UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

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

Chapter 11 Case No. 09-12416 (PJW) (Joint Administration Pending)

Related Docket No. 6

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INTERIM ORDER (I) PROHIBITING UTILITIES FROM INTERRUPTING SERVICE AND (II) APPROVING PROCEDURE FOR PROVIDING ADEQUATE ASSURANCE OF PAYMENT THIS MATIER having come before the Bankruptcy Court upon the motion (the "Motion") of the Debtors for entry of an interim and final order: (a) prohibiting utility service providers from altering, refusing or discontinuing services to, or discriminating against, the Debtors on account ofprepetition invoices; and (b) determining that the Debtors' proposed adequate assurance, as described in the Motion and this Order, provide utility service providers with adequate assurance of payment for postpetition utility services within the meaning of section 366 of the Bankruptcy Code; and the Bankruptcy Court having found that: (a) it has jurisdiction over the matters raised in the Motion pursuant to 28 U.S. C. 157 and 1334(b); (b) this is a core proceeding pursuant to 28 U.S.C. 157(b)(2); (c) venue lies properly with the Bankruptcy Court; (d) the relief requested in the Motion is in the best interests of the Debtors, their estates and their creditors; (e) proper and adequate notice of the Motion and the hearing on the Motion has been given and that no other or further notice is necessary or required; and (f)
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The Debtors are Electroglas, Inc. (EIN 77-0336101) and Electroglas International, Inc. (EIN 77-034501 1). All capitalized terms used but not otherwise defined in this Order shall have the meanings ascribed to them in the Motion.

Docket No. 34 July 13, 2009

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upon the record and after due deliberation, good and sufficient cause exists for granting the relief requested in the Motion; it is hereby ORDERED, ADJUDGED AND DECREED THAT: 1. The Motion is GRANTED, as stated herein, on an interim basis pending a final

hearing thereon, which is hereby scheduled for

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on

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objection to be filed and served so as to be received on or before 2009. 2.

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(J).

Within ten (1 0) days after the date of entry of this Order, the Debtors shall furnish

the Utility Companies (with the exception of PG&E) adequate assurance of payment for postpetition date services by making a deposit equal to 50% of the Debtors' estimated cost of its postpetition monthly utility consumption (a "Utility Deposit") to each Utility Company for the purpose of providing such Utility Company with adequate assurance of payment of its postpetition date services to the Debtors. 3. Except in accordance with the procedures set forth below, absent further order of

the Court, each Utility Company is prohibited from (a) altering, refusing or discontinuing service to, or discriminating against the Debtors solely on the basis of the commencement of this case or on account of any unpaid invoice for services provided before the Petition Date and (b) requiring the payment of any additional deposit or other security in connection with the Utility Companies' continued provision of Utility Services, including the furnishing of water and sanitation, telephone, gas, and electricity services, or any other utility service oflike kind to the Debtors. 4. If a Utility Company is not satisfied with the adequate assurance of future

payment in the form of the Utility Deposit provided by the Debtors (or as to PG&E, its letter of credit), then the Utility Company must serve a written request (the "Request") upon the Debtors

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setting forth the location(s) for which Utility Services are provided, the account number(s) for such location(s), the outstanding balance for each account, a summary of the Debtors payment history on each account, and an explanation of why the Utility Deposit is inadequate assurance of payment. 5. The Request must be actually received by the Debtors and Debtors' counsel,

Pepper Hamilton LLP, Attn: David B. Stratton and James C. Carignan, Hercules Plaza - Suite 5100, 1313 Market Street, P.O. Box 1709 Wilmington, DE 19899-1709, within forty-five (45) days of the date of the interim order granting this Motion (the "Request Deadline"). 6. Without further order of the Court, the Debtors may enter into agreements

granting additional adequate assurance to a Utility Company serving a timely Request, if the Debtors in their discretion determine that the Request is reasonable. 7. If the Debtors believe that a Request is unreasonable, the Debtors within thirty

(30) days after the Request Deadline date shall file a motion pursuant to section 366(c)(2) of the Bankruptcy Code (a "Determination Motion"), seeking a determination from the Court that the Utility Deposit paid to (or letter of credit held by) the objecting Utility Company, plus any additional consideration offered by the Debtors, constitute adequate assurance of payment. Pending notice and a hearing on the Determination Motion, the Utility Company that is the subject of the unresolved Request may not alter, refuse, or discontinue services to the Debtors, nor exercise any set off against Utility Deposit. 8. Any Utility Company that fails to make a timely Request shall be deemed to be

satisfied that the Utility Deposit constitutes adequate assurance of payment. 9. The Debtors may supplement the list of Utility Companies on Exhibit C to the

Motion. If the Debtors supplement the list subsequent to the filing of this Motion, the Debtors

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will serve a copy of the Motion and this Order on any Utility Company that is added to the list by such a supplement (the "Supplemental Service"). In addition, the Debtors will provide a Utility Deposit in the amount of 50% of the estimated cost of monthly utility consumption for the added Utility Company. Any subsequently added Utility Company set forth on a supplement to Exhibit C to the Motion will fall within the scope of this Order from the date of the filing of the supplemental Exhibit C. Such an added Utility Company shall have thirty (30) days from the date of service of the Motion and the Order to make a Request. If such Request is made, the Debtors and the Utility Company making the Request shall be bound by the Procedures set forth herein, as applicable. 10. The Debtors may terminate the services of any Utility Company by providing

written notice (a "Termination Notice"). Upon receipt of a Termination Notice by a Utility Company, the Utility Company shall immediately refund any Utility Deposit to the Debtors, after giving effect to any rights of setoff or any claims the Utility Company may assert against the Debtors with respect to the Utility Deposit. The Debtors' rights to oppose any such setoff or claims of the Utility Companies are reserved. 11. Nothing in this order shall be deemed to vacate or modify any other restrictions

on the termination of service by a Utility Company as provided by sections 362 and 365 of the Bankruptcy Code or other applicable law. Nothing herein or in the Motion shall constitute postpetition assumption or adoption of any agreement pursuant to section 365 of the Bankruptcy Code, nor shall anything herein be deemed a waiver by the Debtors or any other party of any rights with respect to the assumption or rejection of an executory contract.

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12.

The Bankruptcy Court shall retain jurisdiction with respect to all matters arising

from or related to the implementation of this Order.

Dated: July l ~009 Wilmington, Delaware

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