EXHIBIT 10.2

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT is made on May 1, 2005 by and between Quantum Fuel
Systems Technologies Worldwide, Inc. (“Quantum” or the “Company”) and W. Brian
Olson (“Employee”). Capitalized terms not otherwise defined in the body of this
Agreement shall have the meanings specified in Section 5 hereof.

 

RECITALS

 

WHEREAS, the Company and Employee are parties to that certain Employment
Agreement dated September 1, 2002, as amended to date (the “Prior Agreement”);
and

 

WHEREAS, the parties hereto desire to terminate the Prior Agreement on mutually
agreeable terms effective as of the date of this Agreement, and replace the
Prior Agreement with this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and the mutual promises and
covenants contained in this Agreement, the parties hereto agree as follows:

 

SECTION 1. EMPLOYMENT.

 

The Company hereby employs Employee to render services to the Company as Chief
Financial Officer of Quantum. The parties hereto agree that the Prior Agreement
is terminated and replaced in its entirety by this Agreement as of the date
hereof, and that the Prior Agreement shall have no force or effect after the
date of this Agreement.

 

Employee hereby accepts employment under this Agreement and agrees to devote his
best effort and substantially full time, attention and energy to the Company’s
business. Employee’s duties shall include all of the duties, including
reasonable business-related travel, normally associated with the position named
above, and shall include such other activities, responsibilities and duties as
may be reasonably assigned from time to time by the Board of Directors or the
CEO. The Company, through the Board of Directors and the CEO, shall retain full
direction and control of the manner, means and methods by which Employee
performs the services for which he is employed hereunder, provided that
Employee’s duties and responsibilities shall be of substantially the same
character as, or equivalent to, those performed by an executive officer.

 

SECTION 2. COMPENSATION.

 

2.1 BASE SALARY. During the Term, Quantum will pay Employee a base salary of
three hundred fifty thousand dollars ($350,000) per year during the first twelve
(12) months following the date of this Agreement. The CEO shall review this base
salary annually, and the Compensation Committee shall review and approve any
recommended increases. Said salary, including any increases, shall be paid to
Employee every two weeks, for a total of twenty-six payments annually, pursuant
to Quantum’s normal payroll policies as in effect from time to time.

 

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2.2 INCENTIVE COMPENSATION. During the Term, Employee shall be eligible for: (a)
a target annual cash bonus, which shall be payable based on achievement of
corporate and individual performance objectives to be determined by the CEO and
approved by the Compensation Committee, and which shall be paid within one
hundred (100) days following the end of the Fiscal Year, and shall be pro rated
on a daily basis for any period of the Term which does not include all of a
Fiscal Year; and (b) awards under the Company’s long-term incentive plans,
including but not limited to stock options and restricted stock, under the terms
of such plans as in effect from time to time.

 

2.3 BENEFITS. During the Term, Employee shall be entitled to the following
benefits:

 

(a) Except as otherwise specified in this Agreement, the fringe benefits that
the Company makes generally available to its executive officers, which currently
include medical insurance, a Section 401(k) defined contribution employee
savings plan and a non-qualified deferred compensation plan;

 

(b) Term life insurance coverage, paid for by the Company, in the face amount of
the greater of (i) two (2) times an annual amount which is the sum of Employee’s
annual base salary under Section 2.1 as in effect from time to time, and the
average of Employee’s prior two (2) years’ annual cash bonuses under Section
2.2, and (ii) one million dollars ($1,000,000); provided, however, that the face
amount of this coverage shall never decrease;

 

(c) If Employee becomes eligible to receive payments under the Company’s
standard long-term disability (“LTD”) insurance, supplemental LTD insurance
coverage, such that the combination of monthly payments from the Company’s
standard LTD plan and from this supplemental LTD policy shall equal one twelfth
(1/12) of sixty percent (60%) of Employee’s annual base salary as in effect from
time to time.

 

(d) Four (4) weeks of paid vacation each calendar year, pro rated on a daily
basis for any period of the Term which is less than a full calendar year.

 

(e) A car allowance of one thousand dollars ($1,000) per month, pro rated on a
daily basis for any period of the Term which is less than a full month;

 

(f) If Executive becomes unable to work due to disability, sick leave that
covers Employee at full base salary and continued participation in whatever
other Company-sponsored pay and benefit arrangements are in place for Executive
immediately prior to such disability, until Employee is eligible for LTD
benefits. Any unused sick leave shall not be accumulated or carried over, nor
paid for upon termination of this Agreement.

 

2.4 BUSINESS EXPENSE REIMBURSEMENT. During the Term, the Company shall reimburse
Employee for reasonable and necessary out-of-pocket expenses incurred by

 

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Employee in performance of services for the Company under this Agreement (e.g.
transportation, lodging and food expenses incurred while traveling on Company
business), all subject to such policies and other requirements as the Company
may from time to time establish for its employees generally. Employee shall
maintain such records as will enable the Company to deduct such items as
business expenses when computing its taxes.

 

2.5 WITHHOLDING. Payment of compensation to Employee shall be subject to
withholding of such amounts on account of payroll taxes, income taxes and other
withholding as may be required by applicable law, rule or regulation of any
governmental authority or as consented to by Employee.

 

SECTION 3. TERM AND TERMINATION PAYMENTS.

 

3.1 TERM. The Term shall not commence until the Board of Directors or the
Compensation Committee approves this Agreement. Once such approval shall have
been obtained, then the Term shall commence as of the date on which the parties
made this Agreement and shall continue until the earliest of: (a) the Company’s
termination of Employee’s employment as set forth in Section 3.2 of this
Agreement; (b) Employee’s termination of employment as set forth in Section 3.3
of this Agreement; or (c) the Employee’s Disability, Death or Retirement, as set
forth in Section 3.4 of this Agreement.

 

3.2 TERMINATION BY COMPANY. The Company may terminate Employee’s employment with
Cause effective immediately, or without Cause at any time by giving Employee
written notice at least thirty (30) days prior to the effective date of
termination; provided, that if such termination of employment is made by the
Company without Cause prior to the expiration of the Term, then Employee shall
be entitled to the following severance benefits (the “Severance Benefits”):

 

(a) monthly installments equal to one-twelfth (1/12) of an annual amount which
is the sum of: Employee’s annual base salary under Section 2.1 as in effect at
the time of termination, plus the average of Employee’s prior two (2) years’
annual cash bonuses under Section 2.2. No later than the day when the first of
these monthly installments becomes due, the Company shall (i) establish a rabbi
trust to pay said installments and (ii) fund the rabbi trust with the full
amount of said installments. These monthly installments, paid from the rabbi
trust, shall continue for a period of twenty-four (24) months; provided,
however, that these installments shall be subject to offset after eighteen (18)
months to the extent that Employee has earned income at that time from another
source; and further provided, that these installments shall cease upon
Employee’s death (the “Severance Period”). The foregoing severance payments in
any month shall be reduced by the amount of any payments received that month
under the Company’s standard LTD plan and the supplemental LTD plan described in
Section 2.3(c) above.

 

(b) continuation of the benefits provided pursuant to Section 2.3 (a), (b) and
(c) to the extent permitted by the applicable plans, for the Severance Period;
provided, however, that said benefits shall cease immediately when Employee is
next employed with reasonably comparable benefits; and further provided,
however, that if Employee elects during the Severance Period to convert
Employee’s health coverage under COBRA, then Employee shall pay the

 

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Company the same premiums for health coverage that Employee paid prior to
electing COBRA and the Company shall pay the balance of the COBRA premiums
during the Severance Period; and

 

(c) Employee’s stock options, qualified and non-qualified, and other stock-based
compensation: shall continue to vest during the Severance Period as if
Employee’s employment had not been terminated, to the extent permitted by the
terms of the plans governing the stock options and other stock-based
compensation; and shall vest in full as of the day before the date when they
would otherwise have been forfeited for failure to vest under the terms of the
applicable plans.

 

(d) In the event that Section 280G of the Internal Revenue Code, as amended from
time to time, shall apply to Employee’s Severance Benefits and Employee’s
Severance Benefits shall exceed the 2.99x limit set forth in said Section 280G
(the “280G Limit”), then the Company shall provide Employee a Section 280G tax
gross-up payment, subject to a maximum payment of one-sixth (1/6) of the
aggregate amount of the 280G Limit.

 

Employee’s eligibility, both initially and ongoing, to receive the foregoing
Severance Benefits (including payments from the rabbi trust set forth in Section
3.2(a) above) shall be conditioned on: (a) Employee having first signed a
release agreement, in the form attached as Exhibit A; and (b) Employee’s
agreement, made hereby and to be upheld during the Severance Period, (i) not to
engage in any business activity that competes, directly or indirectly, with the
Company or its successors or assigns; and (ii) not to solicit, directly or
indirectly, any employees of the Company to leave the employ of the Company.

 

3.3. TERMINATION BY EMPLOYEE. Employee may terminate employment with the Company
with or without Good Reason effective at any time by giving the Company written
notice at least thirty (30) days prior to the effective date of termination;
provided, however, that if Employee seeks to terminate employment for Good
Reason, then Employee shall give the Company: (a) written notice no more than
fifteen (15) days from the date when Employee first became aware that Good
Reason has taken place (or else Employee forfeits the right to terminate
employment for Good Reason) and (b) the opportunity, for no less than thirty
(30) days from the effective date of Employee’s written notice to the Company,
to cure the purported situation that gave rise to Good Reason. In the event of
termination by Employee without Good Reason, Employee shall not be entitled to
any compensation or benefits following the effective date of termination of
employment, except as expressly provided under the terms of the Company’s
applicable plans and policies. In the event of termination by Employee for Good
Reason and after the Company shall have failed to cure, then Employee shall be
entitled to the Severance Benefits set forth in Section 3.2 above.

 

3.4 TERMINATION BY DEATH, DISABILITY OR RETIREMENT. Employee’s employment shall
terminate automatically upon the earliest of Employee’s death and, to the extent
permitted by law, Disability and Retirement. In the event that Employee’s
employment is terminated by death, Disability or Retirement, then the Company
shall pay all compensation and benefits to which Employee is entitled up to the
date of such termination. Thereafter, all obligations of the Company shall
cease. A termination by death, Disability or Retirement shall not

 

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constitute: (a) a termination by the Company without Cause for purposes of
Section 3.2 above or (b) a termination by Employee for Good Reason for purposes
of Section 3.3 above. Nothing in this section shall affect Employee’s rights
under any Company plan in which Employee is a participant.

 

SECTION 4. CONFIDENTIALITY.

 

4.1 CONFIDENTIAL INFORMATION. Employee shall not at any time, during the period
of employment with the Company or thereafter, except as required in the course
of employment with the Company or as authorized in writing by the Board of
Directors, directly or indirectly use, disclose, disseminate or reproduce any
Confidential Information or use any Confidential Information to compete,
directly or indirectly, with the Company. All notes, notebooks, memoranda,
computer program and similar repositories of information containing or relating
in any way to Confidential Information shall be the property of the Company. All
such items made or compiled by Employee or made available to Employee during the
Term, including all copies thereof, shall be delivered to the Company by
Employee upon termination of the Term or at any other time, upon request of the
Company.

 

4.2 PROPRIETARY INFORMATION OF OTHERS. Employee shall not use in the course of
employment with the Company, or disclose or otherwise make available to the
Company, any information, documents or other items which Employee may have
received from any prior employer or other person and which Employee is
prohibited from so using, disclosing or making available by reason of any
contract, court order, law or other obligation by which Employee is bound.

 

4.3 EQUITABLE RELIEF. Employee acknowledges that: the provisions of this Section
4 of the Agreement are essential to the Company; the Company would not enter
into this Agreement if it did not include such provisions; the damages sustained
by the Company as a result of any breach of such provisions cannot be adequately
remedied by damages; and, in addition to any other right or remedy that the
Company may have under this Agreement by law or otherwise, the Company will be
entitled to injunctive and other equitable relief to prevent or curtail any
breach of any such provisions.

 

SECTION 5. DEFINITIONS.

 

Whenever used in this Agreement with initial letters capitalized, the following
terms shall have the following meanings:

 

“BOARD OF DIRECTORS” means, unless otherwise specified, Quantum Fuel Systems
Technologies Worldwide, Inc.’s Board of Directors.

 

“CAUSE” means (i) Employee’s conviction of a crime involving dishonesty, breach
of trust, or physical harm to any person; (ii) Employee willfully engaging in
conduct that is in bad faith and materially injurious to the Company, including
but not limited to misappropriation of trade secrets; (iii) Employee willfully
engaging in fraud or embezzlement; (iv) Employee’s commission of a material
breach of this Agreement, which breach is not cured within thirty (30)

 

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days after written notice to Employee from the Company; (v) Employee’s willful
refusal to implement or follow a lawful policy or directive of the Company,
which breach is not cured within thirty (30) days after written notice to
Employee from the Company; or (vi) Employee’s engaging in misfeasance or
malfeasance demonstrated by a pattern of failure to perform job duties
diligently and professionally, which breach is not cured within thirty (30) days
after written notice to Employee from Company.

 

“CEO” means the Chief Executive Officer of the Company.

 

“CHANGE OF CONTROL” means a change in ownership or control of the Company
effected through a merger, consolidation or acquisition by any person or related
group of persons (other than an acquisition by the Company or by a
Company-sponsored employee benefit plan or by a person or persons that directly
or indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934) of securities possessing more than fifty
percent (50%) of the total combined voting power of the outstanding securities
of the Company.

 

“COMPENSATION COMMITTEE” means the Compensation Committee of the Board of
Directors.

 

“CONFIDENTIAL INFORMATION” means information not generally known relating to the
business of the Company or any third party that is contributed to, developed by,
disclosed to, or known to Employee in the course of employment by the Company,
including but not limited to customer lists, specifications, data, research,
test procedures and results, know-how, services used, computer programs,
information regarding past, present and prospective plans and methods of
purchasing, accounting, engineering, business, marketing, merchandising, selling
and servicing used by the Company.

 

“DISABILITY” means that Employee becomes eligible for the Company’s long-term
disability benefits or, in the sole discretion of the Company, Employee is
unable to carry out Employee’s executive responsibilities by reason of any
physical or mental impairment for more than ninety (90) consecutive days or more
than one hundred and twenty (120) days in any twelve-month period.

 

“FISCAL YEAR” means the Company’s fiscal year for financial accounting purposes
as in effect from time to time, which is currently a fiscal year ending on April
30.

 

“GOOD REASON” means the occurrence of any of the following events or conditions,
unless consented to by Employee or cured by the Company: (a) a change in
Employee’s status, title, position or responsibilities which represents a
material adverse change from Employee’s status, title, position or
responsibilities as in effect at any time during the Term; provided, however,
that if after a Change in Control, Employee retains substantially the same
status, title, position and responsibilities that Employee had prior to the
Change in Control but Employee is serving as the Chief Financial Officer of the
Company as a subsidiary or division of another entity, then Good Reason shall
not have occurred; (b) a reduction in Employee’s base salary to a level below
that in effect at any time during the Term; (c) requiring Employee to be based
at any place

 

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outside a fifty (50) mile radius from Employee’s job location at the time of the
execution of this Agreement, except for business-related travel reasonably
required for the performance of Employee’s duties as the Company’s Chief
Financial Officer; or (d) requiring Employee to undertake business-related
travel requirements that are materially greater than the business-related travel
requirements as set forth in subsection (c) above and Section 1 of this
agreement.

 

“RETIREMENT” means Employee’s retirement in accordance with the plans and
policies of the Company as in effect from time to time and applicable to
Employee.

 

“TERM” means the period during which Agreement is in effect as provided in
Section 3.1.

 

SECTION 6. MISCELLANEOUS.

 

6.1 COMPLIANCE WITH LAWS. In the performance of this Agreement, each party shall
comply with all applicable laws, regulations, rules, orders and other
requirements of governmental authorities having jurisdiction.

 

6.2 NONWAIVER. The failure of any party to insist upon or enforce strict
performance by any other of any provision of this Agreement or to exercise any
right, remedy or provision of this Agreement shall not be interpreted or
construed as a waiver or relinquishment to any extent of such party’s right to
consent or rely upon the same in that or any other instance; rather, the same
shall be and remain in full force and effect.

 

6.3 ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement, and
supersedes any and all prior agreements between the Company and Employee
(including the Prior Agreement). No amendment, modification or waiver of any of
the provisions of this Agreement shall be valid unless set forth in a written
instrument signed by the party to be bound thereby.

 

6.4 APPLICABLE LAW AND VENUE. This Agreement shall be interpreted, construed and
enforced in all respects in accordance with the laws of the State of California,
and venue for any action arising out of this Agreement shall be in the federal
or state courts in Orange County, California.

 

6.5 SURVIVAL. Section 4, together with all other provisions of this Agreement
which may reasonably be interpreted or construed to survive any termination of
the Term, shall survive termination of the Term.

 

6.6 ATTORNEYS’ FEES. In the event any suit or proceeding is instituted by any
party against another arising out of this Agreement, the prevailing party shall
be entitled to recover its attorneys’ fees and expenses of litigation; provided,
however, that in the event of the settlement of any suit or proceeding, the
parties shall bear their own attorneys’ fees and expenses of litigation.

 

6.7 SEVERABILITY. If any term, provision, covenant or condition of this
Agreement shall be held by a court of competent jurisdiction to be invalid,
unenforceable or void, then the remainder of this Agreement shall remain in full
force and effect.

 

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6.8 HEADINGS. The headings and captions of this Agreement are provided for
convenience only, and are not intended to have any effect upon the
interpretation or construction of the Agreement.

 

6.9 NOTICES. Any notice, request, consent or approval required or permitted to
be given under this Agreement or pursuant to law shall be sufficient if in
writing, and personally delivered to Employee or by registered or certified mail
to Employee’s residence (as noted in the Company’s records), or if personally
delivered to the Company’s Corporate Secretary at the Company’s principal
office.

 

EMPLOYEE:  

QUANTUM FUEL SYSTEMS

TECHNOLOGIES WORLDWIDE, INC.

/s/ W. Brian Olson

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  By:  

/s/ Alan P. Niedzwiecki

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W. Brian Olson       Alan P. Niedzwiecki         President and Chief Executive
Officer

 

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EXHIBIT A

 

FORM OF RELEASE CERTIFICATE

 

                                          (“You”) and Quantum Fuel Systems
Technologies Worldwide, Inc. (the “Company”) have agreed to enter into this
Release Certificate on the following terms:

 

Within ten (10) days after you sign this Release Certificate (which you may sign
no sooner than the last day of your employment with the Company), you will
become eligible to receive severance benefits in accordance with the terms of
your Employment Agreement with the Company.

 

In return for the consideration described in the Employment Agreement, you and
your representatives completely release the Company, its affiliated, related,
parent or subsidiary corporations, and its and their present and former
directors, officers and employees (the “Released Parties”) from all claims of
any kind, known and unknown,1 which you may now have or have ever had against
any of them, or arising out of your relationship with any of them, including all
claims arising from your employment or the termination of your employment, with
the exception of Severance Payments as outlined in Section 3.2, whether based on
contract, tort, statute, local ordinance, regulation or any comparable law in
any jurisdiction (“Released Claims”). By way of example and not in limitation,
the Released Claims shall include any claims arising under Title VII of the
Civil Rights Act of 1964, the Americans with Disabilities Act, the Worker
Adjustment and Retraining Notification Act, the Age Discrimination in Employment
Act, and the California Fair Employment and Housing Act, and any other
comparable state or local law, as well as any claims asserting wrongful
termination, breach of contract, breach of the covenant of good faith and fair
dealing, negligent or intentional misrepresentation, defamation and any claims
for attorneys’ fees. You also agree not to initiate or cause to be initiated
against any of the Released Parties any lawsuit, compliance review,
administrative claim, investigation or proceedings of any kind which pertain in
any manner to the Released Claims.

 

You acknowledge that the release of claims under the Age Discrimination in
Employment Act (“ADEA”) is subject to special waiver protection. Therefore, you
acknowledge the following: (a) you have had twenty-one (21) days to consider
this Release Certificate (but may sign it at any time beforehand, if you so
desire); (b) you can consult an attorney in doing so; (c) you can revoke this
Release Certificate within seven (7) days of signing it, by sending a certified
letter to that effect to the Company’s Chief Executive Officer; and that (d)
notwithstanding the foregoing, the portion of this Release Certificate that
pertains to the release of claims under ADEA shall not become effective

 

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1 You further agree that because this Release Certificate specifically covers
known and unknown claims, you waive your rights under Section 1542 of the
California Civil Code or under any other comparable law of another jurisdiction
that limits a general release to claims that are known to exist at the date of
this release. Section 1542 of the California Civil Code states as follows: “A
general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.”

 

Exhibit A

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or enforceable and no funds shall be exchanged until the seven (7)-day
revocation period has expired, but that all other provisions of this Release
Certificate shall become effective upon its execution by the parties.

 

The parties agree that this Release Certificate and the Employment Agreement
contain all of our agreements and understandings with respect to their subject
matter, and may not be contradicted by evidence of any prior or contemporaneous
agreement, except to the extent that the provisions of any such agreement have
been expressly referred to in this Release Certificate or the Employment
Agreement as having continued effect. It is agreed that this Release Certificate
shall be governed by the laws of the State of California. If any provision of
this Release Certificate or its application to any person, place or circumstance
is held by a court of competent jurisdiction to be invalid, unenforceable or
void, then the remainder of this Release Certificate and such provision as
applied to other person, places and circumstances shall remain in full force and
effect.

 

Please note that this Release Certificate may not be signed before the last day
of your employment with the Company, and that your eligibility for severance
benefits is conditioned upon meeting the terms set forth in your Employment
Agreement.

 

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   Date:                                                  
                                Employee     

QUANTUM FUEL SYSTEMS TECHNOLOGIES

WORLDWIDE, INC.

     By:  

 

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   Date:                                                   Name:  

 

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     Title:  

 

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Exhibit A