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                        SECURED REVOLVING PROMISSORY NOTE

$75,000,000.00                                                   January 2, 2001
                                                      Greenville, South Carolina


         For value received, the undersigned HOMEGOLD, INC., a South Carolina
corporation (the "Borrower"), hereby promises to pay to the order of CAROLINA
INVESTORS, INC., a South Carolina corporation (the "Lender") (i) the principal
amount of Seventy Five Million Dollars ($75,000,000), or if less, an amount
equal to the aggregate unpaid principal amount of loans made from time to time
by the Lender to the Borrower, and (ii) interest on the unpaid principal amount
of this Note from the date hereof, payable monthly in arrears based on the
average principal amount outstanding during such month, no later than the 15th
day of the following month until this Note is paid in full at the per annum
prime rate announced by the Wall Street Journal on the first day of the month in
which interest accrues plus two percent. Notwithstanding any other provision of
this Note, interest paid or becoming due hereunder shall in no event exceed the
maximum rate permitted by applicable law. Interest will be calculated on a daily
basis computed on the actual number of days elapsed over a year of three hundred
sixty-five (365) days. This Note shall mature, and all outstanding amounts
hereunder shall be due and payable, on December 31, 2005.

         In order to secure the payment and performance in full of the
obligations of Borrower to Lender under the terms of this Note, Borrower hereby
grants to Lender a security interest in and to (1) all property of Borrower
currently located in the State of South Carolina as of the date hereof, wherever
hereafter located, and all property hereafter acquired by Borrower in the State
of South Carolina, whether located elsewhere after such acquisition, in each
case other than (a) Borrower's real property and (b) Borrower's property
(including without limitation notes receivable and rights, documents and other
collateral related thereto) now or hereinafter securing any other debts of
Borrower or subject to any loan purchase facility of Borrower and (2) any and
all proceeds from any and all of the foregoing collateral (including without
limitation, all payments under insurance, or any indemnity, warranty, or insured
closing letter, payable by reason of the loss or damage to or otherwise with
respect to any of the foregoing) (collectively, the "Collateral").

          Borrower and Lender hereby acknowledge and agree that the security
interest granted in the Collateral hereby is second in priority to, and
subordinate in all respects to, (1) the security interest in any of the same
Collateral granted by Borrower to Lender pursuant to that certain Guaranty of
HomeGold, Inc. and Security Agreement dated December 31, 2000 by and between
Borrower and Lender entered into in connection with the assumption of all of
Borrowers debts to Lender as of December 31, 2000 by HomeGold Financial, Inc.
and (2) any security interest, lien, set-off right or other encumbrance granted
by Borrower to any bank.

          The Borrower may at any time prepay the whole or any part of the
unpaid principal amount of this Note, without penalty or premium, with interest
accrued to the date fixed for prepayment.

          The Borrower expressly waives presentment, demand, protest, notice of
dishonor, notice of nonpayment and/or protest, and any and all other notices and
demands whatsoever, and agrees to remain bound until the principal and interest
are paid in full, notwithstanding any extension of
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time for payment or all or any part of the principal or interest hereof and
notwithstanding any inaction by, or failure to assert any legal right available
to Lender.

          In the event that this Note shall at any time after maturity or
default be placed with an attorney for collection, Borrower agrees to pay, in
addition to the entire remaining principal balance and accrued interest, all
costs of collection, including without limitation reasonable attorneys fees,
which attorneys fees shall be based upon the usual and customary hourly rates of
Lender's counsel and not based upon a percentage of the balance due on this
Note.

          Whenever Lender is referred to in this Note, such reference shall be
deemed to include the successors and assigns of Lender, including without
limitation subsequent assigns or holders of this Note, and all covenants,
provisions and agreements by or on behalf of Borrower which are contained herein
shall inure to the benefit of the successors and assigns of Lender.

          The Lender shall not by any act, delay, omission or otherwise be
deemed to have waived any of its rights or remedies hereunder, and no waiver
shall be valid unless in writing, signed by the Lender, and then only to the
extent therein set forth. A waiver by the Lender of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Lender would otherwise have on any future occasion. No failure
to exercise nor any delay in exercising on the part of the Lender, any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights or remedies provided by law.

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

         This Note shall be governed by, and construed and interpreted in
accordance with, the internal laws of the State of South Carolina applicable to
contracts made and to be performed therein without consideration as to choice of
law.

         In witness whereof, the Borrower has caused this Note to be executed on
its behalf by its duly authorized corporate officer, to be effective as of the
date first written above.

                                           HOMEGOLD, INC.

                                           By:
                                               ---------------------------------
                                           Name:
                                                 -------------------------------
                                           Title:
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ACCEPTED AND AGREED:
CAROLINA INVESTORS, INC.

By:
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Name:
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Title:
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