Exhibit 10.12




                                   LETTER AGREEMENT (EUROPEAN FACILITY)
                                         dated September 8, 1997
                      Between the Registrant and The First National Bank of 
Chicago


<PAGE>






                                   THE FIRST NATIONAL BANK OF CHICAGO,
                                              London Branch
                                   THE FIRST NATIONAL BANK OF CHICAGO,
                                             Frankfurt Branch
                                       90 Long Acre, Covent Garden
                                             London WC2E 9RB
                                                 England


                                            September 8, 1997



Hurco Europe Limited
Hurco GmbH Werkzeugmaschinen CIM -
 Bausteine Vertrieb und Service


Ladies and Gentlemen:

              Concurrently   herewith,   Hurco   Companies,   Inc.,  an  Indiana
corporation which directly owns 100% of you ("Hurco  Companies"),  and NBD Bank,
N.A., a national banking association  ("NBD"),  and NBD Bank, a Michigan banking
corporation  ("NBD  Michigan"),  have  entered  into that  certain  Amended  and
Restated Credit Agreement and Amendment to Reimbursement Agreement,  dated as of
even date herewith (as amended, the "Credit Agreement").  This letter sets forth
our agreement  with respect to the working  capital  credit  facility  which The
First National Bank of Chicago,  London  Branch,  and The First National Bank of
Chicago, Frankfurt Branch (collectively,  "FCNBD"), are willing to establish for
you (the  "Facility").  (References to "you" or "your" in this  agreement  mean,
individually and not collectively, Hurco Europe Limited, a corporation organized
and existing  under the laws of England and Wales  ("Hurco  Europe"),  and Hurco
GmbH Werkzeugmaschinen CIM - Bausteine Vertrieb und Service ("Hurco GmbH")).

              1. (a) Subject to the terms hereof,  FCNBD agrees to make loans to
you in Dollars or any other  Currency  under the  Facility,  through its foreign
branches in London,  England,  and  Frankfurt,  Germany (or such other branch or
affiliate as it determines in its sole discretion),  during the period ending on
the Expiration Date, the aggregate Dollar Equivalent of the principal amounts of
which do not exceed $5,000,000 outstanding at any one time.

                     (b)    In no event shall the aggregate  Dollar  Equivalent
of the principal  amounts
of the Loans  outstanding  at any time  exceed  the  lesser of (i) Five  Million
Dollars  ($5,000,000)  and (ii) the  difference of (x)  Twenty-Two  Million Five
Hundred Thousand Dollars  ($22,500,000),  minus (y) the Dollar Equivalent of all
debt  owed  by  Hurco  Companies  to NBD  or its  affiliates  under  the  Credit
Agreement.

                     (c)    The  commitment  of NBD to make the Loans is subject
 to the  execution  of the
Credit Agreement and the condition precedent that no default under Section 11 of
this agreement, and no event or condition which might become such a default with
notice or lapse of time,  or both,  shall  exist or shall have  occurred  and be
continuing  on the date such Loan is to be made.  Hurco  Europe  and Hurco  GmbH
shall be deemed to have made a  representation  to that effect when requesting a
Loan.  A  request  for a loan  must be made by you,  or on your  behalf by Hurco
Companies,  by  telephone  to the London  Branch of FCNBD,  to be  confirmed  in
writing mailed the same day and signed by an authorized  officer of you or Hurco
Companies,  as the case may be, at least three Business Days prior to making any
Fixed Rate Loan and at least one Business Day prior to making any Floating  Rate
Loan. Each request shall identify which one of you is the borrower, the Currency
of the  proposed  loan or that the loan is to be in  Dollars,  the amount of the
proposed loan (which must be in a minimum principal amount the Dollar Equivalent
of which is acceptable to FCNBD or the relevant  foreign  branch or  affiliate),
the type of loan  (whether  a Fixed  Rate Loan or a  Floating  Rate  Loan),  the
Eurocurrency Interest Period, if applicable,  and the date the requested loan is
to be made.

                     (d)    Upon the above  conditions  being  satisfied,  FCNBD
 shall make the  requested
loan in accordance with procedures  agreed upon among FCNBD,  the borrower,  and
Hurco  Companies.  Each loan shall be  evidenced  by entries  upon the books and
records of NBD's main office or of FCNBD's  foreign branch  disbursing the loan.
FCNBD shall,  and is authorized by you to,  endorse on its books and records the
date and amount of each loan hereunder, the applicable Currencies (or for Dollar
loans,  that they are in Dollars),  the interest  rate and interest  period with
respect to each loan,  and the amount of each  principal  and  interest  payment
thereon,  which books and records shall constitute prima facie evidence thereof;
provided,  however,  that  the  failure  of  FCNBD to  record,  or any  error in
recording, any such information shall not relieve any borrower of its obligation
to repay  the  outstanding  principal  amount of the  loans to it,  all  accrued
interest  thereon,  and other amounts payable with respect thereto in accordance
with the terms of this Agreement.

                     (e)    Each Fixed Rate Loan shall be due and  payable at
the end of the  Eurocurrency
Interest  Period  relating  thereto.  Any Loan  which is a Fixed Rate Loan shall
automatically  be  converted  into a Fixed  Rate  Loan  bearing  a  Eurocurrency
Interest Period of one month at the end of the applicable  Eurocurrency Interest
Period  unless the Loan is  properly  renewed as a Fixed Rate Loan prior to such
time.  Each Floating Rate Loan shall be due and payable on the Expiration  Date.
Upon  proper  notice  given in  accordance  with the time  periods  set forth in
Paragraph  1(c),  any Loan may be converted from a Fixed Rate Loan to a Floating
Rate Loan, or vice versa,  effective upon the next succeeding  Interest  Payment
Date  relating  to such Loan (or,  with  respect to a Fixed  Rate Loan  having a
six-month  Eurocurrency Interest Period, at the end of the Eurocurrency Interest
Period).  The borrower of each loan shall pay  interest on the unpaid  principal
amount of the loan, for the period commencing on the date the loan is made until
the  loan is paid in  full,  on each  Interest  Payment  Date,  and at  maturity
(whether at stated  maturity,  by acceleration or otherwise),  and thereafter on
demand. All loans not paid in full when due, either at maturity, upon demand, or
otherwise,  shall bear interest at the Overdue Rate until paid.  Hurco Companies
may request loans on your behalf in accordance  with the terms of this agreement
at any time prior to the Expiration Date.

              2. (a) All  payments of principal of and interest on the loans and
other  amounts  payable  by  either  borrower  hereunder  shall  be made by such
borrower  without  setoff or  counterclaim,  and free and clear of, and  without
deduction  or  withholding  for, or on account of, any present or future  taxes,
levies, imposts, duties, fees, assessments, or other charges of whatever nature,
imposed by any governmental  authority,  or by any department,  agency, or other
political subdivision or taxing authority.

                     (b)    The  borrowers  agree to pay to FCNBD a  facility 
fee during the term of this
Agreement, calculated on a per annum rate equal to fifteen one-hundredths of one
percent (.15%) of $5,000,000.  Accrued facility fees shall be payable  quarterly
in arrears on each  Interest  Payment  Date,  commencing  on the first such date
occurring after the date hereof, and on the Expiration Date.

              3. Except as otherwise provided in this agreement to the contrary,
whenever any  installment of principal of, or interest on, any loan or any other
amount due  hereunder  becomes  due and payable on a day which is not a Business
Day, the maturity thereof shall be extended to the next succeeding  Business Day
and, in the case of any  installment  of  principal,  interest  shall be payable
thereon  at the rate per annum  determined  in  accordance  with this  agreement
during such extension. Computations of interest and other amounts due under this
agreement  shall be made on the basis of a year of 360 days,  or, in the case of
any loan in Pounds  Sterling,  365 days,  for the actual number of days elapsed,
including the first day but excluding the last day of the relevant period.

              4.  In the  event  that  any  applicable  law,  treaty,  rule,  or
regulation  (whether domestic or foreign) now or hereafter in effect and whether
or not presently  applicable to FCNBD, or any  interpretation  or administration
thereof  by any  governmental  authority  charged  with  the  interpretation  or
administration  thereof,  or compliance by FCNBD with any guideline,  request or
directive of any such authority  (whether or not having the force of law), shall
(i) affect the basis of taxation of payments to FCNBD of any amounts  payable by
any borrower under this  agreement  (other than taxes imposed on the overall net
income of FCNBD by the jurisdiction,  or by any political  subdivision or taxing
authority of any such jurisdiction, in which FCNBD has its principal office), or
(ii) shall impose,  modify, or deem applicable any reserve,  special deposit, or
similar  requirement  against assets of, deposits with or for the account of, or
credit extended by FCNBD, or (iii) shall impose any other condition with respect
to this  agreement  or any loan  made  hereunder,  and the  result of any of the
foregoing is to increase the cost to FCNBD of making,  funding,  or  maintaining
any Fixed  Rate  Loan or to reduce  the  amount of any sum  receivable  by FCNBD
thereon,  then the  borrower  of the loan  shall pay to FCNBD from time to time,
upon request by FCNBD,  additional  amounts  sufficient to compensate  FCNBD for
such increased cost or reduced sum receivable to the extent,  in the case of any
Fixed  Rate  Loan,  FCNBD  is not  compensated  therefor  in the  interest  rate
applicable to such Fixed Rate Loan. Any such additional  amounts  resulting from
the  reserve  requirements  imposed  by the Bank of  England on a loan made from
FCNBD's  London  Branch shall be  calculated  in  accordance  with  Schedule One
attached  hereto. A statement as to the amount of such increased cost or reduced
sum receivable,  prepared in good faith and in reasonable  detail by FCNBD,  and
submitted by FCNBD to a borrower, shall be presumptively deemed correct.

              5.  In the  event  that  any  applicable  law,  treaty,  rule,  or
regulation  (whether domestic or foreign) now or hereafter in effect and whether
or not presently  applicable to FCNBD, or any  interpretation  or administration
thereof  by any  governmental  authority  charged  with  the  interpretation  or
administration  thereof, or compliance by FCNBD with any guideline,  request, or
directive of such authority (whether or not having the force of law),  including
without limitation  exchange controls,  shall make it unlawful or impossible for
FCNBD to  maintain  any  Fixed  Rate  Loan to you  under  this  agreement,  upon
receiving  notice  thereof  from FCNBD,  the borrower of the loan shall repay in
full the  then-outstanding  principal amount of the affected loan, together with
all accrued  interest  thereon to the date of payment  and all amounts  owing to
FCNBD under Paragraph 6 hereof, (a) on the next Interest Payment Date applicable
to the loan if FCNBD may lawfully  continue to maintain the loan to such day, or
(b) immediately if FCNBD may not continue to maintain the loan to such day.

              6. If you make any payment of principal  with respect to any Fixed
Rate Loan on any date other than the last day of a Eurocurrency  Interest Period
applicable  thereto,  or if you fail to borrow  any loan  after  notice has been
given to FCNBD in accordance  with  Paragraph 1 hereof and agreement to make the
loan  has been  reached,  or if you fail to make any  payment  of  principal  or
interest  in respect of a loan when due,  you shall,  in addition to any amounts
that may be payable  pursuant  to  Paragraph 4 or 5 hereof,  reimburse  FCNBD on
demand for any resulting loss or expense  incurred by FCNBD,  including  without
limitation any loss incurred in obtaining,  liquidating,  or employing  deposits
from third parties,  whether or not FCNBD shall have funded or committed to fund
the loan. A statement as to the amount of such loss or expense, prepared in good
faith and in reasonable  detail by FCNBD and submitted by FCNBD to you, shall be
presumptively deemed correct.  Calculation of all amounts payable to FCNBD under
this  Paragraph  shall be made as though  FCNBD  shall have  actually  funded or
committed to fund the relevant loan through  purchasing an underlying deposit in
an amount  equal to the amount of the loan and having a maturity  comparable  to
the related Eurocurrency Interest Period; provided, however, that FCNBD may fund
any  loan in any  manner  it sees  fit and the  foregoing  assumption  shall  be
utilized  only  for the  purpose  of  calculating  amounts  payable  under  this
Paragraph.

              7. As  used  herein,  the  following  terms  have  the  respective
meanings set forth below:

                     "Business  Day"  means,  with  respect  to a Floating 
Rate Loan,  a day other than a
Saturday,  Sunday,  or other day on which the applicable  office of FCNBD is not
open to the public for carrying on substantially  all of its banking  functions,
and,  with  respect  to a Fixed  Rate  Loan,  means in  addition  a day on which
dealings in Dollar deposits are carried out in the relevant interbank market.

                     "Contingent  Liabilities"  of any person means,  as of any
 date,  all  obligations of
such  person or of others  for which  such  person is  contingently  liable,  as
obligor,  guarantor,  surety,  or in any other capacity,  or in respect of which
obligations  such person  assures a creditor  against loss or agrees to take any
action  to  prevent  any  such  loss  (other  than  endorsements  of  negotiable
instruments  for  collection  in the  ordinary  course of  business),  including
without  limitation all  reimbursement  obligations of such person in respect of
any letters of credit,  surety bonds,  note repurchase  obligations,  or similar
obligations  and all  obligations  of such  person  to  advance  funds to, or to
purchase  assets,  property  or  services  from,  any  other  person in order to
maintain the financial condition of such other person.

                     "Currency" means French Francs,  German Marks,  Pounds 
Sterling,  or any other freely
convertible non-Dollar currency in which a foreign branch of FCNBD is willing to
make a loan to you.

                     "Dollar  Equivalent" means with respect to each loan in 
Dollars,  the amount thereof,
and with respect to each loan in a Currency,  the sum in Dollars  resulting from
converting  the amount of such loan from the relevant  Currency  into Dollars at
the most favorable spot exchange rate  determined by FCNBD to be available to it
for  purchasing  that  Currency  with Dollars at 11:00 a.m.  (local time for the
relevant foreign exchange market) on the date such loan is disbursed, or on such
other date as of which a determination of the Dollar Equivalent is made.

                     "Dollars" and "$" means the lawful money of the United 
States of America.

                     "Eurocurrency  Interest  Period"  means,  with  respect to
 any Fixed  Rate Loan,  the
period  commencing  on the day each  Fixed Rate Loan is made or  converted  to a
Fixed  Rate  Loan  and  ending  on the  date  one,  two,  three,  or six  months
thereafter,  as the borrower may elect under Paragraph 1(c), and each subsequent
period  commencing  on the last day of the  immediately  preceding  Eurocurrency
Interest  Period  and  ending  on the  date  one,  two,  three,  or  six  months
thereafter,  as the  borrower  may elect,  or any other  period as FCNBD and the
borrowers  may  agree  from  time  to  time,  provided,  however,  that  (a) any
Eurocurrency  Interest  Period  which  commences  on the last  Business Day of a
calendar  month (or on any day for which there is no  numerically  corresponding
day in the appropriate subsequent calendar month) shall end on the last Business
Day of the appropriate subsequent calendar month, (b) each Eurocurrency Interest
Period which would  otherwise end on a day which is not a Business Day shall end
on the next  succeeding  Business Day or, if such next  succeeding  Business Day
falls in the next succeeding calendar month, on the next preceding Business Day,
and (c) no  Eurocurrency  Interest  Period which would end after the  Expiration
Date shall be permitted.

                     "Eurocurrency  Rate"  means,  with  respect  to any Fixed 
 Rate Loan and the  related
Eurocurrency Interest Period, the per annum rate that is equal to the sum of:

                     (a)    the Eurocurrency Rate Margin, plus

                     (b)    if the  Fixed  Rate Loan is  denominated  in  
Dollars,  the rate  obtained  by
dividing  (i) the per annum rate of  interest  at which  deposits in Dollars for
such  Eurocurrency  Interest Period and in an aggregate amount comparable to the
amount of such Fixed Rate Loan are  offered to FCNBD by other prime banks in the
London or Nassau interbank market, at approximately  11:00 a.m. London or Nassau
time,  as the case may be, on the second  Business Day prior to the first day of
such  Eurocurrency  Interest  Period  by (ii) an  amount  equal to one minus the
stated  maximum  rate  (expressed  as a  decimal)  of all  reserve  requirements
(including, without limitation, any marginal, emergency,  supplemental,  special
or other  reserves)  that is  specified  on the first  day of such  Eurocurrency
Interest  Period by the Board of Governors of the Federal Reserve System (or any
successor  agency thereto) for determining the maximum reserve  requirement with
respect to eurodollar funding (currently referred to as "Eurodollar liabilities"
in Regulation D of such Board) maintained by a member bank of such System;

all as conclusively  determined by FCNBD,  absent manifest error, such sum to be
rounded up, if necessary,  to the nearest whole multiple of one one-hundredth of
one percent (1/100 of 1%).

                     "Eurocurrency  Rate Margin" means,  as of any date, the 
Applicable  Eurodollar  Rate
Margin then in effect under the Credit Agreement.

                     "Expiration  Date"  means the  earlier to occur of (a)
May 1, 2000,  and (b) the date
on which the Authorization shall be terminated pursuant to Paragraph 12.

                     "Fixed Rate Loan"  means any Loan which  bears  interest at
the Eurocurrency Rate.

                     "Federal  Funds  Rate"  means the per annum rate that is 
equal to the  average of the
rates on  overnight  federal  funds  transactions  with  members of the  Federal
Reserve system  arranged by federal funds  brokers,  as published by the Federal
Reserve Bank of New York for such day, or, if such rate is not so published  for
any day,  the average of the  quotations  for such rates  received by FCNBD from
three  federal funds  brokers of  recognized  standing  selected by FCNBD in its
discretion,  all as conclusively determined by FCNBD, such sum to be rounded up,
of necessary,  to the nearest whole multiple of one one-hundredth of one percent
(1/100 of 1%),  which  Federal Funds Rate shall change  simultaneously  with any
change in such published or quoted rates.

                     "Floating  Rate"  means the per annum rate equal to the
greater of (a) the Prime Rate
in effect from time to time,  and, (b) if the Floating Rate Loan is  denominated
in Dollars, the sum of one percent (1%) per annum plus the Federal Funds Rate in
effect from time to time. The Floating Rate shall change simultaneously with any
change in the Prime Rate or Federal Funds Rate, as the case may be.

                     "Floating Rate Loan" means any Loan which bears interest at
the Floating Rate.

                     "French Francs" means the lawful money of the French
Republic.

                     "German Marks" means the lawful money of the Federal
Republic of Germany.

                     "Guarantors"  means  Autocon  Technologies,  Inc.,  an
Indiana  corporation,  and IMS
Technology,  Inc., a Virginia  corporation,  each a  wholly-owned  subsidiary of
Hurco Companies.

                     "Guaranty"  means the Subsidiary  Guaranty  dated as of
even date herewith,  executed
by the Guarantors in favor of NBD, NBD Michigan, and FCNBD, as it may be amended
from time to time.

                     "Hurco  Guaranty"  means the Hurco Guaranty dated as of
even date herewith,  executed
by Hurco Companies in favor of FCNBD, as it may be amended from time to time.

                     "Interest  Payment  Date" means,  (a) with  respect to any
 Fixed Rate Loan,  the last
day of each  Eurocurrency  Interest Period with respect to such loan and, in the
case of any Eurocurrency Interest Period exceeding three months, those days that
occur during the Eurocurrency Interest Period at intervals of three months after
the first day of the Eurocurrency  Interest Period,  and (b) in all other cases,
the last Business Day of each March, June, September,  and December,  commencing
on the first such Business Day occurring after the date hereof.

                     "Loan"  or  "loan"  means any loan made  pursuant  to 
Paragraph  1. Any such Loan or
portion  thereof may also be denominated as a Floating Rate Loan or a Fixed Rate
Loan and such Floating Rate Loans and Fixed Rate Loans are referred to herein as
"types" of Loans.

                     "Overdue  Rate"  shall mean (a) in respect of  principal 
of Floating  Rate Loans,  a
rate per annum that is equal to the sum of three percent (3%) per annum plus the
Floating Rate, (b) in respect of principal of Fixed Rate Loans, a rate per annum
that is equal to the sum of three percent (3%) per annum plus the per annum rate
in effect  thereon  until the end of the then current  Interest  Period for such
Loan and, thereafter, a rate per annum that is equal to the sum of three percent
(3%) per annum plus the  Floating  Rate,  and (c) in  respect  of other  amounts
payable by the borrower  hereunder (other than interest),  a per annum rate that
is equal to the sum of three percent (3%) per annum plus the Floating Rate.

                     "Pounds Sterling" means the lawful money of the United
Kingdom.

                     "Prime  Rate"  means the per annum rate  announced  by 
FCNBD from time to time as its
"prime rate" or "base rate",  as  applicable  (it being  acknowledged  that such
announced rate may not necessarily be the lowest rate charged by FCNBD to any of
its customers),  which Prime Rate shall change simultaneously with any change in
such announced rate.

              8. Each of you  represents  and warrants  that it is a corporation
duly  organized  and existing  under the laws of the  jurisdiction  in which its
principal place of business is located, that the execution of this agreement and
the transactions  contemplated hereby have been fully authorized by it, that the
officers  executing this agreement and any other documents required to be signed
in connection  with this agreement have been duly  authorized to do so, and that
this  agreement  constitutes  the legal,  valid and  binding  obligation  of it,
enforceable in accordance with its terms.

              9. The  agreement  of FCNBD  to  consider  making a loan to you is
subject to completion  of the following  matters and the receipt by FCNBD of the
following documents, all in form and substance satisfactory to FCNBD:

                     (a)   Certificates   of   incumbency  as  to  the  officers
              authorized to execute this agreement and other documents  required
              by this agreement.

                     (b) The Hurco Guaranty, duly executed by Hurco Companies in
              favor of FCNBD, and the Guaranty,  duly executed by the Guarantors
              in favor of NBD, NBD Michigan, and FCNBD.

                     (c)  Such  other  documents  as FCNBD  or its  counsel  may
              reasonably request.

              10.  So  long as any  credit  facility  is  available  under  this
agreement, and until payment in full of the principal of and accrued interest on
all indebtedness  provided for in this agreement,  (a) Hurco GmbH agrees that it
will furnish or cause to be furnished to FCNBD and NBD within 120 days after the
end of each fiscal year its internally  prepared foreign  consolidating  balance
sheet and related  statement  of income for such fiscal  year,  certified by its
chief  financial  officer as being  accurate in all material  respects,  and (b)
Hurco  Europe  agrees that it will furnish or cause to be furnished to FCNBD and
NBD  within  150 days after the end of each  fiscal  year a copy of its  foreign
consolidating  balance  sheet and  related  statement  of income for such fiscal
year,  with a customary audit report of an auditing firm acceptable to FCNBD and
NBD, without qualifications unacceptable to FCNBD or NBD.

               11.  It shall be a default  under  this  agreement  if any of the
following  shall occur,  taking into account,  in each instance,  any applicable
grace period:

                     (a) Any default occurs in the  performance or observance of
              any term,  covenant,  condition  or  agreement  contained  in this
              agreement  and the same  continues for a period of five days after
              receiving notice from NBD or FCNBD of such default; or

                     (b) Hurco  Companies  fails to observe or perform any term,
              covenant,  condition or agreement contained in the Hurco Guaranty,
              or the Hurco  Guaranty  shall for any  reason  become  invalid  or
              unenforceable; or

                    (c) The  Guarantors  fail to observe  or  perform  any term,
              covenant, condition or agreement contained in the Guaranty, or the
              Guaranty shall for any reason become invalid or unenforceable; or


                     (d)    Any  Event  of  Default  (as  defined  in  the 
Credit  Agreement)
              occurs; or

                     (e)    The  Commitment  (as defined in the Credit 
Agreement)  expires or
              is terminated; or

                     (f) There is any  failure by you or by Hurco  Companies  to
              pay any part of the  principal  of, the  premium,  if any,  or the
              interest  on,  or  any  other  payment  of  money  due  under  any
              indebtedness  to  FCNBD or NBD and such  failure  continues  for a
              period of three  business days  following the due date of any such
              payment.

              12. Upon the  occurrence of any such default,  FCNBD may by notice
to you  terminate  its  commitment  to make  loans  hereunder  and  declare  the
outstanding  principal of and accrued interest on all your indebtedness to FCNBD
provided for in this  agreement  to be  immediately  due and payable,  and FCNBD
thereafter shall no longer consider making loans to you hereunder.

              13. For the  purposes of  obtaining  judgment in any court,  if it
becomes necessary to convert into any other currency any Currency due hereunder,
then the conversion shall be made at the rate of exchange  prevailing on the day
before  the day on which the  judgment  is  given.  For this  purpose,  "rate of
exchange" means the rate at which FCNBD is able on the relevant date to purchase
the Currency for such other currency. In the event that there is a change in the
rate of  exchange  prevailing,  between  the day  before  the day on  which  the
judgment  is given and date of payment,  either of you will pay such  additional
amount (if any) as may be  necessary to ensure that the amount paid on such date
is the  amount  in such  other  currency  which  when  converted  at the rate of
exchange  prevailing for commercial  transactions  on the date of payment is the
amount then due on the  relevant  loan.  Any amount due from either of you under
this  Paragraph  will be due as a  separate  debt and shall not be  affected  by
judgment  being  obtained  for any  other sum due  under or in  respect  of this
agreement.

               14.  This  agreement  is  substituted  for the  revolving  credit
facility  provided to you under a certain letter loan  agreement  dated June 17,
1993 (as amended,  the "Prior Credit Agreement"),  between NBD Michigan and you.
NBD  Michigan has  assigned  its rights and  obligations  under the Prior Credit
Agreement to FCNBD. As of the date of this agreement, each loan to you under the
Prior Credit Agreement outstanding as of such date shall be deemed a loan to you
under this  agreement,  bearing  interest at the interest  rate existing on such
date under the Prior Credit Agreement for the then-remaining interest period. As
of the date of this agreement,  all accrued and unpaid interest on any loan made
to you under the Prior  Credit  Agreement  outstanding  as of such date shall be
deemed  accrued on such loans deemed made under this  agreement.  Each such loan
and such accrued and unpaid  interest  deemed  outstanding  under this agreement
pursuant to this  Paragraph  shall be  evidenced  by entries  upon the books and
records of FCNBD or the  relevant  foreign  branch as  provided  in  Paragraph 1
hereof.  Each of you  consents  to  amending  and  restating  the  Prior  Credit
Agreement in the form of this agreement,  and agrees that as of the date of this
agreement,  the Prior Credit  Agreement is  terminated  as to you, and you shall
have no rights thereunder.

               15.   This   agreement   embodies   the  entire   agreement   and
understanding  between the parties,  and  supersedes  all prior  agreements  and
understandings,  relating to the subject matter hereof.  In case any one or more
of  your  obligations  under  this  agreement  shall  be  invalid,   illegal  or
unenforceable in any jurisdiction,  the validity, legality and enforceability of
your remaining obligations shall not in any way be affected or impaired thereby,
and such invalidity,  illegality or  unenforceability  in one jurisdiction shall
not affect the validity,  legality or  enforceability  of your obligations under
this agreement in any other jurisdiction.

               16. You shall pay FCNBD's expenses,  including without limitation
the fees and expenses  (not to exceed such amount as Hurco  Companies  and FCNBD
may agree) of its counsel,  Dickinson,  Wright,  Moon,  Van Dusen & Freeman,  in
connection  with  preparing,   executing,   delivering  and  administering  this
agreement and consummating the transactions  contemplated  hereby, and all stamp
and other taxes payable in connection herewith.

               17.  This  agreement  shall  be  governed  by  and  construed  in
accordance  with the laws of England  and Wales,  provided,  that the law of the
jurisdiction  where a loan  hereunder  is made shall  govern with respect to the
terms of such loan.

               18. This agreement may be executed in counterparts,  all of which
taken  together shall  constitute  one  agreement.  Execution may be effected by
facsimile signature.

               19.  Your  covenants  and  agreements  herein  shall  survive the
expiration of the facilities  provided  hereunder until all loans made hereunder
and all obligations arising hereunder have been paid in full.

              Should the  foregoing be agreeable to you, as it is to us,  please
indicate your  agreement and  acceptance by executing and returning the enclosed
copy of this letter.

                                                  Very truly yours,

                                                  THE FIRST NATIONAL BANK OF
                                                  CHICAGO, London Branch


                                                  By:     /s/ Scott C. Morrison

                                                  Its:    Vice President


<PAGE>



                                               THE FIRST NATIONAL BANK OF
                                               CHICAGO, Frankfurt Branch


                                               By:        /s/ Scott C. Morrison

                                               Its:       Vice President




AGREED AND ACCEPTED:

Dated: September 8, 1997


HURCO EUROPE LIMITED


By:              /s/ Roger Wolf

        Its:     Director


HURCO GMBH WERKZEUGMASCHINEN CIM
- BAUSTEINE VERTRIEB UND SERVICE


By:              Gerhard Kohlbacher

        Its:     General Manager