UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
(RULE 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND
AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
SOUTHWALL TECHNOLOGIES INC.
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(Name of Issuer)
COMMON STOCK, PAR VALUE $.001 PER SHARE
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(Title of Class of Securities)
844909101
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(CUSIP Number)
CARLOS P. SALAS
DOLPHIN ASSET MANAGEMENT CORPORATION
129 EAST 17TH STREET
NEW YORK, NY 10003
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
DECEMBER 18, 2003
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(Date of Event which Requires Filing of
this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13(d)-1(f) or 13(d)-1(g), check the
following box |_|.
The Information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of the section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
SCHEDULE 13D
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| CUSIP NO. 844909101 | | PAGE 1 OF 4 |
----------------------- ---------------------
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| 1 | NAME OF REPORTING PERSONS |
| | Dolphin Direct Equity Partners, LP |
| | S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS |
| | (Intentionally Omitted) |
|----|-------------------------------------------------------------------------|
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| |
| | (b) |_| |
|----|-------------------------------------------------------------------------|
| 3 | SEC USE ONLY |
|----|-------------------------------------------------------------------------|
| 4 | SOURCE OF FUNDS |
| | WC |
|----|-------------------------------------------------------------------------|
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED |
| | PURSUANT TO ITEMS 2(d) OR 2(e) |_| |
|----|-------------------------------------------------------------------------|
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION |
| | U.S. |
|----------------------------------------------------------------------------- |
| | 7 | SOLE VOTING POWER |
| | | 0 |
| NUMBER OF |----|--------------------------------------------------|
| SHARES | 8 | SHARED VOTING POWER |
| BENEFICIALLY | | 6,127,251 |
| OWNED BY |----|--------------------------------------------------|
| EACH | 9 | SOLE DISPOSITIVE POWER |
| REPORTING | | 0 |
| PERSON WITH |----|--------------------------------------------------|
| | 10 | SHARED DISPOSITIVE POWER |
| | | 6,127,251 |
|----------------------------------------------------------------------------- |
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
| | 6,127,251 |
|----|-------------------------------------------------------------------------|
| 12 | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)EXCLUDES CERTAIN |_| |
| | SHARES* |
|----|-------------------------------------------------------------------------|
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
| | 32.81% |
|----|-------------------------------------------------------------------------|
| 14 | TYPE OF REPORTING PERSON* |
| | PN |
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SCHEDULE 13D
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| CUSIP NO. 844909101 | | PAGE 2 OF 4 |
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| 1 | NAME OF REPORTING PERSONS |
| | Dolphin Advisors, L.L.C. |
| | S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS |
| | (Intentionally Omitted) |
|----|-------------------------------------------------------------------------|
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| |
| | (b) |_| |
|----|-------------------------------------------------------------------------|
| 3 | SEC USE ONLY |
|----|-------------------------------------------------------------------------|
| 4 | SOURCE OF FUNDS |
| | WC |
|----|-------------------------------------------------------------------------|
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED |
| | PURSUANT TO ITEMS 2(d) OR 2(e) |_| |
|----|-------------------------------------------------------------------------|
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION |
| | U.S. |
|------------------------------------------------------------------------------|
| | 7 | SOLE VOTING POWER |
| | | 0 |
| NUMBER OF |----|--------------------------------------------------|
| SHARES | 8 | SHARED VOTING POWER |
| BENEFICIALLY | | 6,127,251 |
| OWNED BY |----|--------------------------------------------------|
| EACH | 9 | SOLE DISPOSITIVE POWER |
| REPORTING | | 0 |
| PERSON WITH |----|--------------------------------------------------|
| | 10 | SHARED DISPOSITIVE POWER |
| | | 6,127,251 |
|------------------------------------------------------------------------------|
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
| | 6,127,251 |
|----|-------------------------------------------------------------------------|
| 12 | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES |_| |
| | CERTAIN SHARES* |
|----|-------------------------------------------------------------------------|
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
| | 32.81% |
|----|-------------------------------------------------------------------------|
| 14 | TYPE OF REPORTING PERSON* |
| | PN |
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SCHEDULE 13D
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| CUSIP NO. 844909101 | | PAGE 3 OF 4 |
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| 1 | NAME OF REPORTING PERSONS |
| | Dolphin Management Inc. |
| | S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS |
| | (Intentionally Omitted) |
|----|-------------------------------------------------------------------------|
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| |
| | (b) |_| |
|----|-------------------------------------------------------------------------|
| 3 | SEC USE ONLY |
|----|-------------------------------------------------------------------------|
| 4 | SOURCE OF FUNDS |
| | WC |
|----|-------------------------------------------------------------------------|
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED |
| | PURSUANT TO ITEMS 2(d) OR 2(e) |_| |
|----|-------------------------------------------------------------------------|
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION |
| | U.S. |
|------------------------------------------------------------------------------|
| | 7 | SOLE VOTING POWER |
| | | 0 |
| NUMBER OF |----|--------------------------------------------------|
| SHARES | 8 | SHARED VOTING POWER |
| BENEFICIALLY | | 6,127,251 |
| OWNED BY |----|--------------------------------------------------|
| EACH | 9 | SOLE DISPOSITIVE POWER |
| REPORTING | | 0 |
| PERSON WITH |----|--------------------------------------------------|
| | 10 | SHARED DISPOSITIVE POWER |
| | | 6,127,251 |
|------------------------------------------------------------------------------|
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
| | 6,127,251 |
|----|-------------------------------------------------------------------------|
| 12 | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES |_| |
| | CERTAIN SHARES* |
|----|-------------------------------------------------------------------------|
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
| | 32.81% |
|----|-------------------------------------------------------------------------|
| 14 | TYPE OF REPORTING PERSON* |
| | CO |
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SCHEDULE 13D
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| CUSIP NO. 844909101 | | PAGE 4 OF 4 |
----------------------- ---------------------
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| 1 | NAME OF REPORTING PERSONS |
| | Peter E. Salas |
| | S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS |
| | (Intentionally Omitted) |
|----|-------------------------------------------------------------------------|
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| |
| | (b) |_| |
|----|-------------------------------------------------------------------------|
| 3 | SEC USE ONLY |
|----|-------------------------------------------------------------------------|
| 4 | SOURCE OF FUNDS |
| | WC |
|----|-------------------------------------------------------------------------|
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED |
| | PURSUANT TO ITEMS 2(d) OR 2(e) |_| |
|----|-------------------------------------------------------------------------|
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION |
| | U.S. |
|------------------------------------------------------------------------------|
| | 7 | SOLE VOTING POWER |
| | | 0 |
| NUMBER OF |----|--------------------------------------------------|
| SHARES | 8 | SHARED VOTING POWER |
| BENEFICIALLY | | 6,127,251 |
| OWNED BY |----|--------------------------------------------------|
| EACH | 9 | SOLE DISPOSITIVE POWER |
| REPORTING | | 0 |
| PERSON WITH |----|--------------------------------------------------|
| | 10 | SHARED DISPOSITIVE POWER |
| | | 6,127,251 |
|------------------------------------------------------------------------------|
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
| | 6,127,251 |
|----|-------------------------------------------------------------------------|
| 12 | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES |_| |
| | CERTAIN SHARES* |
|----|-------------------------------------------------------------------------|
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
| | 32.81% |
|----|-------------------------------------------------------------------------|
| 14 | TYPE OF REPORTING PERSON* |
| | IN |
------------------------------------------------------------------------------
STATEMENT ON SCHEDULE 13D
PURSUANT TO RULE 13D-1 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
ITEM 1. SECURITY AND ISSUER.
This Statement on Schedule 13D (this "Statement") relates to the common
stock, par value $0.001 per share (the "Common Stock"), of Southwall
Technologies Inc., a Delaware corporation (the "Company"). The principal
executive offices of the Company are located at 1029 Corporation Way, Palo Alto,
California 94303.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) and (f) This Statement is filed by Dolphin Direct Equity Partners,
LP, a Delaware limited partnership ("Dolphin Direct"), Dolphin Advisors, L.L.C.,
a Delaware limited liability company ("Dolphin Advisors"), Dolphin Management,
Inc., a New York corporation ("Dolphin Management"), and Peter E. Salas, a
natural person who is a U.S. citizen. Dolphin Direct, Dolphin Advisors, Dolphin
Management and Peter E. Salas are collectively referred to in this Statement as
the "Reporting Persons."
The principal business office and mailing address of the Reporting Persons
is c/o Dolphin Asset Management Corporation, 129 East 17th Street, New York, New
York 10003. Dolphin Direct is a private investment partnership. The business of
Dolphin Advisors is serving as the managing general partner of Dolphin Direct.
The business of Dolphin Management is serving as a general partner of Dolphin
Direct and of Dolphin Offshore Partners, L.P., a private investment partnership,
and as managing member of Dolphin Advisors. The present principal occupation of
Peter E. Salas is President of Dolphin Management.
(d) and (e) During the past five years, none of the Reporting Persons (i)
has been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) has been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, Federal
or State securities laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On December 18, 2003, the Company entered into an agreement (the
"Investment Agreement") for a new bank loan guarantee and equity financing
package of up to $7,500,000 from Dolphin Direct, Needham & Company, Inc., a
Delaware corporation ("Needham & Co."), and the following affiliates of Needham
& Co.: Needham Capital Partners II, L.P., a Delaware limited partnership,
Needham Capital Partners II (Bermuda), L.P., a limited partnership organized and
existing under the laws of Bermuda, Needham Capital Partners III, L.P., a
Delaware limited partnership, Needham Capital Partners IIIA, L.P., a Delaware
limited partnership, and Needham Capital Partners III (Bermuda), L.P., a limited
partnership organized and existing under the laws of Bermuda (together with
Needham & Co., the "Needham Affiliates"), and, pursuant to the Investment
Agreement, issued a warrant to Needham & Co. to purchase 941,115 shares of
Common Stock for an exercise price of $0.01 per share. This warrant is
immediately exercisable and expires on December 18, 2008.
Under the terms of the Investment Agreement, Needham & Co. executed a
guarantee of up to $2.25 million under a $3.0 million line of credit facility
the Company entered into with Pacific Business Funding, a division of Cupertino
National Bank, which is a subsidiary of Great Bay Bancorp ("PBF").
On December 18, 2003, Dolphin Direct and Needham & Co. entered into a
letter agreement (the "Letter Agreement") pursuant to which (i) Dolphin Direct
agreed to deposit funds in the amount of $1,057,799 with Needham & Co. in
connection with the loan guaranty provided by Needham & Co. to the Company and
to reimburse Needham & Co. for one-third of any liability of Needham & Co. under
the loan guaranty and (ii) Needham & Co. agreed to transfer to Dolphin one-third
of the warrants issued to Needham & Co. by the Company in connection with such
loan guaranty, including warrants issued pursuant to the anti-dilution rights
set forth in Section 4.14 of the Investment Agreement. The source of funds
deposited with Needham & Co. by Dolphin Direct was the working capital of
Dolphin Direct.
Pursuant to the Letter Agreement, Needham & Co. transferred to Dolphin
Direct, at Needham & Co.'s cost, (i) a warrant exercisable for 313,705 shares of
Common Stock at an exercise price of $0.01 per share issued to Needham & Co. on
December 18, 2003, which warrants constituted a portion of the warrant for
941,155 shares of Common Stock issued to Needham & Co. pursuant to the
Investment Agreement on December 18, 2003, and (ii) the warrants described below
issued by the Company to Needham & Co. pursuant to Section 4.14 of the
Investment Agreement.
On December 18, 2003, the Company issued warrants and notes to certain
creditors and other parties, including Needham & Co. As a result of these
issuances, pursuant to Section 4.14 of the Investment Agreement, the Company
issued to Dolphin Direct warrants to purchase a total of 141,033 shares of
common stock at an exercise price of $0.01 per share. Pursuant to the Letter
Agreement, Needham & Co. then transferred warrants exercisable for 5,772 shares
of Common Stock to Dolphin Direct at Needham & Co.'s cost.
On January 15, 2004, the Company issued to Needham & Co. a warrant to
purchase 941,115 shares of Common Stock at an exercise price of $0.01 per share.
This warrant was issued to Needham & Co. pursuant to the terms of the Investment
Agreement in consideration for providing a loan guaranty. Pursuant to the Letter
Agreement, Needham & Co. then transferred warrants exercisable for 313,705
shares of Common Stock to Dolphin Direct at Needham & Co.'s cost.
On January 19, 2004, the Company issued warrants and notes to certain
creditors and other parties, including the Needham & Co. As a result of this
issuance, pursuant to Section 4.14 of the Investment Agreement, the Company
issued to Dolphin Direct warrants to purchase a total of 529,818 shares of
Common Stock at an exercise price of $0.01 per share. Pursuant to the Letter
Agreement, Needham & Co. then transferred warrants exercisable for 2,649 shares
of Common Stock to Dolphin Direct at Needham & Co.'s cost.
On January 29, 2004, the Company issued notes to certain creditors. As a
result of this issuance, pursuant to Section 4.14 of the Investment Agreement,
the Company issued to Dolphin Direct warrants to purchase a total of 182,084
shares of Common Stock at an exercise price of $0.01 per share.
On January 30, the Company issued warrants and notes to certain creditors
and other parties, including Needham & Co. As a result of this issuance,
pursuant to Section 4.14 of the Investment Agreement, the Company issued to
Dolphin Direct warrants to purchase a total of 498 shares of Common Stock at an
exercise price of $0.01 per share. Pursuant to the Letter Agreement, Needham &
Co. then transferred warrants exercisable for 1,235 shares of Common Stock to
Dolphin Direct at Needham & Co.'s cost.
On February 19, 2004, the Company issued notes to certain creditors. As a
result of this issuance, pursuant to Section 4.14 of the Investment Agreement,
the Company issued to Dolphin Direct warrants to purchase a total of 1,111,250
shares of Common Stock at an exercise price of $0.01 per share.
On February 20, 2004, the Company entered into an Amended and Restated
Investment Agreement (the "Amended Investment Agreement") with Dolphin Direct
and the Needham Affiliates. The Amended Investment Agreement amended and
restated the Investment Agreement. As more fully described below, on February
20, 2004, Dolphin Direct purchased $1,500,000 of Secured Convertible Promissory
Notes (the "Notes") from the Company for an aggregate purchase price of
$1,500,000, and, in connection with the issuance of the Notes and pursuant to
Section 4.14 of the Amended Investment Agreement, the Company issued to Dolphin
Direct warrants to purchase an aggregate of 2,025,502 shares of Common Stock.
These warrants are immediately exercisable and expire on February 20, 2009. The
source of funds used to purchase the Notes by Dolphin Direct was the working
capital of Dolphin Direct.
ITEM 4. PURPOSE OF TRANSACTION.
On December 18, 2003, the Company entered into the Investment Agreement
for a new bank loan guarantee and equity financing package of up to $7,500,000
from Dolphin Direct and the Needham Affiliates.
As described above under Item 3, under the terms of the Investment
Agreement, Needham & Co. executed a guarantee of up to $2.25 million under a
$3.o million line of credit facility the Company entered into with PBF and
received a warrant to purchase 941,115 shares of Common Stock for an exercise
price of $0.01 per share. The Investment Agreement provided that, subject to
certain conditions, Needham & Co. would execute a guarantee of the remaining
$750,000 under the line of credit and receive an additional warrant to purchase
941,115 shares of Common Stock on the same terms and conditions as the earlier
warrant. This warrant was issued on January 15, 2004, as described above under
Item 3.
The Investment Agreement further provided that, following the extensions
of credit described above, and subject to certain conditions, Dolphin Direct and
the Needham Affiliates would agree to purchase from the Company, and the Company
would agree to sell to them, an aggregate of 1,500,000 shares of the Series A
preferred stock at a price of $0.001 per share (the "Series A Preferred Stock"),
upon the completion, in the purchasers' reasonable discretion, of certain
restructuring measures. The Series A Preferred Stock would be convertible on a
one-for-one basis into Common Stock, have a preference over the Common Stock in
the event of a liquidation or winding up of the Company, and carry a cumulative
dividend of 10% per annum, along with other protective and anti-dilution
provisions. The approval of the holders of the Series A Preferred Stock would be
required for the Company to take certain actions, including the consummation of
any merger or sale of the Company or all or substantially all of its assets. In
connection with this purchase of the Series A Preferred Stock, the purchasers
would receive additional five year warrants to purchase a number of shares of
Common Stock equal to an aggregate of 7.5% of the total shares outstanding, at a
nominal exercise price.
The Investment Agreement further provided that Dolphin Direct and the
Needham Affiliates would agree to purchase from the Company, and the Company
would agree to sell to them, an additional 3,000,000 shares of the Series A
Preferred Stock upon satisfaction, in the purchasers' reasonable discretion, of
certain conditions. These conditions included the Company having attained
certain revenue levels for the first quarter of 2004 from current business lines
and the achieving of cash flow break-even at quarterly revenue levels below
third quarter 2003 levels. In connection with this second purchase of the
Company's preferred stock, the purchasers would receive additional warrants to
purchase a number of shares of the Company's Common Stock equal to an aggregate
of 6% of the total shares outstanding, at a nominal exercise price. The Company
granted certain registration rights to Dolphin Direct and the Needham Affiliates
with respect to the shares issuable upon exercise of the warrants or conversion
of the Series A Preferred Stock.
On December 18, 2003, Dolphin Direct and Needham & Co. entered into the
Letter Agreement, described above under Item 3.
On February 20, 2004, the Company entered into the Amended Investment
Agreement, which amended the Investment Agreement to provide, among other
things, for the purchase by Dolphin Direct and the Needham Affiliates of the
Notes in one traunche rather than shares of Series A Preferred Stock of the
Company in two traunches. As described above under Item 3, pursuant to the
Amended Investment Agreement, on February 20, 2004 Dolphin Direct purchased from
the Company an aggregate principal amount of $1,500,000 of Notes for an
aggregate purchase price of $1,500,000. The Notes pay interest at an annual
interest rate equal to the lower of 10% or the highest rate permitted by
applicable law, compounded daily.
The Notes are convertible, in whole or in part, at the option of the
holder into shares of Series A Preferred Stock at a rate of one share of Series
A Preferred Stock for each $1.00 of debt converted, subject to specified
adjustments. The Notes are secured by a pledge of a portion of the stock of the
Company's subsidiary, Southwall Europe GmBH, pursuant to a Pledge Agreement
between the Company and Dolphin Direct and the Needham Affiliates. Upon
conversion of a majority of the aggregate principal outstanding under the Notes,
the remaining Notes will automatically convert. The Notes are due and payable
February 20, 2009, or earlier upon the occurrence of an event of default under
the Notes, as specified in the Amended Investment Agreement. The approval of the
holders of the Notes will be required for the Company to take certain actions,
including the consummation of any merger or sale of the Company or all or
substantially all of its assets. The Series A Preferred Stock into which the
Notes are convertible are in turn convertible on a one-for-one basis into Common
Stock, have a preference over the Common Stock in the event of a liquidation or
winding up of the Company, and carry a cumulative dividend of 10% per annum
along with other protective and anti-dilution provisions. The approval of a
majority of the holders of the outstanding shares of Series A Preferred Stock
will be required for the Company to take certain actions, including the
consummation of any merger or sale of the Company or all or substantially all of
its assets.
Pursuant to the Amended Investment Agreement, the Company has granted
Needham & Co. board observer rights. The Company also granted certain
registration rights to the holders of the Notes with respect to the shares of
Common Stock underlying the Notes and the warrants issued under the Amended
Investment Agreement.
Under the Amended Investment Agreement, the Company is also required to
issue additional Common Stock warrants to Dolphin Direct and the Needham
Affiliates to protect their ownership position if the Company issues additional
debt or equity in connection with its restructuring efforts.
Other than as specified in this Item 4, the Reporting Persons have no
plans or proposals which relate to or which would result in or relate to any of
the actions specified in paragraphs (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a)(1) Dolphin Direct owns of record and beneficially (i) a Note in the
principal amount of $1,500,000, which is convertible to 1,500,000 shares of
Series A Preferred Stock, which in turn is convertible to 1,500,000 shares of
Common Stock, subject to adjustments applicable to the Note and the Series A
Preferred Stock, and (ii) warrants which are exercisable for 4,627,251 shares of
Common Stock. Accordingly, Dolphin Direct may be deemed to beneficially own the
6,127,251 shares of Common Stock underlying those securities, which amount
constitutes 32.81% of the issued and outstanding Common Stock.
(2) Dolphin Advisors may be deemed to own the Notes and warrants owned by
Dolphin Direct by virtue of its position as managing general partner of Dolphin
Direct, and accordingly may be deemed to beneficially own the 6,127,251 shares
of Common Stock underlying those securities, which amount constitutes 32.81% of
the issued and outstanding Common Stock. Dolphin Advisors disclaims beneficial
ownership of all of the reported shares of Common Stock owned by Dolphin Direct,
and the inclusion of these shares of Common Stock in this report shall not be
deemed an admission by it of beneficial ownership of such shares for any
purpose.
(3) Dolphin Management may be deemed to own the Notes and warrants owned
by Dolphin Direct by virtue of its position as managing member of Dolphin
Advisors, the managing general partner of Dolphin Direct, and accordingly may be
deemed to beneficially own the 6,127,251 shares of Common Stock underlying those
securities, which amount constitutes 32.81% of the issued and outstanding Common
Stock. Dolphin Management disclaims beneficial ownership of all of the reported
shares of Common Stock owned by Dolphin Direct, and the inclusion of these
shares of Common Stock in this report shall not be deemed an admission by it of
beneficial ownership of such shares for any purpose.
(4) Peter E. Salas may be deemed to own the Notes and warrants owned by
Dolphin Direct by virtue of his position as President and a significant
shareholder of Dolphin Management, the managing member of Dolphin Advisors,
which in turn is the managing general partner of Dolphin Direct, and accordingly
may be deemed to beneficially own the 6,127,251 shares of Common Stock
underlying those securities, which amount constitutes 32.81% of the issued and
outstanding Common Stock. Mr. Salas disclaims beneficial ownership of all of the
reported shares of Common Stock owned by Dolphin Direct, and the inclusion of
these shares of Common Stock in this report shall not be deemed an admission by
him of beneficial ownership of such shares for any purpose.
(b) Dolphin Advisors, the managing general partner of Dolphin Direct, and
Dolphin Direct have shared power to direct the vote and disposition of 6,127,251
shares of Common Stock issuable upon the conversion of the Note (assuming the
simultaneous conversion of the shares of Series A Preferred Stock underlying the
Note into shares of Common Stock) and the exercise of the warrants owned by
Dolphin Direct. Dolphin Management may be deemed to have shared power to direct
the vote and disposition of 6,127,251 shares of Common Stock issuable upon the
conversion of the Note (assuming the simultaneous conversion of the shares of
Series A Preferred Stock underlying the Note into shares of Common Stock) and
the exercise of the warrants owned by Dolphin Direct, because it is the managing
member of Dolphin Advisors, the managing general partner of Dolphin Direct.
Peter E. Salas may be deemed to have shared power to direct the vote and
disposition of 6,127,251 shares of Common Stock issuable upon the conversion of
the Note (assuming the simultaneous conversion of the shares of Series A
Preferred Stock underlying the Note into shares of Common Stock) and the
exercise of the warrants owned by Dolphin Direct, because he serves as the
President of Dolphin Management, the managing member of Dolphin Advisors, which
in turn is the managing general partner of Dolphin Direct.
(c) Except as noted above, the Reporting Persons did not effect any
transactions in the securities of the Company during the past 60 days.
(d) and (e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
Other than as described in Item 4 above, to the knowledge of the Reporting
Persons, there are no contracts, arrangements, understandings or relationships
(legal or otherwise) among the persons named in Item 2 with respect to any
securities of the Company.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NO. DESCRIPTION
1 Joint Filing Agreement
2 Power of Attorney of Dolphin Direct Equity Partners, LP
3 Power of Attorney of Dolphin Advisors, L.L.C.
4 Power of Attorney of Dolphin Management Inc.
5 Investment Agreement, dated December 18, 2003, incorporated herein
by reference to Exhibit 99.2 to the Company's Form 8-K filed with
the SEC on December 23, 2003.
6 Warrant, dated December 18, 2003, incorporated herein by reference
to Exhibit 99.5 to the Company's Form 8-K filed with the Commission
on December 23, 2003.
7 Registration Rights Agreement, dated December 18, 2003,
incorporated herein by reference to Exhibit 99.3 to the Company's
Form 8-K filed with the Commission on December 23, 2003.
8 Guaranty, dated December 18, 2003, by Needham & Company, Inc. in
favor of Pacific Business Funding, incorporated herein by reference
to Exhibit 5 to Needham & Co.'s Schedule 13D filed with the SEC on
December 29, 2003.
9 Amended and Restated Investment Agreement, dated February 20, 2003,
incorporated herein by reference to Exhibit 99.2 to the Company's
Form 8-K/A filed with the SEC on March 3, 2004.
10 Needham & Co.'s Schedule 13D filed with the SEC on March 8, 2004.
11 Form of Secured Convertible Promissory Note, incorporated herein by
reference to Exhibit 99.2 to the Company's Form 8-K/A filed with
the SEC on March 3, 2004.
12 Amended and Restated Registration Rights Agreement, dated February
20, 2004, incorporated herein by reference to Exhibit 99.2 to the
Company's Form 8-K/A filed with the SEC on March 3, 2004.
13 Pledge Agreement, dated February 20, 2004, incorporated herein by
reference to Exhibit 99.2 to the Company's Form 8-K/A filed with
the SEC on March 3, 2004.
SIGNATURE
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the information set forth in this statement is true, complete and
correct.
Dated: May 12, 2004
DOLPHIN DIRECT EQUITY PARTNERS, LP
By: Carlos P. Salas
--------------------------------------
Name: Carlos P. Salas
Title: Authorized Signatory
DOLPHIN ADVISORS, L.L.C.
By: Carlos P. Salas
--------------------------------------
Name: Carlos P. Salas
Title: Authorized Signatory
DOLPHIN MANAGEMENT, INC.
By: Carlos P. Salas
--------------------------------------
Name: Carlos P. Salas
Title: Authorized Signatory
Peter E. Salas
------------------------------------------
Peter E. Salas
EXHIBIT 1
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(k) promulgated under the Securities Exchange
Act of 1934, as amended, the undersigned hereby agree to the joint filing with
all other Reporting Persons (as such term is defined in the Schedule 13D
referred to below) on behalf of each of them of a statement on Schedule 13D
(including amendments thereto) with respect to the common shares of beneficial
interest, par value $.001 per share, of Southwall Technologies Inc., a Delaware
corporation, and that this Agreement may be included as an Exhibit to such joint
filing. This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement as of
the 12th day of May, 2004.
DOLPHIN DIRECT EQUITY PARTNERS, LP
By: Carlos P. Salas
--------------------------------------
Name: Carlos P. Salas
Title: Authorized Signatory
DOLPHIN ADVISORS, L.L.C.
By: Carlos P. Salas
--------------------------------------
Name: Carlos P. Salas
Title: Authorized Signatory
DOLPHIN MANAGEMENT, INC.
By: Carlos P. Salas
--------------------------------------
Name: Carlos P. Salas
Title: Authorized Signatory
Peter E. Salas
---------------------------------------
Peter E. Salas
EXHIBIT 2
POWER OF ATTORNEY
DOLPHIN DIRECT EQUITY PARTNERS, LP (the "COMPANY") hereby appoints Carlos
P. Salas its attorney-in-fact to:
(1) Execute on its behalf all Forms in accordance with the Securities
Exchange Act of 1934 and the rules thereunder;
(2) Perform any and all acts on the Company's behalf which may be necessary
or desirable to complete and execute any Form and timely file such Form
with the United States Securities and Exchange Commission and any stock
exchange or similar authority; and
(3) Take any other action in connection with the foregoing which, in the
opinion of such attorney-in-fact, may be of benefit to, in the best
interest of, or legally required by the Company, it being understood that
the documents executed by such attorney-in-fact on its behalf pursuant to
this Power of Attorney shall be in such form and shall contain such terms
and conditions as such attorney-in-fact may approve in his or her
discretion.
The Company grants to such attorney-in-fact full power to do and perform
any and every act necessary or proper to be done in the exercise of any of the
rights and powers herein granted, as fully to all intents and purposes as the
undersigned might or could do if personally present. I ratify and confirm all
that such attorney-in-fact shall lawfully do by the rights and powers herein
granted by this Power of Attorney. Each attorney-in-fact shall have full power
of substitution or revocation.
The Company acknowledges that the attorney-in-fact, in serving in such
capacity at its request, is not assuming any of the Company's responsibility to
comply with the Securities Exchange Act of 1934.
This Power of Attorney shall remain in full force and effect until revoked
in a signed writing delivered to the Office of the Secretary of the Company for
distribution to the foregoing attorneys-in-fact.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to
be executed as of this 4th day of May, 2004.
DOLPHIN DIRECT EQUITY PARTNERS, LP
by Dolphin Advisors, L.L.C,
its managing general partner
Peter E. Salas
-----------------------------------------------
Name: Peter E. Salas
Title: Managing Member
EXHIBIT 3
POWER OF ATTORNEY
DOLPHIN ADVISORS, L.L.C. (the "COMPANY") hereby appoints Carlos P. Salas
its attorney-in-fact to:
(1) Execute on its behalf all Forms in accordance with the Securities
Exchange Act of 1934 and the rules thereunder;
(2) Perform any and all acts on the Company's behalf which may be necessary
or desirable to complete and execute any Form and timely file such Form
with the United States Securities and Exchange Commission and any stock
exchange or similar authority; and
(3) Take any other action in connection with the foregoing which, in the
opinion of such attorney-in-fact, may be of benefit to, in the best
interest of, or legally required by the Company, it being understood that
the documents executed by such attorney-in-fact on its behalf pursuant to
this Power of Attorney shall be in such form and shall contain such terms
and conditions as such attorney-in-fact may approve in his or her
discretion.
The Company grants to such attorney-in-fact full power to do and perform
any and every act necessary or proper to be done in the exercise of any of the
rights and powers herein granted, as fully to all intents and purposes as the
undersigned might or could do if personally present. I ratify and confirm all
that such attorney-in-fact shall lawfully do by the rights and powers herein
granted by this Power of Attorney. Each attorney-in-fact shall have full power
of substitution or revocation.
The Company acknowledges that the attorney-in-fact, in serving in such
capacity at its request, is not assuming any of the Company's responsibility to
comply with the Securities Exchange Act of 1934.
This Power of Attorney shall remain in full force and effect until revoked
in a signed writing delivered to the Office of the Secretary of the Company for
distribution to the foregoing attorneys-in-fact.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to
be executed as of this 4th day of May, 2004.
DOLPHIN ADVISORS, L.L.C
Peter E. Salas
--------------------------------------------
Name: Peter E. Salas
Title: Managing Member
EXHIBIT 4
POWER OF ATTORNEY
DOLPHIN MANAGEMENT INC. (the "COMPANY") hereby appoints Carlos P. Salas
its attorney-in-fact to:
(1) Execute on its behalf all Forms in accordance with the Securities
Exchange Act of 1934 and the rules thereunder;
(2) Perform any and all acts on the Company's behalf which may be necessary
or desirable to complete and execute any Form and timely file such Form
with the United States Securities and Exchange Commission and any stock
exchange or similar authority; and
(3) Take any other action in connection with the foregoing which, in the
opinion of such attorney-in-fact, may be of benefit to, in the best
interest of, or legally required by the Company, it being understood that
the documents executed by such attorney-in-fact on its behalf pursuant to
this Power of Attorney shall be in such form and shall contain such terms
and conditions as such attorney-in-fact may approve in his or her
discretion.
The Company grants to such attorney-in-fact full power to do and perform
any and every act necessary or proper to be done in the exercise of any of the
rights and powers herein granted, as fully to all intents and purposes as the
undersigned might or could do if personally present. I ratify and confirm all
that such attorney-in-fact shall lawfully do by the rights and powers herein
granted by this Power of Attorney. Each attorney-in-fact shall have full power
of substitution or revocation.
The Company acknowledges that the attorney-in-fact, in serving in such
capacity at its request, is not assuming any of the Company's responsibility to
comply with the Securities Exchange Act of 1934.
This Power of Attorney shall remain in full force and effect until revoked
in a signed writing delivered to the Office of the Secretary of the Company for
distribution to the foregoing attorneys-in-fact.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to
be executed as of this 4th day of May, 2004.
DOLPHIN MANAGEMENT INC.
Peter E. Salas
------------------------------------------
Name: Peter E. Salas
Title: President