EXHIBIT 10.5

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

This Agreement is effective March 3, 2005 (the “Effective Date”), by and between
Starcraft Corporation, an Indiana corporation (“Employer”), and Joseph E. Katona
III (“Employee”).

 

W I T N E S S E T H

 

WHEREAS, in connection with the Agreement and Plan of Merger between Employer
and Quantum Fuel Systems Technologies Worldwide, Inc. (“Quantum”) (the
“Merger”), Employee will be employed as Chief Financial Officer of Employer
(“Job Responsibilities”);

 

WHEREAS, Employer and Employee entered into an Employment Agreement dated as of
November 11, 2004, and Employee has made valuable contributions to the strategic
planning, business operations, and financial strength of Employer;

 

WHEREAS, Employer desires to provide fair and reasonable benefits to Employee on
the terms and subject to the conditions set forth in this Agreement;

 

WHEREAS, Employer desires reasonable protection of its confidential business and
customer information and assurance that Employee will not compete with Employer
for a reasonable period of time after termination of his employment with
Employer, except as otherwise provided herein.

 

WHEREAS, Employer desires to assure the continued services of Employee on behalf
of Employer on an objective and impartial basis and without distraction or
conflict of interest in the event of an attempt by any person to change
Employee’s Job Responsibilities or to obtain control of Employer.

 

NOW, THEREFORE, in consideration of the mutual covenants and undertakings herein
contained and the continued employment of Employee to perform Job
Responsibilities for Employer, Employer and Employee, each intending to be
legally bound, covenant and agree as follows:

 

1. Upon the terms and subject to the conditions described in this Agreement,
Employer employs Employee to perform Job Responsibilities for Employer, and
Employee accepts such employment. Employee will devote best efforts to the
service of Employer, to perform his Job Responsibilities, and Employee will not
engage in other employment that conflicts with, or impairs in any way, his
ability to perform his obligations as an employee of Employer.

 

2. Employee agrees to serve as Employer’s Chief Financial Officer, in connection
with the Job Responsibilities and to perform such duties as may reasonably be
required of him by Employer’s President, or any Chief Executive Officer, or
Board of Directors, from time to time. Employee shall devote substantially all
his business time and efforts to Employer’s business. Employee’s duties shall be
performed in or from the current office of Employee in the offices of Employer
currently located in Goshen, Indiana, and Employee’s Job Responsibilities shall
be of the same character as those previously performed by Employee and generally
associated with the offices held by Employee. Employer shall not, without the
prior written consent of Employee, relocate or transfer Employee to a location
more than forty (40) miles from his principal residence.

 

3. The term of this Agreement shall begin on the “Effective Date” and shall end
on the date which is one (1) year following such date, provided, however, each
one (1) year term shall automatically renew and extend for consecutive one (1)
year terms (the expiration of the original one (1) year term, and any extension
term, being an “Anniversary Date”) (the original one (1) year term, including
any extension

 

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thereof, shall be referred to as the “Term”), unless either Employer or Employee
gives a Notice of Termination as provided in Section 10 hereof, at the time
described in paragraph Section 7(B) or Section 7(D) respectively.

 

4. Employee shall receive an annual salary of not less than One Hundred Forty
Thousand Dollars ($140,000.00) (“Base Compensation”) for the Term, payable at
regular intervals in accordance with Employer’s normal payroll practices now or
hereafter in effect. Employer may consider and declare from time to time
increases in the salary it pays Employee and thereby increases in his Base
Compensation. Base Compensation shall not take into account any bonuses,
reimbursed expenses, credits or benefits (including benefits under any plan of
deferred compensation), or any additional cash compensation or compensation
payable in a form other than cash.

 

5. So long as Employee is employed pursuant to this Agreement, and effective the
first day of the month following the Effective Date, Employee shall be included
as a participant in all present and future employee benefit plans generally
available to employees of Employer, consistent with his Base Compensation, and
his Job Responsibilities, subject to applicable plan eligibility requirements,
such as, group life and health insurance program, 401(k) Plan, Stock Incentive
Plan, Executive Bonus Plan, and paid vacation (collectively, “Benefit Plans”).

 

6. So long as Employee is employed by Employer pursuant to this Agreement,
Employee shall receive reimbursement from Employer for all reasonable business
expenses approved by Employer, upon submission to Employer of written vouchers
and statements for reimbursement.

 

7. Subject to the respective continuing obligations of the parties, including
but not limited to those set forth in paragraph 9 hereof, Employee’s employment
by Employer may be terminated prior to the expiration of the Term of this
Agreement as follows:

 

(A) Employer, upon written notice to Employee, may terminate Employee’s
employment with Employer at any time “for cause.” For purposes of this
subsection 7(A), “cause” shall be defined as (i) misconduct, (ii) breach of
fiduciary duty involving personal profit, (iii) failure to perform Job
Responsibilities, (iv) conviction or guilty plea or nolo contendere plea to a
violation of any law, rule, or regulation (other than minor traffic violations),
or (v) any breach of any term, condition or covenant of this Agreement. Prior to
a termination of Employee’s employment upon the occurrence of any event set
forth in this section 7(A) above, except section 7(A)(ii) and (iv), Employer
shall first provide Employee with written notice of his intended termination,
setting forth with specificity the reasons for such intended termination, and
shall give Employee opportunity to remedy any deficiencies.

 

(B) Employer may fail to renew this Agreement effective any Anniversary Date, or
may terminate Employee’s employment with Employer at any time, “without cause,”
upon thirty (30) days prior written notice to Employee.

 

(C) Employee, at any time and upon thirty (30) days written notice to Employer,
may terminate his employment with Employer “for cause.” For purposes of this
subsection 7(C), “cause” shall be defined as breach by Employer of a material
term, condition or covenant of this Agreement (including, for example, a change
of Job Responsibilities without Employee’s prior written consent), or a “Change
of Control.” For purposes of this Agreement, a “Change of Control” of Employer
shall be deemed to have occurred if any “person,” as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder (the “Exchange Act”), other than (a) a
trustee or other fiduciary holding securities under an employee benefit plan of
Quantum; (b) corporation owned, directory or indirectly, by the stockholders of
Quantum in substantially the same proportions as their ownership of stock of
Quantum; or (c) any current beneficial stockholder or group, as defined by

 

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Rule 13d-5 of the Exchange Act, including the heirs, assigns and successors
thereof, of beneficial ownership, within the meaning of Rule 13d-3 of the
Exchange Act, of securities possessing more than 50% of the total combined
voting power of Quantum’s outstanding securities; hereafter becomes the
“beneficial owner,” as defined in Rule 13d-3 of the Exchange Act, directory or
indirectly, of securities of Quantum representing 20% or more of the total
combined voting power represented by Quantum’s then outstanding Voting
Securities.

 

(D) Employee, at any time and upon thirty (30) days written notice to Employer,
may terminate his employment with Employer “without cause.”

 

(E) Employee’s employment with Employer shall terminate in the event of
Employee’s death or permanent disability. “Disability” means (i) if Employee is
covered by an individual or group long-term disability policy under Employer’s
Benefit Plans, then as defined in such policy without regard to any waiting
period, or (ii) if (i) is inapplicable, then “disability” shall be defined as
Employee’s permanent inability by reason of illness or other physical or mental
incapacity to perform Job Responsibilities for any consecutive one hundred
eighty (180) day period, provided that Notice of Termination by Employer because
of Employee’s “disability” shall have been given to Employee prior to the full
resumption by him of the performance of such duties.

 

(F) Notwithstanding any provision of this Agreement, neither the consummation of
the Merger nor the execution of this Amended and Restated Agreement shall be
deemed to constitute a Change of Control under Employee’s agreement of November
11, 2004, or under this Agreement, a change in Job Responsibilities, a breach of
any of Employer’s obligations to Employee, a termination or a non-renewal of
this Agreement.

 

8. In the event of termination of Employee’s employment with Employer pursuant
to section 7 hereof, which shall include a nonrenewal of this Agreement on any
Anniversary Date as provided in section 3 hereof or in subsection 7(B) a
subsection 7(C) hereof, Base Compensation shall continue to be paid by Employer
to Employee as follows:

 

(A) In the event of termination “for cause” by Employer or “without cause” by
Employee pursuant to subsection 7(A) or 7(D), respectively, Base Compensation
shall continue to be paid, and Employee shall continue to participate in the
Benefit Plans and other perquisites as provided in paragraphs 4 and 5 hereof,
through the date of termination specified in the notice of termination. Any
benefits payable under such Benefit Plans as a result of Employee’s
participation in such plans through such date shall be paid when due under those
plans. The date of termination specified in any notice of termination pursuant
to subsection 7(A) or 7(D) shall be no later than the last business day of the
next month following the month in which such notice is provided to Employee or
Employer, as the case may be.

 

(B) In the event of termination “without cause” by Employer or “with cause” by
Employee and pursuant to subsection 7(B) or subsection 7(C), respectively, Base
Compensation shall continue to be paid, and Employee shall continue to
participate in the Benefit Plans and other perquisites as provided in paragraphs
4 and 5 hereof, through the date of termination specified in the notice of
termination. Upon the date of such termination, any outstanding stock options
shall immediately vest in full. Any benefits payable under such Benefit Plans as
a result of Employee’s participation in such plans through such date shall be
paid when due under those plans. In addition, Employee shall be entitled to
continue to receive from Employer his Base Compensation at the rates in effect
at the time of termination of the Term for one (1) additional twelve (12) month
period. In addition, during such periods, Employer will maintain in full force
and effect for the continued benefit of Employee and his spouse and his
dependents each Benefit Plan described in Section 5 in which Employee was
entitled to participate immediately prior to the date of

 

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his termination, unless an essentially equivalent and no less favorable benefit
if provided by a subsequent employer of Employee. If the terms of any such
Benefit Plan, or applicable laws, do not permit continued participation in the
Benefit Plans by Employee and his spouse and his dependents, Employer will
arrange to provide to Employee and his spouse and his dependents a benefit
substantially similar to, and no less favorable than, the benefit he and his
spouse and his dependents were entitled to receive under such Benefit Plan. The
date of termination specified in any notice of termination pursuant to
subsection 7(B) or 7(C) shall be no later than the last business day of the next
month following the month in which such notice is provided to Employee or
Employer, as the case may be.

 

(C) In the event Employee’s employment with Employer shall terminate in the
event of Employee’s disability or death, pursuant to subsection 7(E), Base
Compensation shall continue to be paid through the date of disability or the
date of death, and Employee shall continue to participate in the Benefit Plans
through such date.

 

9. In order to induce Employer to enter into this Agreement, Employee agrees as
follows:

 

(A) Unless otherwise required to do so by law, including the order of a court or
government agency, Employee shall not divulge or furnish trade secrets (as
defined in IND. CODE Sec. 24-2-3-2) of Employer or any confidential information
acquired by him while employed by Employer concerning the policies, plans,
procedures or customers of Employer to any person, firm or corporation, other
than Employer or upon its written request, or use any such trade secret or
confidential information directly or indirectly for Employee’s own benefit or
for the benefit of any person, firm or corporation other than Employer, since
such trade secrets and confidential information are confidential and shall at
all times remain property of Employer. To that end, Employee agrees as follows:

 

(i) That all drawings, blueprints, manuals, letters, reports memoranda, notes,
notebooks, customer lists and all other documents or materials whether or not of
a secret or confidential nature (and all copies thereof) relating to Employer or
any of its affiliates business in any way obtained by Employee while employed by
Employer shall be Employer’s property and shall be delivered by Employee to
Employer on termination of Employee’s employment or at any time at Employer’s
request together with Employee’s written certification of compliance. This
includes but is not limited to documents or other materials concerning
customers, pricing, marketing, and method or process, product or apparatus
manufactured, used, developed, or investigated by Employer or any of its
affiliates, all of which are CONFIDENTIAL;

 

(ii) To disclose to Employer promptly and fully any invention, discovery or
improvement (“invention(s)”), whether patentable or not, hereafter made or
conceived solely or jointly by Employee while employed by Employer and which
relates in any manner to the business or activities of Employer or any of its
affiliates or is suggested by or results from any duties assigned to Employee or
work performed by Employee for or on behalf of Employer;

 

(B) That when requested by Employer, whether during or subsequent to Employee’s
employment, to execute patent applications and other instruments considered
necessary by Employer to apply for and obtain Letters Patent of the United
States and foreign countries with respect to inventions covered by this
Agreement and to make assignments and execute other instruments necessary to
convey to Employer ownership and exclusive rights in such inventions, patent
applications and patents; provided, however, that Employer shall bear all
expenses connected with such patents, patent applications and maintenance of
patent protection, and if services in connection therewith are performed by
Employee at the request of Employer after termination of Employee’s employment,
Employer shall pay reasonable compensation for such post-employment services;

 

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(C) That during the Term of his employment with Employer, and during any period
for which Employee is receiving Benefit Plan benefits or any other payments from
Employer, and for a period of one (1) year thereafter, Employee shall not: (a)
compete, directly or indirectly, with the Business of Employer (which for
purposes of this paragraph 9 is defined as, engineering, consulting, product
development of upfit customization of specialized packages, and second stage
vehicle manufacturing to General Motors, and also including such business as
being conducted by any of its subsidiaries or affiliates), as conducted during
the Term of this Agreement, or have any interest (including any interest or
association, including but not limited to, that of owner, part owner, partner,
shareholder, director, officer, employee, agent, consultant, lender or advisor)
in any person, firm or entity which competes with the Business in the geographic
area described on the attached Exhibit A (each such person, firm or entity is
referred to as “Competitor”) other than the investment by Employee in a publicly
traded company in such form or manner as will not require any services on
Employee’s part in the operation of the affairs of the businesses in which such
investments are made; (b) solicit or accept business for or on behalf of any
Competitor; (c) solicit, induce or persuade, or attempt to solicit, induce or
persuade, any person to work for or provide services to or provide financial
assistance to, any Competitor; (d) solicit or accept for or on behalf of or for
the benefit of any Competitor, any business from any person, firm or entity
which during the term of this Agreement was a vendor or supplier to, or
subcontractor for, or commercial purchaser from, Employer; or (e) engage in any
business, either as an owner or representative or employee or otherwise, that is
competitive with any business engaged in by Employer or any of its affiliates
other than the investment by Employee in a publicly traded company in such form
or manner as will not require any services on Employee’s part in the operation
of the affairs of the businesses in which such investments are made. Employee
recognizes that Employer and its affiliates market products worldwide and,
therefore, performance of the same or substantially similar duties in any
geographic region would be detrimental to Employer’s legitimate interests;
Employer has a legitimate interest which these provisions are reasonably
necessary to protect; the restrictions on competition contained herein are
reasonable in time and geographic scope; and Employee is, and shall not be,
unreasonably restricted in gainful employment by these provisions.

 

(D) If Employee’s employment by Employer is terminated for any reason by either
Employee or Employer, Employee will turn over immediately thereafter to Employer
all business correspondence, letters, papers, reports, customers’ lists,
financial statements, records, drawings, credit reports or other confidential
information or documents of Employer or its affiliates in the possession or
control of Employee, all of which writings are and will continue to be the sole
and exclusive property of Employer or its affiliates.

 

(E) If Employee’s employment by Employer is terminated during the Term of this
Agreement for any of the reasons set forth in section 7 of this Agreement, and
if Employee and Employer in writing agree prior to the end of the Term that
Employee disclaims any rights to any continuing payments from Employer (whether
by way of Base Compensation, Benefit Plans, or otherwise) after the termination
date, then Employee shall have no obligations to Employer with respect to
noncompetition under subsection 9(C) hereof.

 

(F) Anything in this Employment Agreement to the contrary notwithstanding, prior
to Employer seeking relief for a breach by Employee of this paragraph 9,
Employer shall first provide Employee with written notice setting forth the
nature of such breach with specificity, and shall give Employee opportunity to
remedy any deficiencies or to provide evidence that no breach has occurred.

 

10. Any termination of Employee’s employment with Employer as contemplated by
paragraph 3 and paragraph 7 hereof, except in the circumstances of Employee’s
death, shall be communicated by written “Notice of Termination” by the
terminating party to the other party hereto. Any “Notice of Termination” must
refer to one or more of subsections 7(A), 7(B), 7(C), or 7(D) and shall

 

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indicate the specific provisions of this Agreement and one or more of such
subsections of paragraph 7 relied upon, and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for such termination
under one or more of such subsections of paragraph 7.

 

11. Anything in this Agreement to the contrary notwithstanding, payment of Base
Compensation by the Employer or to or for the benefit of the Employee, including
such as may be made pursuant to paragraph 8 hereof, shall be inclusive of
payments attributable to the confidentiality and noncompetition covenants of
paragraph 9 hereof and shall be payable whether or not deductible by the
Employer for federal income tax purposes.

 

12. The validity, interpretation, and performance of this Agreement shall be
governed by the laws of the State of Indiana. The invalidity or unenforceability
of any provisions of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement which shall remain in
full force and effect. If a dispute arises regarding provisions of this
Agreement, including enforcement of the confidentiality and noncompetition
provisions hereof, then such shall be heard only by the judge and not by a jury,
in any court of general jurisdiction in Elkhart County, Indiana, to which sole
and exclusive jurisdiction each party irrevocably consents. The prevailing party
shall be entitled to its costs, expenses and reasonable attorney’s fees. No
attempt will be made to consolidate, by counterclaim or otherwise, any such
action or proceeding with any other action or proceeding in which there is a
trial by jury or in which a jury trial cannot be or has not been waived.

 

13. For purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been given
when personally delivered, or mailed by United States registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:

 

If to Employee:

    

Joseph E. Katona III

      

16330 Elmwood Avenue

      

Mishawaka, IN 46544

If to Employer:

    

Starcraft Corporation

      

1123 South Indiana Avenue

      

Post Office Box 1903

      

Goshen, IN 46527-1903

      

Attention: Michael H. Schoeffler, President

 

14. No provision of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing signed by
Employee and Employer. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of dissimilar provisions or conditions at the same or any prior or
subsequent time. No agreements or representation, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.

 

15. No benefit payable at any time under this Agreement shall be subject in any
manner to alienation, sale, transfer, assignment, pledge, attachment, levy,
garnishment, or encumbrance of any kind.

 

16. Employer shall withhold any applicable income or employment taxes that are
required to be withheld from the benefits provided under this Agreement.

 

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17. Employer does not guarantee payment of benefits payable under any insurance
coverage described or referred to herein, and any benefits thereunder shall be
the exclusive responsibility of the insurer that is required to provide such
benefits under such policy.

 

18. Commencing upon the termination date in the Notice of Termination, the
Employee shall cease to be an employee of the Employer for any purpose, and any
payments to Employee thereafter under this Agreement shall be payments to a
former employee. The right of Employee to receive any Base Compensation, Bonus,
or Benefit Plan payments from Employer ceases upon termination of employment,
except to the limited extent otherwise and expressly described in paragraph 8 of
this Agreement.

 

19. This Agreement is binding upon and inures to the benefit of each party’s
personal representatives, heirs, successors and assigns.

 

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IN WITNESS WHEREOF, the parties have caused the Agreement to be executed and
delivered on the date first set forth above.

 

“Employee”

  “Employer”     STARCRAFT CORPORATION

/s/ Joseph E. Katona III

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/s/ Michael H. Schoeffler

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Joseph E. Katona III

  Michael H. Schoeffler     President

 

[Employment Agreement]

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EXHIBIT A

 

In Japan, Europe, Canada, Mexico, and any of the 48 contiguous States of the
United States of America; it being acknowledged by Employee that the Company
presently conducts a substantial amount of its business in each of the following
States: Indiana, Michigan, Texas, New Jersey, and Louisiana, and, the Province
of Ontario, Canada.