Exhibit 10.1

MAXWELL TECHNOLOGIES, INC.

TRANSITION AGREEMENT

This Transition Agreement (the “Agreement”) is made as of this 23 day of July,
2007, by and between MAXWELL TECHNOLOGIES, INC., a Delaware corporation (the
“Company”), and RICHARD BALANSON (“Executive”). The parties agree with each
other as follows:

1. Transition. Executive’s full-time employment shall terminate as of the close
of business on July 23, 2007 (the “Transition Date”). Executive further agrees
to resign from the Board of Directors of the Company (the “Board”), effective as
of the Transition Date.

2. Future Position.

(i) Transition Period. Executive shall be employed by the Company on a part-time
basis for the period commencing on the Transition Date and ending on
December 31, 2011 (the “Transition Period”). Subject to Section 5, the Company
shall pay Executive a salary during the Transition Period. Such salary shall be
paid in accordance with the Company’s standard payroll procedures, and the
amount of such salary shall be as set forth in the table below (subject to
applicable withholding taxes). During the Transition Period, Executive shall not
be entitled to participate in the Company’s employee benefit plans, except as
provided in Paragraph (ii) below. During the Transition Period, Executive shall
have the title of Senior Technical Adviser and shall provide such services to
the Company as the Board or the Company’s Chief Executive Officer may reasonably
request. Executive may be required to commit to such services up to the number
of hours per week set forth in the table below. In the event of Executive’s
death prior to the completion of the Transition Period, the remaining payments
that would otherwise have been made to Executive under this Paragraph (i) shall
instead be paid on the same schedule to Executive’s designated beneficiary or
beneficiaries or, if none, to his estate.

 

Period

   Annual Salary    Maximum Hours per Week

Prior to October 1, 2007

   $ 450,000    40

October 1 through December 31, 2007

   $ 450,000    8

After December 31, 2007

   $ 175,000    8

(ii) Payments in Lieu of Benefits. In lieu of all group insurance coverage and
participation in other employee benefit plans, the Company shall pay Executive
$15,300 per year in accordance with the Company’s standard payroll procedures
(subject to applicable withholding taxes).

(iii) Options. The Transition Period shall be treated as employment with the
Company for purposes of determining the expiration date of all options to
purchase shares of the Company’s Common Stock held by Executive, as provided in
the Stock Option Agreements evidencing such options.

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(iv) Restricted Shares. The Transition Period shall be treated as employment
with the Company for purposes of determining the vested portion of all awards of
restricted shares of the Company’s Common Stock held by Executive, as provided
in the Restricted Stock Agreements applicable to such shares.

(v) Savings Clause. Payments under this Section 2 shall in no event commence
prior to the earliest date permitted by Section 409A(a)(2) of the Code. If the
commencement of such payments must be delayed, as determined by the Company,
then the deferred installments shall be paid in a lump sum on the earliest
practicable date permitted by Section 409A(a)(2) of the Code.

(vi) Exclusive Rights. After the Transition Date, Executive shall have no claim
against the Company in respect of his employment for damages or otherwise,
except in respect of the payments and other provisions specified in this
Transition Agreement.

(vii) Cooperation. Executive shall cooperate with the Company, as reasonably
requested by the Company, to effect a transition of Executive’s responsibilities
and to ensure that the Company is aware of all matters being handled by
Executive.

3. Resolution of Disputes. The parties recognize that claims, controversies and
disputes may arise out of this Agreement with respect to Executive’s employment,
termination of employment, or other terms of this Agreement or based on common
law or statute, either during the existence of the employment relationship or
afterwards. The parties agree that should any such claim, controversy or dispute
arise, the parties will use their best efforts to resolve such dispute
informally, between them. In the event that any such claim, controversy or
dispute between Company and Executive cannot be resolved within thirty (30) days
after either party first gives notice in writing that any such claim,
controversy or dispute exists, either party may then refer the matter to
arbitration before JAMS/ENDISPUTE pursuant to its rules for resolution of
employment disputes.

The parties hereby agree that referral to arbitration shall be the sole recourse
of either party under this Agreement with respect to any such claim, controversy
or dispute and that the decision of the arbitrator shall be binding on the
parties in accordance with applicable law; provided, however, that nothing in
this Section 3 shall be construed as precluding either party from bringing an
action for injunctive relief or other equitable relief. The parties shall keep
confidential from third parties (other than the arbitrator) the existence of
each such claim, controversy or dispute and the determination thereof, unless
otherwise required by law. Except as provided in the following two sentences,
each decision rendered by the arbitrator shall be final and conclusive and may
be entered in any court having jurisdiction thereof as a basis of judgment and
of the issuance of execution for its collection. In rendering his or her
decision, the arbitrator shall be bound to follow California or Federal law, as
applicable, in the same manner as would a court of law. Any claim that the
arbitrator made a mistake or error in determining or applying the appropriate
law shall be subject to judicial review.

 

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The parties further agree that the party prevailing in the arbitration shall be
entitled to its reasonable attorney’s fees and that the arbitration itself shall
take place within the County of San Diego, California, and that the internal
laws of the State of California shall apply.

4. No Solicitation. Executive agrees that after the Transition Date, he shall
not hire, solicit or otherwise cause to be solicited for employment elsewhere,
either directly or indirectly, any employee, officer or director of the Company
or any individual who chooses not to join the Company, provided that Executive
participated actively in the recruiting of such individual. This Section 4 shall
apply until the close of the Transition Period.

5. Noncompetition. Executive agrees that the Company may immediately discontinue
all payments under Section 2 if he (a) directly or indirectly owns, manages,
operates or controls, or participates in the ownership, management, operation or
control of, or is connected with or has any interest in, as a shareholder,
director, officer, employee, agent, consultant, partner, creditor or otherwise,
any business or activity which is competitive with any business or activity
engaged in by the Company or any of its subsidiaries or affiliates anywhere
within (i) the State of California, (ii) any other state of the United States
and the District of Columbia in which the Company engages in or has engaged in
business during the past five years or (iii) any other country in which the
Company engages in or has engaged in business during the past five years or
(b) permits any entity or other person under his control to engage in any
activity prohibited under clause (a). This Section 5 shall apply until the close
of the Transition Period.

6. Entire Agreement. This Agreement constitutes the entire Agreement between the
parties and contains all agreements between them with the exception of the 1995
Stock Option Plan and the 2005 Omnibus Equity Incentive Plan (and the Stock
Option and Restricted Stock Agreements issued to Executive thereunder), the
other employee benefit and welfare programs maintained by the Company, and the
Invention and Secrecy Agreement dated August 1, 2003, and signed by Executive,
which are supplementary to this Agreement and are each deemed to be incorporated
herein by reference. Each party to this Agreement acknowledges that no
representations, inducements, promises or agreements, orally or otherwise, have
been made by any party, or anyone acting on behalf of any party, which are not
embodied in this Agreement, and that no agreement, statement or promise not
contained in this Agreement shall be valid or binding. Except for the other
agreements, plans and programs referred to in this Section 6, this Agreement
also supersedes any and all other agreements and contracts, whether verbal or in
writing, relating to the subject matter hereof, including (without limitation)
the Employment Agreement dated August 1, 2003.

7. Amendment. Except as otherwise specifically provided herein, the terms and
conditions of this Agreement may be amended at any time by mutual agreement of
the parties; provided that before any amendment shall be valid or effective, it
shall have been reduced to writing and signed by the Chairman of the Board on
behalf of the Company and by Executive.

 

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8. Invalidity. The invalidity or unenforceability of any particular provision of
this Agreement shall not affect its other provisions, and this contract shall be
construed in all respects as if such invalid or unenforceable provision has been
omitted.

9. Binding Nature. Executive’s rights and obligations under this Agreement shall
not be assignable, transferable or delegable by assignment or otherwise, and any
purported assignment, transfer or delegation thereof shall be void. This
Agreement shall be binding upon and shall inure to the benefit of any successor
of the Company and Executive, and any such successor shall be deemed substituted
for the Company or Executive under the terms of this Agreement. The term
“successor” as used in this Section 9 shall include any person, firm,
corporation or other business entity that at any time, by merger, purchase or
otherwise, acquires or gains control over all or substantially all of the assets
or business of the Company.

10. Assistance in Litigation. Executive shall, during and after termination of
employment, upon reasonable notice, furnish such information and proper
assistance to the Company as may reasonably be required by the Company in
connection with any litigation in which it or any of its subsidiaries or
affiliates is or may become a party. Except where Executive is a named defendant
and except during the Transition Period, Executive shall be paid a reasonable
hourly fee to be mutually agreed upon.

11. Indemnification. To the fullest extent permissible by applicable law, the
Company shall indemnify and hold harmless Executive for any liability incurred
by reason of any act or omission performed by Executive while acting in good
faith on behalf of the Company and within the scope of the authority of
Executive.

12. No Duty to Mitigate. Executive shall not be required to mitigate the amount
of any payment contemplated by this Agreement (whether by seeking new employment
or in any other manner), nor shall any such payment be reduced by any earnings
that Executive may receive from any other source not paid for by the Company.

13. Choice of Law. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of California, other
than their choice-of-law provisions, except that Sections 4 and 5 hereof shall
be governed by, and interpreted and construed in accordance with, the internal
laws (without giving effect to choice of law principles) of the jurisdiction in
which either of said Sections is being sought to be enforced.

14. Notices. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and, if given by telegram, telecopy or telex, shall be deemed to have been
validly served, given or delivered when sent, if given by personal delivery,
shall be deemed to have been validly served, given or delivered upon actual
delivery and, if mailed, shall be deemed to have been validly served, given or
delivered three business days after deposit in the United States mail, as
registered or certified mail, with proper postage prepaid and addressed to the
party or parties to be notified, at the following addresses:

If to Executive to:

Richard Balanson

 

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If to the Company to:

Maxwell Technologies, Inc.

9244 Balboa Avenue

San Diego, California 92123

Attn: Chairman of the Board

Telephone: (858) 503-3300

Fax: (858) 503-3301

15. Injunctive Relief. The Company and Executive agree that a breach of any term
of this Agreement by Executive would cause irreparable damage to the Company and
that, in the event of such breach, the Company shall have, in addition to any
and all remedies of law, the right to any injunction, specific performance and
other equitable relief to prevent or to redress the violation of Executive’s
duties or responsibilities hereunder.

16. Release. As a condition to his entitlement to receive the benefits as set
forth in this Agreement, Executive agrees to execute and deliver to the Company
a release in the form attached hereto as Exhibit A. Such release shall be
delivered by Executive on the Transition Date and shall become effective as set
forth therein.

17. Counterparts. This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument, and
either of the parties to this Agreement may execute this Agreement by signing
any such counterpart.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

“Company” MAXWELL TECHNOLOGIES, INC. By:   /s/ Edward B. Caudill “Executive” /s/
Richard Balanson Richard Balanson

 

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Exhibit A

GENERAL RELEASE OF ALL CLAIMS

This General Release of All Claims (“Release”) is made by and between RICHARD
BALANSON (“Executive”) on the one hand and Maxwell Technologies, Inc. (the
“Company”) on the other. (Collectively, Executive and the Company shall be
referred to as the “Parties.”)

1. Executive is an employee of the Company. Executive’s last day of full-time
employment with the Company is July 23, 2007 (the “Transition Date”). The
Parties desire to resolve any and all differences related to Executive’s
full-time employment with the Company and/or the cessation of that employment.
Additionally, the Parties desire to resolve any known or unknown claims between
them, neither Party admitting any liability or fault. For these reasons, the
Parties have entered into this Release.

2. All vacation accrual and other fringe benefits of Executive cease on the
Transition Date.

3. If Executive enters into this Release and does not revoke this Release within
the time period provided below in Section 15, the Company will provide Executive
with the payments and other benefits described in the Transition Agreement dated
July 23, 2007, between the Parties.

4. In consideration of and in return for the promises and covenants undertaken
herein by the Company, including the payments Executive will receive under
Section 3 above, and for other good and valuable consideration, receipt of which
is hereby acknowledged, Executive does hereby acknowledge full and complete
satisfaction of and does hereby release, absolve and discharge the Company and
the Company’s parents, subsidiaries, affiliates, related companies and business
concerns, past and present, and each of them, as well as each of their partners,
trustees, directors, officers, agents, attorneys, servants and employees, past
and present, and each of them (hereinafter collectively referred to as the
“Releasees”) from any and all claims, demands, liens, agreements, contracts,
covenants, actions, suits, causes of action, grievances, severance payments,
obligations, debts, expenses, damages, judgments, orders and liabilities of
whatever kind or nature in state or federal law, equity or otherwise, whether
known or unknown to Executive that Executive now owns or holds or has at any
time owned or held as against Releasees, or any of them, including specifically
but not exclusively and without limiting the generality of the foregoing, any
and all claims, demands, grievances, agreements, obligations and causes of
action, known or unknown, suspected or unsuspected by Executive (a) arising out
of Executive’s employment with the Company or the ending of that employment or
(b) arising out of or in any way connected with any claim, loss, damage or
injury whatever, known or unknown, suspected or unsuspected, resulting from any
act or omission by or on the part of the Releasees, or any of them, committed or
omitted on or before the Transition Date. Also without limiting the generality
of the foregoing, Executive specifically releases the Releasees from any claim
for attorneys’ fees and/or costs of suit. EXECUTIVE SPECIFICALLY AGREES AND
ACKNOWLEDGES EXECUTIVE IS WAIVING ANY

 

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RIGHT TO RECOVERY BASED ON STATE OR FEDERAL AGE, SEX, PREGNANCY, RACE, COLOR,
NATIONAL ORIGIN, MARITAL STATUS, RELIGION, VETERAN STATUS, DISABILITY, SEXUAL
ORIENTATION, MEDICAL CONDITION, OR OTHER ANTI-DISCRIMINATION LAWS, INCLUDING,
WITHOUT LIMITATION, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE AGE
DISCRIMINATION IN EMPLOYMENT ACT, THE AMERICANS WITH DISABILITIES ACT AND THE
CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, OR BASED ON THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, ALL AS AMENDED, WHETHER SUCH CLAIM BE BASED UPON AN
ACTION FILED BY EXECUTIVE OR BY A GOVERNMENTAL AGENCY. However, this Release
covers only those claims that arose prior to the execution of this Release and
only those claims that may be waived by applicable law. Execution of this
Release does not bar any claim that arises hereafter, including (without
limitation) a claim for breach of this Release or the Transition Agreement.
Execution of this Release also does not bar any claim to indemnification under
Section 2802 of the California Labor Code.

5. It is the intention of Executive in executing this Release that it shall be
effective as a bar to each and every claim, demand, grievance and cause of
action hereinabove specified. In furtherance of this intention, Executive hereby
expressly waives any and all rights and benefits conferred upon Executive by the
provisions of Section 1542 of the California Civil Code and expressly consents
that this Release shall be given full force and effect according to each and all
of its express terms and provisions, including those relating to unknown and
unsuspected claims, demands and causes of action, if any, as well as those
relating to any other claims, demands and causes of action hereinabove
specified. Section 1542 provides:

“A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.”

Having been so apprised, Executive nevertheless hereby voluntarily elects to and
does waive the rights described in Civil Code Section 1542 and elects to assume
all risks for claims that now exist in Executive’s favor, known or unknown, that
are released under this Release.

6. The Company expressly denies any violation of any federal, state or local
statute, ordinance, rule, regulation, policy, order or other law. The Company
also expressly denies any liability to Executive. This Release is the compromise
of disputed claims and nothing contained herein is to be construed as an
admission of liability on the part of the parties hereby released, or any of
them, by whom liability is expressly denied. Accordingly, while this Release
resolves all issues regarding the Company referenced herein, it does not
constitute an adjudication or finding on the merits of any allegations and it is
not, and shall not be construed as, an admission by the Company of any violation
of federal, state or local statute, ordinance, rule, regulation, policy, order
or other law, or of any liability. Moreover, neither this Release nor anything
in it shall be construed to be or shall be admissible in any proceeding as
evidence of or an admission by the Company of any violation of any federal,
state or local statute, ordinance, rule, regulation, policy, order or other law,
or of any liability. This Release may be introduced, however, in any proceeding
to enforce this Release or the Transition Agreement. Such introduction shall be
pursuant to an order protecting its confidentiality.

 

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7. Executive agrees the terms and conditions of this Release are confidential
and shall not be disclosed, discussed or revealed by Executive to any other
person or entity, excepting Executive’s spouse, tax advisor or attorney, all of
whom are also obligated to maintain the confidentiality of this Release.

8. Each Party expressly agrees that such Party will not in any way disparage or
otherwise cause to be published or disseminated any negative statements,
remarks, comments or information regarding the other Party.

9. This Release shall be construed in accordance with, and be deemed governed
by, the laws of the State of California.

10. If any provision of this Release or application thereof is held invalid, the
invalidity shall not affect other provisions or applications of this Release
that can be given effect without the invalid provision or application. To this
end, the provisions of this Release are severable.

11. The Parties hereto acknowledge each has read this Release, that each fully
understands its rights, privileges and duties under this Release, and that each
enters into this Release freely and voluntarily. Each Party further acknowledges
each has had the opportunity to consult with an attorney of its choice to
explain the terms of this Release and the consequences of signing it.

12. The undersigned each acknowledge and represent that no promise or
representation not contained in this Release has been made to them and
acknowledge and represent that this Release contains the entire understanding
between the Parties and contains all terms and conditions pertaining to the
compromise and settlement of the subjects referenced herein. The undersigned
further acknowledge that the terms of this Release are contractual and not a
mere recital.

13. Executive acknowledges Executive may hereafter discover facts different
from, or in addition to, those Executive now knows or believes to be true with
respect to the claims herein released and agrees the release herein shall be and
remain in effect in all respects as a complete and general release as to all
matters released herein, notwithstanding any such different or additional facts.

14. The Company hereby advises Executive that this Release includes a waiver of
any rights that the Executive may have under the Age Discrimination in
Employment Act. Executive is advised to discuss this Release with his attorney
before executing it. Executive acknowledges that the Company has provided
Executive at least twenty-one (21) days within which to review and consider this
Release before signing it. Should Executive decide not to use the full
twenty-one days, then Executive knowingly and voluntarily waives any claim that
Executive was not in fact given that period of time or did not use the entire
twenty-one days to consult an attorney and/or consider this Release.

15. Within three calendar days of signing and dating this Release, Executive
shall deliver the executed original of this Release to Tim Hart, Maxwell
Technologies, Inc., 9244 Balboa Avenue, San Diego, California 92123. However,
Executive acknowledges that

 

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Executive may revoke this Release for up to seven (7) calendar days following
Executive’s execution of this Release and that it shall not become effective or
enforceable until the revocation period has expired. Executive acknowledges that
such revocation must be in writing addressed to Tim Hart, Maxwell Technologies,
Inc., 9244 Balboa Avenue, San Diego, California 92123, and received not later
than midnight on the seventh day following execution of this Release by
Executive. If Executive revokes this Release under this Section 15, this Release
shall not be effective or enforceable and Executive will not receive the
payments described in Section 3 above.

16. If Executive does not revoke this Release in the time frame specified in
Section 15, this Release shall be effective at 12:01 a.m. on the eighth day
after it is signed by Executive.

17. Executive acknowledges that, despite the cessation of Executive’s full-time
employment with the Company, Executive may continue to be subject to Section 16
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Executive further acknowledges that the Company has advised him to consult
independent counsel regarding the applicability of Section 16 of the Exchange
Act.

I have read this Release and I accept and agree to the provisions contained
therein and hereby execute it voluntarily and with full understanding of its
consequences.

PLEASE READ CAREFULLY. THIS RELEASE CONTAINS A

GENERAL RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

 

/s/ Richard Balanson     Date: July 23, 2007 Richard Balanson    

 

Maxwell Technologies, Inc.     By:   /s/ Edward B. Caudill     Date: July 23,
2007 Title:   Chairman of the Board      

 

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