INTERCREDITOR AND SUBORDINATION AGREEMENT

Exhibit 10.4

INTERCREDITOR AND SUBORDINATION AGREEMENT

This INTERCREDITOR AND SUBORDINATION AGREEMENT, dated as of March 26, 2007, is entered into by and among Comerica Bank (“ Bank ”), The Bank of New York Trust Company, N.A., as trustee under the Indenture referred to below and collateral agent under the Security Agreement referred to below (in both such capacities, herein, the “ Trustee ”), Electroglas, Inc., a Delaware corporation (“ Electroglas ”) and Electroglas International, Inc., a Delaware corporation (“ International ”).

WITNESSETH:

WHEREAS, Bank and Electroglas have entered into a Loan and Security Agreement dated as of July 16, 2004 pursuant to which Bank has agreed to extend and make available to the Electroglas certain advances of money upon the terms and conditions set forth therein (as such agreement may be amended, restated, amended and restated, extended, supplemented or otherwise modified, from time to time at the option of the parties thereto, and any other agreements pursuant to which any of the indebtedness, commitments, obligations, costs, expenses, fees, reimbursements, indemnities or other obligations payable or owing thereunder may be refinanced, restructured, renewed, extended, increased, refunded or replaced as any such other agreements may from time to time at the option of the parties thereto be amended, restated, amended and restated, extended, supplemented or otherwise modified, being collectively referred to herein as the “ Senior Facility ”);

WHEREAS, the Electroglas, International and The Bank of New York Trust Company, N.A., in its capacity as Trustee, propose to enter into an Indenture, dated as of March 26, 2007 (as such Indenture may be amended, restated, amended and restated, extended, supplemented or otherwise modified, from time to time at the option of the parties thereto, the “ Indenture ”), governing the rights and duties of the Electroglas under the 6.25% Convertible Senior Subordinated Secured Notes due 2027 (the “ Notes ”);

WHEREAS, in connection with the Indenture, Electroglas, International and The Bank of New York Trust Company, N.A. (in its capacity as collateral agent and any successor collateral agent thereunder, the “ Collateral Agent ”) propose to enter into a Security Agreement dated as of March 26, 2007 (as such Security Agreement may be amended, restated, amended and restated, extended, supplemented or otherwise modified, from time to time at the option of the parties thereto, the “ Noteholder Security Agreement ”), with respect to the liens granted by the Borrower and International in favor of the Collateral Agent to secure the Obligations of the Borrower and International under and as defined in the Indenture;

WHEREAS, Bank requires in connection with granting its consent to the Indenture and Noteholder Security Agreement that certain amendments be made to the Senior Facility, that International guarantee the obligations of Borrower under the Senior Facility and grant a security interest in its assets to secured such guarantee, and that certain other Subsidiaries (as defined herein) hereafter guaranty the Senior Facilities in the future (International and such future Subsidiaries as shall guarantee the Senior Facilities referred to herein as “ Subsidiary Guarantors ”, and together with Electroglas referred to herein individually and collectively as “ Borrower ”);

WHEREAS, Bank requires that Trustee, on behalf of itself and the Noteholders (as defined herein) subordinate, and the Trustee has agreed to subordinate, its rights to payment under the Notes, the Indenture and the documents entered into in connection therewith together with the security interest and lien of the Trustee in the Common Collateral (as defined herein), to the security interest and lien of Bank in the Common Collateral, and to Bank’s rights and remedies as a secured party related thereto, all on the terms set forth herein; and

WHEREAS, it is a condition to the closing of the purchase and sale of the Notes under the Securities Purchase Agreement (as defined herein), that Bank and the Trustee (for itself and for the benefit of the Noteholders) enter into this Agreement and the Borrower acknowledges and agrees to the same;

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the adequacy and receipt of which are hereby acknowledged, and in reliance upon the representations, warranties and covenants herein contained, the parties hereto, intending to be legally bound, hereby agree as follows:

Section 1.  Definitions . As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and the plural form of the terms indicated):

“ Agreement ” shall mean this Intercreditor and Subordination Agreement, as amended, restated, amended and restated, extended, supplemented or otherwise modified, from time to time in accordance with the terms hereof.

“ Bank ” shall include, in addition to Bank as referred to in the recitals hereto, the then acting collateral agent for Bank (or if there is more than one agent, a majority of them) under the Senior Lender Documents and any successor thereto exercising substantially the same rights and powers, or if there is no acting agent under the Senior Facility, the lenders under the Senior Lender Documents having a majority in principal amount outstanding and committed thereunder.

“ Bankruptcy Code ” shall mean title 11 of the United States Code (11 U.S.C. 101 et seq.), as amended from time to time and any successor statute.

“ Collateral Agent ” shall have the meaning set forth in the recitals hereto.

“ Common Collateral ” shall mean all of the assets of the Borrower or any of its Subsidiaries whether real, personal or mixed, constituting both Senior Lender Collateral and Noteholder Collateral.

“ Comparable Noteholder Collateral Document ” shall mean, in relation to any Common Collateral subject to any Senior Lender Collateral Document, that Noteholder Collateral Document which creates a security interest in the same Common Collateral, granted by the Borrower or its Subsidiaries.

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“ DIP Financing ” shall have the meaning set forth in Section 6.1 hereof.

“ Discharge of First Priority Lien Obligations ” shall mean payment in full in cash of the principal of, interest and premium, if any, on all First Priority Lien Obligations and the termination of any commitments of Bank under the Senior Facility.

“ Equity Interests ” shall mean capital stock or warrants, options or other rights to subscribe for, acquire or receive capital stock (but excluding any debt security which is convertible into, or exchangeable for, capital stock).

“ First Priority Lien Obligations ” shall mean any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other obligations under the Senior Facility, including, without limitation, all interest accrued or accruing (or which would, absent the commencement of an Insolvency or Liquidation Proceeding, accrue) after the commencement of an Insolvency or Liquidation Proceeding in accordance with and at the rate specified in the Senior Facility or other Senior Lender Documents whether or not the claim for such interest is allowed as a claim in such Proceeding; provided, however, that First Priority Lien Obligations shall not include principal amounts outstanding to the extent the same shall exceed the Maximum Principal Amount. To the extent any payment with respect to the First Priority Lien Obligations (whether by or on behalf of Borrower, as proceeds of security, enforcement of any right of setoff or otherwise) is declared to be fraudulent or preferential in any respect, set aside or required to be paid to a debtor in possession, trustee, receiver or similar Person, the obligation or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred. For purposes of this definition, all references to indebtedness or obligations of the Borrower shall be deemed to include any such indebtedness or obligations of its Subsidiaries as shall from time to time guarantee or otherwise become liable for the First Priority Lien Obligations of Electroglas.

“ Indenture ” shall have the meaning set forth in the recitals hereto.

“ Insolvency or Liquidation Proceeding ” shall mean (a) any voluntary or involuntary case or proceeding under the Bankruptcy Code with respect to the Borrower or a Subsidiary of the Borrower, (b) any other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to the Borrower or a Subsidiary of the Borrower or with respect to any of its assets, (c) any liquidation, dissolution, reorganization or winding up of the Borrower or a Subsidiary of the Borrower whether voluntary or involuntary and whether or not involving insolvency or bankruptcy or (d) any assignment for the benefit of creditors or any other marshalling of assets and liabilities of the Borrower or a Subsidiary of the Borrower.

“ Lien ” shall mean, with respect to any asset, any mortgage, deed of trust, deed to secure debt, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement or any lease in the nature thereof); provided that in no event shall an operating lease be deemed to constitute a Lien.

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“ Maximum Principal Amount ” shall mean, as of the applicable date of determination, (i) the aggregate principal amount (including the undrawn amount of all letters of credit) of indebtedness under the Senior Facility as of such date up to, but not in excess of $8,250,000 minus (ii) any permanent reductions in the commitment under the Senior Facility after the date hereof in connection with a prepayment of indebtedness outstanding under the Senior Facility required by reason of any sale of assets by the Borrower and its Subsidiaries.

“ Notes ” shall have the meaning set forth in the recitals hereto.

“ Noteholder ” as applied to any Note, shall mean any Person in whose name at the time a particular Note is registered on the note register maintained pursuant to the Indenture.

“ Noteholder Collateral ” shall mean all of the assets of the Borrower and any of its Subsidiaries whether real, personal or mixed, in which the Noteholders or the Trustee or any of them now or hereafter holds a Lien as security for the Second Priority Lien Obligations.

“ Noteholder Collateral Documents ” shall mean the Noteholder Security Agreement and any document or instrument executed and delivered pursuant to any Noteholder Document at any time or otherwise pursuant to which a Lien is granted by the Borrower or its Subsidiaries to secure the Second Priority Lien Obligations or under which rights or remedies with respect to any such Lien are governed, as the same may be amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time.

“ Noteholder Documents ” shall mean the Securities Purchase Agreement, the Registration Rights Agreement, the Indenture, the Notes, the Noteholder Collateral Documents, any guaranty and any other related document or instrument executed and delivered pursuant to any Noteholder Document at any time or otherwise evidencing any Second Priority Lien Obligations, as the same may be amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time.

“ Noteholder Security Agreement ” shall have the meaning set forth in the recitals hereto.

“ Noteholders ” shall mean the Persons holding the Notes or otherwise entitled to the benefit of the Second Priority Lien Obligations.

“ Payment Blockage Notice ” shall have the meaning set forth in Section 2.5 hereof.

“ Payment Blockage Period ” shall have the meaning set forth in Section 2.5 hereof.

“ Payment Default ” shall have the meaning set forth in Section 2.5 hereof.

“ Person ” shall mean any person, individual, sole proprietorship, partnership, joint venture, limited liability company, corporation, trust, unincorporated organization, association, institution, entity or other party, including, without limitation, any government and any political subdivision, agency or instrumentality thereof.

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“ Recovery ” shall have the meaning set forth in Section 6.6 hereof.

“ Refinancing Senior Lenders ” shall have the meaning set forth in Section 8.12 hereof.

“ Registration Rights Agreement ” shall mean that certain Registration Rights Agreement, dated as of March 26, 2007, among the Borrower and the Buyers as defined therein, as such agreement may be amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time.

“ Second Priority Lien Obligations ” shall mean any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the Noteholder Documents, including without limitation, the Conversion Price (as defined in the Indenture), the Company Conversion Provisional Payment (as defined in the Indenture), the redemption price for Notes called for redemption in accordance with Section 3.2 of the Indenture, the Repurchase Price (as defined in the Indenture) with respect to Notes submitted for repurchase in accordance with Section 16.1 of the Indenture, Extension Fees (as defined in the Indenture), Liquidated Damages (as defined in the Indenture), expenses or any other amounts in respect of each and all of the Notes and all other obligations, liabilities and indebtedness of every kind, nature and description owing by the Borrower under the Noteholder Documents in each case whether now or hereafter existing, direct or indirect, absolute or contingent, due or not due, primary or secondary, liquidated or unliquidated, renewed or restructured, whether or not from time to time decreased or extinguished and later increased, created or incurred, whether or not arising on or after the commencement of a proceeding under Title 11, U.S. Code or any similar federal or state law for the relief of debtors (including post-petition interest) and whether or not allowed or allowable as a claim in any such proceeding. For purposes of this definition, all references to indebtedness or obligations of the Borrower shall be deemed to include any such indebtedness or obligations of the Subsidiaries.

“ Securities Purchase Agreement ” shall mean that certain Securities Purchase Agreement, dated March 21, 2007, among the Borrower and the parties listed on the Schedule of Buyers attached thereto as Exhibit A, as such agreement may be amended, restated, amended and restated, extended, supplemented or otherwise modified, from time to time.

“ Senior Facility ” shall have the meaning set forth in the recitals hereto.

“ Senior Lender Collateral ” shall mean all of the assets of the Borrower and any of its Subsidiaries whether real, personal or mixed, which is the subject of a Lien that secures any First Priority Lien Obligation.

“ Senior Lender Collateral Documents ” shall mean the Senior Facility and any other document or instrument pursuant to which a Lien is granted securing the First Priority Lien Obligations, as the same may be amended, restated, amended and restated, extended, supplemented or otherwise modified, from time to time.

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“ Senior Lender Documents ” shall mean the Senior Facility, all documents and instruments evidencing any other obligation under the Senior Facility or any First Priority Lien Obligation and any other related document or instrument executed or delivered pursuant to any Senior Lender Document at any time or otherwise evidencing any First Priority Lien Obligations, as any such document or instrument may be amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time.

“ Subsidiary ” shall mean a Person more than 50% of the outstanding voting stock or other Equity Interests of which is owned, directly or indirectly, by the Borrower or by one or more of its Subsidiaries, or by the Borrower and one or more of its Subsidiaries. For the purposes of this definition, “voting stock” means stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency.

“ Trustee ” shall include, in addition to the Trustee referred to in the recitals hereto, the then acting collateral agent under the Indenture and any successor thereto exercising substantially the same rights and powers, or if there is no acting collateral agent under the Indenture, the Noteholders holding a majority in principal amount of Notes then outstanding.

“ Uniform Commercial Code ” or “ UCC ” shall mean the Uniform Commercial Code of the State of New York, as amended from time to time.

Section 2.  Lien and Payment Priorities .

2.1  Lien Subordination . Notwithstanding the date, manner or order of grant, attachment or perfection of any Liens granted to the Trustee or the Noteholders on the Common Collateral or of any Liens granted to Bank on the Common Collateral and notwithstanding any provision of the UCC, or any applicable law or the Noteholder Documents or the Senior Lender Documents or any other circumstance whatsoever, the Trustee, on behalf of itself and the Noteholders, hereby agrees that: (a) any Lien on the Common Collateral securing the First Priority Lien Obligations now or hereafter held by Bank shall be senior and prior to any Lien on the Common Collateral securing the Second Priority Lien Obligations; and (b) any Lien on the Common Collateral now or hereafter held by the Trustee or the Noteholders regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the Common Collateral securing the First Priority Lien Obligations. All Liens on the Common Collateral securing the First Priority Lien Obligations shall be and remain senior to all Liens on the Common Collateral securing the Second Priority Lien Obligations for all purposes. For the avoidance of doubt, in the event the Trustee or any Noteholder becomes a judgment lien creditor in respect of Common Collateral as a result of its enforcement of its rights as an unsecured creditor, such judgment lien shall be subordinated to the Liens securing First Priority Lien Obligations on the same basis as the other Liens securing the Second Priority Lien Obligations are so subordinated to such First Priority Lien Obligations under this Agreement. The Trustee on behalf of itself and each Noteholder, agrees not to take or cause to be taken any action, the purpose or effect of which is to make any Lien in respect of any of the Common Collateral pari passu with or senior to, or to give the

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Trustee or any Noteholder any preference or priority relative to, the liens in favor of Bank in respect of the Senior Lender Collateral. For the purposes of the foregoing allocation of priorities, any claim of a right of set-off shall be treated in all respects as a Lien, and no claimed right of set-off shall be asserted by the Trustee on behalf of itself or any Noteholder to defeat or diminish the rights or priorities of the Lien of Bank provided for herein.

2.2  Prohibition on Contesting Liens . Each of the Trustee, for itself and on behalf of each Noteholder, and Bank agrees that it shall not (and hereby waives any right to) contest or support any other Person in contesting, in any proceeding (including, without limitation, any Insolvency or Liquidation Proceeding), the unavoidability, priority, validity or enforceability of a Lien held by Bank in the Senior Lender Collateral or by the Trustee or Noteholders in the Common Collateral, as the case may be.

2.3  No New Liens . So long as the Discharge of First Priority Lien Obligations has not occurred, (a) the parties hereto agree that, after the date hereof, if the Trustee shall hold any Lien on any assets of the Borrower or its Subsidiaries securing the Second Priority Lien Obligations that are not also Senior Lender Collateral, the Trustee, upon demand by Bank, will either release such Lien or assign it to Bank as security for the First Priority Lien Obligations, (b) the parties hereto agree that, after the date hereof, if Bank shall hold any Lien on any assets of the Borrower or any of its Subsidiaries securing the First Priority Lien Obligations that are not also Noteholder Collateral, if required by the Noteholder Security Agreement, the Borrower or its Subsidiaries, as applicable, shall grant a second-priority Lien on such assets to the Trustee as security for the Second Priority Lien Obligations, and (c) the Borrower agrees not to grant or to permit any of its Subsidiaries to grant any Lien on any of their assets in favor of the Trustee or the Noteholders unless the Borrower or such Subsidiary has granted a similar Lien on such assets in favor of Bank.

2.4 Subordination in Right of Payment . The Borrower covenants and agrees, and the Trustee on behalf of itself and each Noteholder, likewise covenants and agrees, that all Notes shall be issued subject to the provisions of this Agreement and to the extent and in the manner hereinafter set forth in this Agreement, the Second Priority Lien Obligations are hereby expressly made subordinate and junior and subject in right of payment to the prior payment in full in cash of all First Priority Lien Obligations now outstanding or hereinafter incurred.

2.5 Payment Blockage after Default in First Priority Lien Obligations . No payment on account of the Second Priority Lien Obligations shall be made, and no Notes shall be redeemed or purchased directly or indirectly by the Borrower (or any of its Subsidiaries), if at the time of such payment or purchase or immediately after giving effect thereto, (a) a default in the payment of principal, premium, if any, interest or other obligations in respect of any First Priority Lien Obligations occurs and is continuing determined without regard to whether there is a grace period applicable to the payment of such First Priority Lien Obligations (a “ Payment Default ”), unless and until such Payment Default shall have been cured or waived or shall have ceased to exist or (b) the Borrower and Trustee shall have received notice (a “ Payment Blockage Notice ”) from Bank that there exists under First Priority Lien Obligations a default, which shall not have been cured or waived, permitting Bank to declare such First Priority Lien Obligations due and payable, but only for the period (the “ Payment Blockage Period ”) commencing on the date of receipt of the Payment Blockage Notice and ending on the earlier of (i) the date such

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default shall have been cured or waived, or (ii) the 180th day immediately following the Trustee’s receipt of such Payment Blockage Notice. The Borrower shall resume payments on and distributions in respect of the Notes, including any past scheduled payments of the principal of (and premium, if any) and interest on such Notes to which the holders of the Notes would have been entitled but for the provisions of this Section 2.5 in the case of a Payment Default, on the date upon which such Payment Default is cured or waived or ceases to exist. In addition, notwithstanding clauses (a) and (b), unless the holders of First Priority Lien Obligations shall have accelerated the maturity of such First Priority Lien Obligations or there is a Payment Default, the Borrower shall resume payments on the Note after the end of each Payment Blockage Period. Not more than one Payment Blockage Notice may be given in any consecutive 360-day period, irrespective of the number of defaults with respect to First Priority Lien Obligations during such period.

2.6 Payments on Notes . The Borrower may make regularly scheduled payments of the principal of, and any interest or premium on, the Notes, if at the time of payment, and immediately after giving effect thereto, there exists no Payment Default or Payment Blockage Period, provided, however, that nothing in this Agreement shall permit the Borrower to make any payment in respect of the Notes that would result in a default or event of default arising under the Senior Lender Documents.

2.7 Certain Conversions Deemed Payment . For the purposes hereof (a) the issuance and delivery of junior securities upon conversion of Notes in accordance with Article XV of the Indenture shall not be deemed to constitute a payment or distribution on account of the principal of or interest on Notes or on account of the purchase or other acquisition of Notes, and (b) the payment, issuance or delivery of cash (except in satisfaction of fractional shares pursuant to Section 15.4 of the Indenture), property or securities (other than junior securities) upon conversion of a Note shall be deemed to constitute payment on account of the principal of such Note. For the purposes of this 2.7, the term “junior securities” means (y) shares of any stock of any class of the Borrower, or (z) securities of the Borrower which are subordinated in right of payment to all First Priority Lien Obligations which may be outstanding at the time of issuance or delivery of such securities to substantially the same extent as, or to a greater extent than, the Notes are so subordinated as provided herein. Nothing contained in this Agreement is intended to or shall impair, as among the Borrower, its creditors other than Bank and the Trustee and the Noteholders, the right, which is absolute and unconditional, of the holder of any Note to convert such Note in accordance with Article XV of the Indenture.

2.8 Subrogation . Subject to the prior Discharge of First Priority Lien Obligations, the rights of the Noteholders shall be subrogated to the rights of the holders of First Priority Lien Obligations to receive payments or distributions of the assets of the Borrower made on such First Priority Lien Obligations until all Second Priority Lien Obligations shall be paid in full; and for purposes of such subrogation, no payments or distributions to the holders of First Priority Lien Obligations of any cash, property or securities to which any Noteholder would be entitled except for this Agreement shall, as between the Noteholders and the Borrower and/or its creditors other than the holders of the First Priority Lien Obligations, be deemed to be a payment on account of the First Priority Lien Obligations.

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2.9 Rights of Holders Unimpaired . The provisions of this Agreement are and are intended solely for the purposes of defining the relative rights of the Trustee and the Noteholders of the Notes and Bank and nothing in this Agreement shall (a) impair, as between the Borrower and the Trustee and Noteholders, the obligation of the Borrower, which is unconditional and absolute, to pay to the Trustee and Noteholders the Second Priority Lien Obligations in accordance with the terms of the Noteholder Documents or (b) impair, as between the Borrower and Bank, the obligation of the Borrower, which is unconditional and absolute, to pay to Bank the First Priority Lien Obligations, in accordance with the terms of the Senior Lender Documents.

2.10 Holders of First Priority Lien Obligations . This Agreement will constitute a continuing offer to all Persons who, in reliance upon this Agreement, become holders of, or continue to hold, First Priority Lien Obligations; such provisions are made for the benefit of the holders of First Priority Lien Obligations, and such holders are hereby made obligees under such provisions to the same extent as if they were named therein, and they or any of them may proceed to enforce such subordination and no amendment or modification of the provisions contained herein shall diminish the rights of such holders unless such holders have agreed in writing thereto.

2.11 Rights of Trustee and Noteholders as Holder of Senior Indebtedness; Preservation of Rights . The Trustee in its individual capacity and each Noteholder shall be entitled to all the rights set forth in this Agreement with respect to any First Priority Lien Obligations which may at any time be held by it, to the same extent as any other holder of First Priority Lien Obligations, and nothing in this Indenture shall deprive the Trustee or any Noteholder of any of its rights as such holder.

2.12 Proceeds Held in Trust . In the event that notwithstanding the foregoing, any payment or distribution of assets of the Borrower of any kind or character, whether in cash, property or securities (including, without limitation, by way of setoff or otherwise) prohibited by the provisions of the Agreement shall be received by the Trustee or any Noteholder before there shall have occurred a Discharge of First Priority Lien Obligations, such payment or distribution shall be held in trust for the benefit of and shall be paid over or delivered to Bank for application to, or to be held as collateral for, the payment of any First Priority Lien Obligations remaining unpaid to the extent necessary to pay all First Priority Lien Obligations in full after giving effect to any concurrent payment or distribution to Bank.

2.13 Blockage of Remedies . During any Payment Default or any Payment Blockage Period and subject in all events to the limitations of Section 3 below, if an Event of Default has occurred under the Indenture, the Trustee, on behalf of itself and each of the Noteholders, agrees not to commence or join with any creditor of the Borrower or any of its Subsidiaries in asserting or commencing any proceedings to collect or enforce their rights under the Noteholder Documents or take any action to foreclose or realize upon the indebtedness thereunder for a period beginning on the date of such Event of Default and ending on the first to occur of (a) the date that is 180 days following the date of such Event of Default or (b) the date such Payment Default is cured, waived or ceases to exist or the date such Payment Blockage Period ends, as the case may be.

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2.14 Notice of Acceleration . The Trustee, on behalf of itself and each of the Noteholders, agrees, solely for the benefit of the holders of First Priority Lien Obligations, not to declare the unpaid principal amount of any Note to be due and payable pursuant to Section 7.1 of the Indenture unless the Trustee shall, concurrent with such declaration or acceleration, give Bank written notice such declaration of acceleration. In addition, the Borrower, forthwith upon receipt of any such declaration of acceleration, shall send a copy thereof to Bank.

2.15 Notice to Trustee . The Borrower shall give prompt written notice to the Trustee of any Payment Default under and as defined in the Indenture. Failure to give such notice shall not affect the subordination of the Notes to the First Priority Lien Obligations. Notwithstanding the provisions of this Agreement or any provision of the Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Notes, unless and until the Trustee shall have received written notice thereof at the address specified on the signature pages hereto from the Borrower or Bank; and, prior to the receipt of any such written notice, the Trustee shall be entitled in all respects to assume that no such facts exist; provided , however , that if a Responsible Officer (as defined in the Indenture) of the Trustee shall not have received, at least one business day prior to the date upon which by the terms of the Indenture any such money may become payable for any purpose (including, without limitation, payment on account of principal of, premium, if any, or interest on the Notes, the redemption price for Notes called for redemption in accordance with Section 3.2 of the Indenture, the Repurchase Price with respect to Notes submitted for repurchase in accordance with Section 16.1 of the Indenture, the Conversion Price, the Company Conversion Provisional Payment, Extension Fees, Liquidated Damages (as each such term is defined in the Indenture), fees, expenses and any other payment payable with respect to the Notes pursuant to the provisions of the Indenture), a notice of a Payment Default or a Payment Blockage Notice, then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purpose for which such money was received and shall not be affected by any notice to the contrary which may be received by it less than one business day prior to such date.

The Trustee shall be entitled to conclusively rely on the delivery to it of a written notice by a person representing itself to be Bank to establish that such notice has been given by Bank. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any person as a holder of First Priority Lien Obligations to participate in any payment or distribution pursuant to this Section 2, the Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of First Priority Lien Obligations held by such person, the extent to which such person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such person under this Section 2, and if such evidence is not furnished, the Trustee may defer any payment which it may be required to make for the benefit of such person pursuant to the terms of this Agreement pending judicial determination as to the rights of such person to receive such payment.

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2.16 Reliance on Judicial Order or Certificate of Liquidating Agent . Upon any payment or distribution of assets of the Borrower referred to in Section 4.3 of the Indenture, the Trustee and the Holders of the Notes shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Insolvency or Liquidation Proceeding is pending, or a certificate of the trustee in bankruptcy, liquidating trustee, Custodian, receiver, assignee for the benefit of creditors, agent or other person making such payment or distribution, delivered to the Trustee or to the Noteholders, for the purpose of ascertaining the persons entitled to participate in such payment or distribution, the holders of First Priority Lien Obligations and other indebtedness of the Borrower, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Section 2.

Section 3.  Enforcement .

3.1  Exercise of Remedies .

(a) So long as the Discharge of First Priority Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Borrower or any Subsidiary of the Borrower, (i) the Trustee and the Noteholders will not exercise or seek to exercise any rights or remedies (including setoff) with respect to any Common Collateral, institute