<PAGE>

                                                                     EXHIBIT 4.2

                                                                       EXHIBIT A

              FORM OF 5.25% CONVERTIBLE SUBORDINATED NOTE DUE 2007
                           -------------------------

                                ELECTROGLAS, INC.

                             [FORM OF FACE OF NOTE]

[THE FOLLOWING PARAGRAPH SHALL APPEAR ON THE FACE OF EACH RESTRICTED NOTE.]

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS
OR AN EXEMPTION THEREFROM. THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THE SECURITIES.

[THE COMPANY MAY, BUT IS NOT OBLIGATED TO, INSTRUCT THE TRUSTEE TO PLACE THE
FOLLOWING PARAGRAPH ON THE FACE OF EACH NOTE HELD BY OR TRANSFERRED TO AN
"AFFILIATE" (AS DEFINED IN RULE 501(B) OF REGULATION D UNDER THE SECURITIES ACT)
OF THE COMPANY:]

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE HELD BY A PERSON WHO MAY BE
DEEMED TO BE AN AFFILIATE OF THE ISSUER FOR PURPOSES OF RULE 144 PROMULGATED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY BE
SOLD ONLY IN COMPLIANCE WITH RULE 144, PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A VALID EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT.

[THE FOLLOWING PARAGRAPH SHALL APPEAR ON THE FACE OF EACH GLOBAL NOTE.]

"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.6 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.5(b) OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.8 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."


                                      A-1
<PAGE>

                                ELECTROGLAS, INC.

                  5.25% Convertible Subordinated Note due 2007

No. ___                                                      $__________________

CUSIP No. [285324AA7 / 285324AB5]

      Electroglas, Inc., a corporation duly organized and validly existing under
the laws of the State of Delaware (herein called the "Company", which term
includes any successor corporation under the Indenture referred to on the
reverse hereof), for value received hereby promises to pay to
____________________, or registered assigns, the principal sum of ___________
Dollars on June 15, 2007 and to pay interest on said principal sum semi-annually
on June 15 and December 15 of each year, commencing December 15, 2002 at the
rate per annum specified in the title of this Note, accrued from June 21, 2002.
The interest so payable on any June 15 or December 15 will be paid to the person
in whose name this Note, or portion thereof (or one or more Predecessor Notes)
is registered at the close of business on the record date, which shall be the
June 1 or December 1 (whether or not a Business Day) next preceding such June 15
or December 15, respectively; provided that any such interest not punctually
paid or duly provided for shall be payable as provided in the Indenture. Payment
of the principal of and interest accrued on this Note (including Liquidated
Damages, if any) shall be made at the office or agency of the Company maintained
for that purpose in the Borough of Manhattan, The City of New York, or at any
other office or agency permitted by the Indenture, in such lawful money of the
United States of America as at the time of payment shall be legal tender for the
payment of public and private debts; provided further, however, that, with
respect to any holder of Notes with an aggregate principal amount equal to or in
excess of $500,000, at the request of such holder in writing to the Company,
interest on such holder's Notes shall be paid by wire transfer in immediately
available funds in accordance with the written wire transfer instruction
supplied by such holder from time to time to the Trustee and paying agent (if
different from the Trustee) at least two days prior to the applicable record
date.

      Reference is made to the further provisions of this Note set forth on the
reverse hereof, including, without limitation, provisions giving a holder of
this Note the right to convert this Note into Common Stock of the Company on the
terms and subject to the limitations referred to on the reverse hereof and as
more fully specified in the Indenture. Such further provisions shall for all
purposes have the same effect as though fully set forth at this place.

      This Note shall be deemed to be a contract made under the laws of the
State of New York, and for all purposes shall be construed in accordance with
and governed by the laws of said State.

      This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been manually signed by the
Trustee or a duly authorized authenticating agent under the Indenture.


                                      A-2
<PAGE>

      IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.

                                        ELECTROGLAS, INC.

                                        By:
                                           -------------------------------------
                                        Name:
                                        Title:

Attest:

By:
   ----------------------------------
   Name:
   Title:


[FORM OF CERTIFICATE OF AUTHENTICATION]

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

The Bank of New York,
as Trustee, certifies that this is one of the Notes described
in the within-named Indenture.

Dated:

By:
   ----------------------------------
   Authorized Signatory


                                      A-3
<PAGE>

                            [FORM OF REVERSE OF NOTE]

                                ELECTROGLAS, INC.

                  5.25% Convertible Subordinated Note due 2007

      This Note is one of a duly authorized issue of Notes of the Company,
designated as its 5.25% Convertible Subordinated Notes due 2007 (herein called
the "Notes"), limited to the aggregate principal amount of $35,500,000, all
issued or to be issued under and pursuant to an Indenture dated as of June 21,
2002 (herein called the "Indenture"), between the Company and The Bank of New
York (herein called the "Trustee"), to which the Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders of the Notes. All capitalized terms used
herein without definition shall have the meaning set forth in the Indenture.

      In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of, premium, if any, and accrued
interest on all Notes may be declared, and upon said declaration shall become,
due and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture. Liquidated damages paid pursuant to Section 15.2 of
the Indenture, if any, shall be paid within ten (10) Business Days of the date
from which such liquidated damages accrued pursuant to Section 15.2. Liquidated
Damages on the Notes paid pursuant to Section 2(f) of the Registration Rights
Agreement, if any, shall be paid at the times and in the manner provided
therein.

      The Indenture contains provisions permitting the Company and the Trustee
in certain limited circumstances, without the consent of the holders of the
Notes, and in other circumstances, with the consent of the holders of not less
than a majority in aggregate principal amount of the Notes at the time
outstanding, evidenced as in the Indenture provided, to execute amendments to
the Indenture or supplemental indentures adding any provisions to or changing in
any manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the holders of
the Notes; provided, however, that no such amendment or supplemental indenture
shall (i) extend the fixed maturity of any Note, or reduce the rate or extend
the time of payment of interest thereon, or reduce the principal amount thereof
or premium, if any, thereon, or reduce any amount payable on redemption or
repurchase thereof, impair, or change in any respect adverse to the holder of
Notes, the obligation of the Company to repurchase any Note at the option of the
holder upon the happening of a Repurchase Event, or impair or adversely affect
the right of any Noteholder to institute suit for the payment thereof, or change
the currency in which the Notes are payable, or impair or change in any respect
adverse to the Noteholders the right to convert the Notes into Common Stock
subject to the terms set forth herein, including Section 15.7, without the
consent of the holder of each Note so affected, or (ii) reduce the aforesaid
percentage of Notes, the holders of which are required to consent to any such
supplemental indenture, without the consent of the holders of all Notes then
outstanding.

      It is also provided in the Indenture that the holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding may
on behalf of the holders of all of the


                                      A-4
<PAGE>

Notes waive any past default or Event of Default under the Indenture and its
consequences except (i) a default in the payment of interest or premium, if any,
on, or the principal of, the Notes when due, (ii) a failure by the Company to
convert any Notes into Common Stock or (iii) a default in respect of a covenant
or provisions of the Indenture which under Article XI thereof cannot be modified
or amended without the consent of the holders of all Notes then outstanding. Any
such consent or waiver by a holder of this Note (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such holder and upon all
future holders and owners of this Note and any Notes which may be issued in
exchange or substitution hereof, irrespective of whether any notation thereof is
made upon this Note or such other Notes.

      The payment of principal of, premium, if any, and interest on the Notes
will be subordinated in right of payment to the prior payment in full of Senior
Indebtedness as set forth in Article IV of the Indenture.

      Interest on the Notes shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.

      The Notes are issuable in registered form without coupons in denominations
of $1,000 principal amount and integral multiples thereof. At the office or
agency of the Company referred to on the face hereof, and in the manner and
subject to the limitations provided in the Indenture, without payment of any
service charge but with payment of a sum sufficient to cover any tax,
assessments or other governmental charges that may be imposed in connection with
any registration or exchange of Notes, Notes may be exchanged for a like
aggregate principal amount of Notes of other authorized denominations.

      From and after June 21, 2005, the Company may, at its option, redeem all
or any part of the Notes, upon notice as set forth in the Indenture, and the
Company shall pay each holder of Notes redeemed the appropriate redemption price
(expressed as percentages of principal amount) set forth below, plus accrued and
unpaid interest thereon, if any, to, but not including, the date of redemption,
if redeemed during the 12-month period beginning on June 21 of the years
indicated below:

<TABLE>
<CAPTION>
                YEAR                               REDEMPTION PRICE
                ----                               ----------------
<S>                                                <C>
                2005                                   102.10%
                2006                                   101.05%
                2007                                     100%
</TABLE>

        If such notice of redemption has been given as provided in the
Indenture, the Notes or portion of Notes called for redemption shall, unless
converted into Common Stock pursuant to the terms of the Indenture, become due
and payable on the date and at the place or places stated in such notice at the
applicable redemption price and interest accrued to, but excluding, the date
fixed for redemption, and on and after such date (unless the Company shall
default in the payment of such Notes at the redemption price and interest
accrued to, but excluding, said date) interest on the Notes or portion of Notes
so called for redemption shall cease to accrue and such Notes shall cease after
the close of business on the Business Day next preceding the date fixed for
redemption to be


                                      A-5
<PAGE>

convertible into Common Stock and, except as provided in Sections 8.5 and 13.4
of the Indenture, to be entitled to any benefit or security under the Indenture,
and the holders of such Notes shall have no right in respect of such Notes
except the right to receive the redemption price and unpaid interest to, but
excluding, the date fixed for redemption. On presentation and surrender of such
Notes at a place of payment specified in such notice, such Notes or the
specified portions thereof to be redeemed shall be paid and redeemed by the
Company at the applicable redemption price and interest accrued thereon to, but
excluding, the date fixed for redemption; provided that, if the applicable
redemption date is an interest payment date, the semi-annual payment of interest
becoming due on such date shall be payable to the holders of such Notes
registered as such on the relevant record date subject to the terms and
provisions of Section 2.3 of the Indenture.

      The Notes are not subject to redemption through the operation of any
sinking fund.

      Upon the occurrence of a "Repurchase Event," the Noteholder has the right,
at such holder's option, to require the Company to repurchase all or any portion
of such holder's Notes on the 30th calendar day (or, if such 30th day is not a
Business Day, the next succeeding Business Day) after notice of such Repurchase
Event at a price equal to 105% of the principal amount of the Notes such holder
elects to require the Company to repurchase, together, in each case, with
accrued interest to the date fixed for repurchase; provided that if such
repurchase date is June 15 or December 15, then the interest payable on such
date shall be paid to the holder of record of the Note on the next preceding
June 1 or December 1, respectively. The Company or, at the written request of
the Company, the Trustee shall mail to all holders of record of the Notes a
notice of the occurrence of a Repurchase Event and of the repurchase right
arising as a result thereof on or before the fifth (5th) Business Day after the
occurrence of such Repurchase Event. If a redemption date pursuant to Article
III of the Indenture shall occur prior to any repurchase date established
pursuant to a Company Notice under Section 16.2 of the Indenture, provided that
the Company shall have deposited or set aside an amount of money sufficient to
redeem such Notes as set forth in Section 3.2 of the Indenture on or before such
repurchase date, all such Notes shall be redeemed pursuant to Article III of the
Indenture and the repurchase rights under Article XVI of the Indenture shall
have no effect.

      Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time following the date of original issuance of the
Notes and prior to the close of business on June 15, 2007 (except that, with
respect to any Note or portion of a Note that shall be called for redemption,
such right shall terminate, except as otherwise provided in the Indenture, at
the close of business on the Business Day next preceding the date fixed for
redemption unless the Company shall default in payment due upon redemption), to
convert the principal hereof or any portion of such principal which is $1,000 or
an integral multiple thereof, into that number of fully paid and non-assessable
shares of the Company's Common Stock, as said shares shall be constituted at the
date of conversion, obtained by dividing the principal amount of this Note or
portion thereof to be converted by the conversion price of $13.662 or such
conversion price as adjusted from time to time as provided in the Indenture,
upon surrender of this Note, together with a conversion notice as provided in
the Indenture and this Note, to the Company at the office or agency of the
Company maintained for that purpose in the Borough of Manhattan, The City of New
York, or at any other office or agency permitted by the Indenture, and, unless
the shares issuable on conversion are to be issued in the same name as this
Note, duly endorsed by, or accompanied by instruments of transfer in form


                                      A-6
<PAGE>

satisfactory to the Company duly executed by, the holder or by his duly
authorized attorney. The Company shall pay in cash, on this Note or portion
thereof surrendered for conversion during the period from the close of business
on any interest payment date to which interest has been fully paid through the
close of business on the Business Day preceding the record date for the next
such interest payment date, accrued and unpaid interest, if any, to, but
excluding, the date of conversion. Any such payment of interest shall be made
within ten (10) Business Days after the Conversion Date. Notwithstanding the
foregoing, if this Note shall be surrendered for conversion during the period
from the close of business on any record date for any interest payment date
through the close of business on the Business Day next preceding such interest
payment date, this Note (unless the Note or the portion thereof being converted
shall have been called for redemption pursuant to a redemption notice mailed to
the Noteholders in accordance with Section 3.2 of the Indenture or shall have
become due prior to such interest payment date as a result of a Repurchase
Event) must be accompanied by payment in New York Clearing House funds or other
funds acceptable to the Company, of an amount equal to the interest otherwise
payable on such interest payment date on the principal amount being converted;
provided, however, that no such payment need be made if there shall exist at the
time of conversion a default in the payment of interest on the Notes. No
fractional shares of Common Stock will be issued upon any conversion, but an
adjustment in cash will be paid to the holder, as provided in the Indenture, in
respect of any fraction of a share which would otherwise be issuable upon the
surrender of any Note or Notes for conversion.

      If a holder of this Note exercises the right of conversion set forth in
the Indenture prior to March 21, 2003, the Company shall make an additional
payment in cash to such holder with respect to the portion of this Note
converted, in an amount (a "Holder Conversion Provisional Payment") equal to
$39.375 per each $1,000 principal amount of the portion of the Note converted,
less the amount of any interest actually paid on this Note prior to the
Conversion Date (and, if this Note is converted between a record date and the
next payment date, less interest payable on each $1,000 principal amount of the
portion of this Note being converted on such next interest payment date). The
Company may make any such Holder Conversion Provisional Payment in whole or in
part in cash and/or through the issuance of Common Stock valued as provided in
the Indenture.

      In connection with any redemption of Notes, the Company may arrange for
the purchase and conversion of any Notes not converted prior to the expiration
of such conversion right by an agreement with one or more investment bankers or
other purchasers to purchase such Notes by paying to the Trustee in trust for
the Noteholders, on or before the date fixed for redemption, an amount not less
than the applicable redemption price, together with the Provisional Payment, if
any, and interest accrued to the date fixed for redemption, of such Notes.

      The Company may, at its option, automatically convert this Note at any
time prior to June 21, 2005 if the Closing Price per share of the Common Stock
has exceeded 150% of the Conversion Price then in effect for at least fifteen
(15) Trading Days within a period of twenty (20) consecutive Trading Days ending
five (5) Trading Days prior to the Automatic Conversion Date, provided that (i)
a registration statement covering the resale of the Conversion Shares is
effective and available for resale of the Notes and the Common Stock issuable
upon conversion of Notes from the twenty-fifth (25th) Trading Date prior to the
Automatic Conversion Date to and including the Automatic Conversion Date to the
extent required under the Registration Rights Agreement and (ii) the Conversion
Shares are listed for trading on the Principal Market (as defined in the
Securities


                                      A-7
<PAGE>

Purchase Agreement). If the Company exercises this right of conversion prior to
June 21, 2005, the Company shall make an additional payment in cash to each
holder of Notes with respect to the Notes converted, in an amount equal to
$157.50 per each $1,000 principal amount of this Note, less the amount of any
interest actually paid on this Note prior to the Conversion Date (and, if this
Note is converted between a record date and the next interest payment date, less
interest payable on each $1,000 principal amount of this Note on such next
interest payment date).

      Upon due presentment for registration of transfer of this Note and any
other documents as may be required to be delivered by the Indenture at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, or at any other office or agency permitted by the Indenture, a new Note or
Notes of authorized denominations for an equal aggregate principal amount will
be issued to the transferee in exchange thereof, subject to the requirements and
limitations provided in the Indenture, without charge except for any tax or
other governmental charge imposed in connection therewith.

      The Company, the Trustee, any authenticating agent, any paying agent, any
conversion agent and any Note registrar may deem and treat a registered holder
hereof as the absolute owner of this Note (whether or not this Note shall be
overdue and notwithstanding any notation of ownership or other writing hereon),
for the purpose of receiving payment hereof (including Liquidated Damages to the
extent accrued but unpaid), or on account hereof, for the conversion hereof and
for all other purposes; and neither the Company nor the Trustee nor any other
authenticating agent nor any paying agent nor any other conversion agent nor any
Note registrar shall be affected by any notice to the contrary. All such
payments so made to, or upon the order of, such registered holder for the time
being shall be valid, and, to the extent of the sum or sums so paid, effectual
to satisfy and discharge the liability for monies payable on this Note.

      No direct or indirect partner, employee, incorporator, stockholder,
director or officer, as such, past, present or future of the Company or any
successor corporation or any Subsidiary or any of the Company's Affiliates,
shall have any personal liability in respect of the obligations of the Company
under this Note by reason of his, her or its status as such partner, employee,
incorporator, stockholder, director or officer. The holder hereof by accepting
this Note waives and releases all such liability. Such waiver and release are
part of the consideration for the issuance of this Note.


                                      A-8
<PAGE>

                                  ABBREVIATIONS

      The following abbreviations, when used in the inscription of the face of
this Note, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM - as tenants in common            UNIF GIFT MIN ACT -

                                          ____________________________ Custodian
                                          (Cust)

TEN ENT - as tenants by the entireties    ____________________________
                                          (Minor)
JT TEN - as joint tenants with right
of survivorship and not as tenants        Uniform Gifts to Minors Act __________
in common                                                             (State)

Additional abbreviations may also be used though not in the above list.


                                      A-9
<PAGE>

              SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE


The following exchanges of a part of this Global Note for an interest in another
Global Note or for a Definitive Note, or exchanges of a part of another Global
Note or Definitive Note for an interest in this Global Note, have been made:


<TABLE>
<CAPTION>
                                                                                     Principal Amount
                         Amount of decrease in         Amount of increase in        of this Global Note     Signature of authorized
                          Principal Amount of           Principal Amount of           following such         officer of Trustee or
  Date of Exchange          this Global Note              this Global Note         decrease (or increase)       Note Custodian
  ----------------          ----------------              ----------------         ----------------------       --------------
<S>                      <C>                           <C>                         <C>                      <C>
</TABLE>


                                      A-10
<PAGE>

                           [FORM OF CONVERSION NOTICE]


Electroglas, Inc.
6024 Silver Creek Valley Road
San Jose, California  95138
Telecopier No.:  (408) 528-3542
Attention:  Chief Financial Officer

[Registrar address block]

      The undersigned registered owner of this Note hereby irrevocably exercises
the option to convert this Note, or the portion hereof (which is $1,000
principal amount or an integral multiple thereof) below designated, into shares
of Common Stock in accordance with the terms of the Indenture referred to in
this Note, and directs that the shares issuable and deliverable upon such
conversion, together with any check in payment for fractional shares and any
Notes representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If shares or any portion of this Note not converted are to be
issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto. Any amount required to be
paid by the undersigned on account of interest accompanies this Note.

If you want the shares issuable on conversion of this Note credited to your
balance account with The Depositary Trust Company through its Deposit Withdrawal
Agent Commission system, check the box: [ ]

Dated:
      -------------------------------
                                             -----------------------------------

                                             -----------------------------------
                                             Signature(s)

-------------------------------------
Signature Guarantee
Signature(s) must be guaranteed by an
eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and
credit unions) with membership in an
approved signature guarantee medallion
program pursuant to Securities and
Exchange Commission Rule 17Ad-15 if
shares of Common Stock are to be issued, or
Notes to be delivered, other than to and in
the name of the registered holder.


                                      A-11
<PAGE>

If you want the shares issuable on conversion of this Note credited to your
balance account with The Depository Trust Company through its Deposit Withdrawal
Agent Commission system , check the box: [ ]

Fill in for registration of shares if to
be issued, and Notes if to be
delivered, other than to and in the
name of the registered holder:

-------------------------------------
(Name)

-------------------------------------
(Street Address)

-------------------------------------
(City, State and Zip Code)

Please print name and address
                                             Principal amount to be converted
                                             (if less than all):  $______,000

                                             -----------------------------------
                                             Social Security or Other Taxpayer
                                             Identification Number


                                      A-12
<PAGE>

                       [FORM OF OPTION TO ELECT REPAYMENT
                            UPON A REPURCHASE EVENT]


Electroglas, Inc.
6024 Silver Creek Valley Road
San Jose, California  95138
Telecopier No.:  (408) 528-3542
Attention:  Chief Financial Officer

[Registrar address block]



      The undersigned registered owner of this Note hereby acknowledges receipt
of a notice from Electroglas, Inc. (the "Company") as to the occurrence of a
Repurchase Event with respect to the Company and requests and instructs the
Company to repay the entire principal amount of this Note, or the portion
thereof (which is $1,000 principal amount or an integral multiple thereof) below
designated, in accordance with the terms of the Indenture referred to in this
Note, together with accrued interest (including Liquidated Damages, if any) to,
but excluding, such date, to the registered holder hereof.

Dated:
      -------------------------------

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

                                             -----------------------------------
                                             Signature(s)

                                             -----------------------------------
                                             Social Security or Other Taxpayer
                                             Identification Number

                                             Principal amount to be repaid (if
                                             less than all): $______,000

                                             NOTICE: The above signatures of the
                                             holder(s) hereof must correspond
                                             with the name as written upon the
                                             face of the Note in every
                                             particular without alteration or
                                             enlargement or any change whatever.


                                      A-13
<PAGE>

                                                                       EXHIBIT B

                         FORM OF CERTIFICATE OF TRANSFER

Electroglas, Inc.
6024 Silver Creek Valley Road
San Jose, California  95138
Telecopier No.:  (408) 528-3542
Attention:  Chief Financial Officer

[Registrar address block]

      Re: 5.25% Convertible Subordinated Notes due 2007

Reference is hereby made to the Indenture, dated as of June 21, 2002 (the
"Indenture"), among Electroglas, Inc., as issuer (the "Company"), and The Bank
of New York (the "Trustee"). Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.

___________________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to ___________________________ (the "Transferee"), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies that:

                             [CHECK ALL THAT APPLY]

      1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A.

      The Transfer is being effected pursuant to and in accordance with Rule
144A under the United States Securities Act of 1933, as amended (the "Securities
Act"), and, accordingly, the Transferor hereby further certifies that the
beneficial interest or Definitive Note is being transferred to a Person that the
Transferor reasonably believed and believes is purchasing the beneficial
interest or Definitive Note for its own account, or for one or more accounts
with respect to which such Person exercises sole investment discretion, and such
Person and each such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and
such Transfer is in compliance with any applicable blue sky securities laws of
any state of the United States. Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred beneficial interest
or Definitive Note will be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the 144A Global Note and/or the
Definitive Note and in the Indenture and the Securities Act.

      2. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION
OF THE SECURITIES ACT OTHER THAN RULE 144A.

      The Transfer is being effected in compliance with the transfer
restrictions applicable to beneficial interests in Restricted Global Notes and
Restricted Definitive Notes and pursuant to and in


                                      B-1
<PAGE>

accordance with the Securities Act and any applicable blue sky securities laws
of any state of the United States, and accordingly the Transferor hereby further
certifies that (check one):

            (a) [ ] such Transfer is being effected pursuant to and in
      accordance with Rule 144 under the Securities Act;

                                       or

            (b) [ ] such Transfer is being effected to the Company or a
      subsidiary thereof;

                                       or

            (c) [ ] such Transfer is being effected pursuant to an effective
      registration statement under the Securities Act and in compliance with the
      prospectus delivery requirements of the Securities Act;

                                       or

            (d) [ ] such Transfer is being effected to an Institutional
      Accredited Investor and pursuant to an exemption from the registration
      requirements of the Securities Act other than Rule 144A or Rule 144, and
      the Transferor hereby further certifies that it has not engaged in any
      general solicitation within the meaning of Regulation D under the
      Securities Act and the Transfer complies with the transfer restrictions
      applicable to beneficial interests in a Restricted Global Note or
      Restricted Definitive Notes and the requirements of the exemption claimed,
      which certification is supported by (1) a certificate executed by the
      Transferee in the form of Exhibit D to the Indenture and (2) an Opinion of
      Counsel provided by the Transferor or the Transferee (a copy of which the
      Transferor has attached to this certification), to the effect that such
      Transfer is in compliance with the Securities Act. Upon consummation of
      the proposed transfer in accordance with the terms of the Indenture, the
      transferred beneficial interest or Definitive Note will be subject to the
      restrictions on transfer enumerated in the Private Placement Legend
      printed on the IAI Global Note and/or the Definitive Notes and in the
      Indenture and the Securities Act.

      3. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
THE UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.

            (a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer
      is being effected pursuant to and in accordance with Rule 144 under the
      Securities Act and in compliance with the transfer restrictions contained
      in the Indenture and any applicable blue sky securities laws of any state
      of the United States and (ii) the restrictions on transfer contained in
      the Indenture and the Private Placement Legend are not required in order
      to maintain compliance with the Securities Act. Upon consummation of the
      proposed Transfer in accordance with the terms of the Indenture, the
      transferred beneficial interest or Definitive Note will no longer be
      subject to the restrictions on transfer enumerated in the Private
      Placement Legend printed on the Restricted Global Notes, on Restricted
      Definitive Notes and in the Indenture.

            (b) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
      Transfer is being effected pursuant to and in compliance with an exemption
      from the registration requirements of the Securities Act other than Rule
      144, and in compliance with the transfer restrictions contained in the
      Indenture and any applicable blue sky securities laws of any State of the
      United States and (ii) the restrictions on transfer contained in the
      Indenture and


                                      B-2
<PAGE>

      the Private Placement Legend are not required in order to maintain
      compliance with the Securities Act. Upon consummation of the proposed
      Transfer in accordance with the terms of the Indenture, the transferred
      beneficial interest or Definitive Note will not be subject to the
      restrictions on transfer enumerated in the Private Placement Legend
      printed on the Restricted Global Notes or Restricted Definitive Notes and
      in the Indenture.

This certificate and the statements contained herein are made for your benefit
and the benefit of the Company.

                                        ----------------------------------------
                                              [Insert Name of Transferor]



                                        By:
                                           -------------------------------------
                                           Name:
                                           Title:

Dated:
      ----------------------------

---------------------------------------
Signature Guarantee

Signature(s) must be guaranteed by
an eligible Guarantor Institution
(banks, stock brokers, savings and
loan associations and credit unions)
with membership in an approved
signature guarantee medallion
program pursuant to Securities and
Exchange Commission
Rule 17Ad-15 if shares of Common
Stock are to be issued, or Notes to be
delivered, other than to and in the
name of the registered holder.


                                      B-3
<PAGE>

                       ANNEX A TO CERTIFICATE OF TRANSFER

1.    The Transferor owns and proposes to transfer the following:

                            [CHECK ONE OF (a) OR (b)]

      (a) [ ] A BENEFICIAL INTEREST IN THE:

                (i)   [ ] 144A Global Note (CUSIP _________), or

                (ii)  [ ] IAI Global Note (CUSIP _________); or

      (b) [ ] A RESTRICTED DEFINITIVE NOTE.


2.    After the Transfer the Transferee will hold:

                                   [CHECK ONE]

            (a) [ ] a beneficial interest in the:

                (i)   [ ] 144A Global Note (CUSIP _________), or

                (ii)  [ ] IAI Global Note (CUSIP _________); or

                (iii) [ ] Unrestricted Global Note (CUSIP _________); or

            (b) [ ] a Restricted Definitive Note; or

            (c) [ ] an Unrestricted Definitive Note,

            in accordance with the terms of the Indenture.


                                      B-4
<PAGE>

                                                                       EXHIBIT C

                         FORM OF CERTIFICATE OF EXCHANGE

Electroglas, Inc.
6024 Silver Creek Valley Road
San Jose, California  95138
Telecopier No.:  (408) 528-3542
Attention:  Chief Financial Officer

[Registrar address block]

      Re: 5.25% Convertible Subordinated Notes due 2007

                              (CUSIP ____________)

Reference is hereby made to the Indenture, dated as of June 21, 2002 (the
"Indenture"), among Electroglas, Inc., as issuer (the "Company"), and The Bank
of New York (the "Trustee"). Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.

__________________________, (the "Owner") owns and proposes to exchange the
Note[s] or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:

      1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL NOTE

            (a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
      RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL
      NOTE. In connection with the Exchange of the Owner's beneficial interest
      in a Restricted Global Note for a beneficial interest in an Unrestricted
      Global Note in an equal principal amount, the Owner hereby certifies (i)
      the beneficial interest is being acquired for the Owner's own account
      without transfer, (ii) such Exchange has been effected in compliance with
      the transfer restrictions applicable to the Global Notes and pursuant to
      and in accordance with the United States Securities Act of 1933, as
      amended (the "Securities Act"), (iii) the restrictions on transfer
      contained in the Indenture and the Private Placement Legend are not
      required in order to maintain compliance with the Securities Act and (iv)
      the beneficial interest in an Unrestricted Global Note is being acquired
      in compliance with any applicable blue sky securities laws of any state of
      the United States.

            (b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
      RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with
      the Exchange of the Owner's beneficial interest in a Restricted Global
      Note for an Unrestricted Definitive Note, the Owner hereby certifies (i)
      the Definitive Note is being acquired for the Owner's own account without
      transfer, (ii) such Exchange has been effected in compliance with the
      transfer restrictions applicable to the Restricted Global Notes and
      pursuant to and in accordance with the Securities Act, (iii) the
      restrictions on transfer contained in the


                                      C-1
<PAGE>

      Indenture and the Private Placement Legend are not required in order to
      maintain compliance with the Securities Act and (iv) the Definitive Note
      is being acquired in compliance with any applicable blue sky securities
      laws of any state of the United States.

            (c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
      BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
      Owner's Exchange of a Restricted Definitive Note for a beneficial interest
      in an Unrestricted Global Note, the Owner hereby certifies (i) the
      beneficial interest is being acquired for the Owner's own account without
      transfer, (ii) such Exchange has been effected in compliance with the
      transfer restrictions applicable to Restricted Definitive Notes and
      pursuant to and in accordance with the Securities Act, (iii) the
      restrictions on transfer contained in the Indenture and the Private
      Placement Legend are not required in order to maintain compliance with the
      Securities Act and (iv) the beneficial interest is being acquired in
      compliance with any applicable blue sky securities laws of any state of
      the United States.

            (d) [ ]CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
      UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
      Restricted Definitive Note for an Unrestricted Definitive Note, the Owner
      hereby certifies (i) the Unrestricted Definitive Note is being acquired
      for the Owner's own account without transfer, (ii) such Exchange has been
      effected in compliance with the transfer restrictions applicable to
      Restricted Definitive Notes and pursuant to and in accordance with the
      Securities Act, (iii) the restrictions on transfer contained in the
      Indenture and the Private Placement Legend are not required in order to
      maintain compliance with the Securities Act and (iv) the Unrestricted
      Definitive Note is being acquired in compliance with any applicable blue
      sky securities laws of any state of the United States.

      2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES

            (a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
      RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with
      the Exchange of the Owner's beneficial interest in a Restricted Global
      Note for a Restricted Definitive Note with an equal principal amount, the
      Owner hereby certifies that the Restricted Definitive Note is being
      acquired for the Owner's own account without transfer. Upon consummation
      of the proposed Exchange in accordance with the terms of the Indenture,
      the Restricted Definitive Note issued will continue to be subject to the
      restrictions on transfer enumerated in the Private Placement Legend
      printed on the Restricted Definitive Note and in the Indenture and the
      Securities Act.

            (b) [ ]CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
      BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the
      Exchange of the Owner's Restricted Definitive Note for a beneficial
      interest in the [CHECK ONE] [ ] 144A Global Note, [ ] IAI Global Note with
      an equal principal amount, the Owner hereby certifies (i) the beneficial
      interest is being acquired for the Owner's own account without transfer
      and (ii) such Exchange has been effected in compliance with the transfer
      restrictions applicable to the Restricted Global Notes and pursuant to and
      in accordance with the Securities Act, and in compliance with any
      applicable blue sky securities laws of any state of the United States.
      Upon consummation of the proposed Exchange in accordance


                                      C-2
<PAGE>

      with the terms of the Indenture, the beneficial interest issued will be
      subject to the restrictions on transfer enumerated in the Private
      Placement Legend printed on the relevant Restricted Global Note and in the
      Indenture and the Securities Act.

This certificate and the statements contained herein are made for your benefit
and the benefit of the Company.

                                             -----------------------------------
                                                 [Insert Name of Transferor]


                                             By:
                                                --------------------------------
                                             Name:
                                             Title:

Dated:
      -----------------------------

---------------------------------------------
Signature Guarantee

Signature(s) must be guaranteed
by an eligible Guarantor
Institution (banks, stock brokers,
savings and loan associations and
credit unions) with membership
in an approved signature
guarantee medallion program
pursuant to Securities and
Exchange Commission
Rule 17Ad-15 if shares of
Common Stock are to be issued,
or Notes to be delivered, other
than to and in the name of the
registered holder.


                                      C-3
<PAGE>

                                                                       EXHIBIT D

                   FORM OF TRANSFER LETTER OF REPRESENTATIONS

                           (TO BE DELIVERED BY HOLDER
                     UPON CERTAIN TRANSFERS OF NOTES WITHOUT
                        EFFECTIVE REGISTRATION STATEMENT)

We are delivering this letter in connection with the sale or transfer to us of
Notes (as defined in the Indenture, dated as of June 21, 2002, between
Electroglas, Inc., a Delaware corporation (the "Company") and The Bank of New
York, a New York banking corporation (the "Trustee")) other than pursuant to a
registration statement that has been declared effective under the Securities Act
of 1933, as amended (the "Securities Act").

We hereby confirm that:

      (i)   we are an "accredited investor" within the meaning of Rule
            501(a)(1),(2), (3), (5), (6), (7) or (8) under the Securities Act;

      (ii)  any purchase or receipt of the Notes by us will be for investment
            purposes and for our own account, not as a nominee or agent;

      (iii) we have such knowledge and experience in financial and business
            matters that we are capable of evaluating the merits and risks of
            purchasing or receiving the Notes;

      (iv)  we do not have need for liquidity in our investment in the Notes, we
            have the ability to bear the economic risks of our investment in the
            Notes for an indefinite period of time and we are able to afford the
            complete loss of our investment in the Notes;

      (v)   we are not acquiring the Notes with a view to any distribution
            thereof in a transaction that would violate the Securities Act or
            the securities laws of any State of the United States or any other
            applicable jurisdiction, and we have no present intention of
            selling, granting any participation in, or otherwise distributing
            the same;

      (vi)  we have had access to such information regarding the Company
            necessary in order for us to make an informed decision and any such
            information which we have requested have been made available for us
            or our attorney, accountant, or advisor; and

      (vii) we or our attorney, accountant, or advisor have had a reasonable
            opportunity to ask questions of and receive answers from a person or
            persons acting on behalf of the Company concerning the business,
            management and financial affairs of the Company and the terms and
            conditions of the acquisition by us of the Notes and all such
            questions have been answered to our full satisfaction, and we have
            acquired sufficient information about the Company to make an
            informed and knowledgeable decision to acquire the Notes.


                                      D-1
<PAGE>

      We understand that the Notes have not been registered under the Securities
Act, and we agree, on our own behalf and on behalf of each account for which we
acquire any Notes, that such Notes may be offered, resold, pledged or otherwise
transferred only (i) in accordance with an exemption from the registration
requirements of the Securities Act, (ii) to the Company or (iii) pursuant to an
effective registration statement, and, in each case, in accordance with any
applicable securities laws of any State of the United States or any other
applicable jurisdiction. We agree that we will furnish the Company and the
Trustee an opinion of counsel, if the Company so requests, that the foregoing
restrictions on transfer have been complied with. We understand that the Trustee
will not be required to accept for registration of transfer any Notes, except
upon presentation of evidence satisfactory to the Company, including an opinion
of counsel if the Company so requests, that the foregoing restrictions on
transfer have been complied with.

      We acknowledge that the Company and others will rely upon our
confirmations, acknowledgements and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.



                                             -----------------------------------
                                             (Name)




                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                             Address:


                                      D-2