EXHIBIT 10.31

March 16, 2010

Mr. Alan P. Niedzwiecki

Chief Executive Officer and President

Quantum Fuel Systems Technologies Worldwide, Inc.

17872 Cartwright Road

Irvine, CA 92614

 

  Re:  Financial Representative Agreement with J.P. Turner & Company, LLC

Dear Mr. Niedzwiecki,

This letter (the “Agreement”) is to set forth the terms and conditions pursuant
to which J.P. Turner & Company, L.L.C. (the “Agent”) shall serve as exclusive
placement agent and financial advisor in connection with an offering of new
securities (the “Offering”) of Quantum Fuel Systems Technologies Worldwide, Inc.
(the “Company”) to accredited investors. The securities to be sold in the
Offering are expected to be unregistered common shares and warrants (the
“Securities”) as more particularly described in the Company’s private placement
memorandum (“Offering Memorandum”); however, the Company and Agent
(collectively, the “Parties”) can elect to offer different securities. The gross
proceeds from the Offering are estimated to be $20,000,000. It is contemplated
that the pricing for the Securities will be equal to the lesser of
(i) eighty-five percent (85%) of the market value for the common shares as of
the date of the Initial Closing and (ii) the fixed price (the “Fixed Price”),
which shall be eighty-five percent (85%) of the market price at the time the
Private Placement Memorandum is completed, and twenty percent (20%) warrant
coverage with an exercise price equal to the greater of (i) one hundred and
twenty-five percent (125%) of the market value of one share of the underlying
common shares on the date of the initial closing and (ii) the greater of book
value and market value of one share of Company common stock on the date of the
initial closing (“Warrant Exercise Price”). All Warrants issued under this
Offering will be non-exercisable for a period of six months from issuance.
Notwithstanding the foregoing, the Agent acknowledges and agrees that the
Company may retain First Midwest Securities, Inc. to conduct an offering of
convertible notes at a conversion price above the then current market price to
three or fewer investors for the Company, so long as such offering is completed
prior to March 23, 2010.

 

1.0 THE PARTIES

1.1 The Company, with its principal office at 17872 Cartwright Road, Irvine, CA
92614.

1.2 The Agent, with its principal office at 3060 Peachtree Road, 11th FL,
Atlanta, GA, 30305.

1.3 The persons executing this Agreement represent to each other that they have
full and complete authority to do so.

 

2.0 THE AGREEMENT

2.1 Agent will conduct an Offering of the Securities, the Agent’s role will
include: (i) identifying and offering the Securities to purchasers who are
“accredited investors” (“Investor(s)”) as defined in Rule 501 of Regulation D
(“Regulation D”) under the Securities Act of 1933, as amended (the “Securities
Act”), (ii) attempting, on a “reasonable best efforts” basis, to secure
acceptable commitments from Investors to purchase the Securities,
(iii) coordinating the closing of sales of the Securities with Investors and the
Company, and (iv) assembling co-placement agents and/or syndicate selling agents
as the Agent deems appropriate (collectively, the “Services”). The Agent shall
require any co-placement agent and/or syndicate selling agent to agree, for the
benefit of the Company, to comply with, and shall use its commercially
reasonably efforts to ensure that such co-

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Quantum Fuel Systems Technologies Worldwide, Inc.

Financial Representative Agreement

March 16, 2010

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placement agent and/or syndicate selling agent, complies with, the provisions of
this Agreement applicable to the Agent as if such provisions applied to such
co-placement agent and/or syndicate selling agent.

2.2 The Company represents and warrants to the Agent that with respect to the
Offering: (i) the Company will consult with its own legal counsel on all aspects
of the Offering; (ii) Agent has not made any representations to the Company to
induce it to execute this Agreement other than those expressly and directly made
herein; (iii) the Company will not rely on any information, representations or
warranties of any individual or entity, including without limitation the Agent,
in connection with the Offering but for those made directly, personally and
expressly in the definitive transaction documents memorializing the Offering.

2.3 In connection with the Services, the Company authorizes the Agent to
identify and introduce the Company to Investors in connection with the Offering.
Any Investor introduced to the Company by the Agent shall be referred to herein
as an “Agent Proposed Investor”.

2.4 A closing shall occur if any Securities have been purchased by an Agent
Proposed Investor (the “Closing”). If the Securities are purchased through
multiple fundings or stepped milestones, then each such separate funding shall
be deemed a Closing, and the fees shall be paid to the Agent at each Closing.
The total amount of the fee due (as described in Section 3.2) to Agent shall be
due and payable on the date of Closing and delivered simultaneously to the Agent
with the delivery of the funds to the Company. The Company shall be under no
obligation to consummate the Offering, except upon such terms as shall be
acceptable to the Company in its sole discretion. Nothing in this Agreement
shall constitute an undertaking by the Agent to underwrite or otherwise purchase
the Securities offered in the Offering or any other transaction that may be
developed as an alternative.

2.5 The term of this Agreement commences on the date that both parties have
signed this Agreement (“Engagement Date”) and shall continue until the earlier
of (i) July 31, 2010 and (ii) the date of the final Closing under the Offering.
Notwithstanding the foregoing, either party may terminate this Agreement and the
Offering prior to the first closing under the Offering by providing the other
party with written notice of termination twenty-one (21) days prior to the date
of termination; provided, however that such written notice may not be given
prior to May 1, 2010. Upon expiration or termination of this Agreement, Agent
shall be entitled to receive all accrued compensation (as defined herein) and
unreimbursed expenses to the extent Agent is entitled to reimbursement pursuant
to this Agreement, if any.

 

3.0 THE FEES AND PROVISIONS

3.1 THE RETAINER

3.1.a The Company shall pay to Agent a non refundable retainer of twenty five
thousand dollars ($25,000) (the “Retainer”). The Retainer will be non-refundable
and allocated for due diligence, planning and coordination, and implementation
of the services described herein. The Retainer shall be divided and paid in
accordance to the following:

 

  i) $15,000 - Upon the execution of this Agreement. This amount will be
credited against fees earned in the Offering.

 

  ii) $10,000 – Upon the execution of this Agreement. This amount will be
credited against actual travel and legal expenses.

3.2 THE OFFERING

3.2.a Upon the earlier of (i) the Closing of gross proceeds totaling at least
five million dollars ($5,000,000) with Agent Proposed Investors, or (ii) the
final close with Agent Proposed Investors, the Company

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Financial Representative Agreement

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shall issue to Agent a non-refundable retainer warrant to purchase five hundred
thousand (500,000) common shares (the “Retainer Warrant”) with an exercise price
equal to the Warrant Exercise Price, have a term of five (5) years from the date
of issuance, and containing a “Cashless Exercise” provision; provided, however,
that the Company shall issue a pro rata amount of the Retainer Warrant for
Closings of gross proceeds less than five million dollars ($5,000,000). Upon
issuance, the Retainer Warrant will immediately vest, be fully earned, and be
non-refundable and allocated for the implementation of the services described
herein; provided, however, Agent cannot exercise the Retainer Warrant for a
period of six (6) months following its issuance.

3.2.b Upon each Closing with Agent Proposed Investors, the Company shall pay
Agent a cash fee (the “Placement Fee”) equal to thirteen percent (13%). The
Placement Fee shall be due and payable on the date of each Closing and delivered
simultaneously to the Agent with the delivery of the funds to the Company. The
Placement Fee is a percentage of the gross proceeds of the Offering as received
by the Company from the Agent Proposed Investor (the “Gross Proceeds”) and in
accordance to the following schedule:

8% Selling Concession on Gross Proceeds

3% Management fee on Gross Proceeds

2% Non-Accountable Fee on Gross Proceeds

3.2.c The Company shall also issue the Agent a warrant to purchase a number of
the Company’s common shares equal to thirteen percent (13%) of the Gross
Proceeds of the Offering for Accredited Retail Investors (the “Concession
Warrant”) as received by the Company from Agent Proposed Investors. The
Concession Warrant shall have a term of three (3) years after the date the date
of issuance and have an exercise price equal to Warrant Exercise Price.

3.2.d Upon issuance of the Concession Warrant, the Concession Warrant shall
immediately vest in favor of the Agent, be fully paid, non-assessable, and free
of any restrictions on transfer, except for restrictions on transfer for
privately placed securities pursuant to applicable securities laws. The
Concession Warrant and Retainer Warrant (collectively, the “Agent Warrants”)
shall be issued to Agent in the form of a warrant agreement (the “Warrant
Agreement”), which shall be in a form and content reasonably satisfactory to the
Company and to Agent and its counsel. The Warrant Agreement shall provide for,
among other provisions, the above terms and the following: (i) The Agent will be
granted the exact Registration Rights that are provided to the Agent Proposed
Investor; (ii); The Warrants shall have customary anti-dilution provisions for
stock dividends, splits, mergers, and sale of substantially all assets of the
Company; (iii) Agent may exercise the Warrants at any time after the six months
from the date of issuance and the Company agrees to deliver the underlying
common shares to the Agent within seven days following exercise; (iv) The
Warrants shall contain a “Cashless Exercise” provision; and (v) the Company
shall reserve, and at all times have available, a sufficient number of shares of
its common stock to be issued upon the exercise of the Warrants.

3.2.e The Warrant shall be issued to J.P. Turner Partners, LP and mailed to the
following address:

J.P. Turner Partners, LP

Attention: Patrick J. Power

3060 Peachtree Road, 11th Floor

Atlanta, GA 30305

Phone: 404.479.8300

Fax: 888.704.7512

3.2.f In the event of an Early Termination by the Company, then for a period of
twelve (12) months following the date of Early Termination, Agent shall be
entitled to receive the Placement Fee if the Company sells any of its securities
to an Agent Proposed Investor.

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Quantum Fuel Systems Technologies Worldwide, Inc.

Financial Representative Agreement

March 16, 2010

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3.3 GENERAL FEE PROVISIONS

3.3.a The Company shall reimburse Agent for reasonable, accountable
out-of-pocket expenses, including the fees and expenses of its legal counsel
incurred in rendering Services under this Agreement, promptly upon the
presentation by Agent of an itemized statement of such expenses. The Company
will pay or cause to be paid all costs and expenses incident to the Offering,
including, without limitation (i) preparing, printing, or otherwise reproducing,
and mailing, the disclosure memorandum, and other appropriate documents, and any
amendments or supplements thereto, (ii) registering or qualifying the Securities
for offer and sale in the applicable states, as specified by Agent, or obtaining
exemptions there from, (iii) all taxes, if any, on the issuance of the
Securities, (iv) any necessary travel and lodging expenses, including, but not
limited to, due diligence, meetings, road shows, as well as clerical overtime,
which shall upon sufficient notification be paid directly by the Company to
Agent, and (v) all other reasonable and necessary expenses directly incurred by
Agent in connection with the Offering. Agent shall submit a detailed expense
list for approval on any expense greater than $1,000.

3.3.b The Company will establish escrow arrangements that are commercially
reasonable with a nationally recognized escrow agent that is approved by the
Agent. The Company shall include a covenant within the escrow agreement that
requires the Agent to be paid all of its fees described within this Agreement
either from the funds held in escrow pending the Closing or directly from the
Agent Investors in accordance with the following wiring instructions:

 

Account Name:   J.P. Turner & Company, L.L.C. Bank:   Bank of America – Atlanta,
GA Address:   1500 Buford Highway   Buford, GA 30518 Phone:   (770) 497-3011
Fax:   (770) 945-6112 ABA Routing #:   026009593 Account #:   0033-4329-6904

 

4.0 REPRESENTATIONS AND WARRANTIES

4.1 The Company shall provide to Agent, such information, documents and
instruments as may be required under Securities Act of 1933, as amended, and
Regulation D thereunder, for an offer made to accredited investors only. The
Company shall also provide Agent with all requested due diligence information
for inspection and examination.

4.2 The net proceeds to the Company resulting from the sale of Securities will
be used to execute the Company’s business plan, pay professional fees and costs,
marketing and advertising expenses and general working capital. Upon request,
the Company will develop and deliver to Agent a complete Use of Proceeds
Schedule (“Use of Proceeds Schedule”) to be included in the Agents due diligence
binder.

4.3 No officer, director or shareholder of the Company is a member of the
Financial Industry Regulatory Authority, Inc. (“FINRA”), an employee or
associated member of FINRA. The Company has not promised or represented to any
person that any part of the Securities will be directed or otherwise made
available to them in connection with the Offering. The Company has separately
disclosed to Agent all potential conflicts of interest involving officers,
directors, principal shareholders and/or employees.

4.4 The Company covenants and agrees to provide Agent with copies of all press
releases, quarterly and annual financial statements, and other material public
information.

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Financial Representative Agreement

March 16, 2010

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4.5 The Company commits to delivering financial communications to its
shareholders on the same schedule as required by the Securities and Exchange
Commission of publicly traded companies.

4.6 The Company has not sold or issued any securities that would be integrated
with the Offering pursuant to the Securities Act or the Securities Act
Regulations or interpretations thereof by the Securities and Exchange
Commission, which could reasonably render the exemptions relied upon for the
Offering to be unavailable.

4.7 The Agent will, in performing the Services, be entitled to rely on and
assume, without investigation or verification or any obligation or duty to do
so, the accuracy and completeness of all public information that has been issued
or released to the public by the company.

4.8 The Agent, on the dates of all offers and subsequent sales made directly by
the Company under the Offering, was and will be, as applicable, duly registered
as a broker or dealer under the Securities Exchange Act of 1934, as amended, and
under all applicable state securities laws (except where exempted from the
respective state’s broker-dealer registration requirements) and a member of, and
in good standing with, FINRA. The Agent is also an accredited investor.

4.9 The Agent and its affiliates have conducted the Offering in a manner
designed to exempt the Offering from registration under the Securities Act and
applicable state securities laws and to comply with all applicable federal and
state broker-dealer requirements.

4.10 Prior to any sale of Securities by the Company, the Agent shall cause each
purchaser to execute a subscription agreement in a form satisfactory to the
Company and the Agent.

4.11 Any arrangements made by the Company with any broker or other persons with
whom the Company is or may be involved are the total responsibility of the
Company. Upon payment made by the Company to Agent of Agent’s fee, Agent will
hold the Company free and harmless from any and all claims, liabilities,
commissions, fees, or expenses in connection with the transaction from any party
who alleges a relationship with or through Agent and the Agent Proposed
Investors.

4.12 During the Term, the Company agrees to attend the annual J.P. Turner &
Company Investment Banking Conference. The cost to the Company for the
conference will not be greater than the cost to any other sponsored company
attending the conference.

4.13 This Agreement and the terms of this Agreement are strictly confidential
and shall only be disclosed as required by law, advice of counsel or upon mutual
written consent of the parties, in any case only after reasonable prior written
notice to the Parties. Without limiting the generality of the foregoing, the
Company must approve in advance, in writing, any press release of the Company’s
mentioning or including the name of Agent.

 

5.0 OTHER

5.1 In the event of any dispute between the Company and Agent arising under or
pursuant to the terms of this Agreement, or any matters arising from the
performance of the Services, the same shall be settled only by arbitration
through FINRA Dispute Resolution in Fulton County, State of Georgia, in
accordance with the Code of Arbitration Procedure published by FINRA Dispute
Resolution. The determination of the arbitrators shall be final and binding upon
the Company and Agent and may be enforced in any court of appropriate
jurisdiction. This Agreement shall be construed by and governed exclusively
under the laws of the State of Georgia, without regard to its conflicts of law
provisions.

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Quantum Fuel Systems Technologies Worldwide, Inc.

Financial Representative Agreement

March 16, 2010

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5.2 The Company agrees to indemnify and hold harmless Agent and each person, if
any, who controls Agent within the meaning of the Securities Act of 1933, as
amended (the “Act”), its officers, and its employees (collectively, the “Agent
and its Personnel”) from and against any losses, claims, damages or liabilities,
joint or several (which shall, for all purposes of this Agreement, include, but
not be limited to, all reasonable costs of defense, investigation and collection
and all attorneys’ fees), to which Agent and its Personnel may become subject,
under the Act or otherwise, insofar, as such losses, claims, damages or
liabilities (or actions in respect thereof); (i) arising out of or are based
upon any untrue statement or alleged untrue statement of any material fact made
by the Company its officers, employees, agents, and the legal counsel;
(ii) arising out of or are based upon any omission or alleged omission of
material fact necessary to make any statement not misleading, made by the
Company its officers, employees, agents, and its legal counsel; and
(iii) arising out of or based upon any violation of the representations and
warranties of the Investor.

5.3 Agent agrees to indemnify and hold harmless the Company and each person, if
any, who controls the Company within the meaning of the Securities Act of 1933,
as amended (the “Act”), its officers, and its employees (collectively, the
“Company and its Personnel”) from and against any losses, claims, damages or
liabilities, joint or several (which shall, for all purposes of this Agreement,
include, but not be limited to, all reasonable costs of defense, investigation
and collection and all attorneys’ fees), to which Company and its Personnel may
become subject, under the Act or otherwise, insofar, as such losses, claims,
damages or liabilities (or actions in respect thereof); (i) arising out of or
are based upon any untrue statement or alleged untrue statement of any material
fact made by the Agent its officers, employees, agents, and the legal counsel;
(ii) arising out of or are based upon any omission or alleged omission of
material fact necessary to make any statement not misleading, made by Agent its
officers, employees, agents, and its legal counsel; and (iii) arising out of or
based upon any violation of the representations and warranties of the Investor;
provided, however, that Agent’s indemnification obligations under this Agreement
shall be limited to the Placement Fee.

5.4 If any clause or provision of this Agreement is illegal, invalid or
unenforceable under applicable present or future Laws effective during the Term,
the remainder of this Agreement shall not be affected. In lieu of each clause or
provision of this Agreement that is illegal, invalid or unenforceable, there
shall be added as a part of this Agreement a clause or provision as nearly
identical as may be possible and as may be legal, valid and enforceable. In the
event any clause or provision of this Agreement is illegal, invalid or
unenforceable as aforesaid and the effect of such illegality, invalidity or
unenforceability is that either party no longer has the substantial benefit of
its bargain under this Agreement and a clause or provision as nearly identical
as may be possible cannot be added, then, in such event, such party may in its
discretion cancel and terminate this entire Agreement provided such party
exercises such right within a reasonable time after such occurrence.

5.5 The parties agree and acknowledge that they have jointly participated in the
negotiation and drafting of this Agreement and that this Agreement has been
fully reviewed and negotiated by the parties and their respective counsel. In
the event of an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumptions or burdens of proof shall arise favoring any party by virtue of the
authorship of any of the provisions of this Agreement.

5.6 This Agreement may not be modified, amended, supplemented, canceled or
discharged, except by written instrument executed by all parties. No failure to
exercise, and no delay in exercising, any right, power or privilege under this
Agreement shall operate as a waiver, nor shall any single or partial exercise of
any right, power or privilege hereunder preclude the exercise of any other
right, power or privilege. No waiver of any breach of any provision shall be
deemed to be a waiver of any preceding or succeeding breach of the same or any
other provision, nor shall any waiver be implied from any course of dealing
between the parties. To be effective, all waivers must be in writing, signed by
both parties. The rights and remedies of the parties under this Agreement are in
addition to all other rights and remedies, at law or equity, that they may have
against each other except as may be specifically limited herein.

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Financial Representative Agreement

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5.7 This Agreement contains the entire agreement between Agent and the Company
concerning the Services and the Parties relationship and correctly sets forth
the rights and duties of each of the parties to each other concerning that
matter as of the Engagement Date. Any agreement or representation concerning the
subject matter of this Agreement or the duties of Agent to the Company in
relation thereto, not set forth in this Agreement, is null and void.

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Quantum Fuel Systems Technologies Worldwide, Inc.

Financial Representative Agreement

March 16, 2010

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If the foregoing correctly sets forth our agreement, please confirm this by
signing and returning to us the duplicate copy of this letter.

 

Very truly yours, /s/ Patrick John Power

Patrick John Power

Managing Director, Investment Banking

J.P. Turner & Company, LLC

Accepted and approved this 16th day of March, 2010

 

/s/ Alan P. Niedzwiecki

Mr. Alan P. Niedzwiecki

Chief Executive Officer and President

Quantum Fuel Systems Technologies, Inc.