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                                                                     EXHIBIT 4.2



                                PROMISSORY NOTE

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Principal Amount: $4,000,000.00 Initial Rate: 7.000% Date of Note: December 4, 1998
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PROMISE TO PAY.  Mechanical Dynamics, Inc. ("Borrower") promises to pay to 
KeyBank National Association ("Lender"), or order, in lawful money of the 
United States of America, on demand, the principal amount of Four Million & 
00/100 Dollars ($4,000,000.00) or so much as may be outstanding, together with 
interest on the unpaid outstanding principal balance of each advance.  Interest 
shall be calculated from the date of each advance until repayment of each 
advance.

PAYMENT.  BORROWER WILL PAY THIS LOAN IMMEDIATELY UPON LENDER'S DEMAND.  IN
ADDITION, BORROWER WILL PAY REGULAR MONTHLY PAYMENTS OF ALL ACCRUED UNPAID
INTEREST DUE AS OF EACH PAYMENT DATE, BEGINNING JANUARY 4, 1999, WITH ALL
SUBSEQUENT INTEREST PAYMENTS TO BE DUE ON THE SAME DAY OF EACH MONTH AFTER THAT.
Interest on this Note is computed on a 365/360 simple interest basis; that is,
by applying the ratio of the annual interest rate over a year of 360 days, times
the outstanding principal balance, times the actual number of days the principal
balance is outstanding.  Borrower will pay Lender at Lender's address shown
above or at such other place as Lender may designate in writing. Unless
otherwise agreed or required by applicable law, payments will be applied first
to accrued unpaid interest, then to principal, and any remaining amount to any
unpaid collection costs and late charges.

VARIABLE INTEREST RATE.  The interest rate on this Note is subject to change 
from time to time based on changes in an index which is the KeyBank Prime (the
"Index").  The interest rate will change on the date of each announced change of
the Index within KeyBank.  The Index is not necessarily the lowest rate charged
by Lender on its loans and is set by Lender in its sole discretion.  If the
Index becomes unavailable during the term of this loan, the Lender may designate
a substitute index after notifying Borrower.  Lender will tell Borrower the
current Index rate upon Borrower's request.  Borrower understands that Lender
may make loans based on other rates as well.  The Interest rate change will not
occur more often than each day that the rate changes.  THE INDEX CURRENTLY IS
7.750% PER ANNUM.  THE INTEREST RATE TO BE APPLIED TO THE UNPAID PRINCIPAL
BALANCE OF THIS NOTE WILL BE AT A RATE OF 0.750 PERCENTAGE POINTS UNDER THE
INDEX, RESULTING IN AN INITIAL RATE OF 7.000% PER ANNUM. NOTICE: Under no
circumstances will the interest rate on this Note be more than the maximum rate
allowed by applicable law.

PREPAYMENT.  Borrower may pay without penalty all or a portion of the amount 
owed earlier than it is due.  Early payments will not, unless agreed to by 
Lender in writing, relieve Borrower of Borrower's obligation to continue to 
make payments of accrued unpaid interest.  Rather, they will reduce the 
principal balance due.

LATE CHARGE.  If a regularly scheduled interest payment is 10 DAYS OR MORE 
LATE, Borrower will be charged 5.000% of the unpaid portion of the REGULARLY
SCHEDULED PAYMENT OR $50.00, WHICHEVER IS GREATER.  If Lender demands payment 
of this loan, and Borrower does not pay the loan WITHIN 10 DAYS AFTER LENDER'S 
DEMAND, BORROWER ALSO WILL BE CHARGED EITHER 5.000% OF THE UNPAID PORTION OF 
THE SUM OF THE UNPAID PRINCIPAL PLUS ACCRUED UNPAID INTEREST OR $50.00, 
WHICHEVER IS GREATER.

DEFAULT.  Borrower will be in default if any of the following happens: (a) 
Borrower fails to make any payment when due.  (b) Borrower breaks any promise 
Borrower has made to lender, or Borrower fails to comply with or to perform 
when due any other term, obligation, covenant, or condition contained in this 
Note or any agreement related to this Note, or in any other agreement or loan 
Borrower has with Lender.  (c) Borrower defaults under any loan, extension of 
credit, security agreement, purchase or sales agreement, or any other 
agreement, in favor of any other creditor or person that may materially affect 
any of Borrower's property or Borrower's ability to repay this Note or perform 
Borrower's obligations under this Note or any of the Related Documents. (d) Any 
representation or statement made or furnished to Lender by Borrower or on 
Borrower's behalf is false or misleading in any material respect either now or 
at the time made or furnished.  (e) Borrower becomes insolvent, a receiver is 
appointed for any part of Borrower's property, Borrower makes an assignment for 
the benefit of creditors, or any proceeding is commenced either by Borrower or 
against Borrower under any bankruptcy or insolvency laws.  (f) Any creditor 
tries to take any of Borrower's property on or in which Lender has a lien or 
security interest.  This includes a garnishment of any of Borrower's accounts 
with Lender.  (g) Any guarantor dies or any of the other events described in 
this default section occurs with respect to any guarantor of this Note.  (h) A 
material adverse change occurs in Borrower's financial condition, or Lender 
believes the prospect of payment or performance of the Indebtedness is 
impaired.  (i) Lender in good faith deems itself insecure.

LENDER'S RIGHTS.  Upon default, Lender may declare the entire unpaid principal 
balance on this Note and all accrued unpaid interest immediately due, without 
notice, and then Borrower will pay that amount.  Upon default, including 
failure to pay upon final maturity, Lender, at its option, may also, if 
permitted under applicable law, increase the variable interest rate on this 
Note 3.000 percentage points.  The interest rate will not exceed the maximum 
rate permitted by applicable law.  Lender may hire or pay someone else to help 
collect this Note if Borrower does not pay.  Borrower also will pay Lender that 
amount.  This includes, subject to any limits under applicable law, Lender's 
reasonable attorneys' fees and Lender's legal expenses whether or not there is 
a lawsuit, including reasonable attorneys' fees and legal expenses for 
bankruptcy proceedings (including efforts to modify or vacate any automatic 
stay or injunction), appeals, and any anticipated post-judgment collection 
services.  If not prohibited by applicable law, Borrower also will pay any 
court costs, in addition to all other sums provided by law.  THIS NOTE HAS BEEN 
DELIVERED TO LENDER AND ACCEPTED BY LENDER IN THE STATE OF MICHIGAN.  IF THERE 
IS A LAWSUIT, BORROWER AGREES UPON LENDER'S REQUEST TO SUBMIT TO THE 
JURISDICTION OF THE COURTS OF WASHTENAW COUNTY, THE STATE OF MICHIGAN.  LENDER 
AND BORROWER HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, 
PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER LENDER OR BORROWER AGAINST THE 
OTHER.  THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE 
LAWS OF THE STATE OF MICHIGAN.

LINE OF CREDIT.  This Note evidences a revolving line of credit.  Advances 
under this Note may be requested orally by Borrower or by an authorized 
person.  Lender may, but need not, require that all oral requests be confirmed 
in writing.  All communications, instructions, or directions by telephone or 
otherwise to Lender are to be directed to Lender's office shown above.  
Borrower agrees to be liable for all sums either: (a) advanced in accordance 
with the instructions of an authorized person or (b) credited to any of 
Borrower's accounts with Lender.  The unpaid principal balance owing on this
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12-04-1998                    PROMISSORY NOTE                             PAGE 2
                                  (CONTINUED)

Note at any time may be evidenced by endorsements on this Note or by Lender's 
internal records, including daily computer print-outs. Lender will have no 
obligation to advance funds under this Note if: (a) Borrower or any guarantor 
is in default under the terms of this Note or any agreement that Borrower or 
any guarantor has with Lender, including any agreement made in connection with 
the signing of this Note; (b) Borrower or any guarantor ceases doing business 
or is insolvent; (c) any guarantor seeks, claims or otherwise attempts to 
limit, modify or revoke such guarantor's guarantee of this Note or any other 
loan with Lender; (d) Borrower has applied funds provided pursuant to this Note 
for purposes other than those authorized by Lender; or (e) Lender in good faith 
deems itself insecure under this Note or any other agreement between Lender 
and Borrower.

PRIOR NOTE. This Note is a renewal of that Promissory Note from Borrower to 
Lender dated June 27, 1997 in the amount of $4,000,000.00.

GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific 
default provisions or rights of Lender shall not preclude Lender's right to 
declare payment of this Note on its demand. Lender may delay or forgo enforcing 
any of its rights or remedies under this Note without losing them. Borrower and 
any other person who signs, guarantees or endorses this Note, to the extent 
allowed by law, waive presentment, demand for payment, protest and notice of 
dishonor. Upon any change in the terms of this Note, and unless otherwise 
expressly stated in writing, no party who signs this Note, whether as maker, 
guarantor, accommodation maker or endorser, shall be released from liability. 
All such parties agree that Lender may renew or extend (repeatedly and for any 
length of time) this loan, or release any party or guarantor or collateral; or 
impair, fail to realize upon or perfect Lender's security interest in the 
collateral; and take any other action deemed necessary by Lender without the 
consent of or notice to anyone. All such parties also agree that Lender may 
modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF 
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO 
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.

BORROWER:

MECHANICAL DYNAMICS, INC.



BY: /s/ David Peralta
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    DAVID PERALTA, VICE PRESIDENT/CFO