Document:

2003 10-K Exhibit 10.130

Exhibit 10.130

SUPPLY AGREEMENT

between

SOUTHWALL TECHNOLOGIES INC.

3975 E. Bayshore Road

Palo Alto, California 94303 USA

SAINT GOBAIN SEKURIT FRANCE

Bureau Central

B.P. 15, Rue Joffre

F-60150 THOUROTTE, France

 

	
1. Agreement.
	
It is agreed that Saint Gobain
Sekurit France ("SGSF") commits to place a firm, two (2) year,
irrevocable purchase order for XIR® 70 and 75 film
("Film") as detailed in Section 6, below.  Additionally, it is agreed
that Southwall Technologies Inc. ("Southwall") commits to supply the
volume of Film, including the Optional amounts, as detailed in Section 6 below.
The purchase of Film under this Agreement is for the needs of SGSF and Saint
Gobain Sekurit ("SGS") worldwide.  This Agreement to sell Film is for
vehicular application only (not architectural applications), and SGSF agrees
that such Film will be used for no other purpose.  Film purchased under this
Agreement will be incorporated by SGSF (or an SGSF subsidiarySGS worldwide),
into vehicular glass and will otherwise not be resold to third parties who are
not subsidiaries affiliated to of SGSF.  This agreement supercedes the previous
Agreement signed December 18, 2001 by and between Southwall and SGSF.

	
2. Term of the Supply
Agreement.
	
The term of the Supply Agreement
shall be for a period of two (2) years, from January 1, 2004 to December 31,
2005, and may be renewed, if at all, only on such terms and conditions as the
parties may then agree for each subsequent year. 

	
3. Best
Customer/Supplier.
	
Based on committed purchase volumes
from SGSF, Southwall confirms SGSF has received best pricing terms for
the Film and enjoys "best customer" status during the
term of this Agreement. SGSF agrees to give Southwall "best supplier"
status by giving Southwall the option to supply additional Film beyond the
volumes described in this Agreement at the prices agreed to in Appendix A

	
4. Volume of Film
Purchases.
	
By means of an irrevocable two (2)
year purchase order, SGSF commits to xxxxx (xxxxx) square meters (xxxxx million
square feet) of Film intended for delivery in the period January 1, 2004 to
December 31, 2005 (with a plus/minus tolerance of five percent [5%]).  SGSF's
commitment is contingent upon full web (1.83 meters or 2.00 meters) purchase.

	
5. Film Price/Terms/ Warranties and
Liabilities.
	
Refer to the attached Price
Schedule and Terms, Warranties, and Liabilities attached in Appendix A.

 

 

	
 

6. Orders/Forecasts.
	

Volume of Film (square meters)

 

FILM ORDERS
- XIR® 70 & 75 Film
(m2)

                                                2004 / 2005
Total

Committed Quantity              xxxxxx*                    xxxxxx*

Committed + 5% Tolerance  xxxxxx                      xxxxxx     

Option 1  in 2005                    xxxxxx**                   xxxxxx** 

Option 2  in 2005                    xxxxxx**                   xxxxxx** 

Option 3  in 2005                    xxxxxx**                   xxxxxx** 

	*A plus/minus tolerance
of five percent (5%) is acceptable only on the Committed Quantity.

	**Options can only be exercised if + 5% tolerance has
been requested.

By the 25th day of each month, SGSF will supply
Southwall with a takedown schedule for the following three months, confirming
for each Film Type the volumes and widths. For the first month of the three
months, the volumes and widths are binding for each of the Film Types. For the
subsequent two months covered by each such takedown schedule, only the monthly
total for all Film Types together will be binding. Volumes and widths for each
Film Type can be changed for the period beyond the first month covered by each
such takedown schedule upon at least 5 weeks prior written notice for XIR-75 and
7 weeks prior written notice for XIR-70.  

SGSF commits to purchase a total of xxxxx square meters in Q1/2004. For the rest
of 2004 (except the month of August) a minimum volume of xxxxx square
meters is committed per month. In 2005 SGSF commits a minimum
volume of xxxxx square meters for each month (except the month of August).
Notwithstanding the foregoing minimums SGSF is obligated to purchase xxxx square
meters during the term of this Agreement.

Southwall commits to supply up to 130,000xxxx square meters
per month in 2004 and up to xxxx square meters per month in 2005. By December
31, 2004, Southwall will review the monthly commitment and will indicate to SGSF
whether that the commitment for 2005 can be increased beyond xxxx square meters
per month during 2005. 

By December 31, 2004, SGSF will exercise one of the three options above or all
three options for 2005 shall automatically be cancelled. Southwall shall then be
committed to supply and sell such volume and type of Film when so ordered by
SGSF as part of its two (2) year purchase order.  SGSF acknowledges the
commercial necessity to advise Southwall of the initial takedown schedule and
significant forecast demand increases or decreases, and/or significant changes
in the product mix at the earliest opportunity and confirm that it will spread
out takedown volumes as evenly as possible over each year to avoid capacity
problems for Southwall.  In turn, Southwall needs to confirm any changes
of the initial takedown schedule and acknowledges the commercial necessity for
SGSF to receive even volumes and confirms it will ship takedown volumes as
evenly as possible, during each month to avoid production problems for SGSF.

If at the end of any month during the term of this Agreement
more than one week of delay occurs with respect to any Film ordered by SGSF,
SGSF will apply penalties to Southwall for late delivery. These penalties are
structured as follows:

	End of a month with undelivered quantities per SGSF
Purchase Order as received and accepted by Southwall - no penalties.

	Southwall has 1 week to have undelivered quantities
delivered per Payment Terms (Appendix A) for shipments from the U.S. and/or from
SEG.

	At end of week two any remaining undelivered quantities
from the prior month shall have a 2.5% penalty on the price of such undelivered
Film applied to SGSF's account in the form of a customer credit.

	At end of week three any remaining undelivered quantities
from the prior month have a 4% on the price of such undelivered Film penalty
applied to SGSF's account in the form of a customer credit.

	At end of week four any remaining undelivered quantities
from the prior month have a 5% on the price of such undelivered Film penalty
applied to SGSF's account in the form of a customer credit.

	The cumulative total late penalty for late shipments from
the prior month will not exceed 11.5% on the price of such undelivered
Film.

	
7. Product
Specifications.
	
The Film to be supplied under this
Agreement shall correspond to the last valid Specifications (Ref C.DQ.CA.434,
Issue 06, Rev. Date 04/2003 and Ref C.DQ.CA.435, Issue 02, Rev. Date 04/2003)
agreed and signed by both parties, or as may be amended from time to time by
agreement of the Parties in writing so as thereafter to be in effect.

	
8. Assignablilty.
	
This Agreement or any part hereof
may not be assigned by either Party without the prior consent of the other
party; provided, however, that either party may assign this Agreement to any
entity which acquires substantially all of its assets or business, The rights
and obligations of the parties pursuant to the present agreement will be
automatically transferred and binding upon their respective successors and
assignees provided that the assignor assumes all obligations hereunder.

	
9. Term and Termination.
	
The term of this Agreement shall be
for two (2) years, renewable thereafter upon mutual consent. Either Party may
terminate this Agreement for a material breach by the other party which is not
cured within ninety (90) days (thirty (30) days for failure to pay) of notice
thereof.  The rights of termination hereunder are absolute.  Neither party shall
incur any liability or compensation obligation whatsoever for any damages
(including, without limitation, damage or loss of goodwill or investment or
other incidental, consequential, special or indirect damages), loss or expenses
of any kind, suffered or incurred by the other (or for any compensation to the
other) arising from, or incident to, any termination of this Agreement by such
party that complies with the terms of the Agreement, whether such party is aware
of any such damage, loss or expense.

	
10. Force Majeure.
	
Notwithstanding anything else to
the contrary, if the performance of this Agreement is prevented, restricted or
interfered with by reason of any cause or circumstance whatsoever beyond the
reasonable control of the parties hereto, the party so affected, upon giving
notice to the other, shall be excused hereunder to the extent of such
prevention, restriction or interference, provided that the party so affected
shall continue performance hereunder insofar as applicable whenever such causes
or circumstances are removed.  Matters beyond reasonable control of the parties
shall include:

1. Fire, explosion, strike, lock-out, labor dispute, casualty
or accident, lack or failure in all transportation facilities, epidemic,
cyclone, flood, drought, lack or failure of sources of supply of labor, raw
materials, power or supplies; or,

2. War, revolution, civil commotions, acts of public enemies,
terror acts, blockade or embargo; or,

3. Any law, order, proclamation, regulation, ordinance,
demand or requirement of any government or any sub-division, authority or
representative of any such government; or,

4. Any other acts whatsoever, whether similar or dissimilar
to those enumerated, beyond the reasonable control of the parties hereto, but
does not include lack of demand (except when lack of demand is due to a Force
Majeure event, as described herein).

	
11. Product Development.
	
Southwall and SGSF commit to
cooperate on mutual product and process development efforts, including: better
solar properties, heatability, antenna, greater degrees of cross-curvature, and
new products.  SGSF agrees to consider all of SGS's worldwide, new product needs
in these joint activities.

	
12. Confidentiality.
	
Each party (the "Receiving
Party") agrees that all inventions, trade secrets, know-how and ideas it
obtains from the other party (the "Disclosing Party") and all other
business, operational, technical and financial information it obtains from such
party is the confidential property of the Disclosing Party ("Proprietary
Information").  Except as unambiguously allowed in other parts of this
Agreement, the Receiving Party will hold in confidence, and not use or disclose
any Proprietary Information and will similarly bind its employees in writing and
enforce such agreements. The Receiving Party's nondisclosure obligation will not
apply to information it can document: (i) was already known to the Receiving
Party without restriction prior to execution of the Agreement: (ii) is publicly
available through no fault of the Receiving Party; or (iii) is required to be
disclosed pursuant to a regulation or court order (but only to a minimum extent
required to comply with such regulation of order) and upon 30 days prior notice
to the other party.  The Receiving Party understands that any breach of this
Section12 will result in irreparable injury to the Disclosing Party and that the
Disclosing Party shall be entitled to equitable relief, including injunction and
specific performance, as a remedy for any such breach by the Receiving Party.
Such remedies shall not be deemed to be the exclusive remedy for such breach,
but shall be in addition to all other available remedies at law or equity.

	
13. General Terms.
	
Any waivers or amendments shall be
effective only if made in writing and signed by a representative or agent of the
respective parties authorized to bind the parties.  However, this Agreement
shall be controlling over additional or different terms of any purchase order,
confirmation, invoice or similar document, even if accepted in writing by both
parties, and waivers and amendments will be effective only if made by non-
preprinted agreements clearly understood by both parties to be an amendment or
waiver.  Any notice, report, approval or consent required or permitted hereunder
shall be in writing, and will be deemed to have been duly given if delivered
personally or mailed by first-class, registered or certified U.S. mail, postage
prepaid to a party at its address as set forth herein.  Any communication
between the parties shall be in English.  Any dispute arising out of or relating
to this Agreement shall be resolved in accordance with the International Rules
of Arbitration of the American Arbitration Association.   The site of the
Arbitration shall be in the United Kingdom.  In addition to any award of
damages, the prevailing party in any such arbitration shall be entitled to an
award of its attorneys' fees and expenses incurred in connection with the
dispute. In any action or proceeding to enforce rights under this Agreement, the
prevailing party will be entitled to recover costs and attorney's fees.  If any
provisions of this Agreement is held to be illegal or unenforceable, that
provision shall be limited or eliminated to the minimum extent necessary so that
this Agreement will otherwise remain in full force and effect and enforceable.
The parties agree that this Agreement is the complete and exclusive statement of
the mutual understanding of the parties, and supersedes and cancels all previous
written and oral agreements and communications, with respect to the subject
matter of this Agreement.  Each party warrants and represents that this
Agreement has been duly authorized by all necessary corporate action and that
this Agreement has been duly executed by and constitutes a valid and binding
Agreement of that party.

 

 

Accepted and Agreed to:

 

__________________________ ______________________________

Thomas G. HoodJavier Fernandez

President & CEOPurchasing Director

Southwall Technologies Inc.Saint Gobain Sekurit
International,

Palo Alto, CAOn Behalf of Saint Gobain Sekurit,
France

U.S.A.Paris, France

Date: _____________________Date: __________________________

 

APPENDIX A

PRICE SHEET, TERMS, WARRANTIES, and LIABILITIES

SAINT GOBAIN SEKURIT®

PRICE SCHEDULE:
XIR® Film (Effective January 1, 2004)

 

	
 

XIR FILM TYPE

	
2004/2005

Quantity

(xxxx m2)
*
	
2005

Option 1

Additional Quantity

(xxxx m2)**
	
2005

Option 2

Additional 

Quantity

(xxxx m2)**
	

2005

Option 3

Additional Quantity

(xxxx m2)**

	
 

Width & Source of
XIR:
	

1.5m

&

1.6m

SEG
	

Standard

Width

SEG
	

1.5m

&

1.6m

SEG
	

Standard

Width

SEG
	

1.5m

&

1.6m

SEG
	

Standard

Width

SEG
	

1.5m

&

1.6m

SEG
	

Standard

Width

SEG

	

XIR75 (Blue and
Green)
	

€xxx

per m2
	

€xxx

per m2
	

€xxx***

per m2
	

€xxx***

per m2
	

€xxx***

per m2
	

€xxx***

per m2
	

€6.28***

per m2
	

€xxx***

per m2

	

XIR 70 

(2-mil)

	
 

 
	
€xxx

per m2
	
	
€xxx***

per m2

	
 

 
	
€xxx***

per m2
	

 

 

 

 
	
€xxx***

per m2

	

XIR 70 

(1-mil)

	
 

 
	
€xxx

per m2
	
	
€xxx***

per m2
	

 
	
€xxx***

per m2
	

 

 

 

 
	
€xxx***

per m2

*    A plus/minus tolerance of 5% is
acceptable.

**   Only in addition to the +5% tolerance.

*** Prices become valid for total volumes shipped in 2005 if one of the
options is exercised.

 

 

	All prices are per square meter

	SEG pricing is based on shipment terms of DDP
Chantereine, France for 1 delivery per week, after which terms are Ex Works
Grossrohrsdorf, Germany for additional shipments and/or shipments to Crown for
encapsulation.

	Shipments from SEG are 30 days net from date of invoice,
priced in €/m2.

 

 

 

 

	
Shipment Lead Times
	
All changes to product mix for
XIR® film are subject to a five (5) weeks for XIR-75 and seven
(7) weeks for XIR-70 lead-time after receipt of request for change and need to
be confirmed by Southwall.  

	
Shipment Terms
	
DDP Chantereine, France for 1
weekly shipment, and Ex Works Grossrohrsdorf, Germany for additional shipments
and/or shipments to Crown for encapsulation. 

	
Payment Terms
	
Payment terms are open account, net
thirty (30) days from date of invoice.

Buyer shall pay Southwall interest on the outstanding balance
on all overdue accounts until paid in full at the rate per annum of U.S. Prime
Rate plus three (3%) percent.

	
Film Splices
	
Credit will be given for splices at
a rate of 7 m2/splice

	
Governing Law and Legal
Actions
	
Any dispute arising out of or
relating to this Agreement shall be resolved in accordance with the
International Rules of Arbitration of the American Arbitration Association. The
site of the Arbitration shall be in the UK.  In addition to any award of
damages, the prevailing party in any such arbitration shall be entitled to an
award of its attorneys' fees and expenses incurred in connection with the
dispute.

	
Warranties
	
Southwall warrants to SGSF that the
Film, when shipped to SGSF by Southwall, will conform in all material respects
to the Specifications.  Such warranty does not apply to Film that (other than by
Southwall) has been mishandled, mistreated, or used or maintained or stored
other than in conformity with Southwall's instructions.

	
Warranty Disclaimer
	
EXCEPT AS EXPRESSLY PROVIDED IN THE
WARRANTIES SECTION ABOVE, SOUTHWALL MAKES NO WARRANTIES TO ANY PERSON WITH
RESPECT TO THE FILM AND DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING, WITHOUT
LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSE AND
NON-INFRINGEMENT.

	
Limited Liability
	
NOTWITHSTANDING ANYTHING ELSE IN
THIS AGREEMENT OR OTHERWISE, NEITHER PARTY SHALL BE LIABLE UNDER ANY SUBJECT
MATTER OF THIS AGREEMENT OR UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR
OTHER LEGAL OR EQUITABLE THEORY (A) FOR ANY AMOUNTS IN EXCESS IN THE AGGREGATE
OF THE AMOUNTS PAID TO SOUTHWALL HEREUNDER DURING THE TWELVE MONTH PERIOD PRIOR
TO THE DATE THE CAUSE OF ACTION AROSE OR (B) FOR ANY INCIDENTAL, CONSEQUENTIAL,
SPECIAL OR INDIRECT DAMAGES (INCLUDING, WITHOUT LIMITATION, DAMAGE TO OR LOSS OF
GOODWILL OR INVESTMENT), OR (C) FOR COST OF PROCUREMENT OF SUBSTITUTE GOODS.
This section does not limit liability for the bodily injury of a
person.2003 10-K Exhibit 10.137.1

Exhibit 10.137.1

FIRST AMENDMENT TO FORBEARANCE AGREEMENT

This First Amendment To Forbearance Agreement
("Amendment") is entered into as of this 30th day of January 2004, at
Cupertino, California, between the following parties: PACIFIC BUSINESS FUNDING,
a division of CUPERTINO NATIONAL BANK ("PBF"), and SOUTHWALL
TECHNOLOGIES INC., a Delaware corporation ("STI").

RECITALS

	On December 18, 2003, PBF and STI entered into a certain
written Forbearance Agreement (hereinafter "Forbearance Agreement")
with respect to certain extensions of credit described therein.  Among other
things, the Forbearance Agreement described and was conditioned upon the
occurrence of certain events set forth in a written Investment Agreement entered
into by STI with Needham & Company and other parties.  Said Investment
Agreement is referred to in the Forbearance Agreement as the "Investment
Agreement."

	STI has requested that PBF amend the Forbearance
Agreement to extend the time for STI to close and receive all funds to be paid
to STI pursuant to the "Initial Equity" investment described in the
Investment Agreement.

	The purpose of this Amendment is to amend the Forbearance
Agreement as PBF deems appropriate in connection with STI's request.

NOW THEREFORE, IN CONSIDERATION of the foregoing Recitals and
the terms and conditions and agreements contained herein, the parties hereby
agree as follows:

AGREEMENT

	Definitions.
Capitalized terms not otherwise defined in this Amendment shall have the
meanings set forth in the Forbearance Agreement and the Factoring
Documents.

	Acknowledgment.  STI
acknowledges the truth and accuracy of each of the facts and legal relations
contained in the Recitals to this Amendment. 

	Amendment To Forbearance
Agreement.  The Forbearance Agreement is hereby amended as follows:

Section 5.4 of the Forbearance Agreement is deleted and
replaced with the following:

"5.4     STI shall, on or before February 14, 2004, have
closed and received all funds to be paid to STI pursuant to the "Initial
Equity" investment described in Article II of the Investment
Agreement,"

	Consideration For
Amendment.  For and in consideration of PBF's agreement set forth herein,
upon execution of this Amendment, STI shall deliver to PBF a warrant in a form
acceptable to PBF for a term of five years for 35,000 shares of STI's common
stock with an exercise price of $0.01 per share, such warrant to be in a form
acceptable to PBF but substantially similar to the first warrant to be issued to
Needham & Company pursuant to the Investment Agreement.

	Terms And Conditions Of Forbearance Agreement.
Except as expressly amended in section 3 above, all terms and conditions in
the Forbearance Agreement and the Factoring Documents, as the same were
expressly amended in the Forbearance Agreement, remain in full force and effect
as set forth therein.

	Warranty and Release.  In
connection with this Amendment, STI hereby agrees as follows:

	STI warrants and represents that to the extent STI makes
any payments hereunder or the under the Forbearance Agreement or Factoring
Documents, at the time of each such payment, STI is fully authorized to make
such payment.  

	STI warrants and represents to PBF that to the best of
its knowledge or information, it has and has had no claims, causes of action,
demands, costs, losses or actions of any nature against PBF, whether the same
have been or might have been asserted as a claim, cross-claim, counter-claim or
cause of action in any tribunal.

	For and in consideration of PBF's agreement set forth
herein, STI hereby releases and forever discharges PBF, its affiliates, and
their respective officers, directors, employees, shareholders, attorneys, agents
and representatives, individually and collectively, from any and all matters
arising out of the business relationships which have existed to the date hereof
between PBF and STI, including any and all past, present or future claims,
actions, causes of action, obligations, costs or demands, known or unknown,
whether or not any such claim, action, cause of action, obligation, cost, lost
or demand has been, or might have been, asserted as a claim, cross-claim,
counter-claim or cause of action in any tribunal.

	STI warrants and represents that it has not assigned or
transferred or purported to assign or transfer to any other person or entity any
claim or matter released herein and that no other person has any interest
therein of any nature.  In the event that STI shall have assigned or
transferred, or purported to assign or transfer, or any other person shall claim
an interest in any claim or other matter herein released, then the releasing
party or parties shall indemnify PBF and hold it harmless from and against any
and all losses, costs, claims or expenses, including but not limited to all
costs related to the defense of any action, including reasonable attorneys'
fees, based upon or arising out of or incurred as a result of any such claim,
assignment or transfer.

	STI understands and acknowledges that if any claims or
other matters herein released existed, such would be disputed by PBF.  No action
taken by the parties to this Amendment, or any of them, either previously or in
connection with this Amendment shall be deemed or construed to be (a) an
admission to the truth or falsity of any claims made; or (b) an acknowledgment
or admission by PBF of any fault or liability whatsoever to any other party or
to any third party.

	STI hereby relinquishes and waives all rights conferred
upon it by the provisions of Section 1542 of the California Civil Code (or any
like provision of federal or state law), which reads as follows:

A General Release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially affected his settlement
with the debtor.

STI hereby acknowledges that it is aware that it or its
attorneys might hereafter discover facts different from or in addition to those
which it or its attorneys now know or believe to be true with respect to any of
the matters herein released, including that no such claims presently exist, and
STI agrees that this instrument shall remain in effect as a full and complete
release notwithstanding any such different or additional facts. 

	No Waiver of Default.  By
entering into this Amendment, PBF waives none of the Defaults or any other
default under the Factoring Documents nor its right to collect all obligations
currently owing under either the Factoring Documents.

	Governing Law.  This
Amendment shall be interpreted and governed by California law without giving
effect to principles of conflicts of law, and the parties agree that the venue
for any lawsuit relating to this Amendment, the Forbearance Agreement or the
Factoring Documents shall be the State or Federal courts situated in the County
of Santa Clara, California.  THE PARTIES ACKNOWLEDGE AND AGREE THAT IN ANY SUCH
LAWSUIT, THEY EACH WAIVE THE RIGHT TO TRIAL BY JURY AND THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO THE OTHER PARTY TO ENTER INTO THIS
AMENDMENT.

	Successors.  The parties
hereto expressly agree and covenant that this Amendment shall inure to the
benefit of and be binding upon their respective representatives, successors,
trustees and assigns.  With the exception of the foregoing, this Amendment is
not for the benefit of any other parties apart from PBF and STI.

	Entire Agreement.  This
Amendment contains the entire agreement between the parties pertaining to the
subject matter herein, and supersedes any and all prior and/or contemporaneous
oral or written negotiations, agreements, representations, and understandings,
with respect to such subject matter.

[The remainder of this page intentionally left blank]

	Execution in Counterparts.
This Amendment may be executed in an original or one or more counterparts, each
of which shall constitute a duplicate original.

IN WITNESS WHEREOF, this First Amendment to Forbearance
Agreement has been executed as of the date first above written.
PACIFIC BUSINESS FUNDING, 

a division of CUPERTINO NATIONAL BANK

 

 

By:

Its:

 

SOUTHWALL TECHNOLOGIES INC.,

a Delaware corporation

 

 

By:

Its:Vice President, Corporate Controller

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