EXHIBIT 10.43

                AMENDMENT AND WAIVER NO. 7 TO THE LOAN DOCUMENTS

                                                       As of May 23, 2001

         AMENDMENT  AND WAIVER NO. 7 TO THE LOAN  DOCUMENTS  dated as of May 23,
2001 to the Credit  Agreement  dated as of  November  26,  1997 (as  amended and
otherwise  modified by Amendment  and Waiver No. 1 dated as of January 23, 1998,
Letter  Waiver  No. 2 dated as of April  9,  1998,  Amendment  No. 3 to the Loan
Documents  dated as of May 26,  1998,  Amendment  and  Waiver  No. 4 to the Loan
Documents dated as of May 25, 1999,  Amendment No. 5 to the Loan Documents dated
as of April 7, 2000 and Amendment and Waiver No. 6 to the Loan  Documents  dated
as of January 16, 2001, the "Credit Agreement") among Desa International,  Inc.,
a Delaware corporation (the "Borrower"),  Desa Holdings Corporation,  a Delaware
corporation  (the "Parent  Guarantor"),  the Lender Parties party  thereto,  UBS
Securities LLC, as a Co-Arranger and  Documentation  Agent  thereunder,  Banc of
America Securities LLC (formerly  NationsBanc  Montgomery  Securities LLC), as a
Co-Arranger  and  Syndication  Agent  thereunder,  and  Bank  of  America,  N.A.
(formerly  NationsBank,  N.A.),  as  Administrative  Agent (the  "Administrative
Agent")  for the Lender  Parties  thereunder.  Capitalized  terms not  otherwise
defined herein shall have the same meanings as specified  therefor in the Credit
Agreement.

                             PRELIMINARY STATEMENTS

         (1) The Borrower has requested  that the Lender  Parties agree to amend
the Credit Agreement in order to, among other things:

                  (a)  permit the  Borrower  to extend  the  maturity  under the
         Childs Guaranteed Line of Credit to November 26, 2003 and under certain
         circumstances to permit prepayment of the principal amount thereunder;

                  (b) amend the financial  covenants in subsections (a), (b) and
         (c) of Section  5.04 of the Credit  Agreement  for certain  Measurement
         Periods from May 2001 through February 2002;

                  (c)  modify  the   calculation   of  EBITDA  for  purposes  of
         determining  compliance  with  the  financial  covenants  set  forth in
         Section 5.04 of the Credit Agreement; and

                  (d) modify the calculation of Fixed Charge Coverage Ratio.

         (2) The Borrower has requested  that the Lender  Parties agree to waive
the Default under Section 6.01(c) of the Credit  Agreement that has occurred and
is continuing as a result of the failure by the Parent  Guarantor to comply with
the financial  covenants  set forth in Section 5.04 of the Credit  Agreement for
the Measurement Period ended March 3, 2001.

         (3) The Lender Parties have indicated their willingness to agree, among
other things,  to the amendments and waivers of the Credit  Agreement  described
above in  Preliminary  Statements  (1) and (2) on the terms and  subject  to the
satisfaction of the conditions set forth herein.

         NOW,  THEREFORE,  in  consideration  of the  premises and of the mutual
covenants and agreements  contained  herein,  the parties hereto hereby agree as
follows:
<PAGE>

         SECTION 1.  Amendments of Certain  Provisions of the Credit  Agreement.
The Credit  Agreement  is, upon the  occurrence of the Amendment No. 7 Effective
Date (as hereinafter defined), hereby amended as follows:

                  (a) The definition of "Applicable Margin" set forth in Section
         1.01 of the Credit  Agreement  is hereby  amended by deleting the table
         set forth therein and replacing it with the following table:

<TABLE>
<CAPTION>

                                                                      Alternate Base        Eurodollar Rate
                                                 Eurodollar Rate   Rate Advances Under    Advances Under Term
                         Alternate Base Rate     Advances Under      Term B, Term C,           B, Term C,
                         Advances Under Term       Term A and        Acquisition and        Acquisition and
                            A and Working       Working Capital       Acquisition B          Acquisition B
Performance Level         Capital Facilities       Facilities           Facilities             Facilities
------------------------------------------------------------------------------------------------------------
       <S>                     <C>                  <C>                  <C>                    <C>

        I                       1.000%               2.000%               1.625%                 2.625%
        II                      1.250%               2.250%               1.625%                 2.625%
       III                      1.500%               2.500%               1.875%                 2.875%
        IV                      2.000%               3.000%               2.250%                 3.250%
        V                       2.500%               3.500%               2.750%                 3.750%
        VI                      2.750%               3.750%               3.000%                 4.000%
</TABLE>


                  (b) The definition of "Childs  Guaranteed  Line of Credit" set
         forth in Section  1.01 of the Credit  Agreement  is hereby  amended and
         restated in its entirety to read as follows:

                           "Childs   Guaranteed   Line  of  Credit"   means  the
                  unsecured line of credit to the Borrower from Bank of America,
                  N.A.  (and/or its  successors  and  assigns)  in an  aggregate
                  principal amount of up to $15,000,000 which line of credit has
                  a  maturity   date  of  November  26,  2003  and  all  amounts
                  outstanding from time to time under which are  unconditionally
                  and irrevocably guaranteed by UBS Capital LLC.

                  (c) The  definition  of  "Consolidated  EBITDA"  set  forth in
         Section  1.01 of the  Credit  Agreement  is hereby  amended  to restate
         clause (b) thereof in its entirety to read as follows:

                  "(b) the sum of each of the following  expenses that have been
                  deducted  from the  determination  of the net  income  (or net
                  loss) of such Person and its Subsidiaries for such period: (i)
                  all interest  expense of such Person and its  Subsidiaries for
                  such  period,  (ii) all income tax expense  (whether  federal,
                  state,  local,  foreign or  otherwise)  of such Person and its
                  Subsidiaries for such period,  (iii) all depreciation  expense
                  of such Person and its Subsidiaries for such period,  (iv) all
                  amortization  expense of such Person and its  Subsidiaries for
                  such  period,   (v)  all  extraordinary   losses  deducted  in
                  determining  the net income  (or net loss) of such  Person and
                  its   Subsidiaries   for  such   period,   (vi)  all  unusual,
                  non-recurring  costs in  connection  with (A) the  Shelbyville
                  relocation,   (B)   warehouse   relocations,   (C)   executive
                  terminations,  (D)  severance  costs,  (E) China joint venture
                  write-offs, (F) barter agreement write-offs, (G) legal expense
                  write-offs,  and (H) amendment fees and other expenses related
                  to Amendment and Waiver No. 6 to the Loan Documents,
<PAGE>

                  provided,  however that the aggregate amount to be included in
                  the calculation of Consolidated EBITDA pursuant to this clause
                  (vi)  shall not  exceed (w)  $2,500,000  for the  twelve-month
                  Measurement  Period ending May 2001,  (x)  $2,300,000  for the
                  twelve-month   Measurement  Period  ending  August  2001,  (y)
                  $2,000,000  for the  twelve-month  Measurement  Period  ending
                  November  2001  and  (z)  $1,000,000   for  the   twelve-month
                  Measurement  Period ending  February 2002, and (vii) amendment
                  fees and other expenses  related to this  Amendment,  less all
                  extraordinary  gains added in  determining  the net income (or
                  net loss) of such Person and its  Subsidiaries for such period
                  plus".

                  (d) The  definition  of  "Eligible  Inventory"  set  forth  in
         Section 1.01 of the Credit  Agreement is hereby amended and restated in
         its entirety to read as follows:

                  "Eligible  Inventory"  means the gross dollar value (valued at
                  the lower of cost or  market  value,  on a  first-in-first-out
                  basis) of (x) the inventory of the Borrower  which conforms to
                  the representations  and warranties  contained in the Security
                  Agreement, less (i) any supplies (other than raw materials) or
                  promotional,  marketing  or  shipping  materials,  (ii)  goods
                  returned  by  customers  (other  than  goods  that  have  been
                  reconditioned  and goods  returned in the  ordinary  course of
                  business   representing   unsold   inventory   which   remains
                  marketable  at cost  or  greater),  (iii)  goods  rejected  by
                  customers  (other  than goods  that have been  reconditioned),
                  (iv) goods to be  returned to  suppliers,  (v) goods and other
                  inventory that are obsolete, unusable or otherwise unavailable
                  for sale,  (vi)  reconditioned  goods to the  extent  that the
                  aggregate   gross  dollar  value   thereof  is  in  excess  of
                  $2,500,000,  and  (vii) at any time on or after  February  28,
                  2002, the aggregate gross dollar value of inventory consisting
                  of  generators  in excess of the  aggregate  amount of cost of
                  sales  by the  Borrower  and its  Subsidiaries  of  generators
                  during the 15 calendar months  immediately  preceding the date
                  of determination, and less any reserves required in accordance
                  with GAAP for special order goods,  market value  declines and
                  bill and hold (deferred  shipment) sales, (y) any inventory to
                  be purchased  by the Borrower to the extent such  inventory is
                  supported by a Letter of Credit and (z) any  inventory of DESA
                  Europe,  DESA Canada,  Heath Ltd. or Desico stored outside the
                  United States,  to the extent the same meets the  requirements
                  of clause (x) above  (with  necessary  reference  changes  and
                  except  that same may be owned by DESA  Europe,  DESA  Canada,
                  Heath Ltd. or Desico, and are not subject to the liens created
                  under the Security  Agreement),  in an aggregate amount not to
                  exceed   $15,000,000;   provided  that,   notwithstanding  the
                  foregoing  provisions of this definition,  the  Administrative
                  Agent may, in its  reasonable  discretion  following  an audit
                  field  examination  conducted  (solely  at the  expense of the
                  Borrower)  by a qualified  independent  auditor and based upon
                  its analysis of factors and  circumstances  arising  after the
                  date of this  Agreement  that may affect all or any portion of
                  the  goods  and  other  inventory  of  the  Borrower  and  its
                  Subsidiaries  or the  value  thereof,  and upon at least  five
                  Business  Days' notice to the Borrower of its  intention to do
                  so,  exclude  one or  more  other  types  of  goods  or  other
                  inventory  from  Eligible  Inventory  for all purposes of this
                  Agreement.

                  (e) The  definition  of  "Eligible  Receivable"  set  forth in
         Section 1.01 of the Credit  Agreement is hereby amended and restated in
         its entirety to read as follows:

                  "Eligible  Receivable"  means  (x)  the  gross  amount  of the
                  accounts  receivable of the  Borrower,  DESA Canada and Desico
                  which conform to the representations and warranties  contained
                  herein and in the Security Agreement (with necessary reference
                  changes in the case of DESA  Canada and Desico and except that
                  the  accounts  receivable  of DESA Canada and Desico are owned
                  by, and owed to, DESA Canada and Desico, respectively, and are
                  not  subject to the liens  created  pursuant  to the  Security
                  Agreement), less any
<PAGE>

                  returns,  discounts,  claims,  credits and  allowances  of any
                  nature (whether  issued,  owing,  granted or outstanding)  and
                  less   reserves   for   any   other   matter   affecting   the
                  creditworthiness  of account debtors owing any of the accounts
                  receivable (including, without limitation, accounts receivable
                  owing from any Person that shall take or be the subject of any
                  action or proceeding of the type described in Section 6.01(f))
                  and  excluding  (i)  governmental  sales (except to the extent
                  supported   by  a  letter  of  credit   issued  by  an  issuer
                  satisfactory to the Administrative  Agent), (ii) bill and hold
                  (or  deferred   shipment)   transactions,   guaranteed  sales,
                  sales-or-return,  sales on approval or on a consignment  basis
                  or sales subject to any right of return, setoff or chargeback,
                  (iii)  contracts or sales to any  Affiliate of the Borrower or
                  to the Parent Guarantor or any of its  Subsidiaries,  (iv) all
                  accounts receivable which have not been paid in full within 60
                  days of the due  date  thereof,  (v) all  accounts  receivable
                  owing by Nanjing,  a corporation  organized  under the laws of
                  China,  or  any of  its  Affiliates,  and  (vi)  all  accounts
                  receivable   owing  by  Quality   Stores,   Inc.,  a  Delaware
                  corporation,  or any of its Affiliates that are either (A) not
                  required  to be paid in full  within  60 days of the  original
                  billing date therefor,  or (B) more than 30 days past the date
                  payment  is due  thereon,  and (y) the  gross  amount of those
                  accounts  receivable  of DESA  Europe or Heath Ltd.  where the
                  payment  of at  least  75% of  the  amount  of the  respective
                  accounts  receivable is assured  pursuant to credit  insurance
                  issued by an insurer acceptable to the  Administrative  Agent,
                  which  insurance is in full force and effect;  provided  that,
                  notwithstanding  the foregoing  provisions of this definition,
                  the  Administrative  Agent may, in its  reasonable  discretion
                  following an audit field examination  conducted (and solely at
                  the  expense  of  the  Borrower)  by a  qualified  independent
                  auditor   and  based  upon  its   analysis   of  factors   and
                  circumstances  arising after the date of this  Agreement  that
                  may affect all or any portion of the  accounts  receivable  of
                  the Borrower and its  Subsidiaries  or the value thereof,  and
                  upon at least five  Business  Days'  notice to the Borrower of
                  its  intention  to do so,  exclude  one or more other types of
                  accounts receivable from Eligible Receivables for all purposes
                  of this Agreement.

                  (f) The definition of "Fixed Charge  Coverage Ratio" set forth
         in Section 1.01 of the Credit  Agreement  is hereby  amended to restate
         clause (a) thereof in its entirety to read as follows:

                  "(a) (i)  Consolidated  EBITDA of the Parent Guarantor and its
                  Subsidiaries  for such  period  plus (ii) for the  Measurement
                  Periods  ending  May  2001,  August  2001,  November  2001 and
                  February 2002, the $7,500,000 of Net Cash Proceeds received by
                  the Parent Guarantor from its shareholders and received by the
                  Borrower from the Parent Guarantor from the issuance of equity
                  interests   by  the  Parent   Guarantor  to  the  Borrower  in
                  connection  with  Amendment  and  Waiver  No.  7 to  the  Loan
                  Documents  plus (iii) for the  Measurement  Periods ending May
                  2001, August 2001 and November 2001, $15,000,000,  and for the
                  Measurement Period ending February 2002, $1,550,000, less (iv)
                  the aggregate amount of all Capital  Expenditures  made by the
                  Parent Guarantor and its Subsidiaries during such period."

                  (g) The  definition  of "Loan Value" set forth in Section 1.01
         of the Credit  Agreement is hereby amended and restated in its entirety
         to read as follows:

                           "Loan  Value"  means,  as at any  date on  which  the
                  amount thereof is being determined, an amount equal to the sum
                  of  (a)(i)  if  Consolidated   EBITDA  for  the   twelve-month
                  Measurement Period ending on or prior to such date is equal to
                  or greater than $55,000,000,  85% of Eligible Receivables, and
                  (ii) if Consolidated  EBITDA for the twelve-month  Measurement
                  Period   ending  on  or  prior  to  such  date  is  less  than
                  $55,000,000,  80% of  Eligible  Receivables,  plus  (b) 65% of
                  Eligible Inventory, each as
<PAGE>

                  determined from the Borrowing Base  Certificate  most recently
                  delivered pursuant to Section 5.03(r), less (c) if at any time
                  on or  after  November  30,  2001  the  lessor  of  any of the
                  Borrower's  distribution  facility  located in Bowling  Green,
                  Kentucky or the Borrower's two warehouse facilities located in
                  Manchester,  Tennessee  has  not  entered  into  an  agreement
                  providing the  Administrative  Agent with the right to receive
                  notices of default and the right to take  possession  of those
                  goods or other inventory  located at such facility,  an amount
                  equal to the rental  payments  required  to be made during the
                  three months  immediately  following the date of determination
                  with respect to any such  facility;  provided  that during the
                  period from  January 1 to May 31 in each year,  the Loan Value
                  of all  Eligible  Collateral  shall be  deemed to be an amount
                  equal to the  greater of (i)  $30,000,000  and (ii) the sum of
                  (A)(I) if Consolidated EBITDA for the twelve-month Measurement
                  Period  ending  on or prior to the  date of  determination  is
                  equal  to  or  greater  than  $55,000,000,   85%  of  Eligible
                  Receivables,   and  (II)  if   Consolidated   EBITDA  for  the
                  twelve-month Measurement Period ending on or prior to the date
                  of  determination  is less than  $55,000,000,  80% of Eligible
                  Receivables,  plus  (B)  65% of  Eligible  Inventory,  each as
                  determined from the Borrowing Base  Certificate  most recently
                  delivered pursuant to Section 5.03(r), less (C) if at any time
                  on or  after  November  30,  2001  the  lessor  of  any of the
                  Borrower's  distribution  facility  located in Bowling  Green,
                  Kentucky or the Borrower's two warehouse facilities located in
                  Manchester,  Tennessee  has  not  entered  into  an  agreement
                  providing the  Administrative  Agent with the right to receive
                  notices of default and the right to take  possession  of those
                  goods or other inventory  located at such facility,  an amount
                  equal to the rental  payments  required  to be made during the
                  three months  immediately  following the date of determination
                  with respect to any such facility.

                  (h) Section 1.01 of the Credit  Agreement is hereby amended to
         add the following new definition in its appropriate alphabetic order:

                           "Desico"  means  Desico,  S.A. de C.V., a corporation
                  organized  and existing  under the laws of Mexico and a wholly
                  owned Subsidiary of the Borrower."

                  (i) Section 5.02(j) of the Credit  Agreement is hereby amended
         to restate clause (i)(D) thereof in its entirety to read as follows:

                  "(D) the  prepayment  of the  "Loans"  outstanding  under  the
                  Childs  Guaranteed  Line  of  Credit  by the  Borrower  in the
                  following amounts:  (x) if Consolidated EBITDA of the Borrower
                  for any twelve-month Measurement Period ending on or after May
                  31, 2002 is at least $65,000,000,  $5,000,000 in the aggregate
                  since the effective  date of Amendment and Waiver No. 7 to the
                  Loan Documents, (y) if Consolidated EBITDA of the Borrower for
                  any twelve-month  Measurement Period ending on or after August
                  31, 2002 is at least $70,000,000, $10,000,000 in the aggregate
                  since the effective  date of Amendment and Waiver No. 7 to the
                  Loan Documents and (z) if Consolidated  EBITDA of the Borrower
                  for any  twelve-month  Measurement  Period  ending on or after
                  February 28, 2003 is at least $75,000,000,  $15,000,000 in the
                  aggregate since the effective date of Amendment and Waiver No.
                  7 to the Loan Documents; provided that at the time of any such
                  prepayment no Default shall have occurred and be continuing or
                  shall occur as a result thereof".

                  (j) Section 5.04 of the Credit Agreement is hereby amended and
         restated in its entirety to read as follows:
<PAGE>

                           "SECTION 5.04.  Financial  Covenants.  So long as any
                  Advance  shall  remain  unpaid,  any Letter of Credit shall be
                  outstanding  or any Lender  Party  shall  have any  Commitment
                  hereunder, the Parent Guarantor will:

                                    (a) Total Leverage  Ratio.  Maintain a Total
                           Leverage Ratio as of the last day of each Measurement
                           Period of not more than the  amount  set forth  below
                           for each Measurement Period set forth below:

                                    Measurement Period
                                         Ending In                Ratio
                                    -------------------       -------------

                                    May 2001                     7.45:1
                                    August 2001                  7.40:1
                                    November 2001                6.40:1
                                    February 2002                5.50:1

                                    May 2002                     5.50:1
                                    August 2002                  5.25:1
                                    November 2002                5.00:1
                                    February 2003                4.75:1

                                    May 2003                     4.50:1
                                    August 2003                  4.50:1
                                    November 2003 and
                                      thereafter                 4.25:1

                                    (b) Fixed Charge Coverage Ratio.  Maintain a
                           Fixed  Charge  Coverage  Ratio  as of the last day of
                           each  Measurement  Period of not less  1.00:1,  other
                           than the last day of the Measurement Period ending in
                           August  2001,  in which case  maintain a Fixed Charge
                           Coverage  Ratio as of such  last day of not less than
                           0.98:1.

                                    (c)  Interest  Coverage  Ratio.  Maintain an
                           Interest  Coverage  Ratio  as of the last day of each
                           Measurement  Period of not less than the  amount  set
                           forth  below for each  Measurement  Period  set forth
                           below:


                                    Measurement Period
                                         Ending In                Ratio
                                    -------------------       -------------


                                    May 2001                     1.30:1
                                    August 2001                  1.30:1
                                    November 2001                1.55:1
                                    February 2002                1.85:1

                                    May 2002                     2.00:1
                                    August 2002                  2.00:1
                                    November 2002                2.00:1
                                    February 2003                2.00:1

                                    May 2003                     2.25:1
                                    August 2003                  2.25:1
<PAGE>

                                    November 2003                2.25:1
                                    February 2004                2.25:1

                                    May 2004                     2.25:1
                                    August 2004                  2.25:1
                                    November 2004 and
                                     thereafter                  2.50:1"

                  (k) Section 6.01 of the Credit Agreement is hereby amended (i)
         to add at the end of clause (o) thereof the word "or" and (ii) to add a
         new subsection (p) thereof to read as follows:

                  "(p) on or prior to May 31, 2001, the Parent  Guarantor  shall
                  not have  received  from its  shareholders,  and the  Borrower
                  shall not have  received  from the Parent  Guarantor,  in each
                  case,  in  connection  with  Amendment and Waiver No. 7 to the
                  Loan Documents,  at least $7,500,000 in Net Cash Proceeds from
                  the issuance of equity  interests  by the Parent  Guarantor to
                  its shareholders;".

                  (l) Exhibit H to the Credit Agreement is hereby deleted in its
         entirety and replaced with the new Exhibit H thereto attached hereto as
         Annex A.

         SECTION 2. Waiver of Certain  Provisions of the Credit  Agreement.  The
Default under Section  6.01(c) of the Credit  Agreement that has occurred and is
continuing  as a result of the failure of the Parent  Guarantor  to maintain the
required Total Leverage  Ratio,  Fixed Charge Ratio and Interest  Coverage Ratio
for the  Measurement  Period  ended March 3, 2001 in  accordance  with  Sections
5.04(a),  (b) and (c) of the Credit Agreement is, on and as of the Amendment No.
7 Effective Date, hereby waived by the Lender Parties.

         SECTION 3. Conditions of  Effectiveness  of this Amendment.  Sections 1
and 2 of this  Amendment  shall  become  effective  as of the  first  date  (the
"Amendment  No. 7  Effective  Date") on which each of the  following  conditions
precedent shall have been satisfied:

                  (a)  The   Administrative   Agent  shall  have   received  (i)
         counterparts  of this  Amendment  executed by the Borrower,  the Parent
         Guarantor and the Required Lenders or, as to any of the Lender Parties,
         advice satisfactory to the Administrative  Agent that such Lender Party
         has executed this Amendment,  (ii) the Consent attached hereto executed
         by each of the Loan  Parties,  (iii) the  Consent  of UBS  Capital  LLC
         attached  hereto  executed by UBS Capital LLC and (iv) an executed copy
         of Amendment  No. 3 to the Credit  Agreement  dated as of May 23, 2001,
         between the Borrower and Bank of America,  N.A. (formerly  NationsBank,
         N.A.).

                  (b) All of the consents,  approvals and authorizations of, and
         notices and filings to or with, and other actions by, any  governmental
         or  regulatory  authority or any other Person  necessary in  connection
         with  this  Amendment  or any of the  other  transactions  contemplated
         hereby  shall  have  been  obtained  (without  the  imposition  of  any
         conditions that are not reasonably  acceptable to the Required Lenders)
         and  shall  remain  in full  force  and  effect;  and no  law,  rule or
         regulation  shall  be  applicable  in the  reasonable  judgment  of the
         Required Lenders that restrains, prevents or imposes materially adverse
         conditions  upon  this  Amendment  or  any of  the  other  transactions
         contemplated hereby.

                  (c) The  representations  and warranties  contained in each of
         the Loan Documents shall be correct in all material  respects on and as
         of the Amendment No. 7 Effective Date, as though made on and as of such
         date (other than any such  representations or warranties that, by their
         terms,
<PAGE>

         refer to a specific date other than the Amendment No. 7 Effective Date,
         in which case as of such specific date).

                  (d) No  event  shall  have  occurred  and be  continuing  that
         constitutes  a Default,  other than the  Defaults  waived  pursuant  to
         Section 2 of this Amendment.

                  (e) All of the accrued fees and expenses of the Administrative
         Agent and the Lender  Parties  (including the accrued fees and expenses
         of counsel for the Administrative Agent) shall have been paid in full.

                  (f) The Borrower shall have paid to the Administrative  Agent,
         for the ratable  account of each of the  Appropriate  Lenders  that has
         executed  and  delivered  a  counterpart   of  this  Amendment  to  the
         Administrative Agent prior to 5:00 P.M. (New York City time) on May 23,
         2001, an amendment fee of 0.175% on the aggregate  Term A  Commitments,
         Term  B  Commitments,  Term  C  Commitments,  Acquisition  Commitments,
         Acquisition  B  Commitments  and Working  Capital  Commitments  of such
         Lender, it being understood,  that no amendment fee shall be payable by
         the  Borrower for the account of any Lender if this  Amendment  has not
         been  approved  prior to 5:00 P.M. (New York City time) on May 23, 2001
         by the Required Lenders.

                  (g) The Administrative  Agent shall have received on or before
         the Amendment No. 7 Effective Date the following,  each dated such date
         (unless otherwise specified), in form and substance satisfactory to the
         Required Lenders (unless otherwise  specified) and in sufficient copies
         for each Lender Party:

                           (i) Certified  copies of the resolutions of the Board
                  of  Directors  of  the  Borrower  and  the  Parent   Guarantor
                  approving  this  Amendment  and all of the  other  amendments,
                  supplements  and  other  modifications  to the Loan  Documents
                  being effected in connection with this  Amendment,  and of all
                  documents  evidencing  other  necessary  corporate  action and
                  governmental and other third party approvals and consents,  if
                  any,  with  respect  to this  Amendment  and all of the  other
                  amendments,  supplements and other  modifications  to the Loan
                  Documents being effected in connection with this Amendment.

                           (ii) A  certificate  of the  Borrower  and the Parent
                  Guarantor,  signed on behalf of the  Borrower  and the  Parent
                  Guarantor,  respectively, by its President or a Vice President
                  and  its  Secretary  or any  Assistant  Secretary,  dated  the
                  Amendment No. 7 Effective Date (the  statements  made in which
                  certificate  shall  be true on and as of the  Amendment  No. 7
                  Effective  Date),  certifying  as to (A)  the  absence  of any
                  amendments to the charter of such Person since the date of the
                  Secretary  of  State's  certificate  referred  to  in  Section
                  3.01(j)(iv) of the Credit Agreement, or any steps taken by the
                  board of directors (or persons  performing  similar functions)
                  or the  shareholders of such Person to effect or authorize any
                  further amendment,  supplement or other modification  thereto;
                  (B) the accuracy and completeness of the bylaws of such Person
                  as in effect on the date on which the resolutions of the board
                  of directors (or persons performing similar functions) of such
                  Person  referred  to in clause (i) of this  Section  2(g) were
                  adopted and on the Amendment  No. 7 Effective  Date (a copy of
                  which,  if different from the bylaws of such Person  delivered
                  to the Lender Parties on the date of the Initial  Extension of
                  Credit,  shall be attached to such  certificate);  (C) the due
                  incorporation   and  good   standing   of  such  Person  as  a
                  corporation  organized  under the laws of the  jurisdiction of
                  its  incorporation,  and the absence of any proceeding (either
                  pending or contemplated)  for the dissolution,  liquidation or
                  other  termination  of the  existence of such Person or any of
                  its Subsidiaries; (D) the accuracy in all material respects of
                  the  representations and warranties made by such Person
<PAGE>

                  in the  Loan  Documents  to which it is or is to be a party as
                  though made on and as of the Amendment No. 7 Effective Date as
                  though  made on and as of  such  date  (other  than  any  such
                  representations or warranties that, by their terms, refer to a
                  specific date other than the  Amendment No. 7 Effective  Date,
                  in which case as of such specific  date);  and (E) the absence
                  of any event occurring and continuing that would  constitute a
                  Default.

                           (iii) A certificate  of the Secretary or an Assistant
                  Secretary of the Borrower and the Parent Guarantor  certifying
                  the names and true  signatures of the officers of the Borrower
                  or the Parent Guarantor  authorized to sign this Amendment and
                  all  of  the   other   amendments,   supplements   and   other
                  modifications   to  the  Loan  Documents   being  effected  in
                  connection  with this Amendment and the other  documents to be
                  delivered hereunder.

                           (iv) Such financial,  business and other  information
                  regarding  the  Borrower  and the Parent  Guarantor  and their
                  respective   property,    assets   and   businesses   as   the
                  Administrative   Agent  or  the  Lender   Parties  shall  have
                  requested.

                           (v) A  favorable  opinion of  Sullivan  &  Worcester,
                  counsel for the Parent Guarantor and the Borrower, in form and
                  substance reasonably satisfactory to the Required Lenders.

                           (vi) Such other opinions, certificates, documents and
                  information  as  the  Administrative  Agent  or  the  Required
                  Lenders may reasonably request.

The effectiveness of this Amendment is further  conditioned upon the accuracy of
all of the factual matters  described  herein.  This Amendment is subject to the
provisions of Section 9.01 of the Credit Agreement,  except that no amendment or
waiver of any  provision of this Section 3, nor consent to any  departure by the
Parent  Guarantor  or the  Borrower  therefrom,  shall in any event be effective
unless the same shall be in writing and signed by the Required Lenders.

         SECTION 4.  Reference to and Effect on the Loan  Documents.  (a) On and
after the Amendment No. 7 Effective Date, each reference in the Credit Agreement
to "this Agreement",  "hereunder", "hereof" or words of like import referring to
the  Credit  Agreement,  and each  reference  in the Notes  and the  other  Loan
Documents to "the Credit  Agreement",  "thereunder",  "thereof" or words of like
import referring to the Credit  Agreement,  shall mean and be a reference to the
Credit Agreement, as amended and otherwise modified hereby.

         (b)  The  Credit  Agreement,  the  Notes  and  each of the  other  Loan
Documents,  except to the  extent  of the  amendments  and  other  modifications
specifically  provided  above,  are and shall  continue  to be in full force and
effect and are hereby in all respects  ratified and confirmed.  Without limiting
the  generality  of the  foregoing,  the  Collateral  Documents  and  all of the
Collateral  described therein do and shall continue to secure the payment of all
Obligations of the Loan Parties under and in respect of the Loan  Documents,  as
amended and otherwise modified by this Amendment.

         (c) The execution,  delivery and  effectiveness of this Amendment shall
not,  except as  expressly  provided  herein,  operate as a waiver of any right,
power  or  remedy  of any  Lender  Party  or any  Agent  under  any of the  Loan
Documents,  nor  constitute  a  waiver  of any  provision  of  any  of the  Loan
Documents.

         SECTION 5. Costs and Expenses.  The Borrower hereby agrees to pay, upon
demand, all costs and expenses of the Administrative  Agent (including,  without
limitation,  the reasonable fees and expenses of counsel for the  Administrative
Agent) in connection with the preparation,  execution, delivery,
<PAGE>

administration,  syndication,  modification  and amendment of this Amendment and
the other documents,  instruments and agreements to be delivered hereunder,  all
in accordance with the terms of Section 9.04 of the Credit Agreement.

         SECTION 6. Execution in Counterparts. This Amendment may be executed in
any  number  of  counterparts  and  by  different  parties  hereto  in  separate
counterparts,  each of which when so executed  shall be deemed to be an original
and all of which taken  together shall  constitute  one and the same  agreement.
Delivery of an executed  counterpart  of a signature  page to this  Amendment by
telecopier shall be effective as delivery of a manually executed  counterpart of
this Amendment.

         SECTION 7.  Governing  Law.  This  Amendment  shall be governed by, and
construed in accordance with, the laws of the State of New York.



<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized,  as of the date
first above written.



                                   The Borrower

                                   DESA INTERNATIONAL, INC.


                                   By  /s/ Rick Simpson
                                      Name:  Rick Simpson
                                      Title:  Treasurer


                                   The Parent Guarantor

                                   DESA HOLDINGS CORPORATION

                                   By  /s/ Rick Simpson
                                      Name:  Rick Simpson
                                      Title:  Treasurer


                                   The Agents

                                   BANK OF AMERICA, N.A., in each of its
                                      capacities as a Lender Party and as
                                      Administrative Agent


                                   By /s/ Peter D. Griffith
                                      Name:  Peter D. Giffith
                                      Title:  Managing Director


<PAGE>



                                   The Lenders

                                   BANK OF AMERICA, N.A.


                                   By /s/ Peter D. Griffith
                                      Name:  Peter D. Giffith
                                      Title:  Managing Director






<PAGE>



                                   UBS AG, STAMFORD BRANCH


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


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





<PAGE>



                                   HELLER FINANCIAL, INC.


                                   By /s/ K. Craig Gallehugh
                                      Name:  K. Craig Gallehugh
                                      Title:  Senior Vice President





<PAGE>



                                   IMPERIAL BANK, CALIFORNIA
                                   BANKING CORPORATION


                                   By /s/ Kathleen M. Kasperek
                                      Name:  Kathleen M. Kasperek
                                      Title:  Assistant and Vice President





<PAGE>



                                   DRESDNER BANK AG, NEW YORK
                                   AND GRAND CAYMAN BRANCHES


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


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





<PAGE>



                                   FIRST SOURCE FINANCIAL LLP, by
                                   FIRST SOURCE FINANCIAL, INC.


                                   By /s/ Kathi J. Inorio
                                      Name:  Kathi J. Inorio
                                      Title:  Senior Vice President





<PAGE>



                                   FLEET NATIONAL BANK


                                   By /s/ Claire E. Keady
                                      Name:  Claire E. Keady
                                      Title:  Assistant Vice President




<PAGE>



                                   GENERAL ELECTRIC CAPITAL
                                   CORPORATION


                                   By /s/
                                      -----------------------------------------
                                      Name:
                                      Title:  Duly Authorized Signatory





<PAGE>



                                   NATIONAL CITY BANK


                                   By /s/
                                      -----------------------------------------
                                      Name:
                                      Title:  Vice President





<PAGE>



                                   COMERICA BANK


                                   By /s/ Kathleen M. Kasperek
                                      Name: /s/ Kathleen M. Kasperek
                                      Title:  Assistant Vice President





<PAGE>



                                   VAN KAMPEN AMERICAN CAPITAL
                                   PRIME RATE INCOME TRUST


                                   By /s/ Darvin D. Pierce
                                      Name:  Darvin D. Pierce
                                      Title:  Principal





<PAGE>



                                   SENIOR DEBT PORTFOLIO, by
                                   BOSTON MANAGEMENT AND
                                   RESEARCH, as Investment Advisor


                                   By  /s/ Scott H. Page
                                      Name:  Scott H. Page
                                      Title:  Vice President




<PAGE>



                                   MORGAN STANLEY DEAN WITTER PRIME
INCOME TRUST


                                   By /s/ Peter Gewirtz
                                      Name: Peter Gewirtz
                                      Title:  Vice President





<PAGE>



                                   PILGRIM PRIME RATE TRUST


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





<PAGE>



                                   BOEING CAPITAL CORPORATION


                                   By /s/ J D Combs
                                      Name: J D Combs
                                      Title:  Managing Director -
                                      Commercial Finance


<PAGE>



                                   ML CBO IV CAYMAN LTD.


                                   By /s/ Todd Travers
                                      Name:  Todd Travers
                                      Title:  Senior Portfolio Manager




<PAGE>



                                   PAM CAPITAL FUNDING LP

                                   By:  Highland Capital Management, L.P.,
                                   as Collateral Manager


                                   By /s/ Todd Travers
                                      Name:  Todd Travers
                                      Title:  Senior Portfolio Manager




<PAGE>



                                   BANK POLSKA KASA OPIEKI S.A.


                                   By /s/ Barry W. Henry
                                      Name:  Barry W. Henry
                                      Title:  Vice President





<PAGE>



                                   PARIBAS CAPITAL FUNDING LLC


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


<PAGE>



                                     CONSENT

         Reference  is  made to (a)  Amendment  and  Waiver  No.  7 to the  Loan
Documents  dated as of May 23,  2001  (the  "Amendment";  capitalized  terms not
otherwise  defined  herein being used herein as defined in the  Amendment and in
the Credit Agreement referred to therein),  (b) the Credit Agreement dated as of
November 26, 1997 (as amended and otherwise modified by Amendment and Waiver No.
1 dated as of January 23, 1998,  Letter  Waiver No. 2 dated as of April 9, 1998,
Amendment No. 3 to the Loan  Documents  dated as of May 26, 1998,  Amendment and
Waiver No. 4 to the Loan Documents dated as of May 25, 1999,  Amendment No. 5 to
the Loan  Documents  dated as of April 7, 2000 and Amendment and Waiver No. 6 to
the Loan Documents dated as of January 16, 2001, the "Credit  Agreement")  among
Desa International,  Inc., a Delaware corporation,  Desa Holdings Corporation, a
Delaware corporation, the Lender Parties party thereto, UBS Securities LLC, as a
Co-Arranger and Documentation  Agent thereunder,  Banc of America Securities LLC
(formerly   NationsBanc   Montgomery  Securities  LLC),  as  a  Co-Arranger  and
Syndication Agent thereunder,  and Bank of America, N.A. (formerly  NationsBank,
N.A.),  as  Administrative  Agent (the  "Administrative  Agent")  for the Lender
Parties thereunder, and (c) the other Loan Documents referred to therein.

         Each of the  undersigned,  in its  capacity as (a) a Grantor  under the
Security  Agreement,  (b) a Grantor  under the  Intellectual  Property  Security
Agreement,  and/or (c) a  Subsidiary  Guarantor  under the  Subsidiary  Guaranty
executed and  delivered by such  Subsidiary  Guarantor,  hereby  consents to the
execution, delivery and performance of the Amendment and agrees that:

                  (A) each of the Security Agreement,  the Intellectual Property
         Security  Agreement and the Subsidiary  Guaranty to which it is a party
         is, and shall continue to be, in full force and effect and is hereby in
         all respects  ratified and  confirmed on the  Amendment No. 7 Effective
         Date,  except that, on and after the  Amendment  No. 7 Effective  Date,
         each  reference  to "the Credit  Agreement",  "thereunder",  "thereof",
         "therein"  or words of like import  referring  to the Credit  Agreement
         shall mean and be a reference to the Credit  Agreement,  as amended and
         otherwise modified by the Amendment; and

                  (B) as of the  Amendment  No. 7 Effective  Date,  the Security
         Agreement and the Intellectual  Property Security Agreement to which it
         is a party and all of the Collateral of such Person  described  therein
         do, and shall  continue  to,  secure the  payment of all of the Secured
         Obligations.

         This Consent shall be governed by, and  construed in  accordance  with,
the laws of the State of New York.



<PAGE>



         Delivery of an executed counterpart of a signature page of this Consent
by  telecopier  shall  be  effective  as the  delivery  of a  manually  executed
counterpart of this Consent.

                                   DESA INTERNATIONAL, INC.



                                   By /s/ Rick Simpson
                                      Name:  Rick Simpson
                                      Title:  Treasurer


                                   DESA HOLDINGS CORPORATION


                                   By /s/ Rick Simpson
                                      Name:  Rick Simpson
                                      Title:  Treasurer





<PAGE>



                           CONSENT OF UBS CAPITAL LLC

         Reference is made to (a) the  Amendment  and Waiver No. 7 to the Credit
Agreement  dated as of May 23,  2001  (the  "Amendment";  capitalized  terms not
otherwise  defined  herein being used herein as defined in the Waiver and in the
Credit  Agreement  referred to therein),  (b) the Credit  Agreement  dated as of
November 26, 1997 (as amended and otherwise modified by Amendment and Waiver No.
1 dated as of January 23, 1998,  Letter  Waiver No. 2 dated as of April 9, 1998,
Amendment No. 3 to the Loan  Documents  dated as of May 26, 1998,  Amendment and
Waiver No. 4 to the Loan Documents dated as of May 25, 1999,  Amendment No. 5 to
the Loan  Documents  dated as of April 7, 2000 and Amendment and Waiver No. 6 to
the Loan Documents dated as of January 16, 2001, the "Credit  Agreement")  among
Desa International, Inc., a Delaware corporation (the "Borrower"), Desa Holdings
Corporation,  a Delaware  corporation,  the Lender  Parties party  thereto,  UBS
Securities LLC, as a Co-Arranger and  Documentation  Agent  thereunder,  Banc of
America Securities LLC (formerly  NationsBanc  Montgomery  Securities LLC), as a
Co-Arranger  and  Syndication  Agent  thereunder,  and  Bank  of  America,  N.A.
(formerly  NationsBank,  N.A.),  as  Administrative  Agent (the  "Administrative
Agent") for the Lender Parties thereunder, (c) the other Loan Documents referred
to  therein,  (d) the Credit  Agreement  dated as of May 26,  1999  between  the
Borrower and Bank of America,  N.A., (e) all promissory  notes issued to Bank of
America,  N.A. and  evidencing  indebtedness  of the  Borrower  under the Childs
Guaranteed  Line of Credit and (f) the  guaranty  dated  July 28,  2000 from UBS
Capital LLC ("UBS") in favor of Bank of America, N.A. (the "UBS Guaranty").

         The  undersigned,  in its capacity as a guarantor of the Obligations of
the  Borrower  now or  hereafter  existing  under and in  respect  of the Childs
Guaranteed  Line of  Credit  and  pursuant  to the  UBS  Guaranty  executed  and
delivered by UBS, hereby consents to the execution,  delivery and performance of
the  Amendment  and agrees that the UBS  Guaranty to which it is a party is, and
shall  continue  to be, in full force and  effect and is hereby in all  respects
ratified and confirmed on the Amendment  No. 7 Effective  Date,  except that, on
and after the  Amendment  No. 7 Effective  Date,  each  reference to "the Credit
Agreement", "thereunder", "thereof", "therein" or words of like import referring
to the Credit  Agreement shall mean and be a reference to the Credit  Agreement,
as amended and otherwise modified by the Amendment.

         This Consent shall be governed by, and  construed in  accordance  with,
the laws of the State of New York.

         Delivery of an executed counterpart of a signature page of this Consent
by  telecopier  shall  be  effective  as the  delivery  of a  manually  executed
counterpart of this Consent.



                                   UBS CAPITAL LLC



                                   By  /s/
                                      -------------------------------------
                                      Name:
                                      Title: