Document:

GUARANTY AGREEMENT

         THIS  GUARANTY  AGREEMENT  ("Guaranty")  dated as of April 5, 2001,  is
executed and delivered by JEAN CHARLES INCORPORATED ("Guarantor"),  to THE CHASE
MANHATTAN BANK ("Lender"),  a New York banking corporation,  successor by merger
to Chase Bank of Texas, National Association.

RECITALS:

         Effective as of April 8, 1998,  Surrey,  Inc.  ("Borrower")  and Lender
entered into a Loan  Agreement  governing the terms of certain loans from Lender
to Borrower.  The Loan Agreement has previously been amended pursuant to a First
Amendment of Loan Agreement dated  effective May 14, 1998,  pursuant to a Second
Amendment of Loan  Agreement  dated  effective  January 25, 1999,  pursuant to a
Third Amendment of Loan Agreement dated effective March 31, 1999,  pursuant to a
Fourth Amendment of Loan Agreement dated effective June 17, 1999,  pursuant to a
Fifth Amendment of Loan Agreement executed effective June 30, 1999, and pursuant
to a Sixth  Amendment of Loan Agreement  executed  effective  April 8, 2000. The
original  Loan  Agreement,  as  previously  amended,  is herein called the "Loan
Agreement."

         Under the terms of the Loan Agreement,  Borrower is currently  indebted
to Lender  under the loans  evidenced by the  following  promissory  notes:  (a)
promissory note dated April 8, 2000, in the face principal sum of $3,000,000.00,
executed by Borrower,  payable to the order of Lender,  which note is called the
"Revolving Note" in the Loan Agreement, (b) promissory note dated April 8, 1998,
in the face principal sum of $2,300,000.00, executed by Borrower, payable to the
order of Lender,  which note is called the "$2,300,000.00  Advance/Term Note" in
the Loan  Agreement,  (c)  promissory  note dated  January 25, 1999, in the face
principal  sum of  $400,000.00,  executed by  Borrower,  payable to the order of
Lender,  which note is called the  "$400,000.00  Advance/Term  Note" in the Loan
Agreement,  and (d)  promissory  note dated April 8, 2000, in the face principal
sum of  $1,000,000.00,  executed  by  Borrower,  payable to the order of Lender,
which note is called the "Term Note" in the Loan Agreement.

         Borrower has previously  defaulted under the Loan Agreement,  notice of
default  has been  provided  to  Borrower,  Borrower  has  failed  to cure  such
defaults,  and the maturity dates of the promissory  notes referenced above have
been  accelerated.  As such,  all amounts  owed by  Borrower to Lender  under or
governed by the Loan Agreement are now due and payable.  Despite written demand,
these amounts remain unpaid.

         Borrower  has  entered  into   negotiations   with  Guarantor  to  sell
substantially  all  of  Borrower's  assets  to  Guarantor,  subject  to  and  in
accordance  with the terms of that  certain  Agreement  for Purchase and Sale of
Assets  dated on or about  the  effective  date  hereof  between  Guarantor  and
Borrower.  Borrower  and  Guarantor,  in  acknowledgment  of Lender's  rights to
consent to any such sale of assets,  have  requested  that Lender consent to the
terms  of  such  sale,  which  Lender  is  willing  to  do in  consideration  of
Guarantor's agreements contained herein.

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<PAGE>

AGREEMENTS:

         For and in  consideration  of the  premises  and the mutual  agreements
herein contained, the parties hereto agree as follows:

Definitions.  As used in  this Guaranty, these terms shall have these respective
meanings:

         Borrower means Surrey, Inc., a Texas corporation.
         --------

         Consent  Letter means the letter from Borrower and Guarantor  addressed
         to  Lender  dated  concurrently  herewith,  to  which  the form of this
         Guaranty is attached as Exhibit B.

         Guaranteed Debt means the sum of (i)  $3,000,000.00  of the outstanding
         balance of the Notes,  which  amounts is payable under the terms of the
         Consent  Letter  and is to be  applied  by  Lender  to the  outstanding
         balances  of the Notes  (in such  order and  manner of  application  as
         Lender may elect) plus (ii) all reasonable  attorneys' fees incurred by
         Lender in  enforcing  this  Guaranty  or  defending  against any claims
         asserted by Guarantor. In addition, Guarantor will be personally liable
         to Lender for any of the Special  Damages,  if applicable,  incurred by
         Lender.  Any voluntary or involuntary  payment  against or reduction in
         the amounts  outstanding  under the Notes  (other than  payments of the
         Guaranteed  Debt made by Guarantor to Lender as provided below pursuant
         to the  terms of the  Consent  Letter)  shall be  applied  first to the
         amounts  outstanding  under the Notes  which  are not  included  in the
         definition of "Guaranteed Debt".

         Notes  means,  collectively,  the  Revolving  Note,  the  $2,300,000.00
         Advance/Term Note, the $400,000.00  Advance/Term Note and the Term Note
         described in the "Recitals" section of this Guaranty, and all renewals,
         extensions,   modifications,   increases  and  rearrangements  of,  and
         substitutions for, the notes permitted by Lender or other holder of the
         notes.

         Special  Damages  means all loss  Lender may incur and which may become
         owing  to  Lender  as a  result  of or in  connection  with  any of the
         following:

         (1)  Guarantor's fraud or misrepresentations;

         (2)  the  misapplication  by Guarantor  of any proceeds  paid under any
              insurance policies by reason of damage, loss or destruction to any
              portion of the  property  covered by the  liens,  assignments  and
              security  interests of the documents  executed in connection  with
              the  Notes,  but  only to the  full  extent  of such  proceeds  so
              misapplied.

         For value received,  the  sufficiency of which is hereby  acknowledged,
and in  consideration  of the credit and  financial  accommodations  extended to
Borrower  by  Lender  and in  consideration  of  the  matters  described  in the
"Recitals"  above,  which  Guarantor has determined will  substantially  benefit
Guarantor directly or indirectly,  Guarantor hereby  unconditionally  guarantees
unto Lender (jointly and severally with any other guarantor, co-maker, endorser,

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<PAGE>

surety or obligor of all or any part of the  Notes) the  payment  when due under
the terms of the Consent Letter (whether at the stated maturity,  by demand,  by
acceleration   or  otherwise)  of  the   Guaranteed   Debt.   This  Guaranty  is
unconditional  and  absolute,  and if for any reason  all or any  portion of the
Guaranteed Debt shall not be paid when due,  Guarantor will  immediately pay the
same to Lender or other person or entity  entitled  thereto,  regardless  of any
defense, right of set-off or counterclaim which Borrower may have or assert, and
regardless of whether  Lender or any other person or entity shall have taken any
steps to enforce any rights  against  Borrower or any other  person or entity to
collect  such  sum,  and  regardless  of any  other  condition  of  contingency.
Guarantor  acknowledges  that the Notes  are now due and  payable.  Lender  will
forbear from  exercising its rights to pursue  Guarantor  under this Guaranty as
long as Borrower and Guarantor are  performing in full their  obligations  under
the terms of the  Consent  Letter and pay in full,  or cause to be paid in full,
the sum of  $3,000,000.00  to Lender for  application  against  the  outstanding
balances  of the  Notes by the date  180  days  from the date of this  Guaranty.
Lender shall not be entitled to maintain an action against  Guarantor to recover
the  Guaranteed  Debt unless (a)  Borrower or Surrey  breaches  the terms of the
Consent  Letter or (b) the 180-day  forbearance  period under the Consent Letter
expires or  terminates  without  Lender having  received  payment in full of the
amounts to be paid to Lender  under  subparagraphs  a), b) and c) of the Consent
Letter.  Every dollar paid to Lender under the provisions of subparagraph a), b)
or c) of the  Consent  Letter  shall  reduce  the  $3,000,000.00  portion of the
Guaranteed Debt on a dollar-for-dollar basis.

         Notwithstanding  Lender's  agreement  to  forbear  at  this  time  from
pursuing  its rights  under this  Guaranty  against  Guarantor on account of the
existing defaults on the Notes,  Lender formally reserves any and all rights and
remedies  against  Borrower to which  Lender is entitled  under the Note and the
other documents executed in connection therewith,  as a result of such defaults.
Any forbearance by Lender with respect to Guarantor shall in no way be deemed to
obligate or restrict Lender in any manner with respect to its current and future
dealings with Guarantor, other than as specifically set forth herein.

         Guarantor  agrees  that,  if at any time all or any part of any payment
applied by Lender to the  Guaranteed  Debt is or must be returned by  Lender--or
recovered  from  Lender--for  any reason  (including the order of any bankruptcy
court), this Guaranty shall automatically be reinstated to the same effect as if
the prior  application  had not been made,  any  liens,  security  interests  or
collateral  assignments  released in connection with such prior payment shall be
reinstated,  and, in  addition,  Guarantor  hereby  agrees to  indemnify  Lender
against,  and to save and hold  Lender  harmless  from any  required  return  by
Lender--or recovery from Lender--of any such payment because of its being deemed
preferential  under applicable  bankruptcy,  receivership or insolvency laws, or
for any other reason; provided, however, that to the extent any payment required
to be returned by Lender was generated from or proceeds of collateral  purported
to secure the Notes,  and if it is  determined  by final  judgment of a court of
competent  jurisdiction  that  Lender  did  not in  fact  have a  first-priority
perfected lien, security interest or collateral assignment,  as the case may be,
on the  collateral  generating  the  proceeds  used for such payment (or portion
thereof),  the  provisions of this  paragraph,  solely as between  Guarantor and
Lender, shall be inapplicable as to such payment (or portion thereof).

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<PAGE>

         This  is a  continuing  guaranty  and  shall  be  irrevocable,  and all
extensions  of credit and  financial  accommodations  made by Lender to Borrower
shall be conclusively presumed to have been made in acceptance hereof.

         Guarantor waives marshalling of assets and liabilities, sale in inverse
order of alienation,  notice of acceptance of this Guaranty and of any liability
to which it  applies  or may apply,  notice of intent to  accelerate,  notice of
acceleration, notice of default or other notice to, or demand on, any party, and
waives  presentment,  collection,  suit,  or the  taking of any other  action by
Lender.  Payment  by  Guarantor  is to be made at the main  office  of Lender in
Austin, Travis County, Texas.

         The  obligations of Guarantor under this Guaranty shall not be affected
by (a) any  invalidity  of or  defect or  deficiency  in any of the Notes or any
instrument  securing  payment  thereof or (b)  failure to perfect or to maintain
perfection of any lien on or security  interest in any security securing payment
of any of the Notes.

         This is a guaranty  of payment  and not of  collection,  and  Guarantor
waives any right to require that any action be brought  against  Borrower or any
other  person or entity.  Should  Lender  seek to  enforce  the  obligations  of
Guarantor  hereunder  by action in any court,  Guarantor  waives any  necessity,
substantive or procedural,  that (a) a judgment  previously be rendered  against
Borrower or any other person or entity, including without limitation,  any other
guarantor  or other  surety,  or that  Borrower  or any other  person or entity,
including  without  limitation,  any other guarantor or other surety,  should be
joined in such cause and (b) Lender  exercise  any or all of its other  remedies
under any of the Notes or any other documents executed in connection  therewith,
including  without  limitation,  foreclosure  of any lien or  security  interest
securing payment of any of the Notes. The obligations of Guarantor hereunder are
joint  and  several  from  those of  Borrower  or any other  person  or  entity,
including  without  limitation,  any other  guarantor or other  surety,  and are
primary  obligations  concerning which Guarantor is the principal  obligor.  All
waivers  herein  shall be without  prejudice  to Lender at its option to proceed
against Borrower or any other person or entity, whether by separate action or by
joinder. By execution hereof, Guarantor expressly waives each and every right to
which he may be entitled by virtue of the suretyship laws of the State of Texas,
including,  without  limitation,  any rights Guarantor may have pursuant to Rule
31, Texas Rules of Civil  Procedure,  Section 17.001 of the Texas Civil Practice
and  Remedies  Code and  Chapter 34 of the Texas  Business  and  Commerce  Code.
Guarantor  agrees that this  Guaranty  shall not be  discharged  except upon the
earlier of (a) payment in full of the Guaranteed  Debt or (b) payment in full of
the Notes and complete  performance of the  obligations of Borrower to Lender in
connection with the Notes,  subject in all cases to the automatic  reinstatement
provisions  hereof.  Guarantor  further agrees that the obligations of Guarantor
hereunder  shall  not be  affected  in  any  way  by  receivership,  insolvency,
bankruptcy or other similar proceedings affecting Borrower or any of its assets,
or the release,  waiver, or discharge of Borrower or any other person or entity,
including  without  limitation,  any other  guarantor or other surety,  from the
performance or observance of any obligation contained in any of the Notes or any
instrument  securing payment thereof,  by operation of law or otherwise,  or any
other cause, whether similar or dissimilar to the foregoing.

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<PAGE>

         Lender may, at any time without the consent of, or notice to Guarantor,
without incurring  responsibility  to Guarantor,  without impairing or releasing
the  obligations  of Guarantor,  upon or without any terms or conditions  and in
whole or in part, (a) change the manner,  place or terms of payment or change or
extend the time of payment of, renew, or alter any liability hereby  guaranteed,
or any liabilities incurred directly or indirectly  hereunder,  and the guaranty
herein made shall apply to said liabilities as so changed,  extended, renewed or
altered in any manner, (b) sell, exchange, release,  surrender,  realize upon or
otherwise  deal with in any  manner  and in any order any  property  at any time
pledged or mortgaged to secure or securing the liabilities  hereby guaranteed or
any liabilities  incurred directly or indirectly hereunder or any offset against
any of said  liabilities,  (c)  exercise or refrain from  exercising  any rights
against Borrower or others, or otherwise act or refrain from acting,  (d) settle
or compromise any liabilities hereby guaranteed or hereby incurred.

         No delay on the part of Lender in  exercising  any right  hereunder  or
failure to exercise the same shall operate as a waiver of such right; nor in any
event shall any waiver of the provisions of this Guaranty be effective unless in
writing; nor shall any such waiver be applicable except in the specific instance
for which  given.  Notwithstanding  any  payment or payments  made by  Guarantor
hereunder  or any  set-off  or  application  of funds of  Guarantor  by  Lender,
Guarantor  shall not be entitled to be subrogated to any of the rights of Lender
against  Borrower or any collateral  security or rights of offset held by Lender
for the  payment of any of the Notes  until (a) all  amounts  owing to Lender by
Borrower  for or on  account  of the  Notes  are  paid  in  full,  and  (b)  all
obligations  of  Borrower  to Lender  in  connection  with the  Notes  have been
performed.

         Any settlement,  release or compromise of Borrower's obligations on all
or any part of any of the Notes,  any  release  of any  security  or  collateral
securing  payment  of all or any part of any of the Notes,  and any  settlement,
release or compromise of any agreement,  obligation or guaranty of any co-maker,
endorser,  guarantor,  surety or other  obligor of all or any part of any of the
Notes shall not act as a release of any of  Guarantor's  obligations  under this
Guaranty.

         Guarantor  represents  and  warrants to Lender  that:  (a)  Guarantor's
execution, delivery and performance of this Guaranty do not and will not require
(i) any  consent  of any other  person or entity or (ii) any  consent,  license,
permit,  authorization or other approval  (including foreign exchange approvals)
of any court, arbitrator, administrative agency or other governmental authority,
or any notice to, exemption by, any registration,  declaration or filing with or
the  taking of any other  action in  respect  of,  any such  court,  arbitrator,
administrative agency or other governmental authority;  (b) neither execution or
delivery of this Guaranty,  nor the  fulfillment of or compliance with its terms
and provisions will (i) violate any  constitutional  provision,  law or rule, or
any  regulation,  order or decree  of any  governmental  authority  or the basic
organizational  documents  of  Guarantor  or (ii)  conflict  with or result in a
breach of the terms,  conditions or provisions of, or cause a default under, any
agreement, instrument,  franchise, license or concession to which Guarantor is a
party or  bound;  (c)  Guarantor  has  duly and  validly  executed,  issued  and
delivered this Guaranty,  it is in proper legal form for prompt  enforcement and
it  is  Guarantor's  valid  and  legally  binding  obligation,   enforceable  in
accordance  with its terms;  (d) Guarantor is now solvent,  and no bankruptcy or
insolvency  proceedings  are  pending  or  contemplated  by  or--to  the best of
Guarantor's  knowledge--against  Guarantor;  and (e) Guarantor's liabilities and

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<PAGE>

obligations under this Guaranty do not and will not render Guarantor  insolvent,
cause Guarantor's  liabilities to exceed  Guarantor's  assets or leave Guarantor
with too little capital to properly conduct all of its business as now conducted
or contemplated to be conducted.

         Guarantor  further  certifies  to  Lender  that:  (a) the  value of the
consideration  received and to be received by Guarantor is  reasonably  worth at
least as much as the liability and  obligation of Guarantor  incurred or arising
under this Guaranty and all related papers and  arrangements;  and (b) Guarantor
has determined  that such liability and obligation may reasonably be expected to
substantially benefit Guarantor directly or indirectly (or if Guarantor is not a
natural  person,  Guarantor's  board of  directors,  general  partners  or other
governors have made that determination).

         Any notice,  request or other communication required or permitted to be
given  hereunder  shall be given in writing by delivering it against receipt for
it, by depositing it with an overnight delivery service or by depositing it in a
receptacle  maintained  by the United States Postal  Service,  postage  prepaid,
registered  or  certified  mail,  return  receipt  requested,  addressed  to the
respective  parties  as  follows  (and if so given,  shall be deemed  given when
mailed):

          If to Guarantor:                          If to the Lender:

          Jean Charles Incorporated                 The Chase Manhattan Bank
          82449 61st Avenue                         P.O. Box 2558
          Thermal, California 92274                 Houston, Texas 77252-2092
          Attention: President                      Attention: Bruce A. Shilcutt

Each  party's  address for notice  may be changed at  any  time and from time to
time, but only  after ten (10) days'  advance written notice to the other party.
Actual  notice,  however and  from  whomever given or  received, shall always be
effective when received.

         Notwithstanding  any provision to the contrary  contained in any of the
Notes or in any other documents related thereto,  it is expressly  provided that
in no case or event shall the aggregate of any amounts  accrued or paid pursuant
to this Guaranty which under  applicable laws are or may be deemed to constitute
interest  ever  exceed  the  maximum  nonusurious  interest  rate  permitted  by
applicable  Texas or federal  laws,  whichever  permit the higher rate.  In this
connection, Guarantor and Lender stipulate and agree that it is their common and
overriding  intent to contract in strict  compliance with applicable usury laws.
In  furtherance  thereof,  none of the  terms  of this  Guaranty  shall  ever be
construed to create a contract to pay, as consideration for the use, forbearance
or  detention  of  money,  interest  at a rate in  excess  of the  maximum  rate
permitted by applicable  laws.  Guarantor  shall never be liable for interest in
excess of the maximum rate  permitted  by  applicable  laws.  If, for any reason
whatever,  such interest paid or received during the full term of the applicable
indebtedness  produces  a rate which  exceeds  the  maximum  rate  permitted  by
applicable laws,  Lender shall credit against the principal of such indebtedness
(or,  if such  indebtedness  shall have been paid in full,  shall  refund to the
payor of such  interest)  such portion of said interest as shall be necessary to
cause the interest paid to produce a rate equal to the maximum rate permitted by
applicable  laws.  All sums paid or  agreed  to be paid to  Lender  for the use,
forbearance or detention of money shall,  to the extent  permitted by applicable

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<PAGE>

law, be amortized,  prorated, allocated and spread in equal parts throughout the
full term of the applicable  indebtedness,  so that the interest rate is uniform
throughout  the full term of such  indebtedness.  The provisions of this Section
shall  control all  agreements,  whether now or  hereafter  existing and whether
written or oral, between Guarantor and Lender.

         The  benefits,  rights  and  remedies  of Lender  provided  for in this
Guaranty are in addition to all of the  benefits,  rights and remedies of Lender
provided  for in all other  guaranties  now or  hereafter  executed by any other
person or entity, and payment or performance under any such guaranties shall not
reduce the obligations of Guarantor hereunder.

         This  Guaranty  is  entered  into  under and shall be  governed  by and
interpreted in accordance with the laws of the State of Texas.  Guarantor hereby
irrevocably agrees that any legal proceeding against Lender arising out of or in
connection with this Guaranty,  the Notes or any writings executed in connection
herewith shall be brought in the district courts of Travis County,  Texas, or in
the United  States  District  Court for the Western  District  of Texas,  Austin
Division.

         This  Guaranty may be executed in any number of  counterparts,  each of
which  shall  constitute  an  original  and shall be binding  upon the person or
entity signing it and his, her or its heirs, legal  representatives,  successors
and assigns,  whether or not the same or any other  counterpart of this Guaranty
is executed by any other person or entity.

         This Guaranty constitutes the entire agreement of Guarantor and Lender,
supersedes  any  prior  understandings  or  written  or oral  agreement  between
Guarantor  and Lender with  regards to the Notes,  and can be modified or varied
only by a written instrument subscribed to by Guarantor and Lender.

         THIS GUARANTY is executed as of the date first above written.

                NOTICE PURSUANT TO TEX. BUS. & COMM. CODEss.26.02

         THIS GUARANTY  CONSTITUTES A WRITTEN LOAN  AGREEMENT AND REPRESENTS THE
FINAL  AGREEMENT  BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR,  CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

LENDER:                                                       GUARANTOR:
------                                                        ---------

THE CHASE MANHATTAN BANK                       JEAN CHARLES INCORPORATED

By:                                            By:
   -----------------------------                  -----------------------------
Name:                                          Name:
     ---------------------------                    ---------------------------
Title:                                         Title:
      --------------------------                     --------------------------

                                       7
<PAGE>April 5, 2001

The Chase Manhattan Bank
P.O. Box  2558
Houston, TX 77252

Attention: Bruce A. Shilcutt

RE:      SURREY, INC., a Texas Corporation

Gentlemen:

This letter will  confirm our  understanding  with you that The Chase  Manhattan
Bank ("Chase")  consents to the agreement reached between Surrey,  Inc. and Jean
Charles Incorporated,  a Utah corporation, a copy of which Agreement is attached
to  this  letter  as  Exhibit  A.  This  consent  is  subject  to the  following
conditions:

1.       Chase must be promptly  reimbursed by Surrey,  Inc. and/or Jean Charles
         Incorporated for any and all costs and expenses, not to exceed $10,000,
         incurred  by  Chase  (including  attorneys'  fees) in  connection  with
         Chases' consent  contained herein (with the execution of this letter by
         Surrey,  Inc. and Jean Charles  Incorporated  formally  evidencing such
         agreement).

2.       Surrey,  Inc. and Jean  Charles  Incorporated  must provide  Chase with
         current corporate authority  documents,  in the form required by Chase,
         or  other  satisfactory  evidence  confirming  that all  approvals  and
         authorizations  have been  received  with  respect to the  transactions
         contemplated by the Purchase and Sale Agreement and the Guaranty.

Chase's  consent,  which is evidenced  hereby,  shall not be  considered  as any
further  approval or consent by Chase to any further actions  requiring  Chase's
consent.  Chase's  consent  contained  herein  shall not be construed as Chase's
agreement  to  release  any of its  liens,  security  interests  or  assignments
(collectively the "Liens") securing the debt of Surrey,  Inc. to Chase.  Subject
to the automatic reinstatement provisions of the loan documents,  Liens relating
to accounts  receivable  and inventory  will be released by Chase once Chase has
received $3,000,000 from the following sources:

a)       All accounts  receivables  reflecting  any and all debts accruing on or
         before  April 1,  collected  by the Buyer  and  Seller  and  thereafter
         transmitted to Chase Bank within three (3) business days of collection.

b)       Lease payments received from Jean Charles for the month-to-month  lease
         of the Trails End real estate at a rental of $10,000.00 per month, with
         the first of such  monthly  rental  payments due on the date hereof and
         subsequent  payments (if the lease  continues for future months) on the
         same calendar day of each such succeeding calendar month.

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<PAGE>

c)       Ten  percent of sales  revenue  paid to Chase on a weekly  basis,  such
         payments  to be made on or before the third  business  day of each week
         for sales of the preceding week.

Jean Charles guarantees that this $3,000,000 will be paid within 180 days of the
signing of this letter. Any shortfall at the end of the 180 days will be paid by
Jean Charles,  without demand, no later than the date 181 days after the date of
this letter.  Jean Charles will evidence this obligation by executing a Guaranty
Agreement, in the form attached to this letter as Exhibit B.

Notwithstanding   Chase's  consent  to  the  execution  of  the  Asset  Purchase
Agreement,  Chase  formally  reserves  any and all rights and  remedies to which
Chase is entitled  under the loan  documents  relating to the loans for Chase to
Surrey, Inc. as a result of the continuing  defaults under such loans.  However,
as long as  Surrey/Jean  Charles make the payments  detailed in (a) to (c) above
and perform their other obligations under this letter and as long as Surrey/Jean
Charles uses their best  efforts to sell the Trails End real estate,  then Chase
agrees to forbear from taking any action against Surrey,  Inc. or exercising any
other rights or remedies  under the loan  documents or applicable law on account
of such defaults, for a period of time commencing on the date of this letter and
terminating on the date 180 days from the date of this letter.

By its  execution  hereof,  Chase hereby  consents to the tender  provisions  of
Section 8.5 of the Asset Purchase Agreement, as long as such tender offer occurs
after payment to Chase of $3,000,000.00  from the sources detailed in (a) to (c)
above or otherwise after satisfaction in full of the obligations of Jean Charles
Incorporated under the Guaranty Agreement.

This letter embodies the entire agreement and understanding  between the parties
with respect to the subject matter hereof and  supersedes all prior  agreements,
consents and understandings relating to such subject matter.

IN CONSIDERATION OF THE AGREEMENT OF CHASE TO FORBEAR FROM EXERCISING ITS RIGHTS
AND REMEDIES ON ACCOUNT OF THE  CONTINUING  DEFAULTS OF SURREY,  INC.  UNDER THE
LOANS,  SURREY,  INC. HEREBY RELEASES,  DISCHARGES AND ACQUITS FOREVER CHASE AND
ITS OFFICERS, DIRECTORS,  TRUSTEES, AGENTS, EMPLOYEES AND COUNSEL (IN EACH CASE,
PAST, PRESENT OR FUTURE) FROM ANY AND ALL CLAIMS EXISTING AS OF THE DATE HEREOF.
AS USED HEREIN,  THE TERM "CLAIM"  SHALL MEAN ANY AND ALL  LIABILITIES,  CLAIMS,
DEFENSES, DEMANDS, ACTIONS, CAUSES OF ACTION, JUDGMENTS, DEFICIENCIES, INTEREST,
LIENS, COSTS OR EXPENSES (INCLUDING COURT COSTS, PENALTIES,  ATTORNEYS' FEES AND
DISBURSEMENTS,  AND  AMOUNTS  PAID IN  SETTLEMENT)  OF ANY  KIND  AND  CHARACTER
WHATSOEVER,   INCLUDING  CLAIMS  FOR  USURY,  BREACH  OF  CONTRACT,   BREACH  OF
COMMITMENT, NEGLIGENT MISREPRESENTATION OR FAILURE TO ACT IN GOOD FAITH, IN EACH
CASE  WHETHER  NOW KNOWN OR  UNKNOWN,  SUSPECTED  OR  UNSUSPECTED,  ASSERTED  OR

                                       2
<PAGE>

UNASSERTED  OR  PRIMARY  OR  CONTINGENT,  AND  WHETHER  ARISING  OUT OF  WRITTEN
DOCUMENTS,  UNWRITTEN UNDERTAKINGS,  COURSE OF CONDUCT, TORT, VIOLATIONS OF LAWS
OR REGULATIONS OR OTHERWISE.

                NOTICE PURSUANT TO TEX. BUS. & COMM. CODEss.26.02

THIS  AGREEMENT  CONSTITUTES A WRITTEN LOAN  AGREEMENT AND  REPRESENTS THE FINAL
AGREEMENT  BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS  OR  SUBSEQUENT  ORAL  AGREEMENTS  OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

If you have any questions,  please give me a call. If not, then would you please
sign a copy of this  letter and  return it by U.S.  Mail but also send us one by
fax to 760-399-1187.

     JEAN CHARLES INCORPORATED

     BY: ___________________________________
             Steve Yeoman, President

     SURREY, INC

     BY: _______________________________________
     ITS: ______________________________________

     CONSENTED TO AS PROVIDED ABOVE:
     THE CHASE MANHATTAN BANK

     BY: _______________________________________
     ITS: ______________________________________

                                       3
<PAGE>

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