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<FILENAME>y89133exv10w3.txt

<DESCRIPTION>WAIVER AND 3RD AMENDMENT TO A/R CREDIT AGREEMENT

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               WAIVER AND THIRD AMENDMENT TO AMENDED AND RESTATED

                                CREDIT AGREEMENT



      THIS WAIVER AND THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

("Amendment"), dated as of May 15, 2003 (the "Amendment Date"), is among

Friedman's, Inc., a Delaware corporation, each of its Subsidiaries party hereto,

Bank of America, N.A. (in its capacity as administrative agent for the Lenders),

and each of the lending institutions party hereto.



                                    RECITALS:



      A. The Credit Parties, the Lenders, and the Agent have entered into that

certain Amended and Restated Credit Agreement dated as of August 28, 2002 (as

amended, the "Credit Agreement") pursuant to which the Lenders have provided

certain credit facilities to the Borrowers.



      B. The Credit Parties have requested that the Lenders amend certain

provisions of the Credit Agreement and waive certain Events of Default under the

Credit Agreement as provided hereinbelow.



      C. Subject to satisfaction of the conditions set forth herein, the Lenders

are willing to amend the Credit Agreement and provide the requested waiver of

Events of Default as specifically provided herein.



      NOW, THEREFORE, BE IT RESOLVED, THAT, in consideration of the premises

herein contained and other good and valuable consideration, the receipt and

sufficiency of which are hereby acknowledged, the parties hereto hereby agree as

follows:



                                    ARTICLE 1



                                   Definitions



      Section 1.1 Definitions. Capitalized terms used in this Amendment, to the

extent not otherwise defined herein, shall have the same meanings as in the

Credit Agreement, as amended hereby.



                                    ARTICLE 2



                           Waiver of Events of Default



      Section 2.1 Waiver of Events of Default. The Credit Parties have failed to

deliver (a) on or before December 26, 2002, the terminations, releases, and UCC

amendments prescribed by clause (o) of the definition of "Permitted Liens" set

forth in the Credit Agreement which has resulted in a breach of the covenant

contained in Section 7.2 of the Credit Agreement and an Event of Default

pursuant to Section 8.1(c)(i) of the Credit Agreement, (b) on or before December

26, 2002, the terminations, releases, and UCC amendments prescribed by clause

(c) of paragraph 1 of the certain Postclosing Agreement dated as of the Closing

Date among the original parties to the Credit Agreement (as amended or otherwise

modified from time to time, the "Postclosing Agreement") which is an Event of

Default pursuant to the Postclosing Agreement, and (c) on or before November 26,

2002, the agreements prescribed by clause (d) of paragraph 1 of the Postclosing

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Agreement which is an Event of Default pursuant to the Postclosing Agreement

(the Events of Default described in clause (a), clause (b), and clause (c)

preceding being referred to herein collectively as the "Specified Defaults").

The Credit Parties have requested that the Lenders waive the Specified Defaults.

Effective as of the Amendment Date, and subject to the conditions precedent and

other terms of this Amendment, the requisite Lenders hereby waive the Specified

Defaults.



                                    ARTICLE 3



                                   Amendments



      Section 3.1 Amendment to Section 1.1 of the Credit Agreement. Effective as

of the Amendment Date, the definition of "Reserves" in Section 1.1 of the Credit

Agreement is hereby amended by: (a) deleting the word "and" at the end of clause

(g); (b) replacing the period at the end of clause (h) with a semi-colon and the

word "and"; and (c) inserting a new clause (i) which shall read in its entirety

as follows:



            (i) reserves for accounts payable owing to any Person pursuant to a

      transaction whereby a Borrower has transferred, converted, or otherwise

      reclassified consigned inventory, unless the Borrowers have delivered to

      the Agent an executed release letter from such Person, in substantially

      the form of Exhibit F or otherwise in form and substance satisfactory to

      the Agent in its sole discretion.



      Section 3.2 Addition of Section 5.23 to the Credit Agreement. Effective as

of the Amendment Date, the Credit Agreement is hereby amended to add Section

5.23 to the Credit Agreement, which shall read in its entirety as follows:



            Section 5.23 Tax Shelter Regulations. No Credit Party intends to

      treat the Loans and/or Letters of Credit and related transactions as being

      a "reportable transaction" (within the meaning of Treasury Regulation

      Section 1.6011-4). In the event any Credit Party determines to take any

      action inconsistent with such intention, such Credit Party will promptly

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