EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made on January 10, 2006 by and between Quantum Fuel Systems Technologies Worldwide, Inc. ("Quantum" or the "Company") and William 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, Employer desires to employ Employee in accordance with the terms and conditions of this Agreement and Employee desires to be so employed by Employer.

WHEREAS, by executing this Agreement, the parties desire to terminate that certain Employment Agreement by and between the Company and Employee dated May 1, 2005.

AGREEMENT

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

1. .            EMPLOYMENT.

The Company hereby employs Employee as Chief Financial Officer for the Company. 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 that are consistent with such position 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.

2.             COMPENSATION.
3. 1. BASE SALARY. During the Term, Quantum will pay Employee a base salary of Four Hundred Fifty Thousand dollars ($450,000) per year. The CEO shall review this base salary at least annually, and the Compensation Committee shall review and approve any recommended increases. Said salary, including any increases, shall be paid to Employee in accordance with Quantum's normal payroll policies as in effect from time to time.
   2. INCENTIVE COMPENSATION. During the Term, Employee shall be eligible for: (a) participation in any executive cash bonus plan adopted by the Company, 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 andrestricted stock, under the terms of such plans as in effect from time to time.
   3. BENEFITS. During the Term, Employee shall be entitled to the following benefits:
   4. 1. 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;
      2. 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;
      3. 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.
      4. 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.
      5. A car allowance of one thousand five hundred ($1,500) per month, pro rated on a daily basis for any period of the Term which is less than a full month;
      6. If Employee 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 that are in place for Employee 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.
   5. BUSINESS EXPENSE REIMBURSEMENT. During the Term, the Company shall reimburse Employee for reasonable and necessary out-of-pocket expenses incurred by 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.
   6. 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.
4.             TERM AND TERMINATION PAYMENTS.
5. 1. TERM. The Term shall commence effective as of January 10, 2006 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.
   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, then Employee shall be entitled to the following severance benefits (the "Severance Benefits"):
   3. 1. a lump sum cash payment equal to two (2) times the Employee's Base Salary in effect immediately prior to the date of termination. Said payment shall be paid to Employee within ten (10) days of Employee's execution of the Release (as hereinafter defined);
      2. continuation of the benefits provided pursuant to Section 2.3 (a) and (b) for a period of two (2) years following the date of termination (the "Severance Period") to the extent permitted by the applicable plans; 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 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
      3. All incentive compensation awards including, without limitation, stock options (qualified and non-qualified), restricted stock and other stock-based compensation, shall immediately and automatically become fully vested.
      4. 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 shall be conditioned on Employee having first signed a release agreement, in the form attached as Exhibit A (the "Release").

Notwithstanding anything contained in this Agreement to the contrary, under no circumstances shall Employee have any duty or obligation to mitigate the amount of Severance Benefits due under this Agreement.

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 Emplo