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                                                                   EXHIBIT 10.8


                               SECURITY AGREEMENT


      This AGREEMENT made as of the 14th day of July, 1997 is between Friedman's
Inc., a Delaware business corporation (the "Debtor") with its chief executive
office and principal office at 4 West State Street, Savannah, Georgia 31401 and
ABN AMRO Bank N.V., a bank organized under the laws of the Netherlands acting
through its New York Branch located at 500 Park Avenue, New York, New York 10022
(the "Secured Party").

      WHEREAS, the Debtor and the Secured Party have entered into a Consignment
Agreement and Loan Agreement each dated on or about the date hereof, as the same
may be amended from time to time (the "Consignment Agreement" and "Loan
Agreement" respectively) pursuant to which the Secured Party may deliver
precious metal on consignment for sale to the Debtor (hereinafter collectively
referred to as the "Precious Metal") and pursuant to which the Secured Party may
make advances to the Debtor;

      WHEREAS, the Secured Party desires to protect its interest in the Precious
Metal and the payment therefor; and

      WHEREAS, the Secured Party desires to obtain security for the payment and
performance of all indebtedness, liabilities and obligations of the Debtor to
the Secured Party, now existing or hereafter arising under the Consignment
Agreement and the Loan Agreement and the Debtor is willing to grant such
security interest to the Secured Party on the terms and conditions hereinafter
set forth;

      NOW, THEREFORE, for good and valuable consideration, the receipt whereof
is hereby acknowledged, the parties hereto agree as follows:


SECTION 1.               THE SECURITY INTEREST.

      In order to secure the due and punctual payment and performance of all the
obligations of the Debtor contained in the Consignment Agreement and the Loan
Agreement and any related security instruments, including but not limited to,
the due and punctual payment and performance of all present and future
indebtedness, liabilities and obligations of the Debtor to the Secured Party as
evidenced by the Consignment Agreement and Loan Agreement, and all notes
executed in connection therewith and any related security instruments, of every
kind and description, direct, indirect or contingent, now or hereafter existing,
due or to become due, including the obligations of the Debtor hereunder and the
obligations of the Debtor relating to bankers acceptances, overdrafts, loans and
the unpaid purchase price for gold and other precious metal (all hereinafter
called the "Obligations"), the Debtor hereby grants to the Secured Party a
continuing security interest in the following described property of the Debtor
(hereinafter called the "Collateral"):


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                  (a) all of Debtor's inventory, whether now owned or hereafter
         acquired by Debtor and wherever located, including, but not limited to,
         all goods intended for sale or lease by Debtor, or for display or
         demonstration including without limitation, all gold and other precious
         metal and precious stones and gems (including, without limitation,
         diamonds) in whatever form and all products in which any such gold,
         precious metal and precious stones and gems are incorporated or into
         which such gold, precious metal and precious stones and gems are
         processed or converted, including without limitation, bullion, alloys
         or wire; all work in process; all raw materials and other materials and
         supplies of every nature and description used or which might be used in
         connection with the manufacture of such goods or otherwise used or
         consumed in Debtor's business; and all documents evidencing choses in
         action, causes of action, books and records, all rights to
         indemnification, licenses, and customer lists relating to any of the
         foregoing; (b) all accounts, contract rights, chattel paper,
         instruments and documents, whether now owned or hereafter created or
         acquired by Debtor or in which Debtor now has or hereafter acquires any
         interest; and all documents evidencing choses in action, causes of
         action, books and records, computer equipment, and customer lists
         relating to any of the foregoing (the "Accounts"); (c) all monies and
         other property or assets, whether real, personal or mixed, or tangible
         or intangible, of any kind, now or at any time or times hereafter, in
         the possession or under the control of Secured Party or a bailee of
         Secured Party; (d) all accessions to, substitutions for and all
         replacements, products and cash and non-cash proceeds of (a), (b) and
         (c) above, including, without limitation, proceeds of and unearned
         premiums with respect to insurance policies insuring any of the
         Collateral; and (e) all books and records (including, without
         limitation, customer lists, credit files, computer programs, printouts,
         and other computer materials and records) of Debtor pertaining to any
         of (a), (b), (c) or (d) above and all chattel paper pertaining to any
         of (a), (b), (c) or (d) above.

         The security interests granted pursuant to this Section 1 (the
"Security Interests") are granted as security only and shall not subject the
Secured Party to, or transfer or in any way affect or modify, any obligation or
liability of the Debtor under any of the Collateral or any transaction which
gave rise thereto.


SECTION 2.               FILING; FURTHER ASSURANCES.

         The Debtor will, at its expense, execute, deliver, file and record (in
such manner and form as the Secured Party may require), or permit the Secured
Party to file and record, any financing statements, specific assignment or other
paper that may be necessary or desirable, or that the Secured Party may request,
in order to create, preserve, perfect or validate any Security Interest or to
enable the Secured Party to exercise and enforce its rights hereunder with
respect to any of the Collateral. The Secured Party may at any time or from time
to time, at its sole discretion, require the Debtor to cause any chattel paper
to be delivered to the Secured Party, or any agent or representative designated
by it, or to cause a legend referring to the Security Interests to be placed on
such chattel paper and upon any ledgers or other records concerning such
Collateral.

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SECTION 3.               REPRESENTATIONS AND WARRANTIES OF DEBTOR.

         The Debtor hereby represents, warrants and covenants as follows:

                  A. That, except for the Security Interests, the Debtor is, or
         to the extent that certain of the Collateral is to be acquired after
         the date hereof will be, the owner of the Collateral free from any
         adverse lien, security interest or encumbrance, and that the Debtor
         will defend the Collateral against all claims and demands of all
         persons at any time claiming any interest therein.

                  B. That no financing  statement  covering the  Collateral is 
         on file in any public  office, other than the financing statements 
         filed pursuant to this Security Agreement.

                  C. That the Debtor will promptly pay any and all taxes,
         assessments and governmental charges upon the Collateral prior to the
         date penalties are attached thereto, except to the extent that such
         taxes, assessments and charges shall be contested in good faith by such
         Debtor in appropriate proceedings. Such amount which is being contested
         shall be fully reserved on the financial statements of the Debtor.

                  D. That the Debtor will immediately notify the Secured Party
         of any event causing a substantial loss or diminution in the value of
         all or any material part of the Collateral and the amount or an
         estimate of the amount of such loss or diminution.

                  E. The Debtor will not sell or offer to sell or otherwise
         transfer or dispose of the Collateral or any interest therein without
         the written consent of the Secured Party; provided, however, that as
         long as no Event of Default has occurred and is continuing and subject
         to the terms of the Consignment Agreement or Loan Agreement, the Debtor
         may, without the consent of the Secured Party (i) sell its inventory in
         the ordinary course of its business and (ii) sell or otherwise dispose
         of obsolescent items of equipment in the ordinary course of business
         consistent with past practices.

                  F. That except as otherwise provided herein, the Debtor will
         keep the Collateral free from any adverse lien, security interest or
         encumbrance and in good order and repair and will not waste or destroy
         the Collateral or any part thereof; and the Debtor will not use the
         Collateral in violation of any statute or ordinance.


SECTION 4.               RECORDS RELATING TO COLLATERAL.

         The Debtor will keep its records concerning the Collateral, including
its Accounts and all chattel paper included in the accounts, at its principal
office at 4 West State Street, Savannah, Georgia 31401 or at such other place or
places of business as the Secured Party may approve in writing. The Debtor will
hold and preserve such records and chattel paper and will permit representatives
of the Secured Party at any time during normal business hours to examine and
inspect the Collateral and to take abstracts from such records and


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chattel paper, and will furnish to the Secured Party such information and
reports regarding the Collateral as the Secured Party may from time to time
reasonably request.


SECTION 5.               COLLECTIONS WITH RESPECT TO CUSTOMER RECEIVABLES.

         The Debtor will, at its expense, as agent for the Secured Party and
subject at all times to the Secured Party's right to give directions and
instructions:

                  (i)   endeavor to collect or cause to be collected from
         customers indebted on any Accounts, as and when due, any and all
         amounts, including interest, owing under or on account of each Account;

                  (ii)  compromise and settle any dispute relating to any 
         Account; and

                  (iii) take or cause to be taken such appropriate action to
         repossess goods, the sale of which gave rise to any Account, or to
         enforce any rights or liens under the Accounts, as the Debtor or the
         Secured Party may deem proper, and in the name of the Debtor, or the
         Secured Party, as the Secured Party may deem proper; provided that (x)
         in the absence of specific instructions from the Secured Party, the
         Debtor will use its best judgment to protect the interests of the
         Secured Party, and (y) the Debtor shall not be required under this
         Section 5 to take any action which would be contrary to any applicable
         law or court order. Prior to the occurrence of an Event of Default, the
         Debtor is authorized to retain all amounts collected by it and all
         goods returned or repossessed pursuant to this Section 5 and to apply
         such amounts and dispose of such goods in the ordinary course of its
         business. Immediately upon the occurrence of any Event of Default and
         thereafter so long as any Event of Default is continuing, all amounts
         held or collected by the Debtor pursuant to this Section 5 and all
         goods held or returned to or repossessed by the Debtor pursuant to this
         Section 5 shall be held by it in trust for the benefit of the Secured
         Party and paid over or delivered to such persons as the Secured Party
         may direct.


SECTION 6.               GENERAL AUTHORITY.

         The Debtor hereby irrevocably appoints the Secured Party, and each of
its officers, the Debtor's true and lawful attorney, with full power of
substitution, in the name of the Debtor, the Secured Party or otherwise, but at
the Debtor's expense, to the extent permitted by law to exercise, upon ten (10)
days' prior written notice, at any time and from time to time while any Event of
Default has occurred and is continuing, all or any of the following powers with
respect to all or any of the Collateral:

                  (i) to demand, sue for, collect, receive and give acquittance 
         for any and all monies due or to become due upon or by virtue thereof;


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                  (ii) to receive, take, endorse, assign and deliver any and all
         checks, notes, drafts, documents and other negotiable and
         non-negotiable instruments and chattel paper taken or received by the
         Secured Party in connection therewith;

                 (iii) to settle, compromise, compound, prosecute or defend any 
         action or  proceeding  with respect thereto;

                  (iv) to sell, transfer, assign or otherwise deal in or with
         the same or the proceeds or avails thereof or the related goods
         securing the Accounts, as fully and effectually as if the Secured Party
         were the absolute owner thereof;

                   (v) to extend the time of  payment of any or all thereof and 
         to make any allowance and other adjustments with reference thereto;

                  (vi) to discharge any taxes, liens, security interests or 
         other  encumbrances  at any time placed thereon; and

                 (vii) to receive any and all mail addressed to any Debtor;

provided that the Secured Party shall give the Debtor not less than ten (10)
days' prior written notice of the time and place of any sale or other intended
disposition of any of the Collateral, except any Collateral which is perishable
or threatens to decline speedily in value or is of a type customarily sold on a
recognized market. The Secured Party and the Debtor agrees that such notice
constitutes "reasonable notification" within the meaning of Section 9-504(3) of
the Uniform Commercial Code.


SECTION 7.               EVENTS OF DEFAULT.

         The Debtor shall be in default under this Security Agreement upon the
occurrence of any one of the following events (herein referred to as an "Event
of Default"):

                  (a) any representation or warranty made herein shall prove to
         be false or misleading in any material respect;

                  (b) default by any Debtor in the due observance or performance
         of any covenant or agreement herein contained and such default shall
         continue unremedied for ten (10) days after written notice thereof by
         the Secured Party to the Debtor;

                  (c) the occurrence of any Event of Default under the
         provisions of the Consignment Agreement or the Loan Agreement, as
         the same may be amended from time to time;

                  (d) any attachment on any of the Collateral shall remain in
         existence for a period of thirty (30) days from the date such
         attachment was made; or

                  (e) the occurrence of any other event of default under any of
         the Obligations.



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SECTION 8.               REMEDIES UPON EVENT OF DEFAULT.

         If any Event of Default shall have occurred and be continuing, the
Secured Party, may exercise all the rights and remedies of a secured party under
the Uniform Commercial Code (whether or not the Code is in effect in the
jurisdiction where such rights and remedies are exercised) and any and all other
remedies and rights at law or equity and, in addition, the Secured Party may,
without being required to give any notice, except as herein provided or as may
be required by mandatory provisions of law, (i) apply the cash, if any, then
held by it as Collateral in the manner specified in Section 9, and (ii) if there
shall be no such cash or if such cash shall be insufficient to pay all the
Obligations in full, sell the Collateral, or any part thereof, at public or
private sale or at any broker's board, for cash, upon credit or for future
delivery, and at such price or prices as the Secured Party may deem
satisfactory. The Secured Party may require the Debtor to assemble all or part
of the Collateral and make it available to the Secured Party at a place to be
designated by the Secured Party which is reasonably convenient. The Secured
Party may be the purchaser of any or all of the Collateral so sold at any public
sale (or, if the Collateral is of a type customarily sold in a recognized market
or is a type which is the subject of widely distributed standard price
quotations, at any private sale), and may apply all or any portion of the
Obligations towards the payment for any Collateral purchased by the Secured
Party, and may thereafter hold the same, absolutely, free from any right or
claim of whatsoever kind. Upon any such sale the Secured Party shall have the
right to deliver, assign and transfer to the purchaser thereof the Collateral so
sold. Each purchaser at any such sale shall hold the Collateral so sold
absolutely, free from any claim or right of whatsoever kind, including any
equity or right of redemption of the Debtor, which to the extent permitted by
law hereby specifically waives all rights of redemption, stay or appraisal which
it has or may have under any rule of law or statute now existing or hereafter
adopted. The Secured Party shall give ten (10) days' written notice of its
intention to make any such public or private sale or sale at a broker's board.
Such notice, in case of a public sale, shall state the time and place fixed for
such sale, and in case of a sale at a broker's board, shall state the board at
which such sale is to be made and the day on which the Collateral, or a portion
thereof so being sold, will first be offered for sale at such board. Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Secured Party may fix in the notice of such
sale. At any such sale the Collateral may be sold in one lot as an entirety or
in separate parcels, as the Secured Party may determine. The Secured Party shall
not be obligated to make any such sale pursuant to any such notice. The Secured
Party may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time or place to
which the same may be so adjourned. In case of any sale of all or any part of
the Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Secured Party until the selling price is paid by the purchaser
thereof, but the Secured Party shall not incur any liability in case of the
failure of such purchaser to take up and pay for the Collateral so sold and, in
case of any such failure, such Collateral may again be sold upon like notice.
The Secured Party, instead of exercising the power of sale herein conferred upon
it, may proceed by a suit or suits at law or in equity to foreclose the Security
Interests and sell the Collateral, or any portion thereof, under a judgment or
decree of a court or courts of competent jurisdiction. For purposes of


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exercising the rights and powers granted to the Secured Party in this Section 8
or by applicable law, and until all Obligations are satisfied in full, the
Debtor hereby grants to the Secured Party an irrevocable license to use all
trademarks and tradenames (and to sell goods bearing any such trademark or
tradename), registered or unregistered, which are now or hereafter owned by or
licensed to the Debtor or in which the Debtor now has or hereafter acquires any
interest.


SECTION 9.               APPLICATION OF PROCEEDS.

         The proceeds of any sale of, or other realization upon, all or any part
of the Collateral shall be applied in the following order of priorities:

                           first, to pay the expenses of such sale or other
         realization, including out-of-pocket expenses of the Secured Party and
         reasonable fees and expenses of its agents and counsel, and all
         expenses, liabilities and advances incurred or made by the Secured
         Party in connection therewith, and any other unreimbursed expenses for
         which the Secured Party is to be reimbursed pursuant to Section 10;

                           second, apply all proceeds hereunder, (except
         proceeds applied pursuant to clause first above) to the payment of the
         Obligations in such order as the Secured Party shall determine; and

                           finally, to pay to the Debtor, or its successors or
         assigns, or as a court of competent jurisdiction may direct, any
         surplus then remaining from such proceeds.


SECTION 10.              EXPENSES.

         The Debtor will forthwith upon a default under the Consignment
Agreement or Loan Agreement and upon demand pay to the Secured Party:

                  (i)  the amount of any taxes which the Secured Party may have
         been required to pay by reason of the Security Interests (including any
         applicable transfer taxes) or to free any of the Collateral from any
         lien thereon; and

                  (ii) the amount of any and all reasonable out-of-pocket
         expenses, including the reasonable fees and disbursements of its
         counsel and of any agents not regularly in its employ, which the
         Secured Party may incur in connection with (w) the preparation and
         administration of this Security Agreement and related documents, (x)
         the collection, sale or other disposition of any of the Collateral, (y)
         the exercise by the Secured Party of any of the powers conferred upon
         it hereunder, or (z) any default on the Debtor's part hereunder.


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SECTION 11.              NONABATEMENT OF SECURITY INTERESTS.

         The Security Interests granted hereby shall not abate or lapse, but
shall continue in full force and effect so as to secure all liabilities,
obligations or indebtedness of the Debtor to the Secured Party, whether now
existing or hereafter arising, without regard to whether any or no such
liability, obligation or indebtedness shall be outstanding at any particular
time.

         Upon termination of the Consignment Agreement and Loan Agreement and
satisfaction in full of all Obligations the Secured Party will send to the
Debtor termination statements for all Uniform Commercial Code financing
statements of record filed by it hereunder.


SECTION 12.              RIGHT OF SET-OFF.

         In furtherance and not in limitation of any provisions herein
contained, the Debtor hereby agrees that any and all deposits or other sums at
any time held by the Secured Party or claimed by or due from the Secured Party
to the Debtor shall at all times constitute security for the Obligations, and
the Secured Party may apply or set-off such deposits or other sums against the
Obligations upon a default under the Consignment Agreement or Loan Agreement.


SECTION 13.              NOTICES.

         All notices, communications and distributions hereunder shall be given
or made to the following parties at the following addresses:

         (i)      if to the Debtor, to it at

                         Friedman's Inc.
                         4 West State Street
                         Savannah, Georgia  31401
                         Attention:  Mr. Stuart Clifford
                         Telecopy:  (901) 383-2728

         (ii)     if to the Secured Party, to it at

                         ABN AMRO Bank N.V.                    
                         New York Branch                       
                         500 Park Avenue                       
                         New York, New York  10022             
                         Attention: Mr. Jeffrey Sarfaty 
                         Telecopy:  (212) 644-6905             
                          

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or in any of the foregoing cases at such other address as the addressee may
hereafter specify for the purposes by written notice to the other party hereto.
Such notices and other communications will be effectively given only if and when
given in writing and delivered at the address set forth in this Section 13 or
duly deposited in the mails with first class postage prepaid, or transmitted by
facsimile transmission ("FAX") or delivered by a telegraph company with all
charges prepaid, addressed as aforesaid.


SECTION 14.              WAIVERS, NON-EXCLUSIVE REMEDIES.

         No failure on the part of the Secured Party to exercise, and no delay
in exercising, and no course of dealing with respect to, any right, power or
remedy under this Security Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise by the Secured Party of any right, power or
remedy under this Security Agreement preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. The remedies in
this Security Agreement are cumulative and are not exclusive of any other
remedies provided by law.


SECTION 15.              CHANGES IN WRITING.

         Neither this Security Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally but only by a statement in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.


SECTION 16.              GEORGIA LAW; MEANING OF TERMS.

         This Security Agreement shall be construed in accordance with and
governed by the laws of the State of Georgia, except to the extent that remedies
provided by the laws of any State other than Georgia are governed by the laws of
said State. Unless otherwise defined herein, or unless the context otherwise
requires, all terms used herein which are defined in the Georgia Uniform
Commercial Code shall have the meanings therein stated.


SECTION 17.              SEVERABILITY.

         If any provision hereof is invalid or unenforceable in any
jurisdiction, the other provisions hereof shall remain in full force and effect
in such jurisdiction and shall be construed in order to carry out the intentions
of the parties hereto as nearly as may be possible; and the invalidity or
unenforceability of any provision hereof in any jurisdiction shall not affect
the validity or enforceability of such provision in any other jurisdiction.


SECTION 18.              HEADINGS.

         The headings in this Security Agreement are for the purposes of
reference only and shall not limit or otherwise affect the meaning hereof.


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SECTION 19.              PARTIES IN INTEREST.

         All the terms and provisions of this Security Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto, whether so expressed or not.


SECTION 20.              COUNTERPARTS.

         This Security Agreement may be executed simultaneously with one or more
counterparts thereof, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.


SECTION 21.              CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.

         The Debtor and the Secured Party hereby submit to the jurisdiction of
the courts of the State of Georgia for Fulton County and the United States
District Court for the Northern District of Georgia, as well as to the
jurisdiction of all courts to which an appeal may be taken or other review
sought from the aforesaid courts, for the purpose of any suit, action or other
proceeding arising out of any of the Debtor's obligations under or with respect
to this Agreement, and expressly waives any and all objections it may have as to
venue in any of such courts. THE DEBTOR AND THE SECURED PARTY EACH WAIVE TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY OF THEM AGAINST
THE OTHER ON ANY MATTER WHATSOEVER (INCLUDING, WITHOUT LIMITATION, ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
AGREEMENT, ANY OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN). No party to this instrument,
including but not limited to any assignee or successor of a party, shall seek a
jury trial in any lawsuit, proceeding, counterclaim, or any other litigation
procedure based upon, or arising out of, this instrument, any related
instruments, any collateral or the dealings or the relationship between or among
the parties, or any of them. No party will seek to consolidate any such action,
in which a jury trial has been waived, with any other action in which a jury
trial cannot be or has not been waived. THE PROVISIONS OF THIS PARAGRAPH HAVE
BEEN FULLY DISCUSSED BY THE PARTIES HERETO, AND THESE PROVISIONS SHALL BE
SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO
ANY OTHER PARTY THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED
IN ALL INSTANCES.


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         In witness whereof, this Security Agreement has been executed by the
parties hereto all as of the day and year first above written.

                                  Friedman's Inc.



                                  By  /S/
                                      -------------------------------
                                      Title

   Accepted:

ABN AMRO Bank N.V.
 New York Branch


By /S/
   ------------------------------
  Title
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By /S/
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  Title
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