Document:

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                                                                   EXHIBIT 10.20

                              EMPLOYMENT AGREEMENT

         This Employment Agreement (this "Agreement") is made as of October 5,
1999, to be effective as of October 25, 1999 (the "Effective Date"), by Kathleen
Brown Oher, an individual resident in Dallas County, Texas (the "Executive") and
Craftmade International, Inc., a Delaware corporation ("Craftmade").

                                    RECITALS

         This Agreement provides for the employment of Executive as Chief
Financial Officer of Craftmade upon the terms and subject to the conditions set
forth herein.

                                    AGREEMENT

         The parties, intending to be legally bound, agree as follows:

                                   ARTICLE I

                                  DEFINITIONS

         For the purposes of this Agreement, the following terms have the
meanings specified or referred to in this Article I.

         "Basic Compensation"--Salary and Benefits.

         "Board of Directors"--the board of directors of Craftmade.

         "Change of Control"--

         (a) there shall be consummated any consolidation or merger of Craftmade
into or with another corporation or other legal person, and as a result of such
consolidation or merger less than a majority of the combined voting power of the
then-outstanding securities of such corporation or person immediately after such
transactions are held in the aggregate by holders of Voting Stock (as defined in
subsection (d) below) of Craftmade immediately prior to such transactions;

         (b) any sale, lease, exchange or other transfer, whether in one
transaction or any series of related transactions, of all or significant
portions of the assets of Craftmade to any other corporation or other legal
person, less than a majority of the combined voting power of the
then-outstanding securities of such corporation or person immediately after such
sale, lease, exchange, or transfer is held in the aggregate by the holders of
Voting Stock of Craftmade immediately prior to such sale, lease, exchange, or
transfer;

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         (c) the shareholders of Craftmade approve any plan for the liquidation
or dissolution of Craftmade;

         (d) any person (as such term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")), becomes,
either directly or indirectly, the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of securities representing more than 50% of the
combined voting power of the then-outstanding securities entitled to vote
generally in the election of directors of Craftmade ("Voting Stock"); or

         (e) if at any time during a fiscal year a majority of the Board of
Directors shall be replaced by persons who were not recommended for those
positions by at least two-thirds of the directors of Craftmade who were
directors of Craftmade at the beginning of the fiscal year.

         Notwithstanding the preceding, a "Change of Control" shall not be
deemed to have occurred with respect to any of the foregoing transactions
conducted by any employee benefit plan (or related trust) sponsored or
maintained by Craftmade, any corporation controlled by Craftmade, James Ridings,
or any affiliate of James Ridings.

         "Confidential Information"--information that is used in Craftmade's
business and

         (a) is proprietary to, about or created by Craftmade;

         (b) gives Craftmade some competitive advantage, the opportunity of
obtaining such advantage or the disclosure of which could be detrimental to the
interests of Craftmade;

         (c) is not typically disclosed to non-employees by Craftmade, or
otherwise is treated as confidential by Craftmade; or

         (d) is designated as Confidential Information by Craftmade or from all
the relevant circumstances should reasonably be assumed by the Employee to be
confidential to Craftmade.

Confidential Information shall not include information publicly known (other
than as a result of a direct or indirect disclosure by the Executive). The
phrase "publicly known" shall mean readily accessible to the public in a written
publication.

         "Employee Invention"--any idea, invention, technique, modification,
process, or improvement (whether patentable or not), any industrial design
(whether registerable or not) and any work of authorship (whether or not
copyright protection may be obtained for it) created, conceived, or developed by
the Executive, either solely or in conjunction with others, during the
Employment Period, or a period that includes a portion of the Employment Period,
that relates in any way to the business then being conducted or proposed to be
conducted by Craftmade, and any such item created by the Executive, either
solely or in conjunction with others, following termination of the Executive's
employment with Craftmade, that is based upon or uses Confidential Information.

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         "Employment Period"--the term of the Executive's employment under this
Agreement.

         "Fiscal Year"--Craftmade's fiscal year, as it exists on the Effective
Date or as changed from time to time.

         "person"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, or governmental body.

         "Post-Employment Period"--for purposes of Section 8.2, the two-year
period beginning on the date of termination of the Executive's employment with
Craftmade.

                                   ARTICLE II

                           EMPLOYMENT TERMS AND DUTIES

         2.1 Employment. Craftmade hereby employs the Executive commencing as of
the Effective Date, and the Executive hereby accepts employment by Craftmade
commencing as of the Effective Date, upon the terms and conditions set forth in
this Agreement. All of Executive's rights shall be vested immediately upon the
execution of this Agreement by the parties hereto.

         2.2 Term. Subject to the provisions of Article VI, the term of the
Executive's employment under this Agreement will initially be three years,
beginning on the Effective Date and ending on the third anniversary of the
Effective Date (the "Initial Term"). After the Initial Term, the Agreement shall
be extended for two additional one-year terms (the "First Additional Term" and
the "Second Additional Term," respectively), unless the Executive provides
written notice of election not to renew at least 45 days before the commencement
of the First Additional Term and the Second Additional Term, respectively.

         2.3 Duties. The Executive will initially serve as Chief Financial
Officer of Craftmade and will have such duties as are typically commensurate
with such position, subject to the assignment or delegation of duties by the
Board of Directors or Chief Executive Officer of Craftmade. The Executive will
devote her entire business time, attention, skill, and energy exclusively to the
business of Craftmade, will use her best efforts to promote the success of
Craftmade's business, and will cooperate fully with the Board of Directors in
the advancement of the best interests of Craftmade. Executive shall operate
primarily out of Craftmade's executive office, currently situated in Coppell,
Texas. If the Executive is elected as a director of Craftmade (although there
can be no assurance that Executive shall at any time be nominated as a director
of Craftmade), or as a director or officer of any of its affiliates, the
Executive will fulfill her duties as such director or officer with the same
compensation as is paid to the other directors that are employees of Craftmade,
if any.

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                                   ARTICLE III

                                  COMPENSATION

         3.1 Basic Compensation.

         (a) Salary. Commencing on the Effective Date, the Executive will be
paid an annual salary of $156,000.00, subject to adjustment as provided below
(the "Salary"), which will be payable in equal periodic installments according
to Craftmade's customary payroll practices, but no less frequently than monthly.
The Salary will be reviewed by the Board of Directors not less frequently than
annually, and the Board of Directors, subject to its fiduciary obligations,
shall provide for an increase in the Salary proportionate to that of Craftmade's
Chief Executive Officer.

         (b) Bonus. The Chief Executive Officer of Craftmade will review the
performance of the Executive not less frequently than annually, and the Chief
Executive Officer of Craftmade shall provide for an annual bonus to the
Executive (the "Bonus") based on the performance of Craftmade; such standards
for the performance of Craftmade shall be comparable to those standards
established concerning the receipt of any bonus by the Chief Executive Officer
of Craftmade with respect to the performance of Craftmade.

         (c) Benefits. The Executive will, during the Employment Period, be
entitled to such pension, profit sharing, life insurance, hospitalization, major
medical, disability and other employee benefits as are provided to Craftmade's
Chief Executive Officer, to the extent the Executive is eligible under the terms
of any applicable benefit plan (collectively, the "Benefits").

         3.2 Stock Options. The Executive shall be entitled to participate in
any stock option plan, employee stock ownership plan or similar plan of
Craftmade that is provided to Craftmade's Chief Executive Officer, to the extent
the Executive is eligible under the terms of such plan; provided, however, that
in the event that the Board of Directors of Craftmade shall adopt a stock option
plan at any board of directors meeting after the execution of this Agreement and
during the Employment Period, Executive shall be entitled to receive a grant of
options to purchase 50,000 shares of Common Stock, $0.01 par value of Craftmade.
Such stock options shall have an exercise price based on the price of the Common
Stock at the time of approval by the Board of Directors of such stock option
plan, which Craftmade shall use its best efforts to obtain, and shall vest over
five years, in accordance with the terms of any such stock option plan.
Accordingly, 20% of such stock options will be exercisable commencing upon the
approval of the stockholders of Craftmade (which approval Craftmade shall seek
at the annual meeting of the stockholders of Craftmade in October, 2000), and
the remainder of the stock options shall be exercisable each year thereafter in
20% increments. In the event that the stockholders of Craftmade do not approve
such stock option plan, the Executive shall be entitled to receive, in lieu of
such options to purchase 50,000 shares of Common Stock, a one-time cash bonus of
$25,000, which sum shall be payable on or before December 31, 2000.

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                                   ARTICLE IV

                             FACILITIES AND EXPENSES

         Craftmade will furnish the Executive office space, equipment, supplies,
and such other facilities and personnel as Craftmade deems necessary or
appropriate for the performance of the Executive's duties under this Agreement.
Craftmade will pay on behalf of the Executive (or reimburse the Executive for)
reasonable expenses incurred by the Executive at the request of, or on behalf
of, Craftmade in the performance of the Executive's duties pursuant to this
Agreement, and in accordance with Craftmade's employment policies, including
reasonable expenses incurred by the Executive in attending conventions,
seminars, and other business meetings, in appropriate business entertainment
activities, and for promotional expenses. The Executive must file expense
reports with respect to such expenses in accordance with Craftmade's policies.

                                    ARTICLE V

                             VACATIONS AND HOLIDAYS

         The Executive will be entitled to the amount of paid vacation as is
provided to the Chief Executive Officer of Craftmade, in accordance with the
vacation policies of Craftmade in effect for its executive officers from time to
time. Vacation must be taken by the Executive at such time or times as approved
by the Chairman of the Board or Chief Executive Officer of Craftmade. The
Executive will also be entitled to the paid holidays set forth in Craftmade's
policies. Vacation days and holidays during any Fiscal Year that are not used by
the Executive during such Fiscal Year may not be used in any subsequent Fiscal
Year.

                                   ARTICLE VI

                                   TERMINATION

         6.1 Events of Termination. The Employment Period, the Executive's Basic
Compensation, the Executive's Bonus and any and all other rights of the
Executive under this Agreement or otherwise as an employee of Craftmade will
terminate (except as otherwise provided in this Article VI):

         (a) upon the death of the Executive;

         (b) upon the disability of the Executive (as defined in Section 6.2)
immediately upon notice from either party to the other;

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         (c) upon termination of the Executive for Cause (as defined in Section
6.3), immediately upon notice from Craftmade to the Executive, or at such later
time as such notice may specify;

         (d) upon termination by the Executive for Good Reason (as defined in
Section 6.4) upon not less than thirty days' prior notice from the Executive to
Craftmade;

         (e) upon termination of the Executive without Cause; or

         (f) upon termination by the Executive for other than Good Reason.

         6.2 Definition of Disability. The Executive will be deemed to have a
"disability" if, for physical or mental reasons, the Executive is unable to
perform the Executive's duties under this Agreement for 120 consecutive days, or
180 days during any twelve month period, as determined in accordance with this
Section 6.2. The disability of the Executive will be determined by a medical
doctor selected by written agreement of Craftmade and the Executive upon the
request of either party by notice to the other. If Craftmade and the Executive
cannot agree on the selection of a medical doctor, each of them will select a
medical doctor and the two medical doctors will select a third medical doctor
who will determine whether the Executive has a disability. The determination of
the medical doctor selected under this Section 6.2 will be binding on both
parties. The Executive must submit to a reasonable number of examinations by the
medical doctor making the determination of disability under this Section 6.2,
and the Executive hereby authorizes the disclosure and release to Craftmade of
such determination and all supporting medical records. If the Executive is not
legally competent, the Executive's legal guardian or duly authorized
attorney-in-fact will act in the Executive's stead, under this Section 6.2, for
the purposes of submitting the Executive to the examinations, and providing the
authorization of disclosure, required under this Section 6.2.

         6.3 Definition of "Cause". "Cause" means: (a) the Executive's material
breach of this Agreement; (b) the Executive's failure to adhere to any material
written Craftmade policy if the Executive has been given a reasonable
opportunity to comply with such policy or cure her failure to comply (which
reasonable opportunity must be granted during the ten-day period preceding
termination of this Agreement); (c) the appropriation (or attempted
appropriation) of a material business opportunity of Craftmade, including
attempting to secure or securing any personal profit in connection with any
transaction entered into on behalf of Craftmade; (d) the misappropriation (or
attempted misappropriation) of any of Craftmade's funds or property; or (e) the
conviction of or the entering of a guilty plea or plea of no contest with
respect to, a felony or the equivalent thereof.

         6.4 Definition of "Good Reason". The phrase "Good Reason" means any of
the following: (a) Craftmade's or Craftmade's material breach of this Agreement;
(b) the assignment of the Executive without her consent to a position,
responsibilities, or duties of a materially lesser status or degree of
responsibility than her position, responsibilities, or duties at the Effective
Date; or (c) the requirement by Craftmade that the Executive be based anywhere
other than Craftmade's principal executive office in Coppell, Texas, without the
Executive's consent; or (d) any material reduction in Benefits.

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         6.5 Termination Pay. Effective upon the termination of this Agreement,
Craftmade will be obligated to pay the Executive (or, in the event of her death,
her designated beneficiary as defined below) only such compensation as is
provided in this Section 6.5, and in lieu of all other amounts and in settlement
and complete release of (i) all claims the Executive may have against Craftmade
or Craftmade, or any of its affiliates, arising out of or pursuant to this
Agreement and (ii) all claims Craftmade or Craftmade may have against the
Executive arising out of or pursuant to this Agreement. For purposes of this
Section 6.5, the Executive's designated beneficiary will be such individual
beneficiary or trust, located at such address, as the Executive may designate by
notice to Craftmade from time to time or, if the Executive fails to give notice
to Craftmade of such a beneficiary, the Executive's estate. Notwithstanding the
preceding sentence, Craftmade will have no duty, in any circumstances, to
attempt to open an estate on behalf of the Executive, to determine whether any
beneficiary designated by the Executive is alive or to ascertain the address of
any such beneficiary, to determine the existence of any trust, to determine
whether any person or entity purporting to act as the Executive's personal
representative (or the trustee of a trust established by the Executive) is duly
authorized to act in that capacity, or to locate or attempt to locate any
beneficiary, personal representative, or trustee.

         (a) Termination by the Executive for Good Reason or Termination by
Craftmade Without Cause. If the Executive terminates this Agreement for Good
Reason or if Craftmade terminates this Agreement without Cause, Craftmade will
pay the Executive (i) the Executive's Salary for the remainder, if any, of the
Initial Term, the First Additional Term or the Second Additional Term, as
applicable, (ii) the value of any accrued but unpaid or unused vacation or sick
leave for the calendar year and (iii) that portion of the Executive's Bonus, if
any, for the Fiscal Year during which the termination is effective, prorated
through the date of termination.

         (b) Termination by Craftmade for Cause or Termination by the Executive
Without Good Reason. If Craftmade terminates this Agreement for Cause or if the
Executive terminates this Agreement for other than Good Reason, the Executive
will be entitled to receive her Salary only through the date such termination is
effective, but will not be entitled to any Bonus for the Fiscal Year during
which such termination occurs or any subsequent Fiscal Year.

         (c) Termination upon Disability. If this Agreement is terminated by
either party as a result of the Executive's disability, as determined under
Section 6.2, Craftmade will pay the Executive her Salary through the remainder
of the calendar month during which such termination is effective and the period
until disability insurance benefits commence under the disability insurance
coverage furnished by Craftmade to the Executive.

         (d) Termination upon Death. If this Agreement is terminated because of
the Executive's death, the Executive will be entitled to receive her Salary
through the end of the calendar month in which her death occurs, and that part
of the Executive's Bonus, if any, for the Fiscal Year during which her death
occurs, prorated through the end of the calendar month during which her death
occurs.

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         (e) Termination Following a Change of Control. Notwithstanding anything
in this Section 6.5 to the contrary, if this Agreement is terminated by either
party for any reason within twelve months of a Change of Control, (i) if such
termination occurs during the Initial Term, then Craftmade will pay the
Executive's Salary for the remainder of such Initial Term plus two times the
Executive's Salary, (ii) if such termination occurs during the First Additional
Term, then Craftmade will pay the Executive's Salary for the remainder of such
First Additional Term plus an amount equal to the Executive's Salary, or (iii)
if such termination occurs during the Second Additional Term, then Craftmade
will pay the Executive's Salary for the remainder of such Second Additional
Term.

         If the Executive's employment is terminated for other than Cause or the
Executive is removed from office or position with Craftmade in either case
following commencement by one or more representatives of Craftmade of
discussions (authorized by the Board of Directors or the Chief Executive Officer
of Craftmade) with a third party that ultimately results in the occurrence of an
event described in subsections (a), (b), (c), (d), or (e) of the definition of
"Change of Control" (subject to the final paragraph of such definition) and such
termination or removal occurs within the period commencing on the date such
discussions are authorized and ending on the date that is twelve months from the
consummation of such event, regardless of whether such third party is a party to
such occurrence, then such termination or removal shall be deemed to constitute
a termination following a Change of Control for the purposes of the first
paragraph of this Section 6.5(e), and, for the purposes of this Agreement, the
date of the authorization of such discussions shall be deemed to be the date of
the Change of Control of Craftmade.

         (f) Benefits. The Executive's accrual of, or participation in plans
providing for, the Benefits will cease at the effective date of the termination
of this Agreement, and the Executive will be entitled to accrued Benefits
pursuant to such plans only as provided in such plans. Notwithstanding the
preceding, the Executive shall be entitled to receive all accrued but unpaid
salary, Benefits and vacation pay upon the termination of this Agreement.

                                   ARTICLE VII

                  NON-DISCLOSURE COVENANT; EMPLOYEE INVENTIONS

         7.1 Acknowledgments by the Executive. The Executive acknowledges that
(a) during the Employment Period and as a part of her employment, the Executive
will be afforded access to Confidential Information; (b) public disclosure of
such Confidential Information could have an adverse effect on Craftmade and its
business; (c) because the Executive possesses substantial technical expertise
and skill with respect to Craftmade's business, Craftmade desires to obtain
exclusive ownership of each Employee Invention, and Craftmade will be at a
substantial competitive disadvantage if it fails to acquire exclusive ownership
of each Employee Invention; and (d) the provisions of this Article VII are
reasonable and necessary to prevent the improper use or disclosure of
Confidential Information and to provide Craftmade with exclusive ownership of
all Employee Inventions.

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         7.2 Agreements of the Executive. In consideration of the compensation
and benefits to be paid or provided to the Executive by Craftmade under this
Agreement, the Executive covenants as follows:

         (a) Confidentiality.

                  (i) During and following the Employment Period, the Executive
         will hold in confidence the Confidential Information and will not
         disclose it to any person except (A) with the specific prior written
         consent of Craftmade, (B) as necessary to carry out the Executive's
         duties under this Agreement or (C) except as otherwise expressly
         permitted by the terms of this Agreement.

                  (ii) Any trade secrets of Craftmade will be entitled to all of
         the protections and benefits under applicable law. If any information
         that Craftmade deems to be a trade secret is found by a court of
         competent jurisdiction not to be a trade secret for purposes of this
         Agreement, such information will, nevertheless, be considered
         Confidential Information for purposes of this Agreement. The Executive
         hereby waives any requirement that Craftmade submit proof of the
         economic value of any trade secret or post a bond or other security.

                  (iii) None of the foregoing obligations and restrictions
         applies to any part of the Confidential Information that the Executive
         demonstrates was or became generally available to the public other than
         as a result of a direct or indirect disclosure by the Executive.

                  (iv) The Executive will not remove from Craftmade's premises
         (except to the extent such removal is for purposes of the performance
         of the Executive's duties at home or while traveling, or except as
         otherwise specifically authorized by Craftmade) any document, record,
         notebook, plan, model, component, device, or computer software or code,
         whether embodied in a disk or in any other form (collectively, the
         "Proprietary Items"). The Executive recognizes that, as between
         Craftmade and the Executive, all of the Proprietary Items, whether or
         not developed by the Executive, are the exclusive property of
         Craftmade. Upon termination of this Agreement by either party, or upon
         the request of Craftmade during the Employment Period, the Executive
         will return to Craftmade all of the Proprietary Items in the
         Executive's possession or subject to the Executive's control, and the
         Executive shall not retain any copies, abstracts, sketches, or other
         physical embodiment of any of the Proprietary Items.

         (b) Employee Inventions. Each Employee Invention will belong
exclusively to Craftmade. The Executive acknowledges that all of the Executive's
writing, works of authorship, specially commissioned works and other Employee
Inventions are works made for hire and the property of Craftmade, including any
copyrights, patents or other intellectual property rights pertaining thereto. If
it is determined that any such works are not works made for hire, the Executive
hereby assigns to Craftmade all of the Executive's right, title, and interest,
including all rights of copyright, patent and

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other intellectual property rights, to or in such Employee Inventions. The
Executive covenants that she will promptly:

                  (i) disclose to Craftmade in writing any Employee Invention;

                  (ii) assign to Craftmade or to a party designated by
         Craftmade, at Craftmade's request and without additional compensation,
         all of the Executive's right to the Employee Invention for the United
         States and all foreign jurisdictions;

                  (iii) execute and deliver to Craftmade such applications,
         assignments, and other documents as Craftmade may request in order to
         apply for and obtain patents or other registrations with respect to any
         Employee Invention in the United States and any foreign jurisdictions;

                  (iv) sign all other papers necessary to carry out the above
         obligations; and

                  (v) give testimony and render any other assistance in support
         of Craftmade's rights to any Employee Invention.

         7.3 Disputes or Controversies. The Executive recognizes that should a
dispute or controversy arising from or relating to this Agreement be submitted
for adjudication to any court, arbitration panel, or other third party, the
preservation of the secrecy of Confidential Information may be jeopardized. To
the extent permitted by law, all pleadings, documents, testimony, and records
relating to any such adjudication will be maintained in secrecy and will be
available for inspection by Craftmade, the Executive, and their respective
attorneys and experts, who will agree, in advance and in writing, to receive and
maintain all such information in secrecy, except as may be limited by them in
writing.

                                  ARTICLE VIII

                      NON-COMPETITION AND NON-INTERFERENCE

         8.1 Acknowledgments by the Executive. The Executive acknowledges that:
(a) the services to be performed by her under this Agreement are of a special,
unique, unusual, extraordinary, and intellectual character; (b) Craftmade's
business is international in scope and its products are marketed throughout the
world; (c) Craftmade competes with other businesses that are or could be located
in any part of the world; and (d) the provisions of this Article VIII are
reasonable and necessary to protect Craftmade's business.

         8.2 Covenants of the Executive. In consideration of the acknowledgments
by the Executive, and in consideration of the compensation and benefits to be
paid or provided to the Executive by Craftmade, the Executive covenants that she
will not, directly or indirectly:

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         (a) during the Employment Period, except in the course of her
employment hereunder, directly or indirectly, engage or invest in, own, manage,
operate, finance, control, or participate in the ownership, management,
operation, financing, or control of, be employed by, associated with, or in any
manner connected with, lend the Executive's name or any similar name to, lend
Executive's credit to or render services or advice to, any business whose
products compete in whole or in part with the products or market areas of
Craftmade; provided, however, that the Executive may purchase or otherwise
acquire up to (but not more than) one percent of any class of securities of any
enterprise (but without otherwise participating in the activities of such
enterprise) if such securities are listed on any national or regional securities
exchange or have been registered under Section 12(g) of the Exchange Act;

         (b) during the Post-Employment Period, directly or indirectly, engage
or invest in, own, manage, operate, finance, control, or participate in the
ownership, management, operation, financing, or control of, be employed by,
associated with, or in any manner connected with, lend the Executive's name or
any similar name to, lend Executive's credit to or render services or advice to,
any business whose products compete in whole or in part with the product lines
and the market areas utilized by Craftmade and Craftmade on the last day of the
Employment Period; provided, however, that the Executive may purchase or
otherwise acquire up to (but not more than) one percent of any class of
securities of any enterprise (but without otherwise participating in the
activities of such enterprise) if such securities are listed on any national or
regional securities exchange or have been registered under Section 12(g) of the
Exchange Act;

         (c) whether for the Executive's own account or for the account of any
other person, at any time during the Employment Period and the Post-Employment
Period, solicit business of the same product lines being carried by Craftmade in
the same market areas as Craftmade, from any person known by the Executive to be
a customer of Craftmade, whether or not the Executive had personal contact with
such person during and by reason of the Executive's employment with Craftmade;

         (d) whether for the Executive's own account or the account of any other
person (i) at any time during the Employment Period and the Post-Employment
Period, solicit, employ, or otherwise engage as an employee, independent
contractor, or otherwise, any person who is an employee of Craftmade or in any
manner induce or attempt to induce any employee of Craftmade to terminate her
employment with Craftmade; or (ii) at any time during the Employment Period and
the Post- Employment Period, interfere with Craftmade's relationship with any
person, including any person who at any time during the Employment Period was an
employee, contractor, supplier, or customer of Craftmade; or

         (e) at any time during or after the Employment Period, disparage
Craftmade or any of its shareholders, directors, officers, employees, or agents.

         If any covenant in this Section 8.2 is held to be unreasonable,
arbitrary, or against public policy, such covenant will be considered to be
divisible with respect to scope, time, and geographic area, and such lesser
scope, time, or geographic area, or all of them, as a court of competent

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jurisdiction may determine to be reasonable, not arbitrary, and not against
public policy, will be effective, binding, and enforceable against the
Executive.

         The period of time applicable to any covenant in this Section 8.2 will
be extended by the duration of any violation by the Executive of such covenant.

         The Executive will, while the covenant under this Section 8.2 is in
effect, give notice to Craftmade, within ten days after accepting any other
employment, of the identity of the Executive's employer. Craftmade or Craftmade
may notify such employer that the Executive is bound by this Agreement and, at
Craftmade's election, furnish such employer with a copy of this Agreement or
relevant portions thereof.

                                   ARTICLE IX

                               GENERAL PROVISIONS

         9.1 Injunctive Relief and Additional Remedy. The Executive acknowledges
that the injury that would be suffered by Craftmade as a result of a breach of
the provisions of this Agreement (including any provision of Articles VII and
VIII) would be irreparable and that an award of monetary damages to Craftmade
for such a breach would be an inadequate remedy. Consequently, Craftmade will
have the right, in addition to any other rights it may have, to obtain
injunctive relief to restrain any breach or threatened breach or otherwise to
specifically enforce any provision of this Agreement, and Craftmade will not be
obligated to post bond or other security in seeking such relief.

         9.2 Covenants of Articles VII and VIII Are Essential and Independent
Covenants. The covenants by the Executive in Articles VII and VIII are essential
elements of this Agreement, and without the Executive's agreement to comply with
such covenants, Craftmade would not have entered into this Agreement or employed
the Executive. Craftmade and the Executive have independently consulted their
respective counsel and have been advised in all respects concerning the
reasonableness and propriety of such covenants, with specific regard to the
nature of the business conducted by Craftmade.

         The Executive's covenants in Articles VII and VIII are independent
covenants and the existence of any claim by the Executive against Craftmade
under this Agreement or otherwise, or against Craftmade, will not excuse the
Executive's breach of any covenant in Articles VII or VIII.

         If the Executive's employment hereunder expires or is terminated, this
Agreement will continue in full force and effect as is necessary or appropriate
to enforce the covenants and agreements of the Executive in Articles VII and
VIII.

         9.3 Representations and Warranties by the Executive. The Executive
represents and warrants to Craftmade that the execution and delivery by the
Executive of this Agreement do not, and

                                     - 12 -
<PAGE>   13

the performance by the Executive of the Executive's obligations hereunder will
not, with or without the giving of notice or the passage of time, or both: (a)
violate any judgment, writ, injunction, or order of any court, arbitrator, or
governmental agency applicable to the Executive; or (b) conflict with, result in
the breach of any provisions of or the termination of, or constitute a default
under, any agreement to which the Executive is a party or by which the Executive
is or may be bound.

         9.4 Obligations Contingent on Performance. The obligations of Craftmade
hereunder, including its obligation to pay the compensation provided for herein,
are contingent upon the Executive's performance of the Executive's obligations
hereunder.

         9.5 Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by either
party in exercising any right, power, or privilege under this Agreement will
operate as a waiver of such right, power, or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the exercise of any other
right, power, or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other party; (b) no waiver that may be given by
a party will be applicable except in the specific instance for which it is
given; and (c) no notice to or demand on one party will be deemed to be a waiver
of any obligation of such party or of the right of the party giving such notice
or demand to take further action without notice or demand as provided in this
Agreement.

         9.6 Binding Effect; Delegation of Duties Prohibited. This Agreement
shall inure to the benefit of, and shall be binding upon, the parties hereto and
their respective successors, assigns, heirs, and legal representatives,
including any entity with which Craftmade may merge or consolidate or to which
all or substantially all of its assets may be transferred. The duties and
covenants of the Executive under this Agreement, being personal, may not be
delegated.

         9.7 Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by facsimile (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties):

         Executive:
                  Kathleen Brown Oher
                  4414 Bluffview
                  Dallas, Texas 75203
                  Facsimile No.:
                                 -------

                                     - 13 -
<PAGE>   14

         with a copy to:
                  Cole Halliburton
                  5949 Sherry Lane
                  Suite 1622
                  Dallas, Texas 75225
                  Facsimile No.: (214) 987-1630

         Craftmade:
                  Craftmade International, Inc.
                  650 South Royal Lane
                  Suite 100
                  P.O. Box #1037
                  Coppell, Texas 75019-1037
                  Attention: James Ridings
                  Facsimile No.: (972) 304-3754

         with a copy to:
                  Brian D. Barnard
                  Haynes and Boone, LLP
                  201 Main Street
                  Suite 2200
                  Fort Worth, Texas 76102
                  Facsimile No.: (817) 347-6650

         9.8 Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, between the
parties hereto with respect to the subject matter hereof. This Agreement may not
be amended orally, but only by an agreement in writing signed by the parties
hereto.

         9.9 Governing Law. This Agreement will be governed by the laws of the
State of Texas without regard to conflicts of laws principles.

         9.10 Jurisdiction. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement shall be
brought against any of the parties in the courts of the State of Texas, County
of Dallas, or, if it has or can acquire jurisdiction, in the United States
District Court for the Northern District of Texas, and each of the parties
consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid
therein. Process in any action or proceeding referred to in the preceding
sentence may be served on either party anywhere in the world.

         9.11 Section and Article Headings, Construction. The headings of
Sections and Articles in this Agreement are provided for convenience only and
will not affect its construction or

                                     - 14 -
<PAGE>   15

interpretation. All references to "Section" or "Sections" and "Article" or
"Articles" refer to the corresponding Section or Sections and Article or
Articles of this Agreement unless otherwise specified. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.

         9.12 Severability. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.

         9.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.

                                    * * * * *

                                     - 15 -

<PAGE>   16

         IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date above first written above.

                                      EXECUTIVE:

                                      /s/ Kathleen Brown Oher
                                      --------------------------------------
                                      Kathleen Brown Oher

                                      CRAFTMADE INTERNATIONAL, INC.

                                      By:  /s/ James Ridings
                                      --------------------------------------
                                      Name:    James Ridings
                                      Title:   President, Chairman of the Board
                                               and Chief Executive Officer

                                     - 16 -<PAGE>   1
                                                                   EXHIBIT 10.21

[CHASE LOGO]

                      SEVENTH AMENDMENT TO CREDIT AGREEMENT

     THIS SEVENTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") dated
effective as of May 12, 2000 (the "Effective Date"), is among CRAFTMADE
INTERNATIONAL, INC., a Delaware corporation, DUROCRAFT INTERNATIONAL, INC., a
Texas corporation, TRADE SOURCE INTERNATIONAL, INC., a Delaware corporation,
DESIGN TRENDS, LLC, a Delaware limited liability company (collectively, jointly
and severally, "Borrower"), C/D/R INCORPORATED, a Delaware corporation
("C/D/R"), CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as agent ("Agent"), and
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION and THE FROST NATIONAL BANK
(collectively, "Lenders").

                              PRELIMINARY STATEMENT

     Agent, Lenders and 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, a
Second Amendment dated as of November 1, 1997, a Third Amendment dated as of
July 1, 1998, a Fourth Amendment dated as of April 2, 1999, a Fifth Amendment
(in letter form) dated as of August 11, 1999 and a Sixth Amendment dated as of
November 12, 1999 (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.

     Agent, Lenders and Borrower have agreed to amend the Credit Agreement to
modify the terms of the existing indebtedness and provide for additional credit,
subject to the terms and conditions of the Credit Agreement as amended hereby,
and in which Design Trends, LLC, shall become a party hereto as of the date
hereof, and to effect certain other desired changes.

     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, Agent, Lenders and Borrower hereby agree as
follows:

     Section 1. Addition of Definitions. The following definitions are hereby
added to Section 1 of the Credit Agreement:

     ""Craftmade Pledge Agreement" means the Pledge Agreement of
     Craftmade International, Inc., 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.

     ""Design Trends" means Design Trends, LLC, a Delaware
     limited liability company."

<PAGE>   2

     ""Dolan Northwest Pledge Agreement" means the Pledge Agreement of Dolan
     Northwest, LLC, a [DELAWARE] limited liability company, 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."

     ""Revolving Credit Commitment" shall mean, for each Lender, the obligation
     of such Lender to make Revolving Credit Loans in an aggregate principal
     amount at any one time outstanding up to but not exceeding $8,000,000 (in
     each case as the same may be reduced from time to time pursuant to Section
     2.7). The aggregate principal amount of the Revolving Credit Commitments is
     $16,000,000."

     ""Revolving Credit Maturity Date" shall mean November 30, 2001."

     ""Revolving Credit Termination Date" shall mean November 29, 2001."

     ""Revolving Credit Loans" shall mean Advances under the Revolving Credit
     Commitment as provided for in Section 2.1."

     ""Revolving Credit Notes" shall mean the promissory notes provided for by
     Section 2.2(a) and all promissory notes delivered in substitution or
     exchange therefor, in each case as the same shall be modified and
     supplemented and in effect from time to time."

     ""Term Loan Commitment" shall mean, for each Lender, the obligation of such
     Lender to make a Term Loan in the principal amount of $1,500,000. The
     original aggregate principal amount of the Term Loan Commitments is
     $3,000,000."

     ""Term Loan Maturity Date" shall mean May 12, 2001."

     ""Term Loan Notes" shall mean the promissory notes provided for by Section
     2.2(b) and all promissory notes delivered in substitution or exchange
     therefor, in each case as the same shall be modified and supplemented and
     in effect from time to time."

     ""Term Loans" shall mean an Advance under the Term Loan Commitment as
     provided for by Section 2.1."

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

     ""Advance" means an advance of funds from time to time by Lenders to
     Borrower under the Revolving Credit Commitment and a one time advance of
     funds by Lenders to Borrower under the Term Loan Commitment."

     ""Applicable Rate" means:

          (a) during the period that an Advance is a Prime Rate Advance, the
     Prime Rate minus 1/2 of one percent (0.5%); and

SEVENTH AMENDMENT TO CREDIT AGREEMENT - PAGE 2

<PAGE>   3

          (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 1.0 to 1.0, one and one-quarter
     percent (1.25%), (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 1.0 to 1.0, but
     less than 1.5 to 1.0, one and one-half percent (1.5%), and (iii) 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 1.5 to 1.0, one and three-quarters percent (1.75%)."

     ""Borrowing Base" means, at any particular time, an amount equal to the sum
     of (a) eighty percent (80%) of Eligible Accounts, plus (b) fifty-five
     percent (55%) of Eligible Inventory, plus (c) prior to, but not on or
     after, the end of the fiscal quarter of Borrowing ending on or nearest
     September 30, 2000, $1,000,000; provided however, that the Eligible
     Inventory component of the Borrowing Base, determined without regard to
     clause (c) above, shall never be greater than fifty percent (50%) of the
     aggregate amount of outstanding Advances.

     ""Collateral" includes (a) all of the collateral covered by the Craftmade
     Security Agreement, the Durocraft Security Agreement, the Trade Source
     Security Agreement, the Craftmade Pledge Agreement, the Dolan Northwest
     Pledge Agreement and the Design Trends Security Agreement, (b) all of the
     issued and outstanding capital stock of Durocraft, Trade Source, and C/D/R,
     and the limited liability company interest of Design Trends, pledged to the
     Agent and the Lenders pursuant to the Stock Pledge Agreement, the Craftmade
     Pledge Agreement and the Dolan Northwest Pledge Agreement, (c) the issued
     and outstanding stock of the Hong Kong Companies pledged to the Agent and
     the Lenders (in the case of each Hong Kong Company being approximately 65%
     of the total issued and outstanding capital stock of such Hong Kong
     Company) and (d) the Assignment of Life Insurance."

     ""Closing Date" shall mean the date upon which the extension of credit is
     made under the Term Loan Commitment."

     ""Commitments" shall mean the Revolving Credit Commitments and the Term
     Loan Commitments, and Commitments means such obligation of all Lenders, as
     such amounts may be reduced pursuant to SECTION 2.7 or otherwise."

     Section 3. Amendment of Section 2.1. Section 2.1 is hereby amended to read
in its entirety as follows:

     "Section 2.1 Advances. Subject to the terms and conditions of this
     Agreement, each Lender severally agrees to make one or more Advances to
     Borrower from time to time from the date hereof to and including the
     Revolving Credit Termination Date under the Revolving Credit Commitment,
     and a single Advance to Borrower on the Closing Date under the Term Loan
     Commitment, provided that (a) the aggregate outstanding amount of all
     Advances shall not at any time exceed the lesser of the Commitments or the
     Borrowing Base and (b)

SEVENTH AMENDMENT TO CREDIT AGREEMENT - PAGE 3
<PAGE>   4

     the outstanding Advances supported only by the Eligible Inventory component
     of the Borrowing Base (without giving effect to clause (c) of the
     definition thereof) shall not at any time exceed fifty percent (50%) of the
     aggregate outstanding amount of all Advances. Subject to the foregoing
     limitations, and the other terms and provisions of this Agreement, Borrower
     may borrow, repay, and, solely with respect to the Revolving Credit
     Commitment, reborrow hereunder."

     Section 4. Amendment of Section 2.2. Section 2.2 is hereby amended in its
entirety to read as follows:

     "Section 2.2. The Notes. The obligation of Borrower to repay the Advances
     shall be evidenced by the Notes (as specified below) executed and delivered
     by Borrower, and payable to the order of each Lender, in the aggregate
     principal amount of the Commitments and dated the date of the Seventh
     Amendment to this Agreement.

     (a) Revolving Credit Note. The Revolving Credit Loans made by each Lender
     shall be evidenced by a single promissory note of Borrower substantially in
     the form of Exhibit A-1, dated the date of the Seventh Amendment to this
     Agreement, payable to such Lender in a principal amount equal to the amount
     of its Revolving Credit Commitment as originally in effect and otherwise
     duly completed.

     (b) Term Note. The Term Loan made by each Lender shall be evidenced by a
     single promissory note of Borrower substantially in the form of Exhibit
     A-2, dated the date of the Seventh Amendment to this Agreement, payable to
     such Lender in a principal amount equal to the amount of its Term Loan
     Commitment and otherwise duly completed."

     Section 5. Amendment of Section 2.3. Section 2.3 of the Credit Agreement is
hereby amended to read in its entirety:

     "Section 2.3 Repayment of Advances. Borrower shall pay the unpaid principal
     amounts of all Revolving Credit Loans on the Revolving Credit Maturity
     Date. Borrower shall pay the unpaid principal amounts of each Lender's Term
     Loan in equal quarterly installments of $375,000 on each of August 12,
     2000, November 12, 2000, February 12, 2001 and May 12, 2001."

     Section 6. 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 Craftmade Pledge Agreement, the Durocraft Security
     Agreement, the Trade Source Security Agreement, the Stock Pledge Agreement,
     the Design Trends 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

SEVENTH AMENDMENT TO CREDIT AGREEMENT - PAGE 4
<PAGE>   5

     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 7. Amendment of Section 7.1(i). Section 7.1(i) of the Credit
Agreement is hereby amended to read in its entirety as follows:

          "(i) Borrowing Base Report and Accounts Receivable Aging Report. As
     soon as available, and in any event within thirty-five (35) days after the
     end of each calendar month, a consolidated Borrowing Base Report and an
     Accounts Receivable Aging Report, each certified by the chief executive
     officer or chief financial officer of Borrower."

     Section 8. Amendment of Section 8.4. The last proviso of Section 8.4 of the
Credit Agreement is hereby amended to read in its entirety as follows:

     "provided, however, that (i) so long as no Potential Default or Event of
     Default exists or would result, Borrower may purchase treasury stock during
     the fiscal quarter ending on or nearest to June 30, 2000 for a total
     consideration not to exceed $900,000 and (ii) at all times after the end of
     the fiscal quarter ending on or nearest to December 31, 2000, Borrower may
     purchase treasury stock only so long as the Consolidated Debt to
     Consolidated Tangible Net Worth Ratio is not greater than 2.0 to 1.0, and
     as a result of such purchase would not become over 2.0 to 1.0; in each
     case, as described in clauses (i) and (ii) immediately above, as evidenced
     by a Treasury Stock Purchase Compliance Certificate, substantially in the
     form of Exhibit F-1 attached hereto, submitted to Agent showing the effect
     of any potential treasury stock purchases contemplated by Borrower,
     including during a thirty (30) day period commencing on the earlier of (i)
     the date such Treasury Stock Purchase Compliance Certificate is sent to
     Agent or (ii) the date of the initial treasury stock purchase covered by
     such certificate."

     Section 9. 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 maintain a Consolidated Debt to Consolidated Tangible Net
     Worth Ratio of not greater than 2.6 to 1.0 at all times before September
     30, 2000, of not greater than 2.4 to 1.0 at all times during the period
     from and including September 30, 2000 through and including December 30,
     2000, and of not greater than 2.25 to 1.0 on December 31, 2000 and at all
     times thereafter."

     Section 10. Amendment of Section 9.2. Section 9.2 of the Credit Agreement
is hereby amended to read in its entirety as follows:

SEVENTH AMENDMENT TO CREDIT AGREEMENT - PAGE 5
<PAGE>   6

     "Section 9.2 Capital Expenditures. Borrower will not permit the aggregate
     capital expenditures of Borrower and its Subsidiaries to exceed Six Hundred
     Thousand Dollars ($600,000) during any fiscal year; provided, however, that
     during the fiscal year ending June 30, 2001 such limitation shall instead
     be One Million Eight Hundred Thousand Dollars ($1,800,000)."

     Section 11. Amendment of Section 9.3. Section 9.3 of the Credit Agreement
is hereby amended to read as follows:

     "Section 9.3 Funded Debt to EBITDA Ratio. Borrower will at all times
     maintain a Funded Debt to EBITDA Ratio, measured monthly in respect of the
     twelve most recently completed calendar months, of not greater than 2.0 to
     1.0 until December 31, 2000, and of not greater than 1.75 to 1.0 at all
     times thereafter."

     Section 12. Addition of Section 8.12. A new Section 8.12 of the Credit
Agreement is hereby added, to read in its entirety as follows:

     "Section 8.12 Limited Liability Company Distributions. Borrower shall cause
     each distribution by Design Trends (which in any case shall occur no more
     frequently than quarterly) to not exceed twenty-five percent (25%) of
     Design Trend's Net Income (calculated as if Design Trends were a C
     corporation under the Code) for the preceding fiscal quarter."

     Section 13. Addition of Section 8.13. A new Section 8.13 of the Credit
Agreement is hereby added, to read in its entirety as follows:

     "Section 8.13 Royalties, Etc. from Licensing Agreements. Borrower shall
     cause any and all current licensing agreements between Borrower, its
     Subsidiaries and affiliates, considered as one party in interest and/or Pat
     Dolan and his affiliates, considered as the other party in interest, to not
     be modified, amended or rescinded, without Agent's prior written consent.
     Without limiting the foregoing, neither of the two existing agreements will
     be modified to permit royalties or fees or other payments (other than
     distributions, limited as aforesaid) to Pat Dolan and/or his affiliates."

     Section 14. Amendment of Section 9.4. Section 9.4 of the Credit Agreement
is hereby amended to read in its entirety as follows:

     "Section 9.4 Fixed Charge Coverage Ratio. Borrower will at all times
     maintain a Fixed Charge Coverage Ratio of greater than 1.05 to 1.0. Such
     ratio shall be first determined for the fiscal quarter ending June 30,
     2000; thereafter, the determination period shall accumulate until four
     consecutive fiscal quarters have been completed; thereafter, such ratio
     shall be determined with respect to the four most recently completed fiscal
     quarters."

     Section 15. Amendment and Restatement of Exhibits. Exhibit A to the Credit
Agreement is hereby amended and restated in its entirety to be in the form of
Exhibits A-1 and A-2 to this Amendment. Exhibits C, F and F-1 to the Credit
Agreement are hereby amended and

SEVENTH AMENDMENT TO CREDIT AGREEMENT - PAGE 6

<PAGE>   7

restated in their entireties to be in the form of Exhibits C, F and F-1,
respectively, to this Amendment.

     Section 16. Representations; No Event of Default. Borrower hereby
represents and warrants to Agent and 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 (or company, as
     applicable) 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 or
     Guarantor; and

-    neither the certificate of incorporation or articles of incorporation (or
     other charter documents), as applicable, nor bylaws of any of Borrower or
     Guarantor have been amended or revoked since May 30, 1996 (or, in the case
     of Design Trends, ever amended), except as certified in writing to Agent
     and Lenders by 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 in this
     connection Lenders hereby waive the Events of Default that occurred prior
     to the date of this Agreement (a) under Section 9.1 and (b) of treasury
     stock purchases in excess of the limitation set forth in Section 8.4); and

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

     Section 17. Conditions Precedent. The effectiveness of this Amendment shall
be subject to the following conditions precedent:

-    Each Lender shall have received two promissory notes of Borrower payable to
     the order of such Lender, in substantially the form of EXHIBIT A-1 and
     EXHIBIT A-2 hereto, with appropriate completion, which promissory notes
     shall be in modification, increase and replacement of (but not in
     extinguishment of) that certain promissory note payable to such Lender in
     the form of EXHIBIT A to the Credit Agreement (before giving effect to this
     Amendment), and dated as of November 12, 1999 and in the stated maximum
     principal amount of $8,000,000; and

-    Lenders shall have received the Craftmade Pledge Agreement (together with
     the limited liability company certificate, duly endorsed in blank,
     contemplated to be pledged thereby); and

SEVENTH AMENDMENT TO CREDIT AGREEMENT - PAGE 7
<PAGE>   8

-    Lenders shall have received the Dolan Northwest Pledge Agreement (together
     with the limited liability company certificate, duly endorsed in blank,
     contemplated to be pledged thereby); and

-    Lenders shall have received a consent from Design Trends, LLC consenting to
     the pledge to the Agent of the limited liability company interest thereof
     held by Craftmade International, Inc.; and

-    Lenders shall have received a consent from Design Trends, LLC, consenting
     to the pledge to the agent of the limited liability company interest
     thereof held by Dolan Northwest, LLC; and

-    Lenders shall have received an assignment from Design Trends, LLC,
     assigning as collateral its interest under any and all current licensing
     agreements, including but not limited to, that certain licensing agreement
     among Dolan Northwest, LLC and Design Trends, LLC, dated August 3, 1999;
     and

-    Lenders shall have received a consent from Dolan Northwest, LLC, consenting
     to the assignment of Design Trend, LLC's interest under any and all current
     licensing agreements, including but not limited to, that certain licensing
     agreement among Dolan Northwest, LLC and Design Trends, LLC, dated August
     3, 1999; and

-    Lenders shall have received Uniform Commercial Code financing statements or
     amendments executed by Design Trends, and covering such Collateral of
     Design Trends 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 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 such other documents incidental and appropriate
     to the transactions provided for herein as Lenders or their counsel may
     reasonably request, 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 18. 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
Agent and Lenders, includes a guaranty of all of the obligations, indebtedness
and liabilities of Borrower under the Credit Agreement as amended by this
Amendment (specifically including the increased principal amount of $19,000,000
potentially available under the Credit Agreement), (b) represents to Agent and
Lenders that such

SEVENTH AMENDMENT TO CREDIT AGREEMENT - PAGE 8
<PAGE>   9

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 19. 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 20. Liens and Security Interests. Borrower hereby extends and
renews the Liens and security interests previously granted to Agent and Lenders
and agrees that this Amendment shall in no manner affect or impair any Liens or
security interests previously granted. Borrower hereby acknowledges that such
Liens and security interests (a) secure all Debt to Lenders, specifically
including the term loan facility created by this Amendment, and (b) are valid
and existing.

     Section 21. 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 22. 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.
Borrower agrees, acknowledges and confirms that any and all references to
Craftmade International, Inc., Durocraft International, Inc., and Trade Source
International, Inc. as Borrower, shall now include Design Trends, LLC, as set
forth in this Amendment, and that Design Trends is henceforth a Borrower for
purposes of the Loan Documents and any and all documents issued in connection
therewith, whether or not expressly so stated.

     Section 23. 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 24. 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

SEVENTH AMENDMENT TO CREDIT AGREEMENT - PAGE 9
<PAGE>   10

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

                                   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

                                   DESIGN TRENDS, LLC

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

SEVENTH AMENDMENT TO CREDIT AGREEMENT - PAGE 10

<PAGE>   11

          GUARANTOR:               C/D/R INCORPORATED

                                   By: /s/ CLIFFORD CRIMINGS
                                      -----------------------------
                                   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

                                   THE FROST NATIONAL BANK

                                   By: /s/ D. MICHAEL RANDALL
                                      -----------------------------
                                   Name:    D. Michael Randall
                                   Title:   Senior Vice President

SEVENTH AMENDMENT TO CREDIT AGREEMENT - PAGE 11
<PAGE>   12

                              BORROWING BASE REPORT
                                                                       EXHIBIT C

Chase Bank of Texas, National Association, as Agent
Attention:  Jerry G. Petrey, Vice President
500 East Border Street
P.O. Box 250
Arlington, Texas  76004

Gentlemen:

     This Borrowing Base Report, for the month ending ____________, ____, is
executed and 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 therein have the meanings assigned to them in the
Credit Agreement.

     The undersigned, an authorized officer of Borrower, on behalf of Borrower
hereby represents and warrants to Agent and Lenders that:

     - all information contained herein is true, correct and complete; and

     - the total Eligible Accounts and Eligible Inventory referred to below
represent the Eligible Accounts and Eligible Inventory that qualify for purposes
of determining the Borrowing Base under the Credit Agreement; and

     - attached hereto as Exhibit "A" is a true, correct and complete Accounts
Receivable Aging Report dated as of the date hereof.

<TABLE>
<S>             <C>                                                                            <C>
     1.   Eligible Accounts

     (a)  Gross Accounts                                                                       $__________

     (b)  Less:

          (i)  Accounts over 60 days past due                                                  $__________

          (ii) Accounts, not already included in (i), of any
               account debtor whose accounts total $150,000.00 or
               more if 20% of the dollar amount of all accounts
               of such account debtor are 60 days or more past
               due. [Applicable only if 18% or more of Borrower's
               total Accounts are 60 days or more past due. %
               currently past due _________].                                                  $__________

</TABLE>

<PAGE>   13

<TABLE>
<S>       <C>   <C>                                              <C>                           <C>
          (iii) Affiliate Accounts                                                             $__________

          (iv)  Accounts subject to setoff or dispute                                          $__________

          (v)   Other ineligibles                                                              $__________

          (vi)  Total Ineligible Accounts
                (sum of lines (i)-(v))                                                         $__________

     (c)  Total Eligible Accounts
          (line (a) minus line (b)(vi))                          $__________ x 80% =           $__________

     2.   Eligible Inventory

     (a)  Gross finished inventory
          (at lesser of cost or market)                                                        $__________

     (b)  Gross unassembled lamp parts
          (at lesser of cost or market)                                                        $__________

     (c)  Total Gross Inventory
          (sum of (a) + (b))                                                                   $__________

     (d)  Less:  Ineligibles                                                                   $__________

     (e)  Total Eligible Inventory
          (line (c) minus line (d))                              $__________ x 55% =           $__________

     3.   Total Borrowing Base

          (line 1(c) plus line 2(e) plus, if on or
          before the end of the fiscal quarter
          ending nearest September 30, 2000,
          $1,000,000)                                                                          $__________

     4.   Outstanding principal amount
          of Advances (including unpaid amounts
          of $_________ (please complete) under
          term loans in the original principal amount
          of $3,000,000)                                                                       $__________

     5.   Net Availability

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

          (b)   Outstanding Advances supported
</TABLE>

BORROWING BASE REPORT - PAGE 2
<PAGE>   14

<TABLE>
<S>                                                              <C>
                by Eligible Inventory (not to
                exceed 50% of line 4)                            $__________

          (c)   Amount by which line 5(b)
                exceeds 50% of line 4                            $__________
</TABLE>

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

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

Date:

                                   BORROWER:

                                   CRAFTMADE INTERNATIONAL, INC.

                                   By:
                                      -----------------------------
                                   Name:    Kathy Oher
                                   Title:   Chief Financial Officer

                                   DUROCRAFT INTERNATIONAL, INC.

                                   By:
                                      -----------------------------
                                   Name:    Kathy Oher
                                   Title:   Chief Financial Officer

                                   TRADE SOURCE INTERNATIONAL, INC.

                                   By:
                                      -----------------------------
                                   Name:    Kathy Oher
                                   Title:   Chief Financial Officer

                                   DESIGN TRENDS, LLC

                                   By:
                                      -----------------------------
                                   Name:
                                         --------------------------
                                   Title:
                                         --------------------------

BORROWING BASE REPORT - PAGE 3
<PAGE>   15

                                   EXHIBIT "A"
                                       TO
                              BORROWING BASE REPORT

                        Accounts Receivable Aging Report

<PAGE>   16

                    COVENANT COMPLIANCE CERTIFICATE                   EXHIBIT F

Chase Bank of Texas, National Association, as Agent
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 __________, ___
to ___________, ____, and is delivered pursuant to that certain Credit Agreement
(the "Credit Agreement") dated as of May 30, 1996, as amended, among Craftmade
International, Inc., Design Trends, LLC, 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
Agent and 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).

     2.   Consolidated Debt to Consolidated Tangible Net Worth Ratio (calculated
     as provided for in Section 9.1 of the Credit Agreement)

<TABLE>

<S>                                                                             <C>
          (a)  Consolidated Debt                                                $
                                                                                 ---------------

          (b)  Consolidated Tangible Net Worth                                  $
                                                                                 ---------------

          (c)  Ratio [(a) divided by (b)]
               (must not be greater than 2.6 before 9-30-2000; 2.4
               at 9-30-00 and thereafter until 12-30-00; 2.25 at
               12-31-00 and thereafter)
                                                                                 ---------------

     3.   Capital Expenditures

          (the beginning of current fiscal year through date hereof,
          must not exceed $600,000 in any fiscal year or, during
          the fiscal year ending June 2001, $1,800,000)                         $
                                                                                 ---------------
</TABLE>

<PAGE>   17
     4. Funded Debt to EBITDA Ratio (calculated with respect to the twelve most
     recently completed calendar months):

<TABLE>
<S>            <C>                                               <C>
        (a)    Funded Debt                                       $
                                                                  --------------
               Net income
               (after interest & tax expenses)                   $
                                                                  --------------

               Plus: Interest Expense                            $
                                                                  --------------

               Plus:  Tax Expense                                $
                                                                  --------------

               Plus:  Depreciation                               $
                                                                  --------------

               Plus:  Amortization                               $
                                                                  --------------

        (b)    Equals: EBITDA                                    $
                                                                  --------------

               Funded Debt to EBITDA Ratio
               [(a) divided by (b)] (must not be greater
               than 2.0 until 12-31-2000 and 1.75 thereafter)     --------------
</TABLE>

     5. Applicable Rate Determination (applies only with respect to Eurodollar
     Advances):

        The Applicable Rate shall be determined according to the following under
        the Funded Debt to EBIDTA Ratio, such ratio to be measured at end of
        each calendar quarter for purposes of the Eurodollar Advances.

<TABLE>
               Funded Debt to EBIDTA ratio              Circle One
               ---------------------------              ----------
<S>            <C>                                      <C>
               Less than 1.0 to 1.0,
               Applicable Rate equals                   Eurodollar Rate + 1.25%

               Greater than or equal to 1.0 to 1.0
               but less than 1.5 to 1.0,
               Applicable Rate equals                   Eurodollar Rate + 1.5%

               Greater than or equal to 1.5 to 1.0
               Applicable Rate equals                   Eurodollar Rate + 1.75%
</TABLE>

COVENANT COMPLIANCE CERTIFICATE - PAGE 2
<PAGE>   18

     7. Fixed Charge Coverage Ratio (calculated as provided in Section 9.4
     of the Credit Agreement) - must be greater than 1.05; determined first for
     the fiscal quarter ending June 30, 2000; thereafter determined on an
     accumulated basis until four consecutive quarters are achieved, and
     thereafter, with respect to the four most recently completed fiscal
     quarters.:

<TABLE>
<S>                                                                             <C>
                           EBITDA                                               $
                                                                                 -----------------
                           Less:  cash Tax Expense                              $
                                                                                 -----------------
                           Less:  treasury stock repurchases                    $
                                                                                 -----------------
                           Equals:  Numerator (i.e., cash for coverage)         $
                                                                                 -----------------
                           Principal payments on Debt (including
                           prepayments of Mortgage Debt,
                           excluding payments on the revolver loan)             $
                                                                                 -----------------
                           Plus:  Interest Expense                              $
                                                                                 -----------------

                           Plus:  cash dividends                                $
                                                                                 -----------------
                           Equals:  Denominator (i.e., charges)                 $

                                                                                 -----------------

                           Numerator divided by denominator =                   ___________ to 1.0
</TABLE>

     Attached hereto are Schedules setting forth the calculations supporting the
computations set forth in Items 2, 3, 4, 5 and 6 of this Covenant Compliance
Certificate. All information contained herein and on the attached Schedules is
true, complete and correct.

     IN WITNESS WHEREOF, the undersigned has executed this certificate effective
this ______ day of __________.

                                   CRAFTMADE INTERNATIONAL, INC.

                                   By:
                                      --------------------------------
                                   Name: Kathy Oher
                                   Title: Chief Financial Officer

                                   DUROCRAFT INTERNATIONAL, INC.

                                   By:
                                      --------------------------------
                                   Name: Kathy Oher
                                   Title: Chief Financial Officer

COVENANT COMPLIANCE CERTIFICATE - PAGE 3
<PAGE>   19

                                   TRADE SOURCE INTERNATIONAL, INC.

                                   By:
                                      --------------------------------
                                   Name: Kathy Oher
                                   Title: Chief Financial Officer

                                   DESIGN TRENDS, LLC

                                   By:
                                      --------------------------------
                                   Name:
                                        ------------------------------

                                   Title:
                                         -----------------------------

COVENANT COMPLIANCE CERTIFICATE - PAGE 4
<PAGE>   20

                                                                     EXHIBIT A-1
                              REVOLVING CREDIT NOTE

$8,000,000.00                    Dallas, Texas                      May 12, 2000

     FOR VALUE RECEIVED, the undersigned CRAFTMADE INTERNATIONAL, INC., a
Delaware corporation, DUROCRAFT INTERNATIONAL, INC., a Texas corporation, DESIGN
TRENDS, and TRADE SOURCE INTERNATIONAL, INC., a Delaware corporation (jointly
and severally, "Maker"), hereby promise to pay to the order of ______ ("Payee"),
at the offices of 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 EIGHT MILLION DOLLARS AND 00/100ths ($8,000,000.00), 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 Seventh 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 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 Revolving Credit Maturity Date. Accrued and unpaid interest on
this Note shall be due and payable on the last Business Day of each month,
commencing May 31, 2000, at the end of each Interest Period and on the Revolving
Credit Maturity 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

<PAGE>   21

or installment of any sum due the holder hereunder, or if this Note is placed in
the hands of an attorney for collection, or if it is collected through any legal
proceedings, 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 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 July 1, 1998, and in the stated
maximum principal amount of $7,000,000, as amended by that certain promissory
note executed and delivered by Maker, payable to the order of Payee dated
November 12, 1999, and in the stated maximum principal amount of $8,000,000.

     PURSUANT TO SECTION 346.004 OF THE TEXAS FINANCE CODE, CHAPTER 346 OF THE
TEXAS FINANCE CODE SHALL NOT APPLY TO THIS NOTE, OR ANY ADVANCE OR LOAN
EVIDENCED BY THIS NOTE.

     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.

PROMISSORY NOTE - PAGE 2
<PAGE>   22

                                   CRAFTMADE INTERNATIONAL, INC.

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

                                   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

                                   DESIGN TRENDS, LLC

                                   By:
                                      ---------------------------
                                   Name:
                                   Title:

PROMISSORY NOTE - PAGE 3
<PAGE>   23

                              TERM NOTE                             EXHIBIT A-2

$1,500,000.00                 Dallas, Texas                         May 12, 2000

     FOR VALUE RECEIVED, the undersigned CRAFTMADE INTERNATIONAL, INC., a
Delaware corporation, DUROCRAFT INTERNATIONAL, INC., a Texas corporation, DESIGN
TRENDS, and TRADE SOURCE INTERNATIONAL, INC., a Delaware corporation (jointly
and severally, "Maker"), hereby promise to pay to the order of ______ ("Payee"),
at the offices of 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 ONE MILLION FIVE HUNDRED THOUSAND DOLLARS AND 00/100ths
($1,500,000.00), 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 Seventh 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 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. The outstanding principal of this Note shall be due and payable as set
forth in the Credit Agreement, as amended. 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 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.

<PAGE>   24

     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 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

                                   DUROCRAFT INTERNATIONAL, INC.

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

PROMISSORY NOTE - PAGE 2
<PAGE>   25

                                   TRADE SOURCE INTERNATIONAL, INC.

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

                                   DESIGN TRENDS, LLC

                                   By:
                                      ---------------------------
                                   Name:
                                         ------------------------
                                   Title:
                                         ------------------------

PROMISSORY NOTE - PAGE 3
<PAGE>   26

                                                                     EXHIBIT F-1

                 TREASURY STOCK PURCHASE COMPLIANCE CERTIFICATE

Chase Bank of Texas, National Association, as Agent
Attention:  Jerry G. Petrey, Vice President
500 East Border Street
P.O. Box 250
Arlington, Texas 76004

Gentlemen:

     This Treasury Stock Purchase Compliance Certificate covers the period from
__________, ____ to ___________, ____, and is delivered pursuant to that certain
Credit Agreement (the "Credit Agreement") dated as of May 30, 1996, as amended,
among Craftmade International, Inc., Design Trends, LLC, 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
Agent and Lenders that:

<TABLE>
<S>             <C>                                                                  <C>
     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).

     2.   Consolidated Debt to Consolidated Tangible Net Worth Ratio (calculated
          as provided for in Section 9.1 of the Credit Agreement)

          (a)  Consolidated Debt (including Debt to be incurred in connection
               with Proposed Treasury Stock Purchase(s))                             $
                                                                                      ----------------

          (b)  Consolidated Tangible Net Worth                                       $
                                                                                      ----------------

          (c)  Minus: Proposed Treasury Stock Purchase(s)                            $
                                                                                      ----------------

          (d)  Equals: Consolidated Tangible Net Worth (after Proposed Treasury
               Stock Purchase(s))                                                    $
                                                                                      ----------------

          (e)  Ratio [(a) divided by (d)] (must not be greater than 2.6 until
               9-30-2000; 2.4 at 9-30-2000 and thereafter through and at
               11-30-2000; 2.25 thereafter through and at 12-30-00; and 2.0
               thereafter)                                                           -----------------
</TABLE>

TREASURY STOCK PURCHASE COMPLIANCE CERTIFICATE - PAGE 1
<PAGE>   27

<TABLE>
<S>                                                                                  <C>          <C>
          In addition: Treasury Stock Purchases must not exceed $900,000 in the
          fiscal quarter ending/ended June 30, 2000. Compliance (circle one)         Yes          No
</TABLE>

     Attached hereto are Schedules setting forth the calculations supporting the
computations set forth in Item 2 of this Treasury Stock Purchase Compliance
Certificate. All information contained herein and on the attached Schedules is
true, complete and correct.

TREASURY STOCK PURCHASE COMPLIANCE CERTIFICATE - PAGE 2
<PAGE>   28

     IN WITNESS WHEREOF, the undersigned has executed this certificate effective
this ______ day of __________.

                                   CRAFTMADE INTERNATIONAL, INC.

                                   By:
                                      ---------------------------
                                   Name: Kathy Oher
                                   Title: Chief Financial Officer

                                   DUROCRAFT INTERNATIONAL, INC.

                                   By:
                                      ---------------------------
                                   Name: Kathy Oher
                                   Title: Chief Financial Officer

                                   TRADE SOURCE INTERNATIONAL, INC.

                                   By:
                                      ---------------------------
                                   Name: Kathy Oher
                                   Title: Chief Financial Officer

                                   DESIGN TRENDS, LLC.

                                   By:
                                      ---------------------------
                                   Name:
                                        -------------------------
                                   Title:
                                        -------------------------

TREASURY STOCK PURCHASE COMPLIANCE CERTIFICATE - PAGE 3

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