FIRST AMENDMENT TO FORBEARANCE AGREEMENT

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

1. 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."
2. 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.
3. 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

1. Definitions. Capitalized terms not otherwise defined in this Amendment shall have the meanings set forth in the Forbearance Agreement and the Factoring Documents.
2. Acknowledgment. STI acknowledges the truth and accuracy of each of the facts and legal relations contained in the Recitals to this Amendment.
3. 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: