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As filed with the Securities and Exchange Commission on April 9, 1998
Registration No. 333-__________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
--------------------------
MAXWELL TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-2390133
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
9275 Sky Park Court
San Diego, California 92123
(619) 279-5100
(Address, including zip code, and telephone number, including
area code, of registrants' principal executive offices)
---------------------------
DONALD M. ROBERTS, ESQ.
General Counsel
MAXWELL TECHNOLOGIES, INC.
9275 Sky Park Court
San Diego, California 92123
(619) 279-5100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------------------
Copies to:
THOMAS A. WALDMAN, ESQ.
Riordan & McKinzie
300 South Grand Avenue
29th Floor
Los Angeles, California 90071
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Proposed Proposed
maximum maximum
Title of each Class offering aggregate Amount of
of securities to Amount to be price per offering registration
be registered registered unit (1) price (1) fee
- ---------------- -------------- --------- ------------- ------------
Common Stock,
$.10 par value 121,259 shares $28.50 $3,455,881.50 $1,020.00
- ---------------- -------------- --------- ------------- ------------
(1) Calculated pursuant to Rule 457, based on the average of the high and low
sales prices, $29.00 and $28.00 respectively, on April 6, 1998 as reported on
the Nasdaq National Market.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY STATE.
PROSPECTUS (Subject to Completion)
Dated ________ __, 1998
MAXWELL TECHNOLOGIES, INC.
121,259 Shares of Common Stock
------------------------------
The 121,259 shares (the "Shares") of Common Stock, par value $.10 per share
("Common Stock"), of Maxwell Technologies, Inc. ("Maxwell" or the "Company")
offered hereby are to be sold by the persons named herein under "Selling
Stockholders."
The Common Stock is traded on the Nasdaq National Market under the symbol
"MXWL." On April 3, 1998, the reported closing price of the Common Stock on
the Nasdaq National Market was $28.875 per share.
Holders of the Shares may resell the Shares from time to time in transactions
on the Nasdaq National Market, and may sell the Shares through a broker or
brokers or in the over-the-counter market at prices prevailing on such exchange
or over-the-counter market, as appropriate, at the times of such sales. The
Selling Stockholders may also make private sales directly or through such
broker or brokers or sell the Shares in negotiated transactions. See "Plan of
Distribution." Sales of the Shares may be effected by selling such securities
to or through broker-dealers, and such broker-dealers may receive compensation
in the form of discounts, concessions or commissions from the sellers thereof.
Such sellers and any broker-dealer who acts in connection with the sales of
Shares may be deemed to be "underwriters" as that term is defined in the
Securities Act of 1933, as amended (the "Securities Act"), and any commissions
received by them and profit on any resale of the Shares might be deemed to be
underwriting discounts and commissions under the Securities Act.
None of the proceeds from the sale of the Shares will be received by the
Company. The Company has agreed to bear all expenses (other than underwriting
discounts and selling commissions) in connection with the registration and sale
of the Shares being registered hereby. See "Plan of Distribution."
--------------------------
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 HEREOF.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------------------
The date of this Prospectus is ________ __, 1998
-------------------------
No dealer, salesman or other person has been authorized to give any information
or to make any representations not contained or incorporated by reference in
this Prospectus, and, if given or made, such information or representations
must not be relied upon as having been authorized by the Company or by any
other person. All information contained in this Prospectus is as of the date
of this Prospectus. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company or in the facts herein set forth
since the date hereof. This Prospectus does not constitute an offer to sell
or a solicitation of any offer to buy any security other than the securities
covered by this Prospectus, nor does it constitute an offer to or solicitation
of any person in any jurisdiction in which such offer or solicitation may not
lawfully be made.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder, and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Reports, proxy statements and other information filed by
the Company with the Commission can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and will also be
available for inspection and copying at the regional offices of the Commission
located at Seven World Trade Center, Suite 1300, New York, New York 10048 and
at Room 3190, Northwest Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661-2511. Copies of such material can be obtained by mail from the
Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. Such reports, proxy
statements and other information concerning the Company are also available for
inspection at the offices of The Nasdaq Stock Market, Reports Section, 1735 K
Street, N.W., Washington, D.C. 20006. In addition the Commission maintains a
World Wide Web site at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants, including
the Company, that file electronically with the Commission.
The Company has filed with the Commission a registration statement on Form
S-3 (together with all exhibits, schedules, amendments, and supplements
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act") with respect to the Common Stock offered by this
Prospectus. This Prospectus, which forms a part of the Registration Statement,
does not contain all the information set forth in the Registration Statement
(certain parts of which have been omitted in accordance with the rules and
regulations of the Commission). For further information with respect to the
Company and the Common Stock, reference is made to the Registration Statement.
Statements contained in this Prospectus as to the contents of any contract,
agreement or other document are not necessarily complete, and, in each
instance, reference is made to the copy of the document filed as an exhibit to
the Registration Statement, each such statement being qualified in all respects
by reference to such exhibit. The Registration Statement may be inspected and
copied at the public reference facilities at the Commission's offices at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
will also be available for inspection and copying at the regional offices of
the Commission located at Seven World Trade Center, Suite 1300, New York, New
York 10048 and at Room 3190, Northwest Atrium Center, 500 West Madison Street,
Chicago, Illinois 60661-2511. Copies of all or any part thereof may be
obtained from such office upon payment of prescribed fees.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed with the Commission by the
Company are hereby incorporated by reference in this Prospectus.
(1) Annual Report on Form 10-K for the fiscal year ended July 31, 1997.
(2) Description of the Company's Rights contained in the Registration
Statement on Form 8-A dated June 30, 1989.
(3) Quarterly Report on Form 10-Q for the fiscal quarter ended October 31,
1997.
(4) Quarterly Report on Form 10-Q for the fiscal quarter ended January 31,
1998.
(5) Current Report on Form 8-K dated November 10, 1997.
(6) Current Report on Form 8-K dated April 3, 1998.
All documents and reports filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Common Stock
made hereby shall be deemed to be incorporated by reference in this Prospectus
and shall be a part hereof from the date of filing of such reports and
documents. Any statement contained in this Prospectus or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any subsequently filed document which also
is or is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered, upon written or oral request. Copies of this
Prospectus, as amended or supplemented from time-to-time, and any other
documents (or parts of documents) that constitute part of this Prospectus
under Section 10(a) of the Securities Act will also be provided without charge
to each such person, upon written or oral request. Requests should be directed
to Maxwell Technologies, Inc., 9275 Sky Park Court, San Diego, California
92123, Attention: Corporate Secretary; telephone number (619) 279-5100.
THE COMPANY
The Company is a worldwide leader in pulsed power technologies, the storage of
electrical energy and delivery of power in brief controlled bursts. The
Company has leveraged its technical expertise, gained from over 30 years of
experience performing research and development primarily for the United States
Department of Defense, to develop a portfolio of pulsed power based commercial
products. These products address a range of markets and applications and
include ultracapacitors for advanced electrical energy storage and power
delivery, purification systems for water treatment and the sterilization of
medical and pharmaceutical products and electromagnetic interference ("EMI")
filter capacitors for implantable medical devices. In addition to pulsed power
based products, the Company offers industrial computers and subsystems which
are sold to OEMs in the computer telephony, medical, manufacturing automation
and other markets. Government funded research and development projects
continue to be an important element of the Company's business, serving as an
incubator for technological innovations and a resource of scientific and
engineering expertise.
In January 1998, Tekna Seal, Inc., ("TSI") a closely held company, merged
into the Company's Maxwell Energy Products, Inc. subsidiary. The transaction
was accounted for as a pooling-of-interests. The Company issued an aggregate
of 154,030 shares of Common Stock in exchange for all of the outstanding shares
of TSI. TSI manufactures glass to metal seals and other seals for a variety
of customers. In February 1998, the Company acquired closely held Phoenix
Power Systems, Inc. ("Phoenix Power") for 100,679 shares of Company Common
Stock and approximately $1.0 million in cash. Phoenix Power manufactures power
conversion systems utilized in the Company's
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pulsed power products and systems. The shares of the Company Common Stock
issued in the transactions described above were not registered under the
Securities Act. Certain of the Selling Shareholders were granted and are
exercising registration rights in connection with the acquisitions of TSI and
Phoenix Power.
PowerCache(TM), PureBright(R), CoolPure(R), JAMIS(R) and ElectroBlast(TM)
are trademarks of the Company. All other trademarks or tradenames referred to
or incorporated by reference in this Prospectus are the property of their
respective owners.
The Company's executive offices are located at 9275 Sky Park Court, San
Diego, California 92123. Its telephone number is (619) 279-5100.
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RISK FACTORS
Prospective investors should consider carefully, in addition to other
information contained in this Prospectus, the following factors before
purchasing the shares offered hereby.
Dependence on Product Development and Market Acceptance
Many of the Company's products, especially its ultracapacitor and
purification products, are in the development stage and are alternatives to
existing technologies. The Company's success is dependent in part on market
acceptance of its new products and there can be no assurance that any material
commercial market will develop for these products. The Company expects that
its ultracapacitor and purification products will compete with existing
products that are well established in the marketplace and that, in some cases,
are less expensive. The future success of the Company will depend in large
part on the Company's ability to accurately anticipate market demand for its
products and services as well as improve its existing technologies and
products. The Company's ability to demonstrate a technological or economic
advantage, or both, over competitive products in addition to the technical,
financial and other risks involved in introducing new products and technologies
are critical to the Company achieving its goals. There can be no assurance
that the Company will be successful in identifying markets for its technologies
or in developing, manufacturing and marketing new commercial products or
enhancements to existing products that address the needs of these markets, any
of which could have a material adverse effect on the Company's business,
results of operations and financial condition.
Continuing Transition to Commercial Business
The Company is continuing its transition from its historical reliance on
funded research and development business for defense and other federal
government agencies to developing, manufacturing and marketing of products and
services for commercial markets. The Company's success in this regard will
depend upon a number of factors, including the Company's ability to gain
customer acceptance for its products and services, to expand its customer base
through sales and marketing efforts, to expand successfully its manufacturing
capacity, to develop extensions of its existing products and services into new
applications and to conceive and develop new products and services. Commencing
in fiscal 1996, the Company changed its senior management and reorganized its
operations along product and service lines. There can be no assurance that the
Company will be able to continue its transition to commercial businesses. The
Company's inability to achieve any of these objectives would have a material
adverse effect on the Company's business, results of operations and financial
condition.
Fluctuations in Operating Results; History of Losses
Although the Company had net income of $4.0 million in fiscal 1997, it has
incurred significant losses in two of the past five years. Net losses for the
Company's 1996 and 1994 fiscal years were approximately $15.2 million and $1.7
million, respectively. Of the fiscal 1996 loss, $14.4 million arose from
charges related to the reorganization of the Company's operations, a change in
accounting principle and other charges. The Company may in the future
experience significant fluctuations in revenues and operating results from
period to period as a result of a number of factors including, without
limitation, the volume and timing of orders and market acceptance of the
Company's products; the Company's ability to fill orders on a timely basis;
pricing policies of the Company or its competitors; variations in the mix of
product sales; the timing of product introductions by the Company or its
competitors; cancellation, suspension or other action taken by the United
States government or its agencies on its programs and contracts with the
Company; product obsolescence resulting from new product introductions or
changes in customer demand; and expenses associated with the acquisition of
businesses, products or technologies. The Company anticipates that, in order
to obtain market penetration, from time to time it will sell new products at
prices yielding margins below those it ultimately expects to achieve, and
significant aggressive pricing in a particular quarter or quarters could
adversely affect the results of operations for such periods. The impact of the
foregoing factors may cause the Company's operating results to be below the
expectations of public market analysts and investors. In such event, the price
of the Company's Common Stock could be materially adversely affected.
Quarterly results are not necessarily indicative of future performance for any
particular period, and there can be no assurance that the Company will attain
or sustain growth in sales and profitability on a quarterly or annual basis.
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Risks Associated with Acquisitions
As part of its business strategy, the Company regularly reviews possible
acquisitions of complementary companies, technologies or products, and
periodically engages in discussions regarding such possible acquisitions.
Acquisitions involve numerous risks, including evaluating new technologies;
difficulties in the assimilation of the operations, products, personnel and
cultures of the acquired companies; the ability to manage effectively
geographically remote units; the diversion of management's attention from other
day-to-day business concerns; risks of entering markets in which the Company
has limited or no direct experience and the potential loss of key employees of
the acquired companies. In addition, acquisitions may result in dilutive
issuances of equity securities; the incurrence of debt; reduction of any
then-existing cash balances; amortization expenses related to goodwill and
other intangible assets and other charges to operating results that may
materially adversely affect the Company's results of operations. Moreover,
there can be no assurance that any equity or debt financings proposed in
connection with any acquisition would be available to the Company on
acceptable terms or at all, when, and if, suitable strategic acquisition
opportunities arise. Although management expects to carefully analyze any
opportunity before committing the Company's resources, there can be no
assurance that any acquisition that is completed will result in long-term
benefits to the Company or its stockholders or that the Company's management
will be able to manage effectively the resulting business. Such risks are
applicable as well to the Company's recently completed acquisitions of TSI,
Phoenix Power and MAP Micro Ltd. and the pending acquisition of the
Electromagnetic Systems Group of Primex Technologies, Inc.
Extensive Reliance on Strategic Relationships; Restrictions Due to Exclusivity
Rights
The Company has established and will continue to seek to establish
strategic relationships with corporate partners and research relationships with
United States government agencies to support its various development programs,
leverage its expertise and manufacturing resources, obtain an understanding of
and access to markets and validate products. The Company currently
collaborates with a variety of strategic partners, including Tetra Pak
International AB, a leading food packaging machinery and products company, for
purification systems, and PacifiCorp, a leading utility holding company, for
ultracapacitors.
The loss of certain of its strategic relationships could have a material
adverse effect on the Company's sales growth. The Company's future success
will depend in part on its continued relationships with various of its
strategic partners, its ability to enter into other similar collaborative
arrangements, the interest of certain of the Company's strategic partners in
the potential products under development, the Company's success in meeting
expectations of strategic partners and, ultimately, their success in marketing
or willingness to purchase any such products. These programs may require the
Company to share control over its development, manufacturing and marketing
programs, limit its ability to license its technology to others, relinquish
certain rights to its technology, sell equity or rights to purchase equity in
the Company or its subsidiaries to the strategic partner or restrict its
ability to engage in certain areas of product development, production and
marketing. Some of the Company's existing collaborative arrangements permit,
and future arrangements also may permit, the Company's strategic partners to
use or disclose the technology developed in the program without any royalty
obligation, to the extent that the technology is jointly developed.
Furthermore, the Company often grants an exclusivity right to its strategic
partner as an inducement to the partner to participate in the development of a
product or application. Any exclusivity rights granted to strategic partners
may inhibit the Company's ability to find a wider market for certain of its
commercial products and thus may materially reduce revenues during the
exclusivity period. There can be no assurance that the Company will be able to
enter into strategic arrangements on commercially reasonable terms or that
these arrangements, if established, will result in successful programs to
develop, manufacture or market pulsed power and other products or that the
Company's strategic partners will not seek to manufacture jointly developed
products themselves or obtain them from alternative sources.
Limited Volume Manufacturing Experience
The Company has limited experience with volume manufacturing of commercial
products. To date, the Company has not manufactured in volume its
ultracapacitors or purification systems. The Company may face challenges in
scaling up production of its new products, especially those products that
contain newly developed technologies, including problems involving production
yields, quality control and assurance, component supply and shortages of
qualified management and other personnel. In addition, the Company will need
to expand its current facilities or obtain additional facilities in order to
manufacture a substantial quantity of its ultracapacitor, purification
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and EMI filter products. There can be no assurance that the Company will be
successful in expanding its facilities or obtaining additional facilities, or
that it will be able to overcome the management, technological, engineering and
other challenges associated with the production of significant quantities of
products at acceptable cost on a timely basis. The Company may elect to
outsource manufacturing of certain of its products, if such opportunities are
available. Outsourcing of manufacturing involves risks with respect to quality
assurance, cost and the absence of close engineering support. In addition,
part of the Company's ultracapacitor development strategy is the implementation
of a process that could allow customization of products while retaining the
benefits of volume manufacturing and materials procurement. There can be no
assurance that such a process can be developed and implemented in time to meet
the Company's needs in this regard. Difficulties in manufacturing or in
obtaining appropriate facilities or locating and qualifying outsourcing for
manufacturing could have a material adverse effect on the Company's business,
financial condition and results of operations.
Limited Sales and Marketing Experience
The Company has limited experience marketing and selling ultracapacitors
and purification systems. To market these products, the Company will be
required to develop a marketing and sales force that will be able to
effectively demonstrate the advantages of these products over competing
products and other traditional solutions. Furthermore, the highly technical
nature of the Company's products limits the pool of potential sales personnel.
The Company also enters into agreements with distributors or sales
representatives requalified management and other personnel. By entering into
such agreements, the Company may be substantially dependent upon the efforts of
others in deriving commercial benefits from its products. There can be no
assurance that the Company will be successful in marketing and selling its
products, that it will be able to establish adequate sales and distribution
capabilities, that it will be able to enter into marketing agreements with
third parties on financially acceptable terms or that any third parties with
whom it enters into such arrangements will be successful in marketing the
Company's products. The Company's inability to achieve any of these objectives
would have a material adverse effect on the Company's business, results of
operations and financial condition.
Dependence on OEM Customers; Lengthy Sales Cycles
A substantial portion of the Company's sales are derived from sales to a
relatively small number of OEM customers. The timing and amount of sales to
these customers ultimately depend on sales levels and shipping schedules for
the OEM products into which the Company's products are incorporated. The
Company has no control over the shipping date or volumes of products shipped
by its OEM customers, and there can be no assurance that any OEM will continue
to ship products that incorporate the Company's products at current levels or
at all. Failure of these OEMs to achieve significant sales of products
incorporating the Company's products and fluctuations in the timing and volume
of such sales could have a material adverse effect on the Company's business,
financial condition and results of operations.
The decision process leading to the selection of the Company's products and
services is typically lengthy, with significant additional time required for
design, engineering and product approval before commercial shipments can begin.
Moreover, although customers sometimes substitute a new and better product into
an existing product, market opportunities with respect to any particular
customer typically occur at the time the customer is engaged in the design of
a new product or a substantial enhancement of an existing product, which
typically occur at infrequent intervals. Any failure of the Company to
maintain continuing awareness of its customers' product development schedules,
or its inability to provide the optimum solution at the time of such
development can cause the Company to miss a market opportunity that may not
reappear for a substantial period of time.
Lucent Technologies ("Lucent"), an OEM customer of the Company, accounted
for approximately 12% of the Company's total sales in fiscal 1997 and is a
significant customer of the Company's Industrial Computers and Subsystems
business segment. A substantial portion of the Company's existing sales to
Lucent involves products that have not been designed into Lucent's next
generation products and the Company therefore expects that its business with
Lucent will decline substantially in the second half of fiscal 1998 and
subsequent periods. In replacing the Lucent business, the Company's Industrial
Computers and Subsystems division continues to be dependent on large orders
from relatively few customers.
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Dependence on Proprietary Technology
The Company's success is heavily dependent upon the establishment and
maintenance of proprietary technologies. Although the Company attempts to
protect its intellectual property rights through patents, copyrights,
trade secrets and other measures, there can be no assurance that the steps
taken by the Company to protect its proprietary technologies will be adequate
to prevent misappropriation by third parties or will be adequate under
the laws of some foreign countries, which may not protect the Company's
proprietary rights to the same extent as do the laws of the United States. In
addition, others could "reverse engineer" the Company's products in order to
determine their method of operation and introduce competing products or develop
competing technology independently. Any such adverse circumstances could have
a material adverse effect on the Company's business, financial condition and
results of operations.
The Company uses employee and third-party confidentiality and non-
disclosure agreements to protect its trade secrets and unpatented know-how.
The Company requires each of its employees to enter into a proprietary rights
and non-disclosure agreement in which the employee agrees to maintain the
confidentiality of all proprietary information of the Company and, subject to
certain exceptions, to assign to the Company all rights in any proprietary
information or technology made or contributed by the employee during his or
her employment. In addition, the Company regularly enters into non-disclosure
agreements with third parties, such as consultants, potential joint venture
partners and customers. No assurance can be given that these methods will
enable the Company to maintain its trade secrets or unpatented know-how or that
third parties will not independently develop and/or patent substantially
equivalent proprietary information or copy, develop or otherwise obtain and use
the Company's proprietary technology without authorization.
The Company has historically relied primarily on its technological and
engineering abilities and on its design and production capabilities, rather
than on patents, for the development and maintenance of its business. However,
the Company does file patent applications on concepts and processes developed
by the Company's personnel and, as its commercial businesses expand, the
Company has placed increased emphasis on patents to provide protection for
certain of its technologies and products. The Company believes that its future
success will depend in part on its ability to maintain its patents, add to them
where appropriate, and to develop new products and applications without
infringing the patent and other proprietary rights of third parties and
without breaching or otherwise losing rights in technology licenses obtained
by the Company for other products. There can be no assurance that any patent
owned by the Company will not be circumvented or challenged, that the rights
granted thereunder will provide competitive advantages to the Company or that
any of the Company's pending or future patent applications will be issued with
claims of the scope sought by the Company, if at all. If challenged, there
can be no assurance that the Company's patents (or patents under which it
licenses technology) will be held valid or enforceable. In addition, there can
be no assurance that others will not claim rights in the technology covered by
the patents and other proprietary technology owned or licensed by the Company
or that others have not developed or will not develop similar products or
technology without violating the Company's proprietary rights. The invalidity
of a patent or determination that the Company (or its licensor) does not hold
sole rights to the technology covered thereby could have a material adverse
effect on the Company, particularly if the Company is unable to design around
others' proprietary rights.
Competing research and patent activity in many of the Company's
technologies is substantial and the markets are large enough that conflicting
patent and other proprietary rights claims may result in disputes or
litigation. Although the Company does not believe any of its products or
proprietary rights infringe the rights of third parties, there can be no
assurance that infringement claims will not be asserted against the Company
in the future. Any such claims, with or without merit, could be time-
consuming, result in costly litigation, cause product shipment delays or
require the Company to enter into royalty or licensing agreements. Such
royalty or licensing agreements, if required, may not be available on terms
acceptable to the Company, or at all. If infringement were established, the
Company could be required to pay damages or be enjoined from making, using or
selling the infringing product. Likewise, there can be no assurance that a
third party's product, if infringing on the Company's proprietary rights, may
be prevented from doing so without litigation. Any of the foregoing could
have a material adverse effect upon the Company's business, financial condition
and results of operations.
A number of the patents and patent applications owned or licensed by the
Company are subject to "march-in" rights and non-exclusive, royalty-free,
confirmatory licenses held by various governmental agencies or other entities.
March-in rights refer to the right of the United States government or a United
States government agency to cancel
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agreements and require a contractor to grant licenses to third parties if the
contractor fails to continue to develop the technology related to the
agreements. Confirmatory licenses permit the United States government
agencies or other governmental entities to select vendors other than the
Company to produce products for the United States government which would
otherwise infringe the Company's patent rights which are subject to the
royalty-free licenses. In addition, the United States government has the
right to require the Company to grant licenses (including exclusive licenses)
under such patents and patent applications or other inventions to a third
party if the United States government determines that adequate steps have not
been taken to commercialize such inventions, such action is necessary to meet
public health or safety needs, such action is necessary to meet requirements
for public use under federal regulations or such action is necessary because
the Company has not exercised reasonable efforts to ensure products
manufactured pursuant to such invention are manufactured in the United States.
Competition
The markets in which the Company sells commercial products is highly
competitive, rapidly changing and significantly affected by new product
introductions and other market activities of industry participants. The
Company's primary competitors in ultracapacitors include Panasonic and SAFT,
a part of the Alcatel-Alsthom Group; and in the passive backplane segment for
industrial computers, include Texas Microsystems, Diversified Technology,
Advantech, Industrial Computer Source, Teknor and Trenton. The Company's
emerging products also compete with established technologies in many markets,
including batteries in ultracapacitor products and a number of established
methods of treating water and decontaminating food packaging and medical
products.
Many of the Company's competitors have longer operating histories,
significantly greater financial, technical, marketing and other resources,
greater name recognition, and a larger installed base of customers than the
Company. In addition, certain competitors have well-established relationships
with customers and potential customers of the Company. Furthermore, as the
Company's new products gain acceptance, companies with significantly greater
resources than the Company could attempt to increase their presence in these
markets. In order to be successful in the future, the Company must continue
to respond promptly and effectively to the challenges of technological change
and its competitors' innovations by continually enhancing its own product
offerings. There can be no assurance, however, that the Company's products
will continue to compete favorably or that the Company will be successful in
the face of increasing competition from new products and enhancements
introduced by existing competitors or new companies entering its market.
Risks Associated with Government Business
A substantial portion of the Company's sales (approximately 33% in fiscal
1997, 40% in fiscal 1996 and 43% in fiscal 1995) is derived from contracts
with the United States government, principally agencies of the United States
Department of Defense, and subcontracts with government suppliers. After the
Company completes the acquisition of the Electromagnetic Systems Group of
Primex Technologies, the portion of the Company's revenues derived from
Department of Defense contracts will likely increase. The reductions in
defense budgets over the past several years have adversely affected the
Company's business, particularly in the area of system survivability products
and services, such as weapons effects simulation and testing. The Company has
experienced significant reductions in this business as the Department of
Defense has responded to reduced global threats and shrinking defense budgets.
The Company believes that continuing reductions in Department of Defense
spending in its System Division's core simulator business is possible but that
if such reductions occur they would be offset partially by government spending
on scientific programs for which the Company's expertise could be utilized.
The Company has experienced increased competition in bidding for new defense
programs from contractors seeking to replace their lost government business.
There can be no assurance that defense spending in general or that contract
awards to the Company specifically will not be reduced in the future. A
significant loss of United States government funding would have a material
adverse effect on the Company's business, results of operations and financial
condition.
The Company's United States government business is also subject to other
various risks, including: unilateral termination for the convenience of the
government; reduction or modification in the event of changes in the
government's requirements or budgetary constraints; increased or unexpected
costs causing losses or reduced profits under fixed-price contracts or
unallowable costs under cost plus contracts; risks of potential disclosure of
the Company's confidential information to third parties; the failure or
inability of a contractor to perform its obligations under a contract in
circumstances where the Company is a partner contractor or subcontractor; the
failure of the
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<PAGE>
government to exercise options provided for in the contracts and the exercise
of march-in rights or confirmatory licenses by the government. There can be
no assurance that the Company's contracts with the Department of Defense and
other government agencies will not be terminated, reduced or modified or that
the grant of such licenses and rights will not result in a loss of potential
revenues, any of which could have a material adverse effect on the Company's
business, results of operations and financial condition.
The Company participates in government funded programs which may extend
for several years, but are normally funded on an annual basis and shorter
periods in some cases. There can be no assurance that funding will continue
for programs covering the Company's development projects or that the Company
can compete successfully in obtaining contracts for such programs. A
significant reduction in, or discontinuation of, such funding or of the
Company's participation in such programs would have a material adverse effect
on the Company's business, results of operations and financial condition.
Substantial Future Capital Needs
The Company believes that, in order to achieve its long-term strategic
objectives and maintain and enhance its competitive position, it will need
significant additional financial resources over the next several years. To
meet anticipated volume production requirements for several of the Company's
product lines, in particular ultracapacitors and purification systems, the
Company will need expanded manufacturing capabilities and facilities or viable
production alternatives. The Company anticipates that the estimated cash on
hand, together with cash flow from operations and possible debt financing or
leasing, should be adequate to support the Company's anticipated facilities
expansion and equipment purchases through fiscal 1998. The Company anticipates
that it will require additional capital in the future to fund its continuing
expansion into commercial markets, to construct and equip additional
facilities, or to acquire new or complementary businesses, product lines and
technologies. Currently the Company has a $20 million line of credit, but
there can be no assurance that any necessary additional financing will be
available to the Company on acceptable terms or at all. If adequate funds
are not available, the Company may be required to change, delay, reduce or
eliminate its planned product commercialization strategy or its anticipated
facilities expansion plans and expenditures, which could have a material
adverse effect on the Company's business, results of operations and financial
condition.
Dependence on Key Personnel
The Company's future performance depends in significant part upon the
continued service of its key technical and senior management personnel. The
Company is dependent on its ability to identify, hire, train, retain and
motivate high quality personnel, especially key manufacturing executives and
highly skilled engineers and scientists involved in the ongoing development,
introduction and enhancement of the Company's products and technologies. The
industries in which the Company competes are characterized by a high level of
employee mobility and aggressive recruiting of skilled personnel. The
Company's employees may terminate their employment with the Company at any
time. Accordingly, there can be no assurance that any of the Company's
current key employees will continue to work for the Company. Loss of services
of key employees could have a material adverse effect on the Company's
business, financial condition and results of operations.
Reliance on Third Party Suppliers
The Company's success is dependent in part on its ability to secure
qualified and adequate sources for supplies of materials, components and
sub-assemblies. The Company manufactures most of its products using a large
number of components or sub-assemblies, many of which are of commercially
available industrial parts and the remainder of which are custom-made to the
Company's specifications (by the Company and certain qualified outside
manufacturers). The Company endeavors to maintain more than one source of
supply for each of its major components or subassemblies, to the extent
possible, although certain suppliers are currently the sole source of one or
more items upon which the Company is dependent in the manufacture of its EMI
filters and industrial computing products. In the past, the Company has on
occasion experienced difficulty in obtaining timely delivery of power supplies
for industrial computers from outside suppliers which has adversely impacted
the Company's delivery time to its customers and in one circumstance the
Company believes such delivery problems were a contributing factor to the loss
of certain business from a major customer. There can be no assurance that
these and other similar supply problems will not recur. In addition, the
Company currently has only one qualified supplier for a certain component of
its ultracapacitors and is
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contractually obligated to qualify at least one additional supplier. No
assurance can be given that such qualification will be completed in a timely
manner. Moreover, the current sole domestic source of a component of the
Company's EMI filter has indicated its plans to design, build and sell a
competing filter in the future. The Company believes this supplier will
continue to sell to the Company but that, if necessary, the Company could
replace this supplier. Although the Company seeks to reduce its dependence
on sole and limited source suppliers, the partial or complete loss of these
sources could have at least a temporary material adverse effect on the
Company's results of operations and damage customer relationships due to the
complexity of the products supplied and the significant amount of time
required to qualify new suppliers.
Product Liability Risks
Certain of the Company's products may expose it to product liability risks.
The Company's EMI filters are components of implantable medical devices and,
due to the litigious environment surrounding the medical device industry,
subject the Company to an increased risk of product liability claims that may
involve significant defense costs. Other of the Company's products, such as
ultracapacitors and purification systems, may also be used in functions
involving significant product liability risks. There can be no assurance that
product liability claims will not be asserted against the Company in the
future. Although the Company maintains product liability insurance with
coverage limits it believes to be adequate, there can be no assurance that
this coverage will in fact be adequate to protect the Company against future
product liability claims. In addition, product liability insurance is
expensive and there can be no assurance that, in the future, product liability
insurance will be available to the Company in amounts or on terms satisfactory
to the Company, if at all. A successful product liability claim or series of
claims brought against the Company could have a material adverse effect on the
Company's business, financial condition and results of operations.
Environmental Regulations
The Company is subject to a variety of governmental regulations relating
to the use, storage, discharge, handling, emission, generation, manufacture
and disposal of toxic or other hazardous substances. The failure to comply
with current or future regulations could result in substantial fines being
imposed on the Company, suspension of production, alteration of its
manufacturing process or cessation of operations. Such regulations could
require the Company to acquire expensive remediation or abatement equipment
or to incur substantial expenses to comply with environmental regulations.
Any failure by the Company to control the use, disposal or storage of, or
adequately restrict the discharge of, hazardous or toxic substances could
subject the Company to significant liabilities.
Potential Dilutive Impact of Employee Stock Option Programs at Subsidiaries
The Company has adopted stock option plans at five of its subsidiaries
providing for the issuance of incentive and nonqualified stock options to
purchase common stock of these companies. Any of these subsidiary stock
options that have an exercise price per share less than the fair market value
per share of the common stock of a subsidiary ("in-the-money") will have a
negative impact on the Company's earnings per share. The Company expects that
its reported diluted earnings per share will be reduced in future quarters due
to the increased fair market value of certain of the Company's subsidiaries.
Such options, when and if exercised, will dilute the Company's actual
ownership interests in its subsidiaries, thus reducing the Company's share of
the net income, potential dividends or distributions and proceeds of any sale
or other disposition of such subsidiary. The equity interests upon exercise of
stock options in the subsidiaries would be accounted for as a minority
interest. Based on current programs, the dilutive impact attributable to
these option plans could be up to 13% at each of the affected subsidiaries
(17% at one subsidiary). In addition, certain key employees of the Company's
Maxwell Business Systems, Inc. subsidiary, which owns and markets the
Company's job-cost accounting software, currently own an aggregate of 20%,
and have the right to purchase up to an additional 29%, of that subsidiary.
Currently, no established trading market exists for the common stock
underlying any of the subsidiary options and such options are not exchangeable
for Common Stock of the Company. The Company has no plan to offer an
exchangeability feature for options to purchase Company Common Stock or
otherwise provide liquidity for these subsidiary options, but the Company
could consider such alternatives in the future.
Economic Impact of Potential Public Offerings of Subsidiary Stock
By conducting its operations through separate subsidiaries, the Company
promotes clearer market definition and product identity. This business unit
focus also allows the Company to more actively monitor opportunities for
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<PAGE>
growth or cost savings and to promote entrepreneurism with each subsidiary.
While this corporate structure also affords the Company a high level of
flexibility to implement various strategic alternatives, including future
public offerings of subsidiary stock, sales of subsidiaries or strategic
acquisitions, certain of these alternatives may have negative effects upon
the Company's consolidated sales, gross profit, net income and earnings per
share. For example, any public offering or other sale of a minority portion
of a subsidiary's stock, including in connection with any strategic
relationship entered into by the Company, would reduce that subsidiary's
contribution to the Company's net income and earnings per share. While any
transaction would be preceded by a determination that such transaction is in
the best interests of the Company and its stockholders, such a transaction
could, nonetheless, have a material adverse effect on the Company's results
of operations.
Government Regulation
The testing, manufacture and sale of certain of the Company's products are
subject to regulation by numerous governmental authorities. Pursuant to the
Federal Food, Drug, and Cosmetic Act, and the regulations promulgated
thereunder, the United States Food and Drug Administration (the "FDA")
regulates the preclinical and clinical testing, manufacture, labeling, storage,
distribution and promotion of food and medical products and processes. The
Company has obtained clearance from the FDA of its CoolPure technology for
preservation of liquid foods. In addition, the Company has obtained clearance
from the FDA of PureBright for food use and is applying for similar approvals
in Canada and Europe, as well as supporting customers in obtaining clearance
of PureBright for medical applications. Implantable defibrillators and
pacemakers that incorporate the Company's EMI filter have been approved by the
FDA. Delays in receipt of or failure to receive anticipated approvals or
clearances, the loss of previously received approvals or clearances,
limitations on intended use imposed as a condition of such approvals or
clearances, or failure to comply with existing or future regulatory
requirements would have a material adverse effect on the Company's business,
financial condition and results of operations.
The testing, preparation of necessary marketing applications and processing
of those applications with the FDA is expensive and time consuming, can vary
based on the type of product and may take several years to complete. There is
no assurance that the FDA will act favorably or quickly in making such reviews,
and significant difficulties or costs may be encountered by the Company or
others in its efforts to obtain FDA approvals that could delay or preclude the
Company from marketing any products it may develop. The FDA may also require
postmarketing testing and surveillance to monitor the effects of approved
products or place conditions on any approval that could restrict the commercial
applications of such products. Product approvals may be withdrawn if
compliance with regulatory standards is not maintained or if problems occur
following initial marketing. Noncompliance with applicable requirements can
result in, among other things, fines, injunctions, civil penalties, recall or
seizure of products, total or partial suspension of production, failure of the
United States government to grant pre-market clearance or pre-market approval
for products, withdrawal of marketing clearances or approvals and criminal
prosecution.
Long-Term Fixed-Price Contracts
A portion of Maxwell's software business consists of work under a small
number of large, multi-year fixed-price contracts with state and local
government agencies involving sophisticated integration and networking tasks
and a certain amount of application software development. In addition,
certain of the Company's other businesses, primarily those conducted in its
government funded research and systems development business, may also enter
into long-term fixed-price contracts for large hardware systems or components.
The expansion of this business through acquisition will likely result in the
Company assuming additional fixed-price contracts. Events and developments
such as unanticipated delays in program schedule, failure to anticipate costs
accurately over a two- or three-year period or performance problems with
important vendors can adversely affect the profitability of such contracts.
When these contracts are assumed in acquisitions, there can be no assurance
that the Company is properly valuing remaining liabilities or profitability
potential.
Anti-Takeover Provisions
The Company's Board of Directors is divided into three classes, each of
which is elected and serve overlapping three-year terms. In addition, the
Company has adopted a rights plan that, among other things, grants rights to
purchase Common Stock to all stockholders at a price significantly below
market value upon a business combination in the event a single person or group
has previously acquired more than 20% of the outstanding Common Stock without
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<PAGE>
the Board of Directors having elected to redeem such rights. Furthermore, the
Company's certificate of incorporation contains a "fair price provision"
intended to require an acquiror to obtain the consent of the Board of Directors
to any business combination involving the Company. The Company's certificate
of incorporation and bylaws also contain provisions barring stockholders
action by written consent and the calling by stockholders of a special meeting.
Amendment of such provisions requires a super majority vote by the
stockholders, except with the consent of the Board of Directors. The rights
plan and provisions of the Company's certificate of incorporation and bylaws
could delay, deter or prevent a merger, tender offer, or other business
combination or change in control involving the Company that some, or a
majority of, stockholders might consider to be in their best interests,
including offers or attempted takeovers that might otherwise result in such
stockholders receiving a premium over the market price of the Common Stock.
Limited Trading Volume; Volatility of Stock Price
The Company's Common Stock is traded on the Nasdaq National Market.
Trading volume in the twenty trading days ended April 3, 1998 averaged 67,600
shares traded per day. Trading of relatively small blocks of stock can have
a significant impact on the price at which the stock is traded. The Company
believes factors such as quarterly fluctuations in financial results, of new
technologies impacting the Company's products, announcements regarding
acquisitions or dispositions by the Company, announcements by competitors or
changes in securities analysts' recommendations may cause the market price to
fluctuate, perhaps substantially. These fluctuations, as well as general
economic conditions, such as recessions or high interest rates, may adversely
affect the market price of the Common Stock. See "Price Range of
Common Stock."
Forward-Looking Statements
This Prospectus may contain forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act.
Such statements are subject to a number of risks and uncertainties. Actual
results in the future could differ materially from those described in any
forward-looking statements as a result of the Risk Factors set forth above
and the matters set forth elsewhere in this Prospectus generally. The Company
undertakes no obligation to publicly release the result of any revisions to
these forward-looking statements that may be made to reflect any future events
or circumstances.
USE OF PROCEEDS
All of the shares of Common Stock covered hereby are being offered by the
Selling Stockholders. The Company will not receive any proceeds from the sales
of Common Stock by the Selling Stockholders.
PRINCIPAL AND SELLING STOCKHOLDERS
The shares of Common Stock to be sold hereunder were issued to the former
shareholders of Tekna Seal, Inc., a Minnesota corporation ("TSI") and Phoenix
Power Systems, Inc., a California corporation ("Phoenix Power") (collectively,
the "Selling Stockholders") in connection with the Merger and the Purchase
Agreements (as defined herein). None of the Selling Stockholders has held
any position, office or other material relationship with the Company or any
of its affiliates within the past three years other than as a result of (i)
his or her beneficial ownership of Shares or (ii) the fact that certain
Selling Stockholders were employees of TSI or Phoenix Power and have become
employees of the Company.
On January 29, 1998 (the "TSI Closing Date"), Maxwell through its wholly
owned subsidiary, Maxwell Energy Products, Inc., a California corporation
("MEP") completed the acquisition of TSI, pursuant to the terms of an
Agreement and Plan of Reorganization (the "Merger Agreement") dated January
26, 1998, by and among TSI, the shareholders of TSI, MEP and Maxwell. The
acquisition was accounted for as a pooling of interests. The Merger Agreement
provided for the merger of TSI with and into MEP (the "Merger"). In
connection with the Merger, Maxwell delivered to the stockholders of TSI an
aggregate of 154,030 shares of Common Stock. Pursuant to the terms of the
Registration Rights Agreement dated as of January 29, 1998 (the "TSI
Registration Rights Agreement") entered into among Maxwell and certain
shareholders of TSI, the Company agreed to file this Registration Statement
providing for the sale of 34,004 shares of Common Stock by those persons who
were not affiliates of TSI.
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On March 5, 1998 (the "Phoenix Power Closing Date"), Maxwell completed the
acquisition of Phoenix Power, pursuant to the terms of the Stock Purchase
Agreement (the "Purchase Agreement") dated March 1, 1998 by and among the
shareholders of Phoenix Power and Maxwell. In connection with the Purchase
Agreement, Maxwell delivered to certain stockholders of Phoenix Power an
aggregate of 100,679 shares of Common Stock. Pursuant to the terms of the
Registration Rights Agreement dated as of March 5, 1998 (the "Phoenix Power
Registration Rights Agreement") entered into among Maxwell and certain
shareholders of Phoenix Power, the Company agreed to file this Registration
Statement providing for the sale of 87,255 shares of Common Stock by those
stockholders who were a party to the Phoenix Power Registration Rights
Agreement.
Pursuant to the terms of each of the TSI and Phoenix Power Registration
Rights Agreements, the Company and the Selling Stockholders have agreed to
certain indemnity and contribution provisions between the Company and the
Selling Stockholders against certain liabilities arising under the securities
laws. The Company has agreed to bear certain expenses in connection with the
registration of the Shares offered hereby.
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<PAGE>
The following table sets forth, with respect to the Selling Stockholders,
the number of shares of Common Stock owned by each Selling Stockholder prior
to this offering and the number of shares of Common Stock offered for each
Selling Stockholder's account. None of the Selling Stockholders owned prior
to this offering, and none will own after this offering, more than one percent
(1%) of the Company's outstanding Common Stock (based on the number of shares
outstanding on the date of this Prospectus).
Number of Number of Percentage of
Shares Shares of Shares
Name of Beneficially Common Stock Beneficially
Beneficial Owner(1) Owned Offered Owned(1)
- ------------------- ------------ ------------ --------------
Glenn E. Bergstrom
and Patricia N.
Bergstrom, JTWROS 3,461 3,461 *
Harold G. Bergstrom
and Nellie M.
Bergstrom, JTWROS 3,461 3,461 *
Irwin Brodsky or
Edna Brodsky,
Trustee or the
Successor Trustee
of the Irwin and
Edna Brodsky
Family Trust Dated
11-10-97 1,211 1,211 *
Kuo Chang 1,730 1,730 *
Chin-Shia Chiu 865 865 *
Charles H. Cornell 865 865 *
Marylyn Eliason 77 77 *
Robert R. Etem 432 432 *
Victor G. Etem 432 432 *
Jahangir Gaviri 4,155 4,155 *
Donald F. Hagen 1,730 1,730 *
Harold N. Hansen 865 865 *
Carl R. Hanson 1,730 1,730 *
Albert P. Hum 519 519 *
Judith A. Kielty 1,509 1,509 *
Ronald J. Kielty 519 519 *
Ronald J. and
Judith A. Kielty 865 865 *
Laureen Kreuziger 1,730 1,730 *
Robert Lang and
Dorothy M. Lang 1,730 1,730 *
Clifford S. Lozinski 519 519 *
Kimiko Mika 1,730 1,730 *
Eric Molsen/Ella
Gates-Molsen JT-TEN 519 519 *
Virginia E. Muehlberg
(Etem) 432 432 *
Hamid Nekouie 5,194 5,194 *
Arthur Sund Nelson 1,730 1,730 *
Myron Schnickels 1,730 1,730 *
Pete Stromme 153 153 *
Ralph H. Torberg 1,730 1,730 *
Yung-Yu Ike Wang 1,730 1,730 *
Hassan Yarpezeshkan 77,906 77,906 *
__________________________
* Amount represents less than 1% of the Common Stock.
(1) Information with respect to beneficial ownership is based on information
furnished to the Company by each shareholder included in the table
or included in filings with the Securities and Exchange Commission.
The Company believes that each individual person has sole voting
and investment power for shares beneficially owned by him, subject
to community property laws where applicable.
The Shares may be offered from time to time by the Selling Stockholders
named above. However, such Selling Stockholders are under no obligation to
sell all or any portion of such Shares, nor are the Selling Stockholders
obligated to sell any such Shares immediately under this Prospectus. Because
the Selling Stockholders may sell all or part of their shares of Common Stock
offered hereby, no estimate can be given as to the number of shares of Common
Stock that will be held by any Selling Stockholder upon termination of any
offering made hereby.
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<PAGE>
PLAN OF DISTRIBUTION
The Shares are being registered to permit sales of the Shares by the
Selling Stockholders from time to time for 30 days following the effective
date of the Registration Statement of which this Prospectus is a part, or until
such time as all Shares are sold or disposed of. The Company has agreed, among
other things, to bear certain expenses in connection with the registration and
sale of the Shares, including without limitation all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws,
printing expenses, messenger and delivery expenses, National Association of
Securities Dealers, Inc., stock exchange and qualification fees, fees and
disbursements of counsel for the Company and of independent certified public
accountants of the Company (including the expenses of any special audit
required by or incident to such performance), the fees of one counsel and one
accountant representing the Selling Stockholders in connection with the
registration and sale of the Shares, expenses of any underwriters that are
customarily requested in similar circumstances by such underwriters (excluding
discounts, commissions or fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals relating to the
distribution of the Shares, which will be borne by the Selling Stockholders).
The Shares may be sold from time to time to purchasers directly by any or
all of the Selling Stockholders. Alternatively, the Selling Stockholders may
from time to time offer the Shares to or through underwriters, brokers, dealers
or agents, who may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Stockholders or the purchasers of
such securities for whom they may act as agents. The Selling Stockholders
and any underwriters, brokers, dealers or agents that participate in the
distribution of the Shares may be deemed to be "underwriters" within the
meaning of the Securities Act and any profit on the sale of such securities and
any discounts, commissions, concessions or other compensation received by any
such underwriter, broker, dealer or agent may be deemed to be underwriting
discounts and commissions under the Securities Act. Underwriters, brokers,
dealers and agents also may be customers of, engage in transactions with, or
perform other services for Maxwell and its affiliates in the ordinary course
of business.
Any distribution hereunder of the Shares by the Selling Stockholders may be
effected from time to time in one or more of the following transactions: (a) on
the Nasdaq National Market, or through broker-dealers acting as principal or
agent, in transactions (which may involve crosses or block transactions), in
special offerings, or in the over-the-counter market, or otherwise, at market
prices obtainable at the time of sale, at prices related to such prevailing
market prices, at negotiated prices or at fixed prices, (b) to underwriters
who will acquire shares of Common Stock for their own account and resell such
shares in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of
sale (any public offering price and any discount or concessions allowed or
reallowed or paid to dealers may be changed from time to time), (c) directly
or through brokers or agents in private sales at negotiated prices
(including without limitation, pursuant to Rule 144 under the Securities Act),
(d) by distributions or dispositions to shareholders or partners or other
persons affiliated or associated with one or more of the Selling Stockholders
or with Maxwell or one of its affiliates, (e) to lenders pledged as collateral
to secure loans, credit or other financing arrangements and any subsequent
foreclosure, if any, thereunder, (f) through the writing of options or other
derivative instruments (whether listed on an exchange or otherwise) and
pursuant to exercise, conversion, exchange, distribution on or similar delivery
in respect of a derivative security or instrument relating to some or all of
such Common Stock, (g) pursuant to a stock lending or repurchase or reverse
repurchase transaction, or (h) by any other legally available means. Also,
offers to purchase the Common Stock may be solicited by agents designated by
the Selling Stockholders from time to time. The Registration Statement and
this Prospectus shall cover any such sale and resale. Any of such transactions
may be effected at market prices prevailing at the time of sale, at prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at fixed prices. To the extent required, the
specific amount of Common Stock to be sold, the purchase price and public
offering price, the names of any resale agent, dealer or underwriter, and the
terms and amount of any applicable commission or discount with respect to a
particular offer will be set forth in a Prospectus Supplement and/or post-
effective amendment to the Registration Statement of which this Prospectus
constitutes a part.
In order to comply with the securities laws of certain states, if
applicable, the Common Stock will be sold hereunder in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
states the Common Stock may not be sold hereunder unless the Common Stock has
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and complied with.
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<PAGE>
The Company is not aware of any existing arrangements between any Selling
Stockholder, any other stockholder, broker, dealer, underwriter or agent
relating to the sale or distribution of the Shares.
The Selling Stockholders will be indemnified by the Company, to the extent
permitted by law, against certain civil liabilities, including certain
liabilities under the Securities Act, or will be entitled to contribution in
connection therewith, subject to certain limitations. The Company, at its
request, will be indemnified by the Selling Stockholders, to the extent
permitted by law, against certain civil liabilities, including certain
liabilities under the Securities Act, or will be entitled to contribution in
connection therewith, subject to certain limitations.
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DESCRIPTION OF CAPITAL STOCK
Common Stock
The Company's authorized capital stock consists of 40,000,000 shares of
Common Stock, $.10 par value. As of April 3, 1998, there were 8,387,953
shares of Common Stock outstanding, excluding shares issuable upon the
exercise of outstanding options to purchase an aggregate of 1,156,295 shares
of Common Stock held by employees, management and directors. Holders of
Common Stock are entitled to one vote for each share held of record on all
matters submitted to a vote of stockholders. There is no cumulative voting
for the election of directors. Holders of Common Stock are entitled to
receive ratably such dividends as may be declared by the Board of Directors
out of funds legally available therefor. In the event of a liquidation,
dissolution or winding up of the Company, holders of Common Stock are entitled
to share ratably in all assets remaining after payment to all creditors.
Holders of Common Stock have no preemptive rights and have no rights to
convert their Common Stock into any other securities. All of the outstanding
shares of Common Stock are, and the shares being offered hereby will upon
issuance and sale be, fully paid and nonassessable.
The transfer agent and registrar for the Common Stock is ChaseMellon
Shareholder Services, L.L.C.
Common Stock Rights
On June 20, 1989, the Board of Directors of Maxwell declared a dividend
distribution of one Right for each outstanding share of its common stock, par
value $.10 per share (the "Common Stock"), to stockholders of record at the
close of business on June 30, 1989. Each Right entitles the registered holder
to initially purchase from the Company one-half of a share of Common Stock at
a purchase price of $32.50 per one-half share (the "Purchase Price"), since
adjusted to $16.25 per one-half share. The description and terms of the
Rights are set forth in a rights agreement, as amended (the "Rights Agreement")
between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent.
In general, the Rights become exercisable or transferable only upon the
occurrence of certain events related to changes in ownership of the Common
Stock. Once exercisable, each Right entitles its holder initially to purchase
from the Company one-half of a share of Common Stock at a purchase price of
$16.25 per one-half share. The Rights become exercisable upon the earlier of
the close of business on (i) the tenth day following public announcement that
a person or group of affiliated or associated persons (an "Acquiring Person")
has acquired, or generally obtained the right to acquire, beneficial ownership
of 20% or more of the outstanding shares of Common Stock (the "Stock
Acquisition Date"), or (ii) the tenth business day following the commencement
of a tender offer or exchange offer that would result in a person or group
beneficially owning 20% or more of such outstanding shares of Common Stock.
Upon the occurrence of certain other events related to changes in the
ownership of the Common Stock, each holder of a Right would be entitled to
purchase shares of the Common Stock, or an acquiring corporation's common
stock, having a market value equal to four times the exercise value of the
Right. However, Rights are not exercisable following the occurrence of any
of the events set forth above until such time as the Rights are no longer
redeemable by the Company as set forth below.
The Rights expire at the close of business on June 20, 1999, unless earlier
redeemed by the Company. At any time until the close of business on the tenth
business day following the Stock Acquisition Date, the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right (payable in
cash, Common Stock or other consideration deemed appropriate by the Board of
Directors). After the redemption period has expired, the Company's right of
redemption may be reinstated if an Acquiring Person reduces his beneficial
ownership to 10% or less of the outstanding shares of Common Stock in a
transaction or series of transactions not involving the Company. Immediately
upon the action of the Board of Directors ordering redemption of the Rights,
the Rights will terminate and the only right of the holders of Rights will be
to receive the $.01 redemption price. The Rights, if exercised, will cause a
substantial dilution to the equity interest in Maxwell to a person's or group's
ownership interest in the Company's Common Stock that attempts to acquire the
Company on terms not approved by the Company's Board of Directors. See "Risk
Factors-Anti-Takeover Provisions."
18
<PAGE>
Additional Anti-Takeover Provisions
The provisions of the Company's certificate of incorporation and bylaws
having possible "anti-takeover" effects are those that: (i) from a classified
Board of Directors with staggered terms of office, eliminate cumulative voting
and permit the removal of directors only for cause; (ii) impose supermajority
shareholder vote or disinterested director approval requirements in connection
with certain mergers, acquisitions and other business combinations, unless
specified minimum price and procedural requirements are satisfied in the
proposed transaction (a "fair price provision"); (iii) eliminate the right of
stockholders to call special stockholders' meetings and limit their right to
take action without a meeting by written consent and (iv) impose supermajority
shareholder vote or disinterested director approval requirements for amendments
to a number of provisions in the Company's charter documents, including the
provisions described in clauses (i) through (iii) above.
In general, the fair price provisions may have the effect of requiring
payment in cash for shares of Common Stock by an acquiror having accumulated
10% or more of the Common Stock at a price no less than the highest market
price of the Common Stock within a recent date. Such a 10% or more
stockholder must also meet certain procedural requirements intended to prevent
accumulations of additional stock below the fair price.
Delaware Law
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law, an anti-takeover law. In general, Section 203
prohibits a publicly held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years
after the date of the transaction in which the person became an interested
stockholder, unless either (i) prior to the date at which the person becomes
an interested stockholder, the Board of Directors approves such transaction or
business combination; (ii) the stockholder acquires more than 85% of the
outstanding voting stock of the corporation (excluding shares held by directors
who are officers or held in certain employee stock plans) upon consummation
of such transaction or (iii) the business combination is approved by the Board
of Directors and by two-thirds of the outstanding voting stock of the
corporation (excluding shares held by the interested stockholder) at a meeting
of stockholders (and not by written consent). A "business combination"
includes a merger, asset sale or other transaction resulting in a financial
benefit to such interested stockholder. An "interested stockholder" is a
person who, together with affiliates and associates, owns (or within three
years prior, did own) 15% or more of the corporation's voting stock.
LEGAL MATTERS
The validity of the Common Stock in respect of which this Prospectus is
being delivered will be passed on for the Company by Riordan & McKinzie, a
Professional Corporation, Los Angeles, California.
EXPERTS
The financial statements and the related financial statement schedule
incorporated in this Prospectus by reference from the Company's Annual Report
on Form 10-K for the year ended July 31, 1997 have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report, which are
incorporated herein by reference, and have been so incorporated in reliance
on their report given on their authority as experts in accounting and auditing.
19
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is a statement of estimated expenses to be paid by the
Registrant in connection with the issuance and distribution of the securities
being registered. All of the amounts shown are estimated except the
registration fee of the Securities and Exchange Commission.
SEC registration fee $ 1,020
Legal fees 7,500
Accountants' fees 5,000
Blue Sky qualification fees and expenses 0
Transfer Agent fees 0
Miscellaneous 5,000
Total $ 18,520
======
Item 15. Indemnification of Directors and Officers
Maxwell Technologies, Inc. (the "Company") is a Delaware corporation.
Article V of the Company's Bylaws provides that the Company may indemnify its
officers and Directors to the full extent permitted by law. Section 145 of
the General Corporation Law of the State of Delaware ("GCL") provides that a
Delaware corporation has the power to indemnify its officers and directors in
certain circumstances.
Subsection (a) of Section 145 of the GCL empowers a corporation to
indemnify any director or officer, or former director or officer, who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation),
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred in connection with such
action, suit or proceeding provided that such director or officer acted in
good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action
or proceeding, provided that such director or officer had no cause to believe
his or her conduct was unlawful.
Subsection (b) of Section 145 of the GCL empowers a corporation to
indemnify any director or officer, or former director or officer, who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of
the capacities set forth above, against expenses actually and reasonably
incurred in connection with the defense or settlement of such action or suit,
provided that such director or officer acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification may be made in respect of any
claim, issue or matter as to which such director or officer shall have been
adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action was brought shall
determine that despite the adjudication of liability, such director or officer
is fairly and reasonably entitled to indemnity for such expenses which the
court shall deem proper.
Section 145 of the GCL further provides that to the extent a director or
officer of a corporation has been successful in the defense of any action,
suit or proceeding referred to in subsections (a) and (b) or in the defense of
any claim, issue or matter therein, he or she shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him
or her in connection therewith; that indemnification provided for by Section
145 shall not be deemed exclusive of any other rights to which the indemnified
party may be entitled; and that the corporation shall have power to purchase
and maintain insurance on behalf of a director or officer of the corporation
against any liability asserted against him or her or incurred by him or her in
any such capacity or arising out of his or her status as such whether or not
the corporation would have the power to indemnify him or her against such
liabilities under Section 145.
II-1
<PAGE>
Article Seventeenth of the Company's Certificate of Incorporation
currently provides that each Director shall not be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty
as a Director, except for liability (i) for any breach of the Director's duty
of loyalty to the Company or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the GCL, or (iv) for any transaction from which
the Director derived an improper benefit.
The Company has entered into indemnity agreements with each of its
Directors and executive officers. The indemnity agreements generally indemnify
such persons against liabilities arising out of their service in their
capacities as Directors, officers, employees or agents of the Company. The
Company may from time to time enter into indemnity agreements with additional
individuals who become officers or Directors of the Company.
Item 16. Exhibits.
Exhibit
Number Description
- ------- ----------------------
4.1 + Registration Rights Agreement dated as of January 29, 1998 by
and among the Company and certain shareholders of TSI.
4.2 + Registration Rights Agreement dated as of March 5, 1998 by and
among the Company and certain shareholders of Phoenix Power.
5.1 + Opinion of Riordan & McKinzie, a Professional Corporation.
23.1 + Consent of Ernst & Young LLP.
23.2 + Consent of Riordan & McKinzie (included in Exhibit 5.1).
24.1 + Powers of Attorney with respect to the Company (included on
page II-4).
- ----------------------------------
+ Included in this filing.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
Provided, however, that paragraphs (i) and (ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(4) The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth in the prospectus,
to deliver, or cause to be delivered to each person to whom the prospectus is
sent or given, the latest quarterly report that is specifically incorporated
by reference in the prospectus to provide such interim financial information.
(5) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that is has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of San Diego, State of California on the 6th day of
April, 1998.
MAXWELL TECHNOLOGIES, INC.
By: /s/Kenneth F. Potashner
-----------------------
Kenneth F. Potashner
President and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth F. Potashner and Gary J. Davidson, and
each of them his true and lawful attorneys-in-fact and agents with full power
of substitution and resubstitution, for him and in his name, place and stead,
in any and all capacities, to sign any and all amendments to this Registration
Statement, including any post-effective amendments as well as any related
registration statement (or amendment thereto) filed in reliance upon Rule
462(b) under the Securities Act of 1933, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Kenneth F. Potashner President, Chief Executive April 6, 1998
- ------------------------ Officer and Director (Principal
Kenneth F. Potashner Executive Officer)
/s/ Gary J. Davidson Vice President-Finance and April 6, 1998
- ------------------------ Administration, Chief Financial
Gary J. Davidson Officer and Treasurer (Principal
Financial Officer and Principal
Accounting Officer)
/s/ Lewis J. Colby, Jr. Director April 6, 1998
- -------------------------
Lewis J. Colby, Jr.
/s/ Thomas B. Hayward Director April 6, 1998
- -------------------------
Thomas B. Hayward
/s/ Thomas L. Horgan Director April 6, 1998
- -------------------------
Thomas L. Horgan
/s/ Alan C. Kolb Director April 6, 1998
- -------------------------
Alan C. Kolb
II-4
<PAGE>
Signature Title Date
/s/ Karl M. Samuelian Director April 6, 1998
- -------------------------
Karl M. Samuelian
/s/ Mark Rossi Director April 6, 1998
- -------------------------
Mark Rossi
II-5
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- ----------------------
4.1 + Registration Rights Agreement dated as of January 29, 1998 by
and among the Company and certain shareholders of TSI.
4.2 + Registration Rights Agreement dated as of March 5, 1998 by and
among the Company and certain shareholders of Phoenix Power.
5.1 + Opinion of Riordan & McKinzie, a Professional Corporation.
23.1 + Consent of Ernst & Young LLP.
23.2 + Consent of Riordan & McKinzie (included in Exhibit 5.1).
24.1 + Powers of Attorney with respect to the Company (included on
page II-4).
- ----------------------------------
+ Included in this filing.
II-6
EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement (the "Agreement") is entered into as of
January 29, 1998 by and among Maxwell Technologies, Inc., a Delaware
corporation ("Maxwell"), and the shareholders of Tekna Seal, Inc., a
Minnesota corporation (the "Company"), listed on Schedules A and B attached
hereto (each, a "Holder" and collectively, the "Holders").
R E C I T A L S
---------------
A. Maxwell, the Company, Maxwell Energy Products, Inc., a California
corporation ("MEP"), and certain of the Holders are parties to an Agreement
and Plan of Reorganization dated as of January 26, 1998 (the "Merger
Agreement"), pursuant to which the Company will merge with and into MEP; and
B. Pursuant to the Merger Agreement, the shareholders of the Company
have received shares of the common stock, $.10 par value, of Maxwell
("Maxwell Common Stock") in exchange for their securities of the Company; and
C. This Agreement is the Registration Rights Agreement referred to in
Section 12.2 of the Merger Agreement and, pursuant thereto, must be entered
into by the parties as a condition to the consummation of the transactions
contemplated by the Merger Agreement.
A G R E E M E N T
-----------------
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Eligible Resale Date" shall mean ten days following the date on which
Maxwell has filed with the SEC consolidated financial statements of Maxwell
including the results of operations of Maxwell and the Company combined, of
at least 30 days, in accordance with Regulation S-X under the Exchange Act and
SEC releases and interpretations governing pooling-of-interests accounting
treatment in business combinations.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Form S-3" shall mean such form under the Securities Act as in effect
on the date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by Maxwell with
the SEC.
"Holder" shall mean a holder of Registrable Securities. On the date
hereof, the Holders are those persons listed on Schedules A and B hereto.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement and by all other amendments
and supplements to the prospectus, including post-effective amendments and
all material incorporated by reference in such Prospectus.
<PAGE>
"Register," "registered" and "registration" shall mean and refer to a
registration effected by preparing and filing a Registration Statement and
taking all other actions that are necessary or appropriate in connection
therewith, and the declaration or ordering of effectiveness of such
Registration Statement by the SEC.
"Registration Expenses" shall have the meaning set forth in Section 4.
"Registrable Securities" shall mean the shares of Maxwell Common Stock
(i) issued pursuant to the Merger Agreement, and (ii) issued as a dividend or
other distribution with respect to or in exchange for or in replacement of the
shares referenced in (i) above; provided, however, that Registrable Securities
shall not include (i) any shares of Maxwell Common Stock that have previously
been sold to the public, (ii) have been sold in a private transaction
(excluding the issuance of the Maxwell Common Stock pursuant to the
Reorganization Agreement), (iii) are eligible for sale to the public under
Rule 144, or (iv) are subject to the Escrow (as defined in the Merger
Agreement).
"Registration Statement" shall mean any registration statement of
Maxwell in compliance with the Securities Act that covers Registrable
Securities pursuant to the provisions of this Agreement, including, without
limitation, the Prospectus, all amendments and supplements to such
Registration Statement, including all post-effective amendments, all exhibits
and all material incorporated by reference in such Registration Statement.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act or
any similar successor rule, as the same shall be in effect from time to time.
"Rule 415" shall mean Rule 415 promulgated under the Securities Act, or
any similar successor rule, as the same shall be in effect from time to time.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"SEC" shall mean the Securities and Exchange Commission.
"Shareholder Representatives" shall mean Ken Maki and Stanley
Weinberger, Jr., having received the power of attorney of those Holders party
to the Merger Agreement, and the power of attorney of all other Holders
electing to so appoint them.
"Shelf Registration Statement" shall have the meaning set forth in
Section 2(a) hereof.
2. Form S-3 Registration.
(a) As soon as practicable following the Effective Date (as defined
in the Merger Agreement), Maxwell shall file a Registration Statement on Form
S-3 providing for the sale pursuant to Rule 415 (a "Shelf Registration
Statement") by those persons who were not affiliates of the Company and who
are listed on Schedule B hereto, and/or any similar rule that may be adopted
by the SEC, of the Registrable Securities. After the Registration Statement
has become effective, Maxwell shall use commercially reasonable efforts to
keep such Registration Statement continuously effective for 30 days.
(b) As soon as practicable following the Eligible Resale Date,
Maxwell shall file a Shelf Registration Statement providing for the sale of
Common Stock by (i) affiliates of the Company listed on Schedule A hereto and
(ii) those persons on Schedule B holding Registrable Securities. Maxwell
shall use reasonable efforts to provide 10 days' notice to all of the Holders
at their addresses listed on Schedules A and B hereto of the anticipated filing
date of a Shelf Registration Statement under this Section 2(b), and such notice
shall request all information required from a Holder to participate in the
Shelf Registration Statement so that such Holder may participate in such
registration. After the Registration Statement has become effective, Maxwell
shall use commercially reasonable efforts to keep such Registration Statement
continuously effective for 60 days.
<PAGE>
(c) On or as soon as practicable after October 1, 1998, Maxwell
shall file a Shelf Registration Statement providing for the sale of Common
Stock by Holders of Registrable Securities. Maxwell shall use reasonable
efforts to provide 10 days' notice to all of the Holders at their addresses
listed on Schedules A and B hereto of the anticipated filing date of a Shelf
Registration Statement under this Section 2(c), and such notice shall request
all information required from a Holder to participate in the Shelf Registration
Statement so that such Holder may participate in such registration. After the
Registration Statement has become effective, Maxwell shall use commercially
reasonable efforts to keep such Registration Statement continuously effective
for 60 days.
(d) No Holder shall have the right to register securities under this
Agreement unless such Holder provides and/or confirms in writing prior to or
after the filing of the Registration Statement such information (including,
without limitation, information as to the number of Registrable Securities
that such Holder has sold pursuant to any such Registration Statement from
time to time) as Maxwell requests in connection with such Registration
Statement.
(e) Notwithstanding the foregoing, for a period not to exceed 90
days in any 12-month period, Maxwell shall not be obligated to prepare and
file, or be prevented from delaying or abandoning, the Registration Statement
required hereunder if Maxwell, in its good faith judgment, reasonably believes
that the filing or maintenance of such Registration Statement would require
the disclosure of material non-public information regarding Maxwell and,
accordingly, that the filing thereof, at the time requested, or the offering
of Maxwell Common Stock pursuant thereto, would materially and adversely
affect (A) a pending or scheduled public offering or private placement of
securities of Maxwell or any of its subsidiaries, (B) an acquisition, merger,
consolidation or similar transaction by or of Maxwell or any of its
subsidiaries, (C) preexisting and continuing negotiations, discussions or
pending proposals with respect to any of the foregoing transactions, or (D)
the financial condition of Maxwell in view of the disclosure of any pending or
threatened litigation, claim, assessment or governmental investigation which
might be required thereby.
In the event that Maxwell, in good faith, reasonably believes that such
conditions are continuing after such 90-day period, it may, with the consent
of the Holders of a majority of the Registrable Securities subject (or to be
subject) to the Registration Statement, which consent shall not be unreasonably
withheld, extend such 90-day period for an additional 30 days. Any further
delay shall require the consent of the Holders of all such shares.
3. Registration Procedures. In connection with Maxwell's registration
obligations pursuant to Section 2 hereof, Maxwell will use its diligent
efforts to effect such registration to permit the sale of the Registrable
Securities covered thereby in accordance with the intended method or methods
of disposition thereof, and pursuant thereto Maxwell will:
(a) prepare and file with the SEC a Registration Statement with
respect to such Registrable Securities and use its diligent efforts to cause
such Registration Statement to become effective; provided that, before filing
any Registration Statement or Prospectus or any amendments or supplements
thereto, Maxwell will use reasonable efforts to furnish to the Shareholder
Representatives and their counsel, copies of all such documents proposed to
be filed at least five days prior thereto, and Maxwell will not file any such
Registration Statement or amendment thereto or any Prospectus or any
supplement thereto to which any such Holder shall reasonably object within such
five day period; provided, further, that Maxwell will not name or otherwise
provide any information with respect to any Holder in any Registration
Statement or Prospectus without the express written consent of such Holder,
unless required to do so by the Securities Act and the rules and regulations
thereunder;
(b) prepare and file with the SEC such amendments, post-effective
amendments and supplements to the Registration Statement and the Prospectus
as may be necessary to comply with the provisions of the Securities Act and
the rules and regulations thereunder with respect to the disposition of all
securities covered by such Registration Statement;
(c) promptly notify the selling Holders (i) when the Prospectus or
any Prospectus supplement or post-effective amendment has been filed, and,
with respect to the Registration Statement or any post-effective amendment,
when the same has become effective, (ii) of any request by the SEC for
amendments or supplements to the
<PAGE>
Registration Statement or the Prospectus or for additional information, (iii)
of the issuance by the SEC of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose, (iv) of the receipt by Maxwell of any notification with respect to
the suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose and (v) of the happening of any event which makes any statement made
in the Registration Statement, the Prospectus or any document incorporated
therein by reference untrue or which requires the making of any changes in
the Registration Statement, the Prospectus or any document incorporated
therein by reference in order to make the statements therein not misleading in
light of the circumstances then existing;
(d) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement at the
earliest possible moment;
(e) furnish to each selling Holder, without charge, at least one
conformed copy of the Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those
incorporated by reference);
(f) deliver to each selling Holder, without charge, such reasonable
number of conformed copies of the Registration Statement (and any post-
effective amendment thereto) and such number of copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
(and any documents incorporated by reference therein) as such Holder may
reasonably request; Maxwell consents to the use of the Prospectus or any
amendment or supplement thereto by each of the selling Holders in connection
with the offer and sale of the Registrable Securities covered by the
Prospectus or any amendment or supplement thereto;
(g) prior to any offering of Registrable Securities covered by a
Registration Statement, register or qualify or cooperate with the selling
Holders in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue sky
laws of such jurisdictions as any such selling Holder reasonably requests,
and use its reasonable efforts to keep each such registration or qualification
effective, including through new filings, or amendments or renewals, during the
period such Registration Statement is required to be kept effective pursuant
to the terms of this Agreement; and do any and all other acts or things
necessary or advisable to enable the disposition in all such jurisdictions
reasonably requested by the Holders of the Registrable Securities covered by
such Registration Statement, provided that under no circumstances shall
Maxwell be required in connection therewith or as a condition thereof to
qualify to do business or to file a general consent to service of process in
any such states or jurisdictions;
(h) cooperate with the selling Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities
to be sold, free of any and all restrictive legends, such certificates to be in
such denominations and registered in such names as such Holders may request;
(i) upon the occurrence of any event contemplated by Section 4(c)(v)
above, prepare a supplement or post-effective amendment to the Registration
Statement or the Prospectus or any document incorporated therein by reference
or file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, the Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; (j) make generally available to the
holders of Maxwell's outstanding securities earnings statements satisfying
the provisions of Section 11(a) of the Securities Act, no later than 60 days
after the end of any 12 month period (or 90 days, if such period is a fiscal
year) (i) commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in a firm or best efforts underwritten
offering, or, if not sold to underwriters in such an offering, (ii) beginning
with the first month of Maxwell's first fiscal quarter commencing after the
effective date of the Registration Statement, which statements shall cover
said 12 month period;
(k) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by each Registration
Statement from and after a date not later than the effective date of such
Registration Statement;
<PAGE>
(l) use its best efforts to cause all Registrable Securities covered
by each Registration Statement to be listed, subject to notice of issuance,
prior to the date of the first sale of such Registrable Securities pursuant to
such Registration Statement, on each securities exchange on which the Maxwell
Common Stock is then listed, and admitted to trading on the Nasdaq National
Market, if the Maxwell Common Stock is then admitted to trading on the Nasdaq
National Market;
(m) enter into such agreements (including underwriting agreements in
customary form containing, among other things, reasonable and customary
indemnities) and take such other actions as a majority of the Holders shall
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities; and
(n) cooperate with the selling Holders and the managing underwriter
or underwriters in their marketing efforts with respect to the sale of the
Registrable Securities, including participation by Maxwell management in
"road show" presentations.
Each Holder agrees that, upon receipt of any notice from Maxwell of the
happening of any event of the kind described in Section 4(c)(v) hereof, such
Holder will forthwith discontinue disposition of Registrable Securities under
the Prospectus related to the applicable Registration Statement until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 4(i) hereof, or until it is advised in writing by
Maxwell that the use of the Prospectus may be resumed. It shall be a
condition precedent to the obligations of Maxwell to take any action pursuant
to this Section 4 with respect to the Registrable Securities of any selling
Holder that such Holder shall furnish to Maxwell such information regarding
itself and the Registrable Securities held by it as shall be required by the
Securities Act to effect the registration of such Holder's Registrable
Securities.
4. Registration Expenses. All expenses incident to any registration to
be effected hereunder and incident to Maxwell's performance of or compliance
with this Agreement, including without limitation all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws,
printing expenses, messenger and delivery expenses, National Association of
Securities Dealers, Inc., stock exchange and qualification fees, fees and
disbursements of Maxwell's counsel and of independent certified public
accountants of Maxwell (including the expenses of any special audit required
by or incident to such performance), the fees of one counsel and one
accountant representing the Holders in such offering, expenses of any
underwriters that are customarily requested in similar circumstances by such
underwriters (excluding discounts, commissions or fees of underwriters,
selling brokers, dealer managers or similar securities industry professionals
relating to the distribution of the Registrable Securities, which will be
borne by the Holders), all such expenses being herein called "Registration
Expenses," will be borne by Maxwell. Maxwell will also pay its internal
expenses, the expense of any annual audit and the fees and expenses of any
person retained by Maxwell.
5. Holders' Covenants. Each Holder covenants and agrees:
(a) To sell all Registrable Securities only through a broker-dealer
approved by Maxwell in writing; and
(b) During the time the Registration Statement filed pursuant to
Section 2(b) or 2(c) is effective, no Holder shall sell more than 10% of his
or her Registrable Securities on any one trading day, or more than 25% of his
or her Registrable Securities in any five consecutive trading days. Each
Holder understands and agrees these manner of sale requirements are entered
into for the benefit of Maxwell and the other Holders.
6. Indemnification.
(a) Indemnification by Maxwell. Maxwell agrees to indemnify and
hold harmless each Holder of Registrable Securities, its officers, directors,
partners and employees and each person who controls such Holder (within the
meaning of Section 15 of the Securities Act) from and against any and all
losses, claims, damages and liabilities (including any investigation, legal
or other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claim asserted)
(collectively, "Damages") to which such
<PAGE>
Holder may become subject under the Securities Act, the Exchange Act or other
federal or state securities law or regulation, at common law or otherwise,
insofar as such Damages arise out of or are based upon (i) any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus or preliminary prospectus or any amendment or supplement
thereto, (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading and (iii)
any violation or alleged violation by Maxwell of the Securities Act, the
Exchange Act or any state securities or blue sky laws in connection with the
Registration Statement, Prospectus or preliminary prospectus or any amendment
or supplement thereto, provided that Maxwell will not be liable to any Holder
to the extent that such Damages arise from or are based upon any untrue
statement or omission (x) based upon written information furnished to Maxwell
by any Holder expressly for the inclusion in such Registration Statement, (y)
made in any preliminary prospectus if any Holder failed to deliver a copy of
the Prospectus with or prior to the delivery of written confirmation of the
sale by such Holder to the party asserting the claim underlying such Damages
and such Prospectus would have corrected such untrue statement or omission
and (z) made in any Prospectus if such untrue statement or omission was
corrected in an amendment or supplement to such Prospectus and such Holder
failed to deliver such amendment or supplement prior to or concurrently with
the sale of Registrable Securities to the party asserting the claim
underlying such Damages.
(b) Indemnification by Holder of Registrable Securities. Each Holder
of Registrable Securities whose Registrable Securities are sold under a
Prospectus which is a part of a Registration Statement agrees to indemnify
and hold harmless Maxwell, its directors and each officer who signed such
Registration Statement and each person who controls Maxwell (within the
meaning of Section 15 of the Securities Act), and each other Holder of
Registrable Securities whose Registrable Securities are sold under the
Prospectus which is a part of such Registration Statement (and such Holder's
officers, directors and employees and each person who controls such Holder
within the meaning of Section 15 of the Securities Act), under the same
circumstances as the foregoing indemnity from Maxwell to each Holder of
Registrable Securities to the extent that such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue statement of
a material fact or omission of a material fact that was made in the Prospectus,
the Registration Statement, or any amendment or supplement thereto, in reliance
upon and in conformity with information relating to such Holder furnished in
writing to Maxwell by such Holder expressly for use therein, provided that in
no event shall the aggregate liability of any selling Holder of Registrable
Securities exceed the amount of the net proceeds received by such Holder
upon the sale of the Registrable Securities giving rise to such indemnification
obligation. Maxwell and the selling Holders shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, to the
same extent as customarily furnished by such persons in similar circumstances.
(c) Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification and (ii)
permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party; provided, however,
that any person entitled to indemnification hereunder shall have the right to
employ separate counsel and to participate in the defense of such claim, but
the fees and expenses of such counsel shall be at the expense of such person
and not of the indemnifying party unless (A) the indemnifying party has agreed
to pay such fees or expenses, (B) the indemnifying party shall have failed to
assume the defense of such claim and employ counsel reasonably satisfactory
to such person or (C) in the reasonable judgment of such person and the
indemnifying party, based upon written advice of their respective counsel, a
conflict of interest may exist between such person and the indemnifying party
with respect to such claims (in which case, if the person notifies the
indemnifying party in writing that such person elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying party shall
not have the right to assume the defense of such claim on behalf of such
person). If such defense is not assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement
made without its consent (but such consent will not be unreasonably withheld).
No indemnified party will be required to consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by all claimants or plaintiffs to such indemnified party
of a release from all liability in respect to such claim or litigation. Any
indemnifying party who is not entitled to, or elects not to, assume the
defense of a claim will not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such indemnifying party with
respect to such claim. As used in this Section 6(c), the terms "indemnifying
party", "indemnified party" and other terms of similar
<PAGE>
import are intended to include only Maxwell (and its officers, directors and
control persons as set forth above) on the one hand, and the Holders (and their
officers, directors, partners, employees, attorneys and control persons as set
forth above) on the other hand, as applicable.
(d) Contribution. If for any reason the foregoing indemnity is
unavailable, then the indemnifying party shall contribute to the amount paid
or payable by the indemnified party as a result of such losses, claims,
damages, liabilities or expenses (i) in such proportion as is appropriate to
reflect the relative benefits received by the indemnifying party on the one
hand and the indemnified party on the other, or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law or provides a lesser sum
to the indemnified party than the amount hereinafter calculated, in such
proportion as is appropriate to reflect not only the relative benefits received
by the indemnifying party on the one hand and the indemnified party on the
other but also the relative fault of the indemnifying party and the indemnified
party as well as any other relevant equitable considerations. Notwithstanding
the foregoing, no Holder shall be required to contribute any amount in excess
of the amount such Holder would have been required to pay to an indemnified
party if the indemnity under Section 6(b) hereof was available. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The obligation of any
person to contribute pursuant to this Section 6(d) shall be several and not
joint.
(e) Timing of Payments. An indemnifying party shall make payments of
all amounts required to be made pursuant to the foregoing provisions of this
Section 6 to or for the account of the indemnified party from time to time
promptly upon receipt of bills or invoices relating thereto or when otherwise
due or payable.
(f) Survival. The indemnity and contribution agreements contained in
this Section 6 shall remain in full force and effect, regardless of any
investigation made by or on behalf of a participating Holder, its officers,
directors, partners, attorneys, agents or any person, if any, who controls
such Holder as aforesaid, and shall survive the transfer of such Registrable
Securities by such Holder.
7. Preparation; Reasonable Investigation. In connection with the
preparation and filing of a Registration Statement pursuant to the terms of
this Agreement:
(a) Maxwell shall, with respect to a Registration Statement filed
pursuant to Section 2, give the Holders of such Registrable Securities so
registered, their underwriters, if any, and their respective counsel and
accountants the opportunity to participate in the preparation of such
Registration Statement (other than reports and proxy statements incorporated
therein by reference and lawfully and properly filed with the SEC) and each
Prospectus included therein or filed with the SEC, and each amendment thereof
or supplement thereto; and
(b) Maxwell shall give the Holders of such Registrable Securities so
registered, their underwriters, if any, and their respective counsel and
accountants such reasonable access to its books and records and such
opportunities to discuss the business of Maxwell with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of such Holders or such underwriters, to
conduct a reasonable investigation within the meaning of Section 11(b)(3) of
the Securities Act.
8. Rule 144. Maxwell covenants that it will use commercially reasonable
efforts to file, on a timely basis, the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder, and it will take such further action as any
Holder may reasonably request (including, without limitation, compliance with
the current public information requirements of Rule 144(c) and Rule 144A), all
to the extent required from time to time to enable such Holder to sell
Registrable Securities without registration under the Securities Act within
the limitation of the conditions provided by Rule 144, or any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any Holder,
Maxwell will deliver to such holder a written statement verifying that it has
complied with such information and requirements.
9. Specific Performance. Each Holder, in addition to being entitled to
exercise all rights provided herein or granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
<PAGE>
Agreement. Maxwell agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
10. Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by United States first-class
mail, postage prepaid, sent by facsimile or delivered personally by hand or
nationally recognized courier addressed (a) if to a Holder, as indicated on the
list of Holders attached hereto as Schedule A or B, or at such other address as
such Holder or permitted assignee shall have furnished to Maxwell in writing,
(b) if to the Shareholder Representatives, to the address set forth in the
Merger Agreement or (c) if to Maxwell, at 9275 Sky Park Court, San Diego, CA
92123; Attention: Gary J. Davidson and Donald M. Roberts; Facsimile
(619) 277-6754, or such other address provided to the Holders in writing. All
such notices and other written communications shall be effective on the date of
mailing, facsimile transfer or delivery.
11. Successors and Assigns: Assignment of Rights. The rights and benefits
of a Holder hereunder may not be assigned to a transferee or assignee, without
the consent of Maxwell; provided, however, that, no later than the 10th day
prior to the filing of the Registration Statement under Section 2 hereof, the
rights and benefits of a Holder hereunder may be transferred in connection with
a transfer or assignment of any Registrable Securities held by such Holder
(i) by gift to immediate family members of such Holder, or trusts or other
entities for the sole benefit thereof, or (ii) by gift to any entity in which
such Holder, his or her immediate family members, or trusts or other entities
for the sole benefit thereof beneficially own all of the voting securities;
provided, however, that in each case, the transferee executes an instrument
pursuant to which the transferee agrees to be bound by the terms and conditions
hereof as a Holder, and such other documents related to the Merger Agreement as
Maxwell or its counsel may reasonably require, after which, such transferee
shall be deemed a "Holder" hereunder. Any transfer of Registrable Securities,
and rights hereunder, shall be subject to compliance with applicable securities
laws and the restrictions contained in the Investment Letter executed by each
Holder pursuant to the Merger Agreement.
12. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
13. Entire Agreement; Amendment; Waiver. This Agreement, the Merger
Agreement and the other agreements contemplated thereby constitute the full and
entire understanding and agreement among the parties with regard to the
subjects hereof and thereof. Without limiting the foregoing, the rights of
the Holders to registration pursuant to the terms of this Agreement shall be
subject to the limitations on resale contained in the Investment Letter (as
defined in the Merger Agreement). Neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated, except by a written
instrument signed by Maxwell and the holders of at least 51% of the Registrable
Securities and any such amendment, waiver, discharge or termination shall be
binding upon all the parties hereto, but in no event shall the obligation of
any party hereto be materially increased, except upon the written consent of
such party.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be original, and all of which together shall
constitute one instrument.
15. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware without giving effect to
principles of conflicts of laws thereof.
16. No Third Party Beneficiaries. The covenants and agreements set forth
herein are for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns and such covenants and agreements shall not
be construed as conferring, and are not intended to confer, any rights or
benefits upon any other persons.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MAXWELL: MAXWELL TECHNOLOGIES, INC.
By: /s/ Kenneth F. Potashner
Name: Kenneth F. Potashner
Title: President and Chief Executive
Officer
SHAREHOLDER
REPRESENTATIVES:
/s/ Kenneth Maki
Name: Kenneth Maki
/s/ Stanley Weinberger, Jr.
Name: Stanley Weinberger, Jr.
<PAGE>
SCHEDULE A
SCHEDULE OF AFFILIATED HOLDERS
Number of Shares of Maxwell
Common Stock Issued Pursuant
Holder's Name/Address/Telecopier No. to the Merger Agreement
- ------------------------------------ ----------------------------
Kenneth A. Hagstrom 23,443
Stanley J. Weinberger, Jr. 23,443
Brian P. King 7,511
Steve Johnson 7,437
Kenneth C. Maki 23,905
Linda R. Gonier 28,636
<PAGE>
SCHEDULE B
SCHEDULE OF NON-AFFILIATED HOLDERS
Number of Shares of Maxwell
Common Stock Issued Pursuant
Holder's Name/Address/Telecopier No. to the Merger Agreement
- ------------------------------------ ----------------------------
Ronald M. Ahlman & Karen Ann
Ahlman, JTWROS 1,730
Todd Beecroft 1,730
Glenn E. Bergstrom & Patricia
M. Bergstrom, JTWROS 3,461
Harold G. Bergstrom & Nellie
M. Bergstrom, JTWROS 3,461
Irwin Brodsky or Edna Brodsky,
Trustee or the Successor
Trustee of the Irwin and Edna
Brodsky Family Trust Dated 11-10-97 1,211
Kuo Chang 1,730
Chin-Shia Chiu 865
Charles H. Cornell 865
M. Eliason 77
Robert R. Etem 432
Victor G. Etem 432
Genevieve I. Feltl & Raymond M.
Feltl as Trustees of the
Genevieve I. Feltl Revocable Trust 865
Raymond M. Feltl & Genevieve I.
Feltl, Trustees of the Raymond M.
Feltl Revocable Trust 865
Donald F. Hagen 1,730
Carl R. Hanson 1,730
Harold N. Hansen 865
Albert P. Hum 519
Judith A. Kielty 1,509
Ronald J. Kielty 519
Ronald J. & Judith A. Kielty 865
Laureen Kreuziger 1,730
Robert & Dorothy Lang 1,730
Clifford S. Lozinski 519
D. McCarron 461
Kimiko Mika 1,730
Eric Molsen & Ella Gates Molsen,
JTWROS 519
Virginia E. Muehlberg (Etem) 432
Arthur Sund Nelson 1,730
Myron Schnickels 1,730
Pete Stromme 153
Ralph Torborg 1,730
Yung-Yu Ike Wang 1,730
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement (the "Agreement") is entered into as
of March 5, 1998 by and among Maxwell Technologies, Inc., a Delaware
corporation ("Maxwell"), and the shareholders of Phoenix Power Systems, Inc., a
California corporation (the "Company"), listed on Schedule A attached hereto
(each, a "Holder" and collectively, the "Holders").
R E C I T A L S
---------------
A. Maxwell and the Holders are parties to a Stock Purchase Agreement
dated as of March 1, 1998 (the "Purchase Agreement"), pursuant to which
Maxwell will acquire all of the outstanding capital stock of the Company;
and
B. Pursuant to the Purchase Agreement, the shareholders of the
Company will receive shares of the common stock, $.10 par value, of Maxwell
("Maxwell Common Stock") in exchange for their securities of the Company; and
C. This Agreement is the Registration Rights Agreement referred to
in Section 12.1 of the Purchase Agreement and, pursuant thereto, is entered
into by the parties as a condition to the consummation of the transactions
contemplated by the Purchase Agreement.
A G R E E M E N T
-----------------
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Form S-3" shall mean such form under the Securities Act as in effect
on the date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by Maxwell with
the SEC.
"Holder" shall mean a holder of Registrable Securities. On the date
hereof, the Holders are those persons listed on Schedule A hereto.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement and by all other amendments
and supplements to the prospectus, including post-effective amendments and
all material incorporated by reference in such Prospectus.
"Register," "registered" and "registration" shall mean and refer to
a registration effected by preparing and filing a Registration Statement and
taking all other actions that are necessary or appropriate in connection
therewith, and the declaration or ordering of effectiveness of such
Registration Statement by the SEC.
"Registration Expenses" shall have the meaning set forth in Section 4.
<PAGE>
"Registrable Securities" shall mean the shares of Maxwell Common
Stock (i) issued pursuant to the Purchase Agreement, and (ii) issued as a
dividend or other distribution with respect to or in exchange for or in
replacement of the shares referenced in (i) above; provided, however, that
Registrable Securities shall not include (i) any shares of Maxwell Common
Stock that have previously been sold to the public, (ii) have been sold in a
private transaction (excluding the issuance of the Maxwell Common Stock
pursuant to the Purchase Agreement) or (iii) are eligible for sale to the
public under Rule 144.
"Registration Statement" shall mean any registration statement of
Maxwell in compliance with the Securities Act that covers Registrable
Securities pursuant to the provisions of this Agreement, including, without
limitation, the Prospectus, all amendments and supplements to such Registration
Statement, including all post-effective amendments, all exhibits and all
material incorporated by reference in such Registration Statement.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act
or any similar successor rule, as the same shall be in effect from time to
time.
"Rule 415" shall mean Rule 415 promulgated under the Securities Act,
or any similar successor rule, as the same shall be in effect from time to
time.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"SEC" shall mean the Securities and Exchange Commission.
"Shareholder Representative" shall mean Hassan Yarpezeshkan having
received the power of attorney of those Holders party to the Purchase
Agreement, and the power of attorney of all other Holders electing to so
appoint him.
"Shelf Registration Statement" shall have the meaning set forth in
Section 2(a) hereof.
2. Form S-3 Registration.
(a) As promptly as practicable following the Effective Date (as
defined in the Purchase Agreement), Maxwell shall use its reasonable best
efforts to file a Registration Statement on Form S-3 providing for the sale
pursuant to Rule 415 (a "Shelf Registration Statement") by all Holders
requesting registration, and/or any similar rule that may be adopted by the
SEC, of the Registrable Securities. After the Registration Statement has
become effective, Maxwell will use its reasonable best efforts to keep such
Registration Statement continuously effective for 60 days.
(b) Maxwell intends to file a Registration Statement in June 1998
and October 1998. If Maxwell does file a Registration Statement at either
such time, Maxwell shall give written notice of the proposed filing to each
Holder as soon as practicable (but in no event less than 10 days before the
anticipated filing date), and such notice shall offer the Holders the
opportunity to register such number of shares of Registrable Securities as
each such Holder may request in writing within 5 days of receipt of such
notice. If Maxwell does file a Registration Statement in June 1998 or October
1998, Maxwell will use its reasonable best efforts to keep each such
Registration Statement continuously effective for 60 days.
(c) As promptly as practicable after the issuance of Maxwell Common
Stock as Contingent Consideration (as defined in the Purchase Agreement),
Maxwell shall use its reasonable best efforts to file a Shelf Registration
Statement by all Holders requesting registration of the Registrable Securities
(including shares issued at Closing (as defined in the Purchase Agreement)
and not yet sold). After the Registration Statement has become effective,
Maxwell will use its reasonable best efforts to keep such Registration
Statement continuously effective for 60 days.
<PAGE>
(d) For the period from the date the initial shares are first
registered and tradeable until July 15, 1998, Maxwell hereby guarantees a floor
price of the Maxwell Common Stock issued at Closing to the Holders equal to
85.72% of the price established for Closing, subject to an overall maximum
obligation on such guarantee of $300,000. An amount equal to the difference
between the gross proceeds to Holder and the Average Price (at Closing), if
within the limits set forth in this Section, shall be paid in cash no later
than July 31, 1998. This provision shall not apply in respect of any
Contingent earnout shares, nor shall Holders be entitled to the right to
receive any cash if shares are not sold. If the registration statement is
not effective on or prior to June 15, 1998, the July 15 date shall be
extended by each day the registration statement is not effective.
(e) No Holder shall have the right to register securities under this
Agreement unless such Holder provides and/or confirms in writing prior to or
after the filing of the Registration Statement such information (including,
without limitation, information as to the number of Registrable Securities
that such Holder has sold pursuant to any such Registration Statement from
time to time) as Maxwell requests in connection with such Registration
Statement.
(f) Notwithstanding the foregoing, for a period not to exceed 90
days in any 12-month period, Maxwell shall not be obligated to prepare and
file, or be prevented from delaying or abandoning, the Registration Statement
required hereunder if Maxwell, in its good faith judgment, reasonably believes
that the filing or maintenance of such Registration Statement would require the
disclosure of material non-public information regarding Maxwell, or would have
a material and adverse effect on the market for Maxwell Common Stock, and,
accordingly, that the filing thereof, at the time requested, or the offering of
Maxwell Common Stock pursuant thereto, would materially and adversely affect
(A) a pending or scheduled public offering or private placement of securities
of Maxwell or any of its subsidiaries, (B) an acquisition, merger,
consolidation or similar transaction by or of Maxwell or any of its
subsidiaries, (C) preexisting and continuing negotiations, discussions or
pending proposals with respect to any of the foregoing transactions or with
respect to material strategic partnerships, or other material agreements, or
(D) the financial condition of Maxwell in view of the disclosure of any
pending or threatened litigation, claim, assessment or governmental
investigation which might be required thereby.
In the event that Maxwell, in good faith, reasonably believes that such
conditions are continuing after such 90-day period, it may, with the consent of
the Holders of a majority of the Registrable Securities subject (or to be
subject) to the Registration Statement, which consent shall not be unreasonably
withheld, extend such 90-day period for an additional 30 days. Any further
delay shall require the consent of the Holders of all such shares.
3. Registration Procedures. In connection with Maxwell's registration
obligations pursuant to Section 2 hereof, Maxwell will use its diligent
efforts to effect such registration to permit the sale of the Registrable
Securities covered thereby in accordance with the intended method or methods of
disposition thereof, and pursuant thereto Maxwell will:
(a) prepare and file with the SEC a Registration Statement with
respect to such Registrable Securities and use its diligent efforts to cause
such Registration Statement to become effective; provided that, before filing
any Registration Statement or Prospectus or any amendments or supplements
thereto, Maxwell will use reasonable efforts to furnish to the Shareholder
Representative and his counsel, copies of all such documents proposed to be
filed at least five days prior thereto, and Maxwell will not file any such
Registration Statement or amendment thereto or any Prospectus or any supplement
thereto to which any such Holder shall reasonably object within such five day
period; provided, further, that Maxwell will not name or otherwise provide any
information with respect to any Holder in any Registration Statement or
Prospectus without the express written consent of such Holder, unless required
to do so by the Securities Act and the rules and regulations thereunder;
(b) prepare and file with the SEC such amendments, post-effective
amendments and supplements to the Registration Statement and the Prospectus
as may be necessary to comply with the provisions of the Securities Act and
the rules and regulations thereunder with respect to the disposition of all
securities covered by such
<PAGE>
Registration Statement;
(c) promptly notify the selling Holders (i) when the Prospectus or
any Prospectus supplement or post-effective amendment has been filed, and,
with respect to the Registration Statement or any post-effective amendment,
when the same has become effective, (ii) of any request by the SEC for
amendments or supplements to the Registration Statement or the Prospectus or
for additional information, (iii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the initiation
of any proceedings for that purpose, (iv) of the receipt by Maxwell of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose and (v) of the happening of any
event which makes any statement made in the Registration Statement, the
Prospectus or any document incorporated therein by reference untrue or which
requires the making of any changes in the Registration Statement, the
Prospectus or any document incorporated therein by reference in order to make
the statements therein not misleading in light of the circumstances then
existing;
(d) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement at the
earliest possible moment;
(e) furnish to each selling Holder, without charge, at least one
conformed copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those
incorporated by reference);
(f) deliver to each selling Holder, without charge, such reasonable
number of conformed copies of the Registration Statement (and any post-
effective amendment thereto) and such number of copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
(and any documents incorporated by reference therein) as such Holder may
reasonably request; Maxwell consents to the use of the Prospectus or any
amendment or supplement thereto by each of the selling Holders in connection
with the offer and sale of the Registrable Securities covered by the Prospectus
or any amendment or supplement thereto;
(g) prior to any offering of Registrable Securities covered by a
Registration Statement, register or qualify or cooperate with the selling
Holders in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions as any such selling Holder reasonably requests, and use
its reasonable efforts to keep each such registration or qualification
effective, including through new filings, or amendments or renewals, during
the period such Registration Statement is required to be kept effective
pursuant to the terms of this Agreement; and do any and all other acts or
things necessary or advisable to enable the disposition in all such
jurisdictions reasonably requested by the Holders of the Registrable
Securities covered by such Registration Statement, provided that under
no circumstances shall Maxwell be required in connection therewith or as a
condition thereof to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions;
(h) cooperate with the selling Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold, free of any and all restrictive legends, such certificates to be in
such denominations and registered in such names as such Holders may request;
(i) upon the occurrence of any event contemplated by Section 3(c)(v)
above, prepare a supplement or post-effective amendment to the Registration
Statement or the Prospectus or any document incorporated therein by reference
or file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, the Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(j) make generally available to the holders of Maxwell's outstanding
securities earnings statements satisfying the provisions of Section 11(a) of
the Securities Act, no later than 60 days after the end of any 12 month period
(or 90 days, if such period is a fiscal year) (i) commencing at the end of any
fiscal quarter in which
<PAGE>
Registrable Securities are sold to underwriters in a firm or best efforts
underwritten offering, or, if not sold to underwriters in such an offering,
(ii) beginning with the first month of Maxwell's first fiscal quarter
commencing after the effective date of the Registration Statement, which
statements shall cover said 12 month period;
(k) provide and cause to be maintained a transfer agent and registrar
for all Registrable Securities covered by each Registration Statement from and
after a date not later than the effective date of such Registration Statement;
(l) use its best efforts to cause all Registrable Securities covered
by each Registration Statement to be listed, subject to notice of issuance,
prior to the date of the first sale of such Registrable Securities pursuant to
such Registration Statement, on each securities exchange on which the Maxwell
Common Stock is then listed, and admitted to trading on the Nasdaq National
Market, if the Maxwell Common Stock is then admitted to trading on the Nasdaq
National Market;
(m) enter into such agreements (including underwriting agreements in
customary form containing, among other things, reasonable and customary
indemnities) and take such other actions as a majority of the Holders shall
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities; and
(n) cooperate with the selling Holders and the managing underwriter
or underwriters in their marketing efforts with respect to the sale of the
Registrable Securities, including participation by Maxwell management in "road
show" presentations.
Each Holder agrees that, upon receipt of any notice from Maxwell of the
happening of any event of the kind described in Section 3(c)(v) hereof, such
Holder will forthwith discontinue disposition of Registrable Securities under
the Prospectus related to the applicable Registration Statement until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(i) hereof, or until it is advised in writing by
Maxwell that the use of the Prospectus may be resumed. It shall be a
condition precedent to the obligations of Maxwell to take any action pursuant
to this Section 3 with respect to the Registrable Securities of any selling
Holder that such Holder shall furnish to Maxwell such information regarding
itself and the Registrable Securities held by it as shall be required by the
Securities Act to effect the registration of such Holder's Registrable
Securities.
4. Registration Expenses. All expenses incident to any registration to
be effected hereunder and incident to Maxwell's performance of or compliance
with this Agreement, including without limitation all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws,
printing expenses, messenger and delivery expenses, National Association of
Securities Dealers, Inc., stock exchange and qualification fees, fees and
disbursements of Maxwell's counsel and of independent certified public
accountants of Maxwell (including the expenses of any special audit required
by or incident to such performance), expenses of any underwriters that are
customarily requested in similar circumstances by such underwriters (excluding
discounts, commissions or fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals relating to the
distribution of the Registrable Securities, which will be borne by the
Holders), all such expenses being herein called "Registration Expenses," will
be borne by Maxwell. Maxwell will also pay its internal expenses, the expense
of any annual audit and the fees and expenses of any person retained by
Maxwell.
5. Holders' Covenants. Each Holder covenants and agrees:
(a) To sell all Registrable Securities only through a broker-dealer
approved by Maxwell in writing; and
(b) During the time Registration Statement filed pursuant to Section
2(a) is effective, no Holder shall sell more than an aggregate of up to 10,000
shares of his or her Registrable Securities on any one trading day, or more
than the greater of 10,000 shares or [20]% of his or her then current
Registrable Securities in any one month. Each Holder understands and agrees
these manner of sale requirements are entered into for the benefit of Maxwell
and
<PAGE>
the other Holders.
6. Indemnification.
(a) Indemnification by Maxwell. Maxwell agrees to indemnify and
hold harmless each Holder of Registrable Securities, its officers, directors,
partners and employees and each person who controls such Holder (within the
meaning of Section 15 of the Securities Act) from and against any and all
losses, claims, damages and liabilities (including any investigation, legal or
other expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted)
(collectively, "Damages") to which such Holder may become subject under the
Securities Act, the Exchange Act or other federal or state securities law or
regulation, at common law or otherwise, insofar as such Damages arise out of
or are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or
preliminary prospectus or any amendment or supplement thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and (iii) any
violation or alleged violation by Maxwell of the Securities Act, the Exchange
Act or any state securities or blue sky laws in connection with the
Registration Statement, Prospectus or preliminary prospectus or any amendment
or supplement thereto, provided that Maxwell will not be liable to any Holder
to the extent that such Damages arise from or are based upon any untrue
statement or omission (x) based upon written information furnished to Maxwell
by any Holder expressly for the inclusion in such Registration Statement,
(y) made in any preliminary prospectus if any Holder failed to deliver a copy
of the Prospectus with or prior to the delivery of written confirmation of
the sale by such Holder to the party asserting the claim underlying such
Damages and such Prospectus would have corrected such untrue statement or
omission and (z) made in any Prospectus if such untrue statement or omission
was corrected in an amendment or supplement to such Prospectus and such Holder
failed to deliver such amendment or supplement prior to or concurrently with
the sale of Registrable Securities to the party asserting the claim underlying
such Damages.
(b) Indemnification by Holder of Registrable Securities. Each Holder
of Registrable Securities whose Registrable Securities are sold under a
Prospectus which is a part of a Registration Statement agrees to indemnify and
hold harmless Maxwell, its directors and each officer who signed such
Registration Statement and each person who controls Maxwell (within the meaning
of Section 15 of the Securities Act), and each other Holder of Registrable
Securities whose Registrable Securities are sold under the Prospectus which is
a part of such Registration Statement (and such Holder's officers, directors
and employees and each person who controls such Holder within the meaning of
Section 15 of the Securities Act), under the same circumstances as the
foregoing indemnity from Maxwell to each Holder of Registrable Securities to
the extent that such losses, claims, damages, liabilities or actions arise out
of or are based upon any untrue statement of a material fact or omission of a
material fact that was made in the Prospectus, the Registration Statement, or
any amendment or supplement thereto, in reliance upon and in conformity with
information relating to such Holder furnished in writing to Maxwell by such
Holder expressly for use therein, provided that in no event shall the aggregate
liability of any selling Holder of Registrable Securities exceed the amount of
the net proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation. Maxwell and the
selling Holders shall be entitled to receive indemnities from underwriters,
selling brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as customarily furnished
by such persons in similar circumstances.
(c) Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification and (ii)
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party; provided, however, that any
person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such person and not of
the indemnifying party unless (A) the indemnifying party has agreed to pay such
fees or expenses, (B) the indemnifying party shall have failed to assume the
defense of such claim and employ counsel reasonably satisfactory to such
person or (C) in the reasonable judgment of such person and the indemnifying
party, based upon written advice of their respective counsel, a conflict of
interest may exist between such person and the
<PAGE>
indemnifying party with respect to such claims (in which case, if the person
notifies the indemnifying party in writing that such person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of
such person). If such defense is not assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld). No
indemnified party will be required to consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by all claimants or plaintiffs to such indemnified party of a release
from all liability in respect to such claim or litigation. Any indemnifying
party who is not entitled to, or elects not to, assume the defense of a claim
will not be obligated to pay the fees and expenses of more than one counsel for
all parties indemnified by such indemnifying party with respect to such claim.
As used in this Section 6(c), the terms "indemnifying party", "indemnified
party" and other terms of similar import are intended to include only Maxwell
(and its officers, directors and control persons as set forth above) on the one
hand, and the Holders (and their officers, directors, partners, employees,
attorneys and control persons as set forth above) on the other hand, as
applicable.
(d) Contribution. If for any reason the foregoing indemnity is
unavailable, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party on the one hand and
the indemnified party on the other, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law or provides a lesser sum
to the indemnified party than the amount hereinafter calculated, in such
proportion as is appropriate to reflect not only the relative benefits received
by the indemnifying party on the one hand and the indemnified party on the
other but also the relative fault of the indemnifying party and the indemnified
party as well as any other relevant equitable considerations. Notwithstanding
the foregoing, no Holder shall be required to contribute any amount in excess
of the amount such Holder would have been required to pay to an indemnified
party if the indemnity under Section 6(b) hereof was available. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The obligation of any person
to contribute pursuant to this Section 6(d) shall be several and not joint.
(e) Timing of Payments. An indemnifying party shall make payments
of all amounts required to be made pursuant to the foregoing provisions of
this Section 6 to or for the account of the indemnified party from time to
time promptly upon receipt of bills or invoices relating thereto or when
otherwise due or payable.
(f) Survival. The indemnity and contribution agreements contained
in this Section 6 shall remain in full force and effect, regardless of any
investigation made by or on behalf of a participating Holder, its officers,
directors, partners, attorneys, agents or any person, if any, who controls such
Holder as aforesaid, and shall survive the transfer of such Registrable
Securities by such Holder.
7. Preparation; Reasonable Investigation. In connection with the
preparation and filing of a Registration Statement pursuant to the terms of
this Agreement:
(a) Maxwell shall, with respect to a Registration Statement filed
pursuant to Section 2, give the Holders of such Registrable Securities so
registered, their underwriters, if any, and their respective counsel and
accountants the opportunity to participate in the preparation of such
Registration Statement (other than reports and proxy statements incorporated
therein by reference and lawfully and properly filed with the SEC) and each
Prospectus included therein or filed with the SEC, and each amendment thereof
or supplement thereto; and
(b) Maxwell shall give the Holders of such Registrable Securities so
registered, their underwriters, if any, and their respective counsel and
accountants such reasonable access to its books and records and such
opportunities to discuss the business of Maxwell with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of such Holders or such underwriters, to
conduct a reasonable investigation within the meaning of Section 11(b)(3) of
the Securities Act.
<PAGE>
8. Rule 144. Maxwell covenants that it will use commercially reasonable
efforts to file, on a timely basis, the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder, and it will take such further action as any
Holder may reasonably request (including, without limitation, compliance with
the current public information requirements of Rule 144(c) and Rule 144A), all
to the extent required from time to time to enable such Holder to sell
Registrable Securities without registration under the Securities Act within
the limitation of the conditions provided by Rule 144, or any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any Holder,
Maxwell will deliver to such holder a written statement verifying that it has
complied with such information and requirements.
9. Specific Performance. Each Holder, in addition to being entitled to
exercise all rights provided herein or granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. Maxwell agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
10. Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by United States first-class
mail, postage prepaid, sent by facsimile or delivered personally by hand or
nationally recognized courier addressed (a) if to a Holder, as indicated on
the list of Holders attached hereto as Schedule A or B, or at such other
address as such Holder or permitted assignee shall have furnished to Maxwell
in writing, (b) if to the Shareholder Representative, to the address set forth
in the Purchase Agreement or (c) if to Maxwell, at 9275 Sky Park Court, San
Diego, CA 92123; Attention: Gary J. Davidson and Donald M. Roberts; Facsimile
(619) 277-6754, or such other address provided to the Holders in writing. All
such notices and other written communications shall be effective on the date of
mailing, facsimile transfer or delivery.
11. Successors and Assigns: Assignment of Rights. The rights and benefits
of a Holder hereunder may not be assigned to a transferee or assignee, without
the consent of Maxwell; provided, however, that, no later than the 10th day
prior to the filing of the Registration Statement under Section 2 hereof, the
rights and benefits of a Holder hereunder may be transferred in connection with
a transfer or assignment of any Registrable Securities held by such Holder (i)
by gift to immediate family members of such Holder, or trusts or other entities
for the sole benefit thereof, or (ii) by gift to any entity in which such
Holder, his or her immediate family members, or trusts or other entities for
the sole benefit thereof beneficially own all of the voting securities;
provided, however, that in each case, the transferee executes an instrument
pursuant to which the transferee agrees to be bound by the terms and conditions
hereof as a Holder, and such other documents related to the Purchase Agreement
as Maxwell or its counsel may reasonably require, after which, such transferee
shall be deemed a "Holder" hereunder. Any transfer of Registrable Securities,
and rights hereunder, shall be subject to compliance with applicable securities
laws and the restrictions contained in the Investment Letter executed by each
Holder pursuant to the Purchase Agreement.
12. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
13. Attorney's Fees and Costs. If any legal action is brought for the
enforcement of this Agreement, or because of an alleged dispute, breach,
default or misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party shall be entitled to recover its
reasonable attorneys' fees and other costs incurred in such proceeding, in
addition to any other relief to which it may be entitled.
14. Entire Agreement; Amendment; Waiver. This Agreement, the Purchase
Agreement and the other agreements contemplated thereby constitute the full and
entire understanding and agreement among the parties with regard to the
subjects hereof and thereof. Without limiting the foregoing, the rights of
the Holders to registration pursuant to the terms of this Agreement shall be
subject to the limitations on resale contained in the Investment Letter (as
defined in the Purchase Agreement). Neither this Agreement nor any term hereof
may be amended, waived,
<PAGE>
discharged or terminated, except by a written instrument signed by Maxwell and
the Shareholder Representative and any such amendment, waiver, discharge or
termination shall be binding upon all the parties hereto, but in no event
shall the obligation of any party hereto be materially increased, except upon
the written consent of such party.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be original, and all of which together shall
constitute one instrument.
16. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware without giving effect to
principles of conflicts of laws thereof.
17. No Third Party Beneficiaries. The covenants and agreements set forth
herein are for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns and such covenants and agreements shall not
be construed as conferring, and are not intended to confer, any rights or
benefits upon any other persons.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MAXWELL: MAXWELL TECHNOLOGIES, INC.
By: /s/ Gary J. Davidson
---------------------------
Name: Gary J. Davidson
Title: Vice President - Finance
and Administration and
Chief Financial Officer
SHAREHOLDER
REPRESENTATIVE:
/s/ Hassan Yarpezeshkan
---------------------------
Name: Hassan Yarpezeshkan
<PAGE>
SCHEDULE A
----------
SCHEDULE OF HOLDERS
Jahangir Gaviri
Hamid Nekouie
Hassan Yarpezeshkan
EXHIBIT 5.1
RIORDAN & McKINZIE
A Professional Law Corporation
300 S. GRAND AVENUE, 29TH FLOOR
LOS ANGELES, CALIFORNIA 90071-3155
April 9, 1998
13-364-001
Maxwell Technologies, Inc.
9275 Sky Park Court
San Diego, California 92123
Ladies and Gentlemen:
We have acted as counsel to Maxwell Technologies, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "1933 Act"), of 121,259 authorized and
previously issued shares of the Common Stock (the "Shares"), $.10 par value
per share, of the Company to be sold by certain selling stockholders. This
opinion is delivered to you in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the 1933 Act in connection with the
Registration Statement on Form S-3, including all pre-effective and post-
effective amendments thereto (the "Registration Statement"), for the
aforementioned sale, filed with the Securities and Exchange Commission (the
"Commission") under the 1933 Act.
In rendering the opinion set forth herein, we have made such investigations
of fact and law, and examined such documents and instruments, or copies
thereof established to our satisfaction to be true and correct copies thereof,
as we have deemed necessary under the circumstances.
Based upon the foregoing and such other examination of law and fact as we
have deemed necessary, and in reliance thereon, we are of the opinion that,
the Shares are duly authorized, validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Prospectus which is a part of the Registration
Statement. In giving such consent, we do not thereby admit that we are in
the category of persons whose consent is required under Section 7 of the 1933
Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/Riordan & McKinzie
Riordan & McKinzie
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Maxwell
Technologies, Inc. for the registration of 121,259 shares of its common stock
and to the incorporation by reference therein of our report dated September
12, 1997, with respect to the consolidated financial statements and schedule
of Maxwell Technologies, Inc. incorporated by reference in its Annual Report
(Form 10-K) for the year ended July 31, 1997, filed with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
San Diego, California
April 9, 1998
