<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>uk_credit.txt
<DESCRIPTION>UK CREDIT AGREEMENT
<TEXT>
Hurco Europe Limited
c/o Hurco Companies, Inc.
One Technology Way
Indianapolis
Indiana 46268-0180
USA



For the attention of: Mr Roger J. Wolf

                                                               January 15, 2004

Dear Sir

(pound)700,000 Revolving Credit Facility and (pound)300,000 Overdraft Facility

We, Bank One, NA (the "Bank", which expression includes our successors, assigns
and permitted transferees), are pleased to offer Hurco Europe Limited (the
"Borrower"), on the terms and conditions set out in this agreement:

(a) a revolving credit facility (the "Revolving Credit Facility") of up to
(pound)700,000; and

(b) an overdraft facility (the "Overdraft Facility") of up to (pound)300,000,

(together, the "Facilities") to be used for the Borrower's general working
capital and corporate requirements.

1      Definitions

       In this agreement, unless the context otherwise requires:

       "Additional Cost" means, in relation to any period for which a
       calculation of LIBOR is to be made, a percentage calculated for such
       period at an annual rate conclusively determined by the Bank to be the
       cost to the Bank of complying with the Bank of England's reserve asset
       special deposit and mandatory liquid assets requirements from time to
       time;

       "Advance" means each borrowing by way of an advance under the Revolving
       Credit Facility or (as the context requires) the principal amount of that
       borrowing outstanding at any relevant time;

       "Affiliate" means in relation to a company (i) any company or body
       corporate which is for the time being a holding company or a subsidiary
       of that company or a subsidiary of any such holding company ("holding
       company" and "subsidiary" having the meanings respectively given thereto
       by Section 736 of the Companies Act 1985) and (ii) any person or group of
       persons which, or which together, control (within the meaning of Section
       840 of the Income and Corporation Taxes Act 1988) that company;

       "Banking Day" means a day when dealings in Sterling are carried on in the
       London interbank market and banks are open for business in London;

       "Base Rate" means the Bank's base rate for Sterling as varied from time
        to time;

       "Borrowing Base" means, at any time, an amount equal to the aggregate of:
<PAGE>

(a) 80 per cent of the Eligible Trade Debts;

(b) 50 per cent of the Eligible Finished Goods Inventory; and

(c) 40 per cent of the Eligible Unfinished Goods Inventory;

        "Borrowing Base Certificate" means a certificate substantially in the
       form of Appendix 1 or as commonly in use by the Bank or its affiliates;

       "Collateral" means the Charged Assets as such term is defined in the
        Debenture;

       "Credit Documents" means the US Credit Agreement, the US Security
       Documents, the Parent Guarantee and any other agreement, instrument or
       documents designated as such by the Bank;

       "Debenture" means the debenture dated on or about the date of this
       agreement in form and substance satisfactory to the Bank in favour of the
       Bank granting, inter alia, fixed charges over the Borrower's book debts,
       inventory and plant, machinery and equipment and a floating charge over
       all of the Borrower's undertaking, properties and assets to secure all
       the Borrower's obligations, liabilities and indebtedness from time to
       time hereunder;

       "Default" means any Event of Default or any event or circumstance which
       would upon the giving of a notice by the Bank and/or expiry of the
       relevant period and/or fulfilment of any other condition (in each case as
       specified in clause 14), constitute an Event of Default;

       "Eligible Finished Goods Inventory" means the finished goods inventory of
       the Borrower located in the United Kingdom in each case valued at the
       book value given in the Borrower's latest monthly inventory listings
       provided in each case that the Bank has not determined that such
       inventory or goods are not acceptable for any reason having regard to its
       age, type, category and/or quality;

       "Eligible Unfinished Goods Inventory" means the raw material inventory
       and parts inventory of the Borrower located in the United Kingdom,
       excluding work in progress, in each case valued at the book value given
       in the Borrower's latest monthly inventory listings provided in each case
       that the Bank has not determined that such inventory or goods are not
       acceptable for any reason having regard to its age, type, category and/or
       quantity;

       "Eligible Trade Debt" means a book debt of the Borrower:

(a)                  in relation to which the relevant debtor is domiciled in
                     the United States of America or European Union; and

(b)                  which is legally and beneficially owned (with full title
                     guarantee) by the Borrower; and

(c)                  which is not subject to any restrictions on assignment or
                     charge so that it can be charged or otherwise secured to
                     the Bank in accordance with the Debenture; and

(d)                  which the relevant debtor is bound to pay, and does not
                     dispute that it is bound to pay, in full on the due date;
<PAGE>
                     and

(e)                  which is not and is not asserted by the relevant debtor to
                     be:

(i)                  subject of any set-off, counterclaim or other equity; or

(ii)                 subject to any discount (not already accounted for in the
                     Borrower's books) or attempt to vary the terms of its
                     payment; or

(iii)                the subject of any action or attempted action for its
                     recovery; or

(iv)                 a debt in connection with a contract which has been
                     breached; or

(v)                  a debt in connection with any goods or services which have
                     been rejected for any reason whatsoever;

              and

(f)                    in relation to which the relevant debtor has not suffered
                       an event which if it had occurred in relation to the
                       Borrower would have been an Event of Default under
                       clauses 14.1.5 to 14.1.8 (inclusive); and

(g)                    which, if such debt is subject to credit insurance
                       arrangements, is otherwise acceptable to the Bank, in its
                       sole discretion; and

(h)                    which either:

(i)                    (in the case of debts required to be paid within 30 days
                       from the invoice date) has not remained unpaid for a
                       period exceeding 90 days past due; or

(ii)                  (in the case of debts not required to be paid within 30
                      days from the invoice  date) has not  remained  unpaid for
                      a period exceeding 60 days past due;

              and

(i) which is not owed by an Affiliate of the Borrower; and

(j) which is not an Excluded Debt;

       "Encumbrance" means any mortgage, charge (whether fixed or floating),
       pledge, lien, hypothecation, standard security, assignment by way of
       security or other security interest of any kind;

       "Event of Default" means any of the events of default set out in clause
        14;

       "Excluded Debt" " means book debts of the Borrower:

(a)           owing by debtors in connection with non-arms length transactions
              which are connected with any member of the Borrower; or
<PAGE>

(b)           relating to stage payments or progress payments; or

(c)           relating to amounts which are not or are alleged not to be fixed
              for liquidated amounts; or

(d)           owing by a debtor in respect of which 40 per cent. or more of the
              aggregate amount of book debts owed by that debtor to the Borrower
              do not constitute Eligible Trade Debts;

       "Guaranteed Amount" means, at any time, the aggregate amount of the
       Bank's maximum potential liability under all Undertakings issued and
       outstanding at that time;

        "Indebtedness" means:

(a)           all indebtedness in respect of borrowed money or for the deferred
              purchase price of property or services (other than current trade
              liabilities incurred in the ordinary course of business and
              payable in accordance with customary practices);

(b)           any other indebtedness which is evidenced by a note, bond,
              debenture or similar instrument;

(c)           all capitalised lease obligations;

(d)           all obligations in respect of outstanding letters of credit,
              acceptances and similar obligations;

(e)           all liabilities secured by any security interest, lien or other
              encumbrance on any property owned by the Borrower even though the
              Borrower has not assumed or otherwise become liable for the
              payment thereof;

(f)           any net liabilities under interest rate cap agreements, interest
              rate swap agreements, foreign currency exchange agreements and
              other hedging agreements or arrangements; and

(g)           all guaranties, endorsements and other contingent obligations
              whether direct or indirect in respect of Indebtedness of others,
              including any obligation to supply funds to or in any manner to
              invest in, directly or indirectly, the debtor, to purchase
              Indebtedness, or to assure the owner of Indebtedness against loss,
              through an agreement to purchase goods, supplies, or services for
              the purpose of enabling the debtor to make payment of the
              Indebtedness held by such owner or otherwise;

       "LIBOR" means, in relation to any Advance:

(a)           the applicable Screen Rate; or

(b)           (if no Screen Rate is available for the Term of that Advance) the
              rate (rounded upwards to four decimal places) as supplied to the
              Bank at its request quoted by the Reference Bank to leading
              lenders in the London interbank market, as at 11 a.m.  on the
              first day of such  period for the  offering of deposits in
              Sterling of that and for a period comparable to the Term for that
              Advance;
<PAGE>

       "Margin" means the applicable rate of interest set out in the following
table:
<TABLE>

              ------------------------------------------- ----------------------------------------
                    Total Funded Debt/EBITDA Ratio        Margin (% per annum) in respect of the
                                                                        Facilities
              ------------------------------------------- ----------------------------------------
              ------------------------------------------- ----------------------------------------
                     <S>                                                   <C>
                     > 3.00:1                                              2.75%

              ------------------------------------------- ----------------------------------------
              ------------------------------------------- ----------------------------------------
                     > 2.50:1 and <= 3.00:1                                2.00%

              ------------------------------------------- ----------------------------------------
              ------------------------------------------- ----------------------------------------
                     > 2.00:1 and <= 2.50:1                                1.50%

              ------------------------------------------- ----------------------------------------
              ------------------------------------------- ----------------------------------------
                     <= 2.00:1                                             1.00%

              ------------------------------------------- ----------------------------------------
</TABLE>

       But so that:

(a)    no  adjustment  to the Margin  shall  occur  prior to 1 March 2004 and
       prior to such date the Margin  shall at all times be 2.00% per annum; and

(b)           any adjustment to the Margin shall only be made on 1 March, 1
              June, 1 September and 1 December in each year and, for such
              purposes, the Total Funded Debt/EBITDA Ratio shall be determined
              as of the last day of (and for the period of) each period of four
              consecutive quarters ending on the preceding 31 October, 31
              January, 30 April and 31 July respectively by reference to the
              management accounts delivered to the Bank pursuant to Section 6.1
              of the US Credit Agreement;

       "Operating Account" means the account in the name of the Borrower opened
        with the Bank, with account No. 7139268;

       "Optional Currency" means any currency which is freely transferable,
       freely convertible into Sterling and dealt in on the London interbank
       market and for which the Bank provides overdraft facilities in the course
       of its normal operations;

       "Overdraft" means, at any relevant time, the debit balance of the
        Operating Account;

       "Parent"  means  Hurco  Companies,  Inc.,  an Indiana  corporation  whose
        principal  place of  business is at One Technology Way,
        Indianapolis, Indiana 46268-0180;

       "Parent Guarantee" means the agreed form guarantee dated on or about the
       date of this agreement entered into by the Parent in favour of the Bank;
<PAGE>

       "Permitted Disposal" means any sale, lease or other disposal of:

(a)           obsolete assets on normal arm's length commercial terms where the
              assets are no longer required for the purposes of the business of
              the Borrower;

(b)           assets where the disposal proceeds (net of Taxes and costs of
              disposal) are used within six months of that disposal for the
              purchase of an asset to replace the asset disposed;

(c)           assets in exchange for assets of a substantially similar nature
              and value in the ordinary course of business; and

(d)           inventory in the ordinary course of business;

        "Permitted Encumbrance" means an Encumbrance being any of the following:

(a)           Encumbrances granted with the prior written consent of the Bank;

(b)           liens and rights of set off arising by operation of law in the
              normal course of business and any encumbrance arising by way of
              retention of title of goods by the supplier of such goods where
              such goods are supplied on credit and are acquired in the
              Borrower's normal course of business;

(c)           Encumbrances comprised in the Debenture;

(a)           any other Encumbrance permitted to be entered into by a Subsidiary
              (as such term is defined in the US Credit Agreement) under Section
              6.15 of the US Credit Agreement (other than sub-paragraphs (vii),
              (ix) and (x) thereof);

       "Permitted Indebtedness" means:

(a)           Indebtedness incurred under this agreement;

(b)           unsecured debt incurred in the ordinary course of business;

(c)           unsecured Indebtedness owing to the Parent or any Affiliate of the
              Borrower;

(d)           Indebtedness incurred under the UK Lease Liability (as such term
              is defined in the US Credit Agreement); and

(e)           Indebtedness (other than unsecured trade debt incurred in the
              ordinary course of business) that is unsecured and fully
              subordinated to the interests of the Bank on terms acceptable to
              the Bank and only with the Bank's consent;

(f)           any other Indebtedness permitted to be entered into by a
              Subsidiary (as such term is defined in the US Credit Agreement)
              under Section 6.11 of the US Credit Agreement;

       "Qualifying Bank" means a person which (at the time the relevant interest
        payment is made) is:

(a) beneficially entitled to the interest payable to it under this agreement;
and
<PAGE>

(b) a UK Lender or a Treaty Lender;

       "Reference Bank" means the principal London office of Bank One, NA;

       "Screen Rate" means the British Bankers' Association Interest Settlement
       Rate for the relevant period, displayed on the appropriate page of the
       Telerate screen. If the agreed page is replaced or service ceases to be
       available, the Bank may specify another page or service displaying the
       appropriate rate after consultation with the Borrower;

       "Spot Rate" means in respect of any date the Bank's spot rate of exchange
       for the purchase of Dollars with Sterling at or about 11.00 a.m. on such
       date;

       "Sterling" and "(pound)" means the lawful currency for the time being of
       the United Kingdom and in respect of all payments to be made under this
       agreement in Sterling means immediately available, freely transferable
       cleared funds;

       "Taxes" includes all present and future taxes, levies, imposts, duties,
       fees or charges of whatever nature together with interest thereon and
       penalties in respect thereof and "Tax" and "Taxation" shall be construed
       accordingly;

       "Term" has the meaning given to that term in clause 4.1.2(c);

       "Termination Date" means 31 January 2007;

       "Total Funded Debt/EBITDA Ratio" has the meaning given to it in the US
        Credit Agreement;

       "Total Outstandings" means, at any relevant time, the aggregate of:

       (a) all Advances;

       (b) the Overdraft; and

       (c) the Guaranteed Amount,

       at such time;

       "Transferee" has the meaning given to that term in clause 19.1;

       "Treaty Lender" means a person which is resident (as such term is defined
       in the appropriate double taxation treaty) in a country with which the
       United Kingdom has a double taxation treaty giving the Borrower complete
       exemption from the imposition of any withholding or deduction for or on
       account of Taxes on interest (and which does not carry on business in
       that jurisdiction through a permanent establishment with which the
       Facilities in respect of which the interest is paid is effectively
       connected) and which has (or will have prior to the first date on which
       the relevant payment is to be made) delivered to the Bank for
       transmission to the Borrower, all necessary forms, claims, certificates
       and other documentation duly executed by such person necessary to
       establish that such person is entitled to receive payments by the
       Borrower under this agreement without any deduction for, or on account
       of, Taxes imposed and provided that if written authority from the
       relevant Tax authority is required to be obtained, prior to the making of
<PAGE>
       any payments of interest by the Borrower, to make such payment without
       any such deduction, such authority has been received by the Borrower (and
       remains valid and outstanding) prior to the first date on which the
       Borrower is required to make any such payment to such person and the
       Borrower undertakes to use all reasonable endeavours to request such
       authority;

       "UK GAAP" means generally accepted accounting principles and practices in
        the United Kingdom;

       "UK Lender" means a person which is:

(a)           a company which is resident in the UK for tax purposes; or

(b)           partnership each of whose members is a company so resident; or

(c)           a company which is not resident in the UK for tax purposes, but
              which carries on a trade in the UK through a branch or agency and
              is subject to corporation tax on interest paid to it under this
              agreement under section 11(1) of the Income and Corporation Taxes
              Act 1988;

       "Undertakings" means VAT Guarantees, standby letters of credit or
       guarantees issued by the Bank on behalf of the Borrower in accordance
       with clause 5 and "Undertaking" shall be construed accordingly;

       "US Credit Agreement" means the Third Amended and Restated Credit
       Agreement and Amendment to Reimbursement Agreement as of December 1,
       2003, entered into between the Parent and the Bank (as the same may be
       amended and/or restated from time to time);

       "US Credit Documents" means the US Credit Agreement and the US Security
        Documents;

       "US Security Documents" means (collectively, as the same may be amended
        and/or restated from time to time):

(a)           a patents and licences security agreement entered into by the
              Parent in favour of the Bank, dated October 24, 2002 and confirmed
              on December 1, 2003;

(b)    a pledge and  security  agreement  entered  into by the Parent in favour
       of the Bank dated  October  31,  2001 and
              confirmed on December 1, 2003;

(c)           the subsidiary guarantee by the Parent in favour of the Bank,
              dated December 1, 2003; and

(d)           any other documents evidencing any security interest or guarantee
              or indemnity entered into by the Parent in favour of the Bank,
              pursuant to the US Credit Agreement;

       "VAT Guarantee" means each guarantee issued by the Bank in favour of H.M.
       Customs and Excise in relation to the deferred payment of import duty in
       accordance with clause 5.


<PAGE>

2      Conditions

2.1    The Bank shall not be obliged to make the Facilities available under this
       agreement unless it shall have received the following documents in form
       and substance satisfactory to it:

2.1.1  a director's certificate in the form of Appendix 2, attaching the
       following documents:

(a)             a copy of the Certificate of Incorporation and Memorandum and
                Articles of Association of the Borrower;

(b)             a copy of the resolutions of the Board of Directors of the
                Borrower approving the terms of this agreement and the Debenture
                and authorising its appropriate officers to accept this
                agreement and to enter into the Debenture and to give all
                notices hereunder or thereunder on behalf of the Borrower; and

(c)             specimen signatures, authenticated by the secretary or a
                director of the Borrower of the persons authorised in the
                resolutions referred to in (b) above;

2.1.2  the Debenture duly executed by the Borrower;

2.1.3  the Parent Guarantee duly executed by the Parent; and

2.1.4      a copy of the US Credit Agreement duly executed by the parties
           thereto together with evidence that each of the other US Credit
           Documents has become in all respects unconditional in accordance with
           their respective terms;

2.1.5      a copy, certified as being true, complete and up-to-date by a
           Director or the Secretary of the Parent or its solicitors, of:

(a)             the Certificate of Incorporation and By-Laws of the Parent;

(b)             resolutions of the Board of Directors of the Parent approving
                the terms of the Parent Guarantee and authorising its
                appropriate officers to enter into the Parent Guarantee; and

2.1.6      specimen signatures, authenticated by the secretary or a director of
           the Parent of the persons authorised in the resolutions referred to
           in 2.1.5(b) above.

2.2    In addition no utilisation of the Facilities may be made if, at the time
       that utilisation is due to be made (i) the representations and warranties
       set out in clause 12 (for which purpose clause 12.1.5 shall refer to the
       latest audited financial statements of the Borrower delivered to the Bank
       under clause 13.7) are untrue or misleading or incorrect in any respect
       as if made with respect to the facts and circumstances existing at such
       time or (ii) a Default has occurred and is continuing or would result
       from the making of that utilisation.


<PAGE>

3      The Facilities

3.1    The Bank,  relying on each of the  representations  and  warranties  in
       clause 12 agrees to make  available to the Borrower the Facilities.

3.2    The  Revolving  Credit  Facility may be utilised by the Borrower  prior
       to the  Termination  Date on the terms and conditions set out in this
       agreement by:

3.2.1  the drawing of Advances in Sterling by the Borrower; or

3.2.2  the issue of Undertakings.

3.3    The Overdraft Facility may be utilised by the Borrower prior to the
       Termination Date on the terms and conditions set out in this agreement by
       debits to the Operating Account.

3.4    No utilisation of the Facilities shall be permitted if, as a result:

3.4.1  the Total Outstandings would exceed the lower of (A) the Borrowing Base
       and (B)(pound)1,000,000 at that time; or

3.4.2  the Guaranteed Amount would exceed(pound)200,000; or

3.4.3  the aggregate of the Advances and the Guaranteed Amount would exceed
       (pound)700,000; or

3.4.4  the amount of the Overdraft would exceed(pound)300,000.

4      Advances and the Overdraft

4.1    Advances

4.1.1      The Borrower may at any time prior to the Termination Date request
           the Bank by notice in writing to make Advances to the Borrower on the
           terms and conditions set out in this agreement.

4.1.2  Such notice shall specify:

(a)    the amount of the  proposed  Advance  (which  shall be in a minimum
       amount of(pound)50,000 or an integral  multiple of pound)50,000);

(b)             the proposed date of drawing (which shall be a Banking Day); and

(c)             the period (the "Term") during which the Advance is to remain
                outstanding (which shall be 30, 60, 90 or 180 days or such other
                period as the Bank and the Borrower may agree expiring not later
                than the Termination Date),

           and shall be received by the Bank not later than 11.00.a.m. on the
           proposed date of drawing.

4.1.3  Every such notice shall be irrevocable by the Borrower.

4.2    Overdraft

4.2.1  The Overdraft Facility may be used by the Borrower by debits to the
       Operating Account.
<PAGE>

4.2.2      The Overdraft is repayable by the Borrower on demand by the Bank
           which may be made by the Bank in its sole discretion at any time.

4.2.3      The Bank shall deliver to the Borrower as soon as reasonably
           practicable after the 24th day of each month an interest statement
           itemising the daily interest accruing to the Operating Account on
           each day during the period commencing on the 24th day of the previous
           month and ending on the 23rd day of the current month.

5      Undertakings

5.1    The Borrower may make drawings under the Revolving Credit Facility by
       requesting the Bank by notice in writing to issue standby letters of
       credit and/or guarantees on its behalf in favour of such persons as the
       Borrower may specify to the Bank and/or VAT Guarantees on its behalf in
       favour of H.M. Customs and Excise.

5.2    Each  request  shall be  received  by the Bank no later  than  10.00 a.m.
       on the  second  Banking  Day before the proposed date of issuance of the
       relevant undertaking.

5.3    Each Undertaking shall be in Sterling or any other Optional Currency
       agreed by the Bank and in a form and substance approved by the Bank. The
       express expiry date of each Undertaking shall be satisfactory to the Bank
       and no Undertaking shall have an express expiry date later than the
       Termination Date. Without prejudice to the generality of the foregoing,
       each VAT Guarantee shall provide for expiry of the Bank's liability on
       receipt by H.M. Customs and Excise of seven days' notice of termination
       in writing from the Bank.

5.4    The Bank's issuance of any Undertaking shall be deemed, for the purpose
       of clause 3.4, to be a utilisation of the Revolving Credit Facility to
       the extent of the Bank's maximum potential liability under that
       Undertaking.

5.5    Each Undertaking issued by the Bank shall be a guarantee of payment only
       and shall contain no obligations by the Bank other than to make payment
       to the beneficiary/ies of the Undertaking on demand.

5.6    The Borrower shall indemnify the Bank against all losses, costs, damages
       expenses and demands which the Bank may suffer, incur, sustain or receive
       under or by reason of or in connection with the Undertakings and the
       Borrower shall pay to the Bank forthwith all moneys whatsoever which may
       from time to time be claimed or demanded from the Bank or which the Bank
       shall pay under or in connection with the Undertakings. This indemnity
       shall be a continuing indemnity and shall be in addition to any security
       or other right the Bank may have against the Borrower and shall not be
       wholly or partly discharged, varied or affected by any time or indulgence
       granted to or by the Bank or any other party or by any variation of any
       Undertakings or of this agreement or by anything done or omitted which
       would but for this provision operate to exonerate the Borrower.

5.7    The Borrower irrevocably authorises the Bank to pay immediately any
       amounts from time to time demanded or claimed or which the Bank may
       become liable to pay under or by reason of the Undertakings without
       reference to or further authority from the Borrower and notwithstanding
       that the Borrower may dispute the validity of such claim or demand.
<PAGE>

5.8    The Bank's maximum actual and/or potential liability or risk in respect
       of an Undertaking shall not be treated as reduced for the purposes of
       this agreement unless (and to the relevant extent):

5.8.1      the Bank has received a written confirmation from the beneficiary of
           the relevant Undertaking of the amount of such reduction; or

5.8.2  such Undertaking has, under or in accordance with its terms, expired; or

5.8.3  a payment has been made under such an Undertaking.

5.9    Without prejudice to clause 14, upon the occurrence of an Event of
       Default and while the same is continuing the Borrower shall use all
       endeavours to procure the Bank's release from its liability thereunder by
       the relevant beneficiary.

5.10   The Borrower agrees that a certificate signed by an officer of the Bank
       to the effect that a sum has become due from the Bank in connection with
       an Undertaking shall (in the absence of manifest error) be conclusive as
       to the amount then due.

6      Borrowing Base Certificate

6.1    The Borrower shall monthly  prepare and deliver to the Bank a Borrowing
       Base  Certificate  signed by a director or a secretary of the Borrower
       setting out:

6.1.1      the details of the Eligible Trade Debts and stating the aggregate of
           those Eligible Trade Debts at the end of the preceding month;

6.1.2  the value of its Eligible Finished Goods Inventory at the end of the
       preceding month; and

6.1.3  the value of its Eligible Unfinished Goods Inventory at the end of the
       preceding month,

       such certificate to be delivered to the Bank within 30 days of the end of
       each calendar month.

6.2    The  Borrower  shall  ensure  that the  aggregate  of the Total
       Outstandings  at any time  shall not  exceed  the Borrowing Base at that
       time.

6.3    If by reason of the reduction in the Borrowing Base the foregoing is not
       complied with, the Borrower shall within 5 Banking Days reduce the Total
       Outstandings to ensure such compliance.

7      Repayment

7.1    Each Advance shall be repaid in full together with accrued interest and
       all other moneys outstanding in connection with such Advance on the last
       day of its Term.

7.2    Notwithstanding the foregoing, if a new Advance is to be made on a day on
       which an outstanding Advance is due to be repaid then, unless the
       Borrower and the Bank otherwise agree, the Bank shall apply the proceeds
       of the new Advance in meeting the Borrower's obligation to repay the
       maturing Advance.
<PAGE>
7.3    All outstanding Advances (if any) together with accrued interest and all
       other moneys outstanding in connection with such Advances shall be repaid
       or paid in full on the Termination Date.

8      Interest and Guarantee Fees

8.1    Interest on Advances

       Interest shall be paid by the Borrower on each Advance at the rate per
       annum equal to the aggregate of (i) the applicable Margin; (ii) LIBOR;
       and (iii) the Additional Cost and shall be debited to the Operating
       Account on the last day of its Term.

8.2    Interest on the Overdraft

       The Borrower shall pay interest on the Overdraft monthly in arrears on
       the 24th day of each month at the rate per annum determined by the Bank
       to be the aggregate of (i) the applicable Margin and (ii) the Base Rate.
       The accrued interest on the Overdraft shall be debited to the Operating
       Account monthly.

8.3    Guarantee fee

       A guarantee fee shall be payable by the Borrower on the Guaranteed Amount
       from time to time at the annual rate per annum of the applicable Margin.
       Such fee shall be payable quarterly in arrears and the first payment to
       be made three months from the date of the first Undertaking and quarterly
       thereafter.

8.4    Default interest

       Interest shall be paid on any overdue amount under this agreement (both
       before and after judgment) or on the occurrence of any other Default by
       the Borrower or the Parent under this agreement or the Parent Guarantee
       at the annual rate determined by the Bank to be the aggregate of (i) 2
       per cent. per annum, (ii) LIBOR (in the case of the Advances) or the Base
       Rate (in the case of the Overdraft); (iii) the applicable Margin; and
       (iv) the Additional Cost (in the case of the Advances). Such rate shall
       be determined daily or two Banking Days before any period selected by the
       Bank. As long as the amount continues to be overdue such rate shall be
       recalculated on the same basis at the end of each period selected by the
       Bank and such interest shall be compounded at the end of each such
       period.

9      Expenses

       The Borrower shall pay to the Bank (whether or not any of the Facilities
       is utilised) on demand an amount equal to all fees, costs, charges and
       expenses (including, but not limited to, reasonable legal expenses,
       stamp, registration or other duties) incurred by the Bank in connection
       with the preparation and execution of this agreement, the Debenture, the
       Parent Guarantee and the documentation contemplated hereby and all costs,
       charges and expenses (including, but not limited to, reasonable legal
       expenses on a full indemnity basis) of the Bank in connection with the
       enforcement or preservation of any of its rights under this agreement,
       the Debenture and the Parent Guarantee or otherwise in connection with
       the Facilities. The Borrower shall also pay an amount equal to any value
       added tax payable by the Bank in respect of such costs, charges and
       expenses.
<PAGE>

10     Payments and Indemnity

10.1   All sums payable in connection with the Facilities shall be paid to the
       Bank on the due date no later than 12 noon in Sterling in same day funds
       to such account as the Bank shall have notified to the Borrower by not
       less than 3 Banking Days' notice free and clear of any present or future
       taxes duties charges fees or withholdings and without any set-off or
       counterclaim or any condition or deduction whatsoever.

10.2   If the Borrower repays or prepays all or any part of the outstanding
       Advances before the expiry of the relevant Term (whether following the
       occurrence of an Event of Default or otherwise), the Borrower will
       indemnify the Bank against all loss or expense (including, but not
       limited to, reasonable legal expenses on a full indemnity basis) and all
       loss of profit the Bank may incur or sustain (including but not limited
       to all costs and losses resulting from the relevant payment not being
       made on the last day of the relevant Term). The Bank's certificate as to
       the amount of such loss or expense and interest shall be conclusive and
       binding on the Borrower save for manifest error.

10.3   Interest and any other payments under this agreement of an annual nature
       shall be calculated on a day to day basis and on the basis of the actual
       number of days elapsed and on the basis of: (i) a 365 day year (in the
       case of Sterling) and (ii) a 360 day year (in the case of currencies
       other than Sterling).

10.4   Any certificate or determination of the Bank as to any rate of interest,
       rate of exchange or any amount payable hereunder shall be prima facie
       evidence of the relevant rate or amount payable.

10.5   When any payment under this agreement would otherwise be due on a day
       which is not a Banking Day, the due date for payment shall be postponed
       to the next following Banking Day unless such Banking Day falls in the
       next calendar month in which case payment shall be made on the
       immediately preceding Banking Day.

11     Facility Fee

       The Borrower shall pay to the Bank (i) on the date of this agreement and
       (ii) on each anniversary of the date of this agreement until the
       Termination Date, a fee in the amount of US $6,000.

12     Representations and warranties

       The Borrower represents, warrants and undertakes to the Bank on (i) the
       date of this agreement, (ii) each occasion on which the Borrower draws or
       otherwise requests a utilisation under the Facilities and (iii) each
       occasion an Advance is renewed for a further Term that:


<PAGE>

12.1.1     the Borrower is duly incorporated and validly existing under the laws
           of England and Wales and has power to execute, deliver and perform
           its obligations under this agreement and the Debenture; all necessary
           action has been taken by it to authorise the execution, delivery and
           performance of this agreement and the Debenture, no limitation on its
           powers will be exceeded as a result of transactions under this
           agreement or the Debenture and this agreement and (subject to
           applicable insolvency laws and general principles of equity) the
           Debenture, when executed, will constitute valid and legally binding
           obligations of the Borrower enforceable in accordance with their
           respective terms;

12.1.2     the execution, delivery and performance of this agreement and the
           Debenture by the Borrower will not contravene any existing law,
           regulation or authorisation to which it is subject, result in any
           material breach of or default under any agreement or other instrument
           to which the Borrower is a party or is subject or contravene any
           provision of the Borrower's Memorandum or Articles of Association;

12.1.3     every authorisation of, or registration with, governmental or public
           bodies or courts required by the Borrower in connection with the
           execution, delivery, performance, validity, enforceability or
           admissibility in evidence of this agreement and the Debenture has
           been obtained or made and is in full force and effect and there has
           been no default in the observance of any conditions imposed in
           connection therewith;

12.1.4     (save as disclosed to the Bank in writing prior to the date of this
           agreement) no litigation, alternative dispute resolution,
           arbitration, administrative proceeding or labour dispute is taking
           place, pending or, to its knowledge, threatened against the Borrower
           or any of its assets which, if adversely determined, could be
           reasonably expected to result in a liability of the Borrower in
           excess of (pound)50,000;

12.1.5     the audited financial statements of the Borrower provided to the Bank
           pursuant to clause 13.7 (if any) have been prepared in accordance
           with UK GAAP which have been consistently applied and give a true and
           fair view of the financial position of the Borrower as at the date to
           which they were prepared and the results of the operations of the
           Borrower for the financial year ended on such date;

12.1.6     there has been no material adverse change in the financial position
           of the Borrower from that set forth in its most recent financial
           statements (if any) provided pursuant to clause 13.7;

12.1.7     no event or circumstance which constitutes or which with the giving
           of notice or lapse of time or both would constitute an Event of
           Default has occurred and is continuing; and

12.1.8     the Borrower has not sold, transferred, lent or otherwise disposed of
           or ceased to exercise direct control over all or any part of its
           present or future undertaking, assets, rights or resources or agreed
           to do so (other than by way of a Permitted Disposal).

<PAGE>

13     Covenants

       It is a term of the Facilities that at all times during their continuance
       and until repayment of all Advances and the Overdraft and the discharge
       of all Undertakings and payment of all other moneys payable (whether
       actually or contingently) hereunder that the Borrower will:

13.1   not, without the Bank's prior written consent, create or allow to exist
       any Encumbrance (save for a Permitted Encumbrance) over any of its
       present or future assets, rights or revenues to secure obligations of
       itself or of any other person;

13.2   not, without the Bank's prior written consent, sell, transfer, lend,
       lease or otherwise dispose of or cease to exercise direct control over
       all or any part of its present or future undertaking, assets, rights or
       revenues (other than by way of a Permitted Disposal) whether by one or a
       series of transactions related or not other than by way of a Permitted
       Disposal;

13.3   not permit any of the Borrower's liabilities to have the benefit of any
       guarantee, indemnity, bond or comfort letter unless the party giving the
       same similarly guarantees the outstanding Advances and all other moneys
       payable hereunder;

13.4   not make any  material  change  in the  nature  of the  Borrower's
       business,  as  carried  on at the date of this agreement;

13.5   obtain, maintain in full force and effect and comply in all material
       respects with any conditions imposed in connection with, every
       authorisation of governmental or public bodies or courts and do, or cause
       to be done, all other acts and things, which may from time to time be
       necessary under applicable law for the continued due performance of its
       obligations under this agreement;

13.6   inform the Bank of any Event of Default or any event which with the
       giving of notice or lapse of time or both would constitute an Event of
       Default forthwith upon becoming aware thereof;

13.7   send to the Bank:

13.7.1 within 110 days of each fiscal year end, a copy of the Borrower's annual
       audited financial statements;

13.7.2     within 30 days of the end of each calendar month, monthly management
           accounts with such other information, certificates and forecasts as
           the Bank may from time to time reasonably require;

13.7.3 within 30 days of the end of each calendar month, a statement of aged
       accounts receivable; and

13.7.4     all other financial and other information concerning the Borrower and
           its business affairs as the Bank may from time to time reasonably
           require upon reasonable notice;

13.8   not, without the prior written consent of the Bank, incur or permit to
       exist on its behalf any obligations in respect of Indebtedness to any
       person other than Permitted Indebtedness;

<PAGE>

13.9   not acquire or merge with any company;

13.10  file or cause to be filed all tax returns required to be filed in all
       jurisdictions in which it is situated or carries on business or is
       otherwise subject to taxation and pay all taxes shown to be due and
       payable on such returns or any assessments made against it prior to
       penalties being incurred unless the liability to pay such taxes is the
       subject of a bona fide dispute and it is maintaining adequate reserves in
       respect of such liability;

13.11  obtain or cause to be obtained, maintain in full force and effect and
       comply in all material respects with the conditions and restrictions (if
       any) imposed in, or in connection with, every authorisation material to
       the carrying on of its business;

13.12  ensure that its obligations under this agreement and the Debenture shall
       at all times rank at least pari passu with all its other present and
       future unsecured and unsubordinated Indebtedness with the exception of
       any obligations which are mandatorily preferred by law and not by
       contract;

13.13  ensure that the levels of contribution to the pension schemes for the
       time being operated by it are and continue to be sufficient to comply
       with applicable law;

13.14  maintain and keep up to date adequate insurance over all its present and
       future assets, including its employees, in form and substance
       satisfactory to the Bank;

13.15  not change the nature of its business as conducted on the date of this
       agreement; and

13.16  ensure that, by no later than the date falling 6 months after the date of
       this agreement, all primary clearing, depository and other banking
       facilities required by the Borrower are maintained with the Bank.

14     Events of Default

       Without prejudice to the on demand nature of the Overdraft and without
       prejudice to the Bank's other rights, the Bank may terminate the Bank's
       obligation to make the Facilities available and demand immediate
       repayment of all outstanding Advances together with all accrued interest
       thereon and payment of cash cover equal to the Guaranteed Amount and of
       all other moneys payable to the Bank under this agreement or otherwise at
       any time after any of the following events shall have occurred:

14.1.1     the Borrower fails to pay any sum payable by it under this agreement
           in the currency, at the time and in the manner specified in this
           agreement (or within 3 Banking Days thereafter where the failure to
           pay is due solely to an administrative or systems error arising in
           the transmission of funds); or

<PAGE>

14.1.2     the Borrower defaults in the due performance or observance of any
           other of its obligations under this agreement or the Parent default
           in the due performance or observance of any of its obligations under
           the Parent Guarantee and (if such default is in the opinion of the
           Bank capable of remedy) such default shall not have been remedied
           within 10 days of the Bank notifying the Borrower or the Parent, as
           the case may be of such default; or

14.1.3     any representation or warranty made or deemed to be made or repeated
           by the Borrower in or pursuant to this agreement or by the Parent in
           or pursuant to the Parent Guarantee is or proves to have been
           incorrect in any material respect; or

14.1.4     any obligation (including a contingent obligation) of the Borrower in
           respect of Indebtedness is not paid when due or becomes due or
           capable of being declared due prior to its stated maturity by reason
           of default; or

14.1.5     any judgment or order of a court of competent jurisdiction made
           against the Borrower which, if taken together with the amount of all
           other outstanding judgments or orders against the Borrower at such
           time, is in the aggregate sum of the Sterling Equivalent of $100,000,
           is not stayed or complied with within 7 days or an encumbrancer takes
           possession of the whole or any part of the assets, rights or revenues
           of the Borrower, or

14.1.6     a distress or other legal process is levied or enforced upon any of
           the assets, rights or revenues of the Borrower and is not discharged
           within 7 days; or

14.1.7     the Borrower stops or suspends payment of its debts or is, or is
           deemed to be, unable to, or admits inability to, pay its debts as
           they fall due or commences negotiations with one or more of its
           creditors with a view to the general rescheduling of all or any of
           its debts or proposes or enters into any composition or other
           arrangement for the benefit of its creditors generally or any class
           thereof; or

14.1.8     the Borrower is adjudicated or found bankrupt or insolvent or any
           step is taken or proceedings are commenced for the winding-up,
           administration or dissolution of the Borrower or for the appointment
           of a liquidator, administrator, receiver or similar officer in
           respect of the Borrower or of the whole or any part of its assets,
           rights or revenues (and, in the case of a petition for winding-up of
           the Borrower, such petition is not discharged within 7 days from its
           presentation); or

14.1.9     any event occurs or proceeding is taken with respect to the Borrower
           in any jurisdiction to which it is subject which has an effect
           equivalent or similar to any of the events mentioned in clauses
           14.1.5, 14.1.7 or 14.1.8; or

14.1.10    it becomes unlawful for the Borrower to perform all or any of its
           obligations under this agreement or the Debenture or for the Parent
           to perform any of its obligations under the Parent Guarantee; or

<PAGE>

14.1.11       the Borrower ceases to be a subsidiary of the Parent; or

14.1.12       the Debenture ceases for any reason to be the valid and legally
              binding obligations of the Borrower; or

14.1.13       the Parent Guarantee  ceases for any reason to be the valid and
              legally binding  obligations of the Parent; or

14.1.14    any of the Credit  Documents  ceases for any reason to be the
           valid and legally  binding  obligation of the
           Borrower or the Parent; or

14.1.15    a Default (as such term is defined in any Credit Document) occurs
           under any of the Credit Documents or, if any Credit Document has been
           terminated, an event occurs which, but for such termination, would
           have been such a Default; or

14.1.16    any of the events mentioned in clauses 14.1.1 and 14.1.4 to 14.1.9
           occurs in relation to the Parent; or 14.1.17 any other event occurs
           or circumstance arises which, in the reasonable opinion of the Bank,
           is likely materially and adversely to affect the ability of the
           Borrower or the Parent to perform all or any of their respective
           obligations under or otherwise to comply with the terms of this
           agreement or the Debenture (in the case of the Borrower) or the
           Parent Guarantee (in the case of the Parent).

15     Set-off

       The Bank may apply any credit balance to which the Borrower is entitled
       on any of the Borrower's accounts with the Bank at any of the Bank's
       branches in or towards satisfaction or any sum then due and payable by
       the Borrower hereunder. For this purpose, the Bank is authorised to
       purchase with the moneys standing to the credit of such account such
       other currencies as may be necessary to effect such application.

16     Indemnity

16.1   The  Borrower  shall  indemnify  the Bank on demand  against  any loss or
       expense  which the Bank shall incur as a consequence of the occurrence of
       any Event of Default.

16.2   No payment to the Bank under this agreement pursuant to any judgment or
       order of any court or otherwise shall operate to discharge the obligation
       of the Borrower in respect of which it was made unless and until payment
       in full shall have been received in the currency in which it is payable
       and to the extent that the amount of any such payment shall on actual
       conversion into the currency in which it is payable fall short of the
       amount of the obligation expressed in the currency in which it is payable
       the Bank shall have a further and separate cause of action against the
       Borrower for the recovery of such sum as shall after conversion into the
       currency in which it is payable be equal to the amount of the shortfall.

<PAGE>

17     Illegality and increased costs

17.1   If at any time it is unlawful or contrary to any regulation for the Bank
       to make, fund or allow to remain outstanding any Advances or Undertakings
       under this agreement then the Bank's obligation to make the Facilities
       available shall cease and, if the Bank so requires, the Borrower shall
       forthwith repay all amounts outstanding under this agreement together
       with accrued interest thereon and all other moneys owing hereunder and
       pay to the Bank an amount equal to the face amount of each Undertaking.

17.2   If the result of (i) any change in, or in the interpretation or
       application of any law or regulation or (ii) the introduction of any law
       or regulation (in each case which occurs after the date of this
       agreement) is to:

17.2.1     subject the Bank to Taxes or change the basis of Taxation with
           respect to any payment under this agreement (other than Taxes or
           Taxation on the overall net income, profits or gains of the Bank
           imposed in the jurisdiction in which its principal or lending office
           under this agreement is located); and/or

17.2.2     increase the cost to, or impose an additional cost on, the Bank in
           making the Facilities available or maintaining or funding any
           Advances or the Overdraft or providing any Undertaking; and/or

17.2.3     reduce the amount payable or the effective return to the Bank under
           this agreement; and/or

17.2.4     reduce the Bank's rate of return on its capital by reason of a change
           in the manner in which it is required to allocate capital resources
           to its obligations under this agreement; and/or

17.2.5     require the Bank to make a payment or forgo a return on or calculated
           by reference to any amount received or receivable by it under this
           agreement,

         then and in each such case (unless the increased cost or reduction in
         return would not have arisen but for any assignment by the Bank to a
         Transferee under clause 19.1 or the movement by the Bank of its
         facility office):

(i)             the Bank shall notify the Borrower in writing of such event
                promptly upon its becoming aware of the same; and

(ii)            the Borrower shall on demand, made at any time whether or not
                the amounts outstanding under this agreement have been repaid,
                pay to the Bank the amount which the Bank specifies (in a
                certificate setting forth the basis of the computation of such
                amount but not including any matters which the Bank regards as
                confidential in relation to its funding arrangements) is
                required to compensate the Bank for such increased cost,
                reduction, payment or foregone return.

17.3   In the event that the Borrower is obliged to repay any amounts
       outstanding under this agreement under clause 17.2, the Borrower may
       within sixty days from the date of the demand referred to in clause
       17.2.5(ii) prepay the Facilities in full, together with all other amounts
       then payable under this agreement.
<PAGE>

18     Taxes

18.1   If at any time the Borrower is required to make any deduction or
       withholding in respect of Taxes from any payment due under this agreement
       for the account of the Bank, the sum due from the Borrower in respect of
       such payment shall be increased to the extent necessary to ensure that,
       after the making of such deduction or withholding, the Bank receives on
       the due date for such payment (and retains, free from any liability in
       respect of such deduction or withholding) a net sum equal to the sum
       which it would have received had no such deduction or withholding been
       required to be made. The Borrower shall promptly upon request deliver to
       the Bank any receipts, certificates or other proof evidencing the amounts
       (if any) paid or payable in respect of any such deduction or withholding.

18.2   If following any such deduction or withholding as is referred to in
       clause 18.1 the Bank shall receive or be granted a credit against or
       remission for any Taxes payable by it, the Bank shall, subject to the
       Borrower having made any increased payment in accordance with clause 18.1
       and to the extent that the Bank can do so without prejudicing the
       retention of the amount of such credit or remission and without prejudice
       to the right of the Bank to obtain any other relief or allowance which
       may be available to it, reimburse the Borrower with such amount as the
       Bank shall in its absolute discretion certify to be the proportion of
       such credit or remission as will leave the Bank (after such
       reimbursement) in no worse position than it would have been in had there
       been no such deduction or withholding from the payment by the Borrower as
       aforesaid. Such reimbursement shall be made forthwith upon the Bank
       certifying that the amount of such credit or remission has been received
       by it. Nothing contained in this agreement shall oblige the Bank to
       rearrange its tax affairs or to disclose any information regarding its
       tax affairs and computations. Without prejudice to the generality of the
       foregoing, the Borrower shall not by virtue of this clause 18.2, be
       entitled to enquire about the Bank's tax affairs.

18.3   The Bank hereby confirms to the Borrower that, on the date of this
       agreement, it is a Qualifying Bank.

18.4   The Bank shall, upon becoming aware in the context of this agreement that
       it has ceased to be a Qualifying  Bank, promptly notify the Borrower.

19     Assignment

19.1   This agreement shall be binding upon, and enure for the benefit of, the
       Bank and the Borrower and their respective successors. The Borrower may
       not assign or transfer any of its rights or obligations under this
       agreement. The Bank may, without the consent of the Borrower, assign or
       transfer all or any part of its rights or transfer all or any part of its
       obligations under this agreement to any one or more purchasers whether or
       not they are related to the Bank (a "Transferee") unless such Transferee
       is not a Qualifying Bank in which event the Borrower's prior written
       consent to such assignment or transfer shall be required. If the Bank
       transfers all or any part of its rights or transfers all or any part of
       its obligations as provided in this clause 19.1 all relevant references
       in this agreement to the Bank shall thereafter be construed as a
       reference to the Bank and/or its assignee(s) or transferee(s) (as the
       case may be) to the extent of their respective interests and, in the case
       of a transfer, the Borrower shall look solely to the Transferee for the
       performance of the obligations so transferred to it.
<PAGE>

19.2   The Bank may disclose to a potential assignee or transferee or to any
       other person who is proposing to enter into contractual relations with
       the Bank in relation to this agreement such information about the
       Borrower as the Bank shall consider appropriate provided that any such
       potential assignee or transferee or other person has first agreed to keep
       that information confidential.

20     Notices

20.1   Every notice, request, demand or other communication under this agreement
       shall:

20.1.1 be in writing delivered personally or by first-class prepaid letter or
       telefax;

20.1.2     be deemed to have been received, subject as otherwise provided in
           this agreement, in the case of a letter, when delivered and, in the
           case of a telefax, when a complete and legible copy is received by
           the addressee (unless the time of despatch of any telefax is after
           close of business in which case it shall be deemed to have been
           received at the opening of business on the next business day); and

20.1.3 be sent:

(a) to the Borrower at:

                Hurco Europe Limited
                Halifax Road
                Cressex Business Park
                High Wycombe
                Buckinghamshire, Hp12 3SN

                Telefax: +44 (0) 1494 443350
                Attention: David Waghorn, Managing Director;
                           Ray Axon, Financial Controller and Company Secretary;

                with a copy to:

                Hurco Companies, Inc
                One Technology Way
                Indianapolis
                IN 46268-0180

                Telefax:   00 1 317 347 6201
                Attention: Mr Roger J. Wolf, Senior Vice President &
                           Chief Financial Officer


<PAGE>
(b) to the Bank at:

                Bank One, NA
                1 Triton Square
                London NW1 3FN
                Telefax:   020 7903 4889
                Attention: Mark Herridge, Associate Director;
                           Paul Hogan, Associate;

                with a copy to

                Bank One, NA
                111 Monument Circle
                Indianapolis
                IN 46277-0104
                Telefax:   00 1 317 321 6771
                Attention: Brian D Smith, First Vice President.

           or to such other address or telefax number as is notified by the
           relevant party to the other party to this agreement.

21     Law and jurisdiction

21.1   This agreement shall be governed by and construed in accordance with
       English law.

21.2   The parties to this agreement agree for the benefit of the Bank that:

21.2.1     if any party has any claim against any other arising out of or in
           connection with this agreement such claim shall be referred to the
           High Court of Justice in England, to the jurisdiction of which each
           of the parties irrevocably submits; and

21.2.2     nothing in this clause 21.2 shall limit the right of the Bank to
           refer any such claim against the Borrower to any other court of
           competent jurisdiction outside England, to the jurisdiction of which
           the Borrower hereby irrevocably agrees to submit, nor shall the
           taking of proceedings by the Bank before the courts in one or more
           jurisdictions preclude the taking of proceedings in any other
           jurisdiction whether concurrently or not.

21.3   No term of this  agreement is enforceable  under the Contracts
       (Rights of Third Parties) Act 1999 by a person who is not party to this
       agreement

We enclose a copy of this letter which we request the Borrower to sign and
return to us signifying the Borrower's acceptance of the Facilities and the
Borrower's agreement with all the above terms and conditions. If we do not
receive such signed copy by 5.30 p.m. on 31 January 2004 the offer of the
Facilities contained in this letter shall thereupon be deemed automatically to
be withdrawn.

Yours faithfully

/s/ Mark Herridge
...........................................................
For and on behalf of
Bank One, NA
<PAGE>


To:      Bank One, NA
         1 Triton Square
         London   NW1 3FN



                                                             January 15, 2004
Dear Sirs

(pound)700,000 Revolving Credit Facility and (pound)300,000 Overdraft Facility

We are pleased to confirm our acceptance of the Facilities which you have placed
at our disposal on the terms and conditions set out in your letter of 15 January
2004 of which the above is a copy.



/s/ Roger J. Wolf
...........................................................
For and on behalf of
Hurco Europe Limited

<PAGE>


                                   Appendix 1

                       Form of Borrowing Base Certificate

To:    the Bank

From:  the Borrower

                      (pound)700,000 Revolving Credit Facility and
                       (pound)300,000 Overdraft Facility Agreement
                              dated [o]January 2004
                                (the "Agreement")

We hereby certify that as at [specify relevant month end] the amount of Eligible
Trade Debts, Eligible Finished Goods Inventory, Eligible Unfinished Goods
Inventory and the Borrowing Base were:

1      Eligible Trade Debts

(a) total Eligible Trade Debts (pound)[o]

(b)    80 per cent of total Eligible Trade Debts

2      Eligible Finished Goods Inventory

(a) total Eligible Finished Goods Inventory (pound)[o]

(b)    50 per cent of total Eligible Finished Goods Inventory

3      Eligible Unfinished Goods Inventory

(a) total Eligible Unfinished Goods Inventory (pound)[o]

(b)    40 per cent of total Eligible Unfinished Goods Inventory

4      Borrowing Base

       Borrowing Base

       (being the aggregate of:

(a) the amount set out in 1(b);

(b) the amount set out in 2(b); and

(c) the amount set out in 3(b)).

We confirm that:

1      no event or circumstance has occurred and is continuing which constitutes
       an Event of  Default;

2      the representations and warranties contained in clause 12 of the
       Agreement are true and correct at the date of this certificate as if made
       with respect to the facts and circumstances existing at the date of this
       certificate.



<PAGE>


Words and expressions defined in the Agreement shall have the same meaning where
used in the certificate.

.......................................................
For and on behalf of
Hurco Europe Limited





<PAGE>

                                   Appendix 2

                      [DIRECTOR'S/SECRETARY'S] CERTIFICATE

I, Roger J. Wolf, being a Director of Hurco Europe Limited (the "Company"),
HEREBY CERTIFY on behalf of the Company and without personal liability as
follows:

1. Private company

The Company is a private limited company incorporated in England and Wales with
company number 0162880 and registered office at Halifax Road, Cressex Business
Park, High Wycombe, Buckinghamshire HP12 3SN.

2. Constitutional documents of the Company

The documents annexed to this certificate as annexure "A" constitute a true and
up to date copy of the certificate of incorporation, each certificate of
incorporation on change of name of the Company, the certificate of
re-registration as a public or private company and the memorandum and articles
of association of the Company containing all modifications thereto, and there
are no other constitutional documents of the Company.

3. Board resolutions of the Company

The documents annexed to this certificate as annexure "B" are true copies of the
minutes of a meeting of the board of directors of the Company duly convened and
held on [?] January 2004. The resolutions set out therein were duly passed and
have not been amended or revoked. No borrowing restrictions (or lack of power)
in relation to the giving of guarantees or security or otherwise of the Company
will be exceeded as a result of the Company entering into the [Documents] (as
defined in the minutes referred to above) (the "Documents"), borrowing moneys
thereunder or giving the guarantees or security thereunder or incurring or
performing the obligations expressed to be assumed by it thereunder.

4. Authorised signatories

 Set out below are true signatures of those persons authorised by the
resolutions of the board of directors of the Company referred to in paragraph 3
above to sign the Documents and to execute all such undertakings, statements,
certificates, notices (including, without limitation, any Borrowing Base
Certificate), acknowledgements and other documents as may be required to be
done, signed and executed by or on behalf of the Company in connection with the
Documents and otherwise in relation to or ancillary to the same.

       Roger J. Wolf, Director

       David G. Waghorn, Director

       Raymond Axon, Secretary



SIGNED [DATE]

.................................
Roger J. Wolf, Director


</TEXT>
</DOCUMENT>
