STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Pledge Agreement") is made as of
February 2, 1999, between Kenneth F. Potashner as pledgor ("Pledgor"), and
Maxwell Technologies, Inc., a Delaware corporation, as pledgee ("Pledgee").
R E C I T A L S:
A. Pledgor is the beneficial owner of Fifty Thousand (50,000) shares
(the "Shares") of common stock, $0.10 par value per share of Pledgee.
B. Pursuant to the terms of that certain Secured Promissory Note in
the amount of $2,000,000 of even date herewith delivered by Pledgor to Pledgee
(the "Note"), Pledgor has agreed to make payments of principal and interest to
Pledgee as provided in the Note.
C. Pursuant to the terms of Note, Pledgor is required to execute
this Pledge Agreement to secure payment in full of all obligations under the
Note, whether for principal, interest, fees, expenses or otherwise and to ensure
compliance with the terms and conditions of this Pledge Agreement.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and conditions contained herein, the parties hereto agree as follows:
1. GRANT OF SECURITY INTEREST IN THE SHARES. Pledgor hereby grants
to Pledgee a security interest in the Shares, pledges and hypothecates the
Shares to Pledgee, and deposits the certificates evidencing the Shares (the
"Certificates") with Pledgee as collateral security for the payment by Pledgor
of all obligations existing under the Note, whether for principal, interest,
fees, expenses or otherwise, and the satisfaction of all obligations of Pledgor
under this Pledge Agreement. The Certificates, together with one or more stock
assignments duly executed in blank with signatures appropriately guaranteed or
witnessed, are being delivered herewith to Pledgee, to be retained by Pledgee as
the pledgeholder for the Shares.
2. REPRESENTATION AND WARRANTY OF PLEDGOR. Pledgor represents and
warrants to Pledgee that the Shares are free and clear of all claims, mortgages,
pledges, liens and other encumbrances of any nature whatsoever, except (a) the
liens and restrictions set forth herein and
in the Note and (b) any restrictions upon sale and distribution imposed by
the Securities Act of 1933, as amended (the "Act"), and applicable state
securities laws.
3. VOTING OF SHARES. So long as there shall exist no Event of
Default (as hereinafter defined), Pledgor shall be entitled to exercise, as
Pledgor deems proper but in a manner not inconsistent with the terms hereof,
Pledgor's rights to voting power with respect to the Shares. Pledgee, and not
Pledgor, shall be entitled to vote the Shares at any time that there exists an
Event of Default.
4. DIVIDENDS. So long as there shall exist no Event of Default,
Pledgor shall be entitled to receive any dividend (ordinary or extraordinary,
whether paid in cash, stock or property) or other distribution with respect to
the Shares. If there exists an Event of Default, such dividend or other
distribution shall be delivered to Pledgee to be held as additional collateral
security under this Pledge Agreement.
5. PLEDGEE'S DUTIES. So long as Pledgee exercises reasonable care
with respect to the Shares in its possession, Pledgee shall have no liability
for any loss or damage to such Shares, and in no event shall Pledgee have
liability for any diminution in value of the Shares occasioned by economic or
market conditions or events. Pledgee shall be deemed to have exercised
reasonable care within the meaning of the preceding sentence if the Shares in
its possession are accorded treatment substantially equal to that which Pledgee
accords its own property, it being understood that Pledgee shall not have any
responsibility under this Pledge Agreement for (a) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relating to the Shares, whether or not Pledgee has or is deemed to have
knowledge of such matters, or (b) taking any necessary steps to preserve rights
against any person or entity with respect to the Shares.
6. TRANSFERS TO PERMITTED TRANSFEREES. In the event of a purchase
by Pledgee of any or all of the Shares pursuant to Section 3 of the Purchase
Agreement, such Shares shall be released from this Pledge Agreement. Pledgor
hereby authorizes and directs Pledgee, upon receipt by Pledgor of payment
pursuant to Section 3 of the Purchase Agreement, to complete and execute the
stock assignment or stock assignments delivered herewith to effectuate such
Transfer.
Pledgor shall not sell, assign, transfer, hypothecate, encumber or
otherwise dispose of (collectively, a "Transfer") any Shares (except as set
forth in the next sentence), unless Pledgor has made payment to Pledgee of all
unpaid obligations existing under the Note (whether or not then due and
payable), whether for principal, interest, fees, expenses or otherwise and all
unsatisfied obligations of Pledgor under this Pledge Agreement. In the event of
a transfer to which Pledgee gives its written consent (a "Permitted Transfer"),
the Pledgor authorizes the Pledgee to cause the certificate or certificates
evidencing the Shares to be reissued in the name of the transferee (the
"Permitted Transferee"); provided, however, that (a) the Shares shall continue
to be subject to this Agreement and the Permitted Transferee(s) shall execute an
undertaking agreeing to be bound by this Agreement, (b) the reissued certificate
or certificates shall continue
2.
to be held by the Pledgee pursuant hereto, and (c) the Permitted
Transferee(s) shall execute and deliver to the Pledgee stock assignments in
blank with respect to the Shares. Upon receipt by Pledgee of the payment as
required by this paragraph, the Shares shall be released from this Pledge
Agreement.
7. SALE OF COLLATERAL. Upon the occurrence of any Event of Default,
Pledgee shall have all the rights and remedies of a secured party under the
applicable Uniform Commercial Code and also may, without notice, except as
specified below, at its option, sell all or any part of the Shares, for cash,
note or other property upon credit for future delivery or upon such other terms
as Pledgee may deem commercially reasonable. Upon such sale, Pledgee, unless
prohibited by a provision of any applicable statute, may purchase all or any
part of the Shares being sold, free from and discharged of all trusts, claims,
rights of redemption and equities of Pledgor. If the proceeds of any sale of
the Shares shall be insufficient to pay all amounts due under the Notes and
satisfy the obligations of Pledgor under this Pledge Agreement, including
collection costs and expenses of such sale, Pledgor shall remain obligated and
liable for any deficiency with respect thereto. If, at any time when Pledgee
shall determine to exercise its rights to sell all or any part of the Shares
pursuant to this SECTION 7, such Shares, or the part thereof to be sold, shall
not be effectively registered under the Act as then in effect or any similar
statute then in force, subject to the provisions of SECTION 9 hereof, Pledgee,
in its sole and absolute discretion, is hereby expressly authorized to sell such
Shares, or any part thereof, by private sale in such manner and under such
circumstances as Pledgee may deem necessary or advisable in order that such sale
may be effectuated legally without such registration or the Pledgee may
undertake, in its sole and absolute discretion, to register the Shares under the
Act in order to sell such Shares in a public offering, the costs of such
registration to be for the account of the Pledgor. Without limiting the
generality of the foregoing, Pledgee, in its sole and absolute discretion, may
approach and negotiate with a restricted number of potential purchasers to
effectuate such sale or restrict such sale to a purchaser or purchasers who
shall represent and agree that such purchaser or purchasers are purchasing for
its or their own account, for investment only, and not with a view to the
distribution or sale of such Shares or any part thereof. Any sale conducted in
the manner described in the foregoing sentence shall be deemed to be a sale
conducted in a commercially reasonable manner within the meaning of the
applicable Uniform Commercial Code, and Pledgor hereby consents and agrees that
Pledgee shall incur no responsibility or liability for selling all or any part
of the Shares at a price which is not unreasonably low, notwithstanding the
possibility that a substantially higher price might be realized if the sale were
public. Pledgee shall not be obligated to make any sale of the Shares
regardless of notice of sale having been given. Pledgee may adjourn any public
or private sale from time to time by announcement at the time and place fixed
therefor, and any such sale may, without further notice, be made at the time and
place to which it was so adjourned.
8. REDEMPTION OF COLLATERAL. Notwithstanding any other provision of
this Pledge Agreement, upon the occurrence of an Event of Default, Pledgee shall
give Pledgor written notice of the time and place of any public sale or of the
time on or after which any private sale or other Transfer is to be made at least
five (5) days before the date fixed for any public sale or before the day on or
after which any private sale or other Transfer is to be made. Pledgor
3.
agrees that, to the extent notice of sale shall be required by law, such five
(5) days' notice shall constitute reasonable notification. This notice shall
also specify the aggregate outstanding monetary obligations of the Pledgor to
Pledgee at the date of such notice (the "Total Obligation"). At any time
during such five-day period, Pledgor shall have the right to redeem the
Shares by the payment by certified or bank cashier's check of an amount equal
to the Total Obligation.
9. EVENTS OF DEFAULT. At the option of Pledgee, the principal
balance of the Note and all accrued and unpaid interest thereon, and all other
obligations of Pledgor to Pledgee thereunder and hereunder, shall become and be
immediately due and payable, without notice of default, presentment or demand
for payment, protest or notice of nonpayment or dishonor, or other notices or
demands of any kind (all of which are hereby expressly waived by Pledgor), upon
the occurrence of any of the events set forth below (individually, an "Event of
Default"):
(a) Pledgor shall cease to be an employee of the Company or any of
its subsidiaries;
(b) Pledgor shall fail to make complete payment of any installment
of accrued interest under the Note on the date such installment of accrued
interest is due, after being given notice and an opportunity of at least five
(5) days to cure such nonpayment;
(c) Pledgor shall fail to make complete payment of principal when
due under the Note; or
(d) Pledgor shall commit a breach of or default under this Pledge
Agreement.
10. TERMINATION. This Pledge Agreement shall terminate only upon
payment to Pledgee of all unpaid obligations existing under the Note, whether
for principal, interest, fees, expenses or otherwise and all unsatisfied
obligations of Pledgor under this Pledge Agreement. Upon termination of this
Pledge Agreement, Pledgor shall be entitled to the return of the Certificates
then held by Pledgee and any other collateral security then held by Pledgee
pursuant to SECTION 4 of this Pledge Agreement.
11. CUMULATION OF REMEDIES; WAIVER OF RIGHTS. The remedies provided
herein in favor of Pledgee shall not be deemed exclusive but shall be cumulative
and shall be in addition to all of the remedies in favor of Pledgee existing at
law or in equity. Nothing in this Pledge Agreement shall require Pledgee to
proceed against or exhaust its remedies against the Shares before proceeding
against Pledgor or executing against any other security or collateral securing
performance of Pledgor's obligations to Pledgee under the Note or this Pledge
Agreement. No delay on the part of Pledgee in exercising any of its options,
powers or rights, or the partial or single exercise thereof, shall constitute a
waiver thereof.
4.
12. EXECUTION OF ENDORSEMENTS, ASSIGNMENTS, ETC. Upon the occurrence
of an Event of Default, Pledgee shall have the right for and in the name, place
and stead of Pledgor to execute endorsements, assignments or other instruments
of conveyance or transfer with respect to all or any of the Shares and any other
shares of the capital stock of Pledgee or other property which is held by
Pledgee as collateral security pursuant to this Pledge Agreement.
13. MISCELLANEOUS.
(a) FURTHER ASSURANCES; CHANGES IN CAPITALIZATION. Each party
hereto agrees to perform any further acts and execute and deliver any documents
which may be reasonably necessary to carry out the intent of this Pledge
Agreement. The provisions of this Pledge Agreement shall apply to any and all
stock or other securities of the Pledgee or any successor or assign of the
Pledgee, which may be issued in respect of, in exchange for or in substitution
of, the Shares by reason of any split, reverse split, recapitalization,
reclassification, combination, merger, consolidation or otherwise, and such
Shares or other securities shall be encompassed within the term "Shares" for
purposes of this Pledge Agreement and the Pledgee shall have a security interest
in all such securities on the same terms set forth in this Pledge Agreement.
(b) NOTICE. Except as otherwise provided herein, all notices,
requests, demands and other communications under this Agreement shall be in
writing, and if by telegram or telecopy, shall be deemed to have been validly
served, given or delivered when sent, or if by personal delivery or messenger or
courier service, or by registered or certified mail, shall be deemed to have
been validly served, given or delivered upon actual delivery, at the following
addresses, telephone and facsimile numbers (or such other address(es), telephone
and facsimile numbers a party may designate for itself by like notice):
If to Pledgee:
Maxwell Technologies, Inc.
9275 Sky Park Court
San Diego, California 92123
Attention: Donald M. Roberts, Esq.
Telephone: (619) 279-5100
Telecopy: (619) 277-6754
If to Pledgor:
Kenneth F. Potashner
_________________________
_________________________
5.
(c) AMENDMENTS. This Pledge Agreement may be amended only by a
written agreement executed by the parties hereto.
(d) GOVERNING LAW. This Pledge Agreement shall be governed by
and construed in accordance with the laws of the State of California.
(e) DISPUTES. In the event of any dispute between the parties
arising out of this Pledge Agreement, the prevailing party shall be entitled to
recover from the nonprevailing party the reasonable expenses of the prevailing
party including, without limitation, reasonable attorneys' fees.
(f) ENTIRE AGREEMENT. This Pledge Agreement constitutes the
entire agreement and understanding among the parties pertaining to the subject
matter hereof and supersedes any and all prior agreements, whether written or
oral, relating hereto.
(g) SUCCESSORS AND ASSIGNS. Pledgee shall have the right to
assign with absolute discretion any or all of its rights and/or obligations
and/or delegate any or all of its duties under this Agreement to any of its
affiliates, successors and/or assigns, including, without limitation (i) to
any of its banks or lending institutions as collateral security, or (ii) to
any entity succeeding the Pledgee by merger, consolidation or acquisition of
all or substantially all of the Pledgee's assets, and this Agreement shall
inure to the benefit of, and be binding upon, such respective affiliates,
successors and/or assigns of Pledgee in the same manner and to the same
extent as if such affiliates, successors and/or assigns were original parties
hereto. Unless specifically provided herein to the contrary, Pledgor may not
assign any or all of its rights and/or obligations and/or delegate any or all
of its duties under this Pledge Agreement without the prior written consent
of Pledgee. Upon an assignment of any or all of Pledgor's rights and/or
obligations and/or a delegation of any or all of its duties under this Pledge
Agreement in accordance with the terms of this Pledge Agreement, this Pledge
Agreement shall inure to the benefit of, and be binding upon, Pledgor's
respective affiliates, successors and/or assigns in the same manner and to
the same extent as if such affiliates, successors and/or assigns were
original parties hereto.
(h) HEADINGS. Introductory headings at the beginning of each
section and subsection of this Pledge Agreement are solely for the convenience
of the parties and shall not be deemed to be a limitation upon or description of
the contents of any such section and subsection of this Pledge Agreement.
(i) COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed an original and both of which, when
taken together, shall constitute one and the same Pledge Agreement.
6.
IN WITNESS WHEREOF, the parties hereto have duly executed this Pledge
Agreement as of the day and year first above written.
PLEDGEE:
MAXWELL TECHNOLOGIES, INC.
a Delaware corporation
By: /s/ Donald M. Roberts
Name: Donald M. Roberts
Title: VP & General Counsel
PLEDGOR:
/s/ Kenneth F. Potashner
Kenneth F. Potashner
7.