Document:

Exhibit 10.4

                               AMENDMENT NO. 3 TO
                           LOAN AND SECURITY AGREEMENT

     THIS AMENDMENT NO. 3 TO LOAN AND SECURITY  AGREEMENT  ("Amendment") is made
and  entered  into as of April 25,  2006 by and  between  ELECTROGLAS,  INC.,  a
Delaware corporation ("Borrower") and COMERICA BANK ("Bank").

                                    RECITALS

     A.  Borrower  and Bank have  entered  into that  certain  Loan and Security
Agreement  dated as of July 16, 2004,  as amended by Amendment No. 1 to Loan and
Security  Agreement dated as of January 24, 2005 and Amendment No. 2 to Loan and
Security  Agreement  dated  as  of  July  12,  2005  (collectively,   the  "Loan
Agreement")  pursuant to which Bank has agreed to extend and make  available  to
Borrower certain credit facilities.

     B. Borrower  desires that Bank amend the Loan  Agreement upon the terms and
conditions more fully set forth herein.

     C. Subject to the  representations  and  warranties of Borrower  herein and
upon the terms and conditions set forth in this Amendment, Bank is willing to so
amend the Loan Agreement.

     D. This  Amendment,  the Loan  Agreement  and the other Loan  Documents (as
defined in the Loan Agreement),  together with all other documents  entered into
or  delivered  pursuant  to any of the  foregoing,  in each  case as  originally
executed  or  as  the  same  may  from  time  to  time  be  modified,   amended,
supplemented,  restated or superseded,  are hereinafter collectively referred to
as the "Loan Documents."

                                    AGREEMENT

     NOW,  THEREFORE,  in consideration of the foregoing recitals and the mutual
covenants  herein set forth and for other good and valuable  consideration,  the
receipt and  sufficiency of which are hereby  acknowledged,  and intending to be
legally  bound,  Borrower and Bank hereby  agree to amend the Loan  Agreement as
follows:

               1.  Definitions.  Unless  otherwise  defined  herein,  all  terms
defined in the Loan Agreement have the same meaning when used herein.

               2. Waiver.  Subject to the terms and  conditions set forth herein
and in reliance upon the  representations  and  warranties of Borrower set forth
herein,  Bank hereby waives the  violation of the  Effective  Tangible Net Worth
covenant  contained in Section  6.7(b) of the Loan Agreement with respect to the
fiscal  quarter  ending March 4, 2006.  This waiver is one-time only, is limited
precisely  as written,  and shall not be deemed to be a consent to the breach of
this  covenant  for any  other  quarterly  period,  or the  breach  of any other
covenant

                                       1

<PAGE>

               3. Amendments to Loan Agreement.

               a. The  definition  of  "Revolving  Maturity  Date"  contained in
Exhibit  A to the Loan  Agreement  is hereby  amended  and  restated  to read as
follows:

               "Revolving Maturity Date" means September 30, 2006.

               b.  Section  6.7(b) of the Loan  Agreement  is hereby  amended by
substituting "$46,000,000" for "$50,000,000" in the second line thereof.

               c. The Bank's  address  for the purpose of notices  contained  in
Section 10 of the Loan Agreement is amended as follows:

         If to Bank:        COMERICA BANK
                            75 East Trimble Road
                            Mail Code 4770
                            San Jose, CA  95131
                            FAX:  (408) 556-5091

         with a copy to:    COMERICA BANK
                            226 Airport Parkway, Suite 100
                            San Jose, CA  95110
                            Attn:  Robert Shutt, Senior Vice President & Manager
                            FAX:  (408) 451-8568

               4.  Ratification  and  Reaffirmation  of Liens.  Borrower  hereby
ratifies and reaffirms the validity and  enforceability  of all of the liens and
security  interests  heretofore  granted  pursuant  to the  Loan  Documents,  as
collateral security for the Obligations,  and acknowledge that all of such liens
and security  interests,  and all Collateral  heretofore pledged as security for
the Obligations, continues to be and remains Collateral for the Obligations from
and after the date hereof.

               5.  Representations  And  Warranties.   Borrower  represents  and
warrants  that its  representations  and  warranties  in the Loan  Documents (as
amended hereby) continue to be true and complete in all material  respects as of
the date hereof after giving effect to this Amendment (except to the extent such
specifically  relate to  another  date)  and that the  execution,  delivery  and
performance of this Amendment are duly authorized, do not require the consent or
approval  of any  governmental  body  or  regulatory  authority  and  are not in
contravention  of or in  conflict  with  any law or  regulation  or any  term or
provision of any other  agreement  entered into by  Borrower.  Borrower  further
represents  and warrants that, as of the date hereof after giving effect to this
Amendment, no Event of Default has occurred and is continuing.

               6. Full Force And Effect; Entire Agreement.  Except to the extent
expressly  provided  in this  Amendment,  the terms and  conditions  of the Loan
Agreement  and the other Loan  Documents  shall remain in full force and effect.
This  Amendment and the other Loan  Documents  constitute and contain the entire
agreement  of the parties  hereto and  supersede  any and all prior  agreements,
negotiations,  correspondence,  understandings  and  communications  between the
parties,  whether  written or oral,  respecting the subject  matter hereof.  The
parties  hereto  further  agree  that the Loan  Documents  comprise  the  entire
agreement of the parties  thereto and  supersede  any and all prior  agreements,
negotiations,  correspondence,  understandings and other communications  between
the parties thereto,  whether written or oral respecting the extension of credit
by Bank to Borrower and/or its affiliates. Except as expressly set forth herein,
the execution, delivery and performance of this Amendment shall not operate as a
waiver of, or as an amendment  of, any right,  power or remedy of Bank under the
Loan Agreement or any other Loan Document as in effect prior to the date hereof.

                                       2

<PAGE>

               7. Counterparts; Effectiveness. This Amendment may be executed in
any number of  counterparts,  each of which when so delivered shall be deemed an
original,  but all such counterparts taken together shall constitute but one and
the same  instrument.  This  Amendment  is  effective as of the date first above
written;  provided that, as a condition  precedent to the  effectiveness of this
Amendment,  (i) there shall have been no material adverse change in the business
operations   or  condition   (financial   or  otherwise)  of  Borrower  and  its
Subsidiaries  taken  as a whole,  no  material  impairment  of the  prospect  of
repayment  of any  portion of the  Obligations  owing to Bank,  and no  material
impairment of the value or priority of the security  interest in the  Collateral
and (ii) Bank shall have received,  in form and substance  satisfactory to Bank,
the following:

                    (a) this Amendment, duly executed by Borrower;

                    (b) payment of the fees and Bank Expenses then due specified
in Section 2.5 of the Loan Agreement, as amended hereby; and

                    (c) such  other  documents,  and  completion  of such  other
matters, as Bank may reasonably deem necessary or appropriate.

     IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be executed and  delivered by its duly  authorized  officer as of the date first
written above.

                                                   BORROWER:

                                                   ELECTROGLAS, INC.

                                                   By: /s/ Thomas E. Brunton
                                                       -------------------------

                                                   Title Chief Financial Officer
                                                         -----------------------

                                                   BANK:

                                                   COMERICA BANK

                                                   By: /s/ Robert R. Shutt
                                                       -------------------------

                                                   Title: Senior Vice President
                                                          ----------------------

                                       3Exhibit 10.5

                               AMENDMENT NO. 4 TO
                           LOAN AND SECURITY AGREEMENT

     THIS AMENDMENT NO. 4 TO LOAN AND SECURITY  AGREEMENT  ("Amendment") is made
and entered  into as of September  6, 2006 by and between  ELECTROGLAS,  INC., a
Delaware corporation ("Borrower") and COMERICA BANK ("Bank").

                                    RECITALS

     A.  Borrower  and Bank have  entered  into that  certain  Loan and Security
Agreement  dated as of July 16, 2004,  as amended by Amendment No. 1 to Loan and
Security  Agreement  dated as of January 24, 2005,  Amendment  No. 2 to Loan and
Security  Agreement  dated as of July 13, 2005,  and Amendment No. 3 to Loan and
Security  Agreement  dated  as  of  April  25,  2006  (collectively,  the  "Loan
Agreement")  pursuant to which Bank has agreed to extend and make  available  to
Borrower certain credit facilities.

     B. Borrower  desires that Bank amend the Loan  Agreement upon the terms and
conditions more fully set forth herein.

     C. Subject to the  representations  and  warranties of Borrower  herein and
upon the terms and conditions set forth in this Amendment, Bank is willing to so
amend the Loan Agreement.

     D. This  Amendment,  the Loan  Agreement  and the other Loan  Documents (as
defined in the Loan Agreement),  together with all other documents  entered into
or  delivered  pursuant  to any of the  foregoing,  in each  case as  originally
executed  or  as  the  same  may  from  time  to  time  be  modified,   amended,
supplemented,  restated or superseded,  are hereinafter collectively referred to
as the "Loan Documents."

                                    AGREEMENT

     NOW,  THEREFORE,  in consideration of the foregoing recitals and the mutual
covenants  herein set forth and for other good and valuable  consideration,  the
receipt and  sufficiency of which are hereby  acknowledged,  and intending to be
legally  bound,  Borrower and Bank hereby  agree to amend the Loan  Agreement as
follows:

          1. Definitions.  Unless otherwise defined herein, all terms defined in
the Loan Agreement have the same meaning when used herein.

          2. Amendments to Loan Agreement.

               a. Section  2.1(b)(i) of the Loan  Agreement is hereby amended by
deleting  "$2,000,000" in the sixth line thereof and  substituting  "$3,000,000"
therefor.

               b.  Section 2.5 of the Loan  Agreement  is hereby  amended (i) by
deleting the period at the end of Section  2.5(b) and  substituting a semi-colon
therefor and (ii) by adding the following new Section 2.5(c):

                                       1

<PAGE>

               "(c)  Commitment  Fee. On  September  6, 2006,  and on August 31,
2007, a commitment fee equal to $11,250, which shall be nonrefundable."

               c. Section  3.1(h) of the Loan  Agreement  is hereby  amended and
restated in its entirety to read as follows:

               "(h) if the initial  Credit  Extension  shall include a Borrowing
Base Advance,  an accounts  receivable  audit of the  Collateral,  at Borrower's
expense, the results of which shall be satisfactory to Bank;"

               d. Section  6.2(a)(i) of the Loan  Agreement is hereby amended by
deleting the words "fifty (50)" and substituting "forty-five (45)" therefor.

               e. Section  6.2(a)(iv) of the Loan Agreement is hereby amended by
deleting the words "fifty (50)" and substituting "forty-five (45)" therefor.

               f.  Section  6.2(b) of the Loan  Agreement  is hereby  amended by
deleting the words "thirty (30)" and substituting "twenty (20)" therefor.

               g. Section  6.2(e) of the Loan  Agreement  is hereby  amended and
restated in its entirety to read as follows:

               "(e) While any  Borrowing  Base  Advances are  outstanding,  Bank
shall have a right from time to time hereafter to audit Borrower's  Accounts and
appraise  Collateral  at Borrower's  expense,  provided that such audits will be
conducted  no more often than every 6 months  during usual  business  hours upon
reasonable  prior notice to Borrower unless an Event of Default has occurred and
is continuing."

               h.  Section  6.7 of the Loan  Agreement  is  hereby  amended  and
restated in its entirety to read as follows:

               "6.7  Financial  Covenants.  Borrower shall as of the last day of
each fiscal  quarter of Borrower  maintain the financial  ratio and covenant set
forth in  subsection  (a) below and shall at all times  maintain  the  financial
covenant set forth in subsection (b) below:

               (a) Adjusted  Quick Ratio.  A ratio of Cash plus net billed trade
accounts receivable  (provided such accounts receivable are "Eligible Accounts")
to all Indebtedness to Bank of at least 2.50 to 1.00.

               (b)  Minimum  Cash.  A  balance  of Cash in a Bank  money  market
account or a Bank deposit account of not less than $2,500,000."

                    i. Section 7.2 of the Loan  Agreement is hereby  amended and
restated in its entirety to read as follows:

                                       2

<PAGE>

               "7.2 Change in Name,  Location,  Executive  Office,  or Executive
Management; Change in Business; Change in Fiscal Year; Change in Control. Change
its name or the Borrower  State or relocate its chief  executive  office without
giving Bank written  notification  within (5) Business Days thereafter;  replace
its chief  executive  officer or chief  financial  officer  without  giving Bank
written  notification  within  (5)  Business  Days  thereafter;  engage  in  any
business,  or permit any of its  Subsidiaries  to engage in any business,  other
than or reasonably related or incidental to the businesses  currently engaged in
by Borrower; change its fiscal year end; or have a Change in Control."

               j.  Section  7.9 of the Loan  Agreement  is  hereby  amended  and
restated in its entirety to read as follows:

               "7.9  Subordinated  Debt.  Make any  payment  in  respect  of any
Subordinated  Debt, or permit any of its  Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt and except (i) for
the conversion of  Subordinated  Debt into equity  securities of Borrower,  (ii)
Borrower may prepay or pay Borrower's 5.25% Convertible  Subordinated  Notes due
2007  issued  pursuant  to the  Indenture  in full out of the  proceeds of a new
issuance  of  subordinated  debt  ("New   Subordinated   Debt")  not  to  exceed
$15,000,000  in the aggregate so long as before and after giving effect  thereto
no Event of Default exists and such  indebtedness  is subordinated in writing to
the debt owing by Borrower to Bank on terms  reasonably  acceptable to Bank (and
identified  as being such by Borrower and Bank),  and (iii)  Borrower may prepay
the New Subordinated  Debt in an aggregate  amount not to exceed  $2,500,000 per
year so long as before  and after  giving  effect  thereto  no Event of  Default
exists,  or  amend  any  provision  affecting  Bank's  rights  contained  in any
documentation  relating to the  Subordinated  Debt without  Bank's prior written
consent."

               k. Section 7 of the Loan  Agreement  is hereby  amended by adding
the following new Section 7.12 to the end thereof:

               "7.12 Capital  Expenditures.  Make or incur (or commit to make or
incur), or permit any of its Subsidiaries to make or incur (or commit to make or
incur), any Capital  Expenditures in an aggregate amount in excess of $2,000,000
in any calendar year."

                    l. Section 10 of the Loan  Agreement  is hereby  amended and
restated in its entirety to read as follows:

               "10. NOTICES.

               Unless  otherwise  provided  in this  Agreement,  all  notices or
demands by any party relating to this Agreement or any other  agreement  entered
into in  connection  herewith  shall be in writing  and  (except  for  financial
statements and other  informational  documents  which may be sent by first-class
mail,  postage  prepaid)  shall be personally  delivered or sent by a recognized
overnight  delivery  service,  certified mail,  postage prepaid,  return receipt
requested,  or by  telefacsimile  to Borrower or to Bank, as the case may be, at
its addresses set forth below:

                  If to Borrower:               Electroglas, Inc.
                                                5729 Fontanoso Way
                                                San Jose, CA 95138
                                                Attn:  Chief Financial Officer
                                                FAX:  (408) 528-3562

                                       3

<PAGE>

                  If to Bank:                   Comerica Bank
                                                75 East Trimble Road
                                                Mail Code 4770
                                                San Jose, CA  95131
                                                FAX:  (408) 556-5091

                  with a copy to:               Comerica Bank
                                                226 Airport Parkway, Suite 100
                                                San Jose, CA  95110
                                                Attn:  Robert Shutt, Senior Vice
                                                President & Manager
                                                FAX:  (408) 451-8568

               m. A new definition of "Capital  Expenditures" is hereby added to
Exhibit A to the Loan Agreement in alphabetical order to read as follows:

               "Capital  Expenditures" shall mean for any period, the sum of (i)
expenditures  (whether  paid in cash or accrued as a liability)  by the Borrower
and  its  Subsidiaries   during  such  period  that  are  included  in  "capital
expenditures,"  "additions to property,  plant or equipment" or comparable items
in the financial  statements of the Borrower and its  Subsidiaries,  and (ii) to
the extent not  included in clause (i),  the  aggregate  of all net  non-current
assets of businesses  acquired by the Borrower and its Subsidiaries  during that
period,  including all purchase price adjustments and all expenditures accounted
for by the  Borrower  and its  Subsidiaries  as  purchases  of  intangibles  and
licenses.

               n. The definition of "Eligible  Accounts"  contained in Exhibit A
to the Loan  Agreement is hereby  amended (i) by deleting the words "(50% in the
case of National  Semiconductor)" in clause (c) and substituting  therefor "(40%
in the case of ST Microelectronics  NV)" and (ii) by deleting the words "(30% in
the case of National  Semiconductor)"  in clause (d) and  substituting  therefor
"(40% in the case of ST Microelectronics NV)".

               o. Clause (iv) of the definition of "Eligible  Foreign  Accounts"
contained in Exhibit A to the Loan  Agreement is hereby  amended by deleting the
words  "Accounts  with  respect  to  which  the  account  debtor  is  any  of ST
Microelectronics, National Semiconductor, Philips, or Infineon" and substituting
"Accounts with respect to which the account debtor is any of ST Microelectronics
NV,  Philips   Semiconductor   (subsidiary   of  Royal  Philips   electronics  -
Netherlands), or DongbuAnam Semiconductor,  Inc., or a foreign subsidiary of any
of the following:  National Semiconductor,  Seagate Technologies,  International
Rectifier   Corporation,   Atmel  Corporation,   Intel  Corporation,   or  Amkor
Technology" therefor.

               p. The  definition  of  "Revolving  Maturity  Date"  contained in
Exhibit  A to the Loan  Agreement  is hereby  amended  and  restated  to read as
follows:

               "`Revolving Maturity Date' means August 31, 2008."

               q. Section 2 of Exhibit D to the Loan Agreement  (LIBOR Addendum)
is hereby amended and restated to read as follows:

                                       4

<PAGE>

               "2.  Interest  Rate  Options.  Borrower  shall have the following
options regarding the interest rate to be paid by Borrower on Advances under the
Loan Agreement:

                    (a) A rate  equal to two and a half  percent  (2.50%)  above
Bank's LIBOR, which rate shall be in effect during the relevant LIBOR Period; or

                    (b) A rate equal to one quarter of one percent (0.25%) above
the "Prime Rate" as defined in the Loan  Agreement  and quoted from time to time
by Bank as such rate may change from time to time."

                    r.  Exhibit  E  to  the  Loan  Agreement   (Borrowing   Base
Certificate)  is hereby deleted and replaced with Exhibit E in the form attached
to this Amendment.

                    s. Exhibit F to the Loan Agreement (Compliance  Certificate)
is hereby  deleted  and  replaced  with  Exhibit F in the form  attached to this
Amendment.

               3.  Ratification  and  Reaffirmation  of Liens.  Borrower  hereby
ratifies and reaffirms the validity and  enforceability  of all of the liens and
security  interests  heretofore  granted  pursuant  to the  Loan  Documents,  as
collateral security for the Obligations,  and acknowledge that all of such liens
and security  interests,  and all Collateral  heretofore pledged as security for
the Obligations, continues to be and remains Collateral for the Obligations from
and after the date hereof.

               4.  Representations  And  Warranties.  Except as set forth on the
Amendment to Schedule attached hereto, Borrower represents and warrants that its
representations  and  warranties  in the  Loan  Documents  (as  amended  hereby)
continue to be true and complete in all material  respects as of the date hereof
after giving effect to this  Amendment  (except to the extent such  specifically
relate to another date) and that the execution, delivery and performance of this
Amendment  are duly  authorized,  do not  require the consent or approval of any
governmental body or regulatory  authority and are not in contravention of or in
conflict  with any law or  regulation  or any  term or  provision  of any  other
agreement  entered into by Borrower.  Borrower  further  represents and warrants
that, as of the date hereof after giving effect to this  Amendment,  no Event of
Default has occurred and is continuing.

               5. Full Force And Effect; Entire Agreement.  Except to the extent
expressly  provided  in this  Amendment,  the terms and  conditions  of the Loan
Agreement  and the other Loan  Documents  shall remain in full force and effect.
This  Amendment and the other Loan  Documents  constitute and contain the entire
agreement  of the parties  hereto and  supersede  any and all prior  agreements,
negotiations,  correspondence,  understandings  and  communications  between the
parties,  whether  written or oral,  respecting the subject  matter hereof.  The
parties  hereto  further  agree  that the Loan  Documents  comprise  the  entire
agreement of the parties  thereto and  supersede  any and all prior  agreements,
negotiations,  correspondence,  understandings and other communications  between
the parties thereto,  whether written or oral respecting the extension of credit
by Bank to Borrower and/or its affiliates. Except as expressly set forth herein,
the execution, delivery and performance of this Amendment shall not operate as a
waiver of, or as an amendment  of, any right,  power or remedy of Bank under the
Loan Agreement or any other Loan Document as in effect prior to the date hereof.

                                       5

<PAGE>

               6. Counterparts; Effectiveness. This Amendment may be executed in
any number of  counterparts,  each of which when so delivered shall be deemed an
original,  but all such counterparts taken together shall constitute but one and
the same  instrument.  This  Amendment  is  effective as of the date first above
written;  provided that, as a condition  precedent to the  effectiveness of this
Amendment,  (i) there shall have been no material adverse change in the business
operations   or  condition   (financial   or  otherwise)  of  Borrower  and  its
Subsidiaries  taken  as a whole,  no  material  impairment  of the  prospect  of
repayment  of any  portion of the  Obligations  owing to Bank,  and no  material
impairment of the value or priority of the security  interest in the  Collateral
and (ii) Bank shall have received,  in form and substance  satisfactory to Bank,
the following:

                    (a) this Amendment, duly executed by Borrower;

                    (b) payment of the fees and Bank Expenses then due specified
in Section 2.5 of the Loan Agreement, as amended hereby; and

                    (c) such  other  documents,  and  completion  of such  other
matters, as Bank may reasonably deem necessary or appropriate.

                                       6

<PAGE>

     IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be executed and  delivered by its duly  authorized  officer as of the date first
written above.

                                                   BORROWER:

                                                   ELECTROGLAS, INC.

                                                   By:_/s/ Thomas E. Brunton
                                                       -------------------------

                                                   Title Chief Financial Officer
                                                         -----------------------

                                                   BANK:

                                                   COMERICA BANK

                                                   By: /s/ Robert R. Shutt
                                                       -------------------------

                                                   Title: Senior Vice President
                                                          ----------------------

                                       7

<PAGE>

                                    EXHIBIT E

                           BORROWING BASE CERTIFICATE

Borrower:  Electroglas, Inc.                              Lender:  Comerica Bank

Commitment Amount:  $7,500,000

ACCOUNTS RECEIVABLE*

         1.       Accounts Receivable Book Value as of ___          $___________
         2.       Additions (please explain on reverse)             $___________
         3.       TOTAL ACCOUNTS RECEIVABLE                         $___________

ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)*

         4.       Amounts over 90 days of invoice date      $___________
         5.       Balance of 25% (40% in the case of ST
                  Microelectronics NV) over 90 day accounts $___________
         6.       Concentration Limits                      $___________
         7.       Foreign Accounts                          $___________
         8.       Governmental Accounts                     $___________
         9.       Contra Accounts                           $___________
         10.      Demo Accounts                             $___________
         11.      Intercompany/Employee Accounts            $___________
         12.      Other (please explain on reverse)         $___________
         13.      TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS              $___________
         14.      Eligible Accounts (#3 minus #13)                  $___________
         15.      LOAN VALUE OF ACCOUNTS (80% of #14)               $___________

BALANCES

         16.      Revolving Line minus Non-Formula Amount           $___________
         17.      Total Funds Available [Lesser of #16 or #15]      $___________
         18.      Advances in excess of Non-Formula Amount          $___________
         19.      Outstanding under Letter of Credit Sublimit       $___________
         20.      RESERVE POSITION (#17 minus #18 and #19)          $___________

*    As determined in accordance  with the Loan and Security  Agreement dated as
     of July 16, 2004 between Borrower and Lender, as amended.

                                       8

<PAGE>

The undersigned represents and warrants that the foregoing is true, complete and
correct,  and that the information  reflected in this Borrowing Base Certificate
complies  with the  representations  and  warranties  set  forth in the Loan and
Security Agreement between the undersigned and Comerica Bank.

ELECTROGLAS, INC.

By:
    -------------------------------------------------
Authorized Signer

                                       9

<PAGE>

                                    EXHIBIT F

                             COMPLIANCE CERTIFICATE

TO:           COMERICA BANK

FROM:         Electroglas, Inc.

     The undersigned  authorized  officer of Electroglas,  Inc. hereby certifies
that in  accordance  with the  terms  and  conditions  of the Loan and  Security
Agreement  between  Borrower  and  Bank  (as  amended  from  time to  time,  the
"Agreement"),  (i)  Borrower is in  complete  compliance  for the period  ending
_______________  with all required  covenants except as noted below and (ii) all
representations  and warranties of Borrower stated in the Agreement are true and
correct in all material  respects as of the date hereof.  Attached  herewith are
the required documents supporting the above  certification.  The Officer further
certifies that this  Certificate  has been prepared in accordance with Generally
Accepted Accounting  Principles (GAAP)  consistently  applied from one period to
the next except as explained in an accompanying letter or footnotes.

     Please  indicate  compliance  status by circling  Yes/No  under  "Complies"
column.
<TABLE>
<S>                                                                           <C>                      <C>           <C>
Reporting Covenant                                                            Required                      Complies

Company prepared financial statements  (Consolidated)                Quarterly within 45 days          Yes            No
Annual  (CPA Audited; Consolidated)                                  FYE within 120 days               Yes            No
10K and 10Q                                                          Within 5 days after filing        Yes            No
                                                                     with the Securities and
                                                                     Exchange Commission unless
                                                                     available on EDGAR
Borrowing Base Certificate                                           Monthly within 20 days            Yes            No
                                                                     when Borrowing Base
                                                                     Advances are outstanding
</TABLE>

<TABLE>
<S>                                                      <C>                      <C>                  <C>           <C>
Financial Covenant                                            Required             Actual                   Complies

Maintain on a Quarterly Basis:
Minimum Adjusted Quick Ratio                             2.50:1.00                ____:1.00            Yes            No
Maintain at all times:
Minimum Cash with Bank                                   $2,500,000          $___________              Yes            No
</TABLE>

<TABLE>
<S>                                                            <C>                                         <C>     <C>
Comments Regarding Exceptions:  See Attached.                   ---------------------------------------------------------
                                                                BANK USE ONLY
                                                                Received by:
Sincerely,                                                                  ---------------------------------------------
                                                                              AUTHORIZED SIGNER
                                                                Date:
                                                                      ---------------------------------------------------
                                                                Verified:
------------------------------------------------------------              -----------------------------------------------
SIGNATURE                                                                     AUTHORIZED SIGNER

                                                                Date:
------------------------------------------------------------          ---------------------------------------------------
TITLE
ELECTROGLAS, INC.                                               Compliance Status                           Yes     No

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

                                       10

<PAGE>

                              AMENDMENT TO SCHEDULE

     The Schedule  attached to the Loan  Agreement is hereby amended by deleting
the reference to Morgan  Stanley & Co.  Incorporated  in Section 5.3 thereof and
inserting the following in substitution therefor:

     Deutsche Bank Alex Brown Inc.
     300 South Grand Avenue, 40th Floor
     Los Angeles, CA  90071

                                       11

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