INVENTORY LOAN AND SECURITY AGREEMENT

THIS  AGREEMENT  is  entered  into  by and  between  GENERAL  MOTORS  ACCEPTANCE
CORPORATION ("GMAC") and STARCRAFT AUTOMOTIVE GROUP, INC. ("Manufacturer").

Manufacturer  acquires  chassis and/or  vehicles  manufactured by General Motors
("Inventory")  for the purpose of  upfitting or  modifying  with special  bodies
and/or  equipment.  Manufacturer has requested GMAC, and GMAC agrees, to finance
Manufacturer's  acquisition of such Inventory subject to the following terms and
conditions;

1.   Subject to the provisions of this Agreement,  GMAC may make advances,  upon
     Manufacturer's  request, up to a maximum amount of advances  outstanding at
     any one  time  not to  exceed  the  amount  of  ($49,313,000.00)  ("Maximum
     Aggregate  Advance") and Manufacturer has,  concurrently with the execution
     of this Agreement,  executed and delivered to GMAC a demand promissory note
     ("Note") in the amount of such Maximum  Aggregate  Advance.  The Note shall
     bear  interest on each  advance  from the date of each such  advance to the
     date of its  repayment,  at a rate  designated by GMAC from time to time as
     being then in effect under this Agreement.

     The parties hereto intend to comply with applicable  usury law and the Note
     is to be construed in accordance with this intent. The parties  acknowledge
     that these  laws may change  from time to time.  If  acceleration  or other
     events  cause the  interest  contracted  for,  charged or received to be in
     excess of the lawful maximum, Manufacturer will receive credits so that the
     interest  will  comply  with  the law and in no  event  will  the  interest
     contracted for, charged or received exceed the legal maximum.

     The  amount  owed by  Manufacturer  to GMAC  shall at any time be the total
     aggregate  advances  made  hereunder  plus  interest and other  amounts due
     hereunder less all repayments thereof to GMAC by Manufacturer.

     If the Maximum  Aggregate  Advance is increased  at any time,  Manufacturer
     will  deliver  to GMAC a new demand  promissory  note in the amount of such
     increase, which demand promissory note shall also bear interest as provided
     in this Agreement and shall be subject to the provisions of this Agreement.

2.   Advances  by GMAC must be used  exclusively  for the  purpose of holding or
     acquiring  Inventory as may be acceptable to GMAC.  GMAC will advance funds
     for such purpose in an amount not to exceed the Maximum  Aggregate  Advance
     set forth in Paragraph  1, except as provided  herein.  GMAC may  terminate
     this Agreement or reduce the Maximum  Aggregate Advance or suspend advances
     hereunder  (i) in the event of default as defined in  Paragraph  5; (ii) if
     GMAC in its  judgment  believes  that  advances  are not  justified  due to
     changes in Manufacturer's  financial  condition or other material change in
     Manufacturer's  business; or (iii) if GMAC, in its sole discretion,  elects
     to terminate this Agreement by

                                                        -1-


<PAGE>



     providing   Manufacturer   with  90  days  prior  written  notice  of  such
     termination.  All debts,  obligations and remedies  existent at the time of
     any such termination  shall continue in effect until discharged  subject to
     the terms of this Agreement.

3.   To secure collectively the payment by Manufacturer of the amounts due or to
     become due hereunder,  and all other  obligations of  Manufacturer to GMAC,
     now  existing or  hereafter  arising,  Manufacturer  grants GMAC a security
     interest in the following property, hereinafter referred to collectively as
     "Collateral";

     (a)  All Inventory and all other inventory now owned or hereafter  acquired
          by Manufacturer,  and any  replacements,  substitutions or accessions,
          including returns and repossessions;

     (b)  All reserves or other accounts of  Manufacturer  now or hereafter held
          by GMAC;

     (c)  Any   amounts  due  or  to  become  due  to   Manufacturer   from  any
          manufacturer, distributor or other seller of inventory, including, but
          not  limited  to  factory  holdbacks,   warranty  accounts,   rebates,
          incentives or discounts;

     (d)  All  proceeds  of  Collateral  described  in (a),  (b) and (c)  above,
          including,  but not limited to,  accounts,  chattel paper or insurance
          proceeds.

4.   Manufacturer's  possession  of  Inventory  shall  be  for  the  purpose  of
     upfitting or modifying with special bodies and/or  equipment.  Manufacturer
     shall  maintain,  protect,  and  secure  Collateral  and  shall  not use it
     illegally,  improperly or for hire. GMAC shall at all times have the rights
     of access to and inspection of all such Collateral and the right to examine
     Manufacturer's books and records pertaining to Collateral.

     Manufacturer  shall insure the Collateral against all risks in such amounts
     and with a carrier  and  deductibles  acceptable  to GMAC.  Any such policy
     shall  name GMAC as loss  payee and shall be  cancelable  only upon 30 days
     prior written notice to GMAC. Manufacturer shall furnish GMAC with proof of
     such  insurance  promptly upon request by GMAC.  The receipt by GMAC of any
     insurance  proceeds  shall not  release  Manufacturer  from  payment of its
     obligations hereunder, except to the extent of such proceeds.

     Manufacturer  agrees that as each item of  Inventory  is sold  Manufacturer
     will immediately remit to GMAC the amount advanced by it or which it became
     obligated  to advance  on  Manufacturer's  behalf,  together  with  accrued
     interest thereon,  and any other charges due GMAC. Should Manufacturer fail
     to so remit any amount  due, it shall  immediately  account to GMAC for all
     proceeds  of the sale and remit same to GMAC.  The  remittance  of proceeds
     shall not relieve Manufacturer of its obligation to pay the full amount due
     on any item of Inventory.

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<PAGE>



     Manufacturer upon the request of GMAC will execute and deliver to GMAC from
     time to time such supplemental security agreements, financing statements or
     mortgages together with further documents as may be reasonably requested by
     GMAC. Such agreements, mortgages or documents shall be in such form as GMAC
     may in its sole  discretion  require.  GMAC  may  require  Manufacturer  to
     deliver  applicable  Certificates  of Title,  Certificates  of Origin for a
     vehicle or other similar  documents  and GMAC may retain such  documents in
     its possession until the related Inventory is sold and paid for.

     Manufacturer  shall keep Collateral free of taxes,  liens and encumbrances;
     and any sum of  money  that  may be paid by  GMAC,  in its  discretion,  in
     release  or  discharge  thereof  shall be paid by  Manufacturer  to GMAC on
     demand as an additional part of the obligation  secured  hereunder.  Absent
     GMAC's written consent,  Manufacturer shall not mortgage,  pledge or borrow
     upon Collateral and shall not transfer or otherwise dispose of it except as
     herein provided.

5.   An  Event  of  Default  shall  include  the  following:  (1) a  default  by
     Manufacturer  in the payment or performance of any obligation  hereunder or
     under any other agreement  entered into with GMAC; (2) the institution of a
     proceeding  in  bankruptcy,   receivership  or  insolvency  by  or  against
     Manufacturer  or its property;  (3) an assignment by  Manufacturer  for the
     benefit of creditors;  (4) the failure of Manufacturer to maintain, in good
     standing,  its present Approved  Converter Program Agreement (5) a tax lien
     against  any of  the  Manufacturer  property;  (6) a  misrepresentation  by
     Manufacturer for the purpose of obtaining credit or an extension of credit;
     or (7) a refusal by Manufacturer to furnish  financial  information to GMAC
     at reasonable  intervals or to permit GMAC to examine  Manufacturer's books
     or records.

6.   Upon the  occurrence  of an Event of  Default as set forth in  Paragraph  5
     above or if said  Collateral  is in  danger of  misuse,  loss,  seizure  or
     confiscation,  or if  GMAC  shall  deem  itself  insecure,  GMAC  may  take
     immediate  possession of  Collateral  without  demand or further  notice or
     without legal process. In furtherance thereof,  Manufacturer shall, if GMAC
     so  requests,  assemble  Collateral  and  make  it  available  to GMAC at a
     reasonable, convenient place designated by GMAC. GMAC shall have the right,
     and  Manufacturer  hereby  authorizes  and empowers GMAC, to enter upon the
     premises wherever Collateral may be and remove same. Manufacturer shall pay
     all expenses and reimburse GMAC for any expenditures,  including reasonable
     attorney's fees and legal  expenses,  in connection with GMAC's exercise of
     any of its rights and remedies under this Agreement. Upon the occurrence of
     an Event of Default,  in addition to the rights specified  herein,  all the
     rights and remedies afforded GMAC by applicable law shall apply.

7.   Except as  otherwise  provided or  referred  to herein,  there are no other
     agreements or understandings, either oral or in writing between the parties
     affecting this Agreement or relating to any of the subject  matters covered
     by this Agreement. No agreement between GMAC and Manufacturer which relates
     to matters  covered  herein,  and no change  in,  addition  to (except  the
     filling  in of blank  lines),  or erasure  of any  printed  portion of this
     Agreement will

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<PAGE>



     be binding unless it is approved in a written agreement  executed by a duly
     authorized representative of each party.

8.   This  Agreement  shall be binding upon the parties'  successors and assigns
     provided,  however,  that  Manufacturer  shall have no right of  assignment
     absent prior written consent of GMAC.

9.   Any provision  hereof  prohibited by law shall be ineffective to the extent
     of such prohibitions without invalidating the remaining provisions hereof.

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
by its duly authorized representative this 1st day of February, 1996.

Manufacturer   Starcraft Automotive Group, Inc.   By \s\Michael H. Schoeffler
Address        2703 College Ave.                     ------------------------
               Goshen, INN 46526                  Title Senior Vice President
                                                        ---------------------


               General Motors Acceptance Corporation  By
Address        3930 Edison Lakes Parkway #210           ------------------------
               Mishawaka, IN 46545                    Title
                                                           ---------------------


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<PAGE>



                             DEMAND PROMISSORY NOTE

$49,313,000.00                                                 February 1, 1996
--------------

ON DEMAND FOR VALUE RECEIVED,  the  undersigned  promises to pay to the order of
GENERAL MOTORS ACCEPTANCE  CORPORATION  ("GMAC"),  at its offices at 3930 Edison
Lakes Parkway,  Suite 210,  Mishawaka,  IN 46545,  or at such other place as the
holder hereof may from time to time  designate in writing,  the principal sum of
$49,313,000.00  or the  total  amount of all  advances,  less any  repayment  as
described  herein,  that is owing  pursuant to the  Inventory  Loan and Security
Agreement  executed  between  the  undersigned  and GMAC  dated 02/ /96 (and all
amendments and all agreements referred to or incorporated  therein,  hereinafter
referred  to as  the  "Agreement"),  together  with  interest  on  each  advance
hereunder from the date of each advance,  to the date of repayment  thereof,  at
the rate designated by GMAC from time to time as applicable under the Agreement.
Principal and accrued  interest  hereunder  shall be due in accordance  with the
terms of the  Agreement,  with  interest  otherwise  payable on the 10th of each
month.

Principal  and  interest  of this Note shall be  payable in lawful  money of the
United States of America.  The undersigned agrees to pay all costs of collection
and  enforcement  of the Note  including  reasonable  attorneys'  fees and court
costs.

This Note is secured by the Collateral granted to GMAC under and pursuant to the
terms of the  Agreement,  and the  occurrence  of any Event of Default under the
Agreement  shall be deemed a default  hereunder,  and shall  entitle  the holder
hereof to  accelerate  the  maturity of the debt  evidenced  hereby and have all
rights and remedies afforded by law or available under the Agreement.

If, at any time, the interest rate then in effect exceeds the maximum legal rate
of interest, the interest payable will be the maximum legal rate.

The undersigned hereby waives valuation and appraisement,  presentment,  protect
and demand, notices of protest, demand and dishonor and nonpayment of this Note,
and expressly  agrees that the maturity of this Note, or any payment  hereunder,
may be extended  from time to time without in any way affecting the liability of
the undersigned.

                                                STARCRAFT AUTOMOTIVE GROUP, INC.


                                                By:\s\Michael H. Schoeffler
                                                   -----------------------------
                                                   Michael H. Schoeffler

                                                Title: Senior Vice President
                                                      --------------------------


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<PAGE>



                               CORPORATE GUARANTY

     To induce  General  Motors  Acceptance  Corporation  ("GMAC")  to extend or
continue  credit  to  Starcraft  Corp.  ("Manufacturer")  pursuant  to a certain
Inventory  Loan and  Security  Agreement as it may be amended from time to time,
the  undersigned  person or persons does hereby  unconditionally  guarantee  the
payment of all indebtedness of Manufacturer to GMAC,  including any indebtedness
arising in connection with the Inventory Loan and Security  Agreement,  together
with all costs, expenses and attorneys' fees incurred by GMAC in connection with
any default or Manufacturer.

     Any liability of the  undersigned  here under shall not be affected by, nor
shall it be  necessary  to procure  the consent of the  undersigned  to give any
notice in reference to, any settlement,  or variation of terms of any obligation
of the  Manufacturer,  or of a  guarantor  or any other  interested  person,  by
operation of law or  otherwise;  nor by failure to file,  record or register any
security  document.  The  undersigned  recognized  that GMAC may utilize various
means of attempting to verify  Manufacturer's  compliance with its credit terms,
including periodic collateral checks and examinations of books and records,  and
hereby expressly agrees that such steps are for the sole benefit of GMAC and the
adequacy of performance of such checks and examinations  shall not be considered
as a defense to or mitigation of liability hereunder.

     The  undersigned  does hereby  expressly  waive and dispense with notice of
acceptance of this guaranty notices of non-payment or non-performance, notice of
amount  of  indebtedness   outstanding  at  any  time,  protests,   demands  and
prosecution of collection  foreclosure and possessory remedies.  The undersigned
hereby waives any right to require GMAC to (i) proceed against other persons or

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Manufacturer,  (ii)  advise the  undersigned  of the  results of any  collateral
checks or examinations,  (iii) require Manufacturer to comply with its agreement
with GMAC, or (iv) proceed  against  Manufacturer  or proceed against or exhaust
any security.

     This is a  continuing  guaranty  and shall  remain in full force and effect
until  forty-eight  (48) hours after receipt by GMAC, at this office  designated
below,  of written  notice by the  undersigned  terminating  or modifying  same;
provided, however, that such notice shall not operate to release the undersigned
from liability  hereunder with respect to any obligations  incurred prior to the
effective date of such notice.

     GMAC has made no  promises to  Manufacturer  or the  undersigned  to induce
execution of this Guaranty and there are not other agreements or understandings,
wither oral or in  writing,  between  GMAC and the  undersigned  affecting  this
Guaranty.

     The obligation of all parties  signing this guaranty,  where more than one,
shall be joint and several.

     This  guaranty  may not be  changed  orally and shall bind and inure to the
benefit of the heirs, administrators,  successors and assigns of the undersigned
and GMAC, respectively. If any part of this guaranty is not valid or enforceable
according to applicable law, all other parts will remain enforceable.

     The undersigned  represents to GMAC that is entering into this Guaranty for
a good and valid  business  reasons and that it is beneficial to the business of
the  undersigned  that GMAC extend  credit to the  Manufacturer  pursuant to the
Inventory Loan and Security Agreement as it may be amended from time to time.

                                       -7-


<PAGE>


Witness BeverlyAnn M. Lochmandy      Guarantor \s\ Michael H. Schoeffler
        ----------------------                ----------------------------------
                                                Starcraft Automotive Group, Inc.

                                     Address    2703 College Avenue
                                                Goshen, IN 46526

                                     Address    -------------------------------

STATE OF INDIANA

COUNTY OF ELKHART

         On this 1st day of February, 1996, before me personally came and
appeared  Michael H. Schoeffler  to me known and known by me to be (one of) the
person(s)  described in and who executed this instrument and  acknowledged  that
(t)he(y) executed the same as Guarantors.

                                        \s\Kim A. Stanley
                                        ----------------------------------------
                                        Kim A. Stanley, Notary Public in
                                        and for Noble County.

                                        My commission expires: August 30, 1997
                                                              ------------------

                                       -8-