Exhibit 10.4




              FORM OF DIRECTOR NON-QUALIFIED STOCK OPTION AGREEMENT

      Between Registrant and Hendrick J. Hartong, Jr., Andrew L. Lewis, IV,
      Richard T. Niner, O. Curtis Noel and Charles E. Mitchell Rentschler

                  DIRECTOR NON-QUALIFIED STOCK OPTION AGREEMENT

                  This   Director    Non-Qualified    Stock   Option   Agreement
("Agreement") has been entered into as of the 15th day of December 1998, between
Hurco Companies,  Inc., an Indiana  corporation (the "Company") and __________ a
director of the Company ("Director").

                  WHEREAS,  the Board of Directors of the Company has granted to
Director an option to purchase  shares of the  Company's  common  stock,  no par
value (the "Common Stock"),  pursuant to the terms and conditions as provided in
this Agreement; and

                  WHEREAS, the Company and Director desire to set forth the
terms and conditions of the option;

                  WHEREAS,  the option  evidenced by this  Agreement is separate
and distinct from options granted  pursuant to the 1997 Stock Option Plan of the
Company;
                  NOW,  THEREFORE,  in consideration of the mutual covenants and
agreements  contained  in this  Agreement,  the  Company and  Director  agree as
follows:
                  1. Grant of Option and  Exercise  Price.  Subject to the terms
and  conditions  stated in this  Agreement,  on December  15, 1998 (the "Date of
Grant"),  the Committee granted to Director an option (the "Option") to purchase
15,000 shares of the Company's  Common Stock (the "Shares") at an exercise price
of $5.813 per Share (the "Exercise Price").

                  2.       Non-Qualified  Stock  Option.  The Option is not
intended to qualify as an  incentive  stock  option  under Section 422 of the
Internal Revenue Code of 1986, as amended.

                  3.   Exercise  of  Option.   The  Option  shall  become  fully
exercisable  on December 15, 1999.  Notwithstanding  the  foregoing,  the Option
shall become  immediately  exercisable  upon a Change in Control of the Company.
For purposes of this Agreement, a Change in Control of the Company means (a) the
acquisition  of 25% or more of the  outstanding  shares of  Common  Stock of the
Company;  (b) any merger or  consolidation  involving the Company,  if following
such  merger or  consolidation,  the persons  who were the  shareholders  of the
Company prior to such  transaction own less than 50% of the outstanding  capital
stock of the surviving or  consolidated  corporation;  (c)  individuals  who are
currently Directors of the Company cease for any reason to constitute at least a
majority of the Board of Directors of the Company (provided,  however,  that any
individual  becoming a Director  whose  election or nomination  for election was
approved by a vote of at least a majority of the Directors  then  comprising the
current Directors,  shall be considered a current Director);  or (d) approval by
the shareholders of the Company of a complete  liquidation or dissolution of the
Company  or the sale or other  disposition  of all or  substantially  all of the
assets of the Company.
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                  4. Term of Option.  Unless  sooner  terminated  as provided in
this Agreement,  the Option shall expire on December 14, 2004. In the event that
Director  ceases to serve as a director of the Company for any reason other than
his death or total  disability,  the Option shall terminate six (6) months after
termination of service. In the event that Director ceases to serve as a director
because of his death or total disability, the Option shall terminate twelve (12)
months after termination of service.

                  5.  Reclassification,  Consolidation or Merger.  If and to the
extent that the number of issued shares of the Common Stock of the Company shall
be  increased  or reduced by change in par  value,  split up,  reclassification,
distribution  of a stock  dividend  of 5% or more,  or the like,  the  number of
shares  subject  to the  Option  and the  Exercise  Price  per  share  shall  be
proportionately adjusted.

                  If  the   Company  is  the   surviving   corporation   in  any
reorganization, consolidation or merger with another corporation, Director shall
be  entitled  to  receive   options   covering   shares  of  such   reorganized,
consolidated,  or merged company in the same proportion, at an equivalent price,
and subject to the same conditions,  provided,  however,  that the new option or
assumption of the Option shall not give the Director  additional  benefits which
he did not have under the Option,  or deprive him of benefits which he had under
the Option.

                  6.  Rights  Prior  to  Exercise  of  Option.   The  Option  is
non-transferable by Director and is exercisable only by him during his lifetime,
except that in the case of his judicially  declared  incompetence  or disability
the Option may be exercised by the legally appointed  guardian or conservator of
his estate.  In the case of the Director's death while any part of the Option is
outstanding,  the  Option  may be  exercised  by the  executor  of his  will  or
administrator  of his  estate or, if the  administration  of his estate has been
closed,  by his heirs or legatees  entitled  thereto.  Neither  Director nor any
person  claiming  under or through him shall have any rights as a shareholder of
the Company with  respect to any of the option  shares until full payment of the
Exercise  Price and  delivery to him or  certificates  for such shares as herein
provided.

                  7.  Restrictions  on  Disposition.   All  shares  acquired  by
Director   pursuant  to  this  Agreement  shall  be  subject  to  the  following
restrictions:  The shares will be "restricted securities" as defined in Rule 144
under the  Securities  Act of 1933 ("Act") and must be held unless  subsequently
registered  under the Act or an exemption from such  registration  is available.
The Company is not  obligated  to register  the shares under the Act. The shares
acquired pursuant to exercise of the Option shall be acquired for Director's own
account for investment for an indefinite  period and not with a view to the sale
or distribution  of any part or all thereof,  by public or private sale or other
disposition.  Notwithstanding the foregoing,  the Company may refuse to transfer
the shares  until it receives  an opinion of counsel  for the Company  that such
transfer is exempt from  registration  under the Act or qualification  under any
other securities law.


<PAGE>



                  8. Payment of Taxes on Exercise of Option.  Whenever shares of
Common Stock are to be issued to Director in connection with the exercise of the
Option,  the Company shall have the right to require him to remit to the Company
an amount  sufficient  to  satisfy  federal,  state and  local  withholding  tax
requirements  prior to the delivery of any certificate or certificates  for such
shares. In the alternative, the Company may elect to withhold from the shares to
be issued that number of shares  (based on the market value of the stock at that
time) which would satisfy the tax withholding amount due.

                  9.       Binding  Effect.  This  Agreement  shall inure to the
benefit of and be binding upon the parties  hereto and their respective heirs,
executors, administrators, successors and assigns.

                  10.      Governing  Law. This Agreement  shall be governed by
and construed in accordance  with the laws of the State of Indiana.

                  11. Notices. All notices and other communications  required or
permitted  under  this  Agreement  shall  be  written  and  shall  be  delivered
personally or sent by registered or certified  first-class mail, postage prepaid
and return receipt  required,  addressed as follows:  if to the Company,  to the
Company's principal office at One Technology Way,  Indianapolis,  Indiana 46268,
and if to the Director or his or her successor, to the address last furnished by
the Director to the Company.  Each notice and  communication  shall be deemed to
have been given when received by the Company or the Director.

                  IN WITNESS  WHEREOF,  the Company and Director  have  executed
this Agreement as of the date first written above.

                                   HURCO COMPANIES, INC.


                                   By:  ______________________________________
                                          Brian D. McLaughlin, President & CEO


                                        --------------------------------------
                                          Signature of Director