**EXHIBIT 10**

 

**STOCK PURCHASE AGREEMENT**

          This StockPurchase Agreement (this “***Agreement***”)is made and entered into as of April 20, 2001 by and among SouthwallTechnologies Inc., a Delaware corporation (the “***Company”***) and GMX Associates PTE Ltd., aSingapore corporation (“***GMX***”or the “***Investor***”).

          WHEREAS, theCompany supplies GMX with certain film media for distribution to GMX’scustomers and GMX distributes such media through sub-distributors, pursuant tothe Distribution Agreements between theCompany and GMX, dated March 14, 1997, November 17, 1997 and March 1, 2000, andany written amendments thereto executed by the parties to such agreements (allcollectively, the “***DistributionAgreements***”); and

          WHEREAS, theCompany desires to obtain additional capital investments in order to assist itin providing the Investor with additional supply of distributable media andInvestor desires to invest in shares of the Company’s common stock, par value$0.001 per share (the “***Shares***”)on the terms and conditions set forth in this Agreement for such purpose;

          NOW,THEREOFRE, the parties hereby agree as follows:

          **1.**       **AGREEMENT FOR PURCHASEAND SALE OF SHARES****.**

          Subject tothe terms and conditions set forth in this Agreement, the Company hereby agreesto sell to the Investor at the Closing and the Investor hereby agrees topurchase from the Company at the Closing the number of Shares set forth inExhibit A next to the Investor’s name for the purchase price set forth onExhibit A.

          **2.**       **CLOSING****.**

          The purchaseand sale of the Shares will take place at the offices of Fenwick & WestLLP, 275 Battery Street, 15th Floor, San Francisco, California, at11:00 a.m. Pacific Time, on April 28, 2001 or at such other time and place asthe Company and Investor mutually agree (which time and place are referred toin this Agreement as the "***Closing***"). At the Closing, the Company will deliver to the Investor a certificaterepresenting the number of Shares that the Investor has agreed to purchasehereunder against delivery to the Company by the Investor of the full purchaseprice of such Shares, paid by (i) a check payable to the Company's order,(ii) wire transfer of funds to the Company (which transfer shall bedelivered to the Company pursuant to the wire transfer instructions attachedhereto as Exhibit B) or (iii) any combination of the foregoing.

**3.**       **REPRESENTATIONS ANDWARRANTIES OF THE COMPANY****.**

          The Companyhereby represents and warrants to the Investor that the statements in thefollowing paragraphs of this Section 3 are all true and complete:

                    **3.1**     **Organization, Good Standing, Corporate Power and Qualification.**  The Company has been duly incorporated andorganized, and is validly existing in good standing, under the laws of theState of Delaware.  Each subsidiary ofthe Company has been duly incorporated and organized, and is validly existingin good standing, under the laws of the jurisdiction under which it ischartered. The Company has the requisite corporate power and authority to enterinto and perform this Agreement, and the Company and its subsidiaries have thepower to own and operate their respective properties and assets and to carry ontheir respective businesses as currently conducted and as presently proposed tobe conducted.  The Company and each of its subsidiaries are duly qualified to dobusiness as a foreign corporation in good standing in all jurisdictions inwhich such entity is required to be qualified to do business as the Company’sor such subsidiary’s business is currently conducted and as presently proposedto be conducted, as the case may be, except for jurisdictions in which failureto so qualify could not reasonably be expected to have a material adverseeffect on the business and operations of the Company and its subsidiaries takenas a whole.

**                   ****3.2**     **Capitalization.** The capitalization of the Company immediately prior to the Closingconsists of the following:

                              (a)     Common Stock.  A total of 20,000,000 authorized Shares, ofwhich approximately 7,889,000 shares will be issued and outstanding.

                              (b)     Options, Warrants, Reserved Shares.  Except for (i) 2,442,402 Shares reserved forissuance under the Company's 1997 Stock Incentive Plan and the Company’s 1998Stock Option Plan for Employees and Consultantsunder which, collectively, options to purchase 1,968,060are issued and outstanding**,**and (ii) 250,000 Shares reserved forissuance under the Company’s 1997 Employee Stock Purchase Plan and the 1998Employee Stock Purchase Plan, there are no outstanding options,warrants, rights (including conversion or preemptive rights) or agreement forthe purchase or acquisition from the Company of any shares of its capital stockor any securities convertible into or ultimately exchangeable or exercisablefor any shares of the Company's capital stock.

                              (c)     The outstanding shares of the capitalstock of the Company are duly authorized and validly issued, fully paid andnonassessable, and have been approved by all requisite stockholder action.

                    **3.3**     **Due Authorization.**  Allcorporate action on the part of theCompany’s directors and stockholders necessary for the authorization,execution, delivery of, and the performance of all obligations of the Companyunder this Agreement has been taken. This Agreement, when executed and delivered, will constitute the validand legally binding obligation of the Company, enforceable in accordance withits terms, except as may be limited by (i) applicable bankruptcy,insolvency, reorganization or others laws of general application relating to oraffecting the enforcement of creditors' rights generally and (ii) the effect ofrules of law governing the availability of equitable remedies.

                    **3.4**     **Valid Issuance of Stock**. The Shares,when paid for and then issued as provided in this Agreement, will be dulyauthorized and validly issued, fully paid and nonassessable.  Based in part on the representations made bythe Investor in Section 4 hereof, the offer and sale of the Shares solely tothe Investor in accordance with this Agreement are exempt from the registrationand prospectus delivery requirements of the U.S. Securities Act of 1933, asamended (the "***1933 Act***"),and the securities registration and qualification requirements of the State ofCalifornia.

                    **3.5**     **No Conflicts**. The execution, delivery and performance of this Agreement and theconsummation of the transactions contemplated hereby will not conflict with, orresult in any violation of, or default (with or without notice or lapse oftime, or both), or give rise to a right of termination, cancellation oracceleration of any obligation or to loss of a benefit under (i) anyprovision of the Certificate of Incorporation or Bylaws of the Company or thecharter documentation of any of its subsidiaries, or (ii) any indenture,mortgage, lease, line of credit, contract or other agreement or instrument,permit, concession, franchise, license to which the Company or any of itssubsidiaries is a party or by which any of its properties are bound; or(iii) any judgment, order, decree to which the Company or any of itssubsidiaries is a party or to which any of its properties is bound, or (iv) anystatute, law, ordinance or rule applicable to the Company or any of itssubsidiaries or on which the Company’s and its subsidiaries’ business,financial condition, operations or prospects is substantially dependent, ineach case in clauses (ii), (iii) or (iv), the breach, violation, default,termination or forfeiture of which would result in a material adverse effectupon the ability of the Company to consummate the transactions contemplated bythis Agreement, or a material adverse effect on the Company and itssubsidiaries, taken as a whole.

                    **3.6**     **Company’s SEC filings and financialstatements.**

                              (a)      TheCompany has filed all forms, reports, and documents required to be filed by itwith the U. S. Securities and Exchange Commission (“***SEC***”) and has made available to the Investorsuch forms, reports, and documents in the form filed with the SEC.  All such required forms, reports anddocuments (including those that the Company may file subsequent to the datehereof until the Closing) are referred to herein as the “**Company SECReports.**”  As of theirrespective filing dates, the Company SEC Reports, as amended, complied in allmaterial respects with the requirements of the Act or the Securities ExchangeAct of 1934, as amended (the “***Exchange Act***”), as the case may be, and the rules andregulations of the SEC thereunder applicable to such Company SEC Reports.  The Company SEC Reports, this Agreement, theexhibits and schedules hereto, and any certificates or documents to bedelivered to the Company pursuant to this Agreement, when considered together,do not contain any untrue statement of a material fact or omit to state amaterial fact required to be stated therein or necessary in order to make thestatements therein, in the light of the circumstances under which they weremade, not misleading.

                              (b)      Each of theconsolidated financial statements of the Company (including, in each case, thenotes thereto), included in or incorporated by reference into the Company SECReports after December 31, 2000 (the “***Company Financial Statements***”), and eachCompany SEC Report filed after the date hereof until the Closing,(i) complied as to form in all material respects with the published rulesand regulations of the SEC with respect thereto; (ii) was prepared inaccordance with United States Generally Accepted Accounting Principles appliedon a consistent basis throughout the periods indicated (except as may beindicated in the notes thereto or, in the case of unaudited statements, as maybe permitted by the SEC on Form 10-Q under the Exchange Act); and(iii) fairly presented the consolidated financial position of Company andits subsidiaries at the respective dates thereof and the consolidated resultsof Company’s operations and cash flows for the periods indicated (subject, inthe case of unaudited financial statements, to normal audit adjustments thatwill not be material in amount or effect). There has been no change in Company’s accounting policies except as describedin the notes to the Company Financial Statements.

          **4.**       **REPRESENTATIONS OF THEINVESTOR****.**

          The Investorhereby represents and warrants to the Company that the following statements aretrue and complete:

                    **4.1**     **Review and Agreements. **The Investorhas read carefully and understands this Agreement and the Company's Certificateof Incorporation and has consulted the Investor's own attorney, accountant orinvestment adviser with respect thereto and to the investment contemplatedhereby and its suitability for the Investor.

                    **4.2**     **Access to Information. **The Companyhas made available to the Investor prior to the purchase of any Shares, alldocuments and information that the Investor has requested including, withoutlimitation, the Company SEC Reports and the books and records of the Companyand the opportunity to ask questions of and receive answers fromrepresentatives of the Company concerning the investment in the Shares, thebusiness, affairs, operations and finances of the Company and any other mattersrelevant to this investment.  TheInvestor has reviewed the Company SEC Reports.

                    **4.3**     **Long-Term Investment. **TheInvestorunderstands that it must bear the economic risk of its investment for anindefinite period of time; that the Shares have not been registered under the1933 Act and, therefore, cannot be resold unless they are subsequentlyregistered under the Act or unless an exemption from such registration isavailable; that the Investor is purchasing the Shares for investment for theaccount of the Investor and not with a view toward resale or other distributionthereof; that the Investor agrees not to resell or otherwise dispose of all orany part of the Shares purchased by the Investor, except as permitted by law,including, without limitation, any regulations under the Act; that the Companydoes not have any intention of registering the Shares under the Act (other thanas provided in Section 5); and that Rule 144 under the Act will not beavailable as a basis for exemption from registration of any Shares until atleast one year from the Closing.

                    **4.4**     **Suitability. **The Investorhas adequate means of providing for the Investor's current needs and personalcontingencies and has no need for liquidity in connection with the Investor'spurchase of the Shares.  The Investor'soverall commitment to investments which are not readily marketable is notdisproportionate to the net worth of the Investor, and its investment in theShares will not cause such overall commitment to become excessive.  The Investor can afford a complete loss ofits investment in the Shares.  TheInvestor has evaluated the risks of purchasing the Shares and has determinedthat the Shares are a suitable investment for the Investor.  The Investor has such knowledge andexperience in financial, securities, investments and business matters that theInvestor is capable of evaluating the merits and risks of the Investor'spurchase of the Shares.

                    **4.5**     **Residence. **For purposesof the application of state securities laws, the Investor is a resident of thejurisdiction listed as such Investor’s address on Exhibit A.

**                   ****4.6**     **Legends.** It is understood that the certificates evidencing the Shares will bearthe legends substantially as set forth below:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THESECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THESECURITIES LAWS OF ANY OTHER JURISDICTIONS. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY ANDRESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACTAND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTIONTHEREFROM.

Thelegend above shall be removed by the Company (or its transfer agent) from anycertificate evidencing the Shares upon the first to occur of(i) registration of the Shares for resale under the 1933 Act, (ii) resaleof the Shares in the reasonable opinion of counsel to the Company in compliancewith the requirements for Rule 144 or (iii) upon delivery to the Companyof an opinion by counsel, reasonably satisfactory to the Company, that the Sharesmay be resold pursuant to exemptions from the registration and prospectusdelivery requirements of the 1933 Act and the qualification requirements of anyapplicable state Blue Sky laws.

          **5.**       **REGISTRATION RIGHTS****.**

                    **5.1**     **Definitions**.  For purposes of thisSection 5:

                              (a)      Registration .  The terms “***register***,” “***registration***” and “***registered***” refer to a registration effectedby preparing and filing a registration statement in compliance with the 1933Act, and the declaration or ordering of effectiveness of such registrationstatement.

                              (b)      RegistrableSecurities.  The term “***Registrable Securities***” means:(i) all the shares of Common Stock of the Company that are now owned ormay hereafter be acquired by any Investor or any holder of Shares who is itspermitted successor and assign; and (ii) any shares of Common Stock of theCompany issued (or issuable upon the conversion or exercise of any warrant,right or other security which is issued) as a dividend or other distributionwith respect to, or in exchange for or in replacement of, all such shares ofCommon Stock described in clause (i) of this subsection (b); excludingin all cases, however, any such securities of the Company sold by a person in atransaction in which rights under this Section 5 are not assigned inaccordance with this Agreement or any such securities of the Company sold tothe public or sold pursuant to Rule 144 promulgated under the 1933 Act.

                              (c)      RegistrableSecurities Then Outstanding.  Thenumber of shares of “***Registrable Securities then outstanding***” shall mean thenumber of shares of Common Stock which are Registrable Securities that are then(i) issued and outstanding or (ii) issuable pursuant to the exerciseor conversion of then outstanding and then exercisable and qualifying options,warrants or convertible securities.

                              (d)      Holder.  The term “***Holder***” means any person owning of recordRegistrable Securities or any assignee of record of such Registrable Securitiesto whom rights set forth herein have been duly assigned in accordance with thisAgreement.

                              (e)      FormS-3.  The term “***Form S-3***” means such form under the 1933Act as is in effect on the date hereof or any successor registration form underthe 1933 Act subsequently adopted by the SEC which permits inclusion orincorporation of substantial information by reference to other documents filedby the Company with the SEC.

                    **5.2     DemandRegistration**.

                              (a)     Requestby Holders.  If at any timefollowing the expiration of ten months after the Closing and at such time theCompany is not eligible to register shares on Form S-3, the Company shallreceive a written request from the Holders of all of the Registrable Securitiesthen outstanding that the Company file a registration statement under the 1933Act covering the registration of Registrable Securities pursuant to thisSection 5.2, then the Company shall, within 20 days after the receipt ofsuch written request, give written notice of such request (the “***Request Notice***”) toall Holders, and effect, as soon as practicable, the registration under the1933 Act of all Registrable Securities which Holders request to be registeredand included in such registration by written notice given by such Holders tothe Company within 30 days afterreceipt of the Request Notice, subject only to the limitations of thisSection 5.

                              (b)      Underwriting .  If the Holders initiating the registrationrequest under this Section 5.2 (the “***Initiating Holders***”) intend to distribute theRegistrable Securities covered by their request by means of an underwriting,then they shall so advise the Company as a part of their request made pursuantto this Section 5.2 and the Company shall include such information in theRequest Notice.  In such event, theright of any Holder to include his, her, or its Registrable Securities in suchregistration shall be conditioned upon such Holder’s participation in suchunderwriting and the inclusion of such Holder’s Registrable Securities in theunderwriting (unless otherwise mutually agreed by a majority in interest of theInitiating Holders and such Holder) to the extent provided herein.  TheCompany shall not be required to include any securities of any Holder in suchunderwriting unless such Holder accepts the terms of the underwriting as agreedupon between the Company and the underwriters selected by the Company andenters into an underwriting agreement in customary form with the underwriter orunderwriters selected by the Company. Notwithstanding any other provision of this Section 5.2, if theunderwriter(s) advise(s) the Company in writing that marketing factors requirea limitation of the number of securities to be underwritten then the Companyshall so advise all Holders of Registrable Securities that would otherwise beregistered and underwritten pursuant hereto, and the number of RegistrableSecurities that may be included in the underwriting shall be reduced asrequired by the underwriter(s) and allocated among the Holders of RegistrableSecurities on a pro rata basis according to the number of RegistrableSecurities then outstanding held by each Holder requesting registration(including the Initiating Holders); provided, however, that thenumber of shares of Registrable Securities to be included in such underwritingand registration shall not be reduced unless all other securities to be soldfor the account of the Company are first entirely excluded from theunderwriting and registration.  AnyRegistrable Securities excluded and withdrawn from such underwriting shall bewithdrawn from the registration.

                              (c)      MaximumNumber of Demand Registrations.  TheCompany is obligated to effect only one such registration pursuant to thisSection 5.2.  An offering shall notbe deemed a registration pursuant to this Section 5.2 if less than 75% of theRegistrable Securities requested to be included therein were not so included.

                              (d)      Deferral .  Notwithstanding the foregoing, if theCompany shall furnish to Holders requesting the filing of a registrationstatement pursuant to this Section 5.2, a certificate signed by thePresident or Chief Executive Officer of the Company stating that in the goodfaith judgment of the Board of Directors of the Company, it would be seriouslydetrimental to the Company and its stockholders for such registration statementto be filed and it is therefore essential to defer the filing of suchregistration statement, then the Company shall have the right to defer suchfiling or the effectiveness of the registration statement for a period of notmore than 90 days after receipt of the request of the Initiating Holders; provided,however, that the Company may not utilize this right more than once inany twelve month period.

                              (e)      Expenses .  All expenses incurred in connection with aregistration pursuant to this Section 5.2, including without limitationall registration and qualification fees, printers’ and accounting fees, feesand disbursements of counsel for the Company and the reasonable fees and disbursements of one counsel for the sellingHolders (but excluding underwriters’ or brokers’ discounts andcommissions) shall be borne by the Company. Each Holder participating in a registration pursuant to thisSection 5.2 shall bear such Holder’s proportionate share (based on thenumber of shares sold by such Holder over the total number of shares included in such registration at thetime it is declared effective) of all discounts, commissions or otheramounts payable to underwriters or brokers in connection with suchoffering.  Notwithstanding theforegoing, the Company shall not be required to pay for any expenses of any registrationproceeding begun pursuant to this Section 5.2 if the registration requestis subsequently withdrawn at the request of the Holders of a majority of theRegistrable Securities to be registered, unless the Holders of a majority ofthe Registrable Securities then outstanding agree to forfeit their right to onedemand registration pursuant to this Section 5.2 (in which case such rightshall be forfeited by all Holders of Registrable Securities); provided, further,however, that if at the time of such withdrawal, the Holders havelearned of a material adverse change in the condition, business, or prospectsof the Company not known to the Holders at the time of their request for suchregistration and have withdrawn their request for registration with reasonablepromptness after learning of such material adverse change, then the Holdersshall not be required to pay any of such expenses and shall retain their demandregistration rights pursuant to this Section 5.2.

                    **5.3     Piggyback Registrations.**  The Company shallnotify all Holders ofRegistrable Securities in writing at least 30 days prior to filing anyregistration statement under the 1933 Act for purposes of effecting a publicoffering of securities of the Company (including, but not limited to, registrationstatements relating to secondary offerings of securities of the Company, but excluding registrationstatements (i) relating to any registration under Section 5.2 orSection 5.4 of this Agreement or (ii) relating to any employeebenefit plan or a corporate reorganization or other transaction covered byRule 145 promulgated under the 1933 Act, or (iii) on any registrationform which does not permit secondary sales or does not include substantiallythe same information as would be required to be included in a registrationstatement covering the resale of Registrable Securities, and will afford eachsuch Holder an opportunity to include in such registration statement all or anypart of the Registrable Securities then held by such Holder.  Each Holder desiring to include in any suchregistration statement all or any part of the Registrable Securities held bysuch Holder shall, within twenty days after receipt of the above-describednotice from the Company, so notify the Company in writing, and in such notice shallinform the Company of the number of Registrable Securities such Holder wishesto include in such registration statement. If a Holder decides not to include all of its Registrable Securities inany registration statement thereafter filed by the Company, such Holder shallnevertheless continue to have the right to include any Registrable Securitiesin any subsequent registration statement or registration statements as may befiled by the Company with respect to offerings of its securities, all upon the termsand conditions set forth herein.

                              (b)      Underwriting .  If a registration statement under which theCompany gives notice under this Section 5.3 is for an underwrittenoffering, then the Company shall so advise the Holders of RegistrableSecurities.  In such event, the right ofany such Holder’s Registrable Securities to be included in a registrationpursuant to this Section 5.3 shall be conditioned upon such Holder’sparticipation in such underwriting and the inclusion of such Holder’s RegistrableSecurities in the underwriting to the extent provided herein.  All Holders proposing to distribute theirRegistrable Securities through such underwriting shall enter into anunderwriting agreement in customary form with the managing underwriter orunderwriter(s) selected for such underwriting. Notwithstanding any other provision of this Agreement, if the managingunderwriter determine(s) in good faith that marketing factors require alimitation of the number of shares to be underwritten, then the managing underwriter(s)may exclude shares (including Registrable Securities) from the registration andthe underwriting, and the number of shares that may be included in theregistration and the underwriting shall be allocated, first, to theCompany, second to Holders requesting inclusion of their RegistrableSecurities in such registration statement on a pro rata basis based on thenumber of Registrable Securities each such Holder has requested to be includedin the registration, and third to other holders of the Company’ssecurities, provided however, that the right of the underwriters toexclude shares (including Registrable Securities) from the registration andunderwriting as described above shall be restricted so that:  (i) the number of Registrable Securities includedin any such registration is not reduced below 50% percent of the RegistrableSecurities requested to be included in the registration; and (ii) all shares(other than those to be sold by the Company for its account) that are notRegistrable Securities and are held by persons other than the Holders shallfirst be excluded from such registration and underwriting before anyRegistrable Securities are so excluded. If any Holder disapproves of the terms of any such underwriting, suchHolder may elect to withdraw therefrom by written notice, given in accordancewith Section 10.5 hereof, to the Company and the underwriter, delivered atleast 20 days prior to the effective date of the registration statement.  Any Registrable Securities excluded orwithdrawn from such underwriting shall be excluded and withdrawn from theregistration.

                              (c)      Expenses .  All expenses incurred in connection with aregistration pursuant to this Section 5.3, including, without limitation,all registration and qualification fees, printers’ and accounting fees, feesand disbursements of counsel for the Company and the reasonable fees anddisbursements of one counsel for the selling Holders (but excludingunderwriters’ or brokers’ discounts and commissions) shall be borne by theCompany.  Each Holder participating in aregistration pursuant to this Section 5.3 shall bear such Holder’sproportionate share (based on the number of shares sold by such Holder over thetotal number of shares included in suchregistration at the time it goes effective) of all discounts,commissions or other amounts payable to underwriters or brokers in connectionwith such offering.

                    **5.4     Form S-3 Registration.**  In case the Companyshall receive from anyHolder or Holders of at least 50% of RegistrableSecurities then outstanding awritten request or requests that the Company effect a registration on Form S-3and any related qualification or compliance with respect to all or a part ofthe Registrable Securities owned by such Holder or Holders, then the Company willdo the following:

                              (a)      Notice .  Promptly give written notice of the proposedregistration and the Holder’s or Holders’ request therefor, and any relatedqualification or compliance, to all other Holders of Registrable Securities.

                              (b)      Registration .  Use commercially reasonable efforts toeffect as soon as practicable such registration and all such qualifications andcompliances as may be so requested and as would permit or facilitate the saleand distribution of all or such portion of such Holder’s or Holders’Registrable Securities as are specified in such request, together with all orsuch portion of the Registrable Securities of any other Holder or Holdersjoining in such request as are specified in a written request given within 20days after receipt of such written notice from the Company; provided, however,that the Company shall not be obligated to effect any such registration,qualification or compliance pursuant to this Section 5.4:

                                        (i)       ifForm S-3 is not available for such offering;

                                        (ii)      ifthe Holders, together with the holders of any other securities of the Companyentitled to inclusion in such registration, propose to sell RegistrableSecurities and such other securities (if any) at an aggregate price to thepublic of less than $300,000;

                                        (iv)     ifthe Company shall furnish to the Holders a certificate signed by the Presidentor Chief Executive Officer of the Company stating that in the good faithjudgment of the Board of Directors of the Company, it would be seriouslydetrimental to the Company and its stockholders for such Form S-3Registration to be effected at such time, in which event the Company shall havethe right to defer the filing of the Form S-3 registration statement nomore than once during any twelve-month period for a period of not more than 60days after receipt of the request of the Holder or Holders under thisSection 5.4;

                                        (v)      ifthe Company has, within the six-month period preceding the date of suchrequest, already effected one registration on Form S-3 for the Holders pursuantto this Section 5.4; or

                                        (vi)     inany particular jurisdiction in which the Company would be required to qualifyto do business or to execute a general consent to service of process ineffecting such registration, qualification or compliance.

                              (c)      Expenses .  Subject to the foregoing, the Company shallfile a Form S-3 registration statement covering the Registrable Securitiesand other securities so requested to be registered pursuant to thisSection 5.4 as soon as practicable after receipt of the request orrequests of the Holders for such registration. The Company shall pay all expenses incurred in connection with each registration requested pursuantto this Section 5.4, (excluding underwriters’ or brokers’ discounts andcommissions), including without limitation all filing, registration andqualification, printers’ andaccounting fees and the reasonable fees and disbursements of one counsel forthe selling Holder or Holders and counsel for the Company.  Each Holder participating in a registrationpursuant to this Section 5.4 shall bear such Holder’s proportionate share(based on the number of shares sold by such Holder over the total number of shares included in such registration at thetime it goes effective) of all discounts, commissions or other amountspayable to underwriters or brokers in connection with such offering.

                              (d)      NotDemand Registration.  Form S-3registrations shall not be deemed to be demand registrations as described inSection 5.2 above.

                    **5.5     Obligationsof the Company.**  Wheneverrequired to effect the registration of any Registrable Securities under thisAgreement, the Company shall, as expeditiously as reasonably possible:

                              (a)      Prepareand file with the SEC a registration statement with respect to such RegistrableSecurities and use reasonable efforts to cause such registration statement tobecome effective, and, upon the request of the Holders of a majority of theRegistrable Securities registered thereunder, keep such registration statementeffective for up to 90 days.

                              (b)      Prepareand file with the SEC such amendments and supplements to such registrationstatement and the prospectus used in connection with such registrationstatement as may be necessary to comply with the provisions of the 1933 Actwith respect to the disposition of all securities covered by such registrationstatement.

                              (c)      Furnishto the Holders such number of copies of a prospectus, including a preliminaryprospectus, in conformity with the requirements of the 1933 Act, and such otherdocuments as they may reasonably request in order to facilitate the dispositionof the Registrable Securities owned by them that are included in suchregistration.

                              (d)      Usereasonable efforts to register and qualify the securities covered by suchregistration statement under such other securities or Blue Sky laws of suchjurisdictions as shall be reasonably requested by the Holders, provided thatthe Company shall not be required in connection therewith or as a conditionthereto to qualify to do business or to file a general consent to service ofprocess in any such states or jurisdictions.

                              (e)      Inthe event of any underwritten public offering, enter into and perform itsobligations under an underwriting agreement, in usual and customary form, withthe managing underwriter(s) of such offering. Each Holder participating in such underwriting hereby agrees also toenter into and perform its obligations under such an agreement.

                              (f)       Notify eachHolder ofRegistrable Securities covered by such registration statement at any time whena prospectus relating thereto is required to be delivered under the 1933 Act ofthe happening of any event as a result of which the prospectus included in suchregistration statement, as then in effect, includes an untrue statement of amaterial fact or omits to state a material fact required to be stated thereinor necessary to make the statements therein not misleading in the light of thecircumstances then existing.

                              (g)      Furnish,at the request of any Holder requesting registration of Registrable Securities,on the date that such Registrable Securities are delivered to the underwritersfor sale, if such securities are being sold through underwriters, or, if suchsecurities are not being sold through underwriters, on the date that theregistration statement with respect to such securities becomes effective:  (1) an opinion, dated as of such date,of the counsel representing the Company for the purposes of such registration,in form and substance as is customarily given to underwriters in anunderwritten public offering and reasonably satisfactory to a majority ininterest of the Holders requesting registration, addressed to the underwriters,if any, and to the Holders requesting registration of Registrable Securitiesand (2) a “comfort” letter dated as of such date, from the independentcertified public accountants of the Company, in form and substance as iscustomarily given by independent certified public accountants to underwritersin an underwritten public offering and reasonably satisfactory to a majority ininterest of the Holders requesting registration, addressed to the underwriters,if any, and to the Holders requesting registration of Registrable Securities.

                    **5.6     FurnishInformation.**  It shall be acondition precedent to the obligations of the Company to take any actionpursuant to Sections 5.2, 5.3 or 5.4 that the selling Holders shallfurnish to the Company such information regarding themselves, the RegistrableSecurities held by them and the intended method of disposition of suchsecurities as shall be required to timely effect the registration of theirRegistrable Securities.

                    **5.7     Delay ofRegistration.**  No Holdershall have any right to obtain or seek an injunction restraining or otherwisedelaying any such registration as the result of any controversy that mightarise with respect to the interpretation or implementation of thisSection 5.

                    **5.8     Indemnification.**  In the event any RegistrableSecurities areincluded in a registration statement under Sections 5.2, 5.3 or 5.4:

                              (a)      Bythe Company.  To the extentpermitted by law, the Company will indemnify and hold harmless each Holder, thepartners, officers and directors of each Holder, any underwriter (as defined inthe 1933 Act) for such Holder and each person, if any, who controls such Holderor underwriter within the meaning of the 1933 Act or the Exchange Act, againstany losses, claims, damages, or liabilities (joint or several) to which theymay become subject under the 1933 Act, the Exchange Act or other federal orstate law, insofar as such losses, claims, damages, or liabilities (or actionsin respect thereof) arise out of or are based upon any of the followingstatements, omissions or violations (collectively, the “***Violations***” and, individually, a “***Violation***”):

                                        (i)       any untrue statement oralleged untrue statement of a material fact contained in such registrationstatement, including any preliminary prospectus or final prospectus containedtherein or any amendments or supplements thereto; or

                                        (ii)      theomission or alleged omission to state therein a material fact required to bestated therein, or necessary to make the statements therein not misleading; or

                                        (iii)     anyviolation or alleged violation by the Company of the 1933 Act, the ExchangeAct, any federal or state securities law or any rule or regulation promulgatedunder the 1933 Act, the Exchange Act or any federal or state securities law inconnection with the offering covered by such registration statement.

The Company will reimburse each such Holder,partner, officer or director, underwriter or controlling person for any legalor other expenses reasonably incurred by them, within three months after arequest for reimbursement has been received by the Company, in connection withinvestigating or defending any such loss, claim, damage, liability or action; providedhowever, that the indemnity agreement contained in thissubsection 5.8(a) shall not apply to amounts paid in settlement of anysuch loss, claim, damage, liability or action if such settlement is effectedwithout the consent of the Company (which consent shall not be unreasonablywithheld), nor shall the Company be liable in any such case for any such loss,claim, damage, liability or action to the extent that it arises out of or isbased upon a Violation which occurs in reliance upon and in conformity withwritten information furnished expressly for use in connection with suchregistration by such Holder, partner, officer, director, underwriter orcontrolling person of such Holder.

                              (b)      BySelling Holders.  To the extentpermitted by law, each selling Holder will indemnify and hold harmless theCompany, each of its directors, each of its officers who have signed theregistration statement, each person, if any, who controls the Company withinthe meaning of the 1933 Act, any underwriter and any other Holder sellingsecurities under such registration statement or any of such other Holder’spartners, directors or officers or any person who controls such Holder withinthe meaning of the 1933 Act or the Exchange Act, against any losses, claims,damages or liabilities (joint or several) to which the Company or any suchdirector, officer, controlling person, underwriter or other such Holder,partner or director, officer or controlling person of such other Holder maybecome subject under the 1933 Act, the Exchange Act or other federal or statelaw, insofar as such losses, claims, damages or liabilities (or actions inrespect thereto) arise out of or are based upon any Violation, in each case tothe extent (and only to the extent) that such Violation occurs in reliance uponand in conformity with written information furnished by such Holder expresslyfor use in connection with such registration. Each such Holder will reimburse any legal or other expenses reasonablyincurred by the Company or any such director, officer, controlling person,underwriter or other Holder, partner, officer, director or controlling personof such other Holder in connection with investigating or defending any suchloss, claim, damage, liability or action; within three months after a requestfor reimbursement has been received by the indemnifying Holder, provided,however, that the indemnity agreement contained in thissubsection 5.8(b) shall not apply to amounts paid in settlement of anysuch loss, claim, damage, liability or action if such settlement is effectedwithout the consent of the Holder (which consent shall not be unreasonablywithheld); and providedfurther, that the total amounts payablein indemnity by a Holder under this subsection 5.8(b) in respect of allViolation shall not exceed the net proceeds received by such Holder in theregistered offering out of which such Violation arises.

                              (c)      Notice .  Promptly after receipt by an indemnifiedparty under this Section 5.8 of notice of the commencement of any action(including any governmental action), such indemnified party will, if a claim inrespect thereof is to be made against any indemnifying party under thisSection 5.8, deliver to the indemnifying party a written notice of thecommencement thereof.  The indemnifyingparty shall have the right to participate in, and, to the extent theindemnifying party so desires, jointly with any other indemnifying partysimilarly noticed, to assume the defense thereof with counsel mutuallysatisfactory to the parties; provided, however, that anindemnified party shall have the right to retain its own counsel, with the feesand expenses to be paid by the indemnifying party, if representation of suchindemnified party by the counsel retained by the indemnifying party would beinappropriate due to actual or potential conflict of interests between suchindemnified party and any other party represented by such counsel in suchproceeding.  The failure to deliverwritten notice to the indemnifying party within a reasonable time of thecommencement of any such action, if prejudicial to its ability to defend suchaction, shall relieve such indemnifying party of any liability to theindemnified party under this Section 5.8, but the omission so to deliverwritten notice to the indemnifying party will not relieve it of any liabilitythat it may have to any indemnified party otherwise than under thisSection 5.8.

                              (d)      DefectEliminated inFinal Prospectus.  The foregoingindemnity agreements of the Company and Holders are subject to the conditionthat, insofar as they relate to any Violation made in a preliminary prospectusbut eliminated or remedied in the amended prospectus on file with the SEC atthe time the registration statement in question becomes effective or theamended prospectus filed with the SEC pursuant to SEC Rule 424(b) (the “***Final Prospectus***”),such indemnity agreement shall not inure to the benefit of any person if a copyof the Final Prospectus was furnished to the indemnified party and was notfurnished to the person asserting the loss, liability, claim or damage at orprior to the time such action is required by the 1933 Act.

                              (e)      Contribution .  If the indemnification provided for in thisSection 5.8 is held by a court of competent jurisdiction to be unavailableto an indemnified party with respect to any loss, liability, claim, damage orexpense referred to herein, then the indemnifying party, in lieu ofindemnifying the indemnified party, shall contribute to the amount paid orpayable by such indemnified party with respect to such loss, liability, claim,damage or expense in the proportion that is appropriate to reflect the relativefault of the indemnifying party and the indemnified party in connection withthe statements or omissions that resulted in such loss, liability, claim,damage or expense, as well as any other relevant equitable considerations.  The relative fault of the indemnifying partyand the indemnified party shall be determined by reference to, among other things,whether the untrue or alleged untrue statement of material fact or the omissionto state a material fact relates to information supplied by the indemnifyingparty or by the indemnified party, and the parties’ relative intent, knowledge,access to information and opportunity to correct or prevent such statement oromission.  In any such case, (i) nosuch Holder will be required to contribute any amount in excess of the publicoffering price of all such Registrable Securities offered and sold by such Holderpursuant to such registration statement; and (ii) no person or entityguilty of fraudulent misrepresentation (within the meaning ofSection 11(f) of the 1933 Act) will be entitled to contribution from anyperson or entity who was not guilty of such fraudulent misrepresentation.

                              (f)       Conflictwith Underwriting Agreement. Notwithstanding the foregoing, to the extent that the provisions onindemnification and contribution contained in the underwriting agreemententered into in connection with the underwritten public offering are inconflict with the foregoing provisions, the provisions in the underwritingagreement will control.

                              (g)      Survival .  The obligations of the Company and Holdersunder this Section 5.8 shall survive the completion of any offering ofRegistrable Securities in a registration statement, and otherwise.

                    **5.9     Rule 144Reporting.**  With a view tomaking available the benefits of certain rules and regulations of the SEC whichmay at any time permit the sale of the Registrable Securities to the publicwithout registration, so long as the Company is subject to the reportingrequirements of the Exchange Act, the Company agrees to:

                              (a)      Makeand keep public information available, as those terms are understood anddefined in Rule 144 under the 1933 Act;

                              (b)      Use reasonable,diligentefforts to file with the SEC in a timely manner all reports and other documentsrequired of the Company under the 1933 Act and the Exchange Act; and

                              (c)      Solong as a Holder owns any Registrable Securities, to furnish to the Holderforthwith upon request a written statement by the Company as to its compliancewith the reporting requirements of Rule 144, and of the 1933 Act and theExchange Act, a copy of the most recent annual or quarterly report of the Company,and such other reports and documents of the Company as a Holder may reasonablyrequest in availing itself of any rule or regulation of the SEC allowing aHolder to sell any such securities without registration.

                    **5.10   Terminationof the Company’s Obligations.** The Company shall have no obligations pursuant to Sections 5.2through 5.4 with respect to: (a) any request or requests for registration made by any Holder ona date more than five years after the Closing; or (b) any RegistrableSecurities proposed to be sold by a Holder in a registration pursuant toSection 5.2, 5.3 or 5.4 if all such Registrable Securities proposed to besold by a Holder may be sold in a three-month period without registration underthe 1933 Act pursuant to Rule 144.

                    **5.11   Assignment of Registration Rights.**  The registration rightsof a Holder underthis Section 5 may be assigned only to a party who acquires at least50,000 shares (as adjusted for stock splits, stock dividends, stockcombinations, recapitalizations and the like) of Registrable Securities; provided,however that no party may be assigned any of the foregoing rights unlessthe Company is given written notice by the assigning party at the time of suchassignment stating the name and address of the assignee and identifying thesecurities of the Company as to which the rights are being assigned and providedfurther that any such assignee shall receive such assigned rightssubject to all the terms and conditions of Sections 5 and 10 of this Agreement.  Assignments may be made without theCompany’s consent and without the assignee’s obtaining the minimum number ofshares of Registrable Securities set forth above if the assignment is to apartner, affiliate, stockholder, parent, child or spouse of the Holder or tothe Holder’s estate.

          **6.**       **USE OF PROCEEDS****.**

          The partiesacknowledge that the Company’s undertaking to use and actual use of theproceeds of the Shares sold at the Closing as provided in this Section 6 isessential to the Investor’s willingness to enter into and perform itsobligations under this Agreement to acquire the Shares.  The Companyhereby agrees to use proceeds from the sale of the Shares pursuant to thisAgreement in part, to fulfill purchase orders placed under the DistributionAgreements, under the terms of such purchase orders accepted by the Company,including without limitation, terms as to the quantities, the quality, and thetime for delivery specified under such purchase orders, and for generalcorporate and working capital purposes, including, without limitation, therepayment of indebtedness.  The Companyshall continue to use commercially reasonable efforts to accept reasonablepurchase orders in accordance with the Distribution Agreement.  The Company also agrees that, inconsideration of Investor’s purchase of the Shares hereunder, the time forpayment of sums due under outstanding invoices and invoices hereafter issuedunder the Distribution Agreement shall be 60 days from the date of such invoiceor such other period as the parties may hereafter agree in writing.

          **7.**       **SURVIVAL OFREPRESENTATIONS AND WARRANTIES****.**

          Allrepresentations and warranties contained herein shall survive the execution anddelivery of this Agreement and the sale and purchase of the Shares for a periodof one year after the Closing.  If inany material respect such representations, warranties or information shall notbe true and accurate at any time through the Closing, the person making therepresentation will promptly give written notice of such fact to the otherparties to the Agreement, specifying which of the representations, warrantiesor information is not true and accurate and the reasons thereof (it beingunderstood that any representation or warranty that speaks as of a particulardate shall not be deemed untrue or inaccurate as a result of changes theretothat occur after the date as of such representation or warranty speaks).

**         ****8.**       **CONDITIONS TO INVESTOR'SOBLIGATIONS AT CLOSING****.**

          Theobligations of the Investor under Section 2 of this Agreement are subject tothe fulfillment or waiver, on or before the Closing, of each of the followingconditions, which may be given by written, oral or telephone communication tothe Company, its counsel or to counsel to the Investor:

**                   ****8.1**     **Representations and Warranties True.**  Each of the representations and warrantiesof the Company contained in Section 3 shall be true and complete on and as ofthe Closing with the same effect as though such representations and warrantieshad been made on and as of the date of the Closing.

**                   ****8.2**     **Performance.** The Company shall have performed and complied with all agreements,obligations and conditions contained in this Agreement that are required to beperformed or complied with by it on or before the Closing and shall haveobtained all approvals, consents and qualifications necessary to complete thepurchase and sale described herein.

**                   ****8.3**     **Compliance Certificate.** The Company shall have delivered to the Investor at the Closing acertificate signed on its behalf by its President, Chief Executive Officer, orChief Financial Officer certifying that the conditions specified in Sections8.1 and 8.2 have been fulfilled and stating that there shall have been nomaterial adverse change in the business, financial condition, or assets of theCompany not previously disclosed to the Investor in writing.

**                   ****8.4**     **Proceedings and Documents.** All corporate and other proceedings in connection with the transactionscontemplated at the Closing and all documents incident thereto shall bereasonably satisfactory in form and substance to the Investor and to theInvestor's counsel, the Investor shall have received all such counterpartoriginals and certified or other copies of such documents as it may reasonablyrequest.  Such documents shall include(but not be limited to) the following:

                              (a)     Certified Charter Documents.  A copy of the Certificate of Incorporationand the Bylaws of the Company (as amended through the date of the Closing),certified by the Secretary of the Company as true and correct copies thereof asof the Closing.

                              (b)     Corporate Actions.  A copy of the resolutions of the Board ofDirectors authorizing the transactions contemplated by this Agreement,including the issuance of the Shares and the grant of registration rightstherefor as provided in Section 5.

**                   ****8.5**     **No Material Change.** There shall have been no material adverse change in the business,financial condition, or assets of the Company and its subsidiaries taken as awhole, since the date of the Company’s Annual Report on Form 10-K for thefiscal year ended December 31, 2000, filed with the SEC on or about April 9,2001.

**         ****9.**       **CONDITIONS TO THECOMPANY'S OBLIGATIONS AT CLOSING****.**

          Theobligations of the Company to the Investor under this Agreement are subject tothe fulfillment or waiver on or before the Closing of each of the followingconditions by such Investor which may be given by written, oral or telephonecommunication to the Company or its counsel:

**                   ****9.1**     **Representations and Warranties.**  The representations and warranties of theInvestor contained in Section 4 shall be true and complete on the date of theClosing with the same effect as though such representations and warranties hadbeen made on and as of the Closing.

**                   ****9.2**     **Payment of Purchase Price.** The Investor shall have delivered to the Company in accordance with theprovisions of Section 2 the purchase price for the Investor’s Shares referredto in Section 1.

**                   ****9.3**     **Proceedings and Documents.** All corporate and other proceedings in connection with the transactionscontemplated at the Closing and all documents incident thereto shall bereasonably satisfactory in form and substance to the Company and to theCompany's legal counsel, and the Company shall have received all suchcounterpart originals and certified or other copies of such documents as it mayreasonably request.

          **10.**     **GENERAL****.**

**                   ****10.1**   **Successors and Assigns.** Except as otherwise provided in this Agreement, this Agreement, and therights and obligations of the parties hereunder, will be binding upon and inureto the benefit of their respective successors, assigns, heirs, executors,administrators and legal representatives.

**                   ****10.2**   **Governing Law.** This Agreement will be governed by and construed in accordance with thelaws of the State of California, without giving effect to that body of lawspertaining to conflict of laws.

**                   ****10.3**   **Counterparts.** This Agreement may be executed in any number of counterparts, each ofwhich when so executed and delivered will be deemed an original, and all ofwhich together shall constitute one and the same agreement.

**                   ****10.4**   **Titles and Headings.** The titles, captions and headings of this Agreement are included forease of reference only and will be disregarded in interpreting or construingthis Agreement.  Unless otherwisespecifically stated, all references herein to "sections" and"exhibits" will mean "sections" and "exhibits" tothis Agreement.

**                   ****10.5**   **Notices.** Any and all notices required or permitted to be given to a partypursuant to the provisions of this Agreement will be in writing and will beeffective and deemed to provide such party sufficient notice under thisAgreement on the earliest of the following: (i) at the time of personal delivery, if delivery is in person;(ii) one business day after transmissionby facsimile, addressed to the other party at its facsimile number specifiedherein, with confirmation of receipt made by both telephone and printedconfirmation sheet verifying successful transmission of the facsimile;(iii)one business day after deposit with an express overnight courier for United Statesdeliveries and three business days after deposit with an express courier fordeliveries outside the United States, with proof of delivery from the courierrequested in either case; or(iv) three business days after deposit in the United States mail by certifiedmail (return receipt requested) for United States deliveries.  All notices for delivery outside the UnitedStates will be sent only by facsimileor by express courier.  Notices by facsimile shall be machineverified as received.  Allnotices not delivered personally or byfacsimile will be sent with postage and/or other charges prepaid andproperly addressed to the party to be notified at the address or facsimile number as follows, or atsuch other address or facsimile numberas such other party may designate by one of the indicated means of noticeherein to the other parties hereto as follows:

                              (a)     if to the Investor, at the Investor'saddress as set forth next to the Investor’s name on Exhibit A, with a copy to:

Fenwick & West LLP275 Battery Street, 15th FloorSan Francisco, CA  94110Telephone:   415-875-2300Facsimile:  415-281-1350Attn:  Mark Porter

                              (b)     if to the Company at:

Southwall Technologies Inc.1029 Corporation WayPalo Alto, CA  94303Telephone:  650-962-9111Facsimile:  650-967-8313Attn:  President

with a copy to:

Choate, Hall & StewartExchange Place53 State StreetBoston, MA  02109Telephone:  617-248-2133Facsimile:  617-248-4000Attn:  James W. Hackett, Jr.

**                   ****10.6**   **Amendments and Waivers. **Before the Closing, any term of this Agreement may be amended andthe observance of any term of this Agreement may be waived (either generally orin a particular instance and either retroactively or prospectively), only withthe written consent of the Company and the Investor.  After the Closing, any termof this Agreement may be amended and the observance of any term of thisAgreement may be waived (either generally or in a particular instance andeither retroactively or prospectively), only with the written consent of theCompany and the holders of at least 75%of the aggregate number of Registrable Securities then outstanding.  Any amendment or waiver effected inaccordance with this Section shall be binding upon each Holder of any Shares,each future Holder of such securities, and the Company.** **No delay or failureto require performance of any provision of this Agreement shall constitute awaiver of that provision as to that or any other instance.  No waiver granted under this Agreement as toany one provision herein shall constitute a subsequent waiver of such provisionor of any other provision herein, nor shall it constitute the waiver of anyperformance other than the actual performance specifically waived.

**                   ****10.7**   **Entire Agreement.** This Agreement and the documents referred to herein, together with allthe Exhibits hereto, constitute the entire agreement and understanding of theparties with respect to the subject matter of this Agreement, and supersede anyand all prior understandings and agreements, whether oral or written, betweenor among the parties hereto with respect to the specific subject matter hereof.

**                   ****10.8**   **Third Parties.** With the exception of the provisions of Section 5 hereof with regard topermitted successors or assigns of the registration rights of Registrable Securities(which permitted successors and assigns are intended beneficiaries of theprovisions of Section 5 hereof) nothing in this Agreement, express or implied,is intended to confer upon any person, other than the parties hereto and theirsuccessors and assigns, any rights or remedies under or by reason of thisAgreement.

**                   ****10.9**   **Costs And Attorneys' Fees.** In the event that any action, suit or other proceeding is institutedconcerning or arising out of this Agreement or any transaction contemplatedhereunder, the prevailing party shall recover all of such party's costs andattorneys' fees incurred in each such action, suit or other proceeding.

[Remainder of Page Intentionally Left Blank]

          **IN WITNESS WHEREOF**, the undersigned has executed this StockPurchase Agreement as of the day and year first set forth above.

|         |                             |
|--------------|----------------------------------|
| THE COMPANY: | **SOUTHWALL  TECHNOLOGIES INC.** |
|         |                             |
|         | By                               |
|         | Its:                             |