Document:

usci_Ex4_1

		

			 

		

		
			Exhibit 4.1
		

		
			 
		

		
			DESCRIPTION OF SECURITIES
		

		
			As of December 31, 2019, United States Commodity Index Funds Trust (the “Company,” the “Trust,” “USCIFT,” “we,” “us” or “our”) had two classes of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended: shares of beneficial interest in the United States Commodity Index Fund (“USCI”) and the United States Copper Index Fund (“CPER”) (together, the “Trust Series”).
		

		
			Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Annual Report on Form 10-K to which this Description of Securities is attached as an exhibit.
		

		
			Shares of Beneficial Interest in the Trust Series
		

		
			The statements made under this caption include summaries of certain provisions contained in our Certificate of Statutory Trust, as amended, (the “Certificate”) and the Fourth Amended and Restated Declaration of Trust and Trust Agreement, as amended, (the “Declaration of Trust”) and the Sixth Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”) of the sponsor, United States Commodity Funds LLC (“USCF”), each of which is incorporated by reference as an exhibit to our Annual Report on Form 10-K (the “Annual Report”) of which this Exhibit 4.1 is a part. This summary does not purport to be complete and is qualified in its entirety by reference to the Certificate, the Declaration of Trust and the LLC Agreement.
		

		
			The Shares
		

		
			USCF has the power and authority to establish and designate one or more series of the Trust and to issue shares thereof, from time to time as it deems necessary or desirable. USCF has exclusive power to fix and determine the relative rights and preferences as between the shares of any series as to right of redemption, special and relative rights as to dividends and other distributions and on liquidation, conversion rights, and conditions under which the series shall have separate voting rights or no voting rights.
		

		
			The shares of each of USCI and CPER are registered as securities under the Securities Act of 1933 (“1933 Act”). The units may only be redeemed when aggregated in Redemption Baskets and shareholders will have limited voting rights as discussed under “Who is USCF?” below. The shares issued by a Trust Series may only be purchased by Authorized Participants and only in blocks of 50,000 shares called “Creation Baskets” through the Marketing Agent.  Similarly, only Authorized Participants may redeem shares and only in blocks of 50,000 shares called “Redemption Baskets”. While each Trust Series only issues and redeems shares in Creation Baskets or Redemption Baskets, as applicable, shares of each Trust Series are listed on the NYSE Arca and investors may purchase and sell shares at market prices like any security.
		

		
			Shareholders have very limited voting rights with respect to the affairs of each Trust Series and have none of the statutory rights normally associated with the ownership of shares of a corporation (including, for example, the right to bring “oppression” or “derivative” actions). Shareholders may elect a replacement sponsor only if USCF resigns voluntarily or loses its corporate charter. Shareholders are not permitted to participate in the management or control of any Trust Series or the conduct of its business. Shareholders must therefore rely upon the duties and judgment of USCF to manage each Trust Series’ affairs. For example, the dissolution or resignation of USCF would cause each Trust Series to terminate unless, within 90 days of the event, shareholders holding shares representing at least 66 2/3% of the outstanding shares of each Trust Series elect to continue the Trust and appoint a successor sponsor. In addition, USCF may terminate USCI if it determines that USCI’s aggregate net assets in relation to its operating expenses make the continued operation of USCI unreasonable or imprudent. However, no level of losses will require USCF to terminate USCI. USCI’s termination would result in the liquidation of its assets and the distribution of the proceeds thereof, first to creditors and then to the shareholders in accordance with their positive book capital account balances, after giving effect to all contributions, distributions and allocations for all periods, and USCI could incur losses in liquidating its assets in connection with a termination.
		

		
			Creation and Redemption of Shares
		

		
			Each Trust Series creates and redeems shares from time to time, but only in one or more Creation Baskets or Redemption Baskets. The creation and redemption of baskets are only made in exchange for delivery to each Trust Series or the distribution by each Trust Series of the amount of Treasuries and/or cash represented by the baskets being created or redeemed, the amount of which is equal to the combined NAV of the number of shares included in the baskets being created or redeemed determined as of 4:00 p.m. New York time on the day the order to create or redeem baskets is properly received.
		

		
			Authorized Participants are the only persons that may place orders to create and redeem baskets. Authorized Participants must be (1) registered broker-dealers or other securities market participants, such as banks and other financial institutions, that are not required to register as broker-dealers to engage in securities transactions described below, and (2) DTC Participants. To become an Authorized Participant, a person must enter into an Authorized Participant Agreement with USCF. The Authorized Participant Agreement provides 

		 

		

			 

		

		

			 

		

the procedures for the creation and redemption of baskets and for the delivery of the Treasuries and any cash required for such creation and redemptions. The Authorized Participant Agreement and the related procedures attached thereto may be amended by each Trust Series, without the consent of any limited partner or shareholder or Authorized Participant.
		

		
			

		 

		

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			Authorized Participants pay each Trust Series $350 for each order they place to create one or more Creation Baskets or to redeem one or more Redemption Baskets. The transaction fee may be reduced, increased or otherwise changed by USCF. Authorized Participants who make deposits with each Trust Series in exchange for baskets receive no fees, commissions or other form of compensation or inducement of any kind from a Trust Series or USCF, and no such person will have any obligation or responsibility to USCF or a Trust Series to effect any sale or resale of shares.
		

		
			Certain Authorized Participants are expected to be capable of participating directly in the physical commodity and the Commodity Interest markets. Some Authorized Participants or their affiliates may from time to time buy or sell commodities or Commodity Interests and may profit in these instances. USCF believes that the size and operation of the commodities market make it unlikely that Authorized Participants’ direct activities in the commodities or securities markets will significantly affect the price of commodities, Commodity Interests, or the shares of a Trust Series.
		

		
			Each Authorized Participant will be required to be registered as a broker-dealer under the Exchange Act and a member in good standing with FINRA, or exempt from being or otherwise not required to be licensed as a broker-dealer or a member of FINRA, and will be qualified to act as a broker or dealer in the states or other jurisdictions where the nature of its business so requires. Certain Authorized Participants may also be regulated under federal and state banking laws and regulations. Each Authorized Participant has its own set of rules and procedures, internal controls and information barriers as it determines is appropriate in light of its own regulatory regime.
		

		
			Under the Authorized Participant Agreement, USCF, and the Trust under limited circumstances, have agreed to indemnify the Authorized Participants against certain liabilities, including liabilities under the 1933 Act, and to contribute to the payments the Authorized Participants may be required to make in respect of those liabilities.
		

		
			The following description of the procedures for the creation and redemption of baskets is only a summary and an investor should refer to the relevant provisions of the Trust Agreement and the form of Authorized Participant Agreement for more detail, each of which is incorporated by reference into USCI’s prospectus.
		

		
			Creation Procedures
		

		
			On any business day, an Authorized Participant may place an order with the Marketing Agent to create one or more baskets. For purposes of processing purchase and redemption orders, a “business day” means any day other than a day when the NYSE Arca, the New York Stock Exchange, or any of the Futures Exchanges upon which a Benchmark Component Futures Contract is traded is closed for regular trading. Purchase orders must be placed by 10:30 a.m. New York time or the close of regular trading on the NYSE Arca, whichever is earlier. The day on which the Marketing Agent receives a valid purchase order is referred to as the purchase order date.
		

		
			By placing a purchase order, an Authorized Participant agrees to deposit Treasuries, cash or a combination of Treasuries and cash with the Trust, as described below. Prior to the delivery of baskets for a purchase order, the Authorized Participant must also have wired to the Custodian the nonrefundable transaction fee due for the purchase order. Authorized Participants may not withdraw a creation request.
		

		
			The manner by which creations are made is dictated by the terms of the Authorized Participant Agreement. By placing a purchase order, an Authorized Participant agrees to (1) deposit Treasuries, cash, or a combination of Treasuries and cash with the Custodian of the Fund, and (2) if required by USCF in its sole discretion, enter into or arrange for a block trade, an exchange for physical or exchange for swap, or any other OTC transaction (through itself or a designated acceptable broker) with a Trust Series for the purchase of a number and type of futures contracts at the closing settlement price for such contracts on the purchase order date. If an Authorized Participant fails to consummate (1) and (2), the order shall be cancelled. The number and type of contracts specified shall be determined by USCF, in its sole discretion, to meet a Trust Series investment objective and shall be purchased as a result of the Authorized Participant’s purchase of shares.
		

		
			Determination of Required Deposits
		

		
			The total deposit required to create each basket (“Creation Basket Deposit”) is the amount of Treasuries and/or cash that is in the same proportion to the total assets of a Trust Series (net of estimated accrued but unpaid fees, expenses and other liabilities) on the
		

		
			
		

		
			

		 

		

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			purchase order date as the number of shares to be created under the purchase order is in proportion to the total number of shares outstanding on the purchase order date. USCF determines, directly in its sole discretion or in consultation with the Administrator, the requirements for Treasuries and cash, including the remaining maturities of the Treasuries and proportions of Treasuries and cash that may be included in deposits to create baskets. The Marketing Agent will publish an estimate of the Creation Basket Deposit requirements at the beginning of each business day. The amount of cash deposit required is the difference between the aggregate market value of the Treasuries required to be included in a Creation Basket Deposit as of 4:00 pm New York time on the date the order to purchase is properly received and the total required deposit.
		

		
			Delivery of Required Deposits
		

		
			An Authorized Participant who places a purchase order is responsible for transferring to a Trust Series account with the Custodian the required amount of Treasuries and/or cash by noon New York time on the second business day following the purchase order date. Upon receipt of the deposit amount, the Administrator will direct DTC to credit the number of baskets ordered to the Authorized Participant’s DTC account on the second business day following the purchase order date. The expense and risk of delivery and ownership of Treasuries until such Treasuries have been received by the Custodian on behalf of a Trust Series shall be borne solely by the Authorized Participant.
		

		
			Because orders to purchase baskets must be placed by 10:30 a.m., New York time, but the total payment required to create a basket during the continuous offering period will not be determined until 4:00 p.m., New York time, on the date the purchase order is received, Authorized Participants will not know the total amount of the payment required to create a basket at the time they submit an irrevocable purchase order for the basket. A Trust Series NAV and the total amount of the payment required to create a basket could rise or fall substantially between the time an irrevocable purchase order is submitted and the time the amount of the purchase price in respect thereof is determined.
		

		
			Rejection of Purchase Orders
		

		
			USCF acting by itself or through the Marketing Agent shall have the absolute right, but shall have no obligation, to reject any purchase order or Creation Basket Deposit if USCF determines that:
		

			
	
			
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			the purchase order or Creation Basket Deposit is not in proper form;

			
	
			
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			it would not be in the best interest of the shareholders of a Trust Series;

			
	
			
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			due to position limits or otherwise, investment alternatives that will enable a Trust Series to meet its investment objective are not available to a Trust Series at that time;

			
	
			
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			the acceptance of the purchase order or the Creation Basket Deposit would have adverse tax consequences to a Trust Series or its shareholders;

			
	
			
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			the acceptance or receipt of which would, in the opinion of counsel to USCF, be unlawful; or

			
	
			
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			circumstances outside the control of USCF, the Marketing Agent or the Custodian make it, for all practical purposes, not feasible to process Creations Baskets (including if USCF determines that the investments available to a Trust Series at that time will not enable it to meet its investment objective).

		
			None of USCF, the Marketing Agent or the Custodian will be liable for the rejection of any purchase order or Creation Basket Deposit.
		

		
			Redemption Procedures
		

		
			The procedures by which an Authorized Participant can redeem one or more baskets mirror the procedures for the creation of baskets. On any business day, an Authorized Participant may place an order with the Marketing Agent to redeem one or more baskets. Redemption orders must be placed by 10:30 a.m. New York time or the close of regular trading on the NYSE Arca, whichever is earlier. A redemption order so received will be effective on the date it is received in satisfactory form by the Marketing Agent (“Redemption Order Date”). The redemption procedures allow Authorized Participants to redeem baskets and do not entitle an individual shareholder to redeem any shares in an amount less than a Redemption Basket, or to redeem baskets other than through an Authorized Participant.
		

		
			
		

		
			

		 

		

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			By placing a redemption order, an Authorized Participant agrees to deliver the baskets to be redeemed through DTC’s book-entry system to the Trust Series not later than noon New York time on the second business day following the effective date of the redemption order. Prior to the delivery of the redemption distribution for a redemption order, the Authorized Participant must also have wired to USCF’s account at the Custodian the non-refundable transaction fee due for the redemption order. An Authorized Participant may not withdraw a redemption order.
		

		
			The manner by which redemptions are made is dictated by the terms of the Authorized Participant Agreement. By placing a redemption order, an Authorized Participant agrees to (1) deliver the Redemption Basket to be redeemed through DTC’s book-entry system to the Fund’s account with the Custodian no later than 3:00 p.m. New York time on the second business day following the effective date of the redemption order (“Redemption Order Date”), and (2) if required by USCF in its sole discretion, enter into or arrange for a block trade, an exchange for physical or exchange for swap, or any other OTC transaction (through itself or a designated acceptable broker) with a Trust Series for the purchase of a number and type of futures contracts at the closing settlement price for such contracts on the Redemption Order Date. If an Authorized Participant fails to consummate (1) and (2), the order shall be cancelled. The number and type of contracts specified shall be determined by USCF, in its sole discretion, to meet a Trust Series investment objective and shall be sold as a result of the Authorized Participant’s sale of shares.
		

		
			Determination of Redemption Distribution
		

		
			The redemption distribution from a Trust Series will consist of a transfer to the redeeming Authorized Participant of an amount of Treasuries and/or cash that is in the same proportion to the total assets of a Trust Series (net of estimated accrued but unpaid fees, expenses and other liabilities) on the date the order to redeem is properly received as the number of shares to be redeemed under the redemption order is in proportion to the total number of shares outstanding on the date the order is received. USCF, directly or in consultation with the Administrator, determines the requirements for Treasuries and cash, including the remaining maturities of the Treasuries and proportions of Treasuries and cash that may be included in distributions to redeem baskets. The Marketing Agent will publish an estimate of the redemption distribution per basket as of the beginning of each business day.
		

		
			Delivery of Redemption Distribution
		

		
			The redemption distribution due from a Trust Series will be delivered to the Authorized Participant on the second business day following the redemption order date if, by 3:00 p.m., New York time on such second business day, A Trust Series DTC account has been credited with the baskets to be redeemed. If a Trust Series DTC account has not been credited with all of the baskets to be redeemed by such time, the redemption distribution will be delivered to the extent of whole baskets received. Any remainder of the redemption distribution will be delivered on the next business day to the extent of remaining whole baskets received if a Trust Series receives the fee applicable to the extension of the redemption distribution date which USCF may, from time to time, determine and the remaining baskets to be redeemed are credited to a Trust Series DTC account by 3:00 p.m., New York time on such next business day. Any further outstanding amount of the redemption order shall be cancelled. Pursuant to information from USCF, the Custodian will also be authorized to deliver the redemption distribution notwithstanding that the baskets to be redeemed are not credited to a Trust Series DTC account by 3:00 p.m., New York time on the second business day following the redemption order date if the Authorized Participant has collateralized its obligation to deliver the baskets through DTC’s book entry-system on such terms as USCF may from time to time determine.
		

		
			Suspension or Rejection of Redemption Orders
		

		
			USCF may, in its discretion, suspend the right of redemption, or postpone the redemption settlement date, (1) for any period during which the NYSE Arca or any of the Futures Exchanges upon which a Benchmark Component Futures Contract is traded is closed other than customary weekend or holiday closings, or trading on the NYSE Arca or the Futures Exchanges is suspended or restricted, (2) for any period during which an emergency exists as a result of which delivery, disposal or evaluation of Treasuries is not reasonably practicable, or (3) for such other period as USCF determines to be necessary for the protection of the shareholders. For example, USCF may determine that it is necessary to suspend redemptions to allow for the orderly liquidation of a Trust Series assets at an appropriate value to fund a redemption. If USCF has difficulty liquidating a Trust Series positions, e.g., because of a market disruption event in the futures markets or an unanticipated delay in the liquidation of a position in an over the counter contract, it may be appropriate to suspend redemptions until such time as such circumstances are rectified. None of USCF, the Marketing Agent, or the Custodian will be liable to any person or in any way for any loss or damages that may result from any such suspension or postponement.
		

		
			
		

		
			

		 

		

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			Redemption orders must be made in whole baskets. USCF acting by itself or through the Marketing Agent may, in its sole discretion, reject any Redemption Order (1) USCF determines that the Redemption Order is not in proper form, (2) the fulfillment of which its counsel advises may be illegal under applicable laws and regulations, or (3) if circumstances outside the control of USCF, the Marketing Agent or the Custodian make it for all practical purposes not feasible for the shares to be delivered under the Redemption Order. USCF may also reject a redemption order if the number of shares being redeemed would reduce the remaining outstanding shares to 100,000 shares (i.e., two baskets) or less.
		

		
			Creation and Redemption Transaction Fee
		

		
			To compensate a Trust Series for its expenses in connection with the creation and redemption of baskets, an Authorized Participant is required to pay a transaction fee to a Trust Series of $350 per order to create or redeem baskets, regardless of the number of baskets in such order. The transaction fee may be reduced, increased or otherwise changed by USCF. USCF shall notify DTC of any change in the transaction fee and will not implement any increase in the fee for the redemption of baskets until thirty (30) days after the date of notice.
		

		
			Tax Responsibility
		

		
			Authorized Participants are responsible for any transfer tax, sales or use tax, stamp tax, recording tax, value added tax or similar tax or governmental charge applicable to the creation or redemption of baskets, regardless of whether or not such tax or charge is imposed directly on the Authorized Participant, and agree to indemnify USCF and the Trust Series if they are required by law to pay any such tax, together with any applicable penalties, additions to tax and interest thereon.
		

		
			Secondary Market Transactions
		

		
			As noted, a Trust Series will create and redeem shares from time to time, but only in one or more Creation Baskets or Redemption Baskets. The creation and redemption of baskets are only made in exchange for delivery to a Trust Series or the distribution by a Trust Series of the amount of Treasuries and/or cash equal to the aggregate NAV of the number of shares included in the baskets being created or redeemed determined on the day the order to create or redeem baskets is properly received.
		

		
			As discussed above, Authorized Participants are the only persons that may place orders to create and redeem baskets. Authorized Participants must be registered broker-dealers or other securities market participants, such as banks and other financial institutions that are not required to register as broker-dealers to engage in securities transactions. An Authorized Participant is under no obligation to create or redeem baskets, and an Authorized Participant is under no obligation to offer to the public shares of any baskets it does create. Authorized Participants that do offer to the public shares from the baskets they create will do so at per-Share offering prices that are expected to reflect, among other factors, the trading price of the shares on the NYSE Arca, the NAV of a Trust Series at the time the Authorized Participant purchased the Creation Baskets, the NAV of the shares at the time of the offer of the shares to the public, the supply of and demand for shares at the time of sale, and the liquidity of the Commodity Interests. Baskets are generally redeemed when the price per share is at a discount to the per share NAV. Shares initially comprising the same basket but offered by Authorized Participants to the public at different times may have different offering prices. An order for one or more baskets may be placed by an Authorized Participant on behalf of multiple clients. Authorized Participants who make deposits with a Trust Series in exchange for baskets receive no fees, commissions or other forms of compensation or inducement of any kind from either a Trust Series or USCF and no such person has any obligation or responsibility to USCF or to a Trust Series to effect any sale or resale of shares. Shares trade in the secondary market on the NYSE Arca. Shares are expected to trade in the secondary market on the NYSE Arca. Shares may trade in the secondary market at prices that are lower or higher relative to their NAV per Share. The amount of the discount or premium in the trading price relative to the NAV per share may be influenced by various factors, including the number of investors who seek to purchase or sell shares in the secondary market and the liquidity of the Commodity Interests. While the shares trade during the core trading session on the NYSE Arca until 4:00 p.m. New York time, liquidity in the market for Commodity Interests may be reduced after the close of the Futures Exchanges upon which the Benchmark Component Futures Contracts are traded. As a result, during this time, trading spreads, and the resulting premium or discount, on the shares may widen.
		

		
			Who is USCF?
		

		
			USCF is a single member limited liability company that was formed in the state of Delaware on May 10, 2005. USCF maintains its main business office at 1850 Mt. Diablo Boulevard, Suite 640, Walnut Creek, California 94596. USCF is a wholly-owned
		

		
			
		

		
			

		 

		

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			subsidiary of Wainwright Holdings, Inc., a Delaware corporation (“Wainwright”) which is a wholly owned subsidiary of Concierge Technologies, Inc. (publicly traded under the ticker CNCG) (“Concierge”). Mr. Nicholas D. Gerber (discussed below), along with certain other family members and certain other shareholders, owns the majority of the shares of Concierge. Wainwright is a holding company that currently holds both USCF, as well as USCF Advisers LLC, an investment adviser registered under the Investment Advisers Act of 1940, as amended. USCF Advisers LLC serves as the investment adviser for the USCF SummerHaven SHPEN Index Fund (“BUYN”), the USCF SummerHaven SHPEI Index Fund (“BUY”) and USCF SummerHaven Dynamic Commodity Strategy No K-1 Fund (“SDCI”), each a series of the USCF ETF Trust. USCF Advisers LLC also served as the investment adviser to the USCF Commodity Strategy Fund, a series of the USCF Mutual Funds Trust, which liquidated all of its assets and distributed cash pro rata to all remaining shareholders in March 2019. USCF ETF Trust and USCF Mutual Funds Trust are registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Board of Trustees for the USCF ETF Trust and USCF Mutual Funds Trust consist of different independent trustees than those independent directors who serve on the Board of Directors of USCF. USCF is a member of the National Futures Association (the “NFA”) and registered as a commodity pool operator (“CPO”) with the Commodity Futures Trading Commission (the “CFTC”) on December 1, 2005 and as a swaps firm on August 8, 2013.
		

		
			USCF serves as general partner of the United States Oil Fund, LP (“USO”), the United States Natural Gas Fund, LP (“UNG”), the United States 12 Month Oil Fund, LP (“USL”), the United States Gasoline Fund, LP (“UGA”), the United States 12 Month Natural Gas Fund, LP (“UNL”) and the United States Brent Oil Fund, LP (“BNO”). USCF previously served as the general partner for the United States Short Oil Fund, LP (“DNO”) and the United States Diesel-Heating Oil Fund, LP (“UHN”), both of which were liquidated in 2018.
		

		
			In addition, USCF is the sponsor of the USCF Funds Trust, a Delaware statutory trust, and each of its series, the United States 3x Oil Fund (“USOU”) and the United States 3x Short Oil Fund (“USOD”), which listed their shares on the NYSE Arca on July 20, 2017 under the ticker symbols “USOU” and “USOD”, respectively. Each of USOU and USOD liquidated all of its assets and distributed cash pro rata to all remaining shareholders in December 2019.
		

		
			USO, UNG, UGA, UNL, USL, BNO, USCI and CPER are referred to collectively herein as the “Related Public Funds.”
		

		
			The Related Public Funds are subject to reporting requirements under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). For more information about each of the Related Public Funds, investors in the Trust Series may call 1.800.920.0259 or visit www.uscfinvestments.com or the website of the Securities and Exchange Commission’s (the “SEC”) at www.sec.gov.
		

		
			USCF is required to evaluate the credit risk of each Trust Series to the futures commission merchant (“FCM”), oversee the purchase and sale of each Trust Series’ shares by certain authorized purchasers (“Authorized Participants”), review daily positions and margin requirements of each Trust Series and manage each Trust Series’ investments. USCF also pays the fees of ALPS Distributors, Inc., which serves as the marketing agent for each Trust Series (the “Marketing Agent” or “ALPS Distributors”), Brown Brothers Harriman & Co. (“BBH&Co.”), which serves as the administrator (the “Administrator”) and the custodian (the “Custodian”) for each Trust Series, and SummerHaven Investment Management, LLC (“SummerHaven”), which serves as the commodity trading advisor for USCI and CPER.
		

		
			There are no executive officers or employees of the Trust or any series thereof. Pursuant to the Trust Agreement, the affairs of the Trust and each series thereof are managed by USCF.
		

		
			The business and affairs of USCF are managed by a board of directors (the “Board”), which is comprised of four management directors (the “Management Directors”), each of whom are also executive officers or employees of USCF, and three independent directors who meet the independent director requirements established by the NYSE Arca Equities Rules and the Sarbanes-Oxley Act of 2002. The Management Directors have the authority to manage USCF pursuant to the terms of the LLC Agreement. Through its Management Directors, USCF manages the day-to-day operations of each Trust Series. The Board has an audit committee which is made up of the three independent directors (Gordon L. Ellis, Malcolm R. Fobes III and Peter M. Robinson). For additional information relating to the audit committee, please see “Item 10. Directors, Executive Officers and Corporate Governance – Audit Committee” in the annual report on Form 10-K.
		

		 

		

			7Exhibit 10.1

 

FIRST AMENDMENT TO CREDIT AGREEMENT

 

THIS FIRST AMENDMENT
TO CREDIT AGREEMENT (this “Amendment”) dated as of March 13, 2020 to the Credit Agreement referenced below is
by and among HURCO COMPANIES, INC., an Indiana corporation (the “Company”), HURCO B.V., a private company with
limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands,
with its seat (zetel) in Amsterdam, the Netherlands, with its registered office at Prins Bernhardplein 200, 1097 JB Amsterdam,
the Netherlands and registered with the Dutch Chamber of Commerce (Kamer van Koophandel) under number 34114350 (the “Netherlands
Borrower” and, together with the Company, the “Borrowers” and each a “Borrower”),
the Guarantors party hereto and BANK OF AMERICA, N.A. (the “Lender”).

 

W I T N E S S E T H

 

WHEREAS, credit facilities
have been extended to the Borrowers pursuant to the Credit Agreement (as amended, modified, supplemented and extended from time
to time, the “Credit Agreement”) dated as of December 31, 2018 among the Company, the Netherlands Borrower,
the Guarantors from time to time party thereto and the Lender; and

 

WHEREAS, the Borrowers
have requested certain modifications to the Credit Agreement, and the Lender has agreed to the requested modifications on the terms
set forth herein.

 

NOW, THEREFORE, IN
CONSIDERATION of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.       Defined
Terms. Capitalized terms used herein but not otherwise defined herein shall have the meanings provided to such terms in the
Credit Agreement.

 

2.       Amendments
to the Credit Agreement. The Credit Agreement is hereby amended as follows:

 

(a)               
Section 7.04(c) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(c) (i) Permitted
Investments and (ii) Restricted Payments permitted by Section 7.05;

 

(b)               
Section 7.05 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

7.05       Restricted
Payments.

 

The Company
will not, and will not permit any of its Subsidiaries to, declare, pay or make, or agree to declare, pay or make, directly or indirectly,
any Restricted Payment, except (a) the Company may declare and pay dividends with respect to its Equity Interests (i) payable solely
in additional shares of its common stock and (ii) payable in cash so long as (A) no Default or Event of Default shall have occurred
and be continuing or would result therefrom, and (B) immediately before and after giving effect to such Restricted Payment, the
sum of the unused amount of the Commitment plus the Company’s cash on hand as demonstrated to the Lender to its reasonable
satisfaction shall be not less than $10,000,000, (b) Subsidiaries may declare and pay dividends ratably with respect to their Equity
Interests, (c) the Company may make Restricted Payments pursuant to and in accordance with stock option plans or other benefit
plans for management or employees of the Company and its Subsidiaries, and (d) the Company may repurchase its Equity Interests;
provided that (i) no Default or Event of Default shall have occurred and be continuing or would result therefrom and (ii) the aggregate
amount of payments made by the Company for all such repurchases shall not exceed $10,000,000 for any fiscal year.

 

     

     

    

 

(c)               
A new Section 10.20 is hereby added to the Credit Agreement to read as follows:

 

10.20       Acknowledgement
Regarding Any Supported QFCs.

 

To the extent that the Loan Documents
provide support, through a guarantee or otherwise, for any Swap Contract or any other agreement or instrument that is a QFC (such
support, “QFC Credit Support”, and each such QFC, a “Supported QFC”), the parties
acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal
Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations
promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC
Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact
be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject
to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support
(and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing
such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would
be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest,
obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event
a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime,
Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be
exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised
under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States
or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the
parties with respect to the defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported
QFC or any QFC Credit Support.

 

(a)               
As used in this Section 10.20, the following terms shall have the meanings set forth below:

 

“BHC
Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance
with, 12 U.S.C. 1841(k)) of such party.

 

     

     

    

 

“Covered
Entity” means any of the following: (a) a “covered entity” as that term is defined in, and interpreted
in accordance with, 12 C.F.R. § 252.82(b); (b) a “covered bank” as that term is defined in, and interpreted in
accordance with, 12 C.F.R. § 47.3(b); or (c) a “covered FSI” as that term is defined in, and interpreted in accordance
with, 12 C.F.R. § 382.2(b).

 

“Default
Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§
252.81, 47.2 or 382.1, as applicable.

 

“QFC”
has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with,
12 U.S.C. 5390(c)(8)(D).

 

4.       Conditions
Precedent. This Amendment shall become effective as of the date hereof upon receipt by the Administrative Agent of this Amendment
properly executed by the Loan Parties and the Lender.

 

5.       Amendment
is a “Loan Document”. This Amendment is a Loan Document and all references to a “Loan Document” in
the Credit Agreement and the other Loan Documents (including, without limitation, all such references in the representations and
warranties in the Credit Agreement and the other Loan Documents) shall be deemed to include this Amendment.

 

6.       Representations
and Warranties; No Default. Each Loan Party represents and warrants to the Lender that, on and as of the date hereof, immediately
after giving effect to this Amendment, (a) each of the representations and warranties of each Loan Party contained in Article V
of the Credit Agreement or any other Loan Document, or which are contained in any document furnished at any time under or in connection
therewith, are true and correct in all material respects (or, if qualified by materiality or material or Material Adverse Effect,
in all respects), except to the extent that such representations and warranties specifically refer to an earlier date, in which
case they are true and correct as of such earlier date, and (b) no Default exists.

 

7.       Reaffirmation
of Obligations. Each Loan Party (a) acknowledges and consents to all of the terms and conditions of this Amendment, (b) affirms
all of its obligations under the Loan Documents and (c) agrees that this Amendment and all documents, agreements and instruments
executed in connection with this Amendment do not operate to reduce or discharge such Loan Party’s obligations under the
Loan Documents.

 

8.       No
Other Changes. Except as modified hereby, all of the terms and provisions of the Loan Documents shall remain in full force
and effect.

 

9.       Counterparts;
Delivery. This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each
of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an
executed counterpart of this Amendment by facsimile or other electronic imaging means shall be effective as an original.

 

10.       Governing
Law. This Amendment shall be deemed to be a contract made under, and for all purposes shall be construed in accordance with,
the laws of the State of New York.

 

[SIGNATURE PAGES FOLLOW]

 

     

     

    

 

Each of the parties
hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written.

 

	BORROWERS:	HURCO COMPANIES, INC.	 
	 	 	 	 
	 	By: 	/s/ Michael Doar	 
	 	Name: 	Michael Doar	 
	 	Title:	Chief Executive Officer	 
	 	 	 	 
	 	HURCO B.V.	 
	 	 	 	 
	 	By:	/s/ Sonja K. McClelland	 
	 	Name:	Sonja K. McClelland	 
	 	Title:	Managing Director and Authorized Representative	 
	 	 	 	 
	GUARANTORS:	HURCO INTERNATIONAL HOLDINGS, INC.	 
	 	 	 	 
	 	By:	/s/ Sonja K. McClelland	 
	 	Name:	Sonja K. McClelland	 
	 	Title:	Secretary/Treasurer	 
	 	 	 	 
	 	HURCO INTERNATIONAL, INC.	 
	 	 	 	 
	 	By:	/s/ Sonja K. McClelland	 
	 	Name:  	Sonja K. McClelland	 
	 	Title: 	Secretary/Treasurer	 
	 	 	 	 
	 	MILLTRONICS USA, INC.	 
	 	 	 	 
	 	By:  	/s/ Sonja K. McClelland	 
	 	Name: 	Sonja K. McClelland	 
	 	Title: 	Secretary/Treasurer	 
	 	 	 	 
	 	MACHINERY SALES CO. LLC	 
	 	 	 	 
	 	By: 	/s/ Sonja K. McClelland	 
	 	Name: 	Sonja K. McClelland	 
	 	Title: 	Manager 	 
	 	 	 	 
	 	HURCO MIDWEST LLC	 
	 	 	 	 
	 	By: 	/s/ Sonja K. McClelland	 
	 	Name: 	Sonja K. McClelland	 
	 	Title: 	Secretary/Treasurer	 
	 	 	 	 
	 	PROCOBOTS LLC	 
	 	 	 	 
	 	By: 	/s/ Sonja K. McClelland	 
	 	Name: 	Sonja K. McClelland	 
	 	Title: 	Manager 	 
	 	 	 	 
	LENDER:	BANK OF AMERICA, N.A.,

                                                                            as Lender
	 
		 	 	 
	 	By:	/s/ Brian D. Smith	 
	 	Name: 	Brian D. Smith	 
	 	Title: 	Senior Vice President

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