Exhibit 10.10




                                AMENDED AND RESTATED CREDIT AGREEMENT AND
                                  AMENDMENT TO REIMBURSEMENT AGREEMENT,
                                       effective September 8, 1997
                          Between the Registrant and NBD Bank, N.A. and NBD Bank


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                                          HURCO COMPANIES, INC.

                                ------------------------------------------







                                           AMENDED AND RESTATED

                                             CREDIT AGREEMENT

                                                   AND

                                   AMENDMENT TO REIMBURSEMENT AGREEMENT

                                      dated as of September 8, 1997




                                ------------------------------------------

                                              NBD BANK, N.A.

                                                 NBD BANK



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                                                   -i-
                                            TABLE OF CONTENTS

         ARTICLE 1         DEFINITIONS

         1.1      Certain
Definitions...........................................................2
         1.2      Other Definitions; Rules of
Construction................................................16

         ARTICLE 2  THE COMMITMENTS AND THE ADVANCES

         2.1      Commitment of the Bank.
 ................................................................16
         2.2      Termination and Reduction of
Commitment.................................................17
         2.3
Fees......................................................................18
         2.4      Disbursing
Advances.....................................................................19
         2.5      Conditions for First
Disbursement.......................................................20
         2.6      Further Conditions for
Disbursement.....................................................20
         2.7      Subsequent Elections as to
Loans........................................................21
         2.8      Limitation of Requests and
Elections....................................................21
         2.9      Minimum Amounts; Limitation on Number of Loans;
Etc.....................................22

         ARTICLE 3         PAYMENTS AND PREPAYMENTS OF ADVANCES

         3.1      Principal Payments and
Prepayments......................................................22
         3.2      Interest
Payments....................................................................23
         3.3      Letter of Credit Reimbursement
Payments.................................................24
         3.4      Payment
Method.......................................................................25
         3.5      No Setoff or
Deduction..................................................................26
         3.6      Payment on Non-Business Day; Payment
Computations.......................................26
         3.7      Additional
Costs........................................................................26
         3.8      Illegality and
Impossibility............................................................27
         3.9
Indemnification.............................................................28

         ARTICLE 4         REPRESENTATIONS AND WARRANTIES

         4.1      Corporate Existence and
Power...........................................................28
         4.2      Corporate
Authority.....................................................................28
         4.3      Binding
Effect.......................................................................29
         4.4
Subsidiaries.................................................................29
         4.5
Litigation...................................................................29
         4.6      Financial
Condition.....................................................................29
         4.7      Use of
Advances.....................................................................30
         4.8      Consents,
Etc...........................................................................30
         4.9
Taxes........................................................................30
         4.10     Title to
Properties...................................................................31
         4.11
ERISA........................................................................31
         4.12
Disclosure...................................................................31
         4.13     Environmental and Safety
Matters........................................................31
         4.14     No
Default......................................................................32
         4.15     No Burdensome
Restrictions..............................................................32

         ARTICLE 5  COVENANTS

         5.1      Affirmative
Covenants...................................................................32
         5.2      Negative
Covenants...................................................................35

         ARTICLE  DEFAULT

         6.1      Events of
Default.......................................................................40
         6.2
Remedies......................................................................42

         ARTICLE 6A        DEFAULT

         6A.1     Administration of Outstanding
Facilities................................................43
         6A.2     Amendments to NBD Term
Loan.............................................................43
         6A.3     Amendments to Reimbursement
Agreement...................................................44

         ARTICLE 7         MISCELLANEOUS

         7.1      Amendments,
Etc.........................................................................44
         7.2
Notices.................................................................45
         7.3      No Waiver By Conduct; Remedies
Cumulative...............................................45
         7.4      Reliance on and Survival of Various
Provisions..........................................46
         7.5      Expenses;
Indemnification...............................................................46
         7.6      Successors and
Assigns..................................................................48
         7.7
Counterparts..................................................................49
         7.8      Governing
Law...........................................................................49
         7.9      Table of Contents and
Headings..........................................................50
         7.10     Construction of Certain
Provisions......................................................50
         7.11     Integration and
Severability............................................................50
         7.12     Independence of
Covenants...............................................................50
         7.13     Interest Rate
Limitation................................................................50
         7.14     Waiver of Jury
Trial....................................................................51


 .........EXHIBITS

 .........Exhibit A.........Revolving Credit Note
 .........Exhibit B.........Request for Advance
 .........Exhibit C.........Request for Continuation or Conversion
 .........Exhibit D.........Form of Opinion


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         THIS  AMENDED  AND  RESTATED   CREDIT   AGREEMENT   AND   AMENDMENT  TO
REIMBURSEMENT AGREEMENT,  dated as of September __, 1997 (this "Agreement"),  is
among HURCO COMPANIES,  INC., an Indiana corporation (the "Company"),  NBD BANK,
N.A., a national  banking  association  having its headquarters in Indianapolis,
Indiana (the "Bank"),  and NBD BANK, a Michigan banking  corporation  having its
headquarters in Detroit, Michigan ("NBD Michigan").

                                               INTRODUCTION

         To  replace  an  existing  credit  facility  issued in its favor by NBD
Michigan,  an affiliate of the Bank,  pursuant to the 1996 Credit  Agreement (as
defined  below),  the  Company  desires to obtain a revolving  credit  facility,
including letters of credit, in the aggregate principal amount of $22,500,000 in
order to provide funds and other  financial  accommodations  for working capital
and its other general corporate  purposes,  and the Bank is willing to establish
the credit facility in the Company's favor on the terms set forth below.

         The Company  further desires to have the Bank assume the Company's term
loan presently  issued by NBD Michigan under the Term Loan Agreement (as defined
below).

         Autocon  and IMS  (each as  defined  below)  have  separately  provided
certain  security to NBD Michigan to secure the prompt and  complete  payment of
amounts  due  under the 1996  Credit  Agreement,  and  desire  to  guaranty  the
Company's performance under this Agreement.

         Contemporaneously  herewith,  Hurco  Europe  and  Hurco  GmbH  (each as
defined  below),  subsidiaries  of the Company,  are entering  into the European
Facility  (as defined  below) with FCNBD (as defined  below) to obtain a certain
credit  facility,  the  amount  of  which  will  be  limited  by the  facilities
outstanding  hereunder,  and the Company and the Guarantors  desire to provide a
guaranty to FCNBD of this facility.

         The Company and NBD Michigan are parties to a  Reimbursement  Agreement
(as defined  below),  pursuant to which NBD  Michigan has issued the IRB L/C (as
defined  below).  The Company  desires to amend the  Reimbursement  Agreement to
coordinate its provisions with those of this Agreement,  to have Autocon and IMS
guaranty its obligations  thereunder,  and to have NBD Michigan acknowledge such
amendments  and  guaranty.  Pursuant to a  Participation  Agreement of even date
herewith (the "Participation  Agreement"),  the Bank has purchased a 100 percent
participation in NBD Michigan's  rights and obligations  under the Reimbursement
Agreement and the IRB L/C.

         The Bank is willing to  undertake  these  additional  matters,  and NBD
Michigan is willing to amend the Reimbursement  Agreement,  all on the terms set
forth below.

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



                                                ARTICLE 1
                                               DEFINITIONS

         1.1      Certain Definitions.  As used herein, the following terms have
 the following respective meanings:

                  "Active Subsidiary" means a Subsidiary of the Company which is
not an Inactive Subsidiary.

                  "Actuarial  Present Value of Accumulated Plan Benefits" means,
with  respect  to any  Plan as of any  date,  the  "Actuarial  present  value of
accumulated  plan  benefits"  of such Plan as defined in  Statement of Financial
Accounting   Standards  No.  35,  determined   pursuant  to  Generally  Accepted
Accounting Principles, uniformly applied.

                  "Advance" means any Loan and any Letter of Credit Advance.

                  "Affiliate",  when used with respect to any person,  means any
other person which,  directly or indirectly,  controls or is controlled by or is
under common control with such person and, with respect to the Company, includes
each officer, director, and person who holds 10% or more of the Company's voting
stock.  For purposes of this  definition,  "control"  (including the correlative
meanings of the terms  "controlled  by" and "under common control  with"),  with
respect to any person, means possession, directly or indirectly, of the power to
direct or cause the  direction  of the  management  and policies of such person,
whether through the ownership of voting securities or by contract or otherwise.

                  "Applicable Commitment Fee" means the following per annum rate
in effect on each Interest  Payment Date,  based upon the ratio of  Consolidated
Total  Indebtedness  to  EBITDA,  as  adjusted  on the first day of each  fiscal
quarter  of the  Company,  based upon such  ratio for the four  fiscal  quarters
immediately  preceding the fiscal quarter most recently  ended (e.g.,  beginning
with the fiscal  quarter  starting  on  February  1, the per annum rate shall be
based on the ratio for the four fiscal quarters ending on the prior October 31):

                                        Ratio                     Commitment Fee

                         (a)    less than or equal to .5 to 1.0        .15%

                         (b)    greater than .5 to 1.0 and less than   .20%
                                or equal to 1.0 to 1.0

                         (c)    greater than 1.0 to 1.0 and less       .25%
                                than or equal to 2.0 to 1.0

                         (d)    greater than 2.0 to 1.0 and less     .3125%
                                than or equal to 2.5 to 1.0

                         (e)    greater than 2.5 to 1.0               .375%

                  "Applicable Eurodollar Rate Margin" means the following margin
per annum based upon the ratio of Consolidated  Total Indebtedness to EBITDA, as
adjusted on the first day of each fiscal quarter of the Company, based upon such
ratio for the four fiscal quarters immediately preceding the fiscal quarter most
recently ended (e.g.,  beginning with the fiscal quarter starting on February 1,
the margin  shall be based on the ratio for the four fiscal  quarters  ending on
the prior October 31); provided, that, the Eurodollar Rate shall not be adjusted
pursuant to the Applicable Eurodollar Rate Margin for any outstanding Eurodollar
Rate Loan during the applicable Eurodollar Interest Period:

                                                                    Eurodollar
                                   Ratio                            Rate Margin

                          (a)  less than or equal to .5 to 1.0         0.75%

                          (b)  greater than .5 to 1.0 and less than    1.00%
                               or equal to 1.0 to 1.0

                          (c)  greater than 1.0 to 1.0 and less       1.125%
                               than or equal to 1.5 to 1.0

                          (d)  greater than 1.5 to 1.0 and less       1.375%
                               than or equal to 2.0 to 1.0

                          (e)  greater than 2.0 to 1.0 and less        1.75%
                               than or equal to 2.5 to 1.0

                          (f)  greater than 2.5 to 1.0                  2.0%

                  "Asset  Sale   Proceeds"   means  the  proceeds  (net  of  all
disposition expenses) of selling or otherwise disposing of assets of the Company
or any Subsidiary  (other than inventory,  machinery,  and equipment sold in the
ordinary course of business upon customary  credit terms and other than sales of
the  Company's  Capital  Stock) to the  extent  that the  aggregate  book  value
(disregarding   any   write-downs   of  such  book  value  other  than  ordinary
depreciation and  amortization) of the assets disposed of in such sales or other
dispositions (a) in any single year exceeds 5% of the Consolidated Assets at the
end of the prior fiscal year, or (b) in any two successive  fiscal years exceeds
10% of the  Consolidated  Assets at the end of the fiscal  year of the prior two
fiscal years for which the amount of the  Consolidated  Assets is greater,  less
all Asset Sale Proceeds paid under Section 3.1(d)  resulting from sales or other
dispositions during the first of the two successive fiscal years.

                  "Autocon"  means  Autocon   Technologies,   Inc.,  an  Indiana
corporation and wholly-owned subsidiary of the Company.

                  "Automatic Termination Date" means May 1, 2000.

                  "Bond Default", as used in the Reimbursement Agreement,  means
the  occurrence  of an  Event of  Default  under  Section  601(h)  of the  Trust
Indenture  or  under  Section   201(d)(5)  of  the  Trust   Indenture,   or  any
corresponding  default  under  the  Loan  Agreement  referred  to in  the  Trust
Indenture.

                  "Business Day" means a day other than a Saturday,  Sunday,  or
other  day on  which  the  Bank  is not  open  to the  public  for  carrying  on
substantially all of its banking functions in Indianapolis, Indiana.

                  "Capital  Expenditures"  means  capital  expenditures  of  the
Company and its  Subsidiaries,  as defined and  classified  in  accordance  with
Generally Accepted Accounting  Principles,  and including,  without duplication,
any Capital Lease and capitalized software developments costs of the Company and
its Subsidiaries,  computed on a consolidated basis in accordance with Generally
Accepted Accounting Principles.

                  "Capital  Lease"  of any  person  means any  lease  which,  in
accordance  with  Generally  Accepted  Accounting  Principles,  is or  should be
capitalized on the person's books.

                  "Capital Stock" of any person means any equity securities, any
securities  exchangeable  for or  convertible  into equity  securities,  and any
warrants,  rights,  or other  options to  purchase  or  otherwise  acquire  such
securities.

                  "Code"  means the Internal  Revenue  Code of 1986,  as amended
from time to time, and the regulations thereunder.

                  "Commitment"   means  the  commitment  of  the  Bank  to  make
Revolving Credit Loans and Letter of Credit Advances pursuant to Section 2.1, in
amounts not exceeding an aggregate  principal amount outstanding of $22,500,000,
as such amount may be reduced from time to time pursuant to Section 2.2.

                  "Consolidated"  or   "consolidated"   means,  when  used  with
reference to any financial term in this Agreement, the aggregate for two or more
persons of the amounts signified by such term for all such persons determined on
a  consolidated   basis  in  accordance  with  Generally   Accepted   Accounting
Principles.

                  "Consolidated  Assets" as of any date means the aggregate book
value of the total assets of the Company and its  Subsidiaries  determined  on a
consolidated basis in accordance with Generally Accepted Accounting Principles.

                  "Consolidated  Fixed Charges" for any period means the sum of:
(a) interest expense  (including the interest component of Rentals under Capital
Leases and capitalized  interest) of the Company and its  Subsidiaries  for such
period,  determined in accordance with Generally Accepted Accounting Principles,
and (b) Rentals of the Company and its Subsidiaries  under all leases other than
Capital Leases.

                  "Consolidated  Fixed  Charge Net Income" for any period  means
the  consolidated  net income and net losses of the Company and its Subsidiaries
determined in accordance  with Generally  Accepted  Accounting  Principles,  but
excluding  therefrom  (a)  any  extraordinary  gain or  loss  so  classified  in
accordance with Generally Accepted Accounting  Principles and (b) the net income
or loss of any person  (other  than a  Subsidiary  of the  Company) in which the
Company or any of its Subsidiaries  has an ownership  interest and, with respect
to such net  income,  only to the extent  that it has not been  received  by the
Company  or  such   Subsidiary  in  the  form  of  dividends  or  other  similar
distributions.

                  "Consolidated  Income  Available  for Fixed  Charges"  for any
period  means the sum of  Consolidated  Fixed Charge Net Income for such period,
plus (to the  extent  deducted  in  determining  Consolidated  Fixed  Charge Net
Income)  (a) all  provisions  for any  federal,  state,  or other  income  taxes
(including  without limitation the SBT) made by the Company and its Subsidiaries
during such period,  (b) interest expense  (including the interest  component of
Rentals under Capital  Leases and  capitalized  interest) of the Company and its
Subsidiaries  during  such  period,  and  (c)  Rentals  of the  Company  and its
Subsidiaries under all leases other than Capital Leases during such period.

                  "Consolidated   Total   Capitalization"   means   the  sum  of
consolidated  Tangible  Net  Worth  of the  Company  and its  Subsidiaries  plus
Consolidated  Total   Indebtedness,   determined  on  a  consolidated  basis  in
accordance with Generally Accepted Accounting Principles.

                  "Consolidated Total  Indebtedness"  means, as of any date, the
Indebtedness of the Company and its  Subsidiaries,  determined on a consolidated
basis in accordance with Generally Accepted  Accounting  Principles which (a) is
interest-bearing,  and (b), in accordance  with  Generally  Accepted  Accounting
Principles,  should be reflected on a consolidated balance sheet for the Company
and its Subsidiaries as of such date.

                  "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, accommodation party, partner
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 or
similar obligations (including, without limitation, bankers acceptances) 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.

                  "Contractual   Obligation"   means,  as  to  any  person,  any
provision of any security issued by such person or of any agreement,  instrument
or other  undertaking  to which such  person is a party or by which it or any of
its property is bound.

                  "Credit  Obligations" means all present and future obligations
and other liabilities of the Company and its Subsidiaries  (without duplication)
arising under or included  within the  Outstanding  Facilities,  as amended from
time  to  time,  including  without  limitation  any  interest,  premium,  fees,
expenses,  and  charges  relating  thereto  and all  renewals,  extensions,  and
refundings  of the  foregoing.  The principal  amount of the Credit  Obligations
shall  be the  aggregate  of  the  outstanding  principal  amount  of all  loans
outstanding under the Outstanding Facilities plus the face amount of the IRB L/C
and the Letters of Credit plus the  unreimbursed  portions of any amounts  drawn
under the IRB L/C and the Letters of Credit.

                  "Cumulative   Net  Income"   means,   as  of  any  date,   the
consolidated net income of the Company and its Subsidiaries (after deduction for
income taxes, including without limitation the SBT) for the period commencing on
May 1, 1997,  through the end of the most recently completed fiscal quarter (but
without  reduction for any consolidated net loss incurred by the Company and its
Subsidiaries  for the period from May 1, 1997,  through October 31, 1997, or for
any fiscal quarter in any fiscal year during such period which, as of the end of
such period, has not closed),  taken as one accounting period, all as determined
in accordance with Generally Accepted Accounting Principles.

                  "Currency"  means any  non-Dollar  currency in which a foreign
branch or Affiliate  of the Bank is willing to issue a Letter of Credit  Advance
under  this  Agreement  or in which  FCNBD has made a loan  under  the  European
Facility.

                  "Default"  means any event or condition  which might become an
Event of Default with notice or lapse of time or both.

                  "Dollar  Equivalent"  means,  with  respect to each Advance in
Dollars, the amount thereof, and, with respect to each Advance or loan under the
European  Facility in a Currency,  the sum in Dollars  resulting from converting
the amount of such  Advance or loan from the relevant  Currency  into Dollars at
the most favorable spot exchange rate  determined by the Bank 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 Advance or loan is disbursed,
or on such other date as of which the Dollar  Equivalent  determination is to be
made.

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

                  "Domestic  Subsidiaries" means all Subsidiaries of the Company
which are organized under the laws of one of the states of the United States.

                  "EBITDA"  means,  for any  period,  the sum of (i) net  income
(without taking into account any extraordinary  gains or non-cash  extraordinary
losses),  (ii) interest expense,  (iii) depreciation and amortization,  and (iv)
federal, state and local income taxes (including without limitation the SBT), in
each case for the Company and its Subsidiaries, all determined on a consolidated
basis in accordance with Generally Accepted Accounting Principles.

                  "EBITDAR"  means,  for  any  period,  the  sum of  EBITDA  and
Rentals,  in each case for the Company  and its  Subsidiaries,  determined  on a
consolidated basis in accordance with Generally Accepted Accounting Principles.

                  "ERISA" means the Employee  Retirement  Income Security Act of
1974, as amended from time to time, and the regulations thereunder.

                  "ERISA Affiliate" means, with respect to any person, any trade
or business  (whether or not incorporated)  which,  together with such person or
any  Subsidiary  of such  person,  would be treated as a single  employer  under
Section 414 of the Code and the regulations promulgated thereunder.

                  "Effective  Date" means the  effective  date  specified in the
last paragraph of this Agreement.

                  "Environmental  Laws" at any date means all provisions of law,
statute, ordinances, rules, regulations, judgments, writs, injunctions, decrees,
orders,  awards and standards promulgated by the government of the United States
of America or any foreign government or by any state, province,  municipality or
other  political  subdivision  thereof  or  therein,  or by any  court,  agency,
instrumentality,  regulatory  authority or  commission  of any of the  foregoing
concerning the  protection  of, or regulating the discharge of substances  into,
the environment.

                  "Equity  Proceeds"  means  the  amount  of  proceeds  (net  of
reasonable  issuance  expenses)  realized  from the sale by the  Company  or any
Subsidiaries of any Capital Stock of the Company or any Subsidiaries  other than
(a) sales to  officers or  employees  of the  Company or its  Subsidiaries  upon
exercising  options  issued  pursuant  to the "1990  Stock  Option Plan of Hurco
Companies,  Inc.", or the "Hurco Companies, Inc. 1997 Stock Option and Incentive
Plan", and (b) sales by a Subsidiary to the Company or any other Subsidiary.

                  "Eurodollar   Business   Day"  means,   with  respect  to  any
Eurodollar  Rate  Loan,  a day which is both a  Business  Day and a day on which
dealings in Dollar deposits are carried out in the London interbank market.

                  "Eurodollar  Interest  Period"  means,  with  respect  to  any
Eurodollar Rate Loan, the period commencing on the day such Eurodollar Rate Loan
is made or converted  to a  Eurodollar  Rate Loan and ending on the day which is
one,  two,  three,  or six months  thereafter,  as the  Company  may elect under
Section 2.4 or 2.7, and each subsequent period commencing on the last day of the
immediately  preceding Eurodollar Interest Period and ending on the day which is
one, two, three or six months thereafter, as the Company may elect under Section
2.4 or 2.7,  provided,  however,  that (a) any Eurodollar  Interest Period which
commences on the last Eurodollar 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 Eurodollar Business Day of the
appropriate subsequent calendar month, (b) each Eurodollar Interest Period which
would otherwise end on a day which is not a Eurodollar Business Day shall end on
the  next  succeeding  Eurodollar  Business  Day  or,  if such  next  succeeding
Eurodollar Business Day falls in the next succeeding calendar month, on the next
preceding  Eurodollar  Business Day, and (c) no Eurodollar Interest Period which
would end after the Maturity Date (or the  Termination  Date with respect to any
Revolving Credit Loans) shall be permitted.

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

                  (a)      the Applicable Eurodollar Rate Margin, plus

                  (b)......the  rate per annum  obtained by dividing (i) the per
annum rate of interest at which deposits in Dollars for such Eurodollar Interest
Period and in an aggregate  amount  comparable to the amount of such  Eurodollar
Rate Loan are offered to the Bank by other  prime banks in the London  interbank
market at approximately 11:00 a.m. London time on the second Eurodollar Business
Day prior to the first day of such Eurodollar  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 are specified on the first day of
such Eurodollar 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  eurocurrency  funding  (currently  referred to as
"Eurocurrency liabilities" in Regulation D of such Board) maintained by a member
bank of such System;

all as conclusively  determined by the Bank (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%).

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

                  "European Facility" means a facility under which FCNBD, in its
sole  discretion,  may make revolving  credit loans in favor of Hurco Europe and
Hurco GmbH not to exceed $5,000,000 or its Dollar Equivalent (subject to Section
2.1(b)) pursuant to a letter agreement of even date herewith.

                  "Event of Default" means any of the events or conditions
described in Section 6.1.

                  "FCNBD"  means,  collectively,  The  First  National  Bank  of
Chicago,  London  Branch,  and The First  National  Bank of  Chicago,  Frankfort
Branch, each an Affiliate of the Bank, and any successor thereto.

                  "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
the Bank from three federal funds brokers of recognized standing selected by the
Bank in its discretion,  all as conclusively determined by the Bank, such sum to
be rounded up, if 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.

                  "Fiscal  Year" or "fiscal  year"  means the fiscal year of the
Company,  which presently begins on November 1 of each calendar year and ends on
October 31 of the following  calendar year.  Each Fiscal Year may be referred to
by reference to the calendar year during which the Fiscal Year ends,  and may be
divided into four "fiscal quarters".

                  "Floating  Rate" means the per annum rate equal to the greater
of (a) the  Prime  Rate in  effect  from  time to  time,  and (b) the sum of one
percent (1%) per annum plus the Federal  Funds Rate in effect from time to time,
which  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.

                  "Generally  Accepted  Accounting  Principles"  means generally
accepted accounting principles in the United States of America as in effect from
time to time, applied on a basis consistent with that reflected in the financial
statements referred to in Section 4.6.

                  "Guaranty" means the Subsidiary Guaranty of even date herewith
executed by the Guarantors in favor of the Bank, NBD Michigan, and FCNBD.

                  "Guarantors"  means  Autocon  and  IMS as  signatories  to the
Guaranty and any other person who  guaranties  to the Bank,  NBD  Michigan,  and
FCNBD the  Company's  payment  and  performance  of its  obligations  under this
Agreement and the other Loan Documents.

                  "Hazardous  Materials"  includes,   without  limitation,   any
flammable  explosives,  radioactive  materials,  hazardous materials,  hazardous
wastes,  hazardous  or toxic  substances  or  related  materials  defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended  (42  U.S.C.   Sections   9601,  et  seq.),   the  Hazardous   Materials
Transportation Act, as amended (49 U.S.C.  Sections 1801, et seq.), the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, et seq.) and
in the regulations adopted and publications promulgated pursuant thereto, or any
other federal, state or local government law, ordinance, rule or regulation.

                  "Hurco  Europe"  means Hurco  Europe  Limited,  a  corporation
organized  under the laws of  England  and Wales,  and a  indirect  wholly-owned
subsidiary of the Company.

                  "Hurco  Guaranty"  means  the  Hurco  Guaranty  of  even  date
herewith,  executed by the  Company in favor of FCNBD,  by which the Company has
guaranteed  to FCNBD the  obligations  of Hurco  Europe and Hurco GmbH under the
European Facility.

                  "Hurco GmbH" means Hurco GmbH Werkzeugmaschinen  CIM-Bausteine
Vertrieb  und Service,  a  corporation  organized  under the laws of the Federal
Republic of Germany, and a indirect wholly-owned subsidiary of the Company.

                  "IMS" means IMS Technology,  Inc., a Virginia  corporation and
wholly-owned subsidiary of the Company.

                  "IRB Bonds" means the $1,000,000 City of Indianapolis Economic
Development Revenue Bonds (Hurco Companies,  Inc. Project), Series 1990, and the
related  Loan  Agreement  dated as of  September  1, 1990,  between  the City of
Indianapolis, Indiana, and the Company.

                  "IRB L/C"  means the  Irrevocable  Letter  of Credit  No.  252
issued by NBD  Michigan in favor of First of America  Bank-Indianapolis,  in the
face amount of $1,060,274, pursuant to the Reimbursement Agreement in support of
the IRB  Bonds,  and any  letter of credit  issued in  exchange  or  replacement
therefor.

                  "Inactive  Subsidiary"  means a Subsidiary  of the Company not
actively  engaged in business,  and which has assets with a book value less than
or equal to $10,000.  Schedule 4.4 lists all Inactive  Subsidiaries  existing on
the Effective Date.

                  "Indebtedness"  of any person means,  as of any date,  without
duplication,  (a) all  obligations  of such person for borrowed  money,  (b) all
obligations  of  such  person  as  lessee  under  any  Capital  Lease,  (c)  all
obligations  which are secured by any Lien  existing on any asset or property of
such  person,  whether or not the  obligation  secured  thereby  shall have been
assumed by such  person (to the  extent of such Lien if such  obligation  is not
assumed),  (d) all  obligations of such person for the unpaid purchase price for
goods,  property, or services acquired by such person, except for trade accounts
payable  arising in the ordinary  course of business  that are not past due, (e)
all  obligations of such person to purchase goods,  property,  or services where
payment  therefor is required,  regardless of whether  delivery of such goods or
property or the performance of such services is ever made or tendered (generally
referred to as "take or pay  contracts"),  (f) all liabilities of such person in
respect of Unfunded Benefit  Liabilities under any Plan of such person or of any
ERISA  Affiliate,  (g) all obligations of such person in respect of any interest
rate or  currency  swap,  rate cap or other  similar  transaction  (valued in an
amount equal to the highest  termination  payment, if any, that would be payable
by such person upon  termination  for any reason on the date of  determination),
and (h) all  obligations  of others  similar in character to those  described in
clauses (a) through (g) of this definition for which such person is contingently
liable,  as  guarantor,  surety,  accommodation  party,  partner 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 letters of credit,  surety bonds,  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.

                  "Intangible  Assets"  means,  for  the  Company  or any of its
Subsidiaries,  the net book  value,  calculated  in  accordance  with  Generally
Accepted  Accounting  Principles,  of all items of the following character which
are  included in the assets of such  person:  (i)  goodwill,  including  without
limitation the excess of cost over book value of any asset, (ii) organization or
experimental  expenses,  (iii)  unamortized  debt  discount  and  expense,  (iv)
patents, trademarks, trade names and copyrights, (v) deferred taxes and deferred
charges, (vi) franchises, licenses and permits, and (vii) other assets which are
deemed intangible assets under Generally Accepted Accounting Principles.

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

                  "Interest Period" means any Eurodollar Interest Period.

                  "Letter of Credit"  means a standby  or  commercial  letter of
credit, a time draft, a sight draft, a bankers  acceptance,  or a bank guaranty,
each  having a  stated  expiry  date or a date  upon  which  the  draft  must be
reimbursed not later than twelve months after the date of issuance and not later
than the fifth Business Day before the  Termination  Date issued by the Bank for
the  account of the  Company  under an  application  and  related  documentation
acceptable to the Bank requiring, among other things, immediate reimbursement by
the  Company to the Bank in respect  of all drafts or other  demand for  payment
honored  thereunder  and all  expenses  paid or  incurred  by the Bank  relative
thereto.

                  "Letter of Credit  Advance"  means any issuance of a Letter of
Credit under Section 2.4 made pursuant to Section 2.1.

                  "Letter of Credit Documents" is defined in Section 3.3(b).

                  "Lien" means any pledge, assignment, hypothecation,  mortgage,
security  interest,  deposit  arrangement,  option,  conditional  sale or  title
retaining contract, sale and leaseback transaction,  financing statement filing,
lessor's or lessee's  interest  under any lease,  subordination  of any claim or
right, or any other type of lien, charge, encumbrance, preferential arrangement,
or other claim or right.

                  "Loan" means any Revolving  Credit Loan and the Term Loan. Any
Loan or portion  thereof may also be  denominated  as a Floating  Rate Loan or a
Eurodollar Rate Loan and such Loans are referred to herein as "types" of Loans.

                  "Loan  Documents"  means,  collectively,  this Agreement,  the
Revolving Credit Note, the Reimbursement Agreement, the Term Loan Agreement, the
Term Note, the European  Facility,  the Hurco  Guaranty,  the Guaranty,  and all
agreements, instruments, and documents executed pursuant thereto at any time.

                  "Material  Adverse Effect" means a material  adverse effect on
(a) the business,  assets,  operations,  prospects,  or condition  (financial or
otherwise) of the Company and its Subsidiaries on a consolidated  basis, (b) the
ability of the Company or any  Guarantor  to perform its  obligations  under any
Loan Document, or (c) the validity or enforceability of any Loan Document or the
rights or remedies of the Bank under any Loan Document.

                  "Maturity  Date"  means,   with  respect  to  the  Term  Loan,
September 30, 1997.

                  "Multiemployer Plan" means any "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA or Section 414(f) of the Code.

                  "1996 Credit  Agreement" means the Amended and Restated Credit
Agreement  and  Amendment to Term Loan  Agreement  dated as of January 26, 1996,
between the Company and NBD Michigan, as amended.

                  "NBD Assignment" means the Assignment and Assumption Agreement
of even date herewith between NBD Michigan and the Bank.

                  "Net Assets  Available for Benefits"  shall mean, with respect
to any Plan as of any date, the "Net assets available for benefits" of such Plan
as defined in Statement of Financial  Accounting  Standards  No. 35,  determined
pursuant to Generally Accepted Accounting Principles, uniformly applied.

                  "Note" means any Revolving Credit Note or any Term Note.

                  "Outstanding  Facilities" means,  collectively,  the Advances,
the Term Loan Agreement,  the Term Note, the  Reimbursement  Agreement,  the IRB
L/C, the Guaranty, the European Facility, the Hurco Guaranty, and the Letters of
Credit, each as existing following the Effective Date.

                  "Overdue  Rate" means (a) in respect of  principal of Floating
Rate Loans,  a rate per annum that is equal to the sum of two  percent  (2%) per
annum plus the Floating  Rate,  (b) in respect of principal of  Eurodollar  Rate
Loans,  a rate per annum that is equal to the sum of two percent  (2%) 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 two percent (2%) per annum plus the Floating Rate, and (c) in respect
of other amounts payable by the Company  hereunder (other than interest),  a per
annum  rate  that is equal to the sum of two  percent  (2%) per  annum  plus the
Floating Rate.

                  "PBGC" means the Pension Benefit Guaranty  Corporation and any
entity succeeding to any or all of its functions under ERISA.

                  "PML" means Principal Mutual Life Insurance Company, an Iowa
corporation.

                  "PML Note  Agreement"  means the  Amended  and  Restated  Note
Agreement dated as of March 24, 1994, as amended from time to time,  between the
Company and PML.

                  "PML Notes" means the $12,500,000  11.12% Amended and Restated
Senior Notes due December 1, 2000,  issued  pursuant to the PML Note  Agreement,
and any notes issued by PML in exchange or replacement therefor.

                  "Permitted  Investments"  means any  investment  in (i) direct
obligations  of  the  United  States  or  any  agency  thereof,  or  obligations
guaranteed by the United States or any agency  thereof,  (ii)  commercial  paper
rated not less than "P-1" if rated by Moody's Investors  Services,  Inc., or not
less than  "A-1" if rated by  Standard  and  Poor's  Corporation,  or (iii) time
deposits or demand deposits with, including certificates of deposit issued by, a
financial   institution   (which  may  be  the  Agent  or  any  other  financial
institution)  having a  long-term  debt  rating of at least "A" as assigned by a
nationally  recognized  credit  rating  agency,  provided in each case that such
investment matures within 90 days from the date of its acquisition.

                  "Permitted Liens" means Liens permitted by Section 5.2(e).

                  "person"  shall  include  an  individual,  a  corporation,  an
association,  a  partnership,  a trust or  estate,  a joint  stock  company,  an
unincorporated  organization,  a joint venture,  a trade or business (whether or
not  incorporated),  a  government  (foreign  or  domestic),  and any  agency or
political subdivision thereof, or any other entity.

                  "Plan"  means,  with  respect to any person,  any pension plan
(including a Multiemployer  Plan) subject to Title IV of ERISA or to the minimum
funding  standards  of  Section  412 of the Code which has been  established  or
maintained by such person, any Subsidiary of such person or any ERISA Affiliate,
or by any other  person if such  person,  any  Subsidiary  of such person or any
ERISA Affiliate could have liability with respect to such pension plan.

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

                  "Pro Rata  Share"  as of any date  means,  for the  Bank,  the
percentage obtained by dividing (a) the sum of the outstanding  principal amount
of the Term Loan, plus the face amount of the IRB L/C, plus the aggregate amount
outstanding  under the Advances,  plus the aggregate  amount available under the
Commitment,  all  as of  the  specified  date,  by (b)  the  sum  of the  amount
calculated under  subsection (a) above plus the outstanding  principal amount of
the PML Notes as of the specified  date.  For PML, as of any date, the term "Pro
Rata Share" means the percentage obtained by dividing the outstanding  principal
amount of the PML Notes as of the date specified by the amount  calculated under
subsection (b) above.

                  "Prohibited  Transaction" means any transaction  involving any
Plan which is proscribed by Section 406 of ERISA or Section 4975 of the Code.

                  "Reimbursement  Agreement" means the  Reimbursement  Agreement
dated as of September 1, 1990, as amended, between the Company and NBD Michigan,
pursuant to which the IRB L/C was issued.

                  "Rentals" as of the date of any  determination  thereof  means
all fixed payments (including all payments which the lessee is obligated to make
to the lessor on termination of the lease or surrender of the property)  payable
by the Company or a Subsidiary  of the Company,  as lessee or sublessee  under a
lease of real or personal property,  but exclusive of any amounts required to be
paid by the Company or a Subsidiary of the Company (whether or not designated as
rents or additional rents) on account of maintenance, repairs, insurance, taxes,
assessments,  amortization and similar charges.  Fixed rents under any so-called
"percentage  leases" shall be computed solely on the basis of the minimum rents,
if any,  required to be paid by the lessee  regardless  of sales volume or gross
revenues.

                  "Reportable  Event" means a  reportable  event as described in
Section  4043(b) of ERISA including those events as to which the thirty (30) day
notice period is waived under Part 2615 of the  regulations  promulgated  by the
PBGC under ERISA.

                  "Repurchased Shares" is defined in Section 4.7.

                  "Requirement  of Law" means as to any person,  the certificate
of incorporation and by-laws or other  organizational or governing  documents of
such person,  and any law,  treaty,  rule or regulation or  determination  of an
arbitrator or a court or other governmental  authority,  in each case applicable
to or binding  upon such  person or any of its  property to which such person or
any of its property is subject.

                  "Revolving Credit Advance" means any Revolving Credit Loan
and any Letter of Credit
                   ------------------------
Advance.

                  "Revolving  Credit Loan" means any borrowing under Section 2.4
evidenced by the Revolving Credit Note and made pursuant to Section 2.1.

                  "Revolving  Credit  Note"  means  any  promissory  note of the
Company evidencing the Revolving Credit Loans, in substantially the form annexed
hereto as Exhibit A, as amended or modified  from time to time and together with
any promissory note or notes issued in exchange or replacement therefor.

                  "SBT" means the so-called Single Business Tax imposed by the
 State of Michigan.

                  "Subordinated  Debt" of any person means, as of any date, that
Indebtedness  of such person for borrowed  money which is expressly  subordinate
and  junior  in  right  and  priority  of  payment  to the  Advances  and  other
Indebtedness of such person to the Bank in manner and by agreement  satisfactory
in form and substance to the Bank.

                  "Subsidiary" of any person means any other person (whether now
existing or hereafter  organized  or  acquired)  in which (other than  directors
qualifying  shares  required  by law) at least a majority of the  securities  or
other  ownership  interests  of each  class  having  ordinary  voting  power  or
analogous right (other than  securities or other ownership  interests which have
such power or right only by reason of the  happening of a  contingency),  at the
time as of which any determination is being made, are owned, beneficially and of
record,  by such  person  or by one or more of the  other  Subsidiaries  of such
person or by any combination thereof.  Unless otherwise specified,  reference to
"Subsidiary" means a Subsidiary of the Company.

                  "Tangible Net Worth" of any person means,  as of any date, (a)
the amount of any capital stock,  paid-in capital,  and similar equity accounts,
plus (or  minus in the case of a  deficit)  the  capital  surplus  and  retained
earnings  of such  person  and  excluding  the  amount of any  foreign  currency
translation  adjustment account shown as a capital account of such person,  plus
(b) the amount of any  Subordinated  Debt, less (c) any treasury stock, and less
(d) the Intangible Assets of such person.

                  "Term Loan" means the term loan issued by NBD  Michigan to the
Company under the Term Loan Agreement and evidenced by the Term Note.

                  "Term Loan  Agreement"  means the Term Loan Agreement dated as
of September 9, 1991, between the Company and NBD Michigan, as amended from time
to time and as further amended hereby.

                  "Term Note" means the Fourth  Amended  and  Restated  NBD Term
Loan  Note of the  Company  dated  January  26,  1996,  issued  in  favor of NBD
Michigan,  which  evidences  the Term Loan,  as amended or modified from time to
time and  together  with any  promissory  note or notes  issued in  exchange  or
replacement therefor.

                  "Termination  Date"  means  the  earlier  to  occur of (a) the
Automatic  Termination  Date and (b) the date on which the  Commitment  shall be
terminated pursuant to Section 2.2 or 6.2.

                  "Trust  Indenture"  means  the  Trust  Indenture  dated  as of
September  1, 1990,  between  the City of  Indianapolis,  Indiana,  and First of
America  Bank-Indianapolis,  as trustee,  as amended from time to time,  entered
into in conjunction with the IRB Bonds.

                  "Unfunded Benefit Liabilities" means, with respect to any Plan
as of any date,  the amount of the unfunded  benefit  liabilities  determined in
accordance with Section 4001(a)(18) of ERISA.

         1.2  Other  Definitions;  Rules  of  Construction.  The  terms  "Bank",
"Company",  and  "Agreement" are defined in the  introductory  paragraph of this
Agreement.  Such terms,  together  with the other terms  defined in Section 1.1,
include both the  singular  and the plural forms  thereof and shall be construed
accordingly.  All computations  required  hereunder and all financial terms used
herein  shall  be  made or  construed  in  accordance  with  Generally  Accepted
Accounting  Principles  unless such principles are inconsistent with the express
requirements of this Agreement;  provided that, if the Company notifies the Bank
that the  Company  wishes to amend any  covenant in Article 5 to  eliminate  the
effect  of  any  change  in  Generally  Accepted  Accounting  Principles  in the
operation of such  covenant  (or if the Bank  notifies the Company that the Bank
wishes to amend Article 5 for such purpose),  then the Company's compliance with
such covenant shall be determined on the basis of Generally Accepted  Accounting
Principles  in effect  immediately  before  the  relevant  change  in  Generally
Accepted  Accounting  Principles became  effective,  until either such notice is
withdrawn or such  covenant is amended in a manner  satisfactory  to the Company
and the Bank. Use of the terms  "herein",  "hereof",  and  "hereunder"  shall be
deemed  references to this entire  Agreement and not to the Section or clause in
which the term appears.  References to "Sections" and "subsections"  shall be to
Sections and  subsections,  respectively,  of this  Agreement  unless  otherwise
specifically provided.



                                                ARTICLE 2
                                     THE COMMITMENTS AND THE ADVANCES

         2.1      Commitment of the Bank.

                  (a)......Revolving  Credit Advances.  (i) Subject to the terms
of this Agreement, the Bank agrees to make Revolving Credit Loans to the Company
pursuant to Section 2.4 and Section 3.3, and to issue Letter of Credit  Advances
to the Company pursuant to Section 2.4, from time to time from and including the
Effective Date to but excluding the Termination Date, not to exceed in aggregate
principal  amount at any time  outstanding  the amount  determined  pursuant  to
Section 2.1(c).

       (ii)...By the NBD Assignment, NBD Michigan has assigned its rights
and obligations  under the 1996 Credit  Agreement and the Term Loan Agreement to
the Bank. The Bank agrees that this Agreement  consolidates,  amends,  restates,
and supersedes the 1996 Credit Agreement, and the Company acknowledges, accepts,
and ratifies the Outstanding Facilities evidenced by this Agreement. All amounts
outstanding  under  the  1996  Credit  Agreement  on the  Effective  Date  shall
constitute  Loans under this  Agreement,  and the Company's  obligations  to NBD
Michigan  under the 1996 Credit  Agreement are released.  Each letter of credit,
bankers  acceptance,  and bank guaranty issued by NBD Michigan for the Company's
account which is  outstanding  under the 1996 Credit  Agreement on the Effective
Date (other  than the IRB L/C) shall be treated  for all  purposes as Letters of
Credit  issued  by the  Bank  under  this  Agreement,  notwithstanding  that NBD
Michigan was and remains the issuer thereunder.

                           (b)......Term Loan.  Subject to the terms of this
Agreement and the NBD
                                    ---------
Assignment,  the Bank further  agrees to continue the Term Loan on the Effective
Date.

                           (c)......Limitation on Amount of Revolving Credit
Advances.  Notwithstanding
anything in this Agreement to the contrary,  (i) the aggregate  principal amount
of the Revolving Credit Advances made by the Bank at any time outstanding  shall
not exceed the amount of the Commitment as of the date any such Advance is made,
provided,  however,  that the  aggregate  principal  amount  of Letter of Credit
Advances  outstanding  at any time  shall not exceed  $12,000,000;  and (ii) the
aggregate principal amount of the Revolving Credit Advances,  plus the principal
amount of loans made to Hurco Europe and Hurco GmbH under the European Facility,
outstanding at any time shall not exceed the amount of $22,500,000.

         2.2      Termination and Reduction of Commitment.

                  (a)......The  Company has the right to terminate or reduce the
Commitment  at any time and from time to time at its option,  provided  that (i)
the  Company  shall give notice of such  termination  or  reduction  to the Bank
specifying the amount and effective date thereof, (ii) each partial reduction of
the  Commitment  shall be in a minimum  amount of $1,000,000  and in an integral
multiple of $500,000,  (iii) no such termination or reduction shall be permitted
with  respect  to any  portion  of the  Commitment  as to which a request  for a
Advance pursuant to Section 2.4 is then pending, and (iv) the Commitment may not
be terminated if any Advances are then  outstanding and may not be reduced below
the principal amount of Advances then outstanding. The Commitment or any portion
thereof  terminated or reduced pursuant to this Section 2.2, whether optional or
mandatory, may not be reinstated.

                  (b)......For  purposes of this  Agreement,  a Letter of Credit
Advance  (i) shall be deemed  outstanding  in an amount  equal to the sum of the
maximum  amount  available to be drawn under the related  Letter of Credit on or
after the date of determination  and on or before the stated expiry date thereof
plus the  amount of any draws  under  such  Letter of Credit  that have not been
reimbursed as provided in Section 3.3, and (ii) shall be deemed  outstanding  at
all times on and before such stated  expiry date or such  earlier  date on which
all  amounts  available  to be drawn under such Letter of Credit have been fully
drawn, and thereafter until all related reimbursement obligations have been paid
pursuant to Section 3.3. As provided in Section  3.3,  upon each payment made by
the Bank in respect of any draft or other demand for payment under any Letter of
Credit, the amount of any Letter of Credit Advance outstanding immediately prior
to such payment shall be  automatically  reduced by the amount of each Revolving
Credit Loan deemed advanced in respect of the related  reimbursement  obligation
of the Company.

         2.3      Fees.

                  (a)......The  Company  agrees to pay to the Bank a  commitment
fee on the amount of the daily  average  unused amount of the  Commitment  which
exceeds $5,000,000,  for the period from the Effective Date to but excluding the
Termination Date, at a per annum rate equal to the Applicable  Commitment Fee in
effect on the relevant date on which the fee is payable. Accrued commitment fees
shall be payable quarterly in arrears on each Interest Payment Date,  commencing
on the first such Business Day occurring  after the Effective  Date,  and on the
Termination Date.

                  (b)......The  Company agrees to pay to the Bank on or prior to
the Effective Date an arrangement fee in the amount of $62,500.

                  (c)......The  Company  agrees to pay to the Bank a fee for any
Letter of Credit  other than a commercial  letter of credit,  which fee shall be
computed at a rate per annum equal to the  Applicable  Eurodollar  Rate  Margin,
multiplied by the maximum  amount  available to be drawn from time to time under
the Letter of Credit,  for the period from and  including the Letter of Credit's
issuance  date to and  including  the Letter of  Credit's  stated  expiry  date,
subject to the Bank's standard minimum fee existing at the time of issuance, and
without  duplication  for any fees previously paid to NBD Michigan in connection
with  Letters  of Credit  outstanding  under the 1996  Credit  Agreement  on the
Effective Date. This fee shall be payable quarterly in advance,  with an initial
payment due on or before the issuance date of the Letter of Credit,  and then on
each Interest Payment Date  thereafter.  With respect to any Letter of Credit in
the form of a commercial letter of credit, the Company agrees to pay to the Bank
commercial  letter of credit fees at times and in amounts as the Company and the
Bank may agree from time to time.  Such fees are  nonrefundable  and the Company
shall not be  entitled  to any  rebate of any  portion  thereof if the Letter of
Credit does not remain  outstanding  through  its stated  expiry date or for any
other reason.  The Company  further  agrees to pay to the Bank, on demand,  such
other  customary  administrative  fees,  charges,  and  expenses  of the Bank in
respect of issuing, negotiating,  accepting, amending,  transferring, and paying
each  Letter of Credit or  otherwise  payable  pursuant to the  application  and
related documents under which each Letter of Credit is issued.

         2.4      Disbursing Advances.

                  (a) The Company  shall notify the Bank of its request for each
  Advance  in  substantially  the form of  Exhibit B not later  than  11:00 a.m.
  Indianapolis  time (i) three  Eurodollar  Business Days prior to the date such
  Advance is  requested to be made if such Advance is to be made as a Eurodollar
  Rate  Loan,  (ii) five  Business  Days  prior to the date any Letter of Credit
  Advance is requested to be made, and (iii) on the Business Day such Advance is
  requested to be made in all other cases,  which notice shall specify whether a
  Eurodollar  Rate Loan or Floating  Rate Loan or a Letter of Credit  Advance is
  requested  and,  in the  case of each  requested  Eurodollar  Rate  Loan,  the
  Interest  Period to be initially  applicable to such Loan, and, in the case of
  each Letter of Credit  Advance,  such  information as may be necessary for its
  issuance by the Bank. Subject to the terms of this Agreement,  the proceeds of
  each  requested  Loan shall be made available to the Company by depositing the
  proceeds thereof in immediately  available funds, in an account maintained and
  designated by the Company at the Bank's principal office.

                  (b) All Revolving Credit Loans made under Section 2.4 shall be
  evidenced by the Revolving Credit Note and the Term Loan shall be evidenced by
  the Term Note,  and all such Loans shall be due and payable and bear  interest
  as  provided in Article 3. The  Company  authorizes  the Bank to record on any
  schedule attached to the Notes, or in its books and records,  the date, amount
  and type of each Loan and the  duration  of the  related  Interest  Period (if
  applicable),  the amount of each payment or prepayment  of principal  thereon,
  and any other applicable information,  which schedule or books and records, as
  the case may be, shall  constitute  prima facie evidence of the information so
  recorded,  provided, however, that failure of the Bank to record, or any error
  in  recording,  any such  information  shall not  relieve  the  Company of its
  obligation to repay the outstanding principal amount of the Loans, all accrued
  interest  thereon,  and all other  amounts  payable  with  respect  thereto in
  accordance  with the Notes and this  Agreement.  Subject  to the terms of this
  Agreement,  the Company may borrow  Revolving  Credit Loans under this Section
  2.4 and under Section 3.3, prepay  Revolving  Credit Loans pursuant to Section
  3.1,  and  reborrow  Revolving  Credit  Loans under this Section 2.4 and under
  Section 3.3.

                  (c)  Subject to the terms of this  Agreement,  on the date any
  Letter of Credit  Advance is  requested  to be made,  the Bank shall issue the
  related  Letter of Credit  for the  account  of the  Company.  Notwithstanding
  anything  herein to the contrary,  the Bank may decline to issue any requested
  Letter of Credit on the basis that the  beneficiary,  the purpose of issuance,
  or the terms of drawing are unacceptable to it in its discretion.

         2.5  Conditions for First  Disbursement.  The obligation of the Bank to
make the first  Advance  hereunder  is subject  to the  Company  delivering  the
following  documents and the following matters being completed,  all in form and
substance satisfactory to the Bank:

                  (a)......Charter Documents. Certificates of recent date of the
appropriate   authority  or  official  of  the  Company's  and  the  Guarantors'
respective states of incorporation  listing all charter documents of the Company
and the Guarantors on file in that office and certifying as to the good standing
and corporate existence of the Company and the Guarantors,  together with copies
of such charter  documents of the Company and the Guarantors,  certified as of a
recent date by such  authority or official and  certified as true and correct as
of the  Effective  Date by a duly  authorized  officer  of the  Company  and the
Guarantors, respectively;

                  (b)......By-Laws and Corporate  Authorizations.  The Company's
by-laws,  together  with  all  authorizing  resolutions  and  evidence  of other
corporate  action taken by the Company to authorize its execution,  delivery and
performance of this Agreement and the Notes, and the consummation by the Company
of the transactions contemplated hereby, certified as true and correct as of the
Effective Date by a duly authorized officer of the Company,  and the Guarantors'
respective  by-laws,  together with all authorizing  resolutions and evidence of
other  corporate  action taken by the Guarantors to authorize  their  respective
execution, delivery and performance of the Guaranty, and the consummation by the
Guarantors  of the  transactions  contemplated  thereby,  certified  as true and
correct as of the Effective Date by a duly authorized  officer of the respective
Guarantors;

                  (c)......Incumbency  Certificate.  A certificate of incumbency
of the Company and each Guarantor  containing,  and attesting to the genuineness
of, the signatures of those officers  authorized to act on behalf of the Company
and the  Guarantors  in  connection  with this  Agreement,  the  Notes,  and the
Guaranty and their  respective  consummation  of the  transactions  contemplated
thereby,  certified  as true  and  correct  as of the  Effective  Date by a duly
authorized officer of the Company or the Guarantors, as applicable;

                  (d)......Notes and Guaranties.  The Revolving Credit Note 
duly executed on behalf of
the Company, and the Guaranty duly executed on behalf of each Guarantor;

                  (e)......Legal Opinions.  The favorable written opinion of
Baker & Daniels, counsel for
the Company and the Guarantors, in the form attached hereto as Exhibit D;

                  (f)......Consents,  Approvals, Etc. Copies of all governmental
and  non-governmental   consents,   approvals,   authorizations,   declarations,
registrations  or  filings,  if any,  required on the part of the Company or the
Guarantors in connection  with the execution,  delivery,  and performance of the
Loan Documents,  or the transactions  contemplated  thereby or as a condition to
the legality,  validity or  enforceability  of the Loan Documents,  certified as
true and correct and in full force and effect as of the Effective Date by a duly
authorized officer of the Company or the Guarantors, or, if none are required, a
certificate of such officer to that effect;

                  (g)......Fees.  The arrangement fee described in Section 
2.3(b);

                  (h)......European   Facility  and  Hurco  Guaranty.  A  letter
agreement,  in form and  substance  satisfactory  to the  Bank,  evidencing  the
European  Facility,  duly executed by Hurco Europe and Hurco GmbH, and the Hurco
Guaranty  duly  executed  by  the  Company,  together  with  any  documents  and
certificates required to be delivered thereunder;

                  (i)......NBD Assignment and Participation Agreement.  The NBD
 Assignment, duly executed
by NBD Michigan, FCNBD, and the Bank, and the Participation Agreement, duly
executed by NBD Michigan and
the Bank;

                  (j)......PML Documents.  The PML Note Agreement duly executed
 by PML and the Company,
and the PML Notes duly executed by the Company; and

                  (k)......Other.  Such other documents, and completing such 
other matters, as the Bank
                           -----
may reasonably request.

         2.6 Further Conditions for Disbursement.  The obligation of the Bank to
make any  Advance  (including  the first  Advance)  is  further  subject  to the
following conditions being satisfied:

                  (a)......The   representations  and  warranties  contained  in
Article 4 shall be true and  correct on and as of the date such  Advance is made
(both  before and after such  Advance  is made) as if such  representations  and
warranties were made on and as of such date;

                  (b)......No  Default or Event of Default  shall exist or shall
have occurred and be continuing on the date such Advance is made (whether before
or after such Advance is made);

                  (c)......In  the case of any  Letter  of Credit  Advance,  the
Company shall have delivered to the Bank an  application  for the related Letter
of Credit and other  related  documentation  requested by and  acceptable to the
Bank appropriately completed and duly executed on behalf of the Company.

The Company  shall be deemed to have made a  representation  and warranty to the
Bank at the time of the making of, and the  continuation  or conversion of, each
Advance to the effect set forth in clauses (a) and (b) of this  Section 2.6. For
purposes of this Section 2.6, the  representations  and warranties  contained in
Section 4.6 shall be deemed made with respect to both the  financial  statements
referred to therein and the most recent financial  statements delivered pursuant
to Section 5.1(d)(ii) and (iii).

         2.7  Subsequent  Elections  as to Loans.  The  Company may elect (a) to
continue a Eurodollar  Rate Loan,  or a portion  thereof,  as a Eurodollar  Rate
Loan, or (b) may elect to convert a Eurodollar Rate Loan, or a portion  thereof,
to a Loan of another  type,  or (c) elect to convert a Floating  Rate Loan, or a
portion  thereof,  to a  Eurodollar  Rate  Loan,  in each case by giving  notice
thereof to the Bank in substantially the form of Exhibit C hereto not later than
11:00 a.m.  Indianapolis  time three Eurodollar  Business Days prior to the date
any such  continuation  of or  conversion  to a  Eurodollar  Rate  Loan is to be
effective and not later than 11:00 a.m. Indianapolis time one Business Day prior
to the date such  continuation  or  conversion  is to be  effective in all other
cases,  provided that an outstanding  Eurodollar Rate Loan may only be converted
on the last day of the  then-current  Interest Period with respect to such Loan,
and provided, further, if a continuation of a Loan as, or a conversion of a Loan
to, a  Eurodollar  Rate Loan is  requested,  such notice  shall also specify the
Interest Period to be applicable  thereto upon such  continuation or conversion.
If the  Company  shall not  timely  deliver  such a notice  with  respect to any
outstanding Eurodollar Rate Loan, the Company shall be deemed to have elected to
convert such Eurodollar Rate Loan to a Floating Rate Loan on the last day of the
then-current Interest Period with respect to such Loan.

         2.8  Limitation of Requests and  Elections.  Notwithstanding  any other
provision of this Agreement to the contrary,  if, upon receiving a request for a
Eurodollar Rate Loan pursuant to Section 2.4, or a request for a continuation of
a Eurodollar Rate Loan as a Eurodollar Rate Loan of the then-existing  type or a
request  for a  conversion  of a Floating  Rate Loan to a  Eurodollar  Rate Loan
pursuant to Section 2.7, (a) in the case of any Eurodollar  Rate Loan,  deposits
in Dollars for periods  comparable to the Interest Period elected by the Company
are  not  available  to the  Bank in the  London  interbank  market,  or (b) the
Eurodollar  Rate will not  adequately and fairly reflect the cost to the Bank of
making,  funding,  or maintaining  the related  Eurodollar  Rate Loan, or (c) by
reason of national or international financial, political, or economic conditions
or by reason of any applicable law, treaty,  or other  international  agreement,
rule or regulation  (whether domestic or foreign) now or hereafter in effect, or
the  interpretation  or  administration  thereof by any  governmental  authority
charged with the interpretation or administration  thereof, or compliance by the
Bank with any guideline, request, or directive of such authority (whether or not
having the force of law), including without limitation exchange controls,  it is
impracticable, unlawful, or impossible for, or shall limit or impair the ability
of, (i) the Bank to make or fund the relevant Loan or to continue such Loan as a
Loan of the then-existing  type or to convert a Loan to such a Loan, or (ii) the
Company to make or the Bank to receive any payment  under this  Agreement at the
place specified for payment  hereunder or to freely convert any amount paid into
Dollars  at market  rates of  exchange  or to  transfer  any  amount  paid or so
converted to the address of its principal  office specified in Section 7.2, then
the Company shall not be entitled,  so long as such circumstances  continue,  to
request a Loan of the affected type pursuant to Section 2.4 or a continuation of
or  conversion  to a Loan of the affected  type  pursuant to Section 2.7. In the
event that such  circumstances  no longer exist,  the Bank shall again  consider
requests  for Loans of the  affected  type  pursuant  to  Section  2.4,  and for
continuations  of and  conversions  to Loans of the  affected  type  pursuant to
Section 2.7.

         Notwithstanding  any other  provision of this Agreement to the contrary
and in order to give effect to the provisions of Section 3.1(a)(ii), the Company
shall make  requests  for  Eurodollar  Rate Loans  pursuant to Section  2.4, and
requests for  continuations of and conversions to Eurodollar Rate Loans pursuant
to Section 2.7, such that, on each date that any scheduled  principal payment is
due with respect to the Term Loan pursuant to Section  3.1(a),  either  Floating
Rate Loans,  or Eurodollar  Rate Loans having an Interest  Period ending on such
date, or any combination  thereof,  are outstanding on such date in an aggregate
outstanding principal amount not less than the amount of such principal payment.

         2.9 Minimum Amounts; Limitation on Number of Loans; Etc. Except for (a)
Advances which exhaust the entire remaining  amount of the Commitments,  and (b)
payments  required  pursuant to Section 3.8, each  Eurodollar Rate Loan and each
continuation or conversion  pursuant to Section 2.7, and each prepayment thereof
shall be in a minimum  amount  of  $1,000,000  and in an  integral  multiple  of
$100,000,  and each  Floating  Rate  Loan and each  continuation  or  conversion
pursuant  to Section  2.7,  and each  prepayment  thereof  shall be in a minimum
amount of $100,000 and in an integral multiple of $10,000.  The aggregate number
of Eurodollar  Rate Loans  outstanding  at any one time under this Agreement may
not exceed six (6). Letter of Credit Advances may be issued in any  denomination
acceptable to the Bank.



                                                ARTICLE 3
                                   PAYMENTS AND PREPAYMENTS OF ADVANCES

         3.1      Principal Payments and Prepayments.

                  (a)......Unless   earlier   payment  is  required  under  this
Agreement,  (i)  the  Company  shall  pay to the  Bank  the  entire  outstanding
principal amount of the Revolving Credit Loans on the Termination Date, and (ii)
the Company shall pay to the Bank the outstanding  principal  amount of the Term
Loan on the Maturity Date, when the entire  outstanding  principal amount of the
Term Loan shall be due and payable.

                  (b)......If at any time the principal  amounts of the Advances
exceed the Commitment, and upon written notice from the Bank of such occurrence,
the Company shall immediately pay to the Bank an amount not less than the amount
of such excess, to be applied first to the amounts  outstanding under the Loans,
and then  deposited in an  interest-bearing  cash  collateral  account to secure
amounts outstanding under the Letters of Credit.

                  (c)......The  Company  shall  pay or cause to be paid when due
(i) all regularly scheduled principal payments on the Outstanding Facilities and
(ii) all payments of interest and fees (including  without  limitation letter of
credit  fees  and  commitment  fees)  which  are  owing  under  the  Outstanding
Facilities.

                  (d)......Within  fifteen  days  after the  Company  closes the
fiscal  month in which an asset sale has  occurred  from which the  Company  has
received  Asset Sale  Proceeds,  the Company shall pay to the Bank an amount not
less than the  Bank's  Pro Rata  Share as of the end of such  month of the Asset
Sale Proceeds,  to be applied first to amounts  outstanding under the Loans, and
then deposited in an interest-bearing  cash collateral account to secure amounts
outstanding  under the Letters of Credit. At that time, the Company may also pay
to PML an  amount  not  greater  than  PML's Pro Rata  Share of the  Asset  Sale
Proceeds, to be applied to the amounts outstanding under the PML Notes.

                  (e)......The  Company  may at any time  and from  time to time
prepay all or a portion of the Loans, without premium or penalty,  provided that
the  Company  shall  have  notified  the Bank not later  than  12:00  p.m.  Noon
Indianapolis  time on the  Business Day a payment is to be made,  and  provided,
further,  (i) the  Company may not prepay any portion of any Loan as to which an
election  for a  continuation  of or a conversion  to a Eurodollar  Rate Loan is
pending  pursuant to Section  2.4, and (ii) unless  earlier  payment is required
under this  Agreement,  any Eurodollar Rate Loan may only be prepaid on the last
day of the  then-current  Interest  Period with  respect to such Loan.  Upon the
giving of such notice,  the aggregate  principal  amount of such Loan or portion
thereof so  specified in such notice,  together  with such accrued  interest and
other amounts, shall become due and payable on the specified prepayment date.

                  (f)......Prepayments  of the Term Loan,  whether  optional  or
mandatory, shall be applied to installments of principal of the Term Loan in the
inverse order of their  maturities,  and no partial  prepayment of the Term Loan
shall  reduce  the  amount or defer the date of the  scheduled  installments  of
principal required to be paid thereon.

         3.2 Interest  Payments.  The Company  shall pay interest to the Bank on
the unpaid principal amount of each 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, at the following rates per annum:

                  (a)......During such periods that the Loan is a Floating Rate
Loan, the Floating Rate;

                  (b)......During  such  periods  that the Loan is a  Eurodollar
Rate  Loan,  the  Eurodollar  Rate  applicable  to the  Loan  for  each  related
Eurodollar Interest Period.

Notwithstanding  the  foregoing  paragraphs  (a) and (b), the Company  shall pay
interest on demand by the Bank at the Overdue Rate on the outstanding  principal
amount of any Loan and any other amount payable by the Company  hereunder (other
than  interest)  at any time on or after an Event of  Default  unless  otherwise
requested in writing by the Bank.

         3.3      Letter of Credit Reimbursement Payments.

                  (a)......  (i) The Company  agrees to pay to the Bank,  on the
day on which the Bank shall honor a draft or other demand for payment  presented
or made under any Letter of Credit,  an amount  equal to the amount  paid by the
Bank in respect of such draft or other  demand  under such  Letter of Credit and
all expenses paid or incurred by the Bank relative  thereto.  Unless the Company
shall have made such payment to the Bank on such day,  upon each such payment by
the Bank,  the Bank shall be deemed to have  disbursed to the  Company,  and the
Company shall be deemed to have elected to satisfy its reimbursement  obligation
by, a  Revolving  Credit Loan  bearing  interest  at the  Floating  Rate for the
account  of the Bank in an  amount  equal to the  amount  so paid by the Bank in
respect  of such  draft or other  demand  under  such  Letter  of  Credit.  Such
Revolving Credit Loan shall be disbursed  notwithstanding any failure to satisfy
any conditions for  disbursement  of any Loan set forth in Article 2 and, to the
extent of the Revolving Credit Loan so disbursed,  the reimbursement  obligation
of the  Company  under this  Section  3.3 shall be deemed  satisfied;  provided,
however, that nothing in this Section 3.3 shall be deemed to constitute a waiver
of any Default or Event of Default  caused by failing to satisfy the  conditions
for disbursement or otherwise.

                  .........(ii).....If,   for  any  reason  (including   without
limitation as a result of the  occurrence of an Event of Default with respect to
the Company pursuant to Section 6.1(h)),  Floating Rate Loans may not be made by
the Bank as described in Section  3.3(a)(i),  then the Company  agrees that each
reimbursement  amount  not  paid  pursuant  to the  first  sentence  of  Section
3.3(a)(i)  shall bear  interest,  payable on demand by the Bank, at the interest
rate then applicable to Floating Rate Loans.

                  (b)......The  reimbursement  obligation  of the Company  under
this Section 3.3 shall be absolute,  unconditional,  and  irrevocable  and shall
remain in full force and effect until all obligations of the Company to the Bank
hereunder shall have been satisfied,  and such  obligations of the Company shall
not be  affected,  modified,  or  impaired  upon  the  happening  of any  event,
including  without  limitation any of the following,  whether or not with notice
to, or the consent of, the Company:

                           (i)......Any lack of validity or enforceability of
any Letter of Credit or any
documentation relating to any Letter of Credit or to any transaction related in
any way to such Letter
of Credit (the "Letter of Credit Documents");

                           (ii).....Any amendment, modification, or waiver of,
or any consent,
substitution, exchange or release of or failure to perfect any interest in
collateral or security with
respect to, any of the Letter of Credit Documents;

                           (iii)....The existence of any claim, setoff, defense,
 or other right which the
Company may have at any time against any  beneficiary  or any  transferee of any
Letter of Credit (or any persons or entities  for whom any such  beneficiary  or
any such  transferee  may be  acting),  the Bank or any other  person or entity,
whether  in  connection  with  any  of  the  Letter  of  Credit  Documents,  the
transactions contemplated herein or therein, or any unrelated transactions;

                           (iv).....Any draft or other statement or document
presented under any Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement
therein being untrue or inaccurate in any respect;

                           (v)......Payment by the Bank to the beneficiary under
 any Letter of Credit
against presentation of documents which do not comply with the Letter of Credit,
including  failure of any documents to bear any reference or adequate  reference
to such Letter of Credit,  so long as such documents  substantially  comply with
the terms of the Letter of Credit;

                           (vi).....Any failure, omission, delay, or lack on the
 part of the Bank or any
party to any of the Letter of Credit  Documents  to enforce,  assert or exercise
any right, power, or remedy conferred upon the Bank or any such party under this
Agreement  or any of the  Letter  of  Credit  Documents,  or any  other  acts or
omissions on the part of the Bank or any such party;

                           (vii)    Any other event or circumstance that would,
in the absence of this
clause,  result in the release or  discharge by operation of law or otherwise of
the Company from performing or observing any obligation,  covenant, or agreement
contained in this Section.

No setoff,  counterclaim,  reduction,  or  diminution  of any  obligation or any
defense of any kind or nature  which the  Company  has or may have  against  the
beneficiary of any Letter of Credit shall be available  hereunder to the Company
against the Bank. Nothing in this Section shall limit the liability,  if any, of
the Bank to the Company pursuant to Section 7.5.

         3.4      Payment Method.

                  (a)......All payments to be made by the Company hereunder will
be  made  to  the  Bank  in  Dollars  and  in  immediately   available,   freely
transferable,  cleared funds not later than 1:00 p.m.  Indianapolis  time at the
principal office of the Bank specified in Section 7.2.  Payments  received after
1:00 p.m. at the place for payment  shall be deemed to be payments made prior to
1:00 p.m.  at the place for payment on the next  succeeding  Business  Day.  The
Company hereby  authorizes the Bank to charge its account with the Bank in order
to cause  timely  payment  of  amounts  due  hereunder  to be made  (subject  to
sufficient funds being available in such account for that purpose).

                  (b)......At the time of making each such payment,  the Company
shall,  subject to the other  terms of this  Agreement,  specify to the Bank the
Loan or other obligation of the Company hereunder to which such payment is to be
applied.  In the  event  that the  Company  fails  to so  specify  the  relevant
obligation or if an Event of Default shall have occurred and be continuing,  the
Bank may apply such payments as it may determine in its sole discretion.

         3.5 No Setoff or  Deduction.  All payments of principal of and interest
on the Loans and other amounts payable by the Company hereunder shall be made by
the Company without setoff or counterclaim,  and, subject to the next succeeding
sentence,  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.  If any such taxes, levies,  imposts,  duties,  fees,  assessments or
other charges are imposed,  the Company will pay such additional  amounts as may
be necessary so that payment of principal of and interest on the Loans and other
amounts  payable  hereunder,  after  withholding  or deduction for or on account
thereof,  will not be less than any amount provided to be paid hereunder and, in
any such case, the Company will furnish to the Bank certified  copies of all tax
receipts  evidencing  the payment of such amounts  within 45 days after the date
any such payment is due pursuant to applicable law.

         3.6  Payment  on  Non-Business  Day;  Payment  Computations.  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 for the actual  number of days  elapsed,
including the first day but excluding the last day of the relevant period.

         3.7      Additional Costs.

                  (a)......In the event that any applicable law, treaty or other
international  agreement,  rule, or regulation (whether domestic or foreign) now
or hereafter in effect and whether or not  presently  applicable to the Bank, or
any  interpretation  or  administration  thereof by any  governmental  authority
charged with the interpretation or administration  thereof, or compliance by the
Bank with any guideline,  request or directive of any such authority (whether or
not having the force of law), shall (a) affect the basis of taxation of payments
to the Bank of any amounts  payable by the Company under this  Agreement  (other
than taxes imposed on the overall net income of the Bank,  by the  jurisdiction,
or by any political subdivision or taxing authority of any such jurisdiction, in
which the Bank has its principal  office),  or (b) 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 the Bank, or (c)
shall impose any other condition with respect to this  Agreement,  or any of the
Commitments,  the Notes, or the Loans or any Letter of Credit, and the result of
any of the foregoing is to increase the cost to the Bank of making,  funding, or
maintaining  any  Eurodollar  Rate Loan or any Letter of Credit or to reduce the
amount of any sum receivable by the Bank thereon,  then the Company shall pay to
the Bank, from time to time, upon its request,  additional amounts sufficient to
compensate  the Bank for such  increased  cost or reduced sum  receivable to the
extent,  in the case of any Eurodollar  Rate Loan,  the Bank is not  compensated
therefor in computing the interest rate applicable to such Eurodollar Rate Loan.
A statement as to the amount of such increased  cost or reduced sum  receivable,
prepared in good faith and in reasonable detail by the Bank and submitted by the
Bank to the Company,  shall be  conclusive  and binding for all purposes  absent
manifest error in computation.

                  (b)......In  the event that any  applicable  law,  treaty,  or
other international agreement, rule, or regulation (whether domestic or foreign)
now or hereafter in effect and whether or not presently  applicable to the Bank,
or any  interpretation or administration  thereof by any governmental  authority
charged with the interpretation or administration  thereof, or compliance by the
Bank with any guideline,  request or directive of any such authority (whether or
not having  the force of law),  including  any  risk-based  capital  guidelines,
affects  or would  affect  the  amount of capital  required  or  expected  to be
maintained by the Bank (or any  corporation  controlling  the Bank) and the Bank
determines  that the amount of such  capital is  increased  by or based upon the
existence of the Bank's  obligations  hereunder and such increase has the effect
of reducing the rate of return on the Bank's (or such controlling corporation's)
capital as a  consequence  of such  obligations  hereunder to a level below that
which the Bank (or such  controlling  corporation)  could have  achieved but for
such  circumstances  (taking into  consideration  its  policies  with respect to
capital  adequacy),  then the  Company  shall pay to the Bank from time to time,
upon request by the Bank,  additional amounts sufficient to compensate such Bank
(or such controlling  corporation) for any increase in the amount of capital and
reduced rate of return which the Bank  reasonably  determines to be allocable to
the existence of the Bank's obligations  hereunder. A statement as to the amount
of such  compensation,  prepared in good faith and in  reasonable  detail by the
Bank and  submitted  to the  Company,  shall be  conclusive  and binding for all
purposes  absent  manifest  error in  computation.  The Bank may, at its option,
specify that such amounts be paid by way of an increase in the  commitment  fees
payable by the Company pursuant to Section 2.3(a).

         3.8 Illegality and Impossibility. In the event that any applicable law,
treaty, or other international agreement,  rule, or regulation (whether domestic
or foreign) now or hereafter in effect and whether or not  presently  applicable
to the Bank, or any interpretation or administration thereof by any governmental
authority  charged  with  the  interpretation  or  administration   thereof,  or
compliance  by the Bank  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 the Bank to maintain
any  Loan  under  this  Agreement,  shall  make it  impracticable,  unlawful  or
impossible  for, or shall in any way limit or impair  ability of, the Company to
make or the Bank to  receive  any  payment  under  this  Agreement  at the place
specified  for payment  hereunder,  the Company  shall,  upon  receiving  notice
thereof from the Bank,  repay in full the  then-outstanding  principal amount of
each Loan so affected, together with all accrued interest thereon to the date of
payment and all amounts owing to the Bank under Section 3.8, (a) on the last day
of the  then-current  Interest  Period  applicable  to the  Loan if the Bank may
lawfully  continue to maintain the Loan to that day, or (b)  immediately  if the
Bank may not continue to maintain the Loan to that day.

         3.9 Indemnification. If the Company makes any payment of principal with
respect  to any  Eurodollar  Rate Loan on any other date than the last day of an
Interest Period  applicable  thereto  (whether  pursuant to Section 3.7, Section
6.2, or otherwise),  or if the Company fails to borrow any Eurodollar  Rate Loan
after  notice has been given to the Bank in  accordance  with Section 2.4, or if
the Company  fails to make any payment of  principal or interest in respect of a
Eurodollar  Rate Loan when due, the Company  shall  reimburse the Bank on demand
for any  resulting  loss or  expense  incurred  by the Bank,  including  without
limitation any loss incurred in obtaining,  liquidating,  or employing  deposits
from third  parties,  whether or not the Bank 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 the Bank and submitted by the Bank to the
Company,  shall be conclusive and binding for all purposes absent manifest error
in  computation.  Calculation  of all  amounts  payable  to the Bank  under this
Section  3.9 shall be made as though  the Bank  shall  have  actually  funded or
committed to fund the relevant  Eurodollar  Rate Loan through the purchase of an
underlying  deposit in an amount equal to the amount of the Loan in the relevant
market and having a  maturity  comparable  to the  related  Interest  Period and
through  the  transfer of such  deposit to a domestic  office of the Bank in the
United States;  provided,  however,  that the Bank may fund any Eurodollar  Rate
Loan in any manner it sees fit and the  foregoing  assumption  shall be utilized
only for the purpose of calculating amounts payable under this Section 3.9.



                                                ARTICLE 4
                                      REPRESENTATIONS AND WARRANTIES

         The Company represents and warrants to the Bank that:

         4.1 Corporate  Existence and Power.  Each of the Company and its Active
Subsidiaries  is a  corporation  duly  organized,  validly  existing and in good
standing under the laws of the state of its  jurisdiction  of  incorporation  or
organization,  and is duly qualified to do business, and is in good standing, in
all  additional  jurisdictions  where  such  qualification  is  necessary  under
applicable  law. The Company has all requisite  corporate  power to own or lease
the  properties  used in its  business and to carry on its business as now being
conducted  and as proposed  to be  conducted,  and to execute  and deliver  this
Agreement and the Notes and to engage in the  transactions  contemplated by this
Agreement.

         4.2 Corporate Authority. The execution, delivery and performance by the
Company  of this  Agreement  and the  Notes  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 Company's
charter or by-laws,  or of any contract or undertaking to which the Company is a
party or by which the  Company or any of its  property  may be bound or affected
and will not result in the  imposition of any Lien except for  Permitted  Liens.
The execution,  delivery and  performance by the Guarantors of the Guaranty 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  Guarantors'  charter or by-laws,  or of any  contract or
undertaking  to which any  Guarantor is a party or by which any Guarantor or any
of their respective property may be bound or affected and will not result in the
imposition of any Lien except for Permitted Liens.

         4.3 Binding  Effect.  This Agreement is, and the Notes and the Guaranty
when delivered  hereunder will be, legal,  valid and binding  obligations of the
Company  and  the  Guarantors,  respectively,  which  are  signatories  thereto,
enforceable against each of them in accordance with their respective terms.

         4.4  Subsidiaries.   Schedule  4.4  hereto  correctly  sets  forth  the
corporate  name,  jurisdiction  of  incorporation,  and ownership of each Active
Subsidiary, and the corporate name of each Inactive Subsidiary.  Each Subsidiary
of the Company and each  corporation  becoming a Subsidiary of the Company after
the date hereof is and will be a corporation duly organized,  validly  existing,
and in good standing under the laws of its jurisdiction of incorporation  and is
and will be duly qualified to do business in each additional  jurisdiction where
such  qualification is or may be necessary under applicable law. Each Subsidiary
of the Company has and will have all requisite  corporate  power to own or lease
the  properties  used in its  business and to carry on its business as now being
conducted and as proposed to be  conducted.  All  outstanding  shares of capital
stock of each Subsidiary of the Company have been and will be validly issued and
are and will be fully paid and nonassessable and, except as otherwise  indicated
in Schedule  4.4 hereto or  disclosed  in writing to the Bank from time to time,
are and will be owned,  beneficially  and of record,  by the  Company or another
Subsidiary of the Company, free and clear of any Liens.

         4.5 Litigation. Except as set forth in Schedule 4.5 hereto, there is no
action,  suit or proceeding pending or, to the best of the Company's  knowledge,
threatened against or affecting the Company or any of its Subsidiaries before or
by any court, governmental authority, or arbitrator,  which if adversely decided
might  have a  Material  Adverse  Effect  and,  to  the  best  of the  Company's
knowledge, there is no basis for any such action, suit or proceeding.

         4.6 Financial Condition.  The consolidated balance sheet of the Company
and its Subsidiaries and the related  consolidated  statements of operations and
cash flows and  consolidated  changes in shareholders  equity of the Company and
its  Subsidiaries for the fiscal year ended October 31, 1996, and reported on by
the  Company's  independent  certified  public  accountants,   and  the  interim
consolidated balance sheet and interim consolidated statements of operations and
cash flows and  consolidated  changes in shareholders  equity of the Company and
its  Subsidiaries,  as of or for the  six-month  period ended on April 30, 1997,
copies  of which  have  been  furnished  to the Bank,  fairly  present,  and the
financial  statements of the Company and its Subsidiaries  delivered pursuant to
Section 5.1(d) will fairly present,  the consolidated  financial position of the
Company  and  its  Subsidiaries  as at the  respective  dates  thereof,  and the
consolidated  results of operations of the Company and its  Subsidiaries for the
respective  periods  indicated,   all  in  accordance  with  Generally  Accepted
Accounting Principles  consistently applied (subject, in the case of any interim
statements, to year-end audit adjustments). Except as reflected in the financial
statements  delivered to the Bank for the period ended April 30, 1997, there has
been no event or  development  which has had or could  reasonably be expected to
have a Material  Adverse  Effect since October 31, 1996.  Except as reflected in
the  financial  statements  delivered to the Bank for the period ended April 30,
1997,  and except for any letters of credit,  bankers  acceptances,  and bankers
guaranties  issued by the Bank or NBD Michigan since October 31, 1996,  there is
no material Contingent  Liability of the Company or any of its Subsidiaries that
is not reflected in such financial statements or in the notes thereto.

         4.7 Use of Advances.  The Company will use the proceeds of the Advances
for its general corporate purposes, and to repurchase shares of its common stock
from time to time at  prevailing  market  prices (any shares so  purchased,  the
"Repurchased  Shares").  Neither the Company nor any of its Subsidiaries extends
or  maintains,  in the  ordinary  course of  business,  credit for the  purpose,
whether immediate,  incidental,  or ultimate, of buying or carrying margin stock
(within the meaning of  Regulation  U of the Board of  Governors  of the Federal
Reserve System), and no part of the proceeds of any Advance will be used for the
purpose, whether immediate,  incidental,  or ultimate, of buying or carrying any
such margin stock or maintaining or extending credit to others for such purpose.
After  applying  the  proceeds  of each  Advance,  such  margin  stock  will not
constitute more than 25% of the value of the assets (either of the Company alone
or of the Company and its Subsidiaries on a consolidated basis) that are subject
to any  provisions  of this  Agreement  that may cause the Advances to be deemed
secured, directly or indirectly, by margin stock.

         4.8 Consents, Etc. Except for such consents, approvals, authorizations,
declarations,  registrations  or filings  delivered  by the Company  pursuant to
Section 2.5(f),  if any, each of which is in full force and effect,  no consent,
approval, or authorization of, or declaration, registration, or filing with, any
governmental  authority  or any  nongovernmental  person  or  entity,  including
without limitation any creditor,  lessor or stockholder of the Company or any of
its  Subsidiaries,  is required on the part of the Company or any  Guarantor  in
connection with the execution,  delivery, and performance of the Loan Documents,
or the  transactions  contemplated  hereby or thereby,  or as a condition to the
legality, validity, or enforceability of any of the Loan Documents.

         4.9 Taxes. The Company and its Subsidiaries  have filed all tax returns
(foreign and domestic;  federal, state, and local) required to be filed and have
paid all taxes shown thereon to be due,  including  interest and  penalties,  or
have  established  adequate  financial  reserves on their  respective  books and
records for payment  thereof in accordance  with Generally  Accepted  Accounting
Principles.  Neither the Company nor any of its Subsidiaries knows of any actual
or proposed tax assessment or any basis  therefor,  and no extension of time for
the assessment of deficiencies in any tax has been granted by the Company or any
such Subsidiary.

         4.10 Title to Properties.  Except as otherwise  disclosed in the latest
balance sheet delivered pursuant to Section 4.6 or 5.1(d), the Company or one or
more of its Subsidiaries have good and marketable fee simple title to all of the
real property,  and a valid and  indefeasible  ownership  interest in all of the
other  properties  and assets  reflected in said balance  sheet or  subsequently
acquired  by the  Company or any such  Subsidiary.  All of such  properties  and
assets are free and clear of any Lien, except for Permitted Liens.

         4.11  ERISA.  The  Company,  its  Domestic  Subsidiaries,  their  ERISA
Affiliates,  and  their  respective  Plans  are in  compliance  in all  material
respects  with those  provisions  of ERISA and of the Code which are  applicable
with respect to any Plan. No Prohibited  Transaction and no Reportable Event has
occurred with respect to any such Plan. None of the Company, any of its Domestic
Subsidiaries,  or any of their ERISA  Affiliates  is an employer with respect to
any Multiemployer Plan. The Company, its Domestic Subsidiaries,  and their ERISA
Affiliates  have met the minimum funding  requirements  as currently  applicable
under ERISA and the Code with respect to each of their respective Plans, if any,
and have not incurred  any  liability  to the PBGC or any Plan.  The  execution,
delivery,  and  performance of the Loan Documents do not constitute a Prohibited
Transaction.  The Actuarial  Present Value of Accumulated Plan Benefits does not
exceed the Net Assets  Available  for  Benefits  with respect to any Plan of the
Company,  its Domestic  Subsidiaries,  or their ERISA  Affiliates on an on-going
basis.

         4.12 Disclosure. No report or other information furnished in writing by
or on behalf of the Company or any Guarantor or any of their  officers or agents
to the  Bank in  connection  with  the  negotiation  or  administration  of this
Agreement  contains  any  material  misstatement  of fact or omits to state  any
material fact necessary to make the statements  contained therein not misleading
in light of the circumstances in which they were made. Neither this Agreement or
the other  Loan  Documents,  nor any other  document,  certificate,  report,  or
statement  or other  information  furnished  to the Bank by or on  behalf of the
Company or any Guarantor in connection with the transactions contemplated herein
contains any untrue  statement  of a material  fact or omits to state a material
fact in order to make the statements contained herein and therein not misleading
in light of the circumstances in which they were made. There is no fact known to
the Company or any Guarantor  which has, or which in the future may have (so far
as the Company can now foresee) a Material  Adverse  Effect,  which has not been
set forth in this Agreement or in the other documents, certificates, statements,
reports, and other information  furnished in writing to the Bank by or on behalf
of the Company or any Guarantor in connection with the transactions contemplated
hereby.

         4.13  Environmental  and Safety  Matters.  The  Company and each of its
Subsidiaries is in material compliance with all national, state, and local laws,
ordinances,  and regulations relating to safety and industrial hygiene or to the
environmental condition,  including without limitation all Environmental Laws in
jurisdictions  in which the Company or any such Subsidiary owns or operates,  or
has owned or  operated,  a facility or site,  or arranges  or has  arranged  for
disposal or treatment of hazardous  substances,  solid waste,  or other  wastes,
accepts or has accepted for transport any hazardous substances, solid wastes, or
other  wastes or holds or has held any interest in real  property or  otherwise,
except where the failure to so comply will not have a Material  Adverse  Effect.
No demand, claim, notice, action, administrative proceeding,  investigation,  or
inquiry,  whether  brought  by any  governmental  authority,  private  person or
entity,  or otherwise,  arising  under,  relating to or in  connection  with any
Environmental  Laws is pending or  threatened  against the Company or any of its
Subsidiaries,  any real  property in which the Company or any of its  Subsidiary
holds or has held an interest,  or any past or present  operation of the Company
or any of its Subsidiaries.  Neither the Company nor any of its Subsidiaries (a)
is the  subject of any  federal or state  investigation  evaluating  whether any
remedial  action is  needed to  respond  to a release  of any toxic  substances,
radioactive   materials,   hazardous  wastes,  or  related  materials  into  the
environment,  (b) has received any notice of any toxic  substances,  radioactive
materials,  hazardous  waste,  or  related  materials  in or  upon  any  of  its
properties in violation of any  Environmental  Laws,  (c) knows of any basis for
any such investigation,  notice, or violation,  or (d) owns or operates,  or has
owned or operated, property which appears on the United States National Priority
List or any other  governmental  listing  which  identifies  sites for  remedial
clean-up or investigatory actions,  except as disclosed on Schedule 4.13 hereto,
and as to such  matters  disclosed on such  Schedule,  none will have a Material
Adverse Effect. No release,  threatened  release or disposal of hazardous waste,
solid waste,  or other wastes is occurring or has occurred on, under,  or to any
real property in which the Company or any of its Subsidiaries holds any interest
or performs any of its operations, in violation of any Environmental Law.

         4.14 No Default.  Neither the Company nor any  Subsidiary is in default
or has  received any written  notice of default  under or with respect to any of
its Contractual  Obligations in any respect which could have a Material  Adverse
Effect. No Default or Event of Default has occurred and is continuing.

         4.15 No Burdensome  Restrictions.  No Requirement of Law or Contractual
Obligation  applicable  to the Company or any  Subsidiary  could have a Material
Adverse  Effect on the  financial  condition  or business of the Company and its
Subsidiaries.



                                                ARTICLE 5
                                                COVENANTS

         5.1 Affirmative Covenants. The Company covenants and agrees that, until
the Termination  Date and thereafter until the principal of and accrued interest
on the Notes has been paid in full and all other  obligations of the Company and
the  Guarantors  under this  Agreement  and the other Loan  Documents  have been
performed,  unless the Bank shall otherwise  consent in writing,  it shall,  and
shall cause each of its Active Subsidiaries to:

                  (a)......Preservation of Corporate Existence, Etc. Do or cause
to be done all things  necessary to preserve,  renew, and keep in full force and
effect its legal  existence,  except to the extent  permitted by Section 5.2(f),
and  its  qualification  as a  foreign  corporation  in  good  standing  in each
jurisdiction in which such  qualification is necessary under applicable law, and
the rights,  licenses,  permits  (including  those required under  Environmental
Laws), franchises, patents, copyrights,  trademarks, and trade names material to
conducting  its business,  and defend all of the  foregoing  against all claims,
actions,  demands, suits, or proceedings at law or in equity or by or before any
governmental instrumentality or other agency or regulatory authority.

                  (b)......Compliance  with Laws,  Etc.  Comply in all  material
respects  with all  applicable  laws,  rules,  regulations,  and  orders  of any
governmental  authority,  whether federal,  state,  local, or foreign (including
without limitation ERISA, the Code, and Environmental Laws), in effect from time
to time,  and pay and discharge  promptly when due all taxes,  assessments,  and
governmental  charges or levies imposed upon it or upon its income,  revenues or
property,  before the same shall become delinquent or in default, as well as all
lawful claims for labor, materials, and supplies or otherwise, which, if unpaid,
might give rise to Liens upon such properties or any portion thereof,  except to
the extent that payment of any of the foregoing is then being  contested in good
faith by  appropriate  legal  proceedings  and with  respect  to which  adequate
financial reserves have been established on the books and records of the Company
or any of its  Subsidiaries  in accordance  with Generally  Accepted  Accounting
Principles.

                  (c)......Maintenance  of  Properties;   Insurance.   Maintain,
preserve,  and  protect  all  property  that is  material  to the conduct of the
business of the  Company or any of its  Subsidiaries  and keep such  property in
good repair, working order, and condition and from time to time make or cause to
be made all needful and proper repairs, renewals, additions,  improvements,  and
replacements  thereto  necessary  in  order  that  the  business  carried  on in
connection  therewith may be properly  conducted at all times in accordance with
customary and prudent business practices for similar businesses; and maintain in
full  force and  effect  insurance  with  responsible  and  reputable  insurance
companies or  associations  in such  amounts,  on such terms,  and covering such
risks,  including fire and other risks insured against by extended coverage,  as
is usually carried by companies engaged in similar businesses and owning similar
properties  similarly  situated,  and  maintain in full force and effect  public
liability  insurance,  insurance against claims for personal injury or death, or
property  damage  occurring  in  connection  with any of its  activities  or any
properties  owned,  occupied or  controlled by it, in such amount as the Company
shall  reasonably  deem  necessary,  and maintain such other insurance as may be
required by law or as may be  reasonably  requested  by the Bank for purposes of
assuring compliance with this Section.

                  (d)      Reporting Requirements.  Furnish to the Bank the 
following:

                           (i)......Promptly and in any event within three
calendar days after becoming
aware  of the  occurrence  of (A) any  Default  or  Event  of  Default,  (B) the
commencement of any material litigation against, by, or affecting the Company or
any of its  Subsidiaries  (not  including  the  patent  infringement  litigation
instituted  by  the  Company  or  any  of  its  Subsidiaries,   unless  material
counterclaims are brought against the Company or any of its  Subsidiaries),  and
any material developments therein, or (C) entering into any material contract or
undertaking  that is not entered into in the ordinary  course of business  other
than IMS entering into documents reflecting patent infringement  settlements and
related patent  license  agreements,  or (D) any  development in the business or
affairs of the Company or any of its Subsidiaries which has resulted in or which
is likely in the  reasonable  judgment  of the  Company  to result in a Material
Adverse Effect,  a statement of the Company's  chief  financial  officer setting
forth  details of each such  Default  or Event of  Default  or such  litigation,
material  contract,  or  undertaking  or  development  and the action  which the
Company or its  Subsidiary,  as the case may be, has taken and  proposes to take
with respect thereto;

 ...........................(ii).....As soon as available and in any event within
60 days after the end of each fiscal  quarter of the Company,  the  consolidated
and  consolidating  balance sheet of the Company and its  Subsidiaries as of the
end of such quarter, and the related  consolidated and consolidating  statements
of  operations  and cash flows  (except that  consolidating  balance  sheets and
statements  of operations  and retained  earnings need not be given for Inactive
Subsidiaries  or Active  Subsidiaries  whose only asset is the capital  stock of
another Subsidiary of the Company),  for the period commencing at the end of the
previous  fiscal year and ending with the end of such quarter,  setting forth in
each case in comparative form the  corresponding  figures for the  corresponding
date or period of the preceding  fiscal year, all in reasonable  detail and duly
certified  (subject  to  year-end  audit  adjustments)  by the  Company's  chief
financial  officer or  principal  accounting  officer as fairly  presenting  the
consolidated  financial  position of the Company  and its  Subsidiaries  for the
periods  contained  therein  and as having  been  prepared  in  accordance  with
Generally Accepted  Accounting  Principles,  together with a certificate of such
officer  demonstrating  compliance  with the  covenants  contained  in  Sections
5.2(a), (b), (c), (g), and (j), and such supporting schedules setting forth such
information as the Bank may reasonably  request relating to such covenants,  and
stating  whether  such  officer is aware of any Event of Default or any event or
condition  which,  with notice or lapse of time,  or both,  would  constitute an
Event of Default, and, if such an Event of Default or such an event or condition
then exists and is continuing,  a statement  setting forth the nature and status
thereof;

                  .........(iii)....As soon as available and in any event within
110  days  after  the end of each  fiscal  year  of the  Company,  a copy of the
consolidated   and   consolidating   balance   sheet  of  the  Company  and  its
Subsidiaries,  each  as of  the  end  of  such  fiscal  year,  and  the  related
consolidated and consolidating  statements of operations and cash flows for such
fiscal  year and  consolidated  changes  in  shareholders  equity  (except  that
consolidating  balance sheets and statements of operations and retained earnings
need not be given for Inactive  Subsidiaries or Active  Subsidiaries  whose only
asset is the  capital  stock  of  another  Subsidiary  of the  Company),  with a
customary audit report of independent  certified public accountants  selected by
the Company and reasonably acceptable to the Bank, which report shall be without
any  qualifications (it being acknowledged that explanatory text highlighting or
emphasizing  information  provided in the financial  statements and which is not
expressed as a qualification to the report is not to be deemed a qualification),
together  with (A) a  certificate  of such  accountants  stating  that they have
reviewed this  Agreement  and stating  further  whether,  in the course of their
review of such  financial  statements,  they have  become  aware of any Event of
Default or any event or condition which,  with notice or lapse of time, or both,
would  constitute an Event of Default,  and, if such an Event of Default or such
an event or condition then exists and is continuing,  a statement  setting forth
the nature and status  thereof  and (B) a  certificate  of the  Company's  chief
financial  officer or principal  accounting  officer as required  under  Section
5.1(d)(iii);

                           (iv).....Promptly after the sending or filing
thereof, copies of all reports,
proxy  statements,  and  financial  statements  which the  Company or any of its
Subsidiaries sends to or files with any of their respective  security holders or
any  securities  exchange  or the  Securities  and  Exchange  Commission  or any
successor agency thereof; and

                           (v)......Promptly and in any event within 10 calendar
 days after receiving or
becoming  aware thereof (A) a copy of any notice of intent to terminate any Plan
of the Company,  its  Subsidiaries,  or any ERISA Affiliate filed with the PBGC,
(B) a statement of the  Company's  chief  financial  officer  setting  forth the
details of any Reportable Event with respect to any such Plan, (C) a copy of any
notice that the Company,  any of its  Subsidiaries,  or any ERISA  Affiliate may
receive from the PBGC  relating to the  intention  of the PBGC to terminate  any
such Plan or to appoint a trustee to administer  any such Plan, or (D) a copy of
any notice of failure to make a required installment or other payment within the
meaning of Section 412(n) of the Code or Section 302(f) of ERISA with respect to
any such Plan; and

                           (vi).....Promptly, such other information respecting
 the business, properties,
operations,  or condition,  financial or otherwise, of the Company or any of its
Subsidiaries as the Bank may from time to time reasonably request.

                  (e)......Accounting; Access to Records, Books, Etc. Maintain a
system of accounting  established  and  administered  in  accordance  with sound
business practices to permit  preparation of financial  statements in accordance
with  Generally   Accepted   Accounting   Principles  and  to  comply  with  the
requirements  of this  Agreement  and, at any  reasonable  time and from time to
time,  permit the Bank or any agents or  representatives  thereof to examine and
make copies of and abstracts from the records and books of account of, and visit
the properties of, the Company and its Subsidiaries, and to discuss the affairs,
finances, and accounts of the Company and its Subsidiaries with their respective
directors,  officers, employees, and independent auditors, and by this provision
the Company  authorizes  such  persons to discuss  such  affairs,  finances  and
accounts with the Bank.

                  (f)......Further  Assurances.  Execute and  deliver  within 30
days after the Bank's request all further instruments and documents and take all
further  action  that  may be  necessary  or  desirable,  or that  the  Bank may
reasonably  request,  in order to give effect to, and to aid in  exercising  and
enforcing the Bank's rights and remedies under, the Loan Documents.

                  (g)......Additional  Guarantors. Promptly have each Subsidiary
which has total  assets  exceeding  $1,000,000  (as shown on the latest  balance
sheet  delivered  under  subsections  (d)(ii) or (iii))  become a  Guarantor  by
executing a document substantially in the form of the Guaranty.

         5.2 Negative Covenants. Until the Termination Date and thereafter until
payment in full of the  principal  of and accrued  interest on the Notes and the
performance of all other  obligations of the Company under this  Agreement,  the
Company agrees that, unless the Bank shall otherwise consent in writing it shall
not, and shall not permit any of its Subsidiaries to:

                  (a) Indebtedness Ratio. Create,  assume,  incur,  guarantee or
otherwise become liable for,  directly or indirectly,  any  Indebtedness,  other
than Indebtedness of the Company and its Subsidiaries which, after giving effect
thereto  and  the  application  of  the  proceeds   thereof,   would  result  in
Consolidated  Total  Indebtedness of the Company and its Subsidiaries then to be
outstanding,  determined on a  consolidated  basis in accordance  with Generally
Accepted  Accounting  Principles,   exceeding  50%  of  the  Consolidated  Total
Capitalization.

                  (b)......Fixed  Charge  Ratio.  As of the end of  each  fiscal
quarter,  permit the ratio of Consolidated Income Available for Fixed Charges to
Consolidated  Fixed Charges for the preceding twelve months to be less than 1.25
to 1.0.

                  (c)......Tangible  Net  Worth.  Permit or suffer  consolidated
Tangible  Net Worth of the  Company and its  Subsidiaries  as of the last day of
each fiscal  quarter  ending after the Effective Date to be less than the sum of
(i)  $20,000,000  plus (ii) an amount equal to fifty percent (50%) of Cumulative
Net Income of the Company and its  Subsidiaries at the end of the fiscal quarter
plus (iii) an amount equal to seventy-five percent (75%) of the aggregate Equity
Proceeds  received by the Company or its  Subsidiaries  after the Effective Date
and on or prior to the end of the fiscal quarter.

                  (d)......Indebtedness.  Create, incur, assume or in any
manner become liable in respect
of, or suffer to exist, any Indebtedness other than:

                           (i)......The Outstanding Facilities and the IRB
Bonds;

                           (ii).....The Indebtedness outstanding under the PML
Note Agreement and the PML
Notes  having the same terms as those  existing on the  Effective  Date,  but no
extension or renewal thereof shall be permitted;

                           (iii)....Indebtedness (other than Indebtedness 
permitted under subsections
(d)(i) and (d)(ii)) in aggregate  outstanding principal amount not exceeding 15%
of the consolidated  Tangible Net Worth of the Company and its Subsidiaries from
time to time in the aggregate; and

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

                  (e)......Liens.  Create,  incur or suffer to exist any Lien on
any of the  assets,  rights,  revenues  or  property,  real,  personal or mixed,
tangible or intangible,  whether now owned or hereafter acquired, of the Company
or any of its Subsidiaries, other than:

                           (i)......Liens for taxes not delinquent or for taxes
 being contested in good
faith by appropriate  proceedings  and as to which adequate  financial  reserves
have been  established  on its books and records in  accordance  with  Generally
Accepted Accounting Principles;

                           (ii).....Liens (other than any Lien imposed by ERISA
or any Environmental Law)
created and maintained in the ordinary course of business which would not have a
Material  Adverse  Effect and which  constitute  (A) pledges or  deposits  under
worker's compensation laws,  unemployment insurance laws or similar legislation,
(B) good faith deposits in connection with bids, tenders, contracts or leases to
which the Company or any of its Subsidiaries is a party for a purpose other than
borrowing money or obtaining credit, including rent security deposits, (C) liens
imposed  by law,  such as those of  carriers,  warehousemen  and  mechanics,  if
payment of the  obligation  secured  thereby is not yet due, (D) Liens  securing
taxes,  assessments or other  governmental  charges or levies not yet subject to
penalties for nonpayment,  (E) pledges or deposits to secure public or statutory
obligations  of the Company or any of its  Subsidiaries,  or surety,  customs or
appeal bonds to which the Company or any of its Subsidiaries is a party, and (F)
any Lien  created to secure  payment of a portion of the  purchase  price of, or
existing at the time of acquisition of, any tangible fixed asset acquired by the
Company or any of its  Subsidiaries if the outstanding  principal  amount of the
Indebtedness  secured by the Lien does not at any time exceed the purchase price
for the  asset,  the  aggregate  Indebtedness  secured  by such  Liens  does not
increase by more than $500,000 during any single fiscal year, and such Lien does
not encumber any other asset at any time by the Company or any Subsidiary;

                           (iii)....Liens affecting real property which
constitute minor survey
exceptions or defects or irregularities in title, minor encumbrances,  easements
or  reservations  of, or rights of others for, rights of way,  sewers,  electric
lines,  telegraph and telephone lines and other similar  purposes,  or zoning or
other restrictions as to the use of such real property, provided that all of the
foregoing,  in the  aggregate,  do not at any time  materially  detract from the
value of said properties or materially  impair their use in the operation of the
businesses of the Company or any of its Subsidiaries;

                           (iv).....Liens as security for Indebtedness permitted
 by Section 5.2(d)(iii)
which in the  aggregate  does not exceed five percent  (5%) of the  consolidated
Tangible  Net Worth of the Company and its  Subsidiaries  existing  from time to
time; and

                           (v)......The interest or title of a lessor under any
 lease (including without
limitation Capital Leases) otherwise permitted under this Agreement with respect
to the  property  subject  to  such  lease  to  the  extent  performance  of the
obligations of the Company or its Subsidiary thereunder are not delinquent.

                  (f)......Merger;  Acquisitions;  Etc.  Purchase  or  otherwise
acquire,  whether  in one or a  series  of  transactions,  all or a  substantial
portion of the business,  assets, rights,  revenues, or property, real, personal
or mixed, tangible or intangible, of any person, or all or a substantial portion
of the capital stock of or other  ownership  interest in any other  person;  nor
merge or  consolidate  or  amalgamate  with any  other  person or take any other
action  having a similar  effect,  nor enter  into any joint  venture or similar
arrangement with any other person,  provided,  however,  that this Section shall
not prohibit any merger or acquisition if (i) the Company or a Subsidiary of the
Company  shall  be  the  surviving  or  continuing   corporation  thereof,  (ii)
immediately before and after such merger or acquisition,  no Default or Event of
Default  shall  exist  or  shall  have  occurred  and  be  continuing   and  the
representations and warranties  contained in Article 4 shall be true and correct
on and as of the date thereof (both before and after such merger or  acquisition
is  consummated)  as  if  made  on  the  date  such  merger  or  acquisition  is
consummated,  and (iii) prior to the consummation of such merger or acquisition,
the  Company  shall  have  provided  to the Bank an  opinion  of  counsel  and a
certificate  of  the  chief   financial   officer  of  the  Company   (attaching
computations to demonstrate  compliance with all financial covenants hereunder),
each stating that such merger or acquisition complies with this Section and that
any other conditions under this Agreement relating to such transaction have been
satisfied.

                  (g)......Disposition  of Assets.  Sell,  lease,  or  otherwise
transfer or dispose of all or a  substantial  portion of its  business,  assets,
rights,  revenues or property,  real, personal or mixed, tangible or intangible,
whether in one or a series of transactions, other than (i) inventory sold in the
ordinary course of business upon customary  credit terms,  (ii) trade-ins of any
equipment in conjunction with acquiring  replacement  equipment,  (iii) sales of
the Company's Capital Stock, (iv) leases of real property, (v) sales of obsolete
or surplus machinery and equipment in the ordinary course of business so long as
the  purchase  price  is  paid  in  cash or  immediately  available  funds,  if,
immediately  before and after such  transaction,  no Default or Event of Default
shall exist or shall have  occurred  and be  continuing,  and (vi) other  sales,
leases, transfers, or dispositions so long as (A) no Default or Event of Default
shall exist or shall have  occurred  and be  continuing,  and (B) all Asset Sale
Proceeds from such sales and  dispositions are applied as required under Section
3.1(d).

                  (h)......Nature  of Business.  Make any substantial  change in
the nature of its business from that engaged in on the date of this Agreement or
engage in any businesses which are  substantially  different from the businesses
engaged in on the date of this Agreement.

                  (i)......Dividends  and Other Restricted Payments.  Make, pay,
declare, or authorize any dividend, payment, or other distribution in respect of
any class of its capital  stock or any dividend,  payment,  or  distribution  in
connection  with the redemption,  purchase,  retirement,  or other  acquisition,
directly or indirectly,  of any shares of its capital  stock,  or any payment or
other  distribution to its officers or directors  outside the ordinary course of
business,  to the extent such payments or distributions would cause or result in
the occurrence of a Default or Event of Default.

                  (j)......Capital Expenditures.  Acquire or contract to acquire
any fixed asset or make any other Capital  Expenditure if the aggregate purchase
price and other  acquisition  costs of all such fixed assets  acquired and other
Capital  Expenditures made by the Company and any of its Subsidiaries during any
fiscal  quarter,  together with the Capital  Expenditures  made during the prior
three fiscal quarters, would exceed, on a consolidated basis, an amount equal to
the greater of (i) the amount  which would allow the ratio of EBITDAR to the sum
of Consolidated Fixed Charges plus Capital Expenditures to be not less than 1.25
to 1.0 for the  four  fiscal  quarters  immediately  preceding  the  date of the
proposed  Capital  Expenditure  and  (ii)  the  consolidated   depreciation  and
amortization  expense of the Company and its  Subsidiaries  for such four fiscal
quarter period.

                  (k)......Investments,   Loans,   and  Advances.   Purchase  or
otherwise  acquire any capital stock of or other ownership  interest in, or debt
securities of or other evidences of Indebtedness of, any other person;  nor make
any loan or advance of any of its funds or property or make any other  extension
of credit to, or make any investment or acquire any interest  whatsoever in, any
other person; nor incur any Contingent  Liability;  other than (i) extensions of
trade credit made in the ordinary  course of business on customary  credit terms
and  commission,  travel and similar  advances made to officers and employees in
the  ordinary  course of  business,  (ii)  Permitted  Investments,  (iii)  those
investments,  loans,  advances,  and other transactions not exceeding 15% of the
consolidated Tangible Net Worth of the Company and its Subsidiaries from time to
time in the aggregate,  (iv) related to Letters of Credit issued hereunder,  (v)
product warranty obligations  incurred in the ordinary course of business,  (vi)
Contingent  Liabilities  incurred with respect to Indebtedness of the Company or
any  Subsidiary,  and  (vii) in  connection  with  Subsidiaries  established  in
connection with a transaction permitted under Section 5.2(f).

                  (l)......Transactions  with Affiliates.  Enter into,  become a
party to, or become liable in respect of, any contract or  undertaking  with any
Affiliate  except  in the  ordinary  course  of  business  and on terms not less
favorable to the Company or such  Subsidiary  than those which could be obtained
if such contract or undertaking  were an arms length  transaction  with a person
other than an Affiliate.

                  (m)......Sale  and  Leaseback  Transactions.  Become or remain
liable in any way,  whether directly or by assignment or as a guarantor or other
contingent obligor, for the obligations of the lessee or user under any lease or
contract for the use of any real or personal  property if such property is owned
on the date of this  Agreement or  thereafter  acquired by the Company or any of
its  Subsidiaries  and has  been or is to be sold or  transferred  to any  other
person and was,  is, or will be used by the Company or any such  Subsidiary  for
substantially  the same purpose as such property was used by the Company or such
Subsidiary prior to such sale or transfer.

                  (n)......Negative Pledge Limitation.  Enter into any agreement
with any person other than the Bank  pursuant  hereto or PML pursuant to the PML
Note  Agreement  which  prohibits  or limits the  ability of the  Company or any
Subsidiary to create,  incur, assume or suffer to exist any Lien upon any of its
assets,  rights,  revenues,  or property,  real, personal or mixed,  tangible or
intangible,  whether now owned or hereafter acquired, other than the Repurchased
Shares.

                  (o)......Accounting  Changes.  Change its fiscal  year or make
any  significant  changes (i) in accounting  treatment  and reporting  practices
except as permitted by generally accepted accounting principles and disclosed to
the Bank,  or (ii) in tax  reporting  treatment  except as  permitted by law and
disclosed to the Bank.

                  (p)......Inconsistent  Agreements.  Enter  into any  agreement
containing  any provision  which would be violated or breached by this Agreement
or any of the transactions  contemplated hereby or by performance by the Company
or any of its Subsidiaries of its obligations in connection therewith.



                                                ARTICLE 6
                                                 DEFAULT

         6.1  Events of  Default.  The  occurrence  of any one of the  following
events or  conditions  shall be deemed an "Event of  Default"  hereunder  unless
waived pursuant to Section 8.1:

                  (a)......Nonpayment.  The  Company  shall fail to pay when due
any principal of the Notes, or any  reimbursement  obligation  under Section 3.3
(whether by deemed  disbursement  of a Revolving  Credit Loan or otherwise),  or
fail to pay any  interest on the Notes or any fees or any other  amount  payable
hereunder,  which failure continues for a period of three days following written
notice thereof to the Company by the Bank; or

                  (b)......Misrepresentation.  Any  representation  or  warranty
made by the  Company  herein  or in any  other  certificate,  report,  financial
statement,  or other document furnished by or on behalf of the Company or any of
its  Subsidiaries  in connection  with this  Agreement  shall prove to have been
incorrect  in any  material  respect  when made or deemed made and such  failure
continues  for more than five  days  following  written  notice  thereof  to the
Company; or

                  (c)......Certain  Covenants. The Company shall fail to perform
or observe the covenants set forth in Section  5.2(a) through  5.2(p),  and such
failure continues for more than ten days following written notice thereof to the
Company; or

                  (d)......Other   Defaults.   The   Company   or   any  of  its
Subsidiaries  fails to perform or observe any other term,  covenant or agreement
contained  in this  Agreement or any other Loan  Document,  and any such failure
shall remain  unremedied  for more than thirty days after notice  thereof  shall
have been given to the Company by the Bank; or

                  (e)......Cross-Default. The Company or any of its Subsidiaries
shall fail 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 of its  Indebtedness
(other than Indebtedness  hereunder but including the European  Facility) beyond
any  period of grace  provided  with  respect  thereto,  or fails to  perform or
observe any other term,  covenant,  or agreement  contained  in, or if any other
event or condition occurs or exists under, any agreement, document or instrument
evidencing  or  securing  any  such  Indebtedness,   or  under  which  any  such
Indebtedness was incurred,  issued,  or created,  beyond any period of grace, if
any, provided with respect thereto; or

                  (f)......Judgments.  One or more  judgments  or orders for the
payment of money in an  aggregate  amount  exceeding  the Dollar  Equivalent  of
$100,000 shall be rendered against the Company or any of its Subsidiaries  which
are not  covered by  insurance  subject to  ordinary  deductibles,  or any other
judgment or order  (whether  or not for the payment of money)  shall be rendered
against or shall affect the Company or any of its  Subsidiaries  which causes or
could  cause a Material  Adverse  Effect and either (i) such  judgment  or order
shall have remained  unsatisfied  and the Company or such  Subsidiary  shall not
have taken  action  necessary to stay  enforcement  thereof by reason of pending
appeal  or  otherwise,  prior to the  expiration  of the  applicable  period  of
limitations  for taking such action or, if such action shall have been taken,  a
final order  denying  such stay shall have been  rendered,  or (ii)  enforcement
proceedings  shall have been commenced by any creditor upon any such judgment or
order; or

                   (g).....ERISA.  The  occurrence  of a  Reportable  Event that
results  in or  could  result  in  liability  of  the  Company  or  any  of  its
Subsidiaries  or  their  ERISA  Affiliates  to the  PBGC or to any Plan and such
Reportable  Event is not corrected  within thirty (30) days after the occurrence
thereof;  or the  occurrence  of any  Reportable  Event which  could  constitute
grounds for termination of any Plan of the Company or any of its Subsidiaries or
their ERISA  Affiliates by the PBGC or for the  appointment  by the  appropriate
United States  District  Court of a trustee to administer any such Plan and such
Reportable  Event is not corrected  within thirty (30) days after the occurrence
thereof; or the filing by the Company, any of its Subsidiaries,  or any of their
ERISA Affiliates of a notice of intent to terminate a Plan or the institution of
other proceedings to terminate a Plan; or the Company,  any of its Subsidiaries,
or any of their ERISA Affiliates shall fail to pay when due any liability to the
PBGC or to a Plan; or the PBGC shall have  instituted  proceedings to terminate,
or to cause a trustee to be  appointed to  administer,  any Plan of the Company,
any of its Subsidiaries, or any of their ERISA Affiliates; or any person engages
in a Prohibited  Transaction  with respect to any Plan which results in or could
result in liability of the Company, any of its Subsidiaries,  any of their ERISA
Affiliates,  any Plan of the Company,  any of its  Subsidiaries,  or their ERISA
Affiliates or fiduciary of any such Plan; or failure by the Company,  any of its
Subsidiaries, or any of their ERISA Affiliates to make a required installment or
other  payment  to any Plan  within the  meaning  of Section  302(f) of ERISA or
Section  412(n) of the Code that  results in or could result in liability of the
Company,  any of its Subsidiaries,  or any of their ERISA Affiliates to the PBGC
or any Plan; or the withdrawal of the Company,  any of its Subsidiaries,  or any
of their  ERISA  Affiliates  from a Plan  during  a plan  year in which it was a
"substantial  employer"  as  defined  in Section  4001(9a)(2)  of ERISA;  or the
Company,  any of its Subsidiaries,  or any of their ERISA Affiliates  becomes an
employer  with  respect to any  Multiemployer  Plan  without  the prior  written
consent of the Bank; or

                  (h)......Insolvency,  Etc. The Company, any Guarantor,  or any
of its Active  Subsidiaries  shall be dissolved or liquidated  (or any judgment,
order or decree therefor shall be entered), or shall generally not pay its debts
as they become due,  or shall  admit in writing its  inability  to pay its debts
generally,  or shall make a general assignment for the benefit of creditors,  or
shall  institute,  or  there  shall  be  instituted  against  the  Company,  any
Guarantor,  or any of its Active  Subsidiaries any proceeding or case seeking to
adjudicate  it a bankrupt  or  insolvent  or seeking  liquidation,  winding  up,
reorganization, arrangement, adjustment, protection, relief or composition of it
or its debts under any law relating to bankruptcy, insolvency, or reorganization
or relief or  protection of debtors or seeking the entry of an order for relief,
or the appointment of a receiver,  trustee,  custodian or other similar official
for it or for any substantial part of its assets, rights,  revenues or property,
and,  if such  proceeding  is  being  contested  by the  Company,  the  relevant
Guarantor,  or the  Active  Subsidiary,  as the  case may be,  in good  faith by
appropriate  proceedings,  such proceeding shall remain  undismissed or unstayed
for a period of 60 days; or the Company,  the relevant Guarantor,  or the Active
Subsidiary  shall take any action  (corporate  or other) to authorize or further
any of the actions described above in this subsection; or

                  (i)......Loan Documents. Any event of default described in any
Loan Document shall have occurred and be continuing,  or any material  provision
of any Loan  Document  shall at any time for any  reason  cease to be valid  and
binding and enforceable against any obligor thereunder, or the validity, binding
effect,  or  enforceability  thereof  shall be contested  by any person,  or any
obligor  shall  deny  that  it  has  any  or  further  liability  or  obligation
thereunder,  or any Loan Document shall be terminated or be declared ineffective
or inoperative or in any way cease to provide to the Bank the benefits purported
to be created thereby.

         6.2      Remedies.

                  (a)......Upon the occurrence and during the continuance of any
Event of Default,  the Bank may, by notice to the  Company,  (i)  terminate  the
Commitments or (ii) declare the outstanding  principal of, and accrued  interest
on, the Notes, all unpaid reimbursement obligations in respect of drawings under
Letters of Credit,  and all other  amounts  owing  under  this  Agreement  to be
immediately  due and  payable,  and  (iii)  demand  immediate  delivery  of cash
collateral  in respect of all  outstanding  Letters of Credit,  and the  Company
agrees to deliver such cash  collateral  upon demand,  in an amount equal to the
maximum amount that may be available to be drawn at any time prior to the stated
expiry  of all  outstanding  Letters  of  Credit,  or any  one  or  more  of the
foregoing,  whereupon the  Commitments  shall  terminate  forthwith and all such
amounts,  including  such cash  collateral,  shall  become  immediately  due and
payable,  provided  that in the case of any  event  or  condition  described  in
Section  6.1(h) with respect to the Company or any  Guarantor,  the  Commitments
shall  automatically  terminate  forthwith and all such amounts,  including such
cash collateral,  shall automatically become immediately due and payable without
notice; in all cases without demand, presentment,  protest, diligence, notice of
dishonor,  or other  formality,  all of which are  expressly  waived.  Such cash
collateral  delivered  in respect  of  outstanding  Letters  of Credit  shall be
deposited  in a  special  cash  collateral  account  to be held  by the  Bank as
collateral security for the payment and performance of the Company's obligations
under this Agreement to the Bank.

                  (b)......In  addition  to the  remedies  provided  in  Section
6.2(a),  the Bank and NBD  Michigan  may  exercise and enforce any and all other
rights and remedies available to it, whether arising under the Loan Documents or
under  applicable  law,  in any  manner  deemed  appropriate  by the Bank or NBD
Michigan,  as  appropriate,  including  suit in equity,  action at law, or other
appropriate  proceedings,  whether for the specific  performance  (to the extent
permitted by law) of any covenant or agreement  contained in the Loan  Documents
or in aid of the exercise of any power granted in the Loan Documents.

                  (c)......Upon the occurrence and during the continuance of any
Event of Default,  the Bank and any of its  Affiliates  may at any time and from
time to time,  without  notice to the Company (any  requirement  for such notice
being expressly  waived by the Company) set off and apply against any and all of
the  obligations of the Company now or hereafter  existing under this Agreement,
any and all deposits (general or special, time or demand,  provisional or final)
at any time held and other  indebtedness at any time owing by the Bank or any of
its  Affiliates  to or for the  credit  or the  account  of the  Company  or any
Guarantor and any property of the Company or any Guarantor  from time to time in
the possession of the Bank or any of its Affiliates,  irrespective of whether or
not the Bank shall have made any demand  hereunder and although such obligations
may be contingent  and  unmatured.  The Company grants to the Bank a lien on and
security interest in all such deposits, indebtedness, and property as collateral
security for the payment and performance of the Company's obligations under this
Agreement.  The Bank's rights under this Section 6.2(c) are in addition to other
rights and remedies  (including without limitation other rights of setoff) which
it may have.



                                                ARTICLE 6A
                                    AMENDMENTS TO TERM LOAN AGREEMENT
                                       AND REIMBURSEMENT AGREEMENT

         6A.1 Administration of Outstanding Facilities.  The Company will pay or
cause to be paid all amounts  required to be paid on the Term Loan Agreement and
the Reimbursement Agreement under Article 3 and perform or cause to be performed
all other  obligations  contained in the Outstanding  Facilities,  except to the
extent any such performance  would be inconsistent with the requirements of this
Agreement. The Term Loan Agreement, the Reimbursement Agreement, and the IRB L/C
shall continue to be governed by the documents  under which they were originally
issued, as amended through the Effective Date and by the NBD Assignment,  and as
further amended under this Agreement below.

         6A.2 Amendments to NBD Term Loan. By the NBD Assignment,  the Term Loan
has been  assigned by NBD Michigan to the Bank.  After the Effective  Date,  the
Term Loan Agreement is amended as follows:

                  (a)......Definitions.   All   references   in  the  Term  Loan
Agreement to "the Bank" shall mean the Bank, as defined  herein.  Section 1.1 of
the Term Loan  Agreement  is amended by amending  and  restating  the  following
definition,  to read as follows: "'New Facility Credit Agreement' shall mean the
Amended and Restated Credit Agreement and Amendment to  Reimbursement  Agreement
dated as of September __, 1997,  among the Borrower,  NBD Bank, and the Bank, as
such agreement may be amended from time to time."

                  (b)......Payment  Provisions  of the Term Loan.  The Term Note
(as  defined in the Term Loan  Agreement)  shall  continue  to refer to the Term
Note,  as  assigned  by NBD  Michigan to the Bank.  The Term Loan  Agreement  is
further modified to provide that,  notwithstanding any provisions therein to the
contrary,  on and after  the  Effective  Date (as  defined  in this  Agreement),
interest  shall  accrue  on the Term  Loan at the per  annum  rate  equal to the
Eurodollar Rate or the Floating Rate (each as defined in this Agreement), at the
Company's  option,  and be payable on each Interest  Payment Date (as defined in
this Agreement).

                  (c)......Covenants.  The first paragraph of Section 5.1 of the
Term  Loan   Agreement  is  amended  and  restated  to  delete   references  and
incorporation  therein of the  referenced  Sections of the Credit  Agreement (as
defined therein), and to insert in lieu thereof and incorporate by reference the
covenants set forth in Section 5.1 and Section 5.2 of this Agreement,  including
definitions  of defined  terms used  therein and  exhibits  referred to therein,
except that (i) all  cross-references  shall refer to the relevant  provision or
provisions  as  incorporated  therein,  (ii)  references  therein  to  "hereof",
"hereto",  "herein", and "Agreement" shall refer to the Term Loan Agreement, and
(iii)  references in such sections as  incorporated  therein to the defined term
"Event of  Default"  shall be deemed  references  to that term as defined in the
Term Loan Agreement.

                  (d)......Events  of  Default.  Section  6.1 of the  Term  Loan
Agreement is amended and restated to delete references and incorporation therein
of the referenced  Sections of the Credit  Agreement (as defined therein) and to
insert in lieu thereof and  incorporate  by reference  the Events of Default set
forth in Sections 6.1 of this Agreement,  including definitions of defined terms
used   therein  and   exhibits   referred  to  therein,   except  that  (i)  all
cross-references  shall  refer  to  the  relevant  provision  or  provisions  as
incorporated  therein,  and  (ii)  references  therein  to  "hereof",  "hereto",
"herein", and "Agreement" shall refer to the Term Loan Agreement.

         6A.3     Amendments to Reimbursement Agreement.  After the Effective
Date, the Reimbursement
Agreement is amended as follows:

                  (a)......Repayment   of  Reimbursement   Obligation.   Section
1.06(a) of the  Reimbursement  Agreement is  redesignated  as Section 1.06,  and
Section 1.06(b) of the Reimbursement Agreement (improperly designated as Section
6.01(b) in Section 4.3(a) of the 1996 Credit Agreement) is deleted.

                  (b)......Negative   Covenants.  The  first  two  sentences  of
Section 4.02(b) of the  Reimbursement  Agreement are amended to read as follows:
"Permit or suffer the breach of any covenant or  agreement  contained in Section
5.2 of the Amended and Restated Credit  Agreement and Amendment to Reimbursement
Agreement among the Company, the Bank, and NBD Bank, N.A., dated as of September
__, 1997 (as amended or modified from time to time, the "Credit Agreement"). All
such  provisions  of Section 5.2,  including  definitions  of defined terms used
therein and exhibits referred to therein, are incorporated by reference and made
a part of this Agreement to the same extent as if set forth fully herein, except
that all cross-references shall refer to the relevant provision or provisions as
incorporated herein."



                                                ARTICLE 7
                                              MISCELLANEOUS

         7.1 Amendments, Etc. No amendment, modification,  termination or waiver
of any provision of this  Agreement  nor any consent to any departure  therefrom
shall be effective unless the same shall be in writing and signed by the Company
and the Bank. Any such  amendment,  waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.

         7.2      Notices.

                  (a)......Except   as  otherwise  provided  in  Section  7.2(c)
hereof, all notices and other  communications  hereunder shall be in writing and
shall be delivered or sent to the Company and the Guarantors at Hurco Companies,
Inc.,  One  Technology  Way,  Indianapolis,   Indiana  46268,  Attention:  Chief
Financial  Officer,  Facsimile No.  (317)-328-2811  Facsimile  Confirmation  No.
(317)-293-5309, and to the Bank and NBD Michigan at the respective addresses set
forth  on the  signature  pages  hereto,  or to  such  other  address  as may be
designated  by a party by notice to the other  parties  hereto.  All notices and
other  communications  shall be deemed to have been  given at the time of actual
delivery thereof to such address,  or, unless sooner  delivered,  (i) if sent by
certified or registered mail, postage prepaid, to such address, on the third day
after  the date of  mailing,  or (ii) if sent by  facsimile  transmission,  upon
confirmation of receipt by telephone at the number  specified for  confirmation,
provided,  however,  that  notices  to the Bank and NBD  Michigan  shall  not be
effective until received.

                  (b)......Notices  by the  Company to the Bank with  respect to
terminations or reductions of the Commitments  pursuant to Section 2.2, requests
for Advances  pursuant to Section 2.4, requests for continuations or conversions
of Loans pursuant to Section 2.7, and notices of prepayment  pursuant to Section
3.1 shall be irrevocable and binding on the Company.

                  (c)......Any  notice  to be given by the  Company  to the Bank
pursuant to Sections 2.4, 2.7, or 3.1, and any notice to be given by the Bank or
NBD Michigan hereunder, may be given by telephone, and all such notices given by
the Company must be immediately  confirmed in writing in the manner  provided in
Section  7.2(a).  Any such notice given by telephone  shall be deemed  effective
upon  receipt  thereof  by the  party to whom such  notice  is to be given.  The
Company shall indemnify and hold harmless the Bank and NBD Michigan from any and
all losses,  damages,  liabilities,  and claims  arising  from the Bank's or NBD
Michigan's good faith reliance on any such telephone notice.

         7.3 No Waiver By Conduct;  Remedies Cumulative. No course of dealing on
the part of the Bank or NBD  Michigan,  nor any delay or  failure on the part of
the Bank or NBD Michigan 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 or NBD Michigan's rights and remedies hereunder;  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 or NBD Michigan  under this Agreement or
the other Loan  Documents  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 Agreement or the other
Loan Documents or by applicable law to the Bank or NBD Michigan may be exercised
from  time to time and as often as may be  deemed  expedient  by the Bank or NBD
Michigan and, unless  contrary to the express  provisions of the Loan Documents,
irrespective  of the  occurrence  or  continuance  of any  Default  or  Event of
Default.

         7.4  Reliance  on  and  Survival  of  Various  Provisions.  All  terms,
covenants,  agreements,  representations,  and warranties of the Company and the
Guarantors made herein or in any certificate,  report,  financial statement,  or
other  document  furnished by or on behalf of the Company or the  Guarantors  in
connection  with this Agreement  shall be deemed to be material and to have been
relied  upon by the Bank and NBD  Michigan,  notwithstanding  any  investigation
heretofore or hereafter made by the Bank or NBD Michigan or on the Bank's or NBD
Michigan's  behalf,  and those covenants and agreements of the Company set forth
in Sections  3.7, 3.9, and 7.5 hereof shall survive the repayment in full of the
Advances and the termination of the Commitments.

         7.5      Expenses; Indemnification.

                  (a)......The  Company agrees to pay, or reimburse the Bank and
NBD Michigan for the payment of, on demand, (i) the reasonable fees and expenses
of their counsel,  including without limitation the fees and expenses of Messrs.
Dickinson,   Wright,   Moon,  Van  Dusen  &  Freeman,  in  connection  with  the
preparation,  execution,  delivery, and administration of this Agreement and the
other Loan Documents,  and in connection with advising the Bank and NBD Michigan
as to their rights and responsibilities  with respect thereto, and in connection
with any amendments,  waivers, or consents in connection therewith, and (ii) all
stamp and other taxes and fees payable or determined to be payable in connection
with the  execution,  delivery,  filing,  or recording of this  Agreement or any
other  Loan  Document,  or the  consummation  of the  transactions  contemplated
hereby,  and any and all liabilities with respect to or resulting from any delay
in paying or omitting to pay such taxes or fees, and (iii) all reasonable  costs
and  expenses  of the  Bank  and NBD  Michigan  (including  reasonable  fees and
expenses of counsel and whether incurred through negotiations, legal proceedings
or  otherwise)  in  connection  with any  Default  or Event  of  Default  or the
enforcement  of, or the  exercise  or  preservation  of any rights  under,  this
Agreement or the other Loan Documents or in connection  with any  refinancing or
restructuring of the credit arrangements provided under this Agreement, and (iv)
all  reasonable  costs  and  expenses  of the Bank and NBD  Michigan  (including
reasonable  fees and  expenses  of  counsel)  in  connection  with any action or
proceeding  relating to a court order,  injunction,  or other  process or decree
restraining  or seeking to restrain  the Bank from paying any amount  under,  or
otherwise relating in any way to, any Letter of Credit and any and all costs and
expenses which any of them may incur relative to any payment under any Letter of
Credit.

                  (b)......The  Company  indemnifies and agrees to hold harmless
the Bank,  and its  Affiliates,  officers,  directors,  employees,  and  agents,
harmless  from and  against any and all claims,  damages,  losses,  liabilities,
costs or  expenses of any kind or nature  whatsoever  which the Bank or any such
person may incur or which may be claimed  against any of them by reason of or in
connection  with any  Letter  of  Credit,  and  neither  the Bank nor any of its
Affiliates,  officers,  directors,  employees,  or  agents  shall be  liable  or
responsible  for:  (i) the use which may be made of any  Letter of Credit or for
any acts or omissions  of any  beneficiary  in  connection  therewith;  (ii) the
validity,  sufficiency,  or  genuineness  of  documents  or of  any  endorsement
thereon,  even if  such  documents  should  in  fact  prove  to be in any or all
respects invalid, insufficient, fraudulent, or forged; (iii) payment by the Bank
to the beneficiary under any Letter of Credit against  presentation of documents
which do not comply with the terms of any Letter of Credit, including failure of
any  documents  to bear any  reference  or adequate  reference to such Letter of
Credit;  (iv) any  error,  omission,  interruption,  or  delay in  transmission,
dispatch,  or  delivery  of any  message  or  advice,  however  transmitted,  in
connection  with any Letter of Credit;  or (v) any other  event or  circumstance
whatsoever arising in connection with any Letter of Credit;  provided,  however,
that the  Company  shall not be required  to  indemnify  the Bank and such other
persons,  and the Bank shall be liable to the Company to the extent, but only to
the extent,  of any direct,  as opposed to consequential or incidental,  damages
suffered by the Company which were caused by (A) the Bank's wrongful dishonor of
any Letter of Credit after the presentation to it by the beneficiary  thereunder
of a draft  or  other  demand  for  payment  and  other  documentation  strictly
complying  with the terms and  conditions  of such Letter of Credit,  or (B) the
Bank's  payment  to  the   beneficiary   under  any  Letter  of  Credit  against
presentation  of documents which do not  substantially  comply with the terms of
the Letter of Credit to the extent,  but only to the extent,  that such  payment
constitutes gross negligence or willful misconduct of the Bank. It is understood
that in  making  any  payment  under a Letter of  Credit,  the Bank will rely on
documents  presented to it under such Letter of Credit as to any and all matters
set forth therein without further  investigation and regardless of any notice or
information  to the contrary,  and such reliance and payment  against  documents
presented  under a Letter  of  Credit  substantially  complying  with the  terms
thereof shall not be deemed gross  negligence or willful  misconduct of the Bank
in connection with such payment. It is further  acknowledged and agreed that the
Company may have rights against the beneficiary or others in connection with any
Letter of Credit  with  respect to which the Bank is alleged to be liable and it
shall be a precondition of the assertion of any liability of the Bank under this
Section that the Company  shall first have  exhausted all remedies in respect of
the alleged loss against such  beneficiary  and any other  parties  obligated or
liable in connection with such Letter of Credit and any related transactions.

                  (c)......The  Company  indemnifies and agrees to hold harmless
the Bank, and its Affiliates,  officers, directors,  employees, and agents, from
and against any and all claims, damages, losses, liabilities, costs, or expenses
of any  kind or  nature  whatsoever  (including  reasonable  attorneys  fees and
disbursements  incurred in connection with any investigative,  administrative or
judicial  proceeding  whether or not such person shall be  designated as a party
thereto)  which the Bank or any such  person  may incur or which may be  claimed
against  any of them by  reason  of or in  connection  with  entering  into this
Agreement or the transactions  contemplated hereby, including without limitation
those arising under  Environmental  Laws;  provided,  however,  that the Company
shall not be required to indemnify the Bank or such other person, to the extent,
but only to the extent,  that such claim,  damage,  loss,  liability,  cost,  or
expense is  attributable  to the gross  negligence or willful  misconduct of the
Bank.

                  (d) In  consideration  of the  execution  and delivery of this
  Agreement by the Bank and NBD Michigan and the  extension of the  Commitments,
  the Company hereby indemnifies, exonerates, and holds the Bank and each of its
  Affiliates,  officers,  directors,  employees,  and agents (collectively,  the
  "Indemnified Parties") free and harmless from and against any and all actions,
  causes of action, suits, losses, costs, liabilities, and damages, and expenses
  incurred in connection therewith (irrespective of whether any such Indemnified
  Party is a party to the action for which indemnification hereunder is sought),
  including  reasonable  attorneys' fees and  disbursements  (collectively,  the
  "Indemnified Liabilities"), incurred by the Indemnified Parties or any of them
  as a result of, or arising out of, or relating to:

                           (i)......any transaction financed or to be financed 
in whole or in part,
directly or indirectly, with the proceeds of any Advance;

                           (ii).....the entering into and performance of this
Agreement and any other
agreement  or  instrument   executed  in  connection  herewith  by  any  of  the
Indemnified Parties (including any action brought by or on behalf of the Company
as the result of any determination by the Bank not to fund any Advance);

                           (iii)....any investigation, litigation, or proceeding
 related to any
acquisition or proposed acquisition by the Company or any of its Subsidiaries of
 any portion of the
stock or assets of any person, whether or not the Bank is party thereto;

                           (iv).....any investigation, litigation, or proceeding
 related to any
environmental  cleanup,  audit,  compliance,  or other  matter  relating  to the
protection  of the  environment  or the  release  by the  Company  or any of its
Subsidiaries of any Hazardous Material; or

                           (v)......the presence on or under, or the escape,
seepage, leakage, spillage,
discharge, emission,  discharging, or releasing from, any real property owned or
operated by the Company or any of its  Subsidiaries  of any  Hazardous  Material
(including any losses,  liabilities,  damages,  injuries,  costs,  expenses,  or
claims asserted or arising under any Environmental  Law),  regardless of whether
caused by, or within the control of, the Company or such Subsidiary,  except for
any  such  Indemnified  Liabilities  arising  for the  account  of a  particular
Indemnified  Party by reason of the activities of the  Indemnified  Party on the
property of the Company  conducted  subsequent to a foreclosure on such property
by the Bank or by reason of the relevant Indemnified Party's gross negligence or
willful  misconduct or breach of this  Agreement,  and if and to the extent that
the  foregoing  undertaking  may be  unenforceable  for any reason,  the Company
hereby agrees to make the maximum  contribution to the payment and  satisfaction
of each of the Indemnified  Liabilities  which is permissible  under  applicable
law. The Company shall be obligated to indemnify the Indemnified Parties for all
Indemnified  Liabilities  subject to and pursuant to the  foregoing  provisions,
regardless  of whether the Company or any of its  Subsidiaries  had knowledge of
the facts and circumstances giving rise to such Indemnified Liability.

         7.6      Successors and Assigns.

                  (a)......This Agreement shall be binding upon and inure to the
benefit of the  parties  hereto and their  respective  successors  and  assigns,
provided that the Company may not, without the prior consent of the Bank, assign
its rights or obligations hereunder or under the Notes and the Bank shall not be
obligated to make any Advance hereunder to any entity other than the Company.

                  (b)......The  Bank may sell to any  financial  institution  or
institutions, and such financial institution or institutions may further sell, a
participation  interest  (undivided  or divided) in, the Advances and the Bank's
rights and benefits  under this  Agreement  and the Notes,  and to the extent of
that  participation  interest,  such participant or participants  shall have the
same rights and benefits against the Company under Sections 3.7, 3.9, and 6.2(c)
as it or they would have had if such  participant or participants  were the Bank
making the Advances to the Company hereunder,  provided,  however,  that (i) the
Bank's  obligations  under this  Agreement  shall  remain  unmodified  and fully
effective and  enforceable  against the Bank,  (ii) the Bank shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the Bank shall  remain the  holder of its Notes for all  purposes  of this
Agreement,  (iv) the Company shall continue to deal solely and directly with the
Bank in connection with the Bank's rights and obligations  under this Agreement,
and (v) the Bank  shall not grant to its  participant  any  rights to consent or
withhold consent to any action taken by the Bank under this Agreement.

                  (c)......From  time to time in its sole  discretion,  the Bank
may appoint agents for the purpose of servicing and administering this Agreement
and the transactions  contemplated hereby and enforcing or exercising any rights
or remedies of the Bank provided under this  Agreement,  the Notes or otherwise.
In  furtherance  of such agency,  the Bank may from time to time direct that the
Company  provide  notices,  reports,  and other  documents  contemplated by this
Agreement (or  duplicates  thereof) to such agent.  The Company  consents to the
appointment of such agent and agrees to provide all such notices,  reports,  and
other  documents  and to otherwise  deal with such agent acting on behalf of the
Bank in the same manner as would be required if dealing with the Bank itself.

         7.7  Counterparts.  This  Agreement  may be  executed  in any number of
counterparts,  all of which taken  together  shall  constitute  one and the same
instrument,  and any of the parties hereto may execute this Agreement by signing
any such counterpart.

         7.8 Governing Law. This  Agreement is a contract made under,  and shall
be governed by and construed in accordance with, the law of the State of Indiana
applicable to contracts made and to be performed  entirely within such State and
without  giving effect to choice of law  principles  of such State.  Each of the
Company,  the Bank, and NBD Michigan  further agrees that any legal or equitable
action  or  proceeding  with  respect  to  this  Agreement,  the  Notes,  or the
transactions  contemplated  hereby shall be brought in any court of the State of
Indiana, or in any court of the United States of America sitting in Indiana, and
the Company,  the Bank,  and NBD Michigan each submits to and accepts  generally
and  unconditionally the jurisdiction of those courts with respect to its person
and property.  The Company irrevocably  appoints Roger J. Wolf, whose address in
Indiana is c/o Hurco Companies, Inc., One Technology Way, Indianapolis,  Indiana
46268,  as its agent for  service of process  and  irrevocably  consents  to the
service of process in connection  with any such action or proceeding by personal
delivery  to  such  agent  or to the  Company,  or by  the  mailing  thereof  by
registered or certified mail,  postage prepaid to the Company at its address for
notices pursuant to Section 7.2. The Company shall at all times maintain such an
agent in Indiana  for such  purpose  and shall  notify the Bank of such  agent's
address in Indiana  within  ten days of any change of  address.  Nothing in this
paragraph  shall affect the Bank's or NBD  Michigan's  right to serve process in
any other manner permitted by law or limit the Bank's or NBD Michigan's right to
bring any such action or  proceeding  against the Company or its property in the
courts of any other jurisdiction.  The Company,  the Bank, and NBD Michigan each
irrevocably  waives any  objection  to the laying of venue of any such action or
proceeding in the above described courts.

         7.9 Table of  Contents  and  Headings.  The table of  contents  and the
headings of the various subdivisions hereof are for the convenience of reference
only and shall in no way modify any of the terms or provisions hereof.

         7.10  Construction  of Certain  Provisions.  If any  provision  of this
Agreement  refers to any action to be taken by any person,  or which such person
is prohibited  from taking,  such  provision  shall be  applicable  whether such
action is taken directly or indirectly by such person,  whether or not expressly
specified in such provision.

         7.11  Integration  and  Severability.  This  Agreement  and the  Notes,
together  with the  other  Loan  Documents,  embody  the  entire  agreement  and
understanding among the Company,  the Bank, and NBD Michigan,  and supersede all
prior agreements and  understandings,  relating to the subject matter hereof and
thereof.  In case any one or more of the  obligations  of the Company  under the
Loan Documents shall be invalid,  illegal or unenforceable in any  jurisdiction,
the validity,  legality and  enforceability of the remaining  obligations of the
Company  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 the obligations of the Company under
the Loan Documents in any other jurisdiction.

         7.12 Independence of Covenants.  All covenants hereunder shall be given
independent  effect so that if a particular action or condition is not permitted
by any such covenant, the fact that it would be permitted by an exception to, or
would be otherwise  within the limitations of, another  covenant shall not avoid
the  occurrence  of a Default or an Event of Default if such  action is taken or
such condition exists.

         7.13 Interest Rate Limitation.  Notwithstanding  any provisions of this
Agreement or the Notes,  in no event shall the amount of interest paid or agreed
to be paid by the  Company  exceed an amount  computed  at the  highest  rate of
interest   permissible   under  applicable  law.  If,  from  any   circumstances
whatsoever,  fulfillment  of any provision of this Agreement or the Notes at the
time  performance  of such  provision  shall be due shall involve  exceeding the
interest rate  limitation  validly  prescribed by law which a court of competent
jurisdiction may deem applicable hereto, then, ipso facto, the obligations to be
fulfilled shall be reduced to an amount computed at the highest rate of interest
permissible  under  applicable law. If for any reason  whatsoever the Bank shall
ever  receive as interest an amount  which would be deemed  unlawful  under such
applicable  law,  the amount  shall be  automatically  applied to the payment of
principal of the  Advances  outstanding  hereunder  (whether or not then due and
payable) and not to the payment of interest, or shall be refunded to the Company
if such principal and all other obligations of the Company to the Bank have been
paid in full.

         7.14 Waiver of Jury Trial.  The Bank,  NBD  Michigan,  and the Company,
after  consulting  or  having  had the  opportunity  to  consult  with  counsel,
knowingly, voluntarily and intentionally waive any right any of them may have to
a trial by jury in any litigation based upon or arising out of this Agreement or
any related  instrument or agreement or any of the transactions  contemplated by
this Agreement or any course of conduct,  dealing,  statements  (whether oral or
written) or actions of any of them.  Neither  the Bank,  NBD  Michigan,  nor the
Company 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 such party.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly  executed and delivered as of the day and year first above  written,  which
shall be the Effective Date of this Agreement.

                                             HURCO COMPANIES, INC.


                                          By       /s/ Roger J. Wolf
                                                     Roger J. Wolf
                                            Its:  Senior Vice President and
                                                   Chief Financial Officer


Address for Notices:........................      NBD BANK, N.A.


One Indiana Square..........................    By       /s/ Scott C. Morrison
                                                   ---------------------
Indianapolis, Indiana  46266................
                  ..........................       Its:  Vice President
Attention: Scott C. Morrison
Facsimile No.:  (317)-266-6042
Facsimile Confirmation No.:  (317)-266-7351




<PAGE>


Address for Notices:........................                  NBD BANK


One Indiana Square..........................       By_    /s/ Scott C. Morrison
                                                         ---------------------
Indianapolis, Indiana  46266................
                  ..........................               Its:  Vice President
Attention: Scott C. Morrison
Facsimile No.:  (317)-266-6042
Facsimile Confirmation No.:  (317)-266-7351



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