FRIEDMANS INC
EXHIBIT 10.10
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>11
<FILENAME>exhibit10-10.txt
<DESCRIPTION>EXHIBIT 10.10
<TEXT>



                                                                  Exhibit 10.10



                              GUARANTY AGREEMENT
                              ------------------

                  This Guaranty Agreement (as such agreement may be amended,
restated, or otherwise modified from time to time, this "Guaranty Agreement"),
is executed and delivered effective as of September 8, 2004, by each of the
undersigned Guarantors with respect to the indebtedness, liabilities, and
obligations of Friedman's Inc., a Delaware corporation (the "Company"), under
the Letter Agreements defined hereinbelow, as follows:

                                   Recitals:
                                   --------

                  A. This Guaranty Agreement is required by the Letter
Agreements (as defined below), and each Guarantor's execution and delivery
hereof is a condition (among other conditions) to the extension of trade
credit to the Company under the Letter Agreements.

                  B. Concurrently herewith, Guarantors and the Collateral
Trustee have executed and entered into the Security Agreement, which provides
for the obligations hereunder to be secured on the terms and conditions
prescribed therein.

                  C. Each Guarantor has determined that (i) it will directly
and indirectly benefit from the availability of financing to Company under the
Letter Agreements, (ii) it will benefit, directly and indirectly, from
executing and delivering this Guaranty Agreement, (iii) it is in such
Guarantor's best interest, and within its corporate purpose, to execute and
deliver and, if called upon to do so, to perform its obligations under this
Guaranty Agreement, and (iv) execution and delivery of this Guaranty Agreement
is necessary or convenient to the conduct, promotion, and attainment of the
business of such Guarantor.

                  NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, each Guarantor jointly
and severally hereby agrees as follows:

                  1. Definitions:

                      (a) The following terms shall have the following
         meanings where used in this Guaranty Agreement:

                  "Approved Trade Creditors" means each creditor who is a
party to a Letter Agreement.

                  "Collateral Trust Agreement" means that certain Collateral
Trust Agreement, dated as of the date hereof, among Friedman's Inc. and other
parties identified therein, as Grantors, and William Kaye as Collateral
Trustee.

                  "Collateral Trustee" means William Kaye, in its capacity as
collateral trustee for the Approved Trade Creditors under the Letter
Agreements and the Collateral Trust Agreement.

                  "Guaranteed Obligations" means, at any time, all
indebtedness, liabilities, and obligations of Company that are to be secured
pursuant to the terms of any Letter Agreement.

                  "Guarantor" means (a) each of the undersigned Subsidiaries
of Friedman's, Inc. and (b) each other Person, if any, that becomes a party to
this Guaranty Agreement after the Closing Date, by joinder or otherwise, and
in each such case their respective successors and assigns, and "Guarantors"
means all of such Persons, collectively.

                  "Letter Agreements" means, collectively, each Secured Trade
Credit Program Letter Agreement (each, together with the "Terms and Conditions
and Statement of Qualifications" attached thereto, a "Letter Agreement")
executed and delivered from time to time by a trade creditor of Company and
accepted in writing by Company.

                  "Security Agreement" means that certain Security Agreement,
dated as of September 8, 2004 and entered into by and among Company,
Guarantors and Collateral Trustee, as amended, supplemented or otherwise
modified from time to time.

                  "Trade Creditor Lien Documents" means, collectively, this
Guaranty, the Security Agreement, the Collateral Trust Agreement, the
Intercreditor Agreement and the Letter Agreements.

                      (b) Terms defined in the Collateral Trust Agreement,
         wherever used herein, unless otherwise defined herein, shall have the
         same meanings in this Guaranty Agreement as are set forth in the
         Collateral Trust Agreement, and each of such definitions is
         incorporated herein by reference. Each Guarantor expressly
         acknowledges that it has read and is familiar with all such
         incorporated definitions and agrees that they shall have the same
         effect and enforceability in this Guaranty Agreement as though set
         forth herein at length.

                  2. Guaranty of Guaranteed Obligations. This Guaranty
Agreement is executed by each Guarantor pursuant to the Letter Agreements and
is for the benefit of the Collateral Trustee and the Approved Trade Creditors.
As an inducement to the Approved Trade Creditors to extend and continue to
extend credit and other financial accommodations to Company under the Letter
Agreements, each Guarantor, for value received, does hereby jointly and
severally, unconditionally, irrevocably, and absolutely guarantee the prompt
and full payment and performance of the Guaranteed Obligations when due and at
all times thereafter; provided, however, that each Guarantor's liability under
this Guaranty Agreement shall be limited to a maximum aggregate amount equal
to the largest amount that would not render its obligations hereunder subject
to avoidance as a fraudulent transfer or conveyance under any applicable law,
in each case after giving effect to all other liabilities of such Guarantor,
contingent or otherwise, that are relevant under such laws, and after giving
effect to the value, as assets (as determined under the applicable provisions
of such laws) of any rights of such Guarantor to contribution, indemnity,
and/or subrogation from Company or other Person pursuant to any applicable law
or any agreement providing for an equitable allocation among such Guarantor
and any such other Person of their respective obligations thereunder.

                  3. Nature of Guaranty; Limited Recourse. This Guaranty
Agreement is and shall be an absolute, unconditional, irrevocable, and
continuing unlimited guaranty of payment, and not solely of collection. Each
Guarantor guarantees that, subject to the terms and conditions of the
Intercreditor Agreement, the Guaranteed Obligations will be paid strictly in
accordance with the terms of the Letter Agreements, without setoff or
counterclaim, and regardless of any applicable law now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the
Collateral Trustee and the Approved Trade Creditors with respect thereto.
Subject to the terms and provisions of the Intercreditor Agreement, the
Guaranteed Obligations may be increased, reduced, or paid in full at any time
and from time to time without affecting the liability or obligation of any
Guarantor under this Guaranty Agreement with respect to all Guaranteed
Obligations, whenever incurred or arising. All Guaranteed Obligations now or
hereafter arising shall be conclusively presumed to have been made or acquired
in acceptance hereof. Each Guarantor shall be liable, jointly and severally,
with Company and any other Person now or hereafter obligated in respect of the
Guaranteed Obligations, or any portion thereof. It is the intention of each
Guarantor and the Collateral Trustee and the Approved Trade Creditors that,
except as otherwise provided in this Guaranty Agreement, such Guarantor's
indebtedness, liabilities, and obligations hereunder shall not be discharged
except by such Guarantor's full and complete payment and performance of such
indebtedness, liabilities, and obligations and then only to the extent of such
payment and performance (to the extent not otherwise satisfied by Company or
any other Person now or hereafter obligated in respect of the Guaranteed
Obligations).

                  Notwithstanding anything to the contrary in this Guarantee
Agreement or any other Trade Creditor Lien Document, the Collateral Trustee
hereby acknowledges, and each Approved Trade Creditor by execution of the
Letter Agreement to which it is a party hereby acknowledges, that (a) the
performance of the Guaranteed Obligations by each Guarantor shall be enforced
solely against the Collateral, (b) any such enforcement shall be subject to
the provisions of the other Trade Creditor Lien Documents, (c) no deficiency
after applying the net proceeds received from any foreclosure or sale of the
Collateral (or any part thereof) shall ever be asserted against any Guarantor,
and (d) the obligations of the Guarantors and the rights and remedies of the
Approved Trade Creditors and the Collateral Trustee hereunder shall be subject
to the terms and provisions of the Intercreditor Agreement.



                  4. Representations and Warranties. Each Guarantor hereby
represents and warrants to the Collateral Trustee and the Approved Trade
Creditors as follows:

                       (a) Such Guarantor has received and will receive a
         direct and indirect material benefit from the transactions evidenced
         by and contemplated in the Letter Agreements and the other Trade
         Creditor Lien Documents. This Guaranty Agreement is given by such
         Guarantor in furtherance of the direct and indirect business
         interests and corporate purposes of such Guarantor, and is necessary
         to the conduct, promotion, and attainment of the businesses of
         Company and such Guarantor. The value of the consideration received
         and to be received by such Guarantor is reasonably worth at least as
         much as the liability and obligation of such Guarantor hereunder.

                       (b) Such Guarantor is currently informed of the
         financial condition of Company and any and all other Persons
         obligated in respect of the Guaranteed Obligations and of all other
         circumstances which a diligent inquiry would reveal and which bear
         upon the risk of nonpayment of the Guaranteed Obligations. Such
         Guarantor has read and understands the terms and conditions of the
         Trade Creditor Lien Documents. Such Guarantor is familiar with, and
         has had an opportunity to review the books and records regarding, the
         financial condition of Company and is familiar with the value of any
         and all property intended to be security for the payment of all or
         any part of the Guaranteed Obligations; provided, however, such
         Guarantor is not relying on such financial condition or the existence
         or value of any such security as an inducement to enter into this
         Guaranty Agreement. Such Guarantor has adequate means to obtain, on a
         continuing basis, information concerning the financial condition of
         Company. Such Guarantor has not been induced to enter into this
         Guaranty Agreement on the basis of a contemplation, belief,
         understanding, or agreement that any Person other than such Guarantor
         will be liable to pay the Guaranteed Obligations. Neither the
         Collateral Trustee nor any Approved Trade Creditor has made any
         representation, warranty, or statement to such Guarantor in order to
         induce such Guarantor to execute this Guaranty Agreement.

                  5. Obligations Not Impaired. Each Guarantor agrees that,
subject to the provisions of paragraph 3 hereof and the terms and provisions
of the Intercreditor Agreement, its obligations hereunder shall not be
released, diminished, impaired, reduced, or affected by the occurrence of any
one or more of the following events: (a) lack of organizational authority of
Company; (b) any receivership, insolvency, bankruptcy, or other proceedings
affecting Company or any of its respective property; (c) partial or total
release or discharge of Company or other Person from the performance of any
obligation contained in any instrument or agreement evidencing, governing, or
securing all or any part of the Guaranteed Obligations, whether occurring
pursuant to any applicable law or otherwise; (d) any change in the time,
manner, or place of payment of, or in any other term of, or any increase in
the amount of, all the Guaranteed Obligations, or any portion thereof, or any
other amendment or waiver of any term of, or any consent to departure from any
requirement of, any of the Trade Creditor Lien Documents; (e) the taking or
accepting of any collateral security for all or any part of the Guaranteed
Obligations, this Guaranty Agreement, or any other guaranty; (f) the taking or
accepting of any other guaranty for all or any part of the Guaranteed
Obligations; (g) any failure to acquire, perfect, or continue any lien on any
collateral securing all or any part of the Guaranteed Obligations or on any
other guaranty of the Guaranteed Obligations; (h) any exchange, release, or
subordination of any lien on any Collateral, or any release, amendment,
waiver, or subordination of any term of any guaranty of the Guaranteed
Obligations or any other impairment of any collateral security or guaranty now
or hereafter securing all or any part of the Guaranteed Obligations; (i) any
failure to dispose of any collateral security at any time securing all or any
part of the Guaranteed Obligations or this Guaranty Agreement in a
commercially reasonable manner or as otherwise may be required by any
applicable law; (j) any merger, reorganization, consolidation, or dissolution
of Company, any Guarantor, or any other guarantor of the Guaranteed
Obligations, any sale, lease, or transfer of any or all of the assets of
Company, any Guarantor, or any other guarantor of the Guaranteed Obligations,
or any change in name, business, organization, location, composition,
structure, or organization of Company, any Guarantor, or any other guarantor
of the Guaranteed Obligations; (k) any change in the shareholders of Company,
any Guarantor, or any other guarantor of the Guaranteed Obligations; (l) any
invalidity or unenforceability of or defect or deficiency in any of the Trade
Creditor Lien Documents; (m) avoidance or subordination of the Guaranteed
Obligations, or any portion thereof, (n) the unenforceability of all or any
part of the Guaranteed Obligations against Company because any interest
contracted for, charged, or received in respect of the Guaranteed Obligations
exceeds the amount permitted by any applicable law; (o) any waiver, consent,
extension, forbearance, or granting of any indulgence by the Collateral
Trustee or the Approved Trade Creditors with respect to the Guaranteed
Obligations or any provision of any of the Trade Creditor Lien Documents; (p)
any delay in or lack of enforcement of any remedies under the Trade Creditor
Lien Documents; (q) the act of creating all or any part of the Guaranteed
Obligations is ultra vires, or the officers or other representatives creating
all or any part of the Guaranteed Obligations acted in excess of their
authority; (r) any election of remedies by the Collateral Trustee or the
Approved Trade Creditors; (s) any of the Trade Creditor Lien Documents were
forged; (t) the election by the Collateral Trustee or any of the Approved
Trade Creditors in any proceeding under the Bankruptcy Code of the application
of Section 1111(b)(2) thereof; (u) any borrowing or grant of a security
interest by Company, as debtor-in-possession, under Section 364 of the
Bankruptcy Code; (v) the disallowance in bankruptcy of all or any portion of
the claims of the Collateral Trustee or any of the Approved Trade Creditors
for payment of any of the Guaranteed Obligations; or (w) any other
circumstance which might otherwise constitute a legal or equitable discharge
or defense available to Company or any Guarantor (other than that the
Guaranteed Obligations shall have been paid and performed in full).

                  6. Consent and Waiver.

                       (a) Each Guarantor hereby waives to the fullest extent
         permitted by applicable law: (i) notice of acceptance of this
         Guaranty Agreement; (ii) notice of any Letter Agreements or the
         creation or existence of any Guaranteed Obligations; (iii) notice of
         the amount of the Guaranteed Obligations; (iv) notice of any adverse
         change in the financial condition of Company or any other Person or
         of any other fact that might increase or otherwise change such
         Guarantor's risk with respect to the Guaranteed Obligations, Company,
         or any other Person under this Guaranty Agreement; (v) notice of any
         of the events or circumstances enumerated in paragraph 5 hereof, and
         all other notices and demands to which such Guarantor might otherwise
         be entitled (except if such notice is specifically required to be
         given to such Guarantor hereunder or under any of the Trade Creditor
         Lien Documents to which such Guarantor is a party); (vi) any
         requirement that the Collateral Trustee or any of the Approved Trade
         Creditors protect, secure, perfect, or insure the Collateral
         Trustee's lien on any Collateral or other property as security for
         the Guaranteed Obligations or exhaust any right or take any action
         against Company or any other Person or any Collateral or any other
         property subject to a lien; (viii) the benefit of any statute of
         limitation applicable to enforcement of the Guaranteed Obligations,
         or any portion thereof, or any liens on the Collateral or other
         property as security for the Guaranteed Obligations or this Guaranty
         Agreement; (ix) all rights by which such Guarantor might be entitled
         to require suit on an accrued right of action in respect of any of
         the Guaranteed Obligations or require suit against Company or any
         other Person; or (x) any other defense of Company or any other Person
         (other than that the Guaranteed Obligations shall have been paid and
         performed in full).

                       (b) Subject to the provisions of paragraph 3, each
         Guarantor hereby waives and agrees not to assert against the
         Collateral Trustee or any Approved Trade Creditor, to the extent
         allowed by any applicable law: (i) any defense, setoff, counterclaim,
         or claim of any kind or nature available to Company or any other
         Person against the Collateral Trustee or any Approved Trade Creditor,
         arising directly or indirectly from the present or future lack of
         perfection, sufficiency, validity, or enforceability of the
         Guaranteed Obligations or any lien on the Collateral or any other
         property as security for the Guaranteed Obligations; or (ii) any
         right or defense arising by reason of any claim or defense based upon
         an election of remedies by the Collateral Trustee or any Approved
         Trade Creditor under any applicable law.

                       (c) Each Guarantor waives, and agrees that, except as
         otherwise provided in paragraph 3 hereof, its liability hereunder
         shall not be affected by, any neglect, delay, omission, failure, or
         refusal of the Collateral Trustee or any Approved Trade Creditor to
         (i) exercise or properly or diligently exercise any right or remedy
         with respect to any or all of the Guaranteed Obligations or the
         collection thereof or any Collateral or other security for or
         guaranty of the Guaranteed Obligations, or any portion thereof, (ii)
         take or prosecute, or properly or diligently take or prosecute, any
         action for the collection of any or all of the Guaranteed Obligations
         against Company, such Guarantor, or any other Person in respect of
         any or all of the Guaranteed Obligations, (iii) foreclose or
         prosecute, or properly or diligently foreclose or prosecute, any
         action in connection with any agreement, document or instrument or
         arrangement evidencing, securing, or otherwise affecting all or any
         part of the Guaranteed Obligations, or (iv) mitigate damages or take
         any other action to reduce, collect, or enforce the Guaranteed
         Obligations;

                       (d) Subject to paragraph 3 hereof and the Intercreditor
         Agreement and the Collateral Trust Agreement, the Collateral Trustee
         may at any time, without the consent of or notice to any Guarantor,
         without incurring responsibility to any Guarantor and without
         impairing, releasing, reducing, or affecting the obligations of any
         Guarantor hereunder: (i) change the manner, place, or terms of
         payment of all or any part of the Guaranteed Obligations, or renew,
         extend, modify, rearrange, refinance, refund, or alter all or any
         part of the Guaranteed Obligations; (ii) sell, exchange, release,
         surrender, subordinate, realize upon, or otherwise deal with in any
         manner and in any order any Collateral or setoff against all or any
         part of the Guaranteed Obligations; (iii) neglect, delay, omit, fail,
         or refuse to take or prosecute any action for the collection of all
         or any part of the Guaranteed Obligations or this Guaranty Agreement
         or to take or prosecute any action in connection with any of the
         Trade Creditor Lien Documents; (iv) exercise or refrain from
         exercising any rights against Company or other Person, or otherwise
         act or refrain from acting; (v) settle or compromise all or any part
         of the Guaranteed Obligations and subordinate the payment of all or
         any part of the Guaranteed Obligations to the payment of any
         indebtedness, liabilities, or obligations which may be due or become
         due to the Collateral Trustee or the Approved Trade Creditors or
         others; (vi) apply any deposit balance, fund, payment, collections
         through process of law or otherwise or other property of Company to
         the satisfaction and liquidation of indebtedness or obligations of
         any of Company to the Collateral Trustee or the Approved Trade
         Creditors, if any, not guaranteed under this Guaranty Agreement;
         (vii) release all or any one or more parties to any one or more of
         the Trade Creditor Lien Documents or grant other indulgences to
         Company or any other Person in respect thereof; (viii) amend or
         modify in any manner and at any time (or from time to time) any of
         the Trade Creditor Lien Documents; (ix) partially or fully release or
         substitute any guarantor, or enforce, exchange, release, or waive any
         security for the Guaranteed Obligations, or any portion thereof, (x)
         bring suit against any and all Persons liable or obligated in respect
         of the Guaranteed Obligations, collectively together, jointly and
         severally or separately, and apply any amounts obtained by the
         Collateral Trustee in such manner as the Collateral Trustee may
         elect, subject to the Trade Creditor Lien Documents; and (xi) apply
         any sums paid to the Collateral Trustee or the Approved Trade
         Creditors by any Guarantor, or Company, or any other Person to the
         Guaranteed Obligations as provided by the Trade Creditor Lien
         Documents.

                       (e) Subject to the terms and provisions of the
         Intercreditor Agreement, should the Collateral Trustee seek to
         enforce the obligations hereunder by action in any court or
         otherwise, each Guarantor waives any requirement, substantive or
         procedural, that (i) rights or remedies be enforced first against
         Company, or any other Person liable for all or any part of the
         Guaranteed Obligations, including, without limitation, that a
         judgment first be rendered against any such Person, or that Company
         or any other such Person should be joined in such cause or (ii)
         except as provided in paragraph 3 hereof, enforcement shall first be
         made against any Collateral or other property which shall ever have
         been given to secure all or any part of the Guaranteed Obligations or
         this Guaranty Agreement. Such waiver shall be without prejudice to
         the Collateral Trustee's right, at its option, but subject to the
         terms and provisions of the Intercreditor Agreement, to proceed
         against Company or any other Person, whether by separate action or by
         joinder.

                       (f) Each Guarantor hereby assumes sole responsibility
         for keeping itself informed of the financial condition of Company and
         any other Person liable for all or any part of the Guaranteed
         Obligations, and of all other circumstances bearing upon the risk of
         nonpayment of the Guaranteed Obligations or any part thereof. Each
         Guarantor hereby agrees that neither the Collateral Trustee nor any
         Approved Trade Creditor shall have any obligation or duty to advise
         such Guarantor of information known to any of them regarding such
         condition or any such circumstance.

                       (g) Each Guarantor consents and agrees that, except as
         provided in the Intercreditor Agreement, neither the Collateral
         Trustee nor any of the Approved Trade Creditors shall be under any
         obligation to marshal any assets in favor of such Guarantor or
         otherwise in connection with obtaining payment of any or all of the
         Guaranteed Obligations from any Person or source.

                       (h) Each Guarantor agrees that to the extent permitted
         under the Trade Creditor Lien Documents and any applicable law the
         Collateral Trustee may, at any time and from time to time in its
         discretion and with or without valuable consideration, allow
         substitution or withdrawal of Collateral or other security and
         release Collateral or other security.

                       (i) Each Guarantor agrees that neither the Collateral
         Trustee nor any Approved Trade Creditors shall be liable for any
         failure to use diligence or care in the collection of the Guaranteed
         Obligations, in the creation or perfection of any lien, security
         interest or assignment intended as security, or in preserving the
         liability of any Person liable or obligated on the Guaranteed
         Obligations.

                  7. No Waiver, Remedies.

                       (a) No failure on the part of the Collateral Trustee to
         exercise, and no delay or omission by the Collateral Trustee in
         exercising, any right or remedy hereunder shall impair such right or
         remedy or operate or be construed as a waiver thereof or any
         acquiescence therein, nor shall any single or partial exercise of any
         right or remedy hereunder preclude any other or further exercise
         thereof or the exercise of any other right or remedy hereunder. In no
         event shall any waiver of the provisions of this Guaranty Agreement
         be effective unless the same be in writing and signed by an officer
         of the Collateral Trustee, and then only in the specific instance and
         for the purpose given. The remedies herein provided are cumulative
         and not exclusive of any remedies provided by any applicable law or
         any of the other Trade Creditor Lien Documents.

         Failure by the Collateral Trustee or any Approved Trade Creditor at
         any time or times hereafter to require strict performance by Company,
         any Guarantor, or any other Person, of any of the requirements
         contained in any of the Trade Creditor Lien Documents now or at any
         time, from time to time, hereafter executed and delivered by Company,
         any Guarantor, or any such other Person shall not waive, affect, or
         diminish the right to demand strict performance thereof, and such
         right shall not be deemed to have been modified or waived by any
         course of conduct or knowledge of the Collateral Trustee or any
         Approved Trade Creditor, or any agent, officer, or employee thereof,
         respectively.

                  8. Cumulative Remedies; No Election.

                       (a) If any Guarantor is or becomes liable or obligated
         for the Guaranteed Obligations, by endorsement or otherwise, other
         than under this Guaranty Agreement, such liability or obligation
         shall not be in any manner impaired or affected hereby, and the
         rights and remedies of the, Collateral Trustee hereunder shall be
         cumulative of any and all other rights and remedies that the
         Collateral Trustee or any Approved Trade Creditor may ever have
         against such Guarantor. All rights and remedies of the Collateral
         Trustee hereunder are cumulative of each other and of every other
         right or remedy which the Collateral Trustee or any Approved Trade
         Creditor may otherwise have at law or in equity or under any other
         contract or document, and the exercise of one or more rights or
         remedies shall not prejudice or impair the concurrent or subsequent
         exercise of other rights or remedies. The exercise by the Collateral
         Trustee or any Approved Trade Creditor of any right or remedy
         hereunder or under any other agreement, document, or instrument, or
         at law or in equity, shall not preclude the concurrent or subsequent
         exercise of any other right or remedy. Subject to the terms and
         provisions of the Intercreditor Agreement, this Guaranty Agreement
         may be enforced from time to time as often as occasion for
         enforcement may arise as may be determined by the Collateral Trustee,
         and it is agreed and understood that it shall not be necessary for
         the Collateral Trustee, in order to enforce payment by any Guarantor,
         first to exercise any rights or remedies against Company or any other
         Person under the Trade Creditor Lien Documents or any applicable law.

                       (b) Nothwithstanding anything to the contrary in this
         Agreement or in the Trade Creditor Lien Documents, (i) the Collateral
         Trustee shall have no rights, power or authority with respect to the
         Guaranty which are greater than the rights, power or authority that
         would have been conferred upon the Approved Trade Creditors if this
         Guaranty had been made in favor of the Approved Trade Creditors, and
         (ii) the Collateral Trustee has only the rights, powers and authority
         conferred upon the Collateral Trustee under the terms of the
         Collateral Trust Agreement.

                  9. Binding Effect. Neither the Collateral Trustee nor the
Approved Trade Creditors may assign their rights and/or duties hereunder
without the prior written consent of the Guarantors given at the Guarantors'
sole discretion, except as provided in the Letter Agreements, it being
understood that any such assignee's rights with respect to the Collateral and
this Guaranty Agreement shall be limited as set forth herein. Any other
attempted assignment by any Approved Trade Creditor without the Guarantors'
prior written consent, other than as set forth in the immediately preceding
sentence, shall be void and shall void such Approved Trade Creditor's
participation in the Program (as defined in the applicable Letter Agreement)
in accordance with the applicable Letter Agreement. This Guaranty Agreement is
binding upon each Guarantor, and its successors and assigns

                  10. Contribution and Indemnification. To the extent that any
Guarantor shall repay any of the Guaranteed Obligations (any such payment
hereinafter being called an "Accommodation Payment") then the Guarantor making
such Accommodation Payment shall be entitled to contribution and
indemnification from, and be reimbursed by, each of the other Guarantors
hereunder in an amount, for each of such other Guarantors, equal to a fraction
of such Accommodation Payment, the numerator of which fraction is such other
Guarantor's Allocable Amount (as defined below) and the denominator of which
is the sum of the Allocable Amounts of all of the Guarantors. As of any date
of determination, the "Allocable Amount" of each Guarantor shall be equal to
the maximum amount of liability for Accommodation Payments which could be
asserted against such Guarantor hereunder without (a) rendering such Guarantor
"insolvent" within the meaning of Section 101 (31) of the Bankruptcy Code,
Section 2 of the Uniform Fraudulent Transfer Act ("UFTA") or Section 2 of the
Uniform Fraudulent Conveyance Act ("UFCA"), (b) leaving such Guarantor with
unreasonably small capital or assets, within the meaning of Section 548 of the
Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the UFCA, or (c)
leaving such Guarantor unable to pay its debts as they become due within the
meaning of Section 548 of the Bankruptcy Code or Section 4 of the UFTA, or
Section 5 of the UFCA. All rights and claims of contribution, indemnification,
and reimbursement under this paragraph shall be subordinate in right of
payment to the prior payment in full of the Guaranteed Obligations. The
provisions of this paragraph shall, to the extent expressly inconsistent with
any provision in any Trade Creditor Lien Document, supersede such inconsistent
provision.

                  11. Invalid Provisions. If any provision of this Guaranty
Agreement is held to be illegal, invalid, or unenforceable under present or
future laws effective during the term hereof, such provision shall be fully
severable, this Guaranty Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part
hereof, and the remaining provisions hereof shall remain in full force and
effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance herefrom. Furthermore, in lieu of such illegal,
invalid, or unenforceable provision there shall be added automatically as a
part of this Guaranty Agreement a provision as similar in terms to such
illegal, invalid, or unenforceable provision as may be possible and be legal,
valid, and enforceable. Notwithstanding any language to the contrary contained
herein, no provision herein or in any other Trade Creditor Lien Document
evidencing the Guaranteed Obligations shall require the payment or permit the
collection of interest in excess of the maximum permitted by any applicable
law.

12.      Modifications; Termination.

                       (a) No modification, consent, amendment, or waiver of
         any provision of this Guaranty Agreement, and no consent to any
         departure by any Guarantor herefrom, shall be effective unless the
         same shall be in writing and signed by a duly authorized officer of
         the Collateral Trustee and, as to any modification or amendment, the
         Guarantors, and then shall be effective only in the specific instance
         and for the specific purpose for which given; provided that
         notwithstanding anything to the contrary set forth herein, (i) this
         Guaranty Agreement may be terminated as provided below in this
         paragraph 12 and (ii) this Guaranty Agreement may be amended or
         otherwise modified from time to time (A) as provided in the
         Intercreditor Agreement and (B) by notice from any Guarantor to the
         Collateral Trustee and the Trust Board (except that no such
         modification or termination under this clause (ii)(B) that adversely
         affects the Collateral Trustee or the Approved Trade Creditors in any
         material respect shall be effective as to any guaranty hereunder of
         any Guaranteed Obligations outstanding at the time of such notice
         unless agreed to in writing by the Collateral Trustee).

                       (b) Upon the payment in full of all Guaranteed
         Obligations under the Letter Agreements this Guaranty Agreement shall
         automatically terminate.

                       (c) The guaranties hereunder shall cease to apply to
         any Guaranteed Obligations to an Approved Trade Creditor to the
         extent such Guaranteed Obligations cease to be secured under the
         Security Agreement in accordance with the terms of any Letter
         Agreement with such Approved Trade Creditor.

                       (d) The guaranty hereunder of any Guarantor shall
         automatically terminate if and when such Guarantor is conveyed, sold
         or otherwise transferred or disposed of in accordance with the terms
         of the Senior Credit Agreement, the Senior Security Agreements or the
         Intercreditor Agreement.

         Upon any termination of this Guaranty Agreement, Collateral Trustee
will, at Guarantors' expense, execute and deliver to Guarantors such documents
as any Guarantor shall reasonably request to evidence such termination.

                  13. Governing Law; Choice of Forum: Service of Process.

                       (a) THIS GUARANTY AGREEMENT SHALL BE INTERPRETED AND
         THE RIGHTS AND LIABILITIES OF THE GUARANTORS, THE COLLATERAL TRUSTEE,
         AND THE APPROVED TRADE CREDITORS SHALL BE DETERMINED IN ACCORDANCE
         WITH THE LAWS OF THE STATE OF NEW YORK.

                       (b) ALL JUDICIAL PROCEEDINGS ARISING OUT OF OR RELATING
         TO THIS GUARANTY AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE
         BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN
         THE STATE OF GEORGIA, CHATHAM COUNTY OR THE STATE OF NEW YORK, NEW
         YORK COUNTY. BY EXECUTING AND DELIVERING THIS GUARANTY AGREEMENT,
         GUARANTOR, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
         IRREVOCABLY (I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
         NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES ANY
         DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL
         PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY
         REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH
         GUARANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH PARAGRAPH 14;
         (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
         SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH GUARANTOR IN ANY
         SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
         EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (V) AGREES THAT
         COLLATERAL TRUSTEE RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER
         MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH
         GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION.

                  14. Notices. Unless otherwise specifically provided in this
Guaranty Agreement, all notices or other communications required or permitted
to be given under this Guaranty Agreement shall be given as specified in the
Collateral Trust Agreement.

                  15. Survival. All representations, warranties, covenants,
and agreements of each Guarantor in this Guaranty Agreement shall survive the
execution of this Guaranty Agreement.

                  16. Counterparts. This Guaranty Agreement may be executed in
any number of counterparts, each of which shall constitute an original, but
all of which when taken together shall constitute one and the same Guaranty
Agreement. A telecopy of any such executed counterpart shall be deemed valid
as an original.

                  17. Litigation: Waiver of Trial by Jury. GUARANTORS AND
COLLATERAL TRUSTEE HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
GUARANTY AGREEMENT. The scope of this waiver is intended to be
all-encompassing of any and all disputes that may be filed in any court and
that relate to the subject matter of this transaction, including without
limitation contract claims, tort claims, breach of duty claims, and all other
common law and statutory claims. Guarantors and Collateral Trustee acknowledge
that this waiver is a material inducement for Guarantors and Collateral
Trustee to enter into a business relationship, that Guarantors and Collateral
Trustee have already relied on this waiver in entering into this Agreement and
that each will continue to rely on this waiver in their related future
dealings. Guarantors and Collateral Trustee further warrant and represent that
each has reviewed this waiver with its legal counsel, and that each knowingly
and voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER
SPECIFICALLY REFERRING TO THIS PARAGRAPH 17 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY AGREEMENT. In the
event of litigation, this Guaranty Agreement may be filed as a written consent
to a trial by the court.

                  18. Headings. The paragraph headings in this Guaranty
Agreement are for convenience of identification only and do not limit any of
the provisions hereof.

                  19. Consideration. Each Guarantor acknowledges and expressly
agrees with the Collateral Trustee and each Approved Trade Creditors that the
execution and delivery of this Guaranty Agreement by such Guarantor is
required solely as a condition to, and is given solely as inducement for and
in consideration of, credit or accommodations extended or to be extended under
the Trade Creditor Lien Documents to any or all of Company and is not required
or given as a condition of any extensions of credit to such Guarantor.

                 [Remainder of page intentionally left blank]



<PAGE>



         IN WITNESS WHEREOF, the undersigned have executed this Guaranty
Agreement as of the effective date specified in the introductory paragraph
hereinabove.

                                    THE GUARANTORS:
                                    --------------

                                    FRIEDMAN'S FLORIDA PARTNERSHIP

                                    By      Friedman's Management Corp., its
                                            managing partner

                                           By:   /s/ C. Steven Moore
                                              ---------------------------------
                                              Name:  C. Steven Moore
                                              Title:


                                    FI STORES LIMITED PARTNERSHIP

                                    By:     Friedman's Inc., its general partner


                                           By:   /s/ C. Steven Moore
                                              ---------------------------------
                                              Name:  C. Steven Moore
                                              Title:


                                    FRIEDMAN'S HOLDING CORP.

                                    By:   /s/ C. Steven Moore
                                       ---------------------------------
                                       Name:  C. Steven Moore
                                       Title:


                                    FRIEDMAN'S MANAGEMENT CORP.

                                    By:   /s/ C. Steven Moore
                                       ---------------------------------
                                       Name:  C. Steven Moore
                                       Title:


<PAGE>

                                    FCJV HOLDING CORP.

                                    By:   /s/ C. Steven Moore
                                       ---------------------------------
                                       Name:  C. Steven Moore
                                       Title:


                                    FCJV, L.P.

                                    By:   FCJV Holding Corp., its general
                                          partner

                                    By:   /s/ C. Steven Moore
                                       ---------------------------------
                                       Name:  C. Steven Moore
                                       Title:


                                    FRIEDMAN'S INVESTMENTS LLC

                                    By:   /s/ C. Steven Moore
                                       ---------------------------------
                                       Name:  C. Steven Moore
                                       Title:


                                    FRIEDMAN'S BENEFICIARY INC.

                                    By:   /s/ C. Steven Moore
                                       ---------------------------------
                                       Name:  C. Steven Moore
                                       Title:


</TEXT>
</DOCUMENT>
