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                                                             Exhibit 4.2

         
                         LINE OF CREDIT PROMISSORY NOTE
                              (Uncommitted/Demand)



$3,000,000.00                                                Arm Arbor, Michigan
                                                             December 30, 1996



     FOR VALUE RECEIVED, the undersigned, Mechanical Dynamics, Inc., a Michigan
corporation (the "Borrower"), whose address is 2301 Commonwealth Boulevard, Ann
Arbor, Michigan 48105, hereby promises to pay to the order of KeyBank National
Association, a national banking association (the "Bank"), with its banking
offices located at 100 S. Main Street, Ann Arbor, Michigan 48104, or at such
other place or places that may be designated by the Bank, on demand, the
principal sum of Three Million Dollars ($3,000,000.00), or so much thereof as
may be outstanding from time to time, whichever is less, together with interest
thereon as herein below provided.
        


     The outstanding principal balance of this Note, together with all accrued 
and unpaid interest, shall be due and payable in full immediately upon Bank's
demand.  Until such demand, the Borrower may borrow, repay and reborrow
hereunder; provided, however, that: (i) each advance requested by the Borrower
under this credit facility shall be made only in the sole and absolute
discretion of the Bank; and (ii) the aggregate unpaid principal amount of all
loan advances outstanding at any one time hereunder shall not exceed Three
Million Dollars ($3,000,000.00).
        


     All interest accrued on the outstanding principal balance of this Note 
shall be due and payable on the first calendar day of each month, with the 
first such payment being due and payable on the 1st day of January, 1997.
        


     The unpaid principal balance of each advance made under this Note, as the 
same shall exist from time to time, shall bear interest, at the Borrower's 
option, at the Bank's Prime Rate or at the Libor Rate.  The Prime Rate as used 
herein shall mean the prime interest rate of the Bank as announced by the Bank 
at its offices in Ann Arbor, Michigan, as such rate may vary from time to time.
The "Libor Rate" as used herein is a floating rate of interest calculated by 
adding a "Margin" to an "Index", which when added together shall be the Libor 
Rate.  The Libor Rate shall be calculated on the last day of each month (the
"Calculation Date"), and the Libor Rate will be adjusted on the first day of
the month after the Calculation Date ("Adjustment Date").  If the Calculation
Date or Adjustment Date should fall on a Saturday, Sunday or other day or legal
holiday on which the Bank is closed, the Calculation Date will be the next
business day on which the Bank shall be open to conduct substantially all of
its business, and the Adjustment Date will then fall on the next following
business day.  The "Index" and "Margin" are defined as follows:
        


        (a)     "Index" is the 30 Day London InterBank Offered Rate ("Libor")
for which deposits in United States dollars are offered by prime banks in the
London InterBank market as quoted in the Wall Street Journal, Midwest Edition,
on the Calculation Date for contracts entered into two days after the
Calculation Date, rounded up to the next higher whole multiple of 1/16% if such
rate is not a multiple.  Should the Index not be available on the Calculation
Date, or should the Index be discontinued or the Bank be prohibited by rule, law
or regulation from using said Index, the Bank may select any other index to be
used as the Index.  The Bank agrees to reasonably select a replacement Index
which, in the sole and absolute discretion of the Bank, is similar in nature to
the original Index.




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        (b)    "Margin" is that amount added to the Index to arrive at the 
Libor Rate. The Margin used to calculate the Libor Rate herein is two and one-
half percent (2.5%).


All calculations made herein regarding the Libor Rate, Index and the Margin 
shall be made by the Bank.



       The Libor interest rate is used as an index only, and funds for 
Borrower's loans are not being purchased or otherwise matched by the Bank from 
or on the London InterBank Market.  In connection with the Libor interest rate,
Borrower expressly acknowledges that:



         Notwithstanding any other provisions of this Note, if any law, rule 
regulation or interpretation thereof shall change or be introduced that 
increases the cost or expenses to the  Bank of making the Libor interest rate 
loans, the Bank may require the Borrower to, from time  to time, pay those 
additional amounts sufficient to reimburse the Bank for those increased costs
and expenses in order to maintain the Bank's return upon said Libor interest 
rate loan.  The Bank will submit a written certificate to the Borrower 
evidencing said increased costs of making or funding the Libor interest rate 
loans.  Upon such notice from the Bank, the Borrower will:   (a) pay the 
additional costs as required by the Bank; or (b) either prepay the Libor 
interest rate loans outstanding in full, with interest accrued thereon, or 
convert the outstanding loans to an interest rate which is mutually agreeable 
to the Borrower and the Bank not so affected by the increased costs.  The Bank 
agrees to use its best efforts to obtain a rate which is equivalent, or as near
equivalent as possible, to the Libor interest rate loan and which generates a 
return to the Bank upon the outstanding principal which is equivalent to the 
return upon the Libor interest rate loan received by the Bank prior to the 
increased costs associated with the Libor interest rate loans; and

         Notwithstanding any other provisions of this Note, if any law, rule, 
regulation or interpretation thereof shall change or be introduced that makes 
it unlawful for the Bank to continue the use of the Libor Index, and the Bank
does not demand payment in full, then the Bank will give the Borrower written 
notice of that occurrence and the Borrower will: (a) prepay the Libor interest 
rate loans outstanding in full, with interest accrued thereon; or (b) convert 
the outstanding loans to an interest rate which is mutually agreeable to the 
Borrower and the Bank not so affected by said law, rule, regulation or 
interpretation.  The Bank will use its best efforts to obtain an interest rate 
which is equivalent to the Libor interest rate which was determined to be 
unlawful.
        
        Until payment in full of this Note is due, whether based upon 
Borrower's default or otherwise, in the event that any payment of interest due 
under this Note is not paid within six (6) business days after the same becomes
due and payable, a late charge of two (2.0%) of the required amount of such 
payment so overdue, or Two Hundred Dollars ($200.00), whichever is less, may 
be charged by the Bank and an additional late charge may be charged on the first
day of each calendar month thereafter until the installment is paid.  No 
payments will be accepted without payment of this fee.

        Upon default by Borrower to make any payment when due, Bank may declare
the entire outstanding principal balance hereof, together with accrued 
interest thereon, immediately due and payable in full, without notice, and the 
unpaid principal balance under this Note shall thereafter bear interest at an 
annual variable rate equal to three percent (3.0%) in excess of the Libor Rate 
or Prime Rate, as applicable, or the highest lawful rate, if less.     



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        The Borrower agrees that upon default in the making of any payment 
under this Note, the Borrower shall pay to the Bank all costs of collecting, 
securing or attempting to collect or secure this Note, including, without 
limitation, reasonable attorneys' fees and court costs and other expenses 
whether the same be collected or secured by suit or otherwise.

        Presentment for payment, notice of dishonor, protest, notice of 
protest, and diligence in collection are hereby expressly waived by the 
Borrower, and the time of payments or any part thereof may be released by the 
Bank without in any way limiting liability hereunder.  The failure of the Bank 
to exercise any of its rights, powers and/or remedies shall not constitute a 
waiver of the right to exercise the same at any other time.

        This Note is payable upon demand.  The inclusion of specific default 
provisions or rights of the Bank shall not preclude the Bank's right to 
declare payment of this Note on its demand.

        None of the terms and provisions contained in this Note shall ever be 
construed to create a contract for the use, forbearance or detention of money 
requiring payment of interest at a rate in excess of the maximum interest rate 
permitted to be charged by the laws of the State of Michigan.  The Borrower or 
any other party now or hereafter becoming liable for the payment of this Note 
shall never be required to pay interest on this Note at a rate in excess of the
maximum interest rate that may be lawfully charged under the laws of the State 
of Michigan, and the provisions of this paragraph shall control over all other 
provisions hereof and of any other instruments executed in connection herewith 
or executed to secure the indebtedness evidenced hereby which may be in 
apparent conflict with this paragraph.  In the event that the Bank shall 
collect monies which are deemed to constitute payments in the nature of 
interest and which would otherwise increase the effective rate on this Note to 
a rate in excess of that permitted to be charged by the laws of the State of 
Michigan, all such sums deemed to constitute interest in excess of the maximum 
rate shall be considered to have been applied to reduce any other sums due and 
payable under this Note.



                                            Mechanical Dynamics, Inc. a Michigan
                                            corporation



                                            By: James E. Vinike
                                               -------------------------
                                            
                                            Its: CFO
                                                ------------------------




                          ________________________

                              FOR BANK USE ONLY


1. Fed Tax ID #s_____________             3. Obligation #__________________
      and____________________             4. Loan Officer Initials_________
2. Obligor#__________________             5. Loan Officer#_________________

 1:society:mechanic.2nt


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