DEVELOPMENT AGREEMENT



         THIS DEVELOPMENT AGREEMENT ("Agreement"), dated as of this 1st day of

November, 2002, between the SAVANNAH ECONOMIC DEVELOPMENT AUTHORITY, a public

body corporate and politic and an instrumentality of the State of Georgia,

created and existing under the Constitution and Laws of the State of Georgia,

having an office at 8001 Chatham Center Drive, Suite 300, Savannah, GA 31405

("SEDA"), and FRIEDMAN'S INC., a Delaware Corporation, having its main office at

4 West State Street, Savannah, GA 31401 ("Lessee").



         SEDA is the owner of certain real property consisting of 5.893 acres

located in the City of Savannah, Chatham County, Georgia, more particularly

described on Exhibit A attached hereto and made a part hereof by this reference

("the Property"), which is a part of a larger development known as Crossroads

Business Center ("Crossroads"). SEDA has agreed to construct a corporate office

building/distribution facility approximately 40,000 square feet, together with

ancillary improvements on the Property (referred to herein together with the

Property as the "Project") for use by Lessee. SEDA will lease the Project to

Lessee pursuant to a Lease Agreement (the "Lease") to be entered into between

the parties. In consideration of the commitment of SEDA to lease the Project to

Lessee and carry out its other obligations hereunder, Lessee, subject to the

terms and conditions hereof, will indemnify SEDA as hereinafter set forth.



         SEDA desires to appoint Lessee as SEDA's agent for the construction and

equipping of the Project pursuant to the terms of this Development Agreement,

and Lessee has agreed to perform such construction work on behalf of SEDA.



         NOW, THEREFORE, in consideration of the mutual covenants and agreements

herein contained and the satisfaction of all contingencies, SEDA and Lessee

agree as follows:



1.       Description of Project. Subject to the terms and conditions of this

         Agreement Lessee intends to use the Project as a corporate office

         building/distribution facility. The Project contains the following

         estimates:



                  a. Lessee will begin construction during the Third Quarter

         2002 and intends to be operational in Third Quarter 2003. Estimated

         investment is $4,500,000.



                  b. Lessee intends to retain approximately 200 employees and

         between 2002 and 2004 create approximately fifty (50) professional

         managers, technicians, warehousemen and technical support level

         employee positions. Additional employees may be added during peak

         times.



                  c. Lessee intends to utilize Georgia's port facilities for its

         shipping needs whenever practical and competitive;





                                       1

{PAGE}

                  d.  Lessee intends to purchase from and subcontract with local

         vendors where economically viable and competitively priced.



2.       Lease. SEDA will lease the Property and the Project to Lessee pursuant

to the Lease, to be entered into between the parties, on the date hereof.

Pursuant to the terms of the Lease, SEDA will hold title to the Project and

lease the same to Lessee for a base term of ten years and which may be extended

by mutual agreement of the Parties. The Lease may be terminated at any time by

Lessee and, upon such termination, the Project shall be conveyed by SEDA to

Lessee for no additional consideration. The parties agree that during the term

of the Lease, although the Property and the Project shall be titled in SEDA,

Lessee shall be treated as the owner of the Project for federal and state income

taxation purposes. During the term of the Lease and subject to the more

particular terms of the Lease, Lessee or its designee will make payments (the

`Additional Rent") to SEDA on January 1 in the years and amounts as follows:



{TABLE}

{CAPTION}

              January 1       Additional

             of the year        Rent(1)

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

{S}                           {C}

              2003-2005        $     0

                2006             9,908

                2007            16,513

                2008            23,119

                2009            29,724

                2010            36,329

                2011            42,935

                2012            49,540

        2013 and thereafter.        (2)

{/TABLE}





(1) Fixed amounts payable for investment in the Project through the Term of the

    Lease.



(2) Amount to be determined by A Certified Public Accountant agreeable to SEDA

    in an amount equal to what ad valorem taxes would be if the Project were

    owned by Lessee.



         No other lease payment will be required (other than payment for Lot 1A

described below, the hereinafter described Base Rent and any applicable

indemnity payments).



3.       Requirements Relating to Lot 1A. That portion of the Property shown on

Exhibit B as Lot 1A consists of 1.08 ACRES and shall be maintained as attractive

green space by Lessee and its assigns until such time as Lessee or its assigns

shall elect to construct improvements of any type thereon, including surface

parking. Prior to construction of any such improvements Lessee or its assigns

shall notify SEDA in writing of its election to construct such improvements and

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