made as of November 16, 1995 by and among

Exhibit 2

STOCK PURCHASE AGREEMENT

made as of

November 16, 1995

by and among

▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇,

ERNST ▇▇▇▇▇▇ ▇▇▇▇▇,

▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇,

▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇,

▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇,

▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇,

▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇

(as "Sellers"), and

▇ . ▇▇▇▇▇▇▇▇▇▇▇▇ & CO. AG

(as "Corporation")

and

HARDINGE INC.

(as "Purchaser")

CONTENTS

1. Sale and Purchase.................................................... 5

1.1 Share Ownership...................................................... 5

1.2 Purchase Price....................................................... 5

1.3 Transferability of Shares............................................ 6

1.4 Certain Conditions to Closing........................................ 7

1.5 Certain Pre-Closing Covenants........................................ 8

(a) Certain Pre-Closing Covenants of the Corporation and the
Sellers........................................................... 8

(b) No Breach of Representations, Warranties or Covenants by
Sellers........................................................... 9

(d) Corporate Examinations and Investigations; Confidentiality........... 10

(e) Consents, Permits and Notices........................................ 11

(f) Restriction on Transfer.............................................. 12

1.6 Certain Pre-Closing Covenants of the Purchaser....................... 12

(a) No Changes or Breach of Representations, Warranties or
Covenants......................................................... 12

(b) Consents, Permits and Notices........................................ 12

1.7 Certain Conditions Precedent to Purchaser's Obligation............... 13

(a) Representations and Warranties True at Closing....................... 13

(b) Covenants and Agreements Satisfied at Closing........................ 13

(d) Opinion.............................................................. 14

(e) Governmental Permits, Lenders' Consents and Approvals................ 14

(f) Third-Party Consents................................................. 14

(g) Litigation........................................................... 15

(h) Absence of Adverse Changes........................................... 15

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(i) Certificates and Instruments of Transfer............................. 15

(j) Board of Directors of the Corporation................................ 15

(k) Employment Agreements................................................ 15

(l) ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇.................................................... 16

(m) Tax Matters.......................................................... 16

(n) Documents in Satisfactory Form....................................... 16

1.8 Certain Conditions Precedent to the Obligations of the
Sellers and the Corporation....................................... 16

(a) Representations and Warranties True at Closing....................... 16

(b) Covenants and Agreements Satisfied at Closing........................ 16

(d) Opinion.............................................................. 17

(e) Governmental Permits, Lenders' Consents and Approvals................ 17

(f) Third-Party Consents................................................. 17

(g) Litigation........................................................... 17

(h) Consideration for Shares............................................. 18

(i) Documents in Satisfactory Form....................................... 18

(j) Employment Agreements................................................ 18

2. Representations and Warranties of the Corporation and
Sellers........................................................... 18

3. Representations and Warranties of Purchaser.......................... 18

4. Indemnification and Limitations on Remedies.......................... 18

4.1 Obligations of Sellers to Indemnify and Limitations on
Remedies.......................................................... 19

4.2 Remedies for Breach of Warranties and Representations
Related to Accounts Receivable, Inventory and Taxes............... 20

(a) Accounts Receivable................................................... 20

(b) Inventory............................................................. 20

I. Physical Inventory.................................................... 20

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II. Inventory in General.................................................. 22

4.3 Survival of Representations and Warranties and Covenants and
Agreements; Inspection Period; Forfeiture of Claims............... 23

4.4 Notice of Third Party Claims.......................................... 24

4.5 Defense of Third Party Claims......................................... 24

5. Right of Withdrawal and Rescission.................................... 25

6. Miscellaneous......................................................... 27

(a) Use of Name........................................................... 27

(b) Seller's Confidentiality and Non-Competition Obligations.............. 28

(d) Further Assurances.................................................... 29

(e) Publicity............................................................. 29

(f) Notices............................................................... 29

(g) Joint and Several Liability........................................... 31

(h) Entire Agreement...................................................... 31

(i) Waivers and Amendments................................................ 31

(j) Governing Law; Arbitration............................................ 32

(k) Binding Effect; No Assignment......................................... 32

(l) Variations in Pronoun................................................. 33

(m) No Third Party Beneficiaries.......................................... 33

(n) Exhibits.............................................................. 33

(o) Cooperation and Best Efforts.......................................... 33

(p) Counterparts.......................................................... 33

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STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT, made as of the 16th day of November,
1995, by and among:

A. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, an individual residing at ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇,
▇▇-▇▇▇▇ ▇▇. ▇▇▇▇▇▇;

▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, an individual residing at ▇▇▇▇▇▇▇▇▇▇ ▇,
▇▇-▇▇▇▇ ▇▇▇▇▇▇▇;

C. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, an individual residing at ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇, ▇▇-▇▇▇▇ ▇▇▇▇▇▇;

D. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, an individual residing at
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ ▇▇, ▇▇-▇▇▇▇ ▇▇. ▇▇▇▇▇▇;

E. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, an individual residing at ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇, ▇▇-▇▇▇▇ ▇▇▇▇▇▇;

F. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, an individual residing at ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇,
▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇;

▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, an individual residing at ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇,
▇▇-▇▇▇▇ ▇▇. ▇▇▇▇▇▇;

(hereinafter collectively the "Sellers" and each a "Seller")

acting jointly and severally; and

▇. ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ & ▇▇. ▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ (hereinafter
the "Corporation");

and

I. HARDINGE INC., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, ▇.▇.▇.

(hereinafter the "Purchaser", provided however, Hardinge Inc. may prior
to the Closing Date designate an affiliate wholly owned by it in its
place, in which case, "Purchaser" shall mean said affiliate)

concerning 3000 registered shares of CHF 1'000 - nominal value of the
Corporation (the "Shares") ,

W I T N E S S E T H :

The Purchaser, the Corporation and each of the Sellers, which
Sellers' rights and obligations hereunder are joint and several, in
consideration of the mutual benefits to

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be derived herefrom and for other good and valuable consideration, the receipt
of which is hereby acknowledged, and each of Purchaser and Corporation
warranting and representing that the execution of this Agreement has been duly
authorized by their respective Board of Directors, and intending to be legally
bound hereby, do hereby agree as follows:

1. Sale and Purchase.

1.1 Share Ownership. Subject to the terms and conditions hereinafter
set forth, each Seller shall sell and deliver that number of registered Shares
set opposite Seller's name immediately below (collectively, the "Sellers'
Shares", in the aggregate constituting 100% of the issued and outstanding
Shares of ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ & Co. AG) to Purchaser and in consideration
therefor, Purchaser shall deliver to each of the Sellers in cash an amount
equal to the Purchase Price, as hereinafter defined, times the percentage set
forth opposite each respective Seller's name immediately below:

%
-----
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇

▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ 900 shares 30

▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ 300 shares 10

▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ 300 shares 10

▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ 350 shares 11 2/3

▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ 350 shares 11 2/3

▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ 350 shares 11 2/3

Total 3,000 shares 100 %

1.2 Purchase Price. The aggregate Purchase Price for the Sellers'
Shares shall be CHF 21'000'000 (the "Purchase Price"). The Purchase Price
shall be paid by the Purchaser as follows:

(a) CHF 100'000 heretofore paid upon the signing of the letter of
intent between the parties hereto dated September 24, 15, being forfeit
money in the sense of Art. 158 III of the Swiss Code of Obligations
("CO");

(b) CHF 2'100'000 on the Closing Date (as defined in Section 1.4)
into an interest-bearing account (the "Escrow

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Account") with an Agent (the "Escrow Agent") pursuant to an Escrow
Agreement between the Sellers, the Purchaser and the Escrow Agent
basically in accordance with Exhibit 1.2, which Escrow Account shall be
released in accordance with Section 4 of Exhibit 1.2;

(c) CHF 18'800'000 in exchange for the Sellers' Shares on the
Closing Date to an account to be designated by ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, as
representative of Sellers.

(d) Sellers agree to Corporation selling all the outstanding stock
of ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. to Hardinge Inc. prior to Closing of this present
agreement, for a consideration of US$ 1.--.

The Escrow Account shall, pursuant to said Escrow Agreement, secure
for a period of 18 months from the Closing Date for the benefit of Purchaser
the obligations of the Sellers subsequent to the Closing Date pursuant to the
provisions of Section 4 hereof.

1.3 Transferability of Shares. Each Seller hereby represents and
warrants to Purchaser: Such Seller at the time of Closing shall be the legal,
record and beneficial owner of, and have, and the Purchaser shall receive good
and marketable title to such Seller's Shares free and clear of any lien or
option of any nature or any other restrictions whatsoever and howsoever
arising and such Seller shall have the full power and right and legal capacity
to transfer said Shares as contemplated herein and consummate this Agreement;
there is no suit, action, administrative proceeding, arbitration or other
proceeding or governmental investigation pending or initiated or threatened
against or affecting such Seller that could have an adverse effect on such
Seller's ability to consummate the transactions contemplated by this
Agreement, or on the validity and enforceability of this Agreement and related
documents in accordance with their terms against such Seller or the
Corporation, as the case may be; the execution, delivery and performance of
this Agreement and related documents by such Seller does not violate any law,
agreement or understanding to

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which such Seller is party or by which such Seller's Shares are bound or
affected; except for ▇▇▇ ▇▇▇▇▇▇▇▇▇ (as defined in Section 1.7(g) hereto),
there are no permits, consents, approvals, notices, filings or registrations
required to be obtained, given or made by any Seller to consummate the
transactions contemplated herein.

1.4 Certain Conditions to Closing. Upon (a) a negative clearance or
a final and enforceable decision of the Bezirksamt St. Gallen, 9001 St.
Gallen, permitting the consummation of the transaction under the Federal Law
on Restriction for the acquisition of Real Estate by foreigners ("▇▇▇
▇▇▇▇▇▇▇▇▇"), (b) Purchaser's having completed to its satisfaction its
examinations and investigations as described in Section 1.5(d) hereof and
having received satisfactory (as determined solely by Purchaser) resolution or
answers to the issues or questions resulting from such examinations and
investigations and (c) Purchaser's not having terminated this Agreement in
accordance with Sections 1.2 or 5 hereof, the Purchaser shall forthwith give
notice to Sellers of the date upon which the Closing shall occur, which date
shall not be more than 15 business days from the date of said notice. At the
Closing, the Sellers shall furnish to the Purchaser the stock certificates
evidencing the Sellers' Shares duly executed in blank together with all other
documents required to be delivered on or prior to Closing under Section 1.7
and all other applicable provisions of this Agreement.

Upon receipt of each of the aforesaid documents and certificates
(not thereafter withdrawn), the remaining portion of the Purchase Price shall
be promptly transferred to the account to be designated by ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇.
"Closing" and "Closing Date" as used in this Agreement shall mean the date
upon which said certificates and said Purchase Price are transferred as
aforesaid.

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1.5 Certain Pre-Closing Covenants.

(a) Certain Pre-Closing Covenants of the Corporation and the Sellers.

No Changes or Breach of Representations, Warranties or
Covenants. From the date hereof to the date of Closing hereunder, except
as otherwise consented to in advance by Purchaser in writing, Corporation
will, and will cause its subsidiary, ▇▇▇▇▇▇▇▇▇▇▇▇ Incorporated, to:

(i) carry on its business in the usual, regular and ordinary
course in substantially the same manner as heretofore and, to the
extent consistent with such business, use all reasonable efforts to
preserve intact its present business organization;

(ii) comply in all respects with all applicable requirements of
law;

(iii) not amend its charter documents, in particular

- not enter into any transaction of merger or consolidation or
sale of assets or adopt a plan of liquidation or resolutions
providing for its liquidation, dissolution or other reorganization
or enter into any agreement or arrangement with respect thereto or
inconsistent with this Agreement;

- not issue or sell any shares of its capital stock of any class
or issue, sell or exercise any options, warrants, conversion or
other rights to purchase any such shares or any securities
convertible into or exchangeable for such shares or enter into any
agreement to do the same;

- not split, combine or reclassify any of its capital stock;

(iv) not declare or set aside or pay any dividends;

(v) not directly or indirectly redeem, purchase or otherwise
acquire any of its shares of capital stock;

-9-

(vi) not make or obligate itself to make capital expenditures,
i.e., investments in real or personal property having a useful life
of more than one year, aggregating more than CHF 25'000, or in any
event outside the ordinary course of business consistent with past
practice;

(vii) not organize, incorporate or otherwise acquire any
subsidiary;

(viii) not enter into an agreement to any of the foregoing; or

(ix) not take or omit to take any action, or suffer any action
or event without prompt remedy thereof, which would cause the
representations and warranties of the Corporation under this
Agreement to be false or breached, or which would cause the
Corporation to be in violation or breach of its covenants and
agreements under this Agreement or which could adversely affect the
ability of the Corporation to perform its obligations hereunder.

(b) No Breach of Representations, Warranties or Covenants by
Sellers. From the date hereof to the date of Closing hereunder, except as
otherwise consented to in advance by Purchaser in writing, no Seller will take
or omit to take any action, or suffer any action or event without prompt
remedy thereof, which could result in the representations and warranties of
such Seller under this Agreement to be false or breached, or which would or
reasonably could result in such Seller to be in violation or breach of his
covenants and agreements under this Agreement or which could adversely affect
the ability of such Seller to perform such Seller's obligations hereunder.

(c) No Sale to Other Parties. The Sellers guarantee within the
meaning of Art. 111 of the CO that each Seller will, and will cause such
Seller's Affiliates, including without limitation the Corporation and
▇▇▇▇▇▇▇▇▇▇▇▇ Incorporated, and Affiliates of each to, and the Corporation
will, and will cause

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▇▇▇▇▇▇▇▇▇▇▇▇ Incorporated and each of its other Affiliates, to
do the following:

(1) refrain from advertising for or otherwise soliciting or
negotiating or discussing in any manner, directly or indirectly, any
direct or indirect combination of the Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇
Incorporated with or into, or sale or other disposition of any capital
stock of the Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Incorporated or any material
portion of its assets to, any other person(s) or furnish any information
to any person proposing any such transaction or enter into negotiations
or agreements with respect to any such transaction, and shall not take
any action which could cause Corporation to violate (a) above; and

(2) refrain from advertising for or otherwise soliciting, directly
or indirectly, any sale of or option in respect of the Sellers' Shares or
any of them to any other person(s) or furnish any information to any
person in respect of any such transaction or enter into negotiations or
agreements with respect to any such transaction.

For purposes of this Agreement, an "Affiliate" of any person or entity
shall include any other person, associate, employee, partnership,
corporation, association, joint stock company, trust, joint venture or
any other unincorporated entity or organization, controlling, controlled
by or under common control with such person or entity including without
limitation, in the case of an individual, such person's family members
and, in the case of a corporation, such corporation's shareholders,
directors and officers.

(d) Corporate Examinations and Investigations; Confidentiality.
Purchaser commenced its due diligence on or about October 1, 1995 and
Corporation has cooperated therein as of the day of execution thereof. Prior
to the Closing Date, Purchaser shall be entitled, through its employees and

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representatives, to make such investigation of the assets, liabilities,
shareholders' equity, properties, business and operations of the Corporation,
including an environmental survey to be conducted by a specialized engineering
firm, and such examination of the books, records and financial condition of
the Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Incorporated as Purchaser wishes. No
investigation by Purchaser shall diminish or obviate any of the
representations, warranties, covenants or agreements of the Corporation or
Sellers under this Agreement or any other document, or the Purchaser's right
to rely thereon; and Purchaser has relied thereon. In the event of the failure
of the Closing to take place or other termination of this Agreement, except
for use in any action concerning any dispute between the parties hereto or to
the extent otherwise required by law (in which event the Purchaser shall give
the Corporation and the Sellers prior notice of the same), Purchaser shall
keep confidential any material information obtained from the Corporation or
Sellers concerning Corporation's properties, operations and business
identified by the Corporation to Purchaser as being material and confidential
(unless readily ascertainable from public or published information or trade
sources or unless already in the possession of Purchaser) until the same
ceases to be material or confidential or becomes so ascertainable and shall
return to the Corporation all copies of any schedules, statements, documents
or other written information obtained in connection herewith.

(e) Consents, Permits and Notices. Commencing promptly after the
date hereof, Corporation and each Seller shall, and shall cause ▇▇▇▇▇▇▇▇▇▇▇▇
Incorporated to, use its best efforts to give all notices and reports to, make
all filings and registrations with, and obtain all consents, waivers,
approvals and authorizations and all permits amongst themselves and from third
parties which may be necessary for it to effectuate this Agreement and for it
to consummate the transactions contemplated herein in accordance with the
terms

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hereof. The Corporation and each Seller shall promptly advise the Purchaser of
any difficulties encountered by it in obtaining any such consents, waivers,
approvals and authorizations or permits and in making any such notices,
reports, filings and registrations.

(f) Restriction on Transfer. From the date hereof through the date
of Closing hereunder, each Seller shall not, without the prior written consent
of the Purchaser, sell, assign, pledge, donate, transfer, grant options in
respect of or otherwise dispose of such Seller's Shares or permit the Sellers'
Shares to be sold, assigned, pledged, donated, transferred, subjected to
option or otherwise disposed of or converted or entered into any agreement
with respect to any of the foregoing.

1.6 Certain Pre-Closing Covenants of the Purchaser.

(a) No Changes or Breach of Representations, Warranties or
Covenants. From the date hereof to the Closing hereunder, except as otherwise
consented to in advance by Sellers and the Corporation in writing, the
Purchaser will not take or omit to take any action, or suffer any action or
event without prompt remedy thereof, which could cause the representations and
warranties of the Purchaser under this Agreement or related documents to be
false or breached, or which could cause the Purchaser to be in violation or
breach of its covenants and agreements under this Agreement or which could
adversely affect the ability of Purchaser to perform its obligations
hereunder.

(b) Consents, Permits and Notices. Promptly after the date hereof,
the Purchaser shall use its best efforts to do the following:

(1) obtain all consents, waivers, approvals and authorizations and
all permits which may be necessary for it to effectuate this Agreement
and for it to consummate the transactions in accordance with the terms
hereof and thereof; and

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(2) give all notices and reports to, and make all filings and
registrations with, other persons as are required to be given by it in
contemplation and as a result of the execution, delivery and performance
of the Agreement.

The Purchaser shall promptly advise the Sellers and the Corporation
of any difficulties encountered by the Purchaser in obtaining any such
consents or permits and in making any such notices, reports, filings and
registrations.

(c) Employment Agreements. Purchaser shall execute, effective as of
the Closing Date, the employment agreement with ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ attached
hereto as Exhibit 2.21A and in addition on the condition that each of the
following named employees execute non-competition agreements relating to
employment with competition of Corporation on the same terms and conditions as
described in Section 6 of Exhibit 2.21A (except that the period of
noncompetition shall be 1 year), agrees to offer continuation of employment
effective on the Closing Date with Corporation employment to Messrs.
Allenspach, Kramer, ▇▇▇▇▇▇▇ and Spoerli on the same terms and conditions as in
effect on the date hereof (as set forth in Exhibit 2.21), except the
termination notice period shall be six months and the earliest date of giving
of termination notice shall be December 31, 1996.

1.7 Certain Conditions Precedent to Purchaser's Obligation. The
obligation of Purchaser to close and purchase the Sellers' Shares is subject
to satisfaction on or prior to the Closing Date of each of the following
conditions precedent:

(a) Representations and Warranties True at Closing. The
representations and warranties of the Corporation and of the Sellers set forth
in this Agreement shall be true and correct as of the Closing Date as if made
on the Closing Date.

(b) Covenants and Agreements Satisfied at Closing. Each and all of
the covenants, agreements and conditions to be performed and satisfied by the
Corporation or by the Sellers

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under this Agreement at or prior to the Closing have been duly performed and
satisfied.

(c) Closing Certificates. Each Seller and the Corporation shall have
delivered to the Purchaser at the Closing a certificate, in the case of the
Corporation, executed by its President and Chief Financial Officer and dated
as of the Closing Date, to the effect that their respective representations
and warranties set forth in this Agreement are true and correct as of the
Closing Date as if made on the Closing Date and that each and all of the
covenants, agreements and conditions to be performed and satisfied by each of
them under this Agreement at or prior to the Closing have been duly performed
and satisfied.

(d) Opinion. Purchaser shall have received an opinion from
Thouvenin, Stutzer, Eggimann, counsel to the Corporation and to the Sellers,
dated the Closing Date, in the form of Exhibit 1.7 hereto.

(e) Governmental Permits, Lenders' Consents and Approvals. All
permits, consents and approvals required to be obtained by Corporation, all
lender consents required for the execution, delivery and performance of this
Agreement and related documents, and all notices, filings and registrations
required to be made or given by Corporation pursuant to this Agreement shall
have been obtained or given in writing and copies thereof delivered to the
Purchaser, including without limitation a negative clearance or a final and
enforceable decision of the Bezirksamt St. Gallen, 9001 St. Gallen, permitting
the consummation of the transaction under the Federal Law on Restriction for
the acquisition of Real Estate by foreigners ("▇▇▇ ▇▇▇▇▇▇▇▇▇"), and the
Purchaser shall have received all required approvals from the Switzerland
government to complete the purchase and sale herein contemplated.

(f) Third-Party Consents. All consents, waivers, approvals and
authorizations from other persons required to be obtained pursuant to this
Agreement, or for the lawful execution, delivery and performance of this
Agreement and the

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consummation of the transactions by the Corporation or any Seller shall have
been obtained by it.

(g) Litigation. Except as set forth on Exhibit 2.8 hereto, there
shall be no suit, action, administrative proceeding, arbitration or other
proceeding or governmental investigation pending or initiated or threatened
against or affecting the Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Incorporated or any
Seller that could have an adverse effect on the business, condition (financial
or otherwise), results of operations, assets, properties or prospects of
Corporation, the consummation of the transactions contemplated hereunder, or
the validity and enforceability of the Agreement and related documents in
accordance with their terms against the Corporation or any Seller.

(h) Absence of Adverse Changes. None of the events listed in Section
5 (a) shall have occurred.

(i) Certificates and Instruments of Transfer. The Sellers shall have
delivered to the Purchaser stock certificates evidencing the Shares duly
executed in blank.

(j) Board of Directors of the Corporation. The members of the Board
of Directors of the Corporation, and the size of the Board of Directors of the
Corporation, shall be as set forth on Exhibit 2.16 as of the Closing. At or
prior to the Closing, there shall be delivered to the Purchaser letters of
resignation effective upon the Closing of all members of the Corporation's
Board of Directors except for ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, it being understood by
Corporation and Sellers that the Purchaser shall, effective as of the Closing,
elect four (4) additional members to the Board of Directors.

(k) Employment Agreements. Corporation has delivered to Purchaser an
employment agreement attached hereto as Exhibit 2.21A duly executed by ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ and in addition Hardinge Inc. and ▇▇. ▇▇▇ ▇▇▇▇▇ have entered into
an Employment Agreement satisfactory to each of them. By execution hereof ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ agrees to execute said agreement prior to the Closing Date.

-16-

(l) ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇. Corporation has paid ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ the
sum of CHF 150'000.-- and received in consideration therefor releases to
Corporation from any and all further liability for retirement payments.

(m) Tax Matters. Corporation has received from the St. Gallen taxing
authorities a ruling or pre-advice relating to the inventory valuation
satisfactory to Purchaser in its sole and absolute discretion.

The acceptance of the ruling or preadvice does in no way affect the
validity of the representation of Sellers relating to taxes and the remedies
under Section 4.

(n) Documents in Satisfactory Form. All actions and proceedings
hereunder and all documents and other papers required to be executed and/or
delivered by the Sellers or the Corporation under this Agreement or in
connection with the consummation of the transactions and all other related
matters shall be in accordance with the terms and conditions of this Agreement
to the reasonable satisfaction of counsel to the Purchaser.

If any of the foregoing conditions precedent to Purchaser's
obligation to close are not completely satisfied on or prior to the Closing
Date, the Purchaser shall unilaterally be entitled to withdraw from and
rescind this Agreement without incurring any liability therefor.

1.8 Certain Conditions Precedent to the Obligations of the Sellers
and the Corporation. The obligations of the Sellers and the Corporation to
close and sell the Shares is subject to satisfaction on or prior to the
Closing Date of each of the following conditions precedent:

(a) Representations and Warranties True at Closing. The
representations and warranties of the Purchaser set forth in this Agreement
shall be true and correct as of the Closing Date as if made on the Closing
Date.

(b) Covenants and Agreements Satisfied at Closing. Each and all of
the covenants, agreements and conditions to be performed and satisfied by the
Purchaser under this Agreement

-17-

at or prior to the Closing shall have been duly performed and satisfied.

(c) Closing Certificate. The Purchaser shall have delivered to the
Sellers and to the Corporation at the Closing a certificate executed by Mr. J.
▇▇▇▇▇ ▇▇▇▇, Senior Vice President and Chief Operating Officer, and dated as of
the Closing Date, to the effect that the representations and warranties of the
Purchaser set forth in this Agreement and related documents are true and
correct as of the Closing Date as if made on the Closing Date and that each
and all of the covenants, agreements and conditions to be performed and
satisfied by the Purchaser under this Agreement at or prior to the Closing
have been duly performed and satisfied.

(d) Opinion. The Sellers and the Corporation shall have received an
opinion from Sayles, Evans, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to the Purchaser,
dated the Closing Date, in the form of Exhibit 1.8 hereto.

(e) Governmental Permits, Lenders' Consents and Approvals. All
permits, consents and approvals required to be obtained by Purchaser, and all
notices, filings and registrations required to be made or given by it,
pursuant to this Agreement shall have been obtained in writing and copies
thereof delivered to the Corporation and the Sellers, and all required
approvals from the Switzerland government have been received.

(g) Litigation. There shall be no suit, action, administrative
proceeding, arbitration or other proceeding or governmental investigation
pending or initiated or threatened against or affecting the Purchaser or the
transactions with respect thereto contemplated under this Agreement, or any
basis

-18-

for the same, that could have an adverse effect on the
consummation of the transactions, or the validity and
enforceability of the Agreement and related documents in
accordance with their terms against Purchaser.

(h) Consideration for Shares. Upon the Closing hereunder the Sellers
and the Corporation shall have received, against delivery to the Purchaser of
the stock certificates evidencing the Sellers' Shares and the Shares duly
executed in blank, the consideration therefor as described in Section 1.2.

(i) Documents in Satisfactory Form. All actions and proceedings
hereunder and all documents and other papers required to be executed and/or
delivered by the Purchaser under this Agreement or in connection with the
consummation of the transactions and all other related matters shall be in
accordance with the terms and conditions of this Agreement to the reasonable
satisfaction of counsel to the Sellers and the Corporation.

(j) Employment Agreements. Purchaser has consented to and at the
Closing will execute on behalf of the Purchaser a revised employment agreement
with ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, in the form and substance as that agreement
attached hereto as Exhibit 2.21A.

2. Representations and Warranties of the Corporation and Sellers.

Each of the Sellers jointly and severally and the Corporation
represent and warrant to Purchaser as set forth in Exhibit 2 annexed hereto,
incorporated herein and made a part hereof.

3. Representations and Warranties of Purchaser. The Purchaser
represents and warrants to Sellers and to the Corporation as set forth in
Exhibit 3 annexed hereto, incorporated herein and made a part hereof.

-19-

4. Indemnification and Limitations on Remedies.

4.1 Obligations of Sellers to Indemnify and Limitations on Remedies.

(a) Each Seller agrees to and does hereby jointly and severally
indemnify, defend and hold harmless Purchaser against and in respect of any
actual or contingent liabilities, losses, claims, damages and expenses of
Purchaser, whether now known or unknown and whether now existing or hereafter
occurring, relating to or arising directly or indirectly out of the business
or operations of the Corporation or any Seller prior to the Closing Date or
the untruth, inaccuracy or incompleteness of any representation or warranty
made by the Corporation or any Seller in this Agreement or any breach of any
covenant or agreement of the Corporation or any Seller contained in this
Agreement, it being understood and agreed that such obligation to indemnify,
defend and hold harmless Purchaser shall expire only as provided in Section
4.3 hereof.

(b) It is understood and agreed that no claim or demand for
reimbursement shall be made by Purchaser under Section 4.1(a) hereof in
respect of any class of claims or demands listed in Exhibit 4.1(b), unless and
until the aggregate of such losses, damages and expense in respect of the
class of claims or demands to which such reimbursement relates exceeds the
liability thresholds set forth in Exhibit 4.1(b), such liability thresholds
superseding and intended to be in lieu of any reserves hidden or otherwise
reflected in the Financial Statements. In the event that the aggregate of such
losses, damages and expenses in each class exceeds such liability threshold,
Purchaser may claim and each Seller shall be liable to Purchaser for the
amount of such losses, damages and expenses without limitation.
Notwithstanding the foregoing individual class limitations, Purchaser shall
have a claim and demand to the extent that the total of all such claims of
whatever class exceed the sum of CHF 750'000. Purchaser must notify Sellers of
any claim or demand for reimbursement in respect of an untruth, inaccuracy or
incompleteness of any

-20-

representation or warranty made by the Corporation or any Seller in this
Agreement or any breach of any covenant or agreement of the Corporation or any
Seller contained in this Agreement in writing to ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, as
representative of each of the Sellers, within 18 months from the Closing Date
or in the event of a demand related to taxes as defined in Section 2.15 of
Exhibit 2 in due course after assessment.

4.2 Remedies for Breach of Warranties and Representations Related to
Accounts Receivable, Inventory and Taxes.

(a) Accounts Receivable. Taking into account the liability threshold
as set forth in Exhibit 4.1 (b), Purchaser shall be reimbursed by Sellers for
the total of the Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc.'s (i) receivables not
collected within 180 days, or (ii) in the case of the receivables listed in
Exhibit 2.20, any receivable, a scheduled payment on which is not collected
within 30 days after its due date. To this effect, Purchaser shall be entitled
to draw the corresponding amounts (in the case of those listed in Exhibit
2.20, the full amount remaining due at the date a scheduled payment is 30 days
past due) from the Escrow Account. Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. shall
continue in their efforts to collect the receivables on behalf of Sellers and
shall account for and remit to the Sellers the respective amounts less cost of
collection. Alternatively, at their discretion, Sellers may request the
assignment of such receivables not collected, in excess of the liability
threshold. Purchaser shall have no claim for the failure to collect the
receivables or having to fulfil a guarantee described in Exhibit 2.20A

(b) Inventory.

I. Physical Inventory. Corporation maintains a perpetual inventory,
including work in process and finished goods, which inventory valued at the
lower of cost or market value totalled CHF 12'779'619 on September 30, 1995 on
the books of Corporation and US-$ 2'676'535 on the books of

-21-

▇▇▇▇▇▇▇▇▇▇▇▇ Inc. Said inventory is made up of two separate parts - (i) work
in process and finished goods, and (ii) parts inventory which latter is
classified by Corporation into A, B and C parts.

Corporation shall conduct, under the supervision of Purchaser's
accounting firm, ATAG Ernst & Young, a physical inventory prior to the Closing
Date. In the first instance, this taking of physical inventory shall consist
of (1) all of the work in process and finished goods, and (2) a sample of
parts from the A and B classes of parts inventory, said selection to be made
by Purchaser, that total an amount of CHF 2'000'000.

If the inventory value of the work in process and finished goods
class of said physical inventory results in a total value of less than 95% of
the perpetual inventory of said items, the percentage by which said inventory
is less than 95% (rounded to the nearest one-hundredth of a percent) shall be
multiplied by the total value of the work in process and finished goods
perpetual inventory as of such time and the resulting amount shall be deducted
from the Purchase Price as described in Section 1.2

With respect to the physical parts inventory and said selected
sample amounting to CHF 2'000'000, if the inventory value of the selected A
and B classes of said physical inventory results in a total value of less than
95% of the perpetual inventory of said items, Sellers shall have the option
(A) to accept the excess deviation and have the Purchase Price described in
Section 1.2 reduced by an amount equal to the percentage said sample parts
inventory is less than 95% (rounded to the nearest one-hundredth of a percent)
times the total value of the perpetual parts inventory as of such time, or (B)
to expand the physical inventory to include additional parts selected, said
selection to be made by Purchaser, up to a total amount of inventory valued at
CHF 4'000'000, such expansion to be final. If option (B) is selected, the
selected A and B inventory value of the A and B classes of said physical

-22-

inventory results in a total value of less than 95% of the perpetual inventory
of said items, the percentage by which said inventory is less than 95%
(rounded to the nearest one- hundredth of a percent) shall be multiplied by
the total value of the perpetual parts inventory as of such time and the
resulting amount shall be deducted from the Purchase Price as described in
Section 1.2.

II. Inventory in General. In addition to the foregoing, Purchaser
shall be reimbursed following the Closing Date for any losses, damages and
expense on account of the breach of the warranties and representations set
forth in Section 2.20 (b) of Exhibit 2 to the extent that such losses, damages
and expense exceed the inventory liability threshold set forth in Exhibit 4.1
(b), said threshold reduced, however, by the amount of the reductions in
Purchase Price, if any, as described above on account of the failure of the
physical inventory to equal at least 95% of the perpetual inventory as
described above.

(c) Taxes. Purchaser shall be reimbursed for any losses, damages,
including any interests and penalties assessed by the taxing authorities, and
expense (including 0.2 times any decrease in Corporation's operating loss
carry-over as of January 1, 1995) on account of the breach of the warranty and
representation set forth in Section 2.15 of Exhibit 2 to the extent that such
losses, damages and expense exceed the tax liability threshold set forth in
Exhibit 4.1 (b).

Notwithstanding the above, with respect to the inventory as recorded
in the books of Corporation as of September 30, 1995; (i) there shall be no
liability for Sellers if the Tax Authorities accept the reserves made thereon
as appropriate and allowable for the indefinite future; (ii) in the event that
the Tax Authorities require immediate adjustment through payment or offset to
operating loss carry-over, the full amount of taxes, including any penalties
and interest, resulting from such adjustment (including 0.3 times any decrease
in Corporation's operating loss carry-over as of

-23-

September 30, 1995) shall be deducted from the Purchase Price; and (iii) in
the event that the Tax Authorities require adjustment of the reserves over a
period of time, either against profits or through offset against the loss
carry-over, the reduction in Purchase Price shall be 0.2 times the total
adjustment.

Tax counsels to Sellers and Purchasers will jointly approach the Tax
Authorities trying to obtain at least a pre-advice before Closing Date.
Unless the matter is resolved to the entire satisfaction of the Purchaser
before the Closing Date, the Purchaser may exercise its rights pursuant to
Section 1.7 (m) and Section 5.

4.3 Survival of Representations and Warranties and Covenants and
Agreements; Inspection Period; Forfeiture of Claims.

(a) All representations and warranties of the parties to this
Agreement shall survive the date hereof for a period of 18 months from the
Closing Date (except with respect to the representations and warranties
contained in Section 1.3 hereof and Sections 2.1, 2.2, 2.3, 2.5 and 2.16 of
Exhibit 2 hereto which shall survive without any limitation as to time). The
representations and warranties of the Corporation and the Sellers shall be
deemed to have been accepted by Purchaser as correct in all respects, unless a
notice of defect shall have been delivered in writing to ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
as representative of each of the Sellers before the end of the period
commencing on the Closing Date and ending 18 months thereafter, stating in
detail the nature of the defect in respect of which a claim or demand is
asserted (Notification Period pursuant to Art. 201 CO). In the event Sellers
disagree as to the existence of such defect, legal action must be initiated by
Purchaser within a period of 20 months following the Closing Date failing
which an according claim or demand for reimbursement shall be deemed to be
forfeited by Purchaser (Statute of limitation pursuant to Art. 210 CO).
However, in all matters pertaining to taxes, as defined in Section 2.15 of

-24-

Exhibit 2, the Statute of Limitation shall be 5 years as from the date of
Closing.

(b) All covenants and agreements of the parties to this Agreement
shall survive the date hereof, subject to statutes of limitations under
applicable laws, unless otherwise specifically specified above with regard to
any particular covenant or agreement.

4.4 Notice of Third Party Claims. If Purchaser receives notice of
any demand, claim, commencement of any action or proceeding, or circumstances
which, with notice or the lapse of time, would give rise to a claim, action,
investigation or proceeding (a "Claim") with respect to which Sellers are
obligated to provide indemnification pursuant to this Section 4, Purchaser
shall, with reasonable promptness, give Sellers notice thereof (a "Claim
Notice"), provided however, that the failure to so notify Sellers shall not
relieve the Sellers from any liability which it may otherwise have to
Purchaser under this Section 4, except to the extent the rights of the Sellers
are actually prejudiced thereby. The Claim Notice shall describe the Claim in
reasonable detail, and shall indicate, to the extent then determinable, the
amount (estimated, if necessary) of the loss, damage or expense ("Loss") to
which it relates.

4.5 Defense of Third Party Claims. Upon receipt of a Claim Notice
from Purchaser with respect to any claim for indemnification which is based
upon a Claim, the Sellers may, by written notice to Purchaser within 30 days,
elect to compromise or settle the Claim or, if the Claim is made as a
consequence of any action, suit, proceeding, claim, etc., by a third person,
the Sellers may elect to assume the defense of the Claim at their own expense,
with counsel of its choosing reasonably satisfactory to Purchaser. In the
event the Sellers assumes the defense, Purchaser shall cooperate, at the
expense of the Sellers, in the defense of the Claim and shall furnish such
records, information and testimony and attend all such conferences, discovery
proceedings, hearings, trial and appeals

-25-

as may be reasonably required in connection therewith. In any event, Purchaser
shall have the right to employ its own counsel in any such action, but the
fees and expenses of such counsel shall be at the expense of Purchaser unless
either (i) the Sellers shall not have assumed the defense of the Claim as
provided above, in which event such fees and expenses shall be borne by the
Sellers, or (ii) the Sellers are defending, in good faith, any such Claim, but
representation of Purchaser by counsel retained by such Sellers would be
inappropriate by reason of defenses being available to Purchaser which are not
available to such Sellers, in which case Purchaser may be represented by its
own counsel at the expense of Sellers. If the Sellers fail to notify Purchaser
of its election to compromise or defend the Claim as herein provided or
contests its obligation to indemnity under this Agreement, Purchaser may pay,
compromise or defend such Claim. Notwithstanding the foregoing, neither the
Sellers nor Purchaser may settle or compromise any Claim without the written
consent of the other, provided however, that consent to settlement or
compromise shall not be unreasonably withheld.

5. Right of Withdrawal and Rescission. The Purchaser may
unilaterally withdraw from and rescind this Agreement and refuse to close and
purchase the Sellers' Shares under any of the following circumstances by
notice in writing:

(a) Purchaser shall have the right to so withdraw and rescind by
such notice sent on or before the Closing Date if during the period from the
date hereof to the Closing Date any of the following shall occur:

(i) The Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Incorporated shall have
suffered, in the Purchaser's reasonable opinion, any material adverse
change in its condition (financial or otherwise), properties, assets,
liabilities, business, operations or prospects;

(ii) There shall have been proposed or enacted (including without
limitation any threatened proposal or enactment of) any requirement of
law or other policy or

-26-

guideline, or any change in any existing requirement of law or other
policy or guideline, which prohibits or delays, or threatens to prohibit
or delay, the performance of the transactions contemplated herein or
which changes, or threatens to change, in an adverse manner the business,
operations, conditions (financial or otherwise), assets, properties,
prospects or results of operations of the Corporation;

(iii) There shall have occurred a declaration of a banking
moratorium or any suspension of payments in respect of banks or other
national emergency in the United States or Switzerland;

(iv) Purchaser shall learn of any fact or condition with respect to
the businesses, properties, assets or liabilities of the Corporation or
▇▇▇▇▇▇▇▇▇▇▇▇ Incorporated which is at variance with one or more of the
warranties or representations as set forth in Exhibit 2, or which is
first revealed in a schedule furnished pursuant to the terms of this
Agreement and is at variance with the disclosures and representations
made to Purchaser prior to execution of this Agreement to the extent that
Purchaser determines that such variance materially detracts from the
value of the stock to be transferred hereunder, and after written notice
thereof the Sellers shall be unable to furnish reasonable assurance
satisfactory to Purchaser to remedy said fact or condition to Purchaser's
satisfaction;

(v) the Corporation or any Seller shall commit a substantial breach
of any one or more of the obligations or prohibitions set forth in
Section 1.5 of this Agreement and shall be unable to furnish reasonable
assurance satisfactory to Purchaser to cure said breach or the
Corporation or any Seller fails to satisfy any condition precedent set
forth in Section 1.7.

(vi) Purchaser shall learn that any contract of substantial
importance cannot be performed except at a

-27-

loss or burden for which an adequate reserve has not been or cannot be
provided; or

(vii) the Company shall suffer through resignation or otherwise the
loss of employees whose services are of substantial importance to the
normal conduct and success of its businesses;

(b) On the occurrence of any of the events specified in subparagraph
(a) above, Purchaser and the Sellers may agree upon an amount by which the
consideration shall be reduced on account of such event, in which case
Purchaser shall not so withdraw and rescind this Agreement and the
consideration shall be so reduced.

(c) Any of the Purchaser, the Corporation or the Sellers, but only
if acting unanimously, may withdraw and rescind this Agreement by written
notice to the other if for any reason the Closing has not occurred within 60
days from the date hereof, but in any event not later than December 31, 1995.
In such event all parties shall retain whatever rights they may have due to
the other party's failure to perform hereunder.

(d) In the event this Agreement is rescinded in accordance with the
foregoing provisions of this Section 5, all confidential information shall be
returned to the respective parties in accordance with the terms of the
Confidential Disclosure Agreement.

6. Miscellaneous.

(a) Use of Name. The Sellers, and all directors, officers, and
employees of Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Incorporated having the surname
"▇▇▇▇▇▇▇▇▇▇▇▇" agree that they will not henceforth use the name "▇▇▇▇▇▇▇▇▇▇▇▇"
or derivatives thereof in connection with a future business unless:

(i) such business is not involved in any way with the design,
manufacture, assembly, importation, sale, or promotion of industrial
machinery, including but not limited to grinding machines or lathes, or
other products related or similar to such machinery such that the use

-28-

thereupon of the name "▇▇▇▇▇▇▇▇▇▇▇▇" or a derivative thereof would be
likely to cause confusion;

(ii) the word "▇▇▇▇▇▇▇▇▇▇▇▇" is used together with a descriptive
word or words indicating the type of business which is being carried out
under the name; and

(iii) the Purchaser specifically consents in writing to each such
use, which consent shall not be unreasonably withheld.

(b) Seller's Confidentiality and Non-Competition Obligations. Each
Seller shall not, directly or indirectly, reveal to any third persons any
trade secrets or any other non- public information concerning the Corporation;
solicit the employees of the Corporation; or manage, operate, join, control,
participate in, provide consulting advice to, act as an agent or director of,
or have any financial interest in (as a partner, stockholder, investor or
otherwise), any firm, corporation, partnership, association, joint stock
company, joint venture, unincorporated organization, limited liability company
or any such similar business operation or activity (or any portion thereof),
directly or indirectly in competition with any of the business operations or
activities of Purchaser or its Affiliates, for a period ending five (5) years
after the Closing Date or, if longer, in the case of ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇,
for a period ending two (2) years after the later of the date ▇▇. ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ceases to be an employee of the Corporation or ceases to be a
director of the Corporation.

(c) Expenses. Except as otherwise specifically provided in this
Agreement, the Purchaser, on the one hand, and the Sellers on the other hand,
shall be responsible for and shall pay their respective expenses incurred
after September 15, 1995 in connection with the negotiation, execution,
delivery and performance of this Agreement without regard to whether the
transactions contemplated herein are consummated. Corporation shall not be
responsible for nor pay any such expenses, including legal fees, in any way
directly or

-29-

indirectly related to this Agreement and the transactions contemplated herein.

(d) Further Assurances. Each of the parties shall execute such
documents and other papers, make such filings and registrations, request such
approvals, consents and permits, and take such further actions as may be
reasonably required or desirable to carry out the provisions of this
Agreement. Each such party shall use its best efforts to satisfy the
contingencies described in Section 1.4 hereof.

(e) Publicity. No publicity, release or announcement or other
disclosure concerning this Agreement or related documents shall be made
without advance approval thereof by the Corporation's President and the
Purchaser, except that Purchaser shall be entitled to make such disclosure to
comply with the securities or other laws of the United States without advance
approval by Sellers (but shall to the extent feasible consult with the
Corporation with respect thereto). ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ on behalf of the
Corporation, together with Purchaser's designated representative, will make
the appropriate announcements to the employees, the authorities and the local
public at a time mutually agreed upon by him and the Purchaser.

(f) Notices. Any notice or other communication required or permitted
hereunder shall be deemed given if in writing and delivered personally or by
overnight commercial courier, or sent by certified, registered or express
mail, postage prepaid. Any such notice shall be deemed given when so delivered
personally or by overnight commercial courier or, if mailed, 7 business days
after the date of deposit in the United States Mails, First Class (or Air
Mail, if mailed to or from a destination outside the United States) postage
prepaid, as follows:

-30-

(i) if to Purchaser, to:
Hardinge Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
U.S.A.

Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇
President and Chief Executive Officer

with copies to:

Hardinge Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
U.S.A.

Attention: Mr. J. ▇▇▇▇▇ ▇▇▇▇
Senior Vice President and
Chief Operating Officer

and

Sayles, Evans, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
U.S.A.

Attention: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.

and

Haymann & ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇-▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇

Attention: ▇▇. ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇
and/or ▇▇. ▇▇▇▇▇ ▇▇▇▇▇

(ii) if to any Seller, addressed to such Seller at the
address of such Seller set forth above, and if to the Corporation,
to:

▇. ▇▇▇▇▇▇▇▇▇▇▇▇ & Co. AG
St. Gallen
Switzerland

Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇

with a copy to:

-31-

Thouvenin, Stutzer, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇

Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇

Any party may by notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices by such
party hereunder, provided that no such change of address for notice shall be
effective until the other parties hereto receive notice thereof in accordance
with this Agreement.

(g) Joint and Several Liability. The rights and obligations of
Sellers under this Agreement are joint and several.

(h) Entire Agreement. This Agreement, including the Exhibits hereto,
the other certificates and other documents or instruments delivered on or
prior to the date hereof contain the entire agreement among the parties with
respect to this Agreement and supersede all prior agreements, written or oral,
with respect thereto.

(i) Waivers and Amendments. This Agreement may be amended,
superseded, cancelled, renewed or extended, and the terms hereof may be
waived, only by a written instrument signed by the parties hereto or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any such
right, power or privilege, nor any single or partial exercise of any such
right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege. The rights and remedies
of any party based upon, arising out of or otherwise in respect of any
inaccuracy in or breach of any representation, warranty, covenant or agreement
contained in this Agreement shall in no way be limited by the fact that the

-32-

act, omission, occurrence or other state of facts upon which any claim of any
such inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant or agreement contained in this Agreement
(or in any other agreement between the parties) as to which there is no
inaccuracy or breach.

(j) Governing Law; Arbitration. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SWITZERLAND, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.

ANY DISPUTES BETWEEN THE PARTIES HERETO ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT SHALL BE FINALLY SETTLED BY ARBITRATION. THE
ARBITRAL TRIBUNAL SHALL CONSIST OF THREE ARBITRATORS AND SHALL HAVE ITS SEAT
IN ZURICH. THE ARBITRAL PROCEEDING SHALL BE GOVERNED BY THE XIIth CHAPTER OF
THE SWISS PRIVATE INTERNATIONAL LAW ACT OF 18th DECEMBER 1987 AND TO THE
EXTENT THAT IT IS SILENT, BY THE ZURICH CODE OF CIVIL PROCEDURE AND THE
INTERCANTONAL CONCORDAT ON ARBITRATION. THE ARBITRAL PROCEEDING SHALL BE
CONDUCTED IN THE ENGLISH LANGUAGE. NOTWITHSTANDING ART. 183 OF THE SWISS
PRIVATE INTERNATIONAL LAW ACT, THE ORDINARY COURTS WITH PROPER JURISDICTION
SHALL HAVE THE POWER TO GRANT INTERLOCUTORY RELIEF OR ISSUE CONSERVATORY
ORDERS IN THE PERIOD BEFORE AN ACTION IS PENDING BEFORE AN ARBITRAL TRIBUNAL
HAS BEEN VALIDLY CONSTITUTED. IN ALL OTHER INSTANCES, THE ARBITRAL TRIBUNAL
SHALL HAVE JURISDICTION TO GRANT INTERLOCUTORY RELIEF AND ISSUE CONSERVATORY
ORDERS. FOR THE PURPOSE OF THIS ARBITRATION CLAUSE, THE SELLERS SHALL BE
DEEMED TO CONSTITUTE ONE PARTY. THEY SHALL JOINTLY BE ENTITLED TO NOMINATE ONE
ARBITRATOR ONLY.

(k) Binding Effect; No Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
permitted successors, assigns, legal representatives and heirs. Subject to the
next sentence, this Agreement shall not be assignable except by operation of
law by any party without the prior written consent of the other parties, and
any purported assignment by any party without the

-33-

prior written consent of the other parties shall be void. Notwithstanding any
provision of this Agreement or related documents to the contrary, this
Agreement and any or all rights of the Purchaser to exercise rights or to
receive the performance of the obligations of the Corporation or the Sellers
under this Agreement or related documents, may be assigned by the Purchaser to
any wholly-owned subsidiary of the Purchaser; in the event of any such
assignment, unless the Purchaser's assignee determines to the contrary,
references to the Purchaser under this Agreement and the related documents
shall be deemed to be references to such assignee, it being understood,
however, that the representations and warranties of the assignee shall reflect
its incorporation within its own jurisdiction of incorporation, etc.

(l) Variations in Pronoun. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the context
may require.

(m) No Third Party Beneficiaries. This Agreement shall not inure to
the benefit of or be deemed to confer any rights or benefits upon any third
party.

(n) Exhibits. The Exhibits are a part of this Agreement as if fully
set forth herein. All references herein to Sections, subsections, clauses and
Exhibits shall be deemed references to such parts of this Agreement, unless
the context shall otherwise require.

(o) Cooperation and Best Efforts. Each of the parties agrees that he
or it will execute any and all documents necessary or advisable to carry out
the terms of this Agreement. Each party to this Agreement shall use his or its
best efforts to satisfy all conditions within their respective controls.

(p) Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies

-34-

hereof each signed by less than all, but together signed by all of the parties
hereto.

IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed and delivered by natural persons having the legal
capacity and due authorization to do the same on this 16th day of November,
1995.

▇. ▇▇▇▇▇▇▇▇▇▇▇▇ & CO. AG. HARDINGE INC.

By /s/ ▇.▇. ▇▇▇▇▇▇▇ By /s/ J. ▇▇▇▇▇ ▇▇▇▇
--------------------------------- -----------------------------
Its Chairman Its Senior Vice President
and Chief Operating
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ Officer
By ---------------------------------
Its Managing Director

/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Individually.

/s/ Ernst ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Ernst ▇▇▇▇▇▇ ▇▇▇▇▇, Individually.

/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Individually.

/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Individually.

/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Individually.

/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Individually.

/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Individually.

▇. ▇▇▇▇▇▇▇▇▇▇▇▇ & Co. AG/Hardinge Inc.
Stock Purchase Agreement.

EXHIBIT 1.2

Escrow Agreement between
Sellers, Purchaser and Escrow Agent.
ESCROW AGREEMENT

made this _______ day of _________________, 1995, between

▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇

(hereinafter collectively referred to as "the Sellers")

and

HARDINGE INC.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇

(hereinafter referred to as "the Purchaser")

and

KPMG FIDES
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇

(hereinafter referred to as "the Escrow Agent")

WHEREAS,

The Sellers, ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ & Co. AG and the Purchaser have entered
into a stock purchase agreement ("the Stock Purchase Agreement") dated
___________ ____, 1995 relating to the shares of ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ & Co. AG, a
copy of which is attached hereto as Appendix 1;

The Stock Purchase Agreement provides for the establishment of an
Escrow Account and a payment of a part of the purchase price referred to
therein to be released from the Escrow Account by the Escrow Agent subject to
certain conditions;

-2-

The Escrow Agent is willing to render the services required to be
given in this capacity;

The parties wish to define their mutual rights and obligations in
respect of the Escrow Account in a separate agreement.

NOW, THEREFORE, the parties agree as follows:

1. Definitions. In this Escrow Agreement, unless the context
requires otherwise, terms used shall have the same meaning as in the Stock
Purchase Agreement.

2. Escrow Agent. The Escrow Agent shall open an Escrow Account
(current accounts, custody account and fiduciary deposits) with Credit Swiss,
Zurich-Paradeplatz, which it shall operate in its own name, but for the
account and at the risk of the Purchaser (and/or, under the conditions set out
herein, of the Sellers) in accordance with the terms of this agreement. The
parties acknowledge and accept that the beneficial ownership of the Escrow
Account may have to be disclosed to certain authorities (e.g. tax authorities)
or persons (in particular banks).

3. Escrow Amount. The Purchaser shall pay into the Escrow Account an
amount equivalent to CHF 2,100,000, which is to serve as partial security for
the indemnities of the Sellers under Section 4 of the Stock Purchase
Agreement.

4. Release of Escrowed Funds.

4.1 The Escrow Agent shall release the Escrowed Funds to the Sellers
on the close of the first business day 18 months after the Closing Date as
defined in the Stock Purchase Agreement, unless a claim for indemnification is
asserted and notified by the Purchaser within this period and the Escrow Agent
is notified accordingly in writing.

4.2 In the event that the Escrow Agent has received a notification
as described in subclause 4.1 hereof, the Escrow Agent shall release any of
the Escrowed Funds only as instructed jointly in writing by Sellers and
Purchaser or, in the absence of such instructions, in accordance with
directions contained in a final and enforceable arbitral award or

-3-

judgment, the finality and enforceability of which must be confirmed by a
corresponding certificate which shall be presented to the Escrow Agent in
original or in a notarized copy.

4.3 For the purposes of this agreement and subject to the provisions
of subclause 6.3, the Escrow Agent shall be considered to have executed any
release of Escrowed Funds in time if the respective transfer order has been
given to the bank at the latest three business days after the release or
payment date fixed in accordance with this agreement.

5. Investment of Escrowed Funds.

5.1 The Escrowed Funds shall be invested by the Escrow Agent on a
revolving basis as three months fiduciary deposits of Swiss Credit Bank with
any of its foreign branches or subsidiaries, unless jointly instructed
otherwise in writing by the Sellers and the Purchaser in respect of all or
part of the Escrowed Funds.

5.2 All bank correspondence relating to the Escrow Account shall be
sent in original to the Escrow Agent and one copy each to the representative
of the Sellers and the Purchaser.

6. Attribution and Payment of Interest.

6.1 To the extent not disturbed, interest shall be compounded and a
record kept by the Escrow Agent in respect of interest earned both in respect
of capital and interest compounded.

6.2 Interest earned shall be allocated between the Sellers and the
Purchaser in proportion to payments made out of Escrowed Funds to either of
them and released together with the underlying original principal amount.

6.3 In the event that a release of Escrowed Funds were to occur
while all or part of the funds to be released are invested, the release shall
be deferred by the Escrow Agent until the maturity of the relevant investment.

7. Escrow Fees.

-4-

7.1 In consideration of the services rendered hereunder by the
Escrow Agent, the Escrow Agent shall be paid a fee in the amount of 0.2% per
annum of the Escrowed Funds kept at any time in the Escrow Account. The Escrow
Fee shall be payable in arrears at the end of each calendar quarter and be
computed on the basis of the Escrowed Funds in the Escrow Account at the
beginning of the relevant quarter, reduced on a pro rata basis in the event
that the Escrowed Funds are deposited during a calendar quarter or reduced by
way of release or payments in the course of the relevant calendar quarter,
provided, however, that the Escrow Fee shall never be less than CHF 4'500.--
per calendar year or apart thereof.

7.2 Additional services requested to be given by the Escrow Agent in
connection with the operation of the Escrow Account shall be payable
separately on an hourly basis applying a rate of CHF _____ per hour.
Reasonable out-of-pocket expenses of the Escrow Agent shall be reimbursed
separately.

7.3 The fees and cost of the Escrow Agent shall be borne by Sellers
and Purchaser in even parts. If not paid within 30 days after invoicing, the
Escrow Agent shall be entitled to debit the Escrow Account in coverage of his
fees and expenses.

8. Governing Law and Jurisdiction.

8.1 This agreement is governed in all parts by Swiss substantive law.

8.2 Zurich is the place of exclusive jurisdiction.

---------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇.

---------------------------------------
Ernst ▇▇▇▇▇▇ ▇▇▇▇▇.

-5-

---------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇.

---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇.

---------------------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇.

-6-

---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇.

HARDINGE INC.

By
---------------------------------------
Its President and
Chief Executive Officer.

KPMG Fides

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

APPENDIX 1 to Exhibit 1.2 (Escrow Agreement)

STOCK PURCHASE AGREEMENT

▇. ▇▇▇▇▇▇▇▇▇▇▇▇ & Co. AG/Hardinge Inc.
Stock Purchase Agreement.

EXHIBIT 2

Representations and Warranties
of the Corporation and Sellers.

2.1 Organization. Corporation is a corporation duly organized and
validly existing under the laws of Switzerland. The Extracts of the Commercial
Registry on the Corporation, the Statutes, Internal Regulations of the Board
and other corporate documents contained in Exhibit 2.1A hereto are accurate
and up- to-date as at the date of signing and will remain unchanged until the
Closing Date. The Corporation has only one subsidiary, ▇▇▇▇▇▇▇▇▇▇▇▇ Inc.,
which is a corporation duly organized, validly existing and in good standing
under the laws of the State of New York, U.S.A. Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇
Inc. have all requisite power and authority to own, operate and lease their
properties and assets, and to carry on their businesses as now being
conducted. Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. are duly qualified or licensed
and, in the case of ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. in good standing, to do business in each
jurisdiction (other than the jurisdiction of their incorporation or
organization), including foreign countries, in which the nature of their
business or the ownership, operation or leasing of their properties or assets
makes such qualification or licensing necessary. Corporation's Board of
Directors has unanimously duly approved and authorized execution of this
Agreement. Corporation has all requisite power and authority to enter into
this Agreement and execute all documents contemplated herein or in connection
herewith and to carry out the provisions hereof and thereof. Corporation has
delivered to Purchaser prior to the execution of this Agreement complete and
correct copies of the Articles ("Statuten") and Regulation ("VR-Reglement") of
Corporation and governing instruments of ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. Corporation owns
100% of the outstanding equity securities of ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. and there are
no outstanding options, warrants or other rights to acquire, or securities
convertible into, any equity

-2-

securities of ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. Except as set forth on Exhibit 2.1B,
Corporation has no subsidiaries or direct or indirect interest (by way of
stock ownership or otherwise) in any firm, partnership, corporation,
association or business enterprise.

2.2 Capital Structure. The capital stock of Corporation consists of
3,000 registered shares at a par value of CHF 1,000.-- each, all of them fully
paid in, and Corporation has no other outstanding shares of equity stock or
any bonds, debentures, notes or other indebtedness or securities issued or
outstanding. All outstanding shares of Corporation's common stock are validly
issued, fully paid and nonassessable and not subject to preemptive rights,
which are not waived by execution hereof. There is no authorized or
conditional stock. All outstanding shares of any equity security or any Voting
Securities of ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. are owned by Corporation and there are no
options, warrants, calls, rights, commitments or agreements of any character
to which ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. is a party or by which it is bound obligating
Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of any equity security or any
Voting Securities of ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. or obligations of ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. to
grant, extend or enter into any such option, warrant, call, right, commitment
or agreement.

2.3 Execution and Delivery of the Agreement. The execution and
delivery of the Agreement and related documents executed or delivered by
Corporation and the consummation of the transactions contemplated thereby: (i)
have been duly authorized by Corporation's Board of Directors (a copy of the
resolutions unanimously adopted by said Board prior to signing of this
Agreement and duly signed attached hereto as Exhibit 2.3) and all other
actions required under the terms and provisions of Corporation's governing
instruments, the laws governing its formation and of any jurisdictions in
which its properties or assets are located and any other applicable
requirements of governmental authority; (ii) create legal, valid and binding
obligations on each of the Sellers and the

-3-

Corporation enforceable in accordance with their terms; (iii) except for the
Switzerland governmental consent to the real estate acquisition herein
contemplated, do not require the approval, consent, license, exemption of or
filing or registration with any governmental authority having jurisdiction
over Corporation or its properties or assets or any other person; (iv) except
for the Switzerland governmental consent to the real estate acquisition herein
contemplated, do not and will not constitute a violation of, or default under,
the governing instruments of Corporation or any requirement of governmental
authority applicable to Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc.; and (v) except for
the Switzerland governmental consent to the real estate acquisition herein
contemplated, will not be in contravention of any court or administrative
order or ruling applicable to Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc., or any
mortgage, indenture, agreement, commitment or instrument to which such Seller,
Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. is a party or by which such Seller,
Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. or their assets are bound or affected, nor
create or cause to be created any mortgage, lien, encumbrance or charge
against the assets of Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. other than those
permitted by the Agreement and related documents (or which with notice or the
passage of time or both would result in such a contravention or the creation
of such a mortgage, lien, encumbrance or charge).

2.4 Compliance with Laws and Other Instruments. The business and
operations of Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. have been and are being
conducted in all material respects in accordance with all requirements of
governmental authority applicable to Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. Neither
Corporation nor ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. is in violation of, or in default under, any
term or provision of its governing instruments or, in any material respect, of
any mortgage, indenture, agreement, commitment or other instrument to which
Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. is a party or by which any of the assets of
Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. is bound or affected. Neither Seller nor
Corporation nor ▇▇▇▇▇▇▇▇▇▇▇▇ Inc.

-4-

is subject to any restriction of any kind or character which materially and
adversely affects in any way its business, assets, results of operation,
condition (financial or otherwise) or prospects or which prohibits any Seller
or Corporation from entering into this Agreement or except for the Switzerland
governmental consent to the real estate acquisition herein contemplated, would
prevent its performance of or compliance with all or any part of this
Agreement and related documents or the consummation of the transactions
contemplated hereby or thereby.

2.5 No Brokers or Finders. No person has, or as a result of the
transactions contemplated in the Agreement will have, any right or valid claim
against Corporation for any commission, fee or other compensation as a finder
or broker, or in any similar capacity.

2.6 Financial Statements. Attached hereto as Exhibit 2.6 are true
and complete copies of (i) the audited consolidated balance sheets of
Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. at December 31, 1993 and 1994 and the
related audited statements of income, stockholders' equity and cash flow for
each of the years then ended together with the notes thereto and the
unqualified report of STG Coopers & ▇▇▇▇▇▇▇ thereon, and (ii) the unaudited
balance sheet (the "Balance Sheet") of Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. as of
September 30, 1995 and the related unaudited statements of income, cash flow,
machine sales, backlog and other financial data for the interim period ended
on September 30, 1995 (such unaudited and audited financial statements are
collectively referred to as the "Financial Statements"). The Financial
Statements present accurately the financial condition of Corporation and
▇▇▇▇▇▇▇▇▇▇▇▇ Inc. as of the dates indicated therein (including all contingent
liabilities of Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc.) and the results of
operations and changes in financial position of Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇
Inc. for the periods specified therein, have been prepared in accordance with
the provisions of the Swiss Code of Obligations and accounting principles
applied on a consistent basis during the periods

-5-

covered thereby and prior periods, have been derived from the accounting
records of Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. and represent only actual, bona
fide transactions. The Financial Statements are true, correct and complete in
all respects.

2.7 Interim Operations. Since December 31, 1994, there has not been
any adverse change in the condition (financial or otherwise), results of
operations, assets, properties or business of Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc.
Neither Seller nor Corporation is aware of any circumstances which might
result in any adverse change in the condition (financial or otherwise),
results of operations, assets, properties or business of Corporation or
▇▇▇▇▇▇▇▇▇▇▇▇ Inc. Since December 31, 1994: (i) Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇
Inc. have conducted their business only in the ordinary and usual course of
business consistent with past practices and (ii) neither Corporation nor
▇▇▇▇▇▇▇▇▇▇▇▇ Inc. has done, agreed to do or suffered any of the following:

2.7.1 Incurred or paid any obligations or liabilities, whether
absolute, accrued, contingent or otherwise (including, without limitation,
liabilities as guarantor or otherwise with respect to obligations of others)
or made any expenditures or commitments for the acquisition of any asset or
property, in each case other than in the ordinary and usual course of business
consistent with past practice, or failed to pay or discharge when due any
liabilities of which failure to pay or discharge has caused or will cause any
loss or risk of loss to it or any of its assets or properties;

2.7.2 Transferred or otherwise disposed of any asset or property or
entered into any agreement or other arrangement for any such transfer or
disposition other than in the ordinary and usual course of business consistent
with past practice;

2.7.3 Mortgaged, pledged or subjected to any lien, lease, security
interest, encumbrance or other charge any of its assets or properties;

2.7.4 Suffered any damage, destruction or loss, whether or not
covered by insurance, adversely affecting, either in any case or in the
aggregate, any assets or

-6-

properties or the financial condition or the business of Corporation or
▇▇▇▇▇▇▇▇▇▇▇▇ Inc. other than disclosed in Exhibits hereto;

2.7.5 Forgiven, cancelled, modified or waived any debts or claims
held by it or waived any other rights other than adjustments, write-offs or
compromises of accounts receivable in the ordinary and usual course of
business;

2.7.6 Suffered any loss of employees that materially affects the
assets or the business of Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc.;

2.7.7 Suffered any change, materially adverse to Corporation or
▇▇▇▇▇▇▇▇▇▇▇▇ Inc., in its relationship with, or received notice of any future
such change in its relationship with, any lessors, lessees, customers,
licensor, contractors or suppliers;

2.7.8 Been affected by any suit, action or judicial proceeding or
governmental investigation or inquiry not disclosed on Exhibit 2.8 hereof in a
manner which is adverse to Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc.;

2.7.9 Declared, set aside or paid any dividend or other distribution
(whether in cash or property) with respect to any shares of its capital stock
(or comparable equity interest), or purchased, redeemed or otherwise acquired
any of its capital stock (or comparable equity interest), or split, combined
or reclassified any of its capital stock (or comparable equity interest), or
contributed any assets or property to the capital of any subsidiary;

2.7.10 Issued, sold or transferred any of its capital stock, notes
or other securities or debt instruments or granted any options, warrants or
other rights calling for the issue of any such securities or instruments;

2.7.11 Entered into or engaged in any transaction with, or made any
payment or transfer to, any of its shareholders or other Affiliates (other
than ▇▇▇▇▇▇▇▇▇▇▇▇ Inc.) other than in such Affiliates' capacities as employees
or managers pursuant to employment arrangements entered into in the ordinary
course of business for services actually rendered

-7-

and which do not involve extraordinary bonuses or other payments;

2.7.12 Introduced any new or significantly changed method of
management, operation or accounting in respect of its business or any of its
assets, properties or rights, which has had or could reasonably be expected to
have a materially adverse effect on its condition (financial or otherwise),
results of operations, assets, prospects or business;

2.7.13 Entered into, suffered any amendment to or terminated any
contract to which it is a party or by which it is bound, which has had or
could reasonably be expected to have a materially adverse effect on its
condition (financial or otherwise), results of operations, assets, prospects
or business;

2.7.14 Received notice or had knowledge of any actual or threatened
labor trouble, strike or other occurrence, event or condition of any similar
character which has had or could reasonably be expected to have a materially
adverse effect on its condition (financial or otherwise), business, results of
operations, assets or prospects;

2.7.15 Any other event or condition undisclosed to Purchaser which
has had, or reasonably could have, an adverse effect on its business, results
of operations, condition (financial or otherwise), assets or prospects.

2.8 Litigation. Except as set forth on Exhibit 2.8, there are (a) no
claims, actions, suits, proceedings (judicial, governmental or arbitral) or
investigations pending or, to the knowledge of any Seller or Corporation,
threatened against Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc.; and (b) no judgments,
decrees, arbitration awards, settlement agreements or orders binding upon any
Seller or Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. and relating to any of the Shares,
business, properties or assets of Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. Each Seller
and Corporation does not know of any basis for any such claim, action, suit,
proceeding or investigation.

2.9 Title to Property. Attached hereto as Exhibit 2.9 is a listing
of (i) All machines and installations, (ii)

-8-

furniture and vehicles, (iii) electronic equipment owned by
Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. (excluding for (i), (ii) and
(iii) minor items whose total aggregate replacement value is
not more than CHF 100'000.--) and (iv) a listing of all real
and personal property, to the extent the remaining lease
payments exceed CHF 25'000.--. Each of Corporation and
▇▇▇▇▇▇▇▇▇▇▇▇ Inc. has good and marketable title, or valid
leasehold rights in the case of leased property, to all the
real property and all personal property owned or leased by it
as Lessee, in each case free and clear of all mortgages,
claims, other leases, liens, security interests, charges and
other encumbrances.

2.10 Patents, Trademarks, Tradenames and Know-how in General.

A. For purposes of this Section 2.10:

1. The term "Corporation's products" and derivatives thereof
includes all products presently and previously manufactured, assembled,
and/or sold by the Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc.

2. The term "know-how" shall mean technical information, know-how,
manufacturing, engineering data and specifications of materials, and
information in the possession of Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc.,
pertaining to or relating to the manufacturing, assembly, quality
control, testing, and sales of Corporation's products. Know-how shall
also be defined as factual knowledge not capable of precise, separate
description, but which when used in an accumulated form, after being
acquired as the result of trial and error, gives to the one acquiring it
an ability to produce something which he otherwise would not have known
how to produce with the same accuracy, efficiency, or precision.

3. The term "production technology" shall mean the full range of
technical knowledge and experience accumulated by and/or available to
Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. concerning the manufacture, assembly,
quality control, testing, and sales of Corporation's

-9-

products as defined above. Production technology includes any and all
know-how and/or trade secrets presently possessed by Corporation or
▇▇▇▇▇▇▇▇▇▇▇▇ Inc.

B. Exhibit 2.10 sets forth a complete and accurate list of:

1. All United States and foreign, common law and registered
trademarks and service marks, and common law and registered trade names
used, and all pending applications for registration therefor filed on
behalf of, filed by, or assigned to Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc.;

2. All United States and foreign patents issued to and assigned to,
or used by Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc., and all pending United
States and foreign patent applications filed by, assigned to, or filed on
behalf of Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc.;

3. All United States and foreign, common law and registered
copyrights, and all pending United States and foreign applications for
copyright registration filed by, filed on behalf of and issued to, or
used by Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc.; and

4. All existing license agreements or arrangements to which
Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. is a party, whether as licensor or
licensee or otherwise, with respect to any patent, trademark, service
▇▇▇▇, trade name, copyright, trade secret, or other intellectual property
or any application therefor which are used or are contemplated to be used
in the conduct of or otherwise relate to Corporation's business or
▇▇▇▇▇▇▇▇▇▇▇▇ Inc's business.

C. Exhibit 2.10 lists all United States and foreign patents and
patent applications, all United States and foreign, registered, unregistered,
and common law trademarks, service marks, trade names, and copyright (if
registered), and all existing license agreements or arrangements to which
Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. is a party, that are necessary for, presently
being used in, or contemplated being used in the conduct of the Corporation's
or the business of ▇▇▇▇▇▇▇▇▇▇▇▇ Inc.

-10-

D. All licenses, agreements, or arrangements listed in Exhibit 2.10
hereto are valid, binding, and in full force and effect. To the best of
Corporation's knowledge and belief, no other party to any of such licenses,
agreements, or arrangements is in default or alleged default thereunder.

E. Corporation owns, or is licensed or otherwise has the right to
use, all patents, trademarks, tradenames, copyrights, trade secrets, software,
technology, know-how and processes (collectively the "Proprietary Technology")
used in or necessary for the conduct of its business and the business of
▇▇▇▇▇▇▇▇▇▇▇▇ Inc. as now conducted or as presently contemplated. Consummation
of the transactions contemplated by this Agreement and related documents will
not alter or impair any such ownership interests or rights; no claims have
been asserted by any person to the use of any such Proprietary Technology or
challenging or questioning the validity or effectiveness of any such license
or agreement, and to the best of Sellers' knowledge there is no valid basis
for any such claim; and the use of such Proprietary Technology by Corporation
does not and will not infringe on the rights, constitute misappropriation of,
or in any way involve unfair competition with respect to, any proprietary
information or intangible property right of any person. Corporation has the
complete and absolute right to license such Proprietary Technology whether now
existing or developed after the date of this Agreement to third persons
without the consent of any other person or entity, except such Proprietary
Technology which is owned by or originated with another person.

F. Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. are not making use of any
confidential information or trade secret of any former employer of any past or
present employee of Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc., except as a result of
the acquisition by Corporation of the business of such former employer.

G. No officer, director, or employee (or spouse or children thereof)
of Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. has any interest in any intellectual
property used in or pertaining to the business of Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇
Inc.

-11-

H. True and correct copies of all letters patent, trademarks,
service marks, copyrights, applications therefor, licenses, agreements, and
arrangements have been delivered to Purchaser by Corporation.

I. Sellers shall use their best efforts to cause Corporation's
directors, officers, subsidiary, and employees to promptly assist, consult,
and cooperate via the execution of assignments or other documents, or
otherwise, in the transfer and assignment of any and all Proprietary
Technology, applications therefor, production technology, licenses,
agreements, and any heretofore unspecified trade secrets, know- how, or
intellectual property, from Corporation to the Purchaser or to any person
designated by the Purchaser.

J. The Sellers shall use their best efforts to deliver and make
available to the Purchaser all production technology information.
Specifically, but without limitation, this shall include:

1. calculation and design sheets;

2. basic design data, including design drawings;

3. drawings;

4. process specifications;

5. material specifications;

6. performance specifications;

7. purchasing specifications;

8. test methods and data;

9. designs, details drawings, shop drawings and specifications for
all manufacturing and for all tools, jigs, fixtures, and all
apparatus and machinery necessary for Corporation or
▇▇▇▇▇▇▇▇▇▇▇▇ Inc. to manufacture Corporation's products; and

10. operating instructions and similar data generally known as
engineering, manufacturing, and quality control information.

2.11 Licenses and Permits. Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. each
possesses all governmental licenses, franchises, permits, registrations,
certificates and other

-12-

authorizations necessary to the conduct of its business as presently conducted
or contemplated. All such licenses, franchises, permits, registrations,
certificates and authorizations are in full force and effect, no violations
are or have been recorded in respect of any of them, and no proceeding is
pending or threatened to revoke or limit any of them. No such license,
franchise, permit, registration, certificate or other authorization would be
modified, subject to termination or otherwise affected by the consummation of
the Agreement and related documents or the transactions contemplated therein.
Neither Corporation nor ▇▇▇▇▇▇▇▇▇▇▇▇ Inc., nor any director or officer or
other person acting on behalf of any of them, has (i) used any corporate funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity, (ii) made any direct or indirect unlawful
payments to government officials or others from corporate funds or (iii)
established or maintained any unlawful or unrecorded funds.

2.12 Labor Matters. There is not occurring or threatened any strike,
slow down, picket, work stoppage or other concerted action by any union or
other group of employees or other persons against either Corporation or
▇▇▇▇▇▇▇▇▇▇▇▇ Inc. or their respective premises.

2.13 Contracts and Commitments. Except as set forth in Exhibit 2.13,
neither Corporation nor ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. has any contract or agreement, oral
or written, of the following nature:

2.13.1 A contract or indenture relating to the borrowing or lending
of money or guarantee of any obligation for borrowed money;

2.13.2 A contract with or commitment to any labor union or
association;

2.13.3 A contract guaranteeing or assuming the obligations of
others;

2.13.4 A contract containing covenants purporting to limit its
freedom to compete in any respect in any line of business in any geographic
area;

-13-

2.13.5 Any license or royalty agreement or any agreement with
respect to manufacturing or production rights;

2.13.6 Any contract with any officer, director or other Affiliate of
such party or any Affiliate of any such officer or director;

2.13.7 Any contract for the sale of all or a portion of the stock or
assets of Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc., or for the merger or other
consolidation of Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc.; or

2.13.8 Any other contracts (except any contract not described in the
Exhibits hereto and orders for machines in the ordinary and customary course
of business) which cannot be terminated upon 3 months notice or less or
involve a financial commitment of CHF 50'000 or more.

2.14 Defaults Under Agreements. Except as described in Exhibit 2.14
hereof, neither Corporation nor ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. is in default under any
contract or agreement ("Contract") which default would materially adversely
affect its condition (financial or otherwise), operations, properties, assets,
liabilities, earnings or business, and none of Corporation, any Seller or
▇▇▇▇▇▇▇▇▇▇▇▇ Inc. knows of any fact, circumstance or event, including the
transactions contemplated by the Agreement and related documents, which
reasonably can be expected in the future to cause Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇
Inc. to be in default under any Contract, and no person having any material
Contract with Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. is in default thereunder, and
there is no fact, circumstance or event, including the transactions
contemplated by the Agreement and related documents, which reasonably can be
expected in the future to cause any such person (other than distributors or
agents pursuant to an existing agreement) to be in default under, or permit
any such person to terminate, any such Contract.

2.15 Taxes. Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. have filed all Swiss,
U.S., state, local and foreign income, withholding, social security,
unemployment and other tax returns, tax information returns, reports and
estimates

-14-

required to have been filed by them on or before the date of this Agreement;
and all such returns, reports and estimates were prepared, in all respects, in
the manner required by applicable law; and all taxes payable with respect to
the periods covered by such returns, reports and estimates have been paid when
due. There are no pending tax examinations for Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇
Inc., others than those listed in Exhibit 2.8. There are no agreements or
other understandings with any taxing authority which would result in any
adverse tax result to Purchaser or Corporation. There are no taxes of
whatsoever nature or kind which shall arise, come due or be incurred by
Corporation on account of the completion of the purchase and sale herein
contemplated.

2.16 Directors and Officers. Exhibit 2.16 sets forth a complete and
correct list of each officer (including all titles and positions held) and
director of Corporation and of ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. as of the date of this
Agreement.

2.17 Condemnation, Environmental, Zoning. Except as disclosed in
Exhibit 2.18, there is no condemnation, environmental, zoning or other land
use regulation or proceeding, either instituted or, to the best knowledge of
Corporation, planned, which might detrimentally affect the present or proposed
use and enjoyment of the properties and assets of Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇
Inc. in any respect.

2.18 Environmental and Industrial Hygiene. Except as disclosed in
Exhibit 2.18, (i) the properties and assets of Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇
Inc., whether owned or held under lease, are not in violation of any
requirements of governmental authority relating to environmental, health,
safety or industrial hygiene matters, including all regulations and compliance
and guidance documents promulgated pursuant to said laws and any standards or
guidelines issued pursuant to said laws (collectively the "Environmental
Laws"), and Corporation has taken all reasonable precautions to prevent any
such environmental, health, safety or industrial hygiene damages, and (ii)
neither Corporation nor ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. nor any third person has used,
generated, released, manufactured,

-15-

stored or disposed of on, under or about any property owned or leased by
Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. or transported to or from such property any
flammable explosives, petroleum products, radioactive materials, hazardous
wastes, toxic substances or related materials ("Hazardous Materials"),
excluding only use or storage of oil, coolants and solvents in the normal
course of business operations, maintenance or repairs and in compliance in all
respects with all applicable laws, regulations and ordinances. Except as
disclosed on Exhibit 2.18 hereof, there are no existing or pending
requirements of governmental authorities relating to environmental matters
requiring any remedial actions or other work, repairs, construction or capital
expenditures with respect to any properties or assets of Corporation or
▇▇▇▇▇▇▇▇▇▇▇▇ Inc., nor has Corporation received any notice of any of the same
nor have knowledge of any such threatened actions.

2.19 Insurance. Each of the Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. has in
full force and effect on the date hereof all insurance coverage necessary and
customary for the operation of its business where conducted including adequate
insurance coverage for any product liability claim (wherever arising including
the U.S.A.) which could arise from products made or sold by the Corporation or
▇▇▇▇▇▇▇▇▇▇▇▇ Inc. and no event has occurred to the date hereof which would
adversely affect the coverage provided thereunder. All such insurance
coverages are listed on Exhibit 2.19 hereof.

2.20 (a) Accounts Receivable and IAllntories. accounts receivable
owed to the Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. are valid and legally binding,
represent bona fide transactions, arose in the ordinary course of business of
the Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. for goods delivered, are collectible in
full and can reasonably be expected to be paid in full within 90 days of
original invoice for goods delivered except those receivables listed in
Exhibit 2.20, which can be expected to be paid within 30 days after due date
as scheduled.

-16-

(b) Inventories, prior to reduction for any reserves, reflected on
the September 30, 1995 internal consolidated financial statements of the
Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. (attached hereto as Exhibit 2.6) are valued
thereon at the lower of cost or fair market value, do not include any amount
of obsolete items or items of below standard quality, are and will be
marketable in the ordinary course of business at no lower than the values at
which such items are so carried, are not defective nor technologically
obsolete and with respect to inventory carried for the purpose of machine
assembly, are used in machines presently being marketed. Since September 30,
1995 there has been no adverse change in the condition of such inventory and
the inventory reflected on Corporation's and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc.'s internal
records as delivered to Purchaser from time to time reflect only changes due
to normal and customary business activity since September 30, 1995.

2.21 Employment Matters. Neither the Corporation nor ▇▇▇▇▇▇▇▇▇▇▇▇
Inc. has employees other than as listed on Exhibit 2.21 in respect of numbers,
functions and total salaries, no employment contract except as disclosed
herein contains any unusual or onerous condition or notice period beyond the
statutory requirement and all necessary residence and work permits have been
obtained. Attached as Exhibit 2.21 are all present terms and conditions of
employment for Messrs. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇. Attached as Exhibit 2.21 A is form of
future employment contract for ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇.

The Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. have properly established all
pension schemes or company pension arrangements in accordance with the
applicable laws and regulations, these schemes are in good standing and all
their obligations are met. There are no actual or contingent liabilities on
account thereof and the Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. have paid all
contributions due in respect thereof.

-17-

2.22 Disclosure. No representation or warranty of any Seller or the
Corporation contained in this Agreement or other document connected therewith,
and no statement contained in any certificate, exhibit, schedule, list,
financial statement or other instrument furnished to Purchaser by or on behalf
of any Seller or the Corporation contains or will contain any untrue statement
of a fact, or omits or will omit, to state a fact necessary to make the
statements contained herein or therein not misleading. There is no fact which
any Seller or the Corporation has not disclosed to Purchaser in writing which
materially adversely affects nor, insofar as any Seller or the Corporation can
now foresee, will materially adversely affect, the assets, liabilities,
shareholders' equity, business, prospects, results of operations or condition
(financial or other) of the Corporation or ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. or the ability of
any Seller or the Corporation to perform this Agreement or other document
connected therewith or observe the terms of its governing instruments.

2.23 United States Assets and Sales. The Corporation, directly or
indirectly, (i) does not hold assets in the United States (other than
investment assets and voting or non-voting securities of another person)
having an aggregate book value of $15 Million or more and (ii) in 1994
did not, and in 1995 does not anticipate that it will, make aggregate sales in
or into the United States of $25 Million or more.

2.24 Corporate Minute Books and Records. The corporate minute books
and other records of the Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc. are accurate and
complete and reflect all material actions taken by their incorporators,
organizers, stockholders and directors (including any committees of said
corporations' Board of Directors).

2.25 Powers of Attorney; Bank Accounts. Exhibit 2.25 sets forth a
true, complete and correct list of the names and addresses of all persons
holding a power-of- attorney or signatory authority on behalf of the
Corporation and ▇▇▇▇▇▇▇▇▇▇▇▇ Inc., and all deposits and accounts, safe-deposit
boxes maintained by said corporations, the account

-18-

or box numbers thereof, the names and addresses of all banks or other
financial institutions in which said corporations have any such account or
deposit or lockbox or safe-deposit box, with the names of all persons
authorized to draw on such accounts or deposits or to have access to such
boxes.

▇. ▇▇▇▇▇▇▇▇▇▇▇▇ & Co. AG/Hardinge Inc.
Stock Purchase Agreement.

EXHIBIT 3

Representations and Warranties
of the Purchaser.

3.1 Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York, U.S.A.,
and has full power, authority and legal right to enter into this Agreement and
to purchase the Sellers' Shares in accordance with the terms hereof.

3.2 Power and Authority. The Purchaser has all requisite power and
authority to enter into, perform and consummate this Agreement and all its
obligations hereunder.

3.3 Due Authorization. The execution, delivery and performance of
this Agreement has been duly authorized by Purchaser's Board of Directors and
all other requisite corporate action, under the laws of the State of New York,
U.S.A., and each other requirement of law.

3.4 Execution and Delivery of Documents; Enforceability. This
Agreement, and the other documents required to be executed and delivered have
been executed and delivered by the Purchaser with the approval of its Board of
Directors (a certified copy of the resolutions unanimously adopted by said
Board in the form and substance attached hereto as Exhibit 3.4 to be delivered
to Corporation and Sellers prior to execution of this Agreement) and
constitute legal, valid and binding obligations of the Purchaser enforceable
against the Purchaser in accordance with their respective terms.

3.5 No Consent Required. The execution, delivery and performance of
this Agreement and related documents by the Purchaser do not require the
consent, approval or authorization of, license or exemption by or
registration, declaration or filing with, any governmental authority having
jurisdiction over the Purchaser, its properties or its assets, or any other
person, in each case except as contemplated with regard to ▇▇▇ ▇▇▇▇▇▇▇▇▇ and
for those which shall have been obtained or made and shall be in full force
and effect as of the date hereof.

-2-

3.6 Ability of Purchaser to Carry Out this Agreement and Related
Documents. The execution, delivery and performance of this Agreement and
related documents by the Purchaser does not and will not, with notice or lapse
of time or both, have any of the following effects: (i) conflict with or
result in a breach or violation of its charter documents or any applicable
requirement of law; (ii) create any lien on the assets of the Purchaser; (iii)
violate, conflict with or result in the breach of any of the terms of, result
in a modification of the effect of, otherwise give any contracting party the
right to terminate, or constitute a default under, any contract to which the
Purchaser is a party or by or to which the Purchaser or its assets or
properties may be bound or affected or subject; (iv) violate or cause any
revocation of or limitation on any permit; or (v) cause the acceleration of,
or give any person a right to accelerate, any obligation or rights under, any
contract to which the Purchaser is a party or by or to which the Purchaser or
its assets or properties may be bound or affected or subject.

3.7 Litigation. There is no suit, action, administrative proceeding,
arbitration or other proceeding or governmental investigation pending or, to
the best of the Purchaser's knowledge, initiated or threatened against or
affecting the Purchaser with respect to any matter contemplated under this
Agreement, or, to the best of Purchaser's knowledge, any basis for the same,
that, if an adverse outcome were to eventuate, would have an adverse effect on
the consummation of the Agreement, or the validity and enforceability of the
Agreement and related documents in accordance with their terms against the
Purchaser.

3.8 Investment. Purchaser is purchasing the Sellers' Shares for its
own account for investment and not with a view to the distribution thereof.

made as of November 16, 1995 by and among

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