Document:

2003 10-K Exhibit 10.116.1

Exhibit 10.116.1

{Southwall Logo]   - - - - - - - - -
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HEADQUARTERS
3975 East Bayshore Road

       Palo Alto, California  94303

        
      Phone 650.962.9115 x1279

       Fax 650.967.0182

swestra@southwall.com

 

 

 

August 28, 2003

Mr. Andrew Kwan

Director

Globamatrix Holdings Pte. Ltd.

PSB Science Park Annex

3 Science Park Drive #02-16

Singapore 118223

Singapore

 

Dear Andrew,

 

With this letter, I want to summarize our meetings in Singapore during the
week of August 18th that covered the proposed changes to the existing
Distribution Agreement, dated January 1, 2002.

In consideration of several factors that have made, and are expected to
continue to make an impact on our business in 2003 and that are beyond the
control of GMX and Southwall (Force Majeure), we have agreed to the
following:

	The minimum, net Purchase Order quantity for 2003 will be adjusted to
$7.6MM
	The quarterly breakdown will be as follows:

	Q1$2.098 MM (already shipped)
	Q2$0.951 MM (already shipped)
	Q3$2.283 MM (existing F/C of $1,425MM + new orders $0.858MM)
	Q4$2.268 MM (existing F/C, unchanged)
	Total$7.6 MM

	The $0.858MM of new orders for Q3 to include orders from the "short and
narrow" inventory list
	To the extent that new products, such as VK-85, VK-15 or VK-Secure are not
available for shipment in Q3 or Q4 as per the current F/C, GMX will order
released products instead. STI shall endeavor to have the new products available
on a best efforts basis.
	Payment terms for the Q3 shipments will be:

	15 days net for VKI and HOI
	60 days net for VK Inc and HOD.

	If VKI or VK Inc. will be successful in securing additional, significant
orders (e.g. Starbucks or the D.O.D. Contract), GMX and STI will discuss again
how this will impact the minimum Purchase Order quantity for 2003 (and
2004)
	The minimum amount of Product for 2004 ($15.25MM per the Supply Agreement)
will be determined at a later date, based on a more accurate estimate of the
final 2003 performance.  The minimum amount of Product for 2004 will reflect a
reasonable growth with respect to 2003 (less extraordinary projects like DOD
contract should it come about), taking into account recovery from Force Majeure
factors ,  the addition of new products (VK-85, VK-15 and VK-Secure),general
growth of the product line, progress in product durability improvements to
facilitate and maintain product sales in key areas as well as STI's resolute
defense of any infringement upon its patents with respect to the Product.  It is
expected that a meeting will be held in late October, early November to agree on
the minimum amount of Product for 2004.

 

 

Can you please sign and date this letter below and return a copy to my
attention as a confirmation and agreement of our understanding.

 

Best regards,

 

 

Sicco W.T. Westra

VP Business Development

Southwall Technologies Inc

 

Read and agreed,

 

 

 

Andrew Kwan

Director

Globamatrix Holdings Pte. Ltd2003 10-K Exhibit 10.116.2

Exhibit 10.116.2

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- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - CORPORATE
HEADQUARTERS
3975 East Bayshore Road

         Palo Alto,
California  94303

Phone 650.962.9115 x1279

Fax 650.967.0182

swestra@southwall.com

December 17, 2003

Mr. Andrew Kwan

Director

Globamatrix Holdings Pte. Ltd.

PSB Science Park Annex

3 Science Park Drive #02-16

Singapore 118223

Singapore

 

Dear Andrew,

My apologies for being late in getting this letter to you, summarizing the
meeting we had in Tokyo on October 30th and 31st 2003 with
you, Col. Wee, Dennis Capovilla and myself to discuss the existing Distribution
Agreement, dated January 1, 2002. We have agreed to the following:

 
1. 2003 Purchase Orders

The Minimum Purchase Amount for 2003 would be $7.6MM , as previously agreed
in the letter of August 28, 2003.  For any discrepancy between this agreed
amount and the projected amount for 2003, additional orders would be placed, or
credit against the 2004 quota would be given.

 

2. 2004 Purchase Orders 

The Minimum Purchase Amount for 2004 is $9MM.

A further incremental amount of $1 MM would be contingent upon:

     i. Southwall commencing patent infringement litigation with  a "Cease
and desist"   

        letter issued in Q1 '04 to CPF regarding their VS-70;  and

     ii.Introduction of a new film by Southwall with improved durability
(reduced 

        corrosion), before the end of Q1  '04.

 

3. Sputtered film-only

GMX could purchase sputtered film only, in addition to the above Minimum
Purchase Amount, without obligation for incremental converted film purchase.

  

4. Accelerated 2004 purchase orders

Approximately $1MM from 2004 orders were considered for being placed in Q4
2003.  Terms had to be finalized.

 

Please sign and date this letter below and return a copy to my attention as a
confirmation and agreement of our understanding.

.

Best regards,

 

Sicco Westra

Dr. Sicco W.T. Westra

VP Business Development

Southwall Technologies Inc

 

Read and agreed,

 

 

 

Andrew Kwan

Director

Globamatrix Holdings Pte Ltd

 

CC: Dennis Capovilla; Tom Hood2003 10-K Exhibit 10.128

Exhibit 10.128

Guaranteed Loan Agreement

This Loan Agreement is entered into by and between Southwall
Technologies, Inc. ("Southwall") and Teijin, Limited ("Teijin") as of January
19, 2004.

Recitals of Fact

	Teijin guaranteed an obligation of Southwall (the
"Bank Debt") to UFJ Bank Limited (as formerly known as "Sanwa Bank
Limited") (the "Guarantee").

	In connection with the granting of the Guarantee, Teijin
obtained security interests in certain property of Southwall ("Teijin's
Collateral").  

	On November 5, 2003 Southwall defaulted on the Bank Debt.

	Shortly thereafter, Teijin honored its Guarantee by
satisfying the Bank Debt.  

	Pursuant to the agreement of the parties entered into in
connection with the Guarantee, Southwall is obligated immediately to repay the
amounts paid by Teijin to satisfy the Bank Debt, together with fees, interest
and costs incurred by Teijin (collectively, "Teijin's Claim").

	As of January 19, 2004, Teijin's Claim is
$1,268,827.08

	Southwall is unable presently to repay Teijin's Claim.
Southwall has requested that Teijin and certain other creditors enter into
agreements to restructure and defer obligations, including the obligation to pay
Teijin's Claim.

	Southwall Europe GmbH, Southwall's wholly owned German
subsidiary ("SEG"), conducts manufacturing operations for Southwall in Dresden,
Germany.

	The parties hereto wish consensually to provide for the
payment of Teijin's Claim and related matters.

Agreement

NOW, therefore, the parties hereto agree as
follows:

	Payment Schedule: Southwall shall make the
following payments to Teijin on or before the dates set forth below:

	$253,765.42, on or before December 31, 2004;

	$380,648.12, on or before December 31, 2005;

	$211,471.18, on or before December 31, 2006;

	$211,471.18, on or before December 31, 2007;

	$211,471.18, on or before December 31,
2008;

	Full Satisfaction:Timely payment consistent
with the above-mentioned Payment Schedule shall constitute full satisfaction of
any and all of Teijin's claims arising out of or related to the Guarantee and
the Bank Debt, including without limitation Teijin's Claim.

	Interest:The obligations herein shall accrue
no interest if paid when due; provided that, without limiting any other rights
or remedies of Teijin, interest shall accrue, from the date such obligations are
due hereunder, on any past due payments at a rate of __% per annum, but not to
exceed the maximum rate allowed by law.

	Collateral: Southwall may dispose of Teijin's
Collateral as it deems fit, provided only that Southwall shall forthwith pay to
Teijin the net proceeds of any disposition of Teijin's Collateral, which
proceeds shall be deemed a credit against the payment next due under the Payment
Schedule.   In furtherance thereof, Teijin will deliver to Southwall UCC
termination statements and similar documentation promptly after this Agreement
is executed.  Southwall shall bear all costs and expenses associated with
Teijin's Collateral, including without limitation the costs of storage,
marketing, sale, disassembly or assembly, and transportation.  Within ten (10)
days following the sale or other disposition of Teijin's Collateral, Southwall
shall deliver to Teijin a full accounting, certified as accurate by an officer
of Southwall, specifying the gross proceeds and other consideration received for
Teijin's Collateral and all expenses reasonably attributable to the storage,
marketing, sale, disassembly or assembly, and transportation of Teijin's
Collateral borne by Southwall in connection with the sale or other disposition
of Teijin's Collateral.  

 

	Guarantee: Immediately upon the execution of
this Agreement,, Southwall shall cause SEG to execute a guaranty in the form
attached hereto as Exhibit "A" and shall deliver that guaranty to
Teijin.  This Agreement shall take effect upon the delivery of the fully
executed guaranty to Teijin.

	Default:Failure to make timely payments
contemplated by the Payment Schedule when due shall constitute an Event of
Default.  Following the occurrence of an Event of Default, Teijin may give
written notice thereof as provided in paragraph 7 below.  Five business days
after such notice is given, if the default has not previously been cured, all
unpaid obligations under the Payment Schedule shall become immediately due and
payable, and Teijin shall be free to exercise all rights and remedies for the
collection of such obligation which may be available to it in law or equity.
Notwithstanding any other provision of this Agreement, all unpaid obligations
which become immediately due and payable as provided in the immediately
preceding sentence shall thereafter bear interest at a rate of __% per annum,
but not to exceed the maximum rate allowed  by law.  

	Notice:Notice of matters arising hereunder
shall be given by fax  and overnight mail and shall be  provided to:

If to Southwall and/or SEG, to:

Thomas G. Hood, President and CEO

Southwall Technologies, Inc.

3975 East Bayshore Road

Palo Alto, California 94303

Fax  1-650-967-8713

If to Teijin, to:

                General Manager

                Films Business Group

                Teijin Limited

                1-1, Uchisaiwaichou 2-chome

                 Chiyoda-ku Tokyo 100-8585

                 Japan

                Fax 81-3-3506-4581

	Attorneys Fees:The parties further agree that
in the event of any dispute arising from or concerning the terms and conditions
of this Agreement, the prevailing party in any such dispute shall be entitled to
an award of reasonable attorneys' fees and costs.  

	Integration:This Agreement constitutes the
entire agreement between the parties hereto with respect to the matters
identified in the Recitals of Fact, and all other prior agreements, arrangements
or understandings, oral or written, are merged into and superseded by the terms
of this Agreement.

	Authority: Each of the persons executing this
Agreement on behalf of the undersigned warrants that he has full power and
authority to do so, and that no other and further authority or execution by any
other person is necessary.  Teijin and Southwall (on behalf of  itself and SEG)
each represents that the execution and performance of this Agreement in
accordance with its terms will not violate the terms of any other agreement,
covenant or condition by which it is bound.  Each of the persons executing this
Agreement has had an opportunity to consult with counsel, and warrants that he
understands the terms of this Agreement.  

	Counterparts / Fax Signatures:  This Agreement may
be executed in any number of counterparts and by the different parties hereto on
separate counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.   Parties shall be bound hereto by a
fax signature with the same force and effect as an original signature.

	Construction:This Agreement is to be construed
simply and fairly, and not strictly in favor of or against Southwall or Teijin.
This agreement was prepared and negotiated jointly by the parties.

 

 

DATED:SOUTHWALL TECHNOLOGIES, INC.

___________________________

By: Thomas G. Hood, President

 

DATED:TEIJIN, LIMITED

 

___________________________

By: __Takashi Yamagishi_____________, 
              Teijin Group Executive Officer,____________

                    Deputy General Manager

                    Films Business Group

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