EXECUTIVE SEVERANCE AGREEMENT


     THIS AGREEMENT,  dated as of February 20, 1998, by and between JPE, Inc., a
Michigan corporation  ("Corporation"),  and James J. Fahrner, presently residing
at 41445 Fawn Trail, Novi, Michigan ("Executive").

                                   WITNESSETH:

     WHEREAS,  the  Executive  is  presently  employed  by  the  Corporation  as
Executive Vice President, OEM Group; and

     WHEREAS, the Board of Directors ("Board") recognizes that the Executive has
contributed significantly to the business of the Corporation; and

     WHEREAS, the Board desires that the Executive be able to perform his duties
to the  Corporation  without  being  influenced  by  uncertainties  of  his  own
situation  and further able to assess and advise the Board  whether any proposed
transaction  that would constitute a Change of Control (as defined in Section 2)
would be in the best interests of the Corporation and its shareholders; and

     WHEREAS,  the Executive is willing to continue  serving the  Corporation on
the terms and conditions provided herein.

     NOW,  THEREFORE,  in consideration of the premises and the mutual covenants
and obligations hereinafter set forth, the parties agree as follows:

     1.  OPERATION  AND  TERMINATION  OF  AGREEMENT.  This  Agreement  shall  be
effective  immediately upon its execution by both parties.  This Agreement shall
terminate upon the earlier of:

     (a) The termination of the Executive's  employment with the Corporation for
any reason prior to a Change of Control (as defined in Section 2);

     (b)  The  termination  of the  Executive's  employment  because  of  death,
Permanent  Disability (as defined below),  voluntary  retirement on or after age
65, or Cause (as defined below); or

     (c) The second anniversary of a Change of Control.

     (d) For purposes of this Agreement:

          (i) "Permanent  Disability" shall mean that by reason of a physical or
     mental  disability or infirmity for a continuous  period of six (6) months,
     the  Executive  is unable  to  perform  the  duties  of her  position.  The
     determination  of  Permanent  Disability  shall be made by a medical  board
     certified   physician  mutually  acceptable  to  the  Corporation  and  the
     Executive  (or  the  Executive's  legal  representative,  if one  has  been
     appointed).  The Executive agrees to submit to the Corporation such medical
     evidence  regarding  such  disability or infirmity as the  Corporation  may
     reasonably request.

          (ii)  "Termination  For  Cause"  shall  mean  any  termination  of the
     employment of the  Executive  for "Cause." For purposes of this  Agreement,
     only the following shall be deemed to constitute "Cause":

               (A) the Executive's  willful  engaging in dishonest or fraudulent
          actions or  omissions  resulting  or  intended  to result  directly or
          indirectly in any demonstrable  material financial or economic harm to
          the Corporation, or

               (B) if there has been a breach of the Executive's  fiduciary duty
          to the  Corporation  resulting  or  intended  to  result  directly  or
          indirectly in personal profit to the Executive;

     provided that there shall have been delivered to the Executive at least ten
     (10) days prior to the effective date of Termination  for Cause a Notice of
     Termination  (as defined in Section  1(d)(v)),  specifying the  particulars
     thereof in detail.  For purposes of subsection (A) or (B) above,  no act or
     failure to act on the Executive's part shall be considered "willful" unless
     done or omitted to be done by him not in good faith and without  reasonable
     belief  that  his  action  or  omission  was in the best  interests  of the
     Corporation.

     If the  Executive's  employment  shall be terminated by the Corporation for
     Cause,  the Executive shall have the right to contest such termination only
     in accordance with the procedures set forth in Section 8.

          (iii)  "Termination  Without Cause" shall mean any  termination of the
     employment of the Executive by the Corporation  other than  termination (A)
     For Cause, (B) upon death, (C) upon voluntary retirement on or after age 65
     or (D) because of Permanent Disability.

          (iv) Any termination of the Executive's  employment by the Corporation
     or by the  Executive  (other  than upon  death)  shall be  communicated  by
     written  "Notice of  Termination"  to the other  party  hereto.  "Notice of
     Termination"  shall  mean  a  notice  which  shall  indicate  the  specific
     termination  provision relied upon in this Agreement and shall set forth in
     reasonable  detail the facts and  circumstances  claimed to provide a basis
     for  termination  of the  Executive's  employment  under the  provision  so
     indicated.

          (v) The  "Date  of  Termination"  shall  mean  (A) if the  Executive's
     employment is terminated  by his death,  the date of his death,  (B) if the
     Executive's  employment is terminated due to his Permanent Disability,  the
     date that is thirty  (30)  calendar  days after  Notice of  Termination  is
     given,  (C) if the  Executive's  employment  is  terminated  pursuant  to a
     Termination For Cause, the date specified in the Notice of Termination, (D)
     if  terminated  by  voluntary  retirement  on or after age 65,  the date of
     retirement,  and (E) if  termination  of the  Executive's  employment  is a
     Termination  Without  Cause,  date  provided  by the Notice of  Termination
     which, in the case of a termination by the  Corporation,  shall not be less
     than thirty (30)  calendar  days (except in the case of a  termination  for
     Cause) and, in the case of a  termination  by the  Executive,  shall not be
     less than ten (10) calendar  days nor more than sixty (60)  calendar  days,
     respectively, after the date the Notice of Termination is given.

     2. CHANGE OF CONTROL.

     (a) No benefit  shall be payable  under this  Section 2 unless  there shall
have been a Change of Control of the  Corporation  or Pending  Change of Control
(each as defined below).

     (b)  For  the  purpose  of this  Agreement,  a  Change  of  Control  of the
Corporation ("Change of Control") shall be deemed to have occurred if any of the
following events shall have occurred:

          (i) any Person (as defined below), other than John Psarouthakis, is or
     becomes the beneficial owner (as defined in Rule 13d-3 under the Securities
     Exchange  Act of 1934,  as  amended  (the  "Exchange  Act")),  directly  or
     indirectly,  of securities of the Corporation (not including the securities
     beneficially owned by such Person acquired directly from the Corporation or
     its  affiliates)  representing  25% or more of either the then  outstanding
     shares of common stock of the  Corporation or the combined  voting power of
     the Corporation's then outstanding securities; or

          (ii) a change  in the  membership  of the Board as it  existed  in the
     immediately  preceding  calendar year (the "Incumbent Board") such that the
     directors  of the  Incumbent  Board no longer  constitute a majority of the
     Board;  provided  that any  individual  becoming a director in a subsequent
     year  whose  election,   or  nomination  for  election,  by  the  Company's
     shareholders was approved by a vote of at least a majority of the directors
     then  comprising  the  Incumbent  Board  shall  be,  for  purposes  of this
     Agreement,  considered  as  though  such  individual  were a member  of the
     Incumbent Board; or

          (iii) the  shareholders of the Corporation  approve a plan of complete
     liquidation or  dissolution  of the  Corporation or there is consummated an
     agreement  for  the  sale  or  disposition  by  the  Corporation  of all or
     substantially all of the Corporation's assets.

     (c) Person.  For the  purpose of this  Agreement,  "Person"  shall have the
meaning  given in Section  3(a)(9) of the Exchange  Act, as modified and used in
Sections  13(d) and 14(d)  thereof,  except that such term shall not include the
Corporation or any of its subsidiaries.

     (d) Severance Payment Upon Change of Control. If at any time within the two
(2)  years  after a Change  of  Control,  the  Executive's  employment  with the
Corporation  (i) is terminated by the  Corporation for any reason other than his
death,  Permanent  Disability,  voluntary  retirement on or after age sixty-five
(65), or Termination  For Cause, or (ii) is terminated by the Executive for Good
Reason (as hereafter defined),  then the Corporation shall pay the Executive, in
lieu  of any  other  severance  payment,  an  amount  equal  to 2.99  times  the
Executive's annual base salary (the "Base Salary"),  which base salary shall not
be less than  Executive's  annual base salary of $185,000 as of the date of this
Agreement.

     (e) Good Reason. For the purpose of this Section 2 of the Agreement,  "Good
Reason" shall mean the  occurrence  (without the  Executive's  written  consent)
after any Change of Control or during any Pending  Change of Control (as defined
below), as the case may be, of any one of the following events:

          (i) either (1) a significant  alteration,  as reasonably determined by
     the Executive, in the nature of the Executive's reporting responsibilities,
     title other than "Executive Vice President," duties or offices as in effect
     immediately  prior to the Change of Control or Pending  Change of  Control,
     provided, that during any Pending Change of Control, Executive's duties and
     offices  may be changed  by the  Corporation  to  address  the needs of the
     Corporation taking into consideration Executive's capabilities and level of
     experience;  or (2) any  diminution  of more than ten percent  (10%) in the
     Executive's Base Salary from that in effect immediately prior to the Change
     of Control or Pending Change of Control, as the case may be;

          (ii) the requirement by the Corporation that the Executive's principal
     place of employment be relocated more than ten (10) miles from his place of
     employment  immediately prior to the Change in Control or Pending Change in
     Control;

          (iii) the  Corporation's  failure to obtain,  on or before the date of
     the Change of Control,  a  satisfactory  agreement  from any  successor  to
     assume and agree to perform this Agreement, as contemplated in Section 5(a)
     hereof.

          (iv)  either  (1) the  discontinuance  of, or any  amendment  to,  any
     compensation  plan  which is  adverse  to the  Executive  and in which  the
     Executive  participated  immediately  prior to the  Change  of  Control  or
     Pending Change of Control, as applicable,  including but not limited to the
     Corporation's  1993 Stock Incentive Plan, or any substitute plan(s) adopted
     prior to the Change of Control or Pending Change of Control, as applicable,
     unless a substantially  equivalent  substitute or alternative plan has been
     made available to the Executive,  or (2) the failure by the  Corporation to
     continue the  Executive's  participation  therein (or in such substitute or
     alternative  plan(s)) on a basis not  materially  less  favorable,  both in
     terms of the amount of benefits  provided and the level of the  Executive's
     participation relative to other participants, as existed at the time of the
     Change of Control or Pending Change of Control, as applicable; or

          (v) the  discontinuance of any benefits enjoyed by the Executive under
     any of the  Corporation's  pension,  life  insurance,  medical,  health and
     accident,  or disability plans in which the Executive was  participating at
     the time of the Change of Control or Pending Change of Control, as the case
     may be, the taking of any action by the Corporation  that would directly or
     indirectly  materially reduce any of such benefits enjoyed by the Executive
     at the time of the  Change of  Control or  Pending  Change of  Control,  as
     applicable, or the failure by the Corporation to provide the Executive with
     the number of paid  vacation  days to which he is  entitled on the basis of
     years of service with the Corporation in accordance with the  Corporation's
     normal  vacation  policy in effect at the time of the  Change of Control or
     Pending Change of Control, as applicable.

     (f) Severance Payment Upon Pending Change of Control.

          (i) The  Corporation  shall  promptly pay the Executive as termination
     compensation  the Severance  Payment  provided in Section 2(d) in the event
     that at any time during a "Pending Change of Control" (as defined below) of
     the  Corporation  the  Executive's  employment  with the Corporation (i) is
     terminated  by the  Corporation  for any  reason,  other  than  his  death,
     Permanent  Disability,  or  Cause or  normal  retirement  on or  after  age
     sixty-five (65), or (ii) is terminated by the Executive for Good Reason (as
     defined in Section 2(e)).

          (ii) Pending Change of Control.  For the purpose of this Agreement,  a
     "Pending  Change of Control" shall be deemed to have occurred if any of the
     following events shall have occurred:

               (A) the Corporation enters into an agreement, the consummation of
          which would result in the occurrence of a Change of Control;

               (B) the Corporation or any Person publicly announces an intention
          to take or consider actions which, if consummated,  would constitute a
          Change of Control;

               (C)  any  Person,  other  than  John  Psarouthakis,  becomes  the
          beneficial  owner (as defined in Rule 13d-3 under the  Exchange  Act),
          directly or indirectly,  of securities of the Corporation representing
          15% or more of either the then  outstanding  shares of common stock of
          the Corporation or the combined voting power of the Corporation's then
          outstanding  securities (not including in the securities  beneficially
          owned  by such  Person  any  securities  acquired  directly  from  the
          Corporation or its affiliates); or

               (D) the  Board  adopts  a  resolution  to the  effect  that,  for
          purposes of this Agreement, a Pending Change of Control has occurred.

     3. PROTECTED INFORMATION; PROHIBITED COMPETITION.

     (a) The Executive hereby recognizes and acknowledges that during the course
of the Executive's employment by the Corporation,  the Corporation has disclosed
and will furnish,  disclose or make available to the Executive  confidential  or
proprietary  information related to the Corporation's business,  including,  but
not limited to, customer lists, ideas,  processes,  inventions and devices, that
such  confidential  or  proprietary  information  has been developed and will be
developed  through the  expenditure by the  Corporation of substantial  time and
money and that all such confidential  information could be used by the Executive
and others to compete with the Corporation. The Executive hereby agrees that all
such confidential or proprietary information shall constitute trade secrets, and
further agrees to use such confidential or proprietary  information only for the
purpose of carrying  out his duties with the  Corporation  and not  otherwise to
disclose such  information  until the  expiration of a period of three (3) years
from the date her employment with the  Corporation is terminated.  The foregoing
restrictions  shall  not  apply to  information  which  becomes  public  without
disclosure  by the  Executive  or is  obtained  from a  source  other  than  the
Corporation,  or  which  the  Executive  is  required  by  law  or  judicial  or
administrative order or process to disclose.

     (b) The restrictions in this Section 3 shall survive the termination of the
Agreement and shall be in addition to any restrictions  imposed on the Executive
by statute or at common law.

     (c) Upon any  termination  of the  Executive's  employment  under Section 1
(except for Termination Without Cause) the Executive agrees that for a period of
one (1) year  following  the Date of  Termination  the  Executive  will  neither
compete with the Corporation in any market in which the Corporation  operates as
of the Date of Termination,  nor work for or advise,  consult or otherwise serve
with, directly or indirectly, any entity whose business materially competes with
the business activities of the Corporation.

     4. INJUNCTIVE RELIEF. The Executive hereby expressly  acknowledges that any
breach or  threatened  breach by the  Executive of any of the terms set forth in
Section 3 of this Agreement may result in significant  and continuing  injury to
the  Corporation,  the monetary value of which would be impossible to establish.
Therefore,  the Executive hereby agrees that,  notwithstanding  any provision in
Section  8  hereof  to the  contrary,  the  Corporation  shall  be  entitled  to
injunctive  relief  granted by a court of appropriate  jurisdiction  without the
posting of a bond or other  security  in the event of any  breach or  threatened
breach of the terms of either of such sections. Nothing herein will be construed
as prohibiting the Corporation from pursuing any other remedies available to the
Corporation  for such breach or  threatened  breach,  including  the recovery of
damages from the  Executive.  The provisions of this Section 4 shall survive the
termination of this Agreement.

     5. SUCCESSORS; BINDING AGREEMENT.

     (a)  The  Corporation  shall  require  any  successor  (whether  direct  or
indirect,   by  purchase,   merger,   consolidation  or  otherwise)  to  all  or
substantially all of the business and/or assets of the Corporation, by agreement
in form and substance  satisfactory  to the Executive,  to expressly  assume and
agree to perform  this  Agreement in the same manner and to the same extent that
the  Corporation  would  be  required  to  perform  this  Agreement  if no  such
succession had taken place.  Failure of the Corporation to obtain such agreement
prior to a date that is on or before the date of the Change of Control  shall be
a breach of this Agreement and shall entitle the Executive to compensation  from
the  Corporation  in the same  amount and on the same terms as he would  receive
hereunder if he were to terminate his  employment  for Good Reason,  except that
for purposes of  implementing  the  foregoing,  the date on which such Change of
Control becomes  effective  shall be deemed the Date of Termination.  As used in
this Agreement,  "Corporation"  shall mean the Corporation as previously defined
and any successor to its business  and/or assets as aforesaid,  which  successor
executes  and  delivers  the  agreement  provided for in this Section 5 or which
otherwise  becomes bound by all the terms and  provisions  of this  Agreement by
operation of law.

     (b) This Agreement and all rights of the Executive hereunder shall inure to
the  benefit  of and  be  enforceable  by  the  Executive's  personal  or  legal
representatives,  executors,  administrators,  successors,  heirs, distributees,
devisees and legatees.  If the Executive should die after his termination  while
any amounts would still be payable to him hereunder if he had continued to live,
all such amounts,  unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Executive's  devisee,  legatee, or other
designee or, if there be no designee, to the Executive's estate.

     6. NOTICES.  Any notice required or permitted by this Agreement shall be in
writing, sent by registered or certified mail, return receipt requested, or by a
national overnight delivery service,  addressed to the Board and the Corporation
at the  Corporation's  then principal office, or to the Executive at the address
set forth in the  preamble,  or to such other  address or addresses as any party
hereto  may from time to time  specify in  writing  for the  purpose in a notice
given to the other parties in  compliance  with this Section 6. Notices shall be
deemed given when received.

     7.  INDEMNIFICATION  AND INSURANCE;  LEGAL EXPENSES.  The Corporation shall
indemnify  and hold  harmless the Executive  (and his legal  representatives  or
other  successors) if he is a party,  or is threatened to be made a party to any
threatened,  pending or completed  action,  suit,  proceeding or claim,  whether
civil, criminal,  administrative or investigative (other than an action by or in
the right of the Corporation) by reason of the fact that the Executive is or was
a director, officer or employee of the Corporation,  against expenses (including
reasonable attorney's fees), costs,  judgments,  fines and other amounts paid in
settlement (if such  settlement is approved by the Board of Directors)  actually
and  reasonably  incurred  by  him in  connection  with  such  action,  suit  or
proceeding to the fullest extent permitted by law. The Corporation shall provide
the Executive (including his heirs,  executors and administrators) with coverage
under a standard  directors' and officer's  liability  insurance  policy,  which
shall be in an  amount  not less than the  directors'  and  officers'  insurance
available to the Executive on the date hereof.

     8. DISPUTES.

     (a)  The  administrator  for  purposes  of  this  Agreement  shall  be  the
Corporation ("Administrator"), whose address is 775 Technology Drive, Suite 200,
Ann Arbor, MI 48108,  and whose telephone  number is (313) 662-2323.  The "Named
Fiduciary"  as  defined  in  Section  402(a)(2)  of  ERISA,  also  shall  be the
Corporation.  The  Corporation  shall  have the right to  designate  one or more
employees of the Corporation as the Administrator and the Named Fiduciary at any
time,  and  to  change  the  address  and  telephone  number  of the  same.  The
Corporation  shall  give the  Executive  written  notice  of any  change  in the
Administrator and Named Fiduciary,  or in the address or telephone number of the
same.

     (b) The Administrator  shall make all determinations as to the right of any
person to receive benefits under the Agreement.  Any denial by the Administrator
of a claim for benefits by the  Executive  ("the  claimant")  shall be stated in
writing by the  Administrator and delivered or mailed to the claimant within ten
(10) days after receipt of the claim,  unless special  circumstances  require an
extension of time for  processing  the claim.  If such an extension is required,
written notice of the extension  shall be furnished to the claimant prior to the
termination of the initial ten (10) day period. In no event shall such extension
exceed  a period  of ten (10)  days  from  the end of the  initial  ten (10) day
period.  Any  notice of denial  shall set  forth the  specific  reasons  for the
denial,  specific reference to pertinent provisions of this Agreement upon which
the denial is based,  a description  of any  additional  material or information
necessary for the claimant to perfect his claim, with an explanation of why such
material or  information  is  necessary,  and any  explanation  of claim  review
procedures,  written to the best of the Administrator's ability in a manner that
may be understood without legal or actuarial counsel.

     (c) A claimant whose claim for benefits has been wholly or partially denied
by the  Administrator  may request on or before the tenth calendar day following
the date of such  denial a review  of the  denial  in a  written  notice  to the
Administrator.  The claimant shall be entitled to submit such issues or comments
in writing or otherwise, as he shall consider relevant to a determination of the
claim,  and  he  may  include  a  request  for a  personal  hearing  before  the
Administrator.  Prior to submitting his request,  the claimant shall be entitled
to review such documents as the  Administrator  shall agree are pertinent to the
claim. The claimant may, at all stages of review, including arbitration provided
for in  Section  14(d),  be  represented  by  counsel  of his  choice,  legal or
otherwise, and the reasonable fees and expenses of the counsel shall be borne by
the  Corporation.  All  requests  for review  shall be  promptly  resolved.  The
Administrator's  decision  with respect to any such review shall be set forth in
writing  and  shall be  mailed  to the  claimant  not  later  than ten (10) days
following  receipt by the  Administrator  of the  claimant's  request for review
unless  special  circumstances,  such as the need to hold a hearing,  require an
extension of time for  processing,  in which case the  Administrator's  decision
shall be so mailed  not  later  than  twenty  (20) days  after  receipt  of such
request.

     (d) A claimant who has followed the procedure in paragraphs  (b) and (c) of
this  section,  but who has not obtained  full relief on his claim for benefits,
may, within sixty (60) days following his receipt of the Administrator's written
decision  on  review,   apply  in  writing  to  the  Administrator  for  binding
arbitration  of the  claim  before an  arbitrator  mutually  acceptable  to both
parties, the arbitration to be held in Ann Arbor,  Michigan,  in accordance with
the commercial  arbitration rules of the American  Arbitration  Association,  as
then in effect.  If the parties are unable to mutually agree upon an arbitrator,
then the arbitration proceedings shall be held before three (3) arbitrators, one
(1) of whom shall be  designated  by the  Corporation,  one (1) of whom shall be
designated by the claimant and the third of whom shall be designated mutually by
the first two (2)  arbitrators  in accordance  with the  commercial  arbitration
rules  referenced  above.  The sole authority of the  arbitrator(s)  shall be to
interpret and apply the provisions of this Agreement;  not to change, add to, or
subtract from, any of its provisions.  The arbitrator(s) shall have the power to
compel attendance of witnesses at the hearing. Any court having jurisdiction may
enter a judgment based upon the arbitration.

     9. NO  MITIGATION.  The  Executive  shall not be required  to mitigate  the
amount of any payments  provided for by this Agreement by seeking  employment or
otherwise,  nor shall the  amount of any  payment or  benefit  provided  in this
Agreement  be reduced by any  compensation  or benefit  earned by the  Executive
after his termination.

     10. NO SET-OFF. The Corporation's  obligation to make any payments provided
for by this Agreement are absolute and  unconditional  and shall not be affected
by any circumstances,  including, without limitation, any set-off, counterclaim,
recoupment,  defense,  claim of  breach of  contract  or other  right  which the
Corporation may have against the Executive or others.

     11. NONALIENATION OF BENEFITS. Except as may be contrary to applicable law,
no  sale,  transfer,  alienation,   assignment,  pledge,   collateralization  or
attachment of any benefits under this Agreement  shall be valid or recognized by
the Corporation.

     12. ERISA.  This Agreement is an unfunded  compensation  arrangement  for a
member  of a select  group of the  Corporation's  management  employees  and any
applicable ERISA  exemptions for a "top hat" arrangement  shall be applicable to
this Agreement.

     13.  REPORTING AND DISCLOSURE.  The  Corporation,  from time to time, shall
provide  government  agencies with reports  concerning  this Agreement as may be
required by law,  and the  Corporation  shall  provide the  Executive  with such
disclosure  concerning  this  Agreement  as  may  be  required  by law or as the
Corporation may deem appropriate.

     14. EFFECT ON PRIOR AGREEMENTS AND EXISTING  BENEFITS PLANS. This Agreement
contains  the entire  agreement  of the parties  relating to the subject  matter
hereof,  and except  for that  certain  Indemnification  Agreement  between  the
Corporation and Executive dated June 19, 1995,  which shall remain in full force
and effect,  supersedes any prior written or oral  agreements or  understandings
relating to the same subject matter, except that this Agreement shall not affect
or operate to reduce any benefit or  compensation  inuring to the Executive of a
type provided elsewhere including, but not limited to, any pension benefits.

     15. MODIFICATION AND WAIVER. No modification or amendment of this Agreement
shall be valid  unless in  writing  and  signed  by or on behalf of the  parties
hereto.  A waiver of the breach of any term or condition of this Agreement shall
not be deemed to constitute a waiver of any subsequent breach of the same or any
other term or condition.

     16. SEVERABILITY.  This Agreement is intended to be performed in accordance
with,  and only to the extent  permitted by, all  applicable  laws,  ordinances,
rules and  regulations.  If any provision of this Agreement,  or the application
thereof to any person or circumstance,  shall, for any reason and to any extent,
be held invalid or unenforceable, such invalidity and unenforceability shall not
affect the remaining provisions hereof and the application of such provisions to
other persons or  circumstances,  all of which shall be enforced to the greatest
extent permitted by law.

     17.  WITHHOLDING.  The compensation  provided to the Executive  pursuant to
this Agreement shall be subject to any withholdings  and deductions  required by
any applicable income and employment  federal,  state and local tax laws. In the
event the Corporation fails to withhold such sums for any reason, it may require
the Executive to promptly remit to the  Corporation  sufficient  cash to satisfy
applicable income and employment withholding taxes.

     18.  PAYMENT UPON DEATH.  Any amounts  payable to the  Executive  hereunder
after  the death of the  Executive  shall be paid to the  Executive's  estate or
legal representative.

     19.  HEADINGS.  The headings in this Agreement are inserted for convenience
of reference only and shall not be a part of or control or affect the meaning of
any provision hereof.

     20.  LATE  PAYMENT OF  BENEFITS.  If any amount  required to be paid by the
Corporation  to the  Executive  hereunder is not paid when due, the  Corporation
shall pay such amount to the Executive  together with interest at the prime rate
as  announced  from time to time by Comerica  Bank (or its  successor)  plus two
percentage  points, for the period from and after the tenth (10th) day following
the date on which payment was due to and including the date of payment.

     21. ATTORNEY CONSULTATION.  The Executive has had an opportunity to consult
with an attorney of his choosing prior to executing this Agreement.

     22.  GOVERNING  LAW.  To the  extent not  governed  by  Federal  law,  this
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Michigan.

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


                                    JPE, INC.


                                    By: /s/ John Psarouthakis
                                        ------------------------------------

                                    Title: Chairman & CEO



                                    EXECUTIVE

                                    By: /s/ James J. Fahrner
                                        ------------------------------------