FIRST ADDENDUM TO
                              EMPLOYMENT AGREEMENT

         This  Addendum is to the Agreement  ("Agreement")  made and dated as of
December 12, 1996 ("Effective Date"), by and between Starcraft  Corporation,  an
Indiana  Corporation  ("Employer"),  and Kelly L. Rose,  a  resident  of Elkhart
County, Indiana ("Employee").

                                   WITNESSETH

         WHEREAS,  Employee is employed by Employer as its Chairman of the Board
and Chief  Executive  Officer,  for  itself and each of its  subsidiaries  ("Job
Responsibilities") and Employee has made valuable contributions to the strategic
planning, business operations, and financial strength of Employer;

         WHEREAS,  Employer  desires to  encourage  Employee to continue to make
valuable  contributions  to Employer's  business  operations  and not to seek or
accept employment elsewhere; and

         WHEREAS,  Employer  desires to provide fair and reasonable  benefits to
Employee  from  time  to time on the  terms  and  conditions  set  forth  in the
Agreement as amended from time to time.

         NOW THEREFORE, in consideration of these premises, the mutual covenants
and undertakings herein contained,  and the continued  employment of Employee to
perform Job Responsibilities for Employer, Employer and Employee agree to hereby
amend the Agreement, each intending to be legally bound, as follows:

         1.  Subsection  6 of the  Agreement  is hereby  amended  by adding  the
following to subsection 6, which in all other respects remains in full force and
effect except as amended hereby:

         So long as Employee is employed by Employer pursuant to this Agreement,
         Employee  shall be entitled to personal tax  preparation  services,  an
         annual physical examination, personal umbrella insurance coverage in an
         amount not less than Ten Million Dollars ($10,000,00.00),  and Employer
         shall pay and continue to pay the fees, expenses, and premiums for each
         of the foregoing.

         2.  Subsection  4 of the  Agreement  is hereby  amended  by adding  the
following to subsection 4, which in all other respects remains in full force and
effect except as amended hereby:

         Employer shall review  Employee's Base  Compensation on an annual basis
         with the intention  that such review of the Base  Compensation  and the
         Executive Bonus Plan, subject to the discretion,  responsibilities  and
         polices  of the  Employer's  Compensation  Committee,  shall  cause the
         annual Base Compensation and Bonus to increase from year-to-year.

         3.  Subsection  8 of the  Agreement  is hereby  amended  by adding  the
following to subsection 8, which in all other respects remains in full force and
effect:

         (E)      In  the  event  Employee's   employment  with  Employer  shall
                  terminate  in the  event  of  Employee's  death,  pursuant  to
                  subsection 7(D),  compensation  provided for herein (including
                  Base  Compensation)  shall  continue to be paid as provided in
                  subsection  7(C),  and from and after  the date of  Employee's
                  death the spouse of Employee  shall be entitled to continue to
                  receive from Employer the Employee's Base  Compensation at the
                  rates  in  effect  at the  time of  termination  for  five (5)
                  additional twelve (12) month periods. In addition, during such
                  periods,  Employer  will maintain in full force and effect for
                  the  continued  benefit of the spouse of Employee each Benefit
                  Plan  in  which  the  spouse  of  Employee   was  entitled  to
                  participate   immediately  prior  to  the  date  of  death  of
                  Employee,   unless  an  essentially  equivalent  and  no  less
                  favorable benefit is provided by a subsequent  employer of the
                  spouse of  Employee.  If the  terms of any  Benefit  Plan,  or
                  applicable laws, do not permit continued  participation by the
                  spouse of Employee, Employer will arrange to provide to spouse
                  of  Employee a benefit  substantially  similar to, and no less
                  favorable  than,  the  benefit  the  spouse  of  Employee  was
                  entitled to receive  under such  Benefit  Plans at the date of
                  death of  Employee.  Employer  reserves the right to cause the
                  payments provided for herein to be funded and paid in whole or
                  in part from life insurance,  annuities, or other such similar
                  devices, in its sole discretion.

         (F)      In  the  event  Employee's   employment  with  Employer  shall
                  terminate in the event of  Employee's  disability  pursuant to
                  subsection 7(D),  compensation  provided for herein (including
                  Base  Compensation)  shall  continue to be paid as provided in
                  subsection  7(C),  and from and after  the date of  Employee's
                  disability and during the  continuance or recurrence  thereof,
                  Employee  shall  be  entitled  to  continue  to  receive  from
                  Employer  the  Employee's  Base  Compensation  at the rates in
                  effect  at the time of  termination  for  five (5)  additional
                  twelve (12) month periods.  In addition,  during such periods,
                  Employer  will  maintain  in full  force  and  effect  for the
                  continued  benefit  of  Employee  each  Benefit  Plan in which
                  Employee was entitled to participate  immediately prior to the
                  date  of  disability  of  Employee,   unless  an   essentially
                  equivalent  and no less  favorable  benefit is  provided  by a
                  subsequent  employer of Employee.  If the terms of any Benefit
                  Plan,   or   applicable   laws,   do  not   permit   continued
                  participation  by Employee,  Employer  will arrange to provide
                  Employee  a  benefit  substantially  similar  to,  and no less
                  favorable  than, the benefit  Employee was entitled to receive
                  under  such  Benefit  Plans  at  the  date  of  disability  of
                  Employee.  Employer  reserves  the right to cause the payments
                  provided  for herein to be funded and paid in whole or in part
                  from life insurance, annuities, or other such similar devices,
                  in its sole discretion.

         4. Except as expressly  modified by these  amendments  to the Agreement
herein provided, the Agreement remains in full force and effect.

         IN WITNESS  WHEREOF,  the  parties  have  caused  this  Addendum to the
Agreement to be executed and  delivered  this 31st day of December,  1997, as of
the Effective Date.

"EMPLOYEE"                                      "EMPLOYER"

                                                STARCRAFT CORPORATION

                                                By:  /s/ Michael H. Schoeffler
---------------------------                          ---------------------------
Kelly L. Rose                                        Michael H. Schoeffler

                                                Its: President
                                                     --------------------------