EXHIBIT 10.42.6




             Third Amendment to Amended and Restated Note Agreement
                              dated July 31, 1995
       between the Registrant and Principal Mutual Life Insurance Company


































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             THIRD AMENDMENT TO AMENDED AND RESTATED NOTE AGREEMENT


     THIS AMENDMENT  ("Amendment") effective as of July 31, 1995 is entered into
between Hurco  Companies,  Inc., an Indiana  corporation  (the  "Company"),  and
Principal Mutual Life Insurance Company (the "Purchaser").

                                  WITNESSETH:


     The  Company  and the  Purchaser  have  entered  into  that  certain  Hurco
Companies,  Inc. Amended and Restated Note Agreement dated as of March 24, 1994,
as amended by that certain (1) Amendment and Notes Modification  Agreement dated
as of January 31, 1995 and (2)  Amendment  dated May 31, 1995 (as so amended the
"Note  Agreement").  The  Company  and the  Purchaser  agree to  amend  the Note
Agreement on the terms and conditions  hereinafter  set forth.  Terms defined in
the Note  Agreement  which are used herein shall have the same meaning set forth
in the Note Agreement unless otherwise specified herein.

     1.  AMENDMENT.  Effective as of July 31, 1995 and subject to the conditions
     precedent  set forth in  paragraph 2 hereof,  the Note  Agreement is hereby
     amended as follows:

     1.1. In SECTION 7.1, the word "and" before  "April 30, 1996" is deleted and
     replaced by ",",  the words "July 31, 1996 and October 31,  1996" are added
     after "April 30, 1996",  and the following  fiscal  periods and amounts are
     added under the headings  "FISCAL QUARTER ENDED" and "MINIMUM  CONSOLIDATED
     ADJUSTED NET WORTH":
                                                                 
                                                         MINIMUM CONSOLIDATED
                   FISCAL QUARTER ENDED                   ADJUSTED NET WORTH

                      July 31, 1996                            $6,500,000
                     October 31, 1996                          $7,000,000

     For the fiscal  quarters  ending on July 31, 1996 and October 31, 1996, the
     above-stated Minimum  Consolidated  Adjusted Net Worth amounts shall not be
     adjusted by 50% of the cumulative net income.

     1.2 In SECTION 7.2, the date "May 1, 1996" in the fifth line is replaced by
     the date "November 1, 1996",,  and the following fiscal periods and amounts
     are added under the headings  "FISCAL  QUARTER ENDED" and "MINIMUM  CURRENT
     ASSETS":

                  FISCAL QUARTER ENDED                  MINIMUM CURRENT ASSETS

                      July 31, 1996                           $40,000,000
                     October 31, 1996                         $40,000,000

     1.3 In SECTION 7.3, the following  fiscal periods and percentages are added
     under the headings "FISCAL QUARTER ENDED" and "PERCENTAGE":

                   FISCAL QUARTER ENDED                         PERCENTAGE

                      July 31, 1996                                 82%
                     October 31, 1996                               80%


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     1.4 In SECTION 7.4, the following  fiscal period and amount are added under
     the headings "FISCAL PERIOD" and "MAXIMUM LOANS, ETC.":

                    FISCAL PERIOD                          MAXIMUM LOANS, ETC.

                  Fiscal Year Ending
                    October 31, 1996                          $1,500,000

                    Under the same headings,  delete (1) "Fiscal  Quarter Ending
                    January 31,  1996" and  "$375,000  and (2)  "Fiscal  Quarter
                    Ending April 30, 1996" and "$375,000."

     1.5 In SECTION 7.5, the  following  fiscal period and ratio are added under
     the headings "FISCAL QUARTER ENDED" and "RATIO":

                    FISCAL QUARTER ENDED                          RATIO

                       July 31, 1996                            1.0 to 1.0
                      October 31, 1996                          1.25 to 1.0

     1.6 Amend and restate SECTION 7.16 as follows: "The Company will not permit
     the ratio of Consolidated Total Indebtedness, as reflected on the Company's
     consolidated balance sheet, to Consolidated Adjusted Net Worth to exceed at
     any time (i) from the Closing Date through and including  October 31, 1994,
     9.5 to 1.0 and (ii) from  November 1, 1994 through  July 30, 1996,  10.5 to
     1.0 and (iii) from July 31, 1996 through  October 30, 1996,  4.5 to 1.0 and
     (iv) on October 31, 1996 and thereafter, 4.0 to 1.0."

     1.7 Add Section 6.16 as follows:  "6.16 Equity Infusion. The Company agrees
     that if there is any capital  contribution  or cash infused by shareholders
     or third  parties to the  Company  ("Equity  Infusion"),  then the  Minimum
     Consolidated  Adjusted Net Worth  Amounts in paragraph  7.1, for the fiscal
     quarters ended July 31, 1996 and October 31, 1996,  will be immediately and
     automatically  increased  by 85% of the value of the Equity  Infusion,  but
     only for the period of time  commencing on the date of the Equity  Infusion
     through the fiscal  quarter  ended  October 31, 1996.  Also,  if the Equity
     Infusion  equals or exceeds  $3,000,000 in value,  then (1) the percentages
     set forth in paragraph 7.3 for the fiscal  quarters ended July 31, 1996 and
     October 31, 1996 will immediately and automatically reduce to 78%, but only
     for the  period  of time  commencing  on the  date of the  Equity  Infusion
     through the fiscal  quarter  ended  October  31, 1996 and (2) the  leverage
     ratios in paragraph 7.16  applicable to the fiscal  quarters ended July 31,
     1996 and October 31, 1996 will immediately and automatically change to 3.55
     to 1.0,  but  only for the  period  of time  commencing  on the date of the
     Equity Infusion through the fiscal quarter ended October 31, 1996.  Default
     in the  performance of this paragraph 6.16 shall create an Event of Default
     under paragraph 8.1(d).

     1.8. Amend and restate in its entirety Section 6.14 to read as follows:

          "6.14.  MOST FAVORED LENDER. In the event that the Company shall enter
          into any  modification  of the NBD Agreement or any other  contract or
          agreement  pursuant to which the Company shall have  available to it a
          credit  facility (a "Credit  Agreement"),  which  increases  the fees,
          expenses,  interest  rate spreads  over prime rate,  LIBOR rate or any
          other such base rate or any other  charges which are or may be payable
          to a Bank pursuant to a Credit Agreement (but excluding reimbursements

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          for  actual  out-of-pocket  expenses  of the Bank or its  counsel  and
          excluding reasonable commitment fees to obtain,  increase or extend or
          renew a credit  facility,  including  lines of  credit  and term  loan
          facilities,  default rate interest and reasonable fees and expenses or
          costs actually  incurred for  collection  arising out of default under
          any Credit  Agreement  and  excluding  any increase in interest  rate,
          charges, fees or expenses under the NBD Agreement, pursuant to Section
          7.1(i) thereof,  due to an increase in the interest rates on the Notes
          or the fees  payable  under this  Agreement)  over the  interest  rate
          spreads,  fees, charges and expenses provided for the NBD Agreement or
          such other Credit Agreement, as applicable,  then, effective as of the
          date of such increase, the amount of the increase in the interest rate
          spread  (i.e.,  the number of basis points added to the interest  rate
          spread),  if any,  shall be added to the interest  rate payable to the
          Purchaser under the Notes, and as and when the amount representing the
          increase of fees,  expenses  and/or charges,  if any,  becomes due and
          payable  under the  Credit  Agreement,  the  Company  shall pay to the
          Purchaser  a  comparable  amount  as a fee.  In no event  will the fee
          payable to the Purchaser  pursuant to the foregoing  exceed the amount
          of the corresponding  increase in fee, charge or expense payable under
          the  modified  Credit  Agreement.  Failure of the  Company to make the
          payments  which  become due and payable  under this Section 6.14 shall
          constitute an Event of Default under Section 8.1(a). Upon any increase
          in the  interest  rate to be charges  under the Notes  pursuant to the
          terms of this Section 6.14, the Company shall execute such  amendments
          to the  Notes  and this  Agreement  as the  Purchaser  reasonably  may
          request to confirm and evidence the increase in the interest rate.

          The Company also covenants and agrees to provide to Purchaser,  as and
          when  furnished  to NBD Bank or any  replacement  lender,  all written
          reports,  business reports and other financial reports and projections
          furnished  by the  Company  to NBD  Bank or such  replacement  lender,
          whether pursuant to the terms of the NBD Agreement or otherwise."

     1.9 The Company agrees to immediately and automatically grant Purchaser the
     same loan covenants,  and terms as it grants NBD Bank NA or any replacement
     lender,  if  such  covenants  and  terms  are  difference  in  kind or more
     restrictive  (on the Company) than the  Purchaser's  existing  covenants or
     terms. If the Company  defaults in the performance of such new covenants or
     terms,  an Event of  Default  shall  arise  under  paragraph  8.1(d).  This
     covenant  applies  only to the  fiscal  quarters  ended  July 31,  1996 and
     October 31, 1996.

     2. CONDITIONS  PRECEDENT.  This Amendment shall become  effective as of the
     latest to occur of the date (i) the  Company  shall have  delivered  to the
     Purchaser  reaffirmations  of each  of the  Subsidiary  Guaranties  and the
     Autocon Guaranty  executed in favor of Purchaser,  (ii) the Company and NBD
     execute and deliver  amendments  to the NBD Agreement and the NBD Term Loan
     in the form of  EXHIBIT A  attached  hereto,  (iii) the  Purchaser  and NBD
     execute and deliver an amendment to the Intercreditor Agreement in the form
     of EXHIBIT B attached hereto (the "Intercreditor Amendments"), and (iv) the
     Company shall have paid to the Collateral Agent a $25,000 amendment fee.






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     3.  REPRESENTATIONS  AND  WARRANTIES.  The Company  hereby  represents  and
     warrants to the  Purchaser  that (i) this  Amendment  constitutes  a legal,
     valid and binding obligation of the Company enforceable against the Company
     in  accordance  with its terms,  and (ii) that no event has occurred and no
     condition exists which constitutes an "Event of Default" (as defined in the
     Note  Agreement) or with the lapse of time or the giving of notice or both,
     would become an Event of Default.

     4.  COSTS  AND  EXPENSES.  In  accordance  with  Section  11.1 of the  Note
     Agreement, the Company acknowledges that it is liable to pay all reasonable
     expenses of Purchaser,  including,  without limitation,  reasonable charges
     and  disbursements  of special  counsel,  incurred in  connection  with the
     preparation, execution and delivery of this Amendment.

     5. RATIFICATION. Except as specifically amended or modified above, the Note
     Agreement  and each of the Notes shall  remain in full force and effect and
     are  hereby   ratified  and   confirmed.   The   execution,   delivery  and
     effectiveness  of this Amendment  shall neither  operate as a waiver of any
     right,  power or remedy of the  Purchaser  under the Note  Agreement or the
     Notes nor operate a waiver of the  provisions of the Note  Agreement or the
     Notes except as specifically set forth herein.

     IN  WITNESS  WHEREOF,  the  Company  and the  purchaser  have  caused  this
Amendment to be executed and delivered by their  respective  officer or officers
thereunto duly authorized.

                                              HURCO COMPANIES, INC.


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


                                              PRINCIPAL MUTUAL LIFE INSURANCE
                                                 COMPANY


                                              By:     /s/ Donald D. Brattebo
                                              Its:    Second Vice President-
                                                        Securities Investment

                                              By:     /s/ Nora Everett
                                              Its:    Counsel