UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE ) ) ) ) ) ) )

In re ELECTROGLAS, INC., et al.,1 Debtors.

Chapter 11 Case No. 09- 12416 (PJW) (Jointly Administered)

NOTICE OF AUCTION AND SALE HEARING PLEASE TAKE NOTICE OF THE FOLLOWING: 1. On July 10, 2009, the Debtors filed a motion (the Motion) for entry of an order, among other things: (i) approving bidding procedures (the Bidding Procedures) in connection with the sale (the Sale) of substantially all of the Debtors assets (the Purchased Assets) to the bidder with the highest or otherwise best offer (the Successful Bidder); (ii) scheduling a hearing (the Sale Hearing) to consider the sale of the Purchased Assets and setting objection and bidding deadlines with respect to the sale; (iii) approving the form and manner of notice of the Auction on the Purchased Assets and the Sale Hearing; (iv) establishing deadlines by which parties may object to the proposed assumption and assignment of executory contracts and unexpired leases and assert claims for any cure amount; and (v) granting related relief. 2. The Debtors are seeking to sell the Purchased Assets to the Successful Bidder. Approval of the sale of assets to the Successful Bidder may result in, among other things, the assumption and assignment by the Debtors of certain executory contracts and leases. If you are a party to an executory contract or lease with the Debtors, you will receive a separate notice that contains relevant dates and other information that may impact you as a party to an executory contract or lease. 3. On July 30, 2009, the United States Bankruptcy Court for the District of Delaware entered the Bidding Procedures Order. Pursuant to the Bidding Procedures Order, if the Debtors receive any Qualified Bids (as defined in the Bidding Procedures), the Auction for the Purchased Assets shall take place on August 21, 2009 at 12:00 noon (prevailing Eastern Time) at the offices of Morrison & Foerster LLP, 1290 Avenue of the Americas, New York, New York 10104. Only parties that have submitted a Qualified Bid in accordance with the Bidding Procedures, attached to the Bidding Procedures Order as Exhibit A, by no later than August 19, 2009 at 12:00 noon (prevailing Eastern time) (the Third Party Bid Deadline), may participate at the Auction. Any party that wishes to take part in this process and submit a bid for the Purchased Assets must submit their competing bid before the Third Party Bid Deadline and in accordance with the Bidding Procedures.
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The Debtors are Electroglas, Inc. (Electroglas) and Electroglas International, Inc. (Electroglas International).

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4. The Sale Hearing to consider approval of the Sale of the Purchased Assets to the Successful Bidder free and clear of all liens, claims, and encumbrances will be held before the Honorable Peter J. Walsh, United States Bankruptcy Judge, 824 North Market Street, Wilmington, Delaware 19801 on August 26, 2009 at 2:00 p.m. (prevailing Eastern time), or at such other time as scheduled by the Bankruptcy Court. The Sale Hearing may be adjourned from time to time without further notice to creditors or parties in interest other than by announcement of the adjournment in open court on the date scheduled for the Sale Hearing. 5. Objections, if any, to the Sale, or to the relief requested in the Motion (other than with respect to cure amounts and adequate assurance, which are subject to a separate notice, and other than with respect to the Bidding Procedures, which have already been approved by the Bankruptcy Court) must: (a) be in writing; (b) comply with the Bankruptcy Rules and the Local Bankruptcy Rules; (c) be filed with the clerk of the Bankruptcy Court for the District of Delaware, Third Floor, 824 Market Street, Wilmington, Delaware 19801, on or before 4:00 p.m. (prevailing Eastern Time) on August 24, 2009, or such later date and time as the Debtors may agree; and (d) be served so as to be received no later than 4:00 p.m. (prevailing Eastern Time) on the same day, upon (a) Electroglas, Inc., 5729 Fontanoso Way, San Jose, CA 95138-1015 (Attn: Company Officer); (b) counsel to the Debtors, Pepper Hamilton LLP, Hercules Plaza, Suite 5100, 1313 N. Market Street, P.O. Box 1709, Wilmington, Delaware 19899-1709(Attn: David B. Stratton, Esq. and James C. Carignan, Esq.); (c) special counsel to the Debtors, Morrison & Foerster LLP, 425 Market Street, San Francisco, California 94105 (Attn: G. Larry Engel, Esq.), and Morrison & Forester LLP, 1290 Avenue of the Americas, New York, New York 10019 (Attn: James J. DeCristofaro, Esq.); (d) co-counsel to the DIP Lenders, Cozen OConnor, Chase Manhattan Centre, 1201 North Market Street, Suite 1400, Wilmington, DE 19801 (Attn: Mark E. Felger, Esq.); (e) co-counsel to the DIP Lenders, Lovells LLP, 590 Madison Avenue, New York, New York 10022 (Attn: Christopher R. Donoho III, Esq.); (f) counsel to the Creditors Committee, Womble Carlyle Sandridge & Rice, PLLC, 222 Delaware Avenue, Suite 1501, Wilmington, Delaware 19801 (Attn: Steven K. Kortanek, Esq. and Matthew P. Ward, Esq.); and (g) the Office of the United States Trustee, 844 King Street, Room 2313, Wilmington, Delaware 19801 (Attn: Jane Leamy, Esq.). UNLESS AN OBJECTION IS TIMELY SERVED AND FILED IN ACCORDANCE WITH THIS NOTICE, IT MAY NOT BE CONSIDERED BY THE BANKRUPTCY COURT AND THE BANKRUPTCY COURT MAY GRANT THE RELIEF REQUESTED IN THE MOTION WITHOUT FURTHER HEARING AND NOTICE. 6. This Notice and the Sale Hearing is subject to the terms and conditions of the Motion, the Bidding Procedures Order, and the Bidding Procedures, which shall control in the event of any conflict and the Debtors encourage parties in interest to review those documents in their entirety. The Bidding Procedures do not impair the rights of secured creditors to credit bid. Parties interested in receiving more information regarding the sale of the Purchased Assets or to obtain a copy of any related document, subject to any necessary confidentiality agreement, may make a written request to Morrison & Foerster LLP, 755 Page Mill Road, Palo Alto, California 94304-1018 (Attn: Justin Bastian), special counsel to the Debtors. In addition, copies of the Motion, the Bidding Procedures Order and this Notice can be found on (a) the Bankruptcy Courts website, www.deb.uscourts.gov; and (b) www.omnimgt.com/sblite/electroglas, and are on file with the Clerk of the Bankruptcy Court, Third Floor, 824 Market Street, Wilmington, Delaware 19801.

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Dated: Wilmington, Delaware July 31, 2009

/s/ James C. Carignan David B. Stratton (DE No. 960) James C. Carignan (DE No. 4230) PEPPER HAMILTON LLP Hercules Plaza, Suite 5100 1313 N. Market Street, P.O. Box 1709 Wilmington, Delaware 19899-1709 Tel.: (302) 777-6500 Fax: (302) 421-8390 Section 327(a) Counsel to the Debtors -andMORRISON & FOERSTER LLP G. Larry Engel Vincent J. Novak 425 Market Street San Francisco, California 94105 Telephone: (415) 268-7000 Facsimile: (415) 268-7522 MORRISON & FOERSTER LLP James J. DeCristofaro Samantha Martin 1290 Avenue of the Americas New York, NY 10104 Telephone: (212) 468-8000 Facsimile: (212) 468-7900 Section 327(e) Counsel to the Debtors

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