10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended April 30, 2002

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to                

Commission File No.: 001-15143

IMPCO TECHNOLOGIES, INC.

(Exact name of Registrant as specified in its charter)

Delaware	91-1039211
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

16804 Gridley Place Cerritos, California 90703

(Address of principal executive offices, including zip code)

(562) 860-6666

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

None

(Title of each class) (Name of exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.001 par value per share

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x    No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

The aggregate market value of the Common Stock held by non-affiliates of the Registrant as of July 24, 2002 was approximately $71,741,969 based upon the closing sale price of the Registrant’s Common Stock on such date, as reported on the Nasdaq National Market. Shares of Common Stock held by each executive officer and director and each person owning more than 5% of the outstanding Common Stock of the Registrant have been excluded in that such persons may be deemed to be affiliates of the Registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of July 24, 2002, the Registrant had 14,142,036 shares of Common Stock, $.001 par value per share, outstanding.

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties. These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections about our industry, our beliefs and assumptions. We use words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “estimate” and variations of these words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. These risks and uncertainties include those described in “Risk Factors” and elsewhere in this Annual Report. You should not place undue reliance on these forward-looking statements, which reflect our view only as of the date of this Annual Report.

PART I

Item 1.    Business.

Overview

We design, manufacture and supply advanced systems that store gaseous fuels and monitor and control the pressure and flow of those fuels for use in internal combustion engines. Our components and systems enable internal combustion engines to operate on natural gas or propane. Our products improve efficiency, enhance power output, and reduce emissions by electronically sensing and regulating the proper proportion of fuel and air required by the internal combustion engine. Additionally, we have extensive engineering, design and systems integration experience with respect to our customers’ requirements for product performance, durability and physical configuration. Based on over 43 years of technology development and expertise in producing cost-effective, safe and durable fuel technology systems for engines, we believe that we are positioned to provide enabling products and technologies in the rapidly expanding alternative fuel industry.

Our customers use our components and systems on engines ranging from one to 4,000 horsepower. We provide gaseous fuel components and systems for the mobile vehicle aftermarket, material handling, stationary and portable power generation and industrial markets.

A number of automotive, industrial and power generation manufacturers, who are our customers, are developing alternative clean power systems using clean burning gaseous fuels, which decrease fuel costs, lessen dependence on crude oil and reduce harmful emissions in internal combustion engines. We offer the following products, kits and systems to these customers:

• fuel delivery—pressure regulators, fuel injectors, flow control valves, and other components and systems designed to control the pressure, flow and/or metering of gaseous fuels;

• electronic controls—solid-state components and proprietary software that monitor and optimize fuel pressure and flow to meet manufacturers’ engine requirements; and

• systems integration—services to integrate the gaseous fuel storage, fuel delivery and/or electronic control components and sub-systems to meet OEM and aftermarket requirements.

We have been producing and selling gaseous fuel systems and components for over 40 years. We sell these systems and components directly to end users, OEMs and the aftermarket through more than 400 distributors and dealers worldwide.

We were incorporated in Delaware in 1985.

Recent Development

Historically, we organized our business into two operating divisions: the Gaseous Fuel Products division and the Quantum Technologies Worldwide division. On July 23, 2002, we completed the distribution and spin-

off of our Quantum division by distributing one share of Quantum common stock for every share of IMPCO common stock held on the record date, July 5, 2002. As a result of this spin-off we no longer hold any continuing interest in Quantum and we are no longer involved in developing and marketing fuel cell enabling technologies. However, we have entered into a strategic alliance with Quantum to use jointly developed technologies in our respective markets.

A strategic alliance between General Motors and Quantum became effective on the spin-off of Quantum. General Motors acquired Quantum Series A common stock representing 19.9% of Quantum’s equity in consideration of a nominal cash contribution and access to certain General Motors proprietary information. Quantum has committed to provide minimum amounts of annual funding to projects approved under the alliance. Each party will retain the ownership of its existing technology and will jointly own technology that is jointly created under the alliance. Quantum will be free to use jointly created technologies in certain aspects of its business but will be required to share revenues with General Motors on fuel cell system-related products that are sold to General Motors or third parties.

Several business purposes underlie the spin-off of Quantum. In particular, Quantum desires to enhance access to the capital markets by, among other things, allowing the financial community to focus separately on Quantum. We believe the separation of our businesses and the establishment of Quantum as an independent company facilitates opportunities for Quantum to seek capital in the future. We believe that the spin-off enables each entity to best realize its growth strategies as a separate, stand-alone entity, based on its prospective capitalization and financing requirements, acquisition strategies, working capital requirements, projected cash flows from operations and desired credit ratings.

We have included a discussion on the Quantum reporting segment in the Management Discussion and Analysis section since the financial results of Quantum were included in the April 30, 2000, 2001 and 2002 consolidated results of operations. As a result of the spin-off of Quantum, we will report Quantum as a discontinued operation in fiscal year 2003. During fiscal year 2002, the Quantum division revenues represented 25.7% of the consolidation revenues and the Quantum division operating loss during fiscal year 2002 was approximately $39.7 million.

Alternative Fuel Industry

Overview.    Our focus is on the alternative fuel industry. Three independent market factors—economics, energy independence and environmental concerns—are driving the development of alternative fuel industry technology and markets. We believe the price differential between propane or natural gas and gasoline drives the economics of the alternative fuel market. The price of traditional liquid fuels such as gasoline is typically two to three times that of natural gas or propane. By converting an internal combustion engine to run on propane or natural gas through the installation of alternative fuel enabling products, customers can capitalize on the price differential and reduce harmful vehicle emissions.

End users are typically able to recoup the cost of the conversion in six to eighteen months, depending on the fuel cost spread in favor of alternative fuel versus gasoline. Transportation companies in various countries, including Australia, Mexico, India and China, are also taking advantage of these economics.

Among the most active are taxi companies, transit and shuttle bus companies, and delivery fleets, such as Coca Cola, Frito-Lay, Pepsi Cola and United Parcel Service. Small and large industrial engine users in the power generation market wish to capitalize on the cost benefits of using alternative fuels and their low-pollutant capabilities. For example, forklift users often operate equipment indoors where toxic emissions are a concern. In all these situations, it is relatively easy to establish centralized fueling stations. Because of the global price differential in favor of gaseous fuels compared to gasoline, their availability in third-world markets and their lower pollutants, the alternative fuel industry market potential is growing rapidly.

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In addition to economics, energy independence is a significant driver for the alternative fuel market. Many countries have significant natural gas reserves and seek to use alternative fuels to reduce their dependence on imported oil and reduce their unfavorable balance of payments. Natural gas is generally consumed domestically since it is difficult to transport internationally in a gaseous state and liquefying natural gas tends to be costly. Implementing OEM alternative fuel vehicles that operate on natural gas or propane can lessen the demand for gasoline. For example, the Egyptian and Chinese governments realized that rather than relying solely on petroleum for its transportation needs, it could use natural gas in vehicles to free some of its oil production for export.

Governmental emission regulations, which support the use of clean burning alternative fuels, are also expanding industry growth. The negative environmental impact associated with liquid fuels further increases the demand for systems that use clean burning fuels. Internal combustion engines are a major source of air pollution, which has led to increased government regulation and oversight on vehicle and industrial engine emissions. The U.S. Department of Energy estimates that OEM vehicles fueled with natural gas emit 80% less carbon monoxide and nitrogen oxide than vehicles fueled by reformulated gasoline. Most major international cities are experiencing significant pollution from gasoline and diesel emissions. These cities also have the largest concentrations of fleet operators, and many of these cities are taking steps to reduce emissions, typically by implementing natural gas or propane-fueled vehicles. For example, in Mexico City the government has taken steps such as prohibiting the use of certain vehicles on designated days of the week.

In the United States, legislation such as the Comprehensive National Energy Strategy, the Clean Air Act Amendments of 1990 and the Energy Policy Act of 1992 provide goals for energy and efficiency and strict emission standards and promote the development and implementation of alternative fuels and related technologies. Several states, including California, Massachusetts, New York and Vermont, have also adopted legislation targeted at reducing harmful vehicle emissions. In addition, several countries, including Argentina, Canada, China, Colombia, Egypt, France, Germany, Greece, India, Italy, Mexico, Russia and the United Kingdom, have enacted air pollution regulations or programs favoring the use of alternative fuels.

Markets.    According to the World LP Gas Association and the European Natural Gas Association, there are over 5.6 million gaseous fuel vehicles worldwide, consisting of approximately 4.1 million propane vehicles and approximately 1.5 million natural gas vehicles. In 1999, Frost & Sullivan estimated that the number of propane vehicles in the United States will continue to grow at the historical rate of 1.7 to 1.9% per year through 2005 and that the number of natural gas vehicles in the United States would grow at a compounded annual growth rate of 14.6% per year.

In its International Energy Outlook 2001, the Energy Information Administration of the U.S. Department of Energy has found that interest in expanding the use of alternative fuel vehicles is growing in many parts of the world. Growth projections, reported by the Energy Information Administration and the International Association for Natural Gas Vehicles in comparison with current data available from the European Natural Gas Vehicle Association, indicate that over 2 million additional alternative fuel vehicles will be introduced worldwide by 2010. In Europe, alternative fuel vehicles have rapidly penetrated the transportation market. The European Union’s four largest natural gas-consuming members, the United Kingdom, Germany, France, and Italy, have all introduced incentives for gaseous fueled vehicles. The European Union has established a target to replace 20% of their liquid fueled vehicles with gaseous fuels by 2020. The Mexican Regulatory Commission of Energy estimates that it will be able to increase the penetration of natural gas vehicles from 2,000 in 2000 to 100,000 by 2008.

The Asia-Pacific region is emerging as a significant growth market for alternative fuel vehicles. The International Association for Natural Gas Vehicles in its journal NGV Worldwide reports that in 1999, the Japanese government established a target of introducing 3.4 million “Clean Energy Vehicles” by 2010, of which 1 million would be natural gas vehicles. The Australian Natural Gas Vehicles Council forecast that the number of natural gas vehicles in Australia would increase from approximately 2,000 in 2000 to 70,000 by 2010 to

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complement its growing propane vehicle fleet of over 515,000. South Korea is expected to spend $610 million to put 20,000 natural gas-powered buses in service by 2007. This is in addition to South Korea’s aggressive implementation of propane-fueled vehicles, which comprise over eight percent of the registered motor vehicles in South Korea.

Competitive Advantages

We believe our future technological leadership position in the alternative fuel industry will result from our continued success in the design, manufacturing and commercialization of advanced fuel delivery systems and components, our relationships with leading companies in our targeted transportation, material handling and industrial and power generation markets, our financial commitment to research and development and our proven ability to develop and commercialize new products. We believe our competitive strengths include the following:

Industry Leader.    We have derived a technology and product leadership position from the broad application and integration of our technologies and enabling systems into the established and expanding alternative fuel industry. Our significant investment in research and development on gaseous fuel technologies over the past nine years, coupled with our history and experience in this industry, has provided us with a strong technology base for new product innovation for internal combustion engines.

Proven Manufacturing Methods.    We have more than four decades of experience in the manufacture, development and integration of alternative fuel technologies and products. We currently maintain manufacturing and production facilities in the United States, Europe, Mexico and Australia, which produce a broad range of products and services, including components, systems and specialty vehicle assembly. Our U.S., Australian and European facilities have achieved ISO-9000 or QS-9000 certification. QS-9000 is the common supplier quality standard for Chrysler Corporation, Ford Motor Company and General Motors. QS-9000 applies to suppliers of production materials, production and service parts, heat treating, painting and plating and other finishing services. ISO-9000 is a set of three individual, but related, international standards on quality management and quality assurance. These standards were developed to effectively document the quality system elements to be implemented in order to maintain efficient quality systems.

Strong OEM Customer Relationships.    We currently sell products to over 100 OEM customers in domestic and international alternative fuel markets. To date, we have sold over 4 million fuel systems or sub-systems globally to our customers. We believe that the successful historic use of our products and our reputation as a leader in our industry provides a strong competitive position.

Established Systems Integration Expertise.    As more OEMs seek to reduce costs by outsourcing key tasks and reducing the number of suppliers, we have increasingly focused on capturing additional revenue opportunities by expanding our systems integration capabilities. In 1998, we established our Industrial Engine Systems business in Sterling Heights, Michigan, which provides systems integration of our low-emission products for engines that are subsequently sold to industrial OEMs. We believe that our systems integration expertise, together with our proprietary and patented technologies, give us a significant advantage in the alternative fuel markets.

Positioned for Global Growth.    With ten foreign facilities and over 400 distributors and dealers in more than 30 countries outside the United States, we believe that we are positioned to capitalize on global growth opportunities. We believe that the alternative fuel markets will grow dramatically internationally, particularly in China, India, Japan, Mexico and Southeast Asia, because of the existing urban pollution problems and economics that favor alternative fuels versus gasoline.

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Business Strategy

We believe that the successful execution of the following strategic objectives will enable us to maintain and expand our leadership position in the advanced fuel technologies industry.

Capitalize on our Strong Technology Leadership Position.    We are a leading developer and manufacturer of fuel metering and electronic control systems for the alternative fuel industry. We believe that this position results from our current technology advantage and our investment in research and development in this rapidly expanding industry. Our investment has and is expected to continue to permit us to develop and supply new technology and products to our target markets, which are transitioning to gaseous fueled internal combustion engines. We also plan to develop new technologies and expand our product and system integration capabilities to an increasingly larger and more diversified customer base.

Focus on Advanced Fuel Technologies and Products. We intend to focus on advanced electronic and fuel metering technologies and products. We plan to continue our research and product development in fuel delivery and electronic control systems for alternative fuels. We will actively seek to establish joint development programs and strategic alliances with the major engine designers, manufacturers and industry leaders in these markets.

Develop and Expand Key Industry Relationships.    We plan to utilize the successful technical and business relationships and reputation we have established worldwide with major industry leaders using alternative fuel products to enable us to establish and maintain strategic alliances, joint product development programs and joint ventures with these companies in our target markets. We plan to concentrate our efforts on broadening our OEM relationships in an effort to establish strong top-tier supplier positions based on our belief that OEMs will drive industry growth in the alternative fuel industry.

Expand and Broaden Systems Integration Expertise.    We plan to continue to broaden our capabilities to provide the integration, testing, validation and manufacturing of our products and systems into the transportation, material handling, stationary and portable power generation and general industrial markets. As more OEMs seek to reduce costs and shorten time to market by outsourcing key tasks and reducing numbers of suppliers, we are increasingly focused on capturing additional revenue opportunities by expanding into value-added services, such as systems integration. For example, we have established an industrial systems unit in Michigan to provide systems integration for our products in engines that will be sold to industrial OEMs that then install these engines into end products.

Increase Bases of Business Operations and Distributor Network in High-Growth Global Regions.    We plan to expand our operating network in high-growth regions, such as Asia, Europe and Latin America, to take advantage of significant growth opportunities that we believe exist in those areas. We intend to capitalize on these growth opportunities through acquisitions and joint ventures, strengthening of our distributor network and developing key local business and governmental support and recognition. In particular, we are developing working relationships with several foreign governments. We believe that working with local governments and establishing joint ventures with local business leaders is essential to expanding into international markets. For example, our discussions with government officials have led to our involvement in developing regulations in Mexico.

Expand our Global Manufacturing Operations.    We plan to expand our current QS-9000 manufacturing operations in the United States and Mexico by establishing manufacturing sites in low-cost locations with a continued focus on quality, timely delivery and operating efficiency.

Customers and Strategic Relationships

Our customers include some of the world’s largest OEMs and engine manufacturers, including Ashok Leyland, Boss Manufacturing, Caterpillar, Clark, Cummins, Daewoo, Detroit Diesel, Ford Australia, GM Holden, Kohler, Komatsu, Mazda, Mitsubishi, Onan, Still and Toyota.

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We are working with a number of these customers to address their future product and application requirements as they integrate more advanced, certified gaseous fuel systems into their business strategies. Additionally, we continually survey and evaluate the benefits of joint ventures, acquisitions and strategic alliances with our customers and other participants in the alternative fuel industry to strengthen our global business position.

We have focused our strategic alliances on our marketing strategy and/or on our development strategy. Our marketing strategy seeks to expand the distribution channels for our gaseous fuel system technologies. Our development strategy is to advance the state of technology and its application.

IMPCO-Quantum.    In connection with the spin-off of Quantum, we entered into a Strategic Alliance Agreement with Quantum pursuant to which we will work with Quantum in identifying and conducting research and development programs of mutual interest. As part of such research and development activities, we may develop, solely or jointly with Quantum, technology and products that are owned solely by us or jointly with Quantum for use in our respective markets. The other purpose of this relationship is to provide us access to Quantum’s advanced technologies products, including the CNG storage tanks, fuel injectors, in-tank regulators and other products, for use in automotive, bus and truck and industrial aftermarket applications and in the bus and truck and industrial OEM markets. We believe that this alliance will expedite the commercialization and integration of advanced gaseous storage and handling systems and products into broader global alternative fuel markets, including automotive after-market, material handling, internal combustion engine-based stationary and portable power generation, and general industrial markets.

Lotus Engineering.    In March 2002, we announced a teaming agreement with Lotus Engineering to accelerate the development of advanced internal combustion engine technology designs and products that connect the use of clean-burning gaseous fuels such as natural gas and propane in vehicles and equipment to enhance performance and significantly reduce emissions. Lotus Engineering’s core competencies include engine and vehicle engineering and technology. This alliance provides us access to over 900 engineering professionals experienced in engine technology, suspension and vehicle integration.

We intend to establish similar relationships with leading industry OEMs by using our systems integration capabilities and our leading technology position in gaseous fuel products and systems.

Products and Services

Our products include gaseous fuel regulators, fuel shut-off valves, fuel delivery systems, complete engine systems, and electronic controls for use in internal combustion engines for the transportation, material handling, stationary and portable power generator and general industrial markets. In addition to these core products, which we manufacture, we also design, assemble and market ancillary components required for complete systems operation on alternative fuels.

All of our products are designed, tested and validated in accordance with our own internal requirements, as well as tested and certified with major regulatory and safety agencies throughout the world, including Underwriters Laboratories (UL) in North America and TÜV in Europe. The following table describes the features of our products:

Products	Features
Fuel Metering	•      Designed to operate on propane, natural gas or digester gas fuels
	•      Electronic control overlays allow integration with modern emissions monitoring systems for full emissions compliance capability
	•      Designed for high resistance to poor fuel quality

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Products	Features
Fuel Regulation	•      Reduces pressure of gaseous and liquid fuels
	•      Vaporizes liquid fuels
	•      Handles a wide range of inlet pressures
Fuel Shut-Off	•      Mechanically or electronically shuts off fuel supply to the regulator and engine
	•      Available for low-pressure vapor natural gas and high-pressure liquid propane
	•      Designs also incorporate standard fuel filtration to ensure system reliability
Electronics & Controls	•      Provides closed loop fuel control, allowing integration with existing sensors to ensure low emissions
	•      Integrates gaseous fuel systems with existing engine management functions
Engine Systems	•      Turnkey kits for a variety of engine sizes and applications
	•      Customized applications interface per customer requirements
Full Systems	•      Complete vehicle and equipment systems for aftermarket conversion
	•      Complete engine and vehicle management systems for heavy-duty engine on-highway truck and bus operation on natural gas
	•      Complete engine and vehicle management systems for off-highway and industrial engines used for material handling, pumping and industrial applications

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Services.    We provide a broad range of services to both our product customer base and the broader service marketplace. These services fall into the following key areas:

Services	Capabilities
Design and Systems Integration	•      Strong team of applications engineers for component, system and engine level exercises providing support to customers in the application of our gaseous fuel products
	•      Applications engineering services for whole vehicle/machine integration outside of our products
	•      Full three dimensional design modeling and component rapid prototyping services
Certification	•      Certification of component products and services in line with the requirements of California Air Resources Board for off-highway engines
	•      Provide customers with the required tools to manage in-field traceability and other requirements beyond initial emission compliance
Testing and Validation	•      Component endurance testing
	•      Component thermal and flow performance cycling
	•      Engine and vehicle testing and evaluation for performance and emissions
Sub-System Assembly	•      Pre-assembled modules for direct delivery to customers’ production lines
	•      Sourcing and integrating second and third tier supplier components
Training and Technical Service	•      Complete technical service support, including technical literature, web-based information, direct telephone interface (in all major countries) and on-site support
	•      Training services through sponsored programs at approved colleges, at our facilities worldwide and on-site at customer facilities
Service Parts and Warranty Support	•      Access to service parts network, along with direct support in development of customers’ own internal service parts programs and procedures
	•      Warranty and replacement services for our customers worldwide

Sales and Distribution

We sell products through a worldwide network encompassing more than 400 distributors and dealers in over 30 countries and through a sales force that develops sales with OEMs and large end-users. We focus on three markets: material handling OEMs and aftermarket, stationary and portable power generation OEMs and aftermarket, and the mobile vehicle aftermarket. Of these markets, we believe that the automotive vehicle aftermarket, primarily outside of North America, has the greatest potential for immediate growth and that the power generation markets have potential for growth over the next one to five years.

For fiscal year 2002, excluding the Quantum division, sales to distributors (including company-owned distributors) accounted for 46% of our net revenue and sales to OEM customers accounted for approximately 54% of our net revenue. During fiscal year 2002, OEM customers accounted for a higher percent of total sales as

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compared to fiscal years 2001 and 2000. This increase is driven by the need for complete certified systems for use on OEM applications. Distributors primarily service the aftermarket conversion business and small-volume OEMs, and are generally specialized and privately owned enterprises. Many domestic distributors have been our customers for more than 30 years, and many of our export distributors have been our customers for more than 20 years.

Our company-owned distributors are included in our International Operations segment and consist of our subsidiaries located in Europe, Australia, Mexico, Japan, and India, which are responsible for sales, application and market development and technical service. Additionally, these subsidiaries provide sales support, application development and technical support to aftermarket and OEM customers.

Manufacturing

We manufacture and assemble products at our facilities in Cerritos, California, Sterling Heights, Michigan and at our international facilities. Current manufacturing operations consist primarily of mechanical assembly and light machining. We rely on outside suppliers for parts and components and obtain components for products from a variety of domestic and foreign automotive and electronics suppliers, die casters, stamping operations, specialized diaphragm manufacturers and machine shops. For fiscal year 2002, excluding the Quantum division, ten suppliers accounted for approximately 28% of our raw material purchases.

Material costs, die cast aluminum parts and diaphragms in particular, represent the major components of cost of sales. Coordination with suppliers for quality control and timely shipments is a high priority to maximize inventory management. We use a computerized material requirement planning system to schedule material flow and balance the competing demands of timely shipments, productivity and inventory management. All the Gaseous Fuel Products division’s manufacturing facilities are ISO-9001 or QS-9001 certified.

Research and Development

In 2002, we opened a new research and development facility in Seattle, Washington, which is dedicated to the research and development of systems and products that support the use of gaseous fuels in internal combustion engines. This facility has sophisticated, state-of-the-art research laboratories, emissions control equipment, and testing equipment. Our research and development is focused on fuel delivery and electronic control systems and products for motor vehicles, engines, forklifts, stationary engines and small industrial engines.

We have the following technical capabilities:

• Electronic Control Systems.    Specialization in hardware design and selection, engine modeling, calibration and software design for engine and emission controls.

• Mechanical Design and Development.    Specialization in pneumatic, kinematics, hydraulic components and systems and advanced materials, structural, flow and thermal analysis.

• Advanced Catalysts.    Catalyst and emission testing.

• Advanced Products.    Injectors, pressure sensors and bi-directional mass flow sensors, fuel management, mass flow sensors for natural gas measurement and “smart” sensors using 8-bit micro-controllers.

• Component and Subsystem Test Facilities.    Extended vibrations, shock loads and accelerations, flow simulations and pneumatic leak checks.

We believe this facility is a critical component in our ability to maintain our technological leadership position in alternative fuel enabling systems.

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We conduct alternative fuel application development at the following facilities:

• Cerritos, California for the power generation market;

• Seattle, Washington for the transportation market; and

• Sterling Heights, Michigan for the industrial market.

• Rijswijk, Holland for the industrial and transportation market; and

• Cheltenham, Australia for the transportation market.

These facilities encompass approximately 100,000 square feet of laboratory space, and we have over 65 employees at these facilities.

Competition

We are a leading provider of alternative fuel systems. We provide products and integrated services for all gaseous fuels in our target markets for use in all end user applications in the alternative fuel industry.

Our key competitors in gaseous fuel delivery products, accessory components and engine conversions markets include Aisan, BRC, GFI, Koltec, Landi, Lovato, OMVL and Tartarini, which together with us account for a majority of the world market for alternative fuel products and services. In the future, we may face competition from traditional automotive component suppliers, such as Bosch, Delphi, Siemens and Visteon, and from motor vehicle OEMs that develop fuel systems internally.

We believe that our competitive advantage over current and future competitors is our technology leadership derived from many years of experience with alternative gaseous fuels. Our current competitors typically focus on fuel injection and individual components. We are unique in being able to offer complete integrated fuel systems based on our own advanced technologies, including gaseous fuel storage, fuel metering, and electronic controls.

Product Certification

We must obtain emission compliance certification from the Environmental Protection Agency to sell certain of our products in the United States and from the California Air Resources Board to sell certain products in California. Each car, truck or van sold in the U.S. market must be certified by the Environmental Protection Agency before it can be introduced into commerce and its products must meet component, subsystem and system level durability, emission, refueling and various idle tests. In California, both on-road and off-road vehicles have emission compliance regulation. We have also obtained international emissions compliance certification in Argentina, Australia, Brazil, Canada, Chile, Europe and Mexico.

We strive to meet stringent industry standards set by various regulatory bodies, including the Federal Motor Vehicle Safety Standards of the United States, the National Highway and Transportation Safety Administration, the National Fire Protection Association, Underwriters Laboratories and American Gas. Approvals enhance the acceptability of our products in the domestic marketplace. Many foreign countries also accept these agency approvals as satisfying the “approval for sale” requirements in their markets.

Backlog

As of July 1, 2002, our backlog for our products was $15.9 million. We measure backlog for our product sales from the time orders become irrevocable, which generally occurs 90 days prior to the date of delivery.

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Employees

As of May 31, 2002, we employed approximately 510 persons. Of these employees, approximately 156 were employed by our Quantum division and 399 were employed by our Gaseous Fuel Products division, including 103 employees internationally. None of our employees are represented in a collective bargaining agreement. We consider our relations with our employees to be good.

Intellectual Property

We currently rely primarily on patent and trade secret laws to protect our intellectual property. We currently have U.S. patents and foreign patents issued. The U.S. patents expire between October 2002 and May 2020. We also have U.S. and foreign patent applications pending. Our pending patent applications may not be allowed. Even if they are allowed, these patents may not provide us a competitive advantage. Competitors may successfully challenge the validity and scope of our patents and trademarks.

We also rely on a combination of trademark, trade secret and other intellectual property laws and various contract rights to protect our proprietary rights. However, we do not believe our intellectual property provides significant protection from competition. We believe that patent, copyright, trademark and trade secret protection are less significant and that our growth and future success will be more dependent on factors such as the knowledge, ability and experience of our personnel, new product introductions and continued emphasis on research and development. We believe that establishing and maintaining strong strategic relationships with valued customers and OEMs are the most significant factors protecting us from new competitors.

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Item 2.    Properties.

Facilities

Our executive offices and our Gaseous Fuel Products division are located in Cerritos, California. We currently lease additional manufacturing, research and development and general office facilities in the following locations set forth below:

Location	Principal Uses	Square Footage
Cerritos, California	Corporate offices; manufacturing; design, development and testing	105,000
Sterling Heights, Michigan	Sales, marketing application, development and assembly	78,000
Seattle, Washington	Research and development	26,000
Rijswijk, Holland	Sales, marketing application, development and assembly	16,000
Cheltenham, Australia	Sales, marketing application, development and assembly	15,000
Sydney, Australia	Sales, marketing and assembly	7,500
Mexico City, Mexico	Sales, marketing application, development and assembly	12,000
Fukuoka, Japan	Sales, marketing and assembly	4,000

We also lease nominal amounts of office space in France, the United Kingdom and Queensland, Australia.

We believe our facilities are presently adequate for our current core product manufacturing operations and OEM development programs and production.

Item 3.    Legal Proceedings.

Except as set forth below, we are not currently a party to any material legal proceeding. In addition to the proceeding described below, we may from time to time become involved in litigation relating to claims arising in the ordinary course of business. These claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources.

In August 2000, we proceeded with legal action in federal court (Eastern District of Michigan, case # 00-73633) against GFI Control Systems Inc. and Dynetek Industries Ltd. for patent infringement (U.S. Patent No. 6,041,762), which covers a compressed gas fuel system that includes a tank with an internal pressure regulator. GFI Control Systems Inc. filed a counter-claim for patent infringement. In connection with the spin-off of Quantum, we assigned our rights in this litigation to Quantum. We intend to vigorously enforce our intellectual property rights.

Item 4.    Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended April 30, 2002.

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PART II

Item 5.    Market for Company’s Common Equity and Related Stockholder Matters.

Our common stock is traded on the Nasdaq National Market under the symbol “IMCO.” The following table sets forth, for the periods indicated, the closing high and low sale prices of our common stock as reported on the Nasdaq National Market.

	High		Low
Fiscal Year Ended April 30, 2001:
First Quarter	$	44.88	$	20.13
Second Quarter		33.97		15.50
Third Quarter		22.50		9.75
Fourth Quarter		26.88		13.00
Fiscal Year Ended April 30, 2002:
First Quarter	$	39.82	$	23.70
Second Quarter		29.30		10.92
Third Quarter		17.49		10.85
Fourth Quarter		16.76		9.94

As of July 24, 2002, there were approximately 524 stockholders of record.

Dividend Policy

The Company has never paid dividends on its common stock. We previously paid the holders of our 1993 Series 1 Preferred Stock cumulative cash dividends. On March 31, 1999, each share of preferred stock was converted into shares of our common stock. As a result, after March 31, 1999, we have no shares of preferred stock outstanding and have no obligation to pay any further dividends on those shares.

We currently intend to retain any earnings for use in developing and growing our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our board of directors and will be dependent on our results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors deemed relevant by the board of directors.

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Item 6.    Selected Financial Data.

The following table sets forth our selected consolidated financial data for the five years ended April 30, 2002. This data has been derived from our audited consolidated financial statements and should be read in conjunction with the consolidated financial statements, related notes and other financial information included herein. The pro forma data has been prepared to illustrate the effect of our spin-off of our Quantum subsidiary and should be read in conjunction with the unaudited pro forma condensed consolidated financial statements, related notes and other financial information herein.

	Year Ended April 30,
	1998		1999		2000		2001			2002			Pro forma 2002(4)
	(in thousands, except for per share data)
Statement of Operations:
Revenue:
Product sales	$	62,209	$	75,821	$	103,418	$	95,987		$	83,062		$	67,604
Contract revenue		8,874		11,006		9,398		7,910			8,017			72
Net revenue		71,083		86,826		112,816		103,897			91,079			67,676
Cost and expenses:
Cost of product sales		38,174		52,179		69,799		68,951			70,123			44,542
Research and development expense		12,062		11,612		15,576		32,556			38,513			5,856
Selling, general and administrative expense		13,729		16,133		21,343		24,061			26,055			19,676
Operating income (loss)		7,118		6,903		6,097		(21,671	)		(43,612	)		(2,399	)
Interest expense		938		1,213		1,524		1,417			1,653			1,164
Interest income		3		43		82		1,309			245			236
Gain on sale of subsidiary (1)		—		2,169		—		—			—			—
Net income (loss)		4,865		6,331		3,065		(13,103	)		(27,236	)		(2,220	)
Dividends on preferred stock		595		531		—		—			—			—
Net income (loss) applicable to common stock	$	4,270	$	5,800	$	3,065	$	(13,103	)	$	(27,236	)	$	(2,220	)
Net income (loss) per share (1)(2):
Basic	$	0.67	$	0.80	$	0.36	$	(1.32	)	$	(2.45	)	$	(0.20	)
Diluted	$	0.60	$	0.71	$	0.33	$	(1.32	)	$	(2.45	)	$	(0.20	)
Number of shares used in per share computation (2)(3):
Basic		6,334		7,293		8,489		9,935			11,098			11,098
Diluted		8,155		8,976		9,232		9,935			11,098			11,098
Balance Sheet Data:
Total current assets	$	38,817	$	52,120	$	73,385	$	79,636		$	62,417		$	33,031
Total assets		58,178		73,562		95,016		120,763			123,449			80,290
Total current liabilities		11,417		16,892		23,756		28,089			33,110			23,974
Long-term obligations, less current portion		11,387		13,894		23,344		7,998			5,393			5,266
Stockholders’ equity		34,305		41,449		45,379		82,631			82,677			48,782

(1) Represents gain on sale of 49% interest in IMPCO BV to BERU Aktiengesellschaft during fiscal year 1999. We recorded a pre-tax gain of $2.2 million and an after-tax gain of $1.8 million or $0.20 per diluted share.

(2) During fiscal year 1998, shares assumed to be issued upon conversion of our preferred stock were included in the calculation of shares outstanding since the conversion resulted in reportable dilution. During fiscal year 1999, all of our preferred stock was converted to common stock and the diluted earnings per share was calculated as though the conversion occurred at the beginning of fiscal year 1999.

(3) See note 1 of the notes to consolidated financial statements included elsewhere in this prospectus for an explanation of the method used to determine the number of shares used to compute net income per share.

(4) The pro forma data has been prepared to illustrate the effect of our spin-off of Quantum. The adjustments are based upon available information and upon certain assumptions that management believes are reasonable under the circumstances. Diluted pro forma net income per share includes the effect of dilutive employee stock options.

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Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read this discussion together with the financial statements and other financial information included in this Annual Report on Form 10-K.

Overview

We design, manufacture and supply components that store gaseous fuels and monitor and control the pressure and flow of those fuels for use in internal combustion engines. Historically, most of our revenues have been derived from the sale of the products that enable traditional internal combustion engines to run on clean burning alternative fuels such as propane and natural gas instead of gasoline. Based on over 43 years of technology development and expertise in producing cost-effective, safe, and durable fuel technology systems for engines, we believe that we are positioned to provide enabling products and technologies in the rapidly expanding alternative fuel industry.

Prior to the spin-off of Quantum, we classified our business operations into three reporting segments: our Quantum division, the Gaseous Fuel Products division and International Operations. Our Quantum division generates revenues through the sale of fuel storage, fuel delivery and electronic control systems to OEMs, primarily General Motors, and the installation of our products into OEM vehicles. Quantum also generates contract revenue by providing engineering design and support to the OEMs so that our fuel storage, fuel delivery and electronic control systems integrate and operate with certain of their alternative fuel vehicles. The Gaseous Fuel Products division sells products, including parts and conversion systems, for applications in the transportation, material handling, stationary and portable power generator and general industrial markets. Our International Operations in Asia, Australia, Europe, India, Japan and Mexico provide distribution for our products, predominantly from our Gaseous Fuel Products division and some product assembly on engines.

We recognize revenue for product sales when products are shipped and title is transferred. Contract revenues are recognized based on the percentage of completion method. Corporate expenses represent a sub-category of selling, general and administrative expense. Corporate expenses consist of general and administrative expense incurred at the corporate level and includes the amortization of goodwill and other intangible assets. Intersegment eliminations are primarily the result of intercompany sales from the Gaseous Fuel Products division to the International Operations. End markets for our products include the transportation, material handling and industrial and power generation industries.

We expense all research and development when incurred. Research and development expense includes both customer-funded research and development and company-sponsored research and development. Customer funded research and development consists primarily of expenses associated with contract revenue. These expenses include application development costs at Quantum funded under customer contracts.

Recent Developments

Quantum Spin-off.    On July 23, 2002, we completed the distribution and spin-off of our Quantum subsidiary by distributing one share of Quantum common stock for every share of IMPCO common stock held on the record date, which was July 5, 2002. A strategic alliance with General Motors became effective on the date of our spin-off of Quantum. General Motors has acquired Quantum Series A common stock representing 19.9% of Quantum’s equity in consideration of a nominal cash contribution and access to certain General Motors proprietary information.

Several business purposes underlie the spin-off of Quantum. In particular, Quantum desires to enhance access to the capital markets by, among other things, allowing the financial community to focus separately on

15

Quantum. We believe the separation of our businesses and the establishment of Quantum as an independent company facilitates opportunities for Quantum to seek capital in the future. We believe that the spin-off enables each entity to best realize its growth strategies as a separate, stand-alone entity, based on its prospective capitalization and financing requirements, acquisition strategies, working capital requirements, projected cash flows from operations and desired credit ratings. The spin-off is subject to various risks described in “Management’s Discussion and Analysis of Financial Condition and Results of Operation—Risk Factors” included in Item 7 of this Annual Report.

We have included a discussion on the Quantum reporting segment since the financial results of Quantum were included in the April 30, 2000, 2001 and 2002 consolidated results of operations. As a result of the spin-off of Quantum, we will report Quantum as a discontinued operation in fiscal year 2003. We expect the spin-off of Quantum to have a favorable effect on our results of operations and cash flows from operations.

Private Placement.    On May 8, 2002, we completed the sale of an aggregate of 1.5 million shares of our common stock to institutional and accredited investors at a purchase price of $12.50 per share, for gross proceeds of $18.75 million. The proceeds are expected to be used for potential acquisitions, debt repayment, and general corporate purposes.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to bad debts, goodwill, taxes, inventories, warranty obligations, long-term service contracts, and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our consolidated financial statements:

We recognize revenue and profit as work progresses on long-term, fixed price contracts for product application development using the percentage-of-completion method, which relies on estimates of total expected, contract revenue and costs. We follow this method because we can make reasonably dependable estimates of the revenue and costs applicable to various stages of a contract. Recognized revenues and profit are subject to revisions as the contract progresses to completion. Revisions in profit estimates are charged to income in the period in which the facts that give rise to the revision become known.

We provide for the estimated cost of product warranties at the time revenue is recognized. While we engage in product quality programs and processes, including actively monitoring and evaluating the quality of our component suppliers, our warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from our estimates, revisions to the estimated warranty liability would be required.

We write down our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

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We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

We operate wholly owned and majority owned subsidiaries. We recorded goodwill at the time of purchase for the amount of the purchase price over book value. Future adverse changes in market conditions or poor operating results of underlying investments could result in losses or an inability to recover the carrying value of the goodwill, thereby possibly requiring an impairment charge in the future.

We recorded a deferred tax asset and believe that it is more likely than not to be realized. While we consider future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event we were to determine that we would not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made.

Results of Operations

Years Ended April 30, 2001 and 2002

Net revenues and operating income for our reporting segments for the fiscal years ended April 30, 2001 and 2002 are as follows:

	Revenues						Operating Income (Loss)
	Year Ended April 30,						Year Ended April 30,
	2001			2002			2001			2002
	(in thousands)
Gaseous Fuel Products	$	66,925		$	52,055		$	11,138		$	3,416
International Operations		31,132			32,773			1,387			599
Quantum		23,358			23,403			(27,124	)		(39,689	)
Corporate expenses(1)		—			—			(7,019	)		(8,331	)
Intersegment elimination		(17,518	)		(17,152	)		(53	)		393
Total	$	103,897		$	91,079		$	(21,671	)	$	(43,612	)

(1) Represents corporate expenses not allocated to any of the reporting segments.

Net revenue decreased $12.8 million, or 12.3%, from $103.9 million in fiscal year 2001 to $91.1 million in fiscal year 2002. This decrease was primarily due to the decline in sales of conversion kits and components to the material handling market, which is attributable to unfavorable economic conditions.

The following table sets forth our product revenues by application across all reporting segments:

	Year Ended April 30,
	2001		2002
	(in thousands)
Motor vehicle products	$	40,619	$	39,917
Forklifts and other material handling equipment		39,445		27,484
Small portable to large stationary engines		15,923		15,661
Total product sales	$	95,987	$	83,062

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During fiscal years 2001 and 2002, our product revenue was generated in the following geographic regions:

	Year Ended April 30,
	2001		2002
United States and Canada	62.2	%	58.5	%
Pacific Rim	10.9	%	7.4	%
Europe	17.0	%	20.6	%
Latin America	9.9	%	13.5	%

Gaseous Fuel Products.    Net revenues in this segment decreased $14.8 million, or 22.2%, from $66.9 million in fiscal year 2001 to $52.1 million in fiscal year 2002. Revenues were lower primarily due to the decline in sales of our products to the material handling market. We believe this decline in sales was caused by the current economic slowdown. The increase in our large stationary engine market was largely offset by the decline in our small industrial engine market. Assuming the rebound in motor vehicle conversions in Mexico continues and our expectations for increasing international motor vehicle sales due to our expansion in India and Latin America, we anticipate that overall revenues in fiscal year 2003 will be higher than fiscal year 2002.

Gross profit in this segment decreased $8.0 million, or 36.1%, from $22.3 million in fiscal year 2001 to $14.3 million in fiscal year 2002. The decline in revenues negatively impacted gross profit by $5.0 million. The remaining $3.0 million decline in gross profit was due to product mix consisting of a higher percentage of lower margin complete engine systems sales and lower margin sales to our foreign subsidiaries.

Operating income in this segment decreased $7.7 million, or 69.3%, from $11.1 million in fiscal year 2001 to $3.4 million in fiscal year 2002. This decrease was due to lower gross profits offset by a $0.3 million reduction in operating expenses. Assuming growth in overall revenues and gross profits, we anticipate that operating income for this segment for fiscal year 2003 will be higher than fiscal year 2002.

International Operations.    Net revenues in this segment increased by $1.7 million, or 5.3%, from $31.1 million in fiscal year 2001 to $32.8 million in fiscal year 2002. In fiscal year 2002, net revenues increased $4.1 million at our Mexico subsidiary, $0.7 million in Asia and $0.4 million at our European subsidiary. These increases were partially offset by decreases of $2.5 million at our Australian subsidiary and $1.0 million at our Japan subsidiary. In fiscal year 2002, revenues for our International Operations segment would have increased an additional $0.4 million if not for the strengthening of the U.S. Dollar. A strong U.S. Dollar has a negative effect on the conversion of foreign currency denominated sales. Assuming the fundamentals of our international markets remain strong in terms of government regulations, pollution control and economics, we anticipate continuing market growth and increasing revenues for this segment next fiscal year.

Operating income for this segment decreased $0.8 million, or 56.8%, from $1.4 million in fiscal year 2001 to $0.6 million in fiscal year 2002 as all foreign subsidiaries except Mexico experienced lower operating income. This was primarily a result of lower gross margins due to the higher cost of U.S. goods purchased with their weakening local currencies. Additionally, we added marketing and technical personnel to support new and expanding markets in Asia, which resulted in increased operating expenses compared to the prior fiscal year. Assuming higher revenues and gross profits, we anticipate that operating income levels in our International Operations segment will be higher in fiscal year 2003 than in fiscal year 2002.

Quantum.    Net revenues remained relatively unchanged at $23.4 million in fiscal year 2002, increasing only $0.05 million, or 0.2%. Product sales remained at $15.5 million in fiscal year 2002. Product sales consist of those associated with General Motors’ mid-size automobiles, pick-up trucks and van platforms equipped with our bi-fuel and compressed natural gas fuel systems and General Motors’ medium duty trucks equipped with dedicated liquid propane gas kits. For fiscal year 2002, higher service parts sales and higher sales of GM van platforms were offset by lower sales of pick-up trucks, midsize automobiles and medium duty truck platforms.

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Cost of product sales increased $6.1 million, or 31.5%, from $19.5 million in fiscal year 2001 to $25.6 million in fiscal year 2002. The increase in cost of product sales was due to a $1.4 million increase in inventory reserves, of which $0.6 million was related to a “lower of cost-or-market” reserve for the General Motors’ pick-up truck application and $0.5 million related to increases in the provision for obsolescence, $1.4 million in higher material cost related to product mix, a $1.0 million increase in warranty reserves due to increased vehicle sales and higher warranty claims experienced, primarily in our medium duty applications, a $1.8 million increase in labor and manufacturing overhead mainly due to pre-production efforts associated with our fuel storage tanks, a $0.2 million increase in freight charges, and a $0.2 million increase in production related scrap. The “lower of cost-or-market” reserve on the General Motors’ pick-up truck application is due to a fixed sales price and a higher than expected material cost. The higher expected material cost is due to lower anticipated volumes and no firm sales commitment from General Motors. As such, once product is received for this application, we immediately reduce our inventory value to reflect the selling price of the application. We expect the level of the “lower of cost-or-market” adjustment to be lower in the future as a result of pricing increases for the pick-up truck application.

Gross profits on product sales were $6.1 million, or 152.9%, lower in fiscal year 2002 as compared to fiscal year 2001, due to the $6.1 million increase in cost of product sales.

Contract revenues remained relatively unchanged, increasing 0.4% to $7.9 million in fiscal year 2002. The increase is primarily due to new fuel cell contracts which were offset by a $3.5 million decline in General Motors’ alternative fuel model year program revenues. Contract revenue is primarily for system development and application engineering of our products under funded General Motors and other OEM contracts and other funded contract work with state and federal agencies.

For the fiscal year 2002, research and development associated with cost of contract revenues increased $0.8 million, or 14.7%, to $6.3 million as compared to the $5.5 million reported in fiscal year 2001. The increase for fiscal year 2002 is due to a margin decrease from 30.2% to 20.2%. The decrease in margin is primarily due to $1.3 million in cost overruns on the CNG pick-up truck development programs and the cancellation of the GM LPG pick-up truck development program.

Research and development expense increased by $6.0 million, or 22.4%, to $32.7 million for fiscal year 2002, from the $26.7 million reported in fiscal year 2001. The increase in research and development primarily relates to a $4.2 million increase attributable to additional facilities and additional research and development support activities, a $1.0 million increase for fuel storage, fuel delivery systems, and vehicle integration for fuel cell and CNG-related OEM programs for internally funded fuel cell and alternate fuel system and component application development work and a $0.8 million increase in research and development associated with cost of contract revenues.

General and administrative expenses increased by $0.5 million, or 11.8%, to $4.8 million for fiscal year 2002 from $4.3 million for fiscal year 2001. The increase for fiscal year 2002 was mainly due to non-recurring charges of $2.0 million for legal and consulting services associated with the spin-off transaction, the strategic alliance with General Motors and legal proceedings related to patent infringement described in “Business—Legal Proceedings.” These expenses were partially offset by cost reduction efforts executed in the second and third quarter of fiscal year 2002.

Operating losses increased by $12.6 million, or 46.3%, from $27.1 million in fiscal year 2001 to $39.7 million in fiscal year 2002. The increase in loss was attributable to a $6.1 million increase in negative gross profits on product sales, a $6.0 million increase in research and development expenses and a $0.5 million increase in general and administrative expenses. For the fiscal year 2002, operating losses include $1.2 million in restructuring charges for the closure of our Mexico assembly operation, the closure of a Michigan facility and associated personnel severance costs.

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Corporate Expenses.    Corporate expenses consists of general and administrative expenses at the corporate level to support our operating segments in areas such as executive management, finance, human resources, management information systems, legal services and investor relations. Additionally, amortization of goodwill and other intangible assets is recorded as a corporate expense. Corporate expenses increased $1.3 million, or 18.7%, from $7.0 million in fiscal year 2001 to $8.3 million in fiscal year 2002. During fiscal year 2002, increases in corporate expenses were attributable to $1.2 million in legal fees and consulting services primarily related to Quantum spin-off costs and our Form S-3 filing in connection with a follow-on equity offering, which was withdrawn on September 20, 2001. We anticipate that corporate expenses will be lower in 2003.

Interest Expense (Net).    Net interest expense increased $1.3 million, or 1,199.0%, from $0.1 million in fiscal year 2001 to $1.4 million in fiscal year 2002. The increases were primarily due to a higher outstanding balance on our line of credit with Bank of America, as compared to the interest income generated from the proceeds from the July 2000 equity offering in the first quarter of the prior fiscal year. We anticipate that interest expense for fiscal year 2003 will be lower than that of fiscal year 2002 due to lower outstanding balances on the line of credit and term loans.

Provision for Income Taxes.    The estimated effective annual tax benefit rate of 40% for fiscal year 2002 approximates the previous year’s tax benefit rate of 41%. The effective tax benefit rate represents the federal statutory income tax rate, state income taxes and foreign income taxes increased by research and development credits. For the fiscal year ended April 30, 2002 we have incurred a $43.6 million operating loss. Also, we have federal and state research and development credit carryforwards aggregating approximately $10.6 million. Federal research and development credits totaling $6.4 million expire from 2010 to 2022. State research and development credits of $4.2 million have no expiration date. As of April 30, 2002, the net deferred tax asset was $31.9 million. We believe that, based on our history of prior operating earnings, our completed spin-off of Quantum and our expectations for the future, our operating income will more likely than not be sufficient to recognize fully the deferred tax assets and that the estimated effective annual tax rate in the future years will approximate the statutory rate.

Years Ended April 30, 2000 and 2001

Net revenues and operating income for our reporting segments for the fiscal years ended April 30, 2000 and 2001 are as follows:

	Revenues						Operating Income (Loss)
	Year Ended April 30,						Year Ended April 30,
	2000			2001			2000			2001
	(in thousands)
Gaseous Fuel Products	$	76,831		$	66,925		$	19,451		$	11,138
International Operations		29,991			31,132			2,623			1,387
Quantum		22,341			23,358			(8,510	)		(27,124	)
Corporate expenses(1)		—			—			(7,042	)		(7,019	)
Intersegment elimination		(16,347	)		(17,518	)		(425	)		(53	)
Total	$	112,816		$	103,897		$	6,097		$	(21,671	)

(1) Represents corporate expenses not allocated to any of the reporting segments.

Net revenue decreased $8.9 million, or 7.9%, from $112.8 million in fiscal year 2000 to $103.9 million in fiscal year 2001. This decrease was primarily due to short-term declines in the automotive aftermarket end use

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due to less favorable alternative fuel prices and the declines in small industrial engine sales related to year 2000 preparedness. The following table sets forth our product revenues by application across all reporting segments:

	Year Ended April 30,
	2000		2001
	(in thousands)
Motor vehicle products	$	48,626	$	40,619
Forklifts and other material handling equipment		37,947		39,445
Small portable to large stationary engines		16,844		15,923
Total product sales	$	103,417	$	95,987

During fiscal years 2000 and 2001, our product revenue was generated in the following geographic regions:

	Year Ended April 30,
	2000		2001
United States and Canada	60.2	%	62.2	%
Pacific Rim	9.3	%	10.9	%
Europe	13.7	%	17.0	%
Latin America	16.8	%	9.9	%

Gaseous Fuel Products.    Net revenues in this segment decreased $9.9 million, or 12.9%, from $76.8 million in fiscal year 2000 to $66.9 million in fiscal year 2001. Revenues were lower primarily due to a $8.1 million slowdown in sales to distributors in Mexico for automotive aftermarket sales. These lower shipments were caused primarily by reduced volumes in aftermarket public transportation programs, a reduction in prices due to increased competition and a reduction in demand in the Mexican market primarily due to higher propane prices. Additionally, revenues were lower due to a $4.5 million decline in small engine sales related to year 2000 preparedness. These decreases were partially offset by $4.5 million in higher sales of material handling engine systems and for large industrial engine end uses at our engine systems business.

Gross profit in this segment decreased $4.2 million, or 16.0%, from $26.5 million in fiscal year 2000 to $22.3 million in fiscal year 2001. The decline in revenues negatively impacted gross profit by $4.0 million. The higher percentage of sales to our foreign subsidiaries, which involve lower margins, adversely affected gross profit by approximately $1.1 million. Additionally, discounts on sales in the Mexico marketplace negatively affected gross profits by $0.2 million. These declines were partially offset by a $0.7 million increase in gross profit for material handling and large industrial engines due mainly to lower per unit overhead costs as a result of higher volumes.

Operating income in this segment decreased $8.4 million, or 42.7%, from $19.5 million in fiscal year 2000 to $11.1 million in fiscal year 2001. This decrease was primarily due to lower gross profits and higher application development expenses of $4.0 million as compared to the prior fiscal year. The increase in product application development expenses are primarily related to the development of the next generation fuel/engine management systems for the material handling and industrial engine market.

International Operations.    Net revenues in this segment increased by $1.1 million, or 3.8%, from $30.0 million in fiscal year 2000 to $31.1 million in fiscal year 2001. In fiscal year 2001, revenues for our International Operations segment would have increased an additional $3.2 million, if not for the strengthening of the U.S. Dollar. A strong U.S. Dollar has a negative effect on the conversion of foreign currency denominated sales.

Operating income for this segment decreased $1.2 million, or 47.1%, from $2.6 million in fiscal year 2000 to $1.4 million in fiscal year 2001 as all foreign subsidiaries experienced lower operating income. This was primarily a result of lower gross margins due to the higher cost of U.S. goods purchased with their weakening local currencies. Additionally, we added marketing and technical personnel to support these aspects of the business, which resulted in increasing operating expenses compared to the prior fiscal year.

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Quantum.    Net revenues in this segment increased $1.0 million, or 4.6%, from $22.3 million in fiscal year 2000 to $23.3 million in fiscal year 2001.

Product sales increased $2.3 million, or 18.3%, from $13.1 million in fiscal year 2000 to $15.4 million in fiscal year 2001. This increase was primarily due to an increase in unit sales to General Motors. Product sales consists of those associated with General Motors mid-size automobiles, pick-up trucks and van platforms equipped with our bi-fuel compressed natural gas fuel system and General Motors medium-duty trucks equipped with dedicated liquid propane gas kits.

Cost of product sales increased $4.4 million, or 29.0%, from $15.1 million in fiscal year 2000 to $19.5 million in fiscal year 2001. This increase in cost of product sales was due to $1.4 million in higher material cost related to higher production volume, a $1.3 million increase in manufacturing overhead mainly due to pre-production efforts associated with our fuel storage tanks, a $0.5 million increase in production related scrap, a $0.4 million increase in additions to the provision for inventory obsolescence, a $0.3 million in additional direct labor for assembled products and a $0.2 million increase in freight charges. Warranty reserves increased by $0.4 million during the year due to the increased number of vehicles placed into service. Provision for inventory obsolescence is made for each model year based on inventory levels necessary to provide for future warranty and service parts, as well as for parts that cannot be transferred to the next model year program.

Gross margins on product sales were $2.0 million lower in fiscal year 2001 as compared to fiscal year 2000, primarily due to a $4.4 million increase in cost of product sales, offset partially by a $2.4 million increase in product sales.

Contract revenue decreased $1.4 million, or 14.8%, from $9.3 million in fiscal year 2000 to $7.9 million in fiscal year 2001. This decrease was primarily due to lower contract levels, which reflect efficiencies that result from our ability to transfer knowledge between prior model year and current model year contracts. Additionally, the contract revenues recognized on pick-up truck platforms declined due to an expanded scope of the 2001 program to include the 2002 model year, which includes higher engineering costs to complete without a commensurate increase in the contract value.

For the fiscal year 2001, research and development associated with the cost of contract revenues decreased $0.3 million, or 4.6%, to $5.5 million as compared to the $5.8 million reported in fiscal year 2000. The decrease for the fiscal year 2001 is due to reduced revenue of $1.4 million partially offset by a decrease in margin from 37.7% to 30.2%. The decrease in margin is primarily due to $0.6 million in cost overruns on the CNG and LPG pick-up truck development programs.

Research and development expense increased by $13.7 million, or 106.0%, from $13.0 million in fiscal year 2000 to $26.7 million in fiscal year 2001. The increase in research and development primarily relates to our $1.7 million increase in application development support costs and a $9.9 million increase for fuel storage, fuel delivery systems and vehicle integration for fuel cell OEM programs with the remaining $2.4 million attributable to additional facilities and additional research and development activities to support the fuel cell OEM programs. In order to satisfy the anticipated increased OEM demand, we opened four additional facilities to expand our testing capabilities and vehicle integration capacity. These increases were offset by a $0.3 million decrease in research and development associated with the cost of contract revenue.

General and administrative expenses increased by $2.4 million, or 126.7%, from $1.9 million in fiscal year 2000 to $4.3 million in fiscal year 2001. The increase was primarily due to a $1.8 million increase in employment fees and relocation related to our headcount increase.

Operating losses increased $18.6 million, or 218.7%, from $8.5 million in fiscal year 2000 to $27.1 million in fiscal year 2001. This increase was primarily attributable to a $13.7 million increase in research and development expenses, a $2.4 million increase in general and administrative expenses, a $2.0 million decrease in product gross margins and a $1.4 million decrease in contract revenues.

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Corporate Expenses.    Corporate expenses consists of general and administrative expenses at the corporate level to support our operating segments in areas such as executive management, finance, human resources, management information systems, legal services and investor relations. Additionally, amortization of goodwill and other intangible assets is recorded as a corporate expense. Corporate expenses remained flat from fiscal year 2000 to fiscal year 2001. Higher legal expenses of $0.6 million relating to our patent infringement lawsuit against GFI Control Systems, Inc., higher costs pertaining to investor relations of $0.2 million and higher personnel costs of $0.2 million relating to European business development activities were offset by high one-time legal expenses incurred in the previous year.

Interest Expense.    Interest expense decreased $0.1 million, or 6.9%, from $1.5 million in fiscal year 2000 to $1.4 million in fiscal year 2001. Interest expense in fiscal year 2001 was offset by $1.3 million in interest income, which was attributable to the proceeds from our July 2000 equity offering that provided us with net proceeds equal to $53.5 million. We paid off the Bank of America working capital line of credit at the end of the first quarter and we invested the remaining amount in short-term investments and money market accounts.

Provision for Income Taxes.    We have recorded an effective annual tax benefit rate of 41% for fiscal year 2001. The effective tax benefit rate represents the federal statutory income tax rate, state income taxes and foreign income taxes increased by research and development credits. For fiscal year 2001, we incurred nearly a $21.8 million net operating loss, or NOL. We carried a portion of this NOL back to the prior two taxable years resulting in $1.5 million in tax refunds. Research and development credits, freed up by the NOL carryback, may be carried forward to future taxable years. At the end of fiscal year 2001, federal and state research and development credit carryforwards were $6.6 million. Federal research and development credits totaling $4.7 million expire between 2009 and 2021. State research and development credits of $1.9 million have no expiration. At the end of fiscal year 2001, our net deferred tax assets were $12.8 million.

Liquidity and Capital Resources

We use cash generated from our operations, equity capital, bank financings and sales of our equity securities to fund capital expenditures and research and development, as well as to invest in and operate our existing operations and new businesses. In January 2002, we completed a private placement of common stock and warrants in which we received $22.5 million in gross proceeds. In May 2002, subsequent to our fiscal year end, we completed a private placement of common stock in which we received $18.8 million in gross proceeds. On the distribution date, we contributed $15 million in cash to Quantum to supply liquidity to meet their short term operational needs. While these sources of funds have been sufficient in the past, we currently anticipate that we will require additional sources of financing in order to capitalize on opportunities that we believe to exist in the alternative fuel market and to invest in long-term business opportunities. These additional sources of financing may include bank borrowings or public or private offerings of equity or debt securities. We cannot assure you that such additional sources of financing will be available on acceptable terms, if at all.

The ratio of current assets to current liabilities was 1.9:1 at the end of fiscal year 2002 and 2.8:1 at the end of fiscal year 2001. During fiscal year 2002, our total working capital decreased by $22.2 million from $51.5 million at the end of fiscal year 2001 to $29.3 million at the end of fiscal year 2002. Net cash used in operating activities was $27.8 million in fiscal year 2002 as compared to $13.7 million for fiscal year 2001. The increase in cash used in operating activities during fiscal year 2002 resulted primarily from the net operating loss of $43.6 million as compared to the net operating loss of $21.7 million the previous year. For fiscal year 2002, $2.0 million in taxes and interest paid increased the cash used in operating activities. These increases were partially offset by a $6.9 million decrease in accounts receivable, $5.7 million in depreciation and amortization, a $3.5 million decrease in inventory and a $1.5 million decrease in other assets. Excluding the funds used in Quantum’s operating activities, we would have generated cash from operations during fiscal year 2002. As a result of the spin-off of Quantum and our deferred tax asset position, we anticipate generating cash from operations in the future.

Net cash used in investing activities in fiscal year 2002 was $6.7 million, a decrease of $6.0 million from fiscal year 2001. This decrease is primarily a result of lower purchases of equipment and leasehold improvements.

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Net cash provided by financing activities for fiscal year 2002 was $29.1 million or a decrease of $10.6 million from the $39.7 million reported the previous year. The cash provided by financing activities during the current year resulted primarily from the proceeds of our private placement of $22.5 million, option exercises of $0.9 million, the repayment of officer loans of $3.9 million, an increase in our operating line of credit of $3.6 million and an increase in our term debt by $1.8 million; however, this was partially offset by term loan principal payments of $3.0 million.

In June 2002, the credit facility with Bank of America was amended to reduce the line of credit availability from $9.5 million to $8.0 million and extend the maturity date of the Company’s line of credit and term loans to May 31, 2003. The credit facility was also amended to remove Quantum as a subsidiary borrower and to release the pledge on the assets transferred to Quantum as of the distribution date. The amended facility also provides for a $1.0 million non-revolving line of credit for future capital expenditures. The Bank of America facility contains covenants that require us to satisfy certain financial tests, including a minimum EBITDA and a total debt leverage ratio, beginning with the fiscal quarter ending July 31, 2002. While our non-revolving capital expenditure line expires on May 31, 2003, we have the option to convert it to a term loan, requiring quarterly principal reductions, which would extend the maturity date to March 31, 2005. In addition, our subsidiary in the Netherlands has a Euro 2.3 million (US$2.1 million at April 30, 2002) credit facility with Fortis Bank. At April 30, 2002, there was an outstanding balance under this credit facility of US$1.1 million.

Our subsidiary in Japan has a ¥64 million (US$0.5 million at April 30, 2002) short-term loan facility with the Hong Kong and Shanghai Banking Corporation Ltd., Osaka Branch. At April 30, 2002, a balance of US$0.5 million was outstanding.

Derivative Financial Instruments

We use derivative financial instruments for the purpose of reducing our exposure to adverse fluctuations in interest and foreign exchange rates. While these hedging instruments are subject to fluctuations in value, such fluctuations are generally offset by the value of the underlying exposures being hedged. We are not a party to leveraged derivatives and do not hold or issue financial instruments for speculative purposes.

Foreign Currency Management.    The results and financial condition of our international operations are affected by changes in exchange rates between certain foreign currencies and the U.S. Dollar. Our exposure to fluctuations in currency exchange rates has increased as a result of the growth of our international subsidiaries. The functional currency for all of our international subsidiaries is the local currency of the subsidiary. An increase in the value of the U.S. Dollar increases the costs incurred by our subsidiaries because most of our international subsidiaries’ inventory purchases are U.S. Dollar denominated. We monitor this risk and attempt to minimize the exposure through forward currency contracts and the management of cash disbursements in local currencies. At April 30, 2002, we had no forward currency contracts. We seek to manage our foreign currency economic risk by minimizing our U.S. Dollar investment in foreign operations using foreign currency term-loans to finance the operations of our foreign subsidiaries.

Interest Rate Management.    We use interest rate swap agreements with Bank of America to manage our exposure to interest rate changes and to stabilize the cost of borrowed funds. When this type of agreement is executed, the swap is generally linked to a specific debt instrument. At April 30, 2002 we had approximately $6.4 million in a fixed interest rate agreement. One loan totaling $6.4 million at April 30, 2002 had a fixed interest rate of 10.6%. Absent this fixed rate agreement the variable rate for this debt at April 30, 2002 would have been 6.9%. At April 30, 2002 the fair value of the interest rate swap agreement was $(0.2) million.

Debt Obligations.    The following table summarizes our debt obligations at April 30, 2002. The interest rates represent weighted average rates, with the period end rate used for the variable rate debt obligations. The fair value of the debt obligations approximated the recorded value as of April 30, 2002.

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	2003			2004			2005			2006			Thereafter		Total		Fair Value 4/30/02
	(Dollars in millions)
Long term debt denominated in US dollars:
Line of credit	$	—		$	8.6		$	—		$	—		$	—	$	8.6	$	8.6
Term loans, including current portion:
Variable rate	$	3.1		$	3.0		$	1.8		$	—		$	—	$	7.9	$	7.9
Average interest rate		9.9	%		9.8	%		9.6	%		7.0	%		—		—		—
Long term debt denominated in foreign currencies:
Euros
Line of Credit	$	1.1		$	—		$	—		$	—		$	—	$	1.1	$	1.1
Japanese Yen
Line of credit	$	0.5		$	—		$	—		$	—		$	—	$	0.5	$	0.5
Interest rate derivative financial instruments:
Pay fixed/receive variable	$	2.6		$	2.5		$	1.3		$	—		$	—	$	6.4	$	6.6
Average pay rate		5.6	%		5.6	%		5.6	%		—			—		—		—
Average receive rate.		1.9	%		1.9	%		1.9	%		—			—		—		—

Recent Accounting Pronouncements

In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (FAS 144), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, and the accounting and reporting provisions of APB Opinion No. 30, Reporting the Results of Operations for a disposal of a segment of a business. FAS 144 is effective for fiscal years beginning after December 15, 2001, with earlier application encouraged. We expect to adopt FAS 144 as of May 1, 2002 and do not expect that the adoption of the Statement will have a significant impact on our financial position and results of operations, except that the Quantum operations will be presented as a discontinued operation.

In June 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141, “Business Combinations,” and No. 142, “Goodwill and Other Intangible Assets,” effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives.

We will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of fiscal year 2003. Application of the nonamortization provisions of the Statement is expected to result in an increase in net income of approximately $0.5 million ($.04 per share) per year. We will perform the first of the required impairment tests of goodwill and indefinite lived intangible assets as of May 1, 2002 and have not yet determined what the effect, if any, these tests will have on our earnings and financial position.

Risk Factors

The preceding discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. We face a number of risks and uncertainties in any forward-looking statement. Factors that could cause or contribute to such differences include, but are not limited to, the following:

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The recent spin-off of our Quantum subsidiary is subject to tax risks for us and our stockholders, including restrictions on our issuance of equity securities in order to maintain the tax-free status of the spin-off.

If the spin-off qualifies under Section 355 of the Internal Revenue Code, it will be tax-free to our stockholders for federal income tax purposes. No ruling has been or will be sought from the Internal Revenue Service with respect to the federal income tax consequences of the spin-off. Although Morrison & Foerster LLP issued an opinion to the effect that the spin-off will qualify under Section 355 of the Internal Revenue Code, their opinion is not binding on the Internal Revenue Service. The opinion is also subject to specific assumptions and the accuracy and completeness of specific factual representations and statements made by us and Quantum, including that Quantum will complete an initial public offering of its stock within one year following the spin-off. If these assumptions, representations or statements are incorrect or incomplete in any material respect, the conclusions set forth in the opinion may not be correct. Although we are not aware of any facts or circumstances which would cause such representations or assumptions to be untrue, we cannot assure that the spin-off will be tax-free to our stockholders. Neither we nor Quantum will indemnify any of our stockholders who received shares of Quantum common stock in the spin-off for any tax liabilities.

Even if the spin-off qualifies under Section 355 of the Internal Revenue Code, it will be taxable to us (but not our stockholders) if Section 355(e) of the Internal Revenue Code applies to the spin-off. Section 355(e) of the Internal Revenue Code will apply if 50% or more of our stock or Quantum stock, by vote or value, is acquired by one or more persons, other than our historic stockholders who received our common stock in the spin-off, acting pursuant to a plan or a series of related transactions that include the spin-off. Substantial uncertainty exists on the scope of Section 355(e) of the Internal Revenue Code, and we, our stockholders, Quantum and its stockholders have undertaken, contemplate undertaking or may otherwise undertake in the future transactions which may cause Section 355(e) to apply. These transactions include but are not limited to private placements of our stock, any offerings of Quantum stock, and any issuances of our or Quantum stock in connection with the acquisition of other companies. Accordingly, we cannot assure you that Section 355(e) of the Internal Revenue Code will not apply to the spin-off.

Although Quantum has contractually agreed to indemnify us for taxes arising if its actions cause Section 355(e) of the Internal Revenue Code to apply to the spin-off, we cannot provide you any assurance that Quantum will have the financial ability to satisfy this obligation or that our own or another party’s actions will not cause Section 355(e) to apply. In the event that we were liable for any taxes resulting from the application of Section 355(e) of the Internal Revenue Code, the payment would have a substantial and material adverse effect on our business, financial position and results of operations. The potential applicability of Section 355(e) of the Internal Revenue Code may also discourage, delay or prevent a merger, change of control, or other strategic or capital raising transactions involving our outstanding equity or issuance of new equity.

The growth of the alternative fuel market will have a significant impact on our business.

Our future success depends on the continued expansion of the alternative fuel industry, which has not yet gained broad acceptance. In the United States and certain of our other target markets, alternative fuel such as natural gas currently cannot be readily obtained by consumers for motor vehicle use and only a small percentage of motor vehicles manufactured in 2000 was equipped to use alternative fuels. We cannot assure you that the market for gaseous alternative fuel engines will gain broad acceptance or, if it does, that it will result in increased sales of our advanced fuel system products. In addition, we have designed many of our products for alternative fuel vehicles powered by both fuel cells and internal combustion engines, but not currently for alternative power sources, such as electricity or alternate forms of existing fuels. If the major growth in the alternative fuel market relates solely to existing fuels, our revenues may not increase and may decline.

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Users of gaseous alternative fueled vehicles may not be able to obtain fuel conveniently and affordably, which may adversely affect the demand for our products.

Vehicles and equipment powered by gaseous alternative fuels run primarily on natural gas or propane. The construction of a distribution system to deliver natural gas and propane will require investment by third parties. An adequate fuel distribution infrastructure may not be adopted. We are relying on third parties, some of which are committed to the existing gasoline infrastructure, to build this infrastructure. If these parties build a fuel distribution infrastructure, the fuel delivered through it, both due to the cost of the delivery system and the cost of the fuel itself, may have a higher price than users are willing to pay. If users cannot obtain fuel conveniently or affordably, a mass market for vehicles and equipment powered by gaseous alternative fuels or fuel cells is unlikely to develop. Our ability to attract customers and sell products successfully in the alternative fuel industry also depends on a price differential between liquid fuels, such as petroleum and gasoline, and gaseous fuels, such as propane and natural gas. This price differential may not continue. Should this differential narrow or disappear, it could adversely affect the demand of our products.

We currently face and will continue to face significant competition, which could result in a decrease in our revenue.

We currently compete with companies that manufacture products to convert internal combustion engines operating on liquid fuels to gaseous fuels. Increases in the market for alternative fueled vehicles may cause OEMs to find it advantageous to develop and produce their own fuel conversion or fuel management equipment rather than purchasing the equipment from suppliers such as us. In addition, greater acceptance of alternative fuel engines may result in new competitors. Should any of these events occur, the total potential demand for our products could be adversely affected and cause us to lose existing business.

We face risks associated with marketing, distributing and servicing our products internationally.

We currently operate in Australia, Europe, India, Japan and Mexico and market our products and technologies in other international markets, including both industrialized and developing countries. Our international operations are subject to various risks common to international activities, such as the following:

• exposure to currency fluctuations;

• managing potential difficulties in enforcing contractual obligations and intellectual property rights;

• the burden of complying with a wide variety of laws and regulations, including product certification, environmental and import and export laws;

• political instability; and

• difficulties collecting international accounts receivable.

Any significant increase in the value of the dollar against currencies in foreign markets in which we do business may impact negatively our competitiveness in international markets.

Our business may be subject to product liability claims, which could be expensive and could result in a diversion of management’s attention.

The automotive industry experiences significant product liability claims. As a supplier, we face an inherent business risk of exposure to product liability claims in the event that our products or the equipment into which our products are incorporated malfunction, resulting in personal injury or death. We may be named in product liability claims even if there is no evidence that our systems or components caused the accident. Product liability claims could result in significant losses as a result of expenses incurred in defending claims or the award of damages. The sale of systems and components for the transportation industry entails a high risk of these claims. In addition, we may be required to participate in a recall involving these systems if any of our systems prove to

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be defective, or we may voluntarily initiate a recall or make payments related to such claims as a result of various industry or business practices or the need to maintain good customer relationships. We cannot assure you that our product liability insurance will be sufficient to cover all product liability claims, that such claims will not exceed our insurance coverage limits or that such insurance will continue to be available on commercially reasonable terms, if at all. Any product liability claim brought against us could have a material adverse effect on our reputation and business.

Our business may become subject to future product certification regulations which may impair our ability to market our products.

We must obtain product certification from governmental agencies, such as the Environmental Protection Agency and the California Air Resources Board, to sell certain of our products in the United States. A significant portion of our future sales will depend upon sales of fuel management products that are certified to meet existing and future air quality and energy standards. We cannot assure you that our products will continue to meet these standards. The failure to comply with these certification requirements could result in the recall of our products, civil penalties or criminal penalties. Any new government regulation that affects our advanced fuel technologies, whether at the foreign, federal, state or local level, including any regulations relating to installation and servicing of these systems, may increase our costs and the price of our systems. As a result, these regulations may have a negative impact on our revenues and profitability and thereby harm our business, prospects, results of operations or financial condition.

New technologies could render our existing products obsolete.

New developments in technology may negatively affect the development or sale of some or all of our products or make our products obsolete. There is a range of other technologies that could compete with alternative fuel technologies, including electric and hybrid vehicles and methanol vehicles. Our success depends upon our ability to design, develop and market new or modified, fuel delivery and electronic control products for internal combustion engines. Our inability to enhance existing products in a timely manner or to develop and introduce new products that incorporate new technologies, conform to increasingly stringent emission standards and performance requirements, and achieve market acceptance in a timely manner could negatively impact our competitive and financial position. New product development or modification is costly; involves significant research, development, time and expense; and may not necessarily result in the successful commercialization of any new products.

We depend on our intellectual property, and our failure to protect that intellectual property could adversely affect our future growth and success.

We rely on patent, trademark and copyright law, trade secret protection, and confidentiality and other agreements with our employees, customers, partners and others to protect our intellectual property for our fuel cell enabling and alternative fuel technologies. However, some of our intellectual property is not covered by any patent or patent application and, despite our precautions, it may be possible for third parties to obtain and use our intellectual property without authorization. We do not know whether any patents will be issued or whether issued patents will be sufficiently broad to protect our technology or processes. Patent applications and issued patents may be challenged or invalidated. We could incur substantial costs in prosecuting or defending patent infringement suits.

Furthermore, the laws of some foreign countries may not protect intellectual property rights to the same extent as do the laws of the United States. It may be difficult for us to enforce certain of our intellectual property rights against third parties that may have acquired intellectual property rights by filing unauthorized applications in foreign countries to register the marks that we use because of their familiarity with our worldwide operations.

We cannot assure you that we will be successful in protecting our proprietary rights. Any infringement on any of our intellectual rights could have an adverse effect on our ability to develop and sell successfully commercially competitive systems and components.

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We depend on third-party suppliers for the supply of key materials and components for our products.

We have established relationships with third-party suppliers, which provide materials and components for our products. A supplier’s failure to supply materials or components in a timely manner or to supply materials and components that meet our quality, quantity or cost requirements, combined with a delay in our ability to obtain substitute sources for these materials and components in a timely manner or on terms acceptable to us, would harm our ability to manufacture our products or would significantly increase our production costs.

If the offer and sale of our common stock to the selling stockholders were to be found not to be exempt from Section 5 of the Securities Act, then the selling stockholders as well as investors in the January private placement may be able to sue to recover the consideration paid for their shares or for damages.

The offer and sale of our common stock to the selling stockholders occurred less than six months from the completion of the private placement transaction we conducted in January 2002 and the resale registration statement on Form S-3 relating to the shares and warrants issued in the January private placement remains effective. As a result, the two private placements do not fall within the six month safe-harbor provided by Regulation D promulgated under the Securities Act and there is a risk that investors in either offering may claim that the current transaction should be integrated with the January private placement. We do not believe that the offer and sale of our common stock to the selling stockholders should be integrated or treated as a single offering with the January private placement or the resale registration statement that related to the shares and warrants in that transaction, and we believe that the offer and sale of our common stock to the selling stockholders is exempt from registration under the Securities Act. However, if a court were to determine otherwise, and the offer and sale of our common stock to the selling stockholders were found not to be a valid private placement, then the selling stockholders as well as investors in the January private placement may be entitled to recover the consideration paid for the shares they purchased with interest thereon, or for damages (if the investor no longer owns the shares).

Potential fluctuations in our financial results could cause our stock price to decline.

Our revenue and operating results are subject to annual and quarterly fluctuations as a result of a variety of factors, including the following:

• purchasing cycles of fleet operators and other customers;

• the uncertainty of timing of deliveries of vehicles and other equipment on which our products are installed;

• the timing of implementation of government regulations promoting the use of our products; and

• general economic factors.

It is possible that our operating results in one or more future quarters may fall below the expectations of securities analysts and investors. If this occurs, the trading price of our common stock might be materially and adversely affected.

We could lose or fail to attract the personnel necessary to run our business.

Our success depends in large part on our ability to attract and retain key management, engineering, scientific, manufacturing and operating personnel. Recruiting personnel for the industries in which we engage is highly competitive, and the failure to attract or retain qualified personnel could have a material adverse effect on our business.

Our business could be harmed if we fail to meet OEM specifications.

We offer integrated alternative fuel systems, which include tanks, brackets, electronics, software and other components required to allow these products to operate in other alternative fuel applications. Customers for these

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systems require that these products meet strict OEM standards. Our compliance with these requirements has resulted in increased development, manufacturing, warranty and administrative costs. A significant increase in these costs could adversely affect our profitability. If we fail to meet OEM specifications on a timely basis, our relationships with OEMs may be harmed.

We may be subject to increased warranty claims.

In response to consumer demand, vehicle manufacturers have been providing, and may continue to provide, increasingly longer warranty periods for their products. As a consequence, these manufacturers require their suppliers, such as us, to provide correspondingly longer product warranties. As a result, we could incur substantially greater warranty claims in the future.

We may experience unionized labor disputes at OEM facilities.

Vehicle conversion programs with OEMs are dependent on OEM production and the associated labor forces at OEM sites. Labor unions represent most of the labor forces at OEM facilities. Labor disputes could occur at OEM facilities, which could adversely impact our direct OEM product sales.

Changes in environmental policies could hurt the market for our products.

The market for alternative fueled vehicles and equipment, and the demand for products are driven, to a significant degree, by local, state and federal regulations in the United States that relate to air quality and require the purchase of motor vehicles and equipment operating on alternative fuels. Similarly, foreign governmental regulations also affect our international business. These laws and regulations may change, which could result in transportation or equipment manufacturers abandoning their interest in alternative fueled vehicles. In addition, a failure by authorities to enforce current domestic and foreign laws or to adopt additional environmental laws could limit the demand for our products. Although many governments have identified as a significant priority the development of alternative energy sources, we cannot assure you that governments will not change their priorities or that any change they make would not materially affect our revenue or the development of our products.

We may be subject to litigation if our stock price is volatile.

Our common stock has experienced in the past, and may experience in the future, price and volume fluctuations. Many factors may cause the market price for our common stock to decline, perhaps substantially, following this offering, including the following:

• failure to meet our product development and commercialization milestones;

• demand for our common stock;

• failure of our revenue and operating results to meet the expectations of securities analysts or investors in any quarter;

• downward revisions in securities analysts’ estimates or changes in general market conditions;

• technological innovations by competitors or in competing technologies;

• investor perception of our industry or our prospects; or

• general technology or economic or regulatory trends.

In the past, companies that have experienced declines in the market price of their stock have been the subject of securities class action litigation. We may become involved in a securities class action litigation in the

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future. Litigation of this type often results in substantial costs and a diversion of management’s attention and resources, which could harm our business, prospects, results of operations or financial condition.

Provisions of Delaware law and of our charter and bylaws may make a takeover more difficult.

Provisions in our certificate of incorporation and bylaws and in the Delaware corporate law may make it difficult and expensive for a third party to pursue a tender offer, change in control or takeover attempt that our management and Board of Directors oppose. Public stockholders that might desire to participate in one of these transactions may not have an opportunity to do so. We also have a staggered Board of Directors, which makes it difficult for stockholders to change the composition of the Board of Directors in any one year. These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change in control or to change our management and Board of Directors.

We have a Stockholder Protection Rights Agreement that provides for a dividend of one right for each outstanding share of our common stock. Upon the occurrence of some events, including a person or entity’s acquisition of 15% or more of our common stock, each right will entitle the holder to purchase, at an exercise price of $45 per share, common stock with a value equal to twice the exercise price, which could cause substantial dilution. The rights agreement may have the effect of deterring, delaying or preventing a change in control that might otherwise be in the best interests of our stockholders.

Item 7A.    Quantitative and Qualitative Disclosures about Market Risk

Information relating to Quantitative and Qualitative Disclosures About Market Risk appear under the heading “Derivative Financial Instruments” which is included in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operation.

Item 8.    Financial Statements and Supplementary Data.

See pages F-1 through F-25 of this Annual Report on Form 10-K.

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

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PART III

Item 10.    Directors and Executive Officers of the Registrant

The following table sets forth certain information regarding our directors and executive officers as of June 15, 2002:

Name	Age	Position
Robert M. Stemmler (2)(3)	66	Chairman of the Board of Directors, President and Chief Executive Officer
Dale L. Rasmussen	52	Senior Vice President and Secretary
Brad E. Garner	39	General Manager & Director, Gaseous Fuel     Products Division
Donald L. Dominic	60	Vice President and General Counsel
William B. Olson	39	Treasurer, Vice President and Chief Financial     Officer
Norman L. Bryan (1)	60	Director
Paul Mlotok (1)	57	Director
J. David Power III (2)(3)	71	Director
Don J. Simplot (1)(2)(3)	66	Director

(1) Member of the Audit Committee

(2) Member of the Compensation Committee

(3) Member of the Nominating Committee

Robert M. Stemmler has served as our President and Chief Executive Officer since May 1993. He has also been a director since May 1993, and the Chairman of our Board of Directors since June 1998. From December 1992 until July 1993, Mr. Stemmler was a full time consultant to our company. He served as our General Manager from 1982 to 1985 and has held various management and executive positions throughout his career at Celanese Corp. (now Hoechst-Celanese), an international chemical and fibers manufacturer; A.J. Industries, a holding company for aircraft, trucking and heating equipment companies; and Sargent Fletcher Company, a manufacturer of military aircraft fuel tanks and in-flight refueling systems. He holds an M.B.A. degree from Seton Hall University and a B.S. degree in mechanical engineering from Washington University in St. Louis.

Dale L. Rasmussen has served as our Senior Vice President and Secretary since June 1989. He joined us in April 1984 as Vice President of Finance and Administration and Corporate Secretary. Prior to joining us, Mr. Rasmussen was a commercial banker for 12 years at banks that were acquired by Key Bank and U.S. Bank. He received his B.A. degree in Business Administration and Economics from Western Washington University and is a graduate of the Pacific Coast Banking School. Mr. Rasmussen serves as the Chairman of the Board of Directors of Quantum Fuel Systems Technologies Worldwide, Inc.

Brad E. Garner has served as General Manager & Director, Gaseous Fuel Products Division since April 2002. Mr. Garner joined IMPCO in July 1994 as Regional Sales Manager for the U.S. Midwest and Canada Regions. In February 1996, he was promoted to Manager of Applications & Field Engineering. Mr. Garner also held the roles of Engineering Manager and General Manager for the Industrial Engines business unit of the Gaseous Fuel Products Division. Prior to joining IMPCO, Mr. Garner held a position with Superior Propane as Senior Auto Propane Sales & Technical Manager. Prior to his employment at Superior, Mr. Garner was the owner and operator of Advanced Automotive Technology, one of the largest alternative fuels conversion centers in Canada. Mr. Garner is a graduate of Fanshawe College of Technology in Canada with an equivalent to an Associates Degree in Mechanical Engineering.

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Donald L. Dominic has served as our Vice President, General Counsel and Director of Human Resources since June 1998 and is also our Assistant Secretary. Prior to joining us in 1994, Mr. Dominic held various management and technical positions with Honeywell, Hughes and Sargent-Fletcher Company. Mr. Dominic holds a B.S.E.E. degree from the University of Illinois, an M.S.E.E. from West Coast University, an M.B.A. degree from the University of Southern California, and a J.D. from the University of La Verne.

William B. Olson has served as our Treasurer, Vice President and Chief Financial Officer since July 1999. He originally joined us in October 1994 and has held various financial positions with us, including serving as Corporate Controller. Between November 1996 and April 1997, Mr. Olson served as manager of financial planning at Autobytel. Prior to joining us, Mr. Olson was with the public accounting firm of Ernst & Young and its Kenneth Leventhal Group. Mr. Olson holds a B.S. degree in business and operations management from Western Illinois University and an M.B.A. degree in finance and economic policy from the University of Southern California. Mr. Olson is a Certified Financial Manager and a Certified Management Accountant.

Norman L. Bryan has served as a director since November 1993 and is Chair of the Audit Committee. He has been a consultant since January 1995. Mr. Bryan has been employed as the Senior Vice President of Sales and Marketing of EIT, Inc., an electric meter manufacturing company, since October 1998. Prior to retiring in 1994 from Pacific Gas and Electric Company, he was Vice President, Marketing from February 1993 until December 1994, and was Vice President, Clean Air Vehicles from February 1991 to February 1993. Mr. Bryan holds an M.A. degree in business from Stanford University and a B.S.M.E. degree in mechanical engineering from California State University in San Jose.

Paul Mlotok has served as a director since April 1997 and is a member of the Audit Committee. Since 1995, he has been a Senior Practitioner with the consulting firm Global Business Network, which specializes in the areas of energy, natural resources and finance. From 1989 to 1995, he was a Principal and oil industry analyst at Morgan Stanley & Co. He has a B.A. degree in economics from Cornell University and a Ph.D. in economics from Brown University.

J. David Power III has served as a director since August 2000. He is the founder of J.D. Power and Associates where he has served as Chairman since 1996. Mr. Power has previously worked with Ford Motor Company, General Motors Corporation, and J.I. Case Company. Mr. Power was a recipient of the Automotive Hall of Fame’s Distinguished Service Citation. Mr. Power graduated from the College of Holy Cross, has an M.B.A. from The Wharton School of Finance at the University of Pennsylvania, and holds honorary doctorate degrees from College of the Holy Cross, California Lutheran University, and California State University, Northridge.

Don J. Simplot has served as a director since May 1978 and is Chair of the Compensation Committee. He is the President of Simplot Industries, Inc., which is engaged in agricultural enterprises, and a Director member of the office of the chair of J.R. Simplot Company, which is also engaged in agricultural enterprises. Mr. Simplot is a director of Micron Technology, Inc., a designer and manufacturer of semiconductor memory components primarily used in various computer applications.

The Board of Directors is divided into three classes, each consisting of three directors, with the three classes serving staggered three-year terms. Each director will hold office until the first meeting of stockholders immediately following expiration of his three year term of office and until his successor is qualified and elected.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s Directors and executive officers, and persons who own more than 10% of the Company’s Common Stock to file with the Securities and Exchange Commission (“SEC”) initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Executive officers, Directors and greater than 10%

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stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) reports they file. To the Company’s knowledge, based solely on review of the copies of such reports furnished to the Company or advice that no filings were required, during fiscal year 2002 all executive officers, Directors and greater than 10% beneficial owners complied with the Section 16(a) filing requirements.

Item 11.    Executive Compensation

The following table sets forth all compensation paid or accrued during each of the Company’s last three fiscal years to the Company’s chief executive officer and the Company’s four other most highly compensated executive officers whose annual compensation exceeded $100,000 for the last fiscal year (the “Named Executive Officers”).

Summary Compensation Table

		Annual Compensation				Long-Term Compensation Securities Underlying Options (2) (#)	All Other Compensation($)
Name and Principal Position	Year	Salary($)(1)		Bonus($)
Robert M. Stemmler	2002	$	360,000	$	100,000	25,000	$	60,224	(3)
President and Chief	2001		332,423		101,000	20,520		68,016
Executive Officer	2000		308,233		127,000	452		39,164
Dale L. Rasmussen	2002	$	140,462	$	80,000	25,000	$	12,173	(4)
Senior Vice President	2001		133,789		28,000	10,440		19,804
and Secretary	2000		125,000		33,000	452		15,885
Syed Hussain	2002	$	281,097	$	—	—	$	12,135	(5)
Former Vice President of Technology	2001		250,000		194,200	40,000		12,135
and Quantum Division	2000		203,846		49,000	10,000		12,198
William B. Olson	2002	$	153,846	$	80,000	25,000	$	14,190	(6)
Treasurer, Vice President	2001		142,500		36,000	20,000		13,263
and Chief Financial Officer	2000		121,638		41,000	20,000		4,046
Dennis D. Hartman	2002	$	185,000	$	—	—	$	19,691	(7)
Former Vice President of Gaseous	2001		183,116		23,000	6,166		21,561
Fuel Products Division	2000		170,000		45,000	20,153		19,131

(1) Includes amounts deferred by executive officers pursuant to the Employee Savings Plan and Deferred Compensation Plan.

(2) Includes options under the Company’s Incentive Stock Option Plans.

(3) Includes a group term life insurance premium of $15,360, an automobile allowance of $12,000, a matching contribution of $3,323 pursuant to the Employee Savings Plan, a matching contribution of $12,500 pursuant to the Deferred Compensation Plan and a Company-paid car lease of $17,041.

(4) Includes a matching contribution of $173 pursuant to the Employee Savings Plan and an automobile allowance of $12,000.

(5) Includes a group term life insurance premium of $135 and an automobile allowance of $12,000.

(6) Includes a group term life insurance premium of $81, a matching contribution of $4,417 pursuant to the Employee Savings Plan, an automobile allowance of $9,692.

(7) Includes a group term life insurance premium of $387, a matching contribution of $4,435 pursuant to the Employee Savings Plan, a matching contribution of $2,869 pursuant to the Deferred Compensation Plan, and an automobile allowance of $12,000.

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Option/Grants During Fiscal Year 2001

The following table describes the options to acquire shares of our Common Stock that were granted to the Named Executive Officers in fiscal year 2002:

	Individual Grants
	Number of Securities Underlying Options Granted(1)	% of Total Options Granted to Employees in Fiscal Year (2)		Exercise or Base Price ($/Sh)		Expiration Date	Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term (3)
Name							5%($)		10% ($)
Robert M. Stemmler	25,000	10.8	%	$	11.00	12/14/11	$	172,946	$	438,279
Dale L. Rasmussen	25,000	10.8	%		11.00	12/14/11	$	172,946	$	438,279
William B. Olson	25,000	10.8	%		11.00	12/14/11	$	172,946	$	438,279

* Less than 1%

(1) Options are granted at the fair market value of our Common Stock on the date of grant and vest cumulatively at the rate of 40% after the first two years following the date of the grant and 20% each year thereafter so that the employee is 100% vested after five years. However, if employment terminates due to death or disability, retirement at or after age 62, or termination without cause, then options vest at the rate of 25% for each full calendar year of employment. Options may be exercised only while an optionee is employed by us, or within three months following termination of employment. If termination results from death or disability, options may be exercised within one year of the termination date. In no event may options be exercised more than ten years after date of grant. In the event of a change of control of the Company, the Board may in its sole discretion give all or certain optionees the right to exercise all or any portion of their unvested options.

(2) Based on an aggregate of 232,000 options granted to employees during the fiscal year.

(3) The 5% and 10% assumed annual rates of compounded stock price appreciation are mandated by rules of the Securities and Exchange Commission and do not represent our estimate or projection of our future common stock prices.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

The following table sets forth information concerning exercises of stock options during fiscal year 2002 and the value of unexercised options held by the Company’s Named Executive Officers.

	Shares Acquired on Exercise(#)	Value Realized ($)(1)		Number of Securities Underlying Unexercised Options at Fiscal Year-End (#)		Value of Unexercised In-the-Money Options at Fiscal Year-End(2)
Name				Exercisable	Unexercisable	Exercisable		Unexercisable
Robert M. Stemmler	—	$	—	351,744	86,006	$	1,751,980	$	321,498
Dale L. Rasmussen	—		—	62,113	45,779		350,900		131,807
Syed Hussain	72,000		408,525	—	—		—		—
William B. Olson	7,000		65,660	18,600	59,400		76,198		152,002
Dennis D. Hartman	22,456		473,697	12,866	25,109		35,252		71,740

(1) Calculated by determining the difference between the fair market value of the Common Stock underlying the options on the date each option was exercised and the exercise price of the options.

(2) Calculated by determining the difference between the fair market value of the Common Stock underlying the options on April 30, 2002 and the exercise price of the options.

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Compensation of Directors

Each Director who is not an employee of the Company is paid an attendance fee of $1,000, plus out-of-pocket expenses, for each board or committee meeting attended. In addition, the Chairs of the Audit, Compensation and Nominating Committees are paid an annual fee of $3,000.

In the past, we granted options to purchase shares of Common Stock to each of the Directors. Option exercise prices are the higher of (i) the average market value of the stock for the 15 trading days following the date of grant and (ii) the market value on the fifteenth trading day following the date of grant. Options are not assignable and vest cumulatively at the rate of 25% annually, beginning on the first anniversary date of grant. However, if a Director dies, becomes disabled or retires at age 62 or later, then options vest at the rate of 25% for each full calendar year in which the optionee served as one of our Directors. Options must be exercised while serving as a Director or within three months following termination as Director, unless termination results from death or disability, in which case options may be exercised during the one-year period following termination. In no event may options be exercised more than ten years after the date of grant.

Employment Agreements

The Company entered into an Employment Agreement with Mr. Stemmler for a term of two consecutive 12-month periods commencing on April 1, 2002. The agreement requires payment of an annual base salary of $360,000 during the first 12 months and $360,000 during the second 12 months, and payment of incentive compensation under the Company’s Bonus Incentive Plan unless the Board of Directors approves another cash bonus plan which supersedes the Bonus Incentive Plan. In addition, the agreement provides for certain benefits, including term life insurance of $750,000, disability insurance and a car allowance. The agreement is subject to termination events, which include Mr. Stemmler’s resignation and the Company’s right to terminate him. If terminated, Mr. Stemmler is entitled to cash payments equal to his annual base salary plus additional cash compensation that he would have earned for the remaining months following the effective date of termination of employment, and the benefits shall continue for the remaining months of the fiscal year following the effective date of termination of employment.

The Company entered into an Employment Agreement with Mr. Olson for a term of two years commencing on April 1, 2002. The agreement requires payment of an annual base salary of $170,000, and payment of incentive compensation under the Company’s Bonus Incentive Plan unless the Board of Directors approves another cash bonus plan, which supersedes the Bonus Incentive Plan. In addition, the agreement provides for certain benefits, including a car allowance. The agreement is subject to termination events, which include Mr. Olson’s resignation and the Company’s right to terminate him. If terminated, Mr. Olson is entitled to cash payments equal to his annual base salary plus additional cash compensation that he would have earned for the remaining months following the effective date of termination of employment, and the benefits shall continue for the remaining months of the fiscal year following the effective date of termination of employment.

The Company entered into an Employment Agreement with Mr. Rasmussen for a term of two years commencing on April 1, 2002. The agreement requires payment of an annual base salary of $160,000 and payment of incentive compensation under the Company’s Bonus Incentive Plan unless the Board of Directors approves another cash bonus plan, which supersedes the Bonus Incentive Plan. In addition, the agreement provides for certain benefits, including a car allowance. The agreement is subject to termination events, which include Mr. Rasmussen’s resignation and the Company’s right to terminate him. If terminated, Mr. Rasmussen is entitled to cash payments equal to his annual base salary plus additional cash compensation that he would have earned for the remaining months following the effective date of termination of employment, and the benefits shall continue for the remaining months of the fiscal year following the effective date of termination of employment.

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Compensation Committee Interlocks and Insider Participation

During fiscal year 2002, the Compensation Committee consisted Mr. Simplot and Mr. Power. Neither of these persons is or has been an officer or employee of the Company or any of its subsidiaries. In addition, there are no Compensation Committee interlocks between the Company and other entities involving the Company’s executive officers and Directors who serve as executive officers of such entities.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth information with respect to the beneficial ownership of our securities as of July 15, 2002 by:

• each person who is the beneficial owner of more than 5% of the Company’s capital stock;

• each of the Company’s Directors;

• the Company’s chief executive officer and the Company’s four other most highly compensated executive officers whose annual compensation exceeded $100,000 for the last fiscal year (the “Named Executive Officers”); and

• all of the Company’s current executive officers and Directors as a group.

Except as otherwise indicated, all of the shares indicated in the table are shares of Common Stock and each beneficial owner has sole voting and investment power with respect to the shares set forth opposite its name. This percentage ownership included in the following is based on 14,142,036 shares of Common Stock outstanding as of July 15, 2002.

	Shares Beneficially Owned
Name of Beneficial Owner	Number		Percent
Directors and Executive Officers:
Norman L. Bryan	33,000	(1)	*
Dennis D. Hartman	34,466	(2)	*
Syed Hussain	113,858		*
Paul Mlotok	22,000	(3)	*
William B. Olson	27,400	(4)	*
J. David Power III	5,000	(5)	*
Dale L. Rasmussen	205,150	(6)	1.4	%
Don J. Simplot	327,933	(7)	2.3	%
Robert M. Stemmler	438,673	(8)	3.0	%
All current executive officers and Directors as a group (9 persons)	1,091,755	(9)	7.4	%

* Less than 1% of the outstanding Common Stock.

(1) Includes 32,000 shares issuable upon exercise of outstanding options that are exercisable within 60 days after July 15, 2002.

(2) Includes 21,266 shares issuable upon exercise of outstanding options that are exercisable within 60 days after July 15, 2002.

(3) Represents shares issuable upon exercise of outstanding options that are exercisable within 60 days after July 15, 2002.

(4) Represents shares issuable upon exercise of outstanding options that are exercisable within 60 days after July 15, 2002.

(5) Represents shares issuable upon exercise of outstanding options that are exercisable within 60 days after July 15, 2002.

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(6) Includes 72,113 shares issuable upon exercise of outstanding options that are exercisable within 60 days after July 15, 2002.

(7) Includes 32,000 shares issuable upon exercise of outstanding options that are exercisable within 60 days after July 15, 2002.

(9) Includes 391,744 shares issuable upon exercise of outstanding options that are exercisable within 60 days after July 15, 2002.

(10) Includes an aggregate of 614,856 shares issuable upon exercise of outstanding options that are exercisable within 60 days after July 15, 2002.

Securities Authorized for Issuance Under Equity Compensation Plans

Equity Compensation Plan Information

The following table sets forth information about the Company’s Common Stock that may be issued upon exercise of options under all of the Company’s equity compensation plans as of April 30, 2002:

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options	Weighted-Average Exercise Price of Outstanding Options		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans
Equity Compensation Plans Approved by Security Holders	1,377,480	$	9.88	65,502
Equity Compensation Plans Not Approved by Security Holders	0		0	0
Total	1,377,480	$	9.88	65,502

Item 13.    Certain Relationships and Related Transactions

Options Granted by Certain Stockholders

On June 5, 1998, Questor Partners Fund, L.P. and its affiliate, Questor Side-by-Side Partners, L.P. (together, “Questor”), purchased shares of the Company’s Common Stock and 1993 Series 1 Preferred Stock from the estate and family of a deceased stockholder and on the same day granted separate options (the “Questor Options”) to certain officers of the Company to purchase shares of the Company’s Common Stock as follows:

Robert M. Stemmler	113,858
Syed Hussain	113,858
Dale L. Rasmussen	56,928

Each of the Questor Options had an exercise price of $13.75 per share. The options vested at the rate of 25% annually commencing June 30, 1999. The options would become exercisable upon the earlier of (i) June 5, 2003 or (ii) the sale by Questor of 50% or more of the shares of Common Stock owned by it as of June 5, 1998 (including 614,250 shares of Common Stock into which the Company’s 1993 Series 1 Preferred Stock owned by Questor was then convertible). In February 2001, Questor notified the officers that Questor had sold 50% or more of the shares of Common Stock that it had owned as of June 5, 1998, and in March 2001 each of the officers exercised the Questor Options as described below.

Loans

On March 15, 2001, each of Mr. Stemmler (the Company’s President and Chief Executive Officer), Mr. Rasmussen (the Company’s Senior Vice President and Secretary) and Mr. Hussain (the Company’s former Vice President of Technology and Quantum division) exercised his respective Questor Options to purchase IMPCO Common Stock from Questor at $13.75 per share in the following amounts: Mr. Stemmler, 113,858 shares; Mr.

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Rasmussen, 56,928 shares; and Mr. Hussain, 113,858 shares. To finance the exercise of the Questor Options, the Company extended loans to the officers for the full purchase price of an aggregate of $3,913,854 ($1,565,547 each to Messrs. Stemmler and Hussain and $782,760 to Mr. Rasmussen). The loans were secured by (i) a pledge to the Company of a security interest in and lien upon shares of common stock of the Company (the “Pledged Shares”) and certain vested Company nonqualified stock options issued to each such person pursuant to various Company stock option plans (the “NQ Options”) and (ii) an agreement not to exercise any vested Company incentive stock options issued to the Reporting Person pursuant to various Company stock option plans (“ISOPs”) or to grant any third party any interest in such ISOPs. Additionally, Mr. Rasmussen pledged the equity value of his personal residence as collateral to secure his loan and Messrs. Stemmler and Rasmussen provided collateral to secure Mr. Hussain’s loan. Each loan bore interest at 9% per annum with a one year maturity. Each of these loans was repaid in full in July 2001.

The Company loaned Mr. Hussain $58,000 in June 1999 and an additional $90,000 in December 2000. The loans bore interest at a rate of 5% per annum. The purpose of these loan was for general personal reasons. Mr. Hussain’s loans, plus accrued interest, was paid in full in July 2001.

In December 2000, the Company loaned Mr. Rasmussen $100,000 for general personal reasons. The loan initially bore interest at a rate of 5% per annum (through June 30, 2001) and currently bears interest at a rate of 9% per annum. On September 7, 2001, the Company loaned Mr. Rasmussen an additional $175,000 for general personal reasons. The loan bears interest at a rate of 9% per annum. Both loans to Mr. Rasmussen mature July 31, 2002. At June 30, 2002, the total outstanding amounts of the loans were $300,091.

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PART IV

Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)    Documents filed as part of this report:

(1) Consolidated Financial Statements:

Report of independent auditors.

Consolidated balance sheets as of April 30, 2001 and 2002.

Consolidated statements of operations for the years ended April 30, 2000, 2001, and 2002.

Consolidated statements of stockholders’ equity for the years ended April 30, 2000, 2001, and 2002.

Consolidated statements of cash flows for the years ended April 30, 2000, 2001, and 2002.

Notes to consolidated financial statements.

Unaudited Pro Forma Condensed Consolidated Financial Statements

Unaudited Pro Forma Condensed Consolidated Balance Sheets

Unaudited Pro Forma Condensed Consolidated Statements of Operations

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

(2) Supplemental Financial Statement Schedules:

Schedule II—Valuation and Qualifying Accounts

SCHEDULE II—VALUATION ACCOUNTS

	Balance at beginning of period		Additions charged (credited) to costs and expenses		Write-offs and other adjustments			Balance at end of period
Allowance for doubtful accounts for the period ended:
April 30, 2002	$	1,021,353	$	372,653	$	(478,717	)	$	915,289
April 30, 2001		565,597		654,932		(199,176	)		1,021,353
April 30, 2000		535,824		561,679		(531,906	)		565,597
Inventory valuation reserve for the period ended:
April 30, 2002		2,795,757		2,596,930		(1,279,802	)		4,112,885
April 30, 2001		1,943,320		1,259,403		(406,966	)		2,795,757
April 30, 2000		1,543,474		540,310		(140,464	)		1,943,320
Warranty reserve for the period ended:
April 30, 2002		642,146		1,645,270		(776,673	)		1,510,743
April 30, 2001		640,354		500,056		(498,264	)		642,146
April 30, 2000		488,811		693,281		(541,738	)		640,354
Product liability reserve for the period ended:
April 30, 2002		1,000		—		—			1,000
April 30, 2001		1,000		—		—			1,000
April 30, 2000		1,000		—		—			1,000

All other schedules are omitted because the information is not applicable or is not material, or because the information is included in the consolidated financial statements or the notes thereto.

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(3) Exhibits:

Exhibit No.	Description	Note No.
2.1	Deed of Sale of Business by and among IMPCO Technologies Pty. Limited, as buyer, and Ateco Automotive Pty Limited, as seller, dated as of July 1, 1996.	(7	)
2.2	Deed of Release by and among IMPCO Technologies, Inc. and Ateco Automotive Pty Limited dated as of July 1, 1996.	(7	)
2.3	Shareholders Agreement for Gas Parts (NSW) Pty Limited by and among IMPCO Technologies Pty. Limited, Gas Parts Pty Limited and Gas Parts (NSW) Pty. Limited, dated as of July 4, 1996.	(7	)
3.1	Certificate of Incorporation, as currently in effect.	(28	)
3.2	Bylaws adopted July 22, 1998.	(13	)
4.1	Stockholders’ Protection Rights Agreement dated as of June 30, 1999 between IMPCO Technologies, Inc. and ChaseMellon Stockholder Services, L.L.C., as Rights Agent.	(12	)
10.1	Lease between L-W Income Properties and IMPCO Technologies, Inc. dated May 10, 1989.	(2	)
10.2+	1989 Incentive Stock Option Plan.	(3	)
10.3+	1991 Executive Stock Option Plan dated November 5, 1991, among AirSensors, Inc., as the Company, and Bertram R. Martin, James J. Mantras and Dale L. Rasmussen, as Optionees.	(4	)
10.4	First Amendment to Lease dated April 19, 1993, between L-W Income Properties and IMPCO Technologies, Inc.	(5	)
10.5+	1993 Stock Option Plan for Non-employee Directors.	(6	)
10.6+	Amendment to 1989 Incentive Stock Option Plan.	(6	)
10.7+	1996 Incentive Stock Option Plan	(8	)
10.8+	1997 Incentive Stock Option Plan	(9	)
10.9	Lease between Klein Investments, Family Limited Partnership, as lessor, and IMPCO Technologies, Inc., as lessee, dated August 18, 1997.	(10	)
10.10	Amendment dated March 18, 1998 to Loan agreement dated October 7, 1998 between Bank of America National Trust and Savings, as lender, and IMPCO Technologies, Inc., as the borrower.	(10	)
10.11	Amendment dated April 29, 1998 to Loan agreement dated October 7, 1998 between Bank of America National Trust and Savings, as lender, and IMPCO Technologies, Inc., as the borrower.	(10	)
10.12	Loan Agreement for IMPCO Technologies, B.V. as borrower, and Bank of America National Trust and Savings Association, acting through its Amsterdam branch, as lender, dated as of April 27, 1998.	(10	)
10.13	Loan Agreement dated September 11, 1998 between Bank of America National Trust and Savings Association, as lender, and IMPCO Technologies, Inc., as the borrower.	(11	)
10.14	Intentionally Omitted
10.15	Loan Agreement between IMPCO Tech Japan KK, as borrower, and, Hongkong and Shanghai Banking Corporation Ltd., Osaka Branch., as lender, dated as of March 29, 1999.	(13	)

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Exhibit No.		Description	Note No.
10.16+		Employment Agreement dated April 1, 1999, between IMPCO Technologies, Inc., as the Company, and Robert M. Stemmler, as the Employee.	(13	)
10.17		Amended Loan Agreement between IMPCO Technologies, Inc., as borrower and Bank of America N.A. as lender, dated September 13, 1999.	(14	)
10.18		Intentionally Omitted
10.19		Amendment No. 3 to Business Loan Agreement by and between Bank of America, N.A. and IMPCO Technologies, Inc. dated as of June 13, 2000.	(15	)
10.20		Lease dated as of March 31, 2000, by and between Braden Court Associates and IMPCO Technologies, Inc.	(16	)
10.21		Amendment No. 4 to Business Loan Agreement by and between Bank of America, N.A. and IMPCO Technologies, Inc. dated as of September 12, 2000.	(18	)
10.22		Amendment No. 5 to Business Loan Agreement between Bank of America, N.A. and IMPCO Technologies, Inc. dated as of December 13, 2000.	(18	)
10.23		Amendment No. 6 to Business Loan Agreement between Bank of America, N.A. and IMPCO Technologies, Inc. dated as of March 12, 2001.	(19	)
10.24		Promissory Note Issued by Robert Stemmler to Registrant dated March 15, 2001.	(17	)
10.25		Promissory Note Issued by Dale Rasmussen to Registrant dated March 15, 2001.	(17	)
10.26		Promissory Note Issued by Syed Hussain to Registrant dated March 15, 2001.	(17	)
10.27		Security Agreement and Agreement Not to Exercise Options entered into between Robert Stemmler and Registrant dated March 15, 2001.	(17	)
10.28		Security Agreement and Agreement Not to Exercise Options entered into between Dale Rasmussen and Registrant dated March 15, 2001.	(17	)
10.29		Security Agreement and Agreement Not to Exercise Options entered into between Syed Hussain and Registrant dated March 15, 2001.	(17	)
10.30		Deed of Trust Executed by Dale Rasmussen regarding personal residence.	(17	)
10.31	†	Corporate Alliance Agreement dated June 12, 2001 between Quantum Technologies Worldwide, Inc. and General Motors Corporation.	(21	)
10.32		Master Technical Agreement dated June 12, 2001 between Quantum Technologies Worldwide, Inc. and General Motors Corporation.	(21	)
10.33		Stock Transfer Agreement dated June 12, 2001 between Quantum Technologies Worldwide, Inc. and General Motors Corporation.	(21	)
10.34		Registration Rights Agreement dated June 12, 2001 between Quantum Technologies Worldwide, Inc. and General Motors Corporation.	(21	)
10.35		Amended and Restated Business Loan Agreement dated as of April 30, 2001 among the Registrant, Quantum Technologies, Inc. and Bank of America, N.A.	(28	)
10.36+		2000 Incentive Stock Option Plan	(20	)
10.37		IMPCO and GM Teaming Agreement dated July 30, 1997 by the Registrant and General Motors Corporation.	(22	)
10.38		Amendment No. 1 to Amended and Related Business Loan Agreement, dated as of September 5, 2001, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.	(23	)

42

Exhibit No.	Description	Note No.
10.39	Amendment No. 2 to Amended and Restated Business Loan Agreement, dated as of October 8, 2001, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.	(24	)
10.40	Amendment No. 3 to Amended and Restated Business Loan Agreement, dated as of November 9, 2001, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.	(24	)
10.41	Amendment No. 4 to Amended and Restated Business Loan Agreement, dated as of December 12, 2001, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.	(24	)
10.42	Common Stock and Warrants Purchase Agreement, dated January 11, 2002.	(25	)
10.43	Registration Rights Agreement, Dated January 11, 2002.	(25	)
10.44	Form of Stock Purchase Warrant, Dated January 11, 2002.	(25	)
10.45	Amendment No. 5 to Amended and Restated Business Loan Agreement, dated as of January, 2002, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.	(26	)
10.46	Amendment No. 6 to Amended and Restated Business Loan Agreement,dated as of January 31, 2002, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.	(26	)
10.47	Amendment No. 7 to Amended and Restated Business Loan Agreement, dated as of February 28, 2002, among Bank of America, N.A., the Registrant and Quantum Fuel Systems Technologies Worldwide, Inc.	(26	)
10.48	Stock Purchase Agreement, dated May 3, 2002.	(27	)
10.49	Amendment No. 8 to Amended and Restated Business Loan Agreement, dated as of March 31, 2002, among Bank of America, N.A., the Registrant and Quantum Fuel Systems Technologies Worldwide, Inc.	(1	)
10.50	Amendment No. 9 to Amended and Restated Business Loan Agreement, dated as of April 30, 2002, among Bank of America, N.A., the Registrant and Quantum Fuel Systems Technologies Worldwide, Inc.	(1	)
10.51	Second Amended and Restated Business Loan Agreement, dated June 24, 2002, between Bank of America, N.A., and the Registrant.	(1	)
10.52	Employment Agreement dated April 1, 2002, between the Registrant and Robert M. Stemmler.	(1	)
10.53	Employment Agreement dated April 1, 2002, between the Registrant and W. Brian Olson.	(1	)
10.54	Employment Agreement dated April 1, 2002, between the Registrant and Dale L. Rasmussen.	(1	)
10.55	Contribution and Distribution Agreement between the Registrant and Quantum Fuel Systems Technologies Worldwide, Inc., dated July 23, 2002.	(29	)
10.56	Tax Allocation and Indemnification Agreement between the Registrant and Quantum Fuel Systems Technologies Worldwide Inc., dated July 23, 2002.	(29	)
10.57	Transition Services Agreement between the Registrant and Quantum Fuel Systems Technologies Worldwide, Inc., dated July 23, 2002.	(29	)
10.58	Employee Benefit Matters Agreement between the Registrant and Quantum Fuel Systems Technologies Worldwide, Inc., dated July 23, 2002.	(29	)
10.59	Lease dated July 18, 2001 by and between Property Reserve, Inc. and the Registrant.	(1	)
21.1	Subsidiaries of the Company.	(1	)
23.1	Consent of Ernst & Young LLP.	(1	)

(1) Filed herewith.

(2) Incorporated by reference to the Registrant’s Form 10-K for fiscal year 1989.

(3) Incorporated by reference to the Registrant’s Form 10-K for fiscal year 1990.

43

(4) Incorporated by reference to the Registrant’s Form 10-K for fiscal year 1992.

(5) Incorporated by reference to the Registrant’s Form 10-K for fiscal year 1993.

(6) Incorporated by reference to the Registrant’s Form 10-K for fiscal year 1994.

(7) Incorporated by reference to the Registrant’s Form 8-K/A dated July 1, 1996.

(8) Incorporated by reference to the Registrant’s Form 10-K for fiscal year 1997.

(9) Incorporated by reference to the Registrant’s Proxy Statement for fiscal year 1997.

(10) Incorporated by reference to the Registrant’s Form 10-K for fiscal year 1998.

(11) Incorporated by reference to the Registrant’s Form 10-Q for the period ended October 31, 1998.

(12) Incorporated by reference to the Registrant’s Form 8-K dated June 30, 1999.

(13) Incorporated by reference to the Registrant’s Form 10-K for fiscal year 1999.

(14) Incorporated by reference to the Registrant’s Form 10-Q for the period ended December 7, 1999.

(15) Incorporated by reference to the Registrant’s Form S-3/A (File No. 333-34366), filed with the Commission on June 14, 2000.

(16) Incorporated by reference to the Registrant’s Form 10-K for fiscal year 2000.

(17) Incorporated by reference to the Registrant’s Form 8-K dated March 26, 2001.

(18) Incorporated by reference to the Registrant’s Form 10-Q for the period ended October 31, 2000.

(19) Incorporated by reference to the Registrant’s Form 10-Q for the period ended January 31, 2001.

(20) Incorporated by reference to the Registrant’s Proxy Statement for fiscal year 2000.

(21) Incorporated by reference to the Registrant’s Form S-3/A (File No. 333-63726), filed with the Commission on July 9, 2001.

(22) Incorporated by reference to the Registrant’s Form S-3 (File No. 333-34366), filed with the Commission on April 7, 2000.

(23) Incorporated by reference to the Registrant’s Form 10-Q for the period ended July 31, 2001.

(24) Incorporated by reference to the Registrant’s Form 10-Q for the period ended October 31, 2001.

(25) Incorporated by reference to the Registrant’s Form 8-K filed on January 11, 2002.

(26) Incorporated by reference to the Registrant’s Form 10-Q for the period ended January 31, 2001.

(27) Incorporated by reference to the Registrant’s Form 8-K filed on May 10, 2002.

(28) Incorporated by reference to the Registrant’s Form 10-K for fiscal year 2001.

(29) Incorporated by reference to the Form 10-K filed by Quantum Fuel Systems Technologies, Inc., for fiscal year 2002.

+ Management contract or compensatory plan or arrangement.

† Certain information in this exhibit has been omitted and filed separately with The Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

44

(b)    Reports on Form 8-K:

(1)    The Company filed a report on Form 8-K on January 11, 2002 during the third quarter ended January  

31, 2002. Information regarding the items reported on is as follows:

Item Reported on

• Common Stock and Warrants Purchase Agreement, dated January 11, 2002.

• Registration Rights Agreement, Dated January 11, 2002.

• Form of Stock Purchase Warrant, Dated January 11, 2002.

(2)    The Company filed a report on Form 8-K on May 10, 2002 during the fourth quarter ended April 31,

2002. Information regarding the items reported on is as follows:

Item Reported on

• Stock Purchase Agreement, dated May 3, 2002.

(3)    The Company filed a report on Form 8-K on June 20, 2002 during the first quarter ended July 31,

2002. Information regarding the items reported on is as follows:

Item Reported on

• Special dividend to IMPCO stockholders, effective after the close of business on July 23, 2002, to distribute all of the shares of Quantum owned by IMPCO to IMPCO’s stockholders of record on July 5, 2002.

45

IMPCO TECHNOLOGIES, INC.

INDEX TO FINANCIAL STATEMENTS

	Page
CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Auditors	F-2
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Stockholders’ Equity	F-5
Consolidated Statements of Cash Flows	F-6
Notes to Consolidated Financial Statements	F-7
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited Pro Forma Condensed Consolidated Financial Statements	F-22
Unaudited Pro Forma Condensed Consolidated Balance Sheet	F-23
Unaudited Pro Forma Condensed Consolidated Statement of Operations	F-24
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements	F-25

F-1

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders

IMPCO Technologies, Inc.

We have audited the accompanying consolidated balance sheets of IMPCO Technologies, Inc. and subsidiaries as of April 30, 2001 and 2002, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended April 30, 2002. Our audits also included the financial statement schedule listed in the Index at Item 14(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of IMPCO Technologies, Inc. and subsidiaries at April 30, 2001 and 2002, and the consolidated results of their operations and their cash flows for each of the three years in the period ended April 30, 2002, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth herein.

/s/    ERNST & YOUNG LLP

Long Beach, California

July 18, except for

the 3rd paragraph of Note 1 and Note 13

as to which the date is July 23, 2002

F-2

IMPCO TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

	April 30, 2001			April 30, 2002
ASSETS
Current assets:
Cash and cash equivalents	$	16,591,415		$	11,405,695
Accounts receivable		25,486,324			18,513,957
Less allowance for doubtful accounts		1,021,353			915,289
Net accounts receivable		24,464,971			17,598,668
Inventories:
Raw materials and parts		20,675,003			16,207,760
Work-in-process		740,972			443,392
Finished goods		9,935,020			11,631,423
Total inventories		31,350,995			28,282,575
Deferred tax assets		2,168,679			2,807,677
Other current assets		5,060,028			2,322,404
Total current assets		79,636,088			62,417,019
Equipment and leasehold improvements:
Dies, molds and patterns		7,140,156			8,737,763
Machinery and equipment		12,388,246			14,413,896
Office furnishings and equipment		14,207,561			16,589,511
Automobiles and trucks		528,917			596,758
Leasehold improvements		4,478,685			4,808,286
		38,743,565			45,146,214
Less accumulated depreciation and amortization		18,690,053			23,281,881
Net equipment and leasehold improvements		20,053,512			21,864,333
Intangibles arising from acquisitions		15,413,476			15,356,318
Less accumulated amortization		5,878,482			6,277,573
Net intangibles arising from acquisitions		9,534,994			9,078,745
Deferred tax assets		10,601,227			29,128,539
Other assets		936,843			960,289
	$	120,762,664		$	123,448,925
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	11,713,680		$	12,001,673
Accrued payroll obligations		3,881,500			3,545,817
Other accrued expenses		2,735,528			3,276,237
Current lines of credit		6,078,205			8,625,000
Current maturities of long-term debt and capital leases		3,680,158			5,661,632
Total current liabilities		28,089,071			33,110,359
Term loans		6,870,693			4,889,962
Capital leases		1,127,583			503,381
Minority interest		2,044,122			2,268,093
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.001 par value, authorized 500,000 shares; none issued and outstanding at April 30, 2001 and 2000		—			—
Common stock, $.001 par value, authorized 100,000,000 shares; 12,622,836 issued and outstanding at April 30, 2002, 10,294,377 issued and outstanding at April 30, 2001		10,294			12,622
Additional paid-in capital relating to common stock		102,831,566			126,315,507
Shares held in trust		(142,710	)		(321,858	)
Notes receivable from officers		(3,913,854	)		—
Retained earnings (accumulated deficit)		(12,434,966	)		(39,671,014	)
Accumulated other comprehensive income		(3,719,135	)		(3,658,127	)
Total stockholders’ equity		82,631,195			82,677,130
	$	120,762,664		$	123,448,925

See accompanying notes to consolidated financial statements.

F-3

IMPCO TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Fiscal Year Ended April 30
	2000			2001			2002
Revenue:
Product sales	$	103,417,448		$	95,986,664		$	83,062,040
Contract revenue		9,398,305			7,910,540			8,016,777
Net revenue		112,815,753			103,897,204			91,078,817
Costs and expenses:
Cost of product sales		69,798,833			68,951,003			70,123,128
Research and development expense		15,576,475			32,556,371			38,512,814
Selling, general and administrative expense		21,343,333			24,060,425			26,055,228
Total costs and expenses		106,718,641			125,567,799			134,691,170
Operating income (loss)		6,097,112			(21,670,595	)		(43,612,353	)
Interest expense		1,523,648			1,417,281			1,652,817
Interest income		(81,504	)		(1,308,921	)		(245,188	)
Income (loss) before income taxes, minority interest in income of consolidated subsidiaries and dividends		4,654,968			(21,778,955	)		(45,019,982	)
Income tax expense (benefit)		1,126,239			(8,929,370	)		(18,007,905	)
Minority interest in income of consolidated subsidiaries		463,233			253,064			223,971
Net income (loss) applicable to common stock	$	3,065,496		$	(13,102,649	)	$	(27,236,048	)
Net income (loss) per share:
Basic	$	0.36		$	(1.32	)	$	(2.45	)
Diluted	$	0.33		$	(1.32	)	$	(2.45	)
Number of shares used in per share calculation:
Basic		8,489,229			9,934,700			11,097,815
Diluted		9,232,299			9,934,700			11,097,815

See accompanying notes to consolidated financial statements.

F-4

IMPCO TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Fiscal Year Ended April 30
	2000			2001			2002
Common Stock:
Beginning balance		8,408			8,572			10,294
Issuance of common stock (163,326, 97,572, and 328,459 shares, respectively) resulting from the exercise of stock options		164			97			328
Issuance of common stock (0, 1,625,000, 2,000,000 shares, respectively) resulting from equity offering		—			1,625			2,000
Ending balance		8,572			10,294			12,622
Additional paid-in capital relating to common stock:
Beginning balance		45,375,995			47,539,037			102,831,566
Issuance of common stock resulting from the exercise of stock options		1,173,088			880,933			2,626,327
Issuance of common stock resulting from equity offering		—			52,344,370			20,738,085
Reduction in current tax liability related to stock options		989,954			2,067,226			119,529
Other		—			—			—
Ending balance		47,539,037			102,831,566			126,315,507
Shares held in trust for deferred compensation plan, at cost (2,878, 4,137 and 15,870 shares, respectively)		(110,320	)		(142,710	)		(321,858	)
Notes receivable from officers		—			(3,913,854	)		—
Retained earnings (accumulated deficit)
Beginning balance		(2,397,813	)		667,683			(12,434,966	)
Net income (loss) income applicable to common stock		3,065,496			(13,102,649	)		(27,236,048	)
Ending balance		667,683			(12,434,966	)		(39,671,014	)
Accumulated other comprehensive income:
Beginning balance		(1,468,525	)		(2,725,629	)		(3,719,135	)
Foreign currency translation adjustment		(1,257,104	)		(993,506	)		178, 009
Unrealized loss on derivative instrument		—			—			(117,001	)
Ending balance		(2,725,629	)		(3,719,135	)		(3,658,127	)
Total stockholders’ equity	$	45,379,343		$	82,631,195		$	82,677,130
Comprehensive Income:
Net income (loss)	$	3,065,496		$	(13,102,649	)	$	(27,236,048	)
Foreign currency translation adjustment		(1,257,104	)		(993,506	)		178,009
Unrealized loss on derivative instrument		—			—			(117,001	)
Comprehensive income (loss)	$	1,808,392		$	(14,096,155	)	$	(27,175,040	)

See accompanying notes to consolidated financial statements.

F-5

IMPCO TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended April 30
	2000			2001			2002
Cash flows from operating activities:
Net income (loss)	$	3,065,496		$	(13,102,649	)	$	(27,236,048	)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization of intangibles arising from acquisition		736,937			738,066			747,270
Depreciation and other amortization		3,047,342			3,539,737			4,922,782
(Gain) loss on disposal of assets		(74,343	)		(3,461	)		194,567
Gain from sale of available-for-sale securities		—			(16,400	)		—
Deferred income taxes		(846,882	)		(9,277,489	)		(18,971,043	)
(Increase) decrease in accounts receivable		(9,452,278	)		3,710,274			6,855,228
(Increase) decrease in inventories		(11,195,075	)		1,209,793			3,545,257
Increase (decrease) in accounts payable		5,862,387			(1,251,121	)		(311,800	)
Increase in accrued expenses		2,377,404			1,342,433			774,464
Minority interests in income of consolidated subsidiaries		463,233			253,064			223,971
Other, net		(624,158	)		(846,120	)		1,482,880
Net cash used in operating activities		(6,639,937	)		(13,703,873	)		(27,772,472	)
Cash flows from investing activities:
Purchases of equipment and leasehold improvements		(3,682,595	)		(12,635,075	)		(6,471,695	)
Purchases of businesses		(410,927	)		(127,900	)		(211,100	)
Proceeds from sales of equipment		102,802			59,077			3,500
Purchase of available-for-sale securities		—			(15,735,926	)		—
Sale of available-for-sale securities		—			15,784,662			—
Net cash used in investing activities		(3,990,720	)		(12,655,162	)		(6,679,295	)
Cash flows from financing activities:
Increase (decrease) in borrowings under lines of credit		14,264,949			(13,512,639	)		3,574,681
Payments on term loans		(2,733,967	)		(2,945,325	)		(3,038,311	)
Proceeds from issuance of bank term loans		—			7,500,000			1,750,000
Payments of capital lease obligation		(769,395	)		(664,188	)		(340,822	)
Proceeds from issuance of common stock		1,131,878			53,194,635			23,197,942
Increase (decrease) on notes receivable from officers		—			(3,913,854	)		3,913,854
Dividends on preferred stock		—			—			—
Net cash provided by financing activities		11,893,465			39,658,629			29,057,344
Translation adjustment		(259,780	)		279,585			208,703
Net increase (decrease) in cash and cash equivalents		1,003,028			13,579,179			(5,185,720	)
Cash and cash equivalents at beginning of period		2,009,208			3,012,236			16,591,415
Cash and cash equivalents at end of period	$	3,012,236		$	16,591,415		$	11,405,695

See accompanying notes to consolidated financial statements.

F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    Summary of Significant Accounting Policies

(a)    Basis of presentation and description of the business—The consolidated financial statements of IMPCO Technologies, Inc. (“IMPCO” or the “Company”) include the accounts of the Company and its majority owned subsidiary IMPCO-BERU Technologies B.V. (“IMPCO BV”), its majority owned subsidiary Grupo I.M.P.C.O. Mexicano, S. de R.L. de C.V. (“IMPCO Mexicano”) and its wholly owned subsidiaries IMPCO Technologies, Pty. Limited (“IMPCO Pty”), IMPCO Tech Japan K.K. (“IMPCO Japan”), Quantum Technologies Worldwide, Inc. (“Quantum”), and its joint ventures Minda IMPCO Technologies Limited, and Minda IMPCO Limited. All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company is a designer, manufacturer and supplier of components and systems that store gaseous fuels and monitor and control the pressure and flow of those fuels for use in fuel cells and internal combustion engines.

On July 23, 2002, the Company completed the distribution and spin-off of its Quantum subsidiary by distributing one share of Quantum common stock for every share of IMPCO common stock held on the record date, which was July 5, 2002. As a result of the spin-off, the Company no longer holds any continuing interest in Quantum and will report Quantum as a discontinued operation in fiscal year 2003.

(b)    Cash and Cash Equivalents—The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company also considers restricted cash as part of cash and cash equivalents.

(c)    Inventories—Inventories are valued at the lower of cost or market. Cost is determined by the first-in, first-out (FIFO) method while market is determined by replacement cost for raw materials and parts and net realizable value for work-in-process and finished goods.

(d)    Equipment and leasehold improvements—Equipment and leasehold improvements are stated on the basis of historical cost. Depreciation of equipment is provided using the straight-line method over the assets’ estimated useful lives, ranging from three to seven years. Amortization of leasehold improvements and equipment under capital leases is provided using the straight-line method over the shorter of the assets’ estimated useful lives or the lease terms.

(e)    Intangibles arising from acquisitions—Intangibles arising from acquisitions, primarily goodwill, are recorded based on the excess of the cost of the acquisition over amounts assigned to tangible assets and liabilities. Intangible assets arising from acquisitions are amortized using the straight-line method over their estimated lives of twenty years.

(f)    Warranty costs—Estimated future warranty obligations related to certain products are provided by charges to operations in the period in which the related revenue is recognized. Estimates are based, in part, on historical experience.

(g)    Research and development costs—Research and development costs are charged to expense as incurred. Equipment used in research and development with alternative future uses is capitalized.

(h)    Revenue recognition—Revenue is recognized on product sales when goods are shipped in accordance with the Company’s shipping terms. Contract revenue for customer-funded research and development is principally recognized by the percentage of completion method. Amounts expected to be realized on contracts are based on the Company’s estimates of total contract value and costs at completion. These estimates are reviewed and revised periodically throughout the lives of the contracts. Staff Accounting Bulletin No. 101,

F-7

“Revenue Recognition in Financial Statements,” or SAB 101 summarizes certain of the Security and Exchange Commission Staff’s views in applying generally accepted accounting principles to revenue recognition in financial statements. The Company evaluated the effect of SAB 101, which did not result in any material change to its revenue recognition policies. Also, in accordance with Emerging Issues Task Force No. 00-10, the Company includes the costs of shipping and handling, when incurred, in cost of goods sold.

(i)    Minority interests in subsidiaries—The balance sheet amounts in minority interest at April 30, 2002 represent 49% of the equity held by the single minority stockholder in IMPCO BV, 10% of the equity held by the single minority stockholder in IMPCO Mexicano and 49% of the equity held by a single minority stockholder in IMPCO Fuel Systems, a subsidiary of IMPCO Pty, 40% of the equity held by a joint venture partner in Minda Impco Technologies, Ltd., . Minority interest represents the minority stockholder’s proportionate share of equity in those subsidiaries.

(j)    Net income per share—Basic income per share is computed by dividing net income applicable to common stock by the weighted average shares of common stock outstanding during the period. Diluted earnings per share is computed based on the weighted average number of shares of common stock outstanding, and if dilutive, all common stock equivalents.

(k)    Stock based compensation—In October 1995, the Financial Accounting Standards Board issued SFAS No. 123 “Accounting of Stock Based Compensation,” which established accounting and reporting standards for stock based employee compensation plans effective after fiscal year 1996. SFAS 123 encourages entities to adopt the fair value based method of accounting; however, it also allows an entity to continue to measure compensation cost using the intrinsic value based method prescribed by Accounting Principles Board No. 25. Entities electing to remain on the “intrinsic value based” method must make certain pro forma disclosures as if the new fair value method had been applied. At this time, the Company has not adopted the recognition provision of SFAS 123, but has provided pro forma disclosures (see note 6).

The Financial Accounting Standards Board has also issued Interpretation No. 44, “Accounting for Certain Transactions Involving Stock Compensation.” The Interpretation addresses implementation practice issues in accounting for compensation costs under existing rules prescribed by Accounting Principles Board No. 25. The new rules are applied prospectively to all new awards, modifications to outstanding awards and changes in grantee status after July 1, 2000, with certain exceptions. The Company considers the impact of these rules when adopting new stock option plans and when granting any options.

(l)    Impairment of long-lived assets and long-lived assets to be disposed of—Impairment losses are recorded on long-lived assets used in operations when an indicator of impairment (significant decrease in market value of an asset, significant change in extent or manner in which the asset is used or significant physical change to the asset) is present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. The Company has not experienced any significant changes in the business climate or in the use of assets that would require the Company to write down the value of the assets recorded in the balance sheet.

(m)    Use of estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(n)    Reclassifications—Certain prior year amounts have been reclassified to conform to current presentations.

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(o)    Foreign currency translation—Assets and liabilities of the Company’s foreign subsidiaries are generally translated at current exchange rates, and related revenues and expenses are translated at average exchange rates in effect during the period. Resulting translation adjustments are recorded as a foreign currency component of other comprehensive income in stockholders’ equity. The results and financial condition of the Company’s international operations are affected by changes in exchange rates between certain foreign currencies and the U.S. Dollar. The functional currency for all of the Company’s international subsidiaries is the local currency of the subsidiary. An increase in the value of the U.S. Dollar increases costs incurred by the subsidiaries because most of its international subsidiaries’ inventory purchases are U.S. Dollar denominated. The Company seeks to manage its foreign currency economic risk by minimizing its U.S. Dollar investment in foreign operations using foreign currency term loans and lines of credit to finance the operations of its foreign subsidiaries.

Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency, except those transactions that operate as a hedge of an identifiable foreign currency commitment, are included in the results of operations as incurred.

(p)    Financial instruments—At April 30, 2002, the Company’s financial instruments recorded on the balance sheet include cash equivalents, capital lease obligations, short-term bank debt and long-term bank debt. Because of the short maturity, short-term bank debt approximates fair value. The fair value of the Company’s long-term debt and capital lease obligations is estimated using discounted cash flows based on the Company’s incremental borrowing rates for similar types of borrowings. At April 30, 2002, the fair value of the Company’s long-term debt and capital lease obligations approximated carrying value.

The Company periodically enters into foreign currency forward contracts and interest rate swap agreements. When the Company enters into foreign currency forward contracts, it does so to hedge identifiable foreign currency commitments. Foreign currency contracts reduce the Company’s exposure to unfavorable fluctuations in foreign currencies versus the U.S. dollar. Realized gains and losses on these contracts are included in the measurement of the related foreign currency transaction. The Company, from time to time, uses interest rate swap agreements to manage interest rate risk on its floating rate debt portfolio. Each interest rate swap is matched as a hedge against a specific debt instrument and has the same notional amount and tenor as the related debt instrument principle.

The Financial Accounting Standards Board has issued SFAS 133, “Accounting for Derivative Instruments and for Hedging Activities,” as amended by SFAS No. 138 “Accounting for Certain Derivative Instruments and Certain Hedging Activities-An Amendment of FASB 133,” which require the Company to recognize all derivatives on the balance sheet at fair market value. Derivatives that are not designated as hedges must be adjusted to fair value though income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item in recognized in earnings. The ineffective portion of a derivative’s change in fair value will be immediately recognized in earnings.

It is the Company’s policy to enter into interest rate swap contracts only to the extent necessary to reduce exposure to fluctuations in interest rates. The Company does not enter into interest rate swap contracts for speculative purposes. In the unlikely event that a counter party to a swap agreement fails to meet the terms of an interest rate swap contract, the Company’s exposure is limited to the interest rate differential on the notional amount. The Company does not anticipate non-performance by the counter party. At April 30, 2002, the Company has entered into one interest rate swap contract, which matures on September 30, 2004. See Note 3.

(q)    Future accounting requirements—In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (FAS 144), which addresses financial accounting and reporting for the impairment or disposal of

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long-lived assets and supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, and the accounting and reporting provisions of APB Opinion No. 30, Reporting the Results of Operations for a disposal of a segment of a business. FAS 144 is effective for fiscal years beginning after December 15, 2001, with earlier application encouraged. The Company expects to adopt FAS 144 as of May 1, 2002 and does not expect that the adoption of the Statement will have a significant impact on its financial position and results of operations, except that the Quantum operations will be presented as a discontinued operation.

In June 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141, “Business Combinations,” and No. 142, “Goodwill and Other Intangible Assets,” effective

for fiscal years beginning after December 15, 2001. Under the new rules, goodwill will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives.

The Company will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of fiscal year 2003. Application of the nonamortization provisions of the Statement is expected to result in an increase in net income of approximately $0.5 million ($.04 per share) per year. The Company will perform the first of the required impairment tests of goodwill and indefinite lived intangible assets as of May 1, 2002 and it has not yet determined what the effect, if any, these tests will have on its earnings and financial position.

2.    Acquisitions

IMPCO Fuel Systems.    In March 2000, the Company’s subsidiary, IMPCO Technologies, Pty Ltd, and LPM Corporation Pty Ltd, a corporation incorporated under the laws of the state of New South Wales, Australia, established IMPCO Fuel Systems, a corporation incorporated under the laws of the state of New South Wales, Australia. IMPCO Technologies, Pty Ltd has a 51% ownership interest in IMPCO Fuel Systems and paid $300,000 in the purchase of goodwill of LPM’s gaseous fuel equipment business and $110,000 in certain assets, inventory and equipment of LPM. This acquisition was accounted for under the purchase method of accounting and has been included in the consolidated financial statements since the date of acquisition.

3.    Debt Payable

The Company’s debt payable is summarized as follows:

	April 30 2001		April 30 2002
(a) Bank of America NT&SA
Revolving line of credit	$	3,914,000	$	8,625,000
Mexican peso line of credit		541,000		—
Term loan for acquisitions and capital expenditures		8,894,000		6,353,000
Capital lease and expenditure facilities		1,436,000		1,516,000
(b) Credit facility—Fortis Bank (formerly Mees Pierson)		1,461,000		1,068,000
(c) The Hong Kong and Shanghai Banking Corporation Ltd.
Term loan for acquisition of Mikuni		776,000		500,000
Line of credit		162,000		—
(d) Derivative instruments		—		195,000
Other capital leases		572,000		1,423,000
		17,756,000		19,680,000
Less current portion		9,758,000		14,287,000
	$	7,998,000	$	5,393,000

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(a) Bank of America NT&SA

Loan Covenants and Collateral.    The Bank of America credit facility, as amended June 2002, contains certain restrictions, as well as limitations on other indebtedness, and is secured by substantially all of the Company’s assets. In June 2002, the credit facility with Bank of America was amended to reduce the line of credit availability from $9.5 million to $8.0 million and extend the maturity date of the Company’s line of credit and term loans to May 31, 2003. The assets transferred to Quantum as part of the spin-off do not secure this loan. The Company was in compliance with loan covenants at April 30, 2002.

Including the revolving line of credit, the term loan, the capital expenditures facilities, and the capital lease facilities, the total Bank of America NT&SA credit facility was approximately $18,172,000 at April 30, 2002. Details about each of the components of the Company’s credit facility at April 30, 2002 follows.

Revolving Line of Credit.    The $8.0 million revolving line of credit bears interest, payable monthly, at a fluctuating rate per annum equal to the Bank’s reference rate plus up to three-quarters of one percentage point, depending on certain financial ratios. Alternatively, the Company may elect to have all or portions of the line based on an offshore rate, which may also vary depending on certain financial ratios. At April 30, 2002, the outstanding line of credit balance was $8,625,000, which was subject to a prime plus margin rate of 7.0%.

Mexican Peso Line of Credit.    The Mexican peso line of credit expired on December 31, 2001.

Term Loans for Acquisitions and Capital Expenditures.    The term loan bears interest, payable on a monthly basis, at the Bank’s reference rate plus up to three-quarters of one percentage point and matures September 30, 2004. The Company may elect to have all or portions of the term loan bear interest at an alternative interest rate agreed upon by the Bank and IMPCO for periods of not less than 30 days nor more than one year. The alternative interest rate is based on the offshore rate plus 5.0%, which was 6.9% at April 30, 2002. Each alternative rate portion must be for an amount not less than $500,000 and may not include any portion of principal that is scheduled to be repaid before the last day of the applicable interest period.

Capital Lease and Expenditure Facilities.    This facility bears interest, payable on a monthly basis, at the Bank’s reference rate plus up to three-quarters of one percentage point and matures June 30, 2005. The Company may elect to have all or portions of the term loan bear interest at an alternative interest rate agreed upon by the Bank and IMPCO for periods of not less than 30 days nor more than one year. The alternative interest rate is based on the prime rate plus 2.25%, which was 7.0% at April 30, 2002. At April 30, 2002, approximately $1,516,000 was outstanding under this facility, at an interest rate of 7.0%.

The June 2002 credit facility amendment provides the Company with a $1,000,000 non-revolving line of credit. This line of credit bears interest at the Bank’s reference rate or an optional offshore rate. The line matures on May 31, 2003 and can be converted to a term loan due in two years and may be prepaid, in whole or in part, at any time. At June 30, 2002, no borrowings were outstanding under this facility.

(b) Credit Facility—Fortis Bank

IMPCO BV has secured a € 2,300,000 (US$2,100,000) revocable credit facility with Fortis Bank in the Netherlands. The interest rate is determined weekly based on a weighted average of several money market indices. IMPCO BV’s borrowings under this facility may not exceed the combined total of a specified amount of its accounts receivable (70% of book value) and inventory (50% of book value). At April 30, 2002, the interest rate was 4.9% and the outstanding balance was $1,068,000.

(c) The Hong Kong and Shanghai Banking Corporation Ltd.

Term Loan for the Acquisition of Mikuni.    In April 2002, IMPCO Japan secured a ¥64,000,000 (US$500,000) term loan facility with the Hong Kong and Shanghai Banking Corporation Ltd., Osaka Branch.

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This term loan bears interest, payable on a quarterly basis, at the Euroyen London Interbank Offer Rate plus 160 basis points and matures in fiscal year 2004. The Company may elect to lock the interest rate on the loan for periods of not less than 30 days nor more than six months. At April 30, 2002, the outstanding loan balance of ¥64,000,000 (US$500,000) bore an interest rate of 1.694%.

Line of Credit.    The Hong Kong and Shanghai Bank line of credit expired on April 30, 2002.

(d) Derivative Instruments

It is the Company’s policy to enter into interest rate swap contracts only to the extent necessary to reduce exposure to fluctuations in interest rates. The Company does not enter into interest rate swap contracts for speculative purposes. In the unlikely event that a counter party to a swap agreement fails to meet the terms of an interest rate swap contract, the Company’s exposure is limited to the interest rate differential on the notional amount. The Company does not anticipate non-performance by the counter party. On May 2, 2001, the Company entered into one interest rate swap contract with Bank of America NT&SA, which matures on September 30, 2004. This swap has payment dates and amortization identical to the term loan for acquisitions and capital expenditures. At April 30, 2002, the notional amount of the swap was approximately $6.4 million with a fixed payment rate of 5.6% and a fluctuating receiving rate based upon LIBOR. At April 30, 2002 the carrying value of the interest rate swap was $(195,000) and is recorded as a liability. During the current fiscal year ended April 30, 2002, the Company recorded a loss of $117,000 net of an applicable income tax benefit of $78,000 in comprehensive income in order to account for the change in fair value. There is no impact for the change in fair value of the derivative to current earnings due to hedge ineffectiveness. The Company’s weighted-average cost of funds was 7.2%, absent this swap agreement the weighted-average cost of funds would have been 6.0%.

At April 30, 2001, the weighted average interest rate for all of the Company’s debt was 7.2%.

Annual maturities of long-term debt, excluding capital leases (see Note 5) for the five years subsequent to May 1, 2002 are as follows: 2003–$3,041,224; 2004–$3,041,224; 2005–$1,770,612; 2006–$15,625; thereafter–$0.

4.    Income Taxes

The provision for (benefit from) income taxes consists of the following:

	Fiscal years ended April 30
	2000			2001			2002
Current:
Federal	$	715,274		$	(529,476	)	$	(399,806)
State		258,787			103,536			800
Foreign		999,060			774,059			519,069
		1,973,121			348,119			120,063
Deferred:
Federal & State		(846,882	)		(9,277,489	)		(18,127,968	)
Total provision (benefit) for income taxes	$	1,126,239		$	(8,929,370	)	$	(18,007,905	)

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Income (loss) before income taxes and minority interest of consolidated subsidiaries and dividends for U.S. and foreign-based operations is shown below:

	Fiscal years ended April 30
	2000		2001			2002
U.S.	$	2,581,780	$	(23,041,543	)	$	(45,459,482	)
Foreign		2,073,188		1,262,589			439,500
	$	4,654,968	$	(21,778,954	)	$	(45,019,982	)

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes. The Company believes, based on its history of prior operating earnings, its spin-off of the Quantum division and its expectations of future earnings, that operating income of the Company will more likely than not be sufficient to recognize fully these net deferred tax assets.

A reconciliation of income taxes computed at the federal statutory income tax rate to income taxes reported in the consolidated statements of operations is as follows:

	Fiscal years ended April 30
	2000		2001		2002
Federal statutory income tax rate	34.0	%	(34.0	)%	(34.0	)%
Permanent differences	1.8		3.5		0.9
State tax, net	4.9		(1.6	)	(0.7	)
Foreign tax, net	6.3		1.6		0.8
Research and development credit	(22.8	)	(10.5	)	(7.0	)
Effective tax rate	24.2	%	(41.0	)%	(40.0	)%

The components of the Company’s deferred tax liabilities and assets is as follows:

	Fiscal years ended April 30
	2001			2002
Deferred tax liabilities:
Tax over book depreciation	$	(1,203,278	)	$	(1,432,466	)
Other		(1,791,365	)		(3,253,398	)
		(2,994,643	)		(4,685,864	)
Deferred tax assets:
Tax credit carryforwards		7,944,427			10,739,247
Net operating loss carryforwards		5,117,935			22,454,771
Inventory reserves		961,488			1,480,310
Other provisions for estimated expenses		1,740,699			1,947,752
	$	15,764,549		$	36,622,080

For the fiscal year ended April 30, 2002, the Company has a general business tax credit carryforward available for federal income tax purposes of approximately $6,437,000 that, if not used, expires between 2010 to 2022. Additionally, the Company has an alternative minimum tax credit carryforward available for federal income tax purposes of approximately $173,000 and a foreign tax credit of $666,000. The Company also has research and development credit carryforwards for state income tax purposes of approximately $4,161,000, which do not expire for tax reporting purposes. Federal net operating loss carryforwards expire between 2021 and 2022.

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5.    Commitments and Contingencies

(a)    Leases

The Company has certain non-cancelable operating leases for facilities and equipment, and non-cancelable capital leases for machinery, equipment and motor vehicles. Future minimum lease commitments under non-cancelable leases at April 30, 2002 are as follows:

	Lease Obligations
Fiscal years ending April 30,	Capital		Operating
2003	$	962,658	$	3,018,027
2004		512,565		2,866,739
2005		22,353		2,033,111
2006		—		1,265,009
2007		—		981,452
Thereafter		—		2,430,330
Total minimum lease payments		1,497,576	$	12,594,668
Less imputed interest		73,950
Present value of future minimum lease payments		1,423,626
Less current portion		920,245
Long-term capital lease obligation.	$	503,381

Total rental expense under the operating leases for fiscal years ended April 30, 2000, 2001, and 2002 was approximately $1,846,000, $3,401,000 and $4,122,000, respectively. These leases are non-cancelable and certain leases have renewal options and escalation clauses.

At April 30, 2000, 2001, and 2002, approximately $2,168,000, $1,930,000 and $1,328,000 was outstanding under the Company’s capital lease facility, respectively. At April 30, 2002, the gross and net assets acquired under the capital lease facility was approximately $4,556,000 and $1,327,000, respectively. At April 30, 2002, the gross and net assets acquired under the capital lease facility was approximately $ 4,925,000 and $1,750,000, respectively. Amortization of these assets is included in depreciation expense.

(b) Contingencies

The Company is currently subject to certain legal proceedings and claims arising in the ordinary course of business. Based on discussions with legal counsel, management does not believe that the outcome of any of these matters will have a material adverse effect on the Company’s consolidated financial statements.

In August 2000, the Company initiated legal action in federal court (Eastern District of Michigan) against GFI Control Systems Inc. and Dynetek Industries Ltd. claiming that those entities infringed the Company’s patent covering a compressed gas fuel system that includes a tank with an internal pressure regulator. GFI Control Systems Inc. and Dynetek Industries Ltd. filed a counter-suit for patent infringement. The Company intends to enforce vigorously the Company’s intellectual property rights.

(c) Investment and Tax Savings Plan

The Company’s Investment and Tax Savings Plan (the “Plan”) is a defined contribution plan, which is qualified under Internal Revenue Service Code Section 401(k). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974. All employees who are at least age twenty-one or older are eligible to participate in the Plan on the first day of employment with the Company. Employees of the Company

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who elect to participate in the Plan may contribute into the Plan not less than 1% nor more than 15% of compensation. The Company’s matching contributions are discretionary and match elective salary deferrals up to 3.0% of compensation. Approximately 72% of eligible employees were enrolled in the 401(k) plan at April 30, 2002. Employer contributions approximated $482,000, $593,000 and $632,000 for fiscal years ended 2000, 2001, and 2002 respectively.

6.    Stockholders’ Equity

(a)    Stockholder Protection Rights Agreement

On June 30, 1999, the Company’s Board of Director’s adopted a Stockholder Protection Rights Agreement and declared a dividend of one right on each outstanding share of IMPCO common stock. Each right entitles the holder, upon certain events, to purchase, at an exercise price of $45 per share, shares of common stock with a value equal to twice the exercise price. The dividend was paid on July 26, 1999 to stockholders of record on July 12, 1999.

(b)    Stock options

The Company has six stock option plans that provide for the issuance of options to key employees and directors of the Company at the fair market value at the time of grant. Options under the plans generally vest in four or five years and are generally exercisable while the individual is an employee or a director, or ordinarily within one month following termination of employment. In no event may options be exercised more than ten years after date of grant.

	Number of Shares		Weighted Average Exercise Price
Outstanding at April 30, 1999	1,502,658		$	8.40
Granted	104,974			10.46
Exercised	(163,326	)		7.18
Forfeited	(122,375	)		8.35
Options outstanding at April 30, 2000	1,321,931		$	8.72
Granted	416,453			12.99
Exercised	(97,572	)		9.03
Forfeited	(46,047	)		15.69
Options outstanding at April 30, 2001	1,594,765		$	9.62
Granted	232,000			11.01
Exercised	(328,459	)		8.00
Forfeited	(120,826	)		11.78
Options outstanding at April 30, 2002	1,377,480		$	9.88
Shares exercisable at April 30, 2000	685,334		$	8.68
Shares exercisable at April 30, 2001	774,889		$	8.33
Shares exercisable at April 30, 2002	666,623		$	8.56

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The following table sets forth summarized information with respect to stock options outstanding and exercisable at April 30, 2002:

	Outstanding				Exercisable
Exercise Price Range	Number of Shares	Average Life	Average Price		Number of Shares	Average Price
$4.46 to $6.70	93,111	3.2	$	5.86	93,111	$	5.86
$6.70 to $8.93	486,796	4.9		7.75	385,796		7.78
$8.93 to $11.16	548,416	8.5		10.79	68,005		10.54
$11.16 to $13.39	151,152	4.5		11.91	109,132		11.63
$13.39 to $15.62	69,405	8.9		14.29	579		13.81
$15.62 to $17.86	10,000	0.0		16.25	10,000		16.25
$20.09 to $22.32	18,600	8.3		22.32	—		—
	1,377,480				666,623

At April 30, 2002, there were 66,315 shares available for grant.

The Company has elected to account for its employee stock options under Accounting Principles Board Opinion 25, “Accounting for Stock Issued to Employees” (APB 25) and related interpretations in accounting for employee stock options. No compensation expense is recorded under APB 25 because the exercise price of the Company’s employee common stock options equals the market price of the underlying common stock on the grant date.

SFAS 123 requires “as adjusted” information regarding net income and net income per share to be disclosed for new options granted after fiscal year 1996. The fair value of these options was determined at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

	Year Ended April 30
	2000		2001		2002
Expected dividend yield	0.0	%	0.0	%	0.0	%
Calculated volatility	0.729		0.683		0.801
Risk-free interest rate	3	%	5	%	5	%
Expected life of the option in years	8.82		7.45		10.00

The estimated fair value of the options is amortized to expense over the options’ vesting period for “as adjusted” disclosures. The net income per share “as adjusted” for the effects of SFAS 123 is not indicative of the effects on reported net income/loss for future years. The Company’s reported “as adjusted” information at April 30 is as follows (in thousands, except per share amounts):

	Year Ended April 30
	2000		2001			2002
Net income (loss)	$	3,065	$	(13,103	)	$	(27,236	)
As adjusted	$	2,893	$	(13,406	)	$	(27,362	)
Net income (loss) per share as reported—basic	$	0.36	$	(1.32	)	$	(2.45	)
Net income (loss) per share as adjusted—basic	$	0.34	$	(1.35	)	$	(2.47	)
Net income (loss) per share as reported—dilutive	$	0.33	$	(1.32	)	$	(2.45	)
Net income (loss) per share as adjusted—dilutive	$	0.31	$	(1.35	)	$	(2.47	)

(c) Warrants

On January 11, 2002, the Company completed a private placement of 2,000,000 shares of common stock at a price of $11.25 per share for $22.5 million. The Company also issued to the investors warrants to purchase an

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aggregate of 200,000 shares of common stock at an exercise price of $13.25 per share. Each purchaser was issued a warrant to purchase one-tenth of a share of common stock for each share of common stock purchased under the agreement. In addition, the Company issued warrants to purchase an aggregate of 100,000 shares of common stock to the placement agent in connection with the transaction. The warrants are exercisable at any time until January 11, 2006.

(d) Notes receivable from officers

On March 2, 2001, the Board of Directors authorized loans to three officers of the Company for the exercise of options to purchase Company stock from former stockholders. The loans accrued interest at 9% and were fully collateralized by a security interest in and lien upon shares of common stock of the Company and certain vested Company nonqualified stock options issued to the officers. Additionally, the loans were secured by the personal residence of one of the officers and were cross-collateralized. Each of these loans was repaid in full in July 2001.

7.    Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:

	Fiscal Year Ended April 30
	2000			2001			2002
Numerator:
Net income (loss)	$	3,528,729		$	(12,849,585	)	$	(27,012,077	)
Minority interest		(463,233	)		(253,064	)		(223,971	)
Numerator for basic earnings per share—income (loss) available to common stockholders	$	3,065,496		$	(13,102,649	)	$	(27,236,048	)
Denominator:
Denominator for basic earnings per share—weighted-average shares		8,489,229			9,934,700			11,097,815
Effect of dilutive securities:
Employee stock options		743,070			—			—
Dilutive potential common shares		743,070			—			—
Denominator for diluted earnings per share—adjusted weighted-average shares and assumed conversions		9,232,299			9,934,700			11,097,815
Basic earnings per share	$	0.36		$	(1.32	)	$	(2.45	)
Diluted earnings per share.	$	0.33		$	(1.32	)	$	(2.45	)

No employee stock options were included in the computation of diluted earnings per share during fiscal year 2001 or 2002 because the inclusion is anti-dilutive to the net loss.

8.    Revenues

During fiscal year 2000, the IMPCO BV, IMPCO Pty, Grupo IMPCO Mexicano and IMPCO Japan subsidiaries accounted for approximately 12%, 6%, 6% and less than 3% of total consolidated revenues, respectively, and contract revenue accounted for approximately 8% of consolidated revenues. During fiscal year 2001, the IMPCO BV, IMPCO Pty, Grupo IMPCO Mexicano and IMPCO Japan subsidiaries accounted for approximately 14%, 6%, 7% and 3% of total consolidated revenues, respectively, and contract revenue accounted for approximately 8% of consolidated revenues. During fiscal year 2002, the IMPCO BV,IMPCO Pty,Grupo

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IMPCO Mexicano and IMPCO Japan subsidiaries accounted for approximately 17%, 4%, 12%, and 2% of total consolidated revenues, respectively, and contract revenue accounted for approximately 9% of consolidated revenues. During fiscal year 2000, 2001, and 2002, General Motors Corporation, and customers associated with the General Motors program, accounted for approximately 16%, 20% and 23%, respectively, of consolidated revenues.

The Company routinely sells products to a broad base of domestic and international customers, which includes distributors and original equipment manufacturers. Based on the nature of these customers, credit is generally granted without collateral being required. The Company does not anticipate that a significant credit risk exists as a result of these customer relationships.

9.    Business Segment and Geographic Information

Business Segments.    The Company currently has three reporting segments: the Quantum division, the Gaseous Fuel Products division and International Operations. Quantum generates revenues through the sale of fuel storage, fuel delivery and electronic control systems to original equipment manufacturers (OEMs) and the installation of products into OEM vehicles. The division also generates contract revenue by providing engineering design and support to the OEMs so that fuel systems will fit into a variety of their vehicles as they upgrade their models each year. The Gaseous Fuel Products division sells products including parts and conversion systems to OEMs and the aftermarket. The Company’s International Operations in Australia, Europe, Japan and Mexico provide distribution for the Company’s products, predominantly from its Gaseous Fuel Products division and some product assembly.

Corporate expenses consist of general and administrative expenses at the corporate level and include the amortization of goodwill and other intangible assets. Intersegment eliminations are primarily the result of intercompany sales from our Gaseous Fuel Products division to our International Operations.

All research and development is expensed as incurred. Research and development expense includes both customer-funded research and development and Company sponsored research and development. Customer-funded research and development consists primarily of expenses associated with contract revenue. These expenses include applications development costs in the Quantum division funded under customer contracts.

The Company evaluates performance based on profit or loss from operations before interest and income taxes. The accounting policies of the reportable segments are the same as those described in the Summary of Significant Accounting Policies.

F-18

Financial Information by Business Segment.    Financial information by business segment for continuing operations follows:

	Fiscal Year Ended April 30
Revenues	2000			2001			2002
	(in thousands)
Quantum	$	22,341		$	23,358		$	23,403
Gaseous Fuels Products		76,831			66,925			52,055
International Operations		29,991			31,132			32,773
Intersegment Elimination		(16,347	)		(17,518	)		(17,152	)
Total	$	112,816		$	103,897		$	91,079
	Fiscal Year Ended April 30
Operating Income (Loss)	2000			2001			2002
	(in thousands)
Quantum	$	(8,510	)	$	(27,124	)	$	(39,689	)
Gaseous Fuels Products		19,451			11,138			3,416
International Operations		2,623			1,387			599
Corporate Expenses		(7,042	)		(7,019	)		(8,331	)
Intersegment Elimination		(425	)		(53	)		393
Total	$	6,097		$	(21,671	)	$	(43,612	)

	Fiscal Year Ended April 30
Identifiable Assets	2000		2001		2002
	(in thousands)
Quantum	$	20,050	$	32,816	$	28,159
Gaseous Fuels Products		37,169		34,495		26,346
International Operations		24,904		24,222		23,432
Corporate		12,893		29,230		45,512
Total	$	95,016	$	120,763	$	123,449
	Fiscal Year Ended April 30
Capital Expenditures	2000		2001		2002
	(in thousands)
Quantum	$	1,891	$	9,343	$	3,471
Gaseous Fuels Products		1,076		977		2,103
International Operations		600		312		134
Corporate		115		2,003		763
Total	$	3,682	$	12,635	$	6,471
	Fiscal Year Ended April 30
Depreciation and Amortization	2000		2001		2002
	(in thousands)
Quantum	$	1,219	$	1,687	$	2,903
Gaseous Fuels Products		1,258		1,291		1,259
International Operations		602		609		592
Corporate		705		691		916
Total.	$	3,784	$	4,278	$	5,670

F-19

Product Revenues by Application.    The Company’s product revenues by application across all business segments follows (in thousands):

	Fiscal Year Ended April 30
	2000		2001		2002
	(in thousands)
Motor vehicle products	$	48,626	$	40,619	$	39,917
Forklifts and other material handling equipment		37,947		39,445		27,484
Small portable to large stationary engines		16,844		15,923		15,661
Total product sales	$	103,417	$	95,987	$	83,062

Geographic Information.    The Company’s geographic information for revenues to unaffiliated customers and long-lived assets is shown below. The basis for determining revenues is the geographic point of shipment. Long-lived assets represent long-term tangible assets and are physically located in the region as indicated.

	Fiscal Year Ended April 30
Revenues to Unaffiliated Customers	2000		2001		2002
	(in thousands)
United States	$	82,824	$	72,765	$	53,285
Europe		13,938		14,808		18,800
Pacific Rim		9,376		9,402		6,701
Latin America		6,678		6,922		12,293
Total	$	112,816	$	103,897	$	91,079

	Fiscal Year Ended April 30
Long-Lived Assets	2000		2001		2002
	(in thousands)
United States	$	9,580	$	19,101	$	20,891
Europe		323		310		355
Pacific Rim		222		224		211
Latin America		441		419		407
Total	$	10,566	$	20,054	$	21,864

10.    Purchases

During fiscal years 2000, 2001 and 2002, purchases from one vendor constituted approximately 10%, 5% and 8% of consolidated net inventory purchases, respectively. In fiscal year 2001 and 2002, 10 suppliers accounted for approximately 21% and 28%, respectively, of consolidated net inventory purchases.

11.    Supplementary Cash Flow Information

For fiscal years 2000, 2001 and 2002, the Company incurred capital lease obligations of approximately $100,000, $550,000 and $367,000, respectively.

Interest and taxes paid for fiscal year 2000, 2001, and 2002 are as follows:

	Fiscal year ended April 30
	2000		2001		2002
Interest paid	$	1,452,000	$	1,363,000	$	1,354,000
Taxes paid		2,379,000		982,000		638,000

F-20

12.    Quarterly Results Of Operations (Unaudited)

A summary of the unaudited quarterly results of operations follows (in thousands, except per share amounts):

	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Fiscal Year 2001
Product sales	$	26,599		$	22,656		$	20,928		$	25,804
Contract revenue		2,669			2,695			1,116			1,430
Net revenue		29,268			25,351			22,044			27,234
Cost of product sales		17,995			15,866			14,918			20,172
Gross profit on product sales		8,604			6,790			6,010			5,632
Research and development expense		5,998			7,243			8,979			10,336
Net loss		(609	)		(1,382	)		(4,351	)		(6,761	)
Net loss per share: (1)
Basic	$	(0.07	)	$	(0.13	)	$	(0.42	)	$	(0.66	)
Diluted	$	(0.07	)	$	(0.13	)	$	(0.42	)	$	(0.66	)

	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Fiscal Year 2002
Product sales	$	23,512		$	22,816		$	15,948		$	20,786
Contract revenue		2,338			1,247			1,368			3,064
Net revenue		25,850			24,063			17,316			23,850
Cost of product sales		17,712			19,731			13,978			18,703
Gross profit on product sales		5,800			3,085			1,970			2,082
Research and development expense		11,229			10,731			8,683			7,870
Net loss		(5,596	)		(8,732	)		(7,020	)		(5,888	)
Net loss per share: (1)
Basic	$	(0.54	)	$	(0.83	)	$	(0.64	)	$	(0.47	)
Diluted	$	(0.54	)	$	(0.83	)	$	(0.64	)	$	(0.47	)

(1) Per common share amounts for the quarters and full years have each been calculated separately. Accordingly, quarterly amounts may not add to the annual amounts because of differences in the average common shares outstanding during each period and, with regard to diluted per common share amounts only, because of the effect of potentially dilutive securities only in the periods in which the effect would have been dilutive.

13.    Subsequent Events

Quantum Spin-off.    On July 23, 2002, the Company completed the distribution and spin-off of its Quantum subsidiary by distributing one share of Quantum common stock for every share of IMPCO common stock held on the record date, which was July 5, 2002. As a result of the spin-off of Quantum, the Company no longer holds any continuing interest in Quantum and will report Quantum as a discontinued operation in fiscal year 2003. Additionally, the exercise prices of stock options and warrants will be adjusted in accordance with FASB Interpretation No. 44, “Accounting for Certain Transactions Involving Stock Compensation, an interpretation of APB Opinion No. 25.” Accordingly, the exercise prices of the options and warrants will be adjusted to approximately 56% of their pre-distribution amounts.

Private Placement.    On May 8, 2002, the Company completed the sale of an aggregate of 1.5 million shares of our common stock to institutional and accredited investors at a purchase price of $12.50 per share, for gross proceeds of $18.75 million. The proceeds are expected to be used for potential acquisitions in the alternative fuels business, debt repayment, and general corporate purposes.

F-21

IMPCO TECHNOLOGIES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On July 23, 2002, the Company completed the distribution and spin-off of its Quantum subsidiary by distributing one share of Quantum common stock for every share of IMPCO common stock held on the record date, which was July 5, 2002. As a result of the spin-off, the Company no longer holds any interest in Quantum and will report it as a discontinued operation in fiscal year 2003.

The following unaudited pro forma condensed consolidated financial statements have been prepared to illustrate the effect of the intended spin-off of Quantum in accordance with Article 11 of Regulation S-X. The unaudited pro forma condensed consolidated balance sheet illustrates the post spin-off balance sheet of IMPCO Technologies, Inc. as of April 30, 2002. The unaudited pro forma condensed consolidated statement of operations illustrates the post spin-off statement of income of IMPCO Technologies, Inc. for the year ended April 30, 2002 as if the spin-off had occurred on May 1, 2001.

The pro forma adjustments are based upon available information and upon certain assumptions that management believes are reasonable under the circumstances. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the historical financial statements of IMPCO Technologies, Inc., and the notes thereto. The unaudited pro forma condensed consolidated financial statements do not purport to represent what our actual results of operations or actual financial position would have been if the spin-off of Quantum in fact occurred on such dates or to project our results of operations or financial position for any such future period or date.

F-22

IMPCO TECHNOLOGIES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

April 30, 2002

	IMPCO			Historical Quantum(1)		Pro Forma Adjustments			Pro forma IMPCO excluding Quantum
ASSETS
Current Assets:
Cash	$	11,405,695		$	177,414	$	15,000,000	(2)	$	(3,771,719	)
Accounts receivable, less allowance for doubtful accounts		17,598,668			4,494,328		—			13,104,340
Inventories		28,282,575			9,626,616		—			18,655,959
Deferred tax assets		2,807,677					—			2,807,677
Other current assets		2,322,404			87,713		—			2,234,691
Total current assets		62,417,019			14,386,071		15,000,000			33,030,948
Equipment & leasehold improvements:							—
Dies, molds and patterns		8,737,763			2,676,537		—			6,061,226
Machinery and equipment		14,413,896			6,381,335		—			8,032,561
Office furnishings and equipment		16,589,511			7,791,009		—			8,798,502
Automobiles and trucks		596,758			181,173		—			415,585
Leasehold improvements		4,808,286			4,428,449		—			379,837
		45,146,214			21,458,503		—			23,687,711
Less accumulated depreciation and amortization		23,281,881			8,039,150		—			15,242,731
Net equipment and leasehold improvements		21,864,333			13,419,353		—			8,444,980
Intangibles arising from acquisitions, net		9,078,745			—		—			9,078,745
Deferred tax assets		29,128,539			—		—			29,128,539
Other assets		960,289			354,000		—			606,289
	$	123,448,925		$	28,159,424	$	15,000,000		$	80,289,501
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	12,001,673		$	6,761,294				$	5,240,379
Accrued payroll obligations		3,545,817			660,165					2,885,652
Other accrued expenses		3,276,237			1,526,231					1,750,006
Current lines of credit		8,625,000			8,625,000		(8,625,000	)(2)		8,625,000
Current maturities of long-term debt and capital leases		5,661,632			188,832					5,472,800
Total current liabilities		33,110,359			17,761,522		(8,625,000	)		23,973,837
Lines of credit		—			—					—
Term loans		4,889,962			—					4,889,962
Capital leases		503,381			127,355					376,026
Minority interest		2,268,093			—					2,268,093
Stockholders’ equity:
Preferred stock		—			—					—
Common stock		12,622			—					12,622
Additional paid-in capital relating to common stock		126,315,507			10,270,547		23,625,000	(2)		92,419,960
Shares held in trust		(321,858	)		—					(321,858	)
Notes receivable from officers		—			—					—
Retained earnings (accumulated deficit)		(39,671,014	)		—					(39,671,014	)
Accumulated other comprehensive income		(3,658,127	)		—		—			(3,658,127	)
Total stockholders’ equity		82,677,130			10,270,547		23,625,000			48,781,583
	$	123,448,925		$	28,159,424	$	15,000,000		$	80,289,501

F-23

IMPCO TECHNOLOGIES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Fiscal Year Ended April 30, 2002

	IMPCO			Historical Quantum (1)			Pro Forma Adjustments			Pro Forma IMPCO excluding Quantum
Revenue:
Product sales	$	83,062,040		$	15,458,529		$	—		$	67,603,511
Contract revenue		8,016,777			7,944,766			—			72,011
Net revenue		91,078,817			23,403,295			—			67,675,522
Costs and expenses:
Cost of product sales		70,123,128			25,581,284			—			44,541,844
Research and development expense		38,512,814			32,656,683			—			5,856,131
Selling, general and administrative     expense		26,055,228			4,854,656			1,524,364	(2)		19,676,208
Total costs and expenses		134,691,170			63,092,623			1,524,364			70,074,183
Operating loss		(43,612,353	)		(39,689,328	)		(1,524,364	)		(2,398,661	)
Interest expense		1,652,817			488,444			—			1,164,373
Interest income		(245,188	)		(9,555	)		—			(235,633	)
Loss before income taxes, minority     interest in income of consolidated subsidiaries     and dividends		(45,019,982	)		(40,168,217	)		(1,524,364	)		(3,327,401	)
Income tax expense (benefit)		(18,007,905	)		800			(16,676,144	)(3)		(1,330,961	)
Minority interest in income of consolidated     subsidiaries		223,971			—			—			223,971
Net loss applicable to common stock	$	(27,236,048	)	$	(40,169,017	)	$	(15,151,781	)	$	(2,220,412	)
Net loss per share:
Basic	$	(2.45	)							$	(0.20	)
Diluted	$	(2.45	)							$	(0.20	)
Number of shares used in per share computation:
Basic		11,097,815									11,097,815
Diluted		11,097,815									11,097,815

F-24

NOTES TO UNAUDITED PRO FORMA CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

Pro Forma Balance Sheet

1) Assets and liabilities directly attributable to Quantum at April 30, 2002. Additional paid-in capital represents the net book value of Quantum.

2) The adjustment to cash represents a $15.0 million cash transfer from IMPCO to Quantum and the adjustment to current lines of credit represents the assumption by IMPCO of the $8.6 million outstanding under the debt facility.

Pro Forma Statement of Operations

1) Quantum historical operating results for the fiscal year ended April 30, 2002.

2) Specifically identified portion of corporate general and administrative expense directly attributable to Quantum for the fiscal year ended April 30, 2002. The adjusted amount does not include any portion of expected on-going expenses of IMPCO.

3) The adjustment to income taxes represents the effect of Quantum research and development credits and operating losses. The effective income tax rate for IMPCO primarily represents the federal statutory rate plus state and foreign income taxes.

F-25

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on July 29, 2002.

IMPCO TECHNOLOGIES, INC.
By:	/s/    ROBERT M. STEMMLER
	Name:    Robert M. Stemmler
	Title:      Chief Executive Officer and
	Chairman of the Board

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/    ROBERT M. STEMMLER         Robert M. Stemmler	Chief Executive Officer and Chairman of the Board (Principal Executive Officer)	July 29, 2002
/s/    WILLIAM B. OLSON         William B. Olson	Chief Financial Officer, Vice President and Treasurer (Principal Financial Officer)	July 29, 2002
/s/    TIMOTHY S. STONE         Timothy S. Stone	Corporate Controller (Principal Accounting Officer)	July 29, 2002
/s/    NORMAN L. BRYAN         Norman L. Bryan	Director	July 24, 2002
/s/    PAUL MLOTOK         Paul Mlotok	Director	July 29, 2002
/s/    J. DAVID POWERS III         J. David Powers III	Director	July 29, 2002
/s/    DON J. SIMPLOT         Don J. Simplot	Director	July 29, 2002

F-26

EXHIBIT INDEX

Exhibit No.	Description	Note No.
2.1	Deed of Sale of Business by and among IMPCO Technologies Pty. Limited, as buyer, and Ateco Automotive Pty Limited, as seller, dated as of July 1, 1996.	(7	)
2.2	Deed of Release by and among IMPCO Technologies, Inc. and Ateco Automotive Pty Limited dated as of July 1, 1996.	(7	)
2.3	Shareholders Agreement for Gas Parts (NSW) Pty Limited by and among IMPCO Technologies Pty. Limited, Gas Parts Pty Limited and Gas Parts (NSW) Pty. Limited, dated as of July 4, 1996.	(7	)
3.1	Certificate of Incorporation, as currently in effect.	(28	)
3.2	Bylaws adopted July 22, 1998.	(13	)
4.1	Stockholders’ Protection Rights Agreement dated as of June 30, 1999 between IMPCO Technologies, Inc. and ChaseMellon Stockholder Services, L.L.C., as Rights Agent.	(12	)
10.1	Lease between L-W Income Properties and IMPCO Technologies, Inc. dated May 10, 1989.	(2	)
10.2+	1989 Incentive Stock Option Plan.	(3	)
10.3+	1991 Executive Stock Option Plan dated November 5, 1991, among AirSensors, Inc., as the Company, and Bertram R. Martin, James J. Mantras and Dale L. Rasmussen, as Optionees.	(4	)
10.4	First Amendment to Lease dated April 19, 1993, between L-W Income Properties and IMPCO Technologies, Inc.	(5	)
10.5+	1993 Stock Option Plan for Non-employee Directors.	(6	)
10.6+	Amendment to 1989 Incentive Stock Option Plan.	(6	)
10.7+	1996 Incentive Stock Option Plan	(8	)
10.8+	1997 Incentive Stock Option Plan	(9	)
10.9	Lease between Klein Investments, Family Limited Partnership, as lessor, and IMPCO Technologies, Inc., as lessee, dated August 18, 1997.	(10	)
10.10	Amendment dated March 18, 1998 to Loan agreement dated October 7, 1998 between Bank of America National Trust and Savings, as lender, and IMPCO Technologies, Inc., as the borrower.	(10	)
10.11	Amendment dated April 29, 1998 to Loan agreement dated October 7, 1998 between Bank of America National Trust and Savings, as lender, and IMPCO Technologies, Inc., as the borrower.	(10	)
10.12	Loan Agreement for IMPCO Technologies, B.V. as borrower, and Bank of America National Trust and Savings Association, acting through its Amsterdam branch, as lender, dated as of April 27, 1998.	(10	)
10.13	Loan Agreement dated September 11, 1998 between Bank of America National Trust and Savings Association, as lender, and IMPCO Technologies, Inc., as the borrower.	(11	)
10.14	Intentionally Omitted
10.15	Loan Agreement between IMPCO Tech Japan KK, as borrower, and, Hongkong and Shanghai Banking Corporation Ltd., Osaka Branch., as lender, dated as of March 29, 1999.	(13	)

Exhibit No.		Description	Note No.
10.16+		Employment Agreement dated April 1, 1999, between IMPCO Technologies, Inc., as the Company, and Robert M. Stemmler, as the Employee.	(13	)
10.17		Amended Loan Agreement between IMPCO Technologies, Inc., as borrower and Bank of America N.A. as lender, dated September 13, 1999.	(14	)
10.18		Intentionally Omitted
10.19		Amendment No. 3 to Business Loan Agreement by and between Bank of America, N.A. and IMPCO Technologies, Inc. dated as of June 13, 2000.	(15	)
10.20		Lease dated as of March 31, 2000, by and between Braden Court Associates and IMPCO Technologies, Inc.	(16	)
10.21		Amendment No. 4 to Business Loan Agreement by and between Bank of America, N.A. and IMPCO Technologies, Inc. dated as of September 12, 2000.	(18	)
10.22		Amendment No. 5 to Business Loan Agreement between Bank of America, N.A. and IMPCO Technologies, Inc. dated as of December 13, 2000.	(18	)
10.23		Amendment No. 6 to Business Loan Agreement between Bank of America, N.A. and IMPCO Technologies, Inc. dated as of March 12, 2001.	(19	)
10.24		Promissory Note Issued by Robert Stemmler to Registrant dated March 15, 2001.	(17	)
10.25		Promissory Note Issued by Dale Rasmussen to Registrant dated March 15, 2001.	(17	)
10.26		Promissory Note Issued by Syed Hussain to Registrant dated March 15, 2001.	(17	)
10.27		Security Agreement and Agreement Not to Exercise Options entered into between Robert Stemmler and Registrant dated March 15, 2001.	(17	)
10.28		Security Agreement and Agreement Not to Exercise Options entered into between Dale Rasmussen and Registrant dated March 15, 2001.	(17	)
10.29		Security Agreement and Agreement Not to Exercise Options entered into between Syed Hussain and Registrant dated March 15, 2001.	(17	)
10.30		Deed of Trust Executed by Dale Rasmussen regarding personal residence.	(17	)
10.31	†	Corporate Alliance Agreement dated June 12, 2001 between Quantum Technologies Worldwide, Inc. and General Motors Corporation.	(21	)
10.32		Master Technical Agreement dated June 12, 2001 between Quantum Technologies Worldwide, Inc. and General Motors Corporation.	(21	)
10.33		Stock Transfer Agreement dated June 12, 2001 between Quantum Technologies Worldwide, Inc. and General Motors Corporation.	(21	)
10.34		Registration Rights Agreement dated June 12, 2001 between Quantum Technologies Worldwide, Inc. and General Motors Corporation.	(21	)
10.35		Amended and Restated Business Loan Agreement dated as of April 30, 2001 among the Registrant, Quantum Technologies, Inc. and Bank of America, N.A.	(28	)
10.36+		2000 Incentive Stock Option Plan	(20	)
10.37		IMPCO and GM Teaming Agreement dated July 30, 1997 by the Registrant and General Motors Corporation.	(22	)
10.38		Amendment No. 1 to Amended and Related Business Loan Agreement, dated as of September 5, 2001, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.	(23	)

Exhibit No.	Description	Note No.
10.39	Amendment No. 2 to Amended and Restated Business Loan Agreement, dated as of October 8, 2001, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.	(24	)
10.40	Amendment No. 3 to Amended and Restated Business Loan Agreement, dated as of November 9, 2001, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.	(24	)
10.41	Amendment No. 4 to Amended and Restated Business Loan Agreement, dated as of December 12, 2001, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.	(24	)
10.42	Common Stock and Warrants Purchase Agreement, dated January 11, 2002.	(25	)
10.43	Registration Rights Agreement, Dated January 11, 2002.	(25	)
10.44	Form of Stock Purchase Warrant, Dated January 11, 2002.	(25	)
10.45	Amendment No. 5 to Amended and Restated Business Loan Agreement, dated as of January, 2002, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.	(26	)
10.46	Amendment No. 6 to Amended and Restated Business Loan Agreement,dated as of January 31, 2002, among Bank of America, N.A., the Registrant and Quantum Technologies, Inc.	(26	)
10.47	Amendment No. 7 to Amended and Restated Business Loan Agreement, dated as of February 28, 2002, among Bank of America, N.A., the Registrant and Quantum Fuel Systems Technologies Worldwide, Inc.	(26	)
10.48	Stock Purchase Agreement, dated May 3, 2002.	(27	)
10.49	Amendment No. 8 to Amended and Restated Business Loan Agreement, dated as of March 31, 2002, among Bank of America, N.A., the Registrant and Quantum Fuel Systems Technologies Worldwide, Inc.	(1	)
10.50	Amendment No. 9 to Amended and Restated Business Loan Agreement, dated as of April 30, 2002, among Bank of America, N.A., the Registrant and Quantum Fuel Systems Technologies Worldwide, Inc.	(1	)
10.51	Second Amended and Restated Business Loan Agreement, dated June 24, 2002, between Bank of America, N.A., and the Registrant.	(1	)
10.52	Employment Agreement dated April 1, 2002, between the Registrant and Robert M. Stemmler.	(1	)
10.53	Employment Agreement dated April 1, 2002, between the Registrant and W. Brian Olson.	(1	)
10.54	Employment Agreement dated April 1, 2002, between the Registrant and Dale L. Rasmussen.	(1	)
10.55	Contribution and Distribution Agreement between the Registrant and Quantum Fuel Systems Technologies Worldwide, Inc., dated July 23, 2002.	(29	)
10.56	Tax Allocation and Indemnification Agreement between the Registrant and Quantum Fuel Systems Technologies Worldwide Inc., dated July 23, 2002.	(29	)
10.57	Transition Services Agreement between the Registrant and Quantum Fuel Systems Technologies Worldwide, Inc., dated July 23, 2002.	(29	)
10.58	Employee Benefit Matters Agreement between the Registrant and Quantum Fuel Systems Technologies Worldwide, Inc., dated July 23, 2002.	(29	)
10.59	Lease dated July 18, 2001 by and between Property Reserve, Inc. and the Registrant.	(1	)
21.1	Subsidiaries of the Company.	(1	)
23.1	Consent of Ernst & Young LLP.	(1	)

(1) Filed herewith.

(2) Incorporated by reference to the Registrant’s Form 10-K for fiscal year 1989.

(3) Incorporated by reference to the Registrant’s Form 10-K for fiscal year 1990.

(4) Incorporated by reference to the Registrant’s Form 10-K for fiscal year 1992.

(5) Incorporated by reference to the Registrant’s Form 10-K for fiscal year 1993.

(6) Incorporated by reference to the Registrant’s Form 10-K for fiscal year 1994.

(7) Incorporated by reference to the Registrant’s Form 8-K/A dated July 1, 1996.

(8) Incorporated by reference to the Registrant’s Form 10-K for fiscal year 1997.

(9) Incorporated by reference to the Registrant’s Proxy Statement for fiscal year 1997.

(10) Incorporated by reference to the Registrant’s Form 10-K for fiscal year 1998.

(11) Incorporated by reference to the Registrant’s Form 10-Q for the period ended October 31, 1998.

(12) Incorporated by reference to the Registrant’s Form 8-K dated June 30, 1999.

(13) Incorporated by reference to the Registrant’s Form 10-K for fiscal year 1999.

(14) Incorporated by reference to the Registrant’s Form 10-Q for the period ended December 7, 1999.

(15) Incorporated by reference to the Registrant’s Form S-3/A (File No. 333-34366), filed with the Commission on June 14, 2000.

(16) Incorporated by reference to the Registrant’s Form 10-K for fiscal year 2000.

(17) Incorporated by reference to the Registrant’s Form 8-K dated March 26, 2001.

(18) Incorporated by reference to the Registrant’s Form 10-Q for the period ended October 31, 2000.

(19) Incorporated by reference to the Registrant’s Form 10-Q for the period ended January 31, 2001.

(20) Incorporated by reference to the Registrant’s Proxy Statement for fiscal year 2000.

(21) Incorporated by reference to the Registrant’s Form S-3/A (File No. 333-63726), filed with the Commission on July 9, 2001.

(22) Incorporated by reference to the Registrant’s Form S-3 (File No. 333-34366), filed with the Commission on April 7, 2000.

(23) Incorporated by reference to the Registrant’s Form 10-Q for the period ended July 31, 2001.

(24) Incorporated by reference to the Registrant’s Form 10-Q for the period ended October 31, 2001.

(25) Incorporated by reference to the Registrant’s Form 8-K filed on January 11, 2002.

(26) Incorporated by reference to the Registrant’s Form 10-Q for the period ended January 31, 2001.

(27) Incorporated by reference to the Registrant’s Form 8-K filed on May 10, 2002.

(28) Incorporated by reference to the Registrant’s Form 10-K for fiscal year 2001.

(29) Incorporated by reference to the Form 10-K filed by Quantum Fuel Systems Technologies, Inc., for fiscal year 2002.

+ Management contract or compensatory plan or arrangement.

† Certain information in this exhibit has been omitted and filed separately with The Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

EX-10.49

                                                                   Exhibit 10.49


              AMENDMENT NO. 8 TO AMENDED AND RESTATED BUSINESS LOAN
                                    AGREEMENT

           This Amendment No. 8 to Amended and Restated Business Loan Agreement
dated as of March 31, 2002 (this "Amendment") is executed with reference to the
Amended and Restated Business Loan Agreement dated as of April 30, 2001 (as
amended, the "Loan Agreement") among Bank of America, N.A. (the "Bank"), IMPCO
Technologies, Inc. (the "Borrower") and Quantum Fuel Systems Technologies
Worldwide, Inc. (under its former name, Quantum Technologies, Inc.) (the
"Subsidiary Borrower").

           The parties hereby agree to amend the Loan Agreement as follows:

           Defined Terms. All initially capitalized terms used in this Amendment
without definition shall have the respective meanings assigned thereto in the
Loan Agreement. The following defined term is hereby amended and restated in its
entirety beginning on the effective date of this Amendment as set forth below:

           "Offshore Margin" means 5.00%.

           New Defined Term. The Loan Agreement is hereby amended to add the
following new defined term:

           "Swap Agreement" means the ISDA Master Agreement dated as of December
2, 1996, between Borrower and the Bank (under its former name, Bank of America
National Trust and Savings Association), as at any time amended.

           Amendment to Section 1.1(a). Section 1.1(a) of the Loan Agreement is
hereby amended to read in full as follows:

           "(a) During the availability period described below, the Bank will
provide a line of credit ("Facility No. 1") to the Borrower. The amount of the
line of credit (the "Facility No. 1 Commitment") is Nine Million Five Hundred
Thousand Dollars ($9,500,000)."

           Amendment to Section 1.2. Section 1.2 of the Loan Agreement is hereby
amended by deleting the reference to "March 31, 2002" and substituting in place
thereof a reference to "May 31, 2002".

           Amendment to Section 2.3(b). Section 2.3(b) of the Loan Agreement is
hereby amended and restated to read in full as follows:

           "(b) The Borrower will repay principal in one installment of Six
Hundred Thirty-Five Thousand Three Hundred Six Dollars ($635,306) payable March
31, 2002. On May 31, 2002, the Borrower will repay the remaining principal
balance plus any interest then due."

                                      - 1 -



           Amendment to Section 3.4(b). Section 3.4(b) of the Loan Agreement is
hereby amended and restated to read in full as follows:

           "(b) The Borrower will repay the principal amount outstanding on
Facility No. 3 in one installment, equal to One Hundred Twenty-Five Thousand
Dollars ($125,000) payable March 31, 2002. On May 31, 2002, the Borrower will
repay the remaining principal balance plus any interest then due."

           Amendment to Section 5.2. Section 5.2 of the Loan Agreement is hereby
amended to provide that, beginning on the effective date of this Amendment, the
Borrower may only elect the optional interest rate with respect to Facility No.
2. The optional interest rate payable with respect to Portions under Facility
No. 2 shall be the LIBOR Rate plus the Offshore Margin.

           Obligations Secured By Security Agreements. Borrower and Subsidiary
Borrower hereby agree that the obligations secured by the security agreements
previously executed by each of them in favor of the Bank shall include any and
all obligations under the Swap Agreement, as defined herein.

           Cash Reserve. Borrower hereby agrees that it shall at all times
segregate and maintain a cash reserve in the amount of Two Million Dollars
($2,000,000).

           Investments in Subsidiary Borrower. Borrower's aggregate investments
in Subsidiary Borrower following the date hereof through the earlier of (i) May
31, 2002 or (ii) the Quantum Spin-off Date, shall not exceed Three Million
Dollars ($3,000,000).

           Conditions Precedent. The effectiveness of this Amendment shall be
conditioned upon receipt by the Bank of all of the following:

           a.  Counterparts of this Amendment executed by all parties hereto;

           b.  Receipt by the Bank of the amounts due and owing under Facility
               No. 2 and Facility No. 3 as of March 31, 2002, pursuant to
               Sections 2.3(b) and 3.4(b), as amended hereby;

           c.  Receipt by the Bank of an amendment fee in the amount of $15,000
               and payment of the Bank's legal fees and expenses of its counsel,
               including any outstanding invoices; and

           d.  Such other assurances, certificates, documents, consents or
               opinions as the Bank reasonably may require.

           Representations and Warranties. The Borrower hereby represents and
warrants that no default under Section 13 of the Loan Agreement has occurred and
remains continuing.

           Counterparts. This Amendment may be executed in counterparts in
accordance with Section 14.12 of the Loan Agreement.

                                      - 2 -



           Confirmation.  In all other respects, the Loan Agreement is
confirmed.

           IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the date first written above by their duly authorized representatives.

                                       IMPCO TECHNOLOGIES, INC.


                                       By: /s/ W. Brian Olson
                                           ------------------

                                       Title:  CFO
                                             ------------


                                       QUANTUM FUEL SYSTEMS
                                       TECHNOLOGIES WORLDWIDE, INC.
                                       (formerly known as Quantum Technologies,
                                       Inc.)


                                       By: /s/ Alan Niedzwiecki
                                           --------------------

                                       Title:  President
                                               ---------


                                       BANK OF AMERICA, N.A.


                                       By: /s/ David P. Maiorella
                                           ----------------------
                                       David P. Maiorella, Vice President

                                      - 3 -

EX-10.50

                                                                   Exhibit 10.50

              AMENDMENT NO. 9 TO AMENDED AND RESTATED BUSINESS LOAN
                                    AGREEMENT

           This Amendment No. 9 to Amended and Restated Business Loan Agreement
dated as of May 31, 2002 (this "Amendment") is executed with reference to the
Amended and Restated Business Loan Agreement dated as of April 30, 2001 (as
amended, the "Loan Agreement") among Bank of America, N.A. (the "Bank"), IMPCO
Technologies, Inc. (the "Borrower") and Quantum Fuel Systems Technologies
Worldwide, Inc. (under its former name, Quantum Technologies, Inc.) (the
"Subsidiary Borrower").

           The parties hereby agree to amend the Loan Agreement as follows:

      1.   Defined Terms. All initially capitalized terms used in this Amendment
without definition shall have the respective meanings assigned thereto in the
Loan Agreement.

      2.   Amendment to Section 1.2. Section 1.2 of the Loan Agreement is hereby
amended by deleting the reference to "May 31, 2002" and substituting in place
thereof a reference to "June 30, 2002".

      3.   Amendment to Section 2.3(b). Section 2.3(b) of the Loan Agreement is
hereby amended by deleting the reference to "May 31, 2002" and substituting in
place thereof a reference to "June 30, 2002".

      4.   Amendment to Section 3.4(b). Section 3.4(b) of the Loan Agreement is
hereby amended by deleting the reference to "May 31, 2002" and substituting in
place thereof a reference to "June 30, 2002".

      5.   Investments in Subsidiary Borrower. Pursuant to Amendment No. 8 to
Amended and Restated Business Loan Agreement, dated as of March 31, 2002 among
the parties hereto, Borrower's aggregate investments in Subsidiary Borrower were
not to exceed Three Million Dollars ($3,000,000) during the period from March
31, 2002 through the earlier of May 31, 2002 or the day upon which Borrower
successfully spins off Subsidiary Borrower. It is hereby agreed that Borrower's
aggregate investments in Subsidiary Borrower during the period from March 31,
2002 through June 30, 2002 shall not exceed Four Million Five Hundred Thousand
Dollars ($4,500,000).

      6.   Conditions Precedent. The effectiveness of this Amendment shall be
conditioned upon receipt by the Bank of all of the following:

           a.  Counterparts of this Amendment executed by all parties hereto;

           b.  Payment of the Bank's legal fees and expenses of its counsel,
               including any outstanding invoices; and

           c.  Such other assurances, certificates, documents, consents or
               opinions as the Bank reasonably may require.

                                      - 1 -



      7.   Representations and Warranties. The Borrower hereby represents and
warrants that no default under Section 13 of the Loan Agreement has occurred and
remains continuing.

      8.   Counterparts. This Amendment may be executed in counterparts in
accordance with Section 14.12 of the Loan Agreement.

      9.   Confirmation. In all other respects, the Loan Agreement is confirmed.

           IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the date first written above by their duly authorized representatives.

                                       IMPCO TECHNOLOGIES, INC.


                                       By: /s/ W. Brian Olson
                                           ------------------

                                       Title:  CFO
                                             ------------



                                       QUANTUM FUEL SYSTEMS
                                       TECHNOLOGIES WORLDWIDE, INC.
                                       (formerly known as Quantum Technologies,
                                       Inc.)


                                       By: /s/ Alan Niedzwiecki
                                           --------------------

                                       Title:  President
                                               ---------



                                       BANK OF AMERICA, N.A.


                                       By: /s/ David P. Maiorella
                                           ----------------------
                                       David P. Maiorella, Vice President

                                      - 2 -

EX-10.51

                                                                   Exhibit 10.51

               SECOND AMENDED AND RESTATED BUSINESS LOAN AGREEMENT

         This Second Amended and Restated Business Loan Agreement (this
"Agreement") dated as of June 24, 2002, is between Bank of America, N.A. (the
"Bank") and IMPCO Technologies, Inc. (the "Borrower").

                                    RECITALS

         A. The Borrower, its wholly owned subsidiary, Quantum Fuel Systems
Technologies Worldwide, Inc. ("Quantum") (under its former name, Quantum
Technologies, Inc.), and the Bank have heretofore entered into an Amended and
Restated Business Loan Agreement dated as of April 30, 2001 (as previously
amended, the "Existing Loan Agreement"), pursuant to which the Bank extended
joint credit facilities to the Borrower and Quantum.

         B. As of the date of this Agreement, Quantum owns no substantial
assets, has no substantial liabilities, and produces no substantial revenue,
rather the assets, liabilities and revenues associated with the Quantum
business, as described on Schedule A hereto, are owned and operated by the
Quantum Division of Borrower.

         C. It is anticipated that, on or before August 15, 2002, and pursuant
to documentation acceptable to the Bank, the Borrower shall (a) transfer
ownership of Quantum to the shareholders of Borrower (who will own 80.1%) and to
General Motors Corporation (who will directly or indirectly own 19.9%) and (b)
effect a one-time transfer to Quantum of $15,000,000 in cash along with all
accounts receivable, fixed assets, machinery, equipment and inventory associated
with the Borrower's Quantum operating division, as identified on Schedule A
hereto (as further described in Section 11.18, the "Quantum Spin-Off").

         D. The parties hereto agree to amend and restate the Existing Loan
Agreement in its entirety to restructure the obligations of the Borrower under
the Existing Loan Agreement and to remove Quantum as a borrower.

         In consideration of the foregoing and of the mutual covenants and
agreements herein contained, the parties hereto covenant and agree as follows:

                                   DEFINITIONS

As used in this Agreement, the following terms shall have the meanings set forth
below:

         "Annualized Core EBITDA" means (a) as of any date on or prior to prior
     to April 30, 2003, Core EBITDA for the period beginning on May 1, 2002 and
     ending on that date, annualized on a straight line basis, and (b) for any
     period ending on or following April 30, 2003, Core EBITDA for the one year
     period then ended.

                                      -1-



                  "Borrower" means IMPCO Technologies, Inc.

                  "Capital Expenditures" means any expenditures which are
          properly treated as capital expenditures under generally accepted
          accounting principles, including any expenditures in respect of
          capital lease obligations.

                  "Core EBITDA" means, for any period, Borrower's consolidated
          net income for that period from continuing operations and investments,
          determined in accordance with generally accepted accounting principles
          consistently applied, plus, to the extent deducted (or subtracted) in
          arriving at such net income, Borrower's consolidated income tax
          expense or credit, interest expense, minority interest, depreciation
          and amortization, provided that in computing "Core EBITDA" the results
          of operations of Quantum and the Quantum Division of Borrower shall be
          excluded.

                  "Current Ratio" means, as of each date of determination, the
          ratio of (a) Borrower's current assets, to (b) Borrower's current
          liabilities (including without limitation the current portion of
          Borrower's indebtedness for borrowed money), in each case, determined
          in accordance with generally accepted accounting principles,
          consistently applied, provided that the current assets and the current
          liabilities associated with the Quantum Division of Borrower shall be
          excluded.

                  "Debt Service Coverage Ratio" means, as of each date of
          determination, the ratio of (a) Annualized Core EBITDA less unfinanced
          Capital Expenditures for the period for which Annualized Core EBITDA
          has been determined (annualized on the same basis), to (b) the sum of
          (i) the current portion of Borrower's consolidated indebtedness for
          borrowed money and capital lease obligations as of the last day of
          then most recently ended fiscal year of Borrower, plus (ii) Borrower's
          interest expense for the same period for which Annualized Core EBITDA
          has been determined (annualized on the same basis), in each case,
          determined in accordance with generally accepted accounting
          principles, consistently applied.

                  "Default" means any event or circumstance which, with the
          passage of time or the giving of notice, will constitute an Event of
          Default.

                  "Event of Default" shall have the meaning set forth in Section
          13 hereof.

                  "Funded Debt to EBITDA Ratio" means, as of each date of
          determination, the ratio of (a) Borrower's consolidated indebtedness
          for borrowed money and capital lease obligations as of that date, to
          (b) Annualized Core EBITDA as of that date.

                  "Offshore Margin" means during each Pricing Period, the
          interest rate margin set forth in the Pricing Matrix in the column so
          headed opposite the Funded Debt to EBITDA Ratio in effect as of the
          last day of the fiscal quarter of the Borrower ending two months prior
          to the first day of such Pricing Period, provided that during each
          Pricing Period from the date of this Agreement through the Pricing
          Period beginning immediately following the receipt by the Bank of
          Borrower's Compliance Certificate for the Borrower's fiscal quarter
          ended October 31, 2002, Offshore Margin shall be 5.00%.

                                      -2-



                  "Permitted Liens" means as applied to any person or entity:

                  (b) Any lien in favor of the Bank given to secure the
            obligations hereunder and under the Quantum pledge;

                  (c) Liens (i) arising by operation of law on real estate for
            real estate taxes not yet delinquent and (ii) liens for taxes,
            assessments, judgments, governmental charges or levies or claims the
            non-payment of which is being diligently contested in good faith by
            appropriate proceedings and for which adequate reserves have been
            set aside on such person's or entities' books, but only so long as
            no foreclosure, distraint, sale or similar proceedings have been
            commenced with respect thereto and remain unstayed for a period of
            thirty days after their commencement;

                  (d) Liens of landlords, carriers, warehousemen, mechanics,
            laborers and materialmen incurred in the ordinary course of business
            for sums not yet due or being diligently contested in good faith, so
            long as and to the extent that reserves or appropriate provisions
            shall have been made therefor;

                  (e) Restrictions on the transfer of assets imposed by any
            applicable law or regulation;

                  (f) Easements, rights-of-way, restrictions and other similar
            encumbrances on the use of real property which do not in the
            aggregate materially interfere with the ordinary conduct of the
            business of such person or entity, or liens incidental to the
            conduct of the business of such person or entity or to the ownership
            of its properties which were not incurred in connection with
            indebtedness or other extensions of credit and which do not in the
            aggregate materially detract from the value of such properties or
            materially impair their use in the operation of the business of such
            person or entity;

                  (g) Purchase money security interests, which are perfected
            automatically by operation of law, only for the period (not to
            exceed twenty (20) days) of automatic perfection under the law of
            the applicable jurisdiction, and limited to liens on assets so
            purchased;

                  (h) Liens arising from precautionary UCC financing statement
            filings regarding operating leases entered into by such person or
            entity;

                  (i) Judgment and other similar liens arising in connection
            with court proceedings to the extent the attachment or enforcement
            of such liens would not result in an Event of Default hereunder;

                  (j) Liens securing indebtedness which is incurred to extend,
            refinance, renew, replace, defease or refund indebtedness which has
            been secured by an existing lien permitted under this Agreement and
            is permitted to be extended, refinanced, renewed, replaced, defeased
            or refunded under this Agreement, provided, that the scope of
            collateral encumbered by such liens shall not exceed the scope of
            collateral encumbered by the existing lien replaced thereby;

                                      -3-



                  (k) Licenses, leases or subleases granted to third parties in
          the ordinary course of business not materially interfering with the
          conduct of the business of such person or entity;

                  (l) Any interest or title of a lessor, sublessor, licensee or
          licensor under any lease or license agreement; and

                  (m) Inchoate liens in favor of a banking institution
          encumbering deposits (including the right of setoff) held by such
          banking institution.

                  "Pricing Matrix" means the following pricing matrix:



          --------------------------------------------------------------------------------------------
                                                      Unused
                          Funded Debt to            Commitment
          Pricing Level   EBITDA Ratio                 Fee         Offshore Margin   Prime Rate Margin
          --------------------------------------------------------------------------------------------
                                                                         
                  I       Greater or equal to         0.50%             2.75%              0.75%
                          2.00:1.00
          --------------------------------------------------------------------------------------------

                  II      Less than 2.00:1.00 or
                          greater than or equal       0.375%            2.50%              0.50%
                          to 1.50:1:00
          --------------------------------------------------------------------------------------------
                 III      Less than 1.50:1.00 or
                          greater than or equal       0.25%             2.25%              0.25%
                          to 1.25:1:00
          --------------------------------------------------------------------------------------------
                  IV      Less than 1.25:1.00         0.25%             2.00%              0.00%
          --------------------------------------------------------------------------------------------


                  "Pricing Period" means the successive three month periods
          beginning on the first day of each July, October, January and April.

                  "Prime Rate" means the rate of interest publicly announced
          from time to time by the Bank as its Prime Rate. The Prime Rate is set
          by the Bank based on various factors, including the Bank's costs and
          desired return, general economic conditions and other factors, and is
          used as a reference point for pricing some loans. The Bank may price
          loans to its customers at, above, or below the Prime Rate. Any change
          in the Prime Rate shall take effect at the opening of business on the
          day specified in the public announcement of a change in the Prime
          Rate.

                  "Prime Rate Margin" means during each Pricing Period, the
          interest rate margin set forth in the Pricing Matrix in the column so
          headed opposite the Funded Debt to EBITDA ratio in effect as of the
          last day of the fiscal quarter of the Borrower ending two months prior
          to the first day of such Pricing Period, provided that during the
          Pricing Period from the date of this Agreement through the Pricing
          Period beginning immediately following the receipt by the Bank of
          Borrower's Compliance Certificate for the Borrower's fiscal quarter
          ended October 31, 2002, the Prime Rate Margin shall be 2.25%.

                  "Quantum Spin-Off" means the transaction described in Recital
          C hereto, which transaction is subject to the conditions specified in
          Section 11.18.

                                      -4-



                  "Swap Agreement" means the ISDA Master Agreement dated as of
          December 2, 1996, between Borrower and the Bank (under its former
          name, Bank of America National Trust and Savings Association), as at
          any time amended.

                  "Unused Commitment Fee Rate" means during each Pricing Period,
          the rate margin set forth in the Pricing Matrix in the column so
          headed opposite the Funded Debt to EBITDA in effect as of the last day
          of the fiscal quarter of the Borrower ending two months prior to the
          first day of such Pricing Period, provided that during each Pricing
          Period from the date of this Agreement through the receipt by the Bank
          of Borrower's 10-Q Quarterly Report for the Borrower's fiscal quarter
          ended October 31, 2002, the Unused Commitment Fee Rate shall be 0.50%
          per annum.

1.  FACILITY NO. 1: REVOLVING LINE OF CREDIT AMOUNT AND TERMS

          1.1     Line of Credit Amount.

                  (a) During the availability period described below, the Bank
          will provide a line of credit ("Facility No. 1") to the Borrower. The
          amount of the line of credit (the "Facility No. 1 Commitment") is
          initially $8,000,000. The Facility No. 1 Commitment shall
          automatically and permanently reduce on each of (i) September 30,
          2002, (ii) December 31, 2002, and (iii) March 31, 2003, in an amount
          equal to $1,000,000.

                  (b) This is a revolving line of credit. During the
          availability period, the Borrower may repay principal amounts and
          reborrow them.

                  (c) The Borrower agrees not to permit the outstanding
          principal balance of advances under the line of credit to exceed the
          Facility No. 1 Commitment as reduced from time to time pursuant to
          paragraph (a) above.

          1.2     Availability Period. The line of credit is available between
the date of this Agreement and May 31, 2003 (the "Revolving Line Expiration
Date") unless a Default or Event of Default has occurred and remains continuing.

          1.3     Repayment Terms.

                  (a) The Borrower will pay interest with respect to Facility
          No. 1 monthly on the last banking day of each calendar month until
          payment in full of all outstanding principal.

                  (b) The Borrower will immediately repay the amount, if any, by
          which the principal with respect to Facility No. 1 at any time exceeds
          the Facility No. 1 Commitment as reduced from time to time pursuant to
          Section 1.1(a).

                  (c) The Borrower will repay in full all principal and any
          unpaid interest or other charges outstanding under this line of credit
          no later than the Revolving Line Expiration Date.

                                      -5-



     1.4 Interest Rate. Facility No. 1 shall bear interest in the manner
provided in Section 5 of this Agreement.

2.   FACILITY NO. 2: TERM LOAN AMOUNT AND TERMS

     2.1 Term Loan Amount. As of the date of this Agreement, a term loan in the
aggregate principal amount of $6,353,060.78 is outstanding under Facility No. 2
of the Existing Loan Agreement. In order to refinance the Borrower's obligations
under Facility No. 2 of the Existing Loan Agreement, the Bank hereby extends to
the Borrower a Term Loan Facility No. 2 in the amount of $6,353,060.78
("Facility No. 2").

     2.2 Repayment Terms.

         (a) The Borrower will pay interest monthly on the last banking day of
     each calendar month until payment in full of any principal outstanding
     under Facility No. 2.

         (b) The Borrower will repay principal in eight successive quarterly
     installments of $635,306 to be paid on each March 31, June 30, September
     30, and December 31, commencing June 30, 2002. On September 30, 2004, the
     Borrower will repay the remaining principal balance plus any interest then
     due. Amounts repaid or prepaid under Facility No. 2 may not be reborrowed.

         (c) The Borrower may prepay the loan in full or in part at any time.
     The prepayment will be applied to the most remote installment of principal
     due under this Agreement.

     2.3 Interest Rate. Facility No. 2 shall bear interest in the manner
provided in Section 5 of this Agreement.

3.   FACILITY NO. 3: TERM LOAN AMOUNT AND TERMS

     3.1 Term Loan Amount. As of the date of this Agreement, advances in the
aggregate principal amount of $1,515,625.00 are outstanding under Facility No. 3
(Non-Revolving Capital Expenditures Line of Credit) of the Existing Loan
Agreement. In order to refinance the Borrower's obligations under Facility No. 3
of the Existing Loan Agreement, the Bank hereby extends to the Borrower a Term
Loan Facility No. 3 in the amount of $1,515,625.00 ("Facility No. 3").

     3.2 Repayment Terms.

         (a) The Borrower will pay interest monthly on the last banking day of
     each calendar month until payment in full of any principal outstanding on
     Facility No. 3.

         (b) The Borrower will repay the principal amount outstanding on
     Facility No. 3 in twelve successive equal quarterly installments of
     $125,000 each, to be paid each March 31, June 31, September 30, and
     December 31, commencing June 30, 2002. On June 30, 2005, the Borrower will
     repay the remaining principal balance plus any interest then due. Amounts
     repaid or prepaid under Facility No. 3 may not be reborrowed.

                                       -6-



         (c) The Borrower may prepay the loan in full or in part at any time.
     The prepayment will be applied to the most remote payment of principal due
     under this Agreement.

     3.3 Interest Rate. Facility No. 3 shall bear interest in the manner
provided in Section 5 of this Agreement.

4.  FACILITY NO. 4: NON-REVOLVING LINE OF CREDIT AMOUNT AND TERMS

     4.1 Line of Credit Amount.

         (a) During the availability period described below, the Bank will
     provide a line of credit ("Facility No. 4") to the Borrower. The amount of
     the line of credit (the "Facility No. 4 Commitment") is $1,000,000.

         (b) This is a non-revolving line of credit. Amounts repaid under
     Facility No. 4 may not be reborrowed.

         (c) The Borrower agrees not to permit the aggregate amount of advances
     borrowed under this line of credit to exceed the Facility No. 4 Commitment.

     4.2 Availability Period.

         (a) The line of credit is available between the date of the Agreement
     and May 31, 2003 (the "Facility No. 4 Expiration Date") unless a Default or
     Event of Default has occurred and remains continuing.

         (b) During the availability period described above, the Borrower may
     request advances under Facility No. 4 in an amount no greater than the face
     amount of invoices for related Capital Expenditures presented to the Bank
     in connection with such request. The Bank's issuance of advances hereunder
     shall be at the Bank's sole discretion.

     4.3 Repayment Terms.

         (a) The Borrower will repay interest monthly on the last banking day of
     each calendar month until payment in full of all outstanding principal
     under Facility No. 4.

         (b) The Borrower will repay the principal balance outstanding as of the
     Facility No. 4 Expiration Date in successive quarterly installments of
     $125,000 to be paid on each March 31, June 30, September 30 and December
     31, commencing June 30, 2003. On March 31, 2005, the Borrower will repay
     any remaining principal balance and any interest then due.

         (c) The Borrower may prepay the loan in full or in part at any time.
     The prepayment will be applied to the most remote installment of principal
     due under this Agreement.

     4.4 Interest Rate. Facility No. 4 shall bear interest in the manner
provided in Section 5 of this Agreement.

                                       -7-



5.  INTEREST RATES

     5.1 Prime Rate Loans. The interest rate payable with respect to loans under
Facility No. 1, Facility No. 2, Facility No. 3 and Facility No. 4 is the Prime
Rate plus the Prime Rate Margin then in effect.

     5.2 LIBOR Rate. From the date hereof through November 30, 2002, instead of
the interest rate based on the Prime Rate, the Borrower may elect the LIBOR Rate
listed below for Facility No. 2 during interest periods agreed to by the Bank
and the Borrower provided that no Default or Event of Default exists. On or
following December 1, 2002, instead of the interest rate based on the Prime
Rate, the Borrower may elect the LIBOR Rate listed below for any of the
Facilities during interest periods agreed to by the Bank and the Borrower
provided that no Default or Event of Default exists. The LIBOR Rate shall be
subject to the terms and conditions described later in this Agreement. Any
principal amount bearing interest at an optional rate under this Agreement is
referred to as a "Portion." Borrower may select interest Portions each of which
shall bear interest at the LIBOR Rate plus the Offshore Margin then in effect.

         The LIBOR Rate is a rate per year. Interest will be paid on the last
day of each interest period, and on the last day of each month during the
interest period. At the end of any interest period, the interest rate will
revert to the rate based on the Prime Rate, unless the Borrower has designated
another interest period for the Portion. No Portion will be converted to a
different interest rate during the applicable interest period. Upon the
occurrence of an Event of Default under this Agreement, the Bank may terminate
the availability of the LIBOR Rate for interest periods commencing after the
Event of Default occurs.

         The election of LIBOR Rates shall be subject to the following terms and
requirements:

         (a) The interest period during which the LIBOR Rate will be in effect
     will be one, two, three, six or twelve months. The first day of the
     interest period must be a day other than a Saturday or a Sunday on which
     the Bank is open for business in California, New York and London and
     dealing in offshore dollars (a "LIBOR Banking Day"). The last day of the
     interest period and the actual number of days during the interest period
     will be determined by the Bank using the practices of the London inter-bank
     market.

         (b) Each LIBOR Rate portion will be for an amount not less than
     $500,000.

         (c) The "LIBOR Rate" means the interest rate determined by the
     following formula, rounded upward to the nearest 1/100 of one percent. (All
     amounts in the calculation will be determined by the Bank as of the first
     day of the interest period.)

                    LIBOR Rate =    London Inter-Bank Offered Rate
                                    ------------------------------
                                      (1.00 - Reserve Percentage)

     Where,

                   (i) "London Inter-Bank Offered Rate" means the average per
          annum interest rate at which U.S. dollar deposits would be offered for
          the applicable interest period by major banks in the London

                                       -8-



                  inter-bank market, as shown on the Telerate Page 3750 (or such
                  other page as may replace it) at approximately 11:00 a.m.
                  London time two (2) London Banking Days before the
                  commencement of the interest period. If such rate does not
                  appear on the Telerate Page 3750 (or such other page that may
                  replace it), the rate for that interest period will be
                  determined by such alternate method as reasonably selected by
                  the Bank. A "London Banking Day" is a day on which the Bank's
                  London Branch is open for business and dealing in offshore
                  dollars.

                            (ii) "Reserve Percentage" means the total of the
                  maximum reserve percentages for determining the reserves to be
                  maintained by member banks of the Federal Reserve System for
                  Eurocurrency Liabilities, as defined in Federal Reserve Board
                  Regulation D, rounded upward to the nearest 1/100 of one
                  percent. The percentage will be expressed as a decimal, and
                  will include, but not be limited to, marginal, emergency,
                  supplemental, special, and other reserve percentages.

                  (d) The Borrower shall irrevocably request a LIBOR Rate
         portion no later than 12:00 noon San Francisco time on the LIBOR
         Banking Day preceding the day on which the London Inter-Bank Offered
         Rate will be set, as specified above.

                  (e) The Borrower may not elect a LIBOR Rate with respect to
         any principal amount which is scheduled to be repaid before the last
         day of the applicable interest period.

                  (f) Any portion of the principal balance already bearing
         interest at the LIBOR Rate will not be converted to a different rate
         during its interest period.

                  (g) Each prepayment of a LIBOR Rate portion, whether
         voluntary, by reason of acceleration or otherwise, will be accompanied
         by the amount of accrued interest on the amount prepaid and a
         prepayment fee as described below. A "prepayment" is a payment of an
         amount on a date earlier than the scheduled payment date for such
         amount as required by this Agreement. The prepayment fee shall be equal
         to the amount (if any) by which:

                            (i)  the additional interest which would have been
                  payable during the interest period on the amount prepaid had
                  it not been prepaid, exceeds

                            (ii) the interest which would have been recoverable
                  by the Bank by placing the amount prepaid on deposit in the
                  domestic certificate of deposit market, the eurodollar deposit
                  market, or other appropriate money market selected by the
                  Bank, for a period starting on the date on which it was
                  prepaid and ending on the last day of the interest period for
                  such portion (or the scheduled payment date for the amount
                  prepaid, if earlier).

                  (h) The Bank will have no obligation to accept an election for
         a LIBOR Rate portion if any of the following described events has
         occurred and is continuing:

                                      -9-



                  (i)  Dollar deposits in the principal amount, and for periods
         equal to the interest period, of a LIBOR Rate portion are not available
         in the London inter-bank market; or

                  (ii) the LIBOR Rate does not accurately reflect the cost of a
         LIBOR Rate portion.

6.  FEES, EXPENSES AND COSTS

     6.1 Loan Fee. The Borrower agrees to pay to the Bank a non-refundable fee
of $35,000 which is earned and payable as of the date hereof.

     6.2 Unused Commitment Fee. The Borrower agrees to pay a fee on any
difference between the Facility No. 1 Commitment and the Facility No. 4
Commitment and the amount of credit it actually uses under such facilities,
determined by the weighted average credit outstanding during the specified
period at the Unused Commitment Fee Rate as in effect from time to time. This
fee shall be payable on June 30, 2002, and the last day of each calendar quarter
and on the Revolving Line Expiration Date.

     6.3 Expenses. The Borrower agrees to immediately repay the Bank for
reasonable expenses that include, but are not limited to, filing, recording and
search fees, appraisal fees, title report fees, and documentation fees (it being
acknowledged that no appraisals or title reports are presently contemplated).

     6.4 Reimbursement Costs.

         (a) The Borrower agrees to reimburse the Bank for any reasonable
     expenses it incurs in the preparation of this Agreement and any agreement
     or instrument required by this Agreement. Expenses include, but are not
     limited to, reasonable attorneys' fees, including any allocated costs of
     the Bank's in-house counsel.

         (b) The Borrower agrees to reimburse the Bank for the reasonable cost
     of periodic audits and appraisals of the personal property collateral
     securing this Agreement, at such intervals as the Bank may reasonably
     require. The audits and appraisals may be performed by employees of the
     Bank or by independent appraisers.

7.  COLLATERAL

     7.1 Personal Property. The Borrower's obligations to the Bank under this
Agreement and the Swap Agreement will be secured by personal property the
Borrower and Quantum now own or will own in the future as listed below (in the
case of Quantum, only until the Quantum Spin-Off Date). The collateral is
further defined in the security agreements executed by the Borrower and Quantum.
In addition, all personal property collateral securing this Agreement shall also
secure all other present and future obligations of the Borrower to the Bank. All
personal property collateral securing any other present or future obligations of
the Borrower to the Bank shall also secure this Agreement. In order to secure
the obligations under this Agreement and the Swap

                                      -10-



Agreement, the Borrower hereby confirms and regrants to the Bank a security
interest in and to all of its now owned and hereafter acquired:

     (a)   Machinery, equipment, and fixtures;

     (b)   Inventory;

     (c)   Accounts Receivable;

     (d)   Patents, trademarks and other general intangibles;

     (e)   Deposit Accounts; and

the products and proceeds thereof. Following the occurrence of an Event of
Default, Borrower agrees to assemble all such collateral at a location to be
designated by the Bank.

8. DISBURSEMENTS, PAYMENTS AND COSTS

     8.1   Requests for Credit. Each request for an extension of credit will be
made in writing in a manner acceptable to the Bank, or by another means
acceptable to the Bank.

     8.2   Disbursements and Payments. Each disbursement by the Bank and each
payment by the Borrower will be:

           (a)   made at the Bank's branch (or other location) selected by the
     Bank from time to time;

           (b)   made for the account of the Bank's branch selected by the Bank
     from time to time;

           (c)   made in immediately available funds, or such other type of
     funds selected by the Bank;

           (d)   evidenced by records kept by the Bank. In addition, the Bank
     may, at its discretion, require the Borrower to sign one or more
     promissory notes.

     8.3   Telephone and Telefax Authorization.

           (a)   The Bank may honor telephone or telefax instructions for
     advances or repayments or for the designation of optional interest rates
     and telefax requests for the issuance of letters of credit given by any one
     of the individuals authorized to sign loan agreements on behalf of the
     Borrower or any other individual designated by any one of such authorized
     signers.

           (b)   Advances will be deposited in and repayments will be withdrawn
     from the Borrower's account number 12331-16650 or such other of the
     Borrower's accounts with the Bank as designated in writing by the Borrower.

                                      -11-



           (c)   The Borrower indemnifies and excuses the Bank (including its
     officers, employees, and agents) from all liability, loss, and costs in
     connection with any act resulting from telephone or telefax instructions it
     reasonably believes are made by any individual authorized by the Borrower
     to give such instructions. This indemnity and excuse will survive this
     Agreement's termination.

     8.4   Direct Debit (Pre-Billing).

           (a)   The Borrower agrees that the Bank will debit the Borrower's
     deposit account number 12331-16650 or such other of the Borrower's accounts
     with the Bank as designated in writing by the Borrower (the "Designated
     Account") on the date each payment of principal and interest and any fees
     from the Borrower becomes due (the "Due Date"). If the Due Date is not a
     banking day, the Designated Account will be debited on the next banking
     day.

           (b)   Approximately 10 days prior to each Due Date, the Bank will
     mail to the Borrower a statement of the amounts that will be due on that
     Due Date (the "Billed Amount"). The calculation will be made on the
     assumption that no new extensions of credit or payments will be made
     between the date of the billing statement and the Due Date, and that there
     will be no changes in the applicable interest rate.

           (c)   The Bank will debit the Designated Account for the Billed
     Amount, regardless of the actual amount due on that date (the "Accrued
     Amount"). If the Billed Amount debited to the Designated Account differs
     from the Accrued Amount, the discrepancy will be treated as follows:

                          (i)   If the Billed Amount is less than the Accrued
           Amount, the Billed Amount for the following Due Date will be
           increased by the amount of the discrepancy. No Default or Event of
           Default shall exist by reason of any such discrepancy.

                          (ii)  If the Billed Amount is more than the Accrued
           Amount, the Billed Amount for the following Due Date will be
           decreased by the amount of the discrepancy.

           Regardless of any such discrepancy, interest will continue to accrue
           based on the actual amount of principal outstanding without
           compounding. The Bank will not pay the Borrower interest on any
           overpayment.

           (d)   The Borrower will maintain sufficient funds in the Designated
     Account to cover each debit. If there are insufficient funds in the
     Designated Account on the date the Bank enters any debit authorized by this
     Agreement, the debit will be reversed.

     8.5   Banking Days. Unless otherwise provided in this Agreement, a banking
day is a day other than a Saturday or a Sunday on which the Bank is open for
business in California. For amounts bearing interest at an offshore rate (if
any), a banking day is a day other than a Saturday or a Sunday on which the Bank
is open for business in California and dealing in offshore dollars. All payments
and disbursements which would be due on a day which is not a banking day will be
due on the next banking day. All

                                      -12-



payments received on a day which is not a banking day will be applied to the
credit on the next banking day. For amounts bearing interest at a LIBOR Rate, a
banking day is a day other than a Saturday or a Sunday on which the Bank is open
for business in California, New York and London and dealing in offshore dollars.

           8.6   Taxes. If any payments to the Bank under this Agreement are
made from outside the United States, the Borrower will not deduct any foreign
taxes from any payments it makes to the Bank. If any such taxes are imposed on
any payments made by the Borrower (including payments under this Section), the
Borrower will pay the taxes and will also pay to the Bank, at the time interest
is paid, any additional amount which the Bank specifies as necessary to preserve
the after-tax yield the Bank would have received if such taxes had not been
imposed. The Borrower will confirm that it has paid the taxes by giving the Bank
official tax receipts (or notarized copies) within 30 days after the due date.

           8.7   Additional Costs. The Borrower will pay the Bank, on demand,
for the Bank's costs or losses arising from any statute or regulation, or any
request or requirement of a regulatory agency which is applicable to all
national banks or a class of all national banks, in each case to the extent that
such statute or regulation was enacted or promulgated following the date hereof
or the request or requirement was made or became effective following the date
hereof. The costs and losses will be allocated to the loan in a manner
determined by the Bank, using any reasonable method. The costs include the
following:

                 (a)  any reserve or deposit requirements to the extent
           resulting from the foregoing; and

                 (b)  any capital requirements relating to the Bank's assets and
           commitments for credit to the extent resulting from the foregoing.

           8.8   Interest Calculation. Except as otherwise stated in this
Agreement, all interest and fees, if any, will be computed on the basis of a
360-day year and the actual number of days elapsed. This results in more
interest or a higher fee than if a 365-day year is used.

           8.9   Default Rate. Upon the occurrence and during the continuation
of any Event of Default under this Agreement, principal amounts outstanding
under this Agreement will at the option of the Bank bear interest at a rate
which is three percentage points higher than the rate of interest otherwise
provided under this Agreement. This will not constitute a waiver of any Default
or Event of Default. Installments of principal which are not paid when due under
this Agreement shall continue to bear interest until paid. Any interest, fees or
costs which are not paid when due shall bear interest at the Prime Rate plus
three percentage points. This may result in compounding of interest.

9. CONDITIONS

           The Bank must receive the following items, in form and content
acceptable to the Bank, before it is required to extend any credit to the
Borrower under this Agreement on the date of this Agreement:

                                      -13-



           9.1   Authorizations. Evidence that the execution, delivery and
performance by the Borrower of this Agreement and any instrument or agreement
required of Borrower under this Agreement have been duly authorized.

           9.2   Insurance. Evidence of insurance coverage, as required in the
"Covenants" section of this Agreement.

           9.3   Evidence of Priority. Evidence that security interests and
liens in favor of the Bank are valid, enforceable, and prior to all others'
rights and interests, except those the Bank consents to in writing and any
Permitted Liens.

           9.4   Loan Fee. Payment of the Loan Fee described in Section 6.1
hereto.

           9.5   Cash Collateral Deposit. A deposit of cash collateral in the
amount of $2,000,000. This amount shall be held in an interest bearing account
as collateral security for the obligations of the Borrower to the Bank, the
Borrower hereby granting to the Bank a security interest in such account and its
contents. Provided that no Default or Event of Default then exists, the Bank
shall release the collateral contained in such account promptly and in any event
within three Business Days following receipt by the Bank of Compliance
Certificates from the Borrower as of the following dates:

                 Date for which Compliance Certificate Prepared    Amount
Released

                 December 31, 2002                                 $1,000,000

                 March 31, 2003                                    Remainder

           9.6   Other Items. Any other items that the Bank reasonably requires.

                 In addition to the foregoing, it shall be a condition to each
new advance of credit under this Agreement (whether on the date hereof or on any
later date), that (a) each of the representations and warranties set forth
herein are true and correct as of such date (other than any representations
which expressly relate only to another date) and (b) that no Default or Event of
Default has occurred and remains continuing.

10. REPRESENTATIONS AND WARRANTIES

          When the Borrower signs this Agreement, Borrower makes the following
representations and warranties. Each request for an extension of credit
constitutes a renewed representation, provided that following the effective date
of the Quantum Spin-Off, no representations shall be deemed to be made as to
Quantum:

          10.1   Organization. Each of the Borrower and Quantum is a corporation
duly formed and existing under the laws of the state where organized.

          10.2   Authorization. This Agreement, and any instrument or agreement
required hereunder, are within the Borrower's powers, have been duly authorized,
and do not conflict with any of its organizational papers.

                                      -14-



          10.3   Enforceable Agreement. This Agreement is a legal, valid and
binding agreement of the Borrower, enforceable in accordance with its terms, and
any instrument or agreement required of Borrower hereunder, when executed and
delivered, will be similarly legal, valid, binding and enforceable.

          10.4   Good Standing. In each state in which the Borrower and Quantum
do business, they are properly licensed, in good standing, and, where required,
in compliance with fictitious name statutes.

          10.5   No Conflicts. This Agreement does not conflict with any law,
agreement, or obligation by which the Borrower, or its properties are bound.

          10.6   Financial Information. All financial and other information that
has been or will be supplied to the Bank is:

                 (a)  sufficiently complete to give the Bank accurate knowledge
of the Borrower's and Quantum's financial condition.

                 (b)  in compliance with all government regulations that apply.

          10.7  Lawsuits. There is no lawsuit, tax claim or other dispute
pending or threatened against the Borrower which, if lost, would materially
impair the Borrower's financial condition or would impair Borrower's ability to
repay the loans and letters of credit contemplated herein, except as have been
disclosed in writing to the Bank.

          10.8   Collateral. All collateral required in this Agreement is owned
by the grantor of the security interest free of any title defects or any liens
or interests of others (other than Permitted Liens).

          10.9   Permits, Franchises. The Borrower and Quantum possess all
permits, memberships, franchises, contracts and licenses required and all
trademark rights, trade name rights, patent rights and fictitious name rights
necessary to enable each of them to conduct the business in which it is now
engaged.

          10.10  Other Obligations. Neither the Borrower nor Quantum is in
default on any obligation for borrowed money, any purchase money obligation or
any other material lease, commitment, contract, instrument or obligation.

          10.11  Income Tax Returns. The Borrower has no knowledge of any
pending assessments or adjustments of their income tax for any year.

          10.12  No Default. No Default or Event of Default exists.

          10.13  Locations. The Borrower's place of business (or its chief
executive office) is located at the address listed under its signature on this
Agreement.

11. COVENANTS

          The Borrower agrees that it shall comply with the covenants set forth
in this Section 11 (and shall cause each its subsidiaries to so comply, except
that following the effective date of the Quantum Spin-Off, no such compliance
shall be required by or as to

                                      -15-



Quantum), so long as credit is available under this Agreement and until the Bank
is repaid in full:

          11.1   Use of Proceeds. To use the proceeds of (i) Facility No. 1 only
for the Borrower's working capital and other general corporate purposes; (ii)
Facility No. 2 to refinance the existing term loan outstandings under Facility
No. 2 of the Existing Loan Agreement, (iii) Facility No. 3 to refinance the
existing term loan outstandings under Facility No. 3 of the Existing Loan
Agreement, and Facility No. 4 only for Capital Expenditures permitted by this
Agreement.

          11.2   Financial Information. To provide the following financial
information and statements in form and content acceptable to the Bank, and such
additional information as requested by the Bank from time to time:

                 (a)  Within 90 days of Borrower fiscal year end April 30, 2002,
          and each fiscal year end thereafter, the Borrower's annual financial
          statements. These financial statements must be audited by a certified
          public accountant acceptable to the Bank. The statements shall be
          prepared on a consolidated and consolidating basis.

                 (b)  Within 45 days of each fiscal quarter's end, the
          Borrower's quarterly financial statements. These financial statements
          may be Borrower prepared. The statements shall be prepared on a
          consolidated and consolidating basis.

                 (c)  Within 90 days of each fiscal year end, copies of the
          Borrower's Form 10-K Annual Report.

                 (d)  Within 45 days of each fiscal quarter's end, copies of the
          Borrower's Form 10-Q Quarterly Report.

                 (e)  Within 90 days of each fiscal year end, consolidated and
          consolidating projections for the then current fiscal year of the
          Borrower.

                 (f)  Promptly and in any event within 10 days of the date when
          filed, copies of any registration statements or other documents filed
          with the Securities and Exchange Commission.

                 (g)  Within 45 days of each fiscal quarter's end, a detailed
          aging report of consolidated accounts receivable and accounts payable.

                 (h)  Any other such additional information as may be reasonably
          requested by Bank from time to time; and

                 (i)  Within the period(s) provided in subsections (a) and (b)
          above, a compliance certificate signed by an authorized financial
          officer of the Borrower setting forth (i) the information and
          computations (in sufficient detail) to establish that the Borrower is
          in compliance with all financial covenants at the end of the period
          covered by the financial statements then being furnished and (ii)
          whether there existed as of the date of such financial statements and
          whether there exists as of the date of the certificate, any Default or
          Event of Default under this Agreement and, if any such Default or
          Event of Default exists, specifying the

                                      -16-



         nature thereof and the action the Borrower is taking and proposes to
         take with respect thereto.

         11.3  Current Ratio. Cause the Current Ratio, as of the last day of
each fiscal quarter, commencing with the quarterly period ending July 31, 2002,
to be not less than 2.00:1.00.

         11.4  Funded Debt to EBITDA Ratio. Cause the Funded Debt to EBITDA
Ratio, as of the last day of each fiscal quarter, commencing with the quarterly
period ending July 31, 2002, to be less than 2.25:1.00.

         11.5  Debt Service Coverage Ratio. Cause the Debt Service Coverage
Ratio, as of the last day of each fiscal quarter, commencing with the quarterly
period ending July 31, 2002, to be not less than the ratio set forth below
opposite that fiscal quarter:

                  Fiscal Quarters Ending             Minimum Ratio

                  July 31, 2002                      1.05:1.00

                  October 31, 2002                   1.30:1.00

                  January 31, 2003                   1.35:1.00

                  April 30, 2003                     1.50:1.00
                  and thereafter

         11.6  Other Debts. Not to have outstanding or incur any direct or
contingent liabilities (other than those to the Bank and/or any other subsidiary
or affiliate of Bank of America Corporation), or become liable for the
liabilities of others without the Bank's written consent. This does not
prohibit:

               (a) Acquiring goods, supplies, or merchandise on normal trade
         credit, and incurring indebtedness for services rendered, similar in
         nature and amount to such indebtedness incurred by the Borrower in the
         past.

               (b) Endorsing negotiable instruments received in the usual course
         of business.

               (c) Obtaining performance bonds, trade letters of credit, or
         surety bonds in the usual course of business.

               (d) Liabilities in existence on the date of this Agreement
         disclosed in writing to the Bank.

               (e) Additional debts for purchase money transactions including
         capital leases, conditional sales or other title retention contracts
         with respect to property used or acquired, which do not exceed a total
         principal amount of $500,000 for each annual accounting period.

                                      -17-



               (f) a line of credit not in excess of $2,000,000 for IMPCO BV
         from Fortis or another institution acceptable to the Bank.

               (g) guarantees in respect of obligations incurred by Borrower's
         subsidiaries and permitted by this Section 11.6, provided that, in the
         case of Quantum, such guarantees are terminated concurrently with the
         Quantum Spin-Off.

         11.7  Other Liens. Not to create, assume, or allow any security
interest or lien (including judicial liens) on property the Borrower or its
subsidiaries now or later own, except:

               (a) Deeds of trust and security agreements in favor of the Bank.

               (b) Liens for taxes not yet due.

               (c) Additional purchase money security interests and similar
         liens in property acquired after the date of this Agreement, to secure
         transactions permitted under Section 11.5(e).

               (d) Permitted Liens.

         11.8  Notices to Bank. To promptly notify the Bank in writing of:

               (a) any lawsuit under which Borrower's or, prior to the effective
         date of the Quantum Spin-Off, Quantum, may reasonably be expected to be
         in excess of $250,000 in excess of any applicable insurance coverage.

               (b) any actual or potential contingent liability to the Borrower
         or, prior to the effective date of the Quantum Spin-Off, Quantum in
         excess of $250,000.

               (c) any substantial dispute between the Borrower or, prior to the
         effective date of the Quantum Spin-Off, Quantum and any government
         authority.

               (d) any failure to comply with this Agreement.

               (e) any material adverse change in the Borrower's or, prior to
         the effective date of the Quantum Spin-Off, Quantum's business
         condition (financial or otherwise), operations, properties or
         prospects, or (in Borrower's case) ability to repay the credit.

               (f) any change in the Borrower's or, prior to the effective date
         of the Quantum Spin-Off, Quantum's name, legal structure, place of
         business, or chief executive office if either of them has more than one
         place of business.

         11.9  Books and Records. To maintain adequate books and records.

         11.10 Audits. To allow the Bank and its agents to inspect the
Borrower's and, prior to the effective date of the Quantum Spin-Off, Quantum's
properties and examine, audit and make copies of books and records at any
reasonable time. If any of the Borrower's and, prior to the effective date of
the Quantum Spin-Off, Quantum's

                                      -18-



properties, books or records are in the possession of a third party, the
Borrower authorizes that third party to permit the Bank or its agents to have
access to perform inspections or audits and to respond to the Bank's requests
for information concerning such properties, books and records.

         11.11 Compliance with Laws. To comply with the laws (including any
fictitious name statute), regulations, and orders of any government body with
authority over the Borrower's business.

         11.12 Preservation of Rights. To maintain and preserve all rights,
privileges, and franchises the Borrower now has.

         11.13 Maintenance of Properties. To make any repairs, renewals, or
replacements to keep the Borrower's properties in good working condition.

         11.14 Perfection of Liens. To help the Bank perfect and protect its
security interests and liens, and reimburse it for related costs it incurs to
protect its security interests and liens.

         11.15 Cooperation. To take any action reasonably requested by the Bank
to carry out the intent of this Agreement.

         11.16 Insurance.

               (a) Insurance Covering Collateral. To maintain all risk property
         damage insurance policies covering the tangible property comprising the
         collateral. Each insurance policy must be in an amount acceptable to
         the Bank. The insurance must be issued by an insurance company
         acceptable to the Bank and must include a lender's loss payable
         endorsement in favor of the Bank in a form acceptable to the Bank.

               (b) General Business Insurance. To maintain insurance
         satisfactory to the Bank as to amount, nature and carrier covering
         property damage (including loss of use and occupancy) to any of the
         Borrower's properties, public liability insurance including coverage
         for contractual liability, product liability and workers' compensation,
         and any other insurance which is usual for the Borrower's business.

               (c) Evidence of Insurance. Upon the request of the Bank, to
         deliver to the Bank a copy of each insurance policy, or, if permitted
         by the Bank, a certificate of insurance listing all insurance in force.

         11.17 Capital Expenditures. During any fiscal year, beginning with the
fiscal year ending April 30, 2003, make Capital Expenditures (on a consolidated
basis, but exclusive of Quantum) which are not in excess of $2,500,000.

               Quantum Spin-Off. Not less than ten Business Days prior to the
proposed effective date of the Quantum Spin-Off, Borrower shall deliver drafts
of each material instrument, document and agreement to be executed by Borrower
and Quantum in connection therewith (the "Quantum Spin-Off Documents") to the
Bank for its review, and shall thereafter keep the Bank promptly apprised of any
changes thereto.

                                      -19-



Upon the proposed effective date of the Quantum Spin-Off, and as a condition to
the effectiveness thereof, Borrower shall deliver to the Bank a certificate,
signed by an authorized financial officer of the Borrower, certifying that the
Quantum Spin-Off has occurred and is effective pursuant to such instruments,
documents and agreements, and, giving effect to the Quantum Spin-Off, no Default
or Event of Default has occurred or remains continuing, along with all the final
form of the Quantum Spin-Off Documents, which shall be in form and substance
acceptable to the Bank. Subject to the Bank's approval of the form and substance
of the Quantum Spin-Off Documents, and to the other conditions specified in this
Section, the Bank shall deliver to Quantum a writing evidencing the release of
Quantum from any liabilities in respect of this Agreement and releasing the
Bank's liens on the assets of Quantum (including any assets transferred by
Borrower to Quantum in connection with the Quantum Spin-Off).

         11.18 Additional Negative Covenants. Not to, without the Bank's written
consent:

               (a) engage in any business activities substantially different
         from the Borrower's present business.

               (b) liquidate or dissolve the Borrower's or Quantum's business.

               (c) enter into any consolidation, merger, or other combination,
         or become a partner in a partnership, a member of a joint venture, or a
         member of a limited liability company, provided that the Borrower may
         enter into joint ventures in the ordinary course of business to the
         extent the same would not result in any Default or Event of Default.

               (d) sell, lease, transfer or dispose of all or a substantial part
         of the Borrower's business or the Borrower's assets except in an
         aggregate amount not exceeding $500,000 in any fiscal year, other than
         the Quantum Spin-Off.

               (e) acquire or purchase a business or its assets for a
         consideration (including assumption of debt) which would exceed
         $1,000,000 (and then only to the extent that it would not result in any
         Default or Event of Default).

               (f) sell, assign, lease, transfer or otherwise dispose of any
         assets for less than fair market value, or enter into any agreement to
         do so.

               (g) enter into any sale and leaseback agreement covering any of
         its fixed or capital assets.

               (h) voluntarily suspend its business for any period.

               (i) make any investment in Quantum which is not existing as of
         the date of this Agreement, other than investments made in the ordinary
         course of the Borrower's business and prior to the effective date of
         the Quantum Spin-Off in an amount no greater than $1,500,000 in any
         calendar month (provided that following the Quantum Spin-Off, no
         further such investments shall be made).

               (j) make any distributions to shareholders of Borrower or Quantum
         (whether in cash or other property) or repurchase or acquire any
         capital stock or

                                      -20-



         other indebtedness of Borrower or Quantum from such shareholders.
         Notwithstanding the provisions herein, this does not prohibit the
         Quantum Spin-Off.

               (k) Fail to maintain at all times prior to the effective date of
         the Quantum Spin-Off a liquidity reserve, consisting of cash and cash
         equivalents, in an aggregate amount which is not less than $2,000,000
         at any time.

               (l) Make any loans or advances to officers or shareholders which
         would result in the aggregate principal amount of such loans and
         advances being increased by an amount which is in excess of $300,000
         over the amounts outstanding as of December 31, 2001.

12.   HAZARDOUS WASTE INDEMNIFICATION

         The Borrower will indemnify and hold harmless the Bank from any loss or
liability directly or indirectly arising out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance. This indemnity will apply whether
the hazardous substance is on, under or about the Borrower's property or
operations or property leased to the Borrower. The indemnity includes but is not
limited to reasonable attorneys' fees (including the reasonable estimate of the
allocated cost of in-house counsel and staff). The indemnity extends to the
Bank, its parent, subsidiaries and all of their directors, officers, employees,
agents, successors, attorneys and assigns. For these purposes, the term
"hazardous substances" means any substance, material, or waste which is or
becomes designated as "hazardous," "toxic," "pollutant,", or "contaminant" or a
similar designation or regulation under any federal, state or local law (whether
under common law, statute, regulation, or otherwise) or judicial interpretation
of such, including without limitation petroleum or natural gas. This indemnity
will survive repayment of the Borrower's obligations to the Bank.

13.   DEFAULT

         If any of the events or circumstances described in this Section 13
occurs (any such event or circumstance being referred to as an "Event of
Default", the Bank may do one or more of the following: declare the Borrower to
be in default, stop making any additional credit available to the Borrower, and
require the Borrower to repay their entire debt hereunder immediately and
without prior notice and to provide cash collateral for all letters of credit
issued hereunder. If an Event of Default occurs under Section 13.3 with respect
to the Borrower, then the entire debt outstanding under this Agreement will
automatically be due immediately.

         13.1 Failure to Pay. The Borrower fails to make a payment under this
Agreement when due.

         13.2 Lien Priority. The Bank fails to have an enforceable first lien
(except for any prior liens to which the Bank has consented in writing) on or
security interest in any property given as security for this loan.

                                      -21-



         13.3  False Information. The Borrower gives the Bank false or
misleading information or representations.

         13.4  Bankruptcy. (i) The Borrower or, prior to the effective date of
the Quantum Spin-Off, Quantum files a bankruptcy petition, (ii) a bankruptcy
petition is filed against the Borrower or, prior to the effective date of the
Quantum Spin-Off, Quantum, or (iii) the Borrower or, prior to the effective date
of the Quantum Spin-Off, Quantum makes a general assignment for the benefit of
creditors. The Event of Default will be deemed cured if any such involuntary
bankruptcy petition is dismissed within a period of 60 days after the filing;
provided, however, that the Bank will not be obligated to extend any additional
credit under this Agreement during that period.

         13.5  Receivers. A receiver or similar official is appointed for the
Borrower's or, prior to the effective date of the Quantum Spin-Off, Quantum's
business, or the business is terminated.

         13.6  Lawsuits. Any lawsuit or lawsuits are filed on behalf of one or
more trade creditors against the Borrower or, prior to the effective date of the
Quantum Spin-Off, Quantum in an aggregate amount of $500,000 or more in excess
of any insurance coverage.

         13.7  Judgments. (i) Any judgments or arbitration awards are entered
against the Borrower or, prior to the effective date of the Quantum Spin-Off,
Quantum, or (ii) the Borrower or, prior to the effective date of the Quantum
Spin-Off, Quantum enters into any settlement agreements with respect to any
litigation or arbitration, in an aggregate amount of $500,000 or more in excess
of any insurance coverage, which is not fully bonded or stayed within 10
business days of the entry thereof.

         13.8  Government Action. Any government authority takes action that the
Bank believes materially adversely affects the Borrower's or, prior to the
effective date of the Quantum Spin-Off, Quantum's financial condition or
Borrower's ability to repay the obligations hereunder.

         13.9  Failure to Cause Quantum Spin-Off. The Borrower fails to (i)
cause the Quantum Spin-Off to occur and (ii) deliver to the Bank the Quantum
Spin-off Documents on or before August 15, 2002.

         13.10 Material Adverse Change. A material adverse change occurs in the
Borrower's or, prior to the effective date of the Quantum Spin-Off, Quantum's
business condition (financial or otherwise), operations, properties or
prospects, or ability to repay the credit on a consolidated basis.

         13.11 Cross-default. Any default occurs under any agreement in
connection with any credit the Borrower or, prior to the effective date of the
Quantum Spin-Off, Quantum has obtained from anyone else or which the Borrower
or, prior to the effective date of the Quantum Spin-Off, Quantum has guaranteed
and such default is not cured or waived within any cure period applicable
thereto.

         13.12 Default under Related Documents. Any guaranty, subordination
agreement, security agreement, or other document required by this Agreement is
violated or no longer in effect.

                                      -22-



       13.13 Other Bank Agreements. The Borrower or Quantum fails to meet the
conditions of, or fails to perform any obligation under any other agreement the
Borrower or Quantum has with the Bank or any affiliate of the Bank.

       13.14 Other Breach Under Agreement. The Borrower fails to meet the
conditions of, or fails to perform any obligation under, any term of this
Agreement not specifically referred to in this Article. This includes any
failure or anticipated failure by the Borrower to comply with any financial
covenants set forth in this Agreement, whether such failure is evidenced by
financial statements delivered to the Bank or is otherwise known to the Borrower
or the Bank. If, in the Bank's opinion, the breach is capable of being remedied,
the breach will not be considered an Event of Default for a period of fifteen
days after the date on which the Bank gives written notice of the breach to the
Borrower; provided, however, that the Bank will not be obligated to extend any
additional credit under this Agreement during that period.

14.  ENFORCING THIS AGREEMENT; MISCELLANEOUS

       14.1 GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently applied.

       14.2 California Law. This Agreement is governed by California law.

       14.3 Successors and Assigns. This Agreement is binding on the Borrower's
and the Bank's successors and assignees. The Borrower agrees that it may not
assign this Agreement without the Bank's prior consent. The Bank may sell
participations in or assign this loan, and may exchange financial information
about the Borrower and, prior to the effective date of the Quantum Spin-Off,
Quantum with actual or potential participants or assignees. If a participation
is sold or the loan is assigned, the purchaser will have the right of set-off
against the Borrower.

       14.4 Arbitration.

            (a) This paragraph concerns the resolution of any controversies or
       claims between the Borrower and the Bank, including but not limited to
       those that arise from:

                         (i)   This Agreement (including any renewals,
            extensions or modifications of this Agreement);

                         (ii)  Any document, agreement or procedure related to
            or delivered in connection with this Agreement;

                         (iii) Any violation of this Agreement; or

                         (iv)  Any claims for damages resulting from any
            business conducted between the Borrower and the Bank, including
            claims for injury to persons, property or business interests
            (torts).

            (b) At the request of the Borrower or the Bank, any such
       controversies or claims will be settled by arbitration in accordance with
       the United States

                                      -23-



         Arbitration Act. The United States Arbitration Act will apply even
         though this Agreement provides that it is governed by California law.

              (c) Arbitration proceedings will be administered by the American
         Arbitration Association and will be subject to its commercial rules of
         arbitration.

              (d) For purposes of the application of the statute of limitations,
         the filing of an arbitration pursuant to this paragraph is the
         equivalent of the filing of a lawsuit, and any claim or controversy
         which may be arbitrated under this paragraph is subject to any
         applicable statute of limitations. The arbitrators will have the
         authority to decide whether any such claim or controversy is barred by
         the statute of limitations and, if so, to dismiss the arbitration on
         that basis.

              (e) If there is a dispute as to whether an issue is arbitrable,
         the arbitrators will have the authority to resolve any such dispute.

              (f) The decision that results from an arbitration proceeding may
         be submitted to any authorized court of law to be confirmed and
         enforced.

              (g) The procedure described above will not apply if the
         controversy or claim, at the time of the proposed submission to
         arbitration, arises from or relates to an obligation to the Bank
         secured by real property located in California. In this case, the
         Borrower and the Bank must consent to submission of the claim or
         controversy to arbitration. If both parties do not consent to
         arbitration, the controversy or claim will be settled as follows:

                        (i)   The Borrower and the Bank will designate a referee
              (or a panel of referees) selected under the auspices of the
              American Arbitration Association in the same manner as arbitrators
              are selected in Association-sponsored proceedings;

                        (ii)  The designated referee (or the panel of referees)
              will be appointed by a court as provided in California Code of
              Civil Procedure Section 638 and the following related sections;

                        (iii) The referee (or the presiding referee of the
              panel) will be an active attorney or a retired judge; and

                        (iv)  The award that results from the decision of the
              referee (or the panel) will be entered as a judgment in the court
              that appointed the referee, in accordance with the provisions of
              California Code of Civil Procedure Sections 644 and 645.

              (h) This provision does not limit the right of the Borrower or the
         Bank to:

                        (i)   exercise self-help remedies such as setoff;

                        (ii)  foreclose against or sell any real or personal
              property collateral; or

                                      -24-



                        (iii) act in a court of law, before, during or after the
              arbitration proceeding to obtain:

                        (A) an interim remedy; and/or

                        (B) additional or supplementary remedies.

              (i) The pursuit of or a successful action for interim, additional
         or supplementary remedies, or the filing of a court action, does not
         constitute a waiver of the right of the Borrower or the Bank, including
         the suing party, to submit the controversy or claim to arbitration if
         the other party contests the lawsuit. However, if the controversy or
         claim arises from or relates to an obligation to the Bank which is
         secured by real property located in California at the time of the
         proposed submission to arbitration, this right is limited according to
         the provision above requiring the consent of the Borrower and the Bank
         to seek resolution through arbitration.

              (j) If the Bank forecloses against any real property securing this
         Agreement, the Bank has the option to exercise the power of sale under
         the deed of trust or mortgage, or to proceed by judicial foreclosure.

         14.5 Severability; Waivers. If any part of this Agreement is not
enforceable, the rest of the Agreement may be enforced. The Bank retains all
rights, even if it makes a loan after any Default or Event of Default. If the
Bank waives a Default or Event of Default, it may enforce later Defaults or
Events of Default. Any consent or waiver under this Agreement must be in
writing.

         14.6 Administration Costs. The Borrower shall pay the Bank for all
reasonable costs incurred by the Bank in connection with administering this
Agreement.

         14.7 Attorneys' Fees. The Borrower shall reimburse the Bank for any
reasonable costs and attorneys' fees incurred by the Bank in connection with the
enforcement or preservation of any rights or remedies under this Agreement and
any other documents executed in connection with this Agreement, and including
any amendment, waiver, "workout" or restructuring under this Agreement. In the
event of a lawsuit or arbitration proceeding, the prevailing party is entitled
to recover costs and reasonable attorneys' fees incurred in connection with the
lawsuit or arbitration proceeding, as determined by the court or arbitrator. In
the event that any case is commenced by or against the Borrower or, prior to the
effective date of the Quantum Spin-Off, Quantum under the Bankruptcy Code (Title
11, United States Code) or any similar or successor statute, the Bank is
entitled to recover costs and reasonable attorneys' fees incurred by the Bank
related to the preservation, protection, or enforcement of any rights of the
Bank in such a case. As used in this paragraph, "attorneys' fees" includes the
allocated costs of the Bank's in-house counsel.

         14.8 One Agreement. This Agreement and any related security or other
agreements required by this Agreement, collectively:

              (a) represent the sum of the understandings and agreements between
         the Bank, the Borrower and Quantum concerning this credit;

                                      -25-



               (b) replace any prior oral or written agreements between the
     Bank, the Borrower and Quantum concerning this credit; and

               (c) are intended by the Bank and the Borrower as the final,
     complete and exclusive statement of the terms agreed to by them.

In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.

     14.9 Indemnification. The Borrower will indemnify and hold the Bank
harmless from any loss, liability, damages, judgments, and costs of any kind
relating to or arising directly or indirectly out of (a) this Agreement or any
document required hereunder, (b) any credit extended or committed by the Bank to
the Borrower hereunder, and (c) any litigation or proceeding related to or
arising out of this Agreement, any such document, or any such credit. This
indemnity includes but is not limited to reasonable attorneys' fees (including
the allocated cost of in-house counsel). This indemnity extends to the Bank, its
parent, subsidiaries and all of their directors, officers, employees, agents,
successors, attorneys, and assigns. This indemnity will survive repayment of the
obligations hereunder to the Bank. All sums due to the Bank hereunder shall be
obligations of the Borrower, due and payable immediately without demand.

     14.10 Notices. All notices required under this Agreement shall be
personally delivered or sent by first class mail, postage prepaid, to the
addresses on the signature page of this Agreement, or to such other addresses as
the Bank and the Borrower may specify from time to time in writing.

     14.11 Headings. Article and paragraph headings are for reference only and
shall not affect the interpretation or meaning of any provisions of this
Agreement.

                                      -26-



     14.12 Counterparts. This Agreement may be executed in as many counterparts
as necessary or convenient, and by the different parties on separate
counterparts each of which, when so executed, shall be deemed an original but
all such counterparts shall constitute but one and the same agreement.

     This Agreement is executed as of the date stated at the top of the first
page.

BANK OF AMERICA, N.A.                      IMPCO TECHNOLOGIES, INC.


By: /s/ David Maiorella                    By:  /s/ W. Brian Olson
    -----------------------------              ------------------------------
Name:  David Maiorella                     Name:  W. Brian Olson
Title: Vice President                      Title: CFO

Address where notices to the Bank are      Address where notices to the Borrower
to be sent:                                are to be sent:

AZ1-200-19-11                              16804 Gridley Place
201 East Washington Street, 19th Floor     Cerritos, CA 90701-1792
Phoenix, AZ 85004                          562/924-8069 FAX
602/523-2750 FAX

                                      -27-

EX-10.52

                                                                   Exhibit 10.52

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT is made on April 1, 2002 by and among IMPCO
Technologies, Inc., a Delaware corporation ("IMPCO") and Robert Stemmler
("Employee"). Capitalized terms not otherwise defined in this Agreement shall
have the meanings specified in Section 5 unless the context otherwise requires.

Section 1. EMPLOYMENT.

     The Company hereby employs Employee to render services to the Company in an
executive capacity as the President and Chief Executive Officer of IMPCO.
Employee shall also be the Chairman of the Board of Directors of IMPCO during
the Term.

     Employee hereby accepts employment under this Agreement and agrees to
devote his best effort and substantially full tine, attention and energy to the
Company's business. Employee's duties shall include all of the duties normally
associated with the position of chief executive officer and shall include such
other activities, responsibilities and duties as may be reasonably assigned from
time to time by the Board of Directors. The Company, through the Board of
Directors, 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 a
executive officer.

Section 2. COMPENSATION.

     2.1 BASE SALARY. During the Term, IMPCO will pay Employee a base salary of
$360,000 per year during the first twelve months of the effective date of this
agreement, $360,000 per year for a second twelve month period. The annual base
salary will be paid to Employee every two weeks for a total of twenty-six
payments annually pursuant to IMPCO's normal payroll policy, as modified from
time to time.

     2.2 INCENTIVE COMPENSATION. During the Term, Employee shall be eligible for
an annual cash bonus which shall be payable each year within 100 days following
the end of the Fiscal Year and shall be protected on a daily basis for any
period of the Term which does not include all of a Fiscal Year.

                                       1



     2.3 BENEFITS. During the Term, Employee shall be entitled to the following
fringe 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 and a Section 401(k) defined contribution
employee savings plan and a deferred compensation plan (unqualified);

     (b) Term life Insurance in the face amount of $750,000;

     (c) Long-term disability insurance providing for monthly disability
payments of $10,000 to the expiration of this contract after a waiting period
not in excess of ninety (90) days;

     (d) A car allowance of $12000 per year, plus reimbursement of fuel,
maintenance, registration and other expenses, pro rated on a daily basis for any
period of the Term which is less than a full year;

     (e) 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 year;

     (f) Ten (10) days of sick leave each calendar year, pro rated on a daily
basis for any period of the Term which is less than a full year. Unused sick
leave will not be accumulated or carried over nor paid for upon termination of
this Agreement.

     (g) A paid up annuity to provide lifetime medical insurance for Employee
and his spouse.

     (h) Availability of a Company leased vehicle for business purposes.

     (I) Annual Estate Planning Cost

     2.4 BUSINESS EXPENSE REIMBURSEMENT. During the Term, the Company

                                       2



will reimburse Employee for reasonable out-of-pocket expenses incurred by
Employee in performance of service 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 employee 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 will 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. Subject to approval of this Agreement by the Board of Directors,
the Term will commence on April 1 2002, for two (2) consecutive twelve (12)
month periods unless earlier terminated as a result of: (a) Company's
termination of Employee's employment pursuant to Section 3.2; (b) Employee's
resignation of employment pursuant to Section 3.3.

     3.2 TERMINATION BY COMPANY. Company may terminate Employee's employment
with 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 effective:

     (a) Prior to the expiration of the three year Term, then the Employee shall
be paid for the remaining balance of the contract a lump sum payment equal to
the annual base salary under Section 2.1 plus the additional cash compensation
under Section 2.2 that Employee would have earned for the remaining months
following the effective date of termination of employment, and the benefits
provided pursuant to Section 2.4 shall continue for the remaining months of the
fiscal year following the effective date of termination of employment; and

                                       3


     (b) All of the Employee's outstanding incentive stock options, qualified
and non-qualified, will automatically vest.

     3.3. TERMINATION BY EMPLOYEE. Employee may resign at any time by giving the
Company written notice at least thirty (30) days prior to the effective date of
such termination. In the event of termination by Employee, Employee shall not be
entitled to any compensation or benefits following the effective date of
termination of employment.

Section 4. CONFIDENTIALITY.

     4.1 CONFIDENTIALITY INFORMATION. Employee shall not at any time during the
period of his employment or thereafter, except as required in the course of his
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 complete,
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 complied 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 will not use in the course
of Employee's 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 are essential to the Company; the Company would not enter into this
Agreement if it did not include such provisions; the damages

                                       4



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 will have the following meanings:

     "BOARD OF DIRECTORS" means, unless otherwise specified, IMPCO Technologies,
Inc.'s 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 his 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.

     "FISCAL YEAR" means the Company's fiscal year for financial accounting
purposes, which is currently a fiscal year ending on April 30.

     "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
will comply with all applicable laws, regulations, rules, orders and other
requirements of governmental authorities having jurisdiction.

                                       5



     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 will 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
will 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. No
amendment, modification or waiver of any of the provisions of this Agreement
will 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 will be interpreted, construed
and enforced in all respects in accordance with the local laws of the State of
California and venue for any action out of this Agreement shall be in Los
Angeles County, California.

     6.5 SURVIVAL. Section 4. Together with all other provisions of this
Agreement that 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 or
arbitration.

     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, the remainder of this Agreement shall remain in full
force and effect.

     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 or construction of the Agreement.

                                       6



     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.

                                       7



                                   IMPCO TECHNOLOGIES, INC.

                                 By:
                                     /s/ Don J. Simplott
                                     -------------------
                                     Compensation Committee.


                                   By:
                                     /s/     Don J. Simplot
                                     ----------------------
                                     Its Chairman Don J. Simplot

                                     /s/    Dave Power
                                     -----------------
                                     Member Dave Power



                                   Employee:


                                   /s/  Robert M. Stemmler
                                   -----------------------
                                   Robert M. Stemmler

                                       8

EX-10.53

                                                                   Exhibit 10.53

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT is made on April 1, 2002 by and among IMPCO
Technologies, Inc., a Delaware corporation ("IMPCO") and W. Brian Olson
("Employee"). Capitalized terms not otherwise defined in this Agreement shall
have the meanings specified in Section 5 unless the context otherwise requires.

Section 1. EMPLOYMENT.

     The Company hereby employs Employee to render services to the Company in an
executive capacity as the Chief Financial Officer and Treasurer of IMPCO.

     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 normally
associated with the position of Chief Financial Officer and Treasurer and shall
include such other activities, responsibilities and duties as may be reasonably
assigned from time to time by the Chief Executive Officer. The Company, through
the Chief Executive Officer, 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 a executive officer.

Section 2. COMPENSATION.

     2.1 BASE SALARY. During the Term, IMPCO will pay Employee a minimum base
salary of $170,000 per year, paid to Employee every two weeks for a total

                                       1



of twenty-six payments annually pursuant to IMPCO's normal payroll policy, as
modified from time to time. The annual base salary will be reviewed subject to
annual increases.

     2.2 INCENTIVE COMPENSATION. During the Term, Employee shall be eligible for
an annual cash bonus which shall be payable each year within 100 days following
the end of the Fiscal Year and shall be protected on a daily basis for any
period of the Term which does not include all of a Fiscal Year.

     2.3 BENEFITS. During the Term, Employee shall be entitled to the following
fringe 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 and a Section 401(k) defined contribution
employee savings plan and a deferred compensation plan (unqualified);

     (b) A car allowance of $12,000 per year, plus reimbursement of fuel,
maintenance, registration and other expenses, pro rated on a daily basis for any
period of the Term which is less than a full year;

     (c) 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 year;

     (d) Ten (10) days of sick leave each calendar year, pro rated on a daily
basis for any period of the Term which is less than a full year. Unused sick
leave will not be accumulated or carried over nor paid for upon termination of
this Agreement.

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

                                       2



Employee in performance of service 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 employee 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 will 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 will commence on April 1 2002, for two (2) Consecutive
twelve (12) month periods unless earlier terminated as a result of: (a)
Company's termination of Employee's employment pursuant to Section 3.2; (b)
Employee's resignation of employment pursuant to Section 3.3:

     3.2 TERMINATION BY COMPANY. Company may terminate Employee's employment
with 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 effective:

     (a) Prior to the expiration of the two year Term, then the Employee shall
be paid for the remaining balance of the contract a lump sum payment equal to
the annual base salary under Section 2.1 plus the additional cash compensation
under Section 2.2 that Employee would have earned for the remaining months
following the effective date of termination of employment, and the benefits
provided

                                       3



pursuant to Section 2.4 shall continue for the remaining months of the fiscal
year following the effective date of termination of employment; and

     (b) All of the Employee's outstanding incentive stock options, qualified
and non-qualified, will automatically vest.

     3.3. TERMINATION BY EMPLOYEE. Employee may resign at any time by giving the
Company written notice at least thirty (30) days prior to the effective date of
such termination. In the event of termination by Employee, Employee shall not be
entitled to any compensation or benefits following the effective date of
termination of employment.

Section 4. CONFIDENTIALITY.

     4.1 CONFIDENTIALITY INFORMATION. Employee shall not at any time during the
period of his employment or thereafter, except as required in the course of his
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 complete,
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 complied 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 will not use in the course
of Employee's 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



     4.3 EQUITABLE RELIEF. Employee acknowledges that: the provisions of this
Section 4 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 will have the following meanings:

     "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 his 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.

     "FISCAL YEAR" means the Company's fiscal year for financial accounting
purposes, which is currently a fiscal year ending on April 30.

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

                                       5



Section 6. MISCELLANEOUS.

     6.1 COMPLIANCE WITH LAWS. In the performance of this Agreement, each party
will 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 will 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
will 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. No
amendment, modification or waiver of any of the provisions of this Agreement
will 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 will be interpreted, construed
and enforced in all respects in accordance with the local laws of the State of
California and venue for any action out of this Agreement shall be in Los
Angeles County, California.

     6.5 SURVIVAL. Section 4. Together with all other provisions of this
Agreement that 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 or
arbitration.

     6.7 SEVERABILITY. If any term, provision, covenant, or condition of this
Agreement shall be held by a court of competent jurisdiction to be

                                       6



invalid, unenforceable, or void, the remainder of this Agreement shall remain in
full force and effect.

     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 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.

                                       7



                                       IMPCO TECHNOLOGIES, INC.



                                       /s/ Robert M. Stemmler
                                       -------------------------------
                                       Robert M. Stemmler



                                       Employee:


                                       /s/ W. Brian Olson
                                       -------------------------------
                                       W. Brian Olson

                                       8

EX-10.54

                                                                   Exhibit 10.54

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT is made on April 1, 2002 by and among IMPCO
Technologies, Inc., a Delaware corporation ("IMPCO") and Dale L. Rasmussen
("Employee"). Capitalized terms not otherwise defined in this Agreement shall
have the meanings specified in Section 5 unless the context otherwise requires.

Section 1. EMPLOYMENT.

     The Company hereby employs Employee to render services to the Company in an
executive capacity as the Senior Vice President and Secretary of IMPCO.

     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 normally
associated with the position of Senior Vice President and Secretary and shall
include such other activities, responsibilities and duties as may be reasonably
assigned from time to time by the Chief Executive Officer. The Company, through
the Chief Executive Officer, 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 a executive officer.

Section 2. COMPENSATION.

     2.1 BASE SALARY. During the Term, IMPCO will pay Employee a minimum base
salary of $150,000 per year, paid to Employee every two weeks for a total

                                       1



of twenty-six payments annually pursuant to IMPCO's normal payroll policy, as
modified from time to time. The annual base salary will be reviewed subject to
annual increases.

     2.2 INCENTIVE COMPENSATION. During the Term, Employee shall be eligible for
an annual cash bonus which shall be payable each year within 100 days following
the end of the Fiscal Year and shall be protected on a daily basis for any
period of the Term which does not include all of a Fiscal Year.

     2.3 BENEFITS. During the Term, Employee shall be entitled to the following
fringe 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 and a Section 401(k) defined contribution
employee savings plan and a deferred compensation plan (unqualified);

     (b) A car allowance of $12000 per year, plus reimbursement of fuel,
maintenance, registration and other expenses, pro rated on a daily basis for any
period of the Term which is less than a full year;

     (c) 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 year;

     (d) Ten (10) days of sick leave each calendar year, pro rated on a daily
basis for any period of the Term which is less than a full year. Unused sick
leave will not be accumulated or carried over nor paid for upon termination of
this Agreement.

     2.4 BUSINESS EXPENSE REIMBURSEMENT. During the Term, the Company will
reimburse Employee for reasonable out-of-pocket expenses incurred by Employee in
performance of service for the Company under this Agreement (e.g.

                                       2



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 employee 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 will 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 will commence on April 1 2002, for two (2) Consecutive
twelve (12) month periods unless earlier terminated as a result of: (a)
Company's termination of Employee's employment pursuant to Section 3.2; (b)
Employee's resignation of employment pursuant to Section 3.3:

     3.2 TERMINATION BY COMPANY. Company may terminate Employee's employment
with 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 effective:

     (a) Prior to the expiration of the two year Term, then the Employee shall
be paid for the remaining balance of the contract a lump sum payment equal to
the annual base salary under Section 2.1 plus the additional cash compensation
under Section 2.2 that Employee would have earned for the remaining months
following the effective date of termination of employment, and the benefits
provided pursuant to Section 2.4 shall continue for the remaining months of the
fiscal year following the effective date of termination of employment; and

                                       3



     (b) All of the Employee's outstanding incentive stock options, qualified
and non-qualified, will automatically vest.

     3.3. TERMINATION BY EMPLOYEE. Employee may resign at any time by giving the
Company written notice at least thirty (30) days prior to the effective date of
such termination. In the event of termination by Employee, Employee shall not be
entitled to any compensation or benefits following the effective date of
termination of employment.

Section 4. CONFIDENTIALITY.

     4.1 CONFIDENTIALITY INFORMATION. Employee shall not at any time during the
period of his employment or thereafter, except as required in the course of his
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 complete,
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 complied 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 will not use in the course
of Employee's 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 are essential to the Company; the Company would not enter into this
Agreement if it did not include such provisions; the damages

                                       4



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 will have the following meanings:

     "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 his 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.

     "FISCAL YEAR" means the Company's fiscal year for financial accounting
purposes, which is currently a fiscal year ending on April 30.

     "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,

                                       5



each party will 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 will 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
will 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. No
amendment, modification or waiver of any of the provisions of this Agreement
will 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 will be interpreted, construed
and enforced in all respects in accordance with the local laws of the State of
California and venue for any action out of this Agreement shall be in Los
Angeles County, California.

     6.5 SURVIVAL. Section 4. Together with all other provisions of this
Agreement that 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 or
arbitration.

     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, the remainder of this Agreement shall remain in full
force and effect.

                                       6



     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 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.

                                       7



                                      IMPCO TECHNOLOGIES, INC.



                                      /s/  Robert M. Stemmler
                                      --------------------------------
                                      Robert M. Stemmler
                                      --------------------------------


                                      Employee:


                                      /s/ Dale L. Rasmussen
                                      --------------------------------
                                      Dale L. Rasmussen
                                      --------------------------------

                                       8

EX-10.59

                                                                   Exhibit 10.59
















                                 LANDING CENTER


                                 Lease Agreement


                             Property Reserve, Inc.
                                    Landlord






                            Impco Technologies, Inc.
                                    Tenant



                            INDEX TO LEASE AGREEMENT
                                       FOR
                                 LANDING CENTER



                                                                                                          
Specific Lease Provisions .................................................................................... Page
         1.       Leased Premises ............................................................................  4
         2.       Term .......................................................................................  4
         3.       Rental Payment .............................................................................  4
         4.       Operating Expenses .........................................................................  5
         5.       Security Deposit ...........................................................................  7
         6.       Proposed Use ...............................................................................  7
         7.       Improvements ...............................................................................  7
         8.       Service and Repairs ........................................................................  8
         9.       Parking ....................................................................................  9
         10.      Broker's Commission ........................................................................  9
         11.      Graphics ...................................................................................  9
         12.      Guaranty ...................................................................................  9
         13.      Tenant's Notice Address .................................................................... 10
         14.      Early Occupancy ............................................................................ 10
         15.      Contingency ................................................................................ 10
         16.      Option to Extend ........................................................................... 10
         17.      Exhibits ................................................................................... 11

Exhibit A, General Lease Provisions
         1.       Abandonment ................................................................................  1
         2.       Assignment of Sublease .....................................................................  1
         3.       Attorney's Fees ............................................................................  2
         4.       Binding ....................................................................................  2
         5.       Care of Leased Premises ....................................................................  3
         6.       Choice of Law ..............................................................................  3
         7.       Common Areas - Utility Access ..............................................................  4
         8.       Condition of Premises ......................................................................  4
         9.       Damaged to Lease Premises ..................................................................  4
         10.      Damage - Tenant's Election to Terminate ....................................................  4
         11.      Damage Near End of Term ....................................................................  5
         12.      Events by Default of Tenant ................................................................  5
         13.      Defects ....................................................................................  6
         14.      Eminent Domain .............................................................................  6
         15.      Entire Agreement ...........................................................................  7
         16.      Estoppel ...................................................................................  7
         17.      Force Majeure ..............................................................................  8
         18.      No Hazardous Substances Allowed ............................................................  8
         19.      Hold Harmless ..............................................................................  9
         20.      Holding Over ............................................................................... 10
         21.      Improvements Delays Caused by Tenant ....................................................... 10



                                       2




                                                                                                             

         22.      Improvements, Alterations, and Additions ..................................................... 11
         23.      Improvements Obligations of Tenant ........................................................... 11
         24.      Inconvenience Damage ......................................................................... 11
         25.      Insurance by Landlord ........................................................................ 12
         26.      Insurance by Tenant .......................................................................... 12
         27.      Laws, Ordinances, Regulations, and Americans with Disabilities Act ........................... 12
         28.      Lease Memorandum ............................................................................. 12
         29.      Limitation of Landlord's Liability ........................................................... 13
         30.      Name of Project .............................................................................. 13
         31.      No Joint Venture ............................................................................. 13
         32.      Notices ...................................................................................... 13
         33.      Occupancy Delay .............................................................................. 13
         34.      Peaceful Enjoyment ........................................................................... 14
         35.      Personal Property Tax ........................................................................ 14
         36.      Prohibited Activities ........................................................................ 14
         37.      Relocation ................................................................................... 15
         38.      Repairs and Inspection Entry ................................................................. 15
         39.      Reservations by Landlord ..................................................................... 15
         40.      Rules and Regulations ........................................................................ 15
         41.      Sales Tax .................................................................................... 16
         42.      Security Deposit ............................................................................. 16
         43.      Severability ................................................................................. 16
         44.      Services Interruption ........................................................................ 17
         45.      Subordination to Mortgages ................................................................... 17
         46.      Successors and Assigns ....................................................................... 18
         47.      Tenant to Keep Leased Premises Lien Free ..................................................... 18
         48.      Tenant's Property ............................................................................ 18
         49.      Tenant's Request ............................................................................. 18
         50.      Tenant's Right to Audit ...................................................................... 19
         51.      Time is of Essence ........................................................................... 19
         52.      Total Destruction ............................................................................ 19
         53.      Waiver ....................................................................................... 19
         54.      Waiver of Jury Trial ......................................................................... 19
         55.      Waiver of Time Limitations ................................................................... 19
         56.      Waiver of Subrogation ........................................................................ 19


Exhibit B-1, Description of the Project
Exhibit B-2, Description of the Leased Premises
Exhibit C, Improvement Items
Exhibit D, Rules and Regulations

                                       3





                                 LANDING CENTER

                                 LEASE AGREEMENT

         THIS LEASE AGREEMENT made and entered into this 18th day of July,
2001 between PROPERTY RESERVE, INC. (hereinafter referred to as "Landlord"),
whose address for purposes hereof is c/o Norris, Beggs & Simpson, 777 108th
Avenue NE, Suite 103, Bellevue, Washington 98004-5121 and. IMPCO TECHNOLOGIES,
INC., (hereinafter referred to as "Tenant"), whose address for purposes hereof
is 22614 66th Avenue South, Kent, Washington 98032.

This LEASE AGREEMENT consists of the SPECIFIC LEASE PROVISIONS written here
below, the GENERAL LEASE PROVISIONS attached hereto as Exhibit "A," and all
other EXHIBITS attached hereto. In the event there is a conflict between the
SPECIFIC LEASE PROVISIONS and the GENERAL LEASE PROVISIONS, the SPECIFIC LEASE
PROVISIONS shall prevail.


                           SPECIFIC LEASE PROVISIONS

         1. Leased Premises. Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord, subject to the terms and conditions of this Lease
Agreement, those certain premises hereinafter described, and referred to as the
"Leased Premises," consisting of approximately 8,556 square feet of office and
approximately 16,994 square feet of warehouse for a total of approximately
25,550 rentable square feet located at 22614 66th Avenue South, Kent,
Washington, 98032, also known as Building C, in the project known as Landing
Center, located from 22404-22614 66th Avenue South and from 22411-22623 68th
Avenue South, inclusive, Kent, Washington 98032 (hereinafter referred to as the
"Project"), together with the right in common with others to the use of any and
all common entrance ways, lobbies, restrooms, elevators, drives, parking areas,
stairs, and other similar access and service ways and common areas in or
adjacent to and used in common with the building of which said Leased Premises
are a part. The Project is described below and made a part hereof as Exhibit
"B-1". The Leased Premises are described below and reflected on the plan
attached hereto and made a part hereof as Exhibit "B-2".

         2. Term. Subject to and upon the terms and conditions set forth herein,
this Lease Agreement shall continue in force for a term of 120 months, beginning
on the 1st day of October, 2001, or sixty (60) days after the existing Tenant
vacates the premises, whichever is later, ("Beginning Date") and ending on the
30th day of September, 2011, or 120 months after the Beginning Date, whichever
is later ("Expiration Date").

         3. Rental Payment.

              a. Tenant shall pay to Landlord on the first day of each month
during the term of this Lease Agreement in legal tender of the United States of
America, without prior notice or demand and without any offset or deduction
whatsoever, at the office of the Landlord, or at such place or to such property
manager as Landlord may from time to time designate in

                                       4





writing, rental comprised of both Base Rental ("Base Rental") described below
and Additional Rent ("Additional Rent") as hereinafter described. Tenant shall,
however, be required to pay the first month's rent and security deposit upon
execution of this Lease Agreement. Base Rental and Additional Rent are sometimes
referred to hereafter as Rent ("Rent").

              b. Tenant agrees that if any rental payment or other money due
hereunder from Tenant to Landlord remains unpaid five (5) calendar days after
said amount is due, a late charge shall be paid to Landlord by Tenant in the
amount of the greater of five (5%) percent of such payment due or two hundred
fifty dollars ($250.00) provided that in no event shall such charge be greater
than that permitted by law. Tenant agrees that such amount is a reasonable
estimate of Landlord's collection and administrative expenses.

              c.       Base Rental is:

                       Months 1-2       $0.00/ month
                       Months 3-36      $15,015.00/month
                       Months 37-60     $16,365.00/month
                       Months 61-72     $16,856.00/month
                       Months 73-84     $17,362.00/month
                       Months 85-96     $17,883.00/month
                       Months 97-108    $18,419.00/month
                       Months 109-120   $18,972.00/month


         4. Operating  Expenses.  Tenant shall also pay from the  commencement
date of the lease, as Additional  Rent,  Tenant's Proportionate Share of the
following Operating Expenses of the Project.

              a.  Tenant's  Proportionate Share:  Tenant's  Proportionate Share
is 18.54% of the total project, and 100.00% of Building C.

              b.  Tax and Insurance Expenses.

                   i. Tenant  agrees to pay,  as  Additional  Rent,  Tenant's
Pro Rata Share of the  Project's  Tax and Insurance Expenses. Prior to the
commencement of the Lease, and at least annually during the Lease Term,
Landlord will deliver to Tenant a written estimate of the Tax and Insurance
Expenses for the total project and for any individual building in which the
Leased Premises are located, and Tenant's proportionate share, and the monthly
Base Rental shall be increased by one-twelfth (1/12) of said estimated
Additional Rent. In the case of a multi-building Project, if such Tax and
Insurance Expenses are not separately assessed against the Building but are
assessed against the Project as a whole, Landlord shall determine the portion of
such Taxes and Insurance Expenses allocable to the Building in which the Leased
Premises are located.

                                       5




                   ii. Tax and Insurance Expenses shall mean: (A) all ad
valorem, rental, sales, use, and other taxes (other than Landlord's income
taxes), special assessments and other governmental charges, and all assessments
due to deed restrictions and/or owner's associations which accrue against the
Project during the term of this Lease; and (B) all insurance premiums paid by
Landlord with respect to the Project including, without limitation, public
liability, casualty, rental, and property damage insurance.

              c. Common Area Maintenance.

                   i. Tenant agrees to pay, as Additional Rent, Tenant's Pro
Rata Share of the Common Area Maintenance Expenses. Prior to the commencement of
the Lease, and at least annually during the Lease Term, Landlord will deliver to
Tenant a written estimate of the Common Area Maintenance Expenses for the total
project and for any individual building in which the Leased Premises are
located, and Tenant's proportionate share, and the monthly Base Rental shall be
increased by one-twelfth (1/12) of said estimated Additional Rent. In the case
of a multi-building Project, if such Common Area Maintenance is not separately
assessed against the Building but is assessed against the Project as a whole,
Landlord shall determine the portion of such Common Area Maintenance allocable
to the Building in which the Leased Premises are located.

                   ii. Common Area Maintenance shall mean all expenses incurred
by Landlord for the maintenance, repair, and operation of the Project (excluding
only structural soundness of the roof, foundation, and exterior walls),
including but not limited to management fees, common area utilities, maintenance
and repair, mechanical systems (if Landlord provide maintenance services),
system surveys, supplies, material, water and sewer, common area janitorial
services, exterior lighting maintenance, maintenance of elevators, where
applicable, and mechanical systems, supplies, maintenance equipment, tools used
in Project, landscaping, trash, security, wages and fringe benefits payable to
employees of Landlord whose duties are connected with the operation and
maintenance of the Project, amounts paid to contractors or subcontractors for
work or services performed in connection with the operation and maintenance of
the Project, all services, supplies, repairs, replacements or other expenses for
maintaining, repairing and operating the Project including, without limitation,
common areas and parking areas and roof, exterior walls and foundation work that
is not related to structural soundness. It shall include landscape maintenance,
landscape irrigation repairs, pest and rodent control, parking lot repairs and
maintenance, parking lot sweeping, exterior lighting, exterior signage and roof
repair and maintenance. Common Area Maintenance do not include the cost of any
capital improvement to the Project other than the reasonably amortized cost of
capital improvements which result in the reduction of insurance or Common Area
Maintenance Expenses. Further, Common Area Maintenance shall not include repair,
restoration or other work occasioned by fire, windstorm or other casualty with
respect to which Landlord actually receives insurance proceeds, income and
franchise taxes of Landlord, expenses or commissions incurred in procuring and
leasing to tenants, expenses for the renovating of space for new tenants,
interest or principal payments on any mortgage or other indebtedness of
Landlord, compensation paid to any employee of Landlord above the grade of
building superintendent, or depreciation allowance or expense.

                                       6




             d. Annual Statement A Statement showing the actual Tax and
Insurance and the actual Common Area Maintenance Expenses, and Tenant's
proportionate share thereof, (hereinafter referred to as the "Statement of
Actual Adjustment") shall be delivered by Landlord to Tenant after any calendar
year in which Additional Rent was paid by or due from Tenant. Within ten (10)
days after the delivery by Landlord to Tenant of such Statement of Actual
Adjustment, Tenant shall pay Landlord the amount of any Additional Rent shown on
such Statement. If such Statement shows that Tenant has paid more than the
amount of Additional Rent actually due from Tenant for the preceding calendar
year, and if Tenant is not in default under this Lease Agreement, Landlord shall
credit the amount of such excess to the next Additional Rent payment due from
Tenant.

             e. Cap on Common Area Maintenance Expenses. Notwithstanding
anything above to the contrary, with respect to the calendar year 2002, Tenant
shall not be required to pay Common Area Maintenance Expenses in excess of 107%
of the Tenant's Proportionate Share of the actual annualized Common Area
Maintenance Expenses incurred with respect to those months during the 2001
calendar year which are included in the Lease Term. With respect to each
subsequent calendar year, commencing with the year 2003, Tenant shall not be
required to pay Common Area Maintenance Expenses in excess of 107% of the
Tenant's Proportionate Share of the actual Common Area Maintenance Expenses paid
or payable by Tenant with respect to the prior calendar year. Tenant shall pay
Tenant's Proportionate Share of Property Tax and Insurance Expenses in their
full amount as described above without regard to any limitation set forth in
this paragraph."

             f. Proration

                   i. If the Commencement Date of this Lease is a day other than
the first day of a month, or if the Termination Date of this Lease is a day
other than the last day of a month, the amount of Additional Rent shown as due
by Tenant on the Statement of Actual Adjustment shall reflect a proration based
on the ratio of the number of days this Lease was in effect during the month to
the actual number of days in the month.

                   ii. If any data necessary to calculate Additional Rent are
unavailable so that the calculation cannot be timely made, Landlord's estimate
shall be used in lieu thereof.

                   iii. If the term of this Lease Agreement expires on other
than the last day of a calendar year, then the Tenant's Proportionate Share of
the Estimated Operating Expenses and Actual Operating Expenses shall be prorated
for said year. If the Lease Agreement shall expire or other wise terminate with
any operating expenses owed by the Tenant, Tenant shall immediately pay the
balance due. Landlord shall pay any refund due Tenant. The provisions of this
paragraph shall survive the termination of the Lease Agreement.

             g. Landlord's Rights The failure of Landlord to exercise its rights
hereunder to estimate Additional Rent and to require payment of such shall not
constitute a waiver of Landlord's rights which rights may be exercised from time
to time at Landlord's discretion.

                                       7





              h. Tenant's Additional Cost If the nature of Tenant's business or
use of the Leased Premises is such that additional costs are incurred by
Landlord for cleaning, sanitation, trash collection or disposal services, Tenant
agrees to pay as Additional Rent to Landlord the amount of such additional costs
upon demand.

        5. Security Deposit. Upon execution of this Lease Agreement, Tenant
shall deposit with Landlord the sum of $18,972.00. Such deposit shall not earn
interest for Tenant and shall be used for the purposes set forth in the General
Provisions attached hereto.

        6. Proposed Use. Tenant represents, covenants, and warrants that the
Leased Premises will be used lawfully for the following purposes and for no
other purposes: research and development of fuel management systems for heavy
duty engines and related office uses.

        7. Improvements. Tenant shall construct and install tenant improvements
(sometimes called "Improvement Items" herein) in the Leased Premises as set
forth in Exhibit "C" hereto. Landlord's allowance for installation of these
improvements, space planning, construction drawings and permits, and Landlord's
construction management fees is $197,000, which shall be paid by Landlord, at
Tenant's option, either directly to Contractor (or other obligated party) as
invoiced and after satisfactory inspection by Landlord and receipt of
appropriate lien waivers, or to tenant upon substantial completion of the
Improvement Items, satisfactory inspection by Landlord, and upon verification of
payment (including appropriate lien waivers) to the Contractor and to any other
obligated parties. Any costs in excess of the foregoing amount shall be paid
directly to Contractor or other obligated parties by Tenant. Landlord shall have
reasonable rights to approve Tenant's proposed contractor and to be named as
additional insured on the Contractor's insurance policy.

Landlord warrants that the existing improvements are or will be properly
permitted and meet all existing building code requirements in their current
configuration. Landlord further warrants that the Project provides or will
provide adequate parking to allow the Improvement Items to be permitted for
construction. Tenant intends to submit for a building permit on or before August
15, 2001. If there is a delay in obtaining building permits due to Landlord's
delay in providing either the parking or the permitting for the existing
improvements, the commencement date will be adjusted by an equal amount of time.
Any modifications required to the existing improvements as a result of Tenant's
building permit application for the Improvements Items shall be the
responsibility of Tenant.

At the expiration of the lease, Tenant shall be obligated to remove at its sole
cost and expense those improvements (other than the additional office space and
incumbent mechanical, electrical and plumbing systems) installed specifically
for the unique needs of Tenant, including the dynamometer cells, machine shop,
electronics lab, and fuel system and flow bench rooms.

         8. Service and Repairs.

              a. Utilities. Tenant shall pay for all gas, electricity, water,
sewer, and telephone service utilized in the operations of Tenant's business.
Landlord further reserves the right to have separate meters installed for any of
these services. Water and sewer are part of the common area charges of which
Tenant shall pay their pro rata share.


                                       8





              b. Initial Lighting. Landlord shall provide initial lamps, bulbs,
starters and ballasts used on the Leased Premises; Tenant agrees, at his
expense, to maintain and replace such lamps, bulbs, starters and ballasts.

              c. HVAC Maintenance. By signing this Lease Agreement Tenant
accepts the HVAC in as is condition and Tenant shall, at its own cost and
expense, enter into a regularly scheduled preventative maintenance/service
contract for servicing all heating and air-conditioning systems and equipment
servicing the Leased Premises. Landlord is responsible to deliver the HVAC in
good working order at the commencement of said lease term. The maintenance
contractor and the contract must be approved by Landlord which approval shall
not unreasonably be withheld. The service contract must include all services
suggested by the equipment manufacturer within the operation/maintenance manual
and must become effective (and a copy be delivered to Landlord) within thirty
(30) days of the date Tenant takes possession of the Leased Premises. If the
Tenant fails to enter into such service contract as required, Landlord shall
have the right to do so on Tenant's behalf and Tenant agrees to pay Landlord the
cost and expense of same upon demand.

              d. Routine Maintenance. Landlord shall provide only routine
maintenance, and painting to the structure, and electric lighting service for
all public areas and special service areas of the Project in the manner and to
the extent deemed by Landlord to be standard.

              e. Repairs by Tenant. The Tenant will keep, maintain and preserve
the Leased Premises in a first class condition. When and if needed, at the
Tenant's sole cost and expense, the Tenant will make all interior repairs and
replacements including but not limited to interior walls, doors and windows,
floors, floor coverings, light bulbs, plumbing fixtures, heating/air
conditioning systems, hot water systems, and electrical fixtures. Tenant shall
also make all repairs and replacements to Tenant's overhead garage and exterior
pedestrian doors. The Tenant will also repair and replace at its sole cost and
expense any broken windows and/or damage to the building or Premises caused by
the Tenant or its employees, agents, guests or invitees during the Lease term
hereof.

              If Tenant fails to make such repairs or replacements promptly,
Landlord may, at its option, make such repairs or replacements, and Tenant shall
repay the cost thereof to the Landlord as Additional Rent on demand. However,
Tenant shall not suffer any repair work costing over $5,000 to be performed by
Tenant or Tenant's agents without Landlord's prior written consent.

              f. Additional Services. In the event Tenant desires any of the
aforementioned services in amounts in excess of those deemed by Landlord to be
Project standard, and in the event Landlord elects to provide such additional
services, Tenant shall pay Landlord as Additional Rent hereunder the cost of
providing such additional services.

              g. Landlord Responsibility Prior to Commencement. In addition to
those items as set forth above, Landlord shall deliver the loading doors,
plumbing, sprinklers, gas space heaters, water heaters and all windows in good
working order.


                                       9





         9. Parking. Tenant shall be entitled to use stalls in the parking areas
of the Project in common with all other tenants of the Project, at no extra
charge. Tenant agrees not to overburden the parking areas and to cooperate with
Landlord and the other tenants in the use of the parking areas. Tenant
acknowledges that its pro rata share of the parking spaces based on the proposed
improvements, is 43 unassigned parking spaces, which may be modified if the City
of Kent parking requirements are revised. Landlord reserves the right to
determine whether the parking areas are overburdened, and, if so, to allocate
parking spaces between Tenant and the other tenants of the Project. Landlord
shall reserve the right to designate handicapped, loading, reserved, carpool,
vanpool, and visitor parking stalls.

         10. Broker's Commission. Landlord is represented by Collier's
International ("Landlord's Broker") and Tenant is represented by Hallwood
Commercial Real Estate ("Tenant's Broker"). Landlord will be responsible for
paying a commission equal to seven and one-half percent (7 1/2%) of the total
aggregate Base Rental for the first five years of the lease, which shall be
shared by Landlord's Broker and Tenant's Broker, one-third (2 1/2%) to
Landlord's Broker and two-thirds (5%) to Tenant's Broker, and a commission equal
to three and three- quarters percent (3-3/4%) of the total aggregate Base Rental
for the second five years of the lease, which shall also be shared by Landlord's
Broker and Tenant's Broker, one-third (1 1/4%) to Landlord's Broker and
two-thirds (2 1/2%) to Tenant's Broker. One-half of such commission will be paid
upon execution of the Lease Agreement by Landlord and Tenant, and one-half shall
be paid on the Beginning Date of the Lease Agreement. Tenant represents and
warrants to Landlord that Tenant has not entered into any agreements, nor will
Tenant enter into any agreement in the future whereby Landlord would be
obligated to pay any broker's commission or finder's fee in connection with
Tenant's execution of this Lease Agreement. Tenant agrees to indemnify Landlord
against, and to hold Landlord harmless from, all liabilities arising from any
such claim. Tenant agrees to pay for any broker representation it may desire or
require during any negotiation for expansion or contraction of the Leased
Premises. Landlord will pay for any representation it obtains.

         11. Graphics. Landlord, at Tenant's cost, shall provide and install one
sign complying with the sign criteria of the Landlord. Sign to be installed
within sixty days of the signing of this Lease Agreement. All graphics of
Tenant, visible in or from public corridors or the exterior of the Leased
Premises, shall require Landlord's prior written approval. All of the above
shall be in accordance with the Project's Rules and Regulations.

         12. Guaranty. As an inducement for Landlord to enter into the Lease
Agreement, this Guaranty is given by the person(s) or entity signing as
guarantor(s). In consideration of Landlord entering into this Lease Agreement,
subjecting itself to the provisions hereof, the undersigned jointly and
severally unconditionally guarantee to Landlord, its successors, and assigns,
that all sums stated herein to be payable on the Lease Agreement shall be
promptly paid in full, in accordance with the provisions hereof, whether by
agreement, by acceleration, or otherwise, and in case of any extension of time
of payment or renewal, in whole or in part. All sums shall be promptly paid when
due, according to such extension or extensions, renewal or renewals. This
Guaranty shall inure to the benefit of Landlord, its successors and assigns, and
shall be binding upon the guarantors, and each of them and their respective
legal representatives, successors and assigns jointly and severally.

                                       10





         13. Tenant's Notice Address.
             Impco Technologies
             16804 Gridley Place
             Cerritos, CA 90703

         14. Early Occupancy. Tenant shall be allowed occupancy in the premises
for purposes of commencing agreed upon improvements upon vacation by the
existing Tenant or July 15, 2001, whichever is later. All provisions of this
lease except those concerning Rent and Additional Rent shall be in effect during
this early occupancy period.

         15. Contingency. If Tenant is unable to secure permits for Tenant's
Improvement Items, provided that Tenant has applied for all necessary building
permits on or before August 15, 2001, this agreement will be voidable by Tenant.
Tenant's delays in obtaining building permits shall not change the agreed upon
commencement date. In the event this agreement is terminated for reasons
described in this paragraph and the existing tenant has vacated the premises
prior to August 31, 2001, Tenant will be responsible for reimbursing Landlord
for lost rent and operating expense reimbursements which would have been paid by
the existing tenant for the period of Tenant's occupancy until August 31, 2001.

         16. Option to Extend. Landlord hereby grants Tenant the right to extend
the term of this lease ("Option to Extend") for one period of five years
commencing immediately upon the expiration of the initial term, on the same
terms and conditions contained in this lease except that the provisions of
paragraph 7 above do not apply, and except that the Base Rent for the extended
term will be:

                           Months 1-12               $19,541.00/month
                           Months 13-24              $20,127.00/month
                           Months 25-36              $20,731.00/month
                           Months 37-48              $21,353.00/month
                           Months 49-60              $21,994.00/month

         No additional options to extend shall apply following the expiration of
this Option to Extend. Written notice of Tenant's exercise of its Option to
Extend the term of the lease for any extended term provided for hereunder must
be given to Landlord at least six (6) months prior to the date the term of the
lease would otherwise expire. If Tenant is in default under this lease, Tenant
shall have no right to extend the term of this lease during the time commencing
from the date Landlord gives to Tenant a notice of default under this lease and
continuing until the default alleged in said notice is cured. The period of time
within which said Option to Extend may be exercised shall not be extended or
enlarged by reason of Tenant's inability to exercise said Option to Extend
because of such default. Notwithstanding any provision herein to the contrary,
the term of this lease shall not be extended as herein provided if, at any time
following the exercise by Tenant of its Option to Extend herein granted, Tenant
shall be in default in the performance of any covenant, obligation, or agreement
to be performed by Tenant under this lease and Landlord has terminated this
lease as a result of such default.

                                       11




         17 Exhibits. The following exhibits are attached hereto and pertain to
 this Lease Agreement:

            1.       Exhibit A        General Lease Provisions
            2.       Exhibit B-1      Description of the Project
            3.       Exhibit B-2      Description of the Leased Premises
            4.       Exhibit C        Improvement Items
            5.       Exhibit D        Rules and Regulations

         IN WITNESS WHEREOF, the parties have executed this Lease Agreement the
day and year first above written.

AGREED and ACCEPTED                               AGREED and ACCEPTED
LANDLORD:                                         TENANT:
PROPERTY RESERVE, INC.                            IMPCO TECHNOLOGIES, INC.:

By:     /s/ Mark B. Gibbons                       By:  /s/ Robert M. Stemmler
       --------------------------                     --------------------------

Its:   Mark B. Gibbons, President                 Its:     CEO & Chairman
       --------------------------                     --------------------------

Date:       July 30, 2001                         Date:      July 16, 2001
      ---------------------------                      -------------------------




                                       12






STATE OF             CALIFORNIA                      )
         -----------------------------------
                                                     ) ss              TENANT

COUNTY OF            LOS ANGELES                     )
          ----------------------------------



I certify that I know or have satisfactory evidence that   Robert M. Stemmler
                                                         -----------------------
signed this instrument, on oath stated that he/she was authorized to execute the
instrument, and acknowledged it as the  CEO & Chairman   of  Impco Technologies,
                                       -----------------    --------------------
Inc.  to be the free and voluntary act of such party for the uses and purposes
- -----
mentioned in the instrument.

Dated:         July 18        ,   2001
       -----------------------  --------

                                           /s/ Renuka Shah
                       ---------------------------------------------------------
[Notarial Seal]        Notary Public for the State of       California
                                                     ---------------------------
                       Residing at     1483 Moonridge Ct, Upland, CA 91784
                                  ----------------------------------------------





STATE OF UTAH                               )

                                            ) ss              LANDLORD

COUNTY OF SALT LAKE                         )


I certify that I know or have satisfactory evidence that     Mark B. Gibbons
                                                         -----------------------
signed this instrument, on oath stated that he/she was authorized to execute the
instrument, and acknowledged it as the      President      of  Property Reserve
                                      --------------------    ------------------
Inc.  to be the free and voluntary act of such party for the uses and purposes
- -----
mentioned in the instrument.

Dated:                July 30               ,   2001
       -------------------------------------  --------

                                          /s/ Losette Snarr
                       ---------------------------------------------------------
[Notarial Seal]        Notary Public for the State of           Utah
                                                     ---------------------------
                       Residing at    10 E. South Temple #400, SLC Ut 84133
                                  ----------------------------------------------



                                       13





                                   EXHIBIT "A"

                            GENERAL LEASE PROVISIONS


         These following General Lease Provisions shall become effective when
attached to the signed Lease Agreement containing the Specific Lease Provisions
and shall, together with the Exhibits, form the Lease Agreement.

         1. Abandonment. Tenant shall not vacate nor abandon the Leased Premises
at any time during the term of this Lease Agreement, nor permit the Leased
Premises to remain unoccupied for a period longer than fifteen (15) consecutive
days during the term of this Lease Agreement. If Tenant shall abandon, vacate,
or surrender the Leased Premises, or be dispossessed by process of law or
otherwise, any personal property belonging to Tenant and left on the Leased
Premises shall, at the option of the Landlord, be deemed abandoned and title
thereto shall vest to Landlord. If Tenant vacates the Leased Premises but
continues to pay all sums due hereunder and otherwise complies with the terms
hereof, it shall not be considered abandonment.

         2. Assignment or Sublease. Tenant shall not, either voluntarily or by
operation of law, assign, encumber, pledge, or otherwise transfer or hypothecate
all or any part of Tenant's leasehold estate hereunder, or permit the Leased
Premises to be occupied by anyone other than Tenant or Tenant's employees, or
sublet the Leased Premises or any portion thereof, without Landlord's prior
written consent in every instance. Tenant shall give Landlord written notice of
such desire at least thirty (30) days in advance of the date on which Tenant
desires to make such assignment or sublease, which notice shall include the
name, address, evidence of financial capability, and other pertinent information
regarding the proposed assignee or sublessee.

              a. No assignment or subletting by Tenant shall relieve Tenant of
any obligations under this Lease Agreement. If Tenant is a corporation,
partnership, trust, or other legal fictional entity, the transfer of fifty
percent (50%) or more of the beneficial ownership of Tenant shall be deemed an
assignment of this Lease Agreement. Any attempted transfer by Tenant without the
consent of Landlord shall be null and void and, at the option of Landlord, shall
cause termination of this Lease Agreement. The giving of consent by Landlord in
one instance shall not preclude the need for Tenant, and its successors and
assigns, to obtain Landlord's consent to further transfers.

              b. In the event Tenant shall propose to assign or sublet the
Leased Premises and request the consent of Landlord to any assignment or
subletting, or if Tenant shall request consent of Landlord to any other act
Tenant proposes to do, as herein provided, then Tenant shall pay Landlord's
reasonable attorney's fees incurred in connection therewith. Any assignment or
subletting shall not relieve Tenant from responsibility under the Lease
Agreement, and Tenant



shall therefore remain liable for the faithful performance of the Lease
Agreement in case of breach or default by assignee or sublessee.

              c. If the proposed Base Rental between Tenant and any Sublessee is
greater the Base Rental of this lease, then such excess rental shall be deemed
Additional Rent owed by Tenant to Landlord.

              d. Tenant shall not publicly advertise the Rent for which Tenant
is willing to sublet the space; and all public advertisements of the assignment
of the Lease Agreement or sublet of Leased Premises, or any portion thereof,
shall be subject to prior approval in writing by Landlord.

              e. In any assignment or transfer, each assignee or transferee,
other than Landlord, shall assume, as provided herein, all obligations of the
Tenant under this Lease Agreement which relate to all or a portion of the Leased
Premises assigned or sublet, as the case may be, and shall be and remain liable
jointly and severally with Tenant for the payment of the Rent and for due
performance of all the terms, covenants, conditions, and agreements herein
contained on Tenant's part to be performed during the term of this Lease
Agreement.

              f. No consent by Landlord to any assignment or subletting by
Tenant shall relieve Tenant of any obligation to be performed by the Tenant
under this Lease Agreement, whether accruing before or after such assignment or
subletting, unless granted by Landlord to Tenant in writing. The consent by
Landlord to any assignment or subletting shall not relieve Tenant from the
obligation to obtain Landlord's express written consent to any other assignment
or subletting. Any assignment or subletting which is not in compliance with this
Lease Agreement shall be void, and, at the option of Landlord, shall constitute
a material default by Tenant under this Lease Agreement.

         3. Attorney's Fees. In the event either party places the enforcement of
this Lease Agreement, or any part thereof, or the collection of any rent due, or
to become due hereunder, or recovery of the possession of the Leased Premises in
the hands of an attorney, or files suit upon the same, the nonprevailing (or
defaulting) party shall pay the other party's reasonable attorney's fees and
court costs, in any proceeding, whether at trial, or appeal therefrom, or on any
petition for review, or in bankruptcy.

         4. Binding. Each individual executing this Lease Agreement on behalf of
Tenant and Landlord represents and warrants that he/she is duly authorized to
execute and deliver this Lease Agreement on behalf of Tenant and Landlord, and
that this Lease Agreement is binding upon each in accordance with its terms.
This Lease Agreement shall not be considered binding until it has been fully
executed by Landlord and Tenant.

         5. Care of Leased Premises. Tenant shall not commit or allow any waste
or damage to be committed on any portion of the Leased Premises. Tenant shall
not permit the Leased Premises to be used for any purpose other than stated in
the Lease Agreement.



              a. No later than the last day of the Term, Tenant will remove all
Tenant's personal property and repair all damage done by or in connection with
installation or removal of said property and surrender the Leased Premises
(together with all keys, access cards, or entrance passes to the Leased Premises
and/or the Project) in as good a condition as they were at the beginning of the
Term, reasonable wear and tear, unrepaired casualty not caused by Tenant, and
condemnation excepted. All property of Tenant remaining in the Leased Premises
after expiration of the Term shall be deemed conclusively abandoned and may be
removed by Landlord, and Tenant shall reimburse Landlord for the cost of
removing the same, subject, however, to Landlord's right to require Tenant to
remove any improvements or additions made to the Leased Premises by Tenant
pursuant to this Lease Agreement.

              b. In doing any work related to the installation of Tenant's
furnishings, fixtures, or equipment in the Leased Premises, Tenant will use only
contractors or workmen consented to by Landlord in writing prior to the time
such work is commenced. Landlord may condition its consent upon its receipt of
evidence of workers compensation insurance acceptable lien waivers from such
contractors or workmen. Tenant shall promptly remove any lien or claim of lien
for material or labor claimed against the Leased Premises or Project, or both,
by such contractors or workmen, if such claim should arise, and hereby
indemnifies and holds Landlord harmless from and against any and all loss, cost,
damage, expense, or liabilities including, but not limited to, attorney's fees
incurred by Landlord as a result of or in any way related to such claims or such
liens.

              c. Tenant agrees that all personal property brought into the
Leased Premises by Tenant, its employees, licensees, and invitees shall be at
the sole risk of Tenant, and Landlord shall not be liable for theft thereof or
of money deposited therein or for any damages thereto, such theft or damage
being the sole responsibility of Tenant.

              d. Upon termination of this Lease Agreement Landlord shall have
the right to reenter and resume possession of the Leased Premises. Landlord's
costs of post termination cleanup required to return the Leased Premises to as
good a condition as existed at time of occupancy by Tenant, with normal wear and
tear excepted, shall be billed to and promptly paid by Tenant.

         6. Choice of Law. All rights and remedies of Landlord and Tenant under
this Lease Agreement shall be cumulative and none shall exclude any other rights
or remedies allowed by law. All of the terms hereof shall be construed and
enforced according to the laws of the State in which the Leased Premises are
located.

         7. Common Areas--Utility Access. The Leased Premises shall include the
appurtenant right to use, in common with others, the lobbies, entrances, stairs,
elevators, restrooms, and other public portions of the Project. Landlord retains
the right to make changes in the common areas as it solely deems to be in the
best interest of the Project. All of the outside



walls and windows of the Leased Premises, and any space in the Leased Premises
used for shafts, stacks, pipes, conduits, ducts, and electric or other
utilities, custodial sinks or other Project facilities, are part of the rentable
area of the Leased Premises; however, the right to the use thereof and access
thereto through the Leased Premises for the purposes of operation, maintenance,
and repair, are reserved to Landlord.

         8. Condition of Premises. Tenant's taking possession of the Leased
Premises shall be deemed conclusive evidence that, as of the date of taking
possession, the Leased Premises are in good order and satisfactory condition. No
promise of Landlord to alter or remodel, repair, or improve the Lease Premises
or the Project, and no representation, express or implied, respecting any matter
or thing relating to the Leased Premises, the Project or this Lease Agreement,
including, without limitation, the condition of the Leased Premises, has been
made to Tenant by Landlord other than as may be contained herein or in a
separate Exhibit or Addendum attached to this Lease Agreement and incorporated
herein or separately signed by Landlord and Tenant.

         9. Damage to Leased Premises. If all or a portion of the Leased
Premises are rendered untenantable by damage from any casualty insured against
under a standard fire and extended coverage insurance policy, the damage shall
be repaired forthwith by and at the expense of Landlord, provided such repairs
can be, in Landlord's opinion, completed within one hundred twenty (120) days
after notice to Landlord of the occurrence of such damage, without the payment
of repair, overtime or other premiums. Except as set forth herein below, until
such repairs are completed, the rent shall be abated in proportion to the part
of the Leased Premises which is unusable by Tenant in the conduct of its
business. Should the damage be caused by a casualty not insured against under a
standard fire and extended coverage insurance policy, Landlord shall have no
obligation to repair or rebuild. Should Landlord elect not to repair or rebuild,
this lease may be terminated by thirty (30) days' notice to tenant. There shall
be no abatement of rent by reason of any portion of the Leased Premises being
unusable for a period of less than two days. Landlord's opinion as to completion
date of any repair shall be given to Tenant in writing within thirty (30) days
of the occurrence of the damage.

         10. Damage or Destruction --Tenant's Election to Terminate. In case of
any significant damage or destruction mentioned herein, which Landlord is
required or undertakes to repair as provided herein, Tenant may terminate this
Lease Agreement by written notice to Landlord any time prior to completion of
the required repairs if Landlord has not restored and rebuilt the Leased
Premises (exclusive of any property of Tenant or improvements installed by
Tenant located therein) to substantially the same condition as existed
immediately prior to such damage or destruction within one hundred twenty (120)
days after notice to Landlord of the occurrence of such damage or destruction,
or such longer period as Landlord has estimated, plus such additional period
thereafter (not exceeding six months) as shall equal the aggregate period
Landlord may have been delayed in doing so by acts of God, adjustment of
insurance, labor trouble, governmental controls, unavailability of materials, or
any other cause beyond Landlord's reasonable control.



         11. Damage Near End of Term. Notwithstanding anything to the contrary
contained in this Lease Agreement, Landlord shall not have any obligation
whatsoever to repair, reconstruct, or restore the Leased Premises or the Project
when such damage occurs during the last twelve (12) months of the Lease term or
any extension thereof, and when the cost of repair exceeds twenty percent (20%)
of the value of the Leased Premises or the Project.

         12. Events of Default by Tenant. The following shall constitute events
of default by Tenant: (a) If Tenant shall fail to make any payment due under
this Lease Agreement, and such failure shall continue for ten (10) days after
written notice by Landlord; (b) if a default exists in the performance of any of
the other covenants or conditions which Tenant is required to observe and to
perform, and such default shall continue for twenty (20) days after written
notice by Landlord; (c) if the interest of Tenant under this Lease Agreement is
levied upon, or is under execution or other legal process, or if any petition
shall be filed by or against Tenant to declare Tenant as bankrupt or to delay,
reduce, or modify Tenant's debts or obligations; (d) if any petition shall be
filed or other action taken to reorganize or modify Tenant's capital structure
if Tenant be a corporation or other entity; (e) if Tenant is declared insolvent,
or if any assignment of Tenant's property is made for the benefit of creditors
or if a receiver or trustee is appointed for Tenant or its property; (f) if
Tenant vacates or abandons the Leased Premises during the term of this Lease
Agreement or any extensions thereof; or (g) if Tenant makes any transfer of any
interest in the Leased Premises not in accordance with the requirements of this
Lease Agreement, then Landlord may treat the occurrence of any one or more of
the foregoing events as a breach of this Lease Agreement and thereupon, at
Landlord's option, Landlord shall have one or more of the following described
remedies in addition to all other rights and remedies provided at law or in
equity:

              a.Landlord may terminate this Lease Agreement and forthwith, in
accordance with applicable law, repossess the Leased Premises and remove all
persons or property therefrom, and be entitled to recover as damages a sum of
money equal to the total of (i) the cost of recovering the Leased Premises (ii)
the unpaid rent owed thereon from due date plus interest thereon at the rate of
18% per annum or the maximum rate permitted by applicable law, whichever is
lower, (iii) the present value of the balance of the rent for the remainder of
the term, discounted to the present at 8% per annum, and (iv) any other sum of
money and damages owed by Tenant to Landlord;

              b. Landlord shall also be entitled to terminate Tenant's right of
possession in accordance with applicable law and to repossess the Leased
Premises, without demand or notice of any kind to Tenant, by summary
proceedings, any other applicable action or proceeding, or otherwise, all
without terminating this Lease Agreement, in which event Landlord may, but shall
be under no obligation to, relet the same for the account of Tenant for such
rent and upon such terms as shall be satisfactory to Landlord. None of these
actions will be deemed an acceptance of surrender of the Leased Premises. For
the purpose of such reletting Landlord is authorized to decorate or to make any
repairs, changes, alterations, or additions in or to the Leased Premises that
may be necessary or convenient, and (i) if Landlord shall fail or refuse to
relet the Leased



Premises, or (ii) if the same are relet and a sufficient sum shall not be
realized from such reletting, after paying the unpaid Base Rental due hereunder
earned or unpaid at the time of reletting, plus interest thereon at the rate set
forth herein, the cost of recovering possession, and all of the costs and
expenses of such decoration, repairs, changes, alterations, and additions, and
the expense of such reletting, and of the collection of the rent accruing
therefrom to satisfy the payment of the rent provided for in this Lease
Agreement, then Tenant shall pay to Landlord as damages a sum equal to the
amount of the rental reserved in this Lease Agreement for such period or
periods, or if the Leased Premises have been relet, Tenant shall satisfy and pay
any such deficiency upon demand therefor from time to time; and Tenant agrees
that Landlord may file suit to recover any sums falling due under the terms of
this Lease Agreement from time to time on one or more occasions without Landlord
being obligated to wait until expiration of the term of this Lease Agreement and
without barring or affecting in any manner Landlord's right to bring a later
action or actions for further damages; nor shall such reletting be construed as
an election on the part of Landlord to terminate this Lease Agreement unless a
written notice of such intention be given to Tenant by Landlord. Notwithstanding
any such reletting without termination, Landlord may at any time thereafter
elect to terminate this Lease Agreement for such previous breach.

              c. Without prejudice to any other remedy for default, Landlord may
perform any obligation or make any payment required to cure a default by Tenant.
The cost of performance, including attorneys' fees and all disbursements, shall
immediately be paid by Tenant to Landlord upon demand as Additional Rent.

         13. Defects. Tenant agrees to report in writing to Landlord any
defective condition in or about the Leased Premises known to Tenant, and further
agrees to attempt to contact Landlord by telephone immediately in such instance.

         14. Eminent Domain

              a. In the event the Leased Premises are taken pursuant to powers
of eminent domain, all awards for the taking other than awards for interruption
of Tenant's business shall belong solely to Landlord, and Tenant shall make no
claim therefor.

              b. In the event of a partial taking, which does not result in a
termination of this Lease Agreement, rent shall be abated in proportion to the
part of the Leased Premises so made unusable by said partial taking, and any
award for the taking shall belong solely to Landlord.

              c. No temporary taking of the Leased Premises and/or of Tenant's
rights therein or under this Lease Agreement shall terminate this Lease
Agreement or give Tenant any right to any abatement of rent hereunder; and any
award made to Tenant by reason of any such temporary taking shall belong
entirely to Tenant, and Landlord shall not be entitled to share therein. The
Tenant and Landlord will work together to cause the governmental agency


responsible for the taking to restore the Leased Premises and Project, after the
taking, to their original condition prior to the taking.

              d. If the whole of the Leased Premises, or so much thereof as to
render the balance unusable by Tenant, shall be taken by any governmental
authority under power of Eminent Domain, this Lease Agreement shall
automatically terminate as of the date of such condemnation, or as of the date
possession is taken by the condemning authority, whichever is earlier. No award
for any partial or entire taking shall be apportioned, and Tenant hereby assigns
to Landlord any award which may be made in such taking or condemnation, together
with any and all rights of Tenant now or hereafter arising in or to the same or
any part thereof, provided, however, that nothing contained herein shall be
deemed to give Landlord any interest in or to require Tenant to assign to
Landlord any award made to Tenant for the taking of personal property,
equipment, and fixtures belonging to Tenant and/or for the interruption of or
damage to Tenant's business or for Tenant's unamortized cost of improvements
installed by Tenant and/or the cost of moving and/or the lost value of Tenant's
unexpired Lease Agreement term.

         15. Entire Agreement. This instrument, along with any exhibits and
attachments or other documents affixed hereto or referred to herein, constitute
the entire and exclusive agreement between Landlord and Tenant relative to the
Leased Premises herein described, and this Agreement and said exhibits and
attachments and other documents may be altered and/or revoked only by an
instrument in writing signed by both Landlord and Tenant. Landlord and Tenant
hereby agree that all prior written and oral agreements, understandings and/or
practices relative to the leasing of the Leased Premises are merged in or
revoked by this Lease Agreement.

         16. Estoppel Certificate. Tenant shall at any time and from time to
time, upon not less than ten (10) days prior written notice from Landlord,
execute, acknowledge and deliver to Landlord or to other parties as Landlord may
direct, a statement in writing, (a) certifying that this Lease Agreement is
unmodified and in full force and effect (or, if modified, stating the nature of
such modification and certifying that this Lease Agreement as so modified is in
full force and effect), the date to which the rental and other charges are paid
in advance, and the amount of the Base Rental, Estimated Operating Expense
Adjustment, and the commencement and termination dates of the Lease Agreement,
and (b) acknowledging that there are not, to Tenant's knowledge, any uncured
defaults on the part of Landlord hereunder, or specifying such defaults if any
are claimed. Any such statement may be relied upon by any prospective purchaser
or encumbrancer of all or any portion of the real property of which the Leased
Premises are a part. Tenant's failure to deliver such statement within such time
shall be conclusive upon Tenant that: (i) this Lease Agreement is in full force
and effect, without modification except as may be represented by Landlord, (ii)
there are no uncured defaults in Landlord's performance, and (iii) not more than
one month's Base Rental, or Estimated Operating Expense Adjustment installment,
has been paid in advance. If Landlord desires to finance or refinance the
Project, or any part thereof, Tenant agrees to deliver to any lender designated
by Landlord such financial statements of Tenant as may be reasonably required by
such financial institution. All such financial statements shall be received by
Landlord in confidence and shall be used only for the purpose herein set forth.



         17. Force Majeure. Any prevention, delay, or stoppage of work to be
performed by Landlord or Tenant which is due to strikes, labor disputes,
inability to obtain labor, materials, equipment, or reasonable substitutes
therefor, acts of God, governmental restrictions or regulations or controls,
judicial orders, enemy or hostile government actions, civil commotion, fire or
other casualties, or other causes beyond the reasonable control of the party
obligated to perform hereunder, shall excuse performance of the work by that
party for a period equal to the duration of that prevention, delay, or stoppage.
Nothing herein shall excuse or delay Tenant's obligation to pay rent or other
charges under this Lease Agreement, except as otherwise provided in this Lease
Agreement.

         18. No Hazardous Substances Allowed. Tenant shall not cause or permit
any "Hazardous Substances," as defined below, except in amounts as permitted by
law, to be brought upon or kept or used in or about the Premises or the Project
by Tenant, its agents, employees, contractors, or invitees.

              a. Tenant shall at all times and in all respects comply with all
local, state, and federal laws, ordinances, regulations and orders
(collectively, "Hazardous Substances Laws") relating to industrial hygiene,
environmental protection, or the use, analysis, generation, manufacture,
storage, disposal, or transportation of any Hazardous Substances.

              b. As used in this Agreement, the term "Hazardous Substances"
means any hazardous or toxic substances, materials or wastes, including, but not
limited to, those substances, materials, and wastes listed in the United States
Department of Transportation Hazardous Materials Table (49 CFR 172.101) or by
the Environmental Protection Agency as hazardous substances (40 CFR Part 302)
and amendments thereto, or such substances, materials and wastes which are or
become regulated under any applicable local, state or federal law including,
without limitation, any material, waste or substance which is (i) petroleum or
any fraction thereof, (ii) asbestos, (iii) polychlorinated biphenyls, (iv)
defined as a "hazardous waste" under relevant state statutes or any rule
promulgated thereunder, (v) designated as a "hazardous substance" pursuant to
Section 311 of the Clean Water Act, 33 U.S.C.ss.1251, et seq. (33 U.S.C.ss.1321)
or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C.ss.1317),
(vi) defined as a "hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C.ss.6901, et seq. (42 U.S.C.ss.6903) or
(vii) defined as "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C.ss.9601, et seq. (42 U.S.C.ss.9601).

              c. Tenant shall indemnify, defend (by counsel acceptable to
Lessor), protect, and hold harmless Lessor, and each of Lessor's partners,
directors, officers, employees, agents, attorneys, successors, and assigns, from
and against any and all claims, liabilities, penalties, fines, judgments,
forfeitures, losses (including, without limitation), diminution in the value of
the Premises or the Building, damages for the loss or restriction on use of
rentable or usable space or of any amenity of the Premises or the Building,
costs or expenses (including attorneys' fees,



consultant fees, and expert fees) for the death of or injury to any person or
damage to any property whatsoever, arising from or caused in whole or in part,
directly or indirectly, (a) by the presence in, on, under, or about the
Premises, or any discharge or release in or from the Premises of any Hazardous
Substances, or Tenant's use, analysis, storage, transportation, disposal,
release, threatened release, discharge, or generation of Hazardous Substances
to, in, on, under, about, or from the Premises or the Building, or (b) Tenant's
failure to comply with any Hazardous Substances Law. Tenant's obligations under
this Section shall include, without limitation, and whether foreseeable or
unforeseeable, any and all costs incurred in connection with any investigation
of site conditions, and any and all costs of any required or necessary repair,
cleanup, detoxification, or decontamination of the Premises or the Building, and
the preparation and implementation of any closure, remedial action, or other
required plans in connection therewith. Tenant's obligations under this Section
shall survive the expiration or earlier termination of the term of the Lease.
For purposes of the release and indemnity provisions hereof, any acts or
omissions of Tenant, or by employees, agents, assignees, contractors, or
subcontractors of Tenant or others acting for or on behalf of Tenant (whether or
not they are negligent, intentional, willful, or unlawful), shall be strictly
attributable to Tenant.

              d. Tenant acknowledges and agrees that it shall not be
unreasonable for Lessor to withhold its consent to any proposed assignment,
subletting, or transfer of Tenant's interest in this Lease if (a) the
anticipated use of the Premise by the proposed assignee, subtenant, or
transferee (collectively, a "Transferee") involves the generation, storage, use
treatment, or disposal of Hazardous Substances; (b) the proposed Transferee has
been required by any prior lessor, lender, or governmental authority to make
remedial action in connection with Hazardous Substances contaminating a
property, if the contamination resulted from such Transferee's actions or use of
the property in question; or (c) the proposed Transferee is subject to an
enforcement order issued by any governmental authority in connection with the
use, disposal, or storage of a Hazardous Substance.

              e. Landlord does hereby represent to Tenant that, to the best of
Landlord's knowledge, no toxic or hazardous substances have been deposited in or
located on the Leased Premises on the commencement date of the lease except in
the amounts as permitted by law.

         19. Hold Harmless:

              a. By Tenant: Tenant hereby agrees to indemnify and hold Landlord
harmless from and against any injury, expense, damage, liability, or claim
imposed on Landlord by any person or entity, whether due to damage to the Leased
Premises or the Project, claims for injuries to the person or property of any
other tenant of the Project or of any other person in or about the Project for
any purpose whatsoever, or due to administrative or criminal action by a
governmental authority, whether such injury, expense, damage, liability, or
claim results either directly or indirectly from the act, omission, negligence,
misconduct, or breach of any provisions of this Lease Agreement by Tenant, the
agents, servants, or employees of Tenant, or any other person entering upon the
Leased Premises under express or implied invitation or consent of


Tenant. Tenant further agrees to reimburse Landlord for any costs or expenses,
including, but not limited to, court costs and reasonable attorney's fees which
Landlord may incur in investigating, handling, or litigating any such claim or
any action by a governmental authority.

              b. By Landlord: Landlord hereby agrees to indemnify and hold
Tenant harmless from and against any injury, expense, damage, liability, or
claim imposed on Tenant by any person or entity, whether due to damage to the
Leased Premises or the Project, claims for injuries to the person or property of
any other tenant of the Project or of any other person in or about the Project
for any purpose whatsoever, or due to administrative or criminal action by a
governmental authority, whether such injury, expense, damage, liability, or
claim results either directly or indirectly from the act, omission, gross
negligence, misconduct, or breach of any provisions of this Lease Agreement by
Landlord, the agents, servants, or employees of Landlord, or any other person
entering upon the Leased Premises under express or implied invitation or consent
of Landlord. Landlord further agrees to reimburse Tenant for any costs or
expenses, including, but not limited to, court costs and reasonable attorney's
fees, which Tenant may incur in investigating, handling, or litigating any such
claim or any action by a governmental authority

         20. Holding Over. In the event of holding over by Tenant, after
expiration or termination of this Lease Agreement without the written consent of
Landlord, Tenant shall pay to Landlord one and one-half times the total of Base
Rental which Tenant was obligated to pay for the month immediately preceding the
end of the term of this Lease Agreement, for each month or any part thereof of
any such holdover period, together with any Additional Rent. No holding over by
Tenant after the termination of this Lease Agreement shall operate to extend the
Lease Agreement term. In the event of any unauthorized holding over, Tenant
shall indemnify Landlord against all claims for damages by any other tenant
against Landlord to whom Landlord may have leased all or any part of the Leased
Premises covered hereby effective upon the termination of this Lease Agreement.
Any holding over with the written consent of Landlord shall thereafter
constitute this Lease Agreement a lease from month to month, and Landlord or
Tenant may terminate it upon not less than thirty (30) days prior written
notice.

         21. Improvement Delays Caused by Tenant. If Tenant shall cause any of
the following delays in the completion of Landlord's Work, then the beginning
date of the Lease Agreement shall be altered: (i) delay caused because Tenant's
requirements for materials or installations are different from Landlord's
"Project Standard Improvements" (the basic improvement package Landlord offers
to tenants of the Project), (ii) delay in the payment of any sum due from Tenant
pertaining to Landlord's Work, (iii) delay in performance or completion by a
party employed by Tenant, (iv) delay by reason of compliance with applicable
laws arising from Tenant's design of Tenant's Improvements, (v) delay by reason
of changes in the work ordered by Tenant or by reason of any Change Order, (vi)
delay by reason of the malfunctioning of any item or aspect of Tenant's
Improvements which was designed by Tenant.

              a. In the event of any such delay mentioned above then,
notwithstanding the provisions of the Lease Agreement or any other provision of
Exhibit B, the Beginning Date of



the Lease Agreement shall be the earlier of (i) the date Landlord would have
completed Landlord's Work had it not been for Tenant's delay, or (ii) the
earliest Beginning Date as provided in this Lease Agreement. Any and all cost
related to either the illegality or malfunctioning of any item or aspect of
Tenant's Improvements, which arises from Tenant's design, plans, specifications,
or working drawings, shall be borne solely by Tenant, notwithstanding Landlord's
approval or installation of the same.

         22. Improvements, Alterations, and Additions. Tenant shall not make or
allow to be made any alterations or physical additions in or to the Leased
Premises which affect the structure or any other improvements in excess of the
amount stated in the Specific Lease Provisions without first obtaining the
written consent of Landlord . All work shall be done by contractors approved by
Landlord. Landlord's approval or consent shall not be unreasonably withheld or
delayed. Any and all such alterations, physical additions, or improvements, when
made to the Leased Premises by Tenant, shall at once become the property of
Landlord and shall be surrendered to Landlord upon the termination of this Lease
Agreement by lapse of time or otherwise; provided, however, this clause shall
not apply to movable equipment or furniture owned by Tenant. Tenant shall comply
with all government, local building code and permitting requirements and provide
Landlord with evidence of compliance. Tenant shall give Landlord written notice
five (5) days prior to employing any laborer or contractor to perform work on
the Leased Premises so that Landlord may post a notice of nonresponsibility if
allowed by law. Landlord reserves the right to require Tenant, at Tenant's
expense, to remove such alterations, physical additions, or improvements upon
termination of this Lease Agreement and to repair any damage caused by such
removal.

         23. Improvements Obligations of Tenant. Should Tenant fail to perform
its obligations regarding the construction of improvements as set forth in
Exhibit "C," Tenant shall pay to Landlord as Additional Rent (for the purpose of
reimbursing Landlord for additional expenses which will be incurred by Landlord
because of its inability to proceed), one (1) day's Base Rental on the Leased
Premises for each day that Landlord is delayed because of Tenant's failure to
perform its obligations. Such Additional Rent shall be paid by Tenant to
Landlord within thirty (30) days after receipt by Tenant of Landlord's invoice
therefor.

         24. Inconvenience Damage. No damages, compensation, or claim shall be
payable by Landlord for inconvenience, loss of business, or annoyance arising
from any repair or restoration of any portion of the Leased Premises or other
portion of the Project. Landlord shall use commercially reasonable efforts to
effect such repair or restoration promptly and in such manner as to not
unreasonably interfere with Tenant's use and occupancy.

         25. Insurance by Landlord. Landlord shall maintain during the term of
this Lease Agreement an all-risk commercial property policy insuring the
project, common areas, and personal property owned by Landlord, in amounts equal
to replacement value. Landlord shall not be obligated to insure any furniture,
equipment, machinery, goods, or supplies owned by Tenant or which Tenant may
bring or obtain upon the Leased Premises, or any additional improvements



which Tenant may construct thereon. If the annual premiums charged Landlord for
such insurance exceed the standard premium rates because of the nature of
Tenant's operations, then Tenant shall, upon receipt of appropriate premium
invoices, reimburse Landlord for such increases in premium. Landlord may, should
it choose to do so, self insure all or part of the above referenced risks.
Should Landlord choose to self insure any insurance risks, the cost demonstrated
by a bid from a reputable insurance company shall be included in the cost of
insurance for expense reimbursement purposes.

         26. Insurance by Tenant. Tenant shall, at all times during the term of
this Lease Agreement, insure Tenant's personal property including any additional
improvements made by Tenant, while in or upon the Leased Premises, with an
all-risk policy. In addition, Tenant shall maintain a policy or policies of
Commercial General Liability Insurance with the premiums thereon fully paid on
or before due date, issued by an insurance company having at least an A.M. Best
rating of A or better and licensed to do business within the state the Project
is located. The limits afforded by said liability policy shall not be less than
One Million Dollars ($1,000,000) combined single occurrence limit for personal
injury and property damage and $2,000,000 annual aggregate. Landlord shall be
added as an additional insured thereto, and said policy shall not be canceled or
substantially modified without first giving Landlord thirty (30) days written
notice thereof. In addition, Tenant shall maintain Workers Compensation
insurance as required by statute. Tenant shall furnish, within thirty (30) days
of Landlord's request and approval, a certificate of insurance, acceptable to
Landlord, evidencing the Commercial General Liability and Workers Compensation
coverages referred to herein and naming Landlord and Property Manager as
additional insured as to the General Liability Insurance.

         27. Laws, Ordinances, Regulations, and Americans with Disabilities Act.
Landlord shall comply, at its sole cost, with all laws, ordinances, orders,
rules and regulations (state, federal, municipal, or promulgated by other
agencies or bodies having any jurisdiction thereof) relating to the use (based
upon the approved use for Tenant hereunder), condition, or occupancy of the
Leased Premises. Tenant shall comply, at its sole cost, with requirements of the
Americans with Disabilities Act which provides for the removal of architectural
barriers that prevent equal access to disabled persons on the interior of the
Leased Premises. To the extent that barrier removal relates to access on the
exterior of the Project, the obligation shall be that of the Landlord.

         28. Lease Memorandum. Neither this Lease Agreement, nor any notice nor
memorandum regarding the terms hereof, shall be recorded by Tenant without the
prior written consent of the Landlord.

         29. Limitation of Landlord's Liability. The obligations of Landlord
under this Lease Agreement do not constitute personal obligations of Landlord or
of the individual partners, directors, officers, employees, or shareholders of
Landlord or its partners, and Tenant shall look solely to the property that is
the Project described in this Lease Agreement and to no other assets of Landlord
for satisfaction of any liability in respect of this Lease Agreement, and



Tenant will not seek recourse against any other property of Landlord or against
the individual partners, directors, officers, employees, or shareholders of
Landlord or its partners or any of their personal assets for such satisfaction.

         30. Name of Project. Tenant shall not use the name of the Project for
any purpose other than as an address of business to be conducted by the Tenant.
Landlord and its agents shall have the right to change the name, number, or
designation of the Project without liability to Tenant upon fourteen (14) days
prior written notice to Tenant.

         31. No Joint Venture. This Lease Agreement shall not be deemed or
construed to create or establish any relationship of partnership or joint
venture or similar relationship or arrangement between Landlord and Tenant
hereunder.

         32. Notices. All notices, demands, consents, and approvals, which may
or are required to be given by either party to the other hereunder, shall be in
writing and shall be deemed to have been fully given when personally delivered
or delivered by a nationally recognized over night courier, or, if the notice is
deposited in the United States mail, certified or registered, return receipt
requested, postage prepaid, and addressed to the party to be notified at the
address for such party specified in this Lease Agreement (with copies to
Property Reserve, Inc., 10 E. South Temple Street, Suite 400, Salt Lake City,
Utah 84133, and Kirton and McConkie, 60 E. South Temple Street, Suite 1800, Salt
Lake City, UT 84145), then the notice shall be deemed fully given on earlier of
(i) the date of delivery, if delivered personally or by courier, or (ii) the
date set forth on the receipt, or (iii) three (3) days after the notice is
deposited in the mail.

         a. Either party may change its address for notice by at least fifteen
(15) days written notice to the other party. Tenant hereby appoints as its agent
to receive the service of all dispossessory or distraint proceedings and notices
thereunder the person in charge of or occupying the Leased Premises at the time,
and, if no person shall be in charge of or occupying the same, then, if allowed
by law, such service may be made by attaching the same on the main entrance of
the Leased Premises.

         33. Occupancy Delay. In the event that the Leased Premises should not
be ready for occupancy for any reason, this Lease Agreement shall not be void or
voidable, and Landlord shall not be liable or responsible for any claims,
damages, or liabilities in connection therewith or by reason thereof, and the
term of this Lease Agreement shall be for the same term of months as set forth
in the Lease Agreement, but the beginning date shall be effective only from the
time that the Leased Premises are prepared for occupancy in accordance with the
terms and conditions set forth herein. Should the term of this Lease Agreement
begin on a date other than the beginning date, Landlord and Tenant will, at the
request of either, execute a declaration specifying the revised beginning the
term of this Lease Agreement. In such event rental under this Lease Agreement
shall not commence until said revised beginning date, and the stated term in
this Lease Agreement shall thereupon commence and the expiration date shall be
extended so as to give effect to the full stated term. Within five (5) days
after Tenant receives Landlord's notice



that the Leased Premises are ready for occupancy, Tenant shall inspect the
Leased Premises, and except for items specified by Tenant to Landlord within
five (5) days of Tenant's inspection, Tenant shall be deemed to have accepted
the Leased Premises in their then condition, "as is." The existence of "punch
list" (as that term is generally used in the construction industry) items shall
not postpone the beginning date of this Lease Agreement.

         34. Peaceful Enjoyment. Tenant shall occupy and may peacefully have,
hold, and enjoy the Leased Premises, subject to the other provisions hereof,
provided that Tenant pays the rent herein recited and performs all of Tenant's
covenants and agreements herein contained, including the observance of all
reasonable rules and regulations made by Landlord from time to time pursuant to
this Lease Agreement. It is understood and agreed that this covenant and any and
all other covenants of Landlord contained in this Lease Agreement shall be
binding upon Landlord and its successors only with respect to breaches occurring
during its and their respective ownerships of Landlord's interest hereunder.

         35. Personal Property Tax. Tenant shall be liable for and shall pay,
not later than ten (10) days before delinquency, all taxes levied against any
personal property or trade fixture placed by Tenant, in or about the Leased
Premises. Landlord may, after written notice to Tenant, pay any such levy or
tax, regardless of the validity of such levy, but only under proper protest if
so requested by Tenant in writing. Additionally, if the assessed value of
Landlord's property is increased by the inclusion of the value placed upon any
of the personal property or trade fixture of Tenant, Landlord may, after written
notice to Tenant, pay those taxes which are based upon such increased
assessment, regardless of the validity thereof, but only with proper protest if
so requested by Tenant in writing. In such an event Tenant shall, upon demand,
repay to Landlord taxes so levied and paid by Landlord, or that portion of such
taxes resulting from such increase in the assessment. Tenant shall have the
right, in the name of the Landlord and with Landlord's full cooperation, at no
cost to Landlord, to bring suit in any court of competent jurisdiction to
recover the amount of any such taxes so paid under protest. Any amounts so
recovered shall belong to Tenant.

         36. Prohibited Activities. Tenant shall not do or permit anything to be
done in or about the Leased Premises nor bring or keep anything therein which
will in any way increase the existing rate of or affect any fire or other
insurance upon the Project or any of its contents, or cause cancellation of any
insurance policy covering said Project or any part thereof or any of its
contents. Tenant shall not do or permit anything to be done in or about the
Leased Premises which will in any way obstruct or interfere with the rights of
other tenants or occupants of the Project or injure or annoy them, or use or
allow the Leased Premises to be used for any improper, immoral, unlawful, or
objectionable purpose, nor shall Tenant cause, maintain, or permit any nuisance
in, on, or about the Leased Premises. Tenant shall not violate any of the rules
and regulations of the Project.

              a. Tenant shall not do or permit to be done on or about the Leased
Premises, and the Landlord shall not do or permit to be done outside the Leased
Premises any of the



following: (a) any violation of any federal, state or local law, ordinance, or
any regulation, ordinance, order or directive of a governmental agency as such
statutes, ordinances, regulations, orders, or directives now exist or may
hereafter come into effect and concern the use, safety, or environment of the
Property; (b) any violation of any Certificate of Occupancy covering or
affecting the use of the Property or any part thereof; (c) commit any public or
private nuisance.

         37. Relocation. If the size of the Leased Premises is less than Ten
Thousand (10,000) rentable square feet, Landlord reserves the right to relocate
Tenant during the Term of this Lease Agreement or any renewal thereof, to
similar or higher quality space within the Project. If Landlord exercises this
right to relocate Tenant, then any and all costs incident to said relocation
shall be the responsibility of Landlord, said costs to be determined prior to
relocation of Tenant.

         38. Repairs and Inspection Entry. Tenant shall permit Landlord or its
agents or representatives to enter into and upon any part of the Leased Premises
at all reasonable hours to inspect same, clean, make repairs, alterations, or
additions thereto or for any reasonable purpose as Landlord may deem necessary
or desirable, and Tenant shall not be entitled to any abatement or reduction
sums due under this Lease Agreement by reason thereof.

         39. Reservations by Landlord. Landlord reserves the right to:

              a. Make changes, additions improvements, or deletions to, or to
reduce, partition, or otherwise eliminate the Common Areas, including, without
limitation, changes in the location, size shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas, and hallways.

              b. Close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Leased Premises remains available.

              c. Designate other land to be part of the Common Area where the
additional Common Area is available for the use and benefit of tenants of the
Project.

              d. Expand the Project.

         40. Rules and Regulations. Landlord shall have the right to make and
enforce rules and regulations (the "Rules and Regulations") consistent with this
Lease Agreement for the purposes of regulating access, parking, use of the
common areas in the Leased Premises, and promoting safety, order, cleanliness,
and good service to the Project. Tenant will promptly comply with all such Rules
and Regulations. The parties acknowledge that the Rules and Regulations attached
hereto as Exhibit "D" are presently the Rules and Regulations now in effect;
however, Landlord, may at its option and at any time, reasonably amend and
modify said Rules and Regulations, and Tenant, upon receipt of written notice of
same, shall be obligated to comply with said Rules and Regulations.



         41. Sales Tax. In addition to the rental payments hereunder, all state,
county, and municipal transaction privilege (sales) taxes or similar excise
taxes imposed by any state, county, municipality, or other governmental entity
relative to the rental activity under this Lease Agreement, if required, shall
be reimbursed to the Landlord by the Tenant as Additional Rent.

         42. Security Deposit. The Security Deposit shall be held by Landlord,
without payment of interest to Tenant, as security for Tenant's full and
faithful performance of every provision of this Lease Agreement. Landlord may
comingle the deposit with other funds of Landlord and may apply the deposit to
the cost of performing any obligation which Tenant fails to perform within the
time required by this Lease Agreement, but such application shall not be
Landlord's exclusive remedy for Tenant's default. If any portion of said deposit
is applied by Landlord, Tenant shall pay the sum necessary to replenish the
deposit to its original amount upon demand by Landlord. Should Landlord sell its
interest in the Project during the Term hereof, and if Landlord deposits with
the purchaser thereof the then unappropriated funds deposited by Tenant as
aforesaid, Landlord shall thereupon be discharged from any further liability
with respect to the Security Deposit. Notwithstanding the foregoing, Landlord
shall comply with any laws or regulations in effect and related to the handling
of Security Deposits in commercial rental agreements. The Security Deposit shall
increase pro rata for any expansion space added to the Leased Premises.

         43. Severability. If any term or provision of this Lease Agreement, or
the application thereof to any person or circumstances, shall to any extent be
invalid or unenforceable, the remainder of this Lease Agreement, or the
application of such provision to persons or circumstances other than those as to
which it is invalid or unenforceable, shall not be affected thereby, and each
provision of this Lease Agreement shall be valid and shall be enforceable to the
extent permitted by law.

         44. Services Interruption. It is understood that Landlord does not
warrant that any of the services referred to above, or any other services which
Landlord may supply, will be free from interruption. Tenant acknowledges that
any one or more such services may be suspended or reduced by reason of accident
or repairs, alterations, or improvements necessary to be made, by strikes or
accident or by any cause beyond the reasonable control of Landlord, or by orders
or regulations of any federal, state, county, or municipal authority.

              a. Any such interruption or suspension of services shall never be
deemed an eviction of or disturbance to Tenant's use and possession of the
Leased Premises or any part thereof, or render Landlord liable to Tenant for
damages by abatement of rent, or otherwise relieve Tenant of performance of
Tenant's obligation under this Lease Agreement. Landlord will use commercially
reasonable efforts to restore service to full operations, and in the event of a
strike to secure parties not involved in the labor dispute to provide minimum
services.

         45. Subordination to Mortgages. This Lease Agreement shall
automatically be subject and subordinate to the lien of any mortgage or deed of
trust given by Landlord which



does now or may hereafter encumber the Project of which the Leased Premises form
a part, and to all renewals, modifications, consolidations, replacements, and
extensions thereof. Landlord shall also have the right to assign its interest in
this Lease Agreement for security purposes to any mortgagee or trust deed
beneficiary. Tenant agrees that it will execute, within five (5) days of
Landlord's request, any appropriate instrument or certificate that Landlord or
any mortgagee or trust deed beneficiary may require to further document this
subordination, provided that such mortgagee or trust deed beneficiary shall
agree with Tenant not to disturb Tenant's right to possess the Leased Premises
so long as Tenant complies with all of the terms and conditions of this Lease
Agreement. Tenant further agrees that it will provide any such mortgagee or
trust deed beneficiary with any evidence required to show the authority of
Tenant to execute any such subordination instrument or certificate and will, if
so requested by any such mortgagee or trust deed beneficiary, provide to that
person or entity a copy of any notice Tenant gives or is required to give
Landlord under this Lease Agreement. In the event of the enforcement by the
mortgagee or the beneficiary under such mortgage or deed of trust of the
remedies provided for by law or by such mortgage or deed of trust, or in the
event Landlord gives a deed-in-lieu-of-foreclosure to such mortgagee or trust
deed beneficiary, Tenant will, upon request of any person or party succeeding to
the interest of Landlord as a result of such enforcement or termination,
automatically become the Tenant of such successor in interest without change in
the terms or other provisions of this Lease Agreement, provided, however, that
such successor in interest shall not be bound by (i) any payment of rent or
additional rent for more than one month in advance, (ii) any amendment or
modification of this Lease Agreement made without the written consent of such
mortgagee or such beneficiary or their successor in interest, or (iii) any
defaults of Landlord under this Lease Agreement which remain uncured at the time
such successor in interest obtains title to the Project. Tenant shall execute
and deliver any instrument or instruments confirming the attornment herein
provided for.

              a. In the event of any act or omission by Landlord by reason of
which Tenant may claim the right to terminate this Lease Agreement or claim a
defense or offset against the Base Rental due hereunder, Tenant agrees not to
exercise any such right until: (i) Tenant has notified the mortgagee or trust
deed beneficiary in writing of such act or omission by Landlord, and (ii) Tenant
has given the mortgagee or trust deed beneficiary a reasonable opportunity to
cure such act or omission, including the time as shall be reasonably required to
obtain possession of the property and to commence and carry to completion the
foreclosure of its mortgage or deed of trust.

         46. Successors and Assigns. This Lease Agreement shall be binding upon
and inure to the benefit of Landlord, its successors and assigns, and shall be
binding upon and inure to the benefit of Tenant, its successors, and, to the
extent assignment may be approved by Landlord hereunder, Tenant's permitted
assigns.

         47. Tenant to Keep the Leased Premises Lien Free. Tenant shall keep the
Leased Premises and Project free from any mechanic's liens arising from any work
performed, material furnished, or obligations incurred by Tenant, and shall
obtain from its contractor lien releases if



required by Landlord. Tenant shall keep Landlord informed of the status of any
contest and shall defend, indemnify, and hold harmless Landlord from and against
any such lien or claim or action thereon, together with costs of suit and
reasonable attorneys' fees incurred by Landlord in connection with any such
claim or action.

         48. Tenant's Property. Landlord shall not be required to carry
insurance of any kind on Tenant's personal property, and shall not be obligated
to repair any damage thereto or replace the same for any reason.

         49. Tenants Requests. Tenant shall pay all the out of pocket legal
expenses incurred by Landlord as a result of requests from Tenant to exercise
its rights granted under this Lease Agreement, except for litigation in which
the Tenant is the prevailing party.

         50. Tenant's Right to Audit. In the event Tenant's Proportionate Share
of Operating Expense increases, excluding property taxes and insurance, by more
than five percent (5%) in any Calender Year, Tenant may audit Landlord common
area operating costs in order to verify the accuracy of operating expense
charges, provided that:

              a. Tenant specifically designates the calender year(s) that Tenant
intends to audit, which shall be a year within two (2) years of date of the
audit, but must be within the Term of this Lease Agreement.

              b. Such audit will be conducted only by a licensed firm,
unaffiliated with Tenant, with prior Landlord approval, and during regular
business hours at the office where Landlord maintains Operating Expense records,
and only after Tenant gives Landlord fourteen (14) days' notice.

              c. Tenant shall pay for all costs associated with audit.

              d. If audit yields a result that Tenant has underpaid the Tenant
will reimburse Landlord upon receipt of invoice.

              e. Tenant agrees not to divulge the results of the audit to any
other party.

              f. Tenant shall deliver to Landlord a copy of the results of such
audit within fifteen (15) days of its receipt by Tenant. No such audit shall be
conducted if any other tenant has conducted an audit for the time period Tenant
intends to audit and Landlord furnishes to Tenant a copy of the results of such
audit. No audit shall be conducted at any time that Tenant is in default of any
of the terms of the Lease Agreement. No subtenant shall have any right to
conduct an audit and no assignee shall conduct an audit for any period during
which such assignee was not in possession of the Leased Premises. Any refund due
Tenant as a result of such audit shall be paid by Landlord upon receipt of audit
and invoice from Tenant.

         51. Time of the Essence. Time shall be of the essence of this
Agreement.



         52. Total Destruction. A total destruction of the Project shall
automatically terminate this Lease Agreement.

         53. Waiver. Failure of Landlord to declare any default immediately upon
occurrence thereof, or delay in taking any action in connection therewith, shall
not waive such default, but Landlord shall have the right to declare any such
default at any time thereafter. Landlord's acceptance of rent will not be deemed
a waiver of any Tenant breach or default existing at the time of payment, except
a default in the payment of money, and then only to the extent of the amount
received by Landlord.

         54. Waiver of Jury Trial. To the full extent allowed by law, the
respective parties hereto shall and they hereby do waive trial by jury in any
action, proceeding or cross-action whatsoever arising out of or in any way
connected with this lease, the relationship of Landlord and Tenant, Tenant's use
or occupancy of the Premises, or any claim for injury or damage, or the
enforcement of any remedy under any statute or otherwise.

         55. Waiver of Time Limitations. In the event Tenant shall have any
claim or cause of action against Landlord arising out of or otherwise related to
this lease, Tenant must file such action with a court of competent jurisdiction
within one year after the accrual of such claim or cause of action; otherwise,
such claim or cause of action shall be deemed waived and permanently barred by
the passage of time and be void.

         56. Waiver of Subrogation. Landlord and Tenant do each hereby release
the other from any and all liability or responsibility (to the other or to
anyone claiming through or under the other by way of subrogation or otherwise)
for any loss or damage to property or for personal injury caused by perils
insured against by the policies to be carried pursuant to this Lease, even if
the cause of such peril or damage shall have been the negligence of the other
party or of anyone for whom such party may be responsible. Such waiver of
subrogation shall be effective with respect to such loss or damage, and each
policy hereunder shall contain a clause or endorsement to the effect that any
such release shall not adversely affect or impair said policies or prejudice the
right of the releasing party to recover thereunder. Landlord and Tenant each
agree that their policies shall include such a clause or endorsement. The
failure to obtain a clause or endorsement providing such waiver of subrogation
shall in no manner limit or restrict the validity and enforceability of the
waivers of subrogation herein contained.




                                  EXHIBIT "B-1"

                        LANDING CENTER LEGAL DESCRIPTION

PARCEL A
A PORTION OF LOTS 5, 6, 7, AND 8 OF VAN DOREN'S LANDING SHORT PLAT 1 NO.
SP-86-4, IN THE CITY OF KENT, KING COUNTY, WASHINGTON, AS RECORDED UNDER KING
COUNTY RECORDING NO. 8606301093, MORE PARTICULARLY DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHEAST CORNER OF SAID LOT 7; THENCE ALONG THE EAST LINE OF
SAID LOTS 7 AND 8, SOUTH 00(degree)51'13" WEST 441.01 FEET TO A POINT ON THE
SOUTH LINE OF SAID LOT 8; THENCE ALONG SAID SOUTH LINE NORTH 89(degree)08'47"
WEST, 376.04 FEET TO THE BEGINNING OF A CURVE, CONCAVE SOUTHEASTERLY, HAVING A
RADIUS OF 459.28 FEET;

THENCE SOUTHWESTERLY CONTINUING ALONG THE SOUTH LINE OF SAID LOTS 8 AND 5 AND
ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 30(degree)28'46", 244.32 FEET;

THENCE NORTH 00(degree)51'13" EAST, 504.01 FEET TO A POINT ON THE NORTHERLY LINE
OF SAID LOT 6;

THENCE ALONG THE NORTHERLY LINE OF SAID LOTS 6 AND 7, SOUTH 89(degree)11'24"
EAST 609.00 FEET TO THE POINT OF BEGINNING.

(SAID PARCEL ALSO KNOWN AS PARCEL THREE (3) OF CITY OF KENT LOT LINE ADJUSTMENT
NO. 89-6, RECORDED APRIL 21, 1989 UNDER RECORDING NO. 8904210278.)


PARCEL B
A PORTION OF LOT 9 OF VAN DOREN'S LANDING SHORT PLAT 1, SP-86-4, IN THE CITY OF
KENT, KING COUNTY, WASHINGTON, AS RECORDED UNDER KING COUNTY RECORDING NO.
8606301093, MORE PARTICULARLY DESCRIBED AS FOLLOWS:

BEGINNING AT THE SOUTHEAST CORNER OF SAID LOT 9; THENCE ALONG THE SOUTH LINE OF
SAID LOT 9, NORTH 89(degree)09'14" WEST 571.99 FEET TO THE BEGINNING OF A
NON-TANGENT CURVE, CONCAVE NORTHEASTERLY, TO WHICH POINT A RADIAL LINE BEARS
SOUTH 23(degree)55'12" WEST 125.00 FEET;

THENCE NORTHWESTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF
66(degree)55'34" 146.01 FEET;

THENCE NORTH 00(degree)50'46" EAST 112.41 FEET TO A POINT ON THE NORTH LINE OF
SAID LOT 9, SAID POINT BEING THE BEGINNING OF A NON-TANGENT CURVE, CONCAVE
SOUTHEASTERLY, TO WHICH POINT A RADIAL LINE BEARS NORTH 34(degree)59'33" WEST
1160.48 FEET; THENCE ALONG THE NORTH LINE OF SAID LOT 9, THE FOLLOWING THREE (3)
COURSES:

THENCE NORTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF
00(degree)18'18", 6.18 FEET TO THE BEGINNING OF A COMPOUND CURVE, CONCAVE
SOUTHEASTERLY HAVING A RADIUS OF 459.28 FEET;

THENCE NORTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF
35(degree)32'28" 284.90 FEET;

THENCE SOUTH 89(degree)08'47" EAST 376.04 FEET TO THE NORTHEAST CORNER OF SAID
LOT 9; THENCE ALONG THE EAST LINE OF SAID LOT SOUTH 00(degree)51'13" WEST 316.50
FEET TO THE POINT OF BEGINNING.

(PER CITY OF KENT LOT LINE ADJUSTMENT NO. LL-88-28, RECORDING NO. 8908231372.)

BOTH SITUATE IN THE COUNTY OF KING, STATE OF WASHINGTON.




                                   EXHIBIT "C"

Tenant Improvement Items. Tenant will install the improvements to the premises
as described below and consistent in scope to the plans and specifications
included on the preliminary plans dated 5/11/01 as prepared by Synthesis
Architects, attached hereto. Landlord and Tenant acknowledge that the plans will
undergo modification prior to construction, and Landlord has the right to
approve the final plans. A copy of the final approved construction drawings will
be attached to this agreement when they are complete.

o    Additional office improvements of approximately 4,246 square feet for a
     total of approximately 8,556 square feet.

o    Additional mechanical, electrical, lighting, plumbing and fire systems to
     accommodate the additional office space.

o    Installation of four to five "dynamometer test cells" in the existing
     warehouse area, with control room and required ventilation.

o    Upgrade of the power supplied to the building to approximately 1,800 amps.

o    Machine shop, electronics lab, fuel system and flow bench rooms in
     warehouse.




                                   EXHIBIT "D"

                              RULES AND REGULATIONS

         1. The doors, sidewalks, passages, exits, and entrances shall be used
for ingress and egress and shall not be obstructed. Tenant shall use reasonable
efforts to keep such areas clean and free from rubbish.

         2. Loitering anywhere in the Project shall not be permitted. Landlord
reserves the right to exclude or expel from the Project any person who, in the
judgment of Landlord, is under the influence of liquor or drugs or who shall in
any manner do any act in violation of the Rules and Regulations of the Project.

         3. Alterations in any way to the interior or exterior of the Leased
Premises including attaching pictures, certificates, licenses, and similar items
may be done only in a reasonable manner, subject to review by Landlord.

         4. Tenant shall not alter, paint, cover, obstruct, screen, tint,
install curtains, draperies, blinds, or shades, or obscure any window, shall not
affix any signs, advertisements, or notices on or to any window, and shall not
have any window treatment other than building standard as established by
Landlord, without the written consent of Landlord.

         5. All Tenant identification in the public areas of the Project must be
installed and approved by Landlord based on the standard sign age as established
by Landlord.

         6. The location of electrical, telephone, computer or other wiring and
of related outlets must be pre-approved prior to installation in writing by
Landlord. Such items shall be installed by qualified personnel in accordance
with building codes applicable to the Project and the Leased Premises.

         7. No items of unusual size or weight shall be used or placed in the
Project without Landlord's written permission. In no event shall any floor be
overloaded as determined by a competent engineer.

         8. The moving of any of Tenant's business or personal furniture,
equipment, inventory, or other items in or out of the Project or Leased Premises
will be at a time and in a manner designated by Landlord.

         9. No Tenant shall use or keep any foul or noxious gas or substance
which may in any manner be offensive or objectionable to Landlord or other
occupants of the Project. No noises, vibrations, odors, or activities bothersome
to other Tenants will be allowed in the Leased Premises or on the grounds of the
Project.

         10. No animals, fish, birds, etc., are allowed within the Project
without Landlord's written permission.

         11. The Tenant is prohibited from storing goods, wares, or merchandise
in the Project or Leased Premises in areas not acceptable to Landlord for
storage. No auction, public or private, will be permitted in the Leased
Premises.

         12. All Tenant requests for service or maintenance to the Landlord will
be made by notifying the Landlord or its agents at a designated location.
Landlord's agents or contractors shall not perform any work or do anything
outside of their regular or contracted duties unless under special written
instructions from the Landlord.

         13. All keys shall be obtained from Landlord, and all keys shall be
returned to Landlord upon termination or expiration of Tenant's Lease. No
duplicate keys shall be made without Landlord's approval. Tenant is responsible
to control the keys to the Leased Premises, and Tenant shall pay for lost keys.
Tenant shall not change the locks or install other locks on the doors without
Landlord's written approval. If Landlord gives Tenant written approval to change
locks, then Tenant will provide Landlord with keys.

         14. Tenant is responsible to lock and secure all doors to the Leased
Premises after regular business hours or after entering or leaving on
nonbusiness days. Landlord is not responsible to respond to after-hours tenant
lock-outs



         15. The following acts shall not be allowed or suffered to be done nor
conditions allowed to exist upon the Leased Premises or any part thereof:

         a.       Any violation of any federal, state, or municipal statute or
                  ordinance, or any regulation, order, or directive of a
                  governmental agency, as such statutes, ordinances,
                  regulations, orders, or directives now exist or may hereafter
                  provide concerning the use and safety of the Leased Premises.

         b.       Any violation of any certificate of occupancy covering or
                  affecting the use of the Leased Premises or any part hereof.

         c.       Any public or private nuisance.

         d.       The display or distribution of drug paraphernalia or sexually
                  related paraphernalia, except as the same may be legally
                  dispensed by a physician or surgeon, dentist, or pharmacist,
                  duly licensed to practice such profession in the State.

         e.       The manufacture, distribution, sales, or dispensing in any
                  manner of illegal drugs, or any type of illegal drug activity
                  or consumption.

         f.       The sale or dispensing of alcoholic beverages.

         g.       The showing, displaying, viewing, renting, or selling of movie
                  films within the Leased Premises which would be classified or
                  rated as "X or R-rated" under present standards or criteria
                  for such classification and rating.

         h.       Gambling.

         i.       The establishment or maintenance of a bawdy house, bar,
                  nightclub, or tavern.

         j.       Any other act or condition which shall be lewd, obscene, or
                  licentious.

         k.       Performance of abortions.

         l.       Mark, or drive nails, screw or drill into, the partitions,
                  woodwork or plaster or otherwise deface its premisses or any
                  part thereof.

         m.       Smoking shall not be permitted in or around any offices,
                  interior common corridors, restrooms, lobby areas, elevators,
                  stairwells, or building entrances.

         16. Landlord shall have the right to regulate parking throughout the
Project in a manner beneficial to the entire Project. Landlord shall have the
right to re-stripe parking stalls, lanes, and other areas as Landlord deems
reasonably necessary to control parking and access. Landlord may refuse to
permit any person who violates the rules to park in the parking lot, and any
violation of the rules shall subject the car to removal. No extended period
parking for campers, trailers, motor homes, emergency equipment, or other
nonstandard sized vehicles is permitted.

         17. Tenant shall not use the Project, Leased Premises, or parking
facilities for housing or sleeping without the written consent of the Landlord.

         18. Landlord shall in no case be liable for damages for any error with
regard to the admission to or exclusion from the Leased Premises of any person.
In the case of invasion, mob riot, public excitement, or other circumstances
rendering such action advisable in Landlord's opinion, Landlord reserves the
right to prevent access to the Leased Premises during the continuance of the
same by such action as Landlord may deem appropriate, including closing doors
and restricting access to public areas of the Project.



         19. Each Tenant shall see that appliances and utilities are shut off as
appropriate before Tenant or Tenant's employees leave the Leased Premises.
Tenant is required to prevent controllable waste or damage in all aspects of the
Leased Premises from any default or carelessness. All Tenants shall keep the
doors to the Project's corridors closed at all times, except for ingress and
egress, unless door is equipped with an approved magnetic door holder.

         20. No Tenant shall install any radio or television antenna, or
satellite dish, loudspeaker, or other device on the roof or exterior walls of
the Project without Landlord's written permission.

         21. Each Tenant shall store all its refuse or waste within its Leased
Premises and dispose of such refuse or waste only in accordance with Project
rules and all applicable local, state, and federal regulations and laws.

         22. Tenant is not allowed to disturb, solicit, or canvass any occupant
of the Project and shall cooperate to prevent same. Canvassing, soliciting,
distributing handbills or any other written material, or peddling in the Project
is prohibited.

         23. Tenant agrees to enforce and, as necessary, to acquaint all persons
doing business with Tenant with the Project's Rules and Regulations.

         24. The failure of Landlord to enforce any of the Rules and Regulations
against any other Tenant in the Project shall not be deemed a waiver of any of
such Rules and Regulations. Landlord shall not be liable to Tenant for violation
of any of the Rules and Regulations or the breach of any covenant or condition
in any lease by any other Tenant in the Project.

         25. Landlord shall control and operate the public portions of the
Project, and the public facilities, and heating and air conditioning, as well as
facilities furnished for the common use of Tenant. Such control and operation
shall be accomplished in a manner consistent with the best interests of the
tenants in general. Tenant shall not obstruct, alter or in any way impair the
effective operation of the heating and air conditioning, electrical, fire,
safety, or lighting systems, and Tenant shall not tamper with or change any of
the thermostats or temperature control valves in the Project except those that
are in Tenant's space and are provided for Tenant's use.

         26. Tenant shall not use or keep in the Leased Premises or in the
Project any kerosene, gasoline, or other inflammable or combustible fluid or
material, nor use any method or heating or air conditioning not acceptable to
Landlord.

         27. All damage done to the Leased Premises or the Project by the
installation or removal of any property of Tenant, or done by Tenant's property
while in the Leased Premises, shall be repaired at the expense of Tenant.

         28. Plumbing fixtures and appliances shall be used only for their
intended purposes, and Tenant shall not deposit any sweepings, rubbish, rags, or
other unsuitable substances therein. Damage resulting from misuse shall be paid
for by Tenant.

         29. Landlord shall not be responsible for any loss or theft or damage
to personal property in the Leased Premises or the Project from any cause
whatsoever, whether or not such loss, theft, or damage occurs when the Leased
Premises or other portions of the Project are locked against entry.

         30. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.

         31. In the event of any conflict between these Rules and Regulations
and any lease with Tenant, the provisions of the lease shall be controlling.

EX-21.1

                                                                    Exhibit 21.1

                            IMPCO TECHNOLOGIES, INC.

                          SUBSIDIARIES OF THE COMPANY


Name                                         Jurisdiction of Incorporation
- --------------------------------------       ---------------------------------

IMPCO Technologies, B.V.                     Holland

IMPCO Europe, B.V.                           Holland

IMPCO Technologies, Pty.                     Australia

Grupo I.M.P.C.O. Mexicano, S. de R.L.        Mexico
  de C.V.

IMPCO de Venezuela S. de R.L.                Venezuela

IMPCO Tech Japan K.K.                        Japan

EX-23.1

                                                                    EXHIBIT 23.1

               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

     We consent to the incorporation by reference in (a) the Registration
Statement (Form S-3, No. 33-56610) pertaining to shares of common stock of IMPCO
Technologies, Inc. and in the related Prospectus, (b) the Registration Statement
(Form S-8, No. 33-38649) pertaining to the 1989 Incentive Stock Option Plan of
IMPCO Technologies, Inc. and in the related Prospectus, (c) the Registration
Statement (Form S-8, No. 33-72008) pertaining to the 1991 Executive Stock Option
Plan of IMPCO Technologies, Inc. and in the related Prospectus, (d) the
Registration Statement (Form S-8, No. 33-37035) pertaining to the 1996 Incentive
Stock Option Plan of IMPCO Technologies, Inc., (e) the Registration Statement
(Form S-8, No. 33-62889) pertaining to the IMPCO Investment and Tax Savings
Plan, (f) the Registration Statement (Form S-8, No. 333-44085) pertaining to the
1997 Incentive Stock Option Plan of IMPCO Technologies, Inc. and in the related
Prospectus, (g) the Registration Statement (Form S-8, No. 333-71544) pertaining
to the 2000 Incentive Stock Option Plan of IMPCO Technologies, Inc. and in the
related Prospectus, (h) the Registration Statement (Form S-3, No. 333-82110)
pertaining to shares of common stock of IMPCO Technologies, Inc. and in the
related Prospectus, and (i) the Registration Statement (Form S-3, No. 333-88690)
pertaining to shares of common stock of IMPCO Technologies, Inc. and in the
related Prospectus of our report dated July 18, 2002, except for the 3rd
paragraph of Note 1 and Note 13 as to which the date is July 23, 2002 with
respect to the consolidated financial statements and financial statement
schedule of IMPCO Technologies, Inc. included in this Annual Report (Form 10-K)
for the year ended April 30, 2002.


                                               /s/ Ernst & Young LLP

Long Beach, California
July 25, 2002