CRAFTMADE INTERNATIONAL INC
NOTE AND SECURITY AGREEMENT
<DOCUMENT>
<TYPE>EX-10.28
<SEQUENCE>3
<FILENAME>d12540exv10w28.txt
<DESCRIPTION>NOTE AND SECURITY AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.28

                                 LOAN AGREEMENT

Wachovia Bank, National Association
301 South Tryon Street
Charlotte, North Carolina 28202
(Hereinafter referred to as the "Bank")

Prime/Home Impressions, LLC
420 3rd Avenue NW
Hickory, North Carolina 28601
(Individually and collectively "Borrower")

This Loan Agreement ("Agreement") is entered into November 24, 2003, by and
between Bank and Borrower.

This Agreement applies to the loan or loans (individually and collectively, the
"Loan") evidenced by one or more promissory notes of even date herewith or other
notes subject hereto, as modified from time to time (whether one or more, the
"Note") and all Loan Documents. The terms "Loan Documents" and "Obligations," as
used in this Agreement, are defined in the Note.

Relying upon the covenants, agreements, representations and warranties contained
in this Agreement, Bank is willing to extend credit to Borrower upon the terms
and subject to the conditions set forth herein, and Bank and Borrower agree as
follows:

REPRESENTATIONS. Borrower represents that from the date of this Agreement and
until final payment in full of the Obligations: ACCURATE INFORMATION. All
information now and hereafter furnished to Bank is and will be true, correct and
complete. Any such information relating to Borrower's financial condition will
accurately reflect Borrower's financial condition as of the date(s) thereof,
(including all contingent liabilities of every type), and Borrower further
represents that its financial condition has not changed materially or adversely
since the date(s) of such documents. AUTHORIZATION; NON-CONTRAVENTION. The
execution, delivery and performance by Borrower and any guarantor, as
applicable, of this Agreement and other Loan Documents to which it is a party
are within its power, have been duly authorized as may be required and, if
necessary, by making appropriate filings with any governmental agency or unit
and are the legal, binding, valid and enforceable obligations of Borrower and
any guarantors; and do not (i) contravene, or constitute (with or without the
giving of notice or lapse of time or both) a violation of any provision of
applicable law, a violation of the organizational documents of Borrower or any
guarantor, or a default under any agreement, judgment, injunction, order, decree
or other instrument binding upon or affecting Borrower or any guarantor, (ii)
result in the creation or imposition of any lien (other than the lien(s) created
by the Loan Documents) on any of Borrower's or any guarantor's assets, or (iii)
give cause for the acceleration of any obligations of Borrower or any guarantor
to any other creditor. ASSET OWNERSHIP. Borrower has good and marketable title
to all of the properties and assets reflected on the balance sheets and
financial statements supplied Bank by Borrower, and all such properties and
assets are free and clear of mortgages, security deeds, pledges, liens, charges,
and all other encumbrances, except as otherwise disclosed to Bank by Borrower in
writing and approved by Bank ("Permitted Liens"). To Borrower's knowledge, no
default has occurred under any Permitted Liens and no claims or interests
adverse to Borrower's present rights in its properties and assets have arisen.
DISCHARGE OF LIENS AND TAXES. Borrower has duly filed, paid and/or discharged
all taxes or other claims that may become a lien on any of its property or
assets, except to the extent that such items are being appropriately contested
in good faith and an adequate reserve for the payment thereof is being
maintained. SUFFICIENCY OF CAPITAL. Borrower is not, and after consummation of
this Agreement and after giving effect to all indebtedness incurred and liens
created by Borrower in connection with the Note and any other Loan Documents,
will not be, insolvent within the meaning of 11 U.S.C. Section. 101(32).
COMPLIANCE WITH LAWS. Borrower is in compliance in all respects with all
federal, state and local laws, rules and regulations applicable to its
properties, operations, business, and finances, including, without limitation,
any federal or state laws relating to liquor (including 18 U.S.C. Section. 3617,
et seq.) oR narcotics (including 21 U.S.C. Section. 801, et seq.)

<PAGE>

and/or any commercial crimes; all applicable federal, state and local laws and
regulations intended to protect the environment; and the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), if applicable. ORGANIZATION
AND AUTHORITY. Each corporation, partnership or limited liability company
Borrower and/or guarantor, as applicable, is duly created, validly existing and
in good standing under the laws of the state of its organization, and has all
powers, governmental licenses, authorizations, consents and approvals required
to operate its business as now conducted. Each corporation, partnership or
limited liability company Borrower and/or guarantor, as applicable, is duly
qualified, licensed and in good standing in each jurisdiction where
qualification or licensing is required by the nature of its business or the
character and location of its property, business or customers, and in which the
failure to so qualify or be licensed, as the case may be, in the aggregate,
could have a material adverse effect on the business, financial position,
results of operations, properties or prospects of Borrower or any such
guarantor. NO LITIGATION. There are no pending or threatened suits, claims or
demands against Borrower or any guarantor that have not been disclosed to Bank
by Borrower in writing, and approved by Bank.

AFFIRMATIVE COVENANTS. Borrower agrees that from the date hereof and until final
payment in full of the Obligations, unless Bank shall otherwise consent in
writing, Borrower will: ACCESS TO BOOKS AND RECORDS. Allow Bank, or its agents,
during normal business hours, access to the books, records and such other
documents of Borrower as Bank shall reasonably require, and allow Bank, at
Borrower's expense, to inspect, audit and examine the same and to make extracts
therefrom and to make copies thereof. ACCOUNTS RECEIVABLE AGING. Deliver to
Bank, from time to time hereafter but not less than monthly within 15 days of
the end of each such period, a detailed receivables report including totals,
customer names and addresses, a reconciliation statement, and the original date
of each invoice. BUSINESS CONTINUITY. Conduct its business in substantially the
same manner and locations as such business is now and has previously been
conducted. COMPLIANCE WITH OTHER AGREEMENTS. Comply with all terms and
conditions contained in this Agreement, and any other Loan Documents, and swap
agreements, if applicable, as defined in the 11 U.S.C. Section. 101. ESTOPPEL
CERTIFICATE. Furnish, within 15 days after request by Bank, a written statement
duly acknowledged of the amount due under the Loan and whether offsets or
defenses exist against the Obligations. INSURANCE. Maintain adequate insurance
coverage with respect to its properties and business against loss or damage of
the kinds and in the amounts customarily insured against by companies of
established reputation engaged in the same or similar businesses including,
without limitation, commercial general liability insurance, workers compensation
insurance, and business interruption insurance; all acquired in such amounts and
from such companies as Bank may reasonably require. INVENTORY REPORTS. Deliver
to Bank, from time to time hereafter but not less than monthly within 15 days of
the end of each such period, an inventory report showing individual values for
raw materials, work-in-progress, finished products and any inventory
obsolescence. MAINTAIN PROPERTIES. Maintain, preserve and keep its property in
good repair, working order and condition, making all needed replacements,
additions and improvements thereto, to the extent allowed by this Agreement.
NOTICE OF DEFAULT AND OTHER NOTICES (a) NOTICE OF DEFAULT. Furnish to Bank
immediately upon becoming aware of the existence of any condition or event which
constitutes a Default (as defined in the Loan Documents) or any event which,
upon the giving of notice or lapse of time or both, may become a Default,
written notice specifying the nature and period of existence thereof and the
action which Borrower is taking or proposes to take with respect thereto. (b)
OTHER NOTICES. Promptly notify Bank in writing of (i) any material adverse
change in its financial condition or its business; (ii) any default under any
material agreement, contract or other instrument to which it is a party or by
which any of its properties are bound, or any acceleration of the maturity of
any indebtedness owing by Borrower; (iii) any material adverse claim against or
affecting Borrower or any part of its properties; (iv) the commencement of, and
any material determination in, any litigation with any third party or any
proceeding before any governmental agency or unit affecting Borrower; and (v) at
least 30 days prior thereto, any change in Borrower's name or address as shown
above, and/or any change in Borrower's structure. OTHER FINANCIAL INFORMATION.
Deliver promptly such other information regarding the operation, business
affairs, and financial condition of Borrower which Bank may reasonably request.
PAYMENT OF DEBTS. Pay and discharge when due, and before subject to penalty or
further charge, and otherwise satisfy before maturity or delinquency, all
obligations, debts, taxes, and liabilities of whatever nature or amount, except
those which Borrower in good faith disputes. REPORTS AND PROXIES. Deliver to
Bank, promptly, a copy of all financial statements, reports, notices, and all
regular or periodic reports

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required to be filed by Borrower with any governmental agency or authority.

NEGATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Borrower will not: DEFAULT ON OTHER CONTRACTS OR
OBLIGATIONS. Default on any material contract with or obligation when due to a
third party or default in the performance of any obligation to a third party
incurred for money borrowed. GOVERNMENT INTERVENTION. Permit the assertion or
making of any seizure, vesting or intervention by or under authority of any
governmental entity, as a result of which the management of Borrower or any
guarantor is displaced of its authority in the conduct of its respective
business or such business is curtailed or materially impaired. JUDGMENT ENTERED.
Permit the entry of any monetary judgment or the assessment against, the filing
of any tax lien against, or the issuance of any writ of garnishment or
attachment against any property of or debts due. RETIRE OR REPURCHASE CAPITAL
STOCK. Retire or otherwise acquire any of its capital stock.

ANNUAL FINANCIAL STATEMENTS. Borrower shall deliver to Bank, within 90 days
after the close of each fiscal year, unaudited management-prepared financial
statements reflecting its operations during such fiscal year, including, without
limitation, a balance sheet, profit and loss statement and statement of cash
flows, with supporting schedules and in reasonable detail, prepared in
conformity with generally accepted accounting principles, applied on a basis
consistent with that of the preceding year. If unaudited statements are
required, such statements shall be certified as to their correctness by a
principal financial officer of Borrower.

PERIODIC FINANCIAL STATEMENTS. Borrower shall deliver to Bank, within 45 days
after the end of each fiscal quarter, unaudited management-prepared quarterly
financial statements including, without limitation, a balance sheet, profit and
loss statement and statement of cash flows, with supporting schedules; all in
reasonable detail and prepared in conformity with generally accepted accounting
principles, applied on a basis consistent with that of the preceding year. Such
statements shall be certified as to their correctness by a principal financial
officer of Borrower and in each case, if audited statements are required,
subject to audit and year-end adjustments.

CONDITIONS PRECEDENT. The obligations of Bank to make the loan and any advances
pursuant to this Agreement are subject to the following conditions precedent:
ADDITIONAL DOCUMENTS. Receipt by Bank of such additional supporting documents as
Bank or its counsel may reasonably request.

IN WITNESS WHEREOF, Borrower and Bank, on the day and year first written above,
have caused this Agreement to be executed under seal.

                                Prime/Home Impressions, LLC

                                By: /s/ ROBERT W. LACKEY, Sr.             (SEAL)
                                    --------------------------------------
                                    Robert W. Lackey, Sr., Group A Manager


                                By: /s/ NEALL W. HUMPHREY                 (SEAL)
                                    --------------------------------------
                                    Neall W. Humphrey, Group B Manager

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                                Wachovia Bank, National Association

                                By: /s/ PHILIP E. MOORE                 (SEAL)
                                   --------------------------------------
                                   Philip E. Moore, Senior Vice President

Tracking #: 78890rke
CAT - Deal # 240579 Facility ID 218095

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                                 PROMISSORY NOTE

$2,100,000.00

                                                               November 24, 2003

Prime/Home Impressions, LLC
420 3rd Avenue NW
Hickory, North Carolina 28601
(Individually and collectively "Borrower")

Wachovia Bank, National Association
301 South Tryon Street
Charlotte, North Carolina 28202
(Hereinafter referred to as "Bank")

Borrower promises to pay to the order of Bank, in lawful money of the United
States of America, at its office indicated above or wherever else Bank may
specify, the sum of Two Million, One Hundred Thousand and No/100 Dollars
($2,100,000.00) or such sum as may be advanced and outstanding from time to
time, with interest on the unpaid principal balance at the rate and on the terms
provided in this Promissory Note (including all renewals, extensions or
modifications hereof, this "Note").

LOAN AGREEMENT. This Note is subject to the provisions of that certain Loan
Agreement between Bank and Borrower of even date herewith, as modified from time
to time.

TERM LOAN (WITH DRAW PERIOD). From the date of this Note until and including
March 15, 2004 (the "Conversion Date"), Borrower may borrow and, upon the
request of Borrower, Bank shall advance under this Note from time to time (each
an "Advance" and together the "Advances"), so long as the total principal
balance outstanding at any one time does not exceed the principal amount stated
on the face of this Note, subject to the limitations described in any loan
agreement to which this Note is subject. Bank's obligation to make Advances
under this Note shall terminate if Borrower is in Default under this Note. As of
the date of each proposed Advance, Borrower shall be deemed to represent that
each representation made in the Loan Documents is true as of such date.
Advances, once repaid, may not be reborrowed.

USE OF PROCEEDS. Borrower shall use the proceeds of the loan(s) evidenced by
this Note for the commercial purposes of Borrower, as follows: to fund start-up
of the Lowe's lighting accessory program.

SECURITY. Borrower has granted Bank a security interest in the collateral
described in the Loan Documents, including, but not limited to, personal
property collateral described in that certain Security Agreement of even date
herewith.

INTEREST RATE. Interest shall accrue on the unpaid principal balance of each
Advance during each Interest Period from the date of such Advance at a rate per
annum equal to 1-month LIBOR plus 2.25% ("Interest Rate"). Interest for each
Interest Period shall accrue each day during such Interest Period, commencing on
and including the first day to but excluding the last day. "Interest Period"
means, in respect of each Advance, each period commencing on the first day of
the calendar month and ending on the first day of the next succeeding calendar
month; provided (i) the first Interest Period shall commence on the date of such
Advance, (ii) any Interest Period that would otherwise extend past the
Conversion Date shall end on the Conversion Date, and thereafter all Advances
shall be deemed one Advance and the first Interest Period in respect of such
Advance shall commence on the Conversion Date and (iii) any Interest Period that
would otherwise extend past the maturity date of this Note shall end on the
maturity date of this Note. "LIBOR" means, with respect to each Interest Period,
the rate for U.S. dollar deposits with a maturity equal to the number of months
specified above, as reported on Telerate page 3750 as of 11:00 a.m., London
time, on the second London business day before such Interest Period begins, or,
in the case of the first Interest Period, the second London business day before
the first day of the calendar

<PAGE>

month during which such Interest Period begins (or if not so reported, then as
determined by the Bank from another recognized source or interbank quotation).

DEFAULT RATE. In addition to all other rights contained in this Note, if a
Default (as defined herein) occurs and as long as a Default continues, all
outstanding Obligations, other than Obligations under any swap agreements (as
defined in 11 U.S.C. Section. 101) between Borrower and Bank or its affiliates,
shall bear interest at the Interest Rate plus 3% ("Default Rate"), except if the
Note is governed by the laws of the State of North Carolina and the original
principal amount is less than or equal to $300,000.00. The Default Rate shall
also apply from acceleration until the Obligations or any judgment thereon is
paid in full.

INTEREST AND FEE(S) COMPUTATION (ACTUAL/360). Interest and fees, if any, shall
be computed on the basis of a 360-day year for the actual number of days in the
applicable period ("Actual/360 Computation"). The Actual/360 Computation
determines the annual effective yield by taking the stated (nominal) rate for a
year's period and then dividing said rate by 360 to determine the daily periodic
rate to be applied for each day in the applicable period. Application of the
Actual/360 Computation produces an annualized effective interest rate exceeding
the nominal rate.

REPAYMENT TERMS. This Note shall be due and payable as set forth hereinbelow.
From the date of this Note until and including the Conversion Date, this Note
shall be payable in consecutive monthly payments of accrued interest only,
commencing on January 15, 2004, and continuing on the same day of each month
thereafter. After the Conversion Date, this Note shall be payable in consecutive
quarterly payments of principal equal to $525,000.00, plus accrued interest,
commencing on June 15, 2004, and continuing on the same day of each third month
thereafter. In any event, all principal and accrued interest shall be due and
payable on March 15, 2005.

AUTOMATIC DEBIT OF CHECKING ACCOUNT FOR LOAN PAYMENT. Borrower authorizes Bank
to debit demand deposit account number 601001776 or any other account with Frost
National Bank (routing number 114000093) designated in writing by Borrower,
beginning January 15, 2004 for any payments due under this Note. Borrower
further certifies that Borrower holds legitimate ownership of this account and
preauthorizes this periodic debit as part of its right under said ownership.

APPLICATION OF PAYMENTS. Monies received by Bank from any source for application
toward payment of the Obligations shall be applied to accrued interest and then
to principal. If a Default occurs, monies may be applied to the Obligations in
any manner or order deemed appropriate by Bank.

If any payment received by Bank under this Note or other Loan Documents is
rescinded, avoided or for any reason returned by Bank because of any adverse
claim or threatened action, the returned payment shall remain payable as an
obligation of all persons liable under this Note or other Loan Documents as
though such payment had not been made.

DEFINITIONS. LOAN DOCUMENTS. The term "Loan Documents", as used in this Note and
the other Loan Documents, refers to all documents executed in connection with or
related to the loan evidenced by this Note and any prior notes which evidence
all or any portion of the loan evidenced by this Note, and any letters of credit
issued pursuant to any loan agreement to which this Note is subject, any
applications for such letters of credit and any other documents executed in
connection therewith or related thereto, and may include, without limitation, a
commitment letter that survives closing, a loan agreement, this Note, guaranty
agreements, security agreements, security instruments, financing statements,
mortgage instruments, any renewals or modifications, whenever any of the
foregoing are executed, but does not include swap agreements (as defined in 11
U.S.C. Section. 101). OBLIGATIONS. The term "Obligations", as used in this Note
and the other Loan Documents, refers to any and all indebtedness and other
obligations under this Note, all other obligations under any other Loan
Document(s), and all obligations under any swap agreements (as defined in 11
U.S.C. Section. 101) between Borrower and Bank, or its affiliates, whenever
executed. CERTAIN OTHER TERMS. All terms that are used but not otherwise defined
in any of the Loan Documents shall have the definitions provided in the Uniform
Commercial Code.

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LATE CHARGE. If any payments are not timely made, Borrower shall also pay to
Bank a late charge equal to 4% of each payment past due for 15 or more days.

Acceptance by Bank of any late payment without an accompanying late charge shall
not be deemed a waiver of Bank's right to collect such late charge or to collect
a late charge for any subsequent late payment received.

ATTORNEYS' FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Bank's
reasonable expenses incurred to enforce or collect any of the Obligations
including, without limitation, reasonable arbitration, paralegals', attorneys'
and experts' fees and expenses, whether incurred without the commencement of a
suit, in any trial, arbitration, or administrative proceeding, or in any
appellate or bankruptcy proceeding.

USURY. If at any time the effective interest rate under this Note would, but for
this paragraph, exceed the maximum lawful rate, the effective interest rate
under this Note shall be the maximum lawful rate, and any amount received by
Bank in excess of such rate shall be applied to principal and then to fees and
expenses, or, if no such amounts are owing, returned to Borrower.

DEFAULT. If any of the following occurs, a default ("Default") under this Note
shall exist: NONPAYMENT; NONPERFORMANCE. The failure of timely payment or
performance of the Obligations or Default under this Note or any other Loan
Documents. FALSE WARRANTY. A warranty or representation made or deemed made in
the Loan Documents or furnished Bank in connection with the loan evidenced by
this Note proves materially false, or if of a continuing nature, becomes
materially false. CROSS DEFAULT. At Bank's option, any default in payment or
performance of any obligation under any other loans, contracts or agreements of
Borrower, any Subsidiary or Affiliate of Borrower, any general partner of or the
holder(s) of the majority ownership interests of Borrower with Bank or its
affiliates ("Affiliate" shall have the meaning as defined in 11 U.S.C. Section.
101, except that the term "Borrower" shall be substituted for the term "Debtor"
therein; "Subsidiary" shall mean any business in which Borrower holds, directly
or indirectly, a controlling interest). CESSATION; BANKRUPTCY. The death of,
appointment of a guardian for, dissolution of, termination of existence of, loss
of good standing status by, appointment of a receiver for, assignment for the
benefit of creditors of, or commencement of any bankruptcy or insolvency
proceeding by or against Borrower, its Subsidiaries or Affiliates, if any, or
any general partner of or the holder(s) of the majority ownership interests of
Borrower, or any party to the Loan Documents. MATERIAL BUSINESS ALTERATION.
Without prior written consent of Bank, a material alteration in the kind or type
of Borrower's business. MATERIAL CAPITAL STRUCTURE OR BUSINESS ALTERATION.
Without prior written consent of Bank, (i) a material alteration in the kind or
type of Borrower's business or that of Borrower's Subsidiaries or Affiliates, if
any; (ii) the sale of substantially all of the business or assets of Borrower,
any of Borrower's Subsidiaries or Affiliates or any guarantor, or a material
portion (10% or more) of such business or assets if such a sale is outside the
ordinary course of business of Borrower, or any of Borrower's Subsidiaries or
Affiliates or any guarantor, or more than 50% of the outstanding stock or voting
power of or in any such entity in a single transaction or a series of
transactions; (iii) the acquisition of substantially all of the business or
assets or more than 50% of the outstanding stock or voting power of any other
entity; or (iv) should any Borrower or any of Borrower's Subsidiaries or
Affiliates or any guarantor enter into any merger or consolidation. MATERIAL
ADVERSE CHANGE. Bank determines in good faith, in its sole discretion, that the
prospects for payment or performance of the Obligations are impaired or there
has occurred a material adverse change in the business or prospects of Borrower,
financial or otherwise.

REMEDIES UPON DEFAULT. If a Default occurs under this Note or any Loan
Documents, Bank may at any time thereafter, take the following actions: BANK
LIEN. Foreclose its security interest or lien against Borrower's accounts
without notice. ACCELERATION UPON DEFAULT. Accelerate the maturity of this Note
and, at Bank's option, any or all other Obligations, other than Obligations
under any swap agreements (as defined in 11 U.S.C. Section. 101) between
Borrower and Bank, or its affiliates, which shall be governed by the default and
termination provisions of said swap agreements; whereupon this Note and the
accelerated Obligations shall be immediately due and payable; provided, however,
if the Default is based upon a bankruptcy or insolvency proceeding commenced by
or against Borrower or any guarantor or endorser of this Note, all Obligations
(other than Obligations under any swap agreement as referenced above) shall

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automatically and immediately be due and payable. CUMULATIVE. Exercise any
rights and remedies as provided under the Note and other Loan Documents, or as
provided by law or equity.

FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time, including without limitation,
financial statements and information pertaining to Borrower's financial
condition. Such information shall be true, complete, and accurate.

WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note and
other Loan Documents shall be valid unless in writing and signed by an officer
of Bank. No waiver by Bank of any Default shall operate as a waiver of any other
Default or the same Default on a future occasion. Neither the failure nor any
delay on the part of Bank in exercising any right, power, or remedy under this
Note and other Loan Documents shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.

Each Borrower or any person liable under this Note waives presentment, protest,
notice of dishonor, demand for payment, notice of intention to accelerate
maturity, notice of acceleration of maturity, notice of sale and all other
notices of any kind. Further, each agrees that Bank may extend, modify or renew
this Note or make a novation of the loan evidenced by this Note for any period,
and grant any releases, compromises or indulgences with respect to any
collateral securing this Note, or with respect to any other Borrower or any
other person liable under this Note or other Loan Documents, all without notice
to or consent of each Borrower or each person who may be liable under this Note
or any other Loan Document and without affecting the liability of Borrower or
any person who may be liable under this Note or any other Loan Document.

MISCELLANEOUS PROVISIONS. ASSIGNMENT. This Note and the other Loan Documents
shall inure to the benefit of and be binding upon the parties and their
respective heirs, legal representatives, successors and assigns. Bank's
interests in and rights under this Note and the other Loan Documents are freely
assignable, in whole or in part, by Bank. In addition, nothing in this Note or
any of the other Loan Documents shall prohibit Bank from pledging or assigning
this Note or any of the other Loan Documents or any interest therein to any
Federal Reserve Bank. Borrower shall not assign its rights and interest
hereunder without the prior written consent of Bank, and any attempt by Borrower
to assign without Bank's prior written consent is null and void. Any assignment
shall not release Borrower from the Obligations. APPLICABLE LAW; CONFLICT
BETWEEN DOCUMENTS. This Note and, unless otherwise provided in any other Loan
Document, the other Loan Documents shall be governed by and construed under the
laws of the state named in Bank's address on the first page hereof without
regard to that state's conflict of laws principles. If the terms of this Note
should conflict with the terms of any loan agreement or any commitment letter
that survives closing, the terms of this Note shall control. BORROWER'S
ACCOUNTS. Except as prohibited by law, Borrower grants Bank a security interest
in all of Borrower's accounts with Bank and any of its affiliates. JURISDICTION.
Borrower irrevocably agrees to non-exclusive personal jurisdiction in the state
named in Bank's address on the first page hereof. SEVERABILITY. If any provision
of this Note or of the other Loan Documents shall be prohibited or invalid under
applicable law, such provision shall be ineffective but only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Note or other such document.
NOTICES. Any notices to Borrower shall be sufficiently given, if in writing and
mailed or delivered to the Borrower's address shown above or such other address
as provided hereunder, and to Bank, if in writing and mailed or delivered to
Wachovia Bank, National Association, Mail Code VA7391, P. O. Box 13327, Roanoke,
VA 24040 or Wachovia Bank, National Association, Mail Code VA7391, 10 South
Jefferson Street, Roanoke, VA 24011 or such other address as Bank may specify in
writing from time to time. Notices to Bank must include the mail code. In the
event that Borrower changes Borrower's address at any time prior to the date the
Obligations are paid in full, Borrower agrees to promptly give written notice of
said change of address by registered or certified mail, return receipt
requested, all charges prepaid. PLURAL; CAPTIONS. All references in the Loan
Documents to Borrower, guarantor, person, document or other nouns of reference
mean both the singular and plural form, as the case may be, and the term
"person" shall mean any individual, person or entity. The captions contained in
the Loan Documents are inserted for convenience only and shall not affect the
meaning or interpretation of the Loan Documents. ADVANCES. Bank may, in its sole
discretion, make other advances which shall be deemed to be advances under this

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Note, even though the stated principal amount of this Note may be exceeded as a
result thereof. POSTING OF PAYMENTS. All payments received during normal banking
hours after 2:00 p.m. local time at the office of Bank first shown above shall
be deemed received at the opening of the next banking day. JOINT AND SEVERAL
OBLIGATIONS. Each person who signs this Note as a Borrower (as defined herein)
is jointly and severally obligated. FEES AND TAXES. Borrower shall promptly pay
all documentary, intangible recordation and/or similar taxes on this transaction
whether assessed at closing or arising from time to time. LIMITATION ON
LIABILITY; WAIVER OF PUNITIVE DAMAGES. EACH OF THE PARTIES HERETO, INCLUDING
BANK BY ACCEPTANCE HEREOF, AGREES THAT IN ANY JUDICIAL, MEDIATION OR ARBITRATION
PROCEEDING OR ANY CLAIM OR CONTROVERSY BETWEEN OR AMONG THEM THAT MAY ARISE OUT
OF OR BE IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY
OTHER AGREEMENT OR DOCUMENT BETWEEN OR AMONG THEM OR THE OBLIGATIONS EVIDENCED
HEREBY OR RELATED HERETO, IN NO EVENT SHALL ANY PARTY HAVE A REMEDY OF, OR BE
LIABLE TO THE OTHER FOR, (1) INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR (2)
PUNITIVE OR EXEMPLARY DAMAGES. EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES ANY
RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH MAY ARISE
IN THE FUTURE IN CONNECTION WITH ANY SUCH PROCEEDING, CLAIM OR CONTROVERSY,
WHETHER THE SAME IS RESOLVED BY ARBITRATION, MEDIATION, JUDICIALLY OR OTHERWISE.
PATRIOT ACT NOTICE. To help fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain, verify,
and record information that identifies each person who opens an account. For
purposes of this section, account shall be understood to include loan accounts.
SWAP AGREEMENTS. All swap agreements (as defined in 11 U.S.C. Section. 101), if
any, between Borrower and Bank or its affiliates are independent agreements
governed by the written provisions of said swap agreements, which will remain in
full force and effect, unaffected by any repayment, prepayment, acceleration,
reduction, increase or change in the terms of this Note, except as otherwise
expressly provided in said written swap agreements, and any payoff statement
from Bank relating to this Note shall not apply to said swap agreements unless
expressly referred to in such payoff statement.

ARBITRATION. Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any claim or controversy arising out of
or relating to the Loan Documents between parties hereto (a "Dispute") shall be
resolved by binding arbitration conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA") and the Federal Arbitration Act. Disputes
may include, without limitation, tort claims, counterclaims, a dispute as to
whether a matter is subject to arbitration, claims brought as class actions, or
claims arising from documents executed in the future. A judgment upon the award
may be entered in any court having jurisdiction. Notwithstanding the foregoing,
this arbitration provision does not apply to disputes under or related to swap
agreements. SPECIAL RULES. All arbitration hearings shall be conducted in the
city named in the address of Bank first stated above. A hearing shall begin
within 90 days of demand for arbitration and all hearings shall conclude within
120 days of demand for arbitration. These time limitations may not be extended
unless a party shows cause for extension and then for no more than a total of 60
days. The expedited procedures set forth in Rule 51 et seq. of the Arbitration
Rules shall be applicable to claims of less than $1,000,000.00. Arbitrators
shall be licensed attorneys selected from the Commercial Financial Dispute
Arbitration Panel of the AAA. The parties do not waive applicable Federal or
state substantive law except as provided herein. PRESERVATION AND LIMITATION OF
REMEDIES. Notwithstanding the preceding binding arbitration provisions, the
parties agree to preserve, without diminution, certain remedies that any party
may exercise before or after an arbitration proceeding is brought. The parties
shall have the right to proceed in any court of proper jurisdiction or by
self-help to exercise or prosecute the following remedies, as applicable: (i)
all rights to foreclose against any real or personal property or other security
by exercising a power of sale or under applicable law by judicial foreclosure
including a proceeding to confirm the sale; (ii) all rights of self-help
including peaceful occupation of real property and collection of rents, set-off,
and peaceful possession of personal property; (iii) obtaining provisional or
ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and filing an involuntary bankruptcy
proceeding; and (iv) when applicable, a judgment by confession of judgment. Any
claim or controversy with regard to any party's entitlement to such remedies is
a Dispute. WAIVER OF JURY TRIAL. THE PARTIES ACKNOWLEDGE THAT BY AGREEING TO
BINDING ARBITRATION THEY HAVE IRREVOCABLY WAIVED ANY RIGHT

                                     Page 5
<PAGE>

THEY MAY HAVE TO JURY TRIAL WITH REGARD TO A DISPUTE AS TO WHICH BINDING
ARBITRATION HAS BEEN DEMANDED.

IN WITNESS WHEREOF, Borrower, on the day and year first above written, has
caused this Note to be executed under seal.

PLACE OF EXECUTION AND DELIVERY. Borrower hereby certifies that this Note and
the Loan Documents were executed in the State of North Carolina and delivered to
Bank in the State of North Carolina.

                                 Prime/Home Impressions, LLC
                                 Taxpayer Identification Number:_________

                                 By:  /s/ ROBERT W. LACKEY, Sr.          (SEAL)
                                    --------------------------------------
                                    Robert W. Lackey, Sr., Group A Manager

                                 By: /s/ NEALL W. HUMPHREY                (SEAL)
                                    --------------------------------------
                                    Neall W. Humphrey, Group B Manager

Tracking #: 78890rke
CAT - Deal # 240579 Facility ID 218095

                                     Page 6
<PAGE>
                               SECURITY AGREEMENT

                                                               November 24, 2003

Prime/Home Impressions, LLC
420 3rd Avenue NW
Hickory, North Carolina 28601
(Individually and collectively "Debtor")

Wachovia Bank, National Association
301 South Tryon Street
Charlotte, North Carolina 28202
(Hereinafter referred to as "Bank" or "Wachovia")

For value received and to secure payment and performance of any and all
obligations of Debtor (also referred to herein as "Borrower") to Bank however
created, arising or evidenced, whether direct or indirect, absolute or
contingent, now existing or hereafter arising or acquired, and whether or not
evidenced by a Loan Document, including swap agreements (as defined in 11 U.S.C.
Section. 101), future advances, and all costs and expenses incurred by Bank to
obtain, preserve, perfect and enforce the security interest granted herein and
to maintain, preserve and collect the property subject to the security interest
(collectively, "Obligations"), Debtor hereby grants to Bank a continuing
security interest in and lien upon the following described property, whether now
owned or hereafter acquired, and any additions, replacements, accessions, or
substitutions thereof and all cash and non-cash proceeds and products thereof
(collectively, "Collateral"):

All of the personal property of Debtor of every kind and nature including,
without limitation, all accounts, equipment, accessions, inventory, chattel
paper, instruments, investment property, documents, letter-of-credit rights,
deposit accounts, and general intangibles, wherever located.

Debtor hereby represents and agrees that:

OWNERSHIP. Debtor owns the Collateral or Debtor will purchase and acquire rights
in the Collateral within ten days of the date advances are made under the Loan
Documents. If Collateral is being acquired with the proceeds of an advance under
the Loan Documents, Debtor authorizes Bank to disburse proceeds directly to the
seller of the Collateral. The Collateral is free and clear of all liens,
security interests, and claims except those previously reported in writing to
and approved by Bank, and Debtor will keep the Collateral free and clear from
all liens, security interests and claims, other than those granted to or
approved by Bank.

NAME AND OFFICES; JURISDICTION OF ORGANIZATION. The name and address of Debtor
appearing at the beginning of this Agreement are Debtor's exact legal name and
the address of its chief executive office. There has been no change in the name
of Debtor, or the name under which Debtor conducts business, within the five
years preceding the date hereof except as previously reported in writing to
Bank. Debtor has not moved its chief executive office within the five years
preceding the date hereof except as previously reported in writing to Bank.
Debtor is organized under the laws of the State of North Carolina and has not
changed the jurisdiction of its organization within the five years preceding the
date hereof except as previously reported in writing to Bank.

TITLE/TAXES. Debtor has good and marketable title to Collateral and will warrant
and defend same against all claims. Debtor will not transfer, sell, or lease
Collateral (except as permitted herein). Debtor agrees to pay promptly all taxes
and assessments upon or for the use of Collateral and on this Security
Agreement. At its option, Bank may discharge taxes, liens, security interests or
other encumbrances at any time levied or placed on Collateral. Debtor agrees to
reimburse Bank, on demand, for any such payment made by Bank. Any amounts so
paid shall be added to the Obligations.

<PAGE>

WAIVERS. Debtor agrees not to assert against Bank as a defense (legal or
equitable), as a set-off, as a counterclaim, or otherwise, any claims Debtor may
have against any seller or lessor that provided personal property or services
relating to any part of the Collateral or against any other party liable to Bank
for all or any part of the Obligations. Debtor waives all exemptions and
homestead rights with regard to the Collateral. Debtor waives any and all rights
to any bond or security which might be required by applicable law prior to the
exercise of any of Bank's remedies against any Collateral. All rights of Bank
and security interests hereunder, and all obligations of Debtor hereunder, shall
be absolute and unconditional, not discharged or impaired irrespective of (and
regardless of whether Debtor receives any notice of): (i) any lack of validity
or enforceability of any Loan Document; (ii) any change in the time, manner or
place of payment or performance, or in any term, of all or any of the
Obligations or the Loan Documents or any other amendment or waiver of or any
consent to any departure from any Loan Document; or (iii) any exchange,
insufficiency, unenforceability, enforcement, release, impairment or
non-perfection of any collateral, or any release of or modifications to or
insufficiency, unenforceability or enforcement of the obligations of any
guarantor or other obligor. To the extent permitted by law, Debtor hereby waives
any rights under any valuation, stay, appraisement, extension or redemption laws
now existing or which may hereafter exist and which, but for this provision,
might be applicable to any sale or disposition of the Collateral by Bank; and
any other circumstance which might otherwise constitute a defense available to,
or a discharge of any party with respect to the Obligations.

NOTIFICATIONS; LOCATION OF COLLATERAL. Debtor will notify Bank in writing at
least 30 days prior to any change in: (i) Debtor's chief place of business
and/or residence; (ii) Debtor's name or identity; (iii) Debtor's
corporate/organizational structure; or (iv) the jurisdiction in which Debtor is
organized. In addition, Debtor shall promptly notify Bank of any claims or
alleged claims of any other person or entity to the Collateral or the
institution of any litigation, arbitration, governmental investigation or
administrative proceedings against or affecting the Collateral. Debtor will keep
Collateral at the location(s) previously provided to Bank until such time as
Bank provides written advance consent to a change of location. Debtor will bear
the cost of preparing and filing any documents necessary to protect Bank's
liens.

COLLATERAL CONDITION AND LAWFUL USE. Debtor represents that the Collateral is in
good repair and condition and that Debtor shall use reasonable care to prevent
Collateral from being damaged or depreciating, normal wear and tear excepted.
Debtor shall immediately notify Bank of any material loss or damage to
Collateral. Debtor shall not permit any item of Collateral to become a fixture
to real estate or an accession to other personal property unless such property
is also Collateral hereunder. Debtor represents it is in compliance in all
respects with all laws, rules and regulations applicable to the Collateral and
its properties, operations, business, and finances.

RISK OF LOSS AND INSURANCE. Debtor shall bear all risk of loss with respect to
the Collateral. The injury to or loss of Collateral, either partial or total,
shall not release Debtor from payment or other performance hereof. Debtor agrees
to obtain and keep in force property insurance on the Collateral with a Lender's
Loss Payable Endorsement in favor of Bank and commercial general liability
insurance naming Bank as Additional Insured and such other insurance as Bank may
require from time to time. Such insurance is to be in form and amounts
satisfactory to Bank and issued by reputable insurance carriers satisfactory to
Bank with a Best Insurance Report Key Rating of at least "A-". All such policies
shall provide to Bank a minimum of 30 days written notice of cancellation.
Debtor shall furnish to Bank such policies, or other evidence of such policies
satisfactory to Bank. If Debtor fails to obtain or maintain in force such
insurance or fails to furnish such evidence, Bank is authorized, but not
obligated, to purchase any or all insurance or "Single Interest Insurance"
protecting such interest as Bank deems appropriate against such risks and for
such coverage and for such amounts, including either the loan amount or value of
the Collateral, all at its discretion, and at Debtor's expense. In such event,
Debtor agrees to reimburse Bank for the cost of such insurance and Bank may add
such cost to the Obligations. Debtor shall bear the risk of loss to the extent
of any deficiency in the effective insurance coverage with respect to loss or
damage to any of the Collateral. Debtor hereby assigns to Bank the proceeds of
all property insurance covering the Collateral up to the amount of the
Obligations and directs any insurer to make payments directly to Bank. Debtor
hereby appoints Bank its attorney-in-fact, which appointment shall be
irrevocable and coupled with an interest for so long as Obligations are unpaid,
to file proof of loss and/or any other forms required to collect from any
insurer any amount due from any damage or

                                     Page 2
<PAGE>

destruction of Collateral, to agree to and bind Debtor as to the amount of said
recovery, to designate payee(s) of such recovery, to grant releases to insurer,
to grant subrogation rights to any insurer, and to endorse any settlement check
or draft. Debtor agrees not to exercise any of the foregoing powers granted to
Bank without Bank's prior written consent.

FINANCING STATEMENTS, CERTIFICATES OF TITLE, POWER OF ATTORNEY. No financing
statement (other than any filed or approved by Bank) covering any Collateral is
on file in any public filing office. Debtor authorizes the filing of one or more
financing statements covering the Collateral in form satisfactory to Bank, and
without Debtor's signature where authorized by law, agrees to deliver
certificates of title on which Bank's lien has been indicated covering any
Collateral subject to a certificate of title statue, and will pay all costs and
expenses of filing or applying for the same or of filing this Security Agreement
in all public filing offices, where filing is deemed by Bank to be desirable.
Debtor hereby constitutes and appoints Bank the true and lawful attorney of
Debtor with full power of substitution to take any and all appropriate action
and to execute any and all documents, instruments or applications that may be
necessary or desirable to accomplish the purpose and carry out the terms of this
Security Agreement, including, without limitation, to complete, execute, and
deliver any Control Agreement(s) by Bank, Debtor and Third Party(ies) that may
be or become required in connection herewith (individually and collectively the
"Control Agreement"), and any instructions to Third Party(ies) regarding, among
other things, control and disposition of any Collateral which is the subject of
such Control Agreement(s). The foregoing power of attorney is coupled with an
interest and shall be irrevocable until all of the Obligations have been paid in
full. Neither Bank nor anyone acting on its behalf shall be liable for acts,
omissions, errors in judgment, or mistakes in fact in such capacity as
attorney-in-fact. Debtor ratifies all acts of Bank as attorney-in-fact. Debtor
agrees to take such other actions, at Debtor's expense, as might be requested
for the perfection, continuation and assignment, in whole or in part, of the
security interests granted herein and to assure and preserve Bank's intended
priority position. If certificates, passbooks, or other documentation or
evidence is/are issued or outstanding as to any of the Collateral, Debtor will
cause the security interests of Bank to be properly protected, including
perfection by notation thereon or delivery thereof to Bank.

LANDLORD/MORTGAGEE WAIVERS. Debtor shall cause each mortgagee of real property
owned by Debtor and each landlord of real property leased by Debtor to execute
and deliver instruments satisfactory in form and substance to Bank by which such
mortgagee or landlord subordinates its rights, if any, in the Collateral.

CONTROL. Debtor will cooperate with Bank in obtaining control with respect to
Collateral consisting of electronic chattel paper. Debtor authorizes and directs
Third Party to comply with the terms of this Security Agreement, to enter into a
Control Agreement, to mark its records to show the security interest of and/or
the transfer to Bank of the property pledged hereunder.

CHATTEL PAPER, ACCOUNTS, GENERAL INTANGIBLES. Debtor warrants that Collateral
consisting of chattel paper, accounts, or general intangibles is (i) genuine and
enforceable in accordance with its terms; (ii) not subject to any defense,
set-off, claim or counterclaim of a material nature against Debtor except as to
which Debtor has notified Bank in writing; and (iii) not subject to any other
circumstances that would impair the validity, enforceability, value, or amount
of such Collateral except as to which Debtor has notified Bank in writing.
Debtor shall not amend, modify or supplement any lease, contract or agreement
contained in Collateral or waive any provision therein, without prior written
consent of Bank. Debtor will not create any tangible chattel paper without
placing a legend on the chattel paper acceptable to Bank indicating that Bank
has a security interest in the chattel paper. Debtor will not create any
electronic chattel paper without taking all steps deemed necessary by Bank to
confer control of the electronic chattel paper upon Bank in accordance with the
UCC.

ACCOUNT INFORMATION. From time to time, at Bank's request, Debtor shall provide
Bank with schedules describing all accounts, including customers' addresses,
created or acquired by Debtor and at Bank's request shall execute and deliver
written assignments of contracts and other documents evidencing such accounts to
Bank. Together with each schedule, Debtor shall, if requested by Bank,

                                     Page 3
<PAGE>

furnish Bank with copies of Debtor's sales journals, invoices, customer purchase
orders or the equivalent, and original shipping or delivery receipts for all
goods sold, and Debtor warrants the genuineness thereof.

ACCOUNT DEBTORS. If a Default should occur, Bank shall have the right to notify
the account debtors obligated on any or all of the Collateral to make payment
thereof directly to Bank and Bank may take control of all proceeds of any such
Collateral, which rights Bank may exercise at any time. The cost of such
collection and enforcement, including attorneys' fees and expenses, shall be
borne solely by Debtor whether the same is incurred by Bank or Debtor. If a
Default should occur or upon demand of Bank, Debtor will, upon receipt of all
checks, drafts, cash and other remittances in payment on Collateral, deposit the
same in a special bank account maintained with Bank, over which Bank also has
the power of withdrawal.

If a Default should occur, no discount, credit, or allowance shall be granted by
Debtor to any account debtor and no return of merchandise shall be accepted by
Debtor without Bank's consent. Bank may, after Default, settle or adjust
disputes and claims directly with account debtors for amounts and upon terms
that Bank considers advisable, and in such cases Bank will credit the
Obligations with the net amounts received by Bank, after deducting all of the
expenses incurred by Bank. Debtor agrees to indemnify and defend Bank and hold
it harmless with respect to any claim or proceeding arising out of any matter
related to collection of Collateral.

GOVERNMENT CONTRACTS. If any Collateral covered hereby arises from obligations
due to Debtor from any governmental unit or organization, Debtor shall
immediately notify Bank in writing and execute all documents and take all
actions deemed necessary by Bank to ensure recognition by such governmental unit
or organization of the rights of Bank in the Collateral.

INVENTORY. So long as no Default has occurred, Debtor shall have the right in
the regular course of business, to process and sell Debtor's inventory. If a
Default should occur or upon demand of Bank, Debtor will, upon receipt of all
checks, drafts, cash and other remittances, in payment of Collateral sold,
deposit the same in a special bank account maintained with Bank, over which Bank
also has the power of withdrawal. Debtor agrees to notify Bank immediately in
the event that any inventory purchased by or delivered to Debtor is evidenced by
a bill of lading, dock warrant, dock receipt, warehouse receipt or other
document of title and to deliver such document to Bank upon request.

INSTRUMENTS, CHATTEL PAPER, DOCUMENTS. Any Collateral that is, or is evidenced
by, instruments, chattel paper or negotiable documents will be properly assigned
to and the originals of any such Collateral in tangible form deposited with and
held by Bank, unless Bank shall hereafter otherwise direct or consent in
writing. Bank may, without notice, before or after maturity of the Obligations,
exercise any or all rights of collection, conversion, or exchange and other
similar rights, privileges and options pertaining to such Collateral, but shall
have no duty to do so.

COLLATERAL DUTIES. Bank shall have no custodial or ministerial duties to perform
with respect to Collateral pledged except as set forth herein; and by way of
explanation and not by way of limitation, Bank shall incur no liability for any
of the following: (i) loss or depreciation of Collateral (unless caused by its
willful misconduct or gross negligence), (ii) failure to present any paper for
payment or protest, to protest or give notice of nonpayment, or any other notice
with respect to any paper or Collateral.

TRANSFER OF COLLATERAL. Bank may assign its rights in Collateral or any part
thereof to any assignee who shall thereupon become vested with all the powers
and rights herein given to Bank with respect to the property so transferred and
delivered, and Bank shall thereafter be forever relieved and fully discharged
from any liability with respect to such property so transferred, but with
respect to any property not so transferred, Bank shall retain all rights and
powers hereby given.

INSPECTION, BOOKS AND RECORDS. Debtor will at all times keep accurate and
complete records covering each item of Collateral, including the proceeds
therefrom. Bank, or any of its agents, shall have the right, at intervals to be
determined by Bank and without hindrance or delay, at Debtor's expense, to
inspect, audit, and examine the Collateral and to make copies of and extracts
from the books, records,

                                     Page 4
<PAGE>

journals, orders, receipts, correspondence and other data relating to
Collateral, Debtor's business or any other transaction between the parties
hereto. Debtor will at its expense furnish Bank copies thereof upon request. For
the further security of Bank, it is agreed that Bank has and is hereby granted a
security interest in all books and records of Debtor pertaining to the
Collateral.

COMPLIANCE WITH LAW. Debtor will comply with all federal, state and local laws
and regulations, applicable to it, including without limitation, environmental
and labor laws and regulations, in the creation, use, operation, manufacture and
storage of the Collateral and the conduct of its business.

REGULATION U. None of the proceeds of the credit secured hereby shall be used
directly or indirectly for the purpose of purchasing or carrying any margin
stock in violation of any of the provisions of Regulation U of the Board of
Governors of the Federal Reserve System ("Regulation U"), or for the purpose of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry margin stock or for any other purchase which might render the Loan a
"Purpose Credit" within the meaning of Regulation U.

CROSS COLLATERALIZATION LIMITATION. As to any other existing or future consumer
purpose loan made by Bank to Debtor, within the meaning of the Federal Consumer
Credit Protection Act, Bank expressly waives any security interest granted
herein in Collateral that Debtor uses as a principal dwelling and household
goods.

ATTORNEYS' FEES AND OTHER COSTS OF COLLECTION. Debtor shall pay all of Bank's
reasonable expenses incurred in enforcing this Security Agreement and in
preserving and liquidating Collateral, including but not limited to, reasonable
arbitration, paralegals', attorneys' and experts' fees and expenses, whether
incurred with or without the commencement of a suit, trial, arbitration, or
administrative proceeding, or in any appellate or bankruptcy proceeding.

DEFAULT. If any of the following occurs, a default ("Default") under this
Security Agreement shall exist: LOAN DOCUMENT DEFAULT. A default under any Loan
Document. COLLATERAL LOSS OR DESTRUCTION. Any loss, theft, substantial damage,
or destruction of Collateral not fully covered by insurance, or as to which
insurance proceeds are not remitted to Bank within 30 days of the loss.
COLLATERAL SALE, LEASE OR ENCUMBRANCE. Any sale, lease, or encumbrance of any
Collateral not specifically permitted herein without prior written consent of
Bank. LEVY, SEIZURE OR ATTACHMENT. The making of any levy, seizure, or
attachment on or of Collateral which is not removed within 10 days. UNAUTHORIZED
COLLECTION OF COLLATERAL. Any attempt to collect, cash in or otherwise recover
deposits that are Collateral. THIRD PARTY BREACH. Any default or breach by a
Third Party of any provision contained in any Control Agreement executed in
connection with any of the Collateral. UNAUTHORIZED TERMINATION. Any attempt to
terminate, revoke, rescind, modify, or violate the terms of this Security
Agreement or any Control Agreement without the prior written consent of Bank.

REMEDIES ON DEFAULT (INCLUDING POWER OF SALE). If a Default occurs Bank shall
have all the rights and remedies of a secured party under the Uniform Commercial
Code. Without limitation thereto, Bank shall have the following rights and
remedies: (i) to take immediate possession of Collateral, without notice or
resort to legal process, and for such purpose, to enter upon any premises on
which Collateral or any part thereof may be situated and to remove the same
therefrom, or, at its option, to render Collateral unusable or dispose of said
Collateral on Debtor's premises; (ii) to require Debtor to assemble the
Collateral and make it available to Bank at a place to be designated by Bank;
(iii) to exercise its right of set-off or bank lien as to any monies of Debtor
deposited in accounts of any nature maintained by Debtor with Bank or affiliates
of Bank, without advance notice, regardless of whether such accounts are general
or special; (iv) to dispose of Collateral, as a unit or in parcels, separately
or with any real property interests also securing the Obligations, in any county
or place to be selected by Bank, at either private or public sale (at which
public sale Bank may be the purchaser) with or without having the Collateral
physically present at said sale.

Any notice of sale, disposition or other action by Bank required by law and sent
to Debtor at Debtor's address shown above, or at such other address of Debtor as
may from time to time be shown on the

                                     Page 5
<PAGE>

records of Bank, at least 5 days prior to such action, shall constitute
reasonable notice to Debtor. Notice shall be deemed given or sent when mailed
postage prepaid to Debtor's address as provided herein. Bank shall be entitled
to apply the proceeds of any sale or other disposition of the Collateral, and
the payments received by Bank with respect to any of the Collateral, to
Obligations in such order and manner as Bank may determine. Collateral that is
subject to rapid declines in value and is customarily sold in recognized markets
may be disposed of by Bank in a recognized market for such collateral without
providing notice of sale. Debtor waives any and all requirements that the Bank
sell or dispose of all or any part of the Collateral at any particular time,
regardless of whether Debtor has requested such sale or disposition.

REMEDIES ARE CUMULATIVE. No failure on the part of Bank to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by Bank or any right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any right, power or remedy. The remedies herein provided are
cumulative and are not exclusive of any remedies provided by law, in equity, or
in other Loan Documents.

INDEMNIFICATION. Debtor shall protect, indemnify and save harmless Bank from and
against all losses, liabilities, obligations, claims, damages, penalties, causes
of action, costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) (collectively, "Damages") imposed upon, incurred
by or asserted against Bank on account of (i) the Loan Documents or any failure
or alleged failure of Debtor to comply with any of the terms or representations
of this Agreement; (ii) any claim of loss or damage to the Collateral or any
injury or claim of injury to, or death of, any person or property that may be
occasioned by any cause whatsoever pertaining to the Collateral or the use,
occupancy or operation thereof, (iii) any failure or alleged failure of Debtor
to comply with any law, rule or regulation applicable to the Collateral or the
use, occupancy or operation of the Collateral (including, without limitation,
the failure to pay any taxes, fees or other charges), (iv) any Damages
whatsoever by reason of any alleged action, obligation or undertaking of Bank
relating in any way to or any matter contemplated by the Loan Documents, or (v)
any claim for brokerage fees or such other commissions relating to the
Collateral or any other Obligations; provided that such indemnity shall be
effective only to the extent of any Damages that may be sustained by Bank in
excess of any net proceeds received by it from any insurance of Debtor (other
than self-insurance) with respect to such Damages. Nothing contained herein
shall require Debtor to indemnify Bank for any Damages resulting from Bank's
gross negligence or its willful misconduct. The indemnity provided for herein
shall survive payment of the Obligations and shall extend to the officers,
directors, employees and duly authorized agents of Bank. In the event Bank
incurs any Damages arising out of or in any way relating to the transaction
contemplated by the Loan Documents (including any of the matters referred to in
this section), the amounts of such Damages shall be added to the Obligations,
shall bear interest, to the extent permitted by law, at the interest rate borne
by the Obligations from the date incurred until paid and shall be payable on
demand.

MISCELLANEOUS. (i) AMENDMENTS AND WAIVERS. No waiver, amendment or modification
of any provision of this Security Agreement shall be valid unless in writing and
signed by Debtor and an officer of Bank. No waiver by Bank of any Default shall
operate as a waiver of any other Default or of the same Default on a future
occasion. (ii) ASSIGNMENT. All rights of Bank hereunder are freely assignable,
in whole or in part, and shall inure to the benefit of and be enforceable by
Bank, its successors, assigns and affiliates. Debtor shall not assign its rights
and interest hereunder without the prior written consent of Bank, and any
attempt by Debtor to assign without Bank's prior written consent is null and
void. Any assignment shall not release Debtor from the Obligations. This
Security Agreement shall be binding upon Debtor, and the heirs, personal
representatives, successors, and assigns of Debtor. (iii) APPLICABLE LAW;
CONFLICT BETWEEN DOCUMENTS. This Security Agreement shall be governed by and
construed under the law of the jurisdiction named in the address of the Bank
shown on the first page hereof (the "Jurisdiction") without regard to that
Jurisdiction's conflict of laws principles, except to the extent that the UCC
requires the application of the law of a different jurisdiction. If any terms of
this Security Agreement conflict with the terms of any commitment letter or loan
proposal, the terms of this Security Agreement shall control. (iv) JURISDICTION.
Debtor irrevocably agrees to non-exclusive personal jurisdiction in the state
identified as the Jurisdiction above. (v) SEVERABILITY. If any provision of this
Security Agreement shall be

                                     Page 6
<PAGE>

prohibited by or invalid under applicable law, such provision shall be
ineffective but only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Security Agreement. (vi) NOTICES. Any notices to Debtor shall be sufficiently
given, if in writing and mailed or delivered to the address of Debtor shown
above or such other address as provided hereunder; and to Bank, if in writing
and mailed or delivered to Wachovia Bank, National Association, Mail Code
VA7391, P. O. Box 13327, Roanoke, VA 24040 or Wachovia Bank, National
Association, Mail Code VA7391, 10 South Jefferson Street, Roanoke, VA 24011 or
such other address as Bank may specify in writing from time to time. Notices to
Bank must include the mail code. In the event that Debtor changes Debtor's
mailing address at any time prior to the date the Obligations are paid in full,
Debtor agrees to promptly give written notice of said change of address by
registered or certified mail, return receipt requested, all charges prepaid.
(vii) CAPTIONS. The captions contained herein are inserted for convenience only
and shall not affect the meaning or interpretation of this Security Agreement or
any provision hereof. The use of the plural shall also mean the singular, and
vice versa. (viii) JOINT AND SEVERAL LIABILITY. If more than one party has
signed this Security Agreement, such parties are jointly and severally obligated
hereunder. (ix) BINDING CONTRACT. Debtor by execution and Bank by acceptance of
this Security Agreement, agree that each party is bound by all terms and
provisions of this Security Agreement.

DEFINITIONS. LOAN DOCUMENTS. The term "Loan Documents" refers to all documents,
including this Agreement, whether now or hereafter existing, executed in
connection with or related to the Obligations, and may include, without
limitation and whether executed by Debtor or others, commitment letters that
survive closing, loan agreements, promissory notes, guaranty agreements, deposit
or other similar agreements, other security agreements, letters of credit and
applications for letters of credit, security instruments, financing statements,
mortgage instruments, any renewals or modifications, whenever any of the
foregoing are executed, but does not include swap agreements (as defined in 11
U.S.C. Section. 101). THIRD PARTY. The term "Third Party" means any Broker,
Collateral Agent, Securities Intermediary and/or bank which from time to time
maintains a securities account, and is acting in such capacity, for Debtor or
maintains a deposit account for Debtor with respect to any part of the
Collateral. UCC. "UCC" means the Uniform Commercial Code as presently and
hereafter enacted in the Jurisdiction. TERMS DEFINED IN THE UCC. Any term used
in this Agreement and in any financing statement filed in connection herewith
which is defined in the UCC and not otherwise defined in this Agreement or any
other Loan Document has the meaning given to the term in the UCC.

IN WITNESS WHEREOF, Debtor, on the day and year first written above, has caused
this Security Agreement to be executed under seal.

                                 Prime/Home Impressions, LLC

                                 By: /s/ ROBERT W. LACKEY, SR.            (SEAL)
                                    --------------------------------------
                                    Robert W. Lackey, Sr., Group A Manager

                                 By: /s/ NEALL W. HUMPHREY                (SEAL)
                                    --------------------------------------
                                    Neall W. Humphrey, Group B Manager

Tracking #: 78890rke
CAT - Deal # 240579 Facility ID 218095

                                     Page 7
<PAGE>


                             UNCONDITIONAL GUARANTY

                                                               November 24, 2003

Prime/Home Impressions, LLC
420 3rd Avenue NW
Hickory, North Carolina 28601
(Individually and collectively "Borrower")

Craftmade International, Inc.
650 South Royal Lane
Suite 200
Coppell, Texas 75019
(Individually and collectively "Guarantor")

Wachovia Bank, National Association
301 South Tryon Street
Charlotte, North Carolina 28202
(Hereinafter referred to as "Bank")

To induce Bank to make, extend or renew loans, advances, credit, or other
financial accommodations to or for the benefit of Borrower, which are and will
be to the direct interest and advantage of the Guarantor, and in consideration
of loans, advances, credit, or other financial accommodations made, extended or
renewed to or for the benefit of Borrower, which are and will be to the direct
interest and advantage of the Guarantor, Guarantor hereby absolutely,
irrevocably and unconditionally guarantees to Bank and its successors, assigns
and affiliates the timely payment and performance of all liabilities and
obligations of Borrower to Bank and its affiliates, including, but not limited
to, all obligations under any notes, loan agreements, security agreements,
letters of credit, instruments, accounts receivable, contracts, drafts, leases,
chattel paper, indemnities, acceptances, repurchase agreements, overdrafts, and
the Loan Documents, as defined below, and all obligations of Borrower to Bank or
any of its affiliates under any swap agreement (as defined in 11 U.S. Code
Section. 101), however and whenever incurred or evidenced, whether primary,
secondary, direct, indirect, absolute, contingent, due or to become due, now
existing or hereafter contracted or acquired, and all modifications, extensions
and renewals thereof, (collectively, the "Guaranteed Obligations").

Guarantor further covenants and agrees:

GUARANTOR'S LIABILITY. This Guaranty is a continuing and unconditional guaranty
of payment and performance and not of collection. The parties to this Guaranty
are jointly and severally obligated hereunder. This Guaranty does not impose any
obligation on Bank to extend or continue to extend credit or otherwise deal with
Borrower at any subsequent time. This Guaranty shall continue to be effective or
be reinstated, as the case may be, if at any time any payment of the Guaranteed
Obligations is rescinded, avoided or for any other reason must be returned by
Bank, and the returned payment shall remain payable as part of the Guaranteed
Obligations, all as though such payment had not been made. Except to the extent
the provisions of this Guaranty give Bank additional rights, this Guaranty shall
not be deemed to supersede or replace any other guaranties given to Bank by
Guarantor; and the obligations guaranteed hereby shall be in addition to any
other obligations guaranteed by Guarantor pursuant to any other agreement of
guaranty given to Bank and other guaranties of the Guaranteed Obligations.

TERMINATION OF GUARANTY. Guarantor may terminate this Guaranty only by written
notice, delivered personally to or received by certified or registered United
States Mail by an authorized officer of Bank at the address for notices provided
herein. Such termination shall be effective with respect to Guaranteed
Obligations arising more than 15 days after the date such written notice is
received by said

<PAGE>

Bank officer. Guarantor may not terminate this Guaranty as to Guaranteed
Obligations (including any subsequent extensions, modifications or compromises
of the Guaranteed Obligations) then existing, or to Guaranteed Obligations
arising subsequent to receipt by Bank of said notice if such Guaranteed
Obligations are a result of Bank's obligation to make advances pursuant to a
commitment entered into prior to expiration of the 15 day notice period, or are
a result of advances which are necessary for Bank to protect its collateral or
otherwise preserve its interests. Termination of this Guaranty by any single
Guarantor will not affect the existing and continuing obligations of any other
Guarantor hereunder.

CONSENT TO MODIFICATIONS. Guarantor CONSENTS AND AGREES THAT BANK (AND, WITH
RESPECT TO SWAP OBLIGATIONS, ITS AFFILIATES) MAY FROM TIME TO TIME, IN ITS SOLE
DISCRETION, WITHOUT AFFECTING, IMPAIRING, LESSENING OR RELEASING THE OBLIGATIONS
OF GUARANTOR HEREUNDER: (a) extend or modify the time, manner, place or terms of
payment or performance and/or otherwise change or modify the credit terms of the
Guaranteed Obligations; (b) increase, renew, or enter into a novation of the
Guaranteed Obligations; (c) waive or consent to the departure from terms of the
Guaranteed Obligations; (d) permit any change in the business or other dealings
and relations of Borrower or any other guarantor with Bank; (e) proceed against,
exchange, release, realize upon, or otherwise deal with in any manner any
collateral that is or may be held by Bank in connection with the Guaranteed
Obligations or any liabilities or obligations of Guarantor; and (f) proceed
against, settle, release, or compromise with Borrower, any insurance carrier, or
any other person or entity liable as to any part of the Guaranteed Obligations,
and/or subordinate the payment of any part of the Guaranteed Obligations to the
payment of any other obligations, which may at any time be due or owing to Bank;
all in such manner and upon such terms as Bank may deem appropriate, and without
notice to or further consent from Guarantor. No invalidity, irregularity,
discharge or unenforceability of, or action or omission by Bank relating to any
part of the Guaranteed Obligations or any security therefor shall affect or
impair this Guaranty.

WAIVERS AND ACKNOWLEDGMENTS. GUARANTOR WAIVES AND RELEASES THE FOLLOWING RIGHTS,
DEMANDS, AND DEFENSES Guarantor may have with respect to Bank (and, with respect
to swap obligations, its affiliates) and collection of the Guaranteed
Obligations: (a) promptness and diligence in collection of any of the Guaranteed
Obligations from Borrower or any other person liable thereon, and in foreclosure
of any security interest and sale of any property serving as collateral for the
Guaranteed Obligations; (b) any law or statute that requires that Bank (and,
with respect to swap obligations, its affiliates) make demand upon, assert
claims against, or collect from Borrower or other persons or entities, foreclose
any security interest, sell collateral, exhaust any remedies, or take any other
action against Borrower or other persons or entities prior to making demand
upon, collecting from or taking action against Guarantor with respect to the
Guaranteed Obligations, including any such rights Guarantor might otherwise have
had under Va. Code Sections. 49-25 and 49-26, et seq., N.C.G.S. Sections. 26-7,
et seq., Tenn. Code Ann. Section.47-12-101, O.C.G.A. Section. 10-7-24 and any
successor statute and any other applicable law; (c) any law or statute that
requires that Borrower or any other person be joined in, notified of or made
part of any action against Guarantor; (d) that Bank or its affiliates preserve,
insure or perfect any security interest in collateral or sell or dispose of
collateral in a particular manner or at a particular time, provided that Bank's
obligation to dispose of Collateral in a commercially reasonable manner is not
waived hereby; (e) notice of extensions, modifications, renewals, or novations
of the Guaranteed Obligations, of any new transactions or other relationships
between Bank, Borrower and/or any guarantor, and of changes in the financial
condition of, ownership of, or business structure of Borrower or any other
guarantor; (f) presentment, protest, notice of dishonor, notice of default,
demand for payment, notice of intention to accelerate maturity, notice of
acceleration of maturity, notice of sale, and all other notices of any kind
whatsoever to which Guarantor may be entitled; (g) the right to assert against
Bank or its affiliates any defense (legal or equitable), set-off, counterclaim,
or claim that Guarantor may have at any time against Borrower or any other party
liable to Bank or its affiliates; (h) all defenses relating to invalidity,
insufficiency, unenforceability, enforcement, release or impairment of Bank or
its affiliates' lien on any collateral, of the Loan Documents, or of any other
guaranties held by Bank; (i) any right to which Guarantor is or may become
entitled to be subrogated to Bank or its affiliates' rights against Borrower or
to seek contribution, reimbursement, indemnification, payment or the like, or
participation in any claim, right or remedy of Bank or its affiliates against
Borrower or any security which Bank or its affiliates now

                                     Page 2
<PAGE>

has or hereafter acquires, until such time as the Guaranteed Obligations have
been fully satisfied beyond the expiration of any applicable preference period;
(j) any claim or defense that acceleration of maturity of the Guaranteed
Obligations is stayed against Guarantor because of the stay of assertion or of
acceleration of claims against any other person or entity for any reason
including the bankruptcy or insolvency of that person or entity; and (k) the
right to marshalling of Borrower's assets or the benefit of any exemption
claimed by Guarantor. Guarantor acknowledges and represents that Guarantor has
relied upon Guarantor's own due diligence in making an independent appraisal of
Borrower, Borrower's business affairs and financial condition, and any
collateral; Guarantor will continue to be responsible for making an independent
appraisal of such matters; and Guarantor has not relied upon Bank or its
affiliates for information regarding Borrower or any collateral.

FINANCIAL CONDITION. Guarantor warrants, represents and covenants to Bank and
its affiliates that on and after the date hereof: (a) the fair saleable value of
Guarantor's assets exceeds its liabilities, Guarantor is meeting its current
liabilities as they mature, and Guarantor is and shall remain solvent; (b) all
financial statements of Guarantor furnished to Bank are correct and accurately
reflect the financial condition of Guarantor as of the respective dates thereof;
(c) since the date of such financial statements, there has not occurred a
material adverse change in the financial condition of Guarantor; (d) there are
not now pending any court or administrative proceedings or undischarged
judgments against Guarantor, no federal or state tax liens have been filed or
threatened against Guarantor, and Guarantor is not in default or claimed default
under any agreement; and (e) at such reasonable times as Bank requests,
Guarantor will furnish Bank and its affiliates with such other financial
information as Bank and its affiliates may reasonably request.

INTEREST AND APPLICATION OF PAYMENTS. Regardless of any other provision of this
Guaranty or other Loan Documents, if for any reason the effective interest on
any of the Guaranteed Obligations should exceed the maximum lawful interest, the
effective interest shall be deemed reduced to and shall be such maximum lawful
interest, and any sums of interest which have been collected in excess of such
maximum lawful interest shall be applied as a credit against the unpaid
principal balance of the Guaranteed Obligations. Monies received from any source
by Bank or its affiliates for application toward payment of the Guaranteed
Obligations may be applied to such Guaranteed Obligations in any manner or order
deemed appropriate by Bank and its affiliates.

DEFAULT. If any of the following events occur, a default ("Default") under this
Guaranty shall exist: (a) failure of timely payment or performance of the
Guaranteed Obligations or a default under any Loan Document; (b) a breach of any
agreement or representation contained or referred to in the Guaranty, or any of
the Loan Documents, or contained in any other contract or agreement of Guarantor
with Bank or its affiliates, whether now existing or hereafter arising; (c) the
death of, appointment of a guardian for, dissolution of, termination of
existence of, loss of good standing status by, appointment of a receiver for,
assignment for the benefit of creditors of, or the commencement of any
insolvency or bankruptcy proceeding by or against Guarantor or any general
partner of or the holder(s) of the majority ownership interests of Guarantor;
and/or (d) Bank determines in good faith, in its sole discretion, that the
prospects for payment or performance of the Guaranteed Obligations are impaired
or a material adverse change has occurred in the business or prospects of
Borrower or Guarantor, financial or otherwise.

If a Default occurs, the Guaranteed Obligations shall be due immediately and
payable without notice, other than Guaranteed Obligations under any swap
agreements (as defined in 11 U.S.C. Section. 101) with Bank or its affiliates,
which shall be governed by the default and termination provisions of said swap
agreements, and, Bank and its affiliates may exercise any rights and remedies as
provided in this Guaranty and other Loan Documents, or as provided at law or
equity. Guarantor shall pay interest on the Guaranteed Obligations from such
Default at the highest rate of interest charged on any of the Guaranteed
Obligations.

ATTORNEYS' FEES AND OTHER COSTS OF COLLECTION. Guarantor shall pay all of Bank's
and its affiliates' reasonable expenses incurred to enforce or collect any of
the Guaranteed Obligations,

                                     Page 3
<PAGE>

including, without limitation, reasonable arbitration, paralegals', attorneys'
and experts' fees and expenses, whether incurred without the commencement of a
suit, in any suit, arbitration, or administrative proceeding, or in any
appellate or bankruptcy proceeding.

SUBORDINATION OF OTHER DEBTS. Guarantor agrees: (a) to subordinate the
obligations now or hereafter owed by Borrower to Guarantor ("Subordinated Debt")
to any and all obligations of Borrower to Bank or its affiliates now or
hereafter existing while this Guaranty is in effect, provided however that
Guarantor may receive regularly scheduled principal and interest payments on the
Subordinated Debt so long as (i) all sums due and payable by Borrower to Bank
and its affiliates have been paid in full on or prior to such date, and (ii) no
event or condition which constitutes or which with notice or the lapse or time
would constitute an event of default with respect to the Guaranteed Obligations
shall be continuing on or as of the payment date; (b) Guarantor will either
place a legend indicating such subordination on every note, ledger page or other
document evidencing any part of the Subordinated Debt or deliver such documents
to Bank; and (c) except as permitted by this paragraph, Guarantor will not
request or accept payment of or any security for any part of the Subordinated
Debt, and any proceeds of the Subordinated Debt paid to Guarantor, through error
or otherwise, shall immediately be forwarded to Bank by Guarantor, properly
endorsed to the order of Bank, to apply to the Guaranteed Obligations.

MISCELLANEOUS. ASSIGNMENT. This Guaranty and other Loan Documents shall inure to
the benefit of and be binding upon the parties and their respective heirs, legal
representatives, successors and assigns. Bank's interests in and rights under
this Guaranty and other Loan Documents are freely assignable, in whole or in
part, by Bank. Any assignment shall not release Guarantor from the Guaranteed
Obligations. ORGANIZATION; POWERS. Guarantor (i) is (a) an adult individual and
is sui juris, or (b) a corporation, general partnership, limited partnership,
limited liability company or other legal entity (as indicated below), duly
organized, validly existing and in good standing under the laws of its state of
organization, and is authorized to do business in each other jurisdiction
wherein its ownership of property or conduct of business legally requires such
organization, (ii) has the power and authority to own its properties and assets
and to carry on its business as now being conducted and as now contemplated; and
(iii) has the power and authority to execute, deliver and perform, and by all
necessary action has authorized the execution, delivery and performance of, all
of its obligations under this Guaranty and any other Loan Document to which it
is a party. APPLICABLE LAW; CONFLICT BETWEEN DOCUMENTS. This Guaranty shall be
governed by and construed under the laws of the state named in Bank's address
shown above without regard to that state's conflict of laws principles. If the
terms of this Guaranty should conflict with the terms of any commitment letter
that survives closing, the terms of this Guaranty shall control. GUARANTOR'S
ACCOUNTS. Except as prohibited by law, Guarantor grants Bank and its affiliates
a security interest in all of Guarantor's accounts with Bank and its affiliates.
JURISDICTION. Guarantor irrevocably agrees to nonexclusive personal jurisdiction
in the state named in Bank's address shown above. SEVERABILITY. If any provision
of this Guaranty or of the other Loan Documents shall be prohibited or invalid
under applicable law, such provision shall be ineffective but only to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty or other Loan Documents.
NOTICES. Any notices to Guarantor shall be sufficiently given if in writing and
mailed or delivered to Guarantor's address shown above or such other address as
provided hereunder, and to Bank, if in writing and mailed or delivered to
Wachovia Bank, National Association, Mail Code VA7391, P. O. Box 13327, Roanoke,
VA 24040 or Wachovia Bank, National Association, Mail Code VA7391, 10 South
Jefferson Street, Roanoke, VA 24011 or such other address as Bank may specify in
writing from time to time. Notices to Bank must include the mail code. In the
event that Guarantor changes Guarantor's address at any time prior to the date
the Guaranteed Obligations are paid in full, Guarantor agrees to promptly give
written notice of said change of address to Bank by registered or certified
mail, return receipt requested, all charges prepaid. PLURAL; CAPTIONS. All
references in the Loan Documents to borrower, guarantor, person, document or
other nouns of reference mean both the singular and plural form, as the case may
be, and the term "person" shall mean any individual person or entity. The
captions contained in the Loan Documents are inserted for convenience only and
shall not affect the meaning or interpretation of the Loan Documents. BINDING
CONTRACT. Guarantor by execution of and Bank by acceptance of this Guaranty
agree that each party is bound to all terms and provisions of this Guaranty.

                                     Page 4
<PAGE>

AMENDMENTS, WAIVERS AND REMEDIES. No waivers, amendments or modifications of
this Guaranty and other Loan Documents shall be valid unless in writing and
signed by an officer of Bank. No waiver by Bank or its affiliates of any Default
shall operate as a waiver of any other Default or the same Default on a future
occasion. Neither the failure nor any delay on the part of Bank or its
affiliates in exercising any right, power, or privilege granted pursuant to this
Guaranty and other Loan Documents shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise or the
exercise of any other right, power or privilege. All remedies available to Bank
or its affiliates with respect to this Guaranty and other Loan Documents and
remedies available at law or in equity shall be cumulative and may be pursued
concurrently or successively. PARTNERSHIPS. If Guarantor is a partnership, the
obligations, liabilities and agreements on the part of Guarantor shall remain in
full force and effect and fully applicable notwithstanding any changes in the
individuals comprising the partnership. The term "Guarantor" includes any
altered or successive partnerships, and predecessor partnership(s) and the
partners shall not be released from any obligations or liabilities hereunder.
LOAN DOCUMENTS. The term "Loan Documents" refers to all documents executed in
connection with or related to the Guaranteed Obligations and may include,
without limitation, commitment letters that survive closing, loan agreements,
other guaranty agreements, security agreements, instruments, financing
statements, mortgages, deeds of trust, deeds to secure debt, letters of credit
and any amendments or supplements (excluding swap agreements as defined in 11
U.S. Code Section. 101). LIMITATION ON LIABILITY; WAIVER OF PUNITIVE DAMAGES.
EACH OF THE PARTIES HERETO, INCLUDING BANK BY ACCEPTANCE HEREOF, AGREES THAT IN
ANY JUDICIAL, MEDIATION OR ARBITRATION PROCEEDING OR ANY CLAIM OR CONTROVERSY
BETWEEN OR AMONG THEM THAT MAY ARISE OUT OF OR BE IN ANY WAY CONNECTED WITH THIS
AGREEMENT, THE LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN OR
AMONG THEM OR THE OBLIGATIONS EVIDENCED HEREBY OR RELATED HERETO, IN NO EVENT
SHALL ANY PARTY HAVE A REMEDY OF, OR BE LIABLE TO THE OTHER FOR, (1) INDIRECT,
SPECIAL OR CONSEQUENTIAL DAMAGES OR (2) PUNITIVE OR EXEMPLARY DAMAGES. EACH OF
THE PARTIES HEREBY EXPRESSLY WAIVES ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY
DAMAGES THEY MAY HAVE OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION WITH ANY
SUCH PROCEEDING, CLAIM OR CONTROVERSY, WHETHER THE SAME IS RESOLVED BY
ARBITRATION, MEDIATION, JUDICIALLY OR OTHERWISE.

FINANCIAL COVENANTS. Guarantor agrees to the following provisions from the date
hereof until final payment in full of the Guaranteed Obligations, unless Bank
shall otherwise consent in writing, using the financial information for
Guarantor, its subsidiaries, affiliates and its holding or parent company, as
applicable: FUNDED DEBT TO EBITDA RATIO. Guarantor shall maintain a Funded Debt
to EBITDA Ratio of not more than 2.75 to 1.00. This covenant shall be calculated
quarterly, on a rolling four-quarter basis, no later than 45 days from the end
of each quarterly accounting period. "Consolidated Funded Debt" is defined as
the sum of the debt of the Company and its Subsidiaries, determined on a
consolidated basis, consisting of (without duplication) the following: (i)
indebtedness of borrowed money; (i) Capital Leases, and (iii) Guarantees of debt
of Persons other than the Company or any Subsidiary. "Consolidated EBITDA" shall
mean the sum of the following calculated on a consolidated basis in accordance
with GAAPP for the Company and its Subsidiaries: (i) Consolidated Net Income,
plus (ii) Consolidated Interest Expense, plus (iii) Depreciation and
Amortization expense, plus (iv) expenses for taxes paid or accrued during such
period. TOTAL LIABILITIES TO TANGIBLE NET WORTH RATIO. Guarantor shall, at all
times, maintain a ratio of Total Liabilities to Tangible Net Worth of not more
than 3.00 to 1.00, measured on a quarterly basis no later than 45 days from the
end of each quarterly accounting period. "Total Liabilities" shall mean all
liabilities of Guarantor, including capitalized leases and all reserves for
deferred taxes, debt fully subordinated to Bank on terms and conditions
acceptable to Bank, and other deferred sums appearing on the liabilities side of
a balance sheet and all obligations as lessee under off-balance sheet synthetic
leases of Guarantor, all in accordance with generally accepted accounting
principles applied on a consistent basis. "Tangible Net Worth" shall mean the
sum of all shareholder equity less all intangibles appearing on the balance
sheet. For purposes of this computation, the aggregate amount of any intangible
assets of Guarantor including, without limitation, goodwill, franchises,
licenses, patents, trademarks, trade names, copyrights, service marks, and brand
names, shall be subtracted from total assets.

                                     Page 5
<PAGE>

FINANCIAL AND OTHER INFORMATION. Guarantor shall deliver to Bank such
information as Bank may reasonably request from time to time, including without
limitation, financial statements and information pertaining to Guarantor's
financial condition. Such information shall be true, complete, and accurate.

NEGATIVE COVENANTS. Guarantor agrees that from the date of this Agreement and
until final payment in full of the Guaranteed Obligations, unless Bank shall
otherwise consent in writing, Guarantor will not: DEFAULT ON OTHER CONTRACTS OR
OBLIGATIONS. Default on any material contract with or obligation when due to a
third party or default in the performance of any obligation to a third party
incurred for money borrowed. GOVERNMENT INTERVENTION. Permit the assertion or
making of any seizure, vesting or intervention by or under authority of any
governmental entity, as a result of which the management of Guarantor or any
guarantor is displaced of its authority in the conduct of its respective
business or such business is curtailed or materially impaired. JUDGMENT ENTERED.
Permit the entry of any monetary judgment or the assessment against, the filing
of any tax lien against, or the issuance of any writ of garnishment or
attachment against any property of or debts due. RETIRE OR REPURCHASE CAPITAL
STOCK. Retire or otherwise acquire any of its capital stock.

ANNUAL FINANCIAL STATEMENTS. Guarantor shall deliver to Bank, within 90 days
after the close of each fiscal year, audited financial statements reflecting its
operations during such fiscal year, including, without limitation, a balance
sheet, profit and loss statement and statement of cash flows, with supporting
schedules and in reasonable detail, prepared in conformity with generally
accepted accounting principles, applied on a basis consistent with that of the
preceding year. If audited statements are required, all such statements shall be
examined by an independent certified public accountant acceptable to Bank. The
opinion of such independent certified public accountant shall not be acceptable
to Bank if qualified due to any limitations in scope imposed by Guarantor or any
other person or entity. Any other qualification of the opinion by the accountant
shall render the acceptability of the financial statements subject to Bank's
approval.

PERIODIC FINANCIAL STATEMENTS. Guarantor shall deliver to Bank, within 45 days
after the end of each fiscal quarter, unaudited management-prepared quarterly
financial statements including, without limitation, a balance sheet, profit and
loss statement and statement of cash flows, with supporting schedules; all in
reasonable detail and prepared in conformity with generally accepted accounting
principles, applied on a basis consistent with that of the preceding year. Such
statements shall be certified as to their correctness by a principal financial
officer of Guarantor and in each case, if audited statements are required,
subject to audit and year-end adjustments.

ARBITRATION. Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any claim or controversy arising out of
or relating to the Loan Documents between parties hereto (a "Dispute") shall be
resolved by binding arbitration conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA") and the Federal Arbitration Act. Disputes
may include, without limitation, tort claims, counterclaims, a dispute as to
whether a matter is subject to arbitration, claims brought as class actions, or
claims arising from documents executed in the future. A judgment upon the award
may be entered in any court having jurisdiction. Notwithstanding the foregoing,
this arbitration provision does not apply to disputes under or related to swap
agreements. SPECIAL RULES. All arbitration hearings shall be conducted in the
city named in the address of Bank first stated above. A hearing shall begin
within 90 days of demand for arbitration and all hearings shall conclude within
120 days of demand for arbitration. These time limitations may not be extended
unless a party shows cause for extension and then for no more than a total of 60
days. The expedited procedures set forth in Rule 51 et seq. of the Arbitration
Rules shall be applicable to claims of less than $1,000,000.00. Arbitrators
shall be licensed attorneys selected from the Commercial Financial Dispute
Arbitration Panel of the AAA. The parties do not waive applicable Federal or
state substantive law except as provided herein. PRESERVATION AND LIMITATION OF
REMEDIES. Notwithstanding the preceding binding arbitration provisions, the
parties agree to preserve, without diminution, certain remedies that any party
may exercise before or after an arbitration proceeding is brought. The parties
shall have the right to proceed in any court of proper jurisdiction or by
self-help to

                                     Page 6
<PAGE>

exercise or prosecute the following remedies, as applicable: (i) all rights to
foreclose against any real or personal property or other security by exercising
a power of sale or under applicable law by judicial foreclosure including a
proceeding to confirm the sale; (ii) all rights of self-help including peaceful
occupation of real property and collection of rents, set-off, and peaceful
possession of personal property; (iii) obtaining provisional or ancillary
remedies including injunctive relief, sequestration, garnishment, attachment,
appointment of receiver and filing an involuntary bankruptcy proceeding; and
(iv) when applicable, a judgment by confession of judgment. Any claim or
controversy with regard to any party's entitlement to such remedies is a
Dispute. WAIVER OF JURY TRIAL. THE PARTIES ACKNOWLEDGE THAT BY AGREEING TO
BINDING ARBITRATION THEY HAVE IRREVOCABLY WAIVED ANY RIGHT THEY MAY HAVE TO JURY
TRIAL WITH REGARD TO A DISPUTE AS TO WHICH BINDING ARBITRATION HAS BEEN
DEMANDED.

IN WITNESS WHEREOF, Guarantor, on the day and year first written above, has
caused this Unconditional Guaranty to be executed under seal.

                                        Craftmade International, Inc.

                                        By: /s/ JAMES R. RIDINGS          (SEAL)
                                           -------------------------------
                                           James R. Ridings, President

Tracking #: 78890rke
CAT - Deal # 240579 Facility ID 218095

                                     Page 7
<PAGE>
                             UNCONDITIONAL GUARANTY

                                                               November 24, 2003

Prime/Home Impressions, LLC
420 3rd Avenue NW
Hickory, North Carolina 28601
(Individually and collectively "Borrower")

Home Impressions, Inc.
420 Third Avenue NW
Hickory, North Carolina 28601
(Individually and collectively "Guarantor")

Wachovia Bank, National Association
301 South Tryon Street
Charlotte, North Carolina 28202
(Hereinafter referred to as "Bank")

To induce Bank to make, extend or renew loans, advances, credit, or other
financial accommodations to or for the benefit of Borrower, which are and will
be to the direct interest and advantage of the Guarantor, and in consideration
of loans, advances, credit, or other financial accommodations made, extended or
renewed to or for the benefit of Borrower, which are and will be to the direct
interest and advantage of the Guarantor, Guarantor hereby absolutely,
irrevocably and unconditionally guarantees to Bank and its successors, assigns
and affiliates the timely payment and performance of all liabilities and
obligations of Borrower to Bank and its affiliates, including, but not limited
to, all obligations under any notes, loan agreements, security agreements,
letters of credit, instruments, accounts receivable, contracts, drafts, leases,
chattel paper, indemnities, acceptances, repurchase agreements, overdrafts, and
the Loan Documents, as defined below, and all obligations of Borrower to Bank or
any of its affiliates under any swap agreement (as defined in 11 U.S. Code
Section. 101), however and whenever incurred or evidenced, whether primary,
secondary, direct, indirect, absolute, contingent, due or to become due, now
existing or hereafter contracted or acquired, and all modifications, extensions
and renewals thereof, (collectively, the "Guaranteed Obligations").

Guarantor further covenants and agrees:

GUARANTOR'S LIABILITY. This Guaranty is a continuing and unconditional guaranty
of payment and performance and not of collection. The parties to this Guaranty
are jointly and severally obligated hereunder. This Guaranty does not impose any
obligation on Bank to extend or continue to extend credit or otherwise deal with
Borrower at any subsequent time. This Guaranty shall continue to be effective or
be reinstated, as the case may be, if at any time any payment of the Guaranteed
Obligations is rescinded, avoided or for any other reason must be returned by
Bank, and the returned payment shall remain payable as part of the Guaranteed
Obligations, all as though such payment had not been made. Except to the extent
the provisions of this Guaranty give Bank additional rights, this Guaranty shall
not be deemed to supersede or replace any other guaranties given to Bank by
Guarantor; and the obligations guaranteed hereby shall be in addition to any
other obligations guaranteed by Guarantor pursuant to any other agreement of
guaranty given to Bank and other guaranties of the Guaranteed Obligations.

TERMINATION OF GUARANTY. Guarantor may terminate this Guaranty only by written
notice, delivered personally to or received by certified or registered United
States Mail by an authorized officer of Bank at the address for notices provided
herein. Such termination shall be effective with respect to Guaranteed
Obligations arising more than 15 days after the date such written notice is
received by said Bank officer. Guarantor may not terminate this Guaranty as to
Guaranteed Obligations (including any

<PAGE>

subsequent extensions, modifications or compromises of the Guaranteed
Obligations) then existing, or to Guaranteed Obligations arising subsequent to
receipt by Bank of said notice if such Guaranteed Obligations are a result of
Bank's obligation to make advances pursuant to a commitment entered into prior
to expiration of the 15 day notice period, or are a result of advances which are
necessary for Bank to protect its collateral or otherwise preserve its
interests. Termination of this Guaranty by any single Guarantor will not affect
the existing and continuing obligations of any other Guarantor hereunder.

CONSENT TO MODIFICATIONS. Guarantor CONSENTS AND AGREES THAT BANK (AND, WITH
RESPECT TO SWAP OBLIGATIONS, ITS AFFILIATES) MAY FROM TIME TO TIME, IN ITS SOLE
DISCRETION, WITHOUT AFFECTING, IMPAIRING, LESSENING OR RELEASING THE OBLIGATIONS
OF GUARANTOR HEREUNDER: (a) extend or modify the time, manner, place or terms of
payment or performance and/or otherwise change or modify the credit terms of the
Guaranteed Obligations; (b) increase, renew, or enter into a novation of the
Guaranteed Obligations; (c) waive or consent to the departure from terms of the
Guaranteed Obligations; (d) permit any change in the business or other dealings
and relations of Borrower or any other guarantor with Bank; (e) proceed against,
exchange, release, realize upon, or otherwise deal with in any manner any
collateral that is or may be held by Bank in connection with the Guaranteed
Obligations or any liabilities or obligations of Guarantor; and (f) proceed
against, settle, release, or compromise with Borrower, any insurance carrier, or
any other person or entity liable as to any part of the Guaranteed Obligations,
and/or subordinate the payment of any part of the Guaranteed Obligations to the
payment of any other obligations, which may at any time be due or owing to Bank;
all in such manner and upon such terms as Bank may deem appropriate, and without
notice to or further consent from Guarantor. No invalidity, irregularity,
discharge or unenforceability of, or action or omission by Bank relating to any
part of the Guaranteed Obligations or any security therefor shall affect or
impair this Guaranty.

WAIVERS AND ACKNOWLEDGMENTS. GUARANTOR WAIVES AND RELEASES THE FOLLOWING RIGHTS,
DEMANDS, AND DEFENSES Guarantor may have with respect to Bank (and, with respect
to swap obligations, its affiliates) and collection of the Guaranteed
Obligations: (a) promptness and diligence in collection of any of the Guaranteed
Obligations from Borrower or any other person liable thereon, and in foreclosure
of any security interest and sale of any property serving as collateral for the
Guaranteed Obligations; (b) any law or statute that requires that Bank (and,
with respect to swap obligations, its affiliates) make demand upon, assert
claims against, or collect from Borrower or other persons or entities, foreclose
any security interest, sell collateral, exhaust any remedies, or take any other
action against Borrower or other persons or entities prior to making demand
upon, collecting from or taking action against Guarantor with respect to the
Guaranteed Obligations, including any such rights Guarantor might otherwise have
had under Va. Code Sections. 49-25 and 49-26, et seq., N.C.G.S. Sections. 26-7,
et seq., Tenn. Code Ann. Section.47-12-101, O.C.G.A. Section. 10-7-24 and any
successor statute and any other applicable law; (c) any law or statute that
requires that Borrower or any other person be joined in, notified of or made
part of any action against Guarantor; (d) that Bank or its affiliates preserve,
insure or perfect any security interest in collateral or sell or dispose of
collateral in a particular manner or at a particular time, provided that Bank's
obligation to dispose of Collateral in a commercially reasonable manner is not
waived hereby; (e) notice of extensions, modifications, renewals, or novations
of the Guaranteed Obligations, of any new transactions or other relationships
between Bank, Borrower and/or any guarantor, and of changes in the financial
condition of, ownership of, or business structure of Borrower or any other
guarantor; (f) presentment, protest, notice of dishonor, notice of default,
demand for payment, notice of intention to accelerate maturity, notice of
acceleration of maturity, notice of sale, and all other notices of any kind
whatsoever to which Guarantor may be entitled; (g) the right to assert against
Bank or its affiliates any defense (legal or equitable), set-off, counterclaim,
or claim that Guarantor may have at any time against Borrower or any other party
liable to Bank or its affiliates; (h) all defenses relating to invalidity,
insufficiency, unenforceability, enforcement, release or impairment of Bank or
its affiliates' lien on any collateral, of the Loan Documents, or of any other
guaranties held by Bank; (i) any right to which Guarantor is or may become
entitled to be subrogated to Bank or its affiliates' rights against Borrower or
to seek contribution, reimbursement, indemnification, payment or the like, or
participation in any claim, right or remedy of Bank or its affiliates against
Borrower or any security which Bank or its affiliates now has or hereafter
acquires, until such time as the Guaranteed Obligations have been fully
satisfied beyond

                                     Page 2
<PAGE>

the expiration of any applicable preference period; (j) any claim or defense
that acceleration of maturity of the Guaranteed Obligations is stayed against
Guarantor because of the stay of assertion or of acceleration of claims against
any other person or entity for any reason including the bankruptcy or insolvency
of that person or entity; and (k) the right to marshalling of Borrower's assets
or the benefit of any exemption claimed by Guarantor. Guarantor acknowledges and
represents that Guarantor has relied upon Guarantor's own due diligence in
making an independent appraisal of Borrower, Borrower's business affairs and
financial condition, and any collateral; Guarantor will continue to be
responsible for making an independent appraisal of such matters; and Guarantor
has not relied upon Bank or its affiliates for information regarding Borrower or
any collateral.

FINANCIAL CONDITION. Guarantor warrants, represents and covenants to Bank and
its affiliates that on and after the date hereof: (a) the fair saleable value of
Guarantor's assets exceeds its liabilities, Guarantor is meeting its current
liabilities as they mature, and Guarantor is and shall remain solvent; (b) all
financial statements of Guarantor furnished to Bank are correct and accurately
reflect the financial condition of Guarantor as of the respective dates thereof;
(c) since the date of such financial statements, there has not occurred a
material adverse change in the financial condition of Guarantor; (d) there are
not now pending any court or administrative proceedings or undischarged
judgments against Guarantor, no federal or state tax liens have been filed or
threatened against Guarantor, and Guarantor is not in default or claimed default
under any agreement; and (e) at such reasonable times as Bank requests,
Guarantor will furnish Bank and its affiliates with such other financial
information as Bank and its affiliates may reasonably request.

INTEREST AND APPLICATION OF PAYMENTS. Regardless of any other provision of this
Guaranty or other Loan Documents, if for any reason the effective interest on
any of the Guaranteed Obligations should exceed the maximum lawful interest, the
effective interest shall be deemed reduced to and shall be such maximum lawful
interest, and any sums of interest which have been collected in excess of such
maximum lawful interest shall be applied as a credit against the unpaid
principal balance of the Guaranteed Obligations. Monies received from any source
by Bank or its affiliates for application toward payment of the Guaranteed
Obligations may be applied to such Guaranteed Obligations in any manner or order
deemed appropriate by Bank and its affiliates.

DEFAULT. If any of the following events occur, a default ("Default") under this
Guaranty shall exist: (a) failure of timely payment or performance of the
Guaranteed Obligations or a default under any Loan Document; (b) a breach of any
agreement or representation contained or referred to in the Guaranty, or any of
the Loan Documents, or contained in any other contract or agreement of Guarantor
with Bank or its affiliates, whether now existing or hereafter arising; (c) the
death of, appointment of a guardian for, dissolution of, termination of
existence of, loss of good standing status by, appointment of a receiver for,
assignment for the benefit of creditors of, or the commencement of any
insolvency or bankruptcy proceeding by or against Guarantor or any general
partner of or the holder(s) of the majority ownership interests of Guarantor;
and/or (d) Bank determines in good faith, in its sole discretion, that the
prospects for payment or performance of the Guaranteed Obligations are impaired
or a material adverse change has occurred in the business or prospects of
Borrower or Guarantor, financial or otherwise.

If a Default occurs, the Guaranteed Obligations shall be due immediately and
payable without notice, other than Guaranteed Obligations under any swap
agreements (as defined in 11 U.S.C. Section. 101) with Bank or its affiliates,
which shall be governed by the default and termination provisions of said swap
agreements, and, Bank and its affiliates may exercise any rights and remedies as
provided in this Guaranty and other Loan Documents, or as provided at law or
equity. Guarantor shall pay interest on the Guaranteed Obligations from such
Default at the highest rate of interest charged on any of the Guaranteed
Obligations.

ATTORNEYS' FEES AND OTHER COSTS OF COLLECTION. Guarantor shall pay all of Bank's
and its affiliates' reasonable expenses incurred to enforce or collect any of
the Guaranteed Obligations, including, without limitation, reasonable
arbitration, paralegals', attorneys' and experts' fees and

                                     Page 3
<PAGE>

expenses, whether incurred without the commencement of a suit, in any suit,
arbitration, or administrative proceeding, or in any appellate or bankruptcy
proceeding.

SUBORDINATION OF OTHER DEBTS. Guarantor agrees: (a) to subordinate the
obligations now or hereafter owed by Borrower to Guarantor ("Subordinated Debt")
to any and all obligations of Borrower to Bank or its affiliates now or
hereafter existing while this Guaranty is in effect, provided however that
Guarantor may receive regularly scheduled principal and interest payments on the
Subordinated Debt so long as (i) all sums due and payable by Borrower to Bank
and its affiliates have been paid in full on or prior to such date, and (ii) no
event or condition which constitutes or which with notice or the lapse or time
would constitute an event of default with respect to the Guaranteed Obligations
shall be continuing on or as of the payment date; (b) Guarantor will either
place a legend indicating such subordination on every note, ledger page or other
document evidencing any part of the Subordinated Debt or deliver such documents
to Bank; and (c) except as permitted by this paragraph, Guarantor will not
request or accept payment of or any security for any part of the Subordinated
Debt, and any proceeds of the Subordinated Debt paid to Guarantor, through error
or otherwise, shall immediately be forwarded to Bank by Guarantor, properly
endorsed to the order of Bank, to apply to the Guaranteed Obligations.

MISCELLANEOUS. ASSIGNMENT. This Guaranty and other Loan Documents shall inure to
the benefit of and be binding upon the parties and their respective heirs, legal
representatives, successors and assigns. Bank's interests in and rights under
this Guaranty and other Loan Documents are freely assignable, in whole or in
part, by Bank. Any assignment shall not release Guarantor from the Guaranteed
Obligations. ORGANIZATION; POWERS. Guarantor (i) is (a) an adult individual and
is sui juris, or (b) a corporation, general partnership, limited partnership,
limited liability company or other legal entity (as indicated below), duly
organized, validly existing and in good standing under the laws of its state of
organization, and is authorized to do business in each other jurisdiction
wherein its ownership of property or conduct of business legally requires such
organization, (ii) has the power and authority to own its properties and assets
and to carry on its business as now being conducted and as now contemplated; and
(iii) has the power and authority to execute, deliver and perform, and by all
necessary action has authorized the execution, delivery and performance of, all
of its obligations under this Guaranty and any other Loan Document to which it
is a party. APPLICABLE LAW; CONFLICT BETWEEN DOCUMENTS. This Guaranty shall be
governed by and construed under the laws of the state named in Bank's address
shown above without regard to that state's conflict of laws principles. If the
terms of this Guaranty should conflict with the terms of any commitment letter
that survives closing, the terms of this Guaranty shall control. GUARANTOR'S
ACCOUNTS. Except as prohibited by law, Guarantor grants Bank and its affiliates
a security interest in all of Guarantor's accounts with Bank and its affiliates.
JURISDICTION. Guarantor irrevocably agrees to nonexclusive personal jurisdiction
in the state named in Bank's address shown above. SEVERABILITY. If any provision
of this Guaranty or of the other Loan Documents shall be prohibited or invalid
under applicable law, such provision shall be ineffective but only to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty or other Loan Documents.
NOTICES. Any notices to Guarantor shall be sufficiently given if in writing and
mailed or delivered to Guarantor's address shown above or such other address as
provided hereunder, and to Bank, if in writing and mailed or delivered to
Wachovia Bank, National Association, Mail Code VA7391, P. O. Box 13327, Roanoke,
VA 24040 or Wachovia Bank, National Association, Mail Code VA7391, 10 South
Jefferson Street, Roanoke, VA 24011 or such other address as Bank may specify in
writing from time to time. Notices to Bank must include the mail code. In the
event that Guarantor changes Guarantor's address at any time prior to the date
the Guaranteed Obligations are paid in full, Guarantor agrees to promptly give
written notice of said change of address to Bank by registered or certified
mail, return receipt requested, all charges prepaid. PLURAL; CAPTIONS. All
references in the Loan Documents to borrower, guarantor, person, document or
other nouns of reference mean both the singular and plural form, as the case may
be, and the term "person" shall mean any individual person or entity. The
captions contained in the Loan Documents are inserted for convenience only and
shall not affect the meaning or interpretation of the Loan Documents. BINDING
CONTRACT. Guarantor by execution of and Bank by acceptance of this Guaranty
agree that each party is bound to all terms and provisions of this Guaranty.
AMENDMENTS, WAIVERS AND REMEDIES. No waivers, amendments or modifications of
this Guaranty and

                                     Page 4
<PAGE>

other Loan Documents shall be valid unless in writing and signed by an officer
of Bank. No waiver by Bank or its affiliates of any Default shall operate as a
waiver of any other Default or the same Default on a future occasion. Neither
the failure nor any delay on the part of Bank or its affiliates in exercising
any right, power, or privilege granted pursuant to this Guaranty and other Loan
Documents shall operate as a waiver thereof, nor shall a single or partial
exercise thereof preclude any other or further exercise or the exercise of any
other right, power or privilege. All remedies available to Bank or its
affiliates with respect to this Guaranty and other Loan Documents and remedies
available at law or in equity shall be cumulative and may be pursued
concurrently or successively. PARTNERSHIPS. If Guarantor is a partnership, the
obligations, liabilities and agreements on the part of Guarantor shall remain in
full force and effect and fully applicable notwithstanding any changes in the
individuals comprising the partnership. The term "Guarantor" includes any
altered or successive partnerships, and predecessor partnership(s) and the
partners shall not be released from any obligations or liabilities hereunder.
LOAN DOCUMENTS. The term "Loan Documents" refers to all documents executed in
connection with or related to the Guaranteed Obligations and may include,
without limitation, commitment letters that survive closing, loan agreements,
other guaranty agreements, security agreements, instruments, financing
statements, mortgages, deeds of trust, deeds to secure debt, letters of credit
and any amendments or supplements (excluding swap agreements as defined in 11
U.S. Code Section. 101). LIMITATION ON LIABILITY; WAIVER OF PUNITIVE DAMAGES.
EACH OF THE PARTIES HERETO, INCLUDING BANK BY ACCEPTANCE HEREOF, AGREES THAT IN
ANY JUDICIAL, MEDIATION OR ARBITRATION PROCEEDING OR ANY CLAIM OR CONTROVERSY
BETWEEN OR AMONG THEM THAT MAY ARISE OUT OF OR BE IN ANY WAY CONNECTED WITH THIS
AGREEMENT, THE LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN OR
AMONG THEM OR THE OBLIGATIONS EVIDENCED HEREBY OR RELATED HERETO, IN NO EVENT
SHALL ANY PARTY HAVE A REMEDY OF, OR BE LIABLE TO THE OTHER FOR, (1) INDIRECT,
SPECIAL OR CONSEQUENTIAL DAMAGES OR (2) PUNITIVE OR EXEMPLARY DAMAGES. EACH OF
THE PARTIES HEREBY EXPRESSLY WAIVES ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY
DAMAGES THEY MAY HAVE OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION WITH ANY
SUCH PROCEEDING, CLAIM OR CONTROVERSY, WHETHER THE SAME IS RESOLVED BY
ARBITRATION, MEDIATION, JUDICIALLY OR OTHERWISE.

FINANCIAL AND OTHER INFORMATION. Guarantor shall deliver to Bank such
information as Bank may reasonably request from time to time, including without
limitation, financial statements and information pertaining to Guarantor's
financial condition. Such information shall be true, complete, and accurate.

NEGATIVE COVENANTS. Guarantor agrees that from the date of this Agreement and
until final payment in full of the Guaranteed Obligations, unless Bank shall
otherwise consent in writing, Guarantor will not: DEFAULT ON OTHER CONTRACTS OR
OBLIGATIONS. Default on any material contract with or obligation when due to a
third party or default in the performance of any obligation to a third party
incurred for money borrowed. GOVERNMENT INTERVENTION. Permit the assertion or
making of any seizure, vesting or intervention by or under authority of any
governmental entity, as a result of which the management of Guarantor or any
guarantor is displaced of its authority in the conduct of its respective
business or such business is curtailed or materially impaired. JUDGMENT ENTERED.
Permit the entry of any monetary judgment or the assessment against, the filing
of any tax lien against, or the issuance of any writ of garnishment or
attachment against any property of or debts due. RETIRE OR REPURCHASE CAPITAL
STOCK. Retire or otherwise acquire any of its capital stock.

ANNUAL FINANCIAL STATEMENTS. Guarantor shall deliver to Bank, within 90 days
after the close of each fiscal year, reviewed financial statements reflecting
its operations during such fiscal year, including, without limitation, a balance
sheet, profit and loss statement and statement of cash flows, with supporting
schedules and in reasonable detail, prepared in conformity with generally
accepted accounting principles, applied on a basis consistent with that of the
preceding year. All such statements shall be reviewed by an independent
certified public accountant acceptable to Bank. Such statements shall be
certified as to their correctness by a principal financial officer of Guarantor.

                                     Page 5
<PAGE>

ARBITRATION. Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any claim or controversy arising out of
or relating to the Loan Documents between parties hereto (a "Dispute") shall be
resolved by binding arbitration conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA") and the Federal Arbitration Act. Disputes
may include, without limitation, tort claims, counterclaims, a dispute as to
whether a matter is subject to arbitration, claims brought as class actions, or
claims arising from documents executed in the future. A judgment upon the award
may be entered in any court having jurisdiction. Notwithstanding the foregoing,
this arbitration provision does not apply to disputes under or related to swap
agreements. SPECIAL RULES. All arbitration hearings shall be conducted in the
city named in the address of Bank first stated above. A hearing shall begin
within 90 days of demand for arbitration and all hearings shall conclude within
120 days of demand for arbitration. These time limitations may not be extended
unless a party shows cause for extension and then for no more than a total of 60
days. The expedited procedures set forth in Rule 51 et seq. of the Arbitration
Rules shall be applicable to claims of less than $1,000,000.00. Arbitrators
shall be licensed attorneys selected from the Commercial Financial Dispute
Arbitration Panel of the AAA. The parties do not waive applicable Federal or
state substantive law except as provided herein. PRESERVATION AND LIMITATION OF
REMEDIES. Notwithstanding the preceding binding arbitration provisions, the
parties agree to preserve, without diminution, certain remedies that any party
may exercise before or after an arbitration proceeding is brought. The parties
shall have the right to proceed in any court of proper jurisdiction or by
self-help to exercise or prosecute the following remedies, as applicable: (i)
all rights to foreclose against any real or personal property or other security
by exercising a power of sale or under applicable law by judicial foreclosure
including a proceeding to confirm the sale; (ii) all rights of self-help
including peaceful occupation of real property and collection of rents, set-off,
and peaceful possession of personal property; (iii) obtaining provisional or
ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and filing an involuntary bankruptcy
proceeding; and (iv) when applicable, a judgment by confession of judgment. Any
claim or controversy with regard to any party's entitlement to such remedies is
a Dispute. WAIVER OF JURY TRIAL. THE PARTIES ACKNOWLEDGE THAT BY AGREEING TO
BINDING ARBITRATION THEY HAVE IRREVOCABLY WAIVED ANY RIGHT THEY MAY HAVE TO JURY
TRIAL WITH REGARD TO A DISPUTE AS TO WHICH BINDING ARBITRATION HAS BEEN
DEMANDED.

IN WITNESS WHEREOF, Guarantor, on the day and year first written above, has
caused this Unconditional Guaranty to be executed under seal.

                                        Home Impressions, Inc.

                                        By: /s/ ROBERT W. LACKEY, SR.     (SEAL)
                                           -------------------------------
                                           Robert W. Lackey, Sr., Vice President

Tracking #: 78890rke
CAT - Deal # 240579 Facility ID 218095

                                     Page 6

</TEXT>
</DOCUMENT>
