<PAGE>   1
                                                                   EXHIBIT 10.4

********************************************************************************





                          SECOND AMENDED AND RESTATED

                                CREDIT AGREEMENT

                                     among

                         CRAFTMADE INTERNATIONAL, INC.

                                  as Borrower

                           NATIONSBANK OF TEXAS, N.A.

                                    as Agent

                                AND THE LENDERS

                            which are parties hereto





********************************************************************************
<PAGE>   2
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                     Page
                                                                                                                     ----
<S>                                                                                                                    <C>
ARTICLE 1 - Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
         Section 1.1      Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
         Section 1.2      Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10

ARTICLE 2 - Advances  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
         Section 2.1      Advances  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
         Section 2.2      The Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
         Section 2.3      Repayment of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
         Section 2.4      Interest  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
         Section 2.5      Requests for Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
         Section 2.6      Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
         Section 2.7      Reduction or Termination of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . .  11
         Section 2.8      Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12

ARTICLE 3 - Payments, Conversions and Continuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
         Section 3.1      Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
         Section 3.2      Voluntary Prepayment  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
         Section 3.3      Mandatory Prepayment  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
         Section 3.4      Computation of Interest and Fees  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
         Section 3.5      Conversions and Continuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13

ARTICLE 4 - Yield Protection and Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
         Section 4.1      Additional Costs  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
         Section 4.2      Limitation on Types of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
         Section 4.3      Substitute Prime Rate Advances  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
         Section 4.4      Compensation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
         Section 4.5      Capital Adequacy  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16
         Section 4.6      Changes in Law Rendering Loan Unlawful  . . . . . . . . . . . . . . . . . . . . . . . . . .  16

ARTICLE 5 - Conditions Precedent  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
         Section 5.1      Initial Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
         Section 5.2      All Advances  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18

ARTICLE - Representations and Warranties  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19
         Section 6.1      Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19
         Section 6.2      Financial Statements  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19
         Section 6.3      Corporate Action; No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19
         Section 6.4      Operation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
         Section 6.5      Litigation and Judgments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
         Section 6.6      Rights in Properties; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
         Section 6.7      Enforceability  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
</TABLE>





                                       i
<PAGE>   3
<TABLE>
<S>                                                                                                                    <C>
         Section 6.8      Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
         Section 6.9      Debt  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
         Section 6.10     Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
         Section 6.11     Use of Proceeds; Margin Securities  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
         Section 6.12     ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
         Section 6.13     Disclosure  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
         Section 6.14     Subsidiaries  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
         Section 6.15     Compliance with Laws and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
         Section 6.16     Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
         Section 6.17     Current Locations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
         Section 6.18     Security Interest and Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
         Section 6.19     Corporate Name  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23

ARTICLE 7 - Positive Covenants  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23
         Section 7.1      Reporting Requirements  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23
         Section 7.2      Maintenance of Existence; Conduct of Business . . . . . . . . . . . . . . . . . . . . . . .  25
         Section 7.3      Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25
         Section 7.4      Taxes and Claims  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25
         Section 7.5      Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25
         Section 7.6      Inspection Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
         Section 7.7      Keeping Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
         Section 7.8      Compliance with Laws  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
         Section 7.9      Compliance with Agreements  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
         Section 7.10     Further Assurances  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
         Section 7.11     ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26

ARTICLE 8 - Negative Covenants  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
         Section 8.1      Debt  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
         Section 8.2      Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
         Section 8.3      Mergers, Acquisitions and Dissolutions  . . . . . . . . . . . . . . . . . . . . . . . . . .  27
         Section 8.4      Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
         Section 8.5      Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28
         Section 8.6      Transactions With Affiliates  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28
         Section 8.7      Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28
         Section 8.8      Prepayment of Debt  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28
         Section 8.9      Nature of Business  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29
         Section 8.10     Compliance with Environmental Laws  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29
         Section 8.11     Accounting  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29

ARTICLE 9 - Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29
         Section 9.1      Consolidated Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29
         Section 9.2      Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29
         Section 9.3      Leverage Ratio  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29
         Section 9.4      Capital Expenditures  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29
</TABLE>





                                       ii
<PAGE>   4
<TABLE>
<S>                                                                                                                    <C>
ARTICLE 10 - Default  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  30
         Section 10.1     Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  30
         Section 10.2     Remedies Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31
         Section 10.3     Performance by Agent and Lenders  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
         Section 10.4     Setoff  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32

ARTICLE 11 - The Agent  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
         Section 11.1     Appointment, Powers and Immunities  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
         Section 11.2     Rights of Agent as a Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33
         Section 11.3     Defaults  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33
         Section 11.4     INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34
         Section 11.5     Independent Credit Decisions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34
         Section 11.6     Several Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
         Section 11.7     Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35

ARTICLE 12 - Miscellaneous  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
         Section 12.1     Expenses of Agent and Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
         Section 12.2     Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
         Section 12.3     Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
         Section 12.4     Lender Not Fiduciary  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
         Section 12.5     No Waiver; Cumulative Remedies  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
         Section 12.6     Successors and Assigns  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
         Section 12.7     Survival  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
         Section 12.9     Maximum Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
         Section 12.10    Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
         Section 12.11    Applicable Law; Venue; Service of Process . . . . . . . . . . . . . . . . . . . . . . . . .  41
         Section 12.12    Counterparts  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
         Section 12.13    Severability  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
         Section 12.14    Headings  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
         Section 12.15    Non-Application of Chapter 15 of Texas Credit Code  . . . . . . . . . . . . . . . . . . . .  42
         Section 12.16    WAIVER OF JURY TRIAL  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
         Section 12.17    Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42

INDEX TO EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  48

INDEX TO SCHEDULES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  48
</TABLE>





                                      iii
<PAGE>   5
                          SECOND AMENDED AND RESTATED
                                CREDIT AGREEMENT


         THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement")
is dated as of November 14, 1995 and is among CRAFTMADE INTERNATIONAL, INC.
("Borrower"), a Delaware corporation, NATIONSBANK OF TEXAS, N.A., a national
banking association, in its capacity as agent for the Lenders which are parties
hereto ("Agent"), and the Lenders named on the signature pages to this
Agreement (the "Lenders").

                                R E C I T A L S:

         a.       NationsBank of Texas, N.A. ("NationsBank") has previously 
             made a loan to Borrower in the maximum principal amount of
             $6,000,000.00, pursuant to a certain Credit Agreement (the
             "Original Credit Agreement") between Borrower and
             NationsBank, dated January 11, 1993.

         b.       The Original Credit Agreement was amended and restated as 
             provided in that certain First Amended and Restated Credit
             Agreement dated as of January 11, 1993, by and between Borrower and
             NationsBank (the "First Restated Agreement").

         c.       The First Restated Agreement was amended as provided in that
             certain First Amendment to First Amended and Restated Credit
             Agreement dated as of December 13, 1993, by and between the
             Borrower and NationsBank (the "First Amendment").

         d.       The First Restated Agreement was further amended as provided
             in that certain Second Amendment to First Amended and Restated
             Credit Agreement dated as of March 30, 1994, by and between the
             Borrower and NationsBank (the "Second Amendment").

         e.       The First Restated Agreement was further amended as provided
             in that certain Third Amendment to First Amended and Restated
             Credit Agreement dated as of June 30, 1994, by and between the
             Borrower and NationsBank (the "Third Amendment").

         f.       The First Restated Agreement was further amended as provided
             in that certain Fourth Amendment to First Amended and Restated
             Credit Agreement dated as of November 15, 1994, by and between the
             Borrower and NationsBank (the "Fourth Amendment"; the First
             Restated Agreement, as amended by the First Amendment, the Second
             Amendment, the Third Amendment and the Fourth Amendment is referred
             to hereinafter as the "Prior Credit Agreement").





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement
<PAGE>   6
         g.       Borrower and Lenders desire to amend and restate the Prior 
             Credit Agreement as set out herein, including, without limitation,
             to provide for a loan in the maximum principal amount of
             $12,000,000.

                                  AGREEMENTS:

         NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree that this Agreement amends
and restates the Prior Credit Agreement.  The parties hereto further agree as
follows:

                                   ARTICLE 1

                                  Definitions

         Section 1.1      Definitions.  As used in this Agreement, the
following terms have the following meanings:

         "Accounts Receivable Aging Report" means a report, in form 
satisfactory to Agent, showing all current accounts receivable of  Borrower and
all other accounts receivable of Borrower aged in  intervals of thirty, sixty,
ninety and ninety-one days or more past  due.

         "Additional Costs" has the meaning specified in SECTION 4.1.

         "Advance" means an advance of funds by Lenders to Borrower pursuant 
to ARTICLE 2.

         "Advance Request Form" means a certificate, in substantially the form
of EXHIBIT "B" hereto, properly completed and signed by Borrower requesting an
Advance.

         "Affiliate" means, as to any Person, any other Person (a) that 
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, such Person; (b) that directly
or indirectly beneficially owns or holds five percent (5%) or more of any class
of voting stock of such Person; or (c) five percent (5%) or more of the voting
stock of which is directly or indirectly beneficially owned or held by the
Person in question.  The term "control" means the possession, directly or
indirectly, of the power to direct or cause direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise; provided, however, in no event shall the Agent or any
Lender be deemed an Affiliate of Borrower or any of its Subsidiaries.

         "Agent" means NationsBank of Texas, N.A., in its capacity as Agent 
for the Lenders.

         "Applicable Rate" means:





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      2
<PAGE>   7
                          (a)     during the period that an Advance is a Prime
                 Rate Advance, the Prime Rate minus 1/2 of one percent (.5%)
                 and

                          (b)     during the period that an Advance is a
                 Eurodollar Advance, the Eurodollar Rate plus (i) at all times
                 when the most recent compliance certificate delivered in
                 accordance with SECTION 7.1(C) shows that the Leverage Ratio
                 is less than or equal to 1.0 to 1, one and one-quarter percent
                 (1.25%), and (ii) at all times when the most recent compliance
                 certificate delivered in accordance with SECTION 7(C) shows
                 that the Leverage Ratio is greater than 1.0 to 1, one and
                 one-half percent (1.5%).

         "Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and its Assignee and accepted by the Agent pursuant to SECTION
12.6, in substantially the form of EXHIBIT "K" hereto.

         "Borrowing Base" means, at any particular time, an amount equal to the
sum of (a) eighty percent (80%) of Eligible Accounts, plus (b) fifty percent
(50%) of Eligible Inventory.

         "Borrowing Base Report" means a report, substantially in the form of
EXHIBIT "C" hereto, properly completed and executed by an authorized officer of
Borrower.

         "Business Day" means any day on which commercial banks are not
authorized or required to close in Dallas, Texas.

         "Capital Lease Obligation" means Debt represented by obligations under
any lease of real or personal property that is required to be capitalized for
financial reporting purposes in accordance with GAAP, and the amount of such
Debt shall be the capitalized amount of such obligations determined in
accordance with GAAP.

         "C/D/R" means C/D/R Incorporated, a Delaware corporation.

         "C/D/R Guaranty" means the Amended and Restated Guaranty of C/D/R in
favor of the Agent and the Lenders in substantially the form of EXHIBIT "I"
hereto, as the same may be amended, supplemented or otherwise modified from
time to time.

         "Change of Management" means the failure of James R. Ridings to
continue to perform his current or similar duties.

         "Change of Ownership" means the ownership, legally and beneficially,
by any Person of fifty-one percent (51%) or more of the capital stock of
Borrower.

         "Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated and rulings issued thereunder.





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      3
<PAGE>   8
         "Collateral" includes all of the collateral covered by the Security
Agreement, the Durocraft Security Agreement and the Pledge Agreement.

         "Commitment" means, as to any Lender, the obligation of such Lender to
make Advances hereunder in an aggregate principal amount not to exceed the
amount set forth opposite the name of such Lender on the signature pages hereto
under the heading "Commitment," and "Commitments" means such obligation of all
Lenders, as such amounts may be reduced pursuant to SECTION 2.7 or otherwise.

         "Consolidated Liabilities" means, at any particular time, all amounts
which, in conformity with GAAP, would be included as liabilities on a
consolidated balance sheet of Borrower and the Subsidiaries.

         "Consolidated Tangible Net Worth" means, at any particular time, all
amounts which, in conformity with GAAP, would be included as stockholders'
equity on a consolidated balance sheet of Borrower and the Subsidiaries;
provided, however, there shall be excluded therefrom: (a) any amount at which
shares of capital stock of Borrower appear as an asset on Borrower's balance
sheet, (b) goodwill, including any amounts, however designated, that represent
the excess of the purchase price paid for assets or stock over the value
assigned thereto, (c) patents, trademarks, trade names, and copyrights, (d)
deferred expenses, (e) loans and advances to any stockholder, director,
officer, or employee of Borrower or any Subsidiary or any Affiliate, and (f)
all other assets which are properly classified as intangible assets.

         "Continue," "Continuation" and "Continued" shall refer to the
continuation pursuant to SECTION 3.5 of a Eurodollar Advance as a Eurodollar
Advance from one Interest Period to the next Interest Period.

         "Convert," "Conversion" and "Converted" shall refer to a conversion
pursuant to SECTION 3.5 or ARTICLE 4 of one Type of Advance into another Type
of Advance.

         "Debt" means as to any Person at any time (without duplication) all
items which would be properly characterized as liabilities on a balance sheet
of such Person prepared in accordance with GAAP.

         "Default Rate" means the Maximum Rate or, if no Maximum Rate exists,
the sum of the Prime Rate in effect from day to day plus four percent (4%).

         "Dollars" and "$" mean lawful money of the United States of America.

         "Durocraft" means Durocraft International, Inc., a Texas corporation.

         "Durocraft Guaranty" means the Amended and Restated Guaranty of
Durocraft in favor of the Agent and tile Lenders, in substantially the form of
EXHIBIT "E" hereto, as the same may be amended, supplemented, or otherwise
modified from time to time.





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      4
<PAGE>   9
         "Durocraft Security Agreement" means the Amended and Restated Security
Agreement of Durocraft in favor of the Agent and the Lenders in substantially
the form of EXHIBIT "F" hereto, as the same may be amended, supplemented or
otherwise modified from time to time.

         "Eligible Accounts" means the aggregate of all accounts receivable of
Borrower that are acceptable to the Agent in its sole discretion and satisfy
the following conditions: (a) have been outstanding less than sixty (60) days
past the due date thereof; (b) have arisen in the ordinary course of business;
(c) represent complete bona fide transactions which require no further act
under any circumstances on the part of Borrower to make such accounts
receivable payable by the account debtor; (d) the goods of sale which gave rise
to such accounts receivable have been shipped or delivered to the account
debtor on an absolute sale basis and not on consignment, a sale or return
basis, a guaranteed sale basis, a bill and hold basis, or on the basis of any
similar understanding; (e) the goods of sale which gave rise to such accounts
receivable were not, at the time of sale thereof, subject to any Lien, except
as permitted by SECTION 8.2; (f) are not subject to any provision prohibiting
assignment or requiring notice of or consent to such assignment; (g) are
subject to a perfected, first priority security interest in favor of the Agent
and the Lenders and are not subject to any other Lien except as permitted by
SECTION 8.2; (h) are not subject to setoff, counterclaim, defense, allowance,
dispute, or adjustment other than normal discounts for prompt payment, and the
goods of sale which gave rise to such accounts receivable have not been
returned, rejected, repossessed, lost, or damaged; (i) the account debtor is
not insolvent or the subject of any bankruptcy or insolvency proceeding and has
not made an assignment for the benefit of creditors, suspended normal business
operations, dissolved, liquidated, terminated its existence, ceased to pay its
debts as they become due, or suffered a receiver or trustee to be appointed for
any of its assets or affairs; 0) are not evidenced by chattel paper or an
instrument of any kind; (k) are owed by a Person or Persons that are citizens
of or organized under the laws of the United States or any State and are not
owed by any Person located outside of the United States of America; (l) if any
accounts receivable are owed by the United States of America or any department,
agency, or instrumentality thereof, the Federal Assignment of Claims Act shall
have been complied with; and (m) are not owed by an Affiliate of Borrower.  The
amount of any Eligible Accounts owed by an account debtor to Borrower shall be
reduced by the amount of all "contra accounts" and other obligations owed by
Borrower to such account debtor.

         "Eligible Assignee" means (a) any Affiliate of a Lender, or (b) any
commercial bank, savings and loan association, savings bank, finance company,
insurance company, pension fund, mutual fund or other financial institution
(whether a corporation, partnership or other entity) acceptable to the Agent.

         "Eligible Inventory" means, at any time, all inventory of finished
goods and unassembled lamp parts then owned by (and in the possession or under
the control of) Borrower and held for sale or disposition in the ordinary
course of Borrower's business, in which the Agent, for the ratable benefit of
the Lenders, has a perfected, first priority security interest, valued at the
lower of actual cost or fair market value.  Eligible Inventory shall not
include (a) inventory that has been shipped or delivered to a customer on
consignment, a sale or return basis, or on the basis of any similar
understanding, (b) inventory with respect to which a claim exists disputing
Borrower's title to or right to possession of such inventory, (c) inventory
that is not in good condition or does not





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      5
<PAGE>   10
comply with any applicable laws, rules, or regulations or the standards imposed
by any governmental authority with respect to its manufacture, use, or sale,
and (d) inventory that the Agent, in its sole discretion, has determined to be
unmarketable.

         "Environmental Laws" means any and all federal, state, and local laws,
regulations, and requirements pertaining to health, safety, or the environment,
as such laws, regulations, and requirements may be amended or supplemented from
time to time.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereunder.

         "Eurodollar Advances" means Advances the interest rates on which are
determined with reference to the Eurodollar Rate

         "Eurodollar Business Day" means a Business Day on which dealings in
United States Dollars are carried out in the London interbank market.

         "Eurodollar Rate" means, for any Eurodollar Advance for any Interest
Period therefore, a rate per annum equal to (a) the Interbank Offered Rate,
divided by (b) 1.00 minus the Reserve Requirement applicable to Eurodollar
Advances,

         "Event of Default" has the meaning specified in SECTION 10.1.

         "Fixed Charge Coverage Ratio" means, with respect to Borrower and the
Subsidiaries on a consolidated basis for the most recently completed four
quarter period preceding the date of determination, a ratio of (a) Pretax
Income for such period plus interest expense for such period plus Operating
Lease expense for such period to (b) interest expense for such period plus
Operating Lease expense for such period.

         "GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants and/or in statements
of the Financial Accounting Standards Board and/or their respective successors
and which are applicable in the circumstances as of the date in question.
Accounting principles are applied on a "consistent basis" when the accounting
principles observed in a current period are comparable in all material respects
to those accounting principles applied in a preceding period.

         "Guaranty" means the Durocraft Guaranty and the C/D/R Guaranty,
individually and collectively.

         "Guarantor" means Durocraft and C/D/R, jointly and severally.

         "Hazardous Substance" means any substance, product, waste, pollutant,
material, chemical, contaminant, constituent, or other material which is or
becomes listed, regulated, or





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      6
<PAGE>   11
addressed under any Environmental Law, including, without limitation, asbestos,
petroleum, and polychlorinated biphenyls.

         "Interbank Offered Rate" means, with respect to each Interest Period,
the rate of interest per annum at which deposits in immediately available
freely transferable funds in Dollars are offered by NationsBank (at
approximately 1:00 p.m. Dallas, Texas time, two (2) Eurodollar Business Days
prior to the first day of such Interest Period) to first class banks in the
London interbank market for delivery on the first day of such Interest Period,
such deposits being for a period of time equal or comparable to such Interest
Period and in an amount equal or comparable to the principal amount of the
Eurodollar Advance to which such Interest Period relates.  Each determination
of the Interbank Offered Rate by Agent shall be conclusive in the absence of
manifest error.

         "Interest Period" means, with respect to any Eurodollar Advances, each
period commencing on the date such Eurodollar Advances are made or Converted
from Advances of another Type, or, in the case of each subsequent, successive
Interest Period applicable to a Eurodollar Advance, the last day of the next
preceding Interest Period with respect to such Advance, and ending on the day
30, 60, 90 or 180 days thereafter, as Borrower may select as provided in
SECTION 2.5 or 3.5 hereof.  Notwithstanding the foregoing: (a) each Interest
Period which would otherwise end on a day which is not a Eurodollar Business
Day shall end on the next succeeding Eurodollar Business Day; (b) any Interest
Period which would otherwise extend beyond the Termination Date shall end on
the Termination Date; (c) no more than three (3) Interest Periods for
Eurodollar Advances shall be in effect at the same time; (d) no Interest Period
shall have a duration of less than thirty (30) days and, if the Interest Period
for any Eurodollar Advances would otherwise be a shorter period, such Advances
shall not be available hereunder; and (e) no Interest Period may extend beyond
a principal repayment date unless, after giving effect thereto, the aggregate
principal amount of the Eurodollar Advances having Interest Periods that and
after such principal payment date shall be equal to or less than the Advances
to be outstanding hereunder after such principal repayment date.

         "Leverage Ratio" means, at any particular time, the ratio of Debt to
Consolidated Tangible Net Worth.

         "Lien" means any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation, assignment, preference,
priority, or other encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or title retention agreement), whether
arising by contract, operation of law, or otherwise.

         "Loan Documents" means this Agreement and all promissory notes,
security agreements, pledge agreements, deeds of trust, assignments, letters of
credit, applications for letters of credit, guaranties, and other instruments,
agreements and documentation executed and delivered pursuant to or in
connection with this Agreement, as such instruments, agreements and
documentation may be amended, modified, renewed, extended, amended and restated
or supplemented from time to time.





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      7
<PAGE>   12
         "Maximum Rate" means the maximum rate of nonusurious interest
permitted from day to day by applicable law, including as to Article 5069-1.04,
Vernon's Texas Civil Statutes (and as the same may be incorporated by reference
in other Texas statutes), but otherwise without limitation, that rate based
upon the "indicated rate ceiling" and calculated after taking into account any
and all relevant fees, payments, and other charges in respect of the Loan
Documents which are deemed to be interest under applicable law.

         "Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by Borrower or any
Subsidiary and which is covered by Title IV of ERISA.

         "NationsBank" means NationsBank of Texas, N.A., a national banking
association.

         "Net Income" means, for any period, the consolidated net income of
Borrower and the Subsidiaries for such period as determined in accordance with
GAAP.

         "Notes" means the promissory notes of Borrower payable to the order of
each Lender, in substantially the form of EXHIBIT "A" hereto, and all
extensions, renewals, and modifications thereof.

         "Obligated Party" means any Guarantor or any other Person who is or
becomes party to any agreement that guarantees or secures payment and
performance of the Obligations or any part thereof.

         "Obligations" means all obligations, indebtedness, and liabilities of
Borrower to the Agent and the Lenders, now existing or hereafter arising,
whether direct, indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, including, without
limitation, the obligations, indebtedness, and liabilities of Borrower under
this Agreement and the other Loan Documents (including, without limitation, all
of Borrower's contingent reimbursement obligations in respect of letters of
credit), and all interest accruing thereon and all attorneys' fees and other
expenses incurred in the enforcement or collection thereof.

         "Operating Lease" means any lease (other than a lease constituting a
Capital Lease Obligation) of real or personal property.

         "PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.

         "Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, governmental authority, or
other entity.

         "Plan" means any employee benefit or other plan established or
maintained by Borrower or any ERISA Affiliate and which is covered by Title IV
of ERISA.





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      8
<PAGE>   13
         "Pledge Agreement" means the Amended and Restated Pledge Agreement of
Borrower and Durocraft in favor of the Agent and the Lenders in substantially
the form of EXHIBIT "I" hereto, as the same may be amended, supplemented or
otherwise modified from time to time.

         "Potential Default" means any condition or event which, after notice
or lapse of time or both, would constitute an Event of Default.

         "Pretax Income" means, for any period, Net Income for such period plus
(but only to the extent deducted in the determination of Net Income) tax
expense for such period.

         "Prime Rate" means, at any time, the rate of interest per annum then
most recently established by NationsBank as its prime rate.  The Prime Rate is
a reference rate set by NationsBank after taking into account such factors as
it may deem appropriate and does not necessarily represent the lowest or best
rate actually charged to any customer.  The Prime Rate may not correspond with
future increases or decreases in interest rates charged by other lenders or
market rates in general and NationsBank may make various commercial or other
loans at rates of interest having no relationship to such rate.

         "Prime Rate Advance" means Advances that bear interest at rates based
upon the Prime Rate.

         "Prohibited Transaction" means any transaction set forth in Section
406 of ERISA or Section 4975 of the Code.

         "Regulatory Change" means, with respect to any Lender, any change
after the date of this Agreement in United States federal, state, or foreign
laws or regulations (including Regulation D) or the adoption or making after
such date of any interpretations, directives, or requests applying to a class
of banks including either Lender of or under any United States federal or
state, or any foreign, laws or regulations (whether or not having the force of
law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.

         "Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented fpom time to
time.

         "Reportable Event" means any of the events set forth in Section 4043
of ERISA.

         "Required Lenders" means Lenders holding fifty-one percent or more of
the outstanding Advances, or, if no Advances are outstanding, fifty-one percent
or more of the Commitments.

         "Reserve Requirement" means, on any day, that percentage (expressed as
a decimal fraction) which is in effect on such day, as prescribed by the Board
of Governors of the Federal Reserve System (or any successor), for determining
the maximum reserve requirements (including, without limitations basic,
supplemental, marginal and emergency reserves) applicable to "eurocurrency
liabilities" as currently defined in Regulation D or under any other then
applicable similar or successor regulation which prescribes reserve
requirements applicable to





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      9
<PAGE>   14
eurocurrency liabilities or eurocurrency fundings.  Each determination by Agent
of the Reserve Requirement shall be conclusive in the absence of manifest
error.

         "RICO" means the Racketeer Influenced and Corrupt Organization Act of
1970, as amended from time to time.

         "Security Agreement" means the Amended and Restated Security Agreement
of Borrower in favor of the Agent and the Lenders in substantially the form of
EXHIBIT "D" hereto, as the same may be amended, supplemented or otherwise
modified from time to time.

         "Subsidiary" means any corporation of which more than fifty percent
(50%) of the issued and outstanding securities having ordinary voting power for
the election of a majority of directors is owned or controlled, directly or
indirectly, by Borrower, by Borrower and one or more other Subsidiaries, or by
one or more other Subsidiaries.

         "Termination Date" means 11:00 a.m.  Dallas, Texas time on November
15, 1996, or such earlier date and time on which the Commitments terminate as
provided in this Agreement.

         "Type" means any type of Advance (i.e., Prime Rate Advance or
Eurodollar Advance).

         Section 1.2      Other Definitional Provisions.  All definitions
contained in this Agreement are equally applicable to the singular and plural
forms of the terms defined.  The words "hereof", "herein", and "hereunder" and
words of similar import referring to this Agreement refer to this Agreement as
a whole and not to any particular provision of this Agreement.  Unless
otherwise specified, all Article and Section references pertain to this
Agreement.  All accounting terms not specifically defined herein shall be
construed in accordance with GAAP.  Terms used herein that are defined in the
Uniform Commercial Code as adopted by the State of Texas, unless otherwise
defined herein, shall have the meanings specified in the Uniform Commercial
Code as adopted by the State of Texas.

                                   ARTICLE 2

                                    Advances

         Section 2.1      Advances.  Subject to the terms and conditions of
this Agreement, each Lender severally agrees to make one or more Advances to
Borrower from time to time from the date hereof to and including the
Termination Date, provided that (a) the aggregate outstanding amount of all
Advances shall not at any time exceed the lesser of the Commitments or the
Borrowing Base and (b) the outstanding Advances supported only by the Eligible
Inventory component of the Borrowing Base shall not at any time exceed fifty
percent (50%) of the aggregate outstanding amount of all Advances.  Subject to
the foregoing limitations, and the other terms and provisions of this
Agreement, Borrower may borrow, repay, and reborrow hereunder.





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      10
<PAGE>   15
         Section 2.2      The Notes.  The obligation of Borrower to repay the
Advances shall be evidenced by the Notes executed by Borrower, and payable to
the order of each Lender, in the aggregate principal amount of the Commitments
as originally in effect and dated the date hereof.

         Section 2.3      Repayment of Advances.  Borrower shall repay the
unpaid principal amount of all Advances outstanding under the Notes on the
Termination Date.

         Section 2.4      Interest.  The unpaid principal amount of the
Advances shall bear interest prior to maturity at a varying rate per annum
equal from day to day to the lesser of (a) the Maximum Rate or (b) the
Applicable Rate, each such change in the rate of interest charged on the
Advances to become effective, without notice to Borrower, on the effective date
of each change in the Applicable Rate or the Maximum Rate, as the case may be;
provided, however, if at any time the rate of interest specified in clause (b)
preceding shall exceed the Maximum Rate, thereby causing the interest on the
Advances to be limited to the Maximum Rate, then any subsequent reduction in
the Applicable Rate shall not reduce the rate of interest on the Advances below
the Maximum Rate until such time as the aggregate amount of interest accrued on
the Advances equals the aggregate amount of interest which would have accrued
on the Advances if the interest rate specified in clause (b) preceding had at
all times been in effect.  Accrued and unpaid interest on the Advances shall be
payable on the last Business Day of each month and at the end of each Interest
Period, commencing on November 30, 1995, and on the Termination Date.  All past
due principal and interest shall bear interest at the Default Rate.

         Section 2.5      Requests for Advances.  Borrower shall give Agent
notice by means of an Advance Request Form of each requested Advance, at least
three (3) Eurodollar Business Days before the requested date of each Eurodollar
Advance, and by 12:00 p.m. (Dallas, Texas time) on the requested date of each
Prime Rate Advance specifying: (a) the requested date of such Advance (which
shall be a Business Day and, with respect to Eurodollar Advances, a Eurodollar
Business Day), (b) the amount of such Advance, (c) the Type of the Advance and
(d) in the case of a Eurodollar Advance, the duration of the Interest Period
for such Advance.  Agent at its option may accept telephonic requests for
Advances, provided that such acceptance shall not constitute a waiver of
Agent's right to require delivery of an Advance Request Form in connection with
subsequent Advances.  Any telephonic request for an Advance by Borrower shall
be promptly confirmed by submission of a properly completed Advance Request
Form to Agent.  Each Eurodollar Advance shall be in a minimum principal amount
of One Hundred Thousand Dollars ($100,000.00) or an integral multiple thereof
and each Prime Rate Advance shall be in a minimum principal amount of Fifty
Thousand Dollars ($50,000.00). The aggregate amount of Eurodollar Advances
having the same Interest Period shall be at least equal to One Hundred Thousand
Dollars ($100,000.00).  All notices under this SECTION 2.5 shall be irrevocable
and shall be given not later than 12:00 p.m.  (Dallas, Texas time) on the day
specified above for such notice.  Any Advance Request Form requesting an
Advance received after 12:00 p.m. (Dallas, Texas time) on a Business Day shall
be deemed to be received on the next succeeding Business Day.

         Section 2.6      Use of Proceeds.  The proceeds of Advances shall be
used for working capital support of accounts receivable and inventory of
Borrower.





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      11
<PAGE>   16
         Section 2.7      Reduction or Termination of Commitments.  Borrower
shall have the right at any time to terminate in whole or from time to time to
irrevocably reduce in part the Commitments upon at least three (3) Business
Days prior written notice to Agent specifying the effective date thereof,
whether a termination or reduction is being made, and the amount of any partial
reduction; provided, however, that each partial reduction shall be in the
amount of Two Hundred Fifty Thousand Dollars ($250,000.00) or an integral
multiple thereof and Borrower shall simultaneously prepay the amount by which
the aggregate outstanding amount of all Advances exceeds the Commitments (after
giving effect to such notice) plus accrued and unpaid interest on the principal
amount so prepaid.  The Commitments may not be reinstated after they have been
terminated or reduced.  Any reduction in the Commitments will reduce the
Commitment of each Lender pro rata based on its Commitment amount.

         Section 2.8      Letters of Credit.  At the request of Borrower, and
upon execution of letter of credit documentation satisfactory to NationsBank
(including, without limitation, an Application and Agreement for Commercial
Letter of Credit [for documentary letters of credit] or Standby Letter of
Credit Application and Agreement [for standby letters of credit] for each such
letter of credit in the form attached hereto as EXHIBIT "J") (the
"Application"), NationsBank shall issue documentary or standby letters of
credit ("Letters of Credit") from time to time for the account of Borrower for
its benefit or the benefit of its Subsidiaries in a face amount not exceeding
in the aggregate at any time outstanding the lesser of (a) $1,000,000.00 or (b)
$12,000,000 minus the aggregate outstanding principal balance of all Advances.
The Commitments shall at all times be reduced by the aggregate face amount of
outstanding Letters of Credit.  The Letters of Credit shall be on terms
mutually acceptable to Borrower and NationsBank and no Letter of Credit shall
have an expiration date later than the Termination Date.  Any amount paid by
NationsBank on any Letter of Credit which is not immediately reimbursed by
Borrower shall be treated as an Advance without the necessity for any request
by Borrower.  Immediately upon the issuance of any Letter of Credit,
NationsBank shall be deemed to have sold and transferred to each other Lender,
and each such other Lender shall be deemed unconditionally and irrevocably to
have purchased and received from NationsBank, without recourse or warranty, an
undivided interest and participation, pro-rata based upon such other Lender's
Commitment compared to the aggregate Commitments, in such Letter of Credit (as
the same may thereafter be amended, renewed or extended pursuant to this
Agreement), each drawing thereunder and the obligations of Borrower under this
Agreement and the Application with respect thereto and any security therefor or
guaranty pertaining thereto.  In the event and to the extent that any draft
drawn under any Letter of Credit shall not have been promptly reimbursed by
Borrower, NationsBank shall promptly notify Agent, and Agent shall promptly
notify each other Lender, of such failure, and each such other Lender shall, on
the first Business Day following such notification, and notwithstanding (A)
anything to the contrary contained in SECTION 2.1 or elsewhere in this
Agreement or (B) the existence of any Event of Default or the inability of or
failure by Borrower or any Subsidiary to comply with any condition precedent
set forth in ARTICLE 5, make an Advance, which Advance shall be a Prime Rate
Advance and shall be used to repay the applicable portion of NationsBank's
Advance thereon resulting from such drawing, in an amount equal to such
Lender's pro rata share of such drawing (based upon its Commitment compared to
the aggregate Commitments), which amount shall promptly and unconditionally be
made available to Agent for the account of NationsBank as reimbursement for
such drawing and interest accrued thereon, in immediately available funds.





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      12
<PAGE>   17
Borrower shall pay to NationsBank, at the time of issuance of each Letter of
Credit, a fee equal to the greater of (a) (i) one percent (1.0%) per annum for
documentary letters of credit or (ii) one and one-half (1.50) percent per annum
for standby letters of credit, times the face amount of the Letter of Credit or
(b) One Hundred Dollars ($100.00). In connection with the issuance of any
Letters of Credit, Borrower shall pay to NationsBank its standard fees and
charges, including the standard fees and charges provided for in the
Application.  The obligations and indebtedness of Borrower to Lender under this
SECTION 2.8, the Letters of Credit, and the Applications, shall be part of the
Obligations.

                                   ARTICLE 3

                    Payments, Conversions and Continuations

         Section 3.1      Method of Payment.  All payments of principal,
interest, and other amounts to be made by Borrower under this Agreement, the
Notes, and the other Loan Documents shall be made to Agent, for the ratable
benefit of the Lenders, at its office at 901 Main Street, Dallas, Texas 75202,
without setoff, deduction, or counterclaim, in Dollars and in immediately
available funds.  Borrower shall, at the time of making each such payment,
specify to Agent the sums payable by Borrower under this Agreement, the Notes,
or other Loan Document to which such payment is to be applied (and in the event
Borrower fails to so specify, or if an Event of Default has occurred and is
continuing, Agent may apply such payment to the Obligations in such order and
manner as it may elect in its sole discretion).  Whenever any payment under
this Agreement, the Notes, or any other Loan Document shall be stated to be due
on a day that is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of the payment of interest.

         Section 3.2      Voluntary Prepayment.  Borrower may prepay the Notes
in whole at any time or from time to time in part without premium or penalty
but with accrued interest to the date of prepayment on the amount so prepaid,
provided that (a) Eurodollar Advances may be prepaid only on the last day of
the Interest Period for such Advances and (b) each partial prepayment shall be
in the principal amount of $25,000.00 or an integral multiple thereof.

         Section 3.3      Mandatory Prepayment.  If at any time (a) the
aggregate amount of outstanding Advances exceeds the lesser of the Commitments
or the Borrowing Base or (b) the outstanding Advances supported by the Eligible
Inventory component of the Borrowing Base exceeds fifty percent (50%) of the
aggregate amount of outstanding Advances, Borrower shall promptly prepay the
amount of the excess plus (x) accrued and unpaid interest on the amount so
prepaid and (y) any amounts for the compensation of funding losses of the
Lenders pursuant to SECTION 4.4.

         Section 3.4      Computation of Interest and Fees.  Interest on the
indebtedness evidenced by the Notes and all fees provided for herein shall be
computed on the basis of a year of 360 days and the actual number of days
elapsed (including the first day but excluding the last day) unless such
calculation would result in a usurious rate, in which case interest shall be
calculated on the basis of a year of 365 or 366 days, as the case may be.





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      13
<PAGE>   18
         Section 3.5      Conversions and Continuations.  Borrower shall have
the right from time to time to Convert all or part of one Type of Advance into
another Type of Advance or to Continue all or part of any Eurodollar Advance by
giving the Agent written notice at least one (1) Eurodollar Business Day before
Conversion into a Prime Rate Advance and at least three (3) Eurodollar Business
Days before Conversion into or Continuation of a Eurodollar Advance,
specifying: (a) the Type of Advance to be converted, (b) the Conversion or
Continuation date, (c) the amount of the Advance to be Converted or Continued,
(d) in the case of Conversions, the Type of Advance to be Converted into and
(e) in the case of a Continuation of or Conversion into a Eurodollar Advance,
the duration of the Interest Period applicable thereto; provided that (i)
Eurodollar Advances may only be Converted on the last day of the Interest
Period and (ii) except for Conversions into Prime Rate Advances, no Conversions
shall be made while an Event of Default or Potential Default has occurred and
is continuing.  All notices given under this SECTION 3.5 shall be irrevocable
and shall be given not later than 11:00 a.m. (Dallas, Texas time) on the date
which is not less than the number of Business Days or Eurodollar Business Days
specified above for such notice.  If Borrower shall fail to give Agent the
notice as specified above for Continuation or Conversion of a Eurodollar
Advance prior to the end of the Interest Period with respect thereto, such
Eurodollar Advance shall automatically be Converted into a Prime Rate Advance
on the last day of the Interest Period for such Eurodollar Advance.

                                   ARTICLE 4

                        Yield Protection and Illegality

         Section 4.1      Additional Costs.  Borrower shall pay directly to
each Lender from time to time such amounts as such Lender may determine to be
necessary to compensate it for any costs incurred by such Lender which such
Lender determines are attributable to its making or maintaining of any
Eurodollar Advances hereunder or its obligation to make any of such Eurodollar
Advances hereunder, or any reduction in any amount receivable by such Lender
hereunder in respect of any such Eurodollar Advance or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change which:

                 (a)      changes the basis of taxation of any amounts payable
         to such Lender under this Agreement or the Notes in respect of any of
         such Advances (other than taxes imposed on the overall net income of
         such Lender for any of such Advances);

                 (b)      imposes or modifies any reserve, special deposit,
         minimum capital, capital ratio, or similar requirement relating to any
         extensions of credit or other assets of, or any deposits with or other
         liabilities or commitments of, such Lender (including any of such
         Advances or any deposits referred to in the definition of "Eurodollar
         Rate" in SECTION 1.1 hereof);

                 (c)      increases such Lender's costs relating to Advances,
         the Commitments, or any part thereof;





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      14
<PAGE>   19
                 (d)      reduces the yield or rate of return of such Lender on
         Advances, the Commitments, or any part thereof, to a level below that
         which such Lender could have achieved but for such Regulatory Change;
         or

                 (e)      imposes any other condition affecting this Agreement
         or the Notes or any of such extensions of credit or liabilities or
         commitments.

         Each Lender will notify Borrower of any event occurring after the date
of this Agreement which will entitle such Lender to compensation pursuant to
this SECTION 4.1 as promptly as practicable after it obtains knowledge thereof
and determines to request such compensation, and will designate a different
lending office for the Advances affected by such event if such designation will
avoid the need for, or reduce the amount of, such compensation and will not, in
the sole opinion of such Lender, violate any law, rule, or regulation or be in
any way disadvantageous to such Lender.  Such Lender will finish Borrower with
a certificate setting forth the basis and the amount of each request of such
Lender for compensation under this section.  If any Lender requests
compensation from Borrower under this section, Borrower may, by notice to such
Lender suspend the obligation of such Lender to make additional Eurodollar
Advances until the Regulatory Change giving rise to such request ceases to be
in effect (in which case the provisions of SECTION 4.3 hereof shall be
applicable).  Determinations and allocations by any Lender for purposes of this
section shall be conclusive, provided that such determinations and allocations
are made on a reasonable basis.

         Section 4.2      Limitation on Types of Advances.  Anything herein to
the contrary notwithstanding, if with respect to any Eurodollar Advances for
any Interest Period therefor, any Lender determines (which determination shall
be conclusive) that the relevant rates of interest referred to in the
definition of "Eurodollar Rate" in SECTION 1.1 hereof on the basis of which the
rate of interest for Eurodollar Advances for such Interest Period is to be
determined do not accurately reflect the cost to such Lender of making or
maintaining Eurodollar Advances for such Interest Period, then such Lender
shall give Borrower prompt notice thereof specifying the relevant amounts or
periods, and so long as such condition remains in effect, such Lender shall be
under no obligation to make additional Eurodollar Advances or to Convert Prime
Rate Advances into Eurodollar Advances and Borrower shall, on the last day(s)
of the then current Interest Period(s) for the outstanding Eurodollar Advances
either prepay such Eurodollar Advances or Convert such Eurodollar Advances into
Prime Rate Advances in accordance with the terms of this Agreement.

         Section 4.3      Substitute Prime Rate Advances.  If the obligation of
any Lender to make Eurodollar Advances shall be suspended pursuant to SECTION
4.1 or 4.2 hereof, all Advances which would be otherwise made by such Lender as
Eurodollar Advances shall be made instead as Prime Rate Advances and all
Advances which would otherwise be Converted into Eurodollar Advances shall be
Converted instead into (or shall remain as) Prime Rate Advances and, to the
extent that Eurodollar Advances are so made as (or Converted into) Prime Rate
Advances, all payments and prepayments of principal which would otherwise be
applied to such Lender's Eurodollar Advances shall be applied instead to its
Prime Rate Advances.





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      15
<PAGE>   20
         Section 4.4      Compensation.  Borrower shall pay to each Lender,
upon the request of such Lender, such amount or amounts as shall be sufficient
(in the reasonable opinion of such Lender) to compensate it for any loss, cost,
or expense incurred by it as a result of:

                 (a)      Any payment, prepayment or Conversion of a Eurodollar
         Advance for any reason (including, without limitation, the
         acceleration of outstanding Advances pursuant to SECTION 10.2) on a
         date other than the last day of an Interest Period for such Eurodollar
         Advance; or

                 (b)      Any failure by Borrower for any reason (including,
         without limitation, the failure of any conditions precedent specified
         in ARTICLE 5 to be satisfied) to borrow, Convert, Continue, or prepay
         a Eurodollar Advance on the date for such borrowing, Conversion,
         Continuation, or prepayment, specified in the relevant notice of
         borrowing, prepayment, Conversion, or Continuation under this
         Agreement.

         Section 4.5      Capital Adequacy.  If after the date hereof, any
Lender shall have determined that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender (or its parent) with any
request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Lender's (or its
parent's) capital as a consequence of its obligations hereunder or the
transactions contemplated hereby to a level below that which such Lender (or
its parent) could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's policies with respect to capital
adequacy) by an amount deemed by such Lender to be material, then from time to
time, within ten (10) Business Days after demand by such Lender, Borrower shall
pay to such Lender such additional amount or amounts as will compensate such
Lender (or its parent) for such reduction.  A certificate of such Lender
claiming compensation under this SECTION 4.5 and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive, provided that
the determination thereof is made on a reasonable basis.  In determining such
amount or amounts, such Lender may use any reasonable averaging and attribution
methods.

         Section 4.6      Changes in Law Rendering Loan Unlawful.  In the event
that (i) any change in applicable law, treaty or regulation or the
interpretation thereof (whether or not having the force of law) shall make it
unlawful or impossible for any Lender to make or continue to maintain all or
any portion of a Eurodollar Advance contemplated hereunder, or (ii) any central
bank or other fiscal, monetary or other authority having jurisdiction over such
Lender or all or any portion of a Eurodollar Advance shall request such Lender
in writing to comply with restrictions (whether or not having the force of law)
which seek to prohibit such Lender from making or continuing to maintain such a
Eurodollar Advance, then such Lender shall so notify Borrower, and Borrower
shall, upon demand by such Lender, either, at the option of Borrower, prepay
such Eurodollar Advance or convert such Eurodollar Advance to a Prime Rate
Advance in accordance with SECTION 3.5 hereof, except that, subject to the
provisions of SECTION 4.4 hereof, such prepayment or conversion need not be
effected on the last day of the Interest Period applicable to the





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      16
<PAGE>   21
Eurodollar Advance, and upon such demand or upon notice by such Lender, the
obligation of such Lender to make such Eurodollar Advance hereunder shall
terminate.  Failure to prepay any such portion of a Eurodollar Advance shall be
deemed an election to convert to a Prime Rate Advance.  Such demand or notice
shall be accompanied by a certificate of such Lender provided to Borrower as to
the reasons why it is no longer feasible for such Lender to make or continue to
maintain such Eurodollar Advance hereunder and such certificate shall, in the
absence of manifest error in calculation, be conclusive and binding.

                                   ARTICLE 5

                              Conditions Precedent

         Section 5.1      Initial Advance.  The obligation of each Lender to
make any Advance concurrently with or subsequent to the execution of this
Agreement is subject to the condition precedent that Agent shall have received
on or before the day of such Advance all of the following, each dated (unless
otherwise indicated) effective as of the date hereof, in form and substance
satisfactory to Agent:

                 (a)      Resolutions.  Resolutions of the Board of Directors
         of Borrower and each Guarantor certified by their respective Secretary
         or Assistant Secretary which authorize the execution, delivery, and
         performance by Borrower and each Guarantor of the Loan Documents to
         which Borrower or such Guarantor, as applicable, is or is to be a
         party;

                 (b)      Incumbency Certificate.  A certificate of incumbency
         certified by the respective Secretary or Assistant Secretary of
         Borrower and each Guarantor certifying the names of the officers of
         Borrower and such Guarantor authorized to sign each of the Loan
         Documents to which Borrower or such Guarantor, as applicable, is or is
         to be a party (including the certificates contemplated herein),
         together with specimen signatures of such officers;

                 (c)      Articles of Incorporation.  The articles of
         incorporation of Borrower and each Guarantor, each certified by the
         Secretary of State of its respective state of incorporation and dated
         within ten (10) days prior to the date of execution hereof;

                 (d)      Bylaws.  The bylaws of Borrower and each Guarantor
         certified by its respective Secretary or Assistant Secretary;

                 (e)      Governmental Certificates.  Certificates of the
         appropriate government officials of the state of incorporation of
         Borrower and each Guarantor as to the existence and good standing of
         such Persons, together with certificates of the appropriate government
         officials of the State of Texas as to the qualification to do business
         as a foreign corporation and good standing of Borrower and each
         Guarantor in the State of Texas, each dated within ten (10) days prior
         to the date of execution hereof;

                 (f)      Notes.  The Notes executed by Borrower;





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      17
<PAGE>   22
                 (g)      Security Agreement.  The Security Agreement executed
         by Borrower;

                 (h)      Financing Statements and Assignments.  Uniform
         Commercial Code financing statements or amendments executed by
         Borrower or Guarantor, as applicable, and covering such Collateral as
         Agent may request, and Uniform Commercial Code terminations or
         assignments relating to the Liens identified on SCHEDULE 6 hereto;

                 (i)      Guaranty.  The Durocraft Guaranty executed by
         Durocraft, and the C/D/R Guaranty executed by C/D/R;

                 (j)      Durocraft Security Agreement.  The Durocraft Security
         Agreement executed by Durocraft;

                 (k)      Initial Borrowing Base Report.  A Borrowing Base
         Report dated October 31, 1995, properly completed and executed by an
         authorized officer of Borrower reflecting the information required
         thereby as of October 31, 1995;

                 (l)      Landlord and Mortgagee Agreements.  Landlord and
         mortgagee subordinations or waivers executed by each landlord and
         mortgagee identified on SCHEDULE 1 hereto;

                 (m)      Insurance Policies.  Summaries of all insurance
         policies required by SECTION 7.5, together with loss payable
         endorsements in favor of the Agent and the Lenders with respect to all
         insurance policies covering Collateral;

                 (n)      UCC Search.  The results of Uniform Commercial Code
         searches showing all financing statements and other documents or
         instruments on file against Borrower or Guarantor in each applicable
         jurisdiction listed on SCHEDULE 5 hereto, such searches to be as of a
         date no more than ten (10) days prior to the date of execution hereof;

                 (o)      Instruments, Documents and Chattel Paper.  All
         Collateral consisting of instruments, documents and chattel paper
         (except as otherwise provided by the Security Agreement, the Durocraft
         Security Agreement or the Pledge Agreement) endorsed, if applicable,
         payable to the order of Agent and the Lenders; and

                 (p)      Attorneys' Fees and Expenses.  Evidence that the
         costs and expenses (including reasonable attorneys' fees) referred to
         in SECTION 11.1, to the extent incurred, shall have been paid in full
         by Borrower.

         Section 5.2      All Advances.  The obligation of each Lender to make
any Advance (including the initial Advance) is subject to the following
additional conditions precedent:

                 (a)      Advance Request Form.  Agent shall have received in
         accordance with Section 2.5 an Advance Request Form dated the date of
         such Advance and executed by an





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      18
<PAGE>   23
         authorized officer of Borrower, all of the statements in which shall
         be true and correct on and as of such date;

                 (b)      No Default.  No Event of Default or Potential Default
         shall have occurred and be continuing; and

                 (c)      Additional Documentation.  Agent shall have received
         such additional approvals, opinions, or documentation as Agent or its
         legal counsel, Jenkens & Gilchrist, P.C., may request.

                                   ARTICLE 6

                         Representations and Warranties

         To induce the Agent and the Lenders to enter into this Agreement,
Borrower represents and warrants to the Agent and the Lenders that, as of the
execution hereof:

         Section 6.1      Corporate Existence.  Borrower and each Subsidiary
(a) is a corporation duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation; (b) has all requisite
corporate power and authority to own its assets and carry on its business as
now being or as proposed to be conducted; and (c) is qualified to do business
in all jurisdictions in which the nature of its business makes such
qualification necessary and where failure to so qualify would have a material
adverse effect on its business, condition (financial or otherwise), operations,
prospects, or properties.  Borrower has the corporate power and authority to
execute, deliver, and perform its obligations under this Agreement and the
other Loan Documents to which it is or may become a party.

         Section 6.2      Financial Statements.  Borrower has delivered to
Agent audited consolidated financial statements of Borrower and its
Subsidiaries as at and for the fiscal year ended June 30, 1995, and unaudited
consolidated financial statements of Borrower and its Subsidiaries for the
three (3) month period ended September 30, 1995.  Such financial statements are
true and correct, have been prepared in accordance with GAAP, and fairly and
accurately present, on a consolidated basis, the financial condition of
Borrower and its Subsidiaries as of the respective dates indicated therein and
the results of operations for the respective periods indicated therein.
Neither Borrower nor any of its Subsidiaries has any material contingent
liabilities, liabilities for taxes, material forward or long-term commitments,
or unrealized or anticipated losses from any unfavorable commitments not
reflected in such financial statements.  There has been no material adverse
change in the business, condition (financial or otherwise), operations,
prospects, or properties of Borrower or any of its Subsidiaries since the
effective date of the most recent financial statements referred to in this
section.

         Section 6.3      Corporate Action; No Breach.  The execution,
delivery, and performance by Borrower of this Agreement and the other Loan
Documents to which Borrower is or may become a party have been duly authorized
by all requisite action on the part of Borrower and do not and will not violate
or conflict with the articles of incorporation or bylaws of Borrower or any





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      19
<PAGE>   24
law, rule, or regulation or any order, writ, injunction, or decree of any
court, governmental authority, or arbitrator, and do not and will not conflict
with, result in a breach of, or constitute a default under, or result in the
creation or imposition of any Lien (except those Liens in favor of the Agent
and the Lenders) upon any of the revenues or assets of Borrower or any
Subsidiary pursuant to the provisions of any indenture, mortgage, deed of
trust, security agreement, franchise, permit, license, or other instrument or
agreement by which Borrower or any Subsidiary or any of their respective
properties is bound.

         Section 6.4      Operation of Business.  Borrower and each of its
Subsidiaries possess all licenses, permits, franchises, patents, copyrights,
trademarks, and tradenames, or rights thereto, to conduct their respective
businesses substantially as now conducted and as presently proposed to be
conducted, and Borrower and each of its Subsidiaries are not in violation of
any valid rights of others with respect to any of the forgoing.

         Section 6.5      Litigation and Judgments.  To the knowledge of
Borrower, there is no action, suit, investigation, or proceeding before or by
any court, governmental authority, or arbitrator pending or threatened against
or affecting Borrower or any Subsidiary, that would, if adversely determined,
have a material adverse effect on the business, condition (financial or
otherwise), operations, prospects, or properties of Borrower or any Subsidiary
or the ability of Borrower to pay and perform the Obligations.  There are no
outstanding judgments against Borrower or any Subsidiary.

         Section 6.6      Rights in Properties; Liens.  Borrower and each
Subsidiary have good and indefeasible title to or valid leasehold interests in
their respective properties and assets, real and personal, including the
properties, assets, and leasehold interests reflected in the financial
statements described in SECTION 6.2, and none of the properties, assets, or
leasehold interests of Borrower or any Subsidiary is subject to any Lien,
except as permitted by SECTION 8.2.

         Section 6.7      Enforceability.  This Agreement constitutes, and the
other Loan Documents to which Borrower is party, when delivered, shall
constitute the legal, valid, and binding obligations of Borrower, enforceable
against Borrower in accordance with their respective terms, except as limited
by bankruptcy, insolvency, or other laws of general application relating to the
enforcement of creditor's rights.

         Section 6.8      Approvals.  No authorization, approval, or consent
of, and no filing or registration with, any court, governmental authority, or
third party is or will be necessary for the execution, delivery, or performance
by Borrower of this Agreement and the other Loan Documents to which Borrower is
or may become a party or the validity or enforceability thereof.

         Section 6.9      Debt.  Borrower and its Subsidiaries have no Debt,
except as permitted by SECTION 8.1.

         Section 6.10     Taxes.  Borrower and each Subsidiary have filed all
tax returns (federal, state, and local) required to be filed, including all
income, franchise, employment, property, and sales taxes, and have paid all of
their respective liabilities for taxes, assessments, governmental





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      20
<PAGE>   25
charges, and other levies that are due and payable, and Borrower knows of no
pending investigation of Borrower or any Subsidiary by any taxing authority or
of any pending but unassessed tax liability of Borrower or any Subsidiary.

         Section 6.11     Use of Proceeds; Margin Securities.  Neither Borrower
nor any Subsidiary is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing
or carrying margin stock (within the meaning of Regulations G, T, U, or X of
the Board of Governors of the Federal Reserve System), and no part of the
proceeds of any extension of credit under this Agreement will be used to
purchase or carry any such margin stock or to extend credit to others for the
purpose of purchasing or carrying margin stock.

         Section 6.12     ERISA.  Borrower and each Subsidiary have complied
with all applicable minimum funding requirements and all other applicable and
material requirements of ERISA and there are no existing conditions that would
give rise to liability thereunder.  No Reportable Event has occurred in
connection with any Plan that might constitute grounds for the termination
thereof by the PBGC or for the appointment by the appropriate United States
District Court of a trustee to administer such Plan.

         Section 6.13     Disclosure.  No statement, information, report,
representation or warranty made by Borrower in this Agreement or in any other
Loan Document or furnished to the Agent or any Lender in connection with this
Agreement or any transaction contemplated hereby contains any untrue statement
of a material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading.  There is no fact known to
Borrower which has a material adverse effect, or which might in the future have
a material adverse effect, on the business, condition (financial or otherwise),
operations, prospects, or properties of Borrower or any Subsidiary that has not
been disclosed in writing to the Agent and the Lenders.

         Section 6.14     Subsidiaries.  Borrower has no Subsidiaries other
than those listed on SCHEDULE 3 hereto, and SCHEDULE 3 sets forth the
jurisdiction of incorporation of each Subsidiary and the percentage of
Borrower's ownership of the outstanding voting stock of each Subsidiary.  All
of the outstanding capital stock of each Subsidiary has been validly issued, is
fully paid, and is nonassessable.

         Section 6.15     Compliance with Laws and Agreements.  Neither
Borrower nor any Subsidiary is in violation in any material respect of any law,
rule, regulation, order, or decree of any court, governmental authority, or
arbitrator.  Neither Borrower nor any Subsidiary is in default in any respect
in the performance, observance, or fulfillment of any of the obligations,
covenants, or conditions contained in any agreement or instrument material to
its business to which it is a party.

         Section 6.16     Environmental Matters.

                 (a)      Borrower, each Subsidiary, and all of their
         respective properties, assets, and operations are in full compliance
         with all Environmental Laws.  Borrower is not aware of, nor has
         Borrower received notice of, any past, present, or future conditions,
         events,





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      21
<PAGE>   26
         activities, practices, or incidents which may interfere with or
         prevent the compliance or continued compliance of Borrower and the
         Subsidiaries with all Environmental Laws.

                 (b)      Borrower and each Subsidiary have obtained all
         permits, licenses, and authorizations which are required under
         Environmental Laws.

                 (c)      No Hazardous Substances exist on, about, or within or
         have been used, generated, stored, transported, disposed of on, or
         released from any of the properties or assets of Borrower or any
         Subsidiary.  The use which Borrower and the Subsidiaries make and
         intend to make of their respective properties and assets will not
         result in the use, generation, storage, transportation, accumulation,
         disposal, or release of any Hazardous Substance on, in, or from any
         such properties or assets.

                 (d)      There is no action, suit, proceeding, investigation,
         or inquiry before any court, administrative agency, or other
         governmental authority pending or, to the knowledge of Borrower,
         threatened against Borrower or any Subsidiary relating in any way to
         any Environmental Law.  Neither Borrower nor any Subsidiary has (i)
         any liability for remedial action under any Environmental Law, (ii)
         received any request for information by any governmental authority
         with respect to the condition, use, or operation of any of its
         properties or assets, or (iii) received any notice from any
         governmental authority or other Person with respect to any violation
         of or liability under any Environmental Law.

                 (e)      No Lien arising under any Environmental Law has
         attached to any of the properties or assets of Borrower or any of its
         Subsidiaries.

         Section 6.17     Current Locations.  The principal place of business
and chief executive office of the Borrower is located at the address for
notices specified below the Borrower's name on the signature pages hereto.
SCHEDULE 1 attached hereto sets forth all the locations where any of the
Obligated Parties maintain any books or records relating to any of the
Collateral and all other locations where any of the Obligated Parties has a
place of business.  No Obligated Party does business in any location other than
as set forth on SCHEDULE 1 and SCHEDULE 1 correctly identifies each address
where any of the Obligated Parties' inventory or equipment are located.
SCHEDULE 1 correctly identifies the landlords or mortgagees (other than the
Lenders), if any, of each location identified on SCHEDULE 1.  SCHEDULE 1 sets
forth the names and addresses of all Persons other than the Obligated Parties
who have possession of any of the Obligated Parties' Collateral.  None of the
Collateral has been located in any location within the past four months other
than as set forth on SCHEDULE 1.

         Section 6.18     Security Interest and Liens.  The Security Agreement,
the Durocraft Security Agreement and the Pledge Agreement create in favor of
the Agent and the Lenders valid 'and enforceable Liens on the Collateral
described therein which secure the payment and performance of the Obligations,
including without limitation, all future Advances pursuant to this Agreement
and the Notes and all extensions, renewals and other modifications thereof Upon
the filing of Uniform Commercial Code Financing Statements naming Borrower or
Durocraft, as





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      22
<PAGE>   27
applicable, as debtor and the Agent as secured party in the applicable
jurisdictions set forth in SCHEDULE 5 hereto, and delivery to Agent of the
Collateral covered by the Pledge Agreement, and the release or assignment to
Agent of the Liens described on SCHEDULE 6 hereto, the Liens created by the
Loan Documents shall constitute perfected, first priority Liens upon the
Collateral which shall be superior and prior to the rights of all third Persons
now existing or hereafter arising.

         Section 6.19     Corporate Name.  The exact corporate name of Borrower
as it appears in its certificate of incorporation is set forth in the
introduction to this Agreement, and Borrower has not done business in any
location under any other name.

                                   ARTICLE 7

                               Positive Covenants

         Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Lender has any Commitment hereunder,
Borrower will perform and observe the following positive covenants, unless the
Agent and each Lender shall otherwise consent in writing:

         Section 7.1      Reporting Requirements.  Borrower will furnish to
Agent:

                 (a)      Annual Financial Statements.  As soon as available,
         and in any event within ninety (90) days after the end of each fiscal
         year of Borrower, beginning with the fiscal year ending June 30, 1995,
         (i) a copy of the annual audit report of Borrower and the Subsidiaries
         for such fiscal year containing, on a consolidated basis, balance
         sheets, statements of income, and statements of cash flows as at the
         end of such fiscal year and for the twelve-month period then ended, in
         each case setting forth in comparative form the figures for the
         preceding fiscal year, all in reasonable detail and audited and
         certified by independent certified public accountants of recognized
         standing acceptable to Agent, to the effect that such report has been
         prepared in accordance with GAAP; and (ii) a certificate of such
         independent certified public accountants to Agent (A) stating that to
         their knowledge no Event of Default and no Potential Default has
         occurred and is continuing, or if in their opinion an Event of Default
         or Potential Default has occurred and is continuing, a statement as to
         the nature thereof, and (B) confirming the calculations set forth in
         the Covenant Compliance Certificate delivered simultaneously
         therewith;

                 (b)      Monthly Financial Statements.  As soon as available,
         and in any event within thirty (30) days after the end of each month,
         a copy of an unaudited financial report of Borrower and the
         Subsidiaries as of the end of such month, and for the portion of the
         fiscal year then ended, containing, on a consolidated and
         consolidating basis, balance sheets, statements of income, and
         statements of cash flows, in each case setting forth in comparative
         form the figures for the corresponding period of the preceding fiscal
         year, all in reasonable detail certified by the chief financial
         officer of Borrower to have been prepared in accordance with GAAP and
         to fairly and accurately present (subject to year-end audit
         adjustments) the financial condition and results of operations of
         Borrower and





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      23
<PAGE>   28
         the Subsidiaries, on a consolidated and consolidating basis, at the
         date and for the periods indicated therein;

                 (c)      Covenant Compliance Certificate.  Concurrently with
         the delivery of each of the financial statements referred to in
         SUBSECTIONS 7.1(A) and 7.1(B), a certificate of the chief executive
         officer or chief financial officer of Borrower (i) stating that to the
         best of such officer's knowledge, no Event of Default and no Potential
         Default has occurred and is continuing, or if an Event of Default or
         Potential Default has occurred and is continuing, a statement as to
         the nature thereof and the action which is proposed to be taken with
         respect thereto, and (ii) showing in reasonable detail the
         calculations demonstrating compliance with ARTICLE 9;

                 (d)      Notice of Litigation.  Promptly after the
         commencement thereof, notice of all actions, suits, and proceedings
         before any court or governmental department, commission, board,
         bureau, agency, or instrumentality, domestic or foreign, affecting
         Borrower or any Subsidiary which, if determined adversely to Borrower
         or such Subsidiary, could have a material adverse effect on the
         business, condition (financial or otherwise), operations, prospects,
         or properties of Borrower or such Subsidiary;

                 (e)      Notice of Default.  As soon as possible and in any
         event within five (5) days after the occurrence of each Event of
         Default and Potential Default, a written notice setting forth the
         details of such Event of Default or Potential Default and the action
         which Borrower has taken and proposes to take with respect thereto;

                 (f)      ERISA Reports.  Promptly after the filing or receipt
         thereof, copies of all reports, including annual reports, and notices
         which Borrower or any Subsidiary files with or receives from the PBGC
         or the U.S.  Department of Labor under ERISA; and as soon as possible
         and in any event within five (5) days after Borrower or any Subsidiary
         knows or has reason to know that any Reportable Event or Prohibited
         Transaction has occurred with respect to any Plan or that the PBGC or
         Borrower or any Subsidiary has instituted or will institute
         proceedings under Title IV of ERISA to terminate any Plan, a
         certificate of the chief financial officer of Borrower setting forth
         the details as to such Reportable Event or Prohibited Transaction or
         Plan termination and the action that Borrower proposes to take with
         respect thereto;

                 (g)      Notice of Environmental Law Violation.  As soon as
         possible and in any event within five (5) days after the occurrence
         thereof, written notice of any violation of any Environmental Law that
         Borrower or any Subsidiary reports or is required to report to any
         governmental authority;

                 (h)      Notice of Material Adverse Effect.  As soon as
         possible and in any event within five (5) days after the occurrence
         thereof, written notice of any matter that could have a material
         adverse effect on the business, condition (financial or otherwise),
         operations, prospects, or properties of Borrower or any Subsidiary;





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      24
<PAGE>   29
                 (i)      Borrowing Base Report and Accounts Receivable Aging
         Report.  As soon as available, and in any event within thirty (30)
         days after the end of each calendar month, a Borrowing Base Report and
         an Accounts Receivable Aging Report, each certified by the chief
         executive officer or chief financial officer of Borrower;

                 (j)      Proxy Statements, Etc.  As soon as available, one
         copy of each financial statement, report, notice or proxy statement
         sent by Borrower or any Subsidiary to its stockholders generally and
         one copy of each regular, periodic or special report, registration
         statement, or prospectus filed by Borrower or any Subsidiary with any
         securities exchange or the Securities and Exchange Commission or any
         successor agency;

                 (k)      Uninsured Liabilities.  Promptly upon receipt of
         notice thereof, written notice of any actual or potential uninsured
         liabilities of Borrower or any Subsidiary in excess of One Hundred
         Thousand Dollars ($100,000.00); and

                 (l)      General Information.  Promptly, such other
         information concerning Borrower or any Subsidiary as Agent may from
         time to time reasonably request.

         Section 7.2      Maintenance of Existence; Conduct of Business.
Borrower will preserve and maintain, and will cause each Subsidiary to preserve
and maintain, its corporate existence and all of its leases, privileges,
licenses, permits, franchises, qualifications and rights that are necessary or
desirable in the ordinary conduct of its business, and conduct, and cause each
Subsidiary to conduct, its business as presently conducted in an orderly and
efficient manner in accordance with good business practices.

         Section 7.3      Maintenance of Properties.  Borrower will maintain,
keep, and preserve, and cause each Subsidiary to maintain, keep, and preserve,
all of its properties (tangible and intangible) necessary or useful in the
proper conduct of its business in good working order and condition.

         Section 7.4      Taxes and Claims.  Borrower will pay or discharge,
and will cause each Subsidiary to pay or discharge, at or before maturity or
before becoming delinquent (a) all taxes, levies, assessments, and governmental
charges imposed on it or its income or profits or any of its property, and (b)
all lawful claims for labor, material, and supplies, which, if unpaid, might
become a Lien upon any of its property; provided, however, that neither
Borrower nor any Subsidiary shall be required to pay or discharge any tax,
levy, assessment, or governmental charge which is being contested in good faith
by appropriate proceedings diligently pursued, and for which adequate reserves
have been established.

         Section 7.5      Insurance.  Borrower will maintain, and will cause
each Subsidiary to maintain, with financially sound and reputable insurance
companies worker's compensation insurance, liability insurance, and insurance
on its property, assets, and business at least in such amounts and against such
risks as are usually insured against by Persons engaged in similar businesses.
Each insurance policy covering Collateral shall name Agent and the Lenders as
loss





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      25
<PAGE>   30
payee and provide that such policy will not be canceled without thirty (30)
days prior written notice to Agent.

         Section 7.6      Inspection Rights.  At any reasonable time and from
time to time, Borrower will permit, and will cause each Subsidiary to permit,
representatives of Agent to examine and make copies of the books and records
of, and visit and inspect the properties of Borrower and any Subsidiary, and to
discuss the business, operations, and financial condition of Borrower and the
Subsidiaries with their respective officers and employees and with their
independent certified public accountants.

         Section 7.7      Keeping Books and Records.  Borrower will maintain,
and will cause each Subsidiary to maintain, proper books of record and account
in which full, true, and correct entries in conformity with GAAP shall be made
of all dealings and transactions in relation to its business and activities.

         Section 7.8      Compliance with Laws.  Borrower will comply, and will
cause each Subsidiary to comply, in all material respects with all applicable
laws, rules, regulations, and orders of any court, governmental authority, or
arbitrator.

         Section 7.9      Compliance with Agreements.  Borrower will comply,
and will cause each Subsidiary to comply, in all material respects with all
contracts, agreements, and instruments binding on it or affecting its
properties or business.

         Section 7.10     Further Assurances.  Borrower will execute and
deliver, and will cause each Subsidiary to execute and deliver, such further
instruments as may be requested by Agent to carry out the provisions and
purposes of this Agreement and the other Loan Documents and to preserve and
perfect the Liens of the Agent and the Lenders in the Collateral.

         Section 7.11     ERISA.  Borrower will comply, and will cause each
Subsidiary to comply, with all minimum funding requirements, and all other
material requirements, of ERISA, if applicable, so as not to give rise to any
liability thereunder.

                                   ARTICLE 8

                               Negative Covenants

         Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Lender has any Commitment hereunder,
Borrower will perform and observe the following negative covenants, unless the
Agent and each Lender shall otherwise consent in writing:

         Section 8.1      Debt.  Borrower will not incur, create, assume, or
permit to exist, and will not permit any Subsidiary to incur, create, assume,
or permit to exist, any Debt, except:

                 (a)      Debt to the Agent and the Lenders;





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      26
<PAGE>   31
                 (b)      Existing Debt described on SCHEDULE 2 hereto; and

                 (c)      Debt incurred to finance the purchase of property to
         be used in the ordinary course of Borrower's business in an aggregate
         amount during any one fiscal year not to exceed Four Hundred Thousand
         Dollars ($400,000.00) or, during the fiscal year commencing July 1,
         1995, Nine Million Six Hundred Thousand Dollars ($9,600,000.00).

         Section 8.2      Limitation on Liens.  Borrower will not incur,
create, assume, or permit to exist, and will not permit any Subsidiary to
incur, create, assume, or permit to exist, any Lien upon any of its property,
assets, or revenues, whether now owned or hereafter acquired, except:

                 (a)      Liens disclosed on SCHEDULE 4 hereto;

                 (b)      Liens in favor of the Agent and the Lenders;

                 (c)      Encumbrances consisting of minor easements, zoning
         restrictions, or other restrictions on the use of real property that
         do not (individually or in the aggregate) materially affect the value
         of the assets encumbered thereby or materially impair the ability of
         Borrower or the Subsidiaries to use such assets in their respective
         businesses, and none of which is violated in any material respect by
         existing or proposed structures or land use;

                 (d)      Liens for taxes, assessments, or other governmental
         charges which are not delinquent or which are being contested in good
         faith and for which adequate reserves have been established;

                 (e)      Liens of mechanics, materialmen, warehousemen,
         carriers or other similar statutory Liens securing obligations that
         are not yet due and are incurred in the ordinary course of business;

                 (f)      Liens resulting from good faith deposits to secure
         payments of worker's compensation or other social security programs or
         to secure the performance of tenders, statutory obligations, surety
         and appeal bonds, bids, or contracts (other than for payment of Debt)
         in the ordinary course of business- and

                 (g)      Liens created to secure purchase money Debt permitted
         by SECTION 8.1(C) provided that such Liens do not extend to or cover
         any property of Borrower other than the property being acquired with
         the Debt permitted by SECTION 8.1(C).

         Section 8.3      Mergers, Acquisitions and Dissolutions.  Without the
prior written consent of the Agent and the Lenders, Borrower will not, and will
not permit any Subsidiary to, become a party to a merger or consolidation, or
purchase or otherwise acquire all or a substantial part of the assets of any
Person or any shares or other evidence of beneficial ownership of any Person,
or dissolve or liquidate.





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      27
<PAGE>   32
         Section 8.4      Restricted Payments.  Without the prior written
consent of the Agent and the Lenders, Borrower will not declare or pay any
dividends or make any other payment or distribution (in cash, property, or
obligations) on account of its capital stock, or redeem, purchase, retire, or
otherwise acquire any of its capital stock, or set apart any money for a
sinking or other analogous fund for any dividend or other distribution on its
capital stock or for any redemption, purchase, retirement, or other acquisition
of any of its capital stock, or grant or issue any capital stock or any
warrant, right, or option pertaining to its capital stock, or issue any
security convertible into capital stock, or permit any of its Subsidiaries to
purchase or otherwise acquire any capital stock of Borrower or another
Subsidiary; provided, however, that so long as no Potential Default or Event of
Default exists, Borrower may pay quarterly dividends on its capital stock, in
an amount not to exceed forty percent (40%) of Borrower's net profit before
taxes, as determined on a quarterly basis in accordance with GAAP (as reflected
in the monthly financial statements delivered by Borrower to Agent in
accordance with SECTION 7.1(B) of this Agreement and as confirmed by the annual
financial statements delivered by Borrower to Agent in accordance with SECTION
7.1(A) of this Agreement), unless the payment of any such dividend would create
or result in the existence of an Event of Default or Potential Default.

         Section 8.5      Loans and Investments.  Borrower will not make, and
will not permit any Subsidiary to make, any advance, loan, extension of credit,
or capital contribution to or investment in, or purchase, or permit any
Subsidiary to purchase, any stock, bonds, notes, debentures, or other
securities of any Person, except:

                 (a)      readily marketable direct obligations of the United
         States of America;

                 (b)      fully insured certificates of deposit of NationsBank
         with maturities of one year or less from the date of acquisition; and

                 (c)      loans or advances to employees of Borrower in an
         aggregate amount not to exceed $25,000.

         Section 8.6      Transactions With Affiliates.  Borrower will not
enter into, and will not permit any Subsidiary to enter into, any transaction,
including, without limitation, the purchase, sale; or exchange of property or
the rendering of any service, with any Affiliate of Borrower or such
Subsidiary, except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to Borrower or such Subsidiary than would be
obtained in a comparable arm's-length transaction with a Person not an
Affiliate of Borrower or such Subsidiary.

         Section 8.7      Disposition of Assets.  Borrower will not sell,
lease, assign, transfer, or otherwise dispose of any of its assets, or permit
any Subsidiary to do so with any of its assets, except (a) dispositions of
inventory in the ordinary course of business and (b) from the date of this
Agreement until the Termination Date, dispositions of assets (other than
inventory) in the ordinary course of business having an aggregate fair market
value of $100,000 or less





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      28
<PAGE>   33
         Section 8.8      Prepayment of Debt.  Borrower will not prepay, and
will not permit any Subsidiary to prepay, any Debt, except the Obligations.

         Section 8.9      Nature of Business.  Borrower will not, and will not
permit any Subsidiary to, engage in any business other than the businesses in
which they are engaged as of the date hereof.

         Section 8.10     Compliance with Environmental Laws.  Borrower will
not, and will not permit any of its Subsidiaries to, (a) use (or permit any
tenant to use) any of their respective properties or assets for the handling,
processing, storage, transportation, or disposal of any Hazardous Substance,
(b) generate any Hazardous Substance, (c) conduct any activity which is likely
to cause a release or threatened release of any Hazardous Substance, or (d)
otherwise conduct any activity or use any of their respective properties or
assets in any manner that is likely to violate any Environmental Law.

         Section 8.11     Accounting.  Borrower will not make, and will not
permit any of its Subsidiaries to make, any change in accounting treatment or
reporting practices, except as required by GAAP.

                                   ARTICLE 9

                              Financial Covenants

         Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Lender has any Commitment hereunder,
Borrower will observe and perform the following financial covenants. unless the
Agent and each Lender shall otherwise consent in writing:

         Section 9.1      Consolidated Tangible Net Worth.  Borrower will at
all times maintain Consolidated Tangible Net Worth in an amount not less than
Eight Million Dollars ($8,000,000.00).

         Section 9.2      Fixed Charge Coverage Ratio.  Borrower will at all
times maintain a Fixed Charge Coverage Ratio of not less than 1.75 to 1.0.

         Section 9.3      Leverage Ratio.  Borrower will at all times maintain
a Leverage Ratio of not greater than 2.5 to 1.0.

         Section 9.4      Capital Expenditures.  Borrower will not permit the
aggregate capital expenditures of Borrower and the Subsidiaries to exceed Four
Hundred Thousand Dollars ($400,000.00) during any fiscal year, or during the
fiscal year commencing July 1, 1995, Nine Million Six Hundred Thousand Dollars
($9,600,000.00).





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      29
<PAGE>   34
                                   ARTICLE 10

                                    Default

         Section 10.1     Events of Default.  Each of the following shall be
deemed an "Event of Default":

                 (a)      Borrower shall fail to pay when due the Obligations 
         or any part thereof.

                 (b)      Any representation, warranty, certification or
         statement made or deemed made by Borrower or any Obligated Party (or
         any of their respective officers) in any Loan Document or in any
         certificate, report, notice, or financial statement furnished at any
         time in connection with this Agreement shall be false, misleading, or
         erroneous in any material respect when made or deemed to have been
         made.

                 (c)      Borrower or any Obligated Party shall fail to
         perform, observe, or comply with any covenant, agreement, or term
         contained in this Agreement or any other Loan Document.

                 (d)      Borrower, any Subsidiary, or any Obligated Party
         shall commence a voluntary proceeding seeking liquidation,
         reorganization, or other relief with respect to itself or its debts
         under any bankruptcy, insolvency, or other similar law now or
         hereafter in effect or seeking the appointment of a trustee, receiver,
         liquidator, custodian, or other similar official of it or a
         substantial part of its property or shall consent to any such relief
         or to the appointment of or taking possession by any such official in
         an involuntary case or other proceeding commenced against it or shall
         make a general assignment for the benefit of creditors or shall
         generally fail to pay its debts as they become due or shall take any
         corporate action to authorize any of the foregoing.

                 (e)      An involuntary proceeding shall be commenced against
         Borrower, any Subsidiary, or any Obligated Party seeking liquidation,
         reorganization, or other relief with respect to it or its debts under
         any bankruptcy, insolvency, or other similar law now or hereafter in
         effect or seeking the appointment of a trustee, receiver, liquidator,
         custodian or other similar official for it or a substantial part of
         its property, and such involuntary proceeding shall remain undismissed
         and unstayed for a period of thirty (30) days.

                 (f)      Borrower, any Subsidiary, or any Obligated Party
         shall fail to discharge within a period of thirty (30) days after the
         commencement thereof any attachment, sequestration, or similar
         proceeding or proceedings involving an aggregate amount in excess of
         Fifty Thousand Dollars ($50,000.00) against any of its assets or
         properties.

                 (g)      Borrower, any Subsidiary, or any Obligated Party
         shall fail to satisfy and discharge promptly any judgment or judgments
         against it for the payment of money in an aggregate amount in excess
         of Fifty Thousand Dollars ($50,000.00).





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      30
<PAGE>   35
                 (h)      Borrower, any Subsidiary, or any Obligated Party
         shall fail to pay when due any principal of or interest on any Debt
         (other than the Obligations), or the maturity of any such Debt shall
         have been accelerated, or any such Debt shall have been required to be
         prepaid prior to the stated maturity thereof, or any event shall have
         occurred that permits (or, with the giving of notice or lapse of time
         or both, would permit) any holder or holders of such Debt or any
         Person acting on behalf of such holder or holders to accelerate the
         maturity thereof or require any such prepayment.

                 (i)      This Agreement or any other Loan Document shall cease
         to be in full force and effect or shall be declared null and void or
         the validity or enforceability thereof shall be contested or
         challenged by Borrower, any Subsidiary, any Obligated Party or any of
         their respective shareholders, or Borrower or any Obligated Party
         shall deny that it has any further liability or obligation under any
         of the Loan Documents, or any lien or security interest created by the
         Loan Documents shall for any reason cease to be a valid, first
         priority perfected security interest in and lien upon any of the
         Collateral purported to be covered thereby.

                 (j)      Any of the following events shall occur or exist with
         respect to Borrower or any Subsidiary: (i) any Prohibited Transaction
         involving any Plan; (ii) any Reportable Event with respect to any
         Plan; (iii) the filing under Section 4041 of ERISA of a notice of
         intent to terminate any Plan or the termination of any Plan; (iv) any
         event or circumstance that might constitute grounds entitling the PBGC
         to institute proceedings under Section 4042 of ERISA for the
         termination of, or for the appointment of a trustee to administer, any
         Plan, or the institution by the PBGC of any such proceedings; (v)
         complete or partial withdrawal under Section 4201 or 4204 of ERISA
         from a Multiemployer Plan or the reorganization, insolvency, or
         termination of any Multiemployer Plan; and in each case above, such
         event or condition, together with all other events or conditions, if
         any, have subjected or could in the reasonable opinion of Agent
         subject Borrower to any tax, penalty, or other liability to a Plan, a
         Multiemployer Plan, the PBGC, or otherwise (or any combination
         thereof) which in the aggregate exceed or could reasonably be expected
         to exceed Fifty Thousand Dollars ($50,000.00).

                 (k)      The occurrence of a Change of Ownership or Change of
         Management.

                 (l)      Borrower, any of its Subsidiaries, or any Obligated
         Party, or any of their properties, revenues, or assets, shall become
         subject to an order of forfeiture, seizure, or divestiture (whether
         under RICO or otherwise) and the same shall not have been discharged
         within thirty (30) days from the date of entry thereof.

         Section 10.2     Remedies Upon Default.  If any Event of Default shall
occur, the Lenders may without notice terminate their Commitments to make
Advances and declare the Obligations or any part thereof to be immediately due
and payable, and the same shall thereupon become immediately due and payable,
without notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, notice of intent to demand,
protest, or other formalities of any kind, all of which are hereby expressly
waived by Borrower; provided,





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      31
<PAGE>   36
however, that upon the occurrence of an Event of Default under SECTION 10.1(D)
or SECTION 10.1(E), the Commitments of Lenders to make Advances shall
automatically terminate, and the Obligations shall become immediately due and
payable without notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, notice of intent to demand,
protest, or other formalities of any kind, all of which are hereby expressly
waived by Borrower.  If any Event of Default shall occur, the Agent and the
Lenders may exercise all rights and remedies available to them in law or in
equity, under the Loan Documents, or otherwise.

         Section 10.3     Performance by Agent and Lenders.  If Borrower shall
fail to perform any covenant, duty, or agreement contained in any of the Loan
Documents, Agent and Lenders may perform or attempt to perform such covenant,
duty, or agreement on behalf of Borrower.  In such event, Borrower shall, at
the request of Agent, promptly pay any amount expended by the Agent and any
Lender in such performance or attempted performance to Agent, together with
interest thereon at the Default Rate from the date of such expenditure until
paid.  Notwithstanding the foregoing, it is expressly agreed that neither the
Agent nor any Lender shall have any liability or responsibility for the
performance of any obligation of Borrower under this Agreement or any other
Loan Document.

         Section 10.4     Setoff.  Each Lender shall have the right to set off
and apply against the Obligations in such manner as such Lender may determine,
at any time and without notice to Borrower, any and all deposits (general or
special, time or demand, provisional or final) or other sums at any time
credited by or owing from such Lender to Borrower whether or not the
Obligations are then due.  As further security for the Obligations, Borrower
hereby grants to each Lender a security interest in all money, instruments, and
other property of Borrower now or hereafter held by such Lender, including,
without limitation, property held in safekeeping.  In addition to each Lender's
right of setoff and as further security for the Obligations, Borrower hereby
grants to each Lender a security interest in all deposits (general or special,
time or demand, provisional or final) and other accounts of Borrower now or
hereafter on deposit with or held by any Lender and all other sums at any time
credited by or owing from any Lender to Borrower.  The rights and remedies of
Lenders hereunder are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which Lenders may have.

                                   ARTICLE 11

                                   The Agent

         Section 11.1     Appointment, Powers and Immunities.  Each Lender
hereby irrevocably appoints and authorizes the Agent to act as its agent
hereunder and under the other Loan Documents with such powers as are
specifically delegated to the Agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto.  Neither the Agent nor any of its Affiliates, officers,
directors, employees, attorneys or agents shall be liable for any action taken
or omitted to be taken by any of them hereunder or otherwise in connection with
this Agreement or any of the other Loan Documents except for its or their own
gross negligence or willful misconduct.  Without limiting the generality





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      32
<PAGE>   37
of the preceding sentence, the Agent (a) may treat the payee of any Note as the
holder thereof until the Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form satisfactory to the Agent,
(b) shall have no duties or responsibilities except those expressly set forth
in this Agreement and the other Loan Documents, and shall not by reason of this
Agreement or any other Loan Document be a trustee or fiduciary for any Lender,
(c) shall not be required to initiate any litigation or collection proceedings
hereunder or under any other Loan Document except to the extent requested by
the Required Lenders, (d) shall not be responsible to the Lenders for any
recitals, statements, representations or warranties contained in this Agreement
or any other Loan Document, or any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement or any other
Loan Document, or for the value, validity, effectiveness, enforceability or
sufficiency of this Agreement or any other Loan Document, or any other document
referred to or provided for herein or therein or for any failure by any Person
to perform any of his or its obligations hereunder or thereunder, (e) may
consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts, and (f) shall incur no liability under or in respect of
any Loan Document, by acting upon any notice, consent, certificate or other
instrument or writing reasonably believed by it to be genuine and signed or
sent by the proper party or parties.  As to any matters not expressly provided
for by this Agreement, the Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in accordance with instructions
signed by the Required Lenders, and such instructions of the Required Lenders
and any action taken or failure to act pursuant thereto shall be binding on all
of the Banks; provided, however, that the Agent shall not be required to take
any action which exposes the Agent to liability or which is contrary to this
Agreement or any other Loan Document or applicable law.

         Section 11.2     Rights of Agent as a Lender.  With respect to its
Commitment, the Advances made by it and the Note issued to it, NationsBank (and
any successor acting as Agent) in its capacity as a Lender hereunder shall have
the same rights and powers hereunder as any other Lender and may exercise the
same as though it were not acting as the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity.  The Agent and its Affiliates may (without having to
account therefor to any Lender) accept deposits from, lend money to, act as
trustee under indentures of, provide merchant banking services to, own
securities of, and generally engage in any kind of banking, trust or other
business with, the Borrower, the Guarantors or any of their Affiliates and any
other Person who may do business with or own securities of the Borrower, the
Guarantors, or any of their Affiliates, all as if it were not acting as the
Agent and without any duty to account therefor to the Lenders.

         Section 11.3     Defaults.  The Agent shall not be deemed to have
knowledge or notice of the occurrence of an Event of Default or Potential
Default unless the Agent has received notice from a Lender or the Borrower
specifying such Event of Default and stating that such notice is a "Notice of
Default".  In the event that the Agent receives such a notice of the occurrence
of an Event of Default or Potential Default, the Agent shall give prompt notice
thereof to the Lenders.  The Agent shall (subject to SECTION 11.1 take such
action with respect to such Event of Default as shall be directed by the
Required Lenders, provided that unless and until the Agent shall have





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      33
<PAGE>   38
received such directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default
as it shall seem advisable and in the best interest of the Lenders.

         Section 11.4     INDEMNIFICATION.  THE LENDERS HEREBY AGREE TO
INDEMNIFY THE AGENT FROM AND HOLD THE AGENT HARMLESS AGAINST, BUT WITHOUT
LIMITING THE OBLIGATIONS OF THE BORROWER AND THE GUARANTORS UNDER THIS
AGREEMENT, RATABLY IN ACCORDANCE WITH THEIR RESPECTIVE COMMITMENTS, ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES) AND
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON,
INCURRED BY OR ASSERTED AGAINST THE AGENT IN ANY WAY RELATING TO OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY THE
AGENT UNDER OR IN RESPECT OF ANY OF THE LOAN DOCUMENTS; PROVIDED, FURTHER, THAT
NO LENDER SHALL BE LIABLE FOR ANY PORTION OF THE FOREGOING TO THE EXTENT CAUSED
BY THE AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.  WITHOUT LIMITATION OF
THE FOREGOING, IT IS THE EXPRESS INTENTION OF THE LENDERS THAT THE AGENT SHALL
BE INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS AGAINST ALL OF SUCH
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES) AND
DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF THE AGENT (EXCEPT TO THE
EXTENT THE SAME ARE CAUSED BY THE AGENT'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT).  WITHOUT LIMITING ANY OTHER PROVISION OF THIS SECTION 11.4, EACH
LENDER AGREES TO REIMBURSE THE AGENT PROMPTLY UPON DEMAND FOR SUCH LENDER'S PRO
RATA SHARE (CALCULATED ON THE BASIS OF ITS COMMITMENT) OF ANY AND ALL
OUT-OF-POCKET EXPENSES (INCLUDING ATTORNEYS' FEES) INCURRED BY THE AGENT IN
CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION,
MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL
PROCEEDINGS OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF OBLIGATIONS,
RIGHTS, REMEDIES OR RESPONSIBILITIES UNDER, THE LOAN DOCUMENTS, TO THE EXTENT
THAT THE AGENT IS NOT PROMPTLY REIMBURSED FOR SUCH EXPENSES BY THE BORROWER.

         Section 11.5     Independent Credit Decisions.  Each Lender agrees
that it has independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and the Guarantors,
and its own decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or any other Lender, and
based upon such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or not taking
action under this Agreement or any of the other Loan Documents.





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      34
<PAGE>   39
The Agent shall not be required to keep itself informed as to the performance
or observance by the Borrower or Guarantors of this Agreement or any other Loan
Document, or to inspect the properties or books of the Borrower or Guarantors.
Except for notices, reports and other documents and information expressly
required to be furnished to the Lenders by the Agent hereunder or under the
other Loan Documents, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other financial information concerning
the affairs, financial condition or business of the Borrower or Guarantors (or
any of their Affiliates) which may come into the possession of the Agent or any
of its Affiliates.

         Section 11.6     Several Commitments.  The Commitments and other
obligations of the Lenders under this Agreement are several.  The default by
any Lender in making an Advance in accordance with its Commitment shall not, in
and of itself, relieve the other Lenders of their obligations under this
Agreement (which obligations, however, shall continue to be subject to the
conditions set forth in the Loan Documents).  In the event of any default by
any Lender in making any Advance, each nondefaulting Lender shall not be
obligated to advance the amount which the defaulting Lender was required to
advance hereunder.  In no event shall any Lender be required to advance an
amount or amounts which would in the aggregate exceed such Lender's Commitment.
No Lender shall be responsible for any act or omission of any other Lender.

         Section 11.7     Successor Agent.  Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving notice thereof to the Lenders and the Borrower.  Upon any such
resignation, the Required Lenders shall have the right to appoint another
Lender as successor Agent.  If no successor Agent shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Agent's giving of notice of resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be
a commercial bank organized under the laws of the U.S. or any state thereof and
having combined capital and surplus of at least $100,000,000.  Upon the
acceptance of its appointment as successor Agent, such successor Agent shall
thereupon succeed to and become vested with all rights, powers, privileges,
immunities and duties of the resigning Agent, and the resigning Agent shall be
discharged from its duties and obligations under this Agreement and the other
Loan Documents.  After any Agent's resignation as Agent, the provisions of this
ARTICLE 11 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was the Agent.

                                   ARTICLE 12

                                 Miscellaneous

         Section 12.1     Expenses of Agent and Lenders.  Borrower hereby
agrees to pay Agent and Lenders on demand: (a) all costs and expenses incurred
by Agent and Lenders in connection with the preparation, negotiation, and
execution of this Agreement and the other Loan Documents executed in connection
herewith, including, without limitation, the fees and expenses of Agent's and
Lenders' legal counsel not to exceed $5,000.00 in the aggregate, plus all costs
and expenses incurred by the Agent and the Lenders in connection with the
preparation, negotiation and execution of any and all amendments,
modifications, renewals, extensions, and supplements





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      35
<PAGE>   40
thereof and thereto, including, without limitation, the fees and expenses of
Agent's and Lenders' legal counsel, (b) all costs and expenses incurred by
Agent and Lenders in connection with the enforcement of this Agreement or any
other Loan Document, including, without limitation, the fees and expenses of
Agent and Lenders' legal counsel, and (c) all other costs and expenses incurred
by Agent and Lenders in connection with this Agreement or any other Loan
Document, including, without limitation, all costs, expenses, taxes,
assessments, filing fees, and other charges levied by a governmental authority
or otherwise payable in respect of this Agreement or any other Loan Document or
in obtaining any audit or appraisal in respect of the Collateral.

         Section 12.2     Indemnification.  Borrower hereby indemnities the
Agent, each Lender and each Affiliate thereof and their respective officers,
directors, employees, attorneys, and agents from, and holds each of them
harmless against, any and all losses, liabilities, claims, damages, penalties,
judgments, disbursements, costs, and expenses (including attorneys' fees) to
which any of them may become subject which directly or indirectly arise from or
relate to (a) the negotiation, execution, delivery, performance,
administration, or enforcement of any of the Loan Documents, (b) any of the
transactions contemplated by the Loan Documents, (c) any breach by Borrower of
any representation, warranty, covenant, or other agreement contained in any of
the Loan Documents, (d) the presence, release, threatened release, disposal,
removal, or cleanup of any Hazardous Substance located on, about, within, or
affecting any of the properties or assets of Borrower or any Subsidiary or (e)
any investigation, litigation, or other proceeding, including, without
limitation, any threatened investigation, litigation, or other proceeding
relating to any of the foregoing.  WITHOUT LIMITING ANY PROVISION OF THIS
AGREEMENT OR OF ANY OTHER LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE
PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL BE
INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES,
CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES
(INCLUDING ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THE SOLE OR
CONTRIBUTORY NEGLIGENCE OF THE PERSON TO BE INDEMNIFIED.

         Section 12.3     Limitation of Liability.  Neither the Agent, any
Lender nor any Affiliate, officer, director, employee, attorney, or agent of
the Agent or any Lender shall have any liability with respect to, and Borrower
hereby waives, releases, and agrees not to sue any of them upon, any claim for
any special, indirect, incidental, or consequential damages suffered or
incurred by Borrower in connection with, arising out of, or in any way related
to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.
Borrower hereby waives, releases, and agrees not to sue the Agent or any Lender
or any of the Agent's or any Lender's Affiliates, officers, directors,
employees, attorneys, or agents for punitive damages in respect of any claim in
connection with, arising out of, or in any way related to, this Agreement or
any of the other Loan Documents, or any of the transactions contemplated by
this Agreement or any of the other Loan Documents.

         Section 12.4     Lender Not Fiduciary.  The relationship between
Borrower, on the one hand, the Agent and/or Lenders on the other hand, is
solely that of debtor and creditor, and neither the Agent nor any Lender has
any fiduciary or other special relationship with Borrower,





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      36
<PAGE>   41
and no term or condition of any of the Loan Documents shall be construed so as
to deem the relationship among Borrower, the Agent and the Lenders to be other
than that of debtor and creditor.

         Section 12.5     No Waiver; Cumulative Remedies.  No failure on the
part of the Agent or any Lender to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power, or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power, or privilege under this Agreement preclude any
other or further exercise thereof or the exercise of any other right, power, or
privilege.  The rights and remedies provided for in this Agreement and the
other Loan Documents are cumulative and not exclusive of any rights and
remedies provided by law.

         Section 12.6     Successors and Assigns.

                 (a)      This Agreement shall be binding upon and inure to the
         benefit of the parties hereto and their respective successors and
         assigns.  Neither the Borrower nor any Guarantor may assign or
         transfer any of his or its rights or obligations hereunder or under
         the other Loan Documents without the prior written consent of the
         Agent and the Lenders.  Any Lender may sell participations to one or
         more banks or other institutions in all or a portion of its rights and
         obligations under this Agreement and the other Loan Documents
         (including, without limitation, all or a portion of its Commitment and
         the Advances owing to it); provided, however, that (i) such Lender's
         obligations under this Agreement and the other Loan Documents
         (including, without limitation, its Commitment) shall remain
         unchanged, (ii) such Lender shall remain solely responsible to the
         Borrower and the Guarantor (as applicable) for the performance of such
         obligations, (iii) such Lender shall remain the holder of its Note for
         all purposes of this Agreement, (iv) the Borrower and the Guarantors
         shall continue to deal solely and directly with such Lender in
         connection with such Lender's or the Borrower or such Guarantor's
         rights and obligations under this Agreement and the other Loan
         Documents, and (v) such Lender shall not sell a participation that
         conveys to the participant the right to vote or give or withhold
         consents under this Agreement or any other Loan Document, other than
         (if and to the extent that such Lender so agrees) the right to vote
         upon or consent to (A) any increase of such Lender's Commitment (other
         than an increase resulting from an assignment to or in favor of such
         Lender from another Lender in accordance with this Agreement), (B) any
         reduction of the principal amount of, or interest to be paid on, the
         Advances of such Lender, (C) any reduction of any fee or other amount
         payable to such Lender under any Loan Document if and to the extent
         that such reduction would decrease the fee or other amount payable to
         the participant, (D) any postponement of any date for the payment of
         any amount payable in respect of the Advances of such Lender, (E) any
         release of a material portion of the Collateral from the Liens created
         by the Security Documents and not otherwise expressly authorized by
         the Loan Documents, and (F) any release of the Borrower or any
         Guarantor from liability under the Loan Documents.

                 (b)      The Borrower and each of the Lenders agree that any
         Lender (the "Assigning Lender") may at any time assign to one or more
         Eligible Assignees all, or a





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      37
<PAGE>   42
         proportionate part of all, of its rights and obligations under this
         Agreement and the other Loan Documents (including, without limitation,
         its Commitment and Advances) (each an "Assignee"); provided, however,
         that (i) each such assignment shall be of constant (as opposed to
         varying) percentage of the Assigning Lender's rights and obligations
         under this Agreement and the other Loan Documents, (ii) except in the
         case of an assignment of all of a Lender's rights and obligations
         under this Agreement and the other Loan Documents, the amount of the
         Commitment and Advances of the Assigning Lender being assigned
         pursuant to each assignment (determined as of the date of the
         Assignment and Acceptance with respect to such assignment) shall in no
         event be less than $1,000,000, and (iii) the parties to each such
         assignment shall execute and deliver to the Agent for its acceptance
         and recording in the Register (as defined below), an Assignment and
         Acceptance, together with the Note subject to such assignment, and a
         processing and recordation fee of $2,500.  Upon such execution,
         delivery, acceptance and recording, from and after the effective date
         specified in each Assignment and Acceptance, which effective date
         shall be at least five Business Days after the execution thereof, or,
         if so specified in such Assignment and Acceptance, the date of
         acceptance thereof by the Agent, (A) the Assignee thereunder shall be
         a party hereto as a "Lender" and, to the extent that rights and
         obligations hereunder have been assigned to it pursuant to such
         Assignment and Acceptance, have the rights and obligations of a Lender
         hereunder and under the Loan Documents, and (B) the Assigning Lender
         thereunder shall, to the extent that rights and obligations hereunder
         have been assigned by it pursuant to such Assignment and Acceptance,
         relinquish its rights and be released from its obligations under this
         Agreement and the other Loan Documents (and, in the case of an
         Assignment and Acceptance covering all or the remaining portion of a
         Lender's rights and obligations under the Loan Documents, such Lender
         shall cease to be a party thereto).

                 (c)      By executing and delivering an Assignment and
         Acceptance, the Assigning Lender thereunder and the Assignee
         thereunder confirm to and agree with each other and the other parties
         hereto as follows: (i) other than as provided in such Assignment and
         Acceptance, such Assigning Lender makes no representation or warranty
         and assumes no responsibility with respect to any statements,
         warranties or representations made in or in connection with the Loan
         Documents, or the execution, legality, validity, enforceability,
         genuineness, sufficiency or value thereof or any other instrument or
         document furnished pursuant thereto; (ii) such Assigning Lender makes
         no representation or warranty and assumes no responsibility with
         respect to the financial condition or performance of the Borrower or
         any Guarantor or the performance or observance by Borrower or any
         Guarantor of his or its obligations under the Loan Documents, (iii)
         such Assignee confirms that it has received a copy of the other Loan
         Documents, together with copies of the financial statements referred
         to in Section 6.2 and such other documents and information as it has
         deemed appropriate to make its own credit analysis and decision to
         enter into such Assignment and Acceptance; (iv) such Assignee will,
         independently and without reliance upon the Agent or such Assigning
         Lender and based on such documents and information as it shall deem
         appropriate at the time, continue to make its own credit decisions in
         taking or not taking action under this Agreement and the other Loan
         Documents; (v) such Assignee confirms that it is an Eligible Assignee;
         (vi) such Assignee appoints and





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      38
<PAGE>   43
         authorizes the Agent to take such action as agent on its behalf and
         exercise such powers under the Loan Documents as are delegated to the
         Agent by the terms thereof, together with such powers as are
         reasonably incidental thereto; and (vii) such Assignee agrees that it
         will perform in accordance with their terms all of the obligations
         which by the terms of the Loan Documents are required to be performed
         by it as a Lender.

         The Agent shall maintain at its office a copy of each Assignment and
Acceptance delivered to and accepted by it and a register for the recordation
of the names and addresses of the Lender and the Commitment of, and principal
amount of the Advances owing to, each Lender from time to time (the
"Register").  The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and the Borrower, the Guarantors, the
Agent and the Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes under the Loan Documents.  The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.

                 (d)      Upon its receipt of an Assignment and Acceptance
         executed by an Assigning Lender and Assignee representing that it is
         an Eligible Assignee, together with the Note subject to such
         assignment, the Agent shall, if such Assignment and Acceptance has
         been completed and is in substantially the form of EXHIBIT "K" hereto,
         (i) accept such Assignment and Acceptance, (ii) record the information
         contained therein in the Register, and (iii) give prompt written
         notice thereof to the Borrower.  Within five Business Days after its
         receipt of such notice the Borrower, at its expense, shall execute and
         deliver to the Agent in exchange for each surrendered Note, a new Note
         payable to the order of such Eligible Assignee in an amount equal to
         the portion of such Note assigned to it and, if the Assigning Lender
         has retained any Commitment, a new Note evidencing each such
         Commitment payable to the order of the Assigning Lender in the amount
         of such Commitment retained by it (each such promissory note shall
         constitute a "Note" for purposes of the Loan Documents).  Such new
         Notes shall be dated the effective date of such Assignment and
         Acceptance and shall otherwise be in substantially the form of EXHIBIT
         A hereto.

                 (e)      Any Lender may, in connection with any assignment or
         participation or proposed assignment or participation pursuant to this
         SECTION 12.6, disclose to the Assignee or participant or proposed
         Assignee or participant any information relating to the Borrower, any
         Guarantor or any of his or its Affiliates furnished to such Lender by
         or on behalf of such Person.

                 (f)      Any Lender may assign and pledge the Note held by it
         to any Federal Reserve Bank or the U.S.  Treasury as collateral
         security pursuant to Regulation A of the Board of Governors of the
         Federal Reserve System and any operating circular issued by such
         Federal Reserve System and/or Federal Reserve Bank; provided, that,
         any payment made by the Borrower for the benefit of such assigning
         and/or pledging Lender in accordance with the terms of the Loan
         Documents shall satisfy the Borrower's obligations under the Loan
         Documents in respect thereof to the extent of such payment.  No such





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      39
<PAGE>   44
         assignment and/or pledge shall release the assigning and/or pledging
         Lender from its obligations hereunder.

         Section 12.7     Survival.  All representations and warranties made in
this Agreement or any other Loan Document or in any documentation, statement,
or certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by the Agent or any Lender or any closing shall affect the
representations and warranties or the right of the Agent and the Lenders to
rely upon them.  Without prejudice to the survival of any other obligation of
Borrower hereunder, the obligations of Borrower under ARTICLE 4 and SECTIONS
12.1 and 12.2 shall survive repayment of the Notes and termination of the
Commitments.

         SECTION 12.8     ENTIRE AGREEMENT; AMENDMENT AND RESTATEMENT
AMENDMENT.  THIS AGREEMENT, THE NOTES, AND THE OTHER LOAN DOCUMENTS REFERRED TO
HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO.  THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO.  Without limiting the generality of
the foregoing, this Agreement and the other Loan Documents amend and restated
in their entirety the documentation executed in connection with the Prior
Credit Agreement.  No amendment or waiver of any provision of this Agreement,
the Notes or any other Loan Document to which the Borrower or any Guarantor is
a party, nor any consent to any departure by the Borrower or any Guarantor
therefrom, shall in any event be effective unless the same shall be agreed or
consented to by the Required Lenders and the Borrower or such Guarantor (as
applicable) in writing, and each such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given;
provided, that no amendment, waiver or consent shall, unless in writing and
signed by all of the Lenders and the Borrower, do any of the following: (a)
increase the Commitments of the Lenders or subject the lenders to any
additional obligations; (b) reduce the principal of, or interest on, the Notes
or any fees or other amounts payable hereunder; (c) postpone any date fixed for
any payment (including, without limitation, any mandatory prepayment) of
principal of, or interest on, the Notes or any fees or other amounts payable
hereunder; (d) waive any of the conditions precedent specified in ARTICLE 5;
(e) change any Commitment or the aggregate unpaid principal amount of any Note
or the number of Lenders which shall be required for the Lenders or any of them
to take any action under this Agreement or any other Loan Document; (f) modify
the definition of "Required Lenders" contained in SECTION 1.1; (g) except as
expressly authorized by this Agreement, release any Collateral from any of the
Liens created by any of the Loan Documents; or (h) waive any Event of Default
or amend any covenant contained herein.

         Section 12.9     Maximum Interest Rate.  No provision of this
Agreement or of any other Loan Document shall require the payment or the
collection of interest in excess of the Maximum Rate.  If any excess of
interest in such respect is hereby provided for, or shall be adjudicated to





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      40
<PAGE>   45
be so provided, in any Loan Document or otherwise in connection with this loan
transaction, the provisions of this SECTION 12.9 shall govern and prevail and
neither Borrower nor the sureties, guarantors, successors, or assigns of
Borrower shall be obligated to pay the excess amount of such interest or any
other excess sum paid for the use, forbearance, or detention of sums loaned
pursuant hereto.  In the event the Agent or any Lender ever receives, collects,
or applies as interest any such sum, such amount which would be in excess of
the maximum amount permitted by applicable law shall be applied as a payment
and reduction of the principal of the indebtedness evidenced by the Notes; and,
if the principal of the Notes have been paid in full, any remaining excess
shall forthwith be paid to Borrower.  In determining whether or not the
interest paid or payable exceeds the Maximum Rate, Borrower, Agent and Lenders
shall, to the extent permitted by applicable law, (a) characterize any
nonprincipal payment as an expense, fee, or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof, and (c) amortize,
prorate, allocate, and spread in equal or unequal parts the total amount of
interest throughout the entire contemplated term of the indebtedness evidenced
by the Notes so that interest for the entire term does not exceed the Maximum
Rate.

         Section 12.10    Notices.  All notices and other communications
provided for in this Agreement and the other Loan Documents to which Borrower
is a party shall be given or made in writing and telecopied, mailed by
certified mail return receipt requested, or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof; or, as to any party at such other address as shall be designated by
such party in a notice to the other party given in accordance with this SECTION
12.10.  Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given when transmitted by telecopy, subject
to telephone confirmation of receipt, or when personally delivered or, in the
case of a mailed notice, when duly deposited in the mails, in each case given
or addressed as aforesaid; provided, however, notices to Agent pursuant to
ARTICLE 2 and SECTION 3.5 shall not be effective until received by Agent.

         Section 12.11    Applicable Law; Venue; Service of Process.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas and the applicable laws of the United States of America.  This
Agreement has been entered into in Dallas County, Texas, and it shall be
performable for all purposes in Dallas County, Texas.  Any action or proceeding
against Borrower under or in connection with any of the Loan Documents may be
brought in any state or federal court in Dallas County, Texas.  Borrower hereby
irrevocably (a) submits to the nonexclusive jurisdiction of such courts, and
(b) waives any objection it may now or hereafter have as to the venue of any
such action or proceeding brought in any such court or that any such court is
an inconvenient forum.  Borrower agrees that service of process upon it may be
made by certified or registered mail, return receipt requested, at its address
specified or determined in accordance with the provisions of SECTION 12.10.
Nothing herein or in any of the other Loan Documents shall affect the right of
the Agent and the Lenders to serve process in any other manner permitted by law
or shall limit the right of the Agent and the Lenders to bring any action or
proceeding against Borrower or with respect to any of its property in courts in
other jurisdictions.  Any action or proceeding by Borrower against the Agent or
any Lender shall be brought only in a court located in Dallas County, Texas.





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      41
<PAGE>   46
         Section 12.12    Counterparts.  This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.

         Section 12.13    Severability.  Any provision of this Agreement held
by a court of competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder of this Agreement and the effect thereof
shall be confined to the provision held to be invalid or illegal.

         Section 12.14    Headings.  The headings, captions, and arrangements
used in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.

         Section 12.15    Non-Application of Chapter 15 of Texas Credit Code.
The provisions of Chapter 15 of the Texas Credit Code (Vernon's Texas Civil
Statutes, Article 5069-15) are specifically declared by the parties hereto not
to be applicable to this Agreement or any of the other Loan Documents or to the
transactions contemplated hereby.

         Section 12.16    WAIVER OF JURY TRIAL.  TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, BORROWER HEREBY IRREVOCABLY AND EXPRESSLY WAIVES
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF THE AGENT AND THE LENDERS IN THE NEGOTIATION, ADMINISTRATION, OR
ENFORCEMENT THEREOF.

         Section 12.17    ARBITRATION.  ANY CONTROVERSY OR CLAIM BETWEEN OR
AMONG THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR ANY RELATED AGREEMENTS
OR INSTRUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT,
SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL
ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW).  THE RULES OF
PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF JUDICIAL
ARBITRATION AND MEDIATION SERVICES, INC. (J.A.M.S.), AND THE "SPECIAL RULES"
SET FORTH BELOW.  IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL
CONTROL.  JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION.  ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION,
INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY
CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING
JURISDICTION OVER SUCH ACTION.

         i.      Special Rules.  THE ARBITRATION SHALL BE CONDUCTED IN THE CITY
                 OF THE BORROWER'S DOMICILE AT TIME OF THIS AGREEMENT'S
                 EXECUTION AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      42
<PAGE>   47
                 ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM
                 ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION
                 ASSOCIATION WILL SERVE.  ALL ARBITRATION HEARINGS WILL BE
                 COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION;
                 FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE,
                 BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP
                 TO AN ADDITIONAL 60 DAYS.

         ii.     Reservation of Rights.  NOTHING IN THIS AGREEMENT SHALL BE
                 DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE
                 APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS
                 CONTAINED IN THIS AGREEMENT; OR (II) BE A WAIVER BY THE AGENT
                 OR ANY LENDER OF THE PROTECTION AFFORDED TO IT BY 12 U.S. C.
                 SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III)
                 LIMIT THE RIGHT OF THE AGENT AND THE LENDERS  (A) TO EXERCISE
                 SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B)
                 TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL,
                 OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY
                 REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT
                 OF POSSESSION OR THE APPOINTMENT OF A RECEIVER.  THE AGENT AND
                 THE LENDERS MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON
                 SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY
                 REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY
                 ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT.
                 NEITHER THIS EXERCISE OF SELF HELP REMEDIES NOR THE
                 INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR
                 PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF
                 THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH
                 ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM
                 OCCASIONING RESORT TO SUCH REMEDIES.





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      43
<PAGE>   48
                 IN WITNESS WHEREOF, the parties hereto have duly executed this
         Agreement as of the day and year first above written.

                                        BORROWER:
                                        
                                        CRAFTMADE INTERNATIONAL, INC.,
                                        a Delaware corporation
                                        
                                        
                                        By: _________________________________
                                        Name: James R. Ridings
                                        Title: Chief Executive Officer
                                        
                                        Address for Notices:
                                        2700 112th Street
                                        Grand Prairie, Texas 75050
                                        
                                        Fax No.: (214) 647-4872
                                        Telephone No.: (214) 647-8099
                                        
                                        Attention:       Kenneth M. Cancienne
                                                         Chief Financial Officer
                                        
                                        
                                        AGENT:
                                        
                                        NATIONSBANK OF TEXAS, N.A.
                                        
                                        
                                        By: _________________________________
                                        Name: Andrew N. McLean
                                        Title: Vice President
                                        
                                        Address for Notices:
                                        901 Main Street, 7th Floor
                                        P.O. Box 831000
                                        Dallas, Texas 75283-1000
                                        
                                        Fax No.: (214) 508-0388
                                        Telephone No.: (214) 508-0361
                                        
                                        Attention:       Andrew N. McLean
                                                         Vice President





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      44
<PAGE>   49
                                        LENDER:
                                        
Commitment:                             NATIONSBANK OF TEXAS, N.A.
$6,000,000.00                           
                                        
                                        By: __________________________________
                                        Name: Andrew N. McLean
                                        Title: Vice President
                                        
                                        Address for Notices:
                                        
                                        901 Main Street, 7th Floor
                                        P.O. Box 831000
                                        Dallas, Texas 75283-1000
                                        
                                        Fax No.: (214) 508-0388
                                        Telephone No.: (214) 508-0361
                                        
                                        Attention:      Andrew N. McLean
                                                        Vice President
                                        
                                        
Commitment:                             OVERTON BANK AND TRUST
$6,000,000.00                           
                                        
                                        By: __________________________________
                                        Name: Dale Griggs
                                        Title: Executive Vice President
                                        
                                        Address for Notices:
                                        
                                        4200 South Hulen
                                        Fort Worth, Texas 76109
                                        
                                        Fax No.: (817) 731-9123
                                        Telephone No.:  (817) 731-0101
                                        
                                        Attention:      Dale Griggs
                                                        Executive Vice President





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      45
<PAGE>   50
                            CONFIRMATION OF GUARANTY

          Durocraft hereby represents, warrants, covenants and agrees to and
with the Agent and the Lenders that (1) Durocraft is aware of this Agreement
and the transactions contemplated herein (this Agreement and such transactions
being hereinafter collectively called the "Modification"), (2) Durocraft
consents to the Modification, (3) notwithstanding the Modification, the
Durocraft Guaranty shall be and remain a continuing, absolute, unconditional
and irrevocable guaranty of payment and performance of the Guaranteed
Indebtedness, as defined in the Durocraft Guaranty, binding and enforceable in
accordance with the terms of such guaranty, and such guaranty shall not be
deemed to have been terminated, impaired, modified or otherwise affected by the
Modification, except that the obligations guaranteed shall include the
Obligations as defined herein in addition to any other amounts included in the
Guaranteed Indebtedness, and (4) there are no claims, defenses, counterclaims
or offsets to the liability of Durocraft under the Durocraft Guaranty.
          
          EXECUTED on November ___, 1995, to be effective as of November 14, 
1995


                                        DUROCRAFT INTERNATIONAL, INC.,
                                        a Texas corporation
                                        
                                        
                                        By: __________________________________
                                            James R. Ridings,
                                            Chief Executive Officer





                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      46
<PAGE>   51
                            CONFIRMATION OF GUARANTY

          C/D/R hereby represents, warrants, covenants and agrees to and with
the Agent and the Lenders that (1) C/D/R is aware of this Agreement and the
transactions contemplated herein (this Agreement and such transactions being
hereinafter collectively called the "Modification"), (2) C/D/R consents to the
Modification, (3) notwithstanding the Modification, the C/D/R Guaranty shall be
and remain a continuing, absolute, unconditional and irrevocable guaranty of
payment and performance of the Guaranteed Indebtedness, as defined in the C/D/R
Guaranty, binding and enforceable in accordance with the terms of such
guaranty, and such guaranty shall not be deemed to have been terminated,
impaired, modified or otherwise affected by the Modification, except that the
obligations guaranteed shall include the Obligations as defined herein in
addition to any other amounts included in the Guaranteed Indebtedness, and (4)
there are no claims, defenses, counterclaims or offsets to the liability of
C/D/R under the C/D/R Guaranty.

          EXECUTED on November ___, 1995, to be effective as of November 14,
1995.

                                        C/D/R INCORPORATED
                                        a Delaware corporation
                                        
                                        
                                        By: _________________________________
                                        Name: _______________________________
                                        Title: ______________________________
                                        




                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement

                                      47
<PAGE>   52
                                  EXHIBIT "A"

                                      Note




                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement
<PAGE>   53
                                PROMISSORY NOTE


$______________                  Dallas, Texas                 November 14, 1995


         FOR VALUE RECEIVED, the undersigned, CRAFTMADE INTERNATIONAL, INC., a
Delaware corporation ("Maker"), hereby promises to pay to the order of
________________, a _________________ ("Payee"), at the offices of the Agent at
901 Main Street, Dallas, Dallas County, Texas 75283, in lawful money of the
United States of America, the principal sum of ________________________ Dollars
($______________), or so much thereof as may be advanced and outstanding
hereunder, together with interest on the outstanding principal balance as
hereinafter described.

         This Note is one of the Notes provided for in that certain Second
Amended and Restated Credit Agreement of even date herewith among Maker,
NationsBank of Texas, N.A., as Agent, and the Lenders which are parties thereto
(as the same may be amended or otherwise modified, herein referred to as the
"Agreement").  Capitalized terms not otherwise defined herein shall have the
same meanings as set forth in the Agreement.  Reference is hereby made to the
Agreement for provisions affecting this Note, including, without limitation,
provisions regarding the Maker's rights to borrow, repay and reborrow
hereunder, the limitation of interest charged hereunder, the Collateral
securing this Note, Potential Defaults and Events of Default and Payee's rights
arising as a result of the occurrence thereof.

         Subject to the terms of the Agreement, the outstanding principal
balance hereunder shall bear interest prior to maturity at a varying rate per
annum which shall from day to day be equal to the lesser of (a) the Maximum
Rate or (b) the Applicable Rate, each such change in the rate of interest
charged hereunder to become effective, without notice to Maker, on the
effective date of each change in the Applicable Rate or the Maximum Rate, as
the case may be; provided, however, if at any time the rate of interest
specified in clause (b) preceding shall exceed the Maximum Rate, thereby
causing the interest rate hereon to be limited to the Maximum Rate, then any
subsequent reduction in the Applicable Rate shall not reduce the rate of
interest hereon below the Maximum Rate until such time as the aggregate amount
of interest accrued hereon equals the aggregate amount of interest which would
have accrued hereon if the interest rate specified in clause (b) preceding had
at all times been in effect.  All outstanding principal advanced under this
Note shall be due and payable on the Termination Date.  Accrued and unpaid
interest on this Note shall be due and payable on the last Business Day of each
month, commencing November 30, 1995, and on the Termination Date.  All past due
principal and interest shall bear interest at the Default Rate.

         Interest on the indebtedness evidenced by this Note shall be computed
on the basis of a year of 360 days and the actual number of days elapsed
(including the first day but excluding the last day) unless such calculation
would result in a usurious rate, in which case interest shall be calculated on
the basis of a year of 365 or 366 days, as the case may be.





PROMISSORY NOTE - Page 1
<PAGE>   54
         If the holder hereof expends any effort in any attempt to enforce
payment of all or any part or installment of any sum due the holder hereunder,
or if this Note is placed in the hands of an attorney for collection, or if it
is collected through any legal proceedings, Maker agrees to pay all costs,
expenses and fees incurred by the holder, including reasonable attorneys' fees.

         This Note shall be governed by and construed in accordance with the
laws of the State of Texas and the applicable laws of the United States of
America.  This Note is performable in Dallas County, Texas.

         Maker and each surety, guarantor, endorser and other party ever liable
for payment of any sums of money payable on this Note jointly and severally
waive notice, presentment, demand for payment, protest, notice of protest and
non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace, and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Note, all without prejudice
to the holder.  The holder shall similarly have the right to deal in any way,
at any time, with one or more of the foregoing parties without notice to any
other party, and to grant any such party any extensions of time for payment of
any of said indebtedness, or to release or substitute part or all of the
collateral securing this Note, or to grant any other indulgences or
forbearances whatsoever, without notice to any other party and without in any
way affecting the personal liability of any party hereunder.

         Maker hereby authorizes the holder hereof to record in its records all
advances made to Maker hereunder and all payments made on account of the
principal thereof, which records shall be prima facie evidence as to the
outstanding principal amount of this Note; provided, however, any failure by
the holder hereof to make any such records shall not limit or otherwise affect
the obligations of Maker under the Agreement or this Note.

         This Note is executed in renewal, extension, and increase of, but not
in novation, discharge,  or satisfaction of the indebtedness evidenced by, that
certain Promissory Note dated November 15, 1994, in the original principal
amount of $10,000,000 made by the Maker payable to the order of NationsBank of
Texas, N.A. (the "Prior Note").  This Note, and the other Notes executed
concurrently herewith pursuant to the Agreement, evidence the indebtedness
outstanding on the date hereof under the Prior Note.





PROMISSORY NOTE - Page 2
<PAGE>   55
         THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS AS
WRITTEN, REPRESENTS THE FINAL AGREEMENT BETWEEN MAKER AND PAYEE AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF MAKER AND PAYEE.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
MAKER AND PAYEE.

                                        CRAFTMADE INTERNATIONAL, INC.


                                        By: __________________________________
                                            Name: James R. Ridings
                                            Title: Chief Executive Officer





PROMISSORY NOTE - Page 3
<PAGE>   56
                                  EXHIBIT "B"

                              Advance Request Form




                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement
<PAGE>   57
                              ADVANCE REQUEST FORM




TO:      NationsBank of Texas, N.A., as Agent
         Attention:       Andrew N. McLean
                          Vice President
         901 Main Street, 7th Floor
         Dallas, Texas  75283-1000

Gentlemen:

         The undersigned is an officer of Craftmade International, Inc. (the
"Borrower") and is authorized to make and deliver this certificate pursuant to
that certain Second Amended and Restated Credit Agreement dated as of November
14, 1995, among Borrower, NationsBank of Texas, N.A., as Agent, and the Lenders
which are parties thereto (the "Credit Agreement").  All capitalized terms
defined in the Credit Agreement shall have the same meanings herein.  In
accordance with the Agreement, Borrower hereby requests that Lenders make an
Advance in the amount set forth in item (e) below.

         In connection with the foregoing and pursuant to the terms and
provisions of the Credit Agreement, the undersigned hereby certifies that the
following statements are true and correct:

              (i)    The representations and warranties contained in Article 6
         of the Credit Agreement and in each of the other Loan Documents are
         true and correct on and as of the date hereof with the same force and
         effect as if made on and as of such date.

             (ii)    No Event of Default or Potential Default has occurred and
         is continuing.

            (iii)    There has been no material adverse change in the business,
         condition (financial or otherwise), operations, prospects, or
         properties of Borrower or any Subsidiary.

             (iv)    Borrower has not, and will not after giving effect to the
         credit extended pursuant to this request, exceed the credit limits set
         forth in the Credit Agreement.

              (v)    All information supplied below is true, correct, and
         complete as of the date hereof.

                          ADVANCE REQUEST INFORMATION

                                   (i)    Commitments . . . . . .       $_______

                                   (ii)   Borrowing Base (as reflected





ADVANCE REQUEST FORM - Page 2
<PAGE>   58
                 on most recent Borrowing Base Report)  . . . . . .     $_______

                                   (iii)  Aggregate outstanding amount of 
                                          Advances  . . . . . . . .     $_______

                                   (iv)   Net availability

                 (i)      (Lesser of Commitments or
                          Borrowing Base) minus line (c)  . . . .       $_______

                 (ii)     Outstanding Advances supported by
                          Eligible Inventory (not to exceed
                          50% of line (c))  . . . . . . . . . . .       $_______

                                        (v)  Amount of requested Advance (not 
                 to exceed line (d)(i) in aggregate)

<TABLE>
<CAPTION>
       Advance Type             Interest Period (if Eurodollar Advance)     Amount of
(Prime Rate or Eurodollar)            (30, 60, 90 or 180 days)               Advance 
--------------------------        ---------------------------------         ---------
<S>                               <C>                                       <C>
1. _____________                  ___________________________               $________
2. _____________                  ___________________________               $________
3. _____________                  ___________________________               $________
</TABLE>

                                        (vi)  . . .  Date of requested Advance
                                              . . . . . .    _________, 19__


                                        BORROWER:
                                        
                                        CRAFTMADE INTERNATIONAL, INC.
                                        
                                        
                                        By: ___________________________________
                                            Name:  James R. Ridings
                                            Title: Chief Executive Officer

Dated as of:     _________________
                 [insert date of
                 requested Advance]





ADVANCE REQUEST FORM - Page 3
<PAGE>   59
                                  EXHIBIT "C"

                             Borrowing Base Report




                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement
<PAGE>   60
                             BORROWING BASE REPORT


TO:      NationsBank of Texas, N.A.
         Attention:       Andrew N. McLean
                          Vice President
         901 Main Street, 7th Floor
         Dallas, Texas 75283-1000


Gentlemen:

         This Borrowing Base Report ("Report") for the month ending
_____________, 19__ is executed and delivered by Craftmade International, Inc.
("Borrower") to NationsBank of Texas, N.A., as Agent (the "Agent"), pursuant to
that certain Second Amended and Restated Credit Agreement (the "Credit
Agreement") dated as of November 14, 1995, among Borrower, the Agent  and the
Lenders which are parties thereto.  All capitalized terms used herein shall
have the meanings assigned to them in the Credit Agreement.

     Borrower represents and warrants to the Agent and the Lenders that all
information contained herein is true, correct, and complete, and that the total
Eligible Accounts and Eligible Inventory referred to below represent the
Eligible Accounts and Eligible Inventory that qualify for purposes of
determining the Borrowing Base under the Credit Agreement.  Borrower further
represents and warrants to the Agent and the Lenders that attached hereto as
Exhibit "A" is an Accounts Receivable Aging Report dated as of the date hereof.

                          i.               Eligible Accounts

                                        (i)              Gross Accounts $_______

                                        (ii)     . . .   Less:

                          (i)     Accounts over 60
                                  days past due . . . . .               $_______
                          (ii)    Affiliate Accounts  . .               $_______
                          (iii)   Accounts subject to setoff
                                  or dispute  . . . . . .               $_______
                          (iv)    Other ineligibles . . .               $_______
                          (v)     Total Ineligible Accounts
                                      (sum of lines (i)-(iv))           $_______

                                        (iii)    . . .   Total Eligible
                          Accounts (line (a) minus line (b)(v))  .
                          $_______         x 80% =  $_______





BORROWING BASE REPORT - Page 1
<PAGE>   61
                 ii.              Eligible Inventory

                                   (i)      . . .   Gross finished inventory
                          (at lesser of cost or market) .               $_______

                                   (ii)             Gross unassembled lamp parts
                          (at lesser of cost or market) .               $_______

                                   (iii)    . . .   Total Gross Inventory
                          (sum of (a) + (b))  . . . . . .               $_______

                                   (iv)     . . .   Less:  Ineligibles  $_______

                                   (v)      . . .   Total Eligible Inventory
                          (line (c) minus line (d)). . $_______ x 50% = $_______

                 iii.             Total Borrowing Base

                 (line 1(c) plus line 2(e)  . . . . . . . . . . . . .   $_______

                 iv.              Outstanding principal amount
                 of Advances        . . . . . . . . . . . . . . . . .   $_______

                 v.               Net Availability

                                  (i)      . . .   (Lesser of Commitments [minus
                          outstanding face amount of Letters of Credit] or 
                          Borrowing Base (line 3)) minus line 4 . .     $_______

                              (ii)     . . .   Outstanding Advances supported by
                          Eligible Inventory (not to exceed
                          50% of line 4)  . . . . . . . . . . . . .     $_______

                              (iii)    . . .   Amount by which line 5(b) exceeds
                          50% of line 4 . . . . . . . . . . . . . .     $_______

         If the number listed on line 5(a) is a negative number or if any
amount is listed on line 5(c), Borrower will promptly repay such amount plus
accrued interest thereon to the Agent, for the ratable benefit of the Lenders,
in accordance with the Credit Agreement.

         Borrower further represents and warrants to the Agent and the Lenders
that the representations and warranties contained in Article 6 of the Credit
Agreement and in each of the other Loan Documents are true and correct on and
as of the date of this Report as if made on and as of the date hereof, and that
no Event of Default or Potential Default has occurred and is continuing.





BORROWING BASE REPORT - Page 2
<PAGE>   62
         Date:_________________

                                        BORROWER:
                                        
                                        CRAFTMADE INTERNATIONAL, INC.
                                        
                                        
                                        By: __________________________________
                                            Name:  James R. Ridings
                                            Title: Chief Executive Officer
                                        




BORROWING BASE REPORT - Page 3
<PAGE>   63
                                  EXHIBIT "A"
                                       TO
                             BORROWING BASE REPORT


                        Accounts Receivable Aging Report





EXHIBIT "A", Accounts Receivable Aging Report
<PAGE>   64
                                  EXHIBIT "D"

                               Security Agreement




                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement
<PAGE>   65
                    AMENDED AND RESTATED SECURITY AGREEMENT


         THIS AMENDED AND RESTATED SECURITY AGREEMENT (the "Agreement") dated
as of November 14, 1995, is by and between CRAFTMADE INTERNATIONAL, INC., a
Delaware corporation (the "Debtor") and NATIONSBANK OF TEXAS, N.A., a national
banking association, as Agent for the Lenders (as defined below) (in such
capacity, the "Secured Party").

                                   RECITALS:

         A.      NationsBank of Texas, N.A. ("NationsBank") has previously made
a loan to Debtor in the maximum principal amount of $6,000,000.00, pursuant to
a certain Credit Agreement (the "Original Credit Agreement") between Debtor and
Lender, dated January 11, 1993.

         B.      In conjunction with the execution of the Original Credit
Agreement, Debtor and NationsBank entered into that certain Security Agreement
dated as of January 11, 1993 (the "Original Security Agreement"), pursuant to
which the Debtor granted liens on certain of its assets as security for its
obligations under the Original Credit Agreement.

         C.      The Original Credit Agreement was amended and restated as
provided in that certain First Amended and Restated Credit Agreement dated as
of January 11, 1993, by and between Debtor and NationsBank (the "First Restated
Agreement").

         D.      The First Restated Agreement was amended as provided in that
certain First Amendment to First Amended and Restated Credit Agreement dated as
of December 13, 1993, by and between the Debtor and NationsBank (the "First
Amendment").

         E.      The First Restated Agreement was further amended as provided
in that certain Second Amendment to First Amended and Restated Credit Agreement
dated as of March 30, 1994, by and between the Debtor and NationsBank (the
"Second Amendment").

         F.      The First Restated Agreement was further amended as provided
in that certain Third Amendment to First Amended and Restated Credit Agreement
dated as of June 30, 1994, by and between the Debtor and NationsBank (the
"Third Amendment").

         G.      The First Restated Agreement was further amended as provided
in that certain Fourth Amendment to First Amended and Restated Credit Agreement
dated as of November 15, 1994, by and between the Debtor and NationsBank (the
"Fourth Amendment"; the First Restated Agreement, as amended by the First
Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment
is referred to hereinafter as the "Prior Credit Agreement").

         H.      Concurrently herewith, the Borrower, the Secured Party  and
the lenders which are parties thereto (the "Lenders") are amending and
restating the Prior Credit Agreement as set out





AMENDED AND RESTATED SECURITY AGREEMENT - Page 1
<PAGE>   66
in that certain Second Amended and Restated Credit Agreement dated as of
November 14, 1995 (the "Credit Agreement"), including without limitation, to
provide for a loan in the maximum principal amount of $12,000,000.

         I.      The Secured Party and the Lenders have required the Debtor to
execute and deliver this Agreement in amendment and restatement of the Original
Security Agreement as a condition to their execution of the Credit Agreement.

         NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                                   ARTICLE 1

                                  Definitions

         Section 1.1  Definitions.  Capitalized terms used in this Agreement,
to the extent not otherwise defined herein, shall have the same meanings as set
forth in the Credit Agreement.  Terms used herein which are defined in the
Uniform Commercial Code as adopted by the State of Texas, unless otherwise
defined herein or in the Credit Agreement, shall have the meanings set forth in
the Uniform Commercial Code as adopted by the State of Texas.

                                   ARTICLE 2

                               Security Interest

         Section 2.1  Security Interest.  Subject to the terms of this
Agreement and to secure the Obligations, Debtor hereby grants to Secured Party,
for the ratable benefit of the Lenders, a security interest in any and all of
Debtor's right, title and interest in and to all accounts, equipment,
inventory, chattel paper, documents, instruments, and general intangibles of
Debtor, whether now owned or hereafter acquired and wherever arising or
located, and all accessions and attachments thereto and all products and
proceeds thereof, including, without limitation, all patents, patent
applications, trademarks, trademark applications, trade names, trade name
applications and other intellectual property rights (all of the foregoing
property hereinafter sometimes referred to as the "Collateral").

                                   ARTICLE 3

                         Representations and Warranties

         To induce Secured Party and the Lenders to enter into this Agreement
and the Credit Agreement, Debtor represents and warrants to Secured Party and
the Lenders that:





AMENDED AND RESTATED SECURITY AGREEMENT - Page 2
<PAGE>   67
         Section 3.1  Accounts.  Unless Debtor has given Secured Party written
notice to the contrary, whenever the security interest granted hereunder
attaches to an account, Debtor shall be deemed to have represented and
warranted to Secured Party and the Lenders as to each and all of its accounts
that (a) each account is genuine and in all respects what it purports to be,
(b) each account represents the legal, valid, and binding obligation of the
account debtor evidencing indebtedness unpaid and owed by such account debtor
arising out of the performance of labor or services by Debtor or the sale or
lease of goods by Debtor, (c) the amount of each account represented as owing
is the correct amount actually and unconditionally owing except for normal
trade discounts granted in the ordinapy course of business, and (d) no account
is subject to any offset, counterclaim, or other defense.

         Section 3.2  Delivery of Collateral.  Except as otherwise contemplated
by Section 4.5 hereof, all of Debtor's existing instruments, documents and
chattel paper pledged pursuant hereto have been delivered to Secured Party.

                                   ARTICLE 4

                                   Covenants

         Debtor covenants and agrees with Secured Party and the Lenders that
until the Obligations are paid and performed in full and as long as any Lender
has any Commitment under the Credit Agreement, Debtor shall observe and perform
the following covenants:

         Section 4.1  Modification of Collateral.  Except as contemplated by
Section 4.6, Debtor shall not impair the rights of Secured Party and the
Lenders in the Collateral and without the prior written consent of Secured
Party, Debtor shall not grant any extension of time for any payment with
respect to the Collateral, or compromise, compound, or settle any of the
Collateral, or release in whole or in part any person or entity liable for
payment with respect to the Collateral, or allow any credit or discount for
payment with respect to the Collateral other than normal trade discounts
granted in the ordinary course of business, or release any lien, security
interest, or assignment securing the Collateral, or otherwise amend or modify
any of the Collateral.

         Section 4.2  Warehouse Receipts Non-Negotiable.  Debtor agrees that if
any warehouse receipt or receipt in the nature of a warehouse receipt is issued
with respect to any of its inventory, such warehouse receipt or receipt in the
nature thereof shall not be "negotiable" (as such term is used in Section 7-104
of the Uniform Commercial Code as adopted by the State of Texas).

         Section 4.3  Corporate Changes.  Debtor shall not change its name,
identity, or corporate structure in any manner that might make any financing
statement filed in connection with this Agreement seriously misleading unless
Debtor shall have given Secured Party thirty (30) days prior written notice
thereof and shall have taken all action deemed necessary or desirable by
Secured Party to make each financing statement not seriously misleading.
Debtor shall not change its principal place of business, chief executive
office, or the place where it keeps its books and





AMENDED AND RESTATED SECURITY AGREEMENT - Page 3
<PAGE>   68
records unless it shall have given Secured Party thirty (30) days prior written
notice thereof and shall have taken all action deemed necessary or desirable by
Secured Party to cause its security interest in the Collateral to be perfected
with the priority required by this Agreement.

         Section 4.4  Location of Collateral.  Debtor shall not move any of its
equipment or inventory from the locations specified for Debtor on Schedule 1 of
the Credit Agreement without the prior written consent of Secured Party.
Notwithstanding the foregoing, in the ordinary course of business Debtor may
move inventory from any location identified for Debtor on Schedule 1 to the
Credit Agreement to any other location identified for Debtor on Schedule 1 to
the Credit Agreement.  Debtor shall not establish any place of business in any
location other than the locations listed for Debtor on Schedule 1 of the Credit
Agreement.  Debtor shall not permit any Persons other than Secured Party to
have possession of Collateral unless Debtor shall have obtained Secured Party's
prior written consent.

         Section 4.5  Delivery of Collateral.  Upon receipt, Debtor shall
deliver to Secured Party, properly endorsed to Secured Party, if applicable,
all of its instruments, documents, and chattel paper pledged pursuant hereto;
provided that so long as no Event of Default or Potential Default shall have
occurred and shall be continuing, Debtor may retain for collection in the
ordinary course of business any instrument received by it in the ordinary
course of business and any documents received and further negotiated in the
ordinary course of business.  After the occurrence and during the continuance
of an Event of Default or Potential Default and if Secured Party so requests,
Debtor shall deliver to Secured Party the instruments retained for collection
in the ordinary course of its business and the documents retained in the
ordinary course of its business.  Subject to the limitations imposed by the
Credit Agreement on the disposition of assets and except as otherwise disclosed
in reports required by the Credit Agreement, Debtor shall promptly inform
Secured Party of any material additions to or material deletions from the
Collateral pledged by Debtor and shall not permit any items of property pledged
pursuant hereto to become a fixture to real property or an accession to other
personal property (except such personal property covered hereby or personal
property otherwise subject to a perfected security interest in favor of Secured
Party).

         Section 4.6  Collection of Accounts.  Debtor shall collect from its
account debtors, as and when due, any and all amounts owing under or on account
of each account (including without limitation accounts which are delinquent,
such accounts to be collected in accordance with lawful collection procedures)
and apply forthwith upon receipt thereof all such amounts as are so collected
to the outstanding balance of such account, except that, unless an Event of
Default or Potential Default has occurred and is continuing, Debtor may allow
in the ordinary course of business as adjustments to amounts owing under its
accounts (a) an extension or renewal of the time or times of payment, or
settlement for less than the total unpaid balance, which Debtor finds
appropriate in accordance with sound business judgment and (b) a refund or a
credit due as a result of a return of or damage to merchandise, or in
accordance with Debtor's ordinary course of business consistent with its
historical collection practices.





AMENDED AND RESTATED SECURITY AGREEMENT - Page 4
<PAGE>   69
                                   ARTICLE 5

                            Rights of Secured Party

         Section 5.1  Power of Attorney.  Debtor hereby irrevocably constitutes
and appoints Secured Party and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the name of Debtor or in its own name, to take any and
all action and to execute any and all documents and instruments which Secured
Party at any time and from time to time deems necessary or desirable to
accomplish the purposes of this Agreement and, without limiting the generality
of the foregoing, Debtor hereby gives Secured Party the power and right on
behalf of Debtor and in its own name to do any of the following, without notice
to or the consent of Debtor:

                 a.       to demand, sue for, collect, or receive in the name
of Debtor or in its own name, any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral and, in
connection therewith, endorse checks, notes, drafts, acceptances, money orders,
documents of title, or any other instruments for the payment of money under the
Collateral or any policy of insurance;

                 b.       to pay or discharge taxes, liens, security interests,
or other encumbrances levied or placed on or threatened against the Collateral;

                 c.       to send requests for verification to account debtors
and other obligors;

                 d.       (i) to direct account debtors and any other parties
liable for any payment under any of the Collateral to make payment of any and
all monies due and to become due thereunder directly to Secured Party or as
Secured Party shall direct; (ii) to receive payment of and receipt for any and
all monies, claims, and other amounts due and to become due at any time in
respect of or arising out of any Collateral; (iii) to sign and endorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, proxies, stock powers,
verifications, and notices in connection with accounts and other documents
relating to the Collateral; (iv) to commence and prosecute any suit, action, or
proceeding at law or in equity in any court of competent jurisdiction to
collect the Collateral or any part thereof and to enforce any other right in
respect of any Collateral; (v) to defend any suit, action, or proceeding
brought against Debtor with respect to any Collateral; (vi) to settle,
compromise, or adjust any suit, action, or proceeding described above and, in
connection therewith, to give such discharges or releases as Secured Party may
deem appropriate; (vii) to exchange any of the Collateral for other property
upon any merger, consolidation, reorganization, recapitalization, or other
readjustment of the issuer thereof and, in connection therewith, deposit any of
the Collateral with any committee, depositary, transfer agent, registrar, or
other designated agency upon such terms as Secured Party may determine; (viii)
to add or release any guarantor, indorser, surety, or other party to any of the
Collateral or the Obligations; (ix) to renew, extend, or otherwise change the
terms and conditions of any of the Collateral or Obligations; (x) to insure,
and to





AMENDED AND RESTATED SECURITY AGREEMENT - Page 5
<PAGE>   70
make, settle, compromise, or adjust claims under any insurance policy covering,
any of the Collateral; and (xi) to sell, transfer, pledge, make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though Secured Party were the absolute owner thereof for all
purposes, and to do, at Secured Party's option and Debtor's expense, at any
time, or from time to time, all acts and things which Secured Party deems
necessary to protect, preserve, or realize upon the Collateral and Secured
Party's security interest therein.

         This power of attorney is a power coupled with an interest and shall
be irrevocable.  Secured Party shall be under no duty to exercise or withhold
the exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to Secured Party in this Agreement, and shall not be liable
for any failure to do so or any delay in doing so.  Secured Party shall not be
liable for any act or omission or for any error of judgment or any mistake of
fact or law in its individual capacity or in its capacity as attorney-in-fact
except acts or omissions resulting from its willful misconduct.  This power of
attorney is conferred on Secured Party solely to protect, preserve, and realize
upon its security interest in the Collateral.  Secured Party shall not be
responsible for any decline in the value of the Collateral and shall not be
required to take any steps to preserve rights against prior parties or to
protect, preserve, or maintain any security interest or lien given to secure
the Collateral.

         Section 5.2  Performance by Secured Party.  If Debtor fails to perform
or comply with any of its agreements contained herein, Secured Party itself
may, at its sole discretion, cause or attempt to cause performance or
compliance with such agreement and the expenses of Secured Party, together with
interest thereon at the Default Rate, shall be payable by Debtor to Secured
Party on demand and shall constitute obligations secured by this Agreement.
Notwithstanding the foregoing, it is expressly agreed that Secured Party shall
not have any liability or responsibility for the performance of any obligation
of Debtor under this Agreement.

         Section 5.3  Assignment by Secured Party.  Subject to the provisions
of Section 12.6 of the Credit Agreement, Secured Party and the Lenders may from
time to time assign the Obligations and any portion thereof and/or the
Collateral and any portion thereof, and the assignee shall be entitled to all
of the rights and remedies of Secured Party and the Lenders under this
Agreement in relation thereto.

                                   ARTICLE 6

                                    Default

         Section 6.1  Rights and Remedies.  Upon the occurrence of an Event of
Default, Secured Party shall have the following rights and remedies and may do
any one or more of the following:

                 a.       In addition to all other rights and remedies granted
to Secured Party in this Agreement and under the Loan Documents, Secured Party
shall have all of the rights and remedies of a secured party under the Uniform
Commercial Code as adopted by the State of Texas.  Without limiting the
generality of the foregoing, Secured Party may (i) without demand or notice





AMENDED AND RESTATED SECURITY AGREEMENT - Page 6
<PAGE>   71
to Debtor, collect, receive, or take possession of the Collateral or any part
thereof and for that purpose Secured Party may enter upon any premises on which
the Collateral is located and remove the Collateral therefrom or render it
inoperable, and/or (ii) sell, lease, or otherwise dispose of the Collateral, or
any part thereof, in one or more parcels at public or private sale or sales, at
Secured Party's offices or elsewhere, for cash, on credit, or for future
delivery.  Upon the request of Secured Party, Debtor shall assemble the
Collateral and make it available to Secured Party at any place designated by
Secured Party that is reasonably convenient to Debtor and Secured Party.
Debtor agrees that Secured Party shall not be obligated to give more than ten
(10) days written notice of the time and place of any public sale or of the
time after which any private sale may take place and that such notice shall
constitute reasonable notice of such matters.  Debtor shall be liable for all
expenses of retaking, holding, preparing for sale, or the like, and all
attorneys' fees, legal expenses, and all other costs and expenses incurred by
Secured Party in connection with the collection of the Obligations and the
enforcement of Secured Party's rights under this Agreement.  Secured Party may
apply the Collateral against the Obligations in such order and manner as
Secured Party may elect in its sole discretion.  Debtor shall remain liable for
any deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay the Obligations in full.  Debtor waives all rights of
marshalling in respect of the Collateral.

                 b.       Secured Party may cause any or all of the Collateral
held by it to be transferred into the name of Secured Party or the name or
names of Secured Party's nominee or nominees.

                 c.       Secured Party may exercise or cause to be exercised
all voting rights and corporate powers in respect of the Collateral.

                                   ARTICLE 7

                                 Miscellaneous

         Section 7.1  No Waiver; Cumulative Remedies.  No failure on the part
of Secured Party or any Lender to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power, or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power, or privilege under this Agreement preclude any
other or further exercise thereof or the exercise of any other right, power, or
privilege.  The rights and remedies provided for in this Agreement are
cumulative and not exclusive of any rights and remedies provided by law or
under the Loan Documents.

         Section 7.2  Successors and Assigns.  This Agreement shall be binding
upon and inure to the benefit of Debtor, Secured Party and the Lenders and
their respective successors and assigns, except that Debtor may not assign any
of its rights or obligations under this Agreement without the prior written
consent of Secured Party.  Any assignment in violation of this Section 7.2
shall be void.





AMENDED AND RESTATED SECURITY AGREEMENT - Page 7
<PAGE>   72
         Section 7.3  Amendment and Restatement; Entire Agreement; Amendment.
This Agreement amends and restates in its entirety the Original Security
Agreement (but does not extinguish the security interests created thereby) and
embodies the final, entire agreement among the parties hereto and supersedes
any and all prior commitments, agreements, representations, and understandings,
whether written or oral, relating to the subject matter hereof (including,
without limitation, the Original Security Agreement) and may not be
contradicted or varied by evidence of prior, contemporaneous or subsequent oral
agreements or discussions of the parties hereto.  There are no oral agreements
among the parties hereto.  Debtor hereby acknowledges and agrees that the
security interests in the Collateral created under the Original Security
Agreement are not extinguished but are extended and continued by this Agreement
without change to the priority thereof.  The provisions of this Agreement may
be amended or waived only by an instrument in writing signed by the parties
hereto.

         Section 7.4  Notices.  All notices and other communications provided
for in this Agreement shall be given or made in accordance with the terms of
the Credit Agreement.

         Section 7.5  Applicable Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas and the applicable
laws of the United States of America.  This Agreement has been entered into in
Dallas County, Texas.

         Section 7.6  Headings.  The headings, captions and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.

         Section 7.7  Counterparts.  This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.

         Section 7.8  Waiver of Bond.  In the event Secured Party seeks to take
possession of any or all of the Collateral by judicial process, Debtor hereby
irrevocably waives any bonds and any surety or security relating thereto that
may be required by applicable law as an incident to such possession, and waives
any demand for possession prior to the commencement of any such suit or action.

         Section 7.9  Severability.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

         Section 7.10  Obligations Absolute.  Until the Obligations are paid in
full and the obligation of Secured Party and the Lenders under the Credit
Agreement have been terminated, the obligations of Debtor under this Agreement
shall be absolute and unconditional and shall not be released, discharged,
reduced, or in any way impaired by any circumstance whatsoever, including,
without limitation, any amendment, modification, extension, or renewal of any
Loan





AMENDED AND RESTATED SECURITY AGREEMENT - Page 8
<PAGE>   73
Documents (other than this Agreement), the Obligations, or any release or
subordination of collateral, or any waiver, consent, extension, indulgence,
compromise, settlement, or other action or inaction in respect of this
Agreement, any other Loan Document, or the Obligations, or any exercise or
failure to exercise any right, remedy, power, or privilege in respect of the
Obligations.

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

                                        DEBTOR:
                                        
                                        CRAFTMADE INTERNATIONAL, INC.
                                        
                                        
                                        By: __________________________________
                                            Name: James R. Ridings
                                            Title: Chief Executive Officer
                                        
                                        SECURED PARTY:
                                        
                                        NATIONSBANK OF TEXAS, N.A., as Agent
                                        
                                        
                                        By: __________________________________
                                            Name: Andrew N. McLean
                                            Title: Vice President





AMENDED AND RESTATED SECURITY AGREEMENT - Page 9
<PAGE>   74
                                  EXHIBIT "E"

                               Durocraft Guaranty




                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement
<PAGE>   75
                    AMENDED AND RESTATED GUARANTY AGREEMENT
                                  (DUROCRAFT)

         This AMENDED AND RESTATED GUARANTY AGREEMENT (the "Guaranty
Agreement") is executed effective as of November 14, 1995, by DUROCRAFT
INTERNATIONAL, INC., a Texas corporation (the "Guarantor") to and in favor of
the AGENT and the LENDERS, as such terms are defined below.

                                   RECITALS:

         A.      NationsBank of Texas, N.A. ("NationsBank") has previously made
a loan to Craftmade International, Inc.  (the "Borrower") in the maximum
principal amount of $6,000,000.00, pursuant to a certain Credit Agreement (the
"Original Credit Agreement") between Borrower and NationsBank, dated January
11, 1993.

         B.      In conjunction with the execution of the Original Credit
Agreement, Guarantor executed that certain Guaranty Agreement dated as of
January 11, 1993, to and in favor of NationsBank (the "Original Guaranty").

         C.      The Original Credit Agreement was amended and restated as
provided in that certain First Amended and Restated Credit Agreement dated as
of January 11, 1993, by and between Borrower and NationsBank (the "First
Restated Agreement").

         D.      The First Restated Agreement was amended as provided in that
certain First Amendment to First Amended and Restated Credit Agreement dated as
of December 13, 1993, by and between the Borrower and NationsBank (the "First
Amendment").

         E.      The First Restated Agreement was further amended as provided
in that certain Second Amendment to First Amended and Restated Credit Agreement
dated as of March 30, 1994, by and between the Borrower and NationsBank (the
"Second Amendment").

         F.      The First Restated Agreement was further amended as provided
in that certain Third Amendment to First Amended and Restated Credit Agreement
dated as of June 30, 1994, by and between the Borrower and NationsBank (the
"Third Amendment").

         G.      The First Restated Agreement was further amended as provided
in that certain Fourth Amendment to First Amended and Restated Credit Agreement
dated as of November 15, 1994, by and between the Borrower and NationsBank (the
"Fourth Amendment"; the First Restated Agreement, as amended by the First
Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment
is referred to hereinafter as the "Prior Credit Agreement").

         H.      Concurrently herewith, Borrower, the lenders which are parties
thereto (the "Lenders") and NationsBank, as agent for the Lenders (the "Agent")
are entering into that certain





AMENDED AND RESTATED GUARANTY AGREEMENT - Page 1
<PAGE>   76
Second Amended and Restated Credit Agreement (the "Credit Agreement"), amending
and restating the Prior Credit Agreement in its entirety as set out therein,
including, without limitation, to provide for a loan in the maximum principal
amount of $12,000,000.

         I.      The Agent and the Lenders require the Guarantor to deliver
this Guaranty Agreement as an amendment and restatement of the Original
Guaranty as a condition to entering into the Credit Agreement.

         NOW, THEREFORE, for valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Guarantor hereby irrevocably and
unconditionally guarantees to the Agent and the Lenders the full and prompt
payment and performance of the Guaranteed Indebtedness (as hereinafter
defined), this Guaranty Agreement being upon the following terms:

                 i.               The term "Guaranteed Indebtedness" as used
                          herein means all of the "Obligations" as defined in
                          the Credit Agreement.  The term "Guaranteed
                          Indebtedness" shall include any and all post-petition
                          interest and expenses (including attorneys' fees)
                          whether or not allowed under any bankruptcy,
                          insolvency, or other similar law.  All initially
                          capitalized terms not specifically otherwise defined
                          herein shall have the meanings prescribed in the
                          Credit Agreement.

                 ii.              This instrument shall be an absolute,
                          continuing, irrevocable, and unconditional guaranty
                          of payment and performance, and not a guaranty of
                          collection, and Guarantor shall remain liable on its
                          obligations hereunder until the payment and
                          performance in full of the Guaranteed Indebtedness.
                          No set-off, counterclaim, recoupment, reduction, or
                          diminution of any obligation, or any defense of any
                          kind or nature which Borrower may have against the
                          Agent or any Lender or any other party, or which
                          Guarantor may have against Borrower, the Agent or any
                          Lender, or any other party, shall be available to, or
                          shall be asserted by, Guarantor against the Agent or
                          any Lender or any subsequent holder of the Guaranteed
                          Indebtedness or any part thereof or against payment
                          of the Guaranteed Indebtedness or any part thereof.

                 iii.             The obligations of Guarantor hereunder shall
                          be limited to an aggregate amount equal to the
                          largest amount that would not render its obligations
                          hereunder subject to avoidance under Section 548 of
                          the United States Bankruptcy Code, as amended (or any
                          successor statute) or to being set aside, avoided, or
                          annulled under any applicable state law relating to
                          fraudulent transfers or fraudulent obligations.

                 iv.              If Guarantor becomes liable for any
                          indebtedness owing by Borrower to the Agent or any
                          Lender by endorsement or otherwise, other than under
                          this Guaranty Agreement, such liability shall not be
                          in any





AMENDED AND RESTATED GUARANTY AGREEMENT - Page 2
<PAGE>   77
                          manner impaired or affected hereby, and the rights of
                          the Agent and the Lenders hereunder shall be
                          cumulative of any and all other rights that the Agent
                          and the Lenders may ever have against Guarantor.  The
                          exercise by the Agent or any Lender of any right or
                          remedy hereunder or under any other instrument, or at
                          law or in equity, shall not preclude the concurrent
                          or subsequent exercise of any other right or remedy.

                 v.               In the event of default by Borrower in
                          payment or performance of the Guaranteed
                          Indebtedness, or any part thereof, when such
                          Guaranteed Indebtedness becomes due, whether by its
                          terms, by acceleration, or otherwise, Guarantor shall
                          promptly pay the amount due thereon to the Agent, for
                          the ratable benefit of the Lenders, without notice or
                          demand in lawful currency of the United States of
                          America and it shall not be necessary for the Agent
                          or any Lender, in order to enforce such payment by
                          Guarantor, first to institute suit or exhaust its
                          remedies against Borrower or others liable on such
                          Guaranteed Indebtedness, or to enforce any rights
                          against any collateral which shall ever have been
                          given to secure such Guaranteed Indebtedness.

                 vi.              Notwithstanding anything to the contrary
                          contained in this Guaranty Agreement, Guarantor
                          hereby irrevocably waives any and all rights it may
                          now or hereafter have under any agreement or at law
                          or in equity to assert any claim against or seek
                          subrogation, contribution, indemnification or any
                          other form of reimbursement from Borrower or any
                          other party liable for payment of any or all of the
                          Guaranteed Indebtedness for any payment made by
                          Guarantor under or in connection with this Guaranty
                          Agreement or otherwise until the Guaranteed
                          Indebtedness shall have been paid in full in cash.

                 vii.             This Guaranty Agreement shall continue to be
                          effective, or be automatically reinstated, as the
                          case may be, if at any time payment, in whole or in
                          part, of any of the Guaranteed Indebtedness is
                          rescinded or must otherwise be restored or returned
                          by the Agent or any Lender as a preference,
                          fraudulent conveyance or otherwise under any
                          bankruptcy, insolvency or similar law, all as though
                          such payment had not been made; provided that in the
                          event any Guaranteed Indebtedness is rescinded or
                          must be restored or returned, all costs and expenses
                          (including without limitation any legal fees and
                          disbursements) incurred by the Agent or any Lender in
                          defending or enforcing such reinstatement shall be
                          deemed to be included as Guaranteed Indebtedness
                          hereunder.

                 viii.            If acceleration of the time for payment of
                          any amount payable by Borrower under the Guaranteed
                          Indebtedness is stayed upon the insolvency,
                          bankruptcy, or reorganization of Borrower, all such
                          amounts otherwise





AMENDED AND RESTATED GUARANTY AGREEMENT - Page 3
<PAGE>   78
                          subject to acceleration under the terms of the
                          Guaranteed Indebtedness shall nonetheless be payable
                          by Guarantor hereunder forthwith on demand by Agent.

                 ix.              Guarantor hereby agrees that its obligations
                          under this Guaranty Agreement shall not be released,
                          discharged, diminished, impaired, reduced, or
                          affected for any reason or by the occurrence of any
                          event, including, without limitation, one or more of
                          the following events, whether or not with notice to
                          or the consent of Guarantor: (a) the taking or
                          accepting of collateral as security for any or all of
                          the Guaranteed Indebtedness or the release,
                          surrender, exchange, or subordination of any
                          collateral now or hereafter securing any or all of
                          the Guaranteed Indebtedness; (b) any partial release
                          of the liability of Guarantor hereunder, or the full
                          or partial release of any other guarantor from
                          liability for any or all of the Guaranteed
                          Indebtedness; (c) any disability of Borrower, or the
                          dissolution, insolvency, or bankruptcy of Borrower,
                          Guarantor, or any other party at any time liable for
                          the payment of any or all of the Guaranteed
                          Indebtedness; (d) any renewal, extension,
                          modification, waiver, amendment, or rearrangement of
                          any or all of the Guaranteed Indebtedness or any
                          instrument, document, or agreement evidencing,
                          securing, or otherwise relating to any or all of the
                          Guaranteed Indebtedness; (e) any adjustment,
                          indulgence, forbearance, waiver, or compromise that
                          may be granted or given by the Agent or the Lenders
                          to Borrower, Guarantor, or any other party ever
                          liable for any or all of the Guaranteed Indebtedness;
                          (f) any neglect, delay, omission, failure, or refusal
                          of the Agent or the Lenders to take or prosecute any
                          action for the collection of any of the Guaranteed
                          Indebtedness or to foreclose or take or prosecute any
                          action in connection with any instrument, document,
                          or agreement evidencing, securing, or otherwise
                          relating to any or all of the Guaranteed
                          Indebtedness; (g) the unenforceability or invalidity
                          of any or all of the Guaranteed Indebtedness or of
                          any instrument, document, or agreement evidencing,
                          securing, or otherwise relating to any or all of the
                          Guaranteed Indebtedness; (h) any payment by Borrower
                          or any other party to the Agent or any Lender is held
                          to constitute a preference under applicable
                          bankruptcy or insolvency law or if for any other
                          reason the Agent or any Lender is required to refund
                          any payment or pay the amount thereof to someone
                          else; (i) the settlement or compromise of any of the
                          Guaranteed Indebtedness; (j) the non-perfection of
                          any security interest or lien securing any or all of
                          the Guaranteed Indebtedness; (k) any impairment of
                          any collateral securing any or all of the Guaranteed
                          Indebtedness; (l) the failure of the Agent or any
                          Lender to sell any collateral securing any or all of
                          the Guaranteed Indebtedness in a commercially
                          reasonable manner or as otherwise required by law;
                          (m) any change in the corporate existence, structure,
                          or ownership of Borrower; or (n) any other
                          circumstance which





AMENDED AND RESTATED GUARANTY AGREEMENT - Page 4
<PAGE>   79
                          might otherwise constitute a defense available to, or
                          discharge of, Borrower or Guarantor.

                 x.               Guarantor represents and warrants to the
                          Agent and the Lenders as follows:

                                  (i)        Guarantor has the corporate power
                                       and authority and legal right to
                                       execute, deliver, and perform its
                                       obligations under this Guaranty
                                       Agreement and this Guaranty Agreement
                                       constitutes the legal, valid, and
                                       binding obligation of Guarantor,
                                       enforceable against Guarantor in
                                       accordance with its respective terms,
                                       except as limited by bankruptcy,
                                       insolvency, or other laws of general
                                       application relating to the              
                                       enforcement of creditor's rights.

                                  (ii)       The execution, delivery, and 
                                       performance by Guarantor of this
                                       Guaranty Agreement have been duly
                                       authorized by all requisite action on
                                       the part of Guarantor and do not and
                                       will not violate or conflict with the
                                       articles of incorporation or bylaws of
                                       Guarantor or any law, rule, or
                                       regulation or any order, writ,
                                       injunction or decree of any court,
                                       governmental authority or agency, or
                                       arbitrator and do not and will not
                                       conflict with, result in a breach of, or
                                       constitute a default under, or result in
                                       the imposition of any lien upon any
                                       assets of Guarantor pursuant to the
                                       provisions of any indenture, mortgage,
                                       deed of trust, security agreement,
                                       franchise, permit, license, or other
                                       instrument or agreement to which
                                       Guarantor or its properties is
                                       bound.

                                  (iii)      No authorization, approval, or 
                                       consent of, and no filing or
                                       registration with, any court,
                                       governmental authority, or third party
                                       is necessary for the execution, delivery
                                       or performance by Guarantor of this
                                       Guaranty Agreement or the validity or    
                                       enforceability thereof.

                                  (iv)       The value of the consideration 
                                       received and to be received by Guarantor
                                       as a result of Borrower, the Agent and
                                       the Lenders entering into the Credit
                                       Agreement and Guarantor executing and    
                                       delivering





AMENDED AND RESTATED GUARANTY AGREEMENT - Page 5
<PAGE>   80
                                       
                                       this Guaranty Agreement is  reasonably
                                       worth at least as much as the liability
                                       and  obligation of Guarantor  hereunder,
                                       and such liability and obligation and
                                       the Credit Agreement have benefited and
                                       may reasonably be expected to benefit    
                                       Guarantor directly or indirectly.

                                  (v)        Guarantor has, independently and 
                                       without reliance upon the Agent or any
                                       Lender and based upon such documents and
                                       information as Guarantor has deemed
                                       appropriate, made its own analysis and   
                                       decision to enter into this Guaranty
                                       Agreement.

                 xi.              Guarantor covenants and agrees that, as long
                          as the Guaranteed Indebtedness or any part thereof is
                          outstanding or any Lender has any Commitment under
                          the Credit Agreement:

                 (a)      Guarantor will furnish promptly to the Agent written
         notice of the occurrence of any default under this Guaranty Agreement
         or any Event of Default or Potential Default under the Credit
         Agreement of which Guarantor has knowledge.

                 (b)      Guarantor will promptly furnish to the Agent any and
         all such information, writings, and further assurances relating to
         Guarantor or this Guaranty Agreement as the Agent may from time to
         time request.

                 (c)      Guarantor will from time to time obtain any and all
         authorizations, licenses, consents, or approvals as may now or
         hereafter be necessary or desirable under applicable laws or
         regulations or otherwise in connection with the execution, delivery,
         and performance of this Guaranty Agreement and will promptly furnish
         copies thereof to the Agent.

                 (d)      Guarantor will at all times own directly or
         indirectly and free and clear of all liens or encumbrances whatsoever
         at least the same percentage of voting shares of Borrower, if any, as
         Guarantor owns directly or indirectly on the date hereof.

                 xii.             The Agent and each Lender shall have the
                          right to set off and apply against this Guaranty
                          Agreement or the Guaranteed Indebtedness or both, at
                          any time and without notice to Guarantor, any and all
                          deposits (general or special, time or demand,
                          provisional or final) or other sums at any time
                          credited by or owing from the Agent or any Lender to
                          Guarantor whether or not the Guaranteed Indebtedness
                          is then due and irrespective of whether or not the
                          Agent or any Lender shall have made any demand under
                          this Guaranty Agreement.  As security for this
                          Guaranty Agreement and the Guaranteed Indebtedness,
                          Guarantor hereby grants to the Agent, for the





AMENDED AND RESTATED GUARANTY AGREEMENT - Page 6
<PAGE>   81
                          ratable benefit of the Lenders, a security interest
                          in all money, instruments, certificates of deposit,
                          and other property of Guarantor now or hereafter held
                          by the Agent or any Lender, including without
                          limitation, property held in safekeeping.  In
                          addition to the Agent's and the Lenders' right of
                          setoff and as further security for this Guaranty
                          Agreement and the Guaranteed Indebtedness, Guarantor
                          hereby grants to the Agent, for the ratable benefit
                          of the Lenders, a security interest in all deposits
                          (general or special, time or demand, provisional or
                          final) and all other accounts of Guarantor now or
                          hereafter on deposit with or held by the Agent or any
                          Lender and all other sums at any time credited by or
                          owing from the Agent or any Lender to Guarantor.  The
                          rights and remedies of the Agent and the Lenders
                          hereunder are in addition to other rights and
                          remedies (including, without limitation, other rights
                          of setoff) which the Agent and the Lenders may have.

                 xiii.            Guarantor hereby agrees that the Subordinated
                          Indebtedness shall be subordinate and junior in right
                          of payment to the prior payment in full of all
                          Guaranteed Indebtedness, and Guarantor hereby assigns
                          the Subordinated Indebtedness to the Agent, for the
                          ratable benefit of the Lenders, as security for the
                          Guaranteed Indebtedness.  If any sums shall be paid
                          to Guarantor by Borrower or any other person or
                          entity on account of the Subordinated Indebtedness,
                          such sums shall be held in trust by Guarantor for the
                          benefit of Agent and the Lenders and shall forthwith
                          be paid to the Agent without affecting the liability
                          of Guarantor under this Guaranty Agreement and may be
                          applied by the Agent against the Guaranteed
                          Indebtedness in such order and manner as the Agent
                          may determine in its sole discretion.  Upon the
                          request of the Agent, Guarantor shall execute,
                          deliver, and endorse to the Agent such documents and
                          instruments as the Agent may request to perfect,
                          preserve, and enforce its rights and the rights of
                          the Lenders hereunder.  For purposes of this Guaranty
                          Agreement, the term "Subordinated Indebtedness" means
                          all indebtedness, liabilities, and obligations of
                          Borrower to Guarantor, whether such indebtedness,
                          liabilities, and obligations now exist or are
                          hereafter incurred or arise, or whether the
                          obligations of Borrower thereon are direct, indirect,
                          contingent, primary, secondary, several, joint and
                          several, or otherwise, and irrespective of whether
                          such indebtedness, liabilities, or obligations are
                          evidenced by a note, contract, open account, or
                          otherwise, and irrespective of the person or persons
                          in whose favor such indebtedness, obligations, or
                          liabilities may, at their inception, have been, or
                          may hereafter be created, or the manner in which they
                          have been or may hereafter be acquired by Guarantor.
                                  
                                  (i)        Guarantor agrees that any and all
                                       liens, security interests, judgment
                                       liens, charges, or other





AMENDED AND RESTATED GUARANTY AGREEMENT - Page 7
<PAGE>   82
                                       
                                       encumbrances upon Borrower's assets
                                       securing payment of any Subordinated
                                       Indebtedness shall be and remain
                                       inferior and subordinate to any and all
                                       liens, security interests, judgment
                                       liens, charges, or other encumbrances
                                       upon Borrower's assets securing payment
                                       of the Guaranteed Indebtedness or any
                                       part thereof, regardless of whether such
                                       encumbrances in favor of Guarantor, the
                                       Agent or any Lender presently exist or
                                       are hereafter created or attached. 
                                       Without the prior written consent of the
                                       Agent, Guarantor shall not (i) file suit
                                       against Borrower or exercise or enforce
                                       any other creditor's right it may have
                                       against Borrower, or (ii) foreclose,
                                       repossess, sequester, or otherwise take
                                       steps or institute any action or
                                       proceedings (judicial or otherwise,
                                       including without limitation the
                                       commencement of, or joinder in, any
                                       liquidation, bankruptcy, rearrangement,
                                       debtor's relief or insolvency
                                       proceeding) to enforce any liens,
                                       security interests, collateral rights,   
                                       judgments or other encumbrances held by
                                       Guarantor on assets of Borrower.

                                  (ii)       In the event of any receivership,
                                       bankruptcy, reorganization,
                                       rearrangement, debtor's relief, or other
                                       insolvency proceeding involving Borrower
                                       as debtor, the Agent and the Lenders
                                       shall have the right to prove and vote
                                       any claim under the Subordinated
                                       Indebtedness and to receive directly
                                       from the receiver, trustee or other
                                       court custodian all dividends,
                                       distributions, and payments made in
                                       respect of the Subordinated
                                       Indebtedness. The Agent may apply any
                                       such dividends, distributions, and
                                       payments against the Guaranteed
                                       Indebtedness in such order and manner as
                                       the Agent may determine in its sole
                                       discretion.

                                  (iii)      Guarantor agrees that all 
                                       promissory notes, accounts receivable,
                                       ledgers, records, or any other evidence
                                       of Subordinated Indebtedness shall
                                       contain a specific written notice
                                       thereon that the indebtedness evidenced
                                       thereby is subordinated under the terms
                                       of this  Guaranty Agreement.





AMENDED AND RESTATED GUARANTY AGREEMENT - Page 8
<PAGE>   83
                 xiv.             No amendment or waiver of any provision of
                          this Guaranty Agreement or consent to any departure
                          by the Guarantor therefrom shall in any event be
                          effective unless the same shall be in writing and
                          signed by the Agent.  No failure on the part of the
                          Agent to exercise, and no delay in exercising, any
                          right, power, or privilege hereunder shall operate as
                          a waiver thereof; nor shall any single or partial
                          exercise of any right, power, or privilege hereunder
                          preclude any other or further exercise thereof or the
                          exercise of any other right, power, or privilege.
                          The remedies herein provided are cumulative and not
                          exclusive of any remedies provided by law.

                 xv.              Any acknowledgment or new promise, whether by
                          payment of principal or interest or otherwise and
                          whether by Borrower or others (including Guarantor),
                          with respect to any of the Guaranteed Indebtedness
                          shall, if the statute of limitations in favor of
                          Guarantor against the Agent and the Lenders shall
                          have commenced to run, toll the running of such
                          statute of limitations and, if the period of such
                          statute of limitations shall have expired, prevent
                          the operation of such statute of limitations.

                 xvi.             This Guaranty Agreement is for the benefit of
                          the Agent and the Lenders and their respective
                          successors and assigns, and in the event of an
                          assignment of the Guaranteed Indebtedness, or any
                          part thereof, the rights and benefits hereunder, to
                          the extent applicable to the indebtedness so
                          assigned, may be transferred with such indebtedness.
                          This Guaranty Agreement is binding not only on
                          Guarantor, but on Guarantor's successors and assigns.

                 xvii.            Guarantor recognizes that the Agent and the
                          Lenders are relying upon this Guaranty Agreement and
                          the undertakings of Guarantor hereunder in making and
                          continuing to make extensions of credit to Borrower
                          under the Credit Agreement and further recognizes
                          that the execution and delivery of this Guaranty
                          Agreement is a material inducement to the Agent and
                          the Lenders in entering into the Credit Agreement.
                          Guarantor hereby acknowledges that there are no
                          conditions to the full effectiveness of this Guaranty
                          Agreement.

                 xviii.           This Guaranty Agreement shall be governed by
                          and construed in accordance with the laws of the
                          State of Texas.

                 xix.             Guarantor shall pay on demand all reasonable
                          attorneys' fees and all other reasonable costs and
                          expenses incurred by the Agent and the Lenders in
                          connection with the administration, enforcement and
                          collection of this Guaranty Agreement.





AMENDED AND RESTATED GUARANTY AGREEMENT - Page 9
<PAGE>   84
                 xx.              Guarantor hereby waives promptness,
                          diligence, notice of any default under the Guaranteed
                          Indebtedness, demand of payment, notice of acceptance
                          of this Guaranty Agreement, presentment, notice of
                          protest, notice of dishonor, notice of the incurring
                          by Borrower of additional indebtedness, and all other
                          notices and demands with respect to the Guaranteed
                          Indebtedness and this Guaranty Agreement.

                 xxi.             The Credit Agreement, and all of the terms
                          thereof, are incorporated herein by reference, the
                          same as if stated verbatim herein, and Guarantor
                          agrees that the Agent and the Lenders may exercise
                          any and all rights granted to them under the Credit
                          Agreement and the other Loan Documents (as defined in
                          the Credit Agreement) without affecting the validity
                          or enforceability of this Guaranty Agreement.

                 xxii.            Guarantor hereby represents and warrants to
                          the Agent and the Lenders that Guarantor has adequate
                          means to obtain from Borrower on a continuing basis
                          information concerning the financial condition and
                          assets of Borrower and that Guarantor is not relying
                          upon the Agent or any Lender to provide (and neither
                          the Agent nor any Lender shall have any duty to
                          provide) any such information to Guarantor either now
                          or in the future.

                          xxiii.           THIS GUARANTY AGREEMENT EMBODIES THE
                                  FINAL, ENTIRE AGREEMENT OF GUARANTOR, THE
                                  AGENT AND THE LENDERS WITH RESPECT TO
                                  GUARANTOR'S GUARANTY OF THE GUARANTEED
                                  INDEBTEDNESS AND SUPERSEDES ANY AND ALL PRIOR
                                  COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
                                  UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
                                  RELATING TO THE SUBJECT MATTER HEREOF.  THIS
                                  GUARANTY AGREEMENT IS INTENDED BY GUARANTOR,
                                  THE AGENT AND THE LENDERS AS A FINAL AND
                                  COMPLETE EXPRESSION OF THE TERMS OF THE
                                  GUARANTY AGREEMENT, AND NO COURSE OF DEALING
                                  BETWEEN GUARANTOR, ON THE ONE HAND, AND THE
                                  AGENT AND THE LENDERS ON THE OTHER HAND, NO
                                  COURSE OF PERFORMANCE, NO TRADE PRACTICES,
                                  AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
                                  SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR
                                  OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL
                                  BE USED TO CONTRADICT, VARY, SUPPLEMENT OR
                                  MODIFY ANY TERM OF THIS GUARANTY AGREEMENT.
                                  THERE ARE





AMENDED AND RESTATED GUARANTY AGREEMENT - Page 10
<PAGE>   85
                                  NO ORAL AGREEMENTS AMONG GUARANTOR, THE AGENT
                                  AND THE LENDERS.

                 xxiv.            TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
                          LAW, GUARANTOR HEREBY IRREVOCABLY AND EXPRESSLY
                          WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
                          PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON
                          CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
                          RELATING TO THIS GUARANTY AGREEMENT OR THE
                          TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF
                          THE AGENT AND THE LENDERS IN THE NEGOTIATION,
                          ADMINISTRATION, OR ENFORCEMENT THEREOF.

                 xxv.             ARBITRATION.     ANY CONTROVERSY OR CLAIM
                          BETWEEN OR AMONG THE GUARANTOR, ON THE ONE HAND, AND
                          THE AGENT AND THE LENDERS, ON THE OTHER HAND,
                          INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR
                          RELATING TO THIS GUARANTY AGREEMENT OR ANY RELATED
                          AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM BASED
                          ON OR ARISING FROM AN ALLEGED TORT, SHALL BE
                          DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH
                          THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE,
                          THE APPLICABLE STATE LAW).  THE RULES OF PRACTICE AND
                          PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES
                          OF JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC.
                          (J.A.M.S.), AND THE "SPECIAL RULES" SET FORTH BELOW.
                          IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES
                          SHALL CONTROL.  JUDGMENT UPON ANY ARBITRATION AWARD
                          MAY BE ENTERED IN ANY COURT HAVING JURISDICTION.
                          GUARANTOR, THE AGENT OR ANY LENDER MAY BRING AN
                          ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING,
                          TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO
                          WHICH THIS GUARANTY AGREEMENT APPLIES IN ANY COURT
                          HAVING JURISDICTION OVER SUCH ACTION.

                 (a)      Special Rules.  THE ARBITRATION SHALL BE CONDUCTED IN
         THE CITY OF THE GUARANTOR'S DOMICILE AT TIME OF THIS GUARANTY
         AGREEMENT'S EXECUTION AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN
         ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM
         ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION
         ASSOCIATION WILL SERVE.  ALL ARBITRATION HEARINGS WILL BE COMMENCED
         WITHIN 90 DAYS OF THE DEMAND FOR





AMENDED AND RESTATED GUARANTY AGREEMENT - Page 11
<PAGE>   86
         ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF
         CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP
         TO AN ADDITIONAL 60 DAYS.

                 (b)      Reservation of Rights.  NOTHING IN THIS GUARANTY
         AGREEMENT SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY
         OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS
         CONTAINED IN THIS GUARANTY AGREEMENT; OR (II) BE A WAIVER BY THE AGENT
         OR ANY LENDER OF THE PROTECTION AFFORDED TO IT BY 12 U.S.  C. SEC. 91
         OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF
         THE AGENT AND THE LENDERS (A) TO EXERCISE SELF HELP REMEDIES SUCH AS
         (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR
         PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT
         PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO)
         INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A
         RECEIVER.  THE AGENT AND THE LENDERS MAY EXERCISE SUCH SELF HELP
         RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR
         ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY
         ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS GUARANTY AGREEMENT.
         NEITHER THIS EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR
         MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY
         REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY,
         INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF
         THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.

                 xxvi.            This Guaranty Agreement is executed in
                          amendment and restatement of, but not in discharge or
                          satisfaction of the obligations of Guarantor under,
                          the Original Guaranty.

         EXECUTED as of the 14th day of November, 1995.


                                        GUARANTOR:
                                        
                                        DUROCRAFT INTERNATIONAL, INC.,
                                        a Texas corporation
                                        
                                        
                                        By: __________________________________
                                            Name: James R. Ridings
                                            Title: Chief Executive Officer
                                        




<PAGE>   87
                                        Address:
                                        
                                        2700 112th Street
                                        Grand Prairie, Texas 75050
                                        
                                        Fax No.:         214-647-4872
                                        Telephone No.:   214-647-8099
                                        
                                        Attention:   James R. Ridings
                                                     Chief Executive Officer





AMENDED AND RESTATED GUARANTY AGREEMENT - Page 13
<PAGE>   88
                                  EXHIBIT "F"

                          Guarantor Security Agreement




                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement
<PAGE>   89
                    AMENDED AND RESTATED SECURITY AGREEMENT


         THIS AMENDED AND RESTATED SECURITY AGREEMENT (the "Agreement") dated
as of November 14, 1995, is by and between DUROCRAFT INTERNATIONAL, INC., a
Texas corporation (the "Debtor") and NATIONSBANK OF TEXAS, N.A., a national
banking association, as Agent for the Lenders (as defined below) (in such
capacity, the "Secured Party").

                                   RECITALS:

         A.      NationsBank of Texas, N.A. ("NationsBank") has previously made
a loan to Craftmade International, Inc.  (the "Borrower") in the maximum
principal amount of $6,000,000.00, pursuant to a certain Credit Agreement (the
"Original Credit Agreement") between Borrower and NationsBank, dated January
11, 1993.

         B.      In conjunction with the execution of the Original Credit
Agreement, Debtor and NationsBank entered into that certain Security Agreement
dated as of January 11, 1993 (the "Original Security Agreement"), pursuant to
which the Debtor granted liens on certain of its assets as security for the
obligations of the Borrower under the Original Credit Agreement.

         C.      The Original Credit Agreement was amended and restated as
provided in that certain First Amended and Restated Credit Agreement dated as
of January 11, 1993, by and between Borrower and NationsBank (the "First
Restated Agreement").

         D.      The First Restated Agreement was amended as provided in that
certain First Amendment to First Amended and Restated Credit Agreement dated as
of December 13, 1993, by and between the Borrower and NationsBank (the "First
Amendment").

         E.      The First Restated Agreement was further amended as provided
in that certain Second Amendment to First Amended and Restated Credit Agreement
dated as of March 30, 1994, by and between the Borrower and NationsBank (the
"Second Amendment").

         F.      The First Restated Agreement was further amended as provided
in that certain Third Amendment to First Amended and Restated Credit Agreement
dated as of June 30, 1994, by and between the Borrower and NationsBank (the
"Third Amendment").

         G.      The First Restated Agreement was further amended as provided
in that certain Fourth Amendment to First Amended and Restated Credit Agreement
dated as of November 15, 1994, by and between the Borrower and NationsBank (the
"Fourth Amendment"; the First Restated Agreement, as amended by the First
Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment
is referred to hereinafter as the "Prior Credit Agreement").





AMENDED AND RESTATED SECURITY AGREEMENT - Page 1
<PAGE>   90
         H.      Concurrently herewith, the Borrower, the Secured Party  and
the lenders which are parties thereto (the "Lenders") are amending and
restating the Prior Credit Agreement as set out in that certain Second Amended
and Restated Credit Agreement dated as of November 14, 1995 (the "Credit
Agreement") including, without limitation, to provide for a loan in the maximum
principal amount of $12,000,000.

         I.      The Secured Party and the Lenders have required the Debtor to
execute and deliver this Agreement in amendment and restatement of the Original
Security Agreement as a condition to their execution of the Credit Agreement.

         NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                                   ARTICLE 1

                                  Definitions

         Section 1.1  Definitions.  Capitalized terms used in this Agreement,
to the extent not otherwise defined herein, shall have the same meanings as set
forth in the Credit Agreement.  Terms used herein which are defined in the
Uniform Commercial Code as adopted by the State of Texas, unless otherwise
defined herein or in the Credit Agreement, shall have the meanings set forth in
the Uniform Commercial Code as adopted by the State of Texas.

                                   ARTICLE 2

                               Security Interest

         Section 2.1  Security Interest.  Subject to the terms of this
Agreement and to secure the Obligations, the Durocraft Guaranty and all present
and future obligations of Debtor under this Agreement (collectively the
"Secured Obligations"), Debtor hereby grants to Secured Party, for the ratable
benefit of the Lenders, a security interest in any and all of Debtor's right,
title and interest in and to all accounts, equipment, inventory, chattel paper,
documents, instruments, and general intangibles of Debtor, whether now owned or
hereafter acquired and wherever arising or located, and all accessions and
attachments thereto and all products and proceeds thereof, including, without
limitation, all patents, patent applications, trademarks, trademark
applications, trade names, trade name applications and other intellectual
property rights (all of the foregoing property hereinafter sometimes referred
to as the "Collateral").

         Section 2.2  Limitation.  The obligations of Debtor hereunder shall be
limited to an aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance under Section 548 of the
United States Bankruptcy Code, as amended (or any successor statute) or to
being set aside, avoided or annulled under any applicable state law relating to
fraudulent transfers or fraudulent obligations.





AMENDED AND RESTATED SECURITY AGREEMENT - Page 2
<PAGE>   91
                                   ARTICLE 3

                         Representations and Warranties

         To induce Secured Party and the Lenders to enter into this Agreement
and the Credit Agreement, Debtor represents and warrants to Secured Party and
the Lenders that:

         Section 3.1  Title.  Except for the security interests granted herein,
Debtor owns, and with respect to Collateral acquired after the date hereof
Debtor will own, the Collateral free and clear of any lien, security interest,
or other encumbrance.

         Section 3.2  Accounts.  Unless Debtor has given Secured Party written
notice to the contrary, whenever the security interest granted hereunder
attaches to an account, Debtor shall be deemed to have represented and
warranted to Secured Party and the Lenders as to each and all of its accounts
that (a) each account is genuine and in all respects what it purports to be,
(b) each account represents the legal, valid, and binding obligation of the
account debtor evidencing indebtedness unpaid and owed by such account debtor
arising out of the performance of labor or services by Debtor or the sale or
lease of goods by Debtor, (c) the amount of each account represented as owing
is the correct amount actually and unconditionally owing except for normal
trade discounts granted in the ordinary course of business, and (d) no account
is subject to any offset, counterclaim, or other defense.

         Section 3.3  Delivery of Collateral.  Except as otherwise contemplated
by Section 4.13, all of Debtor's existing instruments, documents and chattel
paper pledged pursuant hereto have been delivered to Secured Party.

         Section 3.4  Organization and Authority.  Debtor is a corporation duly
organized, validly existing, and in good standing under the laws of its state
of incorporation and is qualified to do business in all jurisdictions in which
the nature of its business makes such qualification necessary and where failure
to so qualify would have a material adverse effect on its business, financial
condition or operations.  Debtor has the corporate power and authority to
execute, deliver, and perform this Agreement, and the execution, delivery, and
performance of this Agreement by Debtor have been authorized by all necessary
corporate action on the part of Debtor and do not and will not violate any law,
rule or regulation or the articles of incorporation or bylaws of Debtor and do
not and will not conflict with, result in a breach of, or constitute a default
under the provisions of any indenture, mortgage, deed of trust, security
agreement, or other instrument or agreement pursuant to which Debtor or any of
its property is bound.

         Section 3.5  Principal Place of Business; Corporate Name.  The
principal place of business and chief executive office of Debtor, and the
office where Debtor keeps its books and records, is located at the "address for
notices" set forth below Debtor's name on the signature pages hereof.  The
exact corporate name of Debtor as it appears in its certificate of
incorporation is set





AMENDED AND RESTATED SECURITY AGREEMENT - Page 3
<PAGE>   92
forth in the introduction to this Agreement and Debtor has not done business in
any location under any other name.

         Section 3.6  Validity of Security Interest.  The security interests
granted by Debtor constitute valid, legal and perfected first priority security
interests (except for security interests permitted under the Credit Agreement)
in all the Collateral which secure the payment and performance of the Secured
Obligations.

         Section 3.7  Benefit to Debtor.  The operations of Debtor and Borrower
are interrelated and interdependent and, therefore, loans and extensions of
credit to Borrower produce direct financial benefits to the Debtor.  The value
of the consideration received and to be received by Debtor as a result of
Borrower, Secured Party and the Lenders entering into the Credit Agreement and
Debtor's executing and delivering this Agreement is reasonably worth at least
as much as the liability and obligations of Debtor hereunder and under the
other Loan Documents to which it is a party, is necessary and convenient to the
conduct, promotion and attainment of the business of Debtor, and such liability
and obligations have benefited and may reasonably be expected to benefit Debtor
directly and indirectly.

         Section 3.8  No Reliance.  Debtor has, independently and without
reliance upon the Secured Party, and based upon such information as it has
deemed appropriate, made its own business analysis and decision to enter into
this Agreement and the other Loan Documents to which it is a party.

         Section 3.9  Enforceability.  This Agreement constitutes the legal,
valid, and binding obligation of Debtor enforceable against Debtor in
accordance with its terms, except as limited by bankruptcy, insolvency, or
other laws of general application relating to the enforcement of creditors'
rights.

         Section 3.10  Location of Collateral.  All inventory and equipment of
Debtor is located at the places specified for Debtor on Schedule 1 to the
Credit Agreement.  Debtor has exclusive possession and control of its inventory
and equipment.

                                   ARTICLE 4

                                   Covenants

         Debtor covenants and agrees with Secured Party and the Lenders that
until the Obligations are paid and performed in full and as long as any Lender
has any Commitment under the Credit Agreement, Debtor shall observe and perform
the following covenants, unless Secured Party shall otherwise consent in
writing:

         Section 4.1  Maintenance.  Debtor shall maintain the Collateral in
good operating condition and repair and shall not permit any waste or
destruction of the Collateral or any part thereof.  Debtor shall not use or
permit the Collateral to be used in violation of any law or inconsistently





AMENDED AND RESTATED SECURITY AGREEMENT - Page 4
<PAGE>   93
with the terms of any policy of insurance.  Debtor shall not use or permit the
Collateral to be used in any manner or for any purpose that would impair the
value of the Collateral or expose the Collateral to unusual risk.

         Section 4.2  Encumbrances.  Debtor shall not create, permit, or suffer
to exist, and shall defend the Collateral against, any lien, security interest,
or other encumbrance on the Collateral except the security interest of Secured
Party hereunder, and shall defend Debtor's rights in the Collateral and Secured
Party's security interest in the Collateral against the claims of all persons
and entities.

         Section 4.3  Modification of Collateral.  Except as contemplated by
Section 4.14, Debtor shall not impair the rights of Secured Party in the
Collateral and without the prior written consent of Secured Party, Debtor shall
not grant any extension of time for any payment with respect to the Collateral,
or compromise, compound, or settle any of the Collateral, or release in whole
or in part any person or entity liable for payment with respect to the
Collateral, or allow any credit or discount for payment with respect to the
Collateral other than normal trade discounts granted in the ordinary course of
business, or release any lien, security interest, or assignment securing the
Collateral, or otherwise amend or modify any of the Collateral.

         Section 4.4  Disposition of Collateral.  Debtor shall not sell, lease,
or otherwise dispose of the Collateral or any part thereof without the prior
written consent of Secured Party, except Debtor may sell inventory and
equipment in the ordinary course of business.

         Section 4.5  Further Assurances.  At any time and from time to time,
upon the request of Secured Party, and at the sole expense of Debtor, Debtor
shall promptly execute and deliver all such further instruments and documents
and take such further action as Secured Party may deem necessary or desirable
to preserve and perfect its security interest in the Collateral and carry out
the provisions and purposes of this Agreement, including, without limitation,
the execution and filing of such financing statements as Secured Party may
require.  A carbon, photographic, or other reproduction of this Agreement or of
any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement and may be filed as a financing statement.

         Section 4.6  Insurance.  Debtor, at its own expense, shall maintain,
with financially sound and reputable companies, insurance policies (a) insuring
the Collateral against loss by fire, explosion, theft, and such other risks and
casualties as are customarily insured against by companies engaged in the same
or a similar business, and (b) insuring Debtor and Secured Party against
liability for personal injury and property damage relating to the Collateral,
such policies to be in such amounts and covering such risks as are customarily
insured against by companies engaged in the same or a similar business, with
losses payable to Debtor and Secured Party as their respective interests may
appear. All insurance with respect to the Collateral shall provide that no
cancellation, reduction in amount, or change in coverage thereof shall be
effective unless Secured Party has received thirty (30) days prior written
notice thereof.  Debtor shall deliver to Secured Party copies of all insurance
policies covering the Collateral or any part thereof.





AMENDED AND RESTATED SECURITY AGREEMENT - Page 5
<PAGE>   94
         Section 4.7  Warehouse Receipts Non-Negotiable.  Debtor agrees that if
any warehouse receipt or receipt in the nature of a warehouse receipt is issued
with respect to any of its inventory, such warehouse receipt or receipt in the
nature thereof shall not be "negotiable" (as such term is used in Section 7-104
of the Uniform Commercial Code as adopted by the State of Texas).

         Section 4.8  Inspection Rights.  Debtor shall permit Secured Party and
its representatives to examine or inspect the Collateral wherever located and
to examine, inspect, and copy Debtor's books and records at any reasonable time
and as often as Secured Party may desire.

         Section 4.9  Notification.  Debtor shall promptly notify Secured Party
of (a) any lien, security interest, encumbrance, or claim made or threatened
against the Collateral, (b) any material change in the Collateral, including,
without limitation, any material damage to or loss of the Collateral, and (c)
the occurrence or existence of any Event of Default or Potential Default.

         Section 4.10  Corporate Changes.  Debtor shall not change its name,
identity, or corporate structure in any manner that might make any financing
statement filed in connection with this Agreement seriously misleading unless
Debtor shall have given Secured Party thirty (30) days prior written notice
thereof and shall have taken all action deemed necessary or desirable by
Secured Party to make each financing statement not seriously misleading.
Debtor shall not change its principal place of business, chief executive
office, or the place where it keeps its books and records unless it shall have
given Secured Party thirty (30) days prior written notice thereof and shall
have taken all action deemed necessary or desirable by Secured Party to cause
its security interest in the Collateral to be perfected with the priority
required by this Agreement.

         Section 4.11  Compliance with Agreements and Loans.  Debtor shall
comply in all material respects with all mortgages, deeds of trust,
instruments, and other agreements binding on it or affecting its properties or
business.  Debtor shall comply with all applicable laws, rules, regulations,
and orders of any court or governmental authority.

         Section 4.12  Location of Collateral.  Debtor shall not move any of
its equipment or inventory from the locations specified for Debtor on Schedule
1 of the Credit Agreement, unless Debtor shall have obtained Secured Party's
prior written consent.  Notwithstanding the foregoing, in the ordinary course
of business Debtor may move inventory from any location identified for Debtor
on Schedule 1 to the Credit Agreement to any other location identified for
Debtor on Schedule 1 to the Credit Agreement.  Debtor shall not establish any
place of business in any location other than the locations listed for Debtor on
Schedule 1 to the Credit Agreement.  Debtor shall not permit any Persons other
than Secured Party to have possession of Collateral unless Debtor shall have
obtained Secured Party's prior written consent.

         Section 4.13  Delivery of Collateral.  Upon receipt, Debtor shall
deliver to Secured Party, properly endorsed to Secured Party, if applicable,
all of its instruments, documents, and chattel paper pledged pursuant hereto;
provided that so long as no Event of Default or Potential Default exists,
Debtor may retain for collection in the ordinary course of business any
instrument received





AMENDED AND RESTATED SECURITY AGREEMENT - Page 6
<PAGE>   95
by it in the ordinary course of business and any documents received and further
negotiated in the ordinary course of business.  After the occurrence and during
the continuance of an Event of Default or Potential Default and if Secured
Party so requests, Debtor shall deliver to Secured Party the instruments
retained for collection in the ordinary course of its business and the
documents retained in the ordinary course of its business.  Subject to the
limitations imposed by the Credit Agreement on the disposition of assets,
Debtor shall promptly inform Secured Party of any material additions to or
material deletions from the Collateral pledged by Debtor outside the ordinary
course of business and shall not permit any items of property pledged pursuant
hereto to become a fixture to real property or an accession to other personal
property (except such personal property covered hereby or personal property
otherwise subject to a perfected security interest in favor of Secured Party).

         Section 4.14  Collection of Accounts.  Debtor shall collect from its
account debtors, as and when due, any and all amounts owing under or on account
of each account (including without limitation accounts which are delinquent,
such accounts to be collected in accordance with lawful collection procedures)
and apply forthwith upon receipt thereof all such amounts as are so collected
to the outstanding balance of such account, except that, unless an Event of
Default or a Potential Default has occurred and is continuing, Debtor may allow
in the ordinary course of business as adjustments to amounts owing under its
accounts (a) an extension or renewal of the time or times of payment, or
settlement for less than the total unpaid balance, which Debtor finds
appropriate in accordance with sound business judgment, and (b) a refund or a
credit due as a result of a return of or damage to merchandise, or in
accordance with Debtor's ordinary course of business consistent with its
historical collection practices.

                                   ARTICLE 5

                            Rights of Secured Party

         Section 5.1  Power of Attorney.  Debtor hereby irrevocably constitutes
and appoints Secured Party and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the name of Debtor or in its own name, to take any and
all action and to execute any and all documents and instruments which Secured
Party at any time and from time to time deems necessary or desirable to
accomplish the purposes of this Agreement and, without limiting the generality
of the foregoing, Debtor hereby gives Secured Party the power and right on
behalf of Debtor and in its own name to do any of the following, without notice
to or the consent of Debtor:

                 a.       to demand, sue for, collect, or receive in the name
of Debtor or in its own name, any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral and, in
connection therewith, endorse checks, notes, drafts, acceptances, money orders,
documents of title, or any other instruments for the payment of money under the
Collateral or any policy of insurance;





AMENDED AND RESTATED SECURITY AGREEMENT - Page 7
<PAGE>   96
                 b.       to pay or discharge taxes, liens, security interests,
or other encumbrances levied or placed on or threatened against the Collateral;

                 c.       to send requests for verification to account debtors
and other obligors;

                 d.       (i) to direct account debtors and any other parties
liable for any payment under any of the Collateral to make payment of any and
all monies due and to become due thereunder directly to Secured Party or as
Secured Party shall direct; (ii) to receive payment of and receipt for any and
all monies, claims, and other amounts due and to become due at any time in
respect of or arising out of any Collateral; (iii) to sign and endorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, proxies, stock powers,
verifications, and notices in connection with accounts and other documents
relating to the Collateral; (iv) to commence and prosecute any suit, action, or
proceeding at law or in equity in any court of competent jurisdiction to
collect the Collateral or any part thereof and to enforce any other right in
respect of any Collateral; (v) to defend any suit, action, or proceeding
brought against Debtor with respect to any Collateral; (vi) to settle,
compromise, or adjust any suit, action, or proceeding described above and, in
connection therewith, to give such discharges or releases as Secured Party may
deem appropriate; (vii) to exchange any of the Collateral for other property
upon any merger, consolidation, reorganization, recapitalization, or other
readjustment of the issuer thereof and, in connection therewith, deposit any of
the Collateral with any committee, depositary, transfer agent, registrar, or
other designated agency upon such terms as Secured Party may determine; (viii)
to add or release any guarantor, indorser, surety, or other party to any of the
Collateral or the Obligations; (ix) to renew, extend, or otherwise change the
terms and conditions of any of the Collateral or Obligations; (x) to insure,
and to make, settle, compromise, or adjust claims under any insurance policy
covering, any of the Collateral; and (xi) to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral as fully
and completely as though Secured Party were the absolute owner thereof for all
purposes, and to do, at Secured Party's option and Debtor's expense, at any
time, or from time to time, all acts and things which Secured Party deems
necessary to protect, preserve, or realize upon the Collateral and Secured
Party's security interest therein.

         This power of attorney is a power coupled with an interest and shall
be irrevocable.  Secured Party shall be under no duty to exercise or withhold
the exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to Secured Party in this Agreement, and shall not be liable
for any failure to do so or any delay in doing so.  Secured Party shall not be
liable for any act or omission or for any error of judgment or any mistake of
fact or law in its individual capacity or in its capacity as attorney-in-fact
except acts or omissions resulting from its willful misconduct.  This power of
attorney is conferred on Secured Party solely to protect, preserve, and realize
upon its security interest in the Collateral.  Secured Party shall not be
responsible for any decline in the value of the Collateral and shall not be
required to take any steps to preserve rights against prior parties or to
protect, preserve, or maintain any security interest or lien given to secure
the Collateral.





AMENDED AND RESTATED SECURITY AGREEMENT - Page 8
<PAGE>   97
         Section 5.2  Performance by Secured Party.  If Debtor fails to perform
or comply with any of its agreements contained herein, Secured Party itself
may, at its sole discretion, cause or attempt to cause performance or
compliance with such agreement and the expenses of Secured Party, together with
interest thereon at the Default Rate, shall be payable by Debtor to Secured
Party on demand and shall constitute Secured Obligations.  Notwithstanding the
foregoing, it is expressly agreed that Secured Party shall not have any
liability or responsibility for the performance of any obligation of Debtor
under this Agreement.

         Section 5.3  Assignment by Secured Party.  Subject to the provisions
of Section 12.6 of the Credit Agreement, Secured Party and the Lenders may from
time to time assign the Obligations and any portion thereof and/or the
Collateral and any portion thereof, and the assignee shall be entitled to all
of the rights and remedies of Secured Party and the Lenders under this
Agreement in relation thereto.

                                   ARTICLE 6

                                    Default

         Section 6.1  Rights and Remedies.  Upon the occurrence of an Event of
Default, Secured Party shall have the following rights and remedies and may do
any one or more of the following:

                 a.       In addition to all other rights and remedies granted
to Secured Party in this Agreement and under the Loan Documents, Secured Party
shall have all of the rights and remedies of a secured party under the Uniform
Commercial Code as adopted by the State of Texas.  Without limiting the
generality of the foregoing, Secured Party may (A) without demand or notice to
Debtor, collect, receive, or take possession of the Collateral or any part
thereof and for that purpose Secured Party may enter upon any premises on which
the Collateral is located and remove the Collateral therefrom or render it
inoperable, and/or (B) sell, lease, or otherwise dispose of the Collateral, or
any part thereof, in one or more parcels at public or private sale or sales, at
Secured Party's offices or elsewhere, for cash, on credit, or for future
delivery.  Upon the request of Secured Party, Debtor shall assemble the
Collateral and make it available to Secured Party at any place designated by
Secured Party that is reasonably convenient to Debtor and Secured Party.
Debtor agrees that Secured Party shall not be obligated to give more than ten
(10) days written notice of the time and place of any public sale or of the
time after which any private sale may take place and that such notice shall
constitute reasonable notice of such matters.  Debtor shall be liable for all
expenses of retaking, holding, preparing for sale, or the like, and all
attorneys' fees, legal expenses, and all other costs and expenses incurred by
Secured Party in connection with the collection of the Secured Obligations and
the enforcement of Secured Party's rights under this Agreement.  Secured Party
may apply the Collateral against the Secured Obligations in such order and
manner as Secured Party may elect in its sole discretion.  Debtor shall remain
liable for any deficiency if the proceeds of any sale or disposition of the
Collateral are insufficient to pay the Secured Obligations in full.  Debtor
waives all rights of marshalling in respect of the Collateral.





AMENDED AND RESTATED SECURITY AGREEMENT - Page 9
<PAGE>   98
                 b.       Secured Party may cause any or all of the Collateral
held by it to be transferred into the name of Secured Party or the name or
names of Secured Party's nominee or nominees.

                 c.       Secured Party may exercise or cause to be exercised
all voting rights and corporate powers in respect of the Collateral.

                                   ARTICLE 7

                                 Miscellaneous

         Section 7.1  No Waiver; Cumulative Remedies.  No failure on the part
of Secured Party or any Lender to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power, or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power, or privilege under this Agreement preclude any
other or further exercise thereof or the exercise of any other right, power, or
privilege.  The rights and remedies provided for in this Agreement are
cumulative and not exclusive of any rights and remedies provided by law.

         Section 7.2  Successors and Assigns.  This Agreement shall be binding
upon and inure to the benefit of Debtor, Secured Party and the Lenders and
their respective successors and assigns, except that Debtor may not assign any
of its rights or obligations under this Agreement without the prior written
consent of Secured Party.  Any assignment in violation of this Section 7.2
shall be void.

         Section 7.3  Amendment and Restatement; Entire Agreement; Amendment.
This Agreement amends and restates in its entirety the Original Security
Agreement (but does not extinguish the security interests created thereby) and
embodies the final, entire agreement among the parties hereto and supersedes
any and all prior commitments, agreements, representations, and understandings,
whether written or oral, relating to the subject matter hereof (including,
without limitation, the Original Security Agreement) and may not be
contradicted or varied by evidence of prior, contemporaneous or subsequent oral
agreements or discussions of the parties hereto.  There are no oral agreements
among the parties hereto.  Debtor hereby acknowledges and agrees that the
security interests in the Collateral created under the Original Security
Agreement are not extinguished but are extended and continued by this Agreement
without change to the priority thereof.  The provisions of this Agreement may
be amended or waived only by an instrument in writing signed by the parties
hereto.

         Section 7.4  Notices.  All notices and other communications provided
for in this Agreement shall be given or made in writing and telecopied, mailed
by certified mail return receipt requested, or delivered to the intended
recipient at the "Address for Notices" specified below its name on the
signature pages hereof; or, as to any party at such other address as shall be
designated by such party in a notice to the other party given accordance with
this Section.  Except as otherwise provided in this Agreement, all such
communications shall be deemed to have





AMENDED AND RESTATED SECURITY AGREEMENT - Page 10
<PAGE>   99
been duly given when transmitted by telecopy, subject to telephone confirmation
of receipt, or when personally delivered or, in the case of a mailed notice,
when duly deposited in the mails, in each case given or addressed as aforesaid.

         Section 7.5  Applicable Law; Venue; Service of Process.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas and the applicable laws of the United States of America.  This
Agreement has been entered into in Dallas County, Texas, and it shall be
performable for all purposes in Dallas County, Texas.  Any action or proceeding
against Debtor under or in connection with this Agreement or any other
instrument or agreement securing, evidencing, or relating to the Secured
Obligations or any part thereof may be brought in any state or federal court in
Dallas County, Texas.  Debtor hereby irrevocably (a) submits to the
nonexclusive jurisdiction of such courts, and (b) waives any objection it may
now or hereafter have as to the venue of any such action or proceeding brought
in such court or that such court is an inconvenient forum.  Debtor agrees that
service of process upon it may be made by certified or registered mail, return
receipt requested, at its address specified or determined in accordance with
the provisions of Section 7.4 of this Agreement.  Nothing in this Agreement or
any other instrument or agreement securing, evidencing, or relating to the
Secured Obligations or any part thereof shall affect the right of Secured Party
or any Lender to serve process in any other manner permitted by law or shall
limit the right of Secured Party or any Lender to bring any action or
proceeding against Debtor or with respect to any of the Collateral in any state
or federal court in any other jurisdiction.  Any action or proceeding by Debtor
against Secured Party or any Lender shall be brought only in a court located in
Dallas County, Texas.

         Section 7.6  Headings.  The headings, captions and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.

         Section 7.7  Survival of Representations and Warranties.  All
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by Secured Party or any Lender shall affect the
representations and warranties or the right of Secured Party and the Lenders to
rely upon them.

         Section 7.8  Counterparts.  This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.

         Section 7.9  Waiver of Bond.  In the event Secured Party seeks to take
possession of any or all of the Collateral by judicial process, Debtor hereby
irrevocably waives any bonds and any surety or security relating thereto that
may be required by applicable law as an incident to such possession, and waives
any demand for possession prior to the commencement of any such suit or action.

         Section 7.10  Severability.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such





AMENDED AND RESTATED SECURITY AGREEMENT - Page 11
<PAGE>   100
prohibition or unenforceability without invalidating the remaining provisions
of this Agreement, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

         Section 7.11  Construction.  Debtor and Secured Party acknowledge that
each of them has had the benefit of legal counsel of its own choice and has
been afforded an opportunity to review this Agreement with its legal counsel
and that this Agreement shall be construed as if jointly drafted by Debtor and
Secured Party.

         Section 7.12  Obligations Absolute.  Until the Obligations are paid in
full and the obligation of Secured Party and the Lenders under the Credit
Agreement have been terminated, the obligations of Debtor under this Agreement
shall be absolute and unconditional and shall not be released, discharged,
reduced, or in any way impaired by any circumstance whatsoever, including,
without limitation, any amendment, modification, extension, or renewal of any
Loan Documents (other than this Agreement), the Obligations, or any release or
subordination of collateral, or any waiver, consent, extension, indulgence,
compromise, settlement, or other action or inaction in respect of this
Agreement, any other Loan Documents, or the Obligations, or any exercise or
failure to exercise any right, remedy, power, or privilege in respect of the
Obligations.

         Section 7.13  WAIVER OF JURY TRIAL.  TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, DEBTOR HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO
A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF SECURED PARTY AND THE
LENDERS IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.

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

                                        DEBTOR:
                                        
                                        DUROCRAFT INTERNATIONAL, INC.
                                        
                                        
                                        By: __________________________________
                                            Name: James R. Ridings
                                            Title: Chief Executive Officer





AMENDED AND RESTATED SECURITY AGREEMENT - Page 12
<PAGE>   101
                                        Address for Notices:
                                        
                                        2700 112th Street
                                        Grand Prairie, Texas 75050
                                        
                                        Fax No.:        (214) 647-4872
                                        Telephone No.:  (214) 647-8099
                                        Attention:      Kenneth M. Cancienne
                                                        Chief Financial Officer
                                        
                                        
                                        SECURED PARTY:
                                        
                                        NATIONSBANK OF TEXAS, N.A., as Agent
                                        
                                        
                                        By: __________________________________
                                            Name: Andrew N. McLean
                                            Title: Vice President
                                        
                                        Address for Notices:
                                        
                                        901 Main Street, 7th Floor
                                        P. O. Box 831000
                                        Dallas, Texas 75283-1000
                                        
                                        Fax No.:        214-508-0388
                                        Telephone No.:  214-508-0324
                                        Attention:      Andrew N. McLean
                                                        Vice President





AMENDED AND RESTATED SECURITY AGREEMENT - Page 13
<PAGE>   102
                                  EXHIBIT "G"

                        Covenant Compliance Certificate




                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement
<PAGE>   103
                        COVENANT COMPLIANCE CERTIFICATE





NationsBank of Texas, N.A.
Attention:       Andrew N. McNeal
                 Vice President
901 Main Street, 7th Floor
Dallas, Texas 75283-1000


Gentlemen:

         This Covenant Compliance Certificate covers the period from
________________, 19__ to ________________, 19__ and is delivered pursuant to
that certain Second Amended and Restated Credit Agreement (the "Credit
Agreement") dated as of November 14, 1995, among Craftmade International, Inc.,
NationsBank of Texas, N.A., as Agent, and the Lenders which are parties
thereto.  All capitalized terms used herein, unless otherwise defined herein,
shall have the same meanings as set forth in the Credit Agreement.

         The undersigned, an authorized officer of Borrower, does hereby
certify to the Agent and the Lenders that:


                 i.               No Default.  To the best of the undersigned's
                          knowledge, no Event of Default and no Potential
                          Default has occurred and is continuing (or if an
                          Event of Default or Potential Default has occurred
                          and is continuing, Exhibit "A" attached hereto
                          outlines the nature thereof and the action which is
                          proposed to be taken by Borrower with respect
                          thereto).

                 ii.              Consolidated Tangible Net Worth
                          (must not be less than $8,000,000)  . . . .  $________

                 iii.             Fixed Charge Coverage Ratio

                                  (i)   Pretax Income . . . . . . . .  $________
                                  (ii)  Interest expense  . . . . . .  $________
                                  (iii) Operating Lease expense . . .  $________





COVENANT COMPLIANCE CERTIFICATE - Page 1
<PAGE>   104
                      (d)     Fixed Charge Coverage Ratio [(sum of (a) 
                              + (b) + (c) divided by sum of (b) + (c)] 
                              (must not be less than 1.75)  . . . . .  _________

                 iv.          Leverage Ratio

                                  (i)   Debt  . . . . . . . . . . . .  $________
                                  (ii)  Consolidated Tangible Net 
                              Worth   . . . . . . . . . . . . . . . .  $________
                                  (iii) Leverage Ratio ((a) divided by (b))
                              (must not be greater than 2.5)  . . . .  _________

                 v.               Capital Expenditures
                          (Beginning of current fiscal year through date
                          hereof) (must not exceed $400,000 in any fiscal year
                          or $9,600,000 in the fiscal year beginning July 1, 
                          1995) . . . . . . . . . . . . . . . . . . .  $________

         Attached hereto are Schedules setting forth the calculations
supporting the computations set forth in items 2, 3, 4 and 5 of this
certificate.  All information contained herein and on the attached Schedules is
true and correct.

         IN WITNESS WHEREOF, the undersigned has executed this certificate
effective this _____ day of ________________, 19__.

                                        CRAFTMADE INTERNATIONAL, INC.


                                        By: __________________________________
                                            Name:  James R. Ridings
                                            Title: Chief Executive Officer





COVENANT COMPLIANCE CERTIFICATE - Page 2
<PAGE>   105
                                  EXHIBIT "H"

                                 C/D/R Guaranty




                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement
<PAGE>   106
                    AMENDED AND RESTATED GUARANTY AGREEMENT
                                    (C/D/R)

         This AMENDED AND RESTATED GUARANTY AGREEMENT (the "Guaranty
Agreement") is executed effective as of November 14, 1995, by C/D/R
INCORPORATED, a Delaware corporation (the "Guarantor") to and in favor of the
AGENT and the LENDERS, as such terms are defined below.

                                   RECITALS:

         A.      NationsBank of Texas, N.A. ("NationsBank") has previously made
a loan to Craftmade International, Inc.  (the "Borrower") in the maximum
principal amount of $6,000,000.00, pursuant to a certain Credit Agreement (the
"Original Credit Agreement") between Borrower and NationsBank, dated January
11, 1993.

         B.      The Original Credit Agreement was amended and restated as
provided in that certain First Amended and Restated Credit Agreement dated as
of January 11, 1993, by and between Borrower and NationsBank (the "First
Restated Agreement").

         C.      In conjunction with the execution of the First Restated
Agreement, Guarantor executed that certain Guaranty Agreement dated as of
January 11, 1993, to and in favor of NationsBank (the "Original Guaranty").

         D.      The First Restated Agreement was amended as provided in that
certain First Amendment to First Amended and Restated Credit Agreement dated as
of December 13, 1993, by and between the Borrower and NationsBank (the "First
Amendment").

         E.      The First Restated Agreement was further amended as provided
in that certain Second Amendment to First Amended and Restated Credit Agreement
dated as of March 30, 1994, by and between the Borrower and NationsBank (the
"Second Amendment").

         F.      The First Restated Agreement was further amended as provided
in that certain Third Amendment to First Amended and Restated Credit Agreement
dated as of June 30, 1994, by and between the Borrower and NationsBank (the
"Third Amendment").

         G.      The First Restated Agreement was further amended as provided
in that certain Fourth Amendment to First Amended and Restated Credit Agreement
dated as of November 15, 1994, by and between the Borrower and NationsBank (the
"Fourth Amendment"; the First Restated Agreement, as amended by the First
Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment
is referred to hereinafter as the "Prior Credit Agreement").

         H.      Concurrently herewith, Borrower, the lenders which are parties
thereto (the "Lenders") and NationsBank, as agent for the Lenders (the "Agent")
are entering into that certain Second Amended and Restated Credit Agreement
(the "Credit Agreement"), amending and






                                                   Craftmade International, Inc.
                                 Amended and Restated Guaranty Agreement (C/D/R)
<PAGE>   107
restating the Prior Credit Agreement in its entirety as set out therein,
including, without limitation, to provide for a loan in the maximum principal
amount of $12,000,000.

         I.      The Agent and the Lenders require the Guarantor to deliver
this Guaranty Agreement as an amendment and restatement of the Original
Guaranty as a condition to entering into the Credit Agreement.

         NOW, THEREFORE, for valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Guarantor hereby irrevocably and
unconditionally guarantees to the Agent and the Lenders the full and prompt
payment and performance of the Guaranteed Indebtedness (as hereinafter
defined), this Guaranty Agreement being upon the following terms:

         1.      The term "Guaranteed Indebtedness" as used herein means all of
the "Obligations" as defined in the Credit Agreement.  The term "Guaranteed
Indebtedness" shall include any and all post-petition interest and expenses
(including attorneys' fees) whether or not allowed under any bankruptcy,
insolvency, or other similar law.  All initially capitalized terms not
specifically otherwise defined herein shall have the meanings prescribed in the
Credit Agreement.

         2.      This instrument shall be an absolute, continuing, irrevocable,
and unconditional guaranty of payment and performance, and not a guaranty of
collection, and Guarantor shall remain liable on its obligations hereunder
until the payment and performance in full of the Guaranteed Indebtedness.  No
setoff, counterclaim, recoupment, reduction, or diminution of any obligation,
or any defense of any kind or nature which Borrower may have against the Agent
or any Lender or any other party, or which Guarantor may have against Borrower,
the Agent or any Lender, or any other party, shall be available to, or shall be
asserted by, Guarantor against the Agent or any Lender or any subsequent holder
of the Guaranteed Indebtedness or any part thereof or against payment of the
Guaranteed Indebtedness or any part thereof.

         3.      The obligations of Guarantor hereunder shall be limited to an
aggregate amount equal to the largest amount that would not render Guarantor's
obligations hereunder subject to avoidance under Section 548 of the United
States Bankruptcy Code, as amended (or any successor statute), or to being set
aside, avoided, or annulled under any applicable state or federal law relating
to fraudulent or preferential transfers or obligations.

         4.      If Guarantor becomes liable for any indebtedness owing by
Borrower to the Agent or any Lender by endorsement or otherwise, other than
under this Guaranty Agreement, such liability shall not be in any manner
impaired or affected hereby, and the rights of the Agent and the Lenders
hereunder shall be cumulative of any and all other rights that the Agent and
the Lenders may ever have against Guarantor.  The exercise by the Agent or any
Lender of any right or remedy hereunder or under any other instrument, or at
law or in equity, shall not preclude the concurrent or subsequent exercise of
any other right or remedy.

         5.      In the event of default by Borrower in payment or performance
of the Guaranteed Indebtedness, or any part thereof, when such Guaranteed
Indebtedness becomes due, whether by its terms, by acceleration, or otherwise,
Guarantor shall promptly pay the amount due thereon to





                                                   Craftmade International, Inc.
                                 Amended and Restated Guaranty Agreement (C/D/R)

                                      2
<PAGE>   108
the Agent, for the ratable benefit of the Lenders, without notice or demand in
lawful currency of the United States of America, and it shall not be necessary
for the Agent or any Lender, in order to enforce such payment by Guarantor,
first to institute suit or exhaust its remedies against Borrower or others
liable on such Guaranteed Indebtedness, or to enforce any rights against any
collateral which shall ever have been given to secure such Guaranteed
Indebtedness.

         6.      Notwithstanding anything to the contrary contained in this
Guaranty Agreement, Guarantor hereby irrevocably waives any and all rights it
may now or hereafter have under any agreement or at law or in equity to assert
any claim against or seek subrogation, contribution, indemnification or any
other form of reimbursement from Borrower or any other party liable for payment
of any or all of the Guaranteed Indebtedness for any payment made by Guarantor
under or in connection with this Guaranty Agreement or otherwise until the
Guaranteed Indebtedness shall have been paid in full in cash.

         7.      This Guaranty Agreement shall continue to be effective, or be
automatically reinstated, as the case may be, if at any time payment, in whole
or in part, of any of the Guaranteed Indebtedness is rescinded or must
otherwise be restored or returned by the Agent or any Lender as a preference,
fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar
law, all as though such payment had not been made; provided that in the event
any Guaranteed Indebtedness is rescinded or must be restored or returned, all
costs and expenses (including without limitation any legal fees and
disbursements) incurred by the Agent or any Lender in defending or enforcing
such reinstatement shall be deemed to be included as Guaranteed Indebtedness
hereunder.

         8.      If acceleration of the time for payment of any amount payable
by Borrower under the Guaranteed Indebtedness is stayed upon the insolvency,
bankruptcy, or reorganization of Borrower, all such amounts otherwise subject
to acceleration under the terms of the Guaranteed Indebtedness shall
nonetheless be payable by Guarantor hereunder forthwith on demand by Agent.

         9.      Guarantor hereby agrees that its obligations under this
Guaranty Agreement shall not be released, discharged, diminished, impaired,
reduced, or affected for any reason or by the occurrence of any event,
including, without limitation, one or more of the following events, whether or
not with notice to or the consent of Guarantor: (a) the taking or accepting of
collateral as security for any or all of the Guaranteed Indebtedness or the
release, surrender, exchange, or subordination of any collateral now or
hereafter securing any or all of the Guaranteed Indebtedness; (b) any partial
release of the liability of Guarantor hereunder, or the full or partial release
of any other guarantor from liability for any or all of the Guaranteed
Indebtedness; (c) any disability of Borrower, or the dissolution, insolvency,
or bankruptcy of Borrower, Guarantor, or any other party at any time liable for
the payment of any or all of the Guaranteed Indebtedness; (d) any renewal,
extension, modification, waiver, amendment, or rearrangement of any or all of
the Guaranteed Indebtedness or any instrument, document, or agreement
evidencing, securing, or otherwise relating to any or all of the Guaranteed
Indebtedness; (e) any adjustment, indulgence, forbearance, waiver, or
compromise that may be granted or given by the Agent or the Lenders to
Borrower, Guarantor, or any other party ever liable for any or all of the
Guaranteed Indebtedness; (f) any neglect, delay, omission, failure, or refusal
of the Agent or the Lenders to





                                                   Craftmade International, Inc.
                                 Amended and Restated Guaranty Agreement (C/D/R)

                                      3
<PAGE>   109
take or prosecute any action for the collection of any of the Guaranteed
Indebtedness or to foreclose or take or prosecute any action in connection with
any instrument, document, or agreement evidencing, securing, or otherwise
relating to any or all of the Guaranteed Indebtedness; (g) the unenforceability
or invalidity of any or all of the Guaranteed Indebtedness or of any
instrument, document, or agreement evidencing, securing, or otherwise relating
to any or all of the Guaranteed Indebtedness; (h) any payment by Borrower or
any other party to the Agent or any Lender is held to constitute a preference
under applicable bankruptcy or insolvency law or for any other reason the Agent
or any Lender is required to refund any payment or pay the amount thereof to
someone else; (i) the settlement or compromise of any of the Guaranteed
Indebtedness; (j) the non-perfection of any security interest or lien securing
any or all of the Guaranteed Indebtedness; (k) any impairment or release of any
collateral securing any or all of the Guaranteed Indebtedness; (l) the failure
of the Agent or any Lender to sell any collateral securing any or all of the
Guaranteed Indebtedness in a commercially reasonable manner or as otherwise
required by law; (m) any change in the corporate existence, structure, or
ownership of Borrower; or (n) any other circumstance which might otherwise
constitute a defense available to, or discharge of, Borrower or Guarantor.

         10.     Guarantor represents and warrants to the Agent and the Lenders
as follows:

                 (a)      Guarantor is a corporation duly organized, validly
         existing and in good standing under the laws of the state of its
         incorporation, and Guarantor is qualified to do business in all
         jurisdictions in which the nature of the business conducted by
         Guarantor makes such qualification necessary and where failure to so
         qualify would have a material adverse effect on the business,
         financial condition, or operations of Guarantor.

                 (b)      Guarantor has the corporate power and authority and
         legal right to execute, deliver, and perform its obligations under
         this Guaranty Agreement, and this Guaranty Agreement constitutes the
         legal, valid, and binding obligation of Guarantor, enforceable against
         Guarantor in accordance with its respective terms, except as limited
         by bankruptcy, insolvency, or other laws of general application
         relating to the enforcement of creditor's rights.

                 (c)      The execution, delivery, and performance by Guarantor
         of this Guaranty Agreement have been duly authorized by all requisite
         action on the part of Guarantor and do not and will not violate or
         conflict with the articles of incorporation or bylaws of Guarantor or
         any law, rule, or regulation or any order, writ, injunction or decree
         of any court, governmental authority or agency, or arbitrator and do
         not and will not conflict with, result in a breach of, constitute a
         default under, or result in the imposition of any lien upon any assets
         of Guarantor pursuant to the provisions of any indenture, mortgage,
         deed of trust, security agreement, franchise, permit, license, or
         other instrument or agreement by which Guarantor or its properties is
         bound.

                 (d)      No authorization, approval, or consent of, and no
         filing or registration with, any court, governmental authority, or
         third party is necessary for the execution, delivery





                                                   Craftmade International, Inc.
                                 Amended and Restated Guaranty Agreement (C/D/R)

                                      4
<PAGE>   110
         or performance by Guarantor of this Guaranty Agreement or the validity
         or enforceability hereof.

                 (e)      The value of the consideration received and to be
         received by Guarantor as a result of Borrower, the Agent and the
         Lenders entering into the Credit Agreement and Guarantor executing and
         delivering this Guaranty Agreement is reasonably worth at least as
         much as the liability and obligation of Guarantor hereunder, and such
         liability and obligation and the Credit Agreement have benefitted and
         may reasonably be expected to benefit Guarantor directly or
         indirectly.

                 (f)      Guarantor has, independently and without reliance
         upon the Agent or any Lender and based upon such documents and
         information as Guarantor has deemed appropriate, made its own analysis
         and decision to enter into this Guaranty Agreement.

         11.     Guarantor covenants and agrees that, as long as the Guaranteed
Indebtedness or any part thereof is outstanding or any Lender has any
Commitment under the Credit Agreement:

                 (a)      Guarantor will furnish promptly to the Agent written
         notice of the occurrence of any default under this Guaranty Agreement
         or any Event of Default or Potential Default under the Credit
         Agreement of which Guarantor has knowledge.

                 (b)      Guarantor will promptly furnish to the Agent any and
         all such information, writings, and further assurances relating to
         Guarantor or this Guaranty Agreement as the Agent may from time to
         time request.

                 (c)      Guarantor will from time to time obtain any and all
         authorizations, licenses, consents, or approvals as may now or
         hereafter be necessary or desirable under applicable laws or
         regulations or otherwise in connection with the execution, delivery,
         and performance of this Guaranty Agreement and will promptly furnish
         copies thereof to the Agent.

                 (d)      Guarantor will at all times own directly or
         indirectly and free and clear of all liens or encumbrances whatsoever
         at least the same percentage of voting shares of Borrower, if any, as
         Guarantor owns directly or indirectly on the date hereof.

         12.     The Agent and each Lender shall have the right to set off and
apply against this Guaranty Agreement or the Guaranteed Indebtedness or both,
at any time and without notice to Guarantor, any and all deposits (general or
special, time or demand, provisional or final) or other sums at any time
credited by or owing from the Agent or any Lender to Guarantor, whether or not
the Guaranteed Indebtedness is then due and irrespective of whether or not any
Lender shall have made any demand under this Guaranty Agreement.  As security
for this Guaranty Agreement and the Guaranteed Indebtedness, Guarantor hereby
grants to the Agent, for the ratable benefit of the Lenders, a security
interest in all money, instruments, certificates of deposit, and other property
of Guarantor now or hereafter held by the Agent or any Lender, including
without limitation, property held in safekeeping.  In addition to the Agent's
and the Lenders' right of





                                                   Craftmade International, Inc.
                                 Amended and Restated Guaranty Agreement (C/D/R)

                                      5
<PAGE>   111
setoff and as further security for this Guaranty Agreement and the Guaranteed
Indebtedness, Guarantor hereby grants to the Agent, for the ratable benefit of
the Lenders, a security interest in all deposits (general or special, time or
demand, provisional or final) and all other accounts of Guarantor now or
hereafter on deposit with or held by the Agent or any Lender and all other sums
at any time credited by or owing from the Agent or any Lender to Guarantor.
The rights and remedies of the Agent and the Lenders hereunder are in addition
to other rights and remedies (including without limitation other rights of
setoff) which the Agent and the Lenders may have.

         13.     For purposes of this Guaranty Agreement, the term
"Subordinated Indebtedness" means all indebtedness, liabilities, and
obligations of Borrower to Guarantor, whether such indebtedness, liabilities,
and obligations now exist or are hereafter incurred or arise, or whether the
obligations of Borrower thereon are direct, indirect, contingent, primary,
secondary, several, joint and several, or otherwise, and irrespective of
whether such indebtedness, liabilities, or obligations are evidenced by a note,
contract, open account, or otherwise, and irrespective of the person or persons
in whose favor such indebtedness, obligations, or liabilities at their
inception have been, or may hereafter be created, or the manner in which they
have been or may hereafter be acquired by Guarantor.  With respect to the
Subordinated Indebtedness, Guarantor hereby agrees as follows:

                 (a)      The Subordinated Indebtedness shall be subordinate
         and junior in right of payment to the prior payment in full of all
         Guaranteed Indebtedness, and Guarantor hereby assigns the Subordinated
         Indebtedness to the Agent, for the ratable benefit of the Lenders, as
         security for the Guaranteed Indebtedness.  If any sums shall be paid
         to Guarantor by Borrower or any other person or entity on account of
         the Subordinated Indebtedness, such sums shall be held in trust by
         Guarantor for the benefit of the Agent and the Lenders and shall
         forthwith be paid to the Agent without affecting the liability of
         Guarantor under this Guaranty Agreement and may be applied by the
         Agent against the Guaranteed Indebtedness in such order and manner as
         the Agent may determine in its sole discretion.  Upon the request of
         the Agent, Guarantor shall execute, deliver, and endorse to the Agent
         such documents and instruments as the Agent may request to perfect,
         preserve, and enforce its rights and the rights of the Lenders
         hereunder.

                 (b)      Any and all liens, security interests, judgment
         liens, charges, or other encumbrances upon Borrower's assets securing
         payment of any Subordinated Indebtedness shall be and remain inferior
         and subordinate to any and all liens, security interests, judgment
         liens, charges, or other encumbrances upon Borrower's assets securing
         payment of the Guaranteed Indebtedness or any part thereof, regardless
         of whether such encumbrances in favor of Guarantor, the Agent or any
         Lender presently exist or are hereafter created or attached.  Without
         the prior written consent of the Agent, Guarantor shall not (i) file
         suit against Borrower or exercise or enforce any other creditor's
         right it may have against Borrower, or (ii) foreclose, repossess,
         sequester, or otherwise take steps or institute any action or
         proceedings (judicial or otherwise, including without limitation the
         commencement of, or joinder in, any liquidation, bankruptcy,
         rearrangement, debtor's relief or insolvency proceeding) to enforce
         any liens, security interests, collateral rights, judgments or other
         encumbrances held by Guarantor on assets of Borrower.





                                                   Craftmade International, Inc.
                                 Amended and Restated Guaranty Agreement (C/D/R)

                                      6
<PAGE>   112
                 (c)       In the event of any receivership, bankruptcy,
         reorganization, rearrangement, debtor's relief, or other insolvency
         proceeding involving Borrower as debtor, the Agent and the Lenders
         shall have the right to prove and vote any claim under the
         Subordinated Indebtedness and to receive directly from the receiver,
         trustee or other court custodian all dividends, distributions, and
         payments made in respect of the Subordinated Indebtedness.  The Agent
         may apply any such dividends, distributions, and payments against the
         Guaranteed Indebtedness in such order and manner as the Agent may
         determine in its sole discretion.

                 (d)       All promissory notes, accounts receivable, ledgers,
         records, or any other evidence of Subordinated Indebtedness shall
         contain a specific written notice thereon that the indebtedness
         evidenced thereby is subordinated under the terms of this Guaranty
         Agreement.

         14.     No amendment or waiver of any provision of this Guaranty
Agreement or consent to any departure by the Guarantor therefrom shall in any
event be effective unless the same shall be in writing and signed by the Agent.
No failure on the part of the Agent to exercise, and no delay in exercising,
any right, power, or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power, or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power, or privilege.  The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.

         15.     Any acknowledgment or new promise, whether by payment of
principal or interest or otherwise and whether by Borrower or any others
(including Guarantor) with respect to any of the Guaranteed Indebtedness shall,
if the statute of limitations in favor of Guarantor against the Agent and the
Lenders shall have commenced to run, toll the running of such statute of
limitations and, if the period of such statute of limitations shall have
expired, prevent the operation of such statute of limitations.

         16.     This Guaranty Agreement is for the benefit of the Agent and
the Lenders and their respective successors and assigns, and in the event of an
assignment of the Guaranteed Indebtedness, or any part thereof, the rights and
benefits hereunder, to the extent applicable to the indebtedness so assigned,
may be transferred with such indebtedness.  This Guaranty Agreement shall be
binding not only on Guarantor but also on Guarantor's successors and assigns.

         17.     Guarantor recognizes that the Agent and the Lenders are
relying upon this Guaranty Agreement and the undertakings of Guarantor
hereunder in making and continuing to make extensions of credit to Borrower
under the Credit Agreement and further recognizes that the execution and
delivery of this Guaranty Agreement is a material inducement to the Agent and
the Lenders in entering into the Credit Agreement.  Guarantor hereby
acknowledges that there are no conditions to the full effectiveness of this
Guaranty Agreement.

         18.     This Guaranty Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.





                                                   Craftmade International, Inc.
                                 Amended and Restated Guaranty Agreement (C/D/R)

                                      7
<PAGE>   113
         19.     Guarantor shall pay on demand all reasonable attorneys' fees
and all other reasonable costs and expenses incurred by the Agent and the
Lenders in connection with the administration, enforcement and collection of
this Guaranty Agreement.

         20.     Guarantor hereby waives promptness, diligence, notice of any
default under the Guaranteed Indebtedness, demand of payment, notice of
acceptance of this Guaranty Agreement, presentment, notice of protest, notice
of dishonor, notice of the incurring by Borrower of additional indebtedness,
notice of intent to accelerate, notice of acceleration, and all other notices
and demands with respect to the Guaranteed Indebtedness and this Guaranty
Agreement.

         21.     The Credit Agreement, and all of the terms thereof, are
incorporated herein by reference, the same as if stated verbatim herein, and
Guarantor agrees that the Agent and the Lenders may exercise any and all rights
granted to them under the Credit Agreement and the other Loan Documents (as
defined in the Credit Agreement) without affecting the validity or
enforceability of this Guaranty Agreement.

         22.     Guarantor hereby represents and warrants to the Agent and the
Lenders that Guarantor has adequate means to obtain from Borrower on a
continuing basis information concerning the financial condition and assets of
Borrower and that Guarantor is not relying upon the Agent or any Lender to
provide (and neither the Agent nor any Lender shall have any duty to provide)
any such information to Guarantor either now or in the future.

         23.     THIS GUARANTY AGREEMENT EMBODIES THE FINAL, ENTIRE AGREEMENT
OF GUARANTOR, AGENT AND THE LENDERS WITH RESPECT TO GUARANTOR'S GUARANTY OF THE
GUARANTEED INDEBTEDNESS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF.  THIS GUARANTY AGREEMENT IS INTENDED BY
GUARANTOR, THE AGENT AND THE LENDERS AS A FINAL AND COMPLETE EXPRESSION OF THE
TERMS OF THE GUARANTY AGREEMENT, AND NO COURSE OF DEALING BETWEEN GUARANTOR ON
THE ONE HAND, AND THE AGENT AND THE LENDERS ON THE OTHER HAND, NO COURSE OF
PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY
NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS
GUARANTY AGREEMENT.  THERE ARE NO ORAL AGREEMENTS AMONG GUARANTOR, THE AGENT
AND THE LENDERS.

         24.     TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, GUARANTOR
HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS GUARANTY AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED





                                                   Craftmade International, Inc.
                                 Amended and Restated Guaranty Agreement (C/D/R)

                                      8
<PAGE>   114
HEREIN OR THE ACTIONS OF THE AGENT AND THE LENDERS IN THE NEGOTIATION,
ADMINISTRATION, OR ENFORCEMENT THEREOF.

         25.     ARBITRATION.     ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE
GUARANTOR, ON THE ONE HAND, AND THE AGENT AND THE LENDERS, ON THE OTHER HAND,
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS GUARANTY
AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM BASED
ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION
IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE
APPLICABLE STATE LAW).  THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION
OF COMMERCIAL DISPUTES OF JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC.
(J.A.M.S.), AND THE "SPECIAL RULES" SET FORTH BELOW.  IN THE EVENT OF ANY
INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL.  JUDGMENT UPON ANY ARBITRATION
AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION.  GUARANTOR, THE AGENT OR
ANY LENDER MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO
COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS GUARANTY AGREEMENT
APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.

                 (a)      Special Rules.  THE ARBITRATION SHALL BE CONDUCTED IN
         THE CITY OF THE GUARANTOR'S DOMICILE AT TIME OF THIS GUARANTY
         AGREEMENT'S EXECUTION AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN
         ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM
         ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION
         ASSOCIATION WILL SERVE.  ALL ARBITRATION HEARINGS WILL BE COMMENCED
         WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR
         SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE
         COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.

                 (b)      Reservation of Rights.  NOTHING IN THIS GUARANTY
         AGREEMENT SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY
         OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS
         CONTAINED IN THIS GUARANTY AGREEMENT; OR (II) BE A WAIVER BY THE AGENT
         OR ANY LENDER OF THE PROTECTION AFFORDED TO IT BY 12 U.S.  C. SEC. 91
         MR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF
         THE AGENT AND THE LENDERS (A) TO EXERCISE SELF HELP REMEDIES SUCH AS
         (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR
         PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT
         PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO)
         INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A
         RECEIVER.  THE AGENT AND THE LENDERS MAY EXERCISE SUCH SELF HELP
         RIGHTS, FORECLOSE UPON SUCH





                                                   Craftmade International, Inc.
                                 Amended and Restated Guaranty Agreement (C/D/R)

                                      9
<PAGE>   115
         PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE,
         DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT
         PURSUANT TO THIS GUARANTY AGREEMENT.  NEITHER THIS EXERCISE OF SELF
         HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR
         FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A
         WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH
         ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM
         OCCASIONING RESORT TO SUCH REMEDIES.

         26.     This Guaranty Agreement is executed in amendment and
restatement of, but not in discharge or satisfaction of the obligations of
Guarantor under, the Original Guaranty.

         EXECUTED as of the 14th day of November, 1995.


                                        GUARANTOR:
                                        
                                        C/D/R INCORPORATED,
                                        a Delaware corporation
                                        
                                        
                                        By: __________________________________
                                            Name: Terry L. Culbertson
                                            Title: President
                                        
                                        Address:
                                        
                                        2700 112th Street
                                        Grand Prairie, Texas 75050
                                        
                                        Fax No.:         214-647-4872
                                        Telephone No.:   214-647-8099
                                        
                                        Attention:  Terry L. Culbertson
                                                    President
                                        




                                                   Craftmade International, Inc.
                                 Amended and Restated Guaranty Agreement (C/D/R)

                                     10
<PAGE>   116
                                  EXHIBIT "I"

                              The Pledge Agreement




                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement
<PAGE>   117
                     AMENDED AND RESTATED PLEDGE AGREEMENT


         THIS AMENDED AND RESTATED PLEDGE AGREEMENT (this "Agreement") is dated
as of November 14, 1995, and is by and between CRAFTMADE INTERNATIONAL, INC.
("Borrower"), a Delaware corporation, and DUROCRAFT INTERNATIONAL, INC.
("Durocraft"), a Texas corporation, both of whose address is 2700 112th Street,
Grand Prairie, Texas 75050, and NATIONSBANK OF TEXAS, N.A., in its capacity as
Agent for the Lenders (as defined below) ("Secured Party"), whose address is
901 Main Street, 7th Floor, P.O. Box 831000, Dallas, Texas 75283-1000.

                                   RECITALS:

         A.      NationsBank of Texas, N.A. ("NationsBank") has previously made
a loan to Borrower in the maximum principal amount of $6,000,000.00, pursuant
to a certain Credit Agreement (the "Original Credit Agreement") between
Borrower and NationsBank, dated January 11, 1993.

         B.      The Original Credit Agreement was amended and restated as
provided in that certain First Amended and Restated Credit Agreement dated as
of January 11, 1993, by and between Borrower and NationsBank (the "First
Restated Agreement").

         C.      In conjunction with the execution of the First Restated
Agreement, the Borrower and Durocraft executed and delivered to NationsBank
that certain Pledge Agreement dated as of January 13, 1993 (the "Original
Pledge Agreement"), as security for the obligations of the Borrower under the
First Restated Agreement.

         D.      The First Restated Agreement was amended as provided in that
certain First Amendment to First Amended and Restated Credit Agreement dated as
of December 13, 1993, by and between the Borrower and NationsBank (the "First
Amendment").

         E.      The First Restated Agreement was further amended as provided
in that certain Second Amendment to First Amended and Restated Credit Agreement
dated as of March 30, 1994, by and between the Borrower and NationsBank (the
"Second Amendment").

         F.      The First Restated Agreement was further amended as provided
in that certain Third Amendment to First Amended and Restated Credit Agreement
dated as of June 30, 1994, by and between the Borrower and NationsBank (the
"Third Amendment").

         G.      The First Restated Agreement was further amended as provided
in that certain Fourth Amendment to First Amended and Restated Credit Agreement
dated as of November 15, 1994, by and between the Borrower and NationsBank (the
"Fourth Amendment"; the First Restated Agreement, as amended by the First
Amendment, the Second Amendment, the Third






                                                   Craftmade International, Inc.
                                           Amended and Restated Pledge Agreement
<PAGE>   118
Amendment and the Fourth Amendment is referred to hereinafter as the "Prior
Credit Agreement").

         H.      Concurrently herewith, the Borrower, the Secured Party and the
lenders which are parties thereto (the "Lenders") are amending and restating
the Prior Credit Agreement as set out in that certain Second Amended and
Restated Credit Agreement dated as of November 14, 1995 (the "Credit
Agreement"), including, without limitation, to provide for a loan in the
maximum principal amount of $12,000,000.

         I.      The Secured Party and the Lenders have required the Borrower
and Durocraft to execute and deliver this Agreement in amendment and
restatement of the Original Pledge Agreement as a condition to their execution
of the Credit Agreement.

         NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                                  AGREEMENTS:

         Except as otherwise specified, "Pledgor" as used herein shall mean
Borrower and Durocraft collectively, individually, jointly and severally.  All
initially capitalized terms not specifically otherwise defined herein shall
have the meanings prescribed in the Credit Agreement.

                                   ARTICLE 1

                          Security Interest and Pledge

         Section 1.1  Security Interest and Pledge.  As collateral security for
the prompt payment in full when due of the Obligations (whether at stated
maturity, by acceleration, or otherwise) and all present and future obligations
of Pledgor under this Agreement, Pledgor hereby pledges and grants to Secured
Party, for the ratable benefit of the Lenders,  a first priority security
interest in the following property (such property being hereinafter sometimes
called the "Collateral"):

                 a.       All of Pledgor's shares of capital stock in C/D/R/
Incorporated (the "Corporation"), a Delaware corporation, now owned or
hereafter acquired, including, without limitation, the shares of common capital
stock of evidenced by certificates number 1 and 2; and

                 b.       All products, proceeds, revenues, distributions,
dividends, stock dividends, securities, and other property, rights, and
interests that Pledgor receives or is at any time entitled to receive on
account of any such stock.





                                                   Craftmade International, Inc.
                                           Amended and Restated Pledge Agreement

                                      2
<PAGE>   119
                                   ARTICLE 2

                         Representations and Warranties

         Pledgor represents and warrants to Secured Party and the Lenders that:

         Section 2.1  Title.  Pledgor owns, and with respect to Collateral
acquired after the date hereof, Pledgor will own, legally and beneficially, the
Collateral free and clear of any Lien, security interest, pledge, claim, or
other encumbrance or any right or option on the part of any third Person to
purchase or otherwise acquire the Collateral or any part thereof, except for
the security interest granted hereunder.  The Collateral is not subject to any
restriction on transfer or assignment except for compliance with applicable
federal and state securities laws and regulations promulgated thereunder.
Pledgor has the unrestricted right to pledge the Collateral as contemplated
hereby. All of the Collateral has been duly and validly issued and is fully
paid and nonassessable.

         Section 2.2  Organization and Authority.  Borrower and Durocraft each
is a corporation duly organized, validly existing, and in good standing under
the laws of its state of incorporation.  Borrower and Durocraft each has the
corporate power and authority to execute, deliver, and perform its obligations
under this Agreement, and the execution, delivery, and performance of by
Borrower and Durocraft each of its obligations under this Agreement have been
duly authorized by all necessary corporate action and do not and will not
violate or conflict with the articles of incorporation or bylaws of Borrower or
Durocraft or any law, rule, or regulation or any order, writ, injunction, or
decree of any court, governmental authority, or arbitrator and do not and will
not conflict with, result in a breach of, or constitute a default under the
provisions of any indenture, mortgage, deed of trust, security agreement, or
other instrument or agreement binding on either Borrower or Durocraft or any
property of either of them.

         Section 2.3  Principal Place of Business.  The principal place of
business and chief executive office of Pledgor, and the office where Pledgor
keeps its books and records, is located at the address of Pledgor shown at the
beginning of this Agreement.

         Section 2.4  Litigation.  There is no litigation, investigation, or
governmental proceeding pending or threatened against either Borrower or
Durocraft or any property of either of them which if adversely determined would
have a material adverse effect on the Collateral or the financial condition,
operations, or business of Borrower or Durocraft.

         Section 2.5  Percentage of Stock.  The Collateral constitutes one
hundred percent (100%) of the issued and outstanding shares of capital stock in
the Corporation.

         Section 2.6  First Priority Perfected Security Interest.  This
Agreement, together with the delivery to Secured Party of the Collateral,
creates in favor of Secured Party and the Lenders a





                                                   Craftmade International, Inc.
                                           Amended and Restated Pledge Agreement

                                      3
<PAGE>   120
perfected, first priority security interest in the Collateral.  There are no
conditions precedent to the effectiveness of this Agreement that have not been
fully and permanently satisfied.

         Section 2.7  Holding Period.  The Collateral has been beneficially
owned by Pledgor and the purchase price for the Collateral has been paid in
full since the Corporation came into existence on October 2, 1992.  For
purposes of this provision, in calculating the period of Pledgor's fully paid
beneficial ownership, Pledgor is excluding the period, if any, that Pledgor had
a "short position" in, or any put or other option to sell, any shares of the
same class of securities as the Collateral or any securities convertible into
any such shares.

                                   ARTICLE 3

                       Affirmative and Negative Covenants

         Pledgor covenants and agrees with Secured Party and the Lenders that:

         Section 3.1  Delivery.  Prior to or concurrently with the execution
and delivery of this Agreement, Pledgor shall deliver to Secured Party all
certificate(s) identified in SECTION 1.1(A) hereof, accompanied by undated
stock powers duly executed in blank.

         Section 3.2  Encumbrances.  Pledgor shall not create, permit, or
suffer to exist, and shall defend the Collateral against, any Lien, security
interest, or other encumbrance on the Collateral except the pledge and security
interest of Secured Party hereunder, and shall defend Pledgor's rights in the
Collateral and Secured Party's and the Lenders' security interest in the
Collateral against the claims of all Persons.

         Section 3.3  Sale of Collateral.  Pledgor shall not sell, assign, or
otherwise dispose of the Collateral or any part thereof without the prior
written consent of Secured Party.

         Section 3.4  Distributions.  If Pledgor shall become entitled to
receive or shall receive any stock certificate (including, without limitation,
any certificate representing a stock dividend or a distribution in connection
with any reclassification, increase, or reduction of capital or issued in
connection with any reorganization), option or rights, whether as an addition
to, in substitution of, or in exchange for any Collateral or otherwise, Pledgor
agrees to accept the same as Secured Party's agent and to hold the same in
trust for Secured Party and the Lenders, and to deliver the same forthwith to
Secured Party in the exact form received, with any appropriate endorsement of
Pledgor and appropriate undated stock powers duly executed in blank, to be held
by Secured Party as additional Collateral for the Obligations, subject to the
terms hereof.  Any sums paid upon or in respect of the Collateral upon the
liquidation or dissolution of the issuer thereof shall be paid over to Secured
Party to be held by it as additional Collateral for the Obligations subject to
the terms hereof; and if any distribution of capital shall be made on or in
respect of the Collateral or any property shall be distributed upon or with
respect to the Collateral pursuant to any recapitalization or reclassification
of the capital of the issuer thereof or pursuant to any reorganization of the
issuer thereof, the property so distributed shall be delivered to Secured Party





                                                   Craftmade International, Inc.
                                           Amended and Restated Pledge Agreement

                                      4
<PAGE>   121
to be held by it as additional Collateral for the Obligations, subject to the
terms hereof.  All sums of money and property so paid or distributed in respect
of the Collateral that are received by Pledgor shall, until paid or delivered
to Secured Party, be held by Pledgor in trust as additional security for the
Obligations.

         Section 3.5  Further Assurances.  At any time and from time to time,
upon the request of Secured Party, and at the sole expense of Pledgor, Pledgor
shall promptly execute and deliver all such further instruments and documents
and take all such further actions as Secured Party may deem necessary or
desirable to preserve or perfect its and the Lenders' security interest in the
Collateral and carry out the provisions and purposes of this Agreement,
including without limitation the execution and filing of such financing
statements as Secured Party may require.  A carbon, photographic, or other
reproduction of this Agreement or of any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement and
may be filed as a financing statement.  Subject to the right of Pledgor to
receive cash dividends under SECTION 4.03 hereof, in the event any Collateral
is ever received by Pledgor, Pledgor shall promptly transfer and deliver to
Secured Party such Collateral so received by Pledgor (together with any
necessary endorsements in blank or undated stock powers duly executed in
blank), which Collateral shall thereafter be held by Secured Party pursuant to
the terms of this Agreement.  Secured Party shall at all times have the right
to exchange any certificates representing Collateral for certificates of
smaller or larger denominations for any purpose consistent with this Agreement.

         Section 3.6  Inspection Rights.  Pledgor shall permit Secured Party
and its representatives to examine, inspect, and copy Pledgor's books and
records at any reasonable time and as often as Secured Party may desire.

         Section 3.7  Taxes.  Pledgor agrees to pay or discharge prior to
delinquency all taxes, assessments, levies, and other governmental charges
imposed on it or its property, except Pledgor shall not be required to pay or
discharge any tax, assessment, levy, or other governmental charge if (i) the
amount or validity thereof is being contested by Pledgor in good faith by
appropriate proceedings diligently pursued, (ii) such proceedings do not
involve any risk of sale, forfeiture, or loss of the Collateral or any interest
therein, and (iii) adequate reserves therefor have been established in
conformity with GAAP.

         Section 3.8  Notification.  Pledgor shall promptly notify Secured
Party of (i) any Lien, security interest, encumbrance, or claim made or
threatened against the Collateral, (ii) any material change in the Collateral,
including, without limitation, any material decrease in the value of the
Collateral and (iii) the occurrence or existence of any Event of Default or the
occurrence or existence of any condition or event that, with the giving of
notice or lapse of time or both, would be an Event of Default.

         Section 3.9  Books and Records; Information.  Pledgor shall keep
accurate and complete books and records of the Collateral and Pledgor's
business and financial condition in accordance with GAAP.  Pledgor shall from
time to time at the request of Secured Party deliver to Secured Party such
information regarding the Collateral, the Corporation, and Pledgor as Secured
Party





                                                   Craftmade International, Inc.
                                           Amended and Restated Pledge Agreement

                                      5
<PAGE>   122
may request.  Pledgor shall mark its books and records to reflect the security
interest of Secured Party and the Lenders under this Agreement.

         Section 3.10  Compliance with Agreements.  Pledgor shall comply in all
material respects with all agreements, contracts, and instruments binding on it
or affecting its properties or business.

         Section 3.11  Compliance with Laws.  Pledgor shall comply in all
material respects with all applicable laws, rules, regulations, and orders of
any court, governmental authority or arbitrator.

         Section 3.12  Additional Securities.  Pledgor shall not consent to or
approve the issuance of any additional shares of any class of capital stock of
the issuer of the Collateral, or any securities convertible into, or
exchangeable for, any such shares or any warrants, options, rights, or other
commitments entitling any Person to purchase or otherwise acquire any such
shares.

         Section 3.13  Provide Information.  Pledgor shall fully cooperate, to
the extent requested by Secured Party, in the completion of any notice, form,
schedule, or other document filed by Secured Party on its own or the Lenders'
behalf or on behalf of Pledgor, including without limitation any required
notice or statement of beneficial ownership or of the acquisition of beneficial
ownership of equity securities constituting part of the Collateral or any
notice of proposed sale of any such securities pursuant to Rule 144 as
promulgated by the SEC under the Securities Act of 1933, as amended.  Without
limiting the generality of the foregoing, Pledgor shall furnish to Secured
Party any and all information which Secured Party may reasonably request for
purposes of any such filing regarding Pledgor, the Collateral, and any issuer
of any of the Collateral, and Pledgor shall disclose to Secured Party all
material adverse information known by Pledgor with respect to the operations of
any issuer of any of the Collateral.

         Section 3.14  Notification of Changes in Beneficial Ownership.
Pledgor shall promptly notify Secured Party of any sale of securities of the
Corporation by Pledgor or by any other Person and shall furnish promptly to
Secured Party a copy of any Form 144 filed in respect of any such sale.  In
addition, if Pledgor or any other Person shall file with the SEC a form or
other document reporting any change in the beneficial ownership of the stock of
the Corporation, Pledgor shall promptly furnish to Secured Party a copy of such
form or document.

         Section 3.15  Restriction on Sales after Default.  Pledgor shall not
sell or suffer or permit any Person to sell any shares of the same class of
securities as the Collateral at any time after any Event of Default or
Potential Default shall have occurred.





                                                   Craftmade International, Inc.
                                           Amended and Restated Pledge Agreement

                                      6
<PAGE>   123
                                   ARTICLE 4

                      Rights of Secured Party and Pledgor

         Section 4.1  Power of Attorney.  Pledgor hereby irrevocably
constitutes and appoints Secured Party and any officer or agent thereof as
Pledgor's true and lawful attorney-in-fact, coupled with an interest, with full
power of substitution and with full, irrevocable power and authority in the
place and stead and in the name of Pledgor or in its own name, from time to
time in Secured Party's discretion, to take any and all action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement and, without limiting the generality
of the foregoing, hereby gives Secured Party the power and right on behalf of
Pledgor and in its own name to do any of the following (subject to the rights
of Pledgor under SECTIONS 4.2 and 4.3 hereof), without notice to or the consent
of Pledgor:

                 a.       To demand, sue for, collect, or receive in the name
of Pledgor or in its own name, any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral and, in
connection therewith, endorse checks, notes, drafts, acceptances, money orders,
or any other instruments for the payment of money under the Collateral;

                 b.       To pay or discharge taxes, Liens, security interests,
or other encumbrances levied or placed on or threatened against the Collateral;

                 c.       (i) To direct account debtors and any other parties
liable for any payment under any of the Collateral to make payment of any and
all monies due and to become due thereunder directly to Secured Party or as
Secured Party shall direct; (ii) to receive payment of and receipt for any and
all monies, claims, and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (iii) to sign and endorse any
drafts, assignments, proxies, stock powers, verifications, notices, and other
documents relating to the Collateral; (iv) to commence and prosecute any suit,
actions, or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to enforce any
other right in respect of any Collateral; (v) to defend any suit, action, or
proceeding brought against Pledgor with respect to any Collateral; (vi) to
settle, compromise, or adjust any suit, action, or proceeding described above
and, in connection therewith, to give such discharges or releases as Secured
Party may deem appropriate; (vii) to exchange any of the Collateral for other
property upon any merger, consolidation, reorganization, recapitalization, or
other readjustment of the issuer thereof and, in connection therewith, deposit
any of the Collateral with any committee, depositary, transfer agent,
registrar, or other designated agency upon such terms as Secured Party may
determine; (viii) to add or release any guarantor, indorser, surety, or other
party to any of the Collateral or the obligations; (ix) to renew, extend, or
otherwise change the terms and conditions of any of the Collateral or
Obligations; (x) to insure any of the Collateral; (xi) to sell, transfer,
pledge, make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though Secured Party were the absolute
owner thereof for all purposes, and from time to time to do, at Secured Party's
option and Pledgor's expense, all acts and things which Secured Party





                                                   Craftmade International, Inc.
                                           Amended and Restated Pledge Agreement

                                      7
<PAGE>   124
deems necessary to protect, preserve, or realize upon the Collateral and
Secured Party's and the Lenders' security interest therein; and (xii) to
complete, execute and file with the SEC one or more notices of proposed sale of
securities pursuant to Rule 144.

         This power of attorney is a power coupled with an interest and shall
be irrevocable.  Secured Party shall be under no duty to exercise or withhold
the exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to Secured Party in this Agreement and shall not be liable
for any failure to do so or any delay in doing so.  Secured Party shall not be
liable for any act or omission or for any error of judgment or any mistake of
fact or law in its individual capacity or in its capacity as attorney-in-fact,
including without limitation any negligent acts or omissions by Secured Party,
except acts or omissions resulting from willful misconduct by Secured Party.
This power of attorney is conferred on Secured Party solely to protect,
preserve, and realize upon its and the Lenders' security interest in the
Collateral.

         Section 4.2  Voting Rights.  Unless and until an Event of Default
shall have occurred and be continuing, Pledgor shall be entitled to exercise
any and all voting rights pertaining to the Collateral or any part thereof for
any purpose not inconsistent with the terms of this Agreement or the Credit
Agreement.  Secured Party shall execute and deliver to the Pledgor all such
proxies and other instruments as Pledgor may reasonably request for the purpose
of enabling Pledgor to exercise the voting rights which it is entitled to
exercise pursuant to this section.

         Section 4.3  Dividends.  Unless and until an Event of Default shall
have occurred and be continuing, Pledgor shall be entitled to receive and
retain any dividends on the Collateral paid in cash out of earned surplus to
the extent and only to the extent that such dividends are permitted by the
Credit Agreement.

         Section 4.4  Performance by Secured Party.  If Pledgor fails to
perform or comply with any of its agreements contained herein, Secured Party
itself may, at its sole discretion, cause or attempt to cause performance or
compliance with such agreement and the expenses of Secured Party, together with
interest thereon at the maximum nonusurious per annum rate permitted by
applicable law, shall be payable by Pledgor to Secured Party on demand and
shall constitute Obligations secured by this Agreement.  Notwithstanding the
foregoing, it is expressly agreed that neither Secured Party nor any Lender
shall have any liability or responsibility for the performance of any
obligation of Pledgor under this Agreement.

         Section 4.5  Setoff; Property Held by Secured Party.  Secured Party
shall have the right to set off and apply against the Obligations, at any time
and without notice to Pledgor, any and all deposits (general or special, time
or demand, provisional or final) or other sums at any time credited by or owing
from Secured Party or any Lender to Pledgor whether or not the Obligations are
then due.  As additional security for the Obligations, Pledgor hereby grants to
Secured Party, for the ratable benefit of the Lenders, a security interest in
all money, instruments, and other property of Pledgor now or hereafter held by
Secured Party or any Lender, including, without limitation, property held in
safekeeping.  In addition to Secured Party's and the Lenders' right of setoff
and as further security for the Obligations, Pledgor hereby grants to Secured
Party, for the





                                                   Craftmade International, Inc.
                                           Amended and Restated Pledge Agreement

                                      8
<PAGE>   125
ratable benefit of the Lenders, a security interest in all deposits (general or
special, time or demand, provisional or final) and other accounts of Pledgor
now or hereafter maintained with Secured Party or any Lender and all other sums
at any time credited by or owing from Secured Party or any Lender to Pledgor.
The rights and remedies of Secured Party and the Lenders hereunder are in
addition to other rights and remedies (including without limitation other
rights of setoff) which Secured Party and the Lenders may have.

         Section 4.6  Secured Party's Duty of Care.  Other than the exercise of
reasonable care in the physical custody of the Collateral while held by Secured
Party hereunder, Secured Party shall have no responsibility for or obligation
or duty with respect to all or any part of the Collateral or any matter or
proceeding arising out of or relating thereto, including without limitation any
obligation or duty to collect any sums due in respect thereof or to protect or
preserve any rights against prior parties or any other rights pertaining
thereto, it being understood and agreed that Pledgor shall be responsible for
preservation of all rights in the Collateral.  Without limiting the generality
of the foregoing, Secured Party shall be conclusively deemed to have exercised
reasonable care in the custody of the Collateral if Secured Party takes such
action, for purposes of preserving rights in the Collateral, as Pledgor may
reasonably request in writing, but no failure or omission or delay by Secured
Party in complying with any such request by Pledgor, and no refusal by Secured
Party to comply with any such request by Pledgor, shall be deemed to be a
failure to exercise reasonable care.

         Section 4.7  Assignment by Secured Party.  Subject to the provision of
Section 12.6 of the Credit Agreement, Secured Party and each Lender may at any
time and from time to time assign the Obligations and the Collateral or any
portion of them, and the assignee shall be entitled to all of the rights and
remedies of Secured Party and the Lenders under this Agreement in relation
thereto.

                                   ARTICLE 5

                                    Default

         Section 5.1  Rights and Remedies.  If any Event of Default shall
occur, Secured Party shall have the following rights and remedies:

                 a.       In addition to all other rights and remedies granted
to Secured Party in this Agreement and in any other instrument or agreement
securing, evidencing, or relating to the Obligations, Secured Party shall have
all of the rights and remedies of a secured party under the Uniform Commercial
Code as adopted by the State of Texas.  Without limiting the generality of the
foregoing, Secured Party may do any or all of the following:  (i) without
demand or notice to Pledgor, collect, receive, or take possession of the
Collateral or any part thereof; (ii) sell or otherwise dispose of the
Collateral, or any part thereof, in one or more parcels at public or private
sale or sales, at Secured Party's offices or elsewhere, for cash, on credit, or
for future delivery; or (iii) bid and become a purchaser at any sale free of
any right or equity of redemption in Pledgor, which right or equity is hereby
expressly waived and released by Pledgor.  Upon request





                                                   Craftmade International, Inc.
                                           Amended and Restated Pledge Agreement

                                      9
<PAGE>   126
by Secured Party, Pledgor shall assemble the Collateral and make it available
to Secured Party at any place designated by Secured Party that is reasonably
convenient to Pledgor and Secured Party.  Pledgor agrees that Secured Party
shall not be obligated to give more than five (5) days' written notice of the
time and place of any public sale or of the time after which any private sale
may take place and that such notice shall constitute reasonable notice of such
matters.  Secured Party shall not be obligated to make any sale of the
Collateral regardless of notice of sale having been given.  Secured Party may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.  Pledgor shall be
liable for all expenses of retaking, holding, preparing for sale, or the like
and all attorneys' fees and other expenses incurred by Secured Party in
connection with the collection of the Obligations and the enforcement of
Secured Party's rights under this Agreement, all of which expenses and fees
shall constitute additional Obligations secured by this Agreement.  Secured
Party may apply the Collateral against the Obligations in such order and manner
as Secured Party may elect in its sole discretion.  Pledgor shall remain liable
for any deficiency if the proceeds of any sale or disposition of the Collateral
are insufficient to pay the Obligations.  Pledgor waives all rights of
marshalling in respect of the Collateral and any and all other collateral or
security for the Obligations.

                 b.       Secured Party may cause any or all of the Collateral
held by it to be transferred into the name of Secured Party or the name or
names of Secured Party's nominee or nominees.

                 c.       Secured Party may collect or receive all money or
property at any time payable or receivable on account of or in exchange for any
of the Collateral, but shall be under no obligation to do so.

                 d.       Secured Party shall have the right, but shall not be
obligated, to exercise or cause to be exercised all voting, consensual, and
other powers of ownership pertaining to the Collateral, and Pledgor shall
deliver to Secured Party, if requested by Secured Party, irrevocable proxies
with respect to the Collateral in form satisfactory to Secured Party.

                 e.       Pledgor hereby acknowledges and confirms that Secured
Party may be unable to effect a public sale of any or all of the Collateral by
reason of certain prohibitions contained in the Securities Act of 1933, as
amended, and applicable state securities laws and may be compelled to resort to
one or more private sales thereof to a restricted group of purchasers who will
be obligated to agree, among other things, to acquire any shares of the
Collateral for their own respective accounts for investment and not with a view
to distribution or resale thereof.  Pledgor further acknowledges and confirms
that any such private sale may result in prices or other terms less favorable
to the seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner, and Secured Party shall be under no
obligation to take any steps in order to permit the Collateral to be sold at a
public sale.  Secured Party shall be under no obligation to delay a sale of any
of the Collateral for any period of time necessary to permit any





                                                   Craftmade International, Inc.
                                           Amended and Restated Pledge Agreement

                                     10
<PAGE>   127
issuer thereof to register such Collateral for public sale under the Securities
Act of 1933, as amended, or under applicable state securities laws.

                 f.       If Secured Party determines that it will sell all or
part of the Collateral pursuant to SECTION 5.1 hereof and if, in the opinion of
Secured Party it is necessary or advisable to have the Collateral, or that
portion thereof to be sold, registered under the Securities Act of 1933, as
amended, Pledgor will, at Pledgor's expense, cause each issuer of the
Collateral, or that portion thereof to be sold, to execute and deliver, and
cause the directors and officers of each such issuer to execute and deliver all
such instruments and documents and cause such issuer(s), directors, and
officers to do or cause to be done all such other acts and things as may be
necessary or, in Secured Party's opinion, advisable to register the Collateral,
or that portion thereof to be sold, under the Securities Act of 1933, as
amended, and to cause the registration statement relating thereto to become
effective and to remain effective for a period of one year from the date of the
first public offering of the Collateral, or that portion thereof to be sold,
and to make all amendments thereto and to the related prospectus that, in
Secured Party's opinion, are necessary or advisable, all in conformity with the
requirements of the Securities Act of 1933, as amended, and the rules and
regulations of the SEC applicable thereto.  Pledgor agrees to cause each issuer
of the Collateral, or that portion thereof to be sold, to comply with
Securities Act of 1933, as amended, and the blue sky laws of any jurisdiction
that Secured Party shall designate and cause each such issuer to make available
to its security holders, as soon as practical, an earnings statement (which
need not be audited) that will satisfy the provisions of the Securities Act of
1933, as amended.

                 g.       On any sale of the Collateral, Secured Party is
hereby authorized to comply with any limitation or restriction with which
compliance is necessary, in the view of Secured Party's counsel, in order to
avoid any violation of applicable law or in order to obtain any required
approval of the purchaser or purchasers by any applicable governmental
authority.

                                   ARTICLE 6

                                 Miscellaneous

         Section 6.1  Expenses; Indemnification.  Pledgor agrees to pay on
demand all costs and expenses incurred by Secured Party and the Lenders in
connection with the preparation, negotiation, and execution of this Agreement
and any and all amendments, modifications, and supplements hereto.  Pledgor
agrees to pay and to hold Secured Party and the Lenders harmless from and
against all fees and all excise, sales, stamp, and other taxes payable in
connection with this Agreement or the transactions contemplated hereby.
Pledgor hereby indemnifies Secured Party and the Lenders and each affiliate
thereof and their respective officers, directors, employees, attorneys, and
agents from and holds each of them harmless against, any and all losses,
liabilities, claims, damages, penalties, judgments, costs, and expenses
(including attorneys' fees) to which any of them may become subject which
directly or indirectly arise from or relate to (i) the negotiation, execution,
delivery, performance, administration, or enforcement of this Agreement, (ii)
any of the transactions contemplated by this Agreement, (iii) any breach by
Pledgor of any





                                                   Craftmade International, Inc.
                                           Amended and Restated Pledge Agreement

                                     11
<PAGE>   128
representation, warranty, covenant, or other agreement contained in this
Agreement, or (iv) any investigation, litigation, or other proceeding,
including without limitation any threatened investigation, litigation, or other
proceeding relating to any of the foregoing.  WITHOUT LIMITING ANY PROVISION OF
THIS AGREEMENT OR ANY OTHER INSTRUMENT, OR AGREEMENT SECURING, EVIDENCING, OR
RELATING TO THE OBLIGATIONS OR ANY PART THEREOF, IT IS THE EXPRESS INTENTION OF
THE PARTIES HERETO THAT EACH PERSON OR ENTITY TO BE INDEMNIFIED UNDER THIS
SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES,
LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, COSTS, AND EXPENSES
(INCLUDING ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THE SOLE OR
CONTRIBUTORY NEGLIGENCE OF THE PERSON OR ENTITY TO BE INDEMNIFIED.

         Section 6.2  No Waiver; Cumulative Remedies.  No failure on the part
of Secured Party or any Lender to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power, or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power, or privilege under this Agreement preclude any
other or further exercise thereof or the exercise of any other right, power, or
privilege.  The rights and remedies provided for in this Agreement are
cumulative and not exclusive of any rights and remedies provided by law.

         Section 6.3  Successors and Assigns.  This Agreement shall be binding
upon and inure to the benefit of Pledgor, Secured Party and the Lenders and
their respective heirs, successors, and assigns, except that Pledgor may not
assign any of its rights or obligations under this Agreement without the prior
written consent of Secured Party.

         Section 6.4  Amendment and Restatement; Entire Agreement; Amendment.
This Agreement amends and restates in its entirety the Original Pledge
Agreement (but does not extinguish the security interests created thereby) and
embodies the final, entire agreement among the parties hereto and supersedes
any and all prior commitments, agreements, representations, and understandings,
whether written or oral, relating to the subject matter hereof (including,
without limitation, the Original Pledge Agreement) and may not be contradicted
or varied by evidence of prior, contemporaneous or subsequent oral agreements
or discussions of the parties hereto.  There are no oral agreements among the
parties hereto.  Pledgor hereby acknowledges and agrees that the security
interests in the Collateral created under the Original Pledge Agreement are not
extinguished but are extended and continued by this Agreement without change to
the priority thereof.  The provisions of this Agreement may be amended or
waived only by an instrument in writing signed by the parties hereto.

         Section 6.5  Notices.  All notices and other communications provided
for in this Agreement shall be given or made by telex, telegraph, telecopy,
cable or in writing and telexed, telecopied, telegraphed, cabled, mailed by
certified mail return receipt requested, or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof; or as to any party, at such other address as shall be designated by
such party in a notice





                                                   Craftmade International, Inc.
                                           Amended and Restated Pledge Agreement

                                     12
<PAGE>   129
to the other party given in accordance with this section.  Except as otherwise
provided in this Agreement, all such communications shall be deemed to have
been duly given when transmitted by telex or telecopy, subject to telephone
confirmation of receipt, or delivered to the telegraph or cable office, subject
to telephone confirmation of receipt, or when personally delivered or, in the
case of a mailed notice, when duly deposited in the mails, in each case given
or addressed as aforesaid.

         Section 6.6  Applicable Law; Venue; Service of Process.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas and the applicable laws of the United States of America.  This
Agreement has been entered into in Dallas County, Texas, and it shall be
performable for all purposes in Dallas County, Texas.  Any action or proceeding
against Pledgor under or in connection with this Agreement or any other
instrument or agreement securing, evidencing, or relating to the Obligations or
any part thereof may be brought in any state or federal court in Dallas County,
Texas.  Pledgor hereby irrevocably (i) submits to the nonexclusive jurisdiction
of such courts and (ii) waives any objection it may now or hereafter have as to
the venue of any such action or proceeding brought in such court or that such
court is an inconvenient forum.  Pledgor agrees that service of process upon it
may be made by certified or registered mail, return receipt requested, at its
address specified or determined in accordance with the provisions of SECTION
6.5 of this Agreement.  Nothing in this Agreement or any other instrument or
agreement securing, evidencing, or relating to the Obligations or any part
thereof shall affect the right of Secured Party and the Lenders to serve
process in any other manner permitted by law or shall limit the right of
Secured Party and the Lenders to bring any action or proceeding against Pledgor
or with respect to any of its property in courts in other jurisdictions.  Any
action or proceeding by Pledgor against Secured Party or any Lender shall be
brought only in a court located in Dallas County, Texas.

         Section 6.7  Headings.  The headings, captions, and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.

         Section 6.8  Survival.  All representations and warranties made in
this Agreement shall survive the execution and delivery of this Agreement, and
no investigation by Secured Party or any Lender shall affect the
representations and warranties of Pledgor herein or the right of Secured Party
and the Lenders to rely upon them.

         Section 6.9  Counterparts.  This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

         Section 6.10  Severability.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.





                                                   Craftmade International, Inc.
                                           Amended and Restated Pledge Agreement

                                     13
<PAGE>   130
         Section 6.11  Construction.  Pledgor and Secured Party acknowledge
that each of them has been afforded an opportunity to review this Agreement
with legal counsel of its own choice and that this Agreement shall be construed
as if jointly drafted by Pledgor and Secured Party.

         Section 6.12  Obligations Absolute.  The obligations of Pledgor under
this Agreement shall be absolute and unconditional and shall not be released,
discharged, reduced, or in any way impaired by any circumstance whatsoever,
including without limitation any amendment, modification, extension, or renewal
of this Agreement, the Obligations, or any document or instrument evidencing,
securing, or otherwise relating to the Obligations, or any release,
subordination, or impairment of collateral, or any waiver, consent, extension,
indulgence, compromise, settlement, or other action or inaction in respect of
this Agreement, the Obligations, or any document or instrument evidencing,
securing, or otherwise relating to the Obligations, or any exercise or failure
to exercise any right, remedy, power, or privilege in respect of the
Obligations.

         Section 6.13  WAIVER OF JURY TRIAL.  TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, PLEDGOR HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO
A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF SECURED PARTY IN THE
NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.

         Section 6.14  ARBITRATION.  ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG
THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING
ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY
BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT
APPLICABLE, THE APPLICABLE STATE LAW).  THE RULES OF PRACTICE AND PROCEDURE FOR
THE ARBITRATION OF COMMERCIAL DISPUTES OF JUDICIAL ARBITRATION AND MEDIATION
SERVICES, INC. (J.A.M.S.), AND THE "SPECIAL RULES" SET FORTH BELOW.  IN THE
EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL.  JUDGMENT UPON ANY
ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION.  ANY PARTY
TO THIS AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED
PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS
AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.

                 i.       Special Rules.  THE ARBITRATION SHALL BE CONDUCTED IN
         THE CITY OF THE PLEDGOR'S DOMICILE AT TIME OF THIS AGREEMENT'S
         EXECUTION AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR;
         IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE
         ARBITRATION, THEN THE AMERICAN ARBITRATION





                                                   Craftmade International, Inc.
                                           Amended and Restated Pledge Agreement

                                     14
<PAGE>   131
         ASSOCIATION WILL SERVE.  ALL ARBITRATION HEARINGS WILL BE COMMENCED
         WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR
         SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE
         COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.

                 ii.      Reservation of Rights.  NOTHING IN THIS AGREEMENT
                          SHALL BE DEEMED TO (1) LIMIT THE APPLICABILITY OF ANY
                          OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE
                          AND ANY WAIVERS CONTAINED IN THIS AMENDMENT; OR (II)
                          BE A WAIVER BY THE SECURED PARTY OR ANY LENDER OF THE
                          PROTECTION AFFORDED TO IT BY 12 U.S. C. SEC. 91 OR
                          ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III)
                          LIMIT THE RIGHT OF THE SECURED PARTY AND THE LENDERS
                          (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT
                          LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY
                          REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO
                          OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES
                          SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT
                          OF POSSESSION OR THE APPOINTMENT OF A RECEIVER.  THE
                          SECURED PARTY AND THE LENDERS MAY EXERCISE SUCH SELF
                          HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN
                          SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING
                          OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING
                          BROUGHT PURSUANT TO THIS AMENDMENT.  NEITHER THIS
                          EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR
                          MAINTENANCE OF AN ACTION FOR FORECLOSURE OR
                          PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A
                          WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE
                          CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS
                          OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO
                          SUCH REMEDIES.





                                                   Craftmade International, Inc.
                                           Amended and Restated Pledge Agreement

                                     15
<PAGE>   132
         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.

                                        PLEDGOR:
                                        
                                        CRAFTMADE INTERNATIONAL, INC.
                                        
                                        
                                        By:____________________________________
                                           Name:  James R. Ridings
                                           Title: Chief Executive Officer
                                        
                                        
                                        DUROCRAFT INTERNATIONAL, INC.
                                        
                                        
                                        By:____________________________________
                                           Name:   James R. Ridings
                                           Title:  Chief Executive Officer
                                        
                                        Address for Notices:
                                        
                                        2700 112th Street
                                        Grand Prairie, Texas 75050
                                        
                                        Fax No.:         214-647-4872
                                        Telephone No.:   214-647-8099
                                        
                                        Attention: Kenneth M. Cancienne
                                                   Chief Financial Officer
                                        




                                                   Craftmade International, Inc.
                                           Amended and Restated Pledge Agreement

                                     16
<PAGE>   133
                                        SECURED PARTY:
                                        
                                        NATIONSBANK OF TEXAS, N.A., as Agent
                                        
                                        
                                        By:___________________________________
                                           Name:  Andrew N. McLean
                                           Title: Vice President
                                        
                                        Address for Notices:
                                        
                                        901 Main Street, 7th Floor
                                        P. O. Box 831000
                                        Dallas, Texas 75283-1000
                                        
                                        Fax No.:         214-508-0388
                                        Telephone No.:   214-508-0324
                                        
                                        Attention:  Andrew N. McLean
                                                    Vice President





                                                   Craftmade International, Inc.
                                           Amended and Restated Pledge Agreement

                                     17
<PAGE>   134
                                  EXHIBIT "J"

                              Form of Application




                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement
<PAGE>   135
                                  EXHIBIT "K"

                       Form of Assignment and Acceptance




                                                   Craftmade International, Inc.
                                    Second Amended and Restated Credit Agreement
<PAGE>   136
                           ASSIGNMENT AND ACCEPTANCE

                          Date: _______________, 19__


         Reference is made to the Second Amended and Restated Credit Agreement
dated as of November 14, 1995 (as the same may be amended and in effect from
time to time, the "Credit Agreement"), among Craftmade International, Inc., a
Delaware corporation (the "Borrower"), the Lenders named therein (the
"Lenders"), and NationsBank of Texas, N.A., as agent for the Lenders (in such
capacity, the "Agent").  Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.  This Assignment and Acceptance is being executed pursuant to
Section 12.6 of the Credit Agreement.

         ___________________________ (the "Assignor") and ____________________
(the "Assignee") agree as follows:

         1.      The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, the following interest
in and to the Assignor's rights and obligations under the Credit Agreement and
the other Loan Documents as of the Effective Date (as defined below):

         A ____% interest in the Commitments (which percentage interest
         represents a $________ Commitment with respect to the aggregate
         Commitments of $12,000,000).

         After giving effect to this Assignment and Acceptance, the Commitment
         of Assignor will be $__________________.

         2.      The Assignor (i) represents that, as of the date hereof, its
Commitment is $_______________, and its pro rata share of the Letters of Credit
outstanding under its  Commitment is $___________ (all as unreduced by any
assignments which have not yet become effective); (ii) makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement or
any other Loan Document, other than that it is the legal and beneficial owner
of the interest being assigned by it hereunder and that such interest is free
and clear of any adverse claim; (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or any Obligated Party or the performance or observance by the
Borrower or any Obligated Party of any of its obligations under the Credit
Agreement or any other Loan Document; and (iv) attaches the Note held by
Assignor and requests that the Agent exchange such Note for a new Note payable
to the order of (A) the Assignee in an amount equal to the principal amount of
Assignor's Commitment assumed






ASSIGNMENT AND ACCEPTANCE - Page 1
<PAGE>   137
by Assignee hereunder, and (B) the Assignor in an amount equal to the principal
amount of the Commitment retained by Assignor.

         3.      The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii) confirms that it
has received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 7.1 thereof, and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance;
(iii) agrees that it will, independently and without reliance upon the Agent,
the Assignor or any other Lender and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit Agreement and the
other Loan Documents; (iv) confirms that it is an Eligible Assignee; (v)
appoints and authorizes the Agent to take such action on the Assignee's behalf
and to exercise such powers under the Loan Documents as are delegated to the
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; and (vi) agrees that it will perform in accordance with
their terms all obligations which by the terms of the Credit Agreement and the
other Loan Documents are required to be performed by it as a Lender.

         4.      The effective date for this Assignment and Acceptance shall be
___________ ____, 19__ (the "Effective Date")(1).  Following the execution of
this Assignment and Acceptance, it will be delivered to the Agent for
acceptance and recording by the Agent.

         5.      Upon such acceptance and recording, from and after the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, shall have the rights
and obligations of a Lender thereunder and under the other Loan Documents and
(ii) the Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations under
the Credit Agreement and the other Loan Documents.

         6.      Upon such acceptance and recording, from and after the
Effective Date, the Agent shall make all payments in respect of the interest
assigned hereby (including payments of principal, interest, fees and other
amounts) to the Assignee.  The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement and the Notes for periods
prior to the Effective Date directly between themselves.

         7.      THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS 






__________________________________

(1)    Such date shall be at least five (5) Business Days after the execution 
       of this Assignment and Acceptance and delivery thereof to the Agent 
       (unless otherwise agreed by the Agent).

ASSIGNMENT AND ACCEPTANCE - Page 2
<PAGE>   138
(WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES) AND APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.

         8.      The Assignee's address for notices for purposes of the Credit
Agreement (until such address is subsequently changed in accordance with the
Credit Agreement) is specified below its name on the signature pages of this
Assignment and Acceptance.

                                        [NAME OF ASSIGNOR]
                                        
                                        
                                        By: ___________________________________
                                        Name: _________________________________
                                        Title: ________________________________
                                                                               
                                        
                                        
                                        [NAME OF ASSIGNEE]
                                        
                                        
                                        By: ___________________________________
                                        Name: _________________________________
                                        Title: ________________________________
                                                                               
                                        
                                        
                                        Address for Notices:
                                        
                                        ______________________________________
                                        ______________________________________
                                        ______________________________________
                                        Fax No. (_____) ______________________
                                        Telephone No. (_____) ________________
                                        Attention: ___________________________





ASSIGNMENT AND ACCEPTANCE - Page 3
<PAGE>   139
ACCEPTED BY:

NATIONSBANK OF TEXAS, N.A., as Agent for the Lenders



By: ___________________________________
Name: _________________________________
Title: ________________________________


Date: _________________________________ 




ASSIGNMENT AND ACCEPTANCE - Page 4
<PAGE>   140
                                   SCHEDULE 1
                                       TO
                                CREDIT AGREEMENT

                            Locations of Collateral



         Except for any Collateral in the possession of the Agent,

                 2700 112th Street
                 Grand Prairie, Texas 75050

         Also, an alternative address for C/D/R is,

                 300 Delaware Avenue, Suite 1704
                 Wilmington, Delaware 19801





SCHEDULE 1, Locations of Collateral - Page 1
<PAGE>   141
                                   SCHEDULE 2
                                       TO
                                CREDIT AGREEMENT

                                 Existing Debt


1.       Revolving Credit Note dated _______________, 199__, in the maximum
         amount of $_______________, from Borrower to C/D/R, maturing ten years
         from the date thereof, bearing interest at the rate of ten percent,
         executed pursuant to a Loan Agreement dated October ___, 1992.

2.       Agreement dated October 1, 1992, between Craftmade and C/D/R,
         providing for certain royalties to be paid by Craftmade to C/D/R for
         the use of the trademark and trade name "Craftmade."





SCHEDULE 2, Existing Debt - Page 1
<PAGE>   142
                                   SCHEDULE 3
                                       TO
                                CREDIT AGREEMENT

                              List of Subsidiaries


<TABLE>
<CAPTION>
                                                      Jurisdiction                    Percentage of
              Name of Subsidiary                    of Incorporation             Stock Owned by Borrower
              ------------------                    ----------------             -----------------------
 <S>      <C>                                           <C>                          <C>
 1.       Durocraft International, Inc.                   Texas                            100%
          T.I.N. 75-2342081

 2.       C/D/R Incorporated                            Delaware                        95% direct
          T.I.N. 51-0343395                                                            5% indirect
</TABLE>





SCHEDULE 3, List of Subsidiaries - Solo Page
<PAGE>   143
                                   SCHEDULE 4
                                       TO
                                CREDIT AGREEMENT

                                 Existing Liens


         Liens securing the following capital leases:

<TABLE>
<CAPTION>
Lease Date               Item                      Cost             Lessor
----------               ----                      ----             ------
 <S>                <C>                          <C>          <C>
 12/1/88             Phone System                $17,399      T.S.I., Inc.
                                                              P.O. Box 298731
                                                              Houston, Texas  77298-0731

  7/1/90             Forklifts (2)               $27,556      Toyota Motor Credit Corporation
                                                              1515 West 190th Street
                                                              Torrance, California  90509

 12/31/90              Computer                  $59,389      G.E. Capital
                                                              P.O. Box 910020
                                                              Dallas, Texas  75391

  4/4/91              Fax Machine                 $4,435      Danka Leasing
                                                              P.O. Box 728
                                                              Upper Saddle River, NJ  07458

 4/15/91                Copier                    $9,883      Eaton Financial Services
                                                              1505 Luna Road, #134
                                                              Carrollton, Texas  75006

  7/1/90            NP-1218 Copier                $4,510      Innovative Office System
                                                              14875 Landmark Boulevard
                                                              Dallas, Texas  75240

  7/1/90            386-20 Computer               $4,100      All Systems
                                                              P.O. Box 151616
                                                              Arlington, Texas  76015

  7/1/90               Forklift                   $7,477      Kalmar Capital Corp.
                                                              777 Manor Park Drive
                                                              Columbus, Ohio  43228

  7/1/90             1990 Chrysler               $16,225      Curry Auto Leasing
                                                              5422 Alpha Road
                                                              Dallas, Texas  75240
</TABLE>





SCHEDULE 4, Existing Liens - Solo Page
<PAGE>   144
                                   SCHEDULE 5
                                       TO
                                CREDIT AGREEMENT

                            UCC Filing Jurisdictions



              Borrower and Durocraft - Secretary of State of Texas





SCHEDULE 5, UCC Filing Jurisdictions - Solo Page
<PAGE>   145
                                   SCHEDULE 6
                                       TO
                                CREDIT AGREEMENT

                        Liens to be Released or Assigned


                                     None.





SCHEDULE 6, Liens to be Released or Assigned - Solo Page

<PAGE>   146
                       CERTIFICATE OF CORPORATE OFFICERS
                                  (Craftmade)


         The undersigned hereby certifies that the undersigned is now, and at
all times mentioned herein has been, the duly elected, qualified, and acting
Secretary of CRAFTMADE INTERNATIONAL, INC. (the "Corporation"), a Delaware
corporation, and, as such officer, the undersigned has access to the records of
the Corporation, which records reflect that:

         1.      Resolutions.  The Resolutions attached as EXHIBIT A hereto and
incorporated herein by reference constitute a true and correct copy of
resolutions which have been duly adopted by the board of directors of the
Corporation in compliance with, and not in contravention of, the articles of
incorporation and bylaws of the Corporation; none of such resolutions have been
repealed or modified in any respect, and all such resolutions are in full force
and effect as of the execution hereof.

         2.      Incumbency.  The following named individuals are the duly
elected, qualified and acting officers of the Corporation, holding the offices
set forth opposite their respective names as of the date hereof, and the
signatures set opposite the respective names and titles of said officers are
their true, authentic signatures.

<TABLE>
<CAPTION>
     Name                         Title                   Specimen Signature
     ----                         -----                   ------------------
<S>                       <C>                         <C>
James R. Ridings          Chief Executive Officer     _________________________

Kenneth M. Cancienne      Chief Financial Officer     _________________________ 

Terry L. Culbertson       Secretary                   _________________________ 
</TABLE>

         3.      Certificate of Incorporation.  Attached hereto as EXHIBIT B is
a true and correct copy of the Certificate of Incorporation of the Corporation
as certified by the Secretary of State of Delaware on ___________, 1995.
Except as described on EXHIBIT B, the Certificate of Incorporation of the
Corporation has not been repealed, terminated, amended, modified, supplemented
or replaced in any respect.

         4.      Bylaws.  Attached hereto as EXHIBIT C is a true and correct
copy of the Bylaws of the Corporation as in effect on the date hereof.  Except
as described on EXHIBIT C, the Bylaws of the Corporation have not been
repealed, terminated, amended, modified, supplemented or replaced in any
respect.

         5.      Shareholders.  The shareholders of the Corporation and their
respective stock ownership positions have not changed between January 11, 1993
and the execution hereof.




                                                   Craftmade International, Inc.
                                   Certificate of Corporate Officers (Craftmade)
<PAGE>   147
         6.      Corporate Standing, Taxes and Authority.  The Corporation is a
duly organized and validly existing corporation in good standing under the laws
of the State of Delaware and is duly authorized and qualified to do business in
the State of Texas, and all taxes, assessments and franchise fees due of the
Corporation have been fully paid, all as evidenced by the Certificates of
Existence, Good Standing and Foreign Qualification attached hereto as EXHIBIT
D.  The execution and delivery of the documents described in the attached
resolutions will not violate any provision of the articles of incorporation and
bylaws of the Corporation.

         IN WITNESS WHEREOF, I have duly executed this Certificate to be
effective as of the 14th day of November, 1995.


                                        SECRETARY:


                                        
                                        _____________________________________
                                        Terry L. Culbertson


         I, James R. Ridings, hereby certify that I am now the duly elected,
qualified and acting President of the Corporation; that the person executing
and delivering the foregoing Certificate (herein so called) is the duly
elected, qualified and acting officer of the Corporation as indicated in the
Certificate; that the signature set forth above beside each person's name is
each person's correct signature; and that the certifications set forth above
are true and correct as of the date hereof.

                                        PRESIDENT:


                                        
                                        _____________________________________
                                        James R. Ridings

STATE OF TEXAS            Section

COUNTY OF ____________    Section

         This instrument was acknowledged before me on November __, 1995, by
TERRY L. CULBERTSON.

                                                                               
         (NOTARY STAMP)                                                        
                                        _____________________________________  
                                        Notary Public, State of Texas          
                                                                               
My Commission Expires:                                                         
                                        _____________________________________  
                                        Printed Name                           
                                                                               




                                                   Craftmade International, Inc.
                                   Certificate of Corporate Officers (Craftmade)
<PAGE>   148
STATE OF TEXAS            Section

COUNTY OF ____________    Section

         This instrument was acknowledged before me on November __, 1995, by
JAMES R. RIDINGS.


                                                                               
         (NOTARY STAMP)                                                        
                                        _____________________________________  
                                        Notary Public, State of Texas          
                                                                               
My Commission Expires:                                                         
                                        _____________________________________  
                                        Printed Name                           
                                                                               


                                                   Craftmade International, Inc.
                                   Certificate of Corporate Officers (Craftmade)
<PAGE>   149
                                   EXHIBIT A

                                  RESOLUTIONS





                                                   Craftmade International, Inc.
                                   Certificate of Corporate Officers (Craftmade)
<PAGE>   150
                                   EXHIBIT B


                          CERTIFICATE OF INCORPORATION





                                                   Craftmade International, Inc.
                                   Certificate of Corporate Officers (Craftmade)
<PAGE>   151
                                   EXHIBIT C

                                     BYLAWS





                                                   Craftmade International, Inc.
                                   Certificate of Corporate Officers (Craftmade)
<PAGE>   152
                                   EXHIBIT D


                           CERTIFICATES OF EXISTENCE,
                    GOOD STANDING AND FOREIGN QUALIFICATION





                                                   Craftmade International, Inc.
                                   Certificate of Corporate Officers (Craftmade)
<PAGE>   153
                       CERTIFICATE OF CORPORATE OFFICERS
                                    (C/D/R)


         The undersigned hereby certifies that the undersigned is now, and at
all times mentioned herein has been, the duly elected, qualified, and acting
Secretary of C/D/R INCORPORATED (the "Corporation"), a Delaware corporation,
and, as such officer, the undersigned has access to the records of the
Corporation, which records reflect that:

         1.      Resolutions.  The Resolutions attached as EXHIBIT A hereto and
incorporated herein by reference constitute a true and correct copy of
resolutions which have been duly adopted by the board of directors of the
Corporation in compliance with, and not in contravention of, the articles of
incorporation and bylaws of the Corporation; none of such resolutions have been
repealed or modified in any respect, and all such resolutions are in full force
and effect as of the execution hereof.

         2.      Incumbency.  The following named individuals are the duly
elected, qualified and acting officers of the Corporation, holding the offices
set forth opposite their respective names as of the date hereof, and the
signatures set opposite the respective names and titles of said officers are
their true, authentic signatures.

<TABLE>
<CAPTION>
       Name               Title                Specimen Signature
       ----               -----                ------------------
<S>                     <C>                    <C>
Terry L. Culbertson     President              ________________________________

John P. Garniewski      Secretary              ________________________________
</TABLE>

         3.      Certificate of Incorporation.  Attached hereto as EXHIBIT B is
a true and correct copy of the Certificate of Incorporation of the Corporation
as certified by the Secretary of State of Delaware on ___________, 1995.
Except as described on EXHIBIT B, the Certificate of Incorporation of the
Corporation has not been repealed, terminated, amended, modified, supplemented
or replaced in any respect.

         4.      Bylaws.  Attached hereto as EXHIBIT C is a true and correct
copy of the Bylaws of the Corporation as in effect on the date hereof.  Except
as described on EXHIBIT C, the Bylaws of the Corporation have not been
repealed, terminated, amended, modified, supplemented or replaced in any
respect.

         5.      Shareholders.  All of the shareholders of the Corporation and
their respective stock ownership positions are as indicated on EXHIBIT D
attached hereto and incorporated herein by reference.

         6.      Corporate Standing, Taxes and Authority.  The Corporation is a
duly organized and validly existing corporation in good standing under the laws
of the State of Delaware and is duly





                                                   Craftmade International, Inc.
                                       Certificate of Corporate Officers (C/D/R)
<PAGE>   154
authorized and qualified to do business in the State of Texas, and all taxes,
assessments and franchise fees due of the Corporation have been fully paid, all
as evidenced by the Certificates of Existence, Good Standing and Foreign
Qualification attached hereto as EXHIBIT E.  The execution and delivery of the
documents described in the attached resolutions will not violate any provision
of the articles of incorporation and bylaws of the Corporation.

         IN WITNESS WHEREOF, I have duly executed this Certificate to be
effective as of the 14th day of November, 1995.

                                        SECRETARY:


                                        
                                        _______________________________________
                                        John P. Garniewski


         I, Terry L. Culbertson, hereby certify that I am now the duly elected,
qualified and acting President of the Corporation; that the person executing
and delivering the foregoing Certificate (herein so called) is the duly
elected, qualified and acting officer of the Corporation as indicated in the
Certificate; that the signature set forth above beside each person's name is
each person's correct signature; and that the certifications set forth above
are true and correct as of the date hereof.

                                        PRESIDENT:



                                        _______________________________________
                                        Terry L. Culbertson

STATE OF DELAWARE         Section

COUNTY OF ____________    Section

         This instrument was acknowledged before me on November __, 1995, by
JOHN P. GARNIEWSKI.


         (NOTARY STAMP)                                                        
                                        _______________________________________
                                        Notary Public, State of Texas          
                                                                               
My Commission Expires:                                                         
                                        _______________________________________
                                        Printed Name                           
                                                                               




                                                   Craftmade International, Inc.
                                       Certificate of Corporate Officers (C/D/R)
<PAGE>   155
STATE OF TEXAS            Section

COUNTY OF ____________    Section

         This instrument was acknowledged before me on November __, 1995, by
TERRY L. CULBERTSON.


         (NOTARY STAMP)                                                        
                                        _______________________________________
                                        Notary Public, State of Texas          
                                                                               
My Commission Expires:                                                         
                                        _______________________________________
                                        Printed Name                           
                                                                               





                                                   Craftmade International, Inc.
                                       Certificate of Corporate Officers (C/D/R)
<PAGE>   156
                                   EXHIBIT A

                                  RESOLUTIONS





                                                   Craftmade International, Inc.
                                       Certificate of Corporate Officers (C/D/R)
<PAGE>   157
                                   EXHIBIT B

                          Certificate of Incorporation





                                                   Craftmade International, Inc.
                                       Certificate of Corporate Officers (C/D/R)
<PAGE>   158
                                   EXHIBIT C

                                     Bylaws





                                                   Craftmade International, Inc.
                                       Certificate of Corporate Officers (C/D/R)
<PAGE>   159
                                   EXHIBIT D

                      Shareholders and Ownership Positions


<TABLE>
<CAPTION>
Shareholder                                        Percentage Ownership
-----------                                        --------------------
<S>                                                         <C>
Craftmade International, Inc.                               95%

Durocraft International, Inc.                                5%
</TABLE>





                                                   Craftmade International, Inc.
                                       Certificate of Corporate Officers (C/D/R)
<PAGE>   160
                                   EXHIBIT E

                  Certificates of Existence, Good Standing and
                             Foreign Qualification





                                                   Craftmade International, Inc.
                                       Certificate of Corporate Officers (C/D/R)
<PAGE>   161
                       CERTIFICATE OF CORPORATE OFFICERS
                                  (Durocraft)


         The undersigned hereby certifies that the undersigned is now, and at
all times mentioned herein has been, the duly elected, qualified, and acting
Secretary of DUROCRAFT INTERNATIONAL, INC. (the "Corporation"), a Texas
corporation, and, as such officer, the undersigned has access to the records of
the Corporation, which records reflect that:

         1.      Resolutions.  The Resolutions attached as EXHIBIT A hereto and
incorporated herein by reference constitute a true and correct copy of
resolutions which have been duly adopted by the board of directors of the
Corporation in compliance with, and not in contravention of, the articles of
incorporation and bylaws of the Corporation; none of such resolutions have been
repealed or modified in any respect, and all such resolutions are in full force
and effect as of the execution hereof.

         2.      Incumbency.  The following named individuals are the duly
elected, qualified and acting officers of the Corporation, holding the offices
set forth opposite their respective names as of the date hereof, and the
signatures set opposite the respective names and titles of said officers are
their true, authentic signatures.

<TABLE>
<CAPTION>
     Name                      Title                     Specimen Signature
     ----                      -----                     ------------------
<S>                     <C>                          <C>
James R. Ridings        Chief Executive Officer      _________________________

Kenneth M. Cancienne    Chief Financial Officer      _________________________
                                                     
Terry L. Culbertson     Secretary                    _________________________
                                                     
</TABLE>

         3.      Articles.  Attached hereto as EXHIBIT B is a true and correct
copy of the Articles of Incorporation of the Corporation as certified by the
Secretary of State of Texas on ___________, 1995.  Except as described on
EXHIBIT B, the Articles of Incorporation of the Corporation have not been
repealed, terminated, amended, modified, supplemented or replaced in any
respect.

         4.      Bylaws.  Attached hereto as EXHIBIT C is a true and correct
copy of the Bylaws of the Corporation as in effect on the date hereof.  Except
as described on EXHIBIT C, the Bylaws of the Corporation have not been
repealed, terminated, amended, modified, supplemented or replaced in any
respect.

         5.      Shareholders.  The shareholders of the Corporation and their
respective stock ownership positions have not changed between January 11, 1993
and the execution hereof.





                                                   Craftmade International, Inc.
                                   Certificate of Corporate Officers (Durocraft)
<PAGE>   162
         6.      Corporate Standing, Taxes and Authority.  The Corporation is a
duly organized and validly existing corporation in good standing under the laws
of the State of Texas and is duly authorized and qualified to do business in
the State of Texas, and all taxes, assessments and franchise fees due of the
Corporation have been fully paid, as evidenced by the Certificates of
Existence, Good Standing and Foreign Qualification attached hereto as EXHIBIT
D.  The execution and delivery of the documents described in the attached
resolutions will not violate any provision of the articles of incorporation and
bylaws of the Corporation.

         IN WITNESS WHEREOF, I have duly executed this Certificate to be
effective as of the 14th day of November, 1995.

                                        SECRETARY:


                                        _______________________________________
                                        Terry L. Culbertson


         I, James R. Ridings, hereby certify that I am now the duly elected,
qualified and acting President of the Corporation; that the person executing
and delivering the foregoing Certificate (herein so called) is the duly
elected, qualified and acting officer of the Corporation as indicated in the
Certificate; that the signature set forth above beside each person's name is
each person's correct signature; and that the certifications set forth above
are true and correct as of the date hereof.

                                        PRESIDENT:


                                        
                                        _______________________________________
                                        James R. Ridings


STATE OF TEXAS            Section

COUNTY OF ____________    Section

         This instrument was acknowledged before me on November __, 1995, by
TERRY L. CULBERTSON.

         (NOTARY STAMP)                                                        
                                        _______________________________________
                                        Notary Public, State of Texas          
                                                                               
My Commission Expires:                                                         
                                        _______________________________________
                                        Printed Name                           
                                                                               




                                                   Craftmade International, Inc.
                                   Certificate of Corporate Officers (Durocraft)
<PAGE>   163
STATE OF TEXAS            Section

COUNTY OF ____________    Section

         This instrument was acknowledged before me on November __, 1995, by
JAMES R. RIDINGS.

         (NOTARY STAMP)                                                        
                                        _______________________________________
                                        Notary Public, State of Texas          
                                                                               
My Commission Expires:                                                         
                                        _______________________________________
                                        Printed Name                           
                                                                               






                                                   Craftmade International, Inc.
                                   Certificate of Corporate Officers (Durocraft)
<PAGE>   164
                                   EXHIBIT A

                                  RESOLUTIONS





                                                   Craftmade International, Inc.
                                   Certificate of Corporate Officers (Durocraft)
<PAGE>   165
                                   EXHIBIT B


                           ARTICLES OF INCORPORATION





                                                   Craftmade International, Inc.
                                   Certificate of Corporate Officers (Durocraft)
<PAGE>   166
                                   EXHIBIT C


                                     BYLAWS





                                                   Craftmade International, Inc.
                                   Certificate of Corporate Officers (Durocraft)
<PAGE>   167
                                   EXHIBIT D


                           CERTIFICATES OF EXISTENCE,
                    GOOD STANDING AND FOREIGN QUALIFICATION





                                                   Craftmade International, Inc.
                                   Certificate of Corporate Officers (Durocraft)