Document:

INDEPENDENT DIRECTOR AGREEMENT

 

This INDEPENDENT DIRECTOR AGREEMENT (the “Agreement”) is made and entered into as of this 31st day of May, 2011 (the “Effective Date”), by and between China Integrated Energy, Inc., a Delaware corporation whose shares are publicly traded (the “Company”), and Liren Wei, a citizen of the United States, with a permanent residence at 133-10 39th Avenue, Flushing, New York 11354 (the “Independent Director”).

 

WHEREAS, the Company desires to engage the Independent Director, and the Independent Director desires to serve, as a non-employee director of the Company, subject to the terms and conditions contained in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the receipt of which is hereby acknowledged, the Company and the Independent Director, intending to be legally bound, hereby agree as follows:

 

1.            DEFINITIONS.

 

(a)           “Corporate Status” describes the capacity of the Independent Director with respect to the Company and the services performed by the Independent Director in that capacity.

 

(b)           “Entity” shall mean any corporation, partnership, limited liability company, joint venture, trust, foundation, association, organization or other legal entity.

 

(c)           “Proceeding” shall mean any threatened, pending or completed claim, action, suit, arbitration, alternate dispute resolution process, investigation, administrative hearing, appeal, or any other proceeding, whether civil, criminal, administrative or investigative, whether formal or informal, including a proceeding initiated by the Independent Director pursuant to Section 12 of this Agreement to enforce the Independent Director’s rights hereunder.

 

(d)           “Expenses” shall mean all reasonable fees, costs and expenses, incurred in connection with any Proceeding, including, without limitation, attorneys’ fees, disbursements and retainers, fees and disbursements of expert witnesses, private investigators, professional advisors (including, without limitation, accountants and investment bankers), court costs, transcript costs, fees of experts, travel expenses, duplicating, printing and binding costs, telephone and fax transmission charges, postage, delivery services, secretarial services, and other disbursements and expenses.

 

(e)           “Liabilities” shall mean judgments, damages, liabilities, losses, penalties, excise taxes, fines and amounts paid in settlement, and any interest, assessments or other charges imposed thereon, and any federal, state, local or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this Agreement.

 

(f)           “Parent” shall mean any corporation or other entity (other than the Company) in any unbroken chain of corporations or other entities ending with the Company, if each of the corporations or entities, other than the Company, owns stock or other interests possessing 50% or more of the economic interest or the total combined voting power of all classes of stock or other interests in one of the other corporations or entities in the chain.

  

  

  

 

(g)           “Subsidiary” shall mean any corporation or other entity (other than the Company) in any unbroken chain of corporations or other entities beginning with the Company, if each of the corporations or entities, other than the last corporation or entity in the unbroken chain, owns stock or other interests possessing 50% or more of the economic interest or the total combined voting power of all classes of stock or other interests in one of the other corporations or entities in the chain.

 

2.            SERVICES OF INDEPENDENT DIRECTOR. While this Agreement is in effect, the Independent Director shall perform duties as an independent director, be compensated for such and be reimbursed expenses in accordance with the Schedule A attached to this Agreement, subject to the following.

 

(a)           The Independent Director will perform services as is consistent with Independent Director’s position with the Company, as required and authorized by the By-Laws and Certificate of Incorporation of the Company, and in accordance with high professional and ethical standards and all applicable laws and rules and regulations pertaining to the Independent Director’s performance hereunder, including without limitation, laws, rules and regulations relating to a public company.

 

(b)           The Independent Director is solely responsible for taxes arising out of any compensation paid by the Company to the Independent Director under this Agreement, and the Independent Director understands that he/she will be issued a U.S. Treasury form 1099 for any compensation paid to him/her by the Company, and understands and agrees that the Company shall comply with any tax or withholding obligations as required by applicable law from time to time in connection with this Agreement.

 

(c)           The Company may offset any and all monies payable to the Independent Director to the extent of any monies owing to the Company from the Independent Director.

 

(d)           The rules and regulations of the Company notified to the Independent Director, from time to time, apply to the Independent Director. Such rules and regulations are subject to change by the Board in its sole discretion. Notwithstanding the foregoing, in the event of any conflict or inconsistency between the terms and conditions of this Agreement and rules and regulations of the Company, the terms of this Agreement control.

 

3.            REQUIREMENTS OF INDEPENDENT DIRECTOR. During the term of the Independent Director’s services to the Company hereunder, Independent Director shall observe all applicable laws and regulations relating to independent directors of a public company as promulgated from to time, and shall not: (1) be an employee of the Company or any Parent or Subsidiary; (2) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the Company other than as a director and/or a member of a committee of the Board; (3) be an affiliated person of the Company or any Parent or Subsidiary, as the term “affiliate” is defined in 17 CFR 240.10A-3(e)(1), other than in his capacity as a director and/or a member of a committee of the Board; (4) possess an interest in any transaction with the Company or any Parent or Subsidiary, for which disclosure would be required pursuant to 17 CFR 229.404(a), other than in his capacity as a director and/or a member of a committee of the Board; (5) be engaged in a business relationship with the Company or any Parent or Subsidiary, for which disclosure would be required pursuant to 17 CFR 229.404(b), except that the required beneficial interest therein shall be modified to be 5% hereby.

  

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4.            REPORT OBLIGATION. While this Agreement is in effect, the Independent Director shall immediately report to the Company in the event: (1) the Independent Director knows or has reason to know or should have known that any of the requirements specified in Section 3 hereof is not satisfied or is not going to be satisfied; and (2) the Independent Director simultaneously serves on an audit committee of any other public company.

 

5.            TERM AND TERMINATION. The term of this Agreement and the Independent Director’s services hereunder shall be for one (1) year from the Effective Date, unless terminated as provided for in this Section 5. This Agreement and the Independent Director’s services hereunder shall terminate upon the earlier of the following:

 

(a)           Expiration of the Independent Director’s term as a director of the Company;

 

(b)           Removal of the Independent Director as a director of the Company, upon proper Board action in accordance with the By-Laws and Certificate of Incorporation of the Company and applicable law;

 

(c)           Resignation of the Independent Director as a director of the Company upon written notice to the Board of Directors of the Company; or

 

(d)           Termination of this Agreement by the Board, in the event any of the requirements specified in Section 3 hereof is not satisfied, as determined by the Board in its sole discretion.

 

6.            LIMITATION OF LIABILITY. In no event shall the Independent Director be individually liable to the Company or its shareholders for any damages for breach of fiduciary duty as an independent director of the Company, unless the Independent Director’s act or failure to act involves willful misconduct, fraud or a knowing violation of law.  No act or failure to act on the part of the Independent Director shall be considered “willful” unless it is done, or omitted to be done, by the Independent Director in bad faith or without reasonable belief that his action or omission was in the best interest of the Company.

 

7.            AGREEMENT OF INDEMNITY. The Company agrees to indemnify the Independent Director as follows:

 

(a)           Subject to the exceptions contained in Section 8(a) below, if the Independent Director was or is a party or is threatened to be made a party to any Proceeding (other than an action by or in the right of the Company) by reason of the Independent Director’s Corporate Status, the Independent Director shall be indemnified by the Company against all Expenses and Liabilities incurred or paid by the Independent Director in connection with such Proceeding (referred to herein as “INDEMNIFIABLE EXPENSES” and “INDEMNIFIABLE LIABILITIES,” respectively, and collectively as “INDEMNIFIABLE AMOUNTS”).

  

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(b)           Subject to the exceptions contained in Section 8(b) below, if the Independent Director was or is a party or is threatened to be made a party to any Proceeding by or in the right of the Company, to procure a judgment in its favor by reason of the Independent Director’s Corporate Status, the Independent Director shall be indemnified by the Company against all Indemnifiable Amounts.

 

(c)           For purposes of this Agreement, the Independent Director shall be deemed to have acted in good faith in conducting the Company’s affairs as an independent director of the Company and/or a member of a committee of the Board of the Company, if the Independent Director: (i) exercised or used the same degree of diligence, care, and skill as an ordinarily prudent man would have exercised or used under the circumstances in the conduct of his own affairs; or (ii) took, or omitted to take, an action in reliance upon advise of counsels or other professional advisors for the Company, or upon statements made or information furnished by other directors, officers or employees of the Company, or upon a financial statement of the Company provided by a person in charge of its accounts or certified by a public accountant or a firm of public accountants, which the Independent Director had reasonable grounds to believe to be true.

 

(d)           The parties hereto acknowledge and intend that this Agreement shall provide for indemnification in excess of that expressly provided by statute and currently provided in the Company’s formation and governing documents, including, without limitation, any indemnification provided by the Company’s By-Laws, Certificate of Incorporation, vote of its shareholders or disinterested directors, or applicable law.

(e)           In the event the Independent Director intends to engage separate legal counsel, the Independent Director shall provide at least two days’ prior written notice to the Company before such engagement and identify therein the Proceeding.

 

8.            EXCEPTIONS TO INDEMNIFICATION.  The Independent Director shall be entitled to indemnification under Sections 7(a) and 7(b) above in all circumstances other than the following:

 

(a)           If indemnification is requested under Section 7(a) and it has been adjudicated finally by a court or arbitral body of competent jurisdiction that, in connection with the subject of the Proceeding out of which the claim for indemnification has arisen, (i) the Independent Director failed to act in good faith and in a manner the Independent Director reasonably believed to be in or not opposed to the best interests of the Company, (ii) the Independent Director had reasonable cause to believe that the Independent Director’s conduct was unlawful, or (iii) the Independent Director’s conduct constituted willful misconduct, fraud or knowing violation of law, then the Independent Director shall not be entitled to payment of Indemnifiable Amounts hereunder.  No act or failure to act on the part of the Independent Director shall be considered “willful” unless it is done, or omitted to be done, by the Independent Director in bad faith or without reasonable belief that his action or omission was in the best interest of the Company.

  

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(b)           If indemnification is requested under Section 7(b) and

 

(i)           it has been adjudicated finally by a court or arbitral body of competent jurisdiction that, in connection with the subject of the Proceeding out of which the claim for indemnification has arisen, the Independent Director failed to act in good faith and in a manner the Independent Director reasonably believed to be in or not opposed to the best interests of the Company, including without limitation, the breach of Section 4 hereof by the Independent Director, the Independent Director shall not be entitled to payment of Indemnifiable Expenses hereunder; or

 

(ii)           it has been adjudicated finally by a court or arbitral body of competent jurisdiction that the Independent Director is liable to the Company with respect to any claim, issue or matter involved in the Proceeding out of which the claim for indemnification has arisen, including, without limitation, a claim that the Independent Director received an improper benefit or improperly took advantage of a corporate opportunity, the Independent Director shall not be entitled to payment of Indemnifiable Expenses hereunder with respect to such claim, issue or matter.

 

9.            WHOLLY OR PARTLY SUCCESSFUL. Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that the Independent Director is, by reason of the Independent Director’s Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, the Independent Director shall be indemnified in connection therewith. If the Independent Director is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify the Independent Director against those Expenses and Liabilities reasonably incurred by the Independent Director or on the Independent Director’s behalf in connection with each successfully resolved claim, issue or matter. For purposes of this section, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

10.          ADVANCES AND INTERIM EXPENSES. The Company shall pay to the Independent Director on request (and, in any event, within not more than ten business days of such request), all Indemnifiable Expenses incurred by the Independent Director in connection with any Proceeding, including a Proceeding by or in the right of the Company, in advance of the final disposition of such Proceeding, if the Independent Director furnishes the Company with a written undertaking, to the satisfaction of the Company, to repay the amount of such Indemnifiable Expenses advanced to the Independent Director in the event it is finally determined by a court or arbitral body of competent jurisdiction that the Independent Director is not entitled under this Agreement to indemnification with respect to such Indemnifiable Expenses.  The Independent Director’s obligation to reimburse the Company for such advances shall be unsecured and no interest shall be charged thereon.

  

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11.          PROCEDURE FOR PAYMENT OF INDEMNIFIABLE AMOUNTS. The Independent Director shall submit to the Company a written request specifying the Indemnifiable Amounts, for which the Independent Director seeks payment under Section 7 hereof and the Proceeding of which has been previously notified to the Company and approved by the Company for indemnification hereunder. At the request of the Company, the Independent Director shall furnish such documentation and information as are reasonably available to the Independent Director and necessary to establish that the Independent Director is entitled to indemnification hereunder. The Company shall pay such Indemnifiable Amounts within ten (10) days of receipt of all required documents.

 

12.          REMEDIES OF INDEPENDENT DIRECTOR.

 

(a)           RIGHT TO PETITION COURT. In the event that the Independent Director makes a request for payment of Indemnifiable Amounts under Sections 7, 9-11 above, or seeks payment of insurance under Section 14, below, and such payment or advancement is not made in a timely manner (i) by the Company, pursuant to the terms of this Agreement, or (ii) by any insurance carrier(s), pursuant to the terms of their respective insurance policies, then the Independent Director may petition the appropriate judicial authority to enforce the Company’s or the carrier(s) respective obligations.

 

(b)          BURDEN OF PROOF. In any judicial proceeding brought under Section 12 (a) above, the Company shall have the burden of proving that the Independent Director is not entitled to payment of Indemnifiable Amounts hereunder.

 

(c)           EXPENSES. The Company agrees to reimburse the Independent Director in full for any Expenses incurred by the Independent Director in connection with investigating, preparing for, litigating, defending or settling any action brought by the Independent Director under Section 12 (a) above, or in connection with any claim or counterclaim brought by the Company in connection therewith.

 

(d)           VALIDITY OF AGREEMENT. The Company shall be precluded from asserting in any Proceeding, including, without limitation, an action under Section 12 (a) above, that the provisions of this Agreement are not valid, binding and enforceable or that there is insufficient consideration for this Agreement and shall stipulate in court that the Company is bound by all the provisions of this Agreement.

 

(e)           FAILURE TO ACT NOT A DEFENSE. The failure of the Company (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses under this Agreement shall not be a defense in any action brought under Section 12 (a) above.

 

13.          PROCEEDINGS AGAINST COMPANY. Except as otherwise provided in this Agreement, the Independent Director shall not be entitled to payment of Indemnifiable Amounts or advancement of Indemnifiable Expenses with respect to any Proceeding brought by the Independent Director against the Company, any Entity which it controls, any director or officer thereof, or any third party, unless the Board has consented to the initiation of such Proceeding. This section shall not apply to counterclaims or affirmative defenses asserted by the Independent Director in an action brought against the Independent Director.

  

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14.          INSURANCE. The Company shall obtain and maintain a policy or policies of director and officer liability insurance, in an amount not less than $10,000,000, providing the Independent Director with coverage for Indemnifiable Amounts and/or Indemnifiable Expenses in accordance with said insurance policy or policies (“D&O INSURANCE”), provided that the Company shall not be liable under this Agreement to make any payment in connection with any claim made against the Independent Director to the extent the Independent Director has otherwise received payment (under any insurance policy) of the amounts otherwise indemnifiable hereunder.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Independent Director, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.

 

15.          NON-EXCLUSIVITY.  The rights of the Independent Director hereunder shall be in addition to and not in lieu of any other rights the Independent Director may have under the Company’s Certificate of Incorporation, Bylaws, applicable law, contract or otherwise.  It is the intention of this Agreement to effect the greatest protection possible to the Independent Director.  To the extent that a change in applicable law (whether by statute or judicial decision) permits greater indemnification than would be afforded currently under the Company’s Certificate of Incorporation, Bylaws, applicable law, contract or this Agreement, it is the intent of the parties that the Independent Director enjoy by this Agreement and any other agreements the greater benefits so afforded by such change.

 

16.          SUBROGATION. In the event of any payment of Indemnifiable Amounts under this Agreement or the D&O Insurance, the Company or its Insurance Carrier, as the case may be, shall be subrogated to the extent of such payment to all of the rights of contribution or recovery of the Independent Director against other persons, and the Independent Director shall take, at the request of the Company, all reasonable action necessary to secure such rights, including the execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

17.          AUTHORITY. Each party has all necessary power and authority to enter into, and be bound by the terms of, this Agreement, and the execution, delivery and performance of the undertakings contemplated by this Agreement have been duly authorized by each party hereto:

 

18.          SUCCESSORS AND ASSIGNMENT. This Agreement shall (a) be binding upon and inure to the benefit of all successors and assigns of the Company (including any transferee of all or a substantial portion of the business, stock and/or assets of the Company and any direct or indirect successor by merger or consolidation or otherwise by operation of law), and (b) be binding on and shall inure to the benefit of the heirs, personal representatives, executors and administrators of the Independent Director. The Independent Director has no power to assign this Agreement or any rights and obligations hereunder.

 

19.          CHANGE IN LAW. To the extent that a change in applicable law (whether by statute or judicial decision) shall mandate broader or narrower indemnification than is provided hereunder, the Independent Director shall be subject to such broader or narrower indemnification and this Agreement shall be deemed to be amended to such extent.

  

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20.          SEVERABILITY. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement, or any clause thereof, shall be determined by a court of competent jurisdiction to be illegal, invalid or unenforceable, in whole or in part, such provision or clause shall be limited or modified in its application to the minimum extent necessary to make such provision or clause valid, legal and enforceable, and the remaining provisions and clauses of this Agreement shall remain fully enforceable and binding on the parties.

 

21.          MODIFICATIONS AND WAIVER. Except as provided in Section 19 hereof with respect to changes in applicable law which broaden or narrow the right of the Independent Director to be indemnified by the Company, no supplement, modification or amendment of this Agreement shall be binding unless executed in writing by each of the parties hereto. No delay in exercise or non-exercise by the Company of any right under this Agreement shall operate as a current or future waiver by it as to its same or different rights under this Agreement or otherwise.

 

22.          NOTICES. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered by hand, (b) when transmitted by facsimile and receipt is acknowledged, or (c) if mailed by certified or registered mail with postage prepaid, on the third business day after the date en which it is so mailed:

 

If to Independent Director, to: Liren Wei, 133-10 39th Avenue, Flushing, New York 11354, USA.

 

If to the Company, to: Gao Xincheng, Chairman and Chief Executive Officer, China Integrated Energy, Inc., Dongxin Century Square, 7th Floor, Hi-Tech Development District, Xi’an, Shaanxi Province, PRC 710043, or to such other address as may have been furnished in the same manner by any party to the others.

 

23.          GOVERNING LAW. This Agreement shall be governed by and construed and enforced under the laws of the State of Delaware.

 

24.          CONSENT TO JURISDICTION. The parties hereby consent to the jurisdiction of the courts having jurisdiction over matters arising in Delaware for any proceeding arising out of or relating to this Agreement. The parties agree that in any such proceeding, each party shall waive, if applicable, inconvenience of forum and right to a jury.

 

25.          AGREEMENT GOVERNS. This Agreement is to be deemed consistent wherever possible with relevant provisions of the By-Laws and Certificate of Incorporation of the Company; however, in the event of a conflict between this Agreement and such provisions, the provisions of this Agreement shall control.

 

26.          INDEPENDENT CONTRACTOR. The parties understand, acknowledge and agree that the Independent Director’s relationship with the Company is that of an independent contractor and nothing in this Agreement is intended to or should be construed to create a relationship other than that of independent contractor. Nothing in this Agreement shall be construed as a contract of employment/engagement between the Independent Director and the Company or as a commitment on the part of the Company to retain the Independent Director in any capacity, for any period of time or under any specific terms or conditions, or to continue the Independent Director’s service to the Company beyond any period.

  

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27.          ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the Company and the Independent Director with respect to the subject matter hereof, and supersedes all prior understandings and agreements with respect to such subject matter.

 

IN WITNESS WHEREOF, the parties hereto have executed this Independent Director Indemnification Agreement as of the day and year first above written.

	
AGREED

	 	
AGREED

	  	 	  
	
China Integrated Energy, Inc.

	 	
Independent Director

	  	 	  
	
/s/ Gao Xincheng

	 	
/s/ Liren Wei

	
Name:  Gao Xincheng

	 	
Name: Liren Wei

	
Title:   Chairman and CEO

	 	  

 

  

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SCHEDULE A

 

I           POSITION:

 

INDEPENDENT DIRECTOR AND MEMBER OF THE AUDIT COMMITTEE

 

II.         COMPENSATION:

 

FEES. For all services rendered by the Independent Director pursuant to this Agreement, both during and outside of normal working hours, including but not limited to, attending all required meetings of the Board or applicable committees thereof, executive sessions of the independent directors, reviewing filing reports and other corporate documents as requested by the Company, providing comments and opinions as to business matters as requested by the Company, the Company agrees to pay to the Independent Director a fee in cash of Sixty Thousand Dollars ($60,000) per annum (“the Fee”), of which Forty Thousand Dollars ($40,000) shall be payable to the Independent Director promptly following the signing of this Agreement and the remainder Twenty Thousand Dollars ($20,000) shall be payable to the Independent Director on the date that is six (6) months following the date of this Agreement.  If this Agreement is terminated in accordance with Section 5 hereof prior to the end of the Term, the Independent Director agrees to return to the Company the pro rata portion of the Fee for the remainder of the Term.

 

STOCK. During the term of the Independent Director’s service as a director or member of any committee of the Board, the Independent Director shall be granted an option to purchase Eighty Thousand (80,000) shares of common stock of the Company with an exercise price equal to the fair market value of a share of the Company’s common stock on the date of the grant of the option and vesting annually, in equal installments for a three year period.  Any such stock grant shall be in accordance with the equity incentive plans as may be adopted by the Company, from time to time. The Independent Director’s rights in respect to any grant shall be determined solely by the Board of Independent Directors of the Company and are subject to execution by Independent Director of any applicable agreements as established and requested by the Company pursuant to the equity incentive plans.

 

EXPENSES. During the term of the Independent Director’s service as a director of the Company, the Company shall promptly reimburse the Independent Director for all expenses incurred by him/her in connection with attending (a) all meetings of the Board or applicable committees thereof, (b) executive sessions of the independent directors, and (c) stockholder meetings, as a director or a member of any committee of the Board , which are approved by the Company in advance.

  

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NO OTHER BENEFITS OR COMPENSATION. The Independent Director acknowledges and agrees that he/she is not granted and is not entitled to any other benefits or compensation from the Company for the services provided under this Agreement except expressly provided for in this Schedule A.

	
AGREED

	 	
AGREED

	  	 	  
	
China Integrated Energy, Inc.

	 	
Independent Director

	  	 	  
	
/s/ Gao Xincheng

	 	
/s/ Liren Wei

	
Name:  Gao Xincheng

	 	
Name:  Liren Wei

	
Title:   Chairman and CEO

	 	  

 

  

11Exhibit 10.1

SECOND AMENDMENT TO CREDIT AGREEMENT

THIS SECOND AMENDMENT TO CREDIT AGREEMENT, dated as of March 1, 2011 (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, as amended by First Amendment to Credit Agreement dated as of October 30, 2009 (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           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)       Indebtedness of the Borrower’s wholly-owned Subsidiary, Ningbo Hurco Machine Tools Co. Inc., to the Bank (the “Ningbo Hurco Indebtedness”)  and a guaranty of payment of the Ningbo Hurco Indebtedness from the Borrower or any Subsidiary in favor of the Bank.

  

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(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.

 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    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.

  

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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.

  

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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.

 

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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.

	  
	  	  	  
	  	
/s/ John G. Oblazney

	  
	  	
John G. Oblazney

	  
	  	
Vice President & Chief Financial Officer

	  
	  	  	  
	  	
JPMORGAN CHASE BANK, N.A.

	  
	  	  	  
	  	
/s/ Thomas W. Harrison

	  
	  	
Thomas W. Harrison

	  
	  	
Vice President & Senior Underwriter

	  

  

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GUARANTOR REAFFIRMATION AND ACKNOWLEDGMENT

Each of the undersigned Guarantors hereby acknowledges and agrees that it has reviewed and fully consents to the foregoing Second 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.

	  
	  	  	  
	  	
/s/ John G. Oblazney

	  
	  	
John G. Oblazney

	  
	  	
Vice President & Chief Financial Officer

	  
	  	  	  
	  	
HURCO INTERNATIONAL HOLDINGS, INC.

	  	  	  
	  	
/s/ John G. Oblazney

	  
	  	
John G. Oblazney

	  
	  	
Vice President & Chief Financial Officer

	  

  

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