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EXHIBIT 10.28
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 Xxxxxxx Xxxx Xxxx, XxXxxxxx, Xxxxxxx
00000 (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 00/0 Xxx 0 Xxxxxx-Xxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxx
00000 Xxxxxxxx (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
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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 persons
(either natural or juristic), holds or otherwise controls or
benefits from (directly or indirectly) any of the voting
shares, financial interests or other rights of control;
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(h) All items of capital expenditure in excess of Forty Thousand
U.S. Dollars (U.S. $40,000);
(i) Approval of final annual profit and loss accounts and balance
sheets;
(j) Any proposal or agreement for the Company to enter
into any partnership, joint venture, consortium, merger
(amalgamation), business combination, profit-sharing or
similar arrangement with any other company or person;
(k) Sale or transfer of any interest in any intangible assets of
the Company;
(l) Payment of dividends in accordance with Clause 12 (Dividend
Policy) below; and
(m) Any change in the Transfer Pricing Formula (the "Formula")
initially agreed on by the parties and attached hereto as
Exhibit "D" and incorporated herein by this reference. The
Formula reflects the price for carpet tiles to be charged by
the Company to each party hereto.
It is expressly understood that some of the above matters
shall require subsequent approval of the shareholders in
accordance with applicable law or when otherwise required by
the Board of Directors.
6.5 The Board of Directors may adopt a resolution without holding
a meeting if all Directors approve the action by placing their
signatures on the original copy of the resolution. Any such
resolution shall be effective and binding on the Company only
after all of the Directors have signed the resolution, but may
be made effective (by its terms) on an earlier date if so
stated therein. The duly signed resolution shall be delivered
to the Managing Director and placed in the Minute Book of the
Company.
7. SHAREHOLDERS' ACTION
7.1 The first general (regular) meeting of shareholders shall be
held within six (6) months after the date of registration of
the Company, and a general meeting shall be held at least once
every twelve (12) months thereafter, at such time and place as
determined by the Board. Such general meetings are called
"ordinary general meetings", and all other meetings of
shareholders are called "extraordinary general meetings." The
Chairman and any two Directors may summon extraordinary
general meetings (by proper written notice) whenever they
think fit.
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7.2 Not less than twenty (20) days prior written notice of every
ordinary general meeting (seven (7) days in the case of
extraordinary general meetings) shall be given to all
shareholders whose names appear in the register of
shareholders. This notice requirement may be waived in
writing by the shareholder entitled to notice. Notice to
shareholders in Thailand shall be given by post, and notice to
shareholders abroad shall be sent by registered airmail, or
cable, telex or telefax (in the three latter cases an express
delivery letter confirming the notice in writing shall be sent
to the shareholders). The notice shall specify the place, the
date and the hour of the meeting, and the nature of the
business to be transacted thereat.
7.3 A quorum of any meeting of shareholders shall require the
presence of shareholders, in person or by proxy, representing
seventy percent (70%) or more of all shares issued.
7.4 Each shareholder shall have one vote for each share of which
it is the holder. Votes shall be cast by a show of hand, by
poll or by written ballot, as directed by the Chairman.
7.5 Unless otherwise expressly provided herein or required by Thai
law, all resolutions or actions of the shareholders shall
require the affirmative vote of not less than seventy percent
(70%) of the shares with voting rights present at the meeting.
7.6 The following matters shall be passed by two successive
meetings of shareholders by affirmative votes of three-fourths
(3/4) of the shares present at the first meeting and by not
less than two-thirds (2/3) of the shares present at the second
meeting:
(a) To amend the Memorandum of Association or Articles of
Association;
(b) To increase or reduce the registered capital;
(c) To dissolve the Company;
(d) To merge or amalgamate with another company; and
(e) To allot new shares as fully or partly paid up otherwise
than in money.
8. USE OF NAMES
8.1 The parties acknowledge and agree that the names "INTERFACE",
"Heuga", "Interface Heuga", and all other combinations of
these names and other names or symbols constituting
trademarks, style names or trade names used by INTERFACE or
its Affiliates (hereinafter collectively referred to as the
"Marks") in connection with their businesses and products, or
their similar or comparable names or symbols in the Thai
language or any other language, belong exclusively to
INTERFACE (and its affiliates), and MODERNFORM shall make no
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claim of right or interest with respect thereto. A current
list of such marks and names is attached hereto as Exhibit "E"
and made a part hereof by this reference. "Affiliates" of
INTERFACE shall include Interface, Inc. (the parent Company of
INTERFACE) and all companies at least fifty percent (50%) of
which are owned directly or indirectly by Interface, Inc.
This obligation of MODERNFORM shall survive the termination of
this Agreement. The Marks may be used by the Company to the
extent INTERFACE specifically agrees in writing to such use;
provided, however, the Marks shall be deleted and removed from
the Company's name, seal, logos, stationery, business cards,
advertisements, packaging materials, brochures, samples,
telephone listings and all other items bearing such Marks, and
proper formality shall be conducted immediately to remove or
delete such Marks, if and when INTERFACE is no longer a
shareholder of the Company or INTERFACE requests such action
in writing to the Company's Managing Director or Board of
Directors. INTERFACE will notify MODERNFORM and the Company
of any Marks INTERFACE believes either of them may be using
improperly, and MODERNFORM will seek INTERFACE's advice in
case of any doubt by MODERNFORM about whether it or the
Company may be violating INTERFACE's rights regarding a Xxxx.
Both the Company and MODERNFORM shall take all actions and
timely execute all documents requested by INTERFACE to
effectuate the terms, substance and intent of this Clause.
8.2 MODERNFORM will not, and expressly undertakes to cause all
other persons or entities over which MODERNFORM exercises
control to not, commit any act or take any action at any time
which would in any way impair the rights of INTERFACE to any
of the Marks, both registered and unregistered, or claim,
acquire, register or attempt at any time to claim, acquire or
register any rights to any Marks by virtue of their Agreement
or otherwise. MODERNFORM will, and will use its best efforts
to cause all of its dealers or suppliers to, promptly cease
using any of the Marks or any item, as well as any word,
symbol, design, name or logo which in the sole opinion of
INTERFACE, so nearly resembles any of the Marks as to lead to
confusion or uncertainty or to mislead the public.
9. COMPETITIVE ACTIVITY
9.1 From the date of execution of this Agreement, and subject to
the provisions of Clause 9.2 below, neither party shall
commercially associate (directly or indirectly) with any other
person or enterprise, nor shall either party become or remain
a shareholder, partner, director, or managing partner, or
obtain or retain any ownership interest (directly or
indirectly) in other companies, partnerships, or other
business entities whose activities are substantially similar
in nature to or in any way competitive with the business or
activities of the Company, nor shall either party itself
engage (directly or indirectly)
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in such competitive activities, without the prior written
consent of the other party (whose consent shall not be
withheld unreasonably). This prohibition shall continue as to
each party through and including the earlier of: (1) date
which is twenty-four (24) months after the date on which
MODERNFORM ceases to be a shareholder of the Company, or
ceases to have rights under this Agreement by virtue of such
rights properly having been terminated for cause or due to
such party's material default of its obligations hereunder, or
(2) the date on which neither party hereto is a shareholder of
the Company or any successor entity, or (3) six (6) months
after the date on which INTERFACE ceases to be a shareholder
of the Company or any successor entity, or ceases to have
rights under this Agreement by virtue of such rights properly
having been terminated for cause or due to such party's
material default of its obligations hereunder. Nothing
contained in this Article 9 shall be deemed to relieve either
party of its obligations under Article 16 hereof.
9.2 The non-competition obligations under this Article shall be
applicable only in Thailand with respect to INTERFACE's
activities, and throughout the world (including Thailand) with
respect to MODERNFORM's activities. Notwithstanding the
provisions of Clause 9.1, and subject only to contrary
provisions which may appear in the Distribution Agreement
among INTERFACE, MODERNFORM and the Company INTERFACE shall be
entitled to sell its products directly to customers in
Thailand until such time as the Company has a sales and
marketing staff capable and willing to sell INTERFACE's
products on terms mutually agreeable to the Company and
INTERFACE and the Company is manufacturing carpet tiles of
sufficient quantity and quality to satisfy the demands of
customers in Thailand who desire to purchase carpet tiles.
9.3 Each party by executing this Agreement represents that it has
obtained from the Board of Directors of such party all
necessary written consents or approvals to enter into this
Agreement to the extent required by applicable corporate
by-laws, articles of association, laws or regulations.
10. PROJECT IMPLEMENTATION
10.1 The parties shall proceed promptly and in good faith to
achieve the Business Objectives upon final execution of this
Agreement.
11. FINANCING OF OPERATIONS
11.1 Necessary funds for the operation of the Company, not covered
by the Company's paid up capital, shall be principally secured
under the responsibility of the Company itself. However, if
the Company is unable to secure such funds, the shareholders
of the Company will
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cooperate reasonably in attempting to procure such necessary
funds by means of increase of capital, direct loan, guarantee
of Company obligations (unless prohibited by applicable laws,
regulations or other agreements), or otherwise, as the case
may be, but shall be responsible for such capital, direct
loan, guarantee or other arrangement severally (not jointly),
in proportion to their shareholdings of the Company.
Notwithstanding the foregoing provisions, neither party hereto
shall be required to supply directly, or obligate itself for
the payment or guarantee of, such additional funds.
12. DIVIDEND POLICY
12.1 Within one hundred and twenty (120) days after the end of
every financial year in which the Company has earned a profit
and a fund has been properly reserved to meet the requirement
of the laws, a Director may submit to the attention of the
shareholders resolutions of the Board of Directors approving
the payment of dividends.
12.2 By a vote of not less than a majority of all Directors, the
Directors may from time to time pay to the shareholders an
interim dividend in an amount justified by the profits of the
Company.
12.3 No dividend shall be paid otherwise than out of profits. If
the Company has incurred losses, no dividend may be paid
until such losses have been made good.
13. ACCOUNT'S AND RECORDS
13.1 The parties hereto agree that the Company's books and records shall be
maintained in the English language, with Thai translation if required
by Thai law or by the parties, according to generally accepted
international accounting principles (and Thai law). The original
books and records shall be maintained at the Company's principal
office.
13.2 The Company shall hire an auditing firm (or public registered
auditors) designated by INTERFACE who at the end of each fiscal year,
and at such other times as are considered necessary by any of the
Directors or the shareholders, will audit the accounts and records of
the Company at the expense of the Company. The auditor may be
replaced only by a majority vote of the shareholders.
13.3 The fiscal year of the Company, unless otherwise determined at a
general meeting of shareholders, will commence on January 1st and end
on December 31st.
13.4 Authorized representatives of Group A and Group B
shareholders, as designated by such shareholders, shall have
reasonable access to the books of account and records of the
Company and will be permitted to
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14
make extracts or copies therefrom during business hours of
the Company.
13.5 Copies of all audited financial statements of the Company
shall be furnished to the shareholders for review and
approval, as required by Thai law.
14. DEFAULT
14.1 A party shall be in default under this Agreement if it shall
fail to pay or properly and timely perform any of its material
obligations under or pursuant to this Agreement, or the
Distribution Agreement between that party and the Company.
In addition, specific events of default shall include
the following relative to a party:
(a) appointment of a trustee or receiver for all or any
substantial part of its assets or property,
(b) its insolvency or bankruptcy;
(c) a general assignment for the benefit of its
creditors;
(d) attachment of any substantial part of its assets;
(e) dissolution or liquidation of it.
14.2 Except for those events itemized in subparts (a) - (e) in
Clause 14.1 above (upon the occurrence of which termination
shall occur immediately upon written notice), no default under
Clause 14.1 hereof shall be deemed to have occurred until the
nondefaulting party has first given notice of such default to
the defaulting party, and the party in default has failed to
cure such default within thirty (30) days after receipt of
such written notice, or the default cannot be cured within
such time.
14.3 If a party defaults and fails to cure such default pursuant to
Clauses 14.1 and 14.2 hereof, the other party shall have the
right to immediately exercise one or more of the following
rights or such other rights as may be available:
(a) Terminate this Agreement (and exercise the
additional rights provided in Clauses 15.2 and 15.3
hereof);
(b) Recover any actual damages or costs which have been
incurred by the nondefaulting party as a result of
the other party's default, except damages arising
from special circumstances or causes beyond the
defaulting party's control; and
(c) Obtain an award of specific performance or injunctive
relief (as provided in Article 17) in appropriate
circumstances.
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15
15. TERM AND TERMINATION OF AGREEMENT
15.1 This Agreement shall become effective on the date of signing
of this Agreement (first set forth above) and shall continue
in effect through the corporate life of the Company, unless
earlier terminated as provided in this Agreement; provided,
however, that if any shareholder directly or indirectly sells
or transfers all of its shares in the Company in accordance
with the provisions of this Agreement, the rights, obligations
and liabilities of such selling party shall terminate (except
for those rights, obligations and liabilities existing prior
to the sale or transfer of shares or otherwise identified
herein as continuing obligations).
15.2 This Agreement may be terminated by the indicated party for
the following reasons:
(a) Default. If a party has defaulted pursuant to the
provisions of Clause 14 hereof, the other party shall
have the right to terminate this Agreement as
provided therein.
(b) Mutual Agreement. Upon the mutual written agreement
of each party hereto, this Agreement may be
terminated at any time. Any of the effects of
termination, as provided in this Article 15 or
elsewhere in this Agreement, may be expressly waived
in conjunction with such termination by mutual
written consent.
(c) Bankruptcy or Insolvency. In the event that a party
enters, applies to enter, or an application is made
by a third party intending to force that party to
enter, into bankruptcy, composition or
reorganization, or if a party becomes insolvent due
to its being unable to pay its debts as they become
due, then the other party shall have the right to
terminate this Agreement.
(d) Deadlock. In the event that the Board of Directors
is deadlocked (i.e., less than the required number of
total votes, or Group A and B votes, are cast in
favor of a motion or resolution to assure its
passage) on one or more material issues relevant to
the management of any of the essential corporate
affairs of the Company and the shareholders are
unable to break the deadlock within one hundred
twenty (120) days of being notified in writing by the
Chairman of the deadlock and the specific issue(s)
over which there is a deadlock, either party may
terminate this Agreement.
(e) Acquisition of Shares. In the event that one of the
parties acquires all of the shares of the Company
pursuant to Article 4 (or through any other
arrangement agreed to in writing by the parties),
this Agreement shall terminate automatically as to
the
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16
party which thereafter does not own any company
shares, but it shall remain in effect as to the other
party (if that party so elects), and any new party
which replaces the other original party.
Notwithstanding any contrary provision herein, the
provisions of this Agreement which by their terms are
intended to survive termination of this Agreement
shall remain binding on each of the parties hereto.
15.3 In the event this Agreement is terminated pursuant to the
provisions of this Article 15 (and notwithstanding any
contrary provisions in Clause 4.2 above), the parties shall
have the following rights, in addition to and without
prejudice to any other rights, remedies and obligations of the
parties existing at the time of termination.
(a) Option to Purchase or Sell Shares. If the
termination is effected by (i) a default under Clause
15.2(a), or (ii) bankruptcy or insolvency under
Clause 15.2(c), or (iii) deadlock under Clause
15.2(d), then the nondefaulting party in the case of
(i), or the solvent party in the case of (ii), or
INTERFACE in the case of (iii), shall have the right
to exercise one of the following options:
(1) Purchase all the shares of stock in the
Company owned by the other party at a price
equalling the fair market value of such
shares (determined as provided below), or
require the other party to purchase all the
shares in the Company owned by the invoking
party at the same price per share. The
purchase price shall be paid in full promptly
upon transfer of the shares, unless the
parties agree to other terms of sale. The
parties, as shareholders, shall consent to
and approve the aforesaid transfer of shares.
(2) Sell all (but not less than all) of the
shares of stock owned by the invoking party
(i.e., the non-defaulting party, the solvent
party, or INTERFACE, as the case may be) to a
third party, at such price (which is not
limited to a fair market valuation by the
Company's auditor) and upon such other terms
and conditions as may be agreed with such
third party. The parties, as shareholders,
shall consent to and approve the aforesaid
transfer of shares.
(3) Require the dissolution and liquidation of
the Company in accordance with the procedure
set forth in Clause 15.3(b) below.
The "fair market value" referred to in Clause
15.2(a)(1) shall mean the value determined by the
Company's auditor in
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17
accordance with internationally accepted accounting
standards, which shall include the value of goodwill
of the Company. The fair market value so determined
shall be final and binding on both parties.
The "third party" referred to in Clause 15.3(a)(2)
shall mean any person, juristic or natural, whether or
not such person engages in the same line of business
as the Company.
(b) Dissolution and Liquidation. If the termination is
effected by mutual agreement under Clause 15.2(b)
without a written agreement to sell shares to either
party (or to a permitted third party), or to sell the
Company as a going concern, or is elected by a party
under Clause 15.3(a)(3) above, then the Company shall
be dissolved and liquidated. In such cases the
parties shall, in their capacities as shareholders,
vote for a special resolution at a general meeting of
shareholders in favor of such dissolution and
liquidation, and the liquidation of the Company shall
commence in accordance with the laws of Thailand.
15.4 The indefinite duration of the term of this Agreement shall
not operate to extend or otherwise alter the specified
duration of any other agreements between the parties or among
the Company and the parties hereto.
15.5 Notwithstanding any contrary provision in this Agreement, in
the event that INTERFACE is no longer a shareholder of the
Company or the Company is dissolved, INTERFACE shall be
entitled to remove all equipment and other property and
documents from the Company and all facilities owned, leased or
used by the Company which use, contain, reflect or reveal any
of the Confidential Information (as defined in Paragraph 16.1
below) of INTERFACE, and all such equipment, property and
documents shall be delivered to INTERFACE's custody by the
Company; provided, however, as to equipment and machinery so
removed, INTERFACE will pay the appropriate party the fair
market value thereof, as determined by use of Clause 15.3.
16. CONFIDENTIALITY
16.1 Each party agrees to treat as secret and confidential all
documents, formulae, processes, trade secrets, proprietary
information or equipment, know-how and other materials and
information concerning technical, manufacturing, financial,
sales or marketing information (collectively referred to
herein as "Confidential Information") of the other party which
they may obtain during the course of this Agreement and the
business relationship between the parties, unless disclosure
of such information is expressly permitted by written
agreement of the
- 17 -
18
party whose Confidential Information is subject to being
disclosed, or is unequivocally required by law.
16.2 Acting in their capacities as shareholders, the parties shall
cause the Company to adopt measures to ensure that the
Company, and its Directors, officers, employees and agents who
are given access to such Confidential Information, shall treat
all such Confidential Information as secret and confidential,
and that they also shall be bound by and shall fulfill the
obligations of the parties set forth in Clause 16.3 below, so
as to ensure that such information will not be made available
to or used by any unauthorized third party.
16.3 Each party hereto agrees that it shall not use (directly or
indirectly) or disclose (directly or indirectly) to any other
person or entity any written or oral Confidential Information
obtained from the other party or from the Company for any
purposes whatsoever except in connection with accomplishing
the Business Objectives and for the sole and exclusive benefit
of the Company. Any patent rights or other intellectual
property rights developed solely by employees of the Company
without reference to, use of, or reliance on any Confidential
Information of INTERFACE shall remain exclusively the property
of the Company unless the Board of Directors decides otherwise
by affirmative vote of at least three fourths (3/4) of all
Directors. Any other patent rights or intellectual property
rights developed by the Company or employees or
representatives of the Company shall be and remain the
property of INTERFACE. The parties shall cause the Directors
and employees of the Company to take all actions necessary to
perfect and preserve such rights.
16.4 The covenants and agreements of this Article 16 shall survive
the termination of this Agreement and be binding on each party
hereto, the Directors, officers, employees and agents of the
Company, and any other person or entity which becomes an owner
of shares in the Company, for a period of ten (10) years after
such party, and such other person or entity, ceases to own any
shares of the Company, and such Directors, officers employees
and agents cease to be employed by or serve the Company.
17. SPECIFIC PERFORMANCE
17.1 The parties hereby agree that notwithstanding anything to the
contrary contained in the Articles of Association of the
Company, either now or in the future, the provisions of this
Agreement shall be binding upon the parties and they agree to
exercise their respective voting rights in such a manner as
may be necessary to ensure that the provisions contained
herein are honored.
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19
17.2 In the event any party fails to abide by the provisions of
this Agreement, the other party may commence an action against
such party to obtain any equitable remedy available, including
but not limited to an award of specific performance or
injunctive relief.
17.3 Notwithstanding any contrary provision in this Agreement, the
enforcement of this Clause 17 may be obtained in the Civil
Court of Bangkok according to the provisions of Thai law.
18. FORCE MAJEURE
18.1 Neither party hereto shall be liable for any breach or failure
to perform hereunder where such failure is caused by
contingencies beyond the control of such party, including but
not limited to acts of God, fire, flood, storms, typhoons,
wars, civil strike, sabotage, and governmental actions of
either the Government of Thailand or the U.S.A. (including but
not limited to currency import or export prohibitions). The
party so prevented from complying herewith shall immediately
give notice thereof to the other party and shall continue to
take all actions reasonably within its power to comply as
fully as reasonably possible with the terms of this Agreement.
19. NON-ASSIGNMENT
19.1 Neither this Agreement nor any rights or obligations hereunder
may be assigned by either party without the prior written
consent of the other party. Neither party hereto shall
unreasonably withhold its consent to an assignment of any
rights or obligations under this Agreement by the other party
to an Affiliate of the party seeking such assignment, provided
that the Affiliate assumes all of the obligations of such
party, and such party also remains bound to perform (or cause
to be performed) all of its obligations hereunder. The term
"Affiliate" as used in this Agreement means another company,
legal person or entity, partnership, joint venture or other
similar enterprise more than fifty percent (50%) of which is
owned or controlled, directly or indirectly, by the party
hereto of which it is an Affiliate.
20. COSTS AND EXPENSES
20.1 Except as otherwise expressly provided herein, each of the
parties shall bear its own costs and expenses incurred in the
negotiation, arrangement and preparation of all documentation
relating to any transaction stipulated in this Agreement.
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20
21. NOTICE
21.1 Any notice, report or other communication to be given by one
party to the other (or to shareholders) in connection with
this Agreement shall be given in English and, unless otherwise
specifically indicated herein, shall be transmitted by
registered or certified airmail, postage prepaid, return
receipt requested, addressed to the receiving party at the
address set forth below (or at such other address of which the
sending party shall have been previously advised in writing
pursuant to this Article), or by telex or telefax addressed to
such address, followed by a confirmation letter express mailed
in the above manner. Any such notice shall be considered to
have been delivered, received and made effective seven (7)
days after its dispatch, except for notice by telex and
telefax which shall be deemed effective on the date on which
it is sent, provided, in the case of telex notices, that the
answer back of the receiving party is recorded at the end of
the message indicating that the telex has been received.
To INTERFACE: Xx. Xxxxx Xxxxxx
President
Interface Asia-Pacific, Inc.
Shui on Centre 1413-1418
0 Xxxxxxx Xxxx
Xxxx Xxxx
Fax: 011/000-000-0000
With a copy to: Xxxxx X. Xxxxxx
Vice President-General Counsel
Interface, Inc.
0000 Xxxxx Xxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
To MODERNFORM: Khun Chareon Usanachitt
Vice Chairman and Executive Director
Modernform Group Public Company Limited
00/00 Xxx 00 Xxxxxxxxxxxx Xxxx
Xxxxxxx 00000 Xxxxxxxx
Fax: 011/000-000-0000
To the Company: The General Manager
Interface Modernform Co., Ltd.
00/00 Xxx 00 Xxxxxxxxxxxx Xxxx
Xxxxxxx 00000 Xxxxxxxx
Fax: 011/000-000-0000
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21
With a copy to: Xx. Xxxxx Xxxxxx
President
Interface Asia-Pacific, Inc.
Shui on Centre 1413-1418
0 Xxxxxxx Xxxx
Xxxx Xxxx
Fax: 011/000-000-0000
And a copy to: Khun Chareon Usanachitt
Vice Chairman and Executive Director
Modernform Group Public Company Limited
00/00 Xxx 00 Xxxxxxxxxxxx Xxxx
Xxxxxxx 00000 Xxxxxxxx
Fax: 011/000-000-0000
22. GOVERNING LAW
22.1 Subject to Clause 17.3 hereof, the validity, interpretation
and performance of this Agreement shall be determined and
enforced insofar as is possible in accordance with the laws of
the State of Georgia, United States of America.
23. DISPUTES
23.1 Except as allowed in Clause 15.3 (relating to procedures in
the event of deadlock) and Article 17 (relating to equitable
remedies), and any other Clause allowing a party to seek
specific performance or injunctive relief, any dispute,
controversy or claim arising out of or in connection with this
Agreement, or the breach, termination or alleged invalidity
hereof, cannot be amicably settled by the parties, then the
matter shall be settled by (and solely by) arbitration. The
award of the arbitrators shall be final and binding upon the
parties.
23.2 The arbitration shall be conducted under the jurisdiction of
the United Kingdom, and will be conducted in accordance with
the International Chamber of Commerce rules and procedure and
evidence. The venue shall be London, England, and the laws of
the State of Georgia and the United States of America shall be
the governing substantive law. All proceedings shall be
conducted exclusively in the English language. The parties
agree that all decisions rendered by the arbitrators shall be
binding and enforceable in accordance with the Convention on
the Recognition and Enforcement of Foreign Arbitral Awards of
1958, as amended. In connection with all such arbitrations
conducted pursuant to this Article, if the party requesting or
demanding such arbitration is not awarded in substantial part
the relief requested by such party in its request or demand
for arbitration, then such party shall be
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22
obligated to pay all costs of the arbitration as assessed by
the arbitrators.
23.3 Judgment on the arbitration award may be entered in any Court
of law having jurisdiction.
23.4 Unless manifestly impossible or impractical, the parties shall
continue to perform their obligations under this Agreement
without any suspension or delay while such arbitration is in
process.
24. SEVERABILITY
24.1 If any provision of this Agreement shall be deemed illegal or
unenforceable, such illegality or unenforceability shall not
affect the validity and enforceability of any other legal and
enforceable provisions hereof, which shall be construed as if
such illegal or unenforceable provision or provisions had not
been inserted herein, unless the severance of such illegal or
unenforceable provisions would destroy the underlying business
proposes of this Agreement.
25. WAIVER
25.1 No failure or delay on the part of a party hereto to exercise
any right, power or remedy hereunder shall operate as a waiver
thereof by such party, nor shall a single or partial exercise
of any right, power or remedy by a party preclude any further
exercise thereof or the exercise of any other right, power or
remedy by such party. No express waiver or assent by a party
hereto to any breach of or default in any term or condition of
this Agreement by the other party shall constitute a waiver of
or assent to any subsequent breach of or default in the same
or any other term or condition hereof.
26. HEADINGS
26.1 The headings of Articles and paragraphs used in this Agreement
are inserted for convenience of reference only and shall not
affect the interpretation of the respective provisions of this
Agreement.
27. ENTIRE AGREEMENT AND AMENDMENT
27.1 This Agreement, together with its exhibits attached hereto,
constitutes the entire and only agreement between the parties
with respect to the subject matter hereof, and supersedes any
other commitments, agreements, or understandings, written or
verbal, that the parties hereto may have had. No
modification, change or amendment of this Agreement shall be
binding upon the parties hereto except pursuant to
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23
a written document of subsequent date signed by an authorized
officer or representative of each party hereto.
28. BINDING EFFECT
28.1 This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors
and permitted assigns.
29. COUNTERPARTS
29.1 This Agreement shall be executed in multiple counterparts (one
in English and one in Thai for each party to this Agreement).
Each counterpart will for all purposes be deemed an original
and all such counterparts together shall constitute one and
the same agreement. In the event of a dispute concerning the
meaning of any provision herein, or in any document pertaining
to this Joint Venture, the English language version shall
control.
IN WITNESS WHEREOF, this Agreement has been executed on behalf of the
parties by their respective duly authorized representatives as of the date
first appearing above.
INTERFACE ASIA-PACIFIC, INC.
(Seal) By: /s/
--------------------------------------
Title: President
-----------------------------------
Witness: /s/
--------------------------------
Date: 23 August 1994
-----------------------------------
MODERNFORM GROUP PUBLIC CO., LTD.
(Seal) By: /s/ Chareon Usanachitt
------------------------------------
Chareon Usanachitt
Modernform Title: Vice Chairman and Executive Director
Director
MODERNFORM GROUP PUBLIC
COMPANY LIMITED Witness: /s/
--------------------------------
Date: 26th August 1994
----------------------
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