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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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
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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: ______________________________________
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