EXHIBIT 10.3

                       PREFERRED STOCK TAGALONG AGREEMENT

         THIS PREFERRED STOCK TAGALONG  AGREEMENT (this  "Agreement") is entered
into as of  October  9,  1998 by and  among  (i) Desa  Holdings  Corporation,  a
Delaware corporation (as hereinafter further defined, the "Company"),  (ii) J.W.
Childs  Equity  Partners,  L.P.,  a Delaware  limited  Partnership  ("JWC Equity
Partners"),  (iii) JWC Equity Funding,  Inc., a Delaware  corporation,  and (iv)
those persons listed as the Preferred  Holders on the signature pages hereof (as
hereinafter further defined, the "Preferred Holders").

                                    RECITALS

         A. JWC Equity  Partners  owns a majority of the issued and  outstanding
shares of Common Stock (as hereinafter defined) of the Company.

         B. Concurrently with the execution and delivery of this Agreement,  the
Preferred   Holders  have  purchased  certain  shares  of  Preferred  Stock  (as
hereinafter defined) of the Company.

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

                                    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 I

                                   Definitions

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

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

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


<PAGE>



         "Affiliate" of a specified Person shall mean (a) a Person who, directly
or indirectly, through one or more intermediaries,  controls or is controlled by
or is  under  common  control  with  the  specified  Person  or (b) a  director,
executive officer or general partner of such Person.

         "Bonus  Option   Agreement"   shall  mean  that  certain  Bonus  Option
Agreement,  dated as of November 26, 1997, among Robert H. Elman, John M. Kelly,
Terry G.  Scariot and the  Company,  as amended or amended and  restated  and in
effect from time to time.

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

         "Cash  Equivalents"  shall mean (a) United  States  dollars and (b) any
securities or other property,  other than any shares of common stock (or similar
equity  securities of a partnership,  limited  liability company or trust) where
either the issuance or  distribution of such securities have not been registered
under  Section 5 of the 1933 Act or are  subject to any  "lockup  agreement"  or
other contractual restriction on transfer.

         "Certificate of Designation"  shall mean the Certificate of Designation
of the Company for the Preferred  Stock filed on or about November 26, 1997 with
the  Secretary  of State  for the  State of  Delaware,  as from  time to time in
effect.

         "Common  Stock" shall mean (a) shares of Common  Stock,  par value $.01
per share,  of the  Company or of  Nonvoting  Common  Stock,  par value $.01 per
share, of the Company and (b) securities (other than securities which constitute
Cash  Equivalents)  which holders of Common Stock receive in exchange for shares
of Common Stock, or into which shares of Common Stock are converted, pursuant to
any merger,  consolidation,  sale of all or  substantially  all of the Company's
assets or business, liquidation, dissolution or reorganization.

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

         "Exchange" shall mean the exchange by the Company pursuant to Section 5
of the  Certificate of Designation of the shares of Preferred  Stock at the time
outstanding for Exchange Notes.

         "Exchange  Notes" shall mean any of the 12% Junior  Subordinated  Notes
due December 31, 2009 of the Company that may be issued by the Company  pursuant
to Section 5 of the Certificate of Designation.

         "Initiating  Stockholders" shall have the meaning set forth therefor in
Section 2.2 of this Agreement.

         "IPO" shall have the meaning  set forth  therefor in Section  2.1(a) of
this Agreement.

                                       -2-

<PAGE>



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

         "JWC Equity  Partners  Holders" shall mean JWC Equity  Partners and any
subsidiary  of JWC  Equity  Partners  (including  but not  limited to JWC Equity
Funding,  Inc.) and shall also include  Permitted  Transferees of any JWC Equity
Partners Holder and direct and indirect Permitted  Transferees of such Permitted
Transferees.

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

         "JWC  Representative"  shall have the  meaning  set forth  therefor  in
Section 3.8 of this Agreement.

         "Liquidation  Value"  shall,  (a) as of any date prior to the Exchange,
have the meaning set forth therefor in the  Certificate of Designation  and, (b)
as of any date after the  Exchange,  mean the sum of (i)  outstanding  principal
amount of any  Exchange  Note as of such date plus (ii) all  accrued  and unpaid
interest thereon.

         "Permitted Transfer" shall mean:

                  (a) a Transfer of Subject  Securities by a JWC Equity Partners
         Holder  (i)  to (A)  the  partners  of  JWC  Equity  Partners  (or  any
         Affiliates of such partners) or (B) the partners, officers or employees
         of JWC L.P., in either case in connection  with the  liquidation of JWC
         Equity  Partners,  or (ii) to an  entity  or  entities  which  are (and
         continue to be) wholly owned by JWC Equity Partners;

                  (b) a  Transfer  of any  Subject  Securities  between  any JWC
         Equity Partners Holder,  who has become a JWC Equity Partners Holder as
         a  result  of any  Transfer  permitted  under  clause  (a)(i)  of  this
         definition  and is a  natural  person,  and  such JWC  Equity  Partners
         Holder'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  where either (i) such JWC Equity  Partners  Holder
         retains,  as trustee or by some other means, the sole authority to vote
         such Subject  Securities or (ii) such JWC Equity  Partners  Holder does
         not retain authority to vote such Subject  Securities because retention
         of such authority to vote such Subject  Securities  would be reasonably
         likely to result in the  inclusion  of such Subject  Securities  in the
         gross estate of such JWC Equity Partners Holder for purposes of federal
         estate taxes;

                  (c) a Transfer  of Subject  Securities  between any JWC Equity
         Partners Holder who has become a JWC Equity Partners Holder as a result
         of any Transfer  permitted  under clause (a)(i) of this  definition and
         any Affiliate of such JWC Equity  Partners  Holder,  provided that such
         Affiliate  shall  remain at all times an  Affiliate  of such JWC Equity
         Partners Holder;


                                       -3-

<PAGE>



                  (d) a Transfer of Subject  Securities between or among the JWC
         Equity Partners Holders;

                  (e) a Transfer  of Subject  Securities  between any JWC Equity
         Partners  Holder,  who has  become a JWC  Equity  Partners  Holder as a
         result of any Transfer permitted under clause (a)(i) of this definition
         and is a natural person,  and such JWC Equity Partners Holder's estate,
         executors,  legal  representative,  guardian  or  conservator,  or  the
         Transfer  of Subject  Securities  between  the estate of any JWC Equity
         Partners Holder and such JWC Equity Partners Holder'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;

                  (f) (i) a bona fide  pledge  of  Subject  Securities  by a JWC
         Equity  Partners  Holder to (A) Fleet  National  Bank (or any Affiliate
         thereof) in connection with that certain Credit and Guaranty  Agreement
         dated as of November 25, 1996,  as from time to time in effect,  by and
         among Fleet  National  Bank,  JWC Equity  Funding,  Inc. and JWC Equity
         Partners or (B) any extension, renewal,  replacement,  restructuring or
         refinancing of such Credit and Guaranty Agreement,  whether by the same
         or any other  lender or lenders,  or (ii) a Transfer by a pledgee  upon
         any bona fide  foreclosure on any pledge  permitted under clause (f)(i)
         of this definition;

                  (g) (i) a bona fide  pledge  of  Subject  Securities  by a JWC
         Equity Partners Holder,  who has become a JWC Equity Partners Holder as
         a  result  of any  Transfer  permitted  under  clause  (a)(i)  of  this
         definition, to an institutional lender, or (ii) a Transfer by a pledgee
         upon any bona fide  foreclosure  on any pledge  permitted  under clause
         (g)(i) of this definition;

                  (h) a Transfer  of  Preferred  Shares  between  any  Preferred
         Holder and any Affiliate of such Preferred  Holder,  provided that such
         Affiliate  shall  remain at all times an  Affiliate  of such  Preferred
         Holder; and

                  (i) a Transfer  of  Preferred  Shares  between  any  Preferred
         Holder and any shareholder or partner of such Preferred Holder.

No Permitted  Transfer shall be effective unless and until the transferee of the
Subject   Securities   so   Transferred   executes   and  delivers  to  the  JWC
Representative  and  the  Preferred  Holders  an  executed  counterpart  of this
Agreement in  accordance  with Section 3.11 hereof;  provided,  that a Permitted
Transferee which is a pledgee in connection with a Permitted  Transfer  effected
pursuant to clause (f)(i) or (g)(i) of the  definition  of "Permitted  Transfer"
herein  shall not be required  to execute and deliver to the JWC  Representative
and  the  Preferred  Holders  an  executed  counterpart  of  this  Agreement  in
accordance with Section 3.11 hereof until foreclosure on such pledge.


                                       -4-
<PAGE>

         "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.

         "Preferred  Holders"  shall have the meaning set forth in the  preamble
preceding  the  Recitals  to this  Agreement  and shall also  include  Permitted
Transferees  of  the  Preferred  Holders  and  direct  and  indirect   Permitted
Transferees of such Permitted Transferees.

         "Preferred  Shares"  shall  mean,  (a)  as of  any  date  prior  to the
Exchange,  any shares of the Preferred  Stock issued and  outstanding as of such
date and (b) as of any date after the  Exchange,  any Exchange  Notes issued and
outstanding as of such date.

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

         "Put Event" shall have the meaning set forth therefor in Section 2.2(e)
of this Agreement.

         "Put  Notice"  shall have the  meaning  set forth  therefor  in Section
2.2(e) of this Agreement.

         "Put  Option"  shall have the  meaning  set forth  therefor  in Section
2.2(e) of this Agreement.

         "Put  Securities"  shall have the meaning set forth therefor in Section
2.2(e) of this Agreement.

         "Schedule  of  Stockholders"  shall mean the  Schedule of  Stockholders
attached  hereto as  Exhibit  A, as from  time to time  amended  by the  Company
pursuant to Section 3.2(b) hereof.

         "Stockholder"  shall mean any party  hereto  (other than the Company or
any of its subsidiaries), including any Person (other than the Company or any of
its subsidiaries)  who hereafter  becomes a party to this Agreement  pursuant to
Section 3.11 hereof.

         "Stockholder  Group"  shall  mean  any of (a) the JWC  Equity  Partners
Holders taken as a group and (b) the Preferred Holders taken as a group. None of
the Company and its  subsidiaries  shall 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 securities of the Company).

         "Subject  Securities"  shall  mean,  as of any date,  (a) any shares of
Common  Stock  issued  and  outstanding  as of such  date  and (b) any  options,
warrants, securities and other rights to

                                       -5-

<PAGE>



acquire, 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, (i)
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 (ii) so exchangeable, exercisable or convertible.

         "Third Party" means any Person other than (a) the Company or any of its
subsidiaries and (b) any Preferred Holder.

         "Transfer" shall mean to transfer,  sell,  assign,  exchange,  convert,
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.

         "Voting  Stock"  shall  have the  meaning  set  forth  therefor  in the
Certificate of Designation.

                                   ARTICLE II

                                 Transferability

         2.1      Restriction on Transfers.

                  (a) Notwithstanding  anything to the contrary contained in any
         other  agreement  or  instrument,  no JWC  Equity  Partners  Holder may
         Transfer all or any portion of the Subject  Securities at the time held
         by such  JWC  Equity  Partners  Holder  to any  Person  (other  than in
         accordance with Section 2.2 hereof) if:

                           (i) (A) Such  Transfer is in  consideration  of or in
                  exchange for, in whole or in part, Cash  Equivalents,  and (B)
                  immediately after giving effect to such proposed Transfer, the
                  JWC   Equity   Partners   Holders   would  in  the   aggregate
                  beneficially  own a number of Subject  Securities  (subject to
                  adjustment of such number of Subject Securities by the Company
                  pursuant to Section  2.1(b) of this  Agreement)  which is less
                  than  46.5189% of the sum of (I) the  16,102,527.9694  Subject
                  Securities  that are issued and outstanding at the date hereof
                  plus (II) the number of stock options (determined  immediately
                  after giving effect to such proposed  Transfer)  granted under
                  the 1998 Stock  Option  Plan of the Company or pursuant to the
                  Bonus  Option  Agreement,  but in each case only to the extent
                  that such options shall at the time be Subject Securities.

                           (ii)     The consummation of such Transfer

                                    (A) prior to the initial underwritten public
                           offering of the Common Stock pursuant to an effective
                           registration statement under the 1933 Act

                                       -6-

<PAGE>



                           (the  "IPO"),  would  result  in  either  (I) the JWC
                           Equity  Partners  Holders  becoming  the  "beneficial
                           owner"  (as such term is  defined  in Rule  13d-3 and
                           Rule  13d-5  under  the  1934  Act,  except  that for
                           purposes of calculating  the beneficial  ownership of
                           any  "person"  (as  such  term  is  used  in  Section
                           13(d)(3)  of the  1934  Act),  such  person  shall be
                           deemed  to  have   "beneficial   ownership"   of  all
                           securities that such person has the right to acquire,
                           whether  such right is  currently  exercisable  or is
                           exercisable  only upon the occurrence of a subsequent
                           condition)  of less than 37.2% of the Voting Stock of
                           the Company or Desa International,  Inc. (measured by
                           voting  power  rather  than number of shares) or (II)
                           any person  (as  defined  above),  other than the JWC
                           Equity  Partners  Holders,  becoming the  "beneficial
                           owner" (as defined above), directly or indirectly, of
                           40% or more of the  Voting  Stock of the  Company  or
                           Desa  International,  Inc.  and  such  person  is  or
                           becomes, directly or indirectly, the beneficial owner
                           of a greater  percentage  of the voting  power of the
                           Voting  Stock of the  Company or Desa  International,
                           Inc.,  calculated on a fully diluted basis,  than the
                           percentage  beneficially  owned  by  the  JWC  Equity
                           Partners Holders, or

                                    (B)  after  the  IPO,  would  result  in any
                           person (as defined above),  other than the JWC Equity
                           Partners  Holders,  becoming the beneficial owner (as
                           defined  above),  directly or  indirectly,  of 35% or
                           more  of the  Voting  Stock  of the  Company  or Desa
                           International,  Inc.  and such  person is or becomes,
                           directly or  indirectly,  the  beneficial  owner of a
                           greater  percentage of the voting power of the Voting
                           Stock of the  Company  or Desa  International,  Inc.,
                           calculated  on  a  fully-diluted   basis,   than  the
                           percentage  beneficially  owned  by  the  JWC  Equity
                           Partners Holders.

                  (b) If  (i)  the  Company  (A)  pays a  dividend  or  makes  a
         distribution on any class of its Common Stock in shares of any class of
         its Common Stock, or (B) subdivides its outstanding shares of any class
         of Common  Stock into a greater  number of shares,  or (C) combines its
         outstanding  shares of any class of Common Stock into a smaller  number
         of shares, or (D) issues by reclassification of any class of its Common
         Stock any shares of its  capital  stock,  or (ii) the  Common  Stock is
         exchanged for or converted  into any other  securities  pursuant to any
         merger,  consolidation,  sale  of  all  or  substantially  all  of  the
         Company's   assets   or   business,    liquidation,    dissolution   or
         reorganization,  then  Board  of  Directors  of  the  Company  (or  its
         successor) shall appropriately  adjust the number of Subject Securities
         set  forth  in  Section  2.1(a)(i)  hereof.  Promptly  after  any  such
         adjustment,  the Company (or its  successor)  shall give written notice
         thereof to all of the  Stockholders,  which  written  notice  shall set
         forth the calculation of such adjustment in reasonable detail.

                  (c) The  provisions of this Section 2.1 hereof shall not apply
         to a Transfer which is a Permitted Transfer.


                                       -7-

<PAGE>



         2.2  Tagalong.  Notwithstanding  anything to the contrary  contained in
Section  2.1  hereof,  any  Transfer  of Subject  Securities  which would not be
permitted  under Section 2.1 hereof may  nonetheless be consummated if, but only
if, the JWC Equity Partners  Holder  proposing to make such transfer shall fully
comply  with the  terms  and  conditions  set  forth in this  Sections  2.2,  as
applicable.

                  (a)  Any  one  or  more  JWC  Equity   Partners   Holder  (the
         "Initiating  Stockholder") desiring to Transfer such Subject Securities
         shall give not less than 15 business days prior written  notice of such
         intended  Transfer to each Preferred  Holder and to the Company and the
         JWC  Representative;  provided  that,  in the event  that the  proposed
         Transfer includes an offer by the proposed transferee or its nominee to
         purchase all of the Preferred Shares at their  Liquidation  Value, such
         notice  shall be given  not less  than 5  business  days  prior to such
         intended Transfer.  Such notice (the "Participation  Notice") shall set
         forth terms and  conditions  of such proposed  Transfer,  including the
         name of the  proposed  transferee,  the  number of  Subject  Securities
         proposed to be Transferred by the Initiating  Stockholder  and the type
         of Transfer to be effectuated and shall include a copy of the agreement
         pursuant to which such  proposed  Transfer is intended to be  effected.
         Within 10 days  following the delivery of the  Participation  Notice by
         the Initiating  Stockholder,  each Preferred Holder shall, by notice in
         writing to the  Initiating  Stockholder  and to the  Company,  have the
         opportunity  and  right  to sell  to the  proposed  transferee  in such
         proposed  Transfer (for a purchase price equal to the Liquidation Value
         thereof,  which  purchase  price  shall be  payable in cash or by bank,
         cashier's or certified  check or by bank wire  transfer,  but otherwise
         upon the same terms and  conditions as those received by the Initiating
         Stockholder)  any  portion or all of the  Preferred  Shares at the time
         owned by such Preferred  Holder as such Preferred  Holder shall specify
         in such written notice to the Initiating Stockholder and the Company.

                  (b)  Subject  to the  closing  of such  proposed  Transfer  in
         respect  of  which a  Participation  Notice  has been  delivered,  each
         Preferred  Holder so  electing  to sell  Preferred  Shares  pursuant to
         Section  2.2(a)  hereof ("a  "Participating  Preferred  Holder")  shall
         execute and deliver to the proposed transferee at such closing (i) such
         agreements for the sale and purchase of such Preferred Shares and other
         agreements,  instruments and certificates as the Initiating Stockholder
         shall  execute and deliver in connection  with such  proposed  Transfer
         (provided that no  Participating  Preferred Holder shall be required in
         connection with such proposed Transfer (A) to make any  representations
         or warranties other than  representations and warranties as to (I) such
         Participating Preferred Holder's ownership of his, her or its Preferred
         Shares to be  Transferred  free and  clear of all  liens,  claims,  and
         encumbrances,  (II) such  Participating  Preferred  Holder's  power and
         authority to effect such transfer without  violation of any agreements,
         instruments  or laws,  and (III) such matters  pertaining to compliance
         with securities laws as the transferee may reasonably  require,  or (B)
         to agree to indemnify  any Person with respect to any matter other than
         such Participating  Preferred Holder's own representations,  warranties
         and  covenants)  and  (ii)   certificates   and/or  other   instruments
         representing  the  Preferred  Shares  to be sold by such  Participating
         Preferred Holder, free

                                       -8-

<PAGE>



         and clear of all liens and  encumbrances,  together with stock or other
         appropriate  powers  duly  executed  therefor,  and  shall  receive  in
         exchange  therefor at such  closing  the  aggregate  Liquidation  Value
         thereof,  which  shall  be  payable  in cash or by bank,  cashier's  or
         certified check or by bank wire transfer.

                  (c) If the prospective transferee does not purchase any of the
         Preferred Shares of any  Participating  Preferred Holder required to be
         included  in  such  proposed  Transfer  pursuant  to this  Section  2.2
         (otherwise than due to (i) the failure of such Participating  Preferred
         holder to comply with the  provisions of Section  2.2(b) hereof or (ii)
         any  other  fault of such  Participating  Preferred  Holder),  then the
         Initiating Stockholder shall not Transfer any of its Subject Securities
         in such proposed Transfer.

                  (d) The  provisions of this Section 2.2 hereof shall not apply
         to (i) any  Permitted  Transfer  or (ii)  any  Transfer  to  which  the
         restrictions on Transfer set forth in Section 2.1 hereof do not apply.

         2.3 Notice of Proposed  Transfers.  Not less than 3 business days prior
to any  proposed  Transfer  of Subject  Securities  by any JWC  Equity  Partners
Holders (other than a Permitted  Transfer or a Transfer in respect of which such
JWC Equity Partners  Holders shall have given a Participation  Notice),  the JWC
Equity  Partners  Holders  shall  deliver  to the  Preferred  Holders  a  notice
certifying  whether the  provisions of Section 2.2 hereof apply to such proposed
Transfer  and  setting  forth the number of Subject  Securities  proposed  to be
Transferred,  the type of  Transfer to be  effectuated  and  calculations  under
Sections  2.1(a)(i) and 2.1(a)(ii)  hereof  (including a report in substantially
the form of Exhibit B referred to in Section 2.4 below)  giving pro forma effect
to such proposed Transfer.

         2.4  Reports of  Holdings  of JWC  Equity  Partners  Holders.  A report
setting  forth the number of Subject  Securities  beneficially  owned by the JWC
Equity  Partners  Holders as of the date hereof is attached as Exhibit B to this
Agreement.  On the first  business day in March of each year  following the date
hereof during the term of this Agreement,  the JWC Equity Partners  Holders will
deliver to the Preferred  Holders a report,  in  substantially  the form of such
Exhibit B, setting forth the number of Subject Securities  beneficially owned by
the JWC  Equity  Partners  Holders  as of the end of the  Company's  immediately
preceding fiscal year.

                                   ARTICLE III

                            Certain Other Provisions

         3.1      Remedies.

                  (a) The parties to this Agreement  acknowledge and agree that,
         unless the aggregate  amount of Proceeds (as defined in Section  3.1(b)
         below)  received  by any JWC  Equity  Partners  Holders in respect of a
         Prohibited Transfer (as defined in Section 3.1(b) below) is equal to or
         exceeds the aggregate Liquidation Value of all Preferred Shares held

                                       -9-

<PAGE>



         by Preferred Holders as of the date of such Prohibited Transfer (or the
         date of the last of a series of related  Transfers  that  constitute  a
         Prohibited  Transfer  hereunder),  monetary  damages  would  not  be  a
         sufficient  remedy  for any breach of the  covenants  set forth in this
         Agreement and that, therefore, the covenants of the JWC Equity Partners
         Holders  set forth in this  Agreement  may be  enforced  in equity by a
         decree requiring specific performance.  Without limiting the foregoing,
         in the  event of any such  Prohibited  Transfer,  the  parties  to this
         Agreement  agree  that  an  injunction  may  be  issued  in  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. The JWC Equity Partners Holders
         shall not oppose any motion for  injunctive  relief on the grounds that
         monetary damages are an adequate remedy for a breach of their covenants
         set forth in this Agreement, and the JWC Equity Partners Holders hereby
         waive any  requirement for security or the posting of any bond or other
         surety  in  connection   with  any  temporary  or  permanent  award  of
         injunctive, mandatory or other equitable relief.

                  (b) If any JWC Equity Partners  Holders  Transfers any Subject
         Securities in one or more related Transfers occurring within six months
         of one  another to which  Section  2.2 hereof  applies  without  having
         complied in all material  respects  with the  provisions of Section 2.2
         (a), (b) and (c) hereof (collectively, a "Prohibited Transfer"), then:

                           (i) in the event  monetary  damages are determined to
                  be an adequate remedy for such Prohibited  Transfer hereunder,
                  each  Preferred  Holder  shall  be  entitled,  subject  to the
                  following proviso and to Section  3.1(b)(ii) below, to recover
                  from  such JWC  Equity  Partners  Holder as  damages  for such
                  Prohibited Transfer an amount in cash equal to the Liquidation
                  Value of all of the  Preferred  Shares held by such  Preferred
                  Holder as of the date of such Prohibited Transfer (or the date
                  of the last of a series of related Transfers that constitute a
                  Prohibited   Transfer   hereunder)   (the  "Total   Damages");
                  provided, however, that in no event shall any Preferred Holder
                  be  entitled  to  recover   Total  Damages  in  respect  of  a
                  Prohibited Transfer unless the aggregate cash proceeds, net of
                  reasonable  out-of-pocket fees and expenses (including but not
                  limited  to  broker's  fees  and  underwriters  discounts  and
                  commissions) actually received, from time to time prior to the
                  time of the  payment  of the Total  Damages in respect of such
                  Prohibited Transfer, by such JWC Equity Partners Holder either
                  in  such   Prohibited   Transfer  or  from  sale(s)  or  other
                  disposition(s)  of  securities or other  property  (other than
                  cash)  received  by such JWC  Equity  Partners  Holder in such
                  Prohibited Transfer  (collectively,  the "Proceeds") are equal
                  to or exceed the aggregate  Liquidation Value of all Preferred
                  Shares  held  by  Preferred  Holders  as of the  date  of such
                  Prohibited  Transfer  (or the date of the last of a series  of
                  related  Transfers  that  constitute  a  Prohibited   Transfer
                  hereunder).

                           (ii) Such JWC Equity  Partners  Holder shall pay such
                  Total Damages in accordance  with this Section  3.1(b) against
                  delivery of certificates and or other

                                      -10-

<PAGE>

                  instruments representing,  together with stock powers or other
                  appropriate  instruments  of  assignment  duly  endorsed  with
                  respect to, Preferred  Shares having an aggregate  Liquidation
                  Value as of the date of such Total  Damages  payment  equal to
                  such  Total  Damages  payment,  free and clear of all  claims,
                  liens and encumbrances.

                           (iii) The  parties  acknowledge  and  agree  that the
                  remedy  provided in this Section 3.1(b) is reasonable and does
                  not constitute a penalty.

         3.2      Entire Agreement; Amendment; Termination.

                  (a) This Agreement sets forth the entire  understanding of the
         parties, and supersedes all prior 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 a writing
         signed by both the JWC  Representative and the holders of a majority of
         the  Preferred  Shares at the time  held by the  Preferred  Holders  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 or Transfers permitted under Article II
         hereof. Amendments to the Schedule of Stockholders reflecting Permitted
         Transfers or Transfers  permitted  under Article II hereof 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  3.11  hereof,   are  delivered  to  the
         Stockholders.

                  (c) Any other  amendment to this Agreement shall be in writing
         and  shall   require  the  written   consent  of  (i)  either  the  JWC
         Representative  or the holders of a majority of the Subject  Securities
         at the  time  held by the JWC  Equity  Partners  Holders  and  (ii) the
         holders of at least 75% of the Preferred Shares at the time held by the
         Preferred Holders.

                  (d) Without  affecting any other  provision of this  Agreement
         requiring  termination of any rights or obligations of any Stockholder,
         Permitted  Transferee or any other  transferee  of Preferred  Shares or
         Subject Securities, the provisions of Article 2 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 Preferred Shares or Subject Securities.

                  (e) Notwithstanding  the foregoing  provisions of this Section
         3.2,  this  Agreement  may be  terminated  at any time upon the written
         consent  of (i)  either  the JWC  Representative  or the  holders  of a
         majority of the Subject Securities at the time held by

                                      -11-

<PAGE>



         the JWC Equity Partners Holders and (ii) the holders of at least 75% of
         the Preferred Shares at the time held by the Preferred Holders.

                  (f)  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  Preferred
         Shares or Subject Securities, as the case may be, held in the aggregate
         by such  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.

         3.3 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.

         3.4 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 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:

                  (a) For notices and communications to the Company, to it at:

                           Desa Holdings Corporation
                           2701 Industrial Drive
                           Bowling Green, KY  42102
                           Attention:  President
                           Telecopy:  502-781-5705

                  (b) For notices and  communications to the JWC Equity Partners
         Holders,  to their  respective  addresses  set forth in the Schedule of
         Stockholders, with a copy to:

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

                  (c) For notices and  communications to the Preferred  Holders,
         to  their   respective   addresses   set  forth  in  the   Schedule  of
         Stockholders, with a copy to:

                           Kirkland & Ellis
                           200 East Randolph Drive

                                      -12-

<PAGE>



                           Chicago, IL  60601
                           Attention:  Richard Porter, Esq.
                           Telecopy:  312-861-2200

By notice  complying  with the  foregoing  provisions  of this Section 3.4, each
party shall have the right to change the mailing  address for future notices and
communications to such party.

         3.5 Binding  Effect;  Assignment.  This Agreement shall be binding upon
and inure to the benefit of the parties hereto and to their respective permitted
transferees,  successors, assigns, heirs and administrators;  provided, that the
rights of any Preferred  Holder under this Agreement may not be assigned  except
to a  Permitted  Transferee  of  such  Preferred  Holder  in  connection  with a
Permitted  Transfer  effected pursuant to clause (h) or (i) of the definition of
"Permitted Transfer" herein.

         3.6 Recapitalizations, Exchanges, etc. The provisions of this Agreement
shall  apply,  to the full extent set forth  herein with  respect to any and all
shares of capital stock,  debt securities or other  securities 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 any of the  Preferred  Shares or Subject  Securities 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 by the Board of Directors of the Company.  Promptly after
any such adjustment, the Company shall give written notice thereof to all of the
Stockholders.

         3.7  JWC  Representative.   Each  JWC  Equity  Partners  Holder  hereby
designates and appoints (and each  Permitted  Transferee of each such JWC Equity
Partners  Holder shall be deemed to have so designated  and  appointed)  each of
John W.  Childs  and  Adam L.  Suttin,  acting  singly  and 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 Preferred Shares at the time held by the JWC
Equity  Partners  Holders,  provided that written notice thereof is given by the
successor JWC  Representative  to the Preferred Holders and the other JWC Equity
Partners Holders.

                                      -13-

<PAGE>




         3.8 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.

         3.9 Legend on Certificate.  All the  certificates or other  instruments
representing  any  Preferred  Shares  held by any  Preferred  Holder or  Subject
Securities  held by any JWC Equity  Partners  Holder  which are now or hereafter
held by such  Stockholder  shall be subject to the terms of this  Agreement  and
shall have  endorsed in  writing,  stamped or  printed,  thereon  the  following
legend:

                  "THE  SECURITIES  REPRESENTED  HEREBY ARE SUBJECT TO THE TERMS
                  AND CONDITIONS OF A PREFERRED  STOCK TAGALONG  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 UPON WRITTEN REQUEST."

         3.10  Effectiveness  of Transfers.  Subject to Section 3.5 hereof,  any
Person  acquiring  any  Preferred  Shares or Subject  Securities  pursuant  to a
Permitted  Transfer  shall hold such  securities  pursuant to this Agreement and
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 3.11 hereof. Each party hereto
acknowledges and agrees that no Preferred Shares or Subject  Securities shall be
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 hereby  authorizes the Company to
enter appropriate stop transfer notations on its transfer records to give effect
to this Agreement.

         3.11 Additional Stockholders. Any Person acquiring any Preferred Shares
or Subject  Securities  pursuant to a Permitted Transfer shall, on or before the
Transfer or issuance to it of such Preferred Shares or Subject Securities,  sign
and  deliver  to the  Company  a  counterpart  signature  page  hereto  in  form
reasonably  satisfactory to the Company,  the JWC Representative and the holders
of a majority of the Preferred Shares at the time held by the Preferred  Holders
and shall thereby become a party to this  Agreement;  provided that a transferee
which is a  Permitted  Transferee  under  clause  (f)(i)  of the  definition  of
Permitted  Transfer shall not be obligated so to agree until  foreclosure on its
pledge.

         3.12 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 waiver  thereof or otherwise  prejudice such party's
rights, powers and remedies. No single or partial

                                      -14-

<PAGE>



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.

         3.13  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.

         3.14 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 word "including"
is 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.

         3.15  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 therein.

                         [Signatures on Following Pages]

                                      -15-

<PAGE>



                            DESA HOLDINGS CORPORATION

                       Preferred Stock Tagalong 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:

                                    THE JWC EQUITY PARTNERS HOLDERS:

                                    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/____________________________
                                          Title:



<PAGE>



                            DESA HOLDINGS CORPORATION

                       Preferred Stock Tagalong Agreement


                           Counterpart Signature Page


                                    THE PREFERRED 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>




                                                                       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

                     Holdings of JWC Equity Partners Holders
                              As of October 9, 1998

                              [Exhibit has not been
                     included and is available upon request]