<PAGE>   1
                                                                    EXHIBIT 99.2


                       THIRD AMENDMENT TO CREDIT AGREEMENT

         THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment") dated
effective as of July 1, 1998 (the "Effective Date"), is among CRAFTMADE
INTERNATIONAL, INC., a Delaware corporation, DUROCRAFT INTERNATIONAL, INC., a
Texas corporation, TRADE SOURCE INTERNATIONAL, INC., a Delaware corporation
(jointly and severally, the "Borrower"), C/D/R INCORPORATED, a Delaware
corporation ("C/D/R"), CHASE BANK OF TEXAS, NATIONAL ASSOCIATION (formerly named
TEXAS COMMERCE BANK, NATIONAL ASSOCIATION), as agent (the "Agent"), and CHASE
BANK OF TEXAS, NATIONAL ASSOCIATION (formerly named TEXAS COMMERCE BANK,
NATIONAL ASSOCIATION) and FROST NATIONAL BANK (formerly known as OVERTON BANK
AND TRUST) (collectively, the "Lenders").

                              PRELIMINARY STATEMENT

         The Agent, the Lenders and the Borrower are parties to a Credit
Agreement dated as of May 30, 1996 as amended by a First Amendment dated as of
October 8, 1996 and a Second Amendment dated as of November 1, 1997 (as so
amended, the "Credit Agreement"). All capitalized terms defined in the Credit
Agreement and not otherwise defined in this Amendment shall have the same
meanings herein as in the Credit Agreement.

         The Agent, the Lenders and the Borrower have agreed to amend the Credit
Agreement to the extent set forth herein, in connection with the merger of Trade
Source International, Inc., a California corporation, with and into Trade Source
International, Inc., a Delaware corporation and a wholly-owned subsidiary of
Craftmade International, Inc.

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

         Section 1.   Addition of Definitions.  The following definition is 
added to Section 1 of the Credit Agreement:

                  "Borrower" mean Craftmade International, Inc., a Delaware
         corporation, Durocraft International, Inc., a Texas corporation, and
         Trade Source International, Inc., a Delaware corporation, jointly and
         severally.

                  "Chase" means Chase Bank of Texas, National Association, a
         national banking association.

                  "Craftmade Security Agreement" means the Security Agreement of
         Craftmade 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.





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                  "EBITDA" means, for any period, the sum of net earnings (plus
         or minus any material non-recurring charges or credits) of the Borrower
         and its Subsidiaries on a consolidated basis plus each of the
         following, to the extent actually deducted in arriving at such net
         earnings: (a) depreciation and amortization, (b) Interest Expense, and
         (c) Tax Expense. Provided, however, that for periods on and after July
         1, 1998, "EBITDA" shall include, to the extent of Trade Source's
         ownership interest therein (being fifty percent (50%) as of July 1,
         1998), the foregoing income statement items with respect to Prime Home
         notwithstanding that Prime Home would not properly be categorized in
         accordance with GAAP as a consolidated Subsidiary of Craftmade.
         Provided, further, however, that in respect of periods on and after
         July 1, 1997 and before July 1, 1998, the "EBITDA" of Trade Source, on
         a consolidated basis, shall be deemed to be $166,667 per month.

                  "Hong Kong Companies" means Elitex Development Limited, a Hong
         Kong private company limited by shares, and TSI Prime Asia Limited, a
         Hong Kong private company limited by shares.

                  "Prime Home" means Prime Home Impressions, LLC, a North
         Carolina limited liability company.

                  "Stock Pledge Agreement" means the Stock Pledge Agreement of
         Craftmade in favor of the Agent and the Lenders in substantially the
         form of EXHIBIT K hereto, as the same may be amended, supplemented or
         otherwise modified from time to time.

                  "Trade Source" means Trade Source International, Inc., a
         Delaware corporation, which is the surviving corporation in the merger
         of Trade Source International, Inc., a California corporation, with and
         into it, and which also is a wholly-owned subsidiary of Craftmade
         International, Inc.

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

Consistent with the added definition of "Borrower," Trade Source shall upon the
effectiveness of this Amendment become a Borrower for all purposes, as if it
were the same as of May 30, 1996 (being the date of the Credit Agreement prior
to any amendments thereto). In connection with the added definition of "Chase,"
all references in the Loan Documents to "Texas Commerce Bank" (e.g., in the
definition of "Prime Rate") are hereby amended to be references to "Chase." In
connection with the added definition of "EBITDA," all references in the Loan
Documents to "EBDIT" are hereby amended to be references to "EBITDA." In
connection with the added definition of "Craftmade Security Agreement," all
references in the Loan Documents to "Security Agreement" are hereby amended to
be references to "Craftmade Security Agreement."


THIRD AMENDMENT TO CREDIT AGREEMENT - Page 2


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         Section 2.   Amendment of Definitions.  The following definitions in 
Section 1 of the Credit Agreement are amended to read in their entirety as
follows:

                  "Applicable Rate" means:

                  (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 Funded Debt to EBITDA Ratio is less than 1.25 to 1.0,
         one and one-quarter percent (1.25%), and (ii) at all times when the
         most recent compliance certificate delivered in accordance with SECTION
         7.1(C) shows that the Funded Debt to EBITDA Ratio is greater than or
         equal to 1.25 to 1.0, one and one-half percent (1.5%).

                  "Collateral" includes all of the collateral covered by the
         Craftmade Security Agreement, the Durocraft Security Agreement, and the
         Trade Source Security Agreement, all of the issued and outstanding
         capital stock of Durocraft, Trade Source and C/D/R, pledged to the
         Agent and the Lenders pursuant to the Stock Pledge Agreement, the
         issued and outstanding capital stock of the Hong Kong Companies to be
         pledged, as soon as practical after July 1, 1998 but in any event on or
         before September 14, 1998, to the Agent and the Lenders (in the case of
         each Hong Kong Company being not more than 65% of the total issued and
         outstanding capital stock of such Hong Kong Company) and the Assignment
         of Life Insurance.

                  "Commitments" means, as to any Lender, the obligation of such
         Lender to make Advances thereunder in an aggregate principal amount not
         to exceed $7,000,000, as such amount may be reduced pursuant to SECTION
         2.7 or otherwise.

                  "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 their 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 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.


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         Section 3.   Deletion of Definitions.  The definitions of "Security 
Agreement" and "Texas Commerce Bank" are deleted from the Credit Agreement.

         Section 4.   Amendment of Section 6.18. Section 6.18 of the Credit
Agreement is hereby amended to read in its entirety as follows:

                  "Section 6.18 Security Interests and Liens. The Craftmade
         Security Agreement, the Durocraft Security Agreement, the Trade Source
         Security Agreement, the Stock Pledge Agreement and the Assignment of
         Life Insurance create in favor of the Agent and the Lenders valid and
         enforceable Liens on the Collateral described therein, securing 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
         Craftmade, Durocraft or Trade Source, as applicable, as debtor and the
         Agent as secured party in the applicable jurisdictions set forth in
         SCHEDULE 5 hereto 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 5.   Amendment of Section 7.1. Each reference to thirty (30) 
days in Sections 7.1(b), (c) and (i) of the Credit Agreement is hereby amended
to be a reference to thirty-five (35) days.

         Section 6.   Amendment of Section 7.10. A new sentence is hereby added
to the end of Section 7.10 of the Credit Agreement, to read in its entirety as
follows:

                  "Without limiting the foregoing, Borrower will use its best
         efforts to execute and deliver, as soon as practical after July 1, 1998
         but in any event on or before September 14, 1998, (a) a stock pledge
         agreement satisfactory to Agent and the Lenders wherein Trade Source
         pledges to the Agent for the benefit of the Lenders not less than 65%
         of the issued and outstanding capital stock of each Hong Kong Company
         and (b) stock certificates necessary to perfect such pledge, each duly
         endorsed in blank."

         Section 7.   Amendment of Section 8.1. Section 8.1 of the Credit
Agreement is hereby amended to read in its entirety as follows:

                  "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; and

                  (b) Existing Debt described on SCHEDULE 2 hereto; and


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                  (c) other Debt in an aggregate amount not to exceed $600,000
         at any one time outstanding; and

                  (d) Debt evidenced by a guaranty, limited in principal amount
         to $2,000,000, executed by Borrower (whether one or more) and
         guaranteeing the Debt of Prime Home to a lender in connection with a
         revolving credit facility established on or before July 1, 1998 (and
         any Debt ("Refinancing Debt") the net proceeds of which are used solely
         to refinance, renew or replace such Debt of Prime Home; provided, that
         the principal amount of such Refinancing Debt does not exceed the
         principal amount of the Debt so refinanced, renewed or replaced).

                  Without limiting the foregoing, in addition C/D/R will not
         incur, create, assume or permit to exist, and will not permit any
         subsidiary of C/D/R to incur, create, assume or permit to exist, any
         Debt, except Debt in an aggregate amount not to exceed $100,000 at any
         one time outstanding.

                  Further without limiting the foregoing, in addition Borrower
         will not incur, create, assume or permit to exist, and will not permit
         any Subsidiary to incur, create, assume or permit to exist, contingent
         liabilities (determined on a consolidated basis) in excess of $500,000
         at any one time outstanding (excluding contingent liabilities pursuant
         to the guaranties of the revolving credit facility described in clause
         (c) above, which guaranties shall in any event not exceed $2,000,000 in
         aggregate principal amount)."

         Section 8.   Amendment of Section 8.2. A new sentence is hereby added 
to the end of Section 8.2 of the Credit Agreement, to read in its entirety as
follows:

                  "Trade Source will not incur, create, assume or permit to
         exist, and will not permit any Subsidiary thereof to incur, create,
         assume or permit to exist, any Lien upon any of its property, assets or
         revenues, except Liens referenced in clauses (c) through (g) above,
         inclusive."

         Section 9.   Amendment of Section 8.4. The reference to forty percent
(40%) in Section 8.4 of the Credit Agreement is hereby amended to be a reference
to twenty percent (20%). In addition, the last proviso of Section 8.4 of the
Credit Agreement is hereby amended to read in its entirety as follows:

         "provided, however, that Borrower may purchase treasury stock so long
         as (a) the amounts spent for such purchases, in any fiscal year, do not
         exceed $1,000,000 and (b) Borrower remains in compliance with the
         Consolidated Debt to Consolidated Tangible Net Worth Ratio as evidenced
         by a Treasury Stock Purchase Compliance Certificate, substantially in
         the form of EXHIBIT F-1 attached hereto, submitted to the Agent showing
         the effect of any potential treasury stock purchases contemplated by
         Borrower during a thirty (30) day period commencing on the earlier of
         (i) the date such Treasury Stock Purchase Compliance

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         Certificate is sent to the Agent or (ii) the date of the initial
         treasury stock purchase covered by such certificate."

         Section 10.  Addition to Section 8.5. Three new sentences are hereby
added to the end of Section 8.5 of the Credit Agreement, to read in their
entirety as follows:

                  "Without limiting the foregoing, Borrower will not make, and
         will not permit any Subsidiary to make or suffer any Affiliate to make,
         any advance, loan, extension of credit or capital contribution to or
         investment in, or purchase any stock, bonds, notes, debentures or other
         securities of any one or more of, the Hong Kong Companies or any other
         subsidiary of Trade Source, in excess of $400,000 at any one time
         outstanding in the aggregate. Further without limiting the foregoing,
         Borrower will not make, and will not permit any Subsidiary to make or
         suffer any Affiliate to make, any advance, loan, extension of credit or
         capital contribution to or investment in, or purchase any stock, bonds,
         notes, debentures or other securities of any one or more of, Prime Home
         or any subsidiary thereof. In addition, Trade Source shall cause Prime
         Home to punctually pay any and all management and other fees due and
         payable from time to time by Prime Home to Trade Source."

         Section 11.  Amendment of Section 9.1. Section 9.1 of the Credit
Agreement is hereby amended to read in its entirety as follows:

                  "Section 9.1 Consolidated Debt to Consolidated Tangible Net
         Worth Ratio. Borrower will at all times maintain a Consolidated Debt to
         Consolidated Tangible Net Worth Ratio of not greater than 2.25 to 1.0."

         Section 12.  Amendment of Section 9.2. Section 9.2 of the Credit
Agreement is hereby amended to read in its entirety as follows:

                  "Section 9.2 Capital Expenditures. Borrower will not permit
         the aggregate capital expenditures of Borrower and its Subsidiaries to
         exceed $600,000 during any fiscal year."

         Section 13.  Amendment of Section 9.3. Section 9.3 of the Credit
Agreement is hereby amended to read in its entirety as follows:

                  "Section 9.3 Funded Debt to EBITDA Ratio. Borrower will at all
         times maintain a Funded Debt to EBITDA Ratio, determined monthly with
         respect to the twelve most recently completed calendar months, of not
         greater than 2.5 to 1.0."

         Section 14.  Addition of Section 9.4. A new Section 9.4 of the Credit
Agreement is hereby added to read in its entirety as follows:

                  "Section 9.4 EBITDA of Trade Source. Trade Source will at all
         times maintain EBITDA (determined and defined for purposes of this
         Section 9.4 only as if Trade Source

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         were the sole Borrower) of not less than $300,000 in each fiscal
         quarter ending June 30th or September 30th, and not less than $200,000
         in each fiscal quarter ending December 31st or March 31st, in each case
         on a consolidated basis but in any event including any EBITDA allocable
         or attributable to Trade Source's membership or other interest in Prime
         Home."

         Section 15.  Amendment of Exhibits and Schedules. Exhibits A and F to
the Credit Agreement are hereby amended in their entireties to be in the form of
Exhibits A and F, respectively, attached to this Amendment. There are hereby
added Exhibits K and L to the Credit Agreement, each as attached to this
Amendment. The Schedules to the Credit Agreement are hereby amended in their
entireties to be in the form of the Schedules attached to this Amendment.

         Section 16.  Amendment of Index to Exhibits. The Index to Exhibits
appearing after the signatures of the Borrower, the Agent, and the Lenders is
hereby amended in its entirety to be as follows:

<TABLE>
<CAPTION>


         Exhibit                    Description of Exhibit
         -------                    ----------------------
<S>                                 <C>
         A                          Note
         B                          Advance Request Form
         C                          Borrowing Base Report
         D                          Craftmade Security Agreement
         E                          Durocraft Security Agreement
         F                          Covenant Compliance Certificate
         F-1                        Treasury Stock Purchase Compliance Certificate
         G                          C/D/R Guaranty
         H                          Form of Application
         I                          Form of Assignment and Acceptance
         J                          Assignment of Life Insurance
         K                          Stock Pledge Agreement
         L                          Trade Source Security Agreement
</TABLE>


         Section 17.  Representations; No Event of Default.  Borrower hereby 
represents and warrants to the Agent and the Lenders that:

-        the execution, delivery and performance of this Amendment and any and
         all other Loan Documents executed and delivered in connection with this
         Amendment have been authorized by all requisite corporate action on the
         part of Borrower and Guarantor and will not violate the certificate of
         incorporation or articles of incorporation (or other charter
         documents), as applicable, or bylaws of any of Borrower and Guarantor;
         and

-        neither the certificate of incorporation or articles of incorporation
         (or other charter documents), as applicable, nor bylaws of any of
         Borrower and Guarantor have been amended or revoked since May 30, 1996,
         except as certified to the Agent and the Lenders by

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         Borrower or Guarantor contemporaneously with the execution and delivery
         of this Amendment; and

-        the representations and warranties contained in the Credit Agreement,
         as amended hereby, and any other Loan Document, are true and correct on
         and as of the date hereof as though made on and as of the date hereof;
         and

-        as of the date of this Amendment, no Event of Default has occurred and
         is continuing and no event or condition has occurred that with the
         giving of notice or lapse of time or both would be an Event of Default;
         and

-        each of Borrower and Guarantor is in full compliance with all covenants
         and agreements contained in the Credit Agreement, as amended hereby.

         Section 18.  Conditions Precedent. The effectiveness of this Amendment 
shall be subject to the following conditions precedent:

-        The merger of Trade Source International, Inc., a California
         corporation, with and into Trade Source International, Inc., a Delaware
         corporation and a wholly-owned subsidiary of Craftmade International,
         Inc., shall have become effective pursuant to the terms and conditions
         of that certain Merger Agreement (the "Merger Agreement") made as of
         July 1, 1998 by and among Craftmade International, Inc., Trade Source
         International, Inc., a Delaware corporation, Trade Source
         International, Inc., a California corporation, and the latter's
         shareholders identified therein; and

-        Each Lender shall have received a promissory note of Borrower payable
         to the order of such Lender, in substantially the form of EXHIBIT A
         hereto, with appropriate completion, which promissory note shall be in
         modification, increase and replacement of (but not in extinguishment
         of) those certain promissory notes in the form of EXHIBIT A to the
         Credit Agreement, and dated as of May 30, 1996 and in the stated
         maximum principal amount of $6,000,000; and

-        Lenders shall have received the Trade Source Security Agreement and the
         Stock Pledge Agreement (together with the stock certificates, duly
         endorsed in blank, contemplated to be pledged thereby); and

-        Lenders shall have received Uniform Commercial Code financing
         statements or amendments executed by Trade Source, and covering such
         Collateral of Trade Source as the Agent may request, and Uniform
         Commercial Code termination statements, assignments or lien
         subordination agreements as the Agent may request; and

-        Lenders shall have received 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

THIRD AMENDMENT TO CREDIT AGREEMENT - Page 8


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         to all insurance policies covering Collateral, to the extent not
         previously delivered to the Agent; and

-        Lenders shall have received a Secretary's Certificate from the
         secretary or assistant secretary of Borrower and Guarantor certifying
         and attaching appropriate corporate resolutions regarding the
         transactions contemplated hereby, and statements of incumbency; and

-        Lenders shall have received certified copies of the certificate of
         incorporation and bylaws of Trade Source International, Inc., and the
         memorandum of association of and other organizational documents of each
         of the Hong Kong Companies; and

-        Lenders shall have received such other documents incidental and
         appropriate to the transactions provided for herein and in the Merger
         Agreement as Lenders or their counsel may reasonably request
         (including, without limitation, a copy of the opinion of Weintraub
         Genshlea & Sproul referenced in Section 2.7(a)(v) of the Merger
         Agreement, together with a letter addressed to the Agent and the
         Lenders stating that the Agent and the Lenders may rely on the same as
         if it were addressed to them specifically), and all such documents
         shall be in form and substance reasonably satisfactory to Lenders; and

-        All legal matters incident to the consummation of the transactions
         contemplated hereby shall be reasonably satisfactory to special counsel
         for Lenders retained at the expense of Borrower.

         Section 19.  Guaranty. C/D/R hereby acknowledges, consents and agrees 
to this Amendment and (a) acknowledges that its obligations under that certain
Guaranty Agreement executed by it effective as of May 30, 1996, in favor of the
Agent and the Lenders, includes a guaranty of all of the obligations,
indebtedness and liabilities of the Borrower under the Credit Agreement as
amended by this Amendment, (b) represents to the Agent and the Lenders that such
Guaranty remains in full force and effect and shall continue to be its legal,
valid and binding obligation, enforceable against it in accordance with its
terms, and (c) agrees that this Amendment and all documents executed in
connection herewith do not operate, and that the prior amendments to the Credit
Agreement and all documents executed in connection therewith have not operated,
to reduce or discharge its obligations under such Guaranty.

         Section 20.  Ratification. Borrower acknowledges that each of the Loan
Documents is in all respects ratified and confirmed, and all of the rights,
powers and privileges created by this Amendment or under the Loan Documents are
ratified, extended, carried forward and remain in full force and effect except
as the Credit Agreement is amended by this Amendment. Except as expressly
amended by this Amendment, the Credit Agreement is and shall be unchanged.

         Section 21.  Liens and Security Interests.  Borrower hereby extends and
renews the Liens and security interests previously granted to the Agent and the
Lenders and agrees that this

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Amendment shall in no manner affect or impair any Liens or security interests
previously granted. Borrower hereby acknowledges that such Liens and security
interests are valid and existing.

         Section 22.  Counterparts. This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed an original and all of which taken
together shall constitute but one and the same agreement.

         Section 23.  Joint and Several; Loan Documents. Any and all obligations
of Borrower under the Loan Documents are joint and several, whether or not
expressly so stated. This Amendment shall be included within the definition of
"Loan Documents" as used in the Agreement. The "Agreement" as used in the Credit
Agreement is a reference to the Credit Agreement as amended by this Amendment.

         Section 24.  Enforceability. Borrower and Guarantor hereby represent 
and warrant that, as of the date of this Amendment, the Credit Agreement and all
documents and instruments executed in connection therewith are in full force and
effect and that there are no claims, counterclaims, offsets or defenses to any
of such documents or instruments.

         Section 25.  Governing Law.  THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND AS
APPLICABLE, THE LAWS OF THE UNITED STATES OF AMERICA.

         THIS WRITTEN AMENDMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE A "LOAN
AGREEMENT" AS DEFINED IN SECTION 26.02(A) OF THE TEXAS BUSINESS & COMMERCE CODE,
AND REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.

         THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed effective as of the Effective Date.

              BORROWER:                 CRAFTMADE INTERNATIONAL, INC.


                                        By: /s/ James R. Ridings
                                           -------------------------------------
                                        Name:  James R. Ridings
                                        Title:  Chief Executive Officer




THIRD AMENDMENT TO CREDIT AGREEMENT - Page 10


<PAGE>   11


                                        DUROCRAFT INTERNATIONAL, INC.


                                        By: /s/ James R. Ridings
                                           -------------------------------------
                                        Name:  James R. Ridings
                                        Title:  Chief Executive Officer


                                        TRADE SOURCE INTERNATIONAL, INC.


                                        By: /s/ James R. Ridings
                                           -------------------------------------
                                        Name:  James R. Ridings
                                        Title:  Chief Executive Officer

              GUARANTOR:                C/D/R INCORPORATED


                                        By: /s/ Clifford Crimmings
                                           -------------------------------------
                                        Name:  Clifford Crimings
                                        Title:  President


              LENDERS:                  CHASE BANK OF TEXAS, NATIONAL
                                        ASSOCIATION, as Agent and as Lender


                                        By: /s/ Jerry G. Petrey
                                           -------------------------------------
                                        Name:  Jerry G. Petrey
                                        Title:  Vice President


                                        FROST NATIONAL BANK


                                        By: /s/ Michael Smith
                                           -------------------------------------
                                        Name:  Michael Smith
                                        Title:  Senior Vice President




THIRD AMENDMENT TO CREDIT AGREEMENT - Page 11
<PAGE>   12





                                PROMISSORY NOTE


$7,000,000.00                     Dallas, Texas                July 1, 1998

         FOR VALUE RECEIVED, the undersigned CRAFTMADE INTERNATIONAL, INC., a
Delaware corporation, DUROCRAFT INTERNATIONAL, INC., a Texas corporation, and
TRADE SOURCE INTERNATIONAL, INC., a Delaware corporation (jointly and
severally, "Maker"), hereby promise to pay to the order of FROST NATIONAL BANK
("Payee"), at the offices of the Agent at 2200 Ross Avenue, P.O. Box 660197,
Dallas, Dallas County, Texas 75266-0197, in lawful money of the United States
of America, the principal sum of SEVEN MILLION DOLLARS AND 00/100ths
($7,000,000.00), 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 Credit
Agreement dated as of May 30, 1996 among Maker, Chase Bank of Texas, National
Association (formerly named Texas Commerce Bank National Association) as Agent,
and the Lenders parties thereto (as the same may be amended or otherwise
modified from time to time, including most recently pursuant to that certain
Third Amendment to Credit Agreement of even date herewith, 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 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 that 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, that if at any time the rate of interest specified in clause
(b) preceding shall exceed the Maximum Rate, thereby causing the interest rate
thereon to be limited to the Maximum Rate, then any subsequent reduction in the
Applicable Rate shall not reduce the rate of interest thereon below the Maximum
Rate until such time as the aggregate amount of interest accrued thereon equals
the aggregate amount of interest which would have accrued thereon if the
interest rate specified in clause (b) preceding shall 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
July 31, 1998, 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.

         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
<PAGE>   13
attorney for collection, or if it is collected through any legal proceedings,
then 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 hereof, which records shall be prima facie evidence as to the
outstanding principal amount of this Note; provided, however, that 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 made and given in modification, increase and replacement
of (but not in extinguishment of) that certain promissory note executed and
delivered by Maker, payable to the order of Payee, dated as of May 30, 1996,
and in the stated maximum principal amount of $6,000,000.

         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 ORAL AGREEMENTS BETWEEN MAKER AND
PAYEE.

                                    CRAFTMADE INTERNATIONAL, INC.


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


PROMISSORY NOTE - Page 2
<PAGE>   14
                                       DUROCRAFT INTERNATIONAL, INC.


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


                                       TRADE SOURCE INTERNATIONAL, INC.


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






PROMISSORY NOTE - Page 3
<PAGE>   15
                                                                   Exhibit F
                        COVENANT COMPLIANCE CERTIFICATE
                                      
Chase Bank of Texas, National Association
Attention:  Jerry G. Petrey, Vice President
500 East Border Street
P.O. Box 250
Arlington, Texas 76004

Gentlemen:

         This Covenant Compliance Certificate covers the period from
          , 19   to            , 19   and is delivered pursuant to that certain
Credit Agreement (the "Credit Agreement") dated as of May 30, 1996, as amended,
among Craftmade International, Inc., DuroCraft International, Inc., Trade
Source International, Inc., Chase Bank of Texas, National Association, as
Agent, and the Lenders 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:

         1.      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).

<TABLE>
         <S>    <C>
         2.      Consolidated Debt to Consolidated Tangible Net Worth Ratio
                 (a)      Consolidated Debt                        $                         
                                                                    ------------------------
                 (b)      Consolidated Tangible Net Worth          $                         
                                                                    ------------------------
                 (c)      Ratio [(a) divided by (b)]
                          (must not be greater than 2.25)          $                        
                                                                    ------------------------

         3.      Capital Expenditures
                          (the beginning of current fiscal year through date hereof)
                          (must not exceed $600,000 in any fiscal year,
                          excluding Mortgage Debt)                           $                        
                                                                              ------------------------

         4.      Funded Debt to EBITDA Ratio (calculated with respect to the twelve most recently completed calendar
         months)
                 (a)      Funded Debt                                        $                        
                                                                              ------------------------
                 (b)      EBITDA
                          Net income
                          (after interest & tax expenses)                    $                        
                                                                              ------------------------
</TABLE>
<PAGE>   16
<TABLE>
         <S>     <C>
                          Plus: Interest Expense                             $                        
                                                                              ------------------------
                          Plus:  Tax Expense                                 $                        
                                                                              ------------------------
                          Plus:  Depreciation                                $                         
                                                                              ------------------------
                          Plus:  Amortization                                $                         
                                                                              ------------------------

                          Equals: EBITDA                                     $                        
                                                                              ------------------------
                          [(a) divided by (b)] (must not be greater
                             than 2.50)                                                                        
                                                                              ------------------------

         5.      EBITDA of Trade Source (calculated as provided in Section 9.4 of the Credit Agreement)
                          EBITDA of Trade Source                             $                        
                                                                              ------------------------
                          (must be greater than or equal to
                          $300,000 for each fiscal quarter
                          ending June 30th or September 30th,
                          and $200,000 for each fiscal quarter ending
                          December 31st or March 31st)

</TABLE>
         Attached hereto are Schedules setting forth the calculations
supporting the computations set forth in Items 2, 3, 4 and 5 of this Covenant
Compliance 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           , 199  .

                                               CRAFTMADE INTERNATIONAL, INC.


                                               By:
                                                  ---------------------------
                                                  Name: Ken Cancienne
                                                  Title: Chief Financial Officer





COVENANT COMPLIANCE CERTIFICATE - Page 2
<PAGE>   17
                                               DUROCRAFT INTERNATIONAL, INC.


                                               By:
                                                  ------------------------------
                                                  Name: Ken Cancienne
                                                  Title: Chief Financial Officer





COVENANT COMPLIANCE CERTIFICATE - Page 3
<PAGE>   18
                                             TRADE SOURCE INTERNATIONAL, INC.


                                             By:
                                                -----------------------------
                                                Name: Ken Cancienne
                                                Title: Chief Financial Officer





COVENANT COMPLIANCE CERTIFICATE - Page 4
<PAGE>   19


                             STOCK PLEDGE AGREEMENT

         THIS STOCK PLEDGE AGREEMENT (this "Agreement") dated as of July 1,
1998, is between CRAFTMADE INTERNATIONAL, INC., a Delaware corporation
("Pledgor"), and CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as agent for the
Lenders or other financial institutions or entities party, as Lenders, to the
Credit Agreement referred to below (in such capacity, together with its
successors in such capacity, the "Agent").

         Pledgor, Durocraft International, Inc., a Delaware corporation and
Trade Source International, Inc., a Delaware corporation (collectively, the
"Companies"), the Guarantor and Lenders named therein, and Agent are parties to
a Credit Agreement dated as of May 30, 1996 (as modified and supplemented and
in effect from time to time, the "Credit Agreement"), providing, subject to the
terms and conditions thereof, for extensions of credit to be made by said
Lenders to the Companies in an aggregate principal or face amount not exceeding
$14,000,000.

         To induce said Lenders to extend credit under the Credit Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Pledgor has agreed to pledge and grant a
security interest in the Collateral (as hereinafter defined) as security for
the Secured Obligations (as so defined).  Accordingly, the parties hereto agree
as follows:

         1.  Definitions.  Terms defined in the Credit Agreement are used
herein as defined therein.  In addition, as used herein:

                 "Code" shall mean the Uniform Commercial Code as in effect
from time to time in the State of Texas.

                 "Collateral" shall mean all property specifically described on
         Annex 1 attached hereto and made a part hereof.  The term Collateral,
         as used herein, shall also include (i) all certificates, instruments
         and/or other documents evidencing the foregoing, (ii) all renewals,
         replacements and substitutions of all of the foregoing, (iii) all
         Additional Property (as hereinafter defined), and (iv) all products
         and proceeds of all of the foregoing.  The designation of proceeds
         does not authorize Pledgor to sell, transfer or otherwise convey any
         of the foregoing property.  The delivery at any time by Pledgor to
         Agent of any property as a pledge to secure payment or performance of
         any indebtedness or obligation whatsoever shall also constitute a
         pledge of such property as Collateral hereunder.

                 "Issuer" shall mean the respective entity identified on Annex
1 hereto under the caption "Issuer."

                 "Secured Obligations" shall mean the principal of and interest
         on the loans made by the Lenders to, and the Notes of, the Companies,
         all other amounts from time to time owing to the Lenders or Agent by
         the Companies and any Obligated Party under the Loan Documents, all
         other Obligations, and all other obligations of the Companies under
         the Loan Documents.

         All words and phrases used herein which are expressly defined in
Section 1.201, Chapter 8 or Chapter 9 of the Code shall have the meaning
provided for therein.  Other words and phrases
<PAGE>   20
defined elsewhere in the Code shall have the meaning specified therein except
to the extent such meaning is inconsistent with a definition in Section 1.201,
Chapter 8 or Chapter 9 of the Code.

         2.      Security Interest.  As security for the Secured Obligations
and for value received, Pledgor hereby pledges and grants to Agent a continuing
security interest in the Collateral.

         3.      Additional Property.  Collateral shall also include the
following property (collectively, the "Additional Property") which any Pledgor
becomes entitled to receive or shall receive in connection with any other
Collateral:  (a) any interest or stock certificate, including without
limitation, any certificate representing a stock dividend or distribution or
any certificate in connection with any recapitalization, reclassification,
merger, consolidation, conversion, sale of assets, combination of shares or
interests, stock split or spin-off; (b) any option, warrant, subscription or
right, whether as an addition to or in substitution of any other Collateral;
(c) any dividends or distributions of any kind whatsoever, whether
distributable in cash, stock, interests or other property; (d) any interest,
premium or principal payments; and (e) any conversion or redemption proceeds;
provided, however, that until the occurrence of a Event of Default (as
hereinafter defined), Pledgor shall be entitled to all cash dividends,
distributions and all interest paid on the Collateral (except interest paid on
any certificate of deposit pledged hereunder) free of the security interest
created under this Agreement.  All Additional Property received by any Pledgor
contrary to the preceding sentence shall be received in trust for the benefit
of Agent.  All Additional Property and all certificates or other written
instruments or documents evidencing and/or representing the Additional Property
that is received by Pledgor, together with such instruments of transfer as
Agent may request, shall immediately be delivered to or deposited with Agent
and held by Agent as Collateral under the terms of this Agreement.  If the
Additional Property received by Pledgor shall be interests, shares of stock or
other securities, such interests, shares of stock or other securities shall be
duly endorsed in blank or accompanied by proper instruments of transfer and
assignment duly executed in blank with, if requested by Agent, signatures
guaranteed by a member or member organization in good standing of an authorized
Securities Transfer Agents Medallion Program, all in form and substance
satisfactory to Agent. Agent shall be deemed to have possession of any
Collateral in transit to Agent or its agent.

         4.      Voting Rights.  As long as no Event of Default shall have
occurred hereunder, any voting rights incident to any interest, stock or other
securities pledged as Collateral may be exercised by Pledgor; provided,
however, that Pledgor will not exercise, or cause to be exercised, any such
voting rights, without the prior written consent of Agent, if the direct or
indirect effect of such vote will result in an Event of Default hereunder or
adversely affect Agent's security interest hereunder in any material manner.

         5.      Maintenance of Collateral.  Other than the exercise of
reasonable care to assure the safe custody of any Collateral in Agent's
possession from time to time, Agent does not have any obligation, duty or
responsibility with respect to the Collateral.  Without limiting the generality
of the foregoing, Agent shall not have any obligation, duty or responsibility
to do any of the following:  (a) ascertain any maturities, calls, conversions,
exchanges, offers, tenders or similar matters relating to the Collateral or
informing Pledgor with respect to any such matters; (b) fix, preserve or
exercise any right, privilege or option (whether conversion, redemption or
otherwise) with respect to the Collateral unless (i) Pledgor makes written
demand to Agent to do so, (ii) such written demand is





STOCK PLEDGE AGREEMENT - Page 2
<PAGE>   21
received by Agent in sufficient time to permit Agent to take the action
demanded in the ordinary course of its business, and (iii) Pledgor provides
additional collateral, acceptable to Agent in its sole discretion; (c) collect
any amounts payable in respect of the Collateral (Agent being liable to account
to Pledgor only for what Agent may actually receive or collect thereon); (d)
sell all or any portion of the Collateral to avoid market loss; (e) sell all or
any portion of the Collateral unless and until (i) Pledgor makes written demand
upon Agent to sell the Collateral, and (ii) Pledgor provides additional
collateral, acceptable to Agent in its sole discretion; or (f) hold the
Collateral for or on behalf of any party other than Pledgor.

         6.      Representations and Warranties.  Pledgor hereby represents and
warrants the following to Agent:

                 (a)      Enforceability.  This Agreement constitutes legal,
         valid and binding obligations of Pledgor, enforceable in accordance
         with its terms, except as limited by bankruptcy, insolvency or similar
         laws of general application relating to the enforcement of creditors'
         rights and except to the extent specific remedies may generally be
         limited by equitable principles.

                 (b)      Ownership and Liens.  Pledgor has good and marketable
         title to the Collateral free and clear of all liens, security
         interests, encumbrances or adverse claims, except for the security
         interest created by this Agreement.  No dispute, right of setoff,
         counterclaim or defense exists with respect to all or any part of the
         Collateral.  Pledgor has not executed any other security agreement
         currently affecting the Collateral and no financing statement or other
         instrument similar in effect covering all or any part of the
         Collateral is on file in any recording office except as may have been
         executed or filed in favor of Agent.

                 (c)      No Conflicts or Consents.  Neither the ownership, the
         intended use of the Collateral by Pledgor, the grant of the security
         interest by Pledgor to Agent herein nor the exercise by Agent of its
         rights or remedies hereunder, will (i) conflict with any provision of
         (A) any domestic or foreign law, statute, rule or regulation, (B) any
         articles or certificate of incorporation, charter or bylaws applicable
         to or binding upon any Pledgor, or (C) any agreement, judgment,
         license, order or permit applicable to or binding upon any Pledgor or
         otherwise affecting the Collateral, or (ii) result in or require the
         creation of any lien, charge or encumbrance upon any assets or
         properties of any Pledgor except as may be expressly contemplated in
         the Loan Documents.  Except as expressly contemplated in the Loan
         Documents, no consent, approval, authorization or order of, and no
         notice to or filing with, any court, governmental authority or third
         party is required in connection with the grant by Pledgor of the
         security interest herein or the exercise by Agent of its rights and
         remedies hereunder.

                 (d)      Security Interest.  Pledgor has and will have at all
         times full right, power and authority to pledge or grant a security
         interest in the Collateral to Agent in the manner provided herein,
         free and clear of any lien, security interest or other charge or
         encumbrance.  This Agreement creates a legal, valid and binding
         security interest in favor of Agent in the Collateral.





STOCK PLEDGE AGREEMENT - Page 3
<PAGE>   22
                 (e)      Location.  Pledgor's principal places of business and
         the offices where the records concerning the Collateral are kept are
         located at the address set forth on the signature page hereof opposite
         Pledgor's name.

                 (f)      Solvency of Pledgor.  As of the date hereof, and
         after giving effect to this Agreement and the completion of all other
         transactions contemplated by Pledgor at the time of the execution of
         this Agreement, (i) Pledgor is and will be solvent, (ii) the fair
         saleable value of Pledgor's assets exceeds and will continue to exceed
         Pledgor's liabilities (both fixed and contingent), and (iii) Pledgor
         is paying and will continue to be able to pay its debts as they
         mature.

                 (g)      Securities.  Any certificates evidencing securities
         pledged as Collateral are valid and genuine and have not been altered.
         All securities pledged as Collateral have been duly authorized and
         validly issued, are fully paid and non-assessable, and were not issued
         in violation of the rights of any party or of any agreement by which
         any Pledgor or the issuer thereof is bound.  No restrictions or
         conditions exist with respect to the transfer or voting of any
         securities pledged as Collateral, except as have been disclosed to
         Agent in writing.  No issuer of such securities has any outstanding
         stock rights, rights to subscribe, options, warrants or convertible
         securities outstanding or any other rights outstanding entitling any
         party to have issued to such party capital stock of such issuer,
         except as has been disclosed to Agent in writing.

         7.      Affirmative Covenants.  Pledgor will comply with the covenants
contained in this Section at all times during the period of time this Agreement
is effective unless Agent shall otherwise consent in writing.

                 (a)      Ownership and Liens.  Pledgor will maintain good and
         marketable title to all Collateral free and clear of all liens,
         security interests, encumbrances or adverse claims, except for the
         security interest created by this Agreement.  Pledgor will not permit
         any dispute, right of setoff, counterclaim or defense to exist with
         respect to all or any part of the Collateral.  Pledgor will cause any
         financing statement or other security instrument with respect to the
         Collateral to be terminated, except as may exist or as may have been
         filed in favor of Agent.  Pledgor will defend at its expense Agent's
         right, title and security interest in and to the Collateral against
         the claims of any third party.

                 (b)      Inspection of Books and Records.  Pledgor will keep
         adequate records concerning the Collateral and will permit Agent and
         all representatives and agents appointed by Agent upon reasonable
         prior written notice to inspect Pledgor's books and records of or
         relating to the Collateral at any time during normal business hours,
         to make and take away photocopies, photographs and printouts thereof
         and to write down and record any such information.

                 (c)      Adverse Claim.  Pledgor covenants and agrees to
         promptly notify Agent of any claim, action or proceeding affecting
         title to the Collateral, or any part thereof, or the security interest
         created hereunder and, at Pledgor's expense, defend Agent's security
         interest in the Collateral against the claims of any third party.
         Pledgor also covenants and agrees to





STOCK PLEDGE AGREEMENT - Page 4
<PAGE>   23
         promptly deliver to Agent a copy of all written notices received by
         Pledgor with respect to the Collateral, including without limitation,
         notices received from the issuer of any securities pledged hereunder
         as Collateral.

                 (d)      Delivery of Instruments and/or Certificates.
         Contemporaneously herewith, Pledgor covenants and agrees to deliver to
         Agent any certificates, documents or instruments representing or
         evidencing the Collateral, with Pledgor's endorsement thereon and/or
         accompanied by proper instruments of transfer and assignment duly
         executed in blank with, if requested by Agent, signatures guaranteed
         by a member or member organization in good standing of an authorized
         Securities Transfer Agents Medallion Program, all in form and
         substance satisfactory to Agent.

                 (e)      Further Assurances.  Pledgor will contemporaneously
         with the execution hereof and from time to time thereafter at its
         expense promptly execute and deliver all further instruments and
         documents and take all further action necessary or appropriate or that
         Agent may reasonably request in order (i) to perfect and protect the
         security interest created or purported to be created hereby and the
         first priority of such security interest, (ii) to enable Agent to
         exercise and enforce its rights and remedies hereunder in respect of
         the Collateral, and (iii) to otherwise effect the purposes of this
         Agreement, including without limitation:  (A) executing and filing any
         financing or continuation statements, or any amendments thereto; (B)
         obtaining written confirmation from the issuer of any securities
         pledged as Collateral of the pledge of such securities, in form and
         substance reasonably satisfactory to Agent; (C) cooperating with Agent
         in registering the pledge of any securities pledged as Collateral with
         the issuer of such securities; (D) delivering notice of Agent's
         security interest in any securities pledged as Collateral to any
         securities or financial intermediary, clearing corporation or other
         party required by Agent, in form and substance reasonably satisfactory
         to Agent; and (E) obtaining written confirmation of the pledge of any
         securities constituting Collateral from any securities or financial
         intermediary, clearing corporation or other party required by Agent,
         in form and substance reasonably satisfactory to Agent.  If all or any
         part of the Collateral is securities issued by an agency or department
         of the United States, Pledgor covenants and agrees, at Agent's
         request, to cooperate in registering such securities in Agent's name
         or with Agent's account maintained with a Federal Reserve Bank.  When
         applicable law provides more than one method of perfection of Agent's
         security interest in the Collateral, Agent may choose the method(s) to
         be used.

         8.      Negative Covenants.  Pledgor will comply with the covenants
contained in this Section at all times during the period of time this Agreement
is effective, unless Agent shall otherwise consent in writing.

                 (a)      Transfer or Encumbrance.  Pledgor will not (i) sell,
         assign (by operation of law or otherwise) or transfer Pledgor's rights
         in any of the Collateral, (ii) grant a lien or security interest in or
         execute, file or record any financing statement or other security
         instrument with respect to the Collateral to any party other than
         Agent, or (iii) deliver actual or constructive possession of any
         certificate, instrument or document evidencing and/or representing any
         of the Collateral to any party other than Agent.





STOCK PLEDGE AGREEMENT - Page 5
<PAGE>   24
                 (b)      Impairment of Security Interest.  Pledgor will not
         take or fail to take any action which would in any manner impair the
         enforceability of Agent's security interest in any Collateral.

                 (c)      Restrictions on Securities.  Pledgor will not enter
         into any agreement creating, or otherwise permit to exist, any
         restriction or condition upon the transfer, voting or control of any
         securities pledged as Collateral, except as consented to in writing by
         Agent.

                 (d)      Dilution of Ownership.  As to any securities pledged
         as Collateral (other than securities of a class which are publicly
         traded), Pledgor will not consent to or approve of the issuance of (i)
         any additional shares of any class of securities of such issuer
         (unless immediately upon issuance additional securities are pledged
         and delivered to Agent pursuant to the terms hereof to the extent
         necessary to give Agent a security interest after such issuance in at
         least the same percentage of such issuer's outstanding securities as
         Agent had before such issuance), (ii) any instrument convertible
         voluntarily by the holder thereof or automatically upon the occurrence
         or non-occurrence of any event or condition into, or exchangeable for,
         any such securities, or (iii) any warrants, options, contracts or
         other commitments entitling any third party to purchase or otherwise
         acquire any such securities.

         9.      Rights of Agent.  Agent shall have the rights contained in
this Section at all times during the period of time this Agreement is
effective.

                 (a)      Power of Attorney.  Pledgor hereby irrevocably
         appoints Agent as Pledgor's attorney-in-fact, such power of attorney
         being coupled with an interest, with full authority in the place and
         stead of Pledgor and in the name of Pledgor or otherwise, after and
         during the continuation of an Event of Default to take any action and
         to execute any instrument which Agent may from time to time in Agent's
         discretion deem necessary or appropriate to accomplish the purposes of
         this Agreement, including without limitation, the following action:
         (i) transfer any securities, instruments, documents or certificates
         pledged as Collateral in the name of Agent or its nominee; (ii) use
         any interest, premium or principal payments, conversion or redemption
         proceeds or other cash proceeds received in connection with any
         Collateral to reduce any of the Secured Obligations; (iii) exchange
         any of the securities pledged as Collateral for any other property
         upon any merger, consolidation, reorganization, recapitalization or
         other readjustment of the issuer thereof, and, in connection
         therewith, to deposit and deliver any and all of such securities with
         any committee, depository, transfer agent, registrar or other
         designated agent upon such terms and conditions as Agent may deem
         necessary or appropriate; (iv) exercise or comply with any conversion,
         exchange, redemption, subscription or any other right, privilege or
         option pertaining to any securities pledged as Collateral; provided,
         however, except as provided herein, Agent shall not have a duty to
         exercise or comply with any such right, privilege or option (whether
         conversion, redemption or otherwise) and shall not be responsible for
         any delay or failure to do so; and (v) file any claims or take any
         action or institute any proceedings which Agent may deem necessary or
         appropriate for the collection and/or preservation of the Collateral
         or otherwise to enforce the rights of Agent with respect to the
         Collateral.





STOCK PLEDGE AGREEMENT - Page 6
<PAGE>   25
                 (b)      Performance by Agent.  If Pledgor fails to perform
         any agreement or obligation provided herein, Agent may itself perform,
         or cause performance of, such agreement or obligation, and the
         expenses of Agent incurred in connection therewith shall be a part of
         the Secured Obligations, secured by the Collateral and payable by
         Pledgor on demand.

Notwithstanding any other provision herein to the contrary, Agent does not have
any duty to exercise or continue to exercise any of the foregoing rights and
shall not be responsible for any failure to do so or for any delay in doing so.

         10.     Events of Default.  Each of the following constitutes an
"Event of Default" under this Agreement:

                 (a)  Non-Performance of Covenants.  The failure of Pledgor to
         timely and properly observe, keep or perform any covenant, agreement,
         warranty or condition required herein or in any of the other Loan
         Documents; or

                 (b)  Default Under other Loan Documents.  The occurrence of an
         event of default under any of the other Loan Documents (including,
         without limitation, a Potential Event of Default under the Credit
         Agreement); or

                 (c)  False Representation.  Any representation contained
         herein or in any of the other Loan Documents made by the Companies or
         any other Obligated Party is false or misleading in any material
         respect; or

                 (d)  Execution on Collateral.  The Collateral or any portion
         thereof is taken on execution or other process of law in any action
         against Pledgor; or

                 (e)  Abandonment.  Pledgor abandons the Collateral or any
         portion thereof; or

                 (f)  Action by Other Lienholder.  The holder of any lien or
         security interest on any of the assets of Pledgor, including without
         limitation, the Collateral (without hereby implying the consent of
         Agent to the existence or creation of any such lien or security
         interest on the Collateral), declares a default thereunder or
         institutes foreclosure or other proceedings for the enforcement of its
         remedies thereunder; or

                 (g)  Legal Incapacity.  The death or legal incapacity of
         Pledgor.

         11.     Remedies and Related Rights.  If an Event of Default shall
have occurred, and without limiting any other rights and remedies provided
herein, under any of the other Loan Documents or otherwise available to Agent,
Agent may exercise one or more of the rights and remedies provided in this
Section.

                 (a)      Remedies.  Agent may from time to time at its
         discretion, without limitation and without notice except as expressly
         provided in any of the Loan Documents:





STOCK PLEDGE AGREEMENT - Page 7
<PAGE>   26
                          (i)     exercise in respect of the Collateral all the
                 rights and remedies of a secured party under the Code (whether
                 or not the Code applies to the affected Collateral);

                          (ii)    foreclose or otherwise enforce, in whole or
                 in part, the security interest granted hereunder by any
                 available judicial procedure;

                          (iii)   sell or otherwise dispose of, at its office,
                 on the premises of any Pledgor or elsewhere, the Collateral,
                 as a unit or in parcels, by public or private proceedings, and
                 by way of one or more contracts (it being agreed that the sale
                 or other disposition of any part of the Collateral shall not
                 exhaust Agent's power of sale, but sales or other dispositions
                 may be made from time to time until all of the Collateral has
                 been sold or disposed of or until the Secured Obligations have
                 been paid and performed in full), and at any such sale or
                 other disposition it shall not be necessary to exhibit any of
                 the Collateral;

                          (iv)    buy the Collateral, or any portion thereof, at
                 any public sale;

                          (v)     buy the Collateral, or any portion thereof,
                 at any private sale if the Collateral is of a type customarily
                 sold in a recognized market or is of a type which is the
                 subject of widely distributed standard price quotations;

                          (vi)    apply for the appointment of a receiver for
                 the Collateral, and Pledgor hereby consents to any such
                 appointment; and

                          (vii)   at its option, retain the Collateral in
                 satisfaction of the Secured Obligations whenever the
                 circumstances are such that Agent is entitled to do so under
                 the Code or otherwise.

         Pledgor agrees that if Pledgor is entitled to receive any notice under
         the Uniform Commercial Code, as it exists in the state governing any
         such notice, of the sale or other disposition of any Collateral,
         reasonable notice shall be deemed given when such notice is deposited
         in a depository receptacle under the care and custody of the United
         States Postal Service, postage prepaid, at Pledgor's address set forth
         on the signature page hereof, ten (10) days prior to the date of any
         public sale, or after which a private sale, of any of such Collateral
         is to be held.  Agent shall not be obligated to make any sale of
         Collateral regardless of notice of sale having been given.  Agent 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 further acknowledges and agrees that the
         redemption by Agent of any certificate of deposit pledged as
         Collateral shall be deemed to be a commercially reasonable disposition
         under Section 9.504(c) of the Code.

                 (b)      Private Sale of Securities.  Pledgor recognizes that
         Agent may be unable to effect a public sale of all or any part of the
         securities pledged as Collateral because of restrictions in applicable
         federal and state securities laws and that Agent may, therefore,





STOCK PLEDGE AGREEMENT - Page 8
<PAGE>   27
         determine to make one or more private sales of any such securities to
         a restricted group of purchasers who will be obligated to agree, among
         other things, to acquire such securities for their own account, for
         investment and not with a view to the distribution or resale thereof.
         Pledgor acknowledges that any such private sale may be at prices and
         other terms less favorable than what might have been obtained at a
         public sale and, notwithstanding the foregoing, agrees that each such
         private sale shall be deemed to have been made in a commercially
         reasonable manner and that Agent shall have no obligation to delay the
         sale of any such securities for the period of time necessary to permit
         the issuer to register such securities for public sale under any
         federal or state securities laws.  Pledgor further acknowledges and
         agrees that any offer to sell such securities which has been made
         privately in the manner described above to not less than five (5) bona
         fide offerees shall be deemed to involve a "public sale" for the
         purposes of Section 9.504(c) of the Code, notwithstanding that such
         sale may not constitute a "public offering" under any federal or state
         securities laws and that Agent may, in such event, bid for the
         purchase of such securities.

                 (c)      Application of Proceeds.  If any Event of Default
         shall have occurred, Agent may at its discretion apply or use any cash
         held by Agent as Collateral, and any cash proceeds received by Agent
         in respect of any sale or other disposition of, collection from, or
         other realization upon, all or any part of the Collateral as follows
         in such order and manner as Agent may elect:

                          (i)     to the repayment or reimbursement of the
                 reasonable costs and expenses (including, without limitation,
                 reasonable attorneys' fees and expenses) incurred by Agent in
                 connection with (A) the custody, preservation, use or
                 operation of, or the sale of, collection from, or other
                 realization upon, the Collateral, and (B) the exercise or
                 enforcement of any of the rights and remedies of Agent
                 hereunder;

                          (ii)    to the payment or other satisfaction of any
                 liens and other encumbrances upon the Collateral;

                          (iii)   to the satisfaction of the Secured
                 Obligations;

                          (iv)    by holding such cash and proceeds as
                 Collateral;

                          (v)     to the payment of any other amounts required
                 by applicable law (including without limitation, Section
                 9.504(a)(3) of the Code or any other applicable statutory
                 provision); and

                          (vi)    by delivery to Pledgor or any other party
                 lawfully entitled to receive such cash or proceeds whether by
                 direction of a court of competent jurisdiction or otherwise.

                 (d)      Deficiency.  If the proceeds of any sale of,
         collection from, or other realization upon, all or any part of the
         Collateral by Agent are insufficient to pay all amounts to which Agent
         is legally entitled, then Pledgor shall be liable for the deficiency,
         together with interest thereon as provided in the Loan Documents.





STOCK PLEDGE AGREEMENT - Page 9
<PAGE>   28
                 (e)      Non-Judicial Remedies.  In granting to Agent the
         power to enforce its rights hereunder without prior judicial process
         or judicial hearing, Pledgor expressly waives, renounces and knowingly
         relinquishes any legal right which might otherwise require Agent to
         enforce its rights by judicial process.  Pledgor recognizes and
         concedes that non-judicial remedies are consistent with the usage of
         trade, are responsive to commercial necessity and are the result of a
         bargain at arm's length.  Nothing herein is intended to prevent Agent
         or Pledgor from resorting to judicial process at either party's
         option.

                 (f)      Other Recourse.  Pledgor waives any right to require
         Agent to proceed against any third party, exhaust any Collateral or
         other security for the Secured Obligations, or to have any third party
         joined with Pledgor in any suit arising out of the Secured Obligations
         or any of the Loan Documents, or pursue any other remedy available to
         Agent.  Pledgor further waives any and all notice of acceptance of
         this Agreement and of the creation, modification, rearrangement,
         renewal or extension of the Secured Obligations.  Pledgor further
         waives any defense arising by reason of any disability or other
         defense of any third party or by reason of the cessation from any
         cause whatsoever of the liability of any third party.  Until all of
         the Secured Obligations shall have been paid in full, Pledgor shall
         have no right of subrogation and Pledgor waives the right to enforce
         any remedy which Agent has or may hereafter have against any third
         party prior to such payment, and waives any benefit of and any right
         to participate in any other security whatsoever now or hereafter held
         by Agent prior to such payment.  Pledgor authorize Agent, and without
         notice or demand and without any reservation of rights against Pledgor
         and without affecting Pledgor's liability hereunder or on the Secured
         Obligations, to (i) take or hold any other property of any type from
         any third party as security for the Secured Obligations, and exchange,
         enforce, waive and release any or all of such other property, (ii)
         apply such other property and direct the order or manner of sale
         thereof as Agent may in its discretion determine, (iii) renew, extend,
         accelerate, modify, compromise, settle or release any of the Secured
         Obligations or other security for the Secured Obligations, (iv) waive,
         enforce or modify any of the provisions of any of the Loan Documents
         executed by any third party, and (v) release or substitute any third
         party.

                 (g)      Voting Rights.  Upon the occurrence and during the
         continuance of an Event of Default, Pledgor will not exercise any
         voting rights with respect to securities pledged as Collateral.
         Pledgor hereby irrevocably appoints Agent as Pledgor's
         attorney-in-fact (such power of attorney being coupled with an
         interest) and proxy to exercise any voting rights with respect to
         Pledgor's securities pledged as Collateral upon the occurrence of and
         during the continuance of an Event of Default.

                 (h)      Dividend Rights and Interest Payments.  Upon the
         occurrence of an Event of Default:

                 (i)      all rights of Pledgor to receive and retain
         the distributions, dividends and interest payments which it
         would otherwise be authorized to receive and retain pursuant
         to Section 3 shall automatically cease, and all such rights
         shall thereupon become vested with Agent which shall
         thereafter have the sole right to receive, hold and apply as
         Collateral such distributions, dividends and interest
         payments; and





STOCK PLEDGE AGREEMENT - Page 10
<PAGE>   29
                     (ii)         all distributions, dividend and interest
                 payments which are received by Pledgor contrary to the
                 provisions of clause (i) of this Subsection shall be received
                 in trust for the benefit of Agent, shall be segregated from
                 other funds of Pledgor, and shall be forthwith paid over to
                 Agent in the exact form received (properly endorsed or
                 assigned if requested by Agent), to be held by Agent as
                 Collateral.

         12.     Indemnity.  Pledgor hereby indemnifies and agrees to hold 
         harmless Agent, Lenders and their officers, directors, employees,
         agents and representatives (each an "Indemnified Person") from and
         against any and all liabilities, obligations, claims, losses, damages,
         penalties, actions, judgments, suits, costs, expenses or disbursements
         of any kind or nature (collectively, the "Claims") which may be
         imposed on, incurred by, or asserted against, any Indemnified Person
         arising in connection with this Agreement or the Collateral (including
         without limitation, the enforcement of this Agreement and the defense
         of any Indemnified Person's actions and/or inactions in connection
         with the Loan Documents).  WITHOUT LIMITATION, THE FOREGOING
         INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO ANY
         CLAIMS WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE
         ORDINARY, SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH AND/OR ANY OTHER
         INDEMNIFIED PERSON, except to the limited extent the Claims against an
         Indemnified Person are proximately caused by such Indemnified Person's
         gross negligence or willful misconduct.  If Pledgor or any third party
         ever allege such gross negligence or willful misconduct by any
         Indemnified Person, the indemnification provided for in this Section
         shall nonetheless be paid upon demand, subject to later adjustment or
         reimbursement, until such time as a court of competent jurisdiction
         enters a final judgment as to the extent and effect of the alleged
         gross negligence or willful misconduct. The indemnification provided
         for in this Section shall survive the termination of this Agreement
         and shall extend and continue to benefit each individual or entity who
         is or has at any time been an Indemnified Person hereunder.

         13.     Miscellaneous.

                 (a)      Entire Agreement.  This Agreement contains the entire
         agreement of Agent and Pledgor with respect to the Collateral.  If the
         parties hereto are parties to any prior agreement, either written or
         oral, relating to the Collateral, the terms of this Agreement shall
         amend and supersede the terms of such  prior agreements as to
         transactions on or after the effective date of this Agreement, but all
         security agreements, financing statements, guaranties, other contracts
         and notices for the benefit of Agent shall continue in full force and
         effect to secure the Secured Obligations unless Agent specifically
         releases its rights thereunder by separate release.

                 (b)      Amendment.  No modification, consent or amendment of
         any provision of this Agreement or any of the other Loan Documents
         shall be valid or effective unless the same is in writing and signed
         by the party against whom it is sought to be enforced.

                 (c)      Actions by Agent.  The lien, security interest and
         other security rights of Agent hereunder shall not be impaired by (i)
         any renewal, extension, increase or modification with respect to the
         Secured Obligations, (ii) any surrender, compromise, release, renewal,
         extension, exchange or substitution which Agent may grant with respect





STOCK PLEDGE AGREEMENT - Page 11
<PAGE>   30
         to the Collateral, or (iii) any release or indulgence granted to any
         endorser, guarantor or surety of the Secured Obligations.  The taking
         of additional security by Agent shall not release or impair the lien,
         security interest or other security rights of Agent hereunder or
         affect the obligations of Pledgor hereunder.

                 (d)       Waiver by Agent.  Agent may waive any Event of
         Default without waiving any other prior or subsequent Event of
         Default.  Agent may remedy any default without waiving the Event of
         Default remedied.  Neither the failure by Agent to exercise, nor the
         delay by Agent in exercising, any right or remedy upon any Event of
         Default shall be construed as a waiver of such Event of Default or as
         a waiver of the right to exercise any such right or remedy at a later
         date.  No single or partial exercise by Agent of any right or remedy
         hereunder shall exhaust the same or shall preclude any other or
         further exercise thereof, and every such right or remedy hereunder may
         be exercised at any time.  No waiver of any provision hereof or
         consent to any departure by Pledgor therefrom shall be effective
         unless the same shall be in writing and signed by Agent and then such
         waiver or consent shall be effective only in the specific instances,
         for the purpose for which given and to the extent therein specified.
         No notice to or demand on Pledgor in any case shall of itself entitle
         Pledgor to any other or further notice or demand in similar or other
         circumstances.

                 (e)      Costs and Expenses.  Pledgor will upon demand pay to
         Agent the amount of any and all costs and expenses (including without
         limitation, attorneys' fees and expenses), which Agent may incur in
         connection with (i) the custody, preservation, use or operation of, or
         the sale of, collection from, or other realization upon, the
         Collateral, (ii) the exercise or enforcement of any of the rights of
         Agent under this Agreement, or (iii) the failure by Pledgor to perform
         or observe any of the provisions hereof.

                 (f)      GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY
         AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND
         APPLICABLE FEDERAL LAWS, EXCEPT TO THE EXTENT PERFECTION AND THE
         EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST
         GRANTED HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE
         GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS.

                 (g)      Venue.  This Agreement has been entered into in the
         county in Texas where Agent's address for notice purposes is located,
         and it shall be performable for all purposes in such county.  Courts
         within the State of Texas shall have jurisdiction over any and all
         disputes arising under or pertaining to this Agreement and venue for
         any such disputes shall be in the county or judicial district where
         this Agreement has been executed and delivered.

                 (h)      Severability.  If any provision of this Agreement is
         held by a court of competent jurisdiction to be illegal, invalid or
         unenforceable under present or future laws, such provision shall be
         fully severable, shall not impair or invalidate the remainder of this
         Agreement and the effect thereof shall be confined to the provision
         held to be illegal, invalid or unenforceable.





STOCK PLEDGE AGREEMENT - Page 12
<PAGE>   31
                 (i)      No Obligation.  Nothing contained herein shall be
         construed as an obligation on the part of Agent to extend or continue
         to extend credit to the Companies.

                 (j)      Notices.  All notices, requests, demands or other
         communications required or permitted to be given pursuant to this
         Agreement shall be in writing and given by (i) personal delivery, (ii)
         expedited delivery service with proof of delivery, or (iii) United
         States mail, postage prepaid, registered or certified mail, return
         receipt requested, sent to the intended addressee at the address set
         forth on the signature page hereof or to such different address as the
         addressee shall have designated by written notice sent pursuant to the
         terms hereof and shall be deemed to have been received either, in the
         case of personal delivery, at the time of personal delivery, in the
         case of expedited delivery service, as of the date of first attempted
         delivery at the address and in the manner provided herein, or in the
         case of mail, upon deposit in a depository receptacle under the care
         and custody of the United States Postal Service.  Either party shall
         have the right to change its address for notice hereunder to any other
         location within the continental United States by notice to the other
         party of such new address at least thirty (30) days prior to the
         effective date of such new address.

                 (k)      Binding Effect and Assignment.  This Agreement (i)
         creates a continuing security interest in the Collateral, (ii) shall
         be binding on Pledgor and the heirs, executors, administrators,
         personal representatives, successors and assigns of Pledgor, and (iii)
         shall inure to the benefit of Agent and its successors and assigns.
         Without limiting the generality of the foregoing, Agent may pledge,
         assign or otherwise transfer the Secured Obligations and its rights
         under this Agreement and any of the other Loan Documents to any other
         party.  Pledgor's rights and obligations hereunder may not be assigned
         or otherwise transferred without the prior written consent of Agent.

                 (l)      Termination.  It is contemplated by the parties
         hereto that from time to time there may be no outstanding Secured
         Obligations, but notwithstanding such occurrences, this Agreement
         shall remain valid and shall be in full force and effect as to
         subsequent outstanding Secured Obligations.  Upon (i) the satisfaction
         in full of the Secured Obligations, (ii) the termination or expiration
         of any commitment of Agent to extend credit to the Companies, (iii)
         written request for the termination hereof delivered by Pledgor to
         Agent, and (iv) written release delivered by Agent to Pledgor, this
         Agreement and the security interests created hereby shall terminate.
         Upon termination of this Agreement and Pledgor's written request,
         Agent will, at Pledgor's sole cost and expense, return to Pledgor such
         of the Collateral as shall not have been sold or otherwise disposed of
         or applied pursuant to the terms hereof and execute and deliver to
         Pledgor such documents as Pledgor shall reasonably request to evidence
         such termination.

                 (m)      Cumulative Rights.  All rights and remedies of Agent
         hereunder are cumulative of each other and of every other right or
         remedy which Agent may otherwise have at law or in equity or under any
         of the other Loan Documents, and the exercise of one or more of such
         rights or remedies shall not prejudice or impair the concurrent or
         subsequent exercise of any other rights or remedies.





STOCK PLEDGE AGREEMENT - Page 13
<PAGE>   32
                 (n)      Gender and Number.  Within this Agreement, words of
         any gender shall be held and construed to include the other gender,
         and words in the singular number shall be held and construed to
         include the plural and words in the plural number shall be held and
         construed to include the singular, unless in each instance the context
         requires otherwise.

                 (o)      Descriptive Headings; Loan Document.  The headings in
         this Agreement are for convenience only and shall in no way enlarge,
         limit or define the scope or meaning of the various and several
         provisions hereof.  This Agreement is a Loan Document.

                 (p)      Final Agreement.  THIS AGREEMENT, THE CREDIT
         AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
         AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
         CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE
         ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.



            [The balance of this page is intentionally left blank.]





STOCK PLEDGE AGREEMENT - Page 14
<PAGE>   33
         EXECUTED as of the date first written above.

                                    PLEDGOR:

                                    CRAFTMADE INTERNATIONAL, INC.


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

                                     Address for Notices:

                                     650 S. Royal Lane, Suite 100
                                     Coppell, Texas 75019

                                     Fax No: (214) 304-3754
                                     Telephone No.: (214) 393-3800

                                     Attention:       Kenneth M. Cancienne
                                                      Chief Financial Officer


                                     SECURED PARTY:
                                     
                                     CHASE BANK OF TEXAS, NATIONAL
                                     ASSOCIATION as Agent


                                     By:
                                        -------------------------------------   
                                           Name:      Jerry G. Petrey
                                           Title:     Vice President

                                     Address for Notices:

                                     500 East Border Street
                                     P.O. Box 250
                                     Arlington, Texas 76004

                                     Fax No.: (817) 856-3183
                                     Telephone No.: (817) 856-3125
                                     Attention:       Jerry G. Petrey
                                                      Vice President





STOCK PLEDGE AGREEMENT - Page 15
<PAGE>   34
                                                                         ANNEX 1



The following property is a part of the Collateral as defined in Subsection
1(c):



<TABLE>
       <S>                        <C>                      <C>           <C>               <C>

         Issuer                   Description               Cert. No.        No. of Shares    Percent
         ------                   -----------               ---------        -------------    -------


Durocraft International,           Common Stock                001                100           100
  Inc.

C/D/R Incorporated                 Common Stock                                                 100

Trade Source International,
   Inc.                            Common Stock                001                              100





</TABLE>
STOCK PLEDGE AGREEMENT - Page 16

<PAGE>   35


                               SECURITY AGREEMENT

         THIS SECURITY AGREEMENT (this "Agreement") dated as of July 1, 1998,
is by and between TRADE SOURCE INTERNATIONAL, INC., a Delaware corporation (the
"Debtor"), and CHASE BANK OF TEXAS, NATIONAL ASSOCIATION (formerly named TEXAS
COMMERCE BANK NATIONAL ASSOCIATION), a national banking association, as Agent
for the Lenders (as defined below) (in such capacity, the "Secured Party").

                                   RECITALS:

         A.      Concurrently herewith, Craftmade International, Inc.,
Durocraft International, Inc., and Debtor jointly and severally as Borrower,
Chase Bank of Texas, National Association as Agent for Lenders and Chase Bank
of Texas, National Association and Frost National Bank (formerly known as
Overton Bank and Trust) as Lenders have entered into a Third Amendment to
Credit Agreement, increasing a existing revolving line of credit from a maximum
principal amount of $12,000,000.00 (established pursuant to that certain Credit
Agreement dated as of May 30, 1998 among Craftmade International, Inc. and
Durocraft International, Inc., the Agent and the Lenders) to a maximum
principal amount of $14,000,000.00.

         B.      Secured Party and the Lenders have required Debtor to execute
and deliver this Agreement as a condition to their execution of the Third
Amendment to 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 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,
general intangibles and all other personal property, tangible or intangible, of
any kind or character, of Debtor, whether now owned or hereafter acquired and
wherever arising or located, and all accessions and attachments thereto and
<PAGE>   36
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 Third Amendment to 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.





SECURITY AGREEMENT - Page 2
<PAGE>   37
The exact corporate name of Debtor as it appears in its certificate of
incorporation is set 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 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 (including the Third Amendment to Credit Agreement amending the same)
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 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 with
the terms of any policy of insurance.  Debtor shall not use or permit the





SECURITY AGREEMENT - Page 3
<PAGE>   38
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 that 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.

         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,





SECURITY AGREEMENT - Page 4
<PAGE>   39
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 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





SECURITY AGREEMENT - Page 5
<PAGE>   40
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;

         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





SECURITY AGREEMENT - Page 6
<PAGE>   41
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, depository, transfer agent, registrar, or
other designated agency upon such terms as Secured Party may determine; (viii)
to add or release any guarantor, endorser, 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.

         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





SECURITY AGREEMENT - Page 7
<PAGE>   42
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 marshaling 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





SECURITY AGREEMENT - Page 8
<PAGE>   43
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      Entire Agreement; Amendment.  THIS AGREEMENT 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 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.  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 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.  Noting 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.





SECURITY AGREEMENT - Page 9
<PAGE>   44
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.  If Secured Party seeks to take
possession of any or all of the Collateral by judicial process, then 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 that
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 remaking 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





SECURITY AGREEMENT - Page 10
<PAGE>   45
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:

                                       TRADE SOURCE INTERNATIONAL, INC.


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

                                       Address for Notices:
                                                   
                                       650 S. Royal Lane, Suite 100
                                       Coppell, Texas 75019

                                       Fax No: (214) 304-3754
                                       Telephone No.: (214) 393-3800

                                       Attention:       Kenneth M. Cancienne
                                                        Chief Financial Officer


                                       SECURED PARTY:

                                       CHASE BANK OF TEXAS, NATIONAL
                                       ASSOCIATION as Agent


                                       By:                                     
                                            ------------------------------------
                                                 Name:  Jerry G. Petrey
                                                 Title: Vice President

                                       Address for Notices:
                                       
                                       500 East Border Street
                                       P.O. Box 250
                                       Arlington, Texas 76004

                                       Fax No.: (817) 856-3183
                                       Telephone No.: (817) 856-3125
                                       Attention:       Jerry G. Petrey
                                                        Vice President






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