EXHIBIT 10.1








                            DESA HOLDINGS CORPORATION







                   AMENDED AND RESTATED STOCKHOLDERS AGREEMENT


                           Dated as of October 9, 1998




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                   AMENDED AND RESTATED STOCKHOLDERS AGREEMENT

         THIS AMENDED AND RESTATED STOCKHOLDERS  AGREEMENT (this "Agreement") is
entered into as of October 9, 1998,  by and among Desa Holdings  Corporation,  a
Delaware  corporation  (the  "Company"),  those  persons  identified  as the JWC
Holders  on the  signature  pages  hereof  (the "JWC  Holders"),  those  persons
identified  as  the  Management  Holders  on the  signature  pages  hereof  (the
"Management  Holders") and those persons  identified as the Other Holders on the
signature pages hereof (the "Other Holders").

                                    RECITALS

         A. The Company has heretofore issued certain shares of Common Stock (as
hereinafter  defined)  and  certain  warrants  and  options to acquire  from the
Company shares of Common Stock.

         B. All of the Stockholders  desire to enter into this Agreement for the
purpose of regulating  certain aspects of the Stockholders'  relationships  with
one another and with the Company.

         C. This  Agreement  amends in part and  restates  in its  entirety  the
Stockholders  Agreement dated as of November 26, 1997 among the Company, the JWC
Holders  named  therein,  the  Management  Holders  named  therein and the Other
Holders named therein.

                                    AGREEMENT

         In  consideration  of the foregoing  recitals and the mutual  promises,
representations,   warranties,  covenants  and  conditions  set  forth  in  this
Agreement, the parties to this Agreement mutually agree as follows:

                                    ARTICLE 1

                                   Definitions

         1.1  Definitions.  For the purposes of this  Agreement,  the  following
terms shall be defined as follows:

         The "1933 Act" shall mean the  Securities  Act of 1933, as amended,  or
any successor federal statute thereto,  and the rules and regulations of the SEC
promulgated thereunder, all as the same shall be in effect from time to time.

         The "1934 Act"  shall  mean the  Securities  Exchange  Act of 1934,  as
amended, or any successor federal statute thereto, and the rules and regulations
of the SEC promulgated thereunder,  all as the same shall be in effect from time
to time.


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         This  "Agreement"  shall mean this  Amended and  Restated  Stockholders
Agreement, dated as of October 9, 1998, together with all schedules and exhibits
hereto, all as from time to time in effect.

         An "Affiliate"  of a specified  Person (a) shall mean (i) a Person who,
directly  or  indirectly,  through  one or more  intermediaries,  controls or is
controlled  by or is under common  control with such  specified  Person,  (ii) a
director or executive officer of such specified Person,  (iii) a general partner
of such specified Person if such specified  Person is a partnership,  and (iv) a
manager of such specified Person if such specified Person is a limited liability
company, and, (b) when used with respect to the Company or any Subsidiary of the
Company, shall include any holder of capital stock or any officer or director of
the Company or any Subsidiary of the Company.

         "Business  Day" shall mean any day,  other than a  Saturday,  Sunday or
legal  holiday,  on  which  banks  in  both  New  York,  New  York  and  Boston,
Massachusetts are permitted to be open for business.

         "Common  Stock"  shall mean shares of Voting  Common Stock or Nonvoting
Common Stock.

         "Common Stock  Equivalents"  shall mean, as of any date, (a) all shares
of Common Stock  outstanding  as of such date and (b) all shares of Common Stock
that may be acquired as of such date pursuant to Vested Options.

         The  "Company"  shall  mean  Desa  Holdings  Corporation,   a  Delaware
corporation, and its successors and assigns.

         "Company  Notice  Period"  shall have the  meaning set forth in Section
2.4.

         "Company Securities" shall have the meaning set forth in Section 4.17.

         "Demand Registration" shall have the meaning set forth in Section 3.2.

         "Dragalong Group" shall have the meaning set forth in Section 2.3.

         "Election Period" shall have the meaning set forth in Section 4.17.

         "Equity Partners Agreement" shall have the meaning set forth in Section
4.8.

         "First Refusal Offer" shall have the meaning set forth in Section 2.4.

         "First  Refusal  Offer  Notice"  shall  have the  meaning  set forth in
Section 2.4.

         "HMTF Attendee" shall have the meaning set forth in Section 2.5.
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         "HMTF  Holders"  shall mean HMTF Inc.  and those other  persons who are
identified  as HMTF  Holders on the  signature  pages  hereto and (a) shall also
include  (i) any other  Person not at the time a party  hereto  (other  than any
director,  officer or employee of the Company or any of its  Subsidiaries)  who,
after the date hereof,  (A) acquires from the Company or any of its Subsidiaries
any shares of Common Stock or options, warrants,  securities and other rights to
acquire from the Company, by exercise, conversion, exchange or otherwise, shares
of Common Stock or  securities  convertible  into Common Stock and, (B) with the
written consent of the Company, the JWC Representative and the Stockholder Group
comprised of the HMTF Holders, hereafter becomes a party to this Agreement as an
HMTF  Holder,  (ii) any  Permitted  Transferee  of the HMTF  Holders  (except as
otherwise provided in clause (b) of this definition) unless immediately prior to
such Transfer such transferee was already a Management  Holder,  a JWC Holder or
an Other Holder (other than an HMTF Holder) and (iii) any  Permitted  Transferee
in a Permitted  Transfer  permitted  under clause  (e)(iii) or (j) or (k) of the
definition  of "Permitted  Transfer"  herein if,  immediately  prior to any such
Transfer,  such transferee was already a HMTF Holder,  but (b) shall not include
any Permitted  Transferee of the HMTF Holders in a Permitted  Transfer permitted
under clause  (e)(iii) of the  definition  of  "Permitted  Transfer"  herein if,
immediately prior to such Transfer, such Permitted Transferee was not already an
HMTF Holder.

         "HMTF  Inc."  shall mean  Hicks,  Muse,  Tate & Furst  Incorporated,  a
Delaware corporation.

         "Holder" shall have the meaning set forth in Section 3.1.

         "Initiating  Stockholder"  shall have the  meaning set forth in Section
2.2.

         "JWC Equity  Funding" shall mean JWC Equity  Funding,  Inc., a Delaware
corporation.

         "JWC Equity Partners" shall mean J.W. Childs Equity  Partners,  L.P., a
Delaware limited partnership.

         "JWC  Equity  Partners  Agreement"  shall have the meaning set forth in
Section 4.8(b).

         "JWC  Holders"  shall  have  the  meaning  set  forth  in the  preamble
preceding the recitals to this Agreement and

         (a)      shall also include:

                  (i)      any  other  Person  not at the  time a  party  hereto
                           (other than (A) any director,  officer or employee of
                           the  Company  or any of its  Subsidiaries  who is not
                           also  associated  with JWC Equity Partners or (B) any
                           officer,  employee  or  consultant  of JWC Inc.) who,
                           after the date hereof,  (I) acquires from the Company
                           or any of its Subsidiaries any shares of Common Stock
                           or options, warrants, securities and other rights to

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                           acquire  from the Company,  by exercise,  conversion,
                           exchange  or  otherwise,  shares of  Common  Stock or
                           securities  convertible  into Common Stock and,  (II)
                           with the  written  consent  of the  Company,  the JWC
                           Representative,  the  Stockholder  Group comprised of
                           the UBS Holders and the  Stockholder  Group comprised
                           of the  PPM/ReliaStar  Holders,  hereafter  becomes a
                           party to this Agreement as a JWC Holder,

                   (ii)    any other  Person not at the time a party  hereto who
                           is an  officer,  employee or  consultant  of JWC Inc.
                           who, after the date hereof, acquires from the Company
                           or any of its Subsidiaries any shares of Common Stock
                           or options, warrants,  securities and other rights to
                           acquire  from the Company,  by exercise,  conversion,
                           exchange  or  otherwise,  shares of  Common  Stock or
                           securities convertible into Common Stock,

                  (iii)    any Permitted  Transferee of the JWC Holders  (except
                           as   otherwise   provided   in  clause  (b)  of  this
                           definition) unless immediately prior to such Transfer
                           such transferee was already a Management Holder or an
                           Other Holder, and

                  (iv)     any  Permitted  Transferee  in a  Permitted  Transfer
                           permitted  under clause (e)(iii) or (j) or (k) of the
                           definition   of  "Permitted   Transfer"   herein  if,
                           immediately   prior  to  any  such   Transfer,   such
                           transferee was already a JWC Holder,

but

         (b)      shall not include any Permitted  Transferee of the JWC Holders
                  in a Permitted Transfer permitted under clause (e)(iii) or (j)
                  or (k) of the  definition of "Permitted  Transfer"  herein if,
                  immediately prior to such Transfer,  such Permitted Transferee
                  was not already a JWC Holder.

         "JWC/UBS  Holders  Notice  Period"  shall have the meaning set forth in
Section 2.4.

         "JWC  Inc."  shall  mean  J.W.  Childs  Associates,  Inc.,  a  Delaware
corporation.

         "JWC L.P." shall mean J.W. Childs Associates,  L.P., a Delaware limited
partnership.

         "JWC Representative" shall have the meaning set forth in Section 4.8.

         "Junior Security" shall have the meaning set forth in Section 4.17(c).

         "Management Agreement" shall mean that Management Agreement dated as of
November 26, 1997 among the Company, the Operating Company and JWC L.P.

         "Management  Holders"  shall have the meaning set forth in the preamble
preceding  the  recitals to this  Agreement  and (a) shall also  include (i) any
director, officer or employee of the

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Company or any of its Subsidiaries (other than any director, officer or employee
of the Company or any of its Subsidiaries who is also associated with JWC Equity
Partners or any of its Affiliates or UBS Capital or any of its Affiliates)  who,
after the date hereof,  (A) acquires from the Company or any of its Subsidiaries
any shares of Common Stock or options, warrants,  securities and other rights to
acquire from the Company, by exercise, conversion, exchange or otherwise, shares
of Common Stock or  securities  convertible  into Common Stock and, (B) with the
written consent of the Company and the JWC  Representative,  hereafter becomes a
party to this Agreement as a Management Holder,,  (ii) any Permitted  Transferee
of the Management  Holders  (except as otherwise  provided in clause (b) of this
definition)  unless  immediately  prior to such  Transfer  such  transferee  was
already a JWC Holder or an Other Holder, and (iii) any Permitted  Transferees in
a  Permitted  Transfer  permitted  under  clause  (e)(iii)  or (j) or (k) of the
definition  of "Permitted  Transfer"  herein if,  immediately  prior to any such
Transfer,  such  transferee was already a Management  Holder,  but (b) shall not
include (i) any Permitted Transferee of the HMTF Holders in a Permitted Transfer
permitted under clause (e)(iii) of the definition of "Permitted Transfer" herein
if,  immediately  prior to such  Transfer,  such  Permitted  Transferee  was not
already a Management Holder

         "Nonvoting  Common Stock" shall mean shares of Nonvoting  Common Stock,
par value $.01 per share, of the Company.

         "Offered Securities" shall have the meaning set forth in Section 2.4.

         "Operating  Company"  shall mean Desa  International,  Inc., a Delaware
corporation, in its capacity as a Subsidiary of the Company.

         "Other  Holders"  shall  have the  meaning  set  forth in the  preamble
preceding the recitals to this  Agreement and (a) shall also include (i) the UBS
Holders,  (ii) the HMTF  Holders,  (iii)  the  PPM/ReliaStar  Holders,  (iv) the
Warrant Holders, (v) any other Person not at the time a party hereto (other than
any  director,  officer or employee  of the Company or any of its  Subsidiaries)
who,  after  the  date  hereof,  (A)  acquires  from the  Company  or any of its
Subsidiaries  any shares of Common Stock or options,  warrants,  securities  and
other rights to acquire from the Company, by exercise,  conversion,  exchange or
otherwise,  shares of Common Stock or securities  convertible  into Common Stock
and,  (B) with the written  consent of the  Company and the JWC  Representative,
hereafter  becomes  a party  to this  Agreement  as an  Other  Holder,  (vi) any
Permitted  Transferee  of the Other  Holders  (except as  otherwise  provided in
clause (b) of this definition)  unless  immediately  prior to such Transfer such
transferee  was  already  a  Management  Holder or a JWC  Holder,  and (vii) any
Permitted  Transferee in a Permitted Transfer permitted under clause (e)(iii) or
(j) or (k) of the  definition of  "Permitted  Transfer"  herein if,  immediately
prior to any such Transfer,  such transferee was not already a Management Holder
or a JWC Holder but (b) shall not include any Permitted  Transferee of the Other
Holders  in  a  Permitted  Transfer  permitted  under  clause  (e)(iii)  of  the
definition  of  "Permitted  Transfer"  herein  if,  immediately  prior  to  such
Transfer,  such Permitted  Transferee  was already a Management  Holder or a JWC
Holder.

         "Participating  Offerees"  shall have the  meaning set forth in Section
2.2.

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                                       -6-

         "Participation Notice" shall have the meaning set forth in Section 2.2.

         "Participation  Securities" shall have the meaning set forth in Section
2.2.

         "Permitted Transfer" shall mean:

         (a)      a Transfer of any Subject Securities between any JWC Holder or
                  Other Holder or Management  Holder who is a natural person and
                  such  Stockholder's  spouse,  children,  parents  or  siblings
                  (whether  natural,  step or by  adoption) or to a trust solely
                  for  the  benefit  of one or  more  of  any of  such  Persons,
                  provided  that  with  respect  to  any  such   Transfer,   the
                  Stockholder  retains,  as trustee or by some other means,  the
                  sole authority to vote such Subject Securities  (including any
                  Common  Stock  that may be  acquired  pursuant  to any  Vested
                  Options);

         (b)      a Transfer of Subject  Securities  by a JWC Holder to JWC Inc.
                  or to the officers, employees or consultants of JWC Inc. or to
                  a  corporation  or   corporations   or  to  a  partnership  or
                  partnerships (or other entity for collective investment,  such
                  as a  limited  liability  company  or a  fund)  which  is (and
                  continues to be)  controlled  by,  controlling or under common
                  control with JWC Inc.;

         (c)      a Transfer  of  Subject  Securities  (i)  between or among the
                  Management  Holders,  (ii)  between or among the JWC  Holders,
                  (iii) between or among the UBS Holders,  (iv) between or among
                  the HMTF  Holders or (v)  between  or among the  PPM/ReliaStar
                  Holders;

         (d)      a Transfer of Subject  Securities  between any Stockholder who
                  is a natural person and such Stockholder's estate,  executors,
                  legal representative, guardian or conservator, or the Transfer
                  of Subject  Securities  between the estate of any  Stockholder
                  and such Stockholder's spouse,  children,  parents or siblings
                  (whether  natural,  step or by  adoption) or to a trust solely
                  for the benefit of one or more of any of such Persons;

         (e)      (i) a bona fide pledge of Subject  Securities  by a JWC Holder
                  or a UBS  Holder  or an HMTF  Holder  to a bank  or  financial
                  institution  or (ii) any  pledge of  Subject  Securities  by a
                  Management  Holder (A) existing at November 26, 1997 or (B) to
                  the Company or any of its  Subsidiaries or (iii) a Transfer by
                  a  pledgee  upon  any  bona  fide  foreclosure  on any  pledge
                  permitted under clause (e)(i) or (ii) of this definition;

         (f)      a Transfer of Subject  Securities  between any Other Holder or
                  any JWC Holder and any Affiliate of such holder, provided that
                  such  Affiliate  (i) shall remain at all times an Affiliate of
                  such  Stockholder  and (ii) is an  Accredited  Investor at the
                  time of such transfer;

         (g)      a Transfer of Subject  Securities  between any Other Holder or
                  any JWC Holder and any shareholder,  member, officer, director
                  or direct or indirect general or
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                                       -7-

                  limited  partner (or  officer or  director of such  general or
                  limited partner) of such holder;

         (h)      a Transfer of Subject Securities by a HMTF Holder to HMTF Inc.
                  or  to  the  officers  or  employees  of  HMTF  Inc.  or  to a
                  corporation   or   corporations   or  to  a   partnership   or
                  partnerships (or other entity for collective investment,  such
                  as a  limited  liability  company  or a  fund)  which  is (and
                  continues to be)  controlled  by,  controlling or under common
                  control with HMTF Inc.;

         (i)      a  Transfer  of  Subject  Securities  by a UBS  Holder  to UBS
                  Capital or to the officers,  employees or  consultants  of UBS
                  Capital  or  to  a  corporation  or   corporations   or  to  a
                  partnership  or  partnerships  (or other entity for collective
                  investment,  such as a limited  liability  company  or a fund)
                  which is (and continues to be)  controlled by,  controlling or
                  under common control with UBS Capital;

         (j)      a Transfer of "Warrants" or "Warrant  Shares" (each as defined
                  in the Tagalong/Dragalong  Agreement) by a JWC Holder or a UBS
                  Holder   pursuant   to  the  terms  of   Article   II  of  the
                  Tagalong/Dragalong Agreement; and

         (k)      a  Transfer  by a JWC  Holder or a UBS  Holder of any of those
                  576,287.8200  shares of Voting  Common Stock (with such number
                  of shares to be  adjusted  from  time to time to  reflect  any
                  split or  combination of shares of Common Stock) issued by the
                  Company to JWC Equity Funding on November 26, 1997.

No Permitted  Transfer shall be effective unless and until the transferee of the
Subject  Securities  so  transferred  executes  and  delivers  to the Company an
executed counterpart of this Agreement in accordance with Section 4.12 hereof.

         "Permitted  Transferee"  shall mean any Person who shall have  acquired
and who shall hold any Subject Securities pursuant to a Permitted Transfer.

         "Person"  means  an  individual,   corporation,   partnership,  limited
liability company, trust, unincorporated  association,  government or any agency
or political subdivision thereof, or other entity.

         "PPM/ReliaStar  Holders" shall mean those persons who are identified as
PPM/ReliaStar  Holders on the signature  pages hereto and shall also include (a)
any  other  Person  not at the time a party  hereto  (other  than any  director,
officer or employee of the Company or any of its  Subsidiaries)  who,  after the
date hereof, (A) acquires from the Company or any of its Subsidiaries any shares
of Common  Stock or options,  warrants,  securities  and other rights to acquire
from the Company,  by exercise,  conversion,  exchange or  otherwise,  shares of
Common  Stock or  securities  convertible  into Common  Stock and,  (B) with the
written consent of the Company, the JWC Representative and the Stockholder Group
comprised  of the  PPM/ReliaStar  Holders,  hereafter  becomes  a party  to this
Agreement  as a  PPM/ReliaStar  Holder,  (b)  any  Permitted  Transferee  of the
PPM/ReliaStar Holders unless

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                                       -8-

immediately  prior to such  Transfer  such  transferee  was already a Management
Holder, a JWC Holder or an Other Holder (other than a PPM/ReliaStar  Holder) and
(c) any Permitted  Transferee  in a Permitted  Transfer  permitted  under clause
(e)(iii) or (j) or (k) of the  definition  of  "Permitted  Transfer"  herein if,
immediately  prior  to  any  such  Transfer,   such  transferee  was  already  a
PPM/ReliaStar Holder.

         "PPM/ReliaStar Preferred Holder" shall have the meaning set forth in
Section 4.17(a).

         "Preemptive  Rights Notice" shall have the meaning set forth in Section
4.17.

         "Preemptive  Stockholder" shall mean any of the Stockholders identified
on  Exhibit B hereto  and any  Permitted  Transferee  of such  Stockholders  who
hereafter becomes a party to this Agreement pursuant to Section 4.12 hereof.

         "Preferred  Securities"  shall mean the Series C Preferred Stock or any
of the 12% Junior  Subordinated  Notes due December 31, 2009 of the Company that
may be issued by the  Company  in  exchange  for the  Series C  Preferred  Stock
pursuant to the terms of the Series C Preferred Stock.

         "Preferred Stock" shall mean shares of any class or series of preferred
stock  of  the  Company,  whether  now  authorized  and  existing  or  hereafter
authorized and existing.

         "Public  Float  Date" shall mean the date on which (a) shares of Common
Stock shall have been sold pursuant to one or more Public Offerings in which the
aggregate proceeds (before deducting  underwriter  discounts and commissions) to
the Company and the selling stockholders, if any, of such shares equal or exceed
$50 million or (b) the Company shall have merged into or consolidated or entered
into another business combination transaction with a Person in which the Company
is not the surviving  person,  and the surviving person (the  "Successor")  from
such merger, consolidation or other transaction shall (i) have a class of common
stock  (or  similar  equity   securities  of  a  limited  liability  company  or
partnership) that is registered under Section 12 of the 1934 Act, (ii) have sold
shares of such common stock (or similar  equity  securities)  pursuant to one or
more public  offerings  and,  (iii) as of the close of business on the date such
merger,   consolidation  or  other  business  combination   transaction  becomes
effective,  the aggregate fair market value of all of the issued and outstanding
shares of such common stock (or similar  equity  securities)  of the  Successor,
excluding  all such shares that are  received in such merger,  consolidation  or
other  transaction by any Person who was a beneficial  owner of shares of Common
Stock  immediately  prior to the  consummation of such merger,  consolidation or
other  transaction,  shall  be at  least  $50  million.  For  purposes  of  this
definition,  "fair  market  value"  of such  common  stock  (or  similar  equity
securities) of the Successor,  on any date specified herein,  shall mean (A) the
last  reported  sales  price,  regular  way, or, in the event that no sale takes
place on such day,  the average of the  reported  closing bid and asked  prices,
regular  way,  in either  case (I) as  reported  on the New York Stock  Exchange
Composite Tape, or (II) if such security is not listed or admitted to trading on
the New York Stock Exchange,  on the principal national  securities  exchange on
which such  security  is listed or  admitted  to  trading,  or (III) if not then
listed or admitted to trading on any

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                                       -9-

national  securities  exchange,  on the NASDAQ National Market System; or (B) if
such security is not quoted on such National  Market System,  (I) the average of
the closing bid and asked prices on each such day in the over-the-counter market
as reported by NASDAQ, or (II) if bid and asked prices for such security on each
such day shall not have been reported through NASDAQ, the average of the bid and
asked  prices for such day as furnished  by any New York Stock  Exchange  member
firm regularly making a market in such security selected for such purpose by the
Board of Directors of the Successor or a committee thereof.

         A "Public  Offering"  shall mean (a) the completion of a sale of shares
of Common Stock pursuant to a registration  statement which has become effective
under the 1933 Act, excluding registration statements on Form S-4 or Form S-8 or
similar  limited  purpose  forms or or (b) the  merger or  consolidation  of the
Company with, or other business  combination  transaction  involving the Company
with,  a Person in which the  Company  is not the  surviving  person,  where the
surviving person from such merger, consolidation or other transaction shall have
a class of common stock (or similar  equity  securities  of a limited  liability
company or partnership) that is registered under Section 12 of the 1934 Act.

         "Registrable  Securities"  shall mean, as of any date,  with respect to
any  Stockholder,  (a) all shares of Common Stock held by such Stockholder as of
such date and (b) all  shares of Common  Stock that may be  acquired  as of such
date by such Stockholder  upon exercise of Vested Options;  provided that, as to
any  particular  Registrable  Securities,  such  securities  shall  cease  to be
Registrable   Securities  when  (i)  a  registration  statement  (other  than  a
registration statement on Form S-8) with respect to the sale or exchange of such
securities  shall have become  effective  under the 1933 Act and such securities
shall have been disposed of in accordance with such registration statement, (ii)
a registration  statement on Form S-8 with respect to such securities shall have
become  effective under the 1933 Act, (iii) such securities shall have been sold
or acquired under a Rule 144 Transaction, or (iv) such securities have ceased to
be outstanding.

         "Rule 144  Transaction"  means a transfer of Common Stock (a) complying
with  Rule 144  under the 1933 Act as such  rule or a  successor  thereto  is in
effect  on the  date of such  transfer  (but not  including  a sale  other  than
pursuant  to a "brokers  transaction"  as  defined  in  clauses  (i) and (ii) of
paragraph  (g) of Rule 144 as in effect on the date hereof) and (b) occurring at
a time when the Common  Stock is  registered  pursuant to Section 12 of the 1934
Act.

         "Sale Request" shall have the meaning set forth in Section 2.3.

         "Schedule of Stockholders"  shall refer to the Schedule of Stockholders
attached  hereto as Exhibit A as from time to time  amended  pursuant to Section
4.2.

         "Series C Preferred Stock" shall mean the Company's Series C 12% Senior
Redeemable Exchangeable Pay-in-Kind Preferred Stock, par value $.01 per share.

         "Stockholder"  shall  mean any party  hereto  other  than the  Company,
including any Person who hereafter becomes a party to this Agreement pursuant to
Section 4.12 hereof.

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                                      -10-

         "Stockholder  Group" shall mean any of (a) the Other Holders (including
the HMTF Holders,  the UBS Holders,  the  PPM/ReliaStar  Holders and the Warrant
Holders)  taken  as a group,  (b) the JWC  Holders  taken  as a  group,  (c) the
Management  Holders taken as a group, (d) the HMTF Holders taken as a group, (e)
the UBS  Holders  taken as a group,  (f) the  PPM/ReliaStar  Holders  taken as a
group,  and (g) the  Warrant  Holders  taken as a  group.  The  Company  and its
Subsidiaries  shall not in any case be deemed to be a member of any  Stockholder
Group  (whether  or  not  the  Company  or  any of  its  Subsidiaries  holds  or
repurchases any Common Stock  Equivalents).  Where  provisions of this Agreement
contemplate  that actions be taken or notices be given by a  Stockholder  Group,
actions  taken or notices given by the holders of a majority of the Common Stock
Equivalents  held in the aggregate by a Stockholder  Group shall be deemed to be
actions taken or notices given by such Stockholder  Group, and the other parties
hereto are and will be  entitled to rely on any action so taken or any notice so
given by such majority holders of a Stockholder Group.

         "Subject  Securities"  shall mean any Common Stock or Vested Options or
other  options,  warrants,  securities  and  other  rights to  acquire  from the
Company, by exercise, conversion,  exchange or otherwise, shares of Common Stock
or securities  convertible  into Common Stock,  whether now or hereafter held by
any Stockholder.

         "Subsidiary"  with respect to any Person (the "parent")  shall mean any
Person of which such parent,  at the time in respect of which such term is used,
(a) owns directly or  indirectly  more than fifty percent (50%) of the equity or
beneficial  interest,  on a consolidated basis, or (b) owns directly or controls
with  power to vote,  indirectly  through  one or more  Subsidiaries,  shares of
capital  stock  or  beneficial  interest  having  the  power  to cast at least a
majority  of the  votes  entitled  to be cast  for the  election  of  directors,
trustees,  managers  or other  officials  having  powers  analogous  to those of
directors of a corporation.  Unless otherwise specifically indicated,  when used
herein the term Subsidiary shall refer to a direct or indirect Subsidiary of the
Company.

         "Tagalong/Dragalong   Agreement"  shall  mean  the   Tagalong/Dragalong
Agreement dated as of November 26, 1997 among JWC Equity  Funding,  Inc. and UBS
Capital.

         "Third Party" means any Person other than the Company.

         "Third Party Offer" shall have the meaning set forth in Section 2.4.

         "Third Party Offeror" shall have the meaning set forth in Section 2.4.

         "Transfer" shall mean to transfer,  sell, assign, pledge,  hypothecate,
give, grant or create a security  interest in or lien on, place in trust (voting
or otherwise), assign an interest in or in any other way encumber or dispose of,
directly or indirectly and whether or not by operation of law or for value,  any
of the Subject Securities.

         "UBS Attendee" shall have the meaning set forth in Section 2.5.

         "UBS Capital" shall mean UBS Capital LLC, a Delaware limited  liability
company.

<PAGE>
                                      -11-

         "UBS Holders" shall mean UBS Capital and (a) shall also include (i) any
other Person not at the time a party hereto (other than any director, officer or
employee of the Company or any of its  Subsidiaries  who is not also  associated
with UBS Capital or any of its  Affiliates)  ) who,  after the date hereof,  (A)
acquires from the Company or any of its  Subsidiaries any shares of Common Stock
or options,  warrants,  securities and other rights to acquire from the Company,
by  exercise,  conversion,  exchange  or  otherwise,  shares of Common  Stock or
securities  convertible  into Common Stock and, (B) with the written  consent of
the Company,  the JWC  Representative and the Stockholder Group comprised of the
UBS Holders,  hereafter becomes a party to this Agreement as a UBS Holder,  (ii)
any  Permitted  Transferee of the UBS Holders  (except as otherwise  provided in
clause (b) of this definition)  unless  immediately  prior to such Transfer such
transferee  was already a  Management  Holder,  a JWC Holder or an Other  Holder
(other  than a UBS  Holder) and (iii) any  Permitted  Transferee  in a Permitted
Transfer  permitted  under clause  (e)(iii) or (j) or (k) of the  definition  of
"Permitted  Transfer" herein if,  immediately  prior to any such Transfer,  such
transferee  was  already a UBS Holder,  but (b) shall not include any  Permitted
Transferee  of the UBS Holders in a Permitted  Transfer  permitted  under clause
(e)(iii) or (j) or (k) of the  definition  of  "Permitted  Transfer"  herein if,
immediately prior to such Transfer,  such Permitted Transferee was not already a
UBS Holder.

         "Vested  Options"  shall  mean,  as of  any  date,  options,  warrants,
securities  and  other  rights  to  acquire  from  the  Company,   by  exercise,
conversion,  exchange  or  otherwise,  shares  of  Common  Stock  or  securities
convertible  into  Common  Stock,  but only to the  extent  that  such  options,
warrants,  securities  and other  rights are both,  as of such date,  (a) vested
under the terms thereof or under any plan,  agreement or instrument  pursuant to
which such options,  warrants,  securities and other rights were issued, and (b)
so exchangeable, exercisable or convertible.

         "Voting Common Stock" shall mean shares of Common Stock, par value $.01
per share, of the Company.

         "Warrant  Holders" shall mean any Permitted  Transferees in a Permitted
Transfer  permitted  under  clause (j) or (k) of the  definition  of  "Permitted
Transfer" herein if, immediately prior to any such Transfer, such transferee was
not already a Management Holder, a JWC Holder or an Other Holder, and shall also
include  (a) any other  Person not at the time a party  hereto  (other  than any
director,  officer or employee of the Company or any of its  Subsidiaries)  who,
after the date hereof,  (A) acquires from the Company or any of its Subsidiaries
any shares of Common Stock or options, warrants,  securities and other rights to
acquire from the Company, by exercise, conversion, exchange or otherwise, shares
of Common Stock or  securities  convertible  into Common Stock and, (B) with the
written consent of the Company, the JWC Representative and the Stockholder Group
comprised of the Warrant Holders, hereafter becomes a party to this Agreement as
a Warrant Holder,  (b) any Permitted  Transferee of the Warrant Holders,  unless
immediately  prior to such Transfer such transferee was a Management  Holder,  a
JWC  Holder  or an  Other  Holder  (other  than a  Warrant  Holder)  and (c) any
Permitted  Transferee in a Permitted Transfer permitted under clause (e)(iii) or
(j) or (k) of the  definition of  "Permitted  Transfer"  herein if,  immediately
prior to any such Transfer, such transferee was already a Warrant Holder.

<PAGE>

                                      -12-

                                    ARTICLE 2

                           Transferability and Voting

         2.1  Restrictions on Transfers

                  (a) Without  the written  consent of the holders of a majority
of the  Common  Stock  Equivalents  at the  time  held  by the JWC  Holders,  no
Management  Stockholder shall Transfer all or any part of the Subject Securities
at the time held by such  Management  Stockholder  to any  Person  other than in
accordance  with the  provisions of Section 2.3 or in  accordance  with and as a
Participating Offeree (as defined in Section 2.2 hereof) under the provisions of
Section 2.2 hereof.  Without the written consent of the holders of a majority of
the  Common  Stock  Equivalents  at the time held by the JWC  Holders,  no Other
Holder shall Transfer all or any part of the Subject Securities at the time held
by such Other Holder to any Person other than in accordance  with the provisions
of  Section  2.3 or 2.4  hereof  or in  accordance  with and as a  Participating
Offeree under the provisions of Section 2.2 hereof.  Without the written consent
of the holders of a majority of the Common Stock Equivalents at the time held by
the Other  Holders,  no JWC Holder shall Transfer all or any part of the Subject
Securities  at the time held by such JWC  Holder  to any  Person  other  than in
accordance  with the provisions of Section 2.3 hereof or in accordance  with and
as  an  Initiating   Stockholder  (as  defined  in  Section  2.2  hereof)  or  a
Participating Offeree under the provisions of Section 2.2 hereof.

                  (b) The  provisions  of this  Section 2.1 shall not apply to a
Transfer which is (i) a Permitted Transfer,  (ii) pursuant to a Public Offering,
or (iii) after the Public Float Date, pursuant to a Rule 144 Transaction.

         2.2  Tagalong.   No  JWC  Holder  (unless  such  JWC  Holder  shall  be
participating  in a Transfer as a Participating  Offeree under and in accordance
with the provisions of this Section 2.2) shall  Transfer any Subject  Securities
to a Third Party without  complying  with the terms and  conditions set forth in
this Section 2.2, as applicable.

                  (a) Any JWC Holder (the "Initiating  Stockholder") desiring to
Transfer such Subject  Securities shall give not less than 15 days prior written
notice of such  intended  Transfer  to each  other  Stockholder  ("Participating
Offerees") and to the Company.  Such notice (the  "Participation  Notice") shall
set forth terms and conditions of such proposed Transfer,  including the name of
the prospective  transferee,  the number of Common Stock Equivalents proposed to
be transferred (the "Participation  Securities") by the Initiating  Stockholder,
the purchase  price per share proposed to be paid therefor and the payment terms
and type of Transfer to be effectuated. Within 10 days following the delivery of
the  Participation  Notice by the Initiating  Stockholder to each  Participating
Offeree and to the  Company,  each  Participating  Offeree  shall,  by notice in
writing to the Initiating  Stockholder and to the Company,  have the opportunity
and right to sell to the  purchasers  in such proposed  Transfer  (upon the same
terms and conditions as the Initiating Stockholder) up to that number of Subject
Securities  representing  Common  Stock  Equivalents  at the  time  held by such
Participating  Offeree that  constitutes  the same  percentage  of the aggregate
number of Common

<PAGE>
                                      -13-

Stock  Equivalents  owned by such  Participating  Offeree as of the date of such
proposed Transfer as the number of Subject Securities  representing Common Stock
Equivalents to be sold in such proposed  Transfer by the Initiating  Stockholder
(after  giving  effect to the  provisions  of this and the  following  sentence)
constitutes of the aggregate number of Common Stock  Equivalents owned as of the
date of such proposed Transfer by the Initiating Stockholder. As contemplated by
the preceding sentence, the amount of Participation  Securities to be sold by an
Initiating  Stockholder  and the amount of Subject  Securities to be sold by any
Participating  Offerees shall be adjusted to the extent necessary to provide for
sales by the Initiating  Stockholder and Participating  Offerees of an aggregate
number  of  Subject  Securities  (i)  which is not  greater  than the  number of
Participation Securities originally proposed to be transferred by the Initiating
Stockholder  and (ii) such that the  number of Subject  Securities  representing
Common Stock  Equivalents at the time held by each  Participating  Offeree to be
sold in such proposed Transfer  constitutes the same percentage of the aggregate
number of Common Stock Equivalents owned by such Participating Offeree as of the
date of such proposed Transfer as the number of Subject Securities  representing
Common Stock  Equivalents to be sold in such proposed Transfer by the Initiating
Stockholder  (after  giving  effect  to the  provisions  of  this  Section  2.2)
constitutes of the aggregate number of Common Stock  Equivalents owned as of the
date of such proposed Transfer by the Initiating Stockholder.

                  For  example:  if  (i)  an  Initiating   Stockholder  gives  a
Participation  Notice with respect to the proposed  Transfer of 200 Common Stock
Equivalents by the Initiating  Stockholder,  (ii) the Initiating  Stockholder at
the time of such  proposed  Transfer  owns 500 Common Stock  Equivalents,  (iii)
Stockholder A elects to  participate  in such proposed  Transfer and at the time
thereof  owns 200 Common Stock  Equivalents,  and (iv)  Stockholder  C elects to
participate  in such  proposed  Transfer and at the time thereof owns 100 Common
Stock  Equivalents,  then the aggregate number of Common Stock Equivalents to be
sold  would  remain at 200 Common  Stock  Equivalents,  of which the  Initiating
Stockholder  would be entitled to sell 125 Common Stock  Equivalents (25% of the
500  total  Common  Stock  Equivalents  owned  by the  Initiating  Stockholder),
Stockholder A would be entitled to sell 50 Common Stock  Equivalents (25% of the
200 total Common Stock  Equivalents  owned by Stockholder  A) and  Stockholder B
would be  entitled  to sell 25 Common  Stock  Equivalents  (25% of the 100 total
Common Stock Equivalents owned by Stockholder B).

                  (b) At the  closing  of any  proposed  Transfer  in respect of
which a  Participation  Notice has been delivered,  the Initiating  Stockholder,
together with all Participating  Offerees so electing to sell Subject Securities
pursuant  to  this  Section  2.2  shall  deliver  to  the  proposed   transferee
certificates and/or other instruments  representing the Subject Securities to be
sold, free and clear of all liens and encumbrances, together with stock or other
appropriate  powers  duly  endorsed  therefor,  and shall  receive  in  exchange
therefor the consideration to be paid or delivered by the proposed transferee in
respect of such Subject Securities as described in the Participation  Notice. If
the prospective  transferee  does not purchase any of the Subject  Securities of
any  Participating  Offeree  required to be included in such  proposed  Transfer
pursuant  to this  Section  2.2  (otherwise  than due to (i) the failure of such
Participating  Offeree to comply with the  provisions  of the first  sentence of
this Section 2.2(b) or (ii) any other fault

<PAGE>
                                      -14-

of such  Participating  Offeree),  then the  Initiating  Stockholder  shall  not
Transfer any of its Subject Securities in such proposed Transfer.

                  (c) The  provisions of this Section 2.2 shall not apply to (i)
any Transfer  pursuant to a Public Offering or, following the Public Float Date,
pursuant to a Rule 144  Transaction or (ii) any Permitted  Transfer or (iii) any
Transfers pursuant to Section 2.3 or 2.4 hereof.

         2.3  Dragalong.

                  (a) If, at the time a Sale Request (as hereinafter defined) is
given,  both (i) the JWC Holders hold more Common Stock Equivalents than the UBS
Holders  and (ii) JWC  Holders  holding  at least a  majority  of  Common  Stock
Equivalents at the time held by such JWC Holders (the Dragalong Group) determine
to sell or exchange (in a sale or exchange of  securities of the Company or in a
merger, consolidation or other business combination or any similar transaction),
in one or a series of bona fide  arms-length  transactions  to an unrelated  and
unaffiliated  Third Party fifty percent (50%) or more of the Subject  Securities
at the time held by them  then,  upon 30 days'  prior  written  notice  from the
Dragalong Group to the other Stockholders, which notice shall include reasonable
details of the proposed  sale or exchange  including the proposed time and place
of closing and the consideration to be received by the Stockholders (such notice
being  referred  to as the "Sale  Request"),  each  other  Stockholder  shall be
obligated to, and shall,  (i) sell,  transfer and deliver,  or cause to be sold,
transferred and delivered,  to such Third Party an equivalent percentage of such
Stockholder's  Subject Securities in the same transaction at the closing thereof
and shall (A) execute  and  deliver  such  agreements  for the  purchase of such
Subject  Securities and other  agreements,  instruments and  certificates as the
members of the Dragalong Group shall execute and deliver in connection with such
proposed  transaction  (provided  that no Holder  shall be  required to make any
representations  or warranties in  connection  with such sale or transfer  other
than  representations and warranties as to (x) such Holder's ownership of his or
its Subject  Securities to be sold or  transferred  free and clear of all liens,
claims,  and encumbrances,  (y) such Holder's power and authority to effect such
transfer without violation of any agreements,  instruments or laws, and (z) such
matters  pertaining to compliance  with  securities  laws as the  transferee may
reasonably  require)  and (B)  deliver  certificates  and/or  other  instruments
representing such percentage of such Stockholder's Subject Securities,  together
with stock or other appropriate  powers therefor duly executed,  at the closing,
free and clear of all  claims,  liens and  encumbrances),  and each  Stockholder
shall  receive  upon  the  closing  of  such  transaction  the  same  per  share
consideration  (including  terms  of  payment)  to be paid or  delivered  by the
proposed transferee in respect of such Stockholder's Subject Securities as shall
be payable to the  members of the  Dragalong  Group in respect of their  Subject
Securities  (including any consideration payable to the members of the Dragalong
Group in respect of  noncompetition  or  similar  covenants  made by them or for
consulting  services to be  rendered  by them,  but only to the extent that such
consideration  is  unreasonable  in amount) and, if any members of the Dragalong
Group are given an option as to the form or amount of consideration per share to
be  received,  each  Stockholder  shall be given  the same  option,  and (ii) if
stockholder  approval of the  transaction is required,  vote such  Stockholder's
Common Stock in favor thereof.

<PAGE>
                                      -15-

                  (b) The  provisions of this Section 2.3 shall not apply to any
Transfer  (i)  pursuant  to a Public  Offering  or (ii)  pursuant to a Permitted
Transfer.

         2.4 Right of First  Refusal.  If at any time prior to the Public  Float
Date,  any Other Holder shall  receive a bona fide written offer (a "Third Party
Offer") from a Third Party (the "Third  Party  Offeror") to purchase any Subject
Securities and such Other Holder desires to accept such Third Party Offer,  such
Other Holder shall,  prior to accepting the Third Party Offer, offer (the "First
Refusal Offer") to sell such Subject  Securities  (the "Offered  Securities") in
accordance with the procedures, and upon the terms, set forth below.

                  (a)      (i)      The Other Holder shall send a written notice
                                    of the First Refusal Offer (a "First Refusal
                                    Offer  Notice") to the Company,  which First
                                    Refusal  Offer  Notice shall state that such
                                    Other Holder  proposes to effect a sale to a
                                    Third Party Offeror, the number and class or
                                    type of  Subject  Securities  subject to the
                                    Third  Party  Offer and the name and address
                                    of the Third Party Offeror,  together with a
                                    copy of all writings between the Third Party
                                    Offeror and such Other  Holder  necessary to
                                    establish  the  terms  of  the  Third  Party
                                    Offer.

                           (ii)     Subject  to  Section  2.4(b),  the  right of
                                    first   refusal  may  be  exercised  by  the
                                    Company by delivery  of a written  notice to
                                    the Other  Holder  making the First  Refusal
                                    Offer  within 20 days  after  receipt by the
                                    Company  of  the  applicable  First  Refusal
                                    Offer Notice (the "Company Notice  Period"),
                                    which  notice  shall  state  the  number  of
                                    Offered  Securities  the Company  intends to
                                    purchase pursuant to this paragraph (ii). If
                                    the  Company  fails to  respond to the Other
                                    Holder making the First Refusal Offer within
                                    the Company Notice Period, the failure shall
                                    be deemed a rejection  of the First  Refusal
                                    Offer.

                           (iii)    If the Company has not  exercised  the right
                                    of first  refusal with respect to all of the
                                    Offered Securities  pursuant to this Section
                                    2.4,  the Other  Holder  shall  send a First
                                    Refusal Offer Notice to the JWC Holders, the
                                    UBS  Holders and the  PPM/ReliaStar  Holders
                                    (other  than the  Other  Holder  making  the
                                    First  Refusal  Offer)  and  the  Management
                                    Holders  with   respect  to  those   Offered
                                    Securities  as to which the  Company has not
                                    exercised   its  right  of  first   refusal.
                                    Subject  to  Section  2.4(b),  the  right of
                                    first  refusal may be  exercised  by the JWC
                                    Holders,  such UBS Holders and PPM/ReliaStar
                                    Holders and the Management Holders, pro rata
                                    in  accordance  with the  respective  Common
                                    Stock  Equivalents  at the time  held by the
                                    JWC   Holders,    such   UBS   Holders   and
                                    PPM/ReliaStar  Holders  and  the  Management
                                    Holders so  exercising  their  rights  under
                                    this  Section  2.4, by delivery of a written
                                    notice to the Other Holder making the First

<PAGE>
                                      -16-

                                    Refusal  Offer within 20 days after  receipt
                                    by the JWC  Holders,  such UBS  Holders  and
                                    PPM/ReliaStar  Holders  and  the  Management
                                    Holders  of  the  applicable  First  Refusal
                                    Offer Notice (the  "JWC/UBS  Holders  Notice
                                    Period"),   which  notice  shall  state  the
                                    number of Offered Securities each of the JWC
                                    Holders,  such UBS Holders and PPM/ReliaStar
                                    Holders and the Management Holders intend to
                                    purchase  pursuant to this paragraph  (iii).
                                    If the JWC  Holders  or such UBS  Holders or
                                    PPM/ReliaStar   Holders  or  the  Management
                                    Holders, as the case may be, fail to respond
                                    to the Other Holder making the First Refusal
                                    Offer  within  the  JWC/UBS  Holders  Notice
                                    Period,   the  failure  shall  be  deemed  a
                                    rejection of the First  Refusal Offer by the
                                    JWC   Holders   or  such  UBS   Holders   or
                                    PPM/ReliaStar   Holders  or  the  Management
                                    Holders, as the case may be.

                           (iv)     The  purchase of the Offered  Securities  by
                                    the Company and/or the JWC Holders, such UBS
                                    Holders  and  PPM/ReliaStar  Holders and the
                                    Management  Holders pursuant to this Section
                                    2.4 shall be  effected at the offices of JWC
                                    Equity  Partners  within  30 days  after the
                                    expiration of the Company Notice Period (or,
                                    if the JWC  Holders  or such UBS  Holders or
                                    PPM/ReliaStar   Holders  or  the  Management
                                    Holders are exercising  their right of first
                                    refusal  with  respect to any of the Offered
                                    Securities,   within   30  days   after  the
                                    expiration  of the  JWC/UBS  Holders  Notice
                                    Period) on those terms and conditions of the
                                    Third  Party  Offer.  The price per  Offered
                                    Security  payable by the Company  and/or the
                                    JWC   Holders,    such   UBS   Holders   and
                                    PPM/ReliaStar  Holders  and  the  Management
                                    Holders  shall  be equal  to the  price  per
                                    Offered  Security  set  forth  in the  Third
                                    Party  Offer.  The  purchase  price  for the
                                    Offered Securities  purchased by the Company
                                    and/or the JWC Holders, such UBS Holders and
                                    PPM/ReliaStar  Holders  and  the  Management
                                    Holders  shall be paid by  certified  checks
                                    payable,  or  wire  transfer,  to the  Other
                                    Holder   making  the  First   Refusal  Offer
                                    against   receipt   of  a   certificate   or
                                    certificates    representing   all   Offered
                                    Securities so purchased,  properly  endorsed
                                    for  transfer to the Company  and/or the JWC
                                    Holders,  such UBS Holders and PPM/ReliaStar
                                    Holders and the Management  Holders,  as the
                                    case may be.

                           (v)      Any  purchase of the Offered  Securities  by
                                    the Company and/or the JWC Holders, such UBS
                                    Holders  and  PPM/ReliaStar  Holders and the
                                    Management  Holders pursuant to this Section
                                    2.4  shall  be  conditioned  (by  the  Other
                                    Holder making the First Refusal  Offer) upon
                                    the Company's and/or the JWC Holders',  such
                                    UBS Holders' and PPM/ReliaStar  Holders' and
                                    the Management

<PAGE>
                                      -17-

                                    Holders'  exercising  in the  aggregate  the
                                    right of first  refusal  with respect to all
                                    the Offered Securities.

                  (b) Notwithstanding anything to the contrary contained herein,
if the  Company  and/or the JWC  Holders,  such UBS  Holders  and  PPM/ReliaStar
Holders and the Management Holders have not exercised the right of first refusal
with respect to all of the Offered Securities pursuant to this Section 2.4, then
such  Other  Holder may  transfer  to the Third  Party  Offeror on the terms and
conditions  of the Third  Party  Offer all but not less than all of the  Offered
Securities;  provided  that  such  sale is  consummated  within 60 days from the
expiration of the JWC/UBS  Holders Notice Period;  and provided,  further,  that
such Third Party  Offeror  shall agree in writing in advance with the Company to
be bound by and to comply with all  applicable  provisions of this  Agreement to
the same extent as if such Third Party Offeror were such Other  Holder.  If such
sale is not consummated within such 60-day period, the restrictions provided for
in this  Section  2.4 shall  again  become  effective,  and no  transfer of such
Offered Securities may be made thereafter without again offering the same to the
Company and/or the JWC Holders,  such UBS Holders and PPM/ReliaStar  Holders and
the  Management  Holders in  accordance  with the terms and  conditions  of this
Agreement.

                  (c) The  provisions of this Section 2.4 shall not apply to (i)
any  Transfer  pursuant to a Public  Offering or,  following a Public  Offering,
pursuant to a Rule 144  Transaction or (ii) any Permitted  Transfer or (iii) any
Transfers pursuant to Section 2.2 or 2.3 hereof.

         2.5  Corporate Governance.

                  (a) The Company and each of the JWC Holders, the Other Holders
and the Management  Holders shall take all action  (including but not limited to
such Stockholder's voting, or executing proxies or written consents with respect
to, the Common Stock at the time held by such Stockholder as may be from time to
time  requested by holders of a majority of the Common Stock  Equivalents at the
time held by the JWC Holders) so that the  Company's  Board of  Directors  shall
include  such  number of members as may be from time to time  designated  by the
holders of a majority of the Common  Stock  Equivalents  at the time held by the
JWC Holders (or the JWC Representative). The holders of a majority of the Common
Stock   Equivalents   at  the  time  held  by  the  JWC   Holders  (or  the  JWC
Representative)  shall  also be  entitled  to  require  that any  member  of the
Company's  Board of  Directors  so  designated  pursuant to this  Section 2.5 be
removed or  replaced  by another  designee  of the  holders of a majority of the
Common  Stock  Equivalents  at the  time  held  by the JWC  Holders  (or the JWC
Representative), in which event the Company and each such Stockholder shall take
all action, including but not limited to such Stockholder's voting, or executing
written  consents  with  respect  to, the Common  Stock at the time held by such
Stockholder as may be necessary to effect such removal or replacement.

                  (b)  Notwithstanding  the  provisions of Section  2.5(a),  the
Company  and each of the JWC  Holders,  the  Other  Holders  and the  Management
Holders shall take all action,  including but not limited to such  Stockholder's
voting,  or executing  proxies or written  consents  with respect to, the Common
Stock at the time held by such Stockholder as may be from time

<PAGE>

                                      -18-

to time  requested by holders of a majority of the Common Stock  Equivalents  at
the time held by the UBS Holders, so that the Company's Board of Directors shall
include  one (1) member  designated  by the  holders of a majority of the Common
Stock Equivalents at the time held by the UBS Holders which one (1) member shall
initially  be  Michael  Greene;  provided  that the  number  of  members  of the
Company's  Board  of  Director's  that the UBS  Holders  shall  be  entitled  to
designate pursuant to this Section 2.5(b) shall be permanently  reduced from one
(1) member to zero (0) members at such time as the UBS  Holders  shall hold less
than  770,000  shares of Voting  Common  Stock (with such number of shares to be
adjusted  from time to time to  reflect  any split or  combination  of shares of
Common Stock).  The holders of a majority of the Common Stock Equivalents at the
time held by the UBS Holders  shall also be entitled to require  that any member
of the  Company's  Board of  Directors  so  designated  pursuant to this Section
2.5(b) be removed or replaced  by another  designee of the holders of a majority
of the Common Stock  Equivalents  at the time held by the UBS Holders,  in which
event the Company and each such Stockholder shall take all action, including but
not limited to such  Stockholder's  voting,  or executing  written consents with
respect  to, the  Common  Stock at the time held by such  Stockholder  as may be
necessary to effect such removal or replacement.

                  (c)  Notwithstanding  the  provisions  of  Section  2.5(a)  or
2.5(b),  the Stockholders  shall vote their shares of Common Stock to elect each
of Robert H. Elman and Terry G.  Scariot  to the  Company's  Board of  Directors
until  such  person  is no  longer  employed  by  the  Company  or  any  of  its
Subsidiaries.

                  (d)  The  HMTF  Holders  shall  have  the  right  to  have  an
individual  appointed by them (the "HMTF Attendee") in attendance at all regular
and special meetings of the Company's Board of Directors to observe,  but not to
vote on any matters before the Board of Directors at, such  meetings;  provided,
however,  that the HMTF Attendee  shall recuse  himself or herself from any such
meeting during the Board of Directors' discussions,  deliberations and voting on
matters  with respect to which the Board of  Directors  determines,  in the good
faith exercise of its business judgment, the HMTF Attendee's presence presents a
conflict of interest.  The HMTF Attendee shall be provided with all  information
prepared and delivered to board members in general,  at the same time and by the
same means as such information is provided to members of the board.

         2.6 Restrictions on Other Agreements. Except as provided in Section 4.8
and clause (a) of the definition of "Permitted  Transfer" herein, no Stockholder
shall grant any proxy or enter into or agree to be bound by any voting  trust or
voting  agreement  with  respect  to  any  Subject   Securities  nor  shall  any
Stockholder  enter into any stockholders  agreements or arrangements of any kind
with any Person  with  respect to any of the Subject  Securities  on terms which
conflict with the provisions of this Agreement  (whether or not such  agreements
and  arrangements  are with  other  Stockholders  or  holders  of  Common  Stock
Equivalents that are not parties to this Agreement),  including, but not limited
to, agreements or arrangements  with respect to the acquisition,  disposition or
voting of Subject Securities inconsistent herewith.

         2.7  Stockholder   Action.   Each  Stockholder  agrees  that,  in  such
Stockholder's  capacity as a stockholder of the Company, such Stockholder shall,
subject to delivery of the Sale

<PAGE>
                                      -19-

Request  pursuant to Section 2.3 hereof,  vote, or grant proxies relating to the
Common  Stock  at the  time  held  by  such  Stockholder  to  vote,  all of such
Stockholder's Common Stock in favor of any sale or exchange of securities of the
Company  or any  merger,  consolidation  or other  business  combination  or any
similar  transaction  pursuant to Section 2.3 hereof  (other than a  transaction
with an  Affiliate)  if,  and to the  extent  that,  approval  of the  Company's
stockholders is required in order to effect such transaction.

                                    ARTICLE 3

                               Registration Rights

         3.1 General.  For purposes of this Article 3: (a) the terms "register",
"registered" and  "registration"  refer to a registration  effected by preparing
and filing a registration  statement on Form S-1, S-2 or S-3 in compliance  with
the  1933  Act  and  the  declaration  or  ordering  of  effectiveness  of  such
registration statement; and (b) the term "Holder" means any Stockholder.

         3.2  Demand and Piggyback Registration.

                  (a) Demand  Registration of the UBS Holders and  PPM/ReliaStar
Holders.

                           (i)      Demand Registration of the UBS Holders.

                                            (A)  UBS  Holders'   Demand   Right.
                                    Subject to the  provisions of this Agreement
                                    (including  Sections 3.2(b) and 3.9 hereof),
                                    at any time  after the  Public  Float  Date,
                                    upon the written  request of any UBS Holders
                                    requesting   that  the  Company  effect  the
                                    registration   under   the   1933   Act   of
                                    Registrable Securities,  which request shall
                                    specify in  reasonable  detail the number of
                                    Registrable  Securities to be registered and
                                    the intended method of distribution thereof,
                                    the   Company   shall  use  its   reasonable
                                    commercial  efforts  to  register  under the
                                    1933  Act  (a  "Demand   Registration")  the
                                    Registrable Securities which the Company has
                                    been  requested  to  register  by  such  UBS
                                    Holders,  all to  the  extent  requisite  to
                                    permit the  disposition of such  Registrable
                                    Securities  in  accordance  with the plan of
                                    distribution  set  forth  in the  applicable
                                    registration  statement. In the case of such
                                    Demand  Registration,  such UBS Holders must
                                    request    registration    of    Registrable
                                    Securities  representing  not less than such
                                    number   of   Registrable   Securities   the
                                    expected  gross  proceeds  of which,  on the
                                    date of the aforementioned  written request,
                                    would equal at least $5 million  unless such
                                    registration  request  is for all  remaining
                                    Registrable  Securities  held  by  such  UBS
                                    Holders.

                                            (B) Registration Statement Form. Any
                                    Demand Registration under this Section shall
                                    be on Form S-3, if and to the


<PAGE>
                                      -20-

                                    extent that the  Company is  eligible  under
                                    the 1933 Act to use such form at the time of
                                    the   written   request   for  such   Demand
                                    Registration.

                           (ii)     Demand  Registration  of  the  PPM/ReliaStar
                                    Holders.

                                            (A)  PPM/ReliaStar  Holders'  Demand
                                    Right.  Subject  to the  provisions  of this
                                    Agreement (including Sections 3.2(b) and 3.9
                                    hereof),  at any  time  after  one (1)  year
                                    after  the  Public  Float  Date,   upon  the
                                    written request of any PPM/ReliaStar Holders
                                    requesting   that  the  Company  effect  the
                                    registration   under   the   1933   Act   of
                                    Registrable Securities,  which request shall
                                    specify in  reasonable  detail the number of
                                    Registrable Securities to be registered, the
                                    Company shall use its reasonable  commercial
                                    efforts to effect a Demand  Registration  of
                                    the Registrable Securities which the Company
                                    has  been  requested  to  register  by  such
                                    PPM/ReliaStar  Holders,  all to  the  extent
                                    reasonably    requisite    to   permit   the
                                    disposition of the Registrable Securities in
                                    accordance with an at the market offering of
                                    the Registrable  Securities.  In the case of
                                    such Demand Registration, such PPM/ReliaStar
                                    Holders   must   request   registration   of
                                    Registrable Securities representing not less
                                    than such number of  Registrable  Securities
                                    the expected gross proceeds of which, on the
                                    date of the aforementioned  written request,
                                    would equal at least $5 million  unless such
                                    registration  request  is for all  remaining
                                    Registrable    Securities   held   by   such
                                    PPM/ReliaStar Holders.

                                            (B) Registration Statement Form. Any
                                    Demand Registration under this Section shall
                                    be on Form S-3,  if and to the  extent  that
                                    the Company is  eligible  under the 1933 Act
                                    to use such form at the time of the  written
                                    request for such Demand Registration.

                           (iii)    Limitations    on   Demand    Registrations.
                                    Anything     herein    to    the    contrary
                                    notwithstanding,  the  Company  shall not be
                                    required  to  effect  more  than (A) one (1)
                                    Demand  Registration   pursuant  to  Section
                                    3.2(a)(i)  hereof  or  (B)  one  (1)  Demand
                                    Registration  pursuant to Section 3.2(a)(ii)
                                    hereof.

                           (iv)     Effective Registration Statement.  Except as
                                    otherwise  provided  in Section  3.2(a)(vii)
                                    hereof,  a  Demand  Registration   requested
                                    pursuant to this Section 3.2(a) shall not be
                                    deemed to have been  effected  (A)  unless a
                                    registration  statement with respect thereto
                                    has  become  effective,  (B) if after it has
                                    become   effective,   such  registration  is
                                    materially   interfered  with  by  any  stop
                                    order,   injunction   or  similar  order  or
                                    requirement of the Commission or

<PAGE>
                                      -21-

                                    other  governmental  agency or court for any
                                    reason  not  attributable  to any UBS Holder
                                    (in  the  case  of  a  Demand   Registration
                                    pursuant to Section 3.2(a)(i) hereof) or any
                                    PPM/ReliaStar  Holder  (in  the  case  of  a
                                    Demand  Registration   pursuant  to  Section
                                    3.2(a)(ii)  hereof)  and has not  thereafter
                                    become  effective,  or (C) if the conditions
                                    to  closing  specified  in the  underwriting
                                    agreement,   if   any,   entered   into   in
                                    connection  with such  registration  are not
                                    satisfied or waived, other than by reason of
                                    a failure  on the part of any UBS Holder (in
                                    the case of a Demand  Registration  pursuant
                                    to   Section   3.2(a)(i)   hereof)   or  any
                                    PPM/ReliaStar  Holder  (in  the  case  of  a
                                    Demand  Registration   pursuant  to  Section
                                    3.2(a)(ii) hereof).

                           (v)      Selection  of  Underwriters.  In the case of
                                    such a Demand  Registration  by UBS  Holders
                                    pursuant to Section 3.2(a)(i)(A) hereof, the
                                    selection   of  any   managing   and   other
                                    underwriter(s) shall be made by the Company,
                                    with  the  consent  of  UBS  Capital  (which
                                    consent shall not be unreasonably withheld).

                           (vi)     Certain   Requirements  in  Connection  with
                                    Registration  Rights.  In the  case  of such
                                    Demand  Registration by UBS Holders pursuant
                                    to Section  3.2(a)(i)  hereof, if the Holder
                                    has  determined  to  enter  into one or more
                                    underwriting    agreements   in   connection
                                    therewith, no Person may participate in such
                                    Demand   Registration   unless  such  Person
                                    agrees to sell his or its  securities on the
                                    basis    provided   in   the    underwriting
                                    arrangements      and      completes     all
                                    questionnaires,    powers    of    attorney,
                                    indemnities,   underwriting  agreements  and
                                    other  documents  which are  reasonable  and
                                    customary under the circumstances.

                           (vii)    Certain  Other  Matters.   Should  a  Demand
                                    Registration not become effective due to the
                                    failure  of any of the UBS  Holders  (in the
                                    case of a Demand  Registration  pursuant  to
                                    Section  3.2(a)(i)  hereof)  or  any  of the
                                    PPM/ReliaStar  Holders  (in  the  case  of a
                                    Demand  Registration   pursuant  to  Section
                                    3.2(a)(ii)  hereof)  requesting  such Demand
                                    Registration   to  perform  its  obligations
                                    under this  Agreement  or the  inability  of
                                    such  UBS  Holders  (in the case of a Demand
                                    Registration  pursuant to Section  3.2(a)(i)
                                    hereof)   to   reach   agreement   with  the
                                    underwriters  on price  or  other  customary
                                    terms for such transaction,  or in the event
                                    such  UBS  Holders  (in the case of a Demand
                                    Registration  pursuant to Section  3.2(a)(i)
                                    hereof) or such  PPM/ReliaStar  Holders  (in
                                    the case of a Demand  Registration  pursuant
                                    to Section 3.2(a)(ii) hereof) withdraw or do
                                    not  pursue  the  request  for  such  Demand
                                    Registration (in any of the foregoing cases,
                                    provided that at such time the Company is in
                                    compliance in all material respects with
<PAGE>
                                                       -22-

                                    its obligations under this Agreement),  then
                                    such Demand  Registration shall be deemed to
                                    have been effected.

                           (viii)   Shelf  Registration.  The  Company  shall be
                                    permitted to satisfy its  obligations  under
                                    this Section 3.2(a) by filing (if and to the
                                    extent that the Company is eligible to do so
                                    at the time of the  written  request for any
                                    Demand  Registration) a "shelf" registration
                                    statement on Form S-3 (or any successor form
                                    thereto  that  may be  adopted  by the  SEC)
                                    pursuant  to Rule 415 under the 1933 Act (or
                                    any  successor  rule  thereto  that  may  be
                                    adopted by the SEC) (a"Shelf Registration"),
                                    or   amending  a   previously   filed  Shelf
                                    Registration  by the Company  under the 1933
                                    Act, so that such Shelf  Registration  shall
                                    permit the  disposition  (in accordance with
                                    the   intended    methods   of   disposition
                                    specified for the Registrable  Securities to
                                    be included in such Demand  Registration) of
                                    all of the Registrable  Securities for which
                                    a  request  for  registration  has been made
                                    under this Section 3.2(a).

                  (b)  Piggyback  Registration.  If  at  any  time  the  Company
determines  to  register  any  Public  Offering  of  any  of  the  Common  Stock
Equivalents  for the account of any JWC Holder under the 1933 Act in  connection
with the public  offering  of such  securities  or  pursuant  to a request for a
Demand  Registration  pursuant to Section 3.2(a) hereof,  the Company shall,  at
each such time,  promptly give each Holder written notice of such  determination
no later than 30 days before its intended  filing with the SEC. Upon the written
request of any Holder received by the Company within 10 days after the giving of
any  such  notice  by the  Company,  the  Company  shall  use  all  commercially
reasonable  efforts  to cause  to be  registered  under  the 1933 Act all of the
Registrable  Securities  of such  Holder  that  such  Holder  has  requested  be
registered.  If the  total  amount  of  Registrable  Securities  that  are to be
included by the Company in such  registration  exceeds the amount of  securities
that the  underwriters  reasonably  believe  compatible  with the success of the
offering,  then the Company will include in such registration only the number of
securities  which  in the  opinion  of such  underwriters  can be  sold,  in the
following order:

                           (i)      first,  all  securities of the Company to be
                                    offered for the account of the Company; and

                           (ii)     second, the Registrable Securities, pro rata
                                    based   on   the   number   of   Registrable
                                    Securities  held by each  Holder  seeking to
                                    have Registrable Securities included in such
                                    registration  (including any UBS Holders and
                                    PPM/ReliaStar   Holders   seeking   to  have
                                    Registrable   Securities  included  in  such
                                    registration    pursuant    to   a    Demand
                                    Registration  requested under Section 3.2(a)
                                    hereof).

<PAGE>
                                      -23-

         3.3  Obligations of the Company.

                  (a)  Whenever  required  under  Section  3.2 hereof to use all
commercially  reasonable  efforts  to effect  the  registration  of  Registrable
Securities, the Company shall:

                           (i)      prepare and file with the SEC a registration
                                    statement  with respect to such  Registrable
                                    Securities   and   use   all    commercially
                                    reasonable    efforts    to    cause    such
                                    registration  statement to become and remain
                                    (for a period of 90 days after the effective
                                    date of such registration  statement (unless
                                    all securities  covered by such registration
                                    statement    are   sooner    disposed   of))
                                    effective,  including,  without  limitation,
                                    filing  of  post-effective   amendments  and
                                    supplements to any registration statement or
                                    prospectus    necessary    to    keep    the
                                    registration  statement  current;  provided,
                                    however,  that if the Company  shall furnish
                                    to Holders requesting a Demand  Registration
                                    pursuant   to   Section   3.2(a)   hereof  a
                                    certificate  signed by the  Chairman  of the
                                    Board  or  the   President  of  the  Company
                                    stating that, in the good faith  judgment of
                                    the Board of Directors  of the  Company,  it
                                    would  be  seriously   detrimental   to  the
                                    Company  and  its   stockholders   for  such
                                    registration  statement to be filed  because
                                    such  registration  would require  premature
                                    disclosure  of  any  acquisition,  corporate
                                    reorganization,  proposed public offering or
                                    other  material  transaction  involving  the
                                    Company and that it is  therefore  essential
                                    to defer  taking  action with respect to the
                                    filing of such registration statement,  then
                                    the  Company  may  direct  that  the  Demand
                                    Registration  be delayed for a period not to
                                    exceed one hundred  eighty (180) days in the
                                    aggregate;

                           (ii)     as  expeditiously  as  reasonably  possible,
                                    prepare   and   file   with   the  SEC  such
                                    amendments    and    supplements   to   such
                                    registration  statement  and the  prospectus
                                    used in  connection  with such  registration
                                    statement as may be necessary to comply with
                                    the  provisions of the 1933 Act with respect
                                    to the disposition of all securities covered
                                    by such  registration  statement and to keep
                                    each  registration and  qualification  under
                                    this Agreement  effective (and in compliance
                                    with the 1933 Act) by such actions as may be
                                    necessary or appropriate  for a period of 90
                                    days  after  the  effective   date  of  such
                                    registration     statement    (unless    all
                                    securities   covered  by  such  registration
                                    statement  are sooner  disposed  of), all as
                                    requested by such Holder or Holders;

                           (iii)    as  expeditiously  as  reasonably   possible
                                    furnish  to  the  Holders  such  numbers  of
                                    copies   of  a   prospectus,   including   a
                                    preliminary  prospectus,  in conformity with
                                    the  requirements  of the 1933 Act, and such
                                    other   documents  as  they  may  reasonably
                                    request in

<PAGE>
                                      -24-

                                    order  to  facilitate  the   disposition  of
                                    Registrable  Securities  owned  by  them  in
                                    accordance  with  the  plan of  distribution
                                    provided for in such registration statement;

                           (iv)     as expeditiously as reasonably  possible use
                                    all  commercially   reasonable   efforts  to
                                    register and qualify the securities  covered
                                    by such  registration  statement  under such
                                    securities   or  "blue  sky"  laws  of  such
                                    jurisdictions   as   shall   be   reasonably
                                    appropriate  for  the  distribution  of  the
                                    securities   covered  by  the   registration
                                    statement,  provided  that the Company shall
                                    not be required in  connection  therewith or
                                    as a  condition  thereto  to  qualify  to do
                                    business,  subject itself to taxation, or to
                                    file a general consent to service of process
                                    in  any  such   jurisdiction,   and  further
                                    provided that (anything in this Agreement to
                                    the contrary notwithstanding with respect to
                                    the bearing of expenses) if any jurisdiction
                                    in which the  securities  shall be qualified
                                    shall  require  that  expenses  incurred  in
                                    connection  with  the  qualification  of the
                                    securities in that  jurisdiction be borne by
                                    selling  stockholders,  then  such  expenses
                                    shall be payable by selling stockholders pro
                                    rata,   to  the  extent   required  by  such
                                    jurisdiction;

                           (v)      notify each seller of Registrable Securities
                                    covered by such registration  statement,  at
                                    any time when a prospectus  relating thereto
                                    is required to be  delivered  under the 1933
                                    Act,  upon  discovery   that,  or  upon  the
                                    happening of any event as a result of which,
                                    the prospectus included in such registration
                                    statement,  as then in effect,  includes  an
                                    untrue statement of a material fact or omits
                                    to state any  material  fact  required to be
                                    stated  therein  or  necessary  to make  the
                                    statements  therein  not  misleading  in the
                                    light of the circumstances  under which they
                                    were made (each  Holder  hereby  covenanting
                                    that,  upon receipt of any such  notice,  it
                                    shall   forthwith   cease   using  any  such
                                    prospectus  unless  and until it shall  have
                                    received from the Company a supplement to or
                                    amendment of such  prospectus as hereinafter
                                    referred to in this Section 3.3(a)(v)),  and
                                    at the  request of any such seller or Holder
                                    promptly  prepare to furnish to such  seller
                                    or Holder a reasonable number of copies of a
                                    supplement   to  or  an  amendment  of  such
                                    prospectus  as may be necessary so that,  as
                                    thereafter  delivered to the  purchasers  of
                                    such  securities,  such prospectus shall not
                                    include  an untrue  statement  of a material
                                    fact  or  omit  to  state  a  material  fact
                                    required to be stated  therein or  necessary
                                    to   make   the   statements   therein   not
                                    misleading in the light of the circumstances
                                    under which they were made;

                           (vi)     otherwise  use all  commercially  reasonable
                                    efforts to comply with all applicable  rules
                                    and regulations of the SEC, and make
<PAGE>
                                      -25-

                                    available to its security  holders,  as soon
                                    as  reasonably   practicable,   an  earnings
                                    statement covering the period of at least 12
                                    months   but  not  more   than  18   months,
                                    beginning with the first full calendar month
                                    after   the    effective    date   of   such
                                    registration   statement,   which   earnings
                                    statement  shall  satisfy the  provisions of
                                    Section  11(a)  of the  1933  Act,  and will
                                    furnish  to  each  such  seller  at  least 2
                                    Business Days prior to the filing  thereof a
                                    copy of any  amendment or supplement to such
                                    registration  statement  or  prospectus  and
                                    shall not file any thereof to which any such
                                    seller  shall  have   reasonably   objected,
                                    except to the extent required by law, on the
                                    grounds that such  amendment  or  supplement
                                    does not  comply  in all  material  respects
                                    with the  requirements of the 1933 Act or of
                                    the rules or regulations thereunder;

                           (vii)    provide  and  cause  to  be   maintained   a
                                    transfer   agent  and   registrar   for  all
                                    Registrable   Securities   covered  by  such
                                    registration statement from and after a date
                                    not later  than the  effective  date of such
                                    registration statement; and

                           (viii)   use all commercially  reasonable  efforts to
                                    list all Registrable  Securities  covered by
                                    such    registration    statement   on   any
                                    securities  exchange  on which  any class of
                                    Registrable Securities is then listed.

                  (b) The Company  will  furnish to each Holder on whose  behalf
Registrable  Securities have been registered pursuant to this Agreement a signed
counterpart,  addressed  to such  Holder,  of (i) an opinion of counsel  for the
Company  dated the effective  date of such  registration  statement,  and (ii) a
so-called "cold comfort" letter signed by the independent public accountants who
have certified the Company's financial  statements included in such registration
statement,  and such opinion of counsel and accountants' letter, with respect to
events subsequent to the date of such financial  statements,  as are customarily
covered in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in connection with underwritten public offerings of securities.

                  (c) If the Company at any time proposes to register any of its
securities  under the 1933 Act subject to the piggyback  registration  rights of
the Holders  under Section  3.2(b)  hereof or pursuant to a Demand  Registration
under Section  3.2(a)  hereof,  and such  securities are to be distributed by or
through one or more underwriters, then the Company will make reasonable efforts,
if requested by any Holder of Registrable  Securities who requests  registration
of  Registrable  Securities  in  connection  therewith  pursuant  to Section 3.2
hereof, to arrange for such underwriters to include such Registrable  Securities
among the securities to be distributed by or through such underwriters.

                  (d) In  connection  with the  preparation  and  filing of each
registration statement registering  Registrable Securities under this Agreement,
the Company will give the Holders of Registrable Securities on whose behalf such
Registrable Securities are to be so registered and
<PAGE>
                                      -26-

their  underwriters,  if any, and their  respective  counsel and accountants the
opportunity to participate in the  preparation of such  registration  statement,
each  prospectus  included  therein  or filed with the SEC,  and each  amendment
thereof or  supplement  thereto,  and will give each of them such  access to its
books and records and such  opportunities to discuss the business of the Company
with its officers,  its counsel and the independent  public accountants who have
certified its financial  statements,  as shall be reasonably  necessary,  in the
opinion of such Holders or such  underwriters or their  respective  counsel,  in
order to conduct a reasonable and diligent  investigation  within the meaning of
the 1933 Act.  Without  limiting the  foregoing,  each  registration  statement,
prospectus,  amendment, supplement or any other document filed with respect to a
registration  under this  Agreement  shall be  subject to review and  reasonable
approval by the Holders registering  Registrable Securities in such registration
and by their counsel.

         3.4  Furnish  Information.  It shall be a  condition  precedent  to the
obligations  of the Company to take any action  pursuant to this  Article 3 that
each Holder shall furnish to the Company such information regarding such Holder,
the  Registrable  Securities  held by such Holder,  and the  intended  method of
disposition of such  securities as the Company shall  reasonably  request and as
shall be required in connection with the action to be taken by the Company.

         3.5 Expenses of Registration.  All expenses incurred in connection with
a registration pursuant to Section 3.2 hereof (excluding underwriters' discounts
and  commissions,  which  shall  be  borne by the  Holders),  including  without
limitation all registration  and  qualification  fees,  printers' and accounting
fees, fees and disbursements of counsel for the Company, and the reasonable fees
and disbursements of one counsel for the selling Holders (which counsel shall be
selected  by the  holders  of a majority  of the  Registrable  Securities  to be
included in such registration) shall be borne by the Company.

         3.6 Underwriting  Requirements.  In connection with any registration of
Registrable Securities under this Agreement,  the Holders shall, if requested by
the Company or the underwriters for any Registrable  Securities included in such
registration,  enter into an underwriting  agreement with such  underwriters for
such offering,  such agreement to contain such representations and warranties by
the Company and such other terms and provisions as are customarily  contained in
underwriting  agreements  with  respect to secondary  distributions,  including,
without  limitation,  provisions  relating to  indemnification  and contribution
provided,  that no  Holder  shall be  required  to make any  representations  or
warranties,  or provide any indemnity, with respect to any matter other than (a)
such  Holder's  ownership  of  his or  its  Subject  Securities  to be  sold  or
transferred  free and  clear  of all  liens,  claims  and  encumbrances  and (b)
information  regarding  such Holder  appearing  in the  registration  statement,
preliminary or final  prospectus or amendments or  supplements  thereto that has
been provided in writing by such Holder. The Holders on whose behalf Registrable
Securities are to be distributed  by such  underwriters  shall be parties to any
such underwriting agreement,  and the representations and warranties by, and the
other  agreements  on the part of, the  Company  to and for the  benefit of such
underwriters  shall  be also  made to and for the  benefit  of such  Holders  of
Registrable  Securities.  Such underwriting  agreement shall comply with Section
3.7.

<PAGE>
                                      -27-

         3.7  Indemnification.  In the  event  any  Registrable  Securities  are
included in a registration statement pursuant to this Article 3:

                  (a) To the fullest  extent  permitted by law, the Company will
indemnify  and  hold  harmless  each  Holder  joining  in  a  registration,  any
underwriter  (as defined in the 1933 Act) for it, and each  Person,  if any, who
controls  such  Holder or such  underwriter  within the meaning of the 1933 Act,
from and against any losses,  claims,  damages,  expenses (including  reasonable
attorneys'  fees  and  expenses  and  reasonable  costs  of   investigation)  or
liabilities,  joint or several,  to which they or any of them may become subject
under  the 1933 Act or  otherwise,  insofar  as such  losses,  claims,  damages,
expenses  or  liabilities  (or  actions or  proceedings,  whether  commenced  or
threatened,  in  respect  thereof)  arise out of or are  based on any  untrue or
alleged  untrue  statement of any material fact  contained in such  registration
statement  including any preliminary  prospectus or final  prospectus  contained
therein or any amendments or supplements  thereto,  or arise out of or are based
upon the omission or alleged  omission to state therein a material fact required
to be stated  therein or  necessary  to make the  statements  made  therein  not
misleading in light of the circumstances under which they were made or arise out
of any violation by the Company of any rule or regulation  promulgated under the
1933 Act  applicable to the Company and relating to action or inaction  required
of the  Company in  connection  with any such  registration,  provided  that the
indemnity  agreement contained in this Section 3.7(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage,  liability or action if such
settlement is effected  without the consent of the Company  (which consent shall
not be unreasonably withheld), nor shall the Company be liable to anyone for any
such loss claim, damage, liability or action to the extent that it arises out of
or is based upon an untrue  statement or omission made in  connection  with such
registration statement,  preliminary prospectus,  final prospectus or amendments
or  supplements  thereto  in  reliance  upon  and  in  conformity  with  written
information  furnished expressly for use in connection with such registration by
such Holder,  underwriter or control person. Such indemnity shall remain in full
force and effect  regardless of any  investigation  made by or on behalf of such
Holder,  underwriter  or control  person and shall  survive the transfer of such
securities by such Holder.

                  (b) To the  fullest  extent  permitted  by  law,  each  Holder
joining in a registration shall indemnify and hold harmless the Company, each of
its directors,  each of its officers who has signed the registration  statement,
each Person,  if any,  who  controls the Company  within the meaning of the 1933
Act,  and each  agent and any  underwriter  for the  Company  and any Person who
controls any such agent or underwriter  and each other Holder and any Person who
controls  such Holder  (within the meaning of the 1933 Act)  against any losses,
claims,  damages  or  liabilities  to which the  Company  or any such  director,
officer,  control person, agent, underwriter or other Holder may become subject,
under the 1933 Act or  otherwise,  insofar as such  losses,  claims,  damages or
liabilities  (or actions or  proceedings,  whether  commenced or threatened,  in
respect  thereof)  arise out of or are based  upon an  untrue  statement  of any
material  fact  contained  in  such   registration   statement,   including  any
preliminary  prospectus or final prospectus  contained therein or any amendments
or supplements  thereto, or arise out of or are based upon the omission to state
therein a material fact  required to be stated  therein or necessary to make the
statements  therein not misleading,  in each case to the extent, but only to the
extent,  that such untrue  statement or omission  was made in such  registration
statement,

<PAGE>
                                      -28-

preliminary  or final  prospectus,  or amendments  or  supplements  thereto,  in
reliance  upon and in  conformity  with  written  information  furnished by such
Holder with respect to such Holder  expressly  for use in  connection  with such
registration,  and such  Holder  shall  reimburse  any  legal or other  expenses
reasonably  incurred  by the  Company  or any such  director,  officer,  control
person,  agent,  underwriter or other Holder in connection with investigating or
defending any such loss, claim, damage,  liability or action,  provided that the
indemnity obligation of each such Holder hereunder shall be limited to and shall
not  exceed  the  proceeds  actually  received  by  such  Holder  upon a sale of
Registrable  Securities  pursuant to a  registration  statement  hereunder,  and
provided,  further that the indemnity agreement contained in this Section 3.7(b)
shall not apply to amounts paid in settlements  effected  without the consent of
such Holder (which consent shall not be unreasonably  withheld).  Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Company or any such director,  officer, Holder,  underwriter or
control person and shall survive the transfer of such securities by such Holder.

                  (c) Any Person seeking  indemnification under this Section 3.7
will (i) give prompt notice to the indemnifying  party of any claim with respect
to which it seeks indemnification,  but the failure to give such notice will not
affect  the  right  to  indemnification  hereunder  (except  to the  extent  the
indemnifying  party is  prejudiced  by such  failure),  and (ii)  unless in such
indemnified party's reasonable judgment a conflict of interest may exist between
such  indemnified and  indemnifying  parties with respect to such claim,  permit
such indemnifying  party, and other  indemnifying  parties  similarly  situated,
jointly to assume the defense of such claim with counsel reasonably satisfactory
to the parties. In the event that the indemnifying parties cannot mutually agree
as to the  selection of counsel,  each  indemnifying  party may retain  separate
counsel to act on its behalf and at its expense.  The indemnified party shall in
all events be entitled to participate in such defense at its expense through its
own  counsel.  If such  defense is not assumed by the  indemnifying  party,  the
indemnifying  party will not be subject to any liability for any settlement made
without its consent  (but such consent will not be  unreasonably  withheld).  No
indemnifying  party  will  consent  to entry of any  judgment  or enter into any
settlement which does not include as an unconditional term thereof the giving by
the  claimant  or  plaintiff  to such  indemnified  party of a release  from all
liability in respect of such claim or litigation.  An indemnifying  party who is
not  entitled  to, or elects not to,  assume the  defense of a claim will not be
obligated  to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable  judgment of any  indemnified  party a conflict of interest may exist
between such indemnified  party and any other of such  indemnified  parties with
respect to such claim, in which event the indemnifying  party shall be obligated
to pay the reasonable fees and expenses of such additional counsel.

                  (d)  If  for  any  reason  the  foregoing  indemnification  is
unavailable  to any  party or  insufficient  to hold it  harmless  as and to the
extent  contemplated by the preceding  paragraphs of this Section 3.7, then each
indemnifying  party  shall  contribute  to the  amount  paid or  payable  by the
indemnified party as a result of such loss,  claim,  damage expense or liability
in such proportion as is appropriate to reflect the relative  benefits  received
by the Company,  on the one hand, and the applicable  indemnified  party, as the
case may be, on the

<PAGE>
                                      -29-

other  hand,  and also the  relative  fault of the  Company  and any  applicable
indemnified  party, as the case may be, as well as any other relevant  equitable
considerations.

         3.8 Rule 144. With a view to making  available to the Holders and their
transferees  the  benefits  of Rule 144 and Rule 144A under the 1933 Act and any
other rule or regulation of the SEC that may at any time permit a Holder to sell
securities of the Company to the public without registration, the Company agrees
to use all  commercially  reasonable  efforts  to take  all  action  that may be
required as a condition to the availability after a Public Offering of Rule 144,
Rule 144A or such other rules or regulations, including without limitation to:

                  (a) make and keep public information available, as those terms
are understood and defined in Rule 144, at all times subsequent to 90 days after
the effective date of the first registration  statement covering an underwritten
public offering filed by the Company;

                  (b) file with the SEC in a timely manner all reports and other
documents  required  of the  Company  under  the  1933  Act  and  the  1934  Act
(including, without limitation, under Section 13 or Section 15 of the 1934 Act);
and

                  (c)  furnish to any Holder  forthwith  upon  request a written
statement by the Company that it has complied with the reporting requirements of
Rule 144 (at any time  after 90 days  after  the  effective  date of said  first
registration  statement filed by the Company),  and of the 1933 Act and the 1934
Act (at any time after it has become subject to such reporting requirements),  a
copy of the most recent  annual or  quarterly  report of the  Company,  and such
other  reports  and  documents  so filed  by the  Company  as may be  reasonably
requested in availing any Holder of any rule or regulation of the SEC permitting
the selling of any such securities without registration.

         3.9 Market Stand-Off Agreement.  Each Stockholder agrees not to sell or
otherwise  transfer or dispose of any Common Stock (or other  securities) of the
Company at the time held by such Stockholder (other than securities  included in
the applicable  registration  statement or shares purchased in the public market
after the effective  date of  registration)  or any interest or future  interest
therein  during the 15-day  period  prior to and such  period (not to exceed 180
days) as is mutually  acceptable to a majority in interest of  Stockholders  and
the underwriter  following the effective date of the  registration  statement of
the Company filed under the 1933 Act which includes securities of the Company to
be sold to the public in an underwritten offer.

                                    ARTICLE 4

                     Certain Miscellaneous Other Provisions

         4.1 Remedies.  The parties to this Agreement acknowledge and agree that
the covenants of the Company and the  Stockholders  set forth in this  Agreement
may be enforced in equity by a decree requiring  specific  performance.  Without
limiting  the  foregoing,  if any dispute  arises  concerning  the sale or other
disposition of any of the securities of the Company subject to this Agreement or
concerning  any  other  provisions  hereof  or the  obligations  of the  parties
hereunder,  the parties to this Agreement agree that an injunction may be issued
in

<PAGE>
                                      -30-

connection  therewith.  Such remedies shall be cumulative and  non-exclusive and
shall be in addition to any other rights and remedies the parties may have under
this Agreement or otherwise.

         4.2  Entire Agreement; Amendment; Termination.

                  (a) This Agreement sets forth the entire  understanding of the
parties, amends in part and restates in its entirety the Stockholders Agreement,
dated  as of  November  26,  1997,  among  the  Company,  the JWC  Holders,  the
Management Holders and the Other Holders party thereto, and supersedes all other
agreements  and all  other  arrangements  and  communications,  whether  oral or
written, with respect to the subject matter hereof.

                  (b) The Schedule of Stockholders  may be amended in writing by
the  Company  to reflect  changes in the  composition  of the  Stockholders  and
changes in their addresses or telecopy  numbers that may occur from time to time
as a result of Permitted  Transfers,  Transfers permitted under Article 2 hereof
or  issuances  contemplated  by Section  4.12.  Amendments  to the  Schedule  of
Stockholders reflecting Permitted Transfers, Transfers permitted under Article 2
hereof or issuances contemplated by Section 4.12 shall become effective when the
amended  Schedule of  Stockholders,  and a copy of this Agreement as executed by
any new  transferee or other new party hereto in  accordance  with Section 4.12,
are filed with the Company. Upon written request of any Stockholder, the Company
will promptly provide to such Stockholder a copy of the Schedule of Stockholders
as in effect at the date of such request therefor.

                  (c) Any other  amendment to this Agreement shall be in writing
and shall  require the written  consent of (i) the Company,  (ii) either the JWC
Representative  or the holders of a majority of Common Stock  Equivalents at the
time  held  by the  JWC  Holders,  (iii)  if  adverse  to the  interests  of the
Stockholder Group comprised of the Other Holders,  (A) the holders of a majority
of the Common Stock  Equivalents at the time held by the Other Holders,  (B) the
holders of a majority of the Common  Stock  Equivalents  at the time held by the
UBS Holders,  and (C) the holders of a majority of the Common Stock  Equivalents
at the  time  held by the  PPM/ReliaStar  Holders,  and (iv) if  adverse  to the
interests of a particular  Stockholder or any Stockholder  Group (other than the
Stockholder  Group  comprised of the Other  Holders),  that  Stockholder  or the
holders of a majority of the Common Stock  Equivalents  at the time held by that
Stockholder Group, as the case may be.

                  (d) Notwithstanding  the foregoing  provisions of this Section
4.2, this  Agreement  may be terminated at any time upon the written  consent of
(i) the  Company  and  (ii)  the  holders  of a  majority  of the  Common  Stock
Equivalents at the time held by the Management Holders,  the Other Holders,  the
UBS  Holders,  the  PPM/ReliaStar  Holders  and  the  JWC  Holders  (or  the JWC
Representative), each voting separately as a group; provided that the provisions
of Sections 3.7 and 4.20 shall survive any termination of this Agreement.

         4.3 Severability.  The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other  provisions  hereof,  and
this  Agreement  shall  be  construed  in  all  respects  as if the  invalid  or
unenforceable provision were omitted.

<PAGE>
                                      -31-


         4.4 Notices. All notices,  consents and other communications  required,
or contemplated  under this Agreement shall be in writing and shall be delivered
in the manner specified herein or, in the absence of such  specification,  shall
be deemed to have been duly given (i) three (3) Business  Days after  mailing by
first class certified mail, postage prepaid,  (ii) when delivered by hand, (iii)
upon  confirmation  of receipt  by  telecopy,  or (iv) one day after  sending by
overnight delivery service, to the respective addresses of the parties set forth
below:

                  For notices and communications to the Company:

                           c/o J.W. Childs Associates, L.P.
                           One Federal Street
                           Boston, MA 02110
                           Attention:  John W. Childs
                           Telecopy:  617-753-1101

                           with a copy to:

                           Desa International, Inc.
                           2701 Industrial Drive
                           Bowling Green, KY  42102
                           Attention:  President
                           Telecopy:  502-781-9807

                  For notices and  communications  to the  Stockholders,  to the
                  respective   addresses   set   forth   in  the   Schedule   of
                  Stockholders.

                  With a copy in the case of the JWC Holders to:

                           Sullivan & Worcester LLP
                           One Post Office Square
                           Boston, MA  02109
                           Attention: Christopher Cabot, Esq.
                           Telecopy:  617-338-2880

By notice  complying  with the  foregoing  provisions  of this Section 4.4, each
party shall have the right to change the mailing  address or telecopy number for
future notices and communications to such party.

         4.5 Binding Effect;  Assignment.  This Agreement shall binding upon and
inure to the benefit of the parties hereto and to their respective  transferees,
successors,  assigns,  heirs and administrators,  provided that the rights under
this Agreement may not be assigned except as expressly  provided herein. No such
assignment shall relieve an assignor of its obligations hereunder.

<PAGE>
                                      -32-

         4.6  Termination.   Without  affecting  any  other  provision  of  this
Agreement  requiring  termination  of any  rights  in favor of any  Stockholder,
Permitted  Transferee  or  any  other  transferee  of  Subject  Securities,  the
provisions of Articles 2 and 3 (other than Section 3.7, which in any event shall
survive any  termination of this Agreement or the  termination of this Agreement
as to any  Stockholder,  Permitted  Transferee  or other  transferee  when  such
Stockholder, Permitted Transferee or other transferee no longer owns any Subject
Securities)  and Sections 4.17,  4.18 and 4.19 of this Agreement shall terminate
as to such Stockholder, Permitted Transferee or other transferee, when, pursuant
to and in accordance with this Agreement, such Stockholder, Permitted Transferee
or other transferee, as the case may be, no longer owns any Subject Securities.

         4.7 Recapitalizations, Exchanges, etc. The provisions of this Agreement
shall  apply,  to the full extent set forth  herein with respect to Common Stock
Equivalents  and to any and all  shares of capital  stock of the  Company or any
successor or assign of the Company  (whether by merger,  consolidation,  sale of
assets or  otherwise)  which may be issued in respect of, in exchange for, or in
substitution  of the Common Stock  Equivalents,  by reason of a stock  dividend,
stock split, stock issuance, reverse stock split, combination, recapitalization,
reclassification, merger, consolidation or otherwise. Upon the occurrence of any
such events, amounts hereunder shall be appropriately adjusted.

         4.8  JWC Representative.

                  (a) Each JWC Holder hereby  designates  and appoints (and each
Permitted  Transferee  of each  such  JWC  Holder  shall  be  deemed  to have so
designated  and appointed)  John W. Childs and Adam L. Suttin,  and each of them
acting singly, with full power of substitution (the "JWC  Representative"),  the
representative  of each such  Person to perform  all such acts as are  required,
authorized or  contemplated by this Agreement to be performed by any such Person
and hereby  acknowledges  that the JWC  Representative  shall be the only Person
authorized to take any action so required,  authorized or  contemplated  by this
Agreement by each such Person.  Each such Person further  acknowledges  that the
foregoing  appointment  and  designation  shall be deemed to be coupled  with an
interest and shall  survive the death or  incapacity  of such Person.  Each such
Person hereby authorizes (and each Permitted  Transferee shall be deemed to have
authorized)  the other  parties  hereto to disregard  any notice or other action
taken  by  such  Person   pursuant  to  this   Agreement   except  for  the  JWC
Representative. The other parties hereto are and will be entitled to rely on any
action so taken or any notice given by the JWC  Representative  and are and will
be entitled and  authorized to give notices only to the JWC  Representative  for
any notice  contemplated  by this  Agreement to be given to any such  Person.  A
successor to the JWC  Representative  may be chosen by the holders of a majority
of the Common Stock  Equivalents  at the time held by the JWC Holders,  provided
that written notice thereof is given by the successor JWC  Representative to the
Company, the Other Holders, the Management Holders and the other JWC Holders.

                  (b) Each of the JWC  Holders  agrees to be bound by all of the
provisions  of paragraph  3.07 of the First  Amended and  Restated  Agreement of
Limited  Partnership of J.W. Childs Equity  Partners,  L.P. dated as of December
20, 1995 (the "JWC Equity Partners Agreement") including without limitation, the
provisions of paragraph 3.07(b) thereof, and

<PAGE>
                                      -33-

further  agrees  to be  bound by the  confidentiality  provisions  set  forth in
paragraph 14.08 of the JWC Equity Partners  Agreement as if such JWC Holder were
a limited partner under the JWC Equity Partners Agreement.

         4.9 Action  Necessary to Effectuate the  Agreement.  The parties hereto
agree to take or cause to be taken all such corporate and other action as may be
necessary to effect the intent and purposes of this Agreement.

         4.10 Purchase for Investment;  Legend on Certificate.  Each Stockholder
acknowledges  that all of the securities of the Company held by such Stockholder
are being (or have  been)  acquired  for  investment  and not with a view to the
distribution  thereof and that no transfer,  hypothecation  or assignment of any
such  securities  (including  the Common Stock for which such  securities may be
exercisable or  exchangeable  or into which such  securities may be convertible)
may be made except in compliance  with applicable  federal and state  securities
laws.  All  the  certificates  or  other  instruments  representing  any of such
securities  (including  the  Common  Stock  for  which  such  securities  may be
exercisable or  exchangeable  or into which such  securities may be convertible)
which are now or hereafter held by any Stockholder shall be subject to the terms
of this  Agreement  and shall have  endorsed  in  writing,  stamped or  printed,
thereon either of the following legends:

         "THE  SECURITIES  REPRESENTED  BY THIS  CERTIFICATE  ARE SUBJECT TO THE
         TERMS AND CONDITIONS OF AN AMENDED AND RESTATED STOCKHOLDERS  AGREEMENT
         DATED AS OF OCTOBER 9, 1998,  AS AMENDED  FROM TIME TO TIME,  A COPY OF
         WHICH IS ON FILE WITH AND AVAILABLE FROM THE SECRETARY OF THE COMPANY."

or

         "THE SECURITIES  REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
         PROVISIONS REGARDING THE VOTING OF SUCH SECURITIES AND CERTAIN TRANSFER
         RESTRICTIONS  SET  FORTH  IN  THE  AMENDED  AND  RESTATED  STOCKHOLDERS
         AGREEMENT  DATED AS OF OCTOBER 9, 1998, AS AMENDED FROM TIME TO TIME, A
         COPY OF  WHICH  MAY BE  OBTAINED  FROM  THE  COMPANY  AT ITS  PRINCIPAL
         EXECUTIVE OFFICES."

         4.11 Effectiveness of Transfers.  Any Subject Securities transferred by
a Stockholder (other than pursuant to an effective  registration statement under
the 1933 Act or a Rule 144 Transaction)  shall be held by the transferee thereof
pursuant to this Agreement. Such transferee shall, except as otherwise expressly
stated herein, have all the rights and be subject to all of the obligations of a
Stockholder under this Agreement automatically and without requiring any further
act by such  transferee or by any parties to this Agreement.  Without  affecting
the preceding sentence,  if such transferee is not a Stockholder on the dates of
such transfer,  then such  transferee,  as a condition to such  transfer,  shall
confirm such transferee's  obligations hereunder in accordance with Section 4.12
hereof. No Subject Securities shall be

<PAGE>
                                      -34-

transferred on the Company's books and records, and no transfer of thereof shall
be otherwise effective,  unless any such transfer is made in accordance with the
terms and conditions of this Agreement,  and the Company is hereby authorized by
all of the  Stockholders  to enter  appropriate  stop transfer  notations on its
transfer records to give effect to this Agreement.

         4.12  Additional   Stockholders.   Any  Person  acquiring  any  Subject
Securities  (except for any  acquisition  thereof (a) in an offering  registered
under  the 1933 Act or (b) in a Rule 144  Transaction)  shall on or  before  the
transfer  or  issuance  to it of such  Subject  Securities,  sign a  counterpart
signature page hereto in form reasonably satisfactory to the Company and the JWC
Representative and shall thereby become a party to this Agreement; provided that
a  transferee  which is a pledgee  and  within  the  definition  of a  Permitted
Transferee  shall not be obligated so to agree until  foreclosure on its pledge.
The Company shall require each Person  acquiring  any  restricted  stock under a
restricted stock plan or an option, warrant or other right to purchase shares of
Common  Stock under any option or other equity  participation  plan to execute a
counterpart  signature page hereto as a JWC Holder, a Management Holder or Other
Holder, as may be appropriate.

         4.13 No Waiver.  No course of  dealing  and no delay on the part of any
party  hereto  in  exercising  any  right,  power or  remedy  conferred  by this
Agreement shall operate as a waiver thereof or otherwise  prejudice such party's
rights, powers and remedies. No single or partial exercise of any rights, powers
or remedies  conferred  by this  Agreement  shall  preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.

         4.14  Counterparts.  This  Agreement  may be  executed  in two or  more
counterparts each of which shall be deemed an original but all of which together
shall constitute one and the same instrument, and all signatures need not appear
on any one counterpart.

         4.15 Headings, etc. All headings and captions in this Agreement are for
purposes of  references  only and shall not be  construed to limit or affect the
substance of this  Agreement.  Words used in this  Agreement,  regardless of the
gender  and  number  used,  will be deemed and  construed  to include  any other
gender,  masculine,  feminine,  or neuter,  and any other  number,  singular  or
plural,  as  the  context  requires.  As  used  in  this  Agreement,  the  words
"including",  "includes" and  "included" are not limiting,  and the word "or" is
not exclusive.  The words "this  Agreement",  "hereto",  "herein",  "hereunder",
"hereof",  and words or phrases of similar  import refer to this  Agreement as a
whole,  together with any and all Schedules and Exhibits hereto,  and not to any
particular article, section,  subsection,  paragraph, clause or other portion of
this Agreement.

         4.16  Governing  Law.  This  Agreement  shall be  construed  under  and
governed  by the  substantive  and  procedural  laws of the  State  of  Delaware
applicable to a contract executed in and wholly performed within Delaware.

<PAGE>

                                      -35-

         4.17 Preemptive Right Provisions. The Company hereby agrees, so long as
both (i) the Preemptive Stockholders hold any Common Stock Equivalents, and (ii)
a Public Offering shall not have occurred, as follows:

                  (a) Preemptive Rights. Except as otherwise provided in Section
4.17(b)  hereof,  if the Company  proposes  to issue or sell in an offering  any
shares of its capital stock or any security  convertible  into,  exchangeable or
exercisable  for or having rights to purchase any shares of capital stock of the
Company (the "Company  Securities") to any person,  the Company shall deliver to
the Preemptive  Stockholders at the time holding any Subject Securities at least
20 days'  prior  written  notice  in  respect  of such  proposed  offering  (the
"Preemptive  Rights  Notice")  stating its desire to issue or sell such  Company
Securities.  The  Preemptive  Rights  Notice  must  specify the class of and the
amount of such Company  Securities  that the Company desires so to issue or sell
in such proposed offering and the price,  payment terms and other material terms
and conditions at and on which it is willing to sell such Company Securities and
the material terms, provisions and conditions of such Company Securities. Within
10 days after the Company's delivery of a Preemptive Rights Notice in respect of
a proposed offering (the "Election Period"),  each Preemptive Stockholder at the
time holding any Subject  Securities  shall have the right to elect to purchase,
at the designated offering price and on other terms and conditions  specified in
the Preemptive Rights Notice, and in the priority and amounts specified below in
this Section 4.17(a), such Company Securities as follows:

                           (i)      First,   solely  in  the  case  of   Company
                                    Securities  which are not Junior  Securities
                                    (as  hereinafter  defined),  so  long as any
                                    PPM/ReliaStar  Holder  shall hold any of the
                                    Preferred  Securities  (such a holder  being
                                    hereinafter   sometimes  referred  to  as  a
                                    "PPM/ReliaStar   Preferred  Holder"),   such
                                    PPM/ReliaStar  Preferred  Holder  shall have
                                    the  right  to  acquire  up to its pro  rata
                                    portion of such Company Securities (based on
                                    the   respective   holdings   of   Preferred
                                    Securities,  at the  time of the  Preemptive
                                    Rights   Notice,   of   each   PPM/ReliaStar
                                    Preferred  Holder  electing to exercise  its
                                    preemptive   rights   under   this   Section
                                    4.17(a)(i)   in  respect  of  such   Company
                                    Securities);  provided that, notwithstanding
                                    anything to the contrary  contained  herein,
                                    if the  PPM/ReliaStar  Preferred  Holders do
                                    not exercise  their  preemptive  rights with
                                    respect  to all of such  Company  Securities
                                    pursuant to this  Section  4.17(a)(i),  then
                                    this Section 4.17(a)(i) shall cease to apply
                                    to   such   Company   Securities   and   the
                                    PPM/ReliaStar Preferred Holders shall not be
                                    entitled  to  acquire  any of  such  Company
                                    Securities  (other than in their  respective
                                    capacities  as  a  Stockholder  pursuant  to
                                    Section 4.17(a)(ii) hereof); and

                           (ii)     Second,  in the case of  Company  Securities
                                    (A) which are  Junior  Securities  or (B) in
                                    respect of which Section  4.17(a)(i)  hereof
                                    shall cease to apply pursuant to the proviso
                                    contained in said

<PAGE>
                                      -36-

                                    Section    4.17(a)(i),    each    Preemptive
                                    Stockholder  shall have the right to acquire
                                    up to that number of such Company Securities
                                    so  that,   after  giving   effect  to  such
                                    purchase,  such Preemptive Stockholder shall
                                    continue to maintain in the  aggregate  his,
                                    her or its same  proportionate  ownership of
                                    Common Stock  Equivalents  of the Company as
                                    of the date of the Preemptive Rights Notice.
                                    For purposes of determining the ownership of
                                    Common Stock  Equivalents  of the Company as
                                    of the date of the Preemptive  Rights Notice
                                    under the  preceding  sentence,  each holder
                                    (including   but   not   limited   to   each
                                    Stockholder)  of  Vested  Options  shall  be
                                    treated  as though  he,  she or it had fully
                                    converted, exchanged or exercised all Vested
                                    Options  at the time held by him,  her or it
                                    at the then existing conversion, exchange or
                                    exercise price or ratio.

Each  Preemptive  Stockholder  at the time  holding any Subject  Securities  may
exercise his, her or its rights under this Section  4.17(a) solely by delivering
a notice to the Company  during the  Election  Period.  Should  such  Preemptive
Stockholder  elect to  purchase  any such  Company  Securities  pursuant to this
Section  4.17(a),  such  Preemptive  Stockholder  shall  purchase  such  Company
Securities  at the closing and on the closing  date set forth in the  Preemptive
Rights Notice.  The provisions of this Section  4.17(a) shall apply similarly to
successive proposed offerings by the Company of Company Securities.

                  (b) Exclusions. The provisions of Section 4.17(a) hereof shall
not apply to the issuance or sale of (i) Junior Securities issued or issuable to
officers, directors or employees of the Company or any subsidiary of the Company
who are not affiliated with J.W. Childs Associates, L.P., (ii) shares of capital
stock of the Company  Securities issued or issuable upon the exercise,  exchange
or conversion of any Company Security or other securities, options, warrants and
other rights issued by the Company and outstanding as of the date hereof,  after
giving  effect  to  the  closing  of  certain   transactions  that  are  closing
concurrently  with the  issuance  of the  Subject  Securities  pursuant  to this
Agreement,  (iii) Company  Securities  issued or issuable in connection with any
pro rata stock split, stock dividend or recapitalization by or reorganization of
the Company,  (iv) Company  Securities issued or issuable as a pro rata dividend
on the Common Stock, (v) Company Securities issued or issuable by the Company in
connection with and as consideration  for the acquisition of another business or
entity  by the  Company  or any of its  subsidiaries,  (vi)  shares  of Series C
Preferred  Stock  issued or  issuable  as a pro rata  dividend  on the  Series C
Preferred Stock and (vii) Company Securities issued or issuable to any person or
entity who (A) is neither an  Affiliate  of JWC Equity  Partners nor a financial
buyer and (B) is either (I) directly or indirectly  through its  subsidiaries  a
significant  actual  or  prospective  supplier  of goods to or  customer  of the
Company or any of its subsidiaries,  to whom such Company  Securities are issued
or  issuable  for  the  purpose  of   establishing  or  enhancing  the  business
relationship  between  such  supplier  or  customer  and  the  Company  and  its
subsidiaries  or (II) engaged in, and having a principal  business  unit engaged
in,  manufacturing or marketing  tools,  specialty  tools,  decorative,  indoor,
outdoor or other heating products,  lighting products,  security products,  home
improvement  or  decorative  products or other  accessories  or products for the
home.

<PAGE>
                                      -37-


                  (c) For  purposes  of this  Section  4.17,  the  term  "Junior
Security" shall mean (i) any shares of the Voting Common Stock and the Nonvoting
Common  Stock of the  Company  and any  other  class or  series  of stock of the
Company which, by the terms of the Certificate of  Incorporation  of the Company
or of the  instrument  by which the Board of Directors  of the  Company,  acting
pursuant to authority  granted in such Certificate of  Incorporation,  shall fix
the relative rights, preferences and limitations thereof, shall be junior to the
Series C  Preferred  Stock in respect of the right to  receive  dividends  or to
participate  in any  distribution  of assets  (including  but not limited to any
distribution  of assets in connection with the liquidation of the Company) other
than by way of dividends, and (ii) any options or warrants or similar securities
or rights to acquire from the Company any securities  described in clause (i) of
this definition.

         4.18 Transactions with Affiliates.  Other than the Management Agreement
and other agreements entered into on or prior to the date hereof and arms-length
agreements entered into in the ordinary course of business after the date hereof
on terms no less  favorable to the Company than would be available in agreements
entered into with Persons who are not  Affiliates  of JWC Equity  Partners,  the
Company  shall not enter into any  transaction  with any Affiliate of JWC Equity
Partners  without the  consent of the holders of a majority of the Common  Stock
Equivalents at the time held in the aggregate by the Management  Holders and the
Other  Holders,  unless  such  transaction  shall  (a) have been  approved  by a
majority of the  directors of the Company who are not  affiliated  or associated
with JWC Equity  Partners  and (b) be on terms no less  favorable to the Company
than would be  available  in  agreements  entered  into with Persons who are not
Affiliates of JWC Equity Partners.

         4.19 Certain Covenants of the Company.  The Company hereby agrees,  for
the benefit of the UBS Holders,  the HMTF Holders and the PPM/ReliaStar  Holders
for so long as the Public Float Date shall not have  occurred,  the Company will
comply  with and will  cause  its  subsidiaries  to  comply  with the  following
covenants:

                  (a) Annual  Statements.  As soon as available and in any event
within 90 days after the close of each fiscal year of the Company  ending  after
the date of this  Agreement,  the Company  will  deliver to each of UBS Capital,
HMTF Inc., PPM America,  Inc. and ReliaStar  Financial  Corp. a balance sheet of
the Company and its  subsidiaries  and statements of income and of cash flows of
the Company and its  subsidiaries,  audited by any "big six" independent  public
accounting firm selected by the Company (or other independent  public accounting
firm  selected by the Company and  reasonably  acceptable to the UBS Holders and
the HMTF  Holders),  showing  the  financial  position  of the  Company  and its
subsidiaries  as of the  close  of  such  fiscal  year  and the  results  of the
operations of the Company and its subsidiaries during such fiscal year, all on a
consolidated basis. Each of the financial  statements delivered pursuant to this
Section 4.19(a) will be accompanied by a report, without material qualification,
of such accounting  firm to the effect that such financial  statements have been
prepared, except as may be otherwise noted therein, in accordance with generally
accepted accounting principles consistently applied.

<PAGE>
                                      -38-

                  (b) Monthly  Statements.  Within 30 days after the end of each
of the first eleven months in each fiscal year of the Company,  the Company will
deliver to each of UBS  Capital,  HMTF Inc.,  PPM America,  Inc.  and  ReliaStar
Financial  Corp. a consolidated  unaudited  balance sheet of the Company and its
subsidiaries  and  statements of income and of cash flows of the Company and its
subsidiaries as of the end of each such month, all on a consolidated basis, with
(i) a comparison of such month's results to the budgeted  results for such month
and to the  corresponding  month of the prior fiscal year and, (ii) a comparison
of the results for the period from the beginning of the then current fiscal year
to the end of such  month to the  budgeted  results  for such  period and to the
corresponding  period of the prior fiscal year, certified by the chief financial
officer of the Company to be true and correct in all  material  respects  and to
have been prepared, except as may be otherwise noted therein, in accordance with
generally accepted accounting principles consistently applied, subject to normal
year-end adjustments and the addition of footnotes.

                  (c) Other Financial  Information.  The Company will deliver to
each of UBS Capital, HMTF Inc., PPM America, Inc. and ReliaStar Financial Corp.,
within 90 days after the  commencement  of each fiscal year,  projected  monthly
balance  sheets  and  statements  of income for such  fiscal  year  prepared  by
management of the Company.

                  (d) Notice of  Litigation,  Defaults,  Etc.  The Company  will
promptly give notice to each of UBS Capital,  HMTF Inc.,  PPM America,  Inc. and
ReliaStar  Financial  Corp. of any  litigation or  administrative  proceeding to
which the Company or any of its  subsidiaries may hereafter become a party which
has or, in the good faith business judgment of senior management of the Company,
is reasonably  likely to have a material adverse effect on the business,  assets
or financial  condition of the Company and its  subsidiaries,  taken as a whole.
Promptly upon any executive  officer of the Company  obtaining  knowledge of any
default with respect to  indebtedness  for borrowed money involving in excess of
$25,000,000  in principal  amount,  the Company will furnish a notice to each of
UBS  Capital,  HMTF Inc.,  PPM  America,  Inc.  and  ReliaStar  Financial  Corp.
specifying  the nature and period of existence and the action the Company or any
of its  subsidiaries  has  taken,  is taking or  proposes  to take with  respect
thereto.  Promptly after the receipt  thereof,  the Company will provide each of
UBS Capital,  HMTF Inc., PPM America,  Inc. and ReliaStar Financial Corp. copies
of any reports as to adequacies in accounting  controls submitted by independent
accountants with respect to the Company and its subsidiaries.

                  (e) Other  Information.  From  time to time  upon the  written
request of UBS  Capital,  HMTF Inc.,  PPM America,  Inc. or ReliaStar  Financial
Corp.,  the Company  will  furnish  such  information  regarding  the  business,
affairs,  prospects and financial  condition of the Company and its subsidiaries
as the representatives of any UBS Holder or HMTF Holder or PPM/ReliaStar  Holder
may reasonably  request;  provided that,  upon the request and as a condition to
the delivery of such information,  each of the UBS Holders, HMTF Holders and the
PPM/ReliaStar  Holders  who is to receive  such  information  shall  execute and
deliver a  confidentiality  and  nondisclosure  agreement in form and  substance
reasonably  satisfactory to the Company. Each such representative shall have the
right during normal  business hours to examine the financial  books and records,
and  the  certificate  of   incorporation,   bylaws,   minutes  of  meetings  of
stockholders, boards of directors and committees thereof, stockholders records

<PAGE>
                                      -39-

and similar corporate  records,  of the Company and its subsidiaries and to make
copies,  notes  and  abstracts  therefrom,  all at  such  reasonable  times  and
intervals  as such  UBS  Holder  or HMTF  Holder  or  PPM/ReliaStar  Holder  may
reasonably request.

         4.20   Confidentiality Covenant.

                  (a)  Each  of the  UBS  Holders,  the  HMTF  Holders  and  the
PPM/ReliaStar  Holders agrees to keep  confidential any information or materials
provided  by or on  behalf  of  the  Company  hereunder,  except  (i)  as may be
otherwise  required by law and (ii) such information and materials as (A) are or
become generally  available to the public other than as a result of a disclosure
in violation of this Agreement,  (B) was independently  acquired or developed by
such Stockholder  without violating any of its obligations under this Agreement,
or (C) becomes available to such Stockholder on a  nonconfidential  basis from a
person  who is not  and  was  not to such  Stockholder's  knowledge  bound  by a
confidentiality  obligation  to the  Company,  or is not and  was not  otherwise
prohibited from  transmitting such information or materials to such Stockholder.
Notwithstanding the foregoing, each of the UBS Holders, the HMTF Holders and the
PPM/ReliaStar  Holders  shall have the right to  disclose  such  information  or
materials to any  prospective  purchaser of  securities  of the Company owned by
such Stockholder,  provided that such prospective  purchaser shall have executed
and  delivered  a  confidentiality  and  nondisclosure  agreement  in  form  and
substance reasonably satisfactory to the Company.

                  (b)  Each  of  the  UBS   Holders,   HMTF   Holders   and  the
PPM/ReliaStar  Holders acknowledges that securities laws prohibit any person who
has  received  material  non-public  information  regarding  the  Company or its
subsidiaries  from  purchasing  or  selling  securities  of the  Company or from
communicating such information to any other person under  circumstances in which
it is reasonably foreseeable that such person is likely to purchase or sell such
securities.  Each of the UBS Holders, HMTF Holders and the PPM/ReliaStar Holders
agrees that it will not, at any time that it has  received  material  non-public
information  regarding  the  Company  or  its  subsidiaries,  purchase  or  sell
securities of the Company in violation of such  securities  laws or  communicate
such  information  to any  other  person  under  circumstances  in  which  it is
reasonably  foreseeable  that such  person is  likely to  purchase  or sell such
securities in violation of such securities laws.

         4.21  Restatement of Stockholders  Agreement.  This Agreement amends in
part and  restates  in its  entirety  the  Stockholders  Agreement,  dated as of
November 26, 1997, among the Company,  the JWC Holders,  the Management  Holders
and the Other Holders party thereto.

                         [Signatures on Following Pages]


<PAGE>



                            Desa Holdings Corporation
                   Amended and Restated Stockholders Agreement

                           Counterpart Signature Page

         IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as an
instrument under SEAL as of the date first set forth above.

                                  THE COMPANY:

                                  DESA HOLDINGS CORPORATION


                                  By:/s/____________________________
                                        Name:
                                        Title:




<PAGE>

                            Desa Holdings Corporation
                   Amended and Restated Stockholders Agreement

                           Counterpart Signature Page

         IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as an
instrument under SEAL as of the date first set forth above.

                                  THE MANAGEMENT HOLDERS:

                                  /s/ Robert H. Elman
                                  Robert H. Elman

                                  /s/ Terry G. Scariot
                                  Terry G. Scariot

                                  /s/ John M. Kelly
                                  John M. Kelly

                                  /s/ Blaine Chickering
                                  Blaine Chickering

                                  /s/ Donald W. Denton
                                  Donald W. Denton

                                  /s/ Jake Miller
                                  Jake Miller

                                  /s/ Scott M. Nehm
                                  Scott M. Nehm

                                  /s/ Edward G. Patrick
                                  Edward G. Patrick

                                  /s/ Jeffrey Polofsky
                                  Jeffrey Polofsky

                                  /s/ Ralph Pratt
                                  Ralph Pratt

                                  /s/ Douglas D. Rohrer
                                  Douglas D. Rohrer

                                  /s/ Sue Walker
                                  Sue Walker

<PAGE>

                            Desa Holdings Corporation
                   Amended and Restated Stockholders Agreement

                           Counterpart Signature Page

         IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as an
instrument under SEAL as of the date first set forth above.

                                  THE MANAGEMENT HOLDERS, continued:

                                  /s/ David Keown
                                  David Keown

                                  /s/ George Johnson
                                  George Johnson

                                  /s/ Greg Becker
                                  Greg Becker

                                  /s/ Dennis Cornett
                                  Dennis Cornett

                                  /s/ Boyd Jeffries
                                  Boyd Jeffries

                                  /s/ Joe Lee
                                  Joe Lee

                                  /s/ Steve Marcum
                                  Steve Marcum

                                  /s/ Marilyn Parrigin
                                  Marilyn Parrigin

                                  /s/ Gary Sanders
                                  Gary Sanders

                                  /s/ Scott Slater
                                  Scott Slater

                                  /s/ John Barrett
                                  John Barrett

                                  /s/ Doug Smith
                                  Doug Smith

<PAGE>

                            Desa Holdings Corporation
                   Amended and Restated Stockholders Agreement

                           Counterpart Signature Page

         IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as an
instrument under SEAL as of the date first set forth above.

                                  THE MANAGEMENT HOLDERS, continued:

                                  /s/ Dan Waters
                                  Dan Waters

                                  /s/ Richard Willey
                                  Richard Willey

                                  /s/ Doug Green
                                  Doug Green

                                  /s/ Mike Head
                                  Mike Head

                                  /s/ Marty Mozingo
                                  Marty Mozingo

                                  /s/ Nick Noble
                                  Nick Noble

                                  /s/ Sarah Perry
                                  Sarah Perry

                                  /s/ Ivan Shelburne
                                  Ivan Shelburne

                                  /s/ Kirk Weber
                                  Kirk Weber

                                  /s/ Tony James
                                  Tony James

                                  /s/ Steve Manning
                                  Steve Manning

                                  /s/ John Thomas
                                  John Thomas

<PAGE>
                            Desa Holdings Corporation
                   Amended and Restated Stockholders Agreement

                           Counterpart Signature Page

         IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as an
instrument under SEAL as of the date first set forth above.

                                  THE MANAGEMENT HOLDERS, continued:

                                  /s/ Emmet Roche
                                  Emmet Roche

                                  /s/ Brad Jensen
                                  Brad Jensen

                                  /s/ Gary McGriff
                                  Gary McGriff

                                  /s/ Wai Shing Ko
                                  Wai Shing Ko

                                  /s/ Thomas Harris
                                  Thomas Harris

                                  /s/ Joseph Bulhoes
                                  Joseph Bulhoes

                                  /s/ Mark J. Elman
                                  Mark J. Elman

                                  /s/ Valerie N. Elman
                                  Valerie N. Elman

                                  /s/ Wendy J. Elman
                                  Wendy J. Elman

<PAGE>
                            Desa Holdings Corporation
                   Amended and Restated Stockholders Agreement

                           Counterpart Signature Page

         IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as an
instrument under SEAL as of the date first set forth above.

                                           THE JWC HOLDERS:


                                           /s/ John W. Childs
                                           John W. Childs

/s/ Jerry D. Horn                          /s/ Steven G. Segal
Jerry D. Horn                              Steven G. Segal

/s/ Raymond B. Rudy                        /s/ Lambros J. Lambros
Raymond B. Rudy                            Lambros J. Lambros

/s/ Adam L. Suttin                         /s/ Glenn A. Hopkins
Adam L. Suttin                             Glenn A. Hopkins


         By executing  above,  each of the  foregoing  JWC Holders  acknowledges
that,  pursuant  to  Section  4.8 of  this  Amended  and  Restated  Stockholders
Agreement,  each of the foregoing JWC Holders has  designated and appointed John
W.  Childs  and  Adam  L.  Suttin,  and  each  of  them  acting  singly,  as its
representative  to perform all acts as are required,  authorized or contemplated
by this Amended and Restated Stockholders Agreement.



<PAGE>

                            Desa Holdings Corporation
                   Amended and Restated Stockholders Agreement

                           Counterpart Signature Page

         IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as an
instrument under SEAL as of the date first set forth above.

                                            THE JWC HOLDERS, continued:


/s/ Richard S. Childs                       /s/ James E. Childs
Richard S. Childs                           James E. Childs

/s/ Edward D. Yun                           /s/ Dana L. Schmaltz
Edward D. Yun                               Dana L. Schmaltz

STEVEN G. SEGAL 1995                        SGS-III FAMILY LIMITED PARTNERSHIP
IRREVOCABLE TRUST

By:/s/_____________________                 By:/s/______________________
    Title:                                        Title:

SUTTIN FAMILY TRUST                         SGS 1995 FAMILY
                                            LIMITED PARTNERSHIP

By:/s/_____________________                 By:/s/_____________________
       Title:                                      Title:


         By executing  above,  each of the  foregoing  JWC Holders  acknowledges
that,  pursuant  to  Section  4.8 of  this  Amended  and  Restated  Stockholders
Agreement,  each of the foregoing JWC Holders has  designated and appointed John
W.  Childs  and  Adam  L.  Suttin,  and  each  of  them  acting  singly,  as its
representative  to perform all acts as are required,  authorized or contemplated
by this Amended and Restated Stockholders Agreement.



<PAGE>

                            Desa Holdings Corporation
                   Amended and Restated Stockholders Agreement

                           Counterpart Signature Page

         IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as an
instrument under SEAL as of the date first set forth above.

                                                 THE JWC HOLDERS, continued:

OFS INVESTMENT PARTNERS                          BOCK FAMILY TRUST


By:/s/_________________________                  By:/s/________________________
         Title:                                         Title:


/s/James T. McKitrick                            /s/G. Dean Longnecker
James T. McKitrick                               G. Dean Longnecker



         By executing  above,  each of the  foregoing  JWC Holders  acknowledges
that,  pursuant  to  Section  4.8 of  this  Amended  and  Restated  Stockholders
Agreement,  each of the foregoing JWC Holders has  designated and appointed John
W.  Childs  and  Adam  L.  Suttin,  and  each  of  them  acting  singly,  as its
representative  to perform all acts as are required,  authorized or contemplated
by this Amended and Restated Stockholders Agreement.



<PAGE>

                            Desa Holdings Corporation
                   Amended and Restated Stockholders Agreement

                           Counterpart Signature Page

         IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as an
instrument under SEAL as of the date first set forth above.

                                  THE JWC HOLDERS, continued:

                                  J.W. CHILDS EQUITY PARTNERS, L.P.

                                  By: J.W. Childs Advisors, L.P.,
                                         its General Partner

                                  By: J.W. Childs Associates, L.P.,
                                         its General Partner

                                  By: J.W. Childs Associates, Inc.,
                                         its General Partner


                                  By:/s/____________________________
                                         Title:

                                  JWC EQUITY FUNDING, INC.


                                  By:/s/____________________________
                                         Name:
                                         Title:




         By executing  above,  each of the  foregoing  JWC Holders  acknowledges
that,  pursuant  to  Section  4.8 of  this  Amended  and  Restated  Stockholders
Agreement,  each of the foregoing JWC Holders has  designated and appointed John
W.  Childs  and  Adam  L.  Suttin,  and  each  of  them  acting  singly,  as its
representative  to perform all acts as are required,  authorized or contemplated
by this Amended and Restated Stockholders Agreement.



<PAGE>

                            Desa Holdings Corporation
                   Amended and Restated Stockholders Agreement

                           Counterpart Signature Page

         IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as an
instrument under SEAL as of the date first set forth above.

                                   THE JWC HOLDERS, continued:


                                   /s/Mario E. Soussou
                                   Mario E. Soussou









         By executing  above,  each of the  foregoing  JWC Holders  acknowledges
that,  pursuant  to  Section  4.8 of  this  Amended  and  Restated  Stockholders
Agreement,  each of the foregoing JWC Holders has  designated and appointed John
W.  Childs  and  Adam  L.  Suttin,  and  each  of  them  acting  singly,  as its
representative  to perform all acts as are required,  authorized or contemplated
by this Amended and Restated Stockholders Agreement.



<PAGE>

                            Desa Holdings Corporation
                   Amended and Restated Stockholders Agreement

                           Counterpart Signature Page

         IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as an
instrument under SEAL as of the date first set forth above.

                                  THE JWC HOLDERS, continued:

                                  ISABELLE M. SOUSSOU TRUST

                                  By:/s/Mario E. Soussou
                                       Mario E. Soussou, Trustee


                                  MARIELLA Z. SOUSSOU TRUST

                                  By:/s/Mario E. Soussou
                                       Mario E. Soussou, Trustee








         By executing  above,  each of the  foregoing  JWC Holders  acknowledges
that,  pursuant  to  Section  4.8 of  this  Amended  and  Restated  Stockholders
Agreement,  each of the foregoing JWC Holders has  designated and appointed John
W.  Childs  and  Adam  L.  Suttin,  and  each  of  them  acting  singly,  as its
representative  to perform all acts as are required,  authorized or contemplated
by this Amended and Restated Stockholders Agreement.




<PAGE>



                            Desa Holdings Corporation
                   Amended and Restated Stockholders Agreement

                           Counterpart Signature Page

         IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as an
instrument under SEAL as of the date first set forth above.

                                  THE OTHER HOLDERS:

                                  THE UBS HOLDERS:

                                  UBS Capital LLC

                                  By:/s/_________________________
                                        Title:

                                  By:/s/_________________________
                                        Title:



<PAGE>



                            Desa Holdings Corporation
                   Amended and Restated Stockholders Agreement

                           Counterpart Signature Page

         IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as an
instrument under SEAL as of the date first set forth above.

                                  THE OTHER HOLDERS, continued:

                                  THE HMTF HOLDERS:

                                  CCC/OMNI INVESTMENT
                                  PARTNERS, L.P.

                                  By:/s/________________________
                                        Title:

                                  JDF FAMILY TRUST

                                  By:/s/________________________
                                        Title:

                                  /s/Thomas O. Hicks
                                  Thomas O. Hicks

                                  HICKS, MUSE, TATE & FURST EQUITY
                                  FUND II, L.P.

                                  By:  HM2/GP PARTNERS, L.P., its
                                         general partner

                                  By:  HICKS, MUSE GP PARTNERS, L.P.,
                                         its general partner

                                  By:  HICKS MUSE FUND II,
                                         INCORPORATED, its
                                         general partner

                                  By:/s/________________________
                                        Title:






<PAGE>

                            Desa Holdings Corporation
                   Amended and Restated Stockholders Agreement

                           Counterpart Signature Page

         IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as an
instrument under SEAL as of the date first set forth above.

                                  THE OTHER HOLDERS, continued:

                                  THE HMTF HOLDERS, continued:

                                  /s/James N. Mills
                                  James N. Mills

                                  /s/John R. Muse
                                  John R. Muse

                                  MUSE CHILDREN GS TRUST

                                  By:/s/_________________________
                                        Title:

                                  /s/Charles W. Tate
                                  Charles W. Tate


                                  /s/Michael D. Salim
                                  Michael D. Salim





<PAGE>



                            Desa Holdings Corporation
                   Amended and Restated Stockholders Agreement

                           Counterpart Signature Page

         IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as an
instrument under SEAL as of the date first set forth above.

                                  THE OTHER HOLDERS, continued:

                                  THE HMTF HOLDERS, continued:





<PAGE>



                            Desa Holdings Corporation
                   Amended and Restated Stockholders Agreement

                           Counterpart Signature Page

         IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as an
instrument under SEAL as of the date first set forth above.

                                  THE OTHER HOLDERS, continued:

                                  THE PPM/RELIASTAR HOLDERS:


                                  JACKSON NATIONAL LIFE INSURANCE
                                  COMPANY

                                  By:   PPM America, Inc., as attorney in fact,
                                        on behalf of Jackson National Life 
                                        Insurance Company

                                  By:/s/______________________________
                                        Title:

                                  OLD HICKORY FUND I, LLC

                                  By: PPM America, Inc., its manager

                                  By:/s/______________________________
                                        Title:

                                  RELIASTAR FINANCIAL CORP.

                                  By:/s/________________________
                                        Title:





<PAGE>




                            Desa Holdings Corporation

                   Amended and Restated Stockholders Agreement

                           Counterpart Signature Page

         IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as an
instrument under SEAL as of the date first set forth above.

                                  THE OTHER HOLDERS, continued:

                                  CERTAIN OTHER OTHER HOLDERS:

                                  BT INVESTMENT PARTNERS, INC.


                                  By:/s/_________________________
                                        Name:
                                        Title:



<PAGE>



                                                                     EXHIBIT A


                            SCHEDULE OF STOCKHOLDERS
                              As of October 9, 1998

                    [Schedule of stockholders has not been
                    included and is available upon request]




<PAGE>


                                                                       EXHIBIT B


                       SCHEDULE OF PREEMPTIVE STOCKHOLDERS

                    [Schedule of preemptive stockholders has not been
                    included and is available upon request]