Exhibit 10.4

[AEI Letterhead]

Dated as of May 8, 2012

Quantum Fuel Systems Technologies Worldwide, Inc.

17872 Cartwright Road

Irvine, California 92614

Attention: W. Brian Olson, Chief Financial Officer

Gentlemen:

This letter (this “Letter Agreement”) sets forth our prior understanding related
to investment banking services rendered by Advanced Equities to Quantum
Technologies, Inc. (the “Company”) in connection with a $10.0 million senior
secured revolving line of credit financing transaction between the Company and
Bridge Bank, National Association that was completed on May 7, 2012 (the “Bridge
Bank Line of Credit”).

In connection with the Bridge Bank Line of Credit, the Company agrees to pay
Advanced Equities the following: (i) a seven-year common stock purchase warrant
entitling Advanced Equities to purchase up to 200,000 shares of the Company’s
common stock at an exercise price of $0.90 per share and (ii) a cash fee not to
exceed $800,000, payable as follows: (a) $150,000, due and payable on or before
May 11, 2012, and (b) an amount equal to 8% of each “Incremental Drawdown
Amount” (defined below), due and payable within five days following the
Company’s receipt of the Incremental Drawdown Amount from Bridge Bank. The term
Incremental Drawdown Amount means with respect to each Advance (as defined in
the Bridge Bank Loan and Security Agreement) an amount equal to (x) the
aggregate amount of all Advances received by the Company under the Bridge Bank
Line of Credit in excess of $1,875,000, minus (y) the sum of (i) the aggregate
amount of all prior Advances received by the Company for which the 8% fee has
been paid and (ii) the aggregate amount of principal payments made by the
Company under the Bridge Bank Line of Credit. It is acknowledged and agreed that
the $150,000 fee in (a) above represents 8% of the first $1,875,000 of Advances.
In addition, the Company agrees to reimburse Advance Equities for $17,650 of
out-of-pocket expenses (including the fees and expenses of legal counsel).

The Company and Advanced Equities have entered into a separate letter agreement
dated the date hereof and attached hereto as Annex A, which provides, among
other things, for the indemnification of Advanced Equities and specified other
parties by the Company in connection with the engagement. The indemnification
letter agreement is an integral part of this Letter Agreement and the terms
thereof are incorporated by reference into this Letter Agreement in their
entirety and shall survive the completion of the engagement.

The Company acknowledges that Advanced Equities was retained solely to provide
investment banking services for the Company, and not in any other capacity or as
an advisor to or agent of any other person, and that the Company’s engagement of
Advanced Equities was as an independent contractor and not in any fiduciary or
other capacity. Neither this Letter Agreement, the engagement of Advanced
Equities, nor the delivery of any advice in connection with the engagement,
confers rights upon any persons not a party hereto (including security holders,
employees and creditors of the Company) as against Advanced Equities or its
affiliates or their respective directors, officers, agents and employees.

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This Letter Agreement and all aspects of the engagement shall be governed by the
laws of the State of Delaware, without regard to conflicts of law principles
thereof, and will be binding upon and inure to the benefit of the Company and
Advanced Equities and their respective successors and assigns. The Company and
Advanced Equities agree to waive trial by jury in any action, proceeding or
counterclaim brought by or on behalf of either party with respect to any matter
whatsoever relating to or arising out of any actual or proposed Transaction or
the engagement of or performance by Advanced Equities hereunder. The Company
also hereby submits to the exclusive jurisdiction of the courts of the State of
Delaware or in the United States District Court in the District of Delaware, and
each of the parties hereto submits to the jurisdiction of such courts in any
proceeding arising out of or relating to this Agreement, agrees not to commence
any suit, action or proceeding relating thereto except in such courts, and
waives, to the fullest extent permitted by law, the right to move to dismiss or
transfer any action brought in such court on the basis of any objection to
personal jurisdiction, venue or inconvenient forum.

We are delighted to have had the opportunity to act as your agent in connection
with the Bridge Bank Line of Credit. Please confirm that the foregoing is in
accordance with your understanding by signing and returning to us the enclosed
duplicate of this Letter Agreement.

Very truly yours,

ADVANCED EQUITIES SECURITIES LLC

 

By:   LOGO [g340093g96e25.gif]  

Shannon Soqui

Head of Investment Banking – West Coast

Accepted and agreed to as of the date set forth above:

Quantum Fuel Systems Technologies Worldwide, Inc.

 

By:   /s/ W. Brian Olson  

W. Brian Olson

Chief Financial Officer

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ANNEX A – INDEMNIFICATION AGREEMENT

Dated as of May 8, 2012

Quantum Fuel Systems Technologies Worldwide, Inc.

17872 Cartwright Road

Irvine, California 92614

Attention: W. Brian Olson, Chief Financial Officer

Gentlemen:

In connection with your request that we assist you, Quantum Fuel Systems
Technologies Worldwide, Inc., with the matters you have identified to us, you
and we are entering into this indemnification letter agreement (“Indemnification
Agreement”). It is understood and agreed that in the event that Advanced
Equities, Inc. (“Advanced Equities”) or any of our officers, directors,
employees, agents, affiliates, partners or controlling persons (Advanced
Equities and each of the foregoing being an “Indemnified Person”), become
involved in any capacity in any action, claim, suit, proceeding or investigation
(collectively referred to herein as a “Dispute”) brought or threatened by or
against any person, including your stockholders, related to, arising out of or
in connection with our engagement or any matter referred to in our engagement,
you will promptly reimburse, upon demand, each such Indemnified Person for its
legal and other expenses, including without limitation the cost of any
investigation, preparation for or response, as and when they are incurred in
connection therewith, except to the extent that any such Disputes are found by a
court of competent jurisdiction in a judgment which has become final in that it
is no longer subject to appeal or review to have resulted solely from such
Indemnified Person’s gross negligence, willful misconduct or fraud. You will
indemnify and hold harmless each Indemnified Person from and against, and you
agree that no Indemnified Person shall have any liability, whether direct or
indirect, in contract or tort or otherwise, to you, your affiliates, security
holders or creditors, for any losses, claims, damages, liabilities or expense
(collectively, “Losses”) to which any Indemnified Person may become subject
under any applicable federal or state law, or otherwise, related to, arising out
of or in connection with our engagement, whether or not any Dispute giving rise
to such Losses is initiated or brought by you or on your behalf and whether or
not in connection with any Dispute in which you or such Indemnified Persons are
a party, except to the extent that any such Losses are found by a court of
competent jurisdiction in a judgment which has become final in that it is no
longer subject to appeal or review to have resulted solely from such Indemnified
Person’s gross negligence, willful misconduct or fraud. In no event shall any
Indemnified Person be responsible for any special, indirect or consequential
damages. If multiple claims are brought against us in an arbitration related to,
arising out of or in connection with our engagement, with respect to at least
one of which such claims indemnification is permitted under applicable law, you
agree that any arbitration award shall be conclusively deemed to be based on
claims as to which indemnification is permitted and provided for hereunder,
except to the extent the arbitration award expressly states that the award, or
any portion thereof, is based solely on a claim as to which indemnification is
not available.

If for any reason the foregoing indemnification is held unenforceable or is
insufficient to hold an Indemnified Person harmless, then you shall contribute
to the Losses for which such indemnification is held unenforceable or is
insufficient in such proportion as is appropriate to reflect the relative
benefits received, or that would be received if a Transaction were consummated,
by you and your security holders on the one hand and the party entitled to
contribution on the other hand in the matters contemplated by our engagement as
well as the relative fault of yourselves

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and such party with respect to such Losses and any other relevant equitable
considerations. You agree that for the purposes hereof the relative benefits
received, or that would be received if a Transaction were consummated, by you
and your security holders and ourselves shall be deemed to be in the same
proportion as (i) the total value paid or proposed to be paid or received by you
or your security holders, as the case may be, pursuant to the transaction
(whether or not consummated) for which we have been engaged to perform services
bears to (ii) the fees actually received by us in connection with such
engagement; provided, however, that, to the extent permitted by applicable law,
in no event shall we or any other Indemnified Person be required to contribute
an aggregate amount in excess of the aggregate fees actually paid to us for such
services. Your reimbursement, indemnity and contribution obligations under this
Indemnification Agreement shall be in addition to any liability which you may
otherwise have, shall not be limited by any rights we or any other Indemnified
Person may otherwise have and shall be binding upon and inure to the benefit of
any successors, assigns, heirs and personal representatives of yourselves,
ourselves, and any other Indemnified Persons.

You agree that, without our prior written consent, you will not settle,
compromise or consent to the entry of any judgment in or otherwise seek to
terminate any Dispute in respect of which indemnification or contribution could
be sought hereunder (whether or not we or any other Indemnified Persons are an
actual or potential party to such claim, action or proceeding or investigation),
unless such settlement, compromise or consent includes an unconditional release
of each Indemnified Person from all liability arising out of such Dispute. You
will not permit any such settlement, compromise, consent or termination to
include a statement as to, or an admission of, fault, culpability or a failure
to act by or on behalf of an Indemnified Person, without such Indemnified
Person’s prior written consent. Except as otherwise provided in the immediately
succeeding sentence, you further agree that the Indemnified Persons are entitled
to retain separate counsel of their choice in connection with any of the matters
in respect of which indemnification, reimbursement or contribution may be sought
under this Indemnification Agreement. You will have the right, at your option,
to assume the defense of any litigation or proceeding in respect of which
indemnity may be sought hereunder, provided that you employ counsel satisfactory
to us, notify us of such employment and assume the payment of all fees and
expenses of such counsel, in which event, except as provided below, you shall
not be liable for the fees and expenses of any other counsel retained by any
Indemnified Person in connection with such litigation or proceeding. In any such
litigation or proceeding the defense of which you shall have so assumed, any
Indemnified Person shall have the right to participate in such litigation or
proceeding and to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) you and
such Indemnified Person shall have mutually agreed in writing to the retention
of such counsel, or (ii) the named parties to any such litigation or proceeding
(including any impleaded parties) include you and such Indemnified Person and
representation of both parties by the same counsel would, in the opinion of
independent counsel to such Indemnified Person be inappropriate due to actual or
potential differing interests between you and such Indemnified Person. Your
obligations hereunder shall be in addition to any rights that any Indemnified
Person may have at common law or otherwise. No waiver, amendment or other
modification of this Indemnification Agreement shall be effective unless in
writing and signed by each party to be bound thereby.

If the Company enters into any agreement or arrangement with respect to, or
effects, any proposed sale, exchange, dividend or other distribution or
liquidation of all or a significant portion of its assets in one or a series of
transactions or any significant recapitalization or reclassification of its
outstanding securities, the Company shall provide for the assumption of its
obligations under this Indemnification Agreement by another party reasonably
satisfactory to Advanced Equities.

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This Indemnification Agreement and any claim related directly or indirectly to
this Indemnification Agreement shall be governed and construed in accordance
with the laws of the State of Delaware, without regard to the conflicts of law
provisions thereof. No such claim shall be commenced, prosecuted or continued in
any forum other than the courts of the State of Delaware or in the United States
District Court in the District of Delaware, and each of the parties hereto
submits to the jurisdiction of such courts. We and you (on your own behalf and,
to the extent permitted by applicable law, on behalf of your security holders
and creditors) waive all right to trial by jury in any action, proceeding or
counterclaim, whether based upon contract, tort or otherwise, related to or
arising out of or in connection with our engagement. The provisions of this
Indemnification Agreement shall apply to the engagement (including related
activities prior to the date hereof) and any modification thereof and shall
remain in full force and effect indefinitely, regardless of the completion or
termination of the engagement. If any provision, covenant or restriction herein
is held by a court of competent jurisdiction to be invalid, void, unenforceable
or against public policy, then the court so holding shall at our or your
request, reform such provision to give the maximum permissible intent to the
intentions of the parties as set forth herein, and the court shall enforce such
provision as so reformed. If, notwithstanding the foregoing, any provision,
covenant or restriction is held by a court of competent jurisdiction to be
invalid, void, unenforceable or against public policy, the remainder of the
provisions contained herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.

Very truly yours,

ADVANCED EQUITIES SECURITIES LLC

 

By:   LOGO [g340093g96e25.gif]  

Shannon Soqui

Head of Investment Banking – West Coast

Accepted and agreed to as of the date set forth above:

Quantum Fuel Systems Technologies Worldwide, Inc.

 

By:   /s/ W. Brian Olson  

W. Brian Olson

Chief Financial Officer