UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of
Report (Date of earliest event reported): April 2, 2007
Southwall
Technologies Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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0-15930
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94-2551470
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(I.R.S.
Employer Identification No.)
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3788
Fabian Way
Palo
Alto, California 94303
(Address
of principal executive offices)
(650) 798-1200
(Registrant's
telephone number, including area code)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2 below):
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01.
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Entry
into a Material Definitive
Agreement.
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The
second facility is a $3 million revolving line of credit under which we may,
from time to time, borrow up to 80% of eligible accounts receivables (net of
pre-paid deposits, pre-billed invoices, deferred revenue, offsets, contracts
related to each specific account debtor and other requirements in the lender’s
discretion). Amounts borrowed under the second facility bear interest at prime
plus 1.75% annualized on the average daily finance amount outstanding. The
second facility also provides a $2 million letter of credit sub-facility. All
borrowings under the facilities will be collateralized by all of our assets
and
are subject to certain covenants. These covenants include that while the second
facility is outstanding (a) we will maintain a minimum current ratio of 1.00
to
1.00 for the months through May 31, 2007 (thereafter, starting with month ending
June 30, 2007, we need to maintain a current ratio of 1.25 to 1.00 on a monthly
basis); and (b) our quarterly net loss to shareholders (including deemed
dividend) will not exceed $400,000.
The
terms
of the Credit Agreement, among other things, limit our ability to (i) incur,
assume or guarantee additional indebtedness (other than pursuant to the Credit
Agreement), (ii) incur liens upon the collateral pledged to the bank, and (iii)
merge, consolidate, sell or otherwise dispose of substantially all or a
substantial or material portion of our assets.
The
Credit Agreement provides for events of default, which include, among others,
(a) nonpayment of amounts when due (with no grace periods), (b) the breach
of
our representations or covenants or other agreements in the Credit Agreement
or
related documents (c) defaults or accelerations of our other indebtedness,
(d) a
failure to pay certain judgments, (e) the occurrence of any event or condition
that the Bank believes impairs or is substantially likely to impair the
prospects of payment of performance by us, and (f) certain events of bankruptcy,
insolvency or reorganization. Generally, if any event of default occurs, the
Bank may declare all outstanding indebtedness under the Credit Agreement to
be
due and payable.
The
maturity date of the facilities is March 28, 2008.
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Item
1.02.
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Termination
of a Material Definitive
Agreement.
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On
March
30, 2007, Southwall repaid all obligations outstanding under its credit
agreements with Wells Fargo HSBC Trade Bank dated April 28, 2005, as amended
May
31, 2006. Principal and interest then outstanding under these agreements of
approximately $3.0 million was repaid with amounts borrowed under the Credit
Agreement. In connection with this repayment, Wells Fargo will release its
security interests in Southwall's assets.
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Item
2.03.
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Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a
Registrant.
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As
described in Item 1.01 above, Southwall borrowed approximately $3.0 million
under the Credit Agreement on March 29, 2007.
2
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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SOUTHWALL
TECHNOLOGIES INC.
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By:
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/s/ R.
Eugene Goodson
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R.
Eugene Goodson
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Chief
Executive Officer
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Date: April
2, 2007