Joint Venture Agreement

JOINT VENTURE AGREEMENT


THIS JOINT VENTURE AGREEMENT is made and entered into as of the 26th day of August, 1994, by and between INTERFACE ASIA-PACIFIC, INC., a corporation organized and existing under the laws of the State of Georgia, U.S.A., having its principal office at Orchard Hill Road, LaGrange, Georgia 30240 (hereinafter referred to as "INTERFACE"), and MODERNFORM GROUP PUBLIC CO., LTD., a company organized and existing under the laws of Thailand, having its principal office at 33/2 Moo 7 Bangna-Trad Road, Bangplee, Samutprakarn 10540 Thailand (hereinafter referred to as "MODERNFORM").


RECITALS: INTERFACE is engaged in the business of manufacturing and marketing, among other things, modular carpet systems (including carpet tiles and six foot roll goods). MODERNFORM is engaged in Thailand in the business of manufacturing and marketing office furnishings and equipment. INTERFACE and MODERNFORM, after discussion and investigation, desire to establish a joint venture company in Thailand to manufacture carpet in Thailand.


THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged by both parties, the parties hereby agree as follows:


1. PURPOSE OF AGREEMENT


1.1 The main purpose of this Agreement is to establish a limited
company under the laws of Thailand to conduct the business
of manufacturing in Thailand and marketing there high
quality modular carpet tiles (herein referred to as "carpet
tiles"). The Company may later decide to market or
manufacture other products. The carpet tiles shall be
distributed exclusively by INTERFACE or its affiliates
outside of Thailand and exclusively by MODERNFORM within
Thailand. Details of the business objectives of the joint
enterprise (the "Business Objectives") shall be generally in
accordance with Exhibit "A" attached hereto, as amended from
time to time by the Company's Board of Directors or
shareholders, to the extent permitted by applicable law.


2. FORMATION OF COMPANY


2.1 The parties shall establish a limited company (Borisat
Chamkad) (hereinafter referred to as the "Company"), in
accordance with the laws of Thailand, in which INTERFACE
will hold seventy percent (70%) of the ownership interest,
and MODERNFORM will hold thirty percent (30%) of the
ownership interest. The parties shall cooperate in seeking
to obtain all governmental, regulatory and other consents
and licenses 2


necessary for the formation of the Company and carrying out
the purposes of this Agreement, under conditions which the
parties deem to be feasible and profitable.


2.2 The name of the Company upon its incorporation shall be
"Interface Modernform Company Limited", in English, which is
" " in Thai.


2.3 The principal place of business of the Company shall be at
Bangpakong Industrial Park, Thailand, or at such other
location as the Company shall determine. The Company may
establish branches elsewhere in Thailand, in accordance with
and subject to the prevailing Thai laws and regulations, the
requirements of the Articles of Association of the Company,
and sound business judgment.


2.4 The Business Objectives pertaining to the Memorandum of
Association and Articles of Association of the Company shall
be those attached as Exhibit "A", as amended from time to time
by the Board of Directors or the shareholders, to the extent
permitted by applicable law. The Memorandum of Association
and Articles of Association of the Company shall be those
attached as Exhibit "B".


2.5 In the event the Business Objectives or the Memorandum of
Association and Articles of Association of the Company
ultimately registered contain provisions that conflict with or
are inconsistent with any of the terms and conditions of this
Agreement, the terms and conditions of this Agreement shall
prevail insofar as they are not contrary to the law or public
order of Thailand.


2.6 All necessary and appropriate fees and expenses (including,
without limitation, attorney fees expended to form and
incorporate the joint venture company, registration fees and
expenses for that company, Board of Investment Application
expenses, land acquisition expenses, Use of Land Application
fees and expenses, all other legally required (statutory) or
necessary fees and expenses) incurred by the parties in the
initial formation of the Company, exclusive of those fees and
expenses associated with the negotiation, preparation, and
execution of this Agreement (which shall be borne by the party
incurring such charges), shall be reimbursed by the Company to
the parties pro tanto to the sums so expended by each party.


2.7 In the event the Company, through no fault of the parties,
does not ultimately become registered as an existing de jure
entity, the otherwise reimbursable fees and expenses described
above relating to the formation of the Company shall be the
responsibility of the party which paid or incurred them.


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3. CAPITAL STRUCTURE OF THE COMPANY


3.1 The initial registered capital of the Company shall
initially be Baht two hundred million (Baht 200,000,000) divided
into twenty (20) million ordinary shares, each with a par value of
Baht ten (Baht 10).

3.2 The shares of the Company shall be divided into two groups, Group A
shares and Group B shares.


(a) The Group A shares shall constitute seventy percent
(70%) of the total shares, or 14,000,000 shares, being
share certificates numbered one through fourteen
million inclusive, and shall be subscribed by
INTERFACE, or its nominee, at par.

(b) The Group B shares shall constitute thirty percent
(30%) of the total shares, or 6,000,000 shares, being
share certificates numbered fourteen million and one
through twenty million inclusive, and shall be
subscribed by MODERNFORM, or its nominee, at par.


3.3 The initial paid-up capital shall be twenty-five percent (25%)
of the total registered capital, or Baht fifty Million (Baht
50,000,000). At the initial meeting of shareholders required
by law (the "Statutory Meeting"), it will therefore be
resolved that all of the initial paid up capital shall be paid
to the Company by the parties on the date of the Statutory
Meeting. Subsequent calls on the unpaid amount of each share
shall be as authorized by resolution of all Directors, but
shall not be required unless so authorized.


3.4 Following the initial issue of shares of the Company,
according to the numbers and distributions specified above,
any new issues of shares, options or other rights to
purchase shares, transfers of shares, and all other rights,
obligations and liabilities relating to ownership of shares
of the Company, shall be in accordance with the terms of
this Agreement and the Articles of Association of the
Company. Neither the Company nor either party will take or
permit any action that would serve to dilute the percentage
ownership interest of either party, except as may be
expressly permitted by the terms of this Agreement or
subsequent mutual written agreement of the parties.


3.5 Additional required contributions in connection with the
start up of the Company shall be as follows:


(a) INTERFACE shall provide the use of intangible assets
in the form of certain portions of its technology and
know-how and provide such technical expertise and
training as is reasonably necessary to specify,
locate, obtain, transport, and install appropriate
machinery and equipment and assist in beginning


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the manufacture of tufted carpet tiles. To the extent
INTERFACE contributes equipment and machinery to the
Company, the cost (if acquired from a third party) or
fair market value (if acquired from INTERFACE's
existing machinery and equipment inventory) thereof
shall be credited to INTERFACE's capital contribution
account in determining its required contribution to the
Company's capital. Attached hereto as Exhibit "C" and
made a part hereof by this reference is a list of the
equipment and machinery, and its valuation, which will
be contributed by INTERFACE and credited to its
required capital contribution. It is acknowledged by
the parties that INTERFACE's contribution of intangible
assets (technology, technology transfer and practical
"know-how" in manufacturing, marketing and selling
carpet tiles) is essential to the success of the
Company and this venture. In light of these
circumstances, it is agreed that INTERFACE personnel
and representatives will have continuous, immediate and
complete access to all information, plans, strategies
and other data relevant to the construction of the
Company's manufacturing plant; acquisition,
installation and operation of manufacturing equipment;
purchase and use of raw materials; processing of
materials and products; engineering, design, research
and development; sales and marketing activities;
administration and operation of the Company; and all
other facets of the Company's activities. It is
acknowledged and agreed by MODERNFORM that INTERFACE's
contribution to the Company of the limited use of its
trademarks, technology, technology assistance,
"know-how" and other intangible assets is not a
transfer of ownership, but is merely a right of use
limited to the Company and limited strictly by the
terms of this Agreement.


3.6 The purchase and installation of initial machinery and
equipment, hiring employees, obtaining raw materials and
supplies and paying other expenses reasonably necessary for
the operation of the Company, shall be effectuated through
in-kind contributions or cash capital contributions by the
parties, loans, or other financing arrangements, as determined
by the Board of Directors.


4. RESTRICTIONS ON SHARE TRANSFER


4.1 Except as set forth in Clause 4.2 and Clause 15.3 hereof,
neither party shall sell, assign, transfer, pledge, or
otherwise dispose of or encumber in any manner any of its
shares in the Company without the prior approval (evidenced by
written resolution) of all of the shareholders.


4.2 If a shareholder (hereinafter called the "Seller" for the
purposes of this Clause) wishes to sell or transfer any or all
of its shares to a third party, such Seller shall first have
received a written, complete and


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bona fide purchase offer, which is in all respects
acceptable to the Seller, from such third party. The price
and other terms of such offer shall be identical to those
contained in the Transfer Notice referred to below. The
Seller, within ten (10) days of receipt of such offer, shall
give written notice (hereinafter called the "Transfer Notice")
of such desired transfer to the Company and all other
shareholders. The Transfer Notice shall include a complete,
true and correct copy of such third party's purchase offer.
The Transfer Notice shall state the total number of shares for
sale, all terms and conditions of the sale (and all terms
necessary for a complete sale, without contingencies and
requiring full payment in current funds within fifteen (15)
days of acceptance of such offer), and the price of said
shares, and shall invite each shareholder (called "Buyer" for
the purposes of this Clause and Clause 4.3 below) to apply in
writing to the Company and Seller, within forty-five (45) days
of the date of delivery of such Transfer Notice, to purchase
such shares in accordance with the terms stated in the
Transfer Notice. Within such forty-five (45) day period, the
Buyer shall notify Seller in writing of its election either to
accept or reject the offer contained in the Transfer Notice.
If Buyer fails to deliver an unqualified acceptance of the
offer within such period, Buyer shall be deemed to have
rejected it. If Buyer accepts Seller's offer, Buyer shall pay
for Seller's shares within fifteen (15) days of the date of
Buyer's acceptance, and shall discharge all obligations
properly contained in the Transfer Notice, and the Seller
shall be bound to do all things necessary to fully and
properly transfer such shares of Seller to the Buyer
immediately upon receipt of the purchase price therefor. If
Buyer rejects the offer in Seller's Transfer Notice, then
Seller shall be free to sell its shares to the third party,
but Seller must do so strictly in accordance with every term
set forth in the Transfer Notice to Buyer, otherwise such
transfer shall be void, of no effect, and the Board of
Directors shall take all actions necessary to avoid giving
effect to such sale. If the sale to the third party is not
completed within ninety (90) days of the date of last delivery
of the Transfer Notice to a shareholder, then the third
party's offer shall be deemed void and withdrawn, and any sale
of shares thereafter must be carried out by completing from
the outset all requirements of this Clause 4.2.


4.3 The shareholders may approve (by written resolution) any share
transfer or sale without requiring the procedures set forth in
this Article 4, provided that such resolution is approved by
all shareholders.


4.4 Notwithstanding any provision to the contrary contained in
this Agreement, INTERFACE and MODERNFORM agree that no shares
or other interest in the Company or any of its assets
(tangible or intangible) can (directly, indirectly or in any
other manner whatsoever) be assigned or transferred to any
other person or entity unless the assignee or transferee
executes an agreement whereby such assignee or transferee
unconditionally agrees to be bound by and adhere to all of


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the provisions of this Agreement (including, but without
limitation, the provisions of this Article 4, Article 9 and
Article 16) governing the actions of the party from which the
assignee or transferee obtained such shares or other interest.
In no event may shares of the Company be sold by a Seller (as
defined in Clause 4.2 above) to a competitor of the
non-selling shareholder(s) without said shareholder's written
approval, which shall not be withheld unreasonably. The term
"competitor" shall mean any person or entity engaged directly
or indirectly in the manufacture, marketing, sale or
distribution of product or service which competes with any
identical or similar product or service manufactured,
marketed, sold or distributed at the time of inquiry by the
party who has the right to object hereunder to the sale of any
shares to such a person or entity. Notwithstanding any
contrary provision contained in this Article 4, neither party
shall be allowed to exercise any of the rights contained in
Clause 4.2 and Clause 4.3 above earlier than twenty-four (24)
months after the latest of: (i) the date appearing at the
beginning of this Agreement, and (ii) the last date of
signature by a party hereto.


5. MANAGEMENT OF COMPANY


5.1 Management of the Company shall be carried out in accordance
with the principles and policies established from time to time
by the Board of Directors, under the control of the
shareholders and according to the Articles of Association of
the Company, which policies shall include, without limitation,
the requirement that at least one representative of each party
hereto (designated by such party in writing) must receive, on
a monthly, quarterly and annual basis, current and accurate
reports of the Company's financial and operating information,
including without limitation Balance Sheet, Profit and Loss,
and Cash Flow reports reflecting the results of the Company's
operations.


5.2 The Board of Directors shall be composed of five (5) members,
three (3) to be designated by the Group A shareholders ("Group
A Directors") and two (2) to be designated by the Group B
shareholders ("Group B Directors"). A vacancy on the Board
shall be filled through election of a replacement nominated by
the Group of shareholders who nominated the Director whose
position is vacated. Each of the parties hereto agrees to
vote all of its shares in favor of the nominees designated by
the other party with respect to director positions entitled to
be filled by such other party.


5.3 The Board of Directors shall elect a Chairman of the Board (the
"Chairman") from among the Group A Directors; the Chairman
shall hold the post until removed by action of the Board or by
vote of the shareholders. The Group A Directors shall
appoint the Managing Director.


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5.4 Except as otherwise noted in Clause 6.4 hereof, the signature
of at least two (2) Group A Directors or one (1) Group A and
one (1) Group B Director shall be required, together with the
affixing of the Company's seal (if required by law), to bind
the Company with respect to agreements, transactions and
documents pertaining to the matters described in Clause 6.4 of
this Agreement.


5.5 The Board of Directors shall appoint by a majority vote the
operating officers of the Company. Any operating officer can
be removed from office or terminated by a majority vote of the
Directors.


6. BOARD OF DIRECTORS ACTION


6.1 The Board of Directors shall meet at least once every six (6)
months, at such times and places as may be determined by the
Board. Directors may participate at Board meetings via
conference telephone and confirmed by circulation minutes
signed by all directors. The minutes duly signed by all
directors shall constitute the presence of such directors at
the meeting for all purposes. Not less than twenty (20) days
prior written notice of a meeting shall be given to each
Director by registered airmail, cable, telex or telefax as
appropriate (in the latter three cases an express delivery
letter confirming the notice in writing shall be sent to each
Director). Such notice to any Director may be waived in
writing by the Director either before or after the meeting,
and shall be deemed waived by his presence at the meeting
either in person or by proxy unless the Director or proxy, at
the beginning of the meeting (or promptly upon his arrival),
states his objection to the calling of the meeting and the
transaction of business and does not vote on the actions
taken.


6.2 A special or extraordinary Board of Directors meeting shall be
convened promptly upon the written request of a majority of
Directors stating the matter(s) to be considered at the
meeting. The procedure and timing for holding such a meeting
shall be as set forth in this Article 6; provided, however,
the meeting may be held upon only seven (7) days advance
notice if three-fifths (3/5) of the Directors agree in writing
to such shorter notice period.


6.3 The quorum for Board meetings shall be a majority of the
entire Board of Directors present either in person or by
proxy; provided, however, of the Directors present in person
or by proxy, a majority of them must be Group A Directors, and
at least one of them must be a Group B Director. In the event
a quorum is not formed within one (1) hour after the scheduled
time for a meeting, such meeting may be adjourned to any other
reasonable date, time and place as may be fixed by the
Chairman or his proxy, and at such meeting a Group B Director
need not be present as long as there is present a majority of
the entire


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Board, and the Group A Directors make up a majority of the quorum so
formed.


6.4 Except as otherwise set forth herein, a resolution or action of the
Board of Directors shall require the affirmative vote of three-fifths
(3/5) of the Board of Directors. The Chairman shall have no second
and casting vote. At least three (3) Directors' votes, including at
least one (1) Group B Director, are required as to items (c), (g),
(j), (k) and (m) immediately below; all other lettered items below
shall require only three (3) Directors' (whether Group A or Group A
and B) votes for passage:


(a) Borrowing funds or pledging the credit of the Company for a
period of more than ninety (90) days or for aggregate amounts
(relating to a specific transaction, project or event) in
excess of Forty Thousand U.S. Dollars (U.S. $40,000);


(b) Sale or transfer of any interest in tangible assets of the
Company otherwise than in the ordinary course of business, or
having a value (individually or, in relation to any particular
project or transaction to be undertaken by the Company, in
aggregate) in excess of Forty Thousand U.S. Dollars (U.S.
$40,000);


(c) The execution of, or any other action binding the Company to,
any guarantee, indemnity, contract of surety or similar
instrument by or on behalf of the Company if it exceeds Forty
Thousand U.S. Dollars (U.S. $40,000) in liability to the
Company;


(d) The execution of any mortgage, pledge, assignment, encumbrance
or other security over or in respect to any property of the
Company (other than security interests granted with respect to
trade payables incurred in the ordinary course of business);


(e) The signatories to, and the other terms of mandate governing,
the bank account(s) of the Company;


(f) The engagement or removal of accountants, auditors,
solicitors, or taxation advisers by the Company or the
adoption, discontinuance or variation of any accounting or
taxation policy by the Company;


(g) Agreements between the Company and any of the shareholders or
between the Company and any company or juristic person in
which a shareholder, alone or jointly with other ...