JPE INC
8-K, 1999-06-08
MOTOR VEHICLE SUPPLIES & NEW PARTS
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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 8-K

                 Current Report Pursuant to Section 13 or 15(d)
                   of the Securities and Exchange Act of 1934



       Date of Report (Date of earliest event reported): February 8, 1999


                                    JPE, INC.
             (Exact name of registrant as specified in its charter)


                                    MICHIGAN
                 (State or Other Jurisdiction of Incorporation)


      0-22580                                            38-2958730
(Commission File No.)                         (IRS Employer Identification No.)


    775 Technology Drive, Suite 200
         Ann Arbor, Michigan                                    48108
(Address of Principal Executive Offices)                      (Zip Code)


                                 (734) 662-2323
              (Registrant's Telephone Number, Including Area Code)



================================================================================


<PAGE>


ITEM 1   CHANGES IN CONTROL OF REGISTRANT

In  accordance  with  the  terms of an  Investment  Agreement  (the  "Investment
Agreement")  dated April 28, 1999 among JPE, Inc. (the "Company"),  ASC Holdings
LLC, and Kojaian Holdings LLC, the Company issued  1,952,352.19  shares of First
Series  Preferred  Shares  on May  27,  1999  (the  "Closing  Date"),  in  equal
proportions  to ASC  Holdings LLC (50%) and Kojaian  Holdings LLC (50%),  for an
aggregate  purchase  price of  $16,413,274  payable in cash.  In  addition,  the
Investment  Agreement  provides  that the  shareholders  of record of JPE,  Inc.
common  stock on June 11,  1999 (the  "Record  Date")  are  entitled  to receive
warrants (the "Warrants") entitling the holder the right to purchase .075 shares
of First Series  Preferred  Shares of the Company for each share of common stock
held on the Record Date.  The Warrants will be distributed as a dividend to such
shareholders.  The Warrants  carry an initial  exercise price of $9.99 per First
Series Preferred Share,  subject to price  adjustments based on the Final Actual
EBITDA and the cost of  certain  environmental  remediation.  The  Warrants  are
exercisable  for the 90 day  period  following  the  providing  of notice by the
Company  to the  holders  thereof  of the  Final  Actual  EBITDA  after  the JPE
Determination (as defined in the Investment Agreement).

In addition,  pursuant to the Investment Agreement, on May 27, 1999 ASC Holdings
LLC and Kojaian  Holdings  LLC (in equal  proportions)  subscribed  and paid for
9,441,420 newly issued shares of common stock for an aggregate purchase price of
$1,986,726  payable in cash.  These newly issued  shares of common stock will be
distributed to ASC Holdings LLC and Kojaian Holdings LLC on June 12, 1999.

As a  precondition  to  consummation  of the above  transaction,  the  Company's
existing  bank  lenders  (the "Bank  Group")  agreed on May 27,  1999 to a $16.5
million  forgiveness of the Company's existing bank debt, under the terms of the
Company's   Forbearance   Agreement  dated  August  10,  1998,  as  amended.  In
consideration for the debt forgiveness and pursuant to the Investment Agreement,
the Company issued 20,650.115 shares of Preferred Stock to the Bank Group on May
27, 1999 for $1,000 of  consideration.  In  addition,  the  Company  granted the
existing bank lenders 77,437.937 Warrants (which Warrants contain the same terms
and conditions as granted to the  shareholders of common stock of the Company on
the Record Date).

The immediate effect of these transactions  transferred (a) approximately  47.5%
of  the  voting   securities  of  the  Company  to  Kojaian  Holdings  LLC,  (b)
approximately 47.5% of the voting securities of the Company to ASC Holdings LLC,
and (c)  approximately  1% of the voting  securities  of the Company to the Bank
Group. The remaining amount of the voting securities continues to be held by the
public  shareholders of the Company.  If all of the Warrants described above are
exercised, ASC Holdings LLC would own approximately 40% of the voting securities
of the Company,  Kojaian Holdings LLC would own  approximately 40% of the voting
securities of the Company,  the Bank Group would own  approximately  3.7% of the
voting  securities of the Company,  and the  shareholders  of record on June 11,
1999 (other than ASC Holdings LLC,  Kojaian Holdings LLC and the Bank Group) and
any other  public  shareholders  would  own  approximately  16.3% of the  voting
securities of the Company.

Pursuant  to the  terms of a  Shareholders  Agreement  dated as of May 27,  1999
between ASC Holdings  LLC and Kojaian  Holdings  LLC,  the parties,  among other
things, are to cooperate in the voting of their shares of the Company, including
regarding the  nomination  and election of members to the Board of Directors and
at shareholder meetings.  The Shareholders  Agreement also provides that neither
ASC  Holdings  LLC nor Kojaian  Holdings  LLC may sell their  securities  in the
Company  without  the prior  written  consent of the  other.  In  addition,  the
Shareholders  Agreement  provides that upon a deadlock or an impasse between the
parties or their  nominees to the Board of Directors  regarding a material issue
lasting  longer  than 90 days,  that the  parties  shall  sell to a third  party
purchaser  the Company or all or  substantially  all of its  assets,  subject to
certain  terms  and  conditions  (all  as  more  particularly   defined  in  the
Shareholders Agreement). Thus, each of ASC Holdings LLC and Kojaian Holdings LLC
currently  beneficially own  approximately  95% of the voting  securities of the
Company,  and after the exercise of all of the Warrants,  would beneficially own
approximately 80% of the voting securities of the Company.

The sources of funds for the  purchase of the common  stock and the First Series
Preferred  Stock (a) by ASC Holdings LLC was an affiliate  (Heritage  Newspaper,
Inc.)  pursuant to a one year,  non-interest  bearing  demand  loan,  and (b) by
Kojaian  Holdings  LLC were  personal  accounts of Mike  Kojaian and C.  Michael
Kojaian (the members of Kojaian Holdings LLC).

In connection with this transaction,  the reorganization  plans of the Company's
subsidiaries,  Plastic Trim,  Inc. and Starboard  Industries,  Inc.,  which were
confirmed by the Bankruptcy Court on April 16, 1999, became effective on May 27,
1999.  Certain  vendors  of these  subsidiaries  agreed to  accept  30% of their
pre-bankruptcy  account  balances  as a part of the  reorganization  plans.  The
interim  financing  provided to these  subsidiaries  by GMAC Business Credit was
satisfied in full (including prepayment penalties) as a condition to closing the
transaction.

The  Company  is now  operating  under  the  assumed  name of ASCET  INC,  which
represents  ASC  Exterior  Technologies.  New  financing  in the amount of $56.3
million was  arranged  with  Comerica  Bank to pay off the  indebtedness  of the
Company owed to the Bank Group (other than the debt forgiveness described above)
and provide for current  working capital needs.  The new financing  provides for
various  borrowing  and  interest  rate  options  based on prime or LIBOR rates.
Advances are subject to a borrowing limitation based on customer receivables and
inventory  levels  and the loan is secured by the  Company's  assets,  including
stock of the Company's subsidiaries. The new financing is a one year demand loan
and is jointly  guaranteed in full by ASC Holdings LLC and Kojaian  Holdings LLC
(including a pledge of the Company's stock owned by each of them).

In connection  with the  consummation  of the Investment  Agreement,  on May 27,
1999,  the existing  Directors of the Company  tendered their  resignations  and
Heinz C. Prechter,  Mike Kojaian, C. Michael Kojaian and David L. Treadwell were
elected  Directors  of the Company.  Richard R.  Chrysler,  President  and Chief
Executive  Officer,  will  continue  in that  capacity  pursuant  to a  two-year
Employment Agreement executed in connection with the Investment  Agreement.  Mr.
Treadwell  was also elected  Chairman of the Company and the Board of Directors.
James J. Fahrner,  Executive Vice President and Chief  Financial  Officer of the
Company,  resigned his officer positions  effective as of May 27, 1999, but will
remain in the employ of the Company through June 25, 1999.


ITEM 2   ACQUISITION AND DISPOSITION OF ASSETS

As a result of the transaction  described in Item 1 above,  ASC Holdings LLC and
Kojaian  Holdings LLC  acquired  control of the assets of the Company on May 27,
1999.  The  Company  intends  to  maintain  continued  use of the  assets in its
existing  businesses,  specifically the manufacture of automotive  exterior trim
parts and heavy duty truck aftermarket parts.


ITEM 7   FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS

The Financial  Statements  and Pro Forma  Financial  Information  of the Company
reflecting the transaction,  as more fully described in Items 1 and 2 above, are
not  filed  herewith  because  they are  currently  unavailable  to  Registrant.
Registrant  intends to file such Financial  Statements  and Pro Forma  Financial
Information under cover of an amendment to Form 8-K as soon as practicable,  but
not later than August 10, 1999.


<PAGE>


                                   SIGNATURES


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.


                                           JPE, INC.


Date:  June 8, 1999                        /s/  Karen A. Radtke
                                           ------------------------------------
                                           Karen A. Radtke
                                           Secretary and Treasurer


<PAGE>


                                 Exhibits Index


Exhibit
Number    Description
- -------   -----------

  4.1     Form of  Certificate  for Shares of Preferred  Stock,  filed with this
          report.

  4.2     Form of Preferred Stock Warrant issued to Bank Group,  filed with this
          report.

  4.3     Form of Preferred Stock Warrant to be issued to shareholders of record
          of JPE, Inc. Common Stock as of June 11, 1999, filed with this report.

 10.1     Investment  Agreement  dated  April 28, 1999 among ASC  Holdings  LLC,
          Kojaian  Holdings  LLC and JPE,  Inc.  incorporated  by  reference  to
          Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q for the
          quarter ended March 31, 1999.

 10.2     Tenth Amendment,  dated May 21, 1999, to Forbearance Agreement,  filed
          with this report.

 10.3     Letter  Agreement,  dated May 26, 1999, among Comerica Bank, as Agent,
          JPE, Inc. and its subsidiaries, filed with this report.

 10.4     Letter  Agreement,  dated May 27, 1999, among Comerica Bank, JPE, Inc.
          and its subsidiaries, filed with this report.

 10.5     Form of Promissory Note dated May 27, 1999 in the principal  amount of
          $20,000,000  executed by JPE,  Inc. and its  subsidiaries,  filed with
          this report.

 10.6     Form of Promissory Note dated May 27, 1999 in the principal  amount of
          $6,300,000 executed by JPE, Inc. and its subsidiaries, filed with this
          report.

 10.7     Form of Promissory Note dated May 27, 1999 in the principal  amount of
          $30,000,000  executed by JPE,  Inc. and its  subsidiaries,  filed with
          this report.

 10.8     Advance  Formula  Agreement,  dated May 27, 1999 between JPE, Inc. and
          its subsidiaries and Comerica Bank, filed with this report.

 10.9     Form of Security  Agreement  (All  Assets),  dated as of May 27, 1999,
          executed by JPE,  Inc. and each of its  subsidiaries,  filed with this
          report.

 10.10    Patent and  Trademark  Security  Agreement,  dated as of May 27, 1999,
          made by JPE, Inc. in favor of Comerica Bank, filed with this report.

 10.11    Security Agreement (Negotiable Collateral),  dated as of May 27, 1999,
          executed by each of ASC Holdings LLC,  Kojaian Holdings LLC, JPE, Inc.
          and its  wholly-owned  subsidiary,  SAC  Corporation,  filed with this
          report.

 10.12    Guaranty,  dated as of May 27,  1999,  executed by ASC  Holdings  LLC,
          Kojaian Holdings LLC,  API/JPE,  Inc. and SAC Corporation,  filed with
          this report.

 10.13    Letter  Agreement,  dated May 27, 1999, among Heinz C. Prechter,  Mike
          Kojaian and C. Michael Kojaian, filed with this report.

 10.14    Shareholders  Agreement,  dated May 27, 1999, between ASC Holdings LLC
          and Kojaian Holdings LLC, filed with this report.

 10.15    Employment Agreement,  dated May 27, 1999, between Richard R. Chrysler
          and JPE, Inc., filed with this report.

 10.16    Termination  Agreement  and Release of All  :Liability,  dated May 27,
          1999,  between  Richard R.  Chrysler  and JPE,  Inc.,  filed with this
          report.

 10.17    Termination  Agreement  and  Release of All  Liability,  dated May 27,
          1999,  between  Richard P.  Eidswick  and JPE,  Inc.,  filed with this
          report.

 10.18    Letter  Agreement  among  GMAC Business Crdit LLC,  Comerica  Bank and
          Plastic Trim, Inc.

 10.19    Letter  Agreement among  GMAC  Business Credit LLC, Comerica  Bank and
          Starboard Industries, Inc.





NO.                                                                       SHARES


                                    JPE, INC.


This Certifies that                                              is the owner of
                                   full paid and non-assessable PREFERRED Shares
      par value, of JPE, Inc., transferable only on the books of the Corporation
by the holder hereof in person or by duly authorized Attorney upon the surrender
of this Certificate properly endorsed.

     The designations,  preferences,  qualifications,  limitation, restrictions,
and  special or  relative  rights of the  Preferred  Shares  and Common  Shares,
respectively,  are set  forth on the back of this  certificate,  and the  holder
hereof,  by accepting this certificate  expressly assents to and is bound by all
of said provisions.

IN WITNESS  WHEREOF,  the said  Corporation  has caused this  Certificate  to be
signed by its duly  authorized  officers  and to be sealed  with the Seal of the
Corporation, this             day of              A.D. 19   .



- ---------------------------------            -----------------------------------
Karen A. Radtke, Secretary                   Richard R. Chrysler, President




FOR VALUE RECEIVED,      hereby sell, assign and transfer unto
                               Shares represented by the within Certificate, and
do hereby irrevocably constitute and appoint                            Attorney
to transfer the said Shares  on  the books of the  within named Corporation with
full power of substitution in the premises.

     Dated               19

          In presence of

     --------------------------              -------------------------



Except as provided by resolutions of the Board of Directors  dated May 17, 1999,
each share of the First Series Preferred Shares shall possess rights equal to 50
common  shares  of  JPE,  Inc.  Except  as  required  by the  Michigan  Business
Corporation  Act, the First Series  Preferred  Shares shall have no preferential
rights and the holders of First Series  Preferred Shares and common shares shall
vote together and not as separate classes.

The shares  represented by this  certificate  have not been registered under the
Securities Act of 1933, as amended,  the Michigan Uniform  Securities Act or the
securities  statutes  of any  other  State or  jurisdiction  (collectively,  the
"Securities Acts"). The shares are restricted securities and may not be pledged,
hypothecated,  sold or transferred  in the absence of an effective  registration
statement  for the shares  under the  Securities  Acts or an opinion of counsel,
satisfactory  to the  corporation,  that  registration is not required under the
Securities Acts.





NO. _____                                                  ____________ WARRANTS

         NEITHER  THE  WARRANTS  REPRESENTED  HEREBY  (THE  "WARRANTS")  NOR THE
SECURITIES WHICH MAY BE OBTAINED  PURSUANT TO THE EXERCISE OF SUCH WARRANTS HAVE
BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),  AND
THE SECURITIES MAY NOT BE CONVEYED, SOLD OR TRANSFERRED IN ANY MANNER WHATSOEVER
IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT; AND
UNLESS SUCH  EXEMPTION OR  REGISTRATION  IS  APPLICABLE,  ANY ATTEMPT TO SELL OR
TRANSFER SUCH SECURITIES  SHALL BE NULL AND VOID AB INITIO.  THE EXERCISE OF THE
WARRANTS  REPRESENTED  HEREBY ARE SUBJECT TO COMPLIANCE WITH APPLICABLE  FEDERAL
AND STATE SECURITIES LAWS.


                                    JPE, INC.


CUSIP 466230109

THIS CERTIFIES THAT,

(the  "Registered  Holder")  is the owner of the  number of  Warrants  specified
above.  Each  Warrant  initially  entitles  the  Registered  Holder to purchase,
subject  to the  terms and  conditions  set  forth in this  Warrant  Certificate
("Certificate") and the Investment Agreement (as hereinafter defined), one fully
paid and nonassessable  Preferred Share (as defined in the Investment Agreement)
of JPE,  Inc., a Michigan  corporation  ("JPE"),  at any time during the Warrant
Exercise Period (as defined in the Investment  Agreement) upon the  presentation
and  surrender of this  Certificate  with the  Subscription  Form on the reverse
hereof duly executed,  to the Secretary of JPE  accompanied by payment of $9.99,
subject to adjustment as provided in the  Investment  Agreement  (the  "Exercise
Price"),  in lawful  money of the  United  States of America in cash or by check
made  payable to JPE,  which  Preferred  Share  (along with all other  Preferred
Shares obtained through the exercise of Warrants by the Registered Holder) shall
be  represented  by a  certificate  delivered  by JPE  (at its  expense)  to the
Registered Holder in the name of the Registered Holder no later than twenty (20)
days after the end of the Warrant Exercise Period.

     This Certificate and each Warrant represented hereby are issued pursuant to
and are  subject  in all  respect to the terms and  conditions  set forth in the
Investment  Agreement (the "Investment  Agreement") dated April 28, 1999 between
JPE,  ASC  Holdings  LLC, a Michigan  limited  liability  company,  and  Kojaian
Holdings LLC, a Michigan limited liability company,  which Investment  Agreement
is on file  with the  Secretary  of JPE and a copy of which  may  obtained  upon
request by the Registered Holder thereto.

     In the  event  of  certain  contingencies  provided  for in the  Investment
Agreement,  the  Exercise  Price and the number of Preferred  Shares  subject to
purchase  upon the  exercise of each Warrant  represented  hereby are subject to
modification or adjustment.

     Each  Warrant  represented  hereby  is  exercisable  at the  option  of the
Registered  Holder  solely  during the Warrant  Exercise  Period,  which Warrant
Exercise Period shall end at 5:00 P.M. Detroit, Michigan Time on the last day of
the Warrant  Exercise  Period.  If such date shall in the State of Michigan be a
holiday  or a day on which  the banks are  authorized  to close,  then such date
shall be 5:00 P.M. (Detroit,  Michigan Time) the next following day which in the
State of  Michigan is not a holiday or a day on which  banks are  authorized  to
close. In the case of the exercise of less than all of the Warrants  represented
hereby,  JPE shall cancel this  Certificate  upon the surrender hereof and shall
execute and deliver a new Certificate or  Certificates of like tenor,  which the
Secretary of JPE shall countersign for the balance of such Warrants

     If JPE at any time shall, by subdivision,  combination or  reclassification
of  securities  or otherwise,  change any of the  securities  to which  purchase
rights  under  the  Warrants  exist  into  the  same or a  different  number  of
securities of any class or classes, this Certificate shall thereafter permit the
Registered  Holder to acquire such number and kind of  securities  as would have
been issuable as the result of such change with respect to the securities  which
were subject to the purchase rights under this Certificate  immediately prior to
such  subdivision,  combination,   reclassification  or  other  change.  If  the
Preferred Shares for which this Certificate is being exercised are subdivided or
combined into a greater or smaller number of shares, the Exercise Price shall be
proportionately  reduced  in case of  subdivision  of shares or  proportionately
increased in the case of combination of shares, in both cases by the ratio which
the total  number of shares of such class to be  outstanding  immediately  after
such  event  bears to the  total  number of  shares  of such  class  outstanding
immediately  prior to such event. No adjustment  shall be made on account of any
dividends or  distributions  except those payable in the securities to which the
purchase  rights under this  Certificate  exist.  If JPE  possesses a sufficient
number of authorized  but unissued  Common Shares (as defined in the  Investment
Agreement)  of JPE to convert  some or all of the  Preferred  Shares  which were
subject to the purchase rights under this  Certificate,  JPE may, at its option,
convert all or a portion of the  Preferred  Shares that may be  purchased  under
this  Certificate  to Common Shares;  provided that the Registered  Holder shall
receive the right to purchase fifty (50) Common Shares for each Preferred  Share
so converted and that the Exercise Price per Common Share shall be  one-fiftieth
(1/50) of the Exercise Price per Preferred  Share so converted.  In the event of
any adjustments to the Exercise Price or the number or types of securities to be
obtained  upon the exercise of the  Warrants,  JPE shall,  no less than ten (10)
days  prior  to the  beginning  of the  Warrant  Exercise  Period,  provide  the
Registered  Holder with notice of such events and the  calculation of the number
and type of securities that may be obtained upon exercise of the Warrants.

     JPE shall not be  obligated  to  deliver  any  securities  pursuant  to the
exercise of this Certificate unless a registration  statement under the Act with
respect to such securities is effective or an exemption thereunder is available.
JPE has agreed that it will effect a  registration  statement  under the Federal
securities  laws,  if  required  under the Act,  prior to the  beginning  of the
Warrant  Exercise  Period.  This  Certificate  shall  not  be  exercisable  by a
Registered  Holder in any State  where such  exercise  would be  unlawful.  This
Certificate is exchangeable  upon the surrender hereof by the Registered  Holder
to the  Secretary of JPE for a new  Certificate  or  Certificates  of like tenor
representing  an  equal  aggregate   number  of  Warrants,   each  of  such  new
Certificates to represent such number of Warrants as shall be designated by such
Registered  Holder  at the  time of such  surrender.  Upon due  presentment  and
payment of any tax or other charge  imposed in connection  therewith or incident
thereto,  for registration of transfer of this Certificate at such office, a new
Certificate or Certificates  representing an equal aggregate  number of Warrants
will  be  issued  to  the  transferee  in  exchange  therefor,  subject  to  the
limitations provided in the Investment Agreement.

     Prior to the exercise of any Warrant  represented  hereby,  the  Registered
Holder  with  respect to the  Warrants  shall not be entitled to any rights of a
shareholder  of JPE  solely  on  account  of the  Warrants,  including,  without
limitation,  the right to vote or to receive  dividends or other  distributions,
and shall not be  entitled  to  receive  any notice of any  proceedings  of JPE,
except as provided in the Investment Agreement.

     Prior to due presentment for registration of transfer  hereof,  JPE and the
Secretary of JPE may deem and treat the Registered  Holder as the absolute owner
hereof and of each Warrant represented hereby  (notwithstanding any notations of
ownership or writing hereon made by anyone other than a duly authorized  officer
of JPE)  for all  purposes  and  shall  not be  affected  by any  notice  to the
contrary, except as provided in the Investment Agreement.

     This Certificate  shall be governed by and construed in accordance with the
laws of the State of Michigan without giving effect to conflict of laws.

     This Certificate is not valid unless countersigned by the Secretary of JPE.

     IN WITNESS  WHEREOF,  the Company has caused  this  Certificate  to be duly
executed,  manually  or in  facsimile  by two of its  officers  thereunder  duly
authorized and a facsimile of its corporate seal to be imprinted thereon.


DATED:                                  JPE, INC.

                                        By
                                          ---------------------------------
                                          Richard R. Chrysler, President

                                        By
                                          ---------------------------------
                                          Karen A. Radtke, Secretary



                          FORM OF ELECTION TO PURCHASE

The undersigned hereby irrevocably elects to exercise the right,  represented by
this Certificate,  to purchase Preferred Shares of JPE (or such other securities
which are subject to exercise  under this  Certificate  at the time of exercise)
and  herewith  tenders in payment for such  securities  a certified or cashier's
check or  money  order  payable  to the  order of JPE,  Inc.  in the  amount  of
$_____________,  all in  accordance  with  the  terms  hereof.  The  undersigned
requests  that  certificates  for such  securities  be registered in the name of
________________________ whose address is  ______________________________.  This
form is null and void at 5:00 P.M.,  Eastern  Standard  Time, on the last day of
the Warrant Exercise Period.


                                        Signature


                                        (Signature  must  conform in all
                                        respects to the name of the holder
                                        holder as specified on the face of
                                        the Certificate.)



                                        -------------------------------------
                                        (Insert Social Security or Other
                                        Identifying Number of Holders)





NO. ____                                                         ______ WARRANTS

         THE WARRANTS  REPRESENTED HEREBY (THE "WARRANTS") HAVE BEEN DISTRIBUTED
TO THE HOLDER AS A  DIVIDEND  OF JPE,  INC.,  A  MICHIGAN  CORPORATION  ("JPE").
NEITHER THE WARRANTS NOR THE  SECURITIES  WHICH MAY BE OBTAINED  PURSUANT TO THE
EXERCISE OF SUCH WARRANTS HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS  AMENDED  (THE  "ACT"),  AND  THE  SECURITIES  MAY NOT BE  CONVEYED,  SOLD OR
TRANSFERRED IN ANY MANNER  WHATSOEVER IN THE ABSENCE OF SUCH  REGISTRATION OR AN
EXEMPTION  THEREFROM UNDER THE ACT; AND UNLESS SUCH EXEMPTION OR REGISTRATION IS
APPLICABLE,  ANY ATTEMPT TO SELL OR TRANSFER SUCH  SECURITIES  SHALL BE NULL AND
VOID AB INITIO.  THE EXERCISE OF THE WARRANTS  REPRESENTED HEREBY ARE SUBJECT TO
COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS.


                                    JPE, INC.


CUSIP 466230109

THIS CERTIFIES THAT,

(the  "Registered  Holder")  is the owner of the  number of  Warrants  specified
above.  Each  Warrant  initially  entitles  the  Registered  Holder to purchase,
subject  to the  terms and  conditions  set  forth in this  Warrant  Certificate
("Certificate") and the Investment Agreement (as hereinafter defined), one fully
paid and nonassessable  Preferred Share (as defined in the Investment Agreement)
of JPE,  Inc., a Michigan  corporation  ("JPE"),  at any time during the Warrant
Exercise Period (as defined in the Investment  Agreement) upon the  presentation
and  surrender of this  Certificate  with the  Subscription  Form on the reverse
hereof duly executed,  to the Secretary of JPE  accompanied by payment of $9.99,
subject to adjustment as provided in the  Investment  Agreement  (the  "Exercise
Price"),  in lawful  money of the  United  States of America in cash or by check
made  payable to JPE,  which  Preferred  Share  (along with all other  Preferred
Shares obtained through the exercise of Warrants by the Registered Holder) shall
be  represented  by a  certificate  delivered  by JPE  (at its  expense)  to the
Registered Holder in the name of the Registered Holder no later than twenty (20)
days after the end of the Warrant Exercise Period.

     This Certificate and each Warrant represented hereby are issued pursuant to
and are  subject  in all  respect to the terms and  conditions  set forth in the
Investment  Agreement (the "Investment  Agreement") dated April 28, 1999 between
JPE,  ASC  Holdings  LLC, a Michigan  limited  liability  company,  and  Kojaian
Holdings LLC., a Michigan limited liability company,  which Investment Agreement
is on file  with the  Secretary  of JPE and a copy of which  may  obtained  upon
request by the Registered Holder thereto.

     In the  event  of  certain  contingencies  provided  for in the  Investment
Agreement,  the  Exercise  Price and the number of Preferred  Shares  subject to
purchase  upon the  exercise of each Warrant  represented  hereby are subject to
modification or adjustment.

     Each  Warrant  represented  hereby  is  exercisable  at the  option  of the
Registered  Holder  solely  during the Warrant  Exercise  Period,  which Warrant
Exercise Period shall end at 5:00 P.M. Detroit, Michigan Time on the last day of
the Warrant  Exercise  Period.  If such date shall in the State of Michigan be a
holiday  or a day on which  the banks are  authorized  to close,  then such date
shall be 5:00 P.M. (Detroit,  Michigan Time) the next following day which in the
State of  Michigan is not a holiday or a day on which  banks are  authorized  to
close. In the case of the exercise of less than all of the Warrants  represented
hereby,  JPE shall cancel this  Certificate  upon the surrender hereof and shall
execute and deliver a new Certificate or  Certificates of like tenor,  which the
Secretary of JPE shall countersign for the balance of such Warrants

     If JPE at any time shall, by subdivision,  combination or  reclassification
of  securities  or otherwise,  change any of the  securities  to which  purchase
rights  under  the  Warrants  exist  into  the  same or a  different  number  of
securities of any class or classes, this Certificate shall thereafter permit the
Registered  Holder to acquire such number and kind of  securities  as would have
been issuable as the result of such change with respect to the securities  which
were subject to the purchase rights under this Certificate  immediately prior to
such  subdivision,  combination,   reclassification  or  other  change.  If  the
Preferred Shares for which this Certificate is being exercised are subdivided or
combined into a greater or smaller number of shares, the Exercise Price shall be
proportionately  reduced  in case of  subdivision  of shares or  proportionately
increased in the case of combination of shares, in both cases by the ratio which
the total  number of shares of such class to be  outstanding  immediately  after
such  event  bears to the  total  number of  shares  of such  class  outstanding
immediately  prior to such event. No adjustment  shall be made on account of any
dividends or  distributions  except those payable in the securities to which the
purchase  rights under this  Certificate  exist.  If JPE  possesses a sufficient
number of authorized  but unissued  Common Shares (as defined in the  Investment
Agreement)  of JPE to convert  some or all of the  Preferred  Shares  which were
subject to the purchase rights under this  Certificate,  JPE may, at its option,
convert all or a portion of the  Preferred  Shares that may be  purchased  under
this  Certificate  to Common Shares;  provided that the Registered  Holder shall
receive the right to purchase fifty (50) Common Shares for each Preferred  Share
so converted and that the Exercise Price per Common Share shall be  one-fiftieth
(1/50) of the Exercise Price per Preferred  Share so converted.  In the event of
any adjustments to the Exercise Price or the number or types of securities to be
obtained  upon the exercise of the  Warrants,  JPE shall,  no less than ten (10)
days  prior  to the  beginning  of the  Warrant  Exercise  Period,  provide  the
Registered  Holder with notice of such events and the  calculation of the number
and type of securities that may be obtained upon exercise of the Warrants.

     JPE shall not be  obligated  to  deliver  any  securities  pursuant  to the
exercise of this Certificate unless a registration  statement under the Act with
respect to such securities is effective or an exemption thereunder is available.
JPE has agreed that it will effect a  registration  statement  under the Federal
securities  laws,  if  required  under the Act,  prior to the  beginning  of the
Warrant  Exercise  Period.  This  Certificate  shall  not  be  exercisable  by a
Registered Holder in any State where such exercise would be unlawful.

     This  Certificate  is  exchangeable   upon  the  surrender  hereof  by  the
Registered  Holder to the Secretary of JPE for a new Certificate or Certificates
of like tenor  representing an equal aggregate number of Warrants,  each of such
new  Certificates to represent such number of Warrants as shall be designated by
such Registered  Holder at the time of such surrender.  Upon due presentment and
payment of any tax or other charge  imposed in connection  therewith or incident
thereto,  for registration of transfer of this Certificate at such office, a new
Certificate or Certificates  representing an equal aggregate  number of Warrants
will  be  issued  to  the  transferee  in  exchange  therefor,  subject  to  the
limitations provided in the Investment Agreement.

     Prior to the exercise of any Warrant  represented  hereby,  the  Registered
Holder  with  respect to the  Warrants  shall not be entitled to any rights of a
shareholder  of JPE  solely  on  account  of the  Warrants,  including,  without
limitation,  the right to vote or to receive  dividends or other  distributions,
and shall not be  entitled  to  receive  any notice of any  proceedings  of JPE,
except as provided in the Investment Agreement.

     Prior to due presentment for registration of transfer  hereof,  JPE and the
Secretary of JPE may deem and treat the Registered  Holder as the absolute owner
hereof and of each Warrant represented hereby  (notwithstanding any notations of
ownership or writing hereon made by anyone other than a duly authorized  officer
of JPE)  for all  purposes  and  shall  not be  affected  by any  notice  to the
contrary, except as provided in the Investment Agreement.

     This Certificate  shall be governed by and construed in accordance with the
laws of the State of Michigan without giving effect to conflict of laws.

     This Certificate is not valid unless countersigned by the Secretary of JPE.

     IN WITNESS  WHEREOF,  the Company has caused  this  Certificate  to be duly
executed,  manually  or in  facsimile  by two of its  officers  thereunder  duly
authorized and a facsimile of its corporate seal to be imprinted thereon.

DATED:                          JPE, INC.

                                By
                                  --------------------------------------
                                   Richard R. Chrysler, President

                                By
                                  --------------------------------------
                                   Karen A. Radtke, Secretary



                          FORM OF ELECTION TO PURCHASE

The undersigned hereby irrevocably elects to exercise the right,  represented by
this Certificate,  to purchase Preferred Shares of JPE (or such other securities
which are subject to exercise  under this  Certificate  at the time of exercise)
and  herewith  tenders in payment for such  securities  a certified or cashier's
check or  money  order  payable  to the  order of JPE,  Inc.  in the  amount  of
$_____________,  all in  accordance  with  the  terms  hereof.  The  undersigned
requests  that  certificates  for such  securities  be registered in the name of
________________________ whose address is  ______________________________.  This
form is null and void at 5:00 P.M.,  Eastern  Standard  Time, on the last day of
the Warrant Exercise Period.

                                Signature
                                         -------------------------------

                                (Signature must conform in all respects to
                                the name of the holder as specified on the
                                face of the Certificate.)


                                ----------------------------------------
                                (Insert Social Security or Other
                                Identifying Number of Holders)





                                  May 21, 1999


JPE, Inc.
775 Technology Drive
Suite 200
Ann Arbor, Michigan 48108
Attention:   Messrs. Richard P. Eidswick, Richard Chrysler and James J. Fahrner

RE:  FORBEARANCE  AGREEMENT  AMONG  COMERICA  BANK,  NBD BANK,  NATIONAL BANK OF
     CANADA,  HARRIS  TRUST  AND  SAVINGS  BANK,  AND  BANK  ONE,  DAYTON,  N.A.
     (COLLECTIVELY,  THE  "BANKS"),  COMERICA  BANK,  AS  AGENT  FOR  THE  BANKS
     ("AGENT"),  JPE, INC.  ("COMPANY")  AND API/JPE,  INC.  (FORMERLY  KNOWN AS
     ALLPARTS,   INCORPORATED)   ("API"),   DAYTON  PARTS,  INC.  ("DPI"),   SAC
     CORPORATION,  STARBOARD INDUSTRIES,  INC. ("SBI"),  INDUSTRIAL & AUTOMOTIVE
     FASTENERS, INC. ("IAF"), PLASTIC TRIM, INC. ("PTI"), BRAKE, AXLE AND TANDEM
     COMPANY CANADA INC. AND JPE FINISHING,  INC.  (COLLECTIVELY,  "GUARANTORS")
     DATED AUGUST 10, 1998,  AND AMENDED BY A FIRST  AMENDMENT  DATED AUGUST 31,
     1998, A SECOND  AMENDMENT  DATED SEPTEMBER 4, 1998, A THIRD AMENDMENT DATED
     SEPTEMBER  16,  1998,  A FOURTH  AMENDMENT  DATED  OCTOBER 1, 1998, A FIFTH
     AMENDMENT DATED DECEMBER 1, 1998, A SIXTH AMENDMENT DATED MARCH 26, 1999, A
     SEVENTH  AMENDMENT  DATED APRIL 14, 1999, AN EIGHTH  AMENDMENT DATED MAY 3,
     1999, AND A NINTH AMENDMENT DATED MAY 7, 1999 (AS AMENDED, THE "FORBEARANCE
     AGREEMENT")

Dear Messrs. Eidswick, Chrysler and Fahrner:

Company and Guarantors have requested that Banks amend the Forbearance Agreement
to amend the Overformula Amount.

Subject to written  acceptance by Company and Guarantors of the following  terms
and conditions,  Agent and Banks are willing to amend the Forbearance Agreement,
as follows:

1.   All  capitalized   terms  not  defined  in  this  tenth  amendment  ("Tenth
     Amendment") to the Forbearance  Agreement shall have the meanings described
     in the Forbearance Agreement and/or the Loan Documents.

2.   Except as  modified  by this  Tenth  Amendment,  the  Indebtedness  and the
     financing  arrangements  among Agent,  Banks,  Company and Guarantors shall
     continue to be  governed  by the  covenants,  terms and  conditions  of the
     Forbearance  Agreement  and the Loan  Documents,  which  are  ratified  and
     confirmed.  The liens and  security  interests  granted  to Agent and Banks
     under the Loan  Documents and the  Forbearance  Agreement are also ratified
     and  confirmed  by  Company  and the  undersigned  Guarantors.  This  Tenth
     Amendment  shall be binding  upon and shall  inure to the benefit of Agent,
     Banks,  Company  and  the  undersigned  Guarantors,  and  their  respective
     successors and assigns.

3.   Banks agree that the Overformula  Amount for May 24-27, 1999 is adjusted as
     follows:

                   Date                         Overformula Amount
                   ----                         ------------------

                  May 24                           $37,986,113
                  May 25                            38,260,863
                  May 26                            38,439,613
                  May 27                            38,571,113

     Agent in it sole  discretion  may allow  Company up to two  business  days'
     grace in applying reductions in the Overformula Amount scheduled above. For
     example, Agent may in its sole discretion delay imposing the stepdown shown
     on May 24 until May 26.

4.   Company and Guarantors  represent  that this Tenth  Amendment has been duly
     authorized by each corporation's Board of Directors.  Attached as Exhibit A
     is a certified resolution and a certificate of incumbency for each.

5.   This Tenth  Amendment  is not a waiver by Banks of any  defaults  under the
     Forbearance Agreement and/or the Loan Documents.

6.   Company and the undersigned  Guarantors  hereby  represent and warrant that
     (a) execution,  delivery and performance of this Tenth Amendment are not in
     contravention of law or the terms of any agreement by which they are bound,
     and do not  require  the  consent or  approval  of any  governmental  body,
     agency, or authority, and this Tenth Amendment will be valid and binding in
     accordance  with  its  terms;  (b)  the  continuing   representations   and
     warranties  of Company  and the  undersigned  Guarantors  set forth in Loan
     Documents  are true and  correct on and as of the date hereof with the same
     force  and  effect  as  made on and as of the  date  hereof  other  than as
     previously  specified  in writing  to Agent and Banks;  and (c) no event of
     default,  or  condition  or event  which,  with the giving of notice or the
     running of time,  or both,  would  constitute an event of default under the
     Forbearance Agreement, has occurred and is continuing as of the date hereof
     other than as previously specified in writing to Agent and Banks.

7.   COMPANY, THE UNDERSIGNED GUARANTORS,  AGENT AND BANKS ACKNOWLEDGE AND AGREE
     THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE
     WAIVED.  EACH PARTY,  AFTER  CONSULTING  (OR HAVING HAD THE  OPPORTUNITY TO
     CONSULT) WITH COUNSEL OF THEIR CHOICE,  KNOWINGLY AND VOLUNTARILY,  AND FOR
     THEIR  MUTUAL  BENEFIT  WAIVES  ANY  RIGHT TO TRIAL BY JURY IN THE EVENT OF
     LITIGATION  REGARDING  THE  PERFORMANCE  OR  ENFORCEMENT  OF, OR IN ANY WAY
     RELATED TO,  THIS TENTH  AMENDMENT,  THE  FORBEARANCE  AGREEMENT,  THE LOAN
     DOCUMENTS OR THE INDEBTEDNESS.

8.   COMPANY AND THE UNDERSIGNED GUARANTORS,  IN EVERY CAPACITY,  INCLUDING, BUT
     NOT LIMITED TO, AS SHAREHOLDERS,  PARTNERS, OFFICERS, DIRECTORS,  INVESTORS
     AND/OR CREDITORS OF COMPANY AND/OR GUARANTORS,  OR ANY ONE OR MORE OF THEM,
     HEREBY  WAIVE,  DISCHARGE  AND  FOREVER  RELEASE  AGENT,  BANKS,  AND THEIR
     EMPLOYEES, OFFICERS, DIRECTORS, ATTORNEYS,  STOCKHOLDERS AND SUCCESSORS AND
     ASSIGNS,  FROM  AND OF ANY AND ALL  CLAIMS,  CAUSES  OF  ACTION,  DEFENSES,
     COUNTERCLAIMS OR OFFSETS AND/OR  ALLEGATIONS  COMPANY AND/OR GUARANTORS MAY
     HAVE, OR MAY HAVE MADE, OR ARE BASED ON FACTS OR CIRCUMSTANCES  ARISING, AT
     ANY TIME UP THROUGH AND INCLUDING THE DATE OF THIS TENTH AMENDMENT, WHETHER
     KNOWN OR UNKNOWN,  AGAINST  ANY OR ALL OF AGENT,  BANKS,  THEIR  EMPLOYEES,
     OFFICERS, DIRECTORS, ATTORNEYS, STOCKHOLDERS AND SUCCESSORS AND ASSIGNS.

Very truly yours,

COMERICA BANK, Agent

By:   /s/ Cynthia B. Jones
      --------------------------
      Cynthia B. Jones
Its:  Vice President
Special Assets Group
P.O. Box 75000
Detroit, Michigan 48275-3205
(313) 222-3780
(313) 222-5706 Fax

COMERICA BANK                                 NBD BANK

By:   /s/ Cynthia B. Jones                    By:   /s/ Scott E. Roman
      --------------------------                    --------------------------
                                                    As Agent for NBD Bank
Its:  Vice President                          Its:  Vice President


NATIONAL BANK OF CANADA                       HARRIS TRUST and SAVINGS BANK

By:   /s/ Loriann Curnyn                      By:   /s/ Deana Miller
      --------------------------                    --------------------------
Its:  Group Vice President                    Its:  Sr. Vice President

By:   /s/
      --------------------------
Its:  Vice President


BANK ONE, DAYTON, N.A.

By:   /s/ Scott E. Roman
      --------------------------
Its:  Vice President



ACKNOWLEDGED AND AGREED:

JPE, INC.                                     API/JPE, INC. (formerly known as
                                              ALLPARTS, INCORPORATED)

By:   /s/ Richard R. Chrysler                 By:   /s/ Richard R. Chrysler
      --------------------------                    --------------------------
Its:  President & CEO                         Its:  President
Date: 5/25/99                                 Date: 5/25/99


BRAKE, AXLE AND TANDEM                        DAYTON PARTS, INC.
COMPANY CANADA INC.

By:   /s/ Richard R. Chrysler                 By:   /s/ Richard R. Chrysler
      --------------------------                    --------------------------
Its:  Chief Executive Officer                 Its:  Chief Executive Officer
Date: 5/25/99                                 Date: 5/25/99


JPE FINISHING, INC.                           SAC CORPORATION

By:   /s/ Richard R. Chrysler                 By:   /s/ Richard R. Chrysler
      --------------------------                    --------------------------
Its:  President                               Its:  President
Date: 5/25/99                                 Date: 5/25/99





May 26, 1999


Richard R. Chrysler, President
JPE, Inc.
775 Technology Drive, Suite 200
Ann Arbor, Michigan 48108

RE:  FORBEARANCE  AGREEMENT  AMONG  COMERICA  BANK,  NBD BANK,  NATIONAL BANK OF
     CANADA,  HARRIS  TRUST  AND  SAVINGS  BANK,  AND  BANK  ONE,  DAYTON,  N.A.
     (COLLECTIVELY,  THE  "BANKS"),  COMERICA  BANK,  AS  AGENT  FOR  THE  BANKS
     ("AGENT"),  JPE, INC.  ("COMPANY")  AND API/JPE,  INC.  (FORMERLY  KNOWN AS
     ALLPARTS,   INCORPORATED)   ("API"),   DAYTON  PARTS,  INC.  ("DPI"),   SAC
     CORPORATION,  STARBOARD INDUSTRIES,  INC. ("SBI"),  INDUSTRIAL & AUTOMOTIVE
     FASTENERS, INC. ("IAF"), PLASTIC TRIM, INC. ("PTI"), BRAKE, AXLE AND TANDEM
     COMPANY CANADA INC. AND JPE FINISHING,  INC.  (COLLECTIVELY,  "GUARANTORS")
     DATED AUGUST 10, 1998,  AND AMENDED BY A FIRST  AMENDMENT  DATED AUGUST 31,
     1998, A SECOND  AMENDMENT  DATED SEPTEMBER 4, 1998, A THIRD AMENDMENT DATED
     SEPTEMBER  16,  1998,  A FOURTH  AMENDMENT  DATED  OCTOBER 1, 1998, A FIFTH
     AMENDMENT DATED DECEMBER 1, 1998, A SIXTH AMENDMENT DATED MARCH 26, 1999, A
     SEVENTH  AMENDMENT  DATED APRIL 14, 1999, AN EIGHTH  AMENDMENT DATED MAY 3,
     1999, A NINTH  AMENDMENT DATED MAY 7, 1999, AND A TENTH AMENDMENT DATED MAY
     21, 1999 (AS AMENDED, THE "FORBEARANCE AGREEMENT")

Dear Mr. Chrysler.

All capitalized terms are defined in the Forbearance Agreement.

This letter acknowledges your request for a payoff balance as of May 27, 1999 of
the  portion of the  Company's  Liabilities  to the Banks  consisting  of direct
indebtedness.  As more particularly described below, upon the condition that the
Agent  receives  (1) an  executed  original  of this  letter  from  Company  and
Guarantors;  and (2) wire  transfer  or  transfers  in the  amount of the Payoff
Amount in accordance  with the  instructions  set forth below,  then this letter
constitutes  Agent's  agreement  to  prepare,  execute  and  deliver  to Company
discharges of mortgages and UCC  termination  statements  terminating  all liens
granted to Agent by Company  and  Guarantors  to secure  the  Liabilities.  (For
convenience,  the UCC  termination  statements  and the mortgage  discharges are
identified collectively as the "Discharges").

It is a condition  precedent to Agent's  obligation  hereunder  that an executed
facsimile  copy of this letter,  with the original to follow by mail, and a wire
transfer  in the  aggregate  amount of the Payoff  Amount be  received by Agent.
Company  acknowledges  that  Agent  will  not  discharge  any  of its  liens  or
encumbrances until all such events have occurred.

A.   The direct  indebtedness as of May27, 1999, assuming no activity on May 27,
     1999, will be $66,463,771.22. This amount consists of the following:

                              Principal          Interest             Total
                              ---------          --------             -----

     Revolving Credit       $65,554,194.34      $464,117.33      $66,018,311.67

     Swing Line                 415,776.68         5,364.24          421,140.92

     Facility Fee                24,318.63              ---           24,318.63
                                                                 --------------

     TOTAL                                                       $66,463,771.22


B.   Costs and Expenses

     Reimbursement of legal expenses
     through May 25, 1999                       $  7,428.68

     Reserve                                       5,000.00
                                                -----------
                                                                      12,428.68
                                                                 --------------

     GRAND TOTAL                                                 $66,476,199.90

The "Payoff  Amount" is  $49,988,170.90  which is the amount of the  Liabilities
described  above,  less  $1,000  for  the  preferred  stock  and a  discount  of
$16,487,029.

The Payoff Amount must be received by Agent in the form of a wire  transfer,  or
intrabank  transfer,  from Comerica Bank to Agent on or before 2:00 p.m. EDST on
the date of closing,  which is  scheduled  for May 27, 1999.  The wire  transfer
should be directed as follows:

                  Comerica Bank
                  ABA No.
                  Account No.
                  Attn:
                  Reference Payoff for JPE, Inc.

Comerica Bank maintains various controlled  disbursement accounts and lock boxes
for the  benefit of Company  and  Guarantors  and is willing to  maintain  them,
subject to reaching  agreements and receiving  documentation for the maintenance
of those accounts and lock boxes  satisfactory to Comerica Bank.  Also,  Company
maintains  general  accounts at Comerica which accrue fees,  service charges and
other charges (collectively, the "Charges").

The financing arrangement with Company is such that the above payoff balance may
not represent all amounts  owing to Banks  because of  adjustments  for returned
items, insufficient funds checks, partial credits,  provisional credits and like
items taken into  consideration  in calculating  the payoff  (collectively,  the
"Adjustments"). Until Company closes its accounts with Comerica, these fees will
accrue.  Moreover,  additional legal fees and expenses (the "Legal Fees") may be
incurred in connection therewith.  We have made a good faith attempt to identify
the full amount of the Liabilities, including all Adjustments, Charges and Legal
Fees and other expenses as of the date hereof (other than Charges payable in the
ordinary  course of  business),  and have  included  such  amounts in the Payoff
Amount,  but if these amounts are not accurate,  Company and  Guarantors  remain
liable  and must pay the full  amount of all  Liabilities  due Agent and  Banks.
Company and Guarantors agree that any of these Adjustments, fees and Charges may
be charged to any account  maintained  by Company or  Guarantors  with  Comerica
Bank.

Because of the  possibility  of  Adjustments,  Company and  Guarantors  herewith
indemnity  Agent  and  Banks  from any and all  losses,  damages,  deficiencies,
liabilities,  and expenses relating to or caused by any Adjustments,  and agrees
to pay, and hold Agent and Banks harmless, with respect to all Adjustments.

In  consideration  of Agent  delivering the  Discharges,  Company and Guarantors
accept the  responsibility  and  expenses  for filing  the  Discharges  with all
applicable filing offices.

Nothing in this letter  releases  Company and Guarantors from any Liabilities to
Agent or the Banks  arising under any term or provision of any loan and security
document  among the  Company  and Agent and  Banks,  but none of the  collateral
granted  to Agent  or the  Banks  by  Company  or  Guarantors  secures  any such
Liabilities.

The facsimile or other  electronically  transmitted copy of this letter is to be
treated the same as an originally executed copy of this letter.

                                    INDEMNITY

The Company and Guarantors  acknowledge  and agree that it shall pay immediately
on demand any and all costs and expenses of the Agent and Banks, including,  but
not limited  to, all counsel  fees of the Agent and Banks in relation to defense
of Claims (as defined  below) by any person  against the Agent and Banks arising
from or related to the business  relationship  among the Agent and Banks and the
Company and  Guarantors  or any  affiliates of the Company and  Guarantors.  The
Company and  Guarantors'  agreement to be  responsible  for the Agent and Banks'
attorneys'  fees and costs  applies  regardless  of whether  the Agent and Banks
prevail in whole or in part in any action, proceeding, litigation, or otherwise,
and  regardless  of the nature of any action or  litigation  or the  theories or
bases of recovery or defense.  The Company and Guarantors agree to indemnify the
Agent and Banks for all  Claims (as  defined  below)  which may be  imposed  on,
incurred  by, or  asserted  against the Agent and Banks in  connection  with the
Transaction (as defined below), or the business relationship among the Agent and
Banks,  on the one hand, and the Company and Guarantors or any affiliates of the
Company and  Guarantors  on the other hand.  "Claims"  means any demand,  claim,
action or cause of  action,  damage,  liability,  loss,  cost,  debt,  expenses,
obligation, tax, assessment,  charge, lawsuit, contract, agreement,  undertaking
or deficiency,  of any kind or nature, whether known or unknown,  fixed, actual,
accrued  or  contingent,   liquidated  or  unliquidated   (including   interest,
penalties,  attorneys' fees and other costs and expenses incident to proceedings
or investigations  relating to any of the foregoing or the defense of any of the
foregoing),  whether or not litigation has commenced, arising from or related to
the Transaction (as defined below) or the business  relationship among the Agent
and Banks and the Company and  Guarantors  or any  affiliates of the Company and
Guarantors  only.  "Transaction"  means  the  transactions  contemplated  by the
Investment  Agreement  dated  April 28,  1999 among ASC  Holdings  LLC,  Kojaian
Holdings LLC and JPE, Inc.

                                     RELEASE

AS FURTHER CONSIDERATION FOR THE AGREEMENTS AND UNDERSTANDINGS  HEREIN,  COMPANY
AND EAC GUARANTOR HEREBY RELEASES AGENT AND BANKS AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AGENS, ATTORNEYS, AFFILIATES, SUBSIDIARIES, SUCCESSORS AND
ASSIGNS FROM ANY LIABILITY, CLAIM, RIGHT OR CAUSE OF ACTION WHICH NOW EXISTS, OR
HEREAFTER ARISES,  WHETHER KNOWN OR UNKNOWN,  ARISING FROM OR IN ANY WAY RELATED
TO  FACTS  IN  EXISTENCE  AS OF THE  DATE  HEREOF.  BY WAY OF  EXAMPLE  AND  NOT
LIMITATION,  THE  FOREGOING  INCLUDES  ANY CLAIMS IN ANY WAY  RELATED TO ACTIONS
TAKEN OR OMITTED TO BE TAKEN BY AGENT OR THE BANKS UNDER THE LOAN DOCUMENTS WITH
THE  COMPANY,  THE BUSINESS  RELATIONSHIP  WITH AGENT OR THE BANKS AND ALL OTHER
LIABILITIES  OF ANY NATURE OR  UNDERSTANDINGS  (ACTUAL OR ALLEGED),  ANY BANKING
RELATIONSHIPS THAT THE COMPANY HAS OR MAY HAVE HAD WITH COMERICA AT ANY TIME AND
FOR ANY REASON  INCLUDING,  BUT NOT  LIMITED  TO,  DEMAND  DEPOSIT  ACCOUNTS  OR
OTHERWISE.

This letter  agreement may be executed in  counterparts,  each of which shall be
deemed to constitute an original document.  If you have any questions concerning
this matter, please feel free to contact me.

Very truly yours,

COMERICA BANK, Agent

By:  /s/ Cynthia B. Jones
     ----------------------------
Its: Vice President


ACKNOWLEDGED AND AGREED:


JPE, INC.                                     API/JPE, INC. (formerly known as
                                              ALLPARTS, INCORPORATED)

By:  /s/ Richard r. Chrysler                  By:  /s/ Richard R. Chrysler
     ----------------------------                  ---------------------------
Its: President & CEO                          Its: President
Date:                                         Date:


BRAKE, AXLE AND TANDEM                        DAYTON PARTS, INC.
COMPANY CANADA INC.

By:  /s/ Richard R. Chrysler                  By:  /s/ Richard R. Chrysler
     ----------------------------                  ---------------------------
Its: Chief Executive Officer                  Its: Chief Executive Officer
Date:                                         Date:


JPE FINISHING, INC.                           SAC CORPORATION

By:  /s/ Richard R. Chrysler                  By:  /s/ Richard R. Chrysler
     ----------------------------                  ---------------------------
Its: President                                Its: President
Date:                                         Date:





                                  May 27, 1999


The Borrowers listed
in attached Schedule 1
775 Technology Drive
Suite 200
Ann Arbor, Michigan 48108

Attention: Mr. Richard R. Chrysler

Dear Mr. Chrysler:

     This letter  constitutes  an  agreement  by and between  COMERICA  BANK,  a
Michigan banking corporation (herein called "Bank"), and the borrowers listed in
attached  Schedule 1 (collectively,  "Borrowers" and  individually  "Borrower"),
pertaining  to certain  loans and other  credit  which Bank has made or may from
time to time hereafter make available to Borrowers.

     In  consideration of all present and future loans and credit made available
by Bank to Borrowers,  and all present and future  liabilities,  obligations and
indebtedness of Borrowers to Bank,  howsoever  created,  evidenced,  existing or
arising, whether direct or indirect,  absolute or contingent,  joint or several,
now  or  hereafter  existing  or  arising,  or  due  or to  become  due  (herein
collectively called the "Liabilities"), Borrowers covenant and agree as follows:

     1. Each loan or other  extension  of credit made by Bank to or otherwise in
favor of Borrowers  shall be  evidenced  by and subject to a promissory  note or
other agreement or evidence of indebtedness  acceptable to Bank and executed and
delivered by Borrowers to Bank (any and all notes,  instruments,  documents  and
agreements at any time evidencing,  governing, securing or otherwise relating to
any of the Liabilities are herein collectively called the "Loan Documents").

     2. So long as Bank shall have any commitment or obligation, if any, to make
or extend loans or other credit to or in favor of Borrowers, and thereafter,  so
long as any Liabilities remain unpaid and/or outstanding, Borrowers covenant and
agree that they shall:

     (a)  Furnish,  or cause to be  furnished,  to Bank,  (i) within one hundred
          twenty  (120)  days  after  and as of the end of each  fiscal  year of
          Borrowers, audited consolidated and consolidating financial statements
          of JPE, Inc. and its consolidated subsidiaries, in each case certified
          by independent certified public accountants satisfactory to Bank; (ii)
          within  forty  five  (45) days  after and as of the end of each  month
          unaudited consolidated and consolidating  financial statements of JPE,
          Inc., and its consolidated  subsidiaries,  as of the end of such month
          and for the portion of the fiscal year of Borrowers  then  ending,  in
          each case,  certified  by a duly  authorized  officer of  Borrowers on
          behalf of  Borrowers;  (iii) on or before  December  31 of each  year,
          annual  financial  projections for Borrowers for the next fiscal year;
          and (iv)  within  twenty  (20)  days  after  and as of the end of each
          month, an accounts  receivable  aging,  an accounts  payable aging, an
          inventory report, and a borrowing base report; and (v) promptly,  such
          other information and reports as Bank may reasonably request from time
          to time or as may be required under any of the Loan Documents.  All of
          such  financial  statements  and other reports and  information  to be
          furnished  to Bank  hereunder,  to the  extent  applicable,  should be
          prepared in accordance with generally accepted  accounting  principles
          consistently  applied ("GAAP"),  and all such financial statements and
          other  information and reports to be furnished to Bank pursuant to the
          provisions hereof shall be in form and detail reasonably  satisfactory
          to Bank.

     (b)  Promptly inform Bank of the occurrence of any event of default, or any
          condition or event which,  with the giving of notice or the passage of
          time, or both,  would  constitute an event of default under any of the
          Liabilities  or Loan  Documents,  or of any  condition  or event which
          would  reasonably be expected to have a material  adverse  effect upon
          any Borrower's business, properties, financial condition or ability to
          comply with its  obligations  hereunder or otherwise in respect of any
          of the Liabilities.

     (c)  Maintain all of their principal bank accounts with the Bank.

     (d)  Pay to Bank  quarterly  in  arrears a  facility  fee with  respect  to
          Borrowers'  working capital line of credit in an amount equal to three
          eighths of one percent (3/8%) per annum of the average daily amount by
          which $30,000,000  exceeds advances and letters of credit  outstanding
          under the working capital line of credit.  The fee shall be calculated
          on the  basis of a year of 360  days,  for the  actual  number of days
          elapsed.

     3. Any failure by Borrowers to fully observe,  perform or otherwise  comply
with any of the covenants or agreements of Borrowers set forth in this Agreement
shall  constitute an event of default under the  Liabilities,  and Bank shall be
entitled to exercise any and all rights and  remedies  available to or otherwise
conferred  upon  Bank as a  result  thereof,  whether  by  agreement,  by law or
otherwise.

     4. Borrowers hereby  acknowledge and agree that Borrowers'  compliance with
the terms and  conditions  set forth  herein,  and the absence of any default by
Borrowers in the observance or performance of any of the covenants or agreements
of Borrowers hereunder, shall not in any way limit, restrict or otherwise affect
or impair  Bank's  right or ability to deem itself to be insecure or make demand
for payment of any or all of the  Liabilities  which may be on a demand basis at
any time in Bank's  sole and  absolute  discretion,  with or  without  reason or
cause,  and the existence of any default  hereunder shall not be the sole reason
or basis for  enabling  Bank to deem  itself to be  insecure  or make demand for
payment of all or any part of such Liabilities.

     5.  Borrowers  shall pay to Bank on the date of  execution  of this  letter
agreement a closing fee equal to $563,000. Such fee shall be deemed fully earned
upon execution of this letter agreement and shall be  non-refundable;  provided,
however,  if (a) the Dayton Parts,  Inc.  operation is sold on or before May 27,
2000, and the credit  facilities have not been terminated  before such time (and
no  demand  for  payment  thereunder  has been  made and no  default  thereunder
occurred and is continuing),  or (b) Borrowers obtain cash equity  contributions
after the date of execution of this letter  agreement,  then upon payment to the
Bank of the proceeds of the sale of the Dayton  Parts  operation or the proceeds
of such cash equity contributions,  Bank shall refund to the Borrowers an amount
equal  to one  percent  (1%) of the  amount  of such  net  proceeds  applied  to
permanent  reduction of the Liabilities,  multiplied by a fraction the numerator
of which is the  number of days  from the date of  application  of the  proceeds
until May 27, 2000 and the denominator of which is 365.

     6. No forbearance on the part of the Bank in enforcing any of its rights or
remedies  under this  Agreement  or any other Loan  Document,  nor any  renewal,
extension or rearrangement of any payment or covenant to be made or performed by
Borrowers  hereunder or any such other Loan Document,  shall constitute a waiver
of any of the terms of this Agreement or such Loan Document or of any such right
or remedy.

     7. This  Agreement  shall be  governed  by and  construed  and  enforced in
accordance with the laws of the State of Michigan.

     8. Except to the extent expressly stated herein to the contrary,  where the
character  or amount of any asset or  liability  or item of income or expense is
required to be determined or other accounting computation is required to be made
for  purposes  of this  Agreement,  it shall be done in  accordance  with  GAAP.
Furthermore,  all accounting  terms not  specifically  defined in this Agreement
shall be construed in accordance with GAAP.

     9. Borrowers  agree that it will pay upon demand all  reasonable  costs and
expenses in connection with the preparation of this Agreement and any other Loan
Documents  contemplated  hereby,  including,   without  limitation,   reasonable
attorneys' fees and disbursements of counsel for the Bank.

     10.  BORROWERS  AND BANK  ACKNOWLEDGE  THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL  ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE  OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,  KNOWINGLY
AND VOLUNTARILY,  AND FOR THEIR MUTUAL BENEFIT, WAIVE ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION  REGARDING THE  PERFORMANCE OR ENFORCEMENT  OF, OR IN
ANY WAY RELATED TO, THIS AGREEMENT OR THE LIABILITIES.

     11. The obligations of the Borrowers under this Agreement are the joint and
several obligations of the Borrowers.

     12. This Agreement  shall inure to the benefit of and shall be binding upon
the  parties  hereto and their  respective  successors  and  assigns;  provided,
however,  that  Borrowers  shall not assign or transfer  any of their  rights or
obligations  hereunder or otherwise in respect of any of the Liabilities without
the prior written consent of Bank.

     13. The Bank agrees that it will not disclose  without the prior consent of
Borrowers (other than to Bank's  employees,  its subsidiaries or to its auditors
or  counsel)  any  information  with  respect to  Borrowers  which is  furnished
pursuant to the Loan  Documents;  provided  that the Bank may  disclose any such
information  (a) as has  become  generally  available  to the public or has been
lawfully obtained by Bank from any third party under no duty of  confidentiality
to Borrowers,  (b) as may be required or appropriate in any report, statement or
testimony submitted to, or in respect to any inquiry,  by, any municipal,  state
or federal  regulatory body having or claiming to have  jurisdiction  over Bank,
including  the Board of  Governors of the Federal  Reserve  System of the United
States,  the Office of the  Comptroller  of the Currency or the Federal  Deposit
Insurance Corporation or similar organizations  (whether in the United States or
elsewhere) or their successors, (c) as may be required or appropriate in respect
to any summons or subpoena or in connection with any litigation, (d) in order to
comply with any law, order,  regulation or ruling applicable to Bank, and (e) to
any  transferee  or assignee or to any  participant  of, or with respect to, the
Loan Documents.

     14. To the extent any provision of any Loan Document is in express conflict
with the terms of this  letter  agreement,  the terms of this  letter  agreement
shall control. If the foregoing is acceptable to Borrowers, please indicate with
the authorized signature of Borrowers as provided below.


                                          Very truly yours,

                                          COMERICA BANK

                                          By: /s/ Richard S. Arceci
                                              ------------------------------
                                                  Richard S. Arceci
                                          Its:    Vice President


ACCEPTED, ACKNOWLEDGED AND AGREED
ON MAY 27, 1999

JPE, INC.

By:  /s/ Richard R. Chrysler
     -----------------------------
         Richard R. Chrysler
Its:     President and Chief Executive Officer



BRAKE, AXLE AND TANDEM COMPANY CANADA INC.

By:  /s/ Richard R. Chrysler
     -----------------------------
         Richard R. Chrysler
Its:     Chief Executive Officer


DAYTON PARTS, INC.

By:  /s/ Richard R. Chrysler
     -----------------------------
         Richard R. Chrysler
Its:     Chief Executive Officer


PLASTIC TRIM, INC.

By:  /s/ Richard R. Chrysler
     -----------------------------
         Richard R. Chrysler
Its:     President


STARBOARD INDUSTRIES, INC.

By:  /s/ Richard R. Chrysler
     -----------------------------
         Richard R. Chrysler
Its:     President


JPE FINISHING, INC.

By:  /s/ Richard R. Chrysler
     -----------------------------
         Richard R. Chrysler
Its:     President


<PAGE>


                                   SCHEDULE 1

                                    Borrowers

JPE, Inc.

Brake, Axle and Tandem Company Canada Inc.

Dayton Parts, Inc.

Plastic Trim, Inc.

Starboard Industries, Inc.

JPE Finishing, Inc.





                                 EURODOLLAR NOTE
                                 (Demand Basis)

                                                  Tax I.D. No.:________________

                                 PROMISSORY NOTE


$20,000,000                                                    Detroit, Michigan
                                                                    May 27, 1999


FOR VALUE RECEIVED,  the undersigned  (herein called  "Borrowers"),  jointly and
severally  promise to pay, ON DEMAND,  to the order of COMERICA BANK, a Michigan
banking corporation (herein called "Bank"),  the principal sum of TWENTY MILLION
DOLLARS ($20,000,000),  in lawful money of the United States of America. Without
in any way limiting,  restricting  or otherwise  affecting  Bank's right to make
demand for payment of all or any part of the indebtedness of the Borrowers under
this Note at any time in Bank's sole  discretion,  the Borrowers agree to pay to
the  Bank,  without  any  necessity  of  notice  or  demand by the Bank upon the
Borrower,  quarterly  principal  installments each equal to seventy five percent
(75%) of Excess  Cash Flow for the  preceeding  fiscal  quarter,  commencing  on
November 15, 1999, and on the fifteenth (15th) day of each February, May, August
and November  thereafter,  until such time that Bank makes demand for payment of
all outstanding  Indebtedness  under this Note, at which time, the entire unpaid
balance of principal and interest hereunder shall be due and payable.

     "Excess Cash Flow" shall mean for any fiscal  quarter of JPE, Inc., the net
income of JPE, Inc. and its consolidated  subsidiaries  determined in accordance
with generally accepted accounting principles  consistently applied, plus to the
extent deducted in determining such net income all depreciation and amortization
expense for such period,  less all payments of principal  made by JPE,  Inc. and
its  consolidated  subsidiaries  with respect to indebtedness for borrowed money
and the principal component of capital lease obligations (excluding any payments
with respect to any revolving credit facility to the extent such facility is not
permanently reduced by such payment) during such period.

     The entire indebtedness  outstanding hereunder from time to time shall bear
interest either at the Eurodollar-based Rate or the Prime-based Rate, as elected
by Borrowers from time to time, or as otherwise  determined  under the terms and
conditions of this Note. Interest shall be payable on each principal installment
due date and on the last day of any Interest Period applicable hereto, including
any such  Interest  Period  ending  before a  principal  installment  due  date;
provided,  however,  if such  Interest  Period  is more than  three (3)  months,
interest thereon shall also be payable at intervals of three (3) months.

     Interest accruing at the Prime-Based Rate shall be computed on the basis of
a 360 day year and shall be assessed for the actual number of days elapsed,  and
in such computation, effect shall be given to any change in the Prime-Based Rate
as a result  of any  change  in the  Prime-based  Rate on the date of each  such
change.

     Interest  accruing  at the  Eurodollar-based  Rate shall be computed on the
basis of a 360 day year and  shall be  assessed  for the  actual  number of days
elapsed from the first day of the Interest Period  applicable  thereto,  but not
including the last day thereof.

     The amount from time to time  outstanding  under this Note,  the Applicable
Interest Rate, the Interest  Period,  if applicable,  and the amount and date of
any  repayment  shall be noted on  Bank's  books  and  records,  which  shall be
conclusive  evidence  thereof,  absent manifest error;  provided,  however,  any
failure by Bank to make any such  notation,  or any error in any such  notation,
shall not relieve  Borrowers of their  obligations  to repay Bank all principal,
all  accrued  and unpaid  interest  thereon,  and all other  amounts  payable by
Borrowers  to Bank under or pursuant to this Note in  accordance  with the terms
hereof.

     Borrowers  may  elect  from time to time the  Eurodollar-based  Rate as the
Applicable Interest Rate for all or any portion of the indebtedness  outstanding
under this Note by delivering to Bank, by 11:00 a.m.  (Detroit,  Michigan time),
two  (2)  Business   Days  prior  to  the  proposed   effective   date  of  such
Eurodollar-based  Rate,  a Notice of  Eurodollar-based  Rate  executed by a duly
authorized  officer of Borrowers.  Without limiting any other provisions of this
Note, the Borrowers' right and ability to elect the Eurodollar-based Rate as the
Applicable Interest Rate hereunder shall be subject to the following:

     (a)  the  principal  indebtedness  outstanding  under  this Note must be at
          least Five Hundred Thousand Dollars ($500,000);

     (b)  no Event of Default,  or any condition or event which, with the giving
          of notice or the running of time, or both,  would  constitute an Event
          of Default,  shall have  occurred and be  continuing as of the date of
          such Notice of Eurodollar-based Rate;

     (c)  the  principal  amount of the  portion of the  indebtedness  for which
          Borrowers  have  elected the  Eurodollar-based  Rate shall be at least
          $500,000  and,  in the  case of a  larger  amount,  shall  be a larger
          multiple of $50,000; and

     (d)  any  election  by  Borrowers  of  the  Eurodollar-based  Rate  as  the
          Applicable   Interest  Rate  under  this  Note  is  not  revocable  by
          Borrowers.

     For any period of time for which a Notice of Eurodollar-based  Rate has not
been delivered to Bank, or for any period of time during which Borrowers are not
entitled to elect the Eurodollar-based  Rate in accordance with the terms hereof
or the  Eurodollar-based  Rate is not  otherwise  available  to Borrowers as the
Applicable  Interest  Rate in  accordance  with  the  terms  of this  Note,  the
Prime-based Rate shall  automatically be the Applicable Interest Rate hereunder,
subject to the  provisions  hereof with regard to the payment of interest at the
Default Rate.

     This Note may be prepaid in whole or in part without  penalty or premium on
any principal  installment due date, on the last day of an Interest Period,  and
at any time with  respect to any portion of this Note for which the  Prime-based
Rate is the  Applicable  Interest  Rate. In the event that the  Eurodollar-based
Rate  is the  Applicable  Interest  Rate  with  respect  to any  portion  of the
principal  indebtedness   outstanding  under  this  Note,  and  any  payment  or
prepayment of such portion of the indebtedness shall occur on any day other than
the  last  day  of  the  Interest  Period  then  applicable   thereto   (whether
voluntarily,  by acceleration,  or otherwise), or if an Applicable Interest Rate
shall be changed  during any Interest  Period  under or otherwise in  accordance
with the terms of this Note,  or if Borrowers  shall fail to make any payment of
principal or interest hereunder at any time that, and with respect to any amount
for which the  Eurodollar-based  Rate is the Applicable Interest Rate hereunder,
Borrowers shall reimburse Bank on demand for any resulting loss, cost or expense
incurred by Bank as a result thereof,  including,  without limitation,  any such
loss,  cost  or  expense  incurred  in  obtaining,  liquidating,   employing  or
redeploying  deposits from third  parties.  Such amount  payable by Borrowers to
Bank hereunder may include,  without limitation,  an amount equal to the excess,
if any, of (a) the amount of interest which would have accrued on the amounts so
prepaid for the period from the date of such prepayment  through the last day of
the relevant Interest Period therefor,  at the Applicable Interest Rate for such
indebtedness,  as provided under this Note,  over (b) the amount of interest (as
reasonably  determined  by Bank) which would have accrued to Bank on such amount
by placing such amount on deposit for a comparable  period with leading banks in
the interbank  eurodollar  market.  Calculation  of any amounts  payable to Bank
under this paragraph  shall be made as though Bank shall have actually funded or
committed to fund the relevant indebtedness hereunder through the purchase of an
underlined  deposit in an amount  equal to the amount of such  indebtedness  and
having a maturity comparable to the relevant Interest Period; provided, however,
that Bank may fund the  indebtedness  hereunder  in any manner it deems fit, and
the  foregoing  assumption  shall  be  utilized  only  for  the  purpose  of the
calculation of amounts payable under this paragraph. Upon the written request of
Borrowers, Bank shall deliver to Borrowers a certificate setting forth bases for
determining  such  losses,  costs  and  expenses,  which  certificate  shall  be
conclusively  presumed correct,  absent manifest effort.  Any partial prepayment
under this Note shall be applied to the  installments due under this Note in the
inverse order of their maturities.

     For any  Interest  Period  for which the  Applicable  Interest  Rate is the
Eurodollar-based Rate, if Bank shall designate a Eurodollar Lending Office which
maintains  books  separate  from those of the rest of Bank,  Bank shall have the
option of maintaining and carrying this Note, and the indebtedness hereunder, on
the books of such Eurodollar Lending Office.

     If, with respect to any  Interest  Period,  Bank  determines  that,  (a) by
reason of  circumstances  affecting the foreign  exchange and interbank  markets
generally, deposits in Eurodollars in the applicable amounts or for the relative
maturities  are not being offered to the Bank for such Interest  Period,  or (b)
that the  Eurodollar-based  Rate will not adequately reflect the cost to Bank of
maintaining the indebtedness  under this Note at the  Eurodollar-based  Rate for
such  Interest  Period,  then Bank shall  forthwith  give notice  thereof to the
Borrowers.  Thereafter, until Bank notifies Borrowers that such circumstances no
longer exist,  the obligation of Bank to maintain the  indebtedness  outstanding
under this Note at the  Eurodollar-based  Rate,  and the right of  Borrowers  to
elect  the  Eurodollar-based  Rate  as the  Applicable  Interest  Rate  for  the
indebtedness under this Note, shall be suspended.

     If,  after the date  hereof,  the  introduction  of, or any  change in, any
applicable law, rule or regulation or in the  interpretation  or  administration
thereof  by any  governmental  authority  charged  with  the  interpretation  or
administration thereof, or compliance by Bank (or its Eurodollar Lending Office)
with any  request or  directive  (whether or not having the force of law) of any
such  authority,  shall  make it  unlawful  or  impossible  for the Bank (or its
Eurodollar  Lending office) to honor its  obligations  hereunder to maintain the
indebtedness  under this Note with interest at the  Eurodollar-based  Rate, Bank
shall forthwith give notice thereof to Borrowers. Thereafter, (a) the obligation
of  Bank  to  maintain  the  indebtedness  outstanding  under  this  Note at the
Eurodollar-based  Rate, and the right of Borrowers to elect the Eurodollar-based
Rate as the Applicable Interest Rate for the indebtedness under this Note, shall
be  suspended,  and  thereafter,  until Bank gives notice to Borrowers  that the
conditions or circumstances  causing or giving rise to such suspension no longer
exist,  the  Prime-based  Rate  shall be the  Applicable  Interest  Rate for the
indebtedness  outstanding  under  this  Note;  and (b) if Bank may not  lawfully
continue  to  maintain  the  indebtedness  outstanding  under  this  Note at the
Eurodollar-based  Rate to the end of the then current Interest Period applicable
thereto,  the  Prime-based  Rate shall be the  Applicable  Interest Rate for the
remainder of such Interest Period.

     If the adoption after the date hereof,  or any change after the date hereof
in, any  applicable  law,  treaty,  rule,  or  regulation  (whether  domestic or
foreign)  of any  governmental  authority,  central  bank or  comparable  agency
charged with the interpretation or administration thereof, or compliance by Bank
(or its Eurodollar Lending office) with any request or directive (whether or not
having the force of law) made by any such authority,  central bank or comparable
agency  after the date hereof,  including,  without  limitation,  any risk based
capital guidelines:

     (a)  shall subject Bank (or its Eurodollar Lending Office) to any tax, duty
          or  other  charge  with  respect  to  this  Note  or the  indebtedness
          hereunder  or shall  change the basis of  taxation of payments to Bank
          (or its Eurodollar  Lending Office) of the principal of or interest on
          this Note or any other amounts due under this Note in respect  thereof
          (except  for  changes in the rate of tax on the  overall net income of
          Bank or its Eurodollar  Lending office imposed by the  jurisdiction in
          which Bank's principal  executive office or Eurodollar  Lending Office
          is located); or

     (b)  shall  impose,  modify  or deem  applicable  any  reserve  (including,
          without  limitation,  any  imposed  by the Board of  Governors  of the
          Federal  Reserve  System) , special  deposit  or  similar  requirement
          against  assets of,  deposits  with or for the  account  of, or credit
          extended by Bank (or its Eurodollar Lending Office) or shall impose on
          Bank (or its Eurodollar  Lending  Office) or the foreign  exchange and
          interbank  markets of any other  condition  affecting this Note or the
          indebtedness hereunder; or

and the  result  of any of the  foregoing  is to  increase  the  cost to Bank of
maintaining  any part of the  indebtedness  hereunder or to reduce the amount of
any sum received or  receivable  by Bank under this Note by an amount  deemed by
Bank to be material,  then Bank shall promptly notify Borrowers of such fact and
demand compensation therefor from Borrowers, and, within fifteen (15) days after
such demand by Bank,  Borrowers agree to pay to Bank such additional  amounts as
are  sufficient  to compensate  Bank for such  increased  cost or  reduction.  A
certificate of Bank, prepared in good faith and in reasonable detail by Bank and
submitted by the Bank to the Borrowers,  setting forth the basis for determining
such  additional  amount  or  amounts  necessary  to  compensate  Bank  shall be
conclusively  presumed,  absent manifest error. Bank agrees that, as promptly as
practical after it becomes aware of the occurrence of any event or the existence
of a condition  that will cause Bank to be entitled to  compensation  under this
paragraph,  it  will,  to the  extent  not  inconsistent  with  Bank's  internal
policies,  use reasonable efforts to make, fund or maintain any affected portion
of the loan  under  this Note  through  another  lending  office of Bank if as a
result  thereof the  additional  monies which would  otherwise be required to be
paid in respect of such portion of the loan under this Note would be  materially
reduced and if, as determined by Bank, in its reasonable discretion, the making,
funding or  maintaining of such portion of the loan under this Note through such
other lending office would not materially  adversely  affect such portion of the
loan  under  this  Note or Bank.  Borrowers  shall pay all  reasonable  expenses
incurred by Bank in utilizing another lending office pursuant to this paragraph.

     In the event that any applicable law, treaty,  rule or regulation  (whether
domestic or foreign)  now or  hereafter  in effect and whether or not  presently
applicable to the Bank, or any  interpretation or administration  thereof by any
governmental   authority  charged  with  the  interpretation  or  administration
thereof,  or compliance by the Bank with any guideline,  request or directive of
any such  authority  (whether  or not  having the force of law),  including  any
risk-based  capital  guidelines,  affects or would  affect the amount of capital
required  or  expected  to  be  maintained  by  the  Bank  (or  any  corporation
controlling  the Bank),  and the Bank determines that the amount of such capital
is  increased  by or based upon the  existence  of any  obligations  of the Bank
hereunder  or the  making  of the  loan  under  this  Note  or  maintaining  the
indebtedness  hereunder and such increase has the effect of reducing the rate of
return  on  the  Bank's  (or  such  controlling   corporation's)  capital  as  a
consequence  of such  obligations  or the making of such loan or  maintaining of
such  indebtedness  hereunder  to a level  below  that  which  the Bank (or such
controlling  corporation) could have achieved but for such circumstances (taking
into  consideration  its policies with respect to capital adequacy) by an amount
deemed by the Bank to be  material,  then the  Borrowers  shall pay to the Bank,
within  fifteen  (15) days of  Borrowers'  receipt of written  notice  from Bank
demanding such  compensation,  additional  amounts  sufficient to compensate the
Bank (or such controlling corporation) for any increase in the amount of capital
and reduced rate of return which the Bank reasonably  determines to be allocable
to the existence of any  obligations  of the Bank  hereunder or to the making of
such loan or maintaining the indebtedness hereunder. A certificate of Bank as to
the amount of such compensation, prepared in good faith and in reasonable detail
by the Bank and submitted by the Bank to the Borrowers,  shall be conclusive and
binding for all purposes,  absent manifest error.  Bank agrees that, as promptly
as  practical  after it  becomes  aware of the  occurrence  of any  event or the
existence  of a condition  that will cause Bank to be  entitled to  compensation
under  this  paragraph,  it will,  to the extent not  inconsistent  with  Bank's
internal policies, use reasonable efforts to make, fund or maintain any affected
portion of the loan under this Note through another lending office of Bank if as
a result thereof the additional  monies which would  otherwise be required to be
paid in respect of such portion of the loan under this Note would be  materially
reduced and if, as determined by Bank, in its reasonable discretion, the making,
funding or  maintaining of such portion of the loan under this Note through such
other lending office would not materially  adversely  affect such portion of the
loan  under  this  Note or Bank.  Borrowers  shall pay all  reasonable  expenses
incurred by Bank in utilizing another lending office pursuant to this paragraph.

     If  Borrowers  or any  guarantor  under  a  guaranty  of all or part of the
indebtedness  hereunder  ("guarantor") (a) fail(s) to pay this Note, or any part
thereof,  or any of the  Indebtedness  when due, by  maturity,  acceleration  or
otherwise,  or  fail(s)  to pay any  indebtedness  owing on a demand  basis upon
demand;  or (b)  fail(s) to comply  with any of the terms or  provisions  of any
agreement  between  Borrowers or any  guarantor  and Bank;  or (c) become(s) the
subject of a voluntary or involuntary  proceeding in bankruptcy (and if it is an
involuntary  proceeding,  it is not dismissed  neither within sixty (60) days of
the  commencement  thereof),  or  a  reorganization,   arrangement  or  creditor
composition  proceeding,  cease(s) doing business as a going concern,  or is the
subject of a  dissolution,  merger or  consolidation;  or (d) if any warranty or
representation  made by Borrowers or any guarantor in connection  with this Note
or any of the indebtedness  hereunder shall be discovered to be have been untrue
or  incomplete  in any  material  respect  when  made;  (e) or if  there  is any
termination,  notice  of  termination,  or  breach  (which  the Bank in its sole
discretion  deems material) of any guaranty,  pledge,  collateral  assignment or
subordination agreement relating to all or any part of the Indebtedness;  or (f)
if there is any failure by any Borrower or any  guarantor to pay,  when due, any
of its indebtedness  (other than to the Bank) in an amount exceeding $100,000 in
the  aggregate or in the  observance  or  performance  of any term,  covenant or
condition in any document evidencing, securing or relating to such indebtedness;
or (g) if there is filed or issued a levy or writ of attachment  or  garnishment
or other like judicial  process upon any Borrower or any guarantor or any of the
collateral,  including,  without  limit,  any  accounts  of any  Borrower or any
guarantor with Bank,  then Bank,  upon the occurrence and at any time during the
continuance or existence of any of these conditions or events (each an "Event of
Default"), may at its option and without prior notice to Borrowers,  declare any
or  all  of  the  indebtedness  hereunder  to be  immediately  due  and  payable
(notwithstanding  any  provisions  contained  in  the  evidence  of  it  to  the
contrary),  sell or  liquidate  all or any  portion of the  collateral,  set off
against the  indebtedness  hereunder  any amounts owing by Bank to any Borrower,
and exercise  any one or more of the rights and remedies  granted to Bank by any
agreement with Borrowers given to it under applicable law, or otherwise.

     Upon the  occurrence  and during the  continuance  of any Event of Default,
Bank may at any time and from time to time, without notice to the Borrowers (any
requirement  for such notice being expressly  waived by the Borrowers),  set off
and apply against any and all of the  indebtedness of Borrowers to Bank, any and
all deposits (general or special,  time or demand,  provisional or final) at any
time held and other indebtedness at any time owing by Bank to or for. the credit
or the account of any Borrower  and any  property of any  Borrower  from time to
time in possession of Bank,  irrespective of whether or not Bank shall have made
any demand  hereunder  and  although  such  obligations  may be  contingent  and
unmatured.  The rights of Bank under this  paragraph  are in  addition  to other
rights and  remedies  (including,  without  limitation,  other rights of setoff)
which Bank may otherwise have.

     Upon the occurrence and during the continuance of an Event of Default, Bank
may declare this Note due forthwith and collect, deal with and dispose of all or
any part of any security in any manner  permitted or  authorized by the Michigan
Uniform  Commercial  Code or other  applicable law (including  public or private
sale) and after deducting  reasonable expenses  (including,  without limitation,
reasonable  attorneys'  fees and expenses),  Bank may apply the proceeds and any
deposits or credits in part of full payment of any said liabilities, whether due
or not, in any manner or order Bank elects.

     So long as any  Event of  Default  shall be  continuing,  the  indebtedness
outstanding under this Note shall bear interest at the Default Rate.

     For the purposes of this Note the  following  terms will have the following
meanings:

     "Applicable  Interest  Rate"  shall mean the  Eurodollar-based  Rate or the
Prime-based  Rate,  as selected by Borrowers  from time to time,  subject to the
terms and conditions of this Note.

     "Business Day" shall mean any day other than a Saturday,  Sunday or holiday
on  which  Bank  is  open  for  all or  substantially  all of its  domestic  and
international   commercial  banking  business  (including  dealings  in  foreign
exchange) in Detroit, Michigan.

     "Eurodollar-based Rate" shall mean a per annum interest rate which is three
and one half percent (3 1/2%), plus the quotient of:

     (a)  the per annum interest rate at which Bank's Eurodollar  Lending Office
          offers deposits in dollars to prime banks in the eurodollar  market in
          an amount  comparable to the principal amount  outstanding  under this
          Note for which a  Eurodollar-based  Rate has been  requested and for a
          period equal to the relevant  Interest Period at  approximately  11:00
          a.m., Detroit, Michigan time, two (2) Business Days prior to the first
          day of such Interest Period;

          divided by

     (b)  a  percentage  equal to 100%  minus the  maximum  rate on such date at
          which  Bank  is  required  to  maintain   reserves  on  "Euro-currency
          Liabilities"  as defined in and pursuant to  Regulation D of the Board
          of Governors of the Federal  Reserve System or, if such  regulation or
          definition  is  modified,  and as long as Bank is required to maintain
          reserves against a category of liabilities  which includes  eurodollar
          deposits or includes a category of assets  which  includes  eurodollar
          loans,  the rate at which such  reserves are required to be maintained
          on such category.

     "Default  Rate"  means  the sum of three  percent  (3%) and the  Applicable
Interest Rate under this Note.

     "Eurodollar  Lending  Office" shall mean Bank's office located in the Grand
Cayman Islands,  British West Indies, or such other branch of Bank,  domestic or
foreign,  as it may  hereafter  designate as its  Eurodollar  Lending  Office by
notice to Borrowers.

     "Interest Period" shall mean a period of one (1), two (2), three (3) or six
(6)  months (or any  lesser or  greater  number of days  agreed to in advance by
Borrowers  and Bank,  commencing  on the  effective  date of an  election of the
Eurodollar-based  Rate  made in  accordance  with the  terms of this  Agreement,
provided that:

     (a)  any Interest  Period which would otherwise end on a day which is not a
          Business Day shall be extended to the next  succeeding  Business  Day,
          except  that if the next  succeeding  Business  Day  falls in  another
          calendar  month,  the Interest  Period shall end on the next preceding
          Business Day, and when an Interest Period begins on a day which has no
          numerically  corresponding day in the calendar month during which such
          Interest  Period is to end, it shall end on the last  Business  Day of
          such calendar month;

     (b)  no Interest  Period shall extend beyond the next  occurring  principal
          installment payment date under this Note.

     "Notice of  Eurodollar-based  Rate" shall mean a Notice of Eurodollar-based
Rate in form  similar to that  attached  to this Note as Exhibit  "A" issued and
delivered by Borrowers to Bank in accordance with the terms of this Note.

     "Prime Rate" means the per annum  interest rate  established by Bank as its
prime  rate for its  Borrowers,  as such rate may vary from time to time,  which
rate is not necessarily the lowest rate on loans made by Bank at any such time.

     "Prime-based  Rate" shall mean a per annum  interest rate which is equal to
the sum of one percent (1%) plus the greater of (i) the Prime Rate;  or (ii) the
rate of interest  equal to the sum of (a) one  percent  (1%) and (b) the rate of
interest  equal  to  the  average  of  the  rates  on  overnight  Federal  funds
transactions  with  members of the Federal  Reserve  System  arranged by Federal
funds brokers (the "Overnight  Rates"), as published by the Federal Reserve Bank
of New York,  or, if the  overnight  Rates are not so published for any day, the
average of the  quotations  for the Overnight  Rates received by Bank from three
(3) Federal funds brokers of recognized  standing  selected by Bank, as the same
may be  changed  from time to time.  Effect  shall be given to any change in the
Prime-based  Rate as a result of any change in the Prime Rate or Overnight Rates
on the  date of any  such  change  in the  Prime  Rate or  Overnight  Rates,  as
applicable.

     All payments to be made by Borrowers to Bank under or pursuant to this Note
shall be in immediately available funds, without setoff or counterclaim,  and in
the event that any payments submitted hereunder are in funds not available until
collected,  said  payments  shall  continue to bear  interest  until  collected.
Borrowers hereby authorize Bank to charge any account of Borrowers with Bank for
all sums due hereunder when due in accordance with the terms hereof.

     The Borrowers  acknowledge  that this Note matures upon issuance,  and that
the Bank, at any time,  without notice, and without reason, may demand that this
Note be  immediately  paid in full.  The demand nature of this Note shall not be
deemed  modified by reference to a Default in this Note or in any agreement to a
default  by  the  Borrowers  or  to  the  occurrence  of  an  event  of  default
(collectively  an "Event of Default").  For purposes of this Note, to the extent
there is reference  to an Event of Default this  reference is for the purpose of
permitting  the Bank to  accelerate  indebtedness  not on a demand  basis and to
receive  interest at the default rate  provided in the document  evidencing  the
relevant  indebtedness.  It is  expressly  agreed that the Bank may exercise its
demand  rights  under this Note  whether or not an Event of Default has occurred
and  regardless of whether an Interest  Period is in effect.  The Bank,  with or
without reason and without notice, may from time to time make demand for partial
payments  under this Note and these  demands  shall not  preclude  the Bank from
demanding at any time that this Note be immediately paid in full.

     No delay or failure of Bank in  exercising  any right,  power or  privilege
hereunder shall affect such right,  power or privilege,  nor shall any single or
partial exercise thereof preclude any further exercise thereof,  or the exercise
of any other power, right or privilege.  The rights of Bank under this Agreement
are  cumulative  and not  exclusive  of any right or  remedies  which Bank would
otherwise have, whether by other instruments or by law.

     If this Note is signed by two or more parties  (whether by all as makers or
by one or more as an  accommodation  party or otherwise),  the  obligations  and
undertakings  under this Note  shall be that of all and any two or more  jointly
and  also of each  severally.  This  Note  shall  bind  the  Borrowers,  and the
Borrowers' respective successors and assigns.

     THE BORROWERS AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL  ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE  OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,  KNOWINGLY
AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION  REGARDING THE  PERFORMANCE OR ENFORCEMENT  OF, OR IN
ANY WAY RELATED TO, THIS NOTE.

     The  obligations of the Borrowers under this Note are the joint and several
obligations of the Borrowers; provided, however, with respect to Brake, Axle and
Tandem Company Canada Inc., its obligations  shall be several and not joint with
any other Borrower.

     This Note has been deemed to have been delivered at Detroit,  Michigan, and
shall be governed by and construed  and enforced in accordance  with the laws of
the State of Michigan.  Whenever  possible each  provision of this Note shall be
interpreted  in such manner as to be effective and valid under  applicable  law,
but if any  provision  of this Note  shall be  prohibited  by or  invalid  under
applicable  law,  such  provision  shall be  ineffective  to the  extent of such
prohibition or invalidity,  without invalidating the remainder of such provision
or the remaining provisions of this Note.


                                        JPE, INC.

                                        By:  /s/ Richard R. Chrysler
                                             --------------------------------
                                             Richard R. Chrysler
                                        Its: President and Chief Executive
                                               Officer


                                        DAYTON PARTS, INC.

                                        By:  /s/ Richard R. Chrysler
                                             --------------------------------
                                             Richard R. Chrysler
                                        Its: Chief Executive Officer


                                        STARBOARD INDUSTRIES, INC.

                                        By:  /s/ Richard R. Chrysler
                                             --------------------------------
                                             Richard R. Chrysler
                                        Its: President


                                        PLASTIC TRIM, INC.

                                        By:  /s/ Richard R. Chrysler
                                             --------------------------------
                                             Richard R. Chrysler
                                        Its: President


                                        JPE FINISHING, INC.

                                        By:  /s/ Richard R. Chrysler
                                             --------------------------------
                                             Richard R. Chrysler
                                        Its: President


                                        BRAKE, AXLE AND TANDEM COMPANY
                                        CANADA INC.

                                        By:  /s/ Richard R. Chrysler
                                             --------------------------------
                                             Richard R. Chrysler
                                        Its: Chief Executive Officer






                           EURODOLLAR INSTALLMENT NOTE
                                 (Demand Basis)

                                                   Tax I.D. No.:________________

                                 PROMISSORY NOTE


$6,300,000                                                     Detroit, Michigan
                                                                    May 27, 1999


FOR VALUE RECEIVED,  the undersigned  (herein called  "Borrowers"),  jointly and
severally  promise to pay, ON DEMAND,  to the order of COMERICA BANK, a Michigan
banking  corporation  (herein called  "Bank"),  the principal sum of Six Million
Three  Hundred  Thousand  DOLLARS  ($6,300,000),  in lawful  money of the United
States  of  America.  Without  in any way  limiting,  restricting  or  otherwise
affecting  Bank's  right to make  demand  for  payment of all or any part of the
indebtedness  of the  Borrowers  under  this  Note at any  time in  Bank's  sole
discretion,  the  Borrowers  agree to pay to the Bank,  without any necessity of
notice or demand by the Bank upon the Borrower,  monthly principal  installments
equal to One Hundred  Thirty One Thousand Two Hundred Fifty  Dollars  ($131,250)
each,  commencing on July 1, 1999, and on the first day of each succeeding month
thereafter,  until  such  time  that  Bank  makes  demand  for  payment  of  all
outstanding  Indebtedness  under this Note,  at which  time,  the entire  unpaid
balance of principal and interest hereunder shall be due and payable.

     The entire indebtedness  outstanding hereunder from time to time shall bear
interest either at the Eurodollar-based Rate or the Prime-based Rate, as elected
by Borrowers from time to time, or as otherwise  determined  under the terms and
conditions of this Note. Interest shall be payable on each principal installment
due date and on the last day of any Interest Period applicable hereto, including
any such  Interest  Period  ending  before a  principal  installment  due  date;
provided,  however,  if such  Interest  Period  is more than  three (3)  months,
interest thereon shall also be payable at intervals of three (3) months.

     Interest accruing at the Prime-Based Rate shall be computed on the basis of
a 360 day year and shall be assessed for the actual number of days elapsed,  and
in such computation, effect shall be given to any change in the Prime-Based Rate
as a result  of any  change  in the  Prime-based  Rate on the date of each  such
change.

     Interest  accruing  at the  Eurodollar-based  Rate shall be computed on the
basis of a 360 day year and  shall be  assessed  for the  actual  number of days
elapsed from the first day of the Interest Period  applicable  thereto,  but not
including the last day thereof.

     The amount from time to time  outstanding  under this Note,  the Applicable
Interest Rate, the Interest  Period,  if applicable,  and the amount and date of
any  repayment  shall be noted on  Bank's  books  and  records,  which  shall be
conclusive  evidence  thereof,  absent manifest error;  provided,  however,  any
failure by Bank to make any such  notation,  or any error in any such  notation,
shall not relieve  Borrowers of their  obligations  to repay Bank all principal,
all  accrued  and unpaid  interest  thereon,  and all other  amounts  payable by
Borrowers  to Bank under or pursuant to this Note in  accordance  with the terms
hereof.

     Borrowers  may  elect  from time to time the  Eurodollar-based  Rate as the
Applicable Interest Rate for all or any portion of the indebtedness  outstanding
under this Note by delivering to Bank, by 11:00 a.m.  (Detroit,  Michigan time),
two  (2)  Business   Days  prior  to  the  proposed   effective   date  of  such
Eurodollar-based  Rate,  a Notice of  Eurodollar-based  Rate  executed by a duly
authorized  officer of Borrowers.  Without limiting any other provisions of this
Note, the Borrowers' right and ability to elect the Eurodollar-based Rate as the
Applicable Interest Rate hereunder shall be subject to the following:

     (a)  the  principal  indebtedness  outstanding  under  this Note must be at
          least Five Hundred Thousand Dollars ($500,000);

     (b)  no Event of Default,  or any condition or event which, with the giving
          of notice or the running of time, or both,  would  constitute an Event
          of Default,  shall have  occurred and be  continuing as of the date of
          such Notice of Eurodollar-based Rate;

     (c)  the  principal  amount of the  portion of the  indebtedness  for which
          Borrowers  have  elected the  Eurodollar-based  Rate shall be at least
          $500,000  and,  in the  case of a  larger  amount,  shall  be a larger
          multiple of $50,000; and

     (d)  any  election  by  Borrowers  of  the  Eurodollar-based  Rate  as  the
          Applicable   Interest  Rate  under  this  Note  is  not  revocable  by
          Borrowers.

     For any period of time for which a Notice of Eurodollar-based  Rate has not
been delivered to Bank, or for any period of time during which Borrowers are not
entitled to elect the Eurodollar-based  Rate in accordance with the terms hereof
or the  Eurodollar-based  Rate is not  otherwise  available  to Borrowers as the
Applicable  Interest  Rate in  accordance  with  the  terms  of this  Note,  the
Prime-based Rate shall  automatically be the Applicable Interest Rate hereunder,
subject to the  provisions  hereof with regard to the payment of interest at the
Default Rate.

     This Note may be prepaid in whole or in part without  penalty or premium on
any principal  installment due date, on the last day of an Interest Period,  and
at any time with  respect to any portion of this Note for which the  Prime-based
Rate is the  Applicable  Interest  Rate. In the event that the  Eurodollar-based
Rate  is the  Applicable  Interest  Rate  with  respect  to any  portion  of the
principal  indebtedness   outstanding  under  this  Note,  and  any  payment  or
prepayment of such portion of the indebtedness shall occur on any day other than
the  last  day  of  the  Interest  Period  then  applicable   thereto   (whether
voluntarily,  by acceleration,  or otherwise), or if an Applicable Interest Rate
shall be changed  during any Interest  Period  under or otherwise in  accordance
with the terms of this Note,  or if Borrowers  shall fail to make any payment of
principal or interest hereunder at any time that, and with respect to any amount
for which the  Eurodollar-based  Rate is the Applicable Interest Rate hereunder,
Borrowers shall reimburse Bank on demand for any resulting loss, cost or expense
incurred by Bank as a result thereof,  including,  without limitation,  any such
loss,  cost  or  expense  incurred  in  obtaining,  liquidating,   employing  or
redeploying  deposits from third  parties.  Such amount  payable by Borrowers to
Bank hereunder may include,  without limitation,  an amount equal to the excess,
if any, of (a) the amount of interest which would have accrued on the amounts so
prepaid for the period from the date of such prepayment  through the last day of
the relevant Interest Period therefor,  at the Applicable Interest Rate for such
indebtedness,  as provided under this Note,  over (b) the amount of interest (as
reasonably  determined  by Bank) which would have accrued to Bank on such amount
by placing such amount on deposit for a comparable  period with leading banks in
the interbank  eurodollar  market.  Calculation  of any amounts  payable to Bank
under this paragraph  shall be made as though Bank shall have actually funded or
committed to fund the relevant indebtedness hereunder through the purchase of an
underlined  deposit in an amount  equal to the amount of such  indebtedness  and
having a maturity comparable to the relevant Interest Period; provided, however,
that Bank may fund the  indebtedness  hereunder  in any manner it deems fit, and
the  foregoing  assumption  shall  be  utilized  only  for  the  purpose  of the
calculation of amounts payable under this paragraph. Upon the written request of
Borrowers, Bank shall deliver to Borrowers a certificate setting forth bases for
determining  such  losses,  costs  and  expenses,  which  certificate  shall  be
conclusively  presumed correct,  absent manifest effort.  Any partial prepayment
under this Note shall be applied to the  installments due under this Note in the
inverse order of their maturities.

     For any  Interest  Period  for which the  Applicable  Interest  Rate is the
Eurodollar-based Rate, if Bank shall designate a Eurodollar Lending Office which
maintains  books  separate  from those of the rest of Bank,  Bank shall have the
option of maintaining and carrying this Note, and the indebtedness hereunder, on
the books of such Eurodollar Lending Office.

     If, with respect to any  Interest  Period,  Bank  determines  that,  (a) by
reason of  circumstances  affecting the foreign  exchange and interbank  markets
generally, deposits in Eurodollars in the applicable amounts or for the relative
maturities  are not being offered to the Bank for such Interest  Period,  or (b)
that the  Eurodollar-based  Rate will not adequately reflect the cost to Bank of
maintaining the indebtedness  under this Note at the  Eurodollar-based  Rate for
such  Interest  Period,  then Bank shall  forthwith  give notice  thereof to the
Borrowers.  Thereafter, until Bank notifies Borrowers that such circumstances no
longer exist,  the obligation of Bank to maintain the  indebtedness  outstanding
under this Note at the  Eurodollar-based  Rate,  and the right of  Borrowers  to
elect  the  Eurodollar-based  Rate  as the  Applicable  Interest  Rate  for  the
indebtedness under this Note, shall be suspended.

     If,  after the date  hereof,  the  introduction  of, or any  change in, any
applicable law, rule or regulation or in the  interpretation  or  administration
thereof  by any  governmental  authority  charged  with  the  interpretation  or
administration thereof, or compliance by Bank (or its Eurodollar Lending Office)
with any  request or  directive  (whether or not having the force of law) of any
such  authority,  shall  make it  unlawful  or  impossible  for the Bank (or its
Eurodollar  Lending office) to honor its  obligations  hereunder to maintain the
indebtedness  under this Note with interest at the  Eurodollar-based  Rate, Bank
shall forthwith give notice thereof to Borrowers. Thereafter, (a) the obligation
of  Bank  to  maintain  the  indebtedness  outstanding  under  this  Note at the
Eurodollar-based  Rate, and the right of Borrowers to elect the Eurodollar-based
Rate as the Applicable Interest Rate for the indebtedness under this Note, shall
be  suspended,  and  thereafter,  until Bank gives notice to Borrowers  that the
conditions or circumstances  causing or giving rise to such suspension no longer
exist,  the  Prime-based  Rate  shall be the  Applicable  Interest  Rate for the
indebtedness  outstanding  under  this  Note;  and (b) if Bank may not  lawfully
continue  to  maintain  the  indebtedness  outstanding  under  this  Note at the
Eurodollar-based  Rate to the end of the then current Interest Period applicable
thereto,  the  Prime-based  Rate shall be the  Applicable  Interest Rate for the
remainder of such Interest Period.

     If the adoption after the date hereof,  or any change after the date hereof
in, any  applicable  law,  treaty,  rule,  or  regulation  (whether  domestic or
foreign)  of any  governmental  authority,  central  bank or  comparable  agency
charged with the interpretation or administration thereof, or compliance by Bank
(or its Eurodollar Lending office) with any request or directive (whether or not
having the force of law) made by any such authority,  central bank or comparable
agency  after the date hereof,  including,  without  limitation,  any risk based
capital guidelines:

     (a)  shall subject Bank (or its Eurodollar Lending Office) to any tax, duty
          or  other  charge  with  respect  to  this  Note  or the  indebtedness
          hereunder  or shall  change the basis of  taxation of payments to Bank
          (or its Eurodollar  Lending Office) of the principal of or interest on
          this Note or any other amounts due under this Note in respect  thereof
          (except  for  changes in the rate of tax on the  overall net income of
          Bank or its Eurodollar  Lending office imposed by the  jurisdiction in
          which Bank's principal  executive office or Eurodollar  Lending Office
          is located); or

     (b)  shall  impose,  modify  or deem  applicable  any  reserve  (including,
          without  limitation,  any  imposed  by the Board of  Governors  of the
          Federal  Reserve  System) , special  deposit  or  similar  requirement
          against  assets of,  deposits  with or for the  account  of, or credit
          extended by Bank (or its Eurodollar Lending Office) or shall impose on
          Bank (or its Eurodollar  Lending  Office) or the foreign  exchange and
          interbank  markets of any other  condition  affecting this Note or the
          indebtedness hereunder; or

and the  result  of any of the  foregoing  is to  increase  the cost to -Bank of
maintaining  any part of the  indebtedness  hereunder or to reduce the amount of
any sum received or  receivable  by Bank under this Note by an amount  deemed by
Bank to be material,  then Bank shall promptly notify Borrowers of such fact and
demand compensation therefor from Borrowers, and, within fifteen (15) days after
such demand by Bank,  Borrowers agree to pay to Bank such additional  amounts as
are  sufficient  to compensate  Bank for such  increased  cost or  reduction.  A
certificate of Bank, prepared in good faith and in reasonable detail by Bank and
submitted by the Bank to the Borrowers,  setting forth the basis for determining
such  additional  amount  or  amounts  necessary  to  compensate  Bank  shall be
conclusively  presumed,  absent manifest error. Bank agrees that, as promptly as
practical after it becomes aware of the occurrence of any event or the existence
of a condition  that will cause Bank to be entitled to  compensation  under this
paragraph,  it  will,  to the  extent  not  inconsistent  with  Bank's  internal
policies,  use reasonable efforts to make, fund or maintain any affected portion
of the loan  under  this Note  through  another  lending  office of Bank if as a
result  thereof the  additional  monies which would  otherwise be required to be
paid in respect of such portion of the loan under this Note would be  materially
reduced and if, as determined by Bank, in its reasonable discretion, the making,
funding or  maintaining of such portion of the loan under this Note through such
other lending office would not materially  adversely  affect such portion of the
loan  under  this  Note or Bank.  Borrowers  shall pay all  reasonable  expenses
incurred by Bank in utilizing another lending office pursuant to this paragraph.

     In the event that any applicable law, treaty,  rule or regulation  (whether
domestic or foreign)  now or  hereafter  in effect and whether or not  presently
applicable to the Bank, or any  interpretation or administration  thereof by any
governmental   authority  charged  with  the  interpretation  or  administration
thereof,  or compliance by the Bank with any guideline,  request or directive of
any such  authority  (whether  or not  having the force of law),  including  any
risk-based  capital  guidelines,  affects or would  affect the amount of capital
required  or  expected  to  be  maintained  by  the  Bank  (or  any  corporation
controlling  the Bank),  and the Bank determines that the amount of such capital
is  increased  by or based upon the  existence  of any  obligations  of the Bank
hereunder  or the  making  of the  loan  under  this  Note  or  maintaining  the
indebtedness  hereunder and such increase has the effect of reducing the rate of
return  on  the  Bank's  (or  such  controlling   corporation's)  capital  as  a
consequence  of such  obligations  or the making of such loan or  maintaining of
such  indebtedness  hereunder  to a level  below  that  which  the Bank (or such
controlling  corporation) could have achieved but for such circumstances (taking
into  consideration  its policies with respect to capital adequacy) by an amount
deemed by the Bank to be  material,  then the  Borrowers  shall pay to the Bank,
within  fifteen  (15) days of  Borrowers'  receipt of written  notice  from Bank
demanding such  compensation,  additional  amounts  sufficient to compensate the
Bank (or such controlling corporation) for any increase in the amount of capital
and reduced rate of return which the Bank reasonably  determines to be allocable
to the existence of any  obligations  of the Bank  hereunder or to the making of
such loan or maintaining the indebtedness hereunder. A certificate of Bank as to
the amount of such compensation, prepared in good faith and in reasonable detail
by the Bank and submitted by the Bank to the Borrowers,  shall be conclusive and
binding for all purposes,  absent manifest error.  Bank agrees that, as promptly
as  practical  after it  becomes  aware of the  occurrence  of any  event or the
existence  of a condition  that will cause Bank to be  entitled to  compensation
under  this  paragraph,  it will,  to the extent not  inconsistent  with  Bank's
internal policies, use reasonable efforts to make, fund or maintain any affected
portion of the loan under this Note through another lending office of Bank if as
a result thereof the additional  monies which would  otherwise be required to be
paid in respect of such portion of the loan under this Note would be  materially
reduced and if, as determined by Bank, in its reasonable discretion, the making,
funding or  maintaining of such portion of the loan under this Note through such
other lending office would not materially  adversely  affect such portion of the
loan  under  this  Note or Bank.  Borrowers  shall pay all  reasonable  expenses
incurred by Bank in utilizing another lending office pursuant to this paragraph.

     If  Borrowers  or any  guarantor  under  a  guaranty  of all or part of the
indebtedness  hereunder  ("guarantor") (a) fail(s) to pay this Note, or any part
thereof,  or any of the  Indebtedness  when due, by  maturity,  acceleration  or
otherwise,  or  fail(s)  to pay any  indebtedness  owing on a demand  basis upon
demand;  or (b)  fail(s) to comply  with any of the terms or  provisions  of any
agreement  between  Borrowers or any  guarantor  and Bank;  or (c) become(s) the
subject of a voluntary or involuntary  proceeding in bankruptcy (and if it is an
involuntary  proceeding,  it is not  dismissed  within  sixty  (60)  days of the
commencement thereof), or a reorganization,  arrangement or creditor composition
proceeding,  cease(s) doing business as a going concern,  or is the subject of a
dissolution,  merger or consolidation;  or (d) if any warranty or representation
made by Borrowers or any  guarantor in  connection  with this Note or any of the
indebtedness  hereunder shall be discovered to be have been untrue or incomplete
in any material respect when made; (e) or if there is any termination, notice of
termination, or breach (which the Bank in its sole discretion deems material) of
any guaranty,  pledge, collateral assignment or subordination agreement relating
to all or any part of the  Indebtedness;  or (f) if there is any  failure by any
Borrower or any guarantor to pay, when due, any of its indebtedness  (other than
to  the  Bank)  in an  amount  exceeding  $100,000  in the  aggregate  or in the
observance  or  performance  of any term,  covenant or condition in any document
evidencing,  securing or relating to such indebtedness; or (g) if there is filed
or issued a levy or writ of  attachment  or  garnishment  or other like judicial
process upon any Borrower or any guarantor or any of the collateral,  including,
without  limit,  any accounts of any Borrower or any guarantor  with Bank,  then
Bank, upon the occurrence and at any time during the continuance or existence of
any of these  conditions  or events  (each an "Event  of  Default"),  may at its
option  and  without  prior  notice  to  Borrowers,  declare  any  or all of the
indebtedness  hereunder to be immediately due and payable  (notwithstanding  any
provisions  contained in the evidence of it to the contrary),  sell or liquidate
all or any portion of the collateral, set off against the indebtedness hereunder
any amounts owing by Bank to any  Borrower,  and exercise any one or more of the
rights and remedies  granted to Bank by any agreement with Borrowers given to it
under applicable law, or otherwise.

     Upon the  occurrence  and during the  continuance  of any Event of Default,
Bank may at any time and from time to time, without notice to the Borrowers (any
requirement  for such notice being expressly  waived by the Borrowers),  set off
and apply against any and all of the  indebtedness of Borrowers to Bank, any and
all deposits (general or special,  time or demand,  provisional or final) at any
time held and other indebtedness at any time owing by Bank to or for. the credit
or the account of any Borrower  and any  property of any  Borrower  from time to
time in possession of Bank,  irrespective of whether or not Bank shall have made
any demand  hereunder  and  although  such  obligations  may be  contingent  and
unmatured.  The rights of Bank under this  paragraph  are in  addition  to other
rights and  remedies  (including,  without  limitation,  other rights of setoff)
which Bank may otherwise have.

     Upon the occurrence and during the continuance of an Event of Default, Bank
may declare this Note due forthwith and collect, deal with and dispose of all or
any part of any security in any manner  permitted or  authorized by the Michigan
Uniform  Commercial  Code or other  applicable law (including  public or private
sale) and after deducting  reasonable expenses  (including,  without limitation,
reasonable  attorneys'  fees and expenses),  Bank may apply the proceeds and any
deposits or credits in part of full payment of any said liabilities, whether due
or not, in any manner or order Bank elects.

     So long as any  Event of  Default  shall be  continuing,  the  indebtedness
outstanding under this Note shall bear interest at the Default Rate.

     For the purposes of this Note the  following  terms will have the following
meanings:

     "Applicable  Interest  Rate"  shall mean the  Eurodollar-based  Rate or the
Prime-based  Rate,  as selected by Borrowers  from time to time,  subject to the
terms and conditions of this Note.

     "Business Day" shall mean any day other than a Saturday,  Sunday or holiday
on  which  Bank  is  open  for  all or  substantially  all of its  domestic  and
international   commercial  banking  business  (including  dealings  in  foreign
exchange) in Detroit, Michigan.

     "Eurodollar-based Rate" shall mean a per annum interest rate which is three
percent (3%), plus the quotient of:

     (a)  the per annum interest rate at which Bank's Eurodollar  Lending Office
          offers deposits in dollars to prime banks in the eurodollar  market in
          an  amount   comparable  to  the  portion  of  the  principal   amount
          outstanding under this Note for which a Eurodollar-based Rate has been
          requested  and for a period equal to the relevant  Interest  Period at
          approximately  11:00 a.m.,  Detroit,  Michigan  time, two (2) Business
          Days prior to the first day of such Interest Period;

          divided by

     (b)  a  percentage  equal to 100%  minus the  maximum  rate on such date at
          which  Bank  is  required  to  maintain   reserves  on  "Euro-currency
          Liabilities"  as defined in and pursuant to  Regulation D of the Board
          of Governors of the Federal  Reserve System or, if such  regulation or
          definition  is  modified,  and as long as Bank is required to maintain
          reserves against a category of liabilities  which includes  eurodollar
          deposits or includes a category of assets  which  includes  eurodollar
          loans,  the rate at which such  reserves are required to be maintained
          on such category.

     "Default  Rate"  means  the sum of three  percent  (3%) and the  Applicable
Interest Rate under this Note.

     "Eurodollar  Lending  Office" shall mean Bank's office located in the Grand
Cayman Islands,  British West Indies, or such other branch of Bank,  domestic or
foreign,  as it may  hereafter  designate as its  Eurodollar  Lending  Office by
notice to Borrowers.

     "Interest Period" shall mean a period of one (1), two (2), three (3) or six
(6)  months (or any  lesser or  greater  number of days  agreed to in advance by
Borrowers  and Bank),  commencing  on the  effective  date of an election of the
Eurodollar-based  Rate  made in  accordance  with the  terms of this  Agreement,
provided that:

     (a)  any Interest  Period which would otherwise end on a day which is not a
          Business Day shall be extended to the next  succeeding  Business  Day,
          except  that if the next  succeeding  Business  Day  falls in  another
          calendar  month,  the Interest  Period shall end on the next preceding
          Business Day, and when an Interest Period begins on a day which has no
          numerically  corresponding day in the calendar month during which such
          Interest  Period is to end, it shall end on the last  Business  Day of
          such calendar month;

     (b)  no Interest  Period shall extend beyond the next  occurring  principal
          installment payment date under this Note.

     "Notice of  Eurodollar-based  Rate" shall mean a Notice of Eurodollar-based
Rate in form  similar to that  attached  to this Note as Exhibit  "A" issued and
delivered by Borrowers to Bank in accordance with the terms of this Note.

     "Prime Rate" means the per annum  interest rate  established by Bank as its
prime  rate for its  Borrowers,  as such rate may vary from time to time,  which
rate is not necessarily the lowest rate on loans made by Bank at any such time.

     "Prime-based  Rate" shall mean a per annum  interest rate which is equal to
the sum of one half of one  percent  (1/2%)  plus the  greater  of (i) the Prime
Rate; or (ii) the rate of interest  equal to the sum of (a) one percent (1%) and
(b) the rate of interest equal to the average of the rates on overnight  Federal
funds  transactions  with  members of the  Federal  Reserve  System  arranged by
Federal  funds  brokers  (the  "Overnight  Rates"),  as published by the Federal
Reserve Bank of New York,  or, if the  overnight  Rates are not so published for
any day, the average of the quotations for the Overnight  Rates received by Bank
from three (3) Federal funds brokers of recognized standing selected by Bank, as
the same may be changed  from time to time.  Effect shall be given to any change
in the Prime-based Rate as a result of any change in the Prime Rate or Overnight
Rates on the date of any such change in the Prime Rate or  Overnight  Rates,  as
applicable.

     All payments to be made by Borrowers to Bank under or pursuant to this Note
shall be in immediately available funds, without setoff or counterclaim,  and in
the event that any payments submitted hereunder are in funds not available until
collected,  said  payments  shall  continue to bear  interest  until  collected.
Borrowers hereby authorize Bank to charge any account of Borrowers with Bank for
all sums due hereunder when due in accordance with the terms hereof.

     The Borrowers  acknowledge  that this Note matures upon issuance,  and that
the Bank, at any time,  without notice, and without reason, may demand that this
Note be  immediately  paid in full.  The demand nature of this Note shall not be
deemed  modified by reference to a Default in this Note or in any agreement to a
default  by  the  Borrowers  or  to  the  occurrence  of  an  event  of  default
(collectively  an "Event of Default").  For purposes of this Note, to the extent
there is reference  to an Event of Default this  reference is for the purpose of
permitting  the Bank to  accelerate  indebtedness  not on a demand  basis and to
receive  interest at the default rate  provided in the document  evidencing  the
relevant  indebtedness.  It is  expressly  agreed that the Bank may exercise its
demand  rights  under this Note  whether or not an Event of Default has occurred
and  regardless of whether an Interest  Period is in effect.  The Bank,  with or
without reason and without notice, may from time to time make demand for partial
payments  under this Note and these  demands  shall not  preclude  the Bank from
demanding at any time that this Note be immediately paid in full.

     No delay or failure of Bank in  exercising  any right,  power or  privilege
hereunder shall affect such right,  power or privilege,  nor shall any single or
partial exercise thereof preclude any further exercise thereof,  or the exercise
of any other power, right or privilege.  The rights of Bank under this Agreement
are  cumulative  and not  exclusive  of any right or  remedies  which Bank would
otherwise have, whether by other instruments or by law.

     If this Note is signed by two or more parties  (whether by all as makers or
by one or more as an  accommodation  party or otherwise),  the  obligations  and
undertakings  under this Note  shall be that of all and any two or more  jointly
and  also of each  severally.  This  Note  shall  bind  the  Borrowers,  and the
Borrowers' respective successors and assigns.

     THE BORROWERS AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL  ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE  OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,  KNOWINGLY
AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION  REGARDING THE  PERFORMANCE OR ENFORCEMENT  OF, OR IN
ANY WAY RELATED TO, THIS NOTE.

     The  obligations of the Borrowers under this Note are the joint and several
obligations of the Borrowers; provided, however, with respect to Brake, Axle and
Tandem Company Canada Inc., its obligations  shall be several and not joint with
any other Borrower.

     This Note has been deemed to have been delivered at Detroit,  Michigan, and
shall be governed by and construed  and enforced in accordance  with the laws of
the State of Michigan.  Whenever  possible each  provision of this Note shall be
interpreted  in such manner as to be effective and valid under  applicable  law,
but if any  provision  of this Note  shall be  prohibited  by or  invalid  under
applicable  law,  such  provision  shall be  ineffective  to the  extent of such
prohibition or invalidity,  without invalidating the remainder of such provision
or the remaining provisions of this Note.


                                      JPE, INC.

                                      By:  /s/ Richard R. Chrysler
                                           -----------------------------------
                                           Richard R. Chrysler
                                      Its: President and Chief Executive Officer


                                      DAYTON PARTS, INC.

                                      By:  /s/ Richard R. Chrysler
                                           -----------------------------------
                                           Richard R. Chrysler
                                      Its: Chief Executive Officer


                                      STARBOARD INDUSTRIES, INC.

                                      By:  /s/ Richard R. Chrysler
                                           -----------------------------------
                                           Richard R. Chrysler
                                      Its: President


                                      PLASTIC TRIM, INC.

                                      By:  /s/ Richard R. Chrysler
                                           -----------------------------------
                                           Richard R. Chrysler
                                      Its: President


                                      JPE FINISHING, INC.

                                      By:  /s/ Richard R. Chrysler
                                           -----------------------------------
                                           Richard R. Chrysler
                                      Its: President


                                      BRAKE, AXLE AND TANDEM COMPANY CANADA INC.

                                      By:  /s/ Richard R. Chrysler
                                           -----------------------------------
                                           Richard R. Chrysler
                                      Its: Chief Executive Officer





                                               TAX I.D. NO.____________________


                             PROMISSORY NOTE-DEMAND
                                (Eurodollar Rate)

$30,000,000                                                    Detroit, Michigan
                                                                    May 27, 1999

     ON DEMAND, FOR VALUE RECEIVED, the undersigned (herein called "Borrowers"),
jointly and severally  promise to pay to the order of COMERICA  BANK, a Michigan
banking  corporation  (herein called  "Bank"),  in lawful currency of the United
States of America, the principal sum of THIRTY MILLION DOLLARS ($30,000,000), or
so much of said sum as has been  advanced  and is then  outstanding  under  this
Note, together with interest thereon as hereinafter set forth.

     This Note is a note under which Advances, repayments and re-Advances may be
made from time to time,  subject to the terms and conditions of this Note. At no
time  shall  the Bank be  under  any  obligation  to make  any  Advances  to the
Borrowers pursuant to this Note  (notwithstanding  anything expressed or implied
in this Note or elsewhere to the contrary,  including  without limit if the Bank
supplies the Borrowers  with a borrowing  formula) and the Bank, at any time and
from time to time,  without notice,  and in its sole  discretion,  may refuse to
make Advances or  re-advances to the Borrowers  without  incurring any liability
due to this refusal and without  affecting the Borrowers'  liability  under this
Note for any and all amounts advanced.

     Each  of  the  Advances   made   hereunder   shall  bear  interest  at  the
Eurodollar-based  Rate or the  Prime-based  Rate,  as elected by Borrowers or as
otherwise determined under this Note.

     Accrued  and  unpaid  interest  on the unpaid  balance of each  outstanding
Prime-based Advance shall be payable monthly, in arrears,  commencing on June 1,
1999, and on the first Business Day of each succeeding month  thereafter,  until
maturity  (whether as stated herein,  by acceleration,  or otherwise).  Interest
accruing at the Prime-based Rate shall be computed on the basis of a year of 360
days,  and shall be assessed for the actual number of days elapsed,  and in such
computation, effect shall be given to any change in the Applicable Interest Rate
as a result  of any  change  in the  Prime-based  Rate on the date of each  such
change in the Prime-based Rate.

     Accrued  and unpaid  interest  on each  Eurodollar-based  Advance  shall be
payable on the last day of the Interest Period applicable thereto (unless sooner
accelerated in accordance with the terms of this Note);  provided,  however,  if
such  Interest  Period in respect of any such  Eurodollar-based  Advance is more
than three (3) months,  interest  thereon  shall also be payable at intervals of
three  (3)  months  from  the date of such  Advance.  Interest  accruing  at the
Eurodollar-based Rate shall be computed on the basis of a 360 day year and shall
be  assessed  for the actual  number of days  elapsed  from the first day of the
Interest Period applicable thereto but not including the last day thereof.

     From and after the occurrence of any Default hereunder,  and so long as any
such  Default  remains  unremedied  or  uncured  thereafter,   the  Indebtedness
outstanding  under this Note shall  bear  interest  at a per annum rate of three
percent (3%) above the otherwise  Applicable Interest Rate, which interest shall
be payable upon demand.

     The amount and date of each Advance,  its  Applicable  Interest  Rate,  its
Interest Period, if any, and the amount and date of any repayment shall be noted
on Bank's records,  which records shall be conclusive  evidence thereof,  absent
manifest  error;  provided,  however,  any  failure  by Bank to  make  any  such
notation,  or any error in any such  notation,  shall not relieve  Borrowers  of
their  obligations to repay Bank all amounts  payable by Borrowers to Bank under
or pursuant to this Note, when due in accordance with the terms hereof.

     Borrowers may request an Advance  hereunder,  including the refunding of an
outstanding  Advance  as the  same  type  of  Advance  or the  conversion  of an
outstanding Advance as the same type of Advance,  upon the delivery to Bank of a
Request for Advance executed by an authorized  officer of Borrowers,  subject to
the following:

     (a)  no Default, and no condition or event which, with the giving of notice
          or the running of time,  or both,  would  constitute a Default,  shall
          have occurred and be continuing or exist under this Note;

     (b)  each such Request for Advance shall set forth the information required
          on the Request for Advance form annexed hereto as Exhibit "A";

     (c)  each such Request for Advance shall be delivered to Bank by 11:00 a.m.
          (Detroit,  Michigan  time) two (2) Business Days prior to the proposed
          date of Advance in the case of Eurodollar-based  Advances, and by 1:00
          p.m.  (Detroit,  Michigan time) on the proposed date of Advance in the
          case of Prime-based Advances;

     (d)  the  principal  amount of each  Eurodollar-based  Advance  shall be at
          least Five Hundred Thousand Dollars ($500,000);

     (e)  the proposed date of any refunding of any outstanding Eurodollar-based
          Advance as another  Eurodollar-based  Advance or the conversion of any
          outstanding  Eurodollar-based  Advance to a Prime-based  Advance shall
          only be on the  last day of the  Interest  Period  applicable  to such
          outstanding Eurodollar-based Advance; and

     (f)  a Request for Advance,  once delivered to Bank, shall not be revocable
          by  Borrowers;  provided,  however,  as  aforesaid,  Bank shall not be
          obligated to make any Advance under this Note.

     If, as to any outstanding  Eurodollar-based Advance, Bank shall not receive
a timely  Request for Advance in accordance  with the foregoing  requesting  the
refunding of such Advance as a Eurodollar-based Advance, the principal amount of
such  Advance  which is not then repaid  shall be  automatically  converted to a
Prime-based  Advance on the last day of the Interest Period applicable  thereto,
subject in all respects to the terms and  conditions of this Note. The foregoing
shall not in any way whatsoever  limit or otherwise  affect any of Bank's rights
or remedies under this Note upon the occurrence of any Default hereunder, or any
condition or event which,  with the giving of notice or the running of time,  or
both, would constitute a Default.

     Borrowers  may  prepay  all or  part  of  the  outstanding  balance  of any
Prime-based  Advance  under this Note at any time.  Borrowers  may prepay all or
part of any  Eurodollar-based  Advance  on the last day of the  Interest  Period
applicable  thereto,  provided  that the aggregate  balance of  Eurodollar-based
Advances  outstanding  after  such  prepayment  shall be at least  Five  Hundred
Thousand  Dollars  ($500,000),  and the unpaid portion of such  Eurodollar-based
Advance which is then refunded or converted  shall be subject to the limitations
set forth in this Note.  Any prepayment  made in accordance  with this paragraph
shall be without  premium or penalty.  Any other  prepayment  shall be otherwise
restricted by and subject to the terms of this Note.

     Subject to the definition of an "Interest Period"  hereunder,  in the event
that any payment under this Note becomes due and payable on any day which is not
a Business  Day, the due date thereof  shall be extended to the next  succeeding
Business Day, and, to the extent  applicable,  interest shall continue to accrue
and be payable  thereon  during  such  extension  at the rates set forth in this
Note.

     All payments to be made by Borrowers to Bank under or pursuant to this Note
shall be in immediately available funds, without setoff or counterclaim,  and in
the event that any payments submitted hereunder are in funds not available until
collected,  said  payments  shall  continue to bear  interest  until  collected.
Borrowers hereby authorize Bank to charge any account of Borrowers with Bank for
all sums due hereunder when due in accordance with the terms hereof.

     If  Borrowers   make  any  payment  of   principal   with  respect  to  any
Eurodollar-based  Advance  on any day  other  than the last day of the  Interest
Period  applicable  thereto (whether  voluntarily,  by acceleration,  demand, or
otherwise),  or if Borrowers fail to borrow any  Eurodollar-based  Advance after
notice has been given by Borrowers to Bank in accordance  with the terms of this
Note  requesting  such  Advance,  or if  Borrowers  fail to make any  payment of
principal  or  interest  in  respect  of a  Eurodollar-based  Advance  when due,
Borrowers  shall  reimburse  Bank, on demand,  for any resulting  loss,  cost or
expense incurred by Bank as a result thereof, including, without limitation, any
such loss,  cost or expense  incurred in  obtaining,  liquidating,  employing or
redeploying  deposits from third parties,  whether or not Bank shall have funded
or committed to fund such Advance.  Such amount payable by Borrowers to Bank may
include,  without limitation,  an amount equal to the excess, if any, of (a) the
amount of interest which would have accrued on the amount so prepaid,  or not so
borrowed, refunded or converted, for the period from the date of such prepayment
or of such  failure to borrow,  refund or  convert,  through the last day of the
relevant Interest Period, at the applicable rate of interest for said Advance(s)
provided  under  this  Note,  over (b) the  amount of  interest  (as  reasonably
determined  by Bank) which would have  accrued to Bank on such amount by placing
such  amount on  deposit  for a  comparable  period  with  leading  banks in the
interbank  eurodollar  market.  Calculation of any amounts payable to Bank under
this  paragraph  shall be made as though  Bank  shall  have  actually  funded or
committed to fund the relevant  Eurodollar-based Advance through the purchase of
an  underlying  deposit  in an amount  equal to the amount of such  Advance  and
having a maturity comparable to the relevant Interest Period; provided, however,
that Bank may fund any  Eurodollar-based  Advance in any manner it deems fit and
the  foregoing  assumptions  shall  be  utilized  only  for the  purpose  of the
calculation of amounts payable under this paragraph. Upon the written request of
Borrowers, Bank shall deliver to Borrowers a certificate setting forth the basis
for determining  such losses,  costs and expenses,  which  certificate  shall be
conclusively presumed correct, absent manifest error.

     For any  Eurodollar-based  Advance,  if Bank shall  designate a  Eurodollar
Lending  Office which  maintains  books separate from those of the rest of Bank,
Bank shall have the option of maintaining and carrying such Advance on the books
of such Eurodollar Lending Office.

     If, with respect to any  Interest  Period,  Bank  determines  that,  (a) by
reason of  circumstances  affecting the foreign  exchange and interbank  markets
generally, deposits in Eurodollars in the applicable amounts or for the relative
maturities are not being offered to Bank for such Interest Period, or (b) if the
rate of interest referred to in the definition of  "Eurodollar-based  Rate" upon
the basis of which the rate of interest for a Eurodollar-based  Advance is to be
determined  does not  accurately  or fairly cover or reflect the cost to Bank of
making or  maintaining a  Eurodollar-based  Advance  hereunder,  then Bank shall
forthwith give notice thereof to the Borrowers.  Thereafter, until Bank notifies
Borrowers that such conditions or  circumstances  no longer exist,  the right of
Borrowers to request a Eurodollar-based  Advance and to convert an Advance to or
refund an Advance as a Eurodollar-based Advance shall be suspended.

     If,  after the date  hereof,  the  introduction  of, or any  change in, any
applicable law, rule or regulation or in the  interpretation  or  administration
thereof  by any  governmental  authority  charged  with  the  interpretation  or
administration thereof, or compliance by Bank (or its Eurodollar Lending Office)
with any  request or  directive  (whether or not having the force of law) of any
such  authority,  shall  make it  unlawful  or  impossible  for the Bank (or its
Eurodollar  Lending Office) to make or maintain any Advance with interest at the
Eurodollar-based  Rate,  Bank shall  forthwith give notice thereof to Borrowers.
Thereafter,   (a)  until  Bank  notifies   Borrowers  that  such  conditions  or
circumstances   no  longer   exist,   the  right  of   Borrowers  to  request  a
Eurodollar-based  Advance and to convert an Advance to or refund an Advance as a
Eurodollar-based  Advance  shall be  suspended,  and  thereafter,  Borrowers may
select only the Prime-based Rate as the Applicable Interest Rate hereunder,  and
(b) if Bank may not lawfully continue to maintain an outstanding  Advance to the
end of the then current Interest Period applicable thereto, the Prime-based Rate
shall be the Applicable  Interest Rate for the remainder of such Interest Period
with respect to such outstanding Advance.

     If the adoption after the date hereof,  or any change after the date hereof
in, any  applicable  law,  rule or  regulation  of any  governmental  authority,
central  bank  or  comparable   agency  charged  with  the   interpretation   or
administration thereof, or compliance by Bank (or its Eurodollar Lending Office)
with any request or  directive  (whether or not having the force of law) made by
any such authority, central bank or comparable agency after the date hereof:

     (a)  shall subject Bank (or its Eurodollar Lending Office) to any tax, duty
          or other charge with respect to this Note or any Advance  hereunder or
          shall  change  the  basis  of  taxation  of  payments  to Bank (or its
          Eurodollar  Lending  Office) of the  principal  of or  interest on any
          Advance or any other  amounts  due under this Note in respect  thereof
          (except  for  changes in the rate of tax on the  overall net income of
          Bank or its Eurodollar  Lending Office imposed by the  jurisdiction in
          which Bank's principal  executive office or Eurodollar  Lending Office
          is located); or

     (b)  shall  impose,  modify  or deem  applicable  any  reserve  (including,
          without  limitation,  any  imposed  by the Board of  Governors  of the
          Federal  Reserve  System),  special  deposit  or  similar  requirement
          against  assets of,  deposits  with or for the  account  of, or credit
          extended by Bank (or its Eurodollar Lending Office) or shall impose on
          Bank (or its Eurodollar  Lending  Office) or the foreign  exchange and
          interbank markets any other condition affecting any Advance under this
          Note;

and the  result  of any of the  foregoing  is to  increase  the  cost to Bank of
maintaining  any part of the  indebtedness  hereunder or to reduce the amount of
any sum received or  receivable  by Bank under this Note by an amount  deemed by
the Bank to be material,  then Borrowers shall pay to Bank,  within fifteen (15)
days  of  Borrowers'   receipt  of  written  notice  from  Bank  demanding  such
compensation, such additional amount or amounts as will compensate Bank for such
increased cost or reduction.  A certificate of Bank,  prepared in good faith and
in reasonable  detail by Bank and submitted by Bank to Borrowers,  setting forth
the  basis for  determining  such  additional  amount or  amounts  necessary  to
compensate  Bank  shall be  conclusive  and  binding  for all  purposes,  absent
manifest error in computation.  Bank agrees that, as promptly as practical after
it becomes aware of the  occurrence of any event or the existence of a condition
that will cause Bank to be entitled to  compensation  under this  paragraph,  it
will,  to the  extent  not  inconsistent  with  Bank's  internal  policies,  use
reasonable  efforts to make,  fund or  maintain  any  affected  Eurodollar-based
Advance  through  another  lending  office  of Bank if as a result  thereof  the
additional  monies  which would  otherwise  be required to be paid in respect of
such Eurodollar-based  Advance would be materially reduced and if, as determined
by Bank, in its  reasonable  discretion,  the making,  funding or maintaining of
such  Eurodollar-based  Advance  through  such other  lending  office  would not
materially  adversely  affect  such  Advance  or Bank.  Borrowers  shall pay all
reasonable  expenses  incurred  by  Bank in  utilizing  another  lending  office
pursuant to this paragraph.

     In the event that any applicable law, treaty,  rule or regulation  (whether
domestic or foreign)  now or  hereafter  in effect and whether or not  presently
applicable  to Bank,  or any  interpretation  or  administration  thereof by any
governmental   authority  charged  with  the  interpretation  or  administration
thereof,  or compliance by Bank with any guideline,  request or directive of any
such  authority  (whether  or not  having  the  force  of  law),  including  any
risk-based  capital  guidelines,  affects or would  affect the amount of capital
required or expected to be  maintained by Bank (or any  corporation  controlling
Bank),  and Bank  determines  that the amount of such capital is increased by or
based upon the existence of any  obligations  of Bank hereunder or the making or
maintaining any Advances hereunder, and such increase has the effect of reducing
the rate of return on Bank's (or such  controlling  corporation's)  capital as a
consequence  of such  obligations  or the making or maintaining of such Advances
hereunder  to a level  below that which Bank (or such  controlling  corporation)
could have achieved but for such  circumstances  (taking into  consideration its
policies with respect to capital  adequacy),  then Borrowers  shall pay to Bank,
within  fifteen  (15) days of  Borrowers'  receipt of written  notice  from Bank
demanding such compensation,  additional amounts as are sufficient to compensate
Bank (or such controlling corporation) for any increase in the amount of capital
and reduced rate of return which Bank  reasonably  determines to be allocable to
the  existence  of any  obligations  of the Bank  hereunder  or to the making or
maintaining  any Advances  hereunder.  A certificate of Bank as to the amount of
such  compensation,  prepared in good faith and in reasonable detail by the Bank
and  submitted by Bank to  Borrowers,  shall be  conclusive  and binding for all
purposes absent manifest error in computation.  Bank agrees that, as promptly as
practical after it becomes aware of the occurrence of any event or the existence
of a condition  that will cause Bank to be entitled to  compensation  under this
paragraph,  it  will,  to the  extent  not  inconsistent  with  Bank's  internal
policies,  use  reasonable  efforts  to  make,  fund or  maintain  any  affected
Eurodollar-based  Advance  through another lending office of Bank if as a result
thereof the  additional  monies which would  otherwise be required to be paid in
respect of such Eurodollar-based  Advance would be materially reduced and if, as
determined  by Bank,  in its  reasonable  discretion,  the  making,  funding  or
maintaining of such  Eurodollar-based  Advance through such other lending office
would not materially  adversely affect such Advance or Bank. Borrowers shall pay
all reasonable  expenses  incurred by Bank in utilizing  another  lending office
pursuant to this paragraph.

     The Borrowers  acknowledge  that this Note matures upon issuance,  and that
the Bank, at any time,  without notice, and without reason, may demand that this
Note be  immediately  paid in full.  The demand nature of this Note shall not be
deemed  modified by reference to a Default in this Note or in any agreement to a
default  by  the  Borrowers  or  to  the  occurrence  of  an  event  of  default
(collectively  an "Event of Default").  For purposes of this Note, to the extent
there is reference  to an Event of Default this  reference is for the purpose of
permitting  the Bank to  accelerate  indebtedness  not on a demand  basis and to
receive  interest at the default rate  provided in the document  evidencing  the
relevant  indebtedness.  It is  expressly  agreed that the Bank may exercise its
demand  rights  under this Note  whether or not an Event of Default has occurred
and  regardless of whether an Interest  Period is in effect.  The Bank,  with or
without reason and without notice, may from time to time make demand for partial
payments  under this Note and these  demands  shall not  preclude  the Bank from
demanding at any time that this Note be  immediately  paid in full. All payments
under this Note shall be in immediately  available United States funds,  without
setoff or counterclaim.

     This  Note  and any  other  indebtedness  and  liabilities  of any  kind of
Borrowers  to  Bank,  and any  and all  modifications,  renewals  or  extensions
thereof, whether joint or several,  contingent or absolute,  direct or indirect,
now  existing  or  later  arising,  and  however  evidenced   (collectively  the
"Indebtedness"),  are secured by and Bank is granted a security  interest in all
items at any time  deposited  in any account of  Borrowers  with Bank and by all
proceeds of these items (cash or otherwise),  all account  balances of Borrowers
from time to time with Bank,  by all property of Borrowers  from time to time in
the  possession  of Bank,  and by any other  collateral,  rights and  properties
described in each and every mortgage, security agreement, pledge, assignment and
other  security or collateral  agreement  which has been, or will at any time(s)
later  be,  executed  by  Borrowers  or  others  to or for the  benefit  of Bank
(collectively the "Collateral").

     If  Borrowers  or any  guarantor  under  a  guaranty  of all or part of the
Indebtedness ("guarantor") (a) fail(s) to pay this Note, or any part thereof, or
any of the  Indebtedness  when due, by maturity,  acceleration or otherwise,  or
fail(s) to pay any  Indebtedness  owing on a demand  basis upon  demand;  or (b)
fail(s) to comply with any of the terms or provisions  of any agreement  between
Borrowers or any guarantor and Bank; or (c) become(s) the subject of a voluntary
or  involuntary   proceeding  in  bankruptcy  )(and  if  it  is  an  involuntary
proceeding,  it is not  dismissed  within  sixty  (60) days of the  commencement
thereof), or a reorganization,  arrangement or creditor composition  proceeding,
cease(s) doing business as a going concern,  or is the subject of a dissolution,
merger  or  consolidation;  or (d) if any  warranty  or  representation  made by
Borrowers  or  any  guarantor  in  connection  with  this  Note  or  any  of the
Indebtedness  shall be  discovered  to have  been  untrue or  incomplete  in any
material  respect  when  made;  (e) or if there is any  termination,  notice  of
termination, or breach (which the Bank in its sole and absolute discretion deems
material)  of any  guaranty,  pledge,  collateral  assignment  or  subordination
agreement  relating to all or any part of the  Indebtedness;  or (f) if there is
any  failure  by  Borrowers  or any  guarantor  to  pay,  when  due,  any of its
indebtedness  (other  than to the Bank) in an amount  exceeding  $100,000 in the
aggregate or in the observance or performance of any term, covenant or condition
in any document evidencing, securing or relating to such indebtedness; or (g) if
there is filed or issued a levy or writ of  attachment or  garnishment  or other
like  judicial  process  upon  any  Borrower  or  any  guarantor  or  any of the
Collateral,  including,  without  limit,  any  accounts  of any  Borrower or any
guarantor with Bank,  then Bank,  upon the occurrence and at any time during the
continuance or existence of any of these conditions or events (each an "Event of
Default"),  may at its option and without prior notice to any Borrower,  declare
any  or  all  of  the   Indebtedness   to  be   immediately   due  and   payable
(notwithstanding  any  provisions  contained  in  the  evidence  of  it  to  the
contrary),  sell or  liquidate  all or any  portion of the  Collateral,  set off
against the Indebtedness any amounts owing by Bank to any Borrower, and exercise
any one or more of the rights and remedies granted to Bank by any agreement with
Borrowers given to it under applicable law, or otherwise.

     Borrowers waive presentment, demand, protest, notice of dishonor, notice of
demand or intent to demand, notice of acceleration or intent to accelerate,  and
all other notices,  and agrees that no extension or indulgence to Borrowers,  or
release,   substitution  or  nonenforcement  of  any  security,  or  release  or
substitution  of any  guarantor  or any other  party,  whether  with or  without
notice, shall affect the obligations of Borrowers.  Borrowers waive all defenses
or right to discharge  available  under Section 3-605 of the Uniform  Commercial
Code and waives all other suretyship  defenses or right to discharge.  Borrowers
agree that Bank has the right to sell, assign, or grant  participations,  or any
interest,  in any or all of the Indebtedness,  and that, in connection with such
right,  but without  limiting its ability to make other  disclosures to the full
extent allowable, Bank may disclose all documents and information which the Bank
now or later has relating to Borrowers and the Indebtedness.

     Borrowers  agree to  reimburse  Bank,  or any other holder or owner of this
Note, for any and all reasonable costs and expenses  (including,  without limit,
court costs,  legal expenses and reasonable  attorneys' fees,  whether inside or
outside  counsel is used,  whether or not suit is  instituted,  and,  if suit is
instituted,  whether at the trial court level, appellate level, in a bankruptcy,
probate or  administrative  proceeding or  otherwise)  incurred in collecting or
attempting  to collect  this Note or the  Indebtedness  or incurred in any other
matter or proceeding relating to this Note or the Indebtedness.

     Borrowers acknowledge and agree that there are no contrary agreements, oral
or  written,  establishing  a term of this  Note and  agrees  that the terms and
conditions  of this  Note may not be  amended,  waived or  modified  except in a
writing signed by a duly authorized  officer of Bank expressly  stating that the
writing  constitutes an amendment,  waiver or  modification of the terms of this
Note.  If any provision of this Note is  unenforceable  in whole or part for any
reason, the remaining provisions shall continue to be effective. THIS NOTE SHALL
BE  GOVERNED  BY AND  CONSTRUED  IN  ACCORDANCE  WITH THE  LAWS OF THE  STATE OF
MICHIGAN.  All  extensions  of credit  under this Note shall be made from Bank's
principal office located in Detroit, Michigan.

     This Note shall bind  Borrowers and  Borrowers'  respective  successors and
assigns.

     For the  purposes  of this Note,  the  following  terms have the  following
meanings:

     "Advance"  means a borrowing  requested by Borrowers and made by Bank under
this Note, including any refunding of an outstanding Advance as the same type of
Advance or the  conversion  of any such  outstanding  Advance to another type of
Advance, and shall include a Eurodollar-based Advance and a Prime-based Advance.

     "Applicable  Interest  Rate"  means  the   Eurodollar-based   Rate  or  the
Prime-based  Rate,  as selected by  Borrowers  from time to time or as otherwise
determined in accordance with the terms and conditions of this Note.

     "Business Day" means any day, other than a Saturday,  Sunday or holiday, on
which  Bank  is  open  for  all  or  substantially   all  of  its  domestic  and
international  business  (including  dealings in foreign  exchange)  in Detroit,
Michigan.

     "Eurodollar-based  Advance"  means an Advance  which bears  interest at the
Eurodollar-based Rate.

     "Eurodollar-based  Rate" means a per annum  interest rate which is equal to
the sum of three percent (3%), plus the quotient of:

     (a)  the per annum interest rate at which Bank's Eurodollar  Lending Office
          offers dollar  deposits to prime banks in the eurodollar  market in an
          amount comparable to the relevant  Eurodollar-based  Advance and for a
          period  equal to the relevant  Interest  Period at or about 11:00 a.m.
          (Detroit,  Michigan time) (or as soon thereafter as practical) two (2)
          Business Days prior to the first day of such Interest Period;

          divided by

     (b)  a percentage equal to 100% minus the maximum rate during such Interest
          Period  at  which  Bank  is   required   to   maintain   reserves   on
          "Euro-currency Liabilities" as defined in and pursuant to Regulation D
          of the Board of  Governors of the Federal  Reserve  System or, if such
          regulation or definition is modified,  and as long as Bank is required
          to maintain  reserves against a category of liabilities which includes
          eurodollar  deposits or includes a category of assets  which  includes
          eurodollar  loans,  the rate at which such reserves are required to be
          maintained on such category.

     "Eurodollar  Lending  Office"  means  Bank's  office  located in the Cayman
Islands, British West Indies, or such other branch of Bank, domestic or foreign,
as it may  hereafter  designate as its  Eurodollar  Lending  Office by notice to
Borrowers.

     "Interest  Period" means a period of one (1) month,  two (2) months,  three
(3) or six (6)  months (or any  lesser or  greater  number of days  agreed to in
advance by Borrowers and Bank),  as selected by Borrowers  pursuant to the terms
of this Note, commencing on the day a Eurodollar-based Advance is made, provided
that (a) any Interest  Period which would  otherwise end on a day which is not a
Business Day shall be extended to the next succeeding  Business Day, except that
if the next  succeeding  Business  Day  falls in  another  calendar  month,  the
Interest  Period  shall  end on the next  preceding  Business  Day,  and when an
Interest  Period begins on a day which has no numerically  corresponding  day in
the calendar month during which such Interest  Period is to end, it shall end on
the last Business Day of such calendar month.

     "Prime-based  Advance"  shall mean an Advance  which bears  interest at the
Prime-based Rate.

     "Prime Rate" means the per annum  interest rate  established by Bank as its
prime  rate for its  borrowers,  as such rate may vary from time to time,  which
rate is not necessarily the lowest rate on loans made by Bank at any such time.

     "Prime-based  Rate" shall mean a per annum  interest rate which is equal to
the sum of one half of one  percent  (1/2%)  plus the  greater  of (i) the Prime
Rate; or (ii) the rate of interest  equal to the sum of (a) one percent (1%) and
(b) the rate of interest equal to the average of the rates on overnight  Federal
funds  transactions  with  members of the  Federal  Reserve  System  arranged by
Federal  funds  brokers  (the  "Overnight  Rates"),  as published by the Federal
Reserve Bank of New York,  or, if the  overnight  Rates are not so published for
any day, the average of the quotations for the Overnight  Rates received by Bank
from three (3) Federal funds brokers of recognized standing selected by Bank, as
the same may be changed from time to time.

     "Request for Advance" means a Request for Advance issued by Borrowers under
this Note in the form annexed to this Note as Exhibit "A".

     Borrowers agree to make all payments to Bank of any and all amounts due and
owing by Borrowers to Bank hereunder, including, without limitation, the payment
of principal and interest on any Advance, on the date provided for such payment,
in United States Dollars in immediately  available  funds, at the office of Bank
located at Comerica  Tower at Detroit  Center,  500  Woodward  Avenue,  Detroit,
Michigan 48226, or such other address as Bank may notify Borrowers in writing.

     No delay or failure of Bank in  exercising  any right,  power or  privilege
hereunder shall affect such right,  power or privilege,  nor shall any single or
partial exercise thereof preclude any further exercise thereof,  or the exercise
of any other power, right or privilege.  The rights of Bank under this Agreement
are  cumulative  and not  exclusive  of any right or  remedies  which Bank would
otherwise have, whether by other instruments or by law.

     The  obligations of the Borrowers under this Note are the joint and several
obligations of the Borrowers; provided, however, with respect to Brake, Axle and
Tandem Company Canada Inc., its obligations  shall be several and not joint with
any other Borrower.

     BORROWERS  AND  BANK  ACKNOWLEDGE  THAT  THE  RIGHT  TO  TRIAL BY JURY IS A
CONSTITUTIONAL  ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE  OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,  KNOWINGLY
AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION  REGARDING THE  PERFORMANCE OR ENFORCEMENT  OF, OR IN
ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS HEREUNDER.


                                     JPE, INC.

                                     By:  /s/ Richard R. Chrysler
                                          -----------------------------------
                                          Richard R.  Chrysler
                                     Its: President and Chief Executive Officer


                                     DAYTON PARTS, INC.

                                     By:  /s/ Richard R. Chrysler
                                          -----------------------------------
                                          Richard R. Chrysler
                                     Its: Chief Executive Officer


                                     STARBOARD INDUSTRIES, INC.

                                     By:  /s/ Richard R. Chrysler
                                          ----------------------------------
                                          Richard R. Chrysler
                                     Its: President


                                     PLASTIC TRIM, INC.

                                     By:  /s/ Richard R. Chrysler
                                          ---------------------------------
                                          Richard R. Chrysler
                                     Its: President


                                     JPE FINISHING, INC.

                                     By:  /s/ Richard R. Chrysler
                                          --------------------------------
                                          Richard R. Chrysler
                                     Its: President


                                     BRAKE, AXLE AND TANDEM COMPANY CANADA INC.

                                     By:  /s/ Richard R. Chrysler
                                          --------------------------------
                                          Richard R. Chrysler
                                     Its: Chief Executive Officer






                            ADVANCE FORMULA AGREEMENT


As of May 27, 1999,  this  Agreement is made between the  undersigned  borrowers
(collectively,  "Debtors") and COMERICA BANK ("Bank").  For and in consideration
of the loans and other credit which Debtor may now or hereafter obtain from Bank
which are secured pursuant to a certain Security  Agreements dated May 27, 1999,
("Security Agreement"),  and for other good and valuable consideration,  Debtors
agree as follows:

     1. FORMULA  LOANS.  The credit  which Bank may now or  hereafter  extend to
Debtors  subject to the  limitations of this Agreement and to the conditions and
limitations  of any other  agreement  between  Debtors and Bank is identified as
follows:

                       $30,000,000 secured line of credit

and any extensions,  renewals or  substitutions,  whether in a greater or lesser
amount, including any letters of credit issued thereunder ("Formula Loans").

     2. ADVANCE FORMULA. Debtors warrant and agree that Debtors' indebtedness to
Bank for the Formula Loans shall never exceed the sum of:

     (a)  Eighty percent (80%) of their Eligible Accounts, as defined below; and

     (b)  the lesser of fifty  percent  (50%) of their  Eligible  Inventory,  as
          defined below, or Nine Million Dollars ($9,000,000).

     3. FORMULA  COMPLIANCE.  If the  limitations  in  paragraph  2, above,  are
exceeded at any time,  Debtors  shall  immediately  pay Bank sums  sufficient to
reduce the Formula Loans by the amount of such excess.

     4. ELIGIBLE ACCOUNT.  "Eligible  Account" shall mean an Account (as defined
in the Michigan  Uniform  Commercial  Code,  as amended  ("UCC"),  but shall not
include  interest  and  service  charges)  arising in the  ordinary  course of a
Debtor's business which meets each of the following requirements:

     (a)  it is not owing  more  than  ninety  (90)  days  after the date of the
          original invoice or other writing evidencing such Account;

     (b)  it is not owing by an Account  Debtor (as  defined in the UCC) who has
          failed  to pay  twenty  five  percent  (25%) or more of the  aggregate
          amount of its Accounts  owing to Debtors within ninety (90) days after
          the date of the respective  invoices or other writings evidencing such
          Accounts;

     (c)  it  arises  from the sale or lease of goods and such  goods  have been
          shipped or delivered to the Account  Debtor under such Account;  or it
          arises from services rendered and such services have been performed;

     (d)  it is  evidenced  by an  invoice,  dated  not  later  than the date of
          shipment or performance, rendered to such Account Debtor or some other
          evidence of billing acceptable to Bank;

     (e)  it is not  evidenced  by any note,  trade  acceptance,  draft or other
          negotiable  instrument  or by any chattel  paper,  unless such note or
          other  document  or  instrument   previously  has  been  endorsed  and
          delivered by Debtors to Bank;

     (f)  it is a valid,  legally  enforceable  obligation of the Account Debtor
          thereunder,  and is not subject to any offset,  counterclaim  or other
          defense on the part of such Account Debtor or to any claim on the part
          of such Account  Debtor  denying  liability  thereunder in whole or in
          part;

     (g)  it is not  subject  to any sale of  accounts,  any  rights of  offset,
          assignment, lien or security interest whatsoever other than to Bank;

     (h)  it is not owing by a subsidiary  or  affiliate of a Debtor,  nor by an
          Account Debtor which (i) does not maintain its chief executive  office
          in the United States of America,  (ii) is not organized under the laws
          of the United  States of America,  or any state  thereof,  unless such
          Account  Debtor is a Canadian  subsidiary of General  Motors,  Ford or
          Chrysler,  or  (iii)  is the  government  of any  foreign  country  or
          sovereign  state,  or of any state,  province,  municipality  or other
          instrumentality thereof;

     (i)  it is not an  account  owing by the  United  States of  America or any
          state or political subdivision thereof, or by any department,  agency,
          public  body  corporate  or  other   instrumentality  of  any  of  the
          foregoing,  unless all  necessary  steps are taken to comply  with the
          Federal  Assignment  of Claims Act of 1940,  as  amended,  or with any
          comparable state law, if applicable, and all other necessary steps are
          taken to perfect Bank's security interest in such account;

     (j)  it is not owing by an Account Debtor for which a Debtor has received a
          notice of (i) the death of the Account Debtor,  (ii) the  dissolution,
          liquidation,  termination of existence, insolvency or business failure
          of the Account  Debtor,  (iii) the  appointment  of a receiver for any
          part of the property of the Account Debtor,  or (iv) an assignment for
          the benefit of creditors,  the filing of a petition in bankruptcy,  or
          the  commencement of any proceeding under any bankruptcy or insolvency
          laws by or against the Account Debtor;

     (k)  it is not an  account  billed in  advance,  payable on  delivery,  for
          consigned  goods,  for  guaranteed  sales,  for  unbilled  sales,  for
          progress  billings,  payable at a future date in  accordance  with its
          terms,  subject to a retainage  or  holdback by the Account  Debtor or
          insured by a surety company; and

     (l)  it is not owing by any Account Debtor whose  obligations  Bank, acting
          in its reasonable  discretion based on a belief that the prospects for
          payment of the  Accounts  owing by such Account  Debtor are  impaired,
          shall have  notified  Debtors  are not deemed to  constitute  Eligible
          Accounts.

An Account  which is at any time an  Eligible  Account,  but which  subsequently
fails to meet any of the foregoing requirements,  shall forthwith cease to be an
Eligible Account.

     5.  ELIGIBLE  INVENTORY.  Unless  stated  otherwise  in paragraph 12 below,
"Eligible  Inventory"  shall be valued at the lesser of cost or  present  market
value in accordance with generally accepted accounting principles,  consistently
applied,  and shall mean all of Debtors' Inventory (as defined in the UCC) which
is in good and  merchantable  condition,  is not obsolete or  discontinued,  and
which would  properly be  classified as "raw  materials"  or as "finished  goods
inventory" under generally accepted accounting principles, consistently applied,
excluding  (a) Debtors'  work in process,  consigned  goods,  inventory  located
outside the United States of America,  (b) inventory  covered by or subject to a
seller's  right  to  repurchase,  or any  consensual  or  nonconsensual  lien or
security  interest   (including  without  limitation   purchase  money  security
interests)  other  than in favor of Bank,  whether  senior  or  junior to Bank's
security  interest,  and (c) inventory that Bank, acting in its sole discretion,
after having notified Debtors, excludes. Inventory which is at any time Eligible
Inventory,   but  which   subsequently  fails  to  meet  any  of  the  foregoing
requirements, shall forthwith cease to be Eligible Inventory.

     6. CERTIFICATES,  SCHEDULES AND REPORTS.  Debtors will within ten (10) days
after  and as of the end of each  month  (and at such  other  times  as Bank may
request), deliver to Bank agings of the Accounts and a schedule identifying each
Eligible  Account (not previously so identified) and reports as to the amount of
Eligible  Inventory.  Debtors  will  from  time to  time  deliver  to Bank  such
additional  schedules,  certificates  and reports  respecting  all or any of the
Collateral (as defined in the Security Agreement), the items or amounts received
by Debtors in full or partial  payment of any of the  Collateral,  and any goods
(the  sale or lease of which by  Debtors  shall  have  given  rise to any of the
Collateral) possession of which has been obtained by Debtors, all and as to such
extent as Bank may request.  Any such  schedule,  certificate or report shall be
executed by a duly  authorized  officer of Debtors and shall be in such form and
detail as Bank may specify.  Any such schedule  identifying any Eligible Account
shall be  accompanied  (if Bank so  requests)  by a true and correct copy of the
invoice  evidencing  such  Eligible  Account  and by  evidence  of  shipment  or
performance.

     7.  INSPECTIONS;  COMPLIANCE.  Debtors  shall permit Bank and its designees
from time to time to make  such  inspections  and  audits,  and to  obtain  such
confirmations or other information, with respect to any of the Collateral or any
Account  Debtor  as  Bank is  entitled  to make or  obtain  under  the  Security
Agreement,  and  shall  reimburse  Bank on demand  for all  costs  and  expenses
incurred by Bank in connection with such  inspections and audits.  Debtors shall
further  comply  with all of the other  terms  and  conditions  of the  Security
Agreement.

     8.  DEFAULT.  Any  failure by Debtors to comply with this  Agreement  shall
constitute a default  under the Formula  Loans and under the Security  Agreement
and the Indebtedness, as defined therein.

     9.  AMENDMENTS;  WAIVERS.  This  Agreement  may  be  amended,  modified  or
terminated  only in writing duly  executed by Debtors and Bank. No delay by Bank
in requiring  Debtor's  compliance  herewith  shall  constitute a waiver of such
right.  The rights granted to Bank hereunder are cumulative,  and in addition to
any other  rights  Bank may have by  agreement  or under  applicable  law.  This
Agreement  shall  supersede  and  replace in their  entirety  any prior  advance
formula  agreements in effect between Bank and Debtors.  This Agreement shall be
governed by and construed in  accordance  with the internal laws of the State of
Michigan, without regard to conflict of laws principles.

     10. DEMAND BASIS FORMULA  LOANS.  Notwithstanding  anything to the contrary
set forth in this Agreement, in the event that the Formula Loans are at any time
on a demand basis,  Debtors  hereby  acknowledge  and agree that the formula set
forth in paragraph 2 hereof is merely for  advisory  and  guidance  purposes and
Bank shall not be  obligated  to make any loans or  advances  under the  Formula
Loans,  and,  notwithstanding  the terms of  paragraph 3 above,  Bank may at any
time,  at its  option,  demand  payment  of any  or  all of the  Formula  Loans,
whereupon the same shall become due and payable.

     11. JURY WAIVER.  DEBTORS AND BANK  ACKNOWLEDGE  THAT THE RIGHT TO TRIAL BY
JURY IS A  CONSTITUTIONAL  ONE,  BUT THAT IT MAY BE WAIVED.  EACH  PARTY,  AFTER
CONSULTING  (OR HAVING HAD THE  OPPORTUNITY  TO CONSULT)  WITH  COUNSEL OF THEIR
CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT
TO TRIAL  BY JURY IN THE  EVENT  OF  LITIGATION  REGARDING  THE  PERFORMANCE  OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.

     12. SPECIAL PROVISIONS*

                              *None, if left blank.


IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year
first above written.


Debtors' Chief Executive Office Address:     DEBTORS:

775 Technology Drive                         JPE, INC.
Suite 200
Ann Arbor, MI 48108                          By:  /s/ Richard R. Chrysler
                                                  ------------------------------
                                                  Richard R. Chrysler

                                             Its: President and Chief Executive
                                                   Officer


                                             BRAKE, AXLE AND TANDEM COMPANY
                                              CANADA, INC.

                                             By:  /s/ Richard R. Chrysler
                                                  ------------------------------
                                                  Richard R. Chrysler
                                             Its: Chief Executive Officer


                                             DAYTON PARTS, INC.

                                             By:  /s/ Richard R. Chrysler
                                                  ------------------------------
                                                  Richard R. Chrysler
                                             Its: Chief Executive Officer


                                             JPE FINISHING, INC.

                                             By:  /s/ Richard R. Chrysler
                                                  ------------------------------
                                                  Richard R. Chrysler
                                             Its: President


                                             PLASTIC TRIM, INC.

                                             By:  /s/ Richard R. Chrysler
                                                  ------------------------------
                                                  Richard R. Chrysler
                                             Its: President


                                             STARBOARD INDUSTRIES, INC.

                                             By:  /s/ Richard R. Chrysler
                                                  ------------------------------
                                                  Richard R. Chrysler
                                             Its: President


Accepted and Approved:

COMERICA BANK

By:  /s/ Richard S. Arceci
     ----------------------------
         Richard S. Arceci
Its:     Vice President





                               Security Agreement
                                  (All Assets)


As of May 27, 1999, for value  received,  the undersigned  ("Debtor")  grants to
Comerica Bank ("Bank"),  a Michigan banking  corporation,  a continuing security
interest  in the  Collateral  (as  defined  below) to secure  payment  when due,
whether by stated maturity,  demand,  acceleration or otherwise, of all existing
and future  indebtedness  ("Indebtedness") to the Bank of the obligors listed in
attached  Schedule 1  (collectively,  "Borrower")  and/or  Debtor.  Indebtedness
includes  without limit any and all  obligations  or liabilities of the Borrower
and/or Debtor to the Bank,  whether absolute or contingent,  direct or indirect,
voluntary or involuntary, liquidated or unliquidated, joint or several, known or
unknown;  any and all  obligations or liabilities  for which the Borrower and/or
Debtor would  otherwise be liable to the Bank were it not for the  invalidity or
unenforceability  of them by reason of any bankruptcy,  insolvency or other law,
or for any other reason; any and all amendments,  modifications, renewals and/or
extensions  of any of the above;  all costs  incurred  by Bank in  establishing,
determining,  continuing,  or defending the validity or priority of its security
interest,  or in pursuing its rights and remedies  under this Agreement or under
any other  agreement  between Bank and Borrower  and/or  Debtor or in connection
with any proceeding involving Bank as a result of any financial accommodation to
Borrower  and/or  Debtor;  and  all  other  costs  of  collecting  Indebtedness,
including  without limit attorney fees. Debtor agrees to pay Bank all such costs
incurred by the Bank,  immediately  upon demand,  and until paid all costs shall
bear  interest  at  the  highest  per  annum  rate  applicable  to  any  of  the
Indebtedness,  but not in excess  of the  maximum  rate  permitted  by law.  Any
reference  in this  Agreement  to attorney  fees shall be deemed a reference  to
reasonable  fees,  costs,  and expenses of both in-house and outside counsel and
paralegals, whether or not a suit or action is instituted, and to court costs if
a suit or action is  instituted,  and whether  attorney  fees or court costs are
incurred at the trial court level, on appeal, in a bankruptcy, administrative or
probate proceeding or otherwise.

     1. Collateral shall mean all of the following  property Debtor now or later
owns or has an interest in, wherever located:

     (a)  all Accounts  Receivable  (for purposes of this  Agreement,  "Accounts
          Receivable"  consists of all accounts,  general  intangibles,  chattel
          paper, contract rights, deposit accounts, documents and instruments),

     (b)  all Inventory,

     (c)  all Equipment and Fixtures,

     (d)  all  goods,  instruments,  documents,  policies  and  certificates  of
          insurance,  deposits,  money,  investment  property or other  property
          (except real property  which is not a fixture)  which are now or later
          in  possession  or control  of Bank,  or as to which Bank now or later
          controls possession by documents or otherwise, and

     (e)  all   additions,   attachments,   accessions,   parts,   replacements,
          substitutions, renewals, interest, dividends, distributions, rights of
          any kind  (including  but not limited to stock  splits,  stock rights,
          voting  and  preferential  rights),   products,  and  proceeds  of  or
          pertaining  to the  above  including,  without  limit,  cash or  other
          property which were proceeds and are recovered by a bankruptcy trustee
          or otherwise as a preferential transfer by Debtor.

     2. Warranties,  Covenants and Agreements.  Debtor  warrants,  covenants and
agrees as follows:

          2.1 Debtor shall furnish to Bank, in form and at intervals as Bank may
     reasonably  request,  any information Bank may reasonably request and allow
     Bank at all  reasonable  times  during  normal  business  hours to examine,
     inspect,  and copy any of Debtor's books and records.  Debtor shall, at the
     request of Bank,  mark its records and the  Collateral to clearly  indicate
     the security interest of Bank under this Agreement.

          2.2 At the time  any  Collateral  becomes,  or is  represented  to be,
     subject to a security  interest in favor of Bank, Debtor shall be deemed to
     have  warranted  that (a) Debtor is the lawful owner of the  Collateral and
     has the right and authority to subject it to a security interest granted to
     Bank; (b) none of the Collateral is subject to any security  interest other
     than that in favor of Bank and  Permitted  Liens (as  defined  in  attached
     Exhibit "A") and there are no financing  statements on file,  other than in
     favor of Bank and those  filed with  respect to  Permitted  Liens;  and (c)
     Debtor  acquired its rights in the Collateral in the ordinary course of its
     business.

          2.3 Debtor will keep the Collateral free at all times from all claims,
     liens,  security  interests and  encumbrances  other than those in favor of
     Bank and the Permitted  Liens.  Debtor will not,  without the prior written
     consent of Bank, sell, transfer or lease, or permit to be sold, transferred
     or  leased,  any or all of the  Collateral,  except  for  Inventory  in the
     ordinary  course  of its  business  and  except  for  obsolete  or worn out
     property  and  property  no longer  useful  in the  operation  of  Debtor's
     business  and will not return any  Inventory to its  supplier.  Bank or its
     representatives  may at all reasonable times inspect the Collateral and may
     enter upon all premises where the Collateral is kept or might be located.

          2.4 Debtor  will do all acts and will  execute or cause to be executed
     all  writings  reasonably  requested  by Bank to  establish,  maintain  and
     continue a perfected and first security interest of Bank in the Collateral.
     Debtor agrees that Bank has no obligation to acquire or perfect any lien on
     or security  interest in any asset(s),  whether  realty or  personalty,  to
     secure payment of the Indebtedness.

          2.5  Debtor  will pay  within  the time that they can be paid  without
     interest or penalty all taxes, assessments and similar charges which at any
     time are or may become a lien,  charge, or encumbrance upon any Collateral,
     except  to the  extent  contested  in good  faith  and  bonded  in a manner
     reasonably satisfactory to Bank. If Debtor fails to pay any of these taxes,
     assessments,  or other  charges in the time  provided  above,  Bank has the
     option  (but not the  obligation)  to do so and Debtor  agrees to repay all
     amounts so expended by Bank immediately upon demand, together with interest
     at the highest per annum rate applicable to any of the Indebtedness but not
     in excess of the maximum rate allowed by applicable law.

          2.6 Debtor  will keep the  Collateral  in good  condition  (subject to
     ordinary  wear  and  tear)  and  will  protect  it from  loss,  damage,  or
     deterioration  from any cause (other than ordinary  wear and tear).  Debtor
     has and will  maintain  at all times (a) with  respect  to the  Collateral,
     insurance  under  an  "all  risk"  policy  against  fire  and  other  risks
     customarily  insured against,  and (b) public liability insurance and other
     insurance as may be required by law or reasonably  required by Bank, all of
     which  insurance  shall be in  amount,  form and  content,  and  written by
     companies as may be reasonably  satisfactory to Bank, containing a lender's
     loss payable endorsement reasonably acceptable to Bank. Debtor will deliver
     to Bank  immediately upon demand evidence  reasonably  satisfactory to Bank
     that the required insurance has been procured.  If Debtor fails to maintain
     satisfactory insurance,  Bank has the option (but not the obligation) to do
     so and Debtor  agrees to repay all amounts so expended by Bank  immediately
     upon demand,  together  with  interest at the highest  lawful  default rate
     which could be charged by Bank on any Indebtedness.

          2.7 On each  occasion on which  Debtor  evidences  to Bank the account
     balances on and the nature and extent of the  Accounts  Receivable,  Debtor
     shall be deemed to have  warranted  that except as otherwise  indicated (a)
     each  of  those  Accounts  Receivable  is  valid  and  enforceable  without
     performance by Debtor of any act; (b) each of those account balances are in
     fact  owing,  (c)  there  are  no  setoffs,  recoupments,  credits,  contra
     accounts,   counterclaims   or  defenses  against  any  of  those  Accounts
     Receivable,  (d) as to any Accounts Receivable represented by a note, trade
     acceptance,  draft or other instrument or by any chattel paper or document,
     the same have been endorsed and/or  delivered by Debtor to Bank, (e) Debtor
     has not received with respect to any Account Receivable,  any notice of the
     death of the related account debtor,  nor of the dissolution,  liquidation,
     termination of existence,  insolvency,  business failure,  appointment of a
     receiver  for,  assignment  for the benefit of creditors by, or filing of a
     petition in bankruptcy  by or against,  the account  debtor,  and (f) as to
     each Account Receivable,  the account debtor is not an affiliate of Debtor,
     the United States of America or any department,  agency or  instrumentality
     of it, or a citizen or resident of any  jurisdiction  outside of the United
     States.  Debtor will do all acts and will execute all writings requested by
     Bank  to  perform,   enforce  performance  of,  and  collect  all  Accounts
     Receivable.   Debtor  shall  neither  make  nor  permit  any  modification,
     compromise or  substitution  for any Account  Receivable  without the prior
     written  consent of Bank.  Debtor  shall,  at Bank's  request,  arrange for
     verification  of Accounts  Receivable  directly with account  debtors or by
     other methods acceptable to Bank.

          2.8  Debtor  at all  times  shall  be in  compliance  in all  material
     respects  with all  applicable  laws,  including  without  limit  any laws,
     ordinances, directives, orders, statutes, or regulations an object of which
     is  to   regulate   or  improve   health,   safety,   or  the   environment
     ("Environmental Laws").

          2.9 If Bank, acting in its sole discretion,  redelivers  Collateral to
     Debtor or Debtor's  designee  for the purpose of (a) the  ultimate  sale or
     exchange thereof; or (b) presentation, collection, renewal, or registration
     of  transfer  thereof;  or  (c)  loading,  unloading,   storing,  shipping,
     transshipping,  manufacturing,  processing  or  otherwise  dealing  with it
     preliminary to sale or exchange;  such redelivery shall be in trust for the
     benefit  of Bank and shall not  constitute  a  release  of Bank's  security
     interest  in  it  or  in  the  proceeds  or  products  of  it  unless  Bank
     specifically so agrees in writing.  If Debtor requests any such redelivery,
     Debtor will deliver with such request a duly executed  financing  statement
     in form and  substance  satisfactory  to Bank.  Any proceeds of  Collateral
     coming into Debtor's possession as a result of any such redelivery shall be
     held in trust for Bank and immediately delivered to Bank for application on
     the Indebtedness.  Bank may (in its sole discretion)  deliver any or all of
     the  Collateral to Debtor,  and such delivery by Bank shall  discharge Bank
     from all  liability or  responsibility  for such  Collateral.  Bank, at its
     option,  may require  delivery of any  Collateral  to Bank at any time with
     such endorsements or assignments of the Collateral as Bank may request.

          2.10 Following the  occurrence and during the  continuance of an Event
     of Default,  at any time and without notice,  Bank may (a) cause any or all
     of the  Collateral  to be  transferred  to its  name or to the  name of its
     nominees;  (b) receive or collect by legal  proceedings  or  otherwise  all
     dividends,  interest,  principal  payments  and  other  sums and all  other
     distributions  at  any  time  payable  or  receivable  on  account  of  the
     Collateral,  and  hold  the same as  Collateral,  or apply  the same to the
     Indebtedness,  the manner and  distribution of the application to be in the
     sole  discretion  of Bank;  (c) enter  into any  extension,  subordination,
     reorganization,  deposit,  merger or  consolidation  agreement or any other
     agreement relating to or affecting the Collateral, and deposit or surrender
     control of the  Collateral,  and accept other  property in exchange for the
     Collateral and hold or apply the property or money so received  pursuant to
     this Agreement.

          2.11 Bank may assign any of the Indebtedness and deliver any or all of
     the  Collateral  to its  assignee,  who then  shall  have with  respect  to
     Collateral  so  delivered  all the  rights  and  powers of Bank  under this
     Agreement, and after that Bank shall be fully discharged from all liability
     and responsibility with respect to Collateral so delivered.

          2.12  Debtor   delivers  this  Agreement   based  solely  on  Debtor's
     independent investigation of (or decision not to investigate) the financial
     condition  of Borrower and is not relying on any  information  furnished by
     Bank.  Debtor  assumes  full   responsibility  for  obtaining  any  further
     information  concerning the Borrower's financial  condition,  the status of
     the  Indebtedness  or any  other  matter  which  the  undersigned  may deem
     necessary or appropriate  now or later.  Debtor waives any duty on the part
     of Bank,  and agrees that Debtor is not relying upon nor expecting  Bank to
     disclose to Debtor any fact now or later known by Bank, whether relating to
     the  operations or condition of Borrower,  the  existence,  liabilities  or
     financial condition of any guarantor of the Indebtedness, the occurrence of
     any default with respect to the Indebtedness, or otherwise, notwithstanding
     any effect such fact may have upon Debtor's risk or Debtor's rights against
     Borrower.  Debtor  knowingly  accepts the full range of risk encompassed in
     this  Agreement,  which risk includes  without limit the  possibility  that
     Borrower may incur  Indebtedness  to Bank after the financial  condition of
     Borrower,   or  Borrower's  ability  to  pay  debts  as  they  mature,  has
     deteriorated.

          2.13 Debtor  shall  defend,  indemnify  and hold  harmless  Bank,  its
     employees, agents, shareholders,  affiliates,  officers, and directors from
     and against any and all claims,  damages,  fines, expenses,  liabilities or
     causes of action of whatever kind, including without limit consultant fees,
     legal expenses,  and attorney fees,  suffered by any of them as a direct or
     indirect result of any actual or asserted  violation of any law (other than
     a violation by Bank), including,  without limit,  Environmental Laws, or of
     any  remediation  relating to any property  required by any law,  including
     without limit Environmental Laws.

     3. Collection of Proceeds.

          3.1 Debtor  agrees to collect  and enforce  payment of all  Collateral
     until Bank shall direct Debtor to the contrary.  Immediately upon notice to
     Debtor  by Bank and at all times  after  that,  Debtor  agrees to fully and
     promptly cooperate and assist Bank in the collection and enforcement of all
     Collateral  and to  hold  in  trust  for  Bank  all  payments  received  in
     connection with Collateral and from the sale, lease or other disposition of
     any Collateral,  all rights by way of suretyship or guaranty and all rights
     in the nature of a lien or security  interest which Debtor now or later has
     regarding  Collateral.  Immediately upon and after such notice,  during the
     continuance of an Event of Default Debtor agrees to (a) endorse to Bank and
     immediately deliver to Bank all payments received on Collateral or from the
     sale,  lease or other  disposition  of any  Collateral  or arising from any
     other rights or interests of Debtor in the Collateral, in the form received
     by Debtor without  commingling  with any other funds,  and (b)  immediately
     deliver to Bank all  property in Debtor's  possession  or later coming into
     Debtor's  possession through enforcement of Debtor's rights or interests in
     the  Collateral.  During the  continuance  of an Event of  Default,  Debtor
     irrevocably  authorizes  Bank or any Bank  employee or agent to endorse the
     name of Debtor upon any checks or other items which are received in payment
     for any  Collateral,  and to do any and all  things  necessary  in order to
     reduce these items to money.  Bank shall have no duty as to the  collection
     or  protection  of  Collateral  or  the  proceeds  of  it,  nor  as to  the
     preservation  of any related  rights,  beyond the use of reasonable care in
     the custody and  preservation  of  Collateral  in the  possession  of Bank.
     Debtor agrees to take all steps  necessary to preserve rights against prior
     parties with respect to the  Collateral.  Nothing in this Section 3.1 shall
     be deemed a consent by Bank to any sale, lease or other  disposition of any
     Collateral.

          3.2 Debtor agrees that immediately upon Bank's request (whether or not
     any Event of Default  exists) the  Indebtedness  shall be on a  "remittance
     basis" as follows:  Debtor shall at its sole expense establish and maintain
     (and  Bank,  at Bank's  option  may  establish  and  maintain  at  Debtor's
     expense):  (a) an United  States Post Office lock box (the "Lock Box"),  to
     which Bank shall  have  exclusive  access  and  control.  Debtor  expressly
     authorizes  Bank,  from time to time, to remove contents from the Lock Box,
     for disposition in accordance with this Agreement.  Debtor agrees to notify
     all account debtors and other parties obligated to Debtor that all payments
     made to Debtor (other than payments by electronic  funds transfer) shall be
     remitted,  for the credit of  Debtor,  to the Lock Box,  and  Debtor  shall
     include a like statement on all invoices;  and (b) a  non-interest  bearing
     deposit  account with Bank which shall be titled as designated by Bank (the
     "Cash  Collateral  Account") to which Bank shall have exclusive  access and
     control.  Debtor  agrees to notify all account  debtors  and other  parties
     obligated to Debtor that all payments  made to Debtor by  electronic  funds
     transfer shall be remitted to the Cash Collateral  Account,  and Debtor, at
     Bank's  request,  shall include a like  statement on all  invoices.  Debtor
     shall  execute  all  documents  and  authorizations  as required by Bank to
     establish and maintain the Lock Box and the Cash Collateral Account.

          3.3 All items or amounts  which are  remitted  to the Lock Box, to the
     Cash Collateral  Account,  or otherwise  delivered by or for the benefit of
     Debtor to Bank on account of partial or full  payment  of, or with  respect
     to, any Collateral  shall, at Bank's option,  (i) be applied to the payment
     of the Indebtedness, whether then due or not, in such order or at such time
     of  application as Bank may determine in its sole  discretion,  or, (ii) be
     deposited to the Cash Collateral Account. Debtor agrees that Bank shall not
     be liable  for any loss or damage  which  Debtor  may suffer as a result of
     Bank's  processing of items or its exercise of any other rights or remedies
     under this Agreement,  including without  limitation  indirect,  special or
     consequential damages, loss of revenues or profits, or any claim, demand or
     action  by any  third  party  arising  out  of or in  connection  with  the
     processing  of items or the exercise of any other rights or remedies  under
     this Agreement.  Debtor agrees to indemnify and hold Bank harmless from and
     against all such third party  claims,  demands or actions,  and all related
     expenses or liabilities, including, without limitation, attorney fees.

     4. Defaults, Enforcement and Application of Proceeds.

          4.1 Upon the  occurrence  and  during  the  continuance  of any of the
     following  events (each an "Event of Default"),  Debtor shall be in default
     under this Agreement:

          (a)  Any  failure to pay the  Indebtedness  or any other  indebtedness
               when due, or such portion of it as may be due, by acceleration or
               otherwise; or

          (b)  Any  failure or neglect to comply  with,  or breach of or default
               under,  any term of this  Agreement,  or any other  agreement  or
               commitment  between Borrower,  Debtor, or any guarantor of any of
               the Indebtedness ("Guarantor") and Bank; or

          (c)  Any  warranty,  representation,  financial  statement,  or  other
               information  made,  given or furnished to Bank by or on behalf of
               Borrower,  Debtor,  or any Guarantor  shall be, or shall prove to
               have been,  false or materially  misleading when made,  given, or
               furnished; or

          (d)  Any loss, theft,  substantial  damage or destruction to or of any
               material  part  of  the  Collateral   which  is  not  covered  by
               insurance,  or the  issuance or filing of any  attachment,  levy,
               garnishment or the  commencement  of any proceeding in connection
               with any Collateral or of any other judicial  process of, upon or
               in respect of Borrower,  Debtor, any Guarantor, or any Collateral
               which  is not  contested  in good  faith  and  bonded  to  Bank's
               reasonable satisfaction; or

          (e)  Sale or other  disposition by Borrower,  Debtor, or any Guarantor
               of any substantial portion of its assets or property or voluntary
               suspension of the transaction of business by Borrower, Debtor, or
               any Guarantor, or death,  dissolution,  termination of existence,
               merger,   consolidation,   insolvency,   business   failure,   or
               assignment  for  the  benefit  of  creditors  of or by  Borrower,
               Debtor,  or any Guarantor;  or  commencement  of any  proceedings
               under any state or federal  bankruptcy or insolvency laws or laws
               for the relief of debtors by or against Borrower,  Debtor, or any
               Guarantor;  or the  appointment  of a  receiver,  trustee,  court
               appointee,  sequestrator or otherwise, for all or any part of the
               property of Borrower, Debtor, or any Guarantor.

     In the event of an express  conflict  between any provision of this Section
     4.1  and  the  corresponding  provision  of  any of  the  promissory  notes
     evidencing a portion or all of the  Indebtedness,  the  provisions  of such
     promissory notes shall control.

          4.2 Upon the  occurrence  and during the  continuance  of any Event of
     Default,  Bank may at its  discretion  and without  prior  notice to Debtor
     declare any or all of the  Indebtedness  to be immediately due and payable,
     and shall have and may exercise any one or more of the following rights and
     remedies:

          (a)  Exercise all the rights and remedies upon default, in foreclosure
               and otherwise,  available to secured parties under the provisions
               of the Uniform Commercial Code and other applicable law;

          (b)  Institute  legal  proceedings  to  foreclose  upon  the  lien and
               security interest granted by this Agreement,  to recover judgment
               for all  amounts  then  due and  owing  as  Indebtedness,  and to
               collect  the same out of any  Collateral  or the  proceeds of any
               sale of it;

          (c)  Institute legal  proceedings for the sale,  under the judgment or
               decree  of any  court of  competent  jurisdiction,  of any or all
               Collateral; and/or

          (d)  Personally or by agents, attorneys, or appointment of a receiver,
               enter upon any premises where Collateral may then be located, and
               take  possession  of all or any of it and/or  render it unusable;
               and  without  being  responsible  for  loss  or  damage  to  such
               Collateral,  hold, operate, sell, lease, or dispose of all or any
               Collateral  at one or more public or private  sales,  leasings or
               other  disposition,   at  places  and  times  and  on  terms  and
               conditions as Bank may deem fit,  without any previous  demand or
               advertisement;  and except as  provided  in this  Agreement,  all
               notice of sale, lease or other  disposition,  and  advertisement,
               and other  notice or demand,  any right or equity of  redemption,
               and any  obligation  of a  prospective  purchaser  or  lessee  to
               inquire as to the power and authority of Bank to sell,  lease, or
               otherwise  dispose of the Collateral or as to the  application by
               Bank of the proceeds of sale or otherwise,  which would otherwise
               be required by, or available to Debtor under,  applicable law are
               expressly waived by Debtor to the fullest extent permitted.

     At any sale pursuant to this Section 4.2,  whether under the power of sale,
     by virtue of judicial  proceedings or otherwise,  it shall not be necessary
     for  Bank or a  public  officer  under  order  of a court  to have  present
     physical or constructive  possession of Collateral to be sold. The recitals
     contained in any  conveyances  and  receipts  made and given by Bank or the
     public officer to any purchaser at any sale made pursuant to this Agreement
     shall, to the extent  permitted by applicable law,  conclusively  establish
     the truth and accuracy of the matters stated (including,  without limit, as
     to the amounts of the  principal of and interest on the  Indebtedness,  the
     accrual and  nonpayment of it and  advertisement  and conduct of the sale);
     and all  prerequisites to the sale shall be presumed to have been satisfied
     and performed. Upon any sale of any Collateral,  the receipt of the officer
     making the sale under  judicial  proceedings or of Bank shall be sufficient
     discharge to the purchaser for the purchase money,  and the purchaser shall
     not be obligated to see to the  application  of the money.  Any sale of any
     Collateral  under this  Agreement  shall be a perpetual bar against  Debtor
     with respect to that Collateral.

          4.3 Debtor shall at the request of Bank, notify the account debtors or
     obligors of Bank's  security  interest in the Collateral and direct payment
     of it to Bank.  Bank  may,  itself,  upon the  occurrence  and  during  the
     continuance of any Event of Default so notify and direct any account debtor
     or obligor.

          4.4 The  proceeds  of any  sale or  other  disposition  of  Collateral
     authorized  by this  Agreement  shall be  applied  by Bank  first  upon all
     expenses  authorized  by the  Uniform  Commercial  Code and all  reasonable
     attorney  fees and legal  expenses  incurred  by Bank;  the  balance of the
     proceeds of the sale or other  disposition  shall be applied in the payment
     of the  Indebtedness,  first  to  interest,  then  to  principal,  then  to
     remaining  Indebtedness  and the  surplus,  if any,  shall be paid  over to
     Debtor or to such other person(s) as may be entitled to it under applicable
     law. Debtor shall remain liable for any  deficiency,  which it shall pay to
     Bank immediately upon demand.

          4.5 Nothing in this Agreement is intended,  nor shall it be construed,
     to preclude  Bank from  pursuing any other  remedy  provided by law for the
     collection  of the  Indebtedness  or for the  recovery  of any other sum to
     which  Bank may be  entitled  for the breach of this  Agreement  by Debtor.
     Nothing in this Agreement  shall reduce or release in any way any rights or
     security  interests of Bank  contained in any  existing  agreement  between
     Borrower, Debtor, or any Guarantor and Bank.

          4.6 No waiver of  default  or  consent  to any act by Debtor  shall be
     effective unless in writing and signed by an authorized officer of Bank. No
     waiver of any default or  forbearance  on the part of Bank in enforcing any
     of its rights under this  Agreement  shall operate as a waiver of any other
     default or of the same default on a future occasion or of any rights.

          4.7  Debtor  irrevocably  appoints  Bank or any  agent of Bank  (which
     appointment  is coupled with an interest)  the true and lawful  attorney of
     Debtor (with full power of  substitution)  in the name, place and stead of,
     and at the expense of, Debtor:

          (a)  to demand,  receive,  sue for, and give receipts or  acquittances
               for any  moneys  due or to become  due on any  Collateral  and to
               endorse any item  representing  any payment on or proceeds of the
               Collateral;

          (b)  to  execute  and file in the name of and on behalf of Debtor  all
               financing   statements  or  other  filings  deemed  necessary  or
               desirable by Bank to evidence,  perfect, or continue the security
               interests granted in this Agreement; and

          (c)  to do and  perform  any act on  behalf  of  Debtor  permitted  or
               required under this Agreement.

          4.8 Upon the  occurrence  and  during the  continuance  of an Event of
     Default,  Debtor  also  agrees,  upon  request  of Bank,  to  assemble  the
     Collateral  and make it available to Bank at any place  designated  by Bank
     which is reasonably convenient to Bank and Debtor.

     5. Miscellaneous.

          5.1 Until Bank is advised  in writing by Debtor to the  contrary,  all
     notices, requests and demands required under this Agreement or by law shall
     be given to, or made upon, Debtor at the first address indicated in Section
     5.15 below.

          5.2 Debtor will give Bank not less than 30 days prior  written  notice
     of all  contemplated  changes in  Debtor's  name,  chief  executive  office
     location, and/or location of any Collateral.

          5.3 Bank assumes no duty of performance or other  responsibility under
     any contracts contained within the Collateral.

          5.4 Bank has the right to sell, assign,  transfer,  negotiate or grant
     participations  or any interest in, any or all of the  Indebtedness and any
     related obligations,  including without limit this Agreement. In connection
     with the above, but without limiting its ability to make other  disclosures
     to  the  full  extent  allowable,  Bank  may  disclose  all  documents  and
     information   which  Bank  now  or  later  has  relating  to  Debtor,   the
     Indebtedness or this  Agreement,  however  obtained.  Debtor further agrees
     that Bank may provide information relating to this Agreement or relating to
     Debtor  to  the  Bank's  parent,  affiliates,   subsidiaries,  and  service
     providers.

          5.5 In addition to Bank's other rights,  any  indebtedness  owing from
     Bank to Debtor can be set off and  applied by Bank on any  Indebtedness  at
     any time(s)  either before or after  maturity or demand  without  notice to
     anyone.

          5.6  Debtor  waives  any right to  require  the Bank to:  (a)  proceed
     against  any person or  property;  (b) give  notice of the terms,  time and
     place of any public or private sale of personal property security held from
     Borrower or any other person,  or otherwise  comply with the  provisions of
     Section  9-504 of the  Uniform  Commercial  Code;  or (c)  pursue any other
     remedy in the Bank's  power.  Debtor  waives  notice of  acceptance of this
     Agreement and presentment,  demand, protest,  notice of protest,  dishonor,
     notice of dishonor,  notice of default,  notice of intent to  accelerate or
     demand payment of any Indebtedness,  any and all other notices to which the
     undersigned  might  otherwise be entitled,  and diligence in collecting any
     Indebtedness,  and agree(s) that the Bank may, once or any number of times,
     modify  the  terms  of  any  Indebtedness,  compromise,  extend,  increase,
     accelerate, renew or forbear to enforce payment of any or all Indebtedness,
     or permit Borrower to incur additional Indebtedness,  all without notice to
     Debtor and without affecting in any manner the unconditional  obligation of
     Debtor under this Agreement.  Debtor unconditionally and irrevocably waives
     each and every defense and setoff of any nature which,  under principles of
     guaranty or  otherwise,  would operate to impair or diminish in any way the
     obligation  of Debtor  under this  Agreement,  and  acknowledges  that such
     waiver is by this  reference  incorporated  into each  security  agreement,
     collateral  assignment,  pledge  and/or other  document  from Debtor now or
     later securing the  Indebtedness,  and acknowledges  that as of the date of
     this Agreement no such defense or setoff exists.

          5.7  Debtor  waives  any  and  all  rights  (whether  by  subrogation,
     indemnity,  reimbursement,  or  otherwise)  to recover  from  Borrower  any
     amounts  paid or the value of any  Collateral  given by Debtor  pursuant to
     this Agreement.

          5.8 In the event that applicable law shall obligate Bank to give prior
     notice to Debtor of any  action to be taken  under this  Agreement,  Debtor
     agrees that a written  notice given to Debtor at least five days before the
     date of the act shall be  reasonable  notice of the act and,  specifically,
     reasonable  notification of the time and place of any public sale or of the
     time after which any private sale,  lease,  or other  disposition  is to be
     made, unless a shorter notice period is reasonable under the circumstances.
     A notice shall be deemed to be given under this Agreement when delivered to
     Debtor or when placed in an  envelope  addressed  to Debtor and  deposited,
     with postage  prepaid,  in a post office or official  depository  under the
     exclusive care and custody of the United States Postal Service or delivered
     to an  overnight  courier.  The  mailing  shall  be by  overnight  courier,
     certified, or first class mail.

          5.9 Notwithstanding any prior revocation,  termination,  surrender, or
     discharge of this Agreement in whole or in part, the  effectiveness of this
     Agreement shall  automatically  continue or be reinstated in the event that
     any payment received or credit given by Bank in respect of the Indebtedness
     is returned,  disgorged,  or rescinded under any applicable law, including,
     without  limitation,  bankruptcy  or  insolvency  laws,  in which case this
     Agreement,  shall  be  enforceable  against  Debtor  as  if  the  returned,
     disgorged, or rescinded payment or credit had not been received or given by
     Bank, and whether or not Bank relied upon this payment or credit or changed
     its  position  as a  consequence  of it.  In the event of  continuation  or
     reinstatement  of this  Agreement,  Debtor  agrees  upon  demand by Bank to
     execute  and  deliver to Bank those  documents  which Bank  determines  are
     appropriate to further  evidence (in the public records or otherwise)  this
     continuation  or  reinstatement,  although  the  failure of Debtor to do so
     shall not affect in any way the reinstatement or continuation.

          5.10 This Agreement and all the rights and remedies of Bank under this
     Agreement  shall inure to the benefit of Bank's  successors and assigns and
     to any other  holder who  derives  from Bank title to or an interest in the
     Indebtedness  or any  portion of it,  and shall bind  Debtor and the heirs,
     legal representatives,  successors,  and assigns of Debtor. Nothing in this
     Section 5.10 is deemed a consent by Bank to any assignment by Debtor.

          5.11 If there is more than one Debtor,  all  undertakings,  warranties
     and covenants made by Debtor and all rights,  powers and authorities  given
     to or conferred upon Bank are made or given jointly and severally.

          5.12 Except as otherwise provided in this Agreement, all terms in this
     Agreement  have the  meanings  assigned  to them in  Article 9 (or,  absent
     definition  in Article 9, in any other  Article) of the Uniform  Commercial
     Code.  "Uniform  Commercial  Code" means Act No. 174 of the Michigan Public
     Acts of 1962, as amended.

          5.13 No single or partial exercise,  or delay in the exercise,  of any
     right or power  under  this  Agreement,  shall  preclude  other or  further
     exercise   of  the   rights   and  powers   under   this   Agreement.   The
     unenforceability  of any provision of this  Agreement  shall not affect the
     enforceability   of  the  remainder  of  this  Agreement.   This  Agreement
     constitutes  the entire  agreement  of Debtor and Bank with  respect to the
     subject  matter of this  Agreement.  No amendment or  modification  of this
     Agreement shall be effective unless the same shall be in writing and signed
     by Debtor  and an  authorized  officer  of Bank.  This  Agreement  shall be
     governed by and construed in accordance with the internal laws of the State
     of Michigan, without regard to conflict of laws principles.

          5.14 To the  extent  that  any of the  Indebtedness  is  payable  upon
     demand,  nothing  contained  in this  Agreement  shall modify the terms and
     conditions  of that  Indebtedness  nor  shall  anything  contained  in this
     Agreement  prevent  Bank from  making  demand,  without  notice and with or
     without reason, for immediate payment of any or all of that Indebtedness at
     any time(s), whether or not an Event of Default has occurred.

          5.15  Debtor's  chief  executive   office  is  located  and  shall  be
     maintained at 775 Technology Drive, Suite 200, Ann Arbor, Michigan 48108.

     If Collateral  is located at other than the chief  executive  office,  such
     Collateral is located and shall be maintained at

                       See Attached List of Collateral Locations
                       STREET ADDRESS
                       CITY     STATE     ZIP CODE     COUNTY

     Collateral  shall be maintained  only at the  locations  identified in this
     Section 5.15.

          5.16 A carbon,  photographic  or other  reproduction of this Agreement
     shall be sufficient as a financing  statement under the Uniform  Commercial
     Code and may be filed by Bank in any filing office.

          5.17  This  Agreement  shall be  terminated  only by the  filing  of a
     termination  statement in accordance with the applicable  provisions of the
     Uniform  Commercial Code, but the obligations  contained in Section 2.13 of
     this Agreement shall survive termination.

     6.  DEBTOR  AND  BANK  ACKNOWLEDGE  THAT  THE  RIGHT  TO TRIAL BY JURY IS A
CONSTITUTIONAL  ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE  OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,  KNOWINGLY
AND VOLUNTARILY,  AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION  REGARDING THE  PERFORMANCE OR ENFORCEMENT  OF, OR IN
ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.


     Special Provisions Applicable to this Agreement. (*None, if left blank)


                                         Debtor:

                                         --------------------------------------

                                         By:  /s/ Richard R. Chrysler
                                              ---------------------------------
                                              Richard R. Chrysler
                                         Its:
                                              ---------------------------------


<PAGE>


                                   SCHEDULE 1


JPE, Inc.

Brake, Axle and Tandem
  Company Canada Inc.

Dayton Parts, Inc.

Plastic Trim, Inc.

SAC Corporation

Starboard Industries, Inc.

JPE Finishing, Inc.


<PAGE>


                                   SCHEDULE 2


                                 Permitted Liens

                     [to be provided by Borrower's Counsel]


<PAGE>


                          LIST OF COLLATERAL LOCATIONS


                     [to be provided by Borrower's Counsel]



<PAGE>


                                   EXHIBIT "A"



     "Permitted Liens" shall mean:

     (a)  liens for taxes, assessments or governmental charges or levies not yet
          due or delinquent, or which can thereafter be paid without penalty, or
          which are being  contested  in good faith by  appropriate  proceedings
          diligently  pursued,  provided  that  provision for the payment of all
          such  taxes  has been made on  Debtor's  books as may be  required  by
          generally  accepted   accounting   principles   consistently   applied
          ("GAAP");

     (b)  unfiled,   inchoate   construction  liens  for  construction  work  in
          progress;

     (c)  workmen's,  repairmen's,  warehousemen's and carrier's liens and other
          similar  liens,  if any,  arising in the ordinary  course of business,
          which are paid in full when due or which are being  contested  in good
          faith by appropriate proceedings diligently pursued,  provided that in
          the  case  of any  such  contest  (i) any  levy,  execution  or  other
          enforcement  of such  liens  shall have been duly  suspended  and (ii)
          provision  for the  payment  of such  liens has been made on  Debtor's
          books as may be required by GAAP;

     (d)  the liens, if any, shown on Schedule 2 attached hereto;

     (e)  liens   incurred  or  deposits  made  in   connection   with  workers'
          compensation unemployment insurance,  appeal bonds, bids or government
          contracts, or to secure the performance of leases; and

     (f)  any other liens  consented to in writing by Bank (which consent may be
          granted or withheld in the sole discretion of Bank).






                     PATENT AND TRADEMARK SECURITY AGREEMENT



     PATENT AND TRADEMARK SECURITY AGREEMENT,  dated as of May 27, 1999, made by
JPE, Inc., a Michigan  corporation  (the "Grantor") in favor of COMERICA BANK, a
Michigan banking corporation (the "Bank").

                              W I T N E S S E T H:

     WHEREAS, Grantor is a party to the Notes (as defined below) dated as of the
date hereof between the Bank and Grantor;

     WHEREAS,  the Grantor owns certain Trademarks and Trademark Licenses listed
on Schedule I hereto;

     WHEREAS,  the Grantor owns certain  Patents and Patent  Licenses  listed on
Schedule II;

     WHEREAS,  it is a condition precedent to the obligation of the Bank to make
credit  advances to Grantor under the Notes that the Grantor shall have executed
and delivered this Agreement to the Bank;

     NOW, THEREFORE,  in consideration of the premises and to induce the Bank to
enter into the Notes and to make  advances  to Grantor  thereunder,  the Grantor
hereby agrees with the Bank, as follows:

     1. Defined Terms. (a) Unless otherwise  defined herein,  capitalized  terms
defined in the Notes are used herein as defined  therein.  The  following  terms
shall have the following meanings:

          "Agreement": this Patent and Trademark Security Agreement, as the same
     may be amended,  supplemented,  waived or otherwise  modified  from time to
     time.

          "Code":  the Uniform Commercial Code as from time to time in effect in
     the State of Michigan.

          "Collateral": as defined in Section 2 of this Agreement.

          "Event of Default":  any default or event of default  described in the
     Notes and lapse of any applicable grace and/or cure periods.

          "General  Intangibles":  as  defined  in  Section  9-106 of the  Code,
     including,  without limitation, all Patents and Trademarks now or hereafter
     owned by the Grantor to the extent such  Patents  and  Trademarks  would be
     included in General Intangibles under the Code.

          "Lien":  any lien,  security  interest,  pledge,  encumbrance or other
     similar charge, whether voluntary or involuntary and however created.

          "Notes":  the  $20,000,000  Eurodollar Note dated May 27, 1999 made by
     Grantor,  Dayton Parts,  Inc.,  Starboard  Industries,  Inc., Plastic Trim,
     Inc., JPE Finishing,  Inc. and Brake, Axle and Tandem Company Canada,  Inc.
     (collectively,  "Borrowers")  payable  to Bank,  that  certain  $30,000,000
     Promissory Note-Demand dated May 27, 1999 made by Borrowers payable to Bank
     and that certain $6,300,000 Euorodollar Installment Note dated May 27, 1999
     made by  Borrowers  payable  to  Bank  each  as may be  amended,  replaced,
     supplemented or modified from time to time, and "Note" shall mean anyone of
     them.

          "Obligations": the collective reference to the unpaid principal of and
     interest on (including,  without  limitation,  interest  accruing after the
     maturity of each of the Notes and interest accruing after the filing of any
     petition  in   bankruptcy,   or  the   commencement   of  any   insolvency,
     reorganization or like proceeding, relating to the Grantor whether or not a
     claim  for  post-filing  or  post-petition  interest  is  allowed  in  such
     proceeding)  each Note, and all other  obligations  and  liabilities of the
     Grantor to the Bank,  whether  direct or indirect,  absolute or contingent,
     due or to become due, or now  existing or  hereafter  incurred,  including,
     without limitation,  obligations and liabilities which may arise under, out
     of, or in connection with, the Notes or any other document made,  delivered
     or given in  connection  therewith,  in each case  whether  on  account  of
     principal, interest,  reimbursement obligations, fees, indemnities,  costs,
     expenses or otherwise (including,  without limitation,  all reasonable fees
     and disbursements of counsel to the Bank).

          "Patent License":  all United States license agreements with any other
     person  in  connection  with  any of the  Patents  or such  other  person's
     patents,  whether the  Grantor is a licensor  or a licensee  under any such
     license agreement,  including,  without limitation,  the license agreements
     listed on Schedule II hereto and made a part hereof, subject, in each case,
     to the terms of such license  agreements and the right to prepare for sale,
     sell and advertise for sale, all inventory now or hereafter covered by such
     licenses.

          "Patents":   all  United  States  patents,   patent  applications  and
     patentable  inventions,  including,  without  limitation,  all  patents and
     patent  applications  identified in Schedule II attached  hereto and made a
     part hereof,  and  including  without  limitation  (a) all  inventions  and
     improvements described and claimed therein, and patentable inventions,  (b)
     the right to sue or  otherwise  recover  for any and all past,  present and
     future  infringements  and  misappropriations   thereof,  (c)  all  income,
     royalties,  damages and other payments now and hereafter due and/or payable
     with respect thereto  (including,  without  limitation,  payments under all
     licenses entered into in connection therewith, and damages and payments for
     past or future  infringements  thereof),  and (d) all rights  corresponding
     thereto in the United  States and all reissues,  divisions,  continuations,
     continuations-in-part,  substitutes,  renewals, and extensions thereof, all
     improvements  thereon,  and all other rights of any kind  whatsoever of the
     Grantor  accruing  thereunder  or  pertaining  thereto  (Patents and Patent
     Licenses being, collectively, the "Patent Collateral").

          "Trademark  License":  all United States license  agreements  with any
     other  person  in  connection  with  any of the  Trademarks  or such  other
     person's  names or  trademarks,  whether  the  Grantor is a  licensor  or a
     licensee under any such license agreement,  including,  without limitation,
     the license  agreements listed on Schedule I hereto and made a part hereof,
     subject,  in each case,  to the terms of such license  agreements,  and the
     right to prepare for sale,  sell and advertise for sale,  all inventory now
     or hereafter covered by such licenses.

          "Trademarks":  all trademarks, service marks, trade names, trade dress
     or other indicia of trade origin, trademark and service mark registrations,
     and  applications for trademark or service mark  registrations  (except for
     "intent to use"  applications  for trademark or service mark  registrations
     filed  pursuant  to  Section  1(b) of the Lanham  Act,  unless and until an
     Amendment to Allege Use or a Statement of Use under  Sections 1(c) and 1(d)
     of said Act has been filed), and any renewals thereof,  including,  without
     limitation,  each  registration  and  application  identified in Schedule I
     attached hereto and made a part hereof,  and including  without  limitation
     (a) the right to sue or otherwise recover for any and all past, present and
     future  infringements  and  misappropriations   thereof,  (b)  all  income,
     royalties,  damages and other payments now and hereafter due and/or payable
     with respect thereto  (including,  without  limitation,  payments under all
     licenses entered into in connection therewith, and damages and payments for
     past or future  infringements  thereof)  and (c) all  rights  corresponding
     thereto in the United States and all other rights of any kind whatsoever of
     the Grantor  accruing  thereunder or pertaining  thereto,  together in each
     case with the  goodwill  of the  business  connected  with the use of,  and
     symbolized by, each such trademark,  service mark,  trade name, trade dress
     or other indicia of trade origin  (Trademarks and Trademark Licenses being,
     collectively, the "Trademark Collateral").

     (b) The words  "hereof,"  "herein"  and  "hereunder"  and words of  similar
import when used in this Agreement  shall refer to this Agreement as a whole and
not to any  particular  provision of this  Agreement,  and section and paragraph
references are to this Agreement unless otherwise specified.

     (c) The meanings given to terms defined herein shall be equally  applicable
to both the singular and plural forms of such terms.

     2. Grant of Security  Interest.  As collateral  security for the prompt and
complete payment and performance  when due (whether at the stated  maturity,  by
acceleration  or  otherwise) of the  Obligations,  the Grantor  hereby  assigns,
pledges  and  grants to the Bank a  security  interest  in all of the  following
property now owned or at any time hereafter  acquired by the Grantor or in which
the Grantor now has or at any time in the future may acquire any right, title or
interest (collectively, the "Collateral"):

          (i)  all Trademarks;

          (ii) all Trademark Licenses;

         (iii) all Patents;

          (iv) all Patent Licenses;

          (v)  all general  intangibles  connected with the use of or symbolized
               by the Trademarks and Patents; and

          (vi) to the extent not otherwise  included,  all proceeds and products
               of any and all of the foregoing;

     3. Grantor  Remains  Liable;  Limitations on Bank's  Obligations.  Anything
herein to the contrary  notwithstanding,  (a) the Grantor  shall  remain  liable
under the contracts and agreements  included in the Collateral to the extent set
forth  therein to perform all of its duties and  obligations  thereunder  to the
same extent as if this Agreement had not been executed,  (b) the exercise by the
Bank of any of the rights  hereunder  shall not release the Grantor  from any of
its duties or  obligations  under the contracts and  agreements  included in the
Collateral,  and (c) the Bank shall not have any  obligation or liability  under
the  contracts  and  agreements  included  in the  Collateral  by reason of this
Agreement,  nor shall the Bank be obligated to perform any of the obligations or
duties of the Grantor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.

     4.  Representations and Warranties.  The Grantor represents and warrants as
follows:

          (a) Title;  No Other Liens.  Except for the Liens  granted to the Bank
     and liens  permitted  by the Notes,  if any, to the best  knowledge  of the
     Grantor, the Grantor is (or, in the case of after-acquired Collateral, will
     be) the sole,  legal and  beneficial  owner of the entire right,  title and
     interest  in and to the  Trademarks  set forth on Schedule I hereto and the
     Patents  set  forth in  Schedule  II  hereto  free and clear of any and all
     liens. No security  agreement,  financing  statement or other public notice
     similar in effect with respect to all or any part of the  Collateral  is on
     file or of record in any public office (including,  without limitation, the
     United  States Patent and  Trademark  Office)  except such as may have been
     filed in favor of the Bank  pursuant to this  Agreement or as may have been
     filed with respect to liens permitted by the Notes, if any.

          (b) [Intentionally Left Blank]

          (c) Consents. No consent of any party (other than such Grantor) to any
     Patent License or Trademark License constituting  Collateral is required to
     be  obtained  by or on  behalf  of such  Grantor  in  connection  with  the
     execution,  delivery and  performance  of this  Agreement that has not been
     obtained. Each Patent License and Trademark License constituting Collateral
     is in full force and effect and constitutes a valid and legally enforceable
     obligation  of the Grantor and (to the knowledge of the Grantor) each other
     party  thereto  except as  enforceability  may be  limited  by  bankruptcy,
     insolvency,  reorganization,  moratorium  or  similar  laws  affecting  the
     enforcement  of  creditor's  rights  generally  and  by  general  equitable
     principles  (whether  enforcement  is sought by proceedings in equity or at
     law).  No consent or  authorization  of,  filing with or other act by or in
     respect of any  governmental  authority is required in connection  with the
     execution, delivery, performance,  validity or enforceability of any of the
     Patent Licenses or Trademark Licenses by any party thereto other than those
     which have been duly obtained,  made or performed and are in full force and
     effect. Neither the Grantor nor (to the knowledge of the Grantor) any other
     party to any Patent License or Trademark License constituting Collateral is
     in default in the  performance  or observance of any of the terms  thereof,
     except  for such  defaults  as would not  reasonably  be  expected,  in the
     aggregate,  to  have  a  material  adverse  effect  on  the  value  of  the
     Collateral.  The right,  title and interest of the Grantor in, to and under
     each Patent License and Trademark License  constituting  Collateral are not
     subject to any defense, offset, counterclaim or claim.

          (d) Schedules I and II are Complete;  All Filings Have Been Made.  Set
     forth  in  Schedules  I and  II is a  complete  and  accurate  list  of the
     Trademarks and Patents owned by the Grantor of the date hereof. The Grantor
     shall promptly make all necessary  filings and  recordations to protect and
     maintain its interest in the  Trademarks and Patents set forth in Schedules
     I  and  II,  including,  without  limitation,  all  necessary  filings  and
     recordings,  and payments of all  maintenance  fees,  in the United  States
     Patent and Trademark  Office to the extent such  Trademarks and Patents are
     material to the  Grantor's  business.  Set forth in Schedules I and II is a
     complete and accurate  list of all of the material  Trademark  Licenses and
     Patent Licenses owned by the Grantor as of the date hereof.

          (e) [Intentionally Left Blank]

          (f) The Patent and Patent  Licenses  are  Subsisting  and Not Adjudged
     Invalid.  As of the date hereof,  each Patent and patent application of the
     Grantor set forth in Schedule II is  subsisting  and has not been  adjudged
     invalid,  unpatentable or  unenforceable,  in whole or in part, and, to the
     best of the Grantor's knowledge, is valid,  patentable and enforceable.  As
     of the date hereof, each of the Patent Licenses set forth in Schedule II is
     validly  subsisting and has not been adjudged invalid or unenforceable,  in
     whole or in part, and, to the best of the Grantor's knowledge, is valid and
     enforceable.  As of the date  hereof,  the Grantor has notified the Bank in
     writing  of all  uses of any  item of  Patent  Collateral  material  to the
     Grantor's  business of which the Grantor is aware which could reasonably be
     expected to lead to such item becoming invalid or unenforceable.

          (g) No Previous  Assignments or Releases.  As of the date hereof,  the
     Grantor has not made a previous  assignment,  sale,  transfer or  agreement
     constituting a present or future assignment,  sale, transfer or encumbrance
     of any of the Collateral, except with respect to exclusive licenses granted
     in the ordinary course of business or as permitted by this Agreement or the
     Loan  Documents.  As of the date  hereof,  the  Grantor has not granted any
     license,  shop  right,  release,  covenant  not to  sue,  or  non-assertion
     assurance to any person with respect to any part of the Collateral.

          (h) Proper Statutory Notice.  The Grantor has marked its products with
     the trademark  registration symbol the numbers of all appropriate  patents,
     the common law trademark symbol or the designation "patent pending," as the
     case  may  be,  to  the  extent  that  it is  reasonably  and  commercially
     practicable.

          (i) No Knowledge of Claims  Likely to Arise.  Except for the Trademark
     Licenses  and Patent  Licenses  listed in  Schedules  I and II hereto,  the
     Grantor has no knowledge of the  existence of any right or any claim (other
     than as  provided  by this  Agreement)  that is likely to be made  under or
     against any item of Collateral contained on Schedules I and II.

          (j) No Knowledge of Existing or Threatened  Claims.  No claim has been
     made  and is  continuing  or,  to the  best  of  the  Grantor's  knowledge,
     threatened that the use by the Grantor of any item of Collateral is invalid
     or  unenforceable  or that the use by the Grantor of any Collateral does or
     may  violate  the  rights  of any  person.  To the  best  of the  Grantor's
     knowledge,  there is currently no infringement  or unauthorized  use of any
     item of Collateral contained on Schedules I and II.

     5. Covenants. The Grantor covenants and agrees with the Bank that, from and
after the date of this Agreement until the payment in full of the Obligations:

          (a) Further Documentation; Pledge of Instruments and Chattel Paper. At
     any time and from time to time, upon the written request of the Bank or the
     Grantor,  as the case may be, and at the sole expense of the  Grantor,  the
     Grantor or the Bank, as the case may be, will promptly and duly execute and
     deliver such further instruments and documents and take such further action
     as the Bank or the  Grantor  may  reasonably  request  for the  purpose  of
     obtaining or  preserving  the full  benefits of this  Agreement  and of the
     rights and powers herein granted, including, without limitation, the filing
     of any financing or continuation  statements  under the Uniform  Commercial
     Code in effect  in any  jurisdiction  with  respect  to the  Liens  created
     hereby.  The  Grantor  also  hereby  authorizes  the  Bank to file any such
     financing or continuation statement without the signature of the Grantor to
     the extent  permitted by  applicable  law. A carbon,  photostatic  or other
     reproduction of this Agreement shall be sufficient as a financing statement
     for filing in any  jurisdiction.  The Bank agrees to notify the Grantor and
     the  Grantor  agrees to notify the Bank of any  financing  or  continuation
     statement  filed by it pursuant to this  Section  5(a),  provided  that any
     failure  to  give  any  such  notice  shall  not  affect  the  validity  or
     effectiveness of any such filing.

          (b)  Indemnification  and Expenses.  The Grantor agrees to pay, and to
     save the Bank harmless from, any and all liabilities  and reasonable  costs
     and expenses  (including,  without  limitation,  reasonable  legal fees and
     expenses) (i) with respect to, or resulting  from, any delay by the Grantor
     in complying with any material  requirement of law applicable to any of the
     Collateral, or (ii) in connection with any of the transactions contemplated
     by this  Agreement,  provided that such indemnity shall not be available to
     the extent that such  liabilities,  costs and  expenses  resulted  from the
     gross negligence or willful misconduct of the Bank. In any suit, proceeding
     or action brought by the Bank under any of the Collateral for any sum owing
     thereunder,  or to enforce any of the  Collateral,  the Grantor  will save,
     indemnify  and keep the Bank  harmless  from  and  against  all  reasonable
     expenses,   losses  or  damages  suffered  by  reason  of  any  defense  or
     counterclaim raised in any such suit, proceeding or action.

          (c) Maintenance of Records.  (i) The Grantor will keep and maintain at
     its own cost and expense  reasonably  satisfactory  and complete records of
     the Collateral,  and shall mark such records to evidence this Agreement and
     the Liens and the security interests created hereby. For the Bank's further
     security,  the Bank shall have a security  interest in all of the Grantor's
     books and records  pertaining  to the  Collateral,  and the  Grantor  shall
     permit the Bank or its  representatives  to review  such books and  records
     upon reasonable advance notice during normal business hours at the location
     where such books and records are kept and at the reasonable  request of the
     Bank.

          (d) [Intentionally Left Blank]

          (e) Compliance with Laws, etc. The Grantor will comply in all material
     respects with all  requirements  of law applicable to the Collateral or any
     part thereof,  except to the extent that the failure to so comply would not
     be reasonably expected to materially  adversely affect in the aggregate the
     Bank's rights hereunder, the priority of its Liens on the Collateral or the
     value of the Collateral.

          (f) Further Identification of Collateral.  The Grantor will furnish to
     the  Bank  from  time  to  time  such  statements  and  schedules   further
     identifying  and  describing  the  Collateral,  and such  other  reports in
     connection with the Collateral,  as the Bank may reasonably request, all in
     reasonable detail.

          (g) Security  Interest in Any Newly Acquired  Collateral.  The Grantor
     agrees  that  should it  obtain an  ownership  interest  in any  Trademark,
     Patent,  Trademark License or Patent License which is not now a part of the
     Collateral,  (i) the  provisions  of  Section 2 shall  automatically  apply
     thereto,  (ii) any such  Trademark,  Patent,  Trademark  License and Patent
     License shall automatically  become part of the Collateral,  and (iii) with
     respect to any  ownership  interest  in any  Trademark,  Patent,  Trademark
     License or Patent  License that the Grantor should obtain which the Grantor
     reasonably deems is material to its business,  it shall give notice thereof
     to the  Bank in  writing,  in  reasonable  detail,  within  30  days  after
     acquiring  such  ownership  interest.  The Grantor  authorizes  the Bank to
     modify this  Agreement by amending  Schedules I and II (and will  cooperate
     reasonably  with the Bank in effecting  any such  amendment)  to include on
     Schedule I any  Trademark  and  Trademark  License  and on  Schedule II any
     Patent or Patent License of which it receives notice under this Section.

          (h)  Maintenance  of the Trademark  Collateral.  The Grantor agrees to
     take all necessary  steps,  including,  without  limitation,  in the United
     States  Patent and Trademark  Office or in any court,  to (i) maintain each
     trademark  registration and each Trademark License identified on Schedule I
     hereto,  and  (ii)  pursue  each  trademark  application  now or  hereafter
     identified in Schedule I hereto, including,  without limitation, the filing
     of  responses  to office  actions  issued by the United  States  Patent and
     Trademark  Office,  the filing of applications  for renewal,  the filing of
     affidavits  under Sections 8 and 15 of the United States Trademark Act, and
     the   participation   in   opposition,   cancellation,   infringement   and
     misappropriation proceedings, except, in each case in which the Grantor has
     reasonably determined that any of the foregoing is not of material economic
     value to it. The Grantor agrees to take corresponding steps with respect to
     each new or acquired trademark  registration,  trademark application or any
     rights obtained under any Trademark License,  in each case, which it is now
     or later  becomes  entitled,  except in each case in which the  Grantor has
     reasonably determined that any of the foregoing is not of material economic
     value to it. Any expenses incurred in connection with such activities shall
     be borne by the Grantor.

          (i) Maintenance of the Patent  Collateral.  The Grantor agrees to take
     all necessary steps,  including,  without limitation,  in the United States
     Patent and  Trademark  Office or in any court,  to (i) maintain each Patent
     and each Patent License  identified on Schedule II hereto,  and (ii) pursue
     each patent application, now or hereafter identified in Schedule II hereto,
     including,  without  limitation,  the filing of  divisional,  continuation,
     continuation-in-part   and   substitute   applications,   the   filing   of
     applications for reissue, renewal or extensions, the payment of maintenance
     fees, and the  participation  in interference,  reexamination,  opposition,
     infringement and misappropriation proceedings, except in each case in which
     the Grantor has reasonably  determined  that any of the foregoing is not of
     material  economic  value to it. The Grantor  agrees to take  corresponding
     steps with respect to each new or acquired Patent,  patent application,  or
     any rights obtained under any Patent License, in each case, which it is now
     or later  becomes  entitled,  except in each case in which the  Grantor has
     reasonably determined that any of the foregoing is not of material economic
     value to it. Any expenses incurred in connection with such activities shall
     be borne by the Grantor.

          (j) Grantor  Shall Not Abandon any  Collateral.  The Grantor shall not
     abandon any  trademark  registration,  Patent or any pending  trademark  or
     patent  application,  without the written  consent of the Bank,  unless the
     Grantor shall have  previously  determined  that such use or the pursuit or
     maintenance of such trademark registration,  Patent or pending trademark or
     patent  application is not of material economic value to it, in which case,
     the Grantor will, at least annually, give notice of any such abandonment to
     the Bank in writing.

          (k)  Infringement  of Any  Collateral.  In the event that the  Grantor
     becomes  aware  that any  item of the  Collateral  which  the  Grantor  has
     reasonably  determined  to be material  to its  business  is  infringed  or
     misappropriated  by a third party,  the Grantor shall  promptly  notify the
     Bank  promptly and in writing,  in reasonable  detail,  and shall take such
     actions as the Grantor or the Bank deems reasonably  appropriate  under the
     circumstances to protect such Collateral,  including,  without  limitation,
     suing for infringement or  misappropriation  and for an injunction  against
     such infringement or  misappropriation.  Any expense incurred in connection
     with such activities shall be borne by the Grantor. The Grantor will advise
     the Bank  promptly and in writing,  in  reasonable  detail,  of any adverse
     determination  or the  institution  of any proceeding  (including,  without
     limitation,  the  institution of any proceeding in the United States Patent
     and Trademark Office or any court) regarding any item of the Collateral.

          (l)  Limitation on Liens on  Collateral.  The Grantor will not create,
     incur or permit to exist, will defend the Collateral against, and will take
     such  other  action  as is  reasonably  necessary  to  remove,  any Lien or
     material adverse claim on or to any of the Collateral, other than the liens
     created by this  Agreement  and those  permitted by the Notes,  if any, and
     will defend the right,  title and interest of the Bank in and to any of the
     Collateral against the claims and demands of all persons whomsoever.

          (m)  Limitations  on  Dispositions  of  Collateral.  Without the prior
     written consent of the Bank, the Grantor will not sell,  assign,  transfer,
     exchange or otherwise  dispose of, or grant any option with respect to, the
     Collateral, or attempt, offer or contract to do so.

          (n) Notices. The Grantor will advise the Bank promptly,  in reasonable
     detail,  (i) of any Lien (other than Liens created  hereby) on, or material
     adverse  claim  asserted  against,  Patents or  Trademarks  and (ii) of the
     occurrence  of any other event which  would  reasonably  be expected in the
     aggregate to have a material  adverse effect on the aggregate  value of the
     Collateral or the Liens created hereunder.

     6. Bank's Appointment as Attorney-in-Fact.

          (a) Powers.  The Grantor hereby  irrevocably  constitutes and appoints
     the  Bank,  and  any  officer  or  agent   thereof,   with  full  power  of
     substitution, as its true and lawful attorney-in-fact with full irrevocable
     power and  authority  in the place and stead of the Grantor and in the name
     of the  Grantor  or in its own  name,  from  time  to  time  in the  Bank's
     discretion  during the continuance of an Event of Default,  for the purpose
     of  carrying  out  the  terms  of  this  Agreement,  to  take  any  and all
     appropriate  action and to execute any and all  documents  and  instruments
     which may be  necessary or  desirable  to  accomplish  the purposes of this
     Agreement,  and,  without  limiting the  generality of the  foregoing,  the
     Grantor  hereby  gives  the Bank the  power  and  right,  on  behalf of the
     Grantor,  without  notice to or assent by the Grantor,  to do the following
     during the continuance of an Event of Default,  and to the extent permitted
     by law:

               (i) to execute and deliver any and all  agreements,  instruments,
          documents,  and papers as the Bank may reasonably  request to evidence
          the Bank's  security  interest in any of the  Collateral;

               (ii) in the name of the Grantor or its own name, or otherwise, to
          take possession of and indorse and collect any checks,  drafts, notes,
          acceptances or other  instruments  for the payment of moneys due under
          any  general  intangible  (to the  extent  that  any of the  foregoing
          constitute  Collateral) or with respect to any other Collateral and to
          file any claim or to take any other action or institute any proceeding
          in any court of law or equity or otherwise  deemed  appropriate by the
          Bank for the purpose of  collecting  any and all such moneys due under
          any  such  General  Intangible  or  with  respect  to any  such  other
          Collateral whenever payable;

               (iii) to pay or discharge Liens placed on the  Collateral,  other
          than Liens permitted under this Agreement; and

               (iv) (A) to direct any party liable for any payment  under any of
          the  Collateral to make payment of any and all moneys due or to become
          due thereunder  directly to the Bank or as the Bank shall direct;  (B)
          to ask for, or demand,  collect,  receive  payment of and receipt for,
          any and all moneys,  claims and other  amounts due or to become due at
          any time in respect of or arising out of any of the Collateral; (C) to
          sign and  indorse any  invoices,  freight or express  bills,  bills of
          lading,  storage  or  warehouse  receipts,   drafts  against  debtors,
          assignments,  verifications, notices and other documents in connection
          with any of the  Collateral;  (D) to commence and prosecute any suits,
          actions or  proceedings  at law or in equity in any court of competent
          jurisdiction  to collect the  Collateral or any thereof and to enforce
          any other right in respect of any Collateral;  (E) to defend any suit,
          action or proceeding  brought  against the Grantor with respect to any
          of the  Collateral;  (F) to  settle,  compromise  or adjust  any suit,
          action or proceeding  described in clause (E) above and, in connection
          therewith,  to give such  discharges  or releases as the Bank may deem
          appropriate;  (G) subject to any pre-existing  rights or licenses,  to
          assign any Patent or Trademark constituting Collateral (along with the
          goodwill  of the  business  to which  any  such  Patent  or  Trademark
          pertains),  for such term or terms,  on such  conditions,  and in such
          manner,  as the Bank shall in its sole discretion  determine;  and (H)
          generally,  to sell,  transfer,  pledge  and make any  agreement  with
          respect to or otherwise  deal with any of the  Collateral as fully and
          completely as though the Bank were the absolute  owner thereof for all
          purposes,  and to do, at the Bank's option and the Grantor's  expense,
          at any time, or from time to time,  all acts and things which the Bank
          deems  necessary to protect,  preserve or realize upon the  Collateral
          and  the  Bank's  Liens  thereon  and to  effect  the  intent  of this
          Agreement, all as fully and effectively as the Grantor might do.

     The Grantor hereby  ratifies all that said  attorneys  shall lawfully do or
     cause  to be done by  virtue  hereof.  This  power of  attorney  is a power
     coupled with an interest and shall be irrevocable  until payment in full of
     the Obligations.

          (b) Other Powers.  The Grantor also  authorizes the Bank, from time to
     time if an Event of  Default  shall have  occurred  and be  continuing,  to
     execute,  in connection with any sale provided for in Section 8 hereof, any
     endorsements,  assignments  or other  instruments of conveyance or transfer
     with respect to the Collateral. (c) No Duty on the Part of Bank. The powers
     conferred on the Bank hereunder are solely to protect the Bank's  interests
     in the  Collateral  and shall not impose any duty upon the Bank to exercise
     any such  powers.  The Bank shall be  accountable  only for amounts that it
     actually  receives as a result of the exercise of such powers,  and neither
     it nor  any of its  officers,  directors,  employees  or  agents  shall  be
     responsible to the Grantor for any act or failure to act hereunder,  except
     for their own gross negligence or willful misconduct.

     7.  Performance by Bank of Grantor's  Obligations.  If the Grantor fails to
perform or comply with any of its agreements  contained  herein and the Bank, as
provided for by the terms of this Agreement,  shall itself perform or comply, or
otherwise cause performance or compliance,  with such agreement,  the reasonable
expenses of the Bank incurred in connection with such performance or compliance,
together  with  interest  thereon at the rate  provided  in the Notes,  shall be
payable by the  Grantor to the Bank on demand and shall  constitute  Obligations
secured hereby.

     8.  Proceeds.  It is agreed that if an Event of Default  shall occur and be
continuing,  (a)  all  proceeds  of  any  Collateral  received  by  the  Grantor
consisting  of cash,  checks  and  other  near-cash  items  shall be held by the
Grantor in trust for the Bank,  segregated from other funds of the Grantor,  and
at the request of the Bank shall,  forthwith  upon  receipt by the  Grantor,  be
turned over to the Bank in the exact form received by the Grantor (duly indorsed
by the  Grantor to the Bank,  if  required by the Bank) and (b) any and all such
proceeds  received by the Bank (whether  from the Grantor or otherwise)  may, in
the sole discretion of the Bank, be held by the Bank as collateral  security for
the  Obligations  (whether  matured  or  unmatured)  and/or  then or at any time
thereafter  may be applied by the Bank  against,  the  Obligations  then due and
owing.  Any balance of such proceeds  remaining after the payment in full of the
Obligations  shall be paid over to the Grantor or to whomsoever  may be lawfully
entitled to receive the same.

     9. Remedies. If an Event of Default shall occur and be continuing, the Bank
may exercise all rights and remedies of a secured party under the Code,  and, to
the extent permitted by law, all other rights and remedies granted to it in this
Agreement  and in any other  instrument  or agreement  securing,  evidencing  or
relating to the  Obligations.  Without limiting the generality of the foregoing,
the Bank, without demand of performance or other demand,  presentment,  protest,
advertisement  or notice of any kind (except any notice required by law referred
to below) to or upon the  Grantor  or any  other  person  (all and each of which
demands,  defenses,  advertisements  and notices are hereby  waived) may in such
circumstances,  to the extent  permitted  by law,  forthwith  collect,  receive,
appropriate  and realize upon the  Collateral,  or any part thereof,  and/or may
forthwith sell, lease, assign, give option or options to purchase,  or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do any
of the foregoing) in one or more parcels at public or private sale or sales,  at
any exchange,  broker's board or office of the Bank or elsewhere upon such terms
and  conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future  delivery  without  assumption of any credit
risk.  The Bank shall have the right,  to the extent  permitted by law, upon any
such sale or sales, to purchase the whole or any part of the Collateral so sold,
free of any right or equity of redemption in the Grantor,  which right or equity
is hereby waived or released. The Grantor further agrees, at the Bank's request,
upon the  occurrence  and  during the  continuance  of an Event of  Default,  to
assemble  the  Collateral  and make it available to the Bank at places which the
Bank shall reasonably select, whether at the Grantor's premises or elsewhere. In
the  event  of  any  sale,  assignment,  or  other  disposition  of  any  of the
Collateral,  the goodwill of the business  connected  with and symbolized by any
Trademark  Collateral  subject to such  disposition  shall be included,  and the
Grantor  shall  supply to the Bank or its designee  the  Grantor's  know-how and
expertise  relating  to the  Collateral  subject  to such  disposition,  and the
Grantor's notebooks,  studies, reports, records,  documents and things embodying
the same or relating to the  inventions,  processes or ideas  covered by, and to
the  manufacture  of any products  under or in connection  with,  the Collateral
subject to such disposition,  and the Grantor's  customer's  lists,  studies and
surveys and other records and documents relating to the distribution, marketing,
advertising  and sale of  products  relating to the  Collateral  subject to such
disposition.  The Bank  shall  apply the net  proceeds  of any such  collection,
recovery,  receipt,  appropriation,  realization  or sale,  after  deducting all
reasonable  costs and expenses of every kind  incurred  therein or incidental to
the care or  safekeeping  of any of the Collateral or in any way relating to the
Collateral or the rights of the Bank, including, without limitation,  reasonable
attorneys'  fees and  disbursements,  to the  payment in whole or in part of the
Obligations  then due and owing,  and only after such  application and after the
payment  by the Bank of any  other  amount  required  by any  provision  of law,
including,  without limitation,  Section 9-504(1) (c) of the Code, need the Bank
account for the  surplus,  if any, to the  Grantor.  To the extent  permitted by
applicable  law,  the  Grantor  waives all  claims,  damages  and demands it may
acquire against the Bank arising out of the  repossession,  retention or sale of
the Collateral,  other than any such claims,  damages and demands that may arise
from the gross negligence or willful  misconduct of the Bank. If any notice of a
proposed sale or other  disposition of Collateral shall be required by law, such
notice  shall be deemed  reasonable  and proper if given at least 10 days before
such  sale or  other  disposition.  The  Grantor  shall  remain  liable  for any
deficiency if the proceeds of any sale or other  disposition  of the  Collateral
are  insufficient  to  pay  the  then  outstanding  Obligations,  including  the
reasonable  fees and  disbursements  of any  attorneys  employed  by the Bank to
collect such deficiency.

     10. Limitation on Duties Regarding  Preservation of Collateral.  The Bank's
sole duty with respect to the custody,  safekeeping and physical preservation of
the Collateral in its possession,  under Section 9-207 of the Code or otherwise,
shall be to deal  with it in the same  manner  as the Bank  deals  with  similar
property  for  its own  account.  Neither  the  Bank  nor any of its  directors,
officers,  employees or agents shall be liable for failure to demand, collect or
realize upon all or any part of the  Collateral  or for any delay in doing so or
shall be under any  obligation  to sell or otherwise  dispose of any  Collateral
upon the request of the Grantor or any other person.

     11. Powers Coupled with an Interest. All authorizations and agencies herein
contained with respect to the Collateral are powers coupled with an interest and
are irrevocable until payment in full of the Obligations.

     12.  Severability.  Any provision of this Agreement  which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render  unenforceable such provision in any
other  jurisdiction.

     13. Section  Headings.  The Section headings used in this Agreement are for
convenience of reference only and are not to affect the  construction  hereof or
be taken into consideration in the interpretation hereof.

     14. No Waiver;  Cumulative Remedies.  The Bank shall not by any act (except
by a written  instrument  pursuant  to Section 15  hereof),  delay,  indulgence,
omission or otherwise be deemed to have waived any right or remedy  hereunder or
to have  acquiesced in any Event of Default or in any breach of any of the terms
and conditions hereof. No failure to exercise,  nor any delay in exercising,  on
the part of the Bank, any right, power or privilege hereunder shall operate as a
waiver thereof.  No single or partial exercise of any right,  power or privilege
hereunder shall preclude any other or further  exercise  thereof or the exercise
of any other  right,  power or  privilege.  A waiver by the Bank of any right or
remedy  hereunder  on any one  occasion  shall not be  construed as a bar to any
right or remedy which the Bank would otherwise have on any future occasion.  The
rights and remedies herein provided are cumulative,  may be exercised  singly or
concurrently and are not exclusive of any rights or remedies provided by law.

     15. Waivers and  Amendments;  Successors and Assigns.  None of the terms or
provisions of this Agreement may be waived,  amended,  supplemented or otherwise
modified  except by a written  instrument  executed by the Grantor and the Bank.
This  Agreement  shall be binding upon the successors and assigns of the Grantor
and shall  inure to the  benefit  of the Bank and its  successors  and  assigns,
except that the Grantor may not assign,  transfer or delegate  any of its rights
or  obligations  under this Agreement  without the prior written  consent of the
Bank.

     16. Notices. Except as expressly provided otherwise in this Agreement,  all
notices  and other  communications  provided  to any  party  hereto  under  this
Agreement shall be in writing and shall be given by personal delivery,  by mail,
by  reputable  overnight  courier,  by telex or by  facsimile  and  addressed or
delivered to it at its address set forth on Schedule 16 or at such other address
as may be  designated  by such  party  in a notice  to the  other  parties  that
complies  as to  delivery  with the terms of this  Section  16. Any  notice,  if
personally  delivered or if mailed and properly  addressed with postage  prepaid
and sent by registered or certified mail, shall be deemed given when received or
when delivery is refused;  any notice, if given to a reputable overnight courier
and properly addressed,  shall be deemed given 2 Business Days after the date on
which it was sent, unless it is actually received sooner by the named addressee;
and any notice, if transmitted by telex or facsimile, shall be deemed given when
received (answer back confirmed in the case of telexes and receipt  confirmed in
the case of telecopies).  Bank may, but, except as specifically provided herein,
shall not be required to, take any action on the basis of any notice given to it
by  telephone,  but the giver of any such notice  shall  promptly  confirm  such
notice in writing or by telex or  facsimile,  and such notice will not be deemed
to have been received until such  confirmation  is deemed received in accordance
with the provisions of this Section set forth above. If such  telephonic  notice
conflicts with any such confirmation,  the terms of such telephonic notice shall
control.

     17.  GOVERNING LAW. THIS AGREEMENT  SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MICHIGAN WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.

     18. Waiver of Jury Trial.  The Grantor  hereby waives any right to trial by
jury in the event of litigation  regarding the performance or enforcement of, or
in any way related to, this Agreement.

     IN WITNESS  WHEREOF,  the  Grantor  has caused  this  Agreement  to be duly
executed and delivered as of the date first above written.


                                            JPE, INC.

                                            By:  /s/ Richard R. Chrysler
                                                 ------------------------------
                                                 Richard R. Chrysler
                                            Its: President and Chief Executive
                                                   Officer






                               SECURITY AGREEMENT
                             (Negotiable Collateral)


As of May 27, 1999, for value  received,  the undersigned  ("Debtor")  grants to
Comerica Bank ("Bank"),  a Michigan banking  corporation,  a continuing security
interest  in the  Collateral  (as  defined  below) to secure  payment  when due,
whether by stated maturity,  demand  acceleration or otherwise,  of all existing
and future indebtedness  ("Indebtedness") to the Bank of the borrowers listed in
attached  Schedule  1  (collectively  "Borrower")  and/or  Debtor.  Indebtedness
includes  without limit any and all  obligations  or liabilities of the Borrower
and/or Debtor to the Bank,  whether absolute or contingent,  direct or indirect,
voluntary or involuntary, liquidated or unliquidated, joint or several, known or
unknown;  any and all  obligations or liabilities  for which the Borrower and/or
Debtor would  otherwise be liable to the Bank were it not for the  invalidity or
unenforceability  of them by reason of any bankruptcy,  insolvency or other law,
or for any other reason; any and all amendments,  modifications, renewals and/or
extensions  of any of the above;  all costs  incurred  by Bank in  establishing,
determining,  continuing,  or defending the validity or priority of its security
interest,  or in pursuing its rights and remedies  under this Agreement or under
any other  agreement  between Bank and Borrower  and/or  Debtor or in connection
with any proceeding involving Bank as a result of any financial accommodation to
Borrower  and/or  Debtor;   and  all  other   reasonable   costs  of  collecting
Indebtedness,  including  without limit attorney fees. Debtor agrees to pay Bank
all such costs incurred by the Bank, immediately upon demand, and until paid all
costs shall bear interest at the highest per annum rate applicable to any of the
Indebtedness,  but not in excess  of the  maximum  rate  permitted  by law.  Any
reference  in this  Agreement  to attorney  fees shall be deemed a reference  to
reasonable  fees,  costs,  and expenses of both in-house and outside counsel and
paralegals, whether or not a suit or action is instituted, and to court costs if
a suit or action is  instituted,  and whether  attorney  fees or court costs are
incurred at the trial court level, on appeal, in a bankruptcy, administrative or
probate proceeding or otherwise.

1.   Collateral  shall mean all of the  following  property  Debtor now or later
     owns or has an interest in, wherever located:

     (a)  the securities listed on attached Schedule 2;

     (b)  all  goods,  instruments,  documents,  policies  and  certificates  of
          insurance,  deposits,  money,  investment  property or other  property
          (except the stock of JPE Canada,  Inc. and the real property  which is
          not a  fixture)  which are now or later in  possession  or  control of
          Bank,  or as to  which  Bank  now  or  later  controls  possession  by
          documents or otherwise, and

     (c)  all   additions,   attachments,   accessions,   parts,   replacements,
          substitutions, renewals, interest, dividends, distributions, rights of
          any kind  (including  but not limited to stock  splits,  stock rights,
          voting  and  preferential  rights),   products,  and  proceeds  of  or
          pertaining  to the  above  including,  without  limit,  cash or  other
          property which were proceeds and are recovered by a bankruptcy trustee
          or otherwise as a preferential transfer by Debtor.

2.   Warranties, Covenants and Agreements. Debtor warrants, covenants and agrees
     as follows:

     2.1  Debtor  shall  furnish to Bank,  in form and at  intervals as Bank may
          reasonably  request,  any information Bank may reasonably  request and
          allow  Bank at all times  during  normal  business  hours to  examine,
          inspect, and copy any of Debtor's books and records.  Debtor shall, at
          the request of Bank,  mark its records and the  Collateral  to clearly
          indicate the security interest of Bank under this Agreement.

     2.2  At the time any Collateral  becomes,  or is represented to be, subject
          to a security  interest  in favor of Bank,  Debtor  shall be deemed to
          have  warranted  that (a) Debtor is the lawful owner of the Collateral
          and has the right and  authority to subject it to a security  interest
          granted to Bank; (b) none of the Collateral is subject to any security
          interest  other  than  that in favor of Bank and  Permitted  Liens (as
          defined in attached Exhibit "A") and there are no financing statements
          on file,  other than in favor of Bank and those filed with  respect to
          Permitted  Liens; and (c) Debtor acquired its rights in the Collateral
          in the ordinary course of its business.

     2.3  Debtor  will keep the  Collateral  free at all times from all  claims,
          liens,  security interests and encumbrances other than Permitted Liens
          and those in favor of Bank. Debtor will not, without the prior written
          consent  of Bank,  sell,  transfer  or  lease,  or  permit to be sold,
          transferred  or  leased,  any or all of the  Collateral.  Bank  or its
          representatives may at all reasonable times inspect the Collateral and
          may enter upon all premises  where the  Collateral is kept or might be
          located.

     2.4  Debtor will do all acts and will  execute or cause to be executed  all
          writings  requested  by Bank to  establish,  maintain  and  continue a
          perfected  and  first  security  interest  of Bank in the  Collateral.
          Debtor  agrees that Bank has no  obligation  to acquire or perfect any
          lien on or  security  interest  in any  asset(s),  whether  realty  or
          personalty, to secure payment of the Indebtedness.

     2.5  Debtor will pay within the time that they can be paid without interest
          or penalty all taxes,  assessments  and similar  charges  which at any
          time  are or may  become  a lien,  charge,  or  encumbrance  upon  any
          Collateral, except to the extent contested in good faith and bonded in
          a manner  reasonably  satisfactory to Bank. If Debtor fails to pay any
          of these taxes,  assessments,  or other  charges in the time  provided
          above,  Bank  has the  option  (but not the  obligation)  to do so and
          Debtor  agrees to repay all amounts so  expended  by Bank  immediately
          upon  demand,  together  with  interest  at the highest per annum rate
          applicable to any of the Indebtedness but not in excess of the maximum
          rate allowed by applicable law. 2.6 Debtor will keep the Collateral in
          good condition and will protect it from loss, damage, or deterioration
          from any  cause.  Debtor has and will  maintain  at all times (a) with
          respect  to the  Collateral,  insurance  under  an "all  risk"  policy
          against  fire and other risks  customarily  insured  against,  and (b)
          public  liability  insurance and other insurance as may be required by
          law or reasonably required by Bank, all of which insurance shall be in
          amount,  form  and  content,  and  written  by  companies  as  may  be
          reasonably  satisfactory  to Bank,  containing a lender's loss payable
          endorsement reasonably acceptable to Bank. Debtor will deliver to Bank
          immediately upon demand evidence reasonably  satisfactory to Bank that
          the required insurance has been procured.  If Debtor fails to maintain
          satisfactory  insurance,  Bank has the option (but not the obligation)
          to do so and Debtor  agrees to repay all  amounts so  expended by Bank
          immediately upon demand,  together with interest at the highest lawful
          default rate which could be charged by Bank on any Indebtedness.

     2.7  Debtor at all times shall be in  compliance  in all material  respects
          with  all  applicable   laws,   including   without  limit  any  laws,
          ordinances,  directives, orders, statutes, or regulations an object of
          which is to regulate or improve  health,  safety,  or the  environment
          ("Environmental Laws").

     2.8  [Intentionally Left Blank]

     2.9  If Bank,  acting  in its sole  discretion,  redelivers  Collateral  to
          Debtor or Debtor's  designee for the purpose of (a) the ultimate  sale
          or exchange thereof;  or (b)  presentation,  collection,  renewal,  or
          registration of transfer thereof; or (c) loading, unloading,  storing,
          shipping,  transshipping,   manufacturing,   processing  or  otherwise
          dealing with it preliminary to sale or exchange; such redelivery shall
          be in trust for the benefit of Bank and shall not constitute a release
          of Bank's security interest in it or in the proceeds or products of it
          unless Bank specifically so agrees in writing.  If Debtor requests any
          such redelivery, Debtor will deliver with such request a duly executed
          financing  statement in form and substance  satisfactory  to Bank. Any
          proceeds of Collateral coming into Debtor's  possession as a result of
          any such  redelivery  shall be held in trust for Bank and  immediately
          delivered to Bank for  application on the  Indebtedness.  Bank may (in
          its sole  discretion)  deliver any or all of the Collateral to Debtor,
          and such delivery by Bank shall  discharge  Bank from all liability or
          responsibility  for such Collateral.  Bank, at its option, may require
          delivery of any Collateral to Bank at any time with such  endorsements
          or assignments of the Collateral as Bank may request.

     2.10 Bank may (a) following the occurrence and during the continuance of an
          Event of Default cause any or all of the  Collateral to be transferred
          to its name or to the name of its nominees;  (b) receive or collect by
          legal  proceedings  or otherwise all  dividends,  interest,  principal
          payments  and  other  sums  and all  other  distributions  at any time
          payable or receivable on account of the Collateral,  and hold the same
          as Collateral,  or apply the same to the Indebtedness,  the manner and
          distribution  of the application to be in the sole discretion of Bank;
          provided, however, while no Event of Default exists, Debtor may retain
          cash dividends paid in the ordinary course of business with respect to
          the   Collateral;   (c)  following  the   occurrence  and  during  the
          continuance   of  an  Event  of  Default  enter  into  any  extension,
          subordination,   reorganization,   deposit,  merger  or  consolidation
          agreement  or  any  other  agreement  relating  to  or  affecting  the
          Collateral,  and deposit or surrender  control of the Collateral,  and
          accept other property in exchange for the Collateral and hold or apply
          the property or money so received  pursuant to this Agreement.  Unless
          an Event of Default  shall have  occurred  and be  continuing,  Debtor
          shall have the  exclusive  right to  exercise  all  voting  power with
          respect to any shares of stock constituting the Collateral.  After any
          Event of Default shall have  occurred and be  continuing  and Bank has
          notified Debtor of Bank's  intention to exercise its voting power with
          respect to the Collateral.

          (i)  Bank may exercise  (to the  exclusion of Debtor) the voting power
               and all other incidental  rights of ownership with respect to any
               shares of stock constituting  Collateral and Debtor hereby grants
               Bank an irrevocable proxy,  exercisable under such circumstances,
               to vote such Collateral; and

          (ii) Debtor shall promptly deliver to Bank such additional proxies and
               other  documents  as may be  necessary  to allow Bank to exercise
               such voting power.

     2.11 Bank may assign any of the  Indebtedness and deliver any or all of the
          Collateral  to its  assignee,  who then  shall  have with  respect  to
          Collateral  so delivered  all the rights and powers of Bank under this
          Agreement,  and after  that Bank  shall be fully  discharged  from all
          liability and responsibility with respect to Collateral so delivered.

     2.12 Debtor  delivers this Agreement  based solely on Debtor's  independent
          investigation  of (or  decision  not  to  investigate)  the  financial
          condition of Borrower and is not relying on any information  furnished
          by Bank. Debtor assumes full  responsibility for obtaining any further
          information concerning the Borrower's financial condition,  the status
          of the Indebtedness or any other matter which the undersigned may deem
          necessary or appropriate  now or later.  Debtor waives any duty on the
          part of Bank, and agrees that Debtor is not relying upon nor expecting
          Bank to  disclose  to  Debtor  any fact  now or  later  known by Bank,
          whether  relating to the  operations  or condition  of  Borrower,  the
          existence,  liabilities or financial condition of any guarantor of the
          Indebtedness,  the  occurrence  of any  default  with  respect  to the
          Indebtedness,  or otherwise,  notwithstanding any effect such fact may
          have upon Debtor's risk or Debtor's  rights against  Borrower.  Debtor
          knowingly   accepts  the  full  range  of  risk  encompassed  in  this
          Agreement,  which risk  includes  without limit the  possibility  that
          Borrower may incur Indebtedness to Bank after the financial  condition
          of Borrower,  or Borrower's  ability to pay debts as they mature,  has
          deteriorated.

     2.13 Debtor shall defend,  indemnify and hold harmless Bank, its employees,
          agents,  shareholders,  affiliates,  officers,  and directors from and
          against any and all claims, damages,  fines, expenses,  liabilities or
          causes of action of whatever kind,  including without limit consultant
          fees, legal expenses,  and attorney fees, suffered by any of them as a
          direct or indirect  result of any actual or asserted  violation of any
          law  (other  than a  violation  by Bank),  including,  without  limit,
          Environmental  Laws,  or of any  remediation  relating to any property
          required by any law, including without limit Environmental Laws.

3.   Collection of Proceeds. Debtor agrees to collect and enforce payment of all
     Collateral until Bank shall direct Debtor to the contrary. Immediately upon
     notice  to Debtor by Bank and at all times  after  that,  Debtor  agrees to
     fully  and  promptly  cooperate  and  assist  Bank  in the  collection  and
     enforcement  of all  Collateral  and to hold in trust for Bank all payments
     received in connection  with  Collateral and from the sale,  lease or other
     disposition of any Collateral,  all rights by way of suretyship or guaranty
     and all rights in the nature of a lien or security  interest  which  Debtor
     now or later has  regarding  Collateral.  Immediately  upon and after  such
     notice,  Debtor  agrees to (a) endorse to Bank and  immediately  deliver to
     Bank all payments  received on Collateral or from the sale,  lease or other
     disposition of any Collateral or arising from any other rights or interests
     of  Debtor  in the  Collateral,  in the form  received  by  Debtor  without
     commingling with any other funds,  and (b) immediately  deliver to Bank all
     property in Debtor's  possession or later coming into  Debtor's  possession
     through  enforcement  of Debtor's  rights or interests  in the  Collateral.
     During  the  continuance  of  an  Event  of  Default,   Debtor  irrevocably
     authorizes Bank or any Bank employee or agent to endorse the name of Debtor
     upon any  checks or other  items  which are  received  in  payment  for any
     Collateral, and to do any and all things necessary in order to reduce these
     items to money.  Bank shall have no duty as to the collection or protection
     of  Collateral  or the  proceeds of it, nor as to the  preservation  of any
     related  rights,  beyond  the use of  reasonable  care in the  custody  and
     preservation of Collateral in the possession of Bank. Debtor agrees to take
     all steps  necessary to preserve  rights against prior parties with respect
     to the  Collateral.  Nothing in this Section 3 shall be deemed a consent by
     Bank to any sale, lease or other disposition of any Collateral.

4.   Defaults, Enforcement and Application of Proceeds.

     4.1  Upon the occurrence of any of the following  events (each an "Event of
          Default"), Debtor shall be in default under this Agreement:

          (a)  Any  failure to pay the  Indebtedness  or any other  indebtedness
               when due, or such portion of it as may be due, by acceleration or
               otherwise; or

          (b)  Any  failure or neglect to comply  with,  or breach of or default
               under,  any term of this  Agreement,  or any other  agreement  or
               commitment  between Borrower,  Debtor, or any guarantor of any of
               the Indebtedness ("Guarantor") and Bank; or

          (c)  Any  warranty,  representation,  financial  statement,  or  other
               information  made,  given or furnished to Bank by or on behalf of
               Borrower,  Debtor,  or any Guarantor  shall be, or shall prove to
               have been,  false or materially  misleading when made,  given, or
               furnished; or

          (d)  Any loss, theft,  substantial  damage or destruction to or of any
               material part of the Collateral, or the issuance or filing of any
               attachment,   levy,   garnishment  or  the  commencement  of  any
               proceeding  in  connection  with any  Collateral  or of any other
               judicial process of, upon or in respect of Borrower,  Debtor, any
               Guarantor, or any Collateral which is not contested in good faith
               and bonded to the Bank's reasonable satisfaction; or

          (e)  Sale or other  disposition by Borrower,  Debtor, or any Guarantor
               of any substantial portion of its assets or property or voluntary
               suspension of the transaction of business by Borrower, Debtor, or
               any Guarantor, or death,  dissolution,  termination of existence,
               merger,   consolidation,   insolvency,   business   failure,   or
               assignment  for  the  benefit  of  creditors  of or by  Borrower,
               Debtor,  or any Guarantor;  or  commencement  of any  proceedings
               under any state or federal  bankruptcy or insolvency laws or laws
               for the relief of debtors by or against Borrower,  Debtor, or any
               Guarantor;  or the  appointment  of a  receiver,  trustee,  court
               appointee,  sequestrator or otherwise, for all or any part of the
               property of Borrower, Debtor, or any Guarantor.

          In the event of any express  conflict  between any  provision  of this
          Section 4.1 and the  corresponding  provision of any of the promissory
          notes evidencing the  Indebtedness,  the provisions of such promissory
          notes shall control.

     4.2  Upon  the  occurrence  of  any  Event  of  Default,  Bank  may  at its
          discretion  and without  prior notice to Debtor  declare any or all of
          the Indebtedness to be immediately due and payable, and shall have and
          may exercise any one or more of the following rights and remedies:

          (a)  Exercise all the rights and remedies upon default, in foreclosure
               and otherwise,  available to secured parties under the provisions
               of the Uniform Commercial Code and other applicable law;

          (b)  Institute  legal  proceedings  to  foreclose  upon  the  lien and
               security interest granted by this Agreement,  to recover judgment
               for all  amounts  then  due and  owing  as  Indebtedness,  and to
               collect  the same out of any  Collateral  or the  proceeds of any
               sale of it;

          (c)  Institute legal  proceedings for the sale,  under the judgment or
               decree  of any  court of  competent  jurisdiction,  of any or all
               Collateral; and/or

          (d)  Personally or by agents, attorneys, or appointment of a receiver,
               enter upon any premises where Collateral may then be located, and
               take  possession  of all or any of it and/or  render it unusable;
               and  without  being  responsible  for  loss  or  damage  to  such
               Collateral,  hold, operate, sell, lease, or dispose of all or any
               Collateral  at one or more public or private  sales,  leasings or
               other  dispositions,  at  places  and  times  and  on  terms  and
               conditions as Bank may deem fit,  without any previous  demand or
               advertisement;  and except as  provided  in this  Agreement,  all
               notice of sale, lease or other  disposition,  and  advertisement,
               and other  notice or demand,  any right or equity of  redemption,
               and any  obligation  of a  prospective  purchaser  or  lessee  to
               inquire as to the power and authority of Bank to sell,  lease, or
               otherwise  dispose of the Collateral or as to the  application by
               Bank of the proceeds of sale or otherwise,  which would otherwise
               be required by, or available to Debtor under,  applicable law are
               expressly waived by Debtor to the fullest extent permitted.

          At any sale  pursuant to this Section 4.2,  whether under the power of
          sale, by virtue of judicial proceedings or otherwise,  it shall not be
          necessary for Bank or a public  officer under order of a court to have
          present physical or constructive  possession of Collateral to be sold.
          The recitals  contained in any conveyances and receipts made and given
          by Bank or the  public  officer  to any  purchaser  at any  sale  made
          pursuant  to  this  Agreement   shall,  to  the  extent  permitted  by
          applicable law,  conclusively  establish the truth and accuracy of the
          matters stated  (including,  without  limit,  as to the amounts of the
          principal  of  and  interest  on the  Indebtedness,  the  accrual  and
          nonpayment of it and  advertisement  and conduct of the sale); and all
          prerequisites to the sale shall be presumed to have been satisfied and
          performed. Upon any sale of any Collateral, the receipt of the officer
          making  the  sale  under  judicial  proceedings  or of Bank  shall  be
          sufficient  discharge to the purchaser for the purchase money, and the
          purchaser  shall not be  obligated  to see to the  application  of the
          money.  Any sale of any  Collateral  under this  Agreement  shall be a
          perpetual bar against Debtor with respect to that Collateral.

     4.3  Debtor  shall at the request of Bank,  notify the  account  debtors or
          obligors  of Bank's  security  interest in any  Collateral  and direct
          payment  of it to Bank.  Bank may,  itself,  upon the  occurrence  and
          during  the  continuance  of any Event of Default so notify and direct
          any account debtor or obligor.

     4.4  The proceeds of any sale or other disposition of Collateral authorized
          by this  Agreement  shall be applied  by Bank first upon all  expenses
          authorized by the Uniform Commercial Code and all reasonable  attorney
          fees and legal expenses  incurred by Bank; the balance of the proceeds
          of the sale or other  disposition  shall be applied in the  payment of
          the  Indebtedness,  first  to  interest,  then to  principal,  then to
          remaining  Indebtedness and the surplus, if any, shall be paid over to
          Debtor  or to such  other  person(s)  as may be  entitled  to it under
          applicable law.  Debtor shall remain liable for any deficiency,  which
          it shall pay to Bank immediately upon demand.

     4.5  Nothing in this Agreement is intended,  nor shall it be construed,  to
          preclude Bank from  pursuing any other remedy  provided by law for the
          collection of the Indebtedness or for the recovery of any other sum to
          which Bank may be entitled for the breach of this Agreement by Debtor.
          Nothing  in this  Agreement  shall  reduce or  release  in any way any
          rights  or  security  interests  of  Bank  contained  in any  existing
          agreement between Borrower, Debtor, or any Guarantor and Bank.

     4.6  No  waiver  of  default  or  consent  to any act by  Debtor  shall  be
          effective  unless in writing  and signed by an  authorized  officer of
          Bank. No waiver of any default or  forbearance  on the part of Bank in
          enforcing  any of its rights under this  Agreement  shall operate as a
          waiver  of any  other  default  or of the  same  default  on a  future
          occasion or of any rights.

     4.7  Debtor  irrevocably   appoints  Bank  or  any  agent  of  Bank  (which
          appointment is coupled with an interest) the true and lawful  attorney
          of Debtor  (with full power of  substitution)  in the name,  place and
          stead of, and at the expense of, Debtor:

          (a)  to demand,  receive,  sue for, and give receipts or  acquittances
               for  any  moneys  due  or to  become  due  with  respect  to  any
               Collateral and to endorse any item representing any payment on or
               proceeds of the Collateral;

          (b)  to  execute  and file in the name of and on behalf of Debtor  all
               financing   statements  or  other  filings  deemed  necessary  or
               desirable by Bank to evidence,  perfect, or continue the security
               interests granted in this Agreement; and

          (c)  to do and  perform  any act on  behalf  of  Debtor  permitted  or
               required under this Agreement.

     4.8  Upon the occurrence and during the continuance of an Event of Default,
          Debtor also agrees,  upon request of Bank, to assemble the  Collateral
          and make it available to Bank at any place designated by Bank which is
          reasonably convenient to Bank and Debtor.

5.   Miscellaneous.

     5.1  Until  Bank is  advised  in  writing  by Debtor to the  contrary,  all
          notices,  requests and demands required under this Agreement or by law
          shall be given to, or made upon, Debtor at the first address indicated
          in Section 5.15 below.

     5.2  Debtor  will give Bank not less than 30 days prior  written  notice of
          all  contemplated  changes in Debtor's name,  chief  executive  office
          location, and/or location of any Collateral.

     5.3  Bank assumes no duty of performance or other  responsibility under any
          contracts contained within the Collateral.

     5.4  Bank has the  right  to sell,  assign,  transfer,  negotiate  or grant
          participations  or any interest in, any or all of the Indebtedness and
          any related  obligations,  including without limit this Agreement.  In
          connection  with the above,  but without  limiting its ability to make
          other disclosures to the full extent allowable,  Bank may disclose all
          documents  and  information  which Bank now or later has  relating  to
          Debtor, the Indebtedness or this Agreement,  however obtained.  Debtor
          further  agrees  that Bank may  provide  information  relating to this
          Agreement  or  relating  to Debtor to the Bank's  parent,  affiliates,
          subsidiaries, and service providers.

     5.5  In addition to Bank's other rights,  any indebtedness  owing from Bank
          to Debtor can be set off and  applied by Bank on any  Indebtedness  at
          any time(s)  either before or after  maturity or demand without notice
          to anyone.

     5.6  Debtor  waives any right to require the Bank to: (a)  proceed  against
          any person or property;  (b) give notice of the terms,  time and place
          of any public or private sale of personal  property security held from
          Borrower or any other person,  or otherwise comply with the provisions
          of Section  9-504 of the Uniform  Commercial  Code;  or (c) pursue any
          other remedy in the Bank's  power.  Debtor waives notice of acceptance
          of this Agreement and presentment, demand, protest, notice of protest,
          dishonor,  notice of dishonor,  notice of default, notice of intent to
          accelerate or demand  payment of any  Indebtedness,  any and all other
          notices to which the  undersigned  might  otherwise be  entitled,  and
          diligence in collecting any  Indebtedness,  and agree(s) that the Bank
          may,   once  or  any  number  of  times,   modify  the  terms  of  any
          Indebtedness,  compromise,  extend,  increase,  accelerate,  renew  or
          forbear  to  enforce  payment  of any or all  Indebtedness,  or permit
          Borrower  to incur  additional  Indebtedness,  all  without  notice to
          Debtor  and  without   affecting  in  any  manner  the   unconditional
          obligation of Debtor under this Agreement.  Debtor unconditionally and
          irrevocably  waives  each and every  defense  and setoff of any nature
          which,  under  principles of guaranty or  otherwise,  would operate to
          impair or  diminish  in any way the  obligation  of Debtor  under this
          Agreement,  and  acknowledges  that such  waiver is by this  reference
          incorporated  into each  security  agreement,  collateral  assignment,
          pledge  and/or other  document  from Debtor now or later  securing the
          Indebtedness,  and acknowledges  that as of the date of this Agreement
          no such defense or setoff exists.

     5.7  Debtor waives any and all rights (whether by  subrogation,  indemnity,
          reimbursement, or otherwise) to recover from Borrower any amounts paid
          or the  value of any  Collateral  given  by  Debtor  pursuant  to this
          Agreement.

     5.8  In the event that  applicable  law shall  obligate  Bank to give prior
          notice to  Debtor of any  action  to be taken  under  this  Agreement,
          Debtor agrees that a written notice given to Debtor at least five days
          before the date of the act shall be reasonable  notice of the act and,
          specifically,  reasonable  notification  of the time and  place of any
          public  sale or of the time after which any private  sale,  lease,  or
          other  disposition  is to be made,  unless a shorter  notice period is
          reasonable  under the  circumstances.  A notice  shall be deemed to be
          given under this  Agreement when delivered to Debtor or when placed in
          an envelope  addressed to Debtor and deposited,  with postage prepaid,
          in a post office or official  depository  under the exclusive care and
          custody  of the  United  States  Postal  Service  or  delivered  to an
          overnight  courier.   The  mailing  shall  be  by  overnight  courier,
          certified, or first class mail.

     5.9  Notwithstanding  any  prior  revocation,  termination,  surrender,  or
          discharge of this Agreement in whole or in part, the  effectiveness of
          this Agreement  shall  automatically  continue or be reinstated in the
          event that any payment  received or credit given by Bank in respect of
          the  Indebtedness  is  returned,  disgorged,  or  rescinded  under any
          applicable  law,   including,   without   limitation,   bankruptcy  or
          insolvency  laws, in which case this  Agreement,  shall be enforceable
          against Debtor as if the returned,  disgorged, or rescinded payment or
          credit had not been received or given by Bank, and whether or not Bank
          relied  upon this  payment  or credit or  changed  its  position  as a
          consequence of it. In the event of  continuation or  reinstatement  of
          this  Agreement,  Debtor  agrees  upon  demand by Bank to execute  and
          deliver to Bank those  documents which Bank determines are appropriate
          to  further  evidence  (in  the  public  records  or  otherwise)  this
          continuation or reinstatement, although the failure of Debtor to do so
          shall not affect in any way the reinstatement or continuation.

     5.10 This  Agreement  and all the  rights and  remedies  of Bank under this
          Agreement shall inure to the benefit of Bank's  successors and assigns
          and to any other  holder who derives from Bank title to or an interest
          in the  Indebtedness  or any  portion of it, and shall bind Debtor and
          the heirs, legal representatives,  successors,  and assigns of Debtor.
          Nothing  in this  Section  5.10 is  deemed  a  consent  by Bank to any
          assignment by Debtor.

     5.11 If there is more than one Debtor,  all  undertakings,  warranties  and
          covenants made by Debtor and all rights,  powers and authorities given
          to or conferred upon Bank are made or given jointly and severally.

     5.12 Except as  otherwise  provided  in this  Agreement,  all terms in this
          Agreement have the meanings  assigned to them in Article 9 (or, absent
          definition  in  Article  9,  in any  other  Article)  of  the  Uniform
          Commercial Code, as of the date of this Agreement. "Uniform Commercial
          Code"  means  Act No.  174 of the  Michigan  Public  Acts of 1962,  as
          amended.

     5.13 No single or partial exercise,  or delay in the exercise, of any right
          or power  under  this  Agreement,  shall  preclude  other  or  further
          exercise  of  the  rights  and  powers  under  this   Agreement.   The
          unenforceability  of any provision of this Agreement  shall not affect
          the enforceability of the remainder of this Agreement.  This Agreement
          constitutes  the entire  agreement  of Debtor and Bank with respect to
          the subject matter of this Agreement.  No amendment or modification of
          this Agreement shall be effective  unless the same shall be in writing
          and signed by Debtor and an authorized officer of Bank. This Agreement
          shall be governed by and  construed  in  accordance  with the internal
          laws of the State of  Michigan,  without  regard to  conflict  of laws
          principles.

     5.14 To the extent that any of the  Indebtedness  is payable  upon  demand,
          nothing  contained  in this  Agreement  shall  modify  the  terms  and
          conditions of that  Indebtedness nor shall anything  contained in this
          Agreement prevent Bank from making demand,  without notice and with or
          without  reason,   for  immediate  payment  of  any  or  all  of  that
          Indebtedness  at any  time(s),  whether or not an Event of Default has
          occurred.

     5.15 Debtor's chief executive  office is located and shall be maintained at
          775 Technology Drive, Suite 200, Ann Arbor, Michigan 48108.

          If  Collateral  is located at other than the chief  executive  office,
          such  Collateral is located and shall be  maintained  at: See attached
          Schedule 3.

          Collateral  shall be maintained  only at the  locations  identified in
          this Section 5.15.

     5.16 A carbon,  photographic or other  reproduction of this Agreement shall
          be sufficient as a financing  statement  under the Uniform  Commercial
          Code and may be filed by Bank in any filing office.

     5.17 This Agreement shall be terminated only by the filing of a termination
          statement in accordance with the applicable  provisions of the Uniform
          Commercial Code, but the obligations contained in Section 2.13 of this
          Agreement shall survive termination.

6.   DEBTOR  AND  BANK  ACKNOWLEDGE  THAT  THE  RIGHT  TO  TRIAL  BY  JURY  IS A
     CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING
     (OR HAVING HAD THE  OPPORTUNITY  TO CONSULT)  WITH COUNSEL OF THEIR CHOICE,
     KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO
     TRIAL BY JURY IN THE  EVENT OF  LITIGATION  REGARDING  THE  PERFORMANCE  OR
     ENFORCEMENT   OF,  OR  IN  ANY  WAY  RELATED  TO,  THIS  AGREEMENT  OR  THE
     INDEBTEDNESS.

7.   Special Provisions Applicable to this Agreement. (*None, if left blank)


                                          Debtor:

                                          ------------------------------------

                                          By:
                                               -------------------------------

                                          Its:


<PAGE>


                                   SCHEDULE 1

                                    Borrowers

JPE, Inc.

Dayton Parts, Inc.

Starboard Industries, Inc.

Plastic Trim, Inc.

JPE Finishing, Inc.

Brake, Axle and Tandem Company Canada, Inc.


<PAGE>


                                   SCHEDULE 2


1.   100  shares of the stock of  API/JPE,  Inc.  and all other  shares of stock
     thereof now owned or hereafter acquired by Debtor.

2.   4,000  shares of the stock of Dayton  Parts,  Inc.  and all other shares of
     stock thereof now owned or hereafter acquired by Debtor.

3.   100 shares of the stock of Fastener Acquisition,  Inc. and all other shares
     of stock thereof now owned or hereafter acquired by Debtor.

4.   100  shares of the stock of JPE  Finishing,  Inc.  and all other  shares of
     stock thereof now owned or hereafter acquired by Debtor.

5.   100 shares of the stock of Plastic Trim, Inc. and all other shares of stock
     thereof now owned or hereafter acquired by Debtor.

6.   50,000 shares of the stock of SAC Corporation and all other shares of stock
     thereof now owned or hereafter acquired by Debtor.


<PAGE>


                                   SCHEDULE 3

                                 Other Locations


                     [to be prepared by Borrower's counsel]


<PAGE>


                                   EXHIBIT "A"


     "Permitted Liens" shall mean:

     (a)  liens for taxes, assessments or governmental charges or levies not yet
          due or delinquent, or which can thereafter be paid without penalty, or
          which are being  contested  in good faith by  appropriate  proceedings
          diligently  pursued,  provided  that  provision for the payment of all
          such  taxes  has been made on  Debtor's  books as may be  required  by
          generally  accepted   accounting   principles   consistently   applied
          ("GAAP");

     (b)  the liens, if any, shown on Schedule 4 attached hereto;

     (c)  any other liens  consented to in writing by Bank (which consent may be
          granted or withheld in the sole discretion of Bank).


<PAGE>


                                   SCHEDULE 4


                                 Permitted Liens


                     [to be provided by Borrower's counsel]





                                    Guaranty


As of May 27, 1999, the  undersigned,  for value received,  unconditionally  and
absolutely   guarantee(s)  to  Comerica  Bank  ("Bank"),   a  Michigan   banking
corporation,  payment when due, whether by stated maturity, demand, acceleration
or otherwise,  of all existing and future  indebtedness  ("Indebtedness") to the
Bank of the borrowers listed in attached Schedule 1 (collectively,  "Borrower").
Indebtedness  includes  without limit any and all  obligations or liabilities of
the Borrower to the Bank,  whether  absolute or contingent,  direct or indirect,
voluntary or involuntary, liquidated or unliquidated, joint or several, known or
unknown; any and all indebtedness, obligations or liabilities for which Borrower
would  otherwise  be  liable  to the  Bank  were  it  not  for  the  invalidity,
irregularity or unenforceability of them by reason of any bankruptcy, insolvency
or  other  law or  order  of any  kind,  or for any  other  reason;  any and all
amendments,  modifications,  renewals and/or extensions of any of the above; and
all costs of collecting Indebtedness,  including,  without limit, attorney fees.
Any  reference in this  Guaranty to attorney fees shall be deemed a reference to
reasonable  fees,  charges,  costs and  expenses  of both  in-house  and outside
counsel and  paralegals,  whether or not a suit or action is instituted,  and to
court  costs if a suit or action is  instituted,  and whether  attorney  fees or
court costs are incurred at the trial court level,  on appeal,  in a bankruptcy,
administrative  or probate  proceeding or otherwise.  All costs shall be payable
immediately by the undersigned  when incurred by the Bank,  without demand,  and
until paid shall bear interest a the highest per annum rate applicable to any of
the Indebtedness, but not in excess of the maximum rate permitted by law.

1.   LIMITATION:  The total obligation of the undersigned under this Guaranty is
     UNLIMITED unless specifically limited in the Additional  Provisions of this
     Guaranty,  and this obligation  (whether unlimited or limited to the extent
     specified in the Additional  Provisions) shall include,  IN ADDITION TO any
     limited  amount of  principal  guaranteed,  all  interest  on that  limited
     amount,  and all costs incurred by the Bank in collection  efforts  against
     the Borrower  and/or the  undersigned or otherwise  incurred by the Bank in
     any way relating to the Indebtedness,  or this Guaranty,  including without
     limit  attorney  fees. The  undersigned  agree(s) that (a) this  limitation
     shall not be a limitation on the amount of Borrower's  Indebtedness  to the
     Bank;  (b) any  payments  by the  undersigned  shall not reduce the maximum
     liability of the  undersigned  under this Guaranty unless written notice to
     that effect is  actually  received by the Bank at, or prior to, the time of
     the payment;  and (c) the liability of the undersigned to the Bank shall at
     all times be deemed to be the aggregate  liability of the undersigned under
     this Guaranty and any other guaranties  previously or subsequently given to
     the  Bank  by the  undersigned  and  not  expressly  revoked,  modified  or
     invalidated in writing.

2.   NATURE OF  GUARANTY:  This is a  continuing  Guaranty of payment and not of
     collection and remains  effective  whether the Indebtedness is from time to
     time  reduced  and  later  increased  or  entirely  extinguished  and later
     reincurred.  The  undersigned  deliver(s) this Guaranty based solely on the
     undersigned's independent investigation of (or decision not to investigate)
     the  financial  condition  of  Borrower  and is (are)  not  relying  on any
     information   furnished  by  the  Bank.  The  undersigned   assume(s)  full
     responsibility  for  obtaining  any  further  information   concerning  the
     Borrower's financial condition, the status of the Indebtedness or any other
     matter  which the  undersigned  may deem  necessary or  appropriate  now or
     later.  The  undersigned   knowingly  accept(s)  the  full  range  of  risk
     encompassed in this  Guaranty,  which risk  includes,  without  limit,  the
     possibility  that  Borrower  may incur  Indebtedness  to the Bank after the
     financial condition of the Borrower, or the Borrower's ability to pay debts
     as they mature, has deteriorated.

3.   APPLICATION OF PAYMENTS:  The  undersigned  authorize(s)  the Bank,  either
     before or after  termination of this Guaranty,  without notice to or demand
     on the undersigned and without affecting the undersigned's  liability under
     this Guaranty,  from time to time to: (a) apply any security and direct the
     order or manner of sale; and (b) apply  payments  received by the Bank from
     the Borrower to any indebtedness of the Borrower to the Bank, in such order
     as the Bank shall  determine  in its sole  discretion,  whether or not this
     indebtedness is covered by this Guaranty,  and the undersigned waive(s) any
     provision  of  law  regarding   application  of  payments  which  specifies
     otherwise.  The  undersigned  agree(s) to provide to the Bank copies of the
     undersigned's financial statements upon request.

4.   SECURITY:  The undersigned  grant(s) to the Bank a security interest in and
     the right of setoff as to any and all  property of the  undersigned  now or
     later in the possession of the Bank. The undersigned  further  assign(s) to
     the Bank as collateral for the  obligations of the  undersigned  under this
     Guaranty  all claims of any nature  that the  undersigned  now or later has
     (have) against the Borrower  (other than any claim under a deed of trust or
     mortgage covering  California real property) with full right on the part of
     the Bank, in its own name or in the name of the undersigned, to collect and
     enforce  these  claims.  The  undersigned  agree(s) that no security now or
     later held by the Bank for the payment of any  Indebtedness,  whether  from
     the Borrower, any guarantor,  or otherwise,  and whether in the nature of a
     security interest, pledge, lien, assignment, setoff, suretyship,  guaranty,
     indemnity,   insurance  or  otherwise,  shall  affect  in  any  manner  the
     unconditional  obligation of the undersigned  under this Guaranty,  and the
     Bank,  in its sole  discretion,  without  notice  to the  undersigned,  may
     release,  exchange,  enforce and otherwise  deal with any security  without
     affecting in any manner the  unconditional  obligation  of the  undersigned
     under this Guaranty.  The undersigned  acknowledge(s) and agree(s) that the
     Bank has no  obligation  to  acquire  or  perfect  any lien on or  security
     interest in any asset(s),  whether realty or personalty,  to secure payment
     of the  Indebtedness,  and the  undersigned  is (are) not relying  upon any
     asset(s) in which the Bank has or may have a lien or security  interest for
     payment of the Indebtedness.

5.   OTHER  GUARANTORS:  If any  Indebtedness  is  guaranteed  by  two  or  more
     guarantors,  the  obligation of the  undersigned  shall be several and also
     joint, each with all and also each with any one or more of the others,  and
     may be enforced at the option of the Bank against each  severally,  any two
     or more jointly, or some severally and some jointly.  The Bank, in its sole
     discretion,  may  release  any  one or  more  of  the  guarantors  for  any
     consideration which it deems adequate, and may fail or elect not to prove a
     claim  against  the  estate  of any  bankrupt,  insolvent,  incompetent  or
     deceased  guarantor;  and after that, without notice to any guarantor,  the
     Bank may  extend  or  renew  any or all  Indebtedness  and may  permit  the
     Borrower to incur additional Indebtedness,  without affecting in any manner
     the unconditional obligation of the remaining guarantor(s). The undersigned
     acknowledge(s)  that the  effectiveness of this Guaranty is not conditioned
     on any or all of the indebtedness being guaranteed by anyone else.

6.   TERMINATION:  Any of the undersigned may terminate their  obligation  under
     this Guaranty as to future Indebtedness  (except as provided below) by (and
     only by) delivering written notice of termination to an officer of the Bank
     and  receiving  from an  officer  of the Bank  written  acknowledgement  of
     delivery;  provided,  however, the termination shall not be effective until
     the opening of business on the fifth (5th) day ("effective date") following
     written  acknowledgement  of delivery.  Any termination shall not affect in
     any  way  the  unconditional  obligations  of the  remaining  guarantor(s),
     whether or not the termination is known to the remaining guarantor(s).  Any
     termination  shall not affect in any way the  unconditional  obligations of
     the  terminating  guarantor(s)  as to  any  Indebtedness  existing  at  the
     effective  date of  termination  or any  Indebtedness  created  after  that
     pursuant  to any  commitment  or  agreement  of the Bank or pursuant to any
     Borrower loan with the Bank existing at the effective  date of  termination
     (whether  advances or readvances  by the Bank after the  effective  date of
     termination are optional or obligatory),  or any modifications,  extensions
     or renewals of any of this  Indebtedness,  whether in whole or in part, and
     as to all of this Indebtedness and modifications, extensions or renewals of
     it, this Guaranty shall continue  effective  until the same shall have been
     fully  paid.  The Bank has no duty to give  notice  of  termination  by any
     guarantor(s) to any remaining guarantor(s). The undersigned shall indemnify
     the Bank  against  all  claims,  damages,  costs and  expenses,  including,
     without limit,  attorney fees,  incurred by the Bank in connection with any
     suit,  claim or action against the Bank arising out of any  modification or
     termination  of a  Borrower  loan or any  refusal  by the  Bank  to  extend
     additional credit in connection with the termination of this Guaranty.

7.   REINSTATEMENT: Notwithstanding any prior revocation, termination, surrender
     or discharge of this Guaranty (or of any lien,  pledge or security interest
     securing  this  Guaranty) in whole or in part,  the  effectiveness  of this
     Guaranty,  and of all liens,  pledges and security  interests securing this
     Guaranty,  shall automatically  continue or be reinstated in the event that
     any  payment  received  or  credit  given  by the  Bank in  respect  of the
     Indebtedness is returned, disgorged or rescinded under any applicable state
     or  federal  law,  including,   without  limitation,   laws  pertaining  to
     bankruptcy  or  insolvency,  in which  case this  Guaranty,  and all liens,
     pledges and security interests securing this Guaranty, shall be enforceable
     against the undersigned as if the returned,  disgorged or rescinded payment
     or credit had not been  received  or given by the Bank,  and whether or not
     the Bank  relied upon this  payment or credit or changed its  position as a
     consequence of it. In the event of  continuation or  reinstatement  of this
     Guaranty  and the liens,  pledges and security  interests  securing it, the
     undersigned agree(s) upon demand by the Bank, to execute and deliver to the
     Bank those  documents  which the Bank determines are appropriate to further
     evidence  (in  the  public  records  or  otherwise)  this  continuation  or
     reinstatement,  although the failure of the  undersigned to do so shall not
     affect in any way the  reinstatement  or  continuation.  If the undersigned
     do(es) not execute and deliver to the Bank upon demand such documents,  the
     Bank and each Bank officer is irrevocably  appointed (which  appointment is
     coupled with an interest) the true and lawful  attorney of the  undersigned
     (with full power of  substitution) to execute and deliver such documents in
     the name and on behalf of the undersigned.

8.   WAIVERS:  The  undersigned  waive(s)  any right to require the Bank to: (a)
     proceed against any person or property;  (b) give notice of the terms, time
     and place of any public or private sale of personal  property security held
     from the  Borrower  or any  other  person,  or  otherwise  comply  with the
     provisions  of Section  9-504 of the Michigan or other  applicable  Uniform
     Commercial  Code; or (c) pursue any other remedy in the Bank's  power.  The
     undersigned waive(s) notice of acceptance of this Guaranty and presentment,
     demand, protest, notice of protest, dishonor, notice of dishonor, notice of
     default,   notice  of  intent  to  accelerate  or  demand  payment  of  any
     Indebtedness,  any and all other  notices  to which the  undersigned  might
     otherwise be entitled,  and diligence in collecting any  Indebtedness,  and
     agree(s) that the Bank may,  once or any number of times,  modify the terms
     of any Indebtedness,  compromise,  extend, increase,  accelerate,  renew or
     forbear  to  enforce  payment  of any or all  Indebtedness,  or permit  the
     Borrower  to incur  additional  Indebtedness,  all  without  notice  to the
     undersigned  and  without   affecting  in  any  manner  the   unconditional
     obligation of the undersigned under this Guaranty.

     The undersigned  unconditionally  and  irrevocably  waive(s) each and every
     defense and setoff of any nature  which,  under  principles  of guaranty or
     otherwise, would operate to impair or diminish in any way the obligation of
     the  undersigned  under this Guaranty,  and  acknowledge(s)  that each such
     waiver is by this  reference  incorporated  into each  security  agreement,
     collateral  assignment,  pledge and/or other document from the  undersigned
     now  or  later  securing  this  Guaranty  and/or  the   Indebtedness,   and
     acknowledge(s)  that as of the date of this  Guaranty  no such  defense  or
     setoff exists.

9.   WAIVER OF SUBROGATION: The undersigned waive(s) any and all rights (whether
     by subrogation, indemnity, reimbursement, or otherwise) to recover from the
     Borrower any amounts paid by the undersigned pursuant to this Guaranty.

10.  SALE/ASSIGNMENT: The undersigned acknowledge(s) that the Bank has the right
     to sell, assign, transfer, negotiate, or grant participations in all or any
     part of the Indebtedness and any related  obligations,  including,  without
     limit,  this Guaranty,  without notice to the undersigned and that the Bank
     may disclose any documents and information  which the Bank now has or later
     acquires  relating to the undersigned or to the Borrower in connection with
     such sale,  assignment,  transfer,  negotiation,  or grant. The undersigned
     agree(s) that the Bank may provide information relating to this Guaranty or
     relating to the undersigned to the Bank's parent, affiliates,  subsidiaries
     and service providers.

11.  GENERAL:  This Guaranty constitutes the entire agreement of the undersigned
     and the Bank  with  respect  to the  subject  matter of this  Guaranty.  No
     waiver, consent,  modification or change of the terms of the Guaranty shall
     bind any of the undersigned or the Bank unless in writing and signed by the
     waiving party or an authorized  officer of the waiving party, and then this
     waiver,  consent,  modification  or change shall be  effective  only in the
     specific  instance and for the specific purpose given.  This Guaranty shall
     inure to the benefit of the Bank and its  successors  and assigns and shall
     be  binding  on  the  undersigned  and  the  undersigned's   heirs,   legal
     representatives,  successors  and assigns  including,  without  limit,  any
     debtor in possession or trustee in bankruptcy  for any of the  undersigned.
     The  undersigned  has (have)  knowingly and  voluntarily  entered into this
     Guaranty  in good  faith for the  purpose  of  inducing  the Bank to extend
     credit or make  other  financial  accommodations  to the  Borrower.  If any
     provision  of this  Guaranty is  unenforceable  in whole or in part for any
     reason,  the remaining  provisions  shall  continue to be  effective.  THIS
     GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
     LAWS  OF THE  STATE  OF  MICHIGAN,  WITHOUT  REGARD  TO  CONFLICT  OF  LAWS
     PRINCIPLES.

12.  HEADINGS:  Headings in this  Agreement are included for the  convenience of
     reference  only and shall not  constitute a part of this  Agreement for any
     purpose.

13.  ADDITIONAL  PROVISIONS:  The  total  obligations  of ASC  Holdings  LLC and
     Kojaian  Holdings LLC under the Guaranty shall be limited to the Collateral
     (as defined in and) provided  pursuant to that certain  Security  Agreement
     (Negotiable  Collateral) dated May 27, 1999 executed by ASC Holdings LLC in
     favor of Bank and that certain Security Agreement  (Negotiable  Collateral)
     dated May 27,  1999  executed  by  Kojaian  Holdings  LLC in favor of Bank,
     respectively.

14.  JURY TRIAL WAIVER:  THE UNDERSIGNED AND BANK  ACKNOWLEDGE THAT THE RIGHT TO
     TRIAL BY JURY IS A  CONSTITUTIONAL  ONE,  BUT THAT IT MAY BE  WAIVED.  EACH
     PARTY,  AFTER  CONSULTING  (OR HAVING HAD THE  OPPORTUNITY TO CONSULT) WITH
     COUNSEL OF THEIR CHOICE,  KNOWINGLY AND  VOLUNTARILY,  AND FOR THEIR MUTUAL
     BENEFIT  WAIVES  ANY  RIGHT  TO TRIAL  BY JURY IN THE  EVENT OF  LITIGATION
     REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS
     GUARANTY OR THE INDEBTEDNESS.

IN WITNESS  WHEREOF,  Guarantor(s) has (have) signed and delivered this Guaranty
the day and year first written above.


                                          GUARANTOR(S): ASC HOLDINGS LLC
WITNESSES:

- ----------------------------              By:  /s/ David L. Treadwell
SIGNATURE OF                                   --------------------------------
                                                   David L. Treadwell
                                          Its:     President
- ----------------------------
SIGNATURE OF
                                          KOJAIAN HOLDINGS LLC


                                          By:  /s/ C. Michael Kojaian
                                               --------------------------------
                                                   C. Michael Kojaian
                                          Its:     President



                                          API/JPE, INC.

                                          By:  /s/ Richard R. Chrysler
                                               --------------------------------
                                               Richard R. Chrysler
                                          Its: President


                                          SAC CORPORATION

                                          By:  /s/ Richard R. Chrysler
                                               --------------------------------
                                               Richard R. Chrysler
                                          Its: President


                                          GUARANTOR'S ADDRESS:
                                          775 Technology Drive
                                          Suite 200
                        `                 Ann Arbor, Michigan 48108


<PAGE>


                                   Schedule 1


JPE, Inc.
Brake, Axle and Tandem
  Company Canada, Inc.
Dayton Parts, Inc.
JPE Finishing, Inc.
Plastic Trim, Inc.
Starboard Industries, Inc.





                                  Mike Kojaian
                               C. Michael Kojaian
                           1400 North Woodward Avenue
                                    Suite 250
                        Bloomfield Hills, Michigan 48304



                                  May 27, 1999



Mr. Heinz C. Prechter
One Heritage Place
Suite 400
Southgate, Michigan  48195

Re:  JPE, Inc. Put

Dear Heinz:

     1. Background.  As you are aware,  Kojaian Holdings LLC, a Michigan limited
liability  company (100% owned by Mike Kojaian  ("Mike") and C. Michael  Kojaian
("Michael")),  and ASC Holdings LLC, a Michigan limited  liability company (100%
owned by you),  have entered into an Investment  Agreement  dated April 28, 1999
(the "Investment  Agreement") to purchase a controlling  number of Common Shares
and  Preferred  Shares of JPE. This letter  agreement  reflects our agreement in
connection  with  Kojaian  Holdings  LLC's  participation  as part of  Buyer  in
connection  with the  Transaction.  All  capitalized  terms not  defined in this
letter agreement shall have the meanings set forth in the Investment Agreement.

     2. The Dott Acquisition. It is contemplated that following the consummation
of the Transaction, all of the outstanding shares of capital stock or all of the
assets of Dott  Industries,  Inc.,  a Michigan  corporation  ("Dott"),  would be
purchased  (the "Dott  Acquisition")  by one or more of the JPE Companies or one
half  by  ASC  Holdings  LLC  (and  one-half  of  Kojaian   Holdings  LLC)  (the
"Purchaser")  for an aggregate  purchase  price of no less than $28-$30  million
(the "Purchase  Price").  In the event the Dott  Acquisition is structured as an
acquisition  of stock or a merger,  the Purchase Price would be no less than $28
to $30 million, less the amount of the existing indebtedness of Dott, and at the
closing,  the  Purchaser  would  arrange  financing  to  pay  off  all  existing
indebtedness of Dott, including indebtedness of Dott to its shareholders. In the
event the transaction is structured as an asset purchase, the aggregate Purchase
Price would be no less than $28 to $30 million,  and Dott would use a portion of
the Purchase Price to pay off all existing indebtedness.

     3.  The  Put.  As  a  condition   precedent  to  Kojaian   Holdings   LLC's
participation in the Transaction as part of Buyer,  Michael,  Mike, ASC Holdings
LLC, and you (in your individual  capacity)  agreed that if the Dott Acquisition
is not  consummated  (for any reason  whatsover) on or before June 30, 1999 (the
"Trigger  Date"),  Michael  and/or  Mike  shall  have the right to  require  you
(through ASC Holdings LLC or otherwise) to purchase all of the Subscribed Shares
then  owned  by  Kojaian  Holdings  LLC  (the  "Put  Shares")  for  50%  of  the
Subscription  Price,  plus interest  beginning on the Closing Date and ending on
the consummation of the purchase of the Put Shares  calculated at the prime rate
of interest  announced by Comerica  Bank as its prime rate (the "Put").  Michael
and/or Mike may exercise  the Put at any time  beginning on the Trigger Date and
ending on the  thirtieth  day  following  the  Trigger  Date (the "Put  Exercise
Period"),  by written notice to you at the address set forth above in the manner
provided  for in the  Investment  Agreement  (the  "Put  Notice")  (except  that
personal  delivery shall be valid and shall be considered to have been delivered
the date of delivery and the copy shall be sent (only) to: David L.  Treadwell).
If no Put Notice is given during the Put Exercise Period, the Put shall expire.

     4. The Closing of the Put.  Subject to paragraph 3, the purchase of the Put
Shares shall take place at a closing,  at such date as may be mutually agreed by
the  parties,  but in no event later than fifteen days after the delivery of the
Put Notice or, if a longer time is required under  applicable  Law, within three
business days after the earliest date  permissible  under  applicable  Law. Such
closing  shall occur at Michael's  primary  place of  business,  or at any other
place the parties agree. At such closing,  (a) the Purchasers  shall pay for the
Put Shares as provided above by wire transfer of cash, and (b) Kojaian  Holdings
LLC shall  deliver the  certificates  representing  all of the Put Shares,  duly
endorsed in blank (or accompanied by assignments separate from certificate, duly
endorsed in blank).

     5. No  Waiver.  No waiver of any  breach of any  provision  of this  letter
agreement  shall be deemed a waiver of any preceding or succeeding  breach or of
any  other  provision  of this  letter  agreement.  No  extension  of  time  for
performance  of any  obligations  or acts under this letter  agreement  shall be
deemed an extension of the time for performance of any other obligations or acts
under this letter agreement.

     6.  Successors and Assigns.  This letter  agreement shall bind and inure to
the benefit of the parties  and their  successors  and  assigns;  provided  that
neither party may assign this letter agreement without the prior written consent
of the other.

     7.  Severability.  The provisions of this letter  agreement shall be deemed
severable,  and if any  provision  or  part  of this  letter  agreement  is held
illegal,  void or invalid under  applicable  Law, such  provision or part may be
construed or deemed changed by a court of competent  jurisdiction  to the extent
reasonably  necessary to make the provision or part, as so construed or changed,
legal,  valid and binding.  If any  provision  of this letter  agreement is held
illegal,  void or invalid in its  entirety,  the  remaining  provisions  of this
letter  agreement  shall not in any way be affected or impaired but shall remain
binding in accordance with their terms.

     8. Entire Agreement;  Amendment.  This letter agreement contains the entire
agreement of the parties with respect to the Put.  This letter  agreement may be
altered or amended  only by an  instrument  in  writing,  duly  executed by each
party.

     9. Cost of Litigation.  If any party breaches this letter  agreement and if
counsel is employed to enforce this letter agreement, the successful party shall
be entitled to Fees and Costs associated with such enforcement.

     10.  Interpretation.  This letter  agreement  is being  entered  into among
competent and experienced  business  persons,  represented by counsel,  and have
been  reviewed  by the  parties  and their  counsel.  Therefore,  any  ambiguous
language in this letter agreement shall not necessarily be construed against any
particular party as the drafter of such language.

     11. Counterparts. This letter agreement may be executed in counterparts (by
facsimile  transmission  or otherwise),  each of which when so executed shall be
deemed an original,  but both of such counterparts together shall constitute one
and the same instrument.

     12.  Applicable  Law;  Venue.  This letter  agreement shall be construed in
accordance with and governed by the laws of the State of Michigan without regard
to  principles  of  conflicts of law.  The parties  acknowledge  that the United
States District Court for the Eastern  District of Michigan or the Circuit Court
for the County of Oakland  shall have  exclusive  jurisdiction  over any case or
controversy  arising out of or relating  to this letter  agreement  and that all
litigation  arising  out of or  relating  to  this  letter  agreement  shall  be
commenced  in the United  States  District  Court for the  Eastern  District  of
Michigan or in the Oakland County Circuit Court.

     13. Expenses.  Except as otherwise provided in this letter agreement,  each
party  shall  bear  his or its own  expenses  in  connection  with  this  letter
agreement  and the Put,  including  costs and expenses of his or its  respective
attorneys, accountants, consultants and other professionals. Notwithstanding the
foregoing,  the  Purchasers  shall pay (a) all costs,  filing fees and  expenses
incurred in connection with meeting the requirements of  Hart-Scott-Rodino,  and
(b) any  applicable  transfer or other  Taxes  imposed on the parties due to the
consummation of the Put.

                                         Sincerely,



                                         Mike Kojaian



                                         C. Michael Kojaian



Accepted and agreed to on May ___, 1999:

By:
     -----------------------------------
         Heinz C. Prechter







                                    JPE, INC.

                             SHAREHOLDERS AGREEMENT


     THIS SHAREHOLDERS AGREEMENT (this "Shareholders Agreement"),  is made as of
the  27th day of May,  1999,  between  ASC  Holdings  LLC,  a  Michigan  limited
liability  company  ("ASC"),  and  Kojaian  Holdings  LLC,  a  Michigan  limited
liability  company  ("Kojaian") (each of ASC and Kojaian,  a "Shareholder",  and
together, the "Shareholders").


                                    RECITALS

     A.  Simultaneously  with the execution of this  Shareholders  Agreement and
pursuant to an  Investment  Agreement  dated April 28, 1999 among JPE,  Inc.,  a
Michigan corporation ("JPE"), ASC and Kojaian (the "Investment Agreement"), each
of ASC and Kojaian  have,  among other things,  subscribed  for shares of common
capital stock (the "Common Shares") of JPE and shares of preferred capital stock
of JPE (the  "Preferred  Shares") (the  Preferred  Shares and the Common Shares,
together, the "Shares") (the "Subscription").

     B. As a result of the Subscription,  ASC and Kojaian,  together,  currently
own a majority of the issued and outstanding Common Shares and Preferred Shares.
Each  of ASC  and  Kojaian  have  determined  that it is in  their  mutual  best
interests  to enter  into  this  Shareholders  Agreement  to set  forth  certain
agreements  with respect to the corporate  governance  of JPE,  transfers of the
Shares and certain other matters.

     THEREFORE, the parties hereto, intending to be legally bound hereby, and in
consideration  of the mutual promises and covenants  hereinafter  made, agree as
follows:

     1. VOTING; SOLICITATION OF VOTES.

     (a) Neither  Shareholder  shall,  without the prior written  consent of the
other Shareholder,  (1) cast its votes at any meeting (whether annual or special
and whether or not an adjourned or postponed meeting) of the shareholders of JPE
(a  "Shareholders  Meeting")  or consent (or cause to be  consented)  any of its
Shares in a consent of the  shareholders  of JPE (a  "Consent")  unless at least
sixty days prior to such  Shareholders  Meeting or Consent such Shareholder (the
"Voting  Shareholder")  consults with the other Shareholder regarding the issues
to be addressed at such  Shareholders  Meeting or by such Consent and the Voting
Shareholder  discloses to the other Shareholder its intention  regarding how the
Voting Shareholder intends to cast its Shares at such Shareholders Meeting or in
such  Consent or (2) vote or consent  any of its Shares in a manner  contrary to
the intention it disclosed pursuant to Section 1(a)(1).

     (b) Subject to the other terms of this Shareholders  Agreement,  (i) at any
Shareholders  Meeting, each Shareholder shall appear at the Shareholders Meeting
or otherwise  cause its Shares to be counted as present  thereat for the purpose
of establishing a quorum, (ii) in connection with any Consent,  each Shareholder
shall  cause its Shares to be cast in the  Consent,  (iii)  neither  Shareholder
shall  solicit  the votes of (or enter into a voting or  shareholders  agreement
(written  or  otherwise)  with)  any  shareholder  who is not a  party  to  this
Shareholders   Agreement   without  the  prior  written  consent  of  the  other
Shareholder,  and (iv) each  Shareholder  shall vote or consent  (or cause to be
voted or  consented)  all of its  Shares in  accordance  with  Section  1(a) and
Section 2 of this Shareholders Agreement.

     (c)  Notwithstanding  Section  2(b),  in the  event  that  there  exists  a
disagreement   between  the  Shareholders   regarding  a  potential  vote  at  a
Shareholders Meeting or Consent, whether such disagreement is disclosed pursuant
to Section 1(a) or otherwise (a "Shareholders Deadlock"), each Shareholder shall
abstain  from  voting or  consenting  any of its Shares with regard to the issue
underlying  the  Shareholder  Deadlock,  and, if  practical,  shall use its best
efforts  to  prevent  such issue  from  coming to a vote  before a  Shareholders
Meeting or Consent,  including by failing to appear at a Shareholders Meeting or
otherwise  causing  its Shares not to be  counted  as  present  thereat  for the
purpose of  establishing  a quorum at which such issue is to be presented  for a
vote or by failing  to allow its  Shares to be  counted  or cast in any  Consent
addressing such issue.

     (d)  Neither  Shareholder  shall  enter into any  agreement  or  commitment
(written or otherwise) to vote the shares of JPE with any shareholder of JPE who
is not a party to this Shareholders  Agreement without the prior written consent
of the other Shareholder.

     2. BOARD OF DIRECTORS.

     (a) Number of Directors.  In accordance  with the Bylaws of JPE and each of
its  subsidiaries  (JPE  and  each  such  subsidiary,   a  "JPE  Company"),  the
Shareholders  shall use their best  efforts to establish a Board of Directors of
each JPE Company  (with  regard to each JPE Company,  the "Board of  Directors")
consisting of four members.

     (b)  Election  of  Directors.  In  accordance  with the  Bylaws of each JPE
Company,  ASC shall nominate two  individuals to serve on the Board of Directors
of each JPE  Company  (the  "ASC  Nominees")  and  Kojaian  shall  nominate  two
individuals to serve on the Board of Directors of each JPE Company (the "Kojaian
Nominees").  Each of ASC and Kojaian  shall,  at each election of the directors,
vote all  Shares  owned by such  Shareholder,  on the  record  date  fixed for a
determination  of  those  shareholders  entitled  to  vote  in any  election  of
directors of each JPE Company,  or will cause such shares to be voted,  in favor
of the  election as  directors  of each JPE Company of the ASC  Nominees and the
Kojaian Nominees.  With regard to each JPE Company,  the ASC Nominee designated,
from time to time,  by ASC as the Chairman of the Board of Directors of such JPE
Company  shall be  appointed  the Chairman of the Board of Directors of such JPE
Company by the applicable  Board of Directors.  With regard to each JPE Company,
the  Kojaian  Nominee  designated,  from time to time,  by  Kojaian  as the Vice
Chairman of the Board of  Directors of such JPE Company  shall be appointed  the
Vice  Chairman of the Board of Directors  of such JPE Company by the  applicable
Board of  Directors.  As soon as  practicable  following  the  execution of this
Shareholders Agreement,  the Shareholders shall take such action as is necessary
to reconstitute the Boards of Directors as contemplated by Section 2(a) and this
Section 2(b).

     (c) Filling Vacancies.  At any time a vacancy is created on any of Board of
Directors of a JPE Company by the death,  removal or  resignation  of any one of
the directors, (i) no action shall be taken by the applicable Board of Directors
which would have an adverse  effect on the party that  nominated  such director,
until such vacancy on such Board of Directors has been filled in accordance with
this Shareholders Agreement,  and (ii) ASC and Kojaian shall cause the remaining
directors  to meet as quickly as  possible  for the  purpose  of  approving  and
appointing  a director  to fill such  vacancy in a manner so as to  reconstitute
such Board pursuant to the requirements of Section 2(b).

     (d)  Subject  to the other  terms of this  Shareholders  Agreement,  (i) no
meeting of the Board of  Directors  of any JPE  Company  (for each JPE Company a
"Board  Meeting")  may occur  without the presence of all four (4)  directors of
such JPE Company at the Board  Meeting  and,  subject to a consent  described in
Section 2(d)(ii), in the event a director is incapable of attending an otherwise
duly called Board Meeting, each other director shall use his or her best efforts
to prevent such Board Meeting from being held, including by failing to appear at
such Board  Meeting,  and (ii) any action taken at a Board  Meeting  without the
presence of all four (4) directors  shall be null and void ab initio without the
prior  written  consent of the  Shareholder  which one or two  nominees  are not
present at such Board Meeting (which consent may be limited to certain topics to
be addressed and actions to be taken as set forth in such consent).

     3. TRANSFER OF SHARES.  Neither Shareholder shall,  directly or indirectly,
Transfer  or enter into any  commitment  to  directly  or  indirectly  convey or
Transfer (as defined below),  all or any portion of its Shares,  or any interest
therein, now held or hereafter acquired by such Shareholder, as the case may be,
without  the  express  prior  written  consent of the other  Shareholder,  which
consent  may be  granted  or  withheld  in the  sole  discretion  of such  other
Shareholder. Any such Transfer may be conditioned upon the continued application
of this  Shareholders  Agreement  to any Shares  subject to such  Transfer.  Any
purported  Transfer not expressly  authorized by the terms of this  Shareholders
Agreement  shall be void ab initio and of no force and  effect.  As used in this
Section 3, the term "Transfer" shall mean any transfer or conveyance whatsoever,
including any sale, assignment, transfer, pledge, encumbrance,  hypothecation or
any other alienation (whether voluntary, involuntary or by operation of law).

     4. DISPUTES.  Upon the event of (a) an impasse between the ASC Nominees, on
the one hand,  and the  Kojaian  Nominees,  on the  other  hand,  regarding  any
material  issue  lasting  longer  than  ninety  (90)  days or (b) a  Shareholder
Deadlock lasting longer than ninety (90) days, the  Shareholders  shall use good
faith, reasonable efforts to sell their ownership of JPE (whether by stock sale,
asset sale,  merger,  consolidation,  stock  subscription or in any other manner
whatsoever) to a third party purchaser (a  "Divestiture").  Notwithstanding  the
foregoing,  a Divestiture shall not be consummated  unless (A) both Shareholders
approve of the material  terms of the  Divestiture  which  approval shall not be
unreasonably   withheld  and  (B)  the  approval  and/or  the   consummation  of
Divestiture is not a breach of the fiduciary duties of the Board of Directors of
JPE  and  complies  with  all  applicable  laws  and,  in the  event  there  are
Shareholders  of JPE  other  than the  Shareholders,  at the  request  of either
Shareholder,  the Board of  Directors  of JPE shall have  received  a  "fairness
opinion"  from  Roney  & co.  stating  that  the  Divestiture  is  fair  to  the
shareholders  of JPE from a  financial  point of view.

     5.  REPRESENTATIONS  AND  WARRANTIES  OF ASC.  ASC  hereby  represents  and
warrants to Kojaian as follows:

     (a) Due  Organization.  ASC is a limited  liability company duly organized,
validly  existing and in good standing  under the laws of the State of Michigan.
ASC has all  requisite  power and  authority  to enter into and to perform  this
Shareholders Agreement.

     (b)  Due  Execution.   The  execution  and   performance  by  ASC  of  this
Shareholders  Agreement  have  been duly  authorized  by all  requisite  limited
liability  company  action of ASC. The execution and  performance by ASC of this
Shareholders  Agreement  will not (i) violate any law,  rule,  regulation or any
order of any  court or  other  agency  of  government  applicable  to ASC or its
business or assets, or ASC's Articles of Organization or Operating  Agreement or
(ii) violate,  cause the  termination  or  acceleration  of, or require  consent
under, any material  indenture,  agreement or other instrument to which ASC is a
party or by which it is bound.

     6. REPRESENTATIONS AND WARRANTIES OF KOJAIAN. Kojaian hereby represents and
warrants to ASC as follows:

     (a)  Due  Organization.   Kojaian  is  a  limited  liability  company  duly
organized,  validly existing and in good standing under the laws of the State of
Michigan.  Kojaian has all  requisite  power and  authority to enter into and to
perform this Shareholders Agreement.

     (b) Due  Execution.  The  execution  and  performance  by  Kojaian  of this
Shareholders  Agreement  have  been duly  authorized  by all  requisite  limited
liability company action of Kojaian. The execution and performance by Kojaian of
this  Shareholders  Agreement will not (i) violate any law, rule,  regulation or
any order of any court or other agency of  government  applicable  to Kojaian or
its  business or assets,  or  Kojaian's  Articles of  Organization  or Operating
Agreement or (ii) violate,  cause the termination or acceleration of, or require
consent under,  any material  indenture,  agreement or other instrument to which
Kojaian is a party or by which it is bound.

     7. LEGEND ON SHARES.

     (a) Endorsement on Certificates. Each of ASC and Kojaian shall use its best
efforts to ensure that the  certificates  for all of the Shares  owned by either
ASC or JPE, whether now owned or hereafter  acquired,  shall, during the term of
this  Shareholders  Agreement,  bear a conspicuous  legend in substantially  the
following form:

     "The shares of capital stock  represented by this  certificate  are subject
     to, and are transferable only upon compliance with, a certain  Shareholders
     Agreement dated as of May 27, 1999,  between ASC Holdings,  LLC, a Michigan
     limited  liability  company,  and Kojaian  Holdings LLC, a Michigan limited
     liability  company,  the  provisions  of which are  incorporated  herein by
     reference.  A copy  of said  agreement  is on  file  in the  office  of the
     Secretary of JPE, Inc."

     (b)  Removal of Legend.  If any of the Shares  shall cease to be subject to
this Shareholders Agreement, the applicable shareholder may request to JPE, Inc.
that it issue to such  shareholder  a new  certificate  evidencing  such  Shares
without the legend required by Section 7(a) endorsed  thereon.  In addition,  if
any of the Shares are  transferred  to  successors  or assigns of a  Shareholder
pursuant to either  Section 3 or Section 9.3 and such Shares  continue to remain
subject  to the terms of this  Shareholders  Agreement,  the legend set forth in
Section  7(a)  shall be  amended  to  reflect  the names of such  successors  or
assigns.

     8.  EQUITABLE  REMEDIES.  The  obligations  of ASC,  on the one  hand,  and
Kojaian,  on the other hand, under this Shareholders  Agreement are of a special
and unique  character  and the failure to perform  such  obligations  under this
Shareholders  Agreement by ASC, on the one hand, or Kojaian,  on the other hand,
shall cause irreparable  injury to the other party, the amount of which would be
extremely difficult,  if not impossible,  to estimate or determine and which may
not be adequately compensable by monetary damages alone. Therefore,  any injured
party shall be entitled,  as a matter of course,  to an injunction,  restraining
order,  writ of mandamus or other  equitable  relief from any court of competent
jurisdiction,  including  specific  performance,  restraining  any  violation or
threatened  violation of any term of this Shareholders  Agreement,  or requiring
compliance  with or  performance  of any  obligations  under  this  Shareholders
Agreement,  or requiring compliance with or performance of any obligations under
this Shareholders  Agreement,  by the violating party or parties,  or such other
persons as a court of competent  jurisdiction  may order.  The  parties'  rights
under  this  Section 8 are  cumulative  and are in  addition  to the  rights and
remedies  otherwise  available  to  them  under  any  other  provision  of  this
Shareholders Agreement, any other agreement or applicable law.

     9. MISCELLANEOUS.

     9.1  Notices.  Any notice  required  or  permitted  to be given  under this
Shareholders Agreement must be sent by (a) recognized overnight courier (such as
Airborne or Federal  Express),  (b) by certified  or  registered  mail,  postage
prepaid or (c) by facsimile,  with  confirmation of transmission by the sender's
machine,  followed  by  further  notice  under (a) or (b)  above  the  following
business day, as follows:

     (a)      To ASC:               ASC Holdings LLC
                                    One Heritage Place
                                    Suite 400
                                    Southgate, MI  48195
                                    Attn: David L. Treadwell
                                    Facsimile:  (734) 285-6702

              with a copy to:       ASC Holdings LLC
                                    One Heritage Place
                                    Suite 400
                                    Southgate, MI  48195
                                    Attn: Steven J. Morello
                                    Facsimile:  (734) 285-6702

     (b)      To Kojaian:           Kojaian Holdings LLC
                                    c/o Kojain Management
                                    1400 N. Woodward Avenue, #350
                                    Bloomfield Hills, MI 48304
                                    Attn: C. Michael Kojaian
                                    Facsimile:  (248) 644-7620

              with a copy to:       Honigman Miller Schwartz and Cohn
                                    2290 First National Building
                                    660 Woodward Avenue
                                    Detroit, MI 48226
                                    Attn: G. Scott Romney
                                    Facsimile:

Notice  shall be  considered  given (a) the next  business day upon sending by a
recognized  overnight  carrier,  (b) three  business  days  after  deposit  with
certified or registered  mail or (c) the next business day upon  transmission by
facsimile.

Addresses  for notices may be changed by notice  given  pursuant to this Section
9.1.

     9.2  No  Waiver.  No  waiver  of  any  breach  of  any  provision  of  this
Shareholders  Agreement  shall be deemed a waiver of any preceding or succeeding
breach or of any other provision of this Shareholders Agreement. No extension of
time  for  performance  of any  obligations  or  acts  under  this  Shareholders
Agreement  shall be deemed an extension of the time for performance of any other
obligations or acts under this Shareholders Agreement.

     9.3  Successors and Assigns.  This  Shareholders  Agreement  shall bind and
inure to the benefit of the parties and their  successors and assigns;  provided
that each Shareholder  shall have the right to assign (including by operation of
law) this  Shareholders  Agreement  only with the prior  written  consent of the
other Shareholder.

     9.4 Severability.  The provisions of this  Shareholders  Agreement shall be
deemed severable, and if any provision or part of this Shareholders Agreement is
held illegal,  void or invalid under  applicable law, such provision or part may
be  construed  or deemed  changed by a court of  competent  jurisdiction  to the
extent  reasonably  necessary to make the  provision or part, as so construed or
changed,  legal,  valid  and  binding.  If any  provision  of this  Shareholders
Agreement  is held  illegal,  void or invalid  in its  entirety,  the  remaining
provisions of this  Shareholders  Agreement  shall not in any way be affected or
impaired but shall remain binding in accordance with their terms.

     9.5 Entire Agreement;  Amendment.  This Shareholders Agreement contains the
entire  agreement of the parties with  respect to the subject  matter  addressed
herein,  and no  representations  made by  either  Shareholder  may be relied on
unless set forth in this Shareholders Agreement. This Shareholders Agreement may
be altered or amended only by an instrument in writing, duly executed by each of
ASC and Kojaian.

     9.6  Cost  of  Litigation.  If  either  party  breaches  this  Shareholders
Agreement and if counsel is employed to enforce this Shareholders Agreement, the
successful  party  shall  be  entitled  to Fees and  Costs  (as  defined  in the
Investment Agreement) associated with such enforcement.

     9.7 Interpretation. This Shareholders Agreement is being entered into among
competent and experienced  business  persons,  represented by counsel,  and have
been  reviewed  by the  parties  and their  counsel.  Therefore,  any  ambiguous
language in this  Shareholders  Agreement  shall not  necessarily  be  construed
against any particular party as the drafter of such language.

     9.8  Counterparts.  This  Shareholders  Agreement  may be  executed  in two
counterparts  (by facsimile  transmission  or otherwise),  each of which when so
executed  shall be deemed an original,  but both of such  counterparts  together
shall constitute one and the same instrument.

     9.9 Applicable Law; Venue. This  Shareholders  Agreement shall be construed
in  accordance  with and  governed by the laws of the State of Michigan  without
regard to  principles  of  conflicts of law.  The parties  acknowledge  that the
United States District Court for the Eastern District of Michigan or the Circuit
Court for the County of Oakland shall have exclusive  jurisdiction over any case
or  controversy  arising out of or relating to this  Shareholders  Agreement and
that all litigation  arising out of or relating to this  Shareholders  Agreement
shall be commenced in the United States District Court for the Eastern  District
of Michigan or in the Oakland County Circuit Court.

     9.10 Expenses. Except as otherwise provided in this Shareholders Agreement,
each party shall bear its own  expenses  in  connection  with this  Shareholders
Agreement,   including   costs  and  expenses  of  its   respective   attorneys,
accountants, consultants and other professionals.

     9.11  Further  Assurances.  If at any  time  after  the  execution  of this
Shareholders  Agreement,  ASC or Kojaian reasonably considers or is advised that
any further  actions,  assignments  or  assurances  on its part are necessary or
desirable  to  carry  out  the  intent  and  accomplish  the  purposes  of  this
Shareholders Agreement, it shall, at its own expense, take such actions, execute
and make all such  assignments  and  assurances  and do all things  necessary or
appropriate  to  carry  out the  intent  and  accomplish  the  purposes  of this
Shareholders Agreement.

         IN WITNESS  WHEREOF,  the parties have duly executed this  Shareholders
Agreement as of the day and year first written above.


                            ASC HOLDINGS LLC,
                            a Michigan limited liability company

                            By: /s/ David L. Treadwell
                                -------------------------------------
                                Name:  David L. Treadwell
                                Its:   President


                            KOJAIAN HOLDINGS LLC,
                            a Michigan limited liability company

                            By: /s/ C. Michael Kojaian
                                -------------------------------------
                                Name:  C. Michael Kojaian
                                Its:   President





                                    JPE, INC.
                              775 Technology Drive
                                    Suite 200
                            Ann Arbor, Michigan 48018


                                  May 27, 1999


Mr. Richard Chrysler
775 Technology Drive
Suite 200
Ann Arbor, MI  48018

Re:  Your Employment Agreement with JPE, Inc.

Dear Mr. Chrysler:

     We are pleased to offer you the position of President  and Chief  Executive
Officer of JPE, Inc. upon the following terms:

     1. Background. As you know, pursuant to an Investment Agreement dated April
28, 1999 (the "Investment  Agreement")  among JPE, Inc., a Michigan  corporation
("JPE"),  ASC Holdings LLC, a Michigan limited  liability  company ("ASC"),  and
Kojaian Holdings LLC, a Michigan limited liability company ("Kojaian"),  each of
ASC and Kojaian are,  among other things,  today  subscribing  for a controlling
number of Common Shares and Preferred  Shares of JPE. This employment  agreement
(the  "Agreement"),  is being  entered  into  pursuant to Section  6.2(h) of the
Investment  Agreement.  All  capitalized  terms not  otherwise  defined  in this
Agreement shall have the meanings given them in the Investment Agreement.

     2. Duties.  During the  Employment  Term (as defined in  paragraph  4), you
shall be employed as the President and Chief  Executive  Officer of JPE and such
JPE Companies as determined by JPE (collectively,  the "Companies").  Subject to
direct reporting to and supervision by the Chairman of the Board of Directors of
JPE,  your duties shall  include the duties to be performed by the President and
Chief Executive  Officer of the Companies.  During the Employment Term you shall
devote your full  working  time and  attention  to the duties  described in this
paragraph 2.

     3.  Compensation.  Your  annual  salary as  President  and Chief  Executive
Officer of the Companies  shall be $300,000  payable in accordance  with payroll
practices of the  Companies in effect from time to time.  All  compensation  and
benefits  shall be subject to applicable  federal,  State and local  withholding
taxes.

     4. Term. The term of your employment (the "Employment Term") shall continue
until the earlier of (a) your death;  (b) JPE's  termination of your  employment
with the Companies;  (c) your voluntary  termination of your employment with the
Companies; and (d) the two year anniversary of this Agreement.

     5. Benefits. During the Employment Term:

     (a) You shall be entitled to four (4) weeks paid  vacation and you shall be
eligible to  participate in the employee  benefits  coverages of JPE on the same
basis as other employees of JPE.

     (b) The Companies  shall  reimburse  you for all  necessary and  reasonable
business,  travel and  entertainment  expenses  incurred by you in the course of
performing  your duties for the Companies.  Reimbursement  shall occur upon your
submission of written  vouchers or expense  statements  indicating the amount of
the  expense,  the date the  expense  was  incurred,  the place the  expense was
incurred,  the  purpose of the  expense and when  entertaining  any client,  the
referral  source,   prospective  client  or  prospective  referral  source,  and
identification  of persons  (including the names of the individuals  present and
their businesses).

     6. Termination; Termination Benefits.

     (a) JPE is free to terminate  your  employment  with the  Companies for any
reason  whatsoever,  with fourteen  (14) days' prior written  notice to you. The
termination  benefits  described  in this  paragraph  6 shall  be in lieu of any
termination  or severance  benefits  required by the policy of the  Companies or
applicable law, and shall constitute your sole and exclusive rights and remedies
with respect to the  termination  of your  employment  with the  Companies.  The
Companies may withhold from any payments made to you under this  paragraph 6 all
federal, State, city or other taxes to the extent required by law.

     (b) Upon your  termination  without  Cause (as  defined  below),  you shall
receive the  difference  between (1) $600,000 minus (2) the total salary paid to
you pursuant to this Agreement  prior to the last day of your  employment  under
this  Agreement,  payable as if your  employment  continued  throughout the full
Employment Term.

     (c) If JPE terminates your employment for Cause,  you shall receive the pro
rata  portion  of  your  salary  under  Paragraph  3  through  the  date of your
employment.

     (d) For purposes of this Agreement:

          (i)  Termination  for "Cause" means  termination for (A) your material
     breach of this Agreement,  (B) fraud, (C) theft, (D) any other  intentional
     act or omission of moral turpitude which you know or reasonably should have
     known  would  materially  injure one or more of the  Companies,  or (E) any
     deliberate   action  (or  omission)  by  you  which,   in  the   reasonable
     determination  of JPE,  you  should  have  known  constitutes  malfeasance,
     dereliction of duty,  insubordination or refusal to follow direct, explicit
     instructions or policies of one or more of the Companies; and

          (ii) "Disability" means your inability, whether mental or physical, to
     render services reasonably  requested by JPE consistent with your positions
     for two (2) consecutive months or eight (8) weeks during any four (4) month
     period.  If JPE and you are unable to agree whether you are  Disabled,  the
     question  shall be decided by a physician  mutually  agreed upon by JPE and
     you and paid by JPE, whose determination shall be final and binding. If you
     and JPE are unable to agree on a  physician,  you and JPE shall each choose
     one  physician  who  shall  mutually  choose  a  third   physician,   whose
     determination  shall be final  and  binding  (which  decision  shall not be
     subject to collateral attack for any reason absent manifest error,  perjury
     or  misconduct)  and which shall be  enforceable  by any  Michigan  Circuit
     Court, which such court may render a judgment thereon.

     (e)  Notwithstanding  anything in this Agreement to the contrary,  upon the
termination  of your  employment  you shall  execute  a  release  in the form of
Exhibit I to this  Agreement (the  "Release");  and you shall not be entitled to
receive any termination  benefits under this paragraph 6 or otherwise unless you
have executed and delivered the Release.

     7. Confidential Information.

     (a) You  recognize  the unique  value of the  Companies'  business  and its
clients  and  agree  that at such  time as your  employment  with the  Companies
terminate,  you  shall  not for a  period  of one (1)  year  after  the  date of
termination  (i) engage or attempt to engage,  directly  or  indirectly,  in the
solicitation  of any business  competitive  with the business of the  Companies,
(ii)  divert  (directly  or  indirectly)  or  attempt  to divert  in any  manner
whatsoever from the Companies any business, employees, representatives,  agents,
clients, suppliers or customers, distributors, or (iii) influence the Companies'
business  relationships  with  any  of  its  customers,   employees  or  agents.
Notwithstanding  the  foregoing,  if your  employment was terminated for reasons
other  than  Cause,  you may  engage  in the  activities  set  forth  in  clause
(a)(i)-(ii)  (other than the  diversion  or  attempted  diversion  in any manner
whatsoever from the Companies of any employees, representatives or agents), upon
the earlier of (I) your notice to the Company to end any further  payments under
paragraph  6(b) (and upon such notice,  the Company  shall be released  from any
payments  due and  outstanding  under  paragraph  6(b)),  or (II)  upon the full
payment  to you  of the  termination  benefits  set  forth  in  paragraph  6(b).
Additionally,  you shall not, at any time,  either  during or  subsequent to the
termination of your  employment by the Companies,  disclose or use,  directly or
indirectly,  any confidential or proprietary  information of the Companies which
you gained by reason of your employment,  relating to the property, business and
affairs of the Companies,  including, but not limited to, information concerning
the  Companies'  marketing  and business  methods,  procedures  and  strategies,
products,   services,   manufacturing   techniques,    operations,   businesses,
representatives,  suppliers,  distributors,  employees,  customers, fees, rates,
clients,  mailing  lists,  trade  secrets,  plans  for  the  development  of new
services,  and plans for the  expansion  into new  areas or  markets,  financial
records,  data,  results of  operations,  billings and  Propertiary  Rights (the
"Confidential and Proprietary Information").

     (b) Because of the special and unique character of the matters addressed in
paragraph 7(a), the violation of such paragraph may cause irreparable  injury to
the  Companies,  the  amount  of which  shall  be  extremely  difficult,  if not
impossible  to  determine  and may not be  adequately  compensable  by  monetary
damages alone. Accordingly, the Companies may, in addition to pursuing its other
remedies,  seek to obtain equitable and injunctive  relief  (including,  but not
limited to,  preliminary and permanent  injunctions) from any court of competent
jurisdiction,  as may be necessary to enjoin any such violation of the foregoing
restraints,  and further,  no bond or other security shall be required to obtain
such relief and shall be entitled to receive from you all costs  associated with
its enforcement of such paragraph (including Fees and Costs).

     8. Inventions, etc.

     (a)  Any  inventions,  improvements,  discoveries,  formulas  or  processes
relating to the  business or products of the  Companies,  which you  discover or
learn  while  employed  by the  Companies,  at any  time,  shall be the sole and
absolute  property  of the  applicable  Company,  which  shall  be the  sole and
absolute  owner  of all  patents  and  other  rights  associated  therewith.  In
addition,  you shall  assign to the  applicable  Company,  all right,  title and
interest  to any and all  information  and ideas  relating to the  business  and
products of such Company,  discovered  or learned by you while  employed by such
Company.

     (b) Because of the special and unique character of the matters addressed in
paragraph 8(a), the violation of such paragraph may cause irreparable  injury to
the  Companies,  the  amount  of which  shall  be  extremely  difficult,  if not
impossible  to  determine  and may not be  adequately  compensable  by  monetary
damages alone. Accordingly, the Companies may, in addition to pursuing its other
remedies,  seek to obtain equitable and injunctive  relief  (including,  but not
limited to,  preliminary and permanent  injunctions) from any court of competent
jurisdiction,  as may be necessary to enjoin any such violation of the foregoing
restraints,  and further,  no bond or other security shall be required to obtain
such relief.

     9. Arbitration.

     (a) The  arbitration  procedure set forth in this  paragraph 9 shall be the
sole and exclusive  method for resolving and remedying  monetary  claims arising
out of disputes regarding this Agreement (the "Disputes"); provided that nothing
in this  paragraph  9 shall  prohibit a party  from  instituting  litigation  to
enforce  any Final  Determination  (as  defined  below) or to obtain  injunctive
relief.  Except as otherwise  provided in this  paragraph 9 or in the Commercial
Arbitration  Rules of the American  Arbitration  Association as in effect at the
pertinent time, the arbitration procedures and any Final Determination hereunder
shall be governed by, and shall be enforced pursuant to, the Uniform Arbitration
Act.

     (b) In the event that either  party  asserts  that there  exists a Dispute,
such party  shall  deliver a written  notice to the other party  specifying  the
nature of the  asserted  Dispute and  requesting a meeting to attempt to resolve
the same. If no such  resolution is reached  within ten (10) business days after
such delivery of such notice,  the party  delivering such notice of Dispute (the
"Disputing  Person") may, within forty-five (45) business days after delivery of
such notice,  commence  arbitration by delivering to the other party a notice of
arbitration  (a "Notice  of  Arbitration").  Such  Notice of  Arbitration  shall
specify  the  matters  as to which  arbitration  is  sought,  the  nature of any
Dispute,  the claims of the party and shall specify the amount and nature of any
damages,  if any,  sought to be recovered as a result of any alleged claim,  and
any other matters required by the Commercial  Arbitration  Rules of the American
Arbitration  Association  as in  effect  at the  pertinent  time to be  included
therein, if any.

     (c)(i) The parties  shall in good faith select one  arbitrator to arbitrate
the dispute who shall resolve the dispute  according to the procedures set forth
in this paragraph 9.

     (c)(ii) If the parties are unable to agree upon an  arbitrator  pursuant to
paragraph  9(c)(i)  within  fifteen (15)  business  days,  then each party shall
select one  arbitrator  within the next fifteen (15) business days. In the event
that either party fails to select an  arbitrator  as provided in this  paragraph
9(c)(ii),  then the matter shall be resolved by the  arbitrator  selected by the
other party. If each party chooses an arbitrator,  then those  arbitrators shall
select a third  independent,  neutral arbitrator expert in the subject matter of
the dispute,  and the three  arbitrators  so selected  shall  resolve the matter
according to the procedures  set forth in this  paragraph 9. If the  arbitrators
selected by the parties are unable to agree on a third arbitrator within fifteen
(15)  business  days,  after  their  selection,  the third  arbitrator  shall be
selected by the President of the American Arbitration Association.

     (d) The arbitration  shall be conducted in Ann Arbor,  Michigan,  under the
Commercial  Arbitration  Rules of the  American  Arbitration  Association  as in
effect from time to time,  except as modified  by the written  agreement  of the
parties,  to this Agreement.  The arbitrator(s) shall so conduct the arbitration
that a final result,  determination,  finding, judgment and/or award (the "Final
Determination")  shall be made or  rendered  as soon as  practicable,  but in no
event  later than one  hundred  (100)  business  days after the  delivery of the
Notice of Arbitration nor later than ten (10) business days following completion
of the arbitration.  The Final  Determination  must be agreed upon and signed by
the sole arbitrator or by at least two of the three arbitrators (as applicable).
The Final  Determination  shall be final and  binding on all  parties  and there
shall be no appeal from or reexamination of the Final Determination,  except for
fraud,  perjury,  or misconduct by an arbitrator  prejudicing  the rights of any
party and to correct manifest  clerical errors.  The prevailing party or parties
shall be entitled to Fees and Costs.

     (e) Judgment may be entered  upon the Final  Determination  by any court of
competent jurisdiction.

     10. Miscellaneous.

     (a) This  Agreement  shall be governed by and construed in accordance  with
the laws of the State of Michigan  without  regard to principles of conflicts of
law.

     (b) The provisions of this Agreement shall be severable, and if any part of
any  provision  is held  illegal,  void,  unreasonable  in  scope  or  otherwise
unenforceable,  such  provision  may be  changed  or  construed  to  the  extent
reasonably  necessary to make the  provision,  as so changed,  legal,  valid and
binding. If any provision of this Agreement is held illegal,  void or invalid in
its entirety, the remaining provisions of this Agreement shall not in any way be
affected or impaired but shall remain binding in accordance with their terms.

     (c) There is not, nor shall there be,  unless in writing  signed by both of
us, any express or implied agreement as to your continued employment with any of
the Companies after the Employment Term, as applicable, and any employment after
such Term shall be "at will" (i.e.,  terminable by either of us at any time with
or without cause or notice), with your position, salary, duties, and benefits to
be as we may mutually determine.

     (d) This  Agreement  is  personal  to you and cannot be sold,  assigned  or
pledged by you;  this  Agreement  may be assigned by JPE,  provided that no such
assignment will relieve JPE of its obligations under this Agreement.

     (e) Upon termination of your employment with JPE for any reason,  you shall
immediately deliver and return to the Companies all memoranda,  notes,  records,
agreements,   documents  and  other  materials  constituting   Confidential  and
Proprietary Information.

     (f) This Agreement, the Investment Agreement and the Related Agreements (as
defined in the Investment  Agreement),  constitute the entire agreement  between
the parties in connection  with the subject matter  addressed by this Agreement,
supercedes  any and all other  agreements,  either oral or written,  between the
parties with respect to the subject matter so addressed,  and this Agreement may
not be modified orally, and no modification shall be effective unless in writing
and signed by JPE and you.

     (g) This Agreement may be executed in counterparts,  both of which together
shall be deemed to be an original of this Agreement.

     (i) Paragraphs 6-10 shall survive the expiration of the Employment Term.

     Again, we are pleased to offer you the employment and consultant  positions
and  hope to  receive  a  positive  response  from  you.  Please  indicate  your
acceptance of this Agreement by dating and signing below.

                                   Sincerely,

                                   JPE, INC.,
                                   a Michigan corporation

                                   By: /s/ David L. Treadwell
                                       ---------------------------------
                                   Name:   David L. Treadwell
                                   Its:    Chairman

                                   Dated:  May 27, 1999


Accepted and Agreed to:

May 27, 1999

/s/ Richard R. Chrysler
- -----------------------------
Richard Chrysler






                                                                      EXHIBIT I



                              SEPARATION AGREEMENT
                          AND RELEASE OF ALL LIABILITY


         This   Separation   Agreement  and  Release  of  All  Liability   (this
"Agreement") is made on [________],  between (i) Richard  Chrysler  ("Chrysler")
and (ii) JPE, Inc., a Michigan  corporation.  As used in this  agreement,  "JPE"
means  JPE,  Inc.,  its   predecessors,   successors,   Subsidiaries,   Divested
Subsidiaries,  ASC, Kojaian,  assigns, parents,  subsidiaries,  divisions and/or
affiliates  (whether  incorporated or  unincorporated),  and all of the past and
present directors, officers, trustees, employees and agents (in their individual
and  representative  capacities)  of each  and any and all  persons  acting  by,
through,  or in concert with any of them. All  capitalized  terms not defined in
this Agreement  shall have the meanings  given them in the Investment  Agreement
dated April 28,  1999 among JPE,  Inc.,  ASC  Holdings  LLC, a Michigan  limited
liability  company,  and Kojaian Holdings LLC, a Michigan limited liability (the
"Investment Agreement"). This Agreement is being delivered pursuant to paragraph
6(e) of the Employment Agreement.


                                    RECITALS

     A. Chrysler has worked in the employ of JPE in various capacities.

     B.  Chrysler's  employment  with  JPE  terminated  on  [____________]  (the
"Termination Date").

     C. In  consideration  of certain  payments to be made,  and  benefits to be
provided,  by JPE to  Chrysler,  Chrysler  has  agreed to  release  JPE from any
liability to Chrysler.

     Therefore, Chrysler and JPE agree as follows:

     1.  Chrysler  resigned from all his  positions  with JPE,  effective on the
Termination Date.

     2. As Chrysler's  sole and exclusive  consideration,  payments and benefits
with  respect  to the  termination  of his  employment,  he  shall  receive  (a)
$________,  payable as provided in paragraph 6(a) of the  Employment  Agreement,
plus (b) $1,000.00, which he acknowledges is sufficient consideration.

     3. For the consideration described in this Agreement, Chrysler hereby fully
and forever  releases,  acquits  and  discharges  JPE from all suits,  claims or
actions, or any pending actions,  claims or suits, in law or in equity,  against
JPE on account of any  employment  related  action or cause of action based upon
any  facts,  whether  known  or  unknown,  including  all  claims  for  wrongful
discharge,  breach of contract,  violation of the penal statutes,  negligence of
any kind,  intentional  infliction  of  emotional  distress,  defamation  and/or
discrimination on account of sex, age, race, disability, religion or nationality
which has or could have been alleged under any Law, including:  Title VII of the
Civil  Rights  Act of  1964;  the Age  Discrimination  in  Employment  Act;  the
Rehabilitation  Act of 1973;  the Older  Workers  Benefit  Protection  Act;  the
Americans With  Disabilities  Act; the Family and Medical Leave Act of 1993; and
all analogous Michigan Laws,  including the Elliot-Larsen  Civil Rights Act; and
any and all amendments to any of the foregoing.  Chrysler is completely  able to
perform the duties of his  position  at JPE,  and has no  disability  recognized
under the Workers' Compensation Act or otherwise.

     4.  Except for  actions or suits  based upon  breaches of the terms of this
Agreement,  Chrysler  hereby shall fully and forever refrain from commencing any
suits, claims or actions,  or prosecuting any pending actions,  claims or suits,
in law or in equity,  against JPE on account of any employment related action or
cause of action based upon any facts,  whether  known or unknown,  including all
claims  for  wrongful  discharge,  breach of  contract,  violation  of the penal
statutes,  negligence of any kind, intentional infliction of emotional distress,
defamation  and/or  discrimination  on account of sex,  age,  race,  handicap or
nationality which has or could have been alleged under any Law, including: Title
VII of the Civil Rights Act of 1964; the Age  Discrimination  in Employment Act;
the  Rehabilitation  Act of 1973; the Older Workers Benefit  Protection Act; the
Americans With  Disabilities  Act; the Family and Medical Leave Act of 1993; and
all analogous  Michigan Laws including the  Elliot-Larsen  Civil Rights Act; and
any and all amendments to any of the foregoing.

     5. Chrysler shall maintain for all time as  confidential,  all Confidential
and Proprietary Information of JPE.

     6. To the fullest extent permitted by Law,  Chrysler shall not assist,  aid
or communicate with, either orally or in writing, in any manner whatsoever,  any
other person,  corporation,  firm,  partnership or other entity, in or about any
action,  cause of action,  suit, claim,  proceeding,  litigation or other matter
against JPE unless required by lawfully issued subpoena power or court order. In
the event  Chrysler  is served  with a subpoena or is required by court order to
testify in any type of proceeding  involving  JPE,  Chrysler  shall  immediately
notify JPE by providing  written  notice within three (3) days in the manner and
to the addresses for ASC,  Kojaian and JPE set forth for the delivery of notices
in the Investment Agreement.

     7. This  Agreement,  which shall be effective and  irrevocable  immediately
upon the time limits described herein, reflects the entire agreement of Chrysler
and JPE  relative to the subject  matter  hereof,  and  supersedes  any previous
employment,  consulting or similar agreement and other prior or  contemporaneous
oral or written understandings, statements, representations or promises.

     8. Chrysler  understands that by this Agreement he is waiving any rights he
may presently have under the Age  Discrimination  in Employment Act, as amended.
Chrysler enters into this Agreement freely and voluntarily without any duress or
coercion,  and after he has carefully and  completely  read all of the terms and
provisions of this Agreement.  He has been advised to consult with legal counsel
and understands he shall be allowed to consider this Agreement for 21 days prior
to  signing  it.  Chrysler  understands  that this  Agreement  shall not  become
effective for seven days  following the date it is signed,  during which time he
may revoke  this  Agreement  by written  notice to ASC,  Kojaian  and JPE at the
addresses  and in the manner  set forth in the  Investment  Agreement.  Chrysler
understands  that payments to be made to him as provided in this Agreement shall
not commence until the expiration of such seven days.

     9. Arbitration.

     (a) The  arbitration  procedure set forth in this  paragraph 9 shall be the
sole and exclusive  method for resolving and remedying  monetary  claims arising
out of disputes regarding this Agreement (the "Disputes"); provided that nothing
in this  paragraph  9 shall  prohibit a party  from  instituting  litigation  to
enforce  any Final  Determination  (as  defined  below) or to obtain  injunctive
relief.  Except as otherwise  provided in this  paragraph 9 or in the Commercial
Arbitration  Rules of the American  Arbitration  Association as in effect at the
pertinent time, the arbitration procedures and any Final Determination hereunder
shall be governed by, and shall be enforced pursuant to, the Uniform Arbitration
Act.

     (b) In the event that either  party  asserts  that there  exists a Dispute,
such party  shall  deliver a written  notice to the other party  specifying  the
nature of the  asserted  Dispute and  requesting a meeting to attempt to resolve
the same. If no such  resolution is reached  within ten (10) business days after
such delivery of such notice,  the party  delivering such notice of Dispute (the
"Disputing  Person") may, within forty-five (45) business days after delivery of
such notice,  commence  arbitration by delivering to the other party a notice of
arbitration  (a "Notice  of  Arbitration").  Such  Notice of  Arbitration  shall
specify  the  matters  as to which  arbitration  is  sought,  the  nature of any
Dispute,  the claims of the party and shall specify the amount and nature of any
damages,  if any,  sought to be recovered as a result of any alleged claim,  and
any other matters required by the Commercial  Arbitration  Rules of the American
Arbitration  Association  as in  effect  at the  pertinent  time to be  included
therein, if any.

     (c)(i) The parties  shall in good faith select one  arbitrator to arbitrate
the dispute who shall resolve the dispute  according to the procedures set forth
in this paragraph 9.

     (c)(ii) If the parties are unable to agree upon an  arbitrator  pursuant to
paragraph  9(c)(i)  within  fifteen (15)  business  days,  then each party shall
select one  arbitrator  within the next fifteen (15) business days. In the event
that either party fails to select an  arbitrator  as provided in this  paragraph
9(c)(ii),  then the matter shall be resolved by the  arbitrator  selected by the
other party. If each party chooses an arbitrator,  then those  arbitrators shall
select a third  independent,  neutral arbitrator expert in the subject matter of
the dispute,  and the three  arbitrators  so selected  shall  resolve the matter
according to the procedures  set forth in this  paragraph 9. If the  arbitrators
selected by the parties are unable to agree on a third arbitrator within fifteen
(15)  business  days,  after  their  selection,  the third  arbitrator  shall be
selected by the President of the American Arbitration Association.

     (d) The arbitration  shall be conducted in Ann Arbor,  Michigan,  under the
Commercial  Arbitration  Rules of the  American  Arbitration  Association  as in
effect from time to time,  except as modified  by the written  agreement  of the
parties,  to this Agreement.  The arbitrator(s) shall so conduct the arbitration
that a final result,  determination,  finding, judgment and/or award (the "Final
Determination")  shall be made or  rendered  as soon as  practicable,  but in no
event  later than one  hundred  (100)  business  days after the  delivery of the
Notice of Arbitration nor later than ten (10) business days following completion
of the arbitration.  The Final  Determination  must be agreed upon and signed by
the sole arbitrator or by at least two of the three arbitrators (as applicable).
The Final  Determination  shall be final and  binding on all  parties  and there
shall be no appeal from or reexamination of the Final Determination,  except for
fraud,  perjury,  or misconduct by an arbitrator  prejudicing  the rights of any
party and to correct manifest  clerical errors.  The prevailing party or parties
shall be entitled to Fees and Costs.

     (e) Judgment may be entered  upon the Final  Determination  by any court of
competent jurisdiction.

     10.  Nothing  in this  Agreement  shall be  construed  as an  admission  of
liability by JPE of any wrongdoing and all liability is hereby  expressly denied
by JPE.

     11.  Chrysler  shall not  disparage  JPE or  articulate  in any  manner any
negative fact or opinion concerning JPE.

     12. If any provision of this  Agreement is deemed  invalid or illegal,  all
other provisions shall remain in full force and effect.

     13. This  Agreement  shall be construed in accordance  with and governed by
the Laws of the State of Michigan.


                                    --------------------------------
                                    Richard Chrysler

                                    Date: --------------------------


                                    JPE, Inc.,
                                    a Michigan corporation

                                    By:
                                       -----------------------------
                                    Name:
                                          --------------------------

                                    Title:
                                          --------------------------
                                    Date:
                                          --------------------------





                              TERMINATION AGREEMENT
                          AND RELEASE OF ALL LIABILITY


         This   Termination   Agreement  and  Release  of  All  Liability  (this
"Agreement") is made on May 27, 1999, between (i) Richard Chrysler  ("Chrysler")
and (ii) JPE, Inc., a Michigan  corporation.  As used in this  agreement,  "JPE"
means  JPE,  Inc.,  its   predecessors,   successors,   Subsidiaries,   Divested
Subsidiaries,  assigns,  parents,  subsidiaries,   divisions  and/or  affiliates
(whether  incorporated  or  unincorporated),  and all of the  past  and  present
directors,  officers,  trustees,  employees and agents (in their  individual and
representative  capacities) of each and any and all persons acting by,  through,
or in  concert  with any of them.  All  capitalized  terms not  defined  in this
Agreement  shall have the meanings given them in the Investment  Agreement dated
April 28, 1999 among JPE, Inc., ASC Holdings LLC, a Michigan  limited  liability
company, and Kojaian Holdings LLC, a Michigan limited liability (the "Investment
Agreement"). This Agreement is being delivered pursuant to Section 6.2(e) of the
Investment Agreement.


                                    RECITALS

     A.  Chrysler  has  worked  in the  employ  of JPE as  President  and  Chief
Executive Officer effective as of November 9, 1998, pursuant to employment terms
approved by the Board of Directors as reflected in their  Minutes of November 6,
1998 (the "Original Employment Agreement").  Pursuant to the Original Employment
Agreement,  Chrysler has been granted certain stock options to purchase  200,000
Common Shares (whether or not exercisable, the "Options").

     B. Pursuant to the  Investment  Agreement,  Chrysler and JPE have agreed to
enter  into  the  Employment  Agreement  on the  Closing  Date.  The  Investment
Agreement  also  requires,  as a condition  precedent,  among other things,  the
delivery of this Agreement.  Accordingly, Chrysler and JPE have, pursuant to the
Investment Agreement,  agreed to terminate the Original Employment Agreement and
the Options on the terms set forth in this  Agreement.  Each of JPE and Chrysler
agree that the entering  into this  Agreement and the  Employment  Agreement and
consummating  the  Transaction  is in the  mutual  best  interests  of  JPE  and
Chrysler.

     C. In consideration of the foregoing and the consideration  provided below,
Chrysler has agreed to release JPE from any liability to Chrysler, including any
liability  arising as a result of the  termination  of the  Original  Employment
Agreement and the Options.

     Therefore, Chrysler and JPE agree as follows:

     1.  Chrysler and JPE hereby  render null and void the  Original  Employment
Agreement and the Options (the "Termination").

     2. As Chrysler's  sole and exclusive  consideration,  payments and benefits
with  respect to the  Termination,  subject to the terms and  conditions  of the
Investment  Agreement,  (a) JPE shall consummate the Transaction,  (b) JPE shall
enter into the Employment Agreement and, pursuant to the terms of the Employment
Agreement,  be  obligated  to pay his salary  thereunder,  and (c) JPE shall pay
Chrysler $1,000.00, which he acknowledges is sufficient consideration.

     3. For the consideration described in this Agreement, Chrysler hereby fully
and forever  releases,  acquits  and  discharges  JPE from all suits,  claims or
actions, or any pending actions,  claims or suits, in law or in equity,  against
JPE on account of the  Termination  or any other  employment  related  action or
cause of action based upon any facts  existing on or prior to the Closing  Date,
whether known or unknown, including all claims for wrongful discharge, breach of
contract,  violation of the penal statutes,  negligence of any kind, intentional
infliction of emotional distress, defamation and/or discrimination on account of
sex, age, race, disability, religion or nationality which has or could have been
alleged under any Law, including: Title VII of the Civil Rights Act of 1964; the
Age  Discrimination in Employment Act; the Rehabilitation Act of 1973; the Older
Workers Benefit  Protection Act; the Americans With Disabilities Act; the Family
and Medical Leave Act of 1993; and all analogous  Michigan  Laws,  including the
Elliot-Larsen  Civil  Rights  Act;  and  any and  all  amendments  to any of the
foregoing.  Chrysler is completely able to perform the duties of his position at
JPE, and has no disability  recognized  under the Workers'  Compensation  Act or
otherwise.

     4.  Except for  actions or suits  based upon  breaches of the terms of this
Agreement,  Chrysler  hereby shall fully and forever refrain from commencing any
suits, claims or actions,  or prosecuting any pending actions,  claims or suits,
in law or in equity,  against  JPE on account  of the  Termination  or any other
employment related action or cause of action based upon any facts existing on or
prior to the Closing Date,  whether  known or unknown,  including all claims for
wrongful  discharge,  breach  of  contract,  violation  of the  penal  statutes,
negligence of any kind, intentional infliction of emotional distress, defamation
and/or  discrimination  on account of sex, age,  race,  handicap or  nationality
which has or could have been alleged under any Law, including:  Title VII of the
Civil  Rights  Act of  1964;  the Age  Discrimination  in  Employment  Act;  the
Rehabilitation  Act of 1973;  the Older  Workers  Benefit  Protection  Act;  the
Americans With  Disabilities  Act; the Family and Medical Leave Act of 1993; and
all analogous  Michigan Laws including the  Elliot-Larsen  Civil Rights Act; and
any and all amendments to any of the foregoing.

     5.  Chrysler  shall  maintain  for two  years  following  the  date of this
Agreement as confidential, all Confidential and Proprietary Information of JPE.

     6. To the fullest extent permitted by Law,  Chrysler shall not assist,  aid
or communicate with, either orally or in writing, in any manner whatsoever,  any
other person,  corporation,  firm,  partnership or other entity, in or about any
action,  cause of action,  suit, claim,  proceeding,  litigation or other matter
against JPE unless required by lawfully issued subpoena power or court order. In
the event  Chrysler  is served  with a subpoena or is required by court order to
testify in any type of proceeding  involving  JPE,  Chrysler  shall  immediately
notify JPE by providing  written  notice within three (3) days in the manner and
to the addresses for ASC,  Kojaian and JPE set forth for the delivery of notices
in the Investment Agreement.

     7. This  Agreement,  which shall be effective and  irrevocable  immediately
upon the time limits described herein, reflects the entire agreement of Chrysler
and JPE  relative to the subject  matter  hereof,  and  supersedes  any previous
employment,  consulting or similar agreement and other prior or  contemporaneous
oral  or  written  understandings,   statements,  representations  or  promises;
provided, however, that the parties acknowledge that Chrysler and JPE, Inc. have
today entered into the Employment Agreement.

     8. Chrysler  understands that by this Agreement he is waiving any rights he
may presently have under the Age  Discrimination  in Employment Act, as amended.
Chrysler enters into this Agreement freely and voluntarily without any duress or
coercion,  and after he has carefully and  completely  read all of the terms and
provisions of this Agreement.  He has been advised to consult with legal counsel
and understands he shall be allowed to consider this Agreement for 21 days prior
to  signing  it.  Chrysler  understands  that this  Agreement  shall not  become
effective for seven days  following the date it is signed,  during which time he
may revoke  this  Agreement  by written  notice to ASC,  Kojaian  and JPE at the
addresses  and in the manner  set forth in the  Investment  Agreement.  Chrysler
understands  that payments to be made to him as provided in this Agreement shall
not commence until the expiration of such seven days.

     9. Arbitration.

     (a) The  arbitration  procedure set forth in this  paragraph 9 shall be the
sole and exclusive  method for resolving and remedying  monetary  claims arising
out of disputes regarding this Agreement (the "Disputes"); provided that nothing
in this  paragraph  9 shall  prohibit a party  from  instituting  litigation  to
enforce  any Final  Determination  (as  defined  below) or to obtain  injunctive
relief.  Except as otherwise  provided in this  paragraph 9 or in the Commercial
Arbitration  Rules of the American  Arbitration  Association as in effect at the
pertinent time, the arbitration procedures and any Final Determination hereunder
shall be governed by, and shall be enforced pursuant to, the Uniform Arbitration
Act.

     (b) In the event that either  party  asserts  that there  exists a Dispute,
such party  shall  deliver a written  notice to the other party  specifying  the
nature of the  asserted  Dispute and  requesting a meeting to attempt to resolve
the same. If no such  resolution is reached  within ten (10) business days after
such delivery of such notice,  the party  delivering such notice of Dispute (the
"Disputing  Person") may, within forty-five (45) business days after delivery of
such notice,  commence  arbitration by delivering to the other party a notice of
arbitration  (a "Notice  of  Arbitration").  Such  Notice of  Arbitration  shall
specify  the  matters  as to which  arbitration  is  sought,  the  nature of any
Dispute,  the claims of the party and shall specify the amount and nature of any
damages,  if any,  sought to be recovered as a result of any alleged claim,  and
any other matters required by the Commercial  Arbitration  Rules of the American
Arbitration  Association  as in  effect  at the  pertinent  time to be  included
therein, if any.

     (c)(i) The parties  shall in good faith select one  arbitrator to arbitrate
the dispute who shall resolve the dispute  according to the procedures set forth
in this paragraph 9.

     (c)(ii) If the parties are unable to agree upon an  arbitrator  pursuant to
paragraph  9(c)(i)  within  fifteen (15)  business  days,  then each party shall
select one  arbitrator  within the next fifteen (15) business days. In the event
that either party fails to select an  arbitrator  as provided in this  paragraph
9(c)(ii),  then the matter shall be resolved by the  arbitrator  selected by the
other party. If each party chooses an arbitrator,  then those  arbitrators shall
select a third  independent,  neutral arbitrator expert in the subject matter of
the dispute,  and the three  arbitrators  so selected  shall  resolve the matter
according to the procedures  set forth in this  paragraph 9. If the  arbitrators
selected by the parties are unable to agree on a third arbitrator within fifteen
(15)  business  days,  after  their  selection,  the third  arbitrator  shall be
selected by the President of the American Arbitration Association.

     (d) The arbitration  shall be conducted in Ann Arbor,  Michigan,  under the
Commercial  Arbitration  Rules of the  American  Arbitration  Association  as in
effect from time to time,  except as modified  by the written  agreement  of the
parties,  to this Agreement.  The arbitrator(s) shall so conduct the arbitration
that a final result,  determination,  finding, judgment and/or award (the "Final
Determination")  shall be made or  rendered  as soon as  practicable,  but in no
event  later than one  hundred  (100)  business  days after the  delivery of the
Notice of Arbitration nor later than ten (10) business days following completion
of the arbitration.  The Final  Determination  must be agreed upon and signed by
the sole arbitrator or by at least two of the three arbitrators (as applicable).
The Final  Determination  shall be final and  binding on all  parties  and there
shall be no appeal from or reexamination of the Final Determination,  except for
fraud,  perjury,  or misconduct by an arbitrator  prejudicing  the rights of any
party and to correct manifest  clerical errors.  The prevailing party or parties
shall be entitled to Fees and Costs.

     (e) Judgment may be entered  upon the Final  Determination  by any court of
competent jurisdiction.

     10. If any provision of this  Agreement is deemed  invalid or illegal,  all
other provisions shall remain in full force and effect.

     11. This  Agreement  shall be construed in accordance  with and governed by
the Laws of the State of Michigan.


                                        /s/ Richard R. Chrysler
                                        ------------------------------------
                                            Richard Chrysler


                                        Date:
                                             -------------------------------


                                        JPE, Inc.,
                                        a Michigan corporation

                                        By: /s/ Karen A. Radtke
                                            --------------------------------
                                        Name:   Karen A. Radtke

                                        Title:  Secretary and Treasurer

                                        Date:
                                             -------------------------------






                              TERMINATION AGREEMENT
                          AND RELEASE OF ALL LIABILITY


         This   Termination   Agreement  and  Release  of  All  Liability  (this
"Agreement") is made on May 27, 1999 between (i) Richard  Eidswick  ("Eidswick")
and (ii) JPE, Inc., a Michigan  corporation.  As used in this  agreement,  "JPE"
means  JPE,  Inc.,  its   predecessors,   successors,   Subsidiaries,   Divested
Subsidiaries,  assigns,  parents,  subsidiaries,   divisions  and/or  affiliates
(whether  incorporated  or  unincorporated),  and all of the  past  and  present
directors,  officers, trustees,  consultants and agents (in their individual and
representative  capacities) of each and any and all persons acting by,  through,
or in  concert  with any of them.  All  capitalized  terms not  defined  in this
Agreement  shall have the meanings given them in the Investment  Agreement dated
April 28, 1999 among JPE, Inc., ASC Holdings LLC, a Michigan  limited  liability
company, and Kojaian Holdings LLC, a Michigan limited liability (the "Investment
Agreement"). This Agreement is being delivered pursuant to Section 6.2(e) of the
Investment Agreement.


                                    RECITALS

     A. Eidswick has provided various  consulting  services to JPE pursuant to a
consulting  agreement dated November 9, 1998 between Eidswick and JPE, Inc. (the
"Consulting  Agreement").  In addition,  Eidswick and JPE are parties to a Stock
Option Agreement dated November 9, 1998 (the "Stock Option  Agreement") by which
Eidswick was granted the option to purchase  50,000  Common Shares under certain
circumstances (whether or not currently exercisable, the "Options").

     B. On the date of this Agreement,  JPE is Closing the Investment  Agreement
that requires, as a condition precedent, the delivery of this Agreement. Each of
Eidswick and JPE agree that JPE's Closing of the Investment  Agreement is in the
mutual  best  interests  of JPE  and  Eidswick.  Accordingly,  each  of JPE  and
Eidswick,  pursuant to the  Investment  Agreement,  have agreed to terminate the
Consulting  Agreement,  the Stock Option  Agreement and the Options on the terms
set forth in this Agreement.

     C. In  consideration  of the foregoing and for the  consideration  provided
below,  Eidswick  has  agreed to release  JPE from any  liability  to  Eidswick,
including any liability arising as a result of the termination of the Consulting
Agreement, the Stock Option Agreement and the Options.

     Therefore, Eidswick and JPE agree as follows:

     1. Eidswick and JPE hereby render null and void the  Consulting  Agreement,
the Stock Option Agreement and the Options (the "Termination").

     2. As Eidswick's  sole and exclusive  consideration,  payments and benefits
with respect to the  Termination  (a) subject to the terms and conditions of the
Investment  Agreement,  JPE shall consummate the Transaction,  and (b) JPE shall
pay Eidswick $1,000.00, which he acknowledges is sufficient consideration.

     3. For the consideration described in this Agreement, Eidswick hereby fully
and forever  releases,  acquits  and  discharges  JPE from all suits,  claims or
actions, or any pending actions,  claims or suits, in law or in equity,  against
JPE on account of the  Termination  or any other  consulting  related  action or
cause of action based upon any facts  existing on or prior to the Closing  Date,
whether known or unknown, including all claims for wrongful discharge, breach of
contract,  violation of the penal statutes,  negligence of any kind, intentional
infliction of emotional distress, defamation and/or discrimination on account of
sex, age, race, disability, religion or nationality which has or could have been
alleged under any Law, including: Title VII of the Civil Rights Act of 1964; the
Age  Discrimination in Employment Act; the Rehabilitation Act of 1973; the Older
Workers Benefit  Protection Act; the Americans With Disabilities Act; the Family
and Medical Leave Act of 1993; and all analogous  Michigan  Laws,  including the
Elliot-Larsen  Civil  Rights  Act;  and  any and  all  amendments  to any of the
foregoing.  Eidswick  is  completely  able  to  perform  the  duties  under  the
Consulting  Agreement,  and has no  disability  recognized  under  the  Workers'
Compensation Act or otherwise.

     4.  Except for  actions or suits  based upon  breaches of the terms of this
Agreement,  Eidswick  hereby shall fully and forever refrain from commencing any
suits, claims or actions,  or prosecuting any pending actions,  claims or suits,
in law or in equity,  against  JPE on account  of the  Termination  or any other
consulting related action or cause of action based upon any facts existing on or
prior to the Closing Date,  whether  known or unknown,  including all claims for
wrongful  discharge,  breach  of  contract,  violation  of the  penal  statutes,
negligence of any kind, intentional infliction of emotional distress, defamation
and/or  discrimination  on account of sex, age,  race,  handicap or  nationality
which has or could have been alleged under any Law, including:  Title VII of the
Civil  Rights  Act of  1964;  the Age  Discrimination  in  Employment  Act;  the
Rehabilitation  Act of 1973;  the Older  Workers  Benefit  Protection  Act;  the
Americans With  Disabilities  Act; the Family and Medical Leave Act of 1993; and
all analogous  Michigan Laws including the  Elliot-Larsen  Civil Rights Act; and
any and all amendments to any of the foregoing.

     5. Eidswick shall maintain for all time as  confidential,  all Confidential
and Proprietary Information of JPE (as defined in the Employment Agreement).

     6. To the fullest extent permitted by Law,  Eidswick shall not assist,  aid
or communicate with, either orally or in writing, in any manner whatsoever,  any
other person,  corporation,  firm,  partnership or other entity, in or about any
action,  cause of action,  suit, claim,  proceeding,  litigation or other matter
against JPE unless required by lawfully issued subpoena power or court order. In
the event  Eidswick  is served  with a subpoena or is required by court order to
testify in any type of proceeding  involving  JPE,  Eidswick  shall  immediately
notify JPE by providing  written  notice within three (3) days in the manner and
to the addresses for ASC,  Kojaian and JPE set forth for the delivery of notices
in the Investment Agreement;  provided, however,  notwithstanding the foregoing,
that  nothing  in this  paragraph  6 shall  preclude  Eidswick  from  (a)  fully
complying with and fulfilling  his duties and  obligations  under Section 3.3 of
the Investment  Agreement or (b)  participating  in any judgment,  settlement or
award granted to members of a class action  lawsuit by or for the benefit of the
shareholders of JPE, Inc. provided that Eidswick otherwise  participates in such
lawsuit solely as a passive member of such class.

     7. This  Agreement,  which shall be effective and  irrevocable  immediately
upon the time limits described herein, reflects the entire agreement of Eidswick
and JPE relative to the subject  matter hereof (i.e.,  regarding his options and
consulting)  and  supersedes  any  previous  employment,  consulting  or similar
agreement  and other prior or  contemporaneous  oral or written  understandings,
statements, representations or promises.

     8.  Nothing  in this  Agreement  shall  be  construed  as an  admission  of
liability by JPE of any wrongdoing and all liability is hereby  expressly denied
by JPE.

     9. Arbitration.

     (a) The  arbitration  procedure set forth in this  paragraph 9 shall be the
sole and exclusive  method for resolving and remedying  monetary  claims arising
out of disputes regarding this Agreement (the "Disputes"); provided that nothing
in this  paragraph  9 shall  prohibit a party  from  instituting  litigation  to
enforce  any Final  Determination  (as  defined  below) or to obtain  injunctive
relief.  Except as otherwise  provided in this  paragraph 9 or in the Commercial
Arbitration  Rules of the American  Arbitration  Association as in effect at the
pertinent time, the arbitration procedures and any Final Determination hereunder
shall be governed by, and shall be enforced pursuant to, the Uniform Arbitration
Act.

     (b) In the event that either  party  asserts  that there  exists a Dispute,
such party  shall  deliver a written  notice to the other party  specifying  the
nature of the  asserted  Dispute and  requesting a meeting to attempt to resolve
the same. If no such  resolution is reached  within ten (10) business days after
such delivery of such notice,  the party  delivering such notice of Dispute (the
"Disputing  Person") may, within forty-five (45) business days after delivery of
such notice,  commence  arbitration by delivering to the other party a notice of
arbitration  (a "Notice  of  Arbitration").  Such  Notice of  Arbitration  shall
specify  the  matters  as to which  arbitration  is  sought,  the  nature of any
Dispute,  the claims of the party and shall specify the amount and nature of any
damages,  if any,  sought to be recovered as a result of any alleged claim,  and
any other matters required by the Commercial  Arbitration  Rules of the American
Arbitration  Association  as in  effect  at the  pertinent  time to be  included
therein, if any.

     (c)(i) The parties  shall in good faith select one  arbitrator to arbitrate
the dispute who shall resolve the dispute  according to the procedures set forth
in this paragraph 9.

     (c)(ii) If the parties are unable to agree upon an  arbitrator  pursuant to
paragraph  9(c)(i)  within  fifteen (15)  business  days,  then each party shall
select one  arbitrator  within the next fifteen (15) business days. In the event
that either party fails to select an  arbitrator  as provided in this  paragraph
9(c)(ii),  then the matter shall be resolved by the  arbitrator  selected by the
other party. If each party chooses an arbitrator,  then those  arbitrators shall
select a third  independent,  neutral arbitrator expert in the subject matter of
the dispute,  and the three  arbitrators  so selected  shall  resolve the matter
according to the procedures  set forth in this  paragraph 9. If the  arbitrators
selected by the parties are unable to agree on a third arbitrator within fifteen
(15)  business  days,  after  their  selection,  the third  arbitrator  shall be
selected by the President of the American Arbitration Association.

     (d) The arbitration  shall be conducted in Ann Arbor,  Michigan,  under the
Commercial  Arbitration  Rules of the  American  Arbitration  Association  as in
effect from time to time,  except as modified  by the written  agreement  of the
parties,  to this Agreement.  The arbitrator(s) shall so conduct the arbitration
that a final result,  determination,  finding, judgment and/or award (the "Final
Determination")  shall be made or  rendered  as soon as  practicable,  but in no
event  later than one  hundred  (100)  business  days after the  delivery of the
Notice of Arbitration nor later than ten (10) business days following completion
of the arbitration.  The Final  Determination  must be agreed upon and signed by
the sole arbitrator or by at least two of the three arbitrators (as applicable).
The Final  Determination  shall be final and  binding on all  parties  and there
shall be no appeal from or reexamination of the Final Determination,  except for
fraud,  perjury,  or misconduct by an arbitrator  prejudicing  the rights of any
party and to correct manifest  clerical errors.  The prevailing party or parties
shall be entitled to Fees and Costs.

     (e) Judgment may be entered  upon the Final  Determination  by any court of
competent jurisdiction.

     (f) Notwithstanding anything to the contrary in this Agreement, any dispute
with  respect to  Eidswick's  actions  (or  inaction)  under  Section 3.3 of the
Investment  Agreement  shall not be subject to the  arbitration  requirements of
this Section 9.

     10. If any provision of this  Agreement is deemed  invalid or illegal,  all
other provisions shall remain in full force and effect.

     11. This  Agreement  shall be construed in accordance  with and governed by
the Laws of the State of Michigan.


                                             /s/ Richard P. Eidswick
                                             -------------------------------
                                                 Richard Eidswick

                                             Date:
                                                  --------------------------


                                             JPE, Inc.,
                                             a Michigan corporation

                                             By: /s/ Richard R. Chrysler
                                                 ---------------------------
                                             Name:   Richard R. Chrysler

                                             Title:  President

                                             Date:
                                                  --------------------------





                              GMAC Business Credit
            300 Galleria Officentre, Suite 110, Southfield, MI 48034
                             Telephone: 248-356-4622


Karen Radtke                                         Comerica Bank
Plastic Trim, Inc.                                   One Detroit Center
c/o JPE, Inc.                                        Detroit, Michigan 48226
775 Technology Drive, Suite 200
Ann Arbor, Michigan 48108

Re:  Payoff of Obligations of Plastic Trim,  Inc.  ("Borrower") to GMAC Business
     Credit, LLC ("Lender")

Dear Ladies and Gentlemen:

     This  letter is in response  to your  request  for a payoff  balance of the
Borrower's obligations to Lender. We understand that Borrower will be paying off
all of its obligations to Lender.

     If we receive (1) an executed  copy of this letter from you, and (2) a wire
transfer in the amount set forth below,  then this letter  constitutes  Lender's
agreement that this amount will satisfy all of the Borrower's  indebtedness  and
obligations  to  Lender.  The  payoff  amount  is  $13,709,464.00  (the  "Payoff
Amount"),  which assumes no borrowings or repayments  after 4:00 p.m.  E.S.T. on
May 26, 1999. This amount consists of the following:

        Principal                                       $13,312,138.75
        Interest                                             77,770.25
        Facility Fee                                         52,500.00
        Service Fee (May)                                     3,500.00
        Reserve for Unpaid Legal Fees and Costs               3,000.00
        Early Termination Fee (reduced per
        agreement)                                          260,555.00

        Total                                           $13,709,464.00

     The Payoff  amount must be  received  by Lender by transfer in  immediately
available funds by 1:00 p.m. E.S.T. on May 27, 1999, to the following account:

                  Bank One, Michigan
                  Detroit, Michigan
                  ABA #
                  Account #
                  Reference:  Plastic Trim, Inc.

     The  financing  arrangement  with  Borrower  is such that the above  payoff
balance may not represent all amounts owing to Lender because of adjustments for
returned  items,  insufficient  funds checks,  partial  credits and  provisional
credits taken into consideration in calculating the Payoff Amount (collectively,
the "Adjustments"). Likewise, we have included a $3,000 reserve for unpaid legal
fees and costs;  if actual  legal fees and costs are less than  $3,000,  we will
remit the balance of the reserve to you within the next 60 days.

     Because of the possibility of  Adjustments,  Lender and Comerica Bank agree
to  indemnify  Lender  from any and all  losses  or  deficiencies  caused  by an
Adjustment,  and to agree to pay, and hold Lender  harmless  with respect to all
Adjustments,  but Comerica's obligation to Lender with respect to Adjustments is
limited to  Adjustments  occurring on or before June 15, 1999.  Borrower  agrees
that any such  payments made by Comerica Bank may be charged to its loan account
with Comerica.

     Upon receipt of the Payoff  Amount,  Lender will deliver to Comerica  UCC-3
termination  statements  to terminate  all  financing  statements  filed against
Borrower or its assets, together with a "Satisfaction of Post-Petition Loans" to
be filed with the Bankruptcy Court.

     The facsimile or other electronically transmitted copy of this letter is to
be treated the same as an originally executed copy of this letter.

     This letter agreement may be executed in counterparts,  each of which shall
be  deemed  to  constitute  an  original  document.  If you have  any  questions
concerning this matter, please feel free to contact me.

                               Very truly ours,

                               GMAC Business Credit, LLC

                               By: /s/ Mark R. Matheson
                                   ---------------------------
                               Name:   Mark R. Matheson
                               Title:  Vice President


Agreed to and accepted by:                  Agreed to and accepted by:

Plastic Trim, Inc.                          Comerica Bank

By:  /s/ Richard R. Chrysler                By:  /s/ Richard S. Arceci
     --------------------------                  --------------------------
Name:    Richard R. Chrysler                Name:    Richard S. Arceci
Title:   President                          Title:   President





                              GMAC Business Credit
            300 Galleria Officentre, Suite 110, Southfield, MI 48034
                             Telephone: 248-356-4622


Karen Radtke                               Comerica Bank
Starboard Industries, Inc.                 One Detroit Center
c/o JPE, Inc.                              Detroit, Michigan 48226
775 Technology Drive, Suite 200
Ann Arbor, Michigan 48108

Re:  Payoff of Obligations of Starboard  Industries,  Inc.  ("Borrower") to GMAC
     Business Credit, LLC ("Lender")

Dear Ladies and Gentlemen:

     This  letter is in response  to your  request  for a payoff  balance of the
Borrower's obligations to Lender. We understand that Borrower will be paying off
all of its obligations to Lender.

     If we receive (1) an executed  copy of this letter from you, and (2) a wire
transfer in the amount set forth below,  then this letter  constitutes  Lender's
agreement that this amount will satisfy all of the Borrower's  indebtedness  and
obligations to Lender. The payoff amount is $3,102,733.97 (the "Payoff Amount"),
which  assumes no borrowings or  repayments  after 4:00 p.m.  E.S.T.  on May 26,
1999. This amount consists of the following:

         Principal                                        $2,993,294.57
         Interest                                             15,638.40
         Facility Fee                                         15,000.00
         Service Fee (May)                                     1,000.00
         Reserve for Unpaid Legal Fees and Costs               3,000.00
         Early Termination Fee (reduced per
         agreement)                                           74,445.00

         Total                                            $3,102,377.97

     The Payoff  amount must be  received  by Lender by transfer in  immediately
available funds by 1:00 p.m. E.S.T. on May 27, 1999, to the following account:

                  Bank One, Michigan
                  Detroit, Michigan
                  ABA #
                  Account #
                  Reference:  Starboard Industries, Inc.

     The  financing  arrangement  with  Borrower  is such that the above  payoff
balance may not represent all amounts owing to Lender because of adjustments for
returned  items,  insufficient  funds checks,  partial  credits and  provisional
credits taken into consideration in calculating the Payoff Amount (collectively,
the "Adjustments"). Likewise, we have included a $3,000 reserve for unpaid legal
fees and costs;  if actual  legal fees and costs are less than  $3,000,  we will
remit the balance of the reserve to you within the next 60 days.

     Because of the possibility of  Adjustments,  Lender and Comerica Bank agree
to  indemnify  Lender  from any and all  losses  or  deficiencies  caused  by an
Adjustment,  and to agree to pay, and hold Lender  harmless  with respect to all
Adjustments,  but Comerica's obligation to Lender with respect to Adjustments is
limited to  Adjustments  occurring on or before June 15, 1999.  Borrower  agrees
that any such  payments made by Comerica Bank may be charged to its loan account
with Comerica.

     Upon receipt of the Payoff  Amount,  Lender will deliver to Comerica  UCC-3
termination  statements  to terminate  all  financing  statements  filed against
Borrower or its assets, together with a "Satisfaction of Post-Petition Loans" to
be filed with the Bankruptcy Court.

     The facsimile or other electronically transmitted copy of this letter is to
be treated the same as an originally executed copy of this letter.

     This letter agreement may be executed in counterparts,  each of which shall
be  deemed  to  constitute  an  original  document.  If you have  any  questions
concerning this matter, please feel free to contact me.

                                    Very truly ours,

                                    GMAC Business Credit, LLC

                                    By:  /s/ Mark R. Matheson
                                         --------------------------------
                                    Name:    Mark R. Matheson
                                    Title:   Vice President


Agreed to and accepted by:                  Agreed to and accepted by:

Starboard Industries, Inc.                  Comerica Bank

By:  /s/ Richard R. Chrysler                By:  /s/ Richard S. Arceci
     ---------------------------                 --------------------------
Name:    Richard R. Chrysler                Name:    Richard S. Arceci
Title:   President                          Title:   President




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