CONE MILLS CORP
JOINT VENTURE AGREEMENT EXHIBIT 10.27.1
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>exh10-271.txt
<DESCRIPTION>JOINT VENTURE AGREEMENT EXHIBIT 10.27.1
<TEXT>

                                                                Exhibit 10.27.1


================================================================================

                             JOINT VENTURE AGREEMENT




                                     between




                 ISKO DOKUMA ISLETMELERI SANAYI VE TICARET A.S.




                                       and




                             CONE MILLS CORPORATION

                                       and




                               Zekeriye Konukoglu


                                       and


                                 Fatih Konukoglu

                                       and

                                Oguzhan Gurdogan


                            Dated as of June 17, 2002






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<PAGE>



                                TABLE OF CONTENTS


                                                                           Page


                                    ARTICLE I
                               STOCKHOLDER ACTIONS

1.1     Ordinary Actions..................................................... 2
1.2     Extraordinary Actions................................................ 2

                                   ARTICLE II
                               BOARD OF DIRECTORS

2.1     Board of Directors................................................... 3
2.2     Decisions by the Board of Directors.................................. 3
2.3     Election of Directors................................................ 5
2.4     Adoption of Initial Business Plan.................................... 6

                                   ARTICLE III
                                    OFFICERS

3.1     Nomination of Officers............................................... 6

                                   ARTICLE IV
                              CAPITAL CONTRIBUTIONS

4.1     Initial Capital Contributions........................................ 7
4.2     Additional Capital Contributions..................................... 7

                                    ARTICLE V
                              TRANSFER OF JV STOCK

5.1     Restrictions on Transfer of JV Stock................................. 8
5.2     Notification of Transfer Restrictions................................ 9

                                   ARTICLE VI
                         CERTAIN COVENANTS ANDAGREEMENTS

6.1     Financial and Other Information...................................... 9
6.2     Confidentiality..................................................... 10
6.3     Public Announcements................................................ 10
6.4     Compliance with Laws................................................ 11



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<PAGE>


                                                                           Page

                                   ARTICLE VII
                                  MISCELLANEOUS

7.1     Definitions......................................................... 11
7.2     Termination......................................................... 13
7.3     Governing Law....................................................... 14
7.4     Arbitration......................................................... 14
7.5     Recapitalizations, Exchanges, etc. Affecting JV Stock............... 14
7.6     Amendment, Assignment, etc.......................................... 14
7.7     Notices............................................................. 14
7.8     Permitted Transferee Shares......................................... 15
7.9     Expenses............................................................ 15
7.10    Severability; Invalidity............................................ 15
7.11    No Third Party Beneficiaries........................................ 15
7.12    Translation......................................................... 15
7.13    Integration; Section Headings; Counterparts; etc.................... 15



                                       ii
<PAGE>



                             JOINT VENTURE AGREEMENT


     JOINT VENTURE  AGREEMENT,  dated as of June 17, 2002 between (1) CONE MILLS
CORPORATION  ("Cone"),  a corporation  organized  under the laws of the State of
North Carolina,  United States of America, (2) ISKO DOKUMA ISLETMELERI SANAYI VE
TICARET A.S., a  corporation  organized  under the laws of Turkey,  (3) Zekeriye
Konukoglu, (4) Fatih Konukoglu and (5) Oguzhan Gurdogan (Isko Dokuma Isletmeleri
Sanayi ve  Ticaret  A.S.,  Zekeriye  Konukoglu,  Fatih  Konukoglu,  and  Oguzhan
Gurdogan shall hereinafter collectively be referred to in this Agreement and all
other agreements related to the Joint Venture as "Isko").


                                    RECITALS

     A. Isko and Cone wish to establish a joint venture to sell denim fabrics to
Levi Strauss Europe or its 100% owned subsidiaries  ("LSE") for Levi's(R) 501(R)
jeans such fabrics to be marketed to LSE by Cone and produced by Isko based upon
orders allocated by Cone and accepted by Isko (the "Project").

     B. Isko and Cone are in the process of forming and organizing  IsKone Denim
Pazarlama A.S.  ("JV"),  to be organized  under the laws of Turkey within a Free
Trade Zone, for the purpose of carrying out the Project.

     C. JV has issued to Isko 49,000  shares and Cone 51,000  shares of ordinary
voting  stock,  par value $ 1.00 per share,  representing  all of the issued and
outstanding  shares of capital  stock of JV (such  shares of stock and all other
shares of capital stock of JV which may be  outstanding  from time to time,  the
"JV Stock").

     D. Isko and Cone have contributed, or agreed to contribute, $49,000 and
$51,000 respectively, to JV in cash.

     E. Isko and Cone have  caused  the  articles  of  association  set forth as
Exhibit A to be adopted as the initial articles of association of JV (as amended
from time to time, the "Articles of Association").

     F. Isko and Cone desire to set forth their  agreement as to the  management
of JV, transfers of JV Stock and certain other matters relating to JV.

     NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, the parties hereto agree as follows:



                                       1
<PAGE>


                                    ARTICLE I
                               STOCKHOLDER ACTIONS

     1.1 Ordinary  Actions.  The following action (the "Ordinary  Action") shall
not be taken without the approval, at a duly convened  Stockholders' meeting, of
Stockholders  holding  a  majority  of  the  shares  of JV  Stock  held  by  all
Stockholders present or represented at such meeting;  provided that Stockholders
holding at least a majority of the outstanding shares of JV Stock are present or
represented  at such meeting:  election of the members of the Board of Directors
of JV (the "Board of  Directors"),  said Board of  Directors  to consist of four
members with Cone and Isko each having the right to designate  two Directors and
two alternates

     1.2 Extraordinary Actions. None of the following actions (collectively, the
"Extraordinary Actions") shall be taken without the approval, at a duly convened
Stockholders'  meeting, of Stockholders  holding at least 75% of the outstanding
shares of JV Stock.

     (a) any amendment to the Articles of Association;

     (b)  appointment  of  the  independent   auditors  of  JV  or  approval  or
          modification  of the  annual  report  of the Board of  Directors,  the
          annual  financial  statements  of JV  and  the  annual  report  of the
          auditors of JV;

     (c)  any liquidation, merger/acquisition,  dissolution, split-up, a sale of
          all or  substantially  all of its assets or similar  transaction by or
          involving JV;

     (d)  any  recapitalization,  capital increase or capital reduction by JV or
          issuance or  repurchase  of any equity  securities  of JV,  securities
          convertible  into or exchangeable  for equity  securities of JV or any
          options to acquire any of the foregoing;

     (e)  declaring  dividends  based  on the  recommendation  of the  Board  of
          Directors;  provided however,  in the event that there is no agreement
          between the stockholders of JV as to the distribution of profit,  100%
          of the  profit  for the  relevant  year  shall be  distributed  to the
          Stockholders as dividends; or

     (f) any other actions which may be required by applicable Turkish law.



                                       2
<PAGE>


                                   ARTICLE II
                               BOARD OF DIRECTORS

     2.1.  Board of  Directors.  The Board of Directors  shall have four members
(each, a "Director") and four alternates.  The members and the alternates may be
elected for a maximum term of office of three (3) years.  A member whose term of
office expires may be re-elected.

     2.2 Decisions by the Board of Directors.  (a) The Board of Directors  shall
meet as required by law, and  otherwise  when  requested by any Director upon at
least 20 days  notice  to each  other  Director.  The  Chairman  of the Board of
Directors  shall  prepare and furnish to each other  Director,  at least 10 days
prior to any  meeting of the Board of  Directors,  an agenda  for such  meeting,
which agenda shall include any proposed  action that any Director  shall request
by notice to the  Chairman  no later than 15 days prior to such  meeting.  Three
Directors  shall  be  required  for a  quorum  of any  meeting  of the  Board of
Directors.  Should  there be a failure  of a quorum and  continued  failure of a
quorum  for  ninety  days,  then two  Directors  shall  constitute  a quorum for
purposes  of that  meeting.  Decisions  may be taken by the  Board of  Directors
without a meeting if a proposal  for action is  submitted  in writing in turn to
each of the members of the Board of Directors  and each such member  consents in
writing to such action.

     (b)  The following issues  (collectively,  the "Fundamental  Actions") will
          require the  affirmative  vote of at least 3  directors,  including at
          least  one (1) of the  directors  nominated  by each of Cone and Isko,
          except to the extent any such  action is  specifically  set forth in a
          Business  Plan  approved  by the  Board  of  Directors  in  accordance
          herewith:

     (i)  approval  of  the  annual  budget  (including  the  annual  investment
          budget),  such  approval  to occur not later than  December  30 of the
          preceding year, and any amendments thereto;

     (ii) approval  and   modification  of  any  business  plan  and  any  major
          investments to be made by the Company;

     (iii)appointment/dismissal  and  setting/modification  of the  compensation
          and other terms of employment of the Company's Chief Executive Officer
          or any other senior officer;

     (iv) approval and modification of the JV's "Signature Circular";

     (v)  incur any capital  commitment  in excess of  US$100,000  in any single
          transaction  or in excess of US$150,000  in any one financial  year of
          the Company other than those already  agreed to in the annual  capital
          budget;



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<PAGE>


     (vi) entering  into,  amending,  terminating or replacing any Joint Venture
          Credit Facility or any other financing or credit agreement (other than
          draw downs  under  letters of credit or other  financing  arrangements
          previously   authorized  by  the  Board  of  Directors  in  accordance
          herewith);

     (vii)any draw  down or other  borrowing  under  any  Joint  Venture  Credit
          Facility or any other previously  authorized credit facility having an
          aggregate principal amount in excess of US$50,000 or equivalent;

     (viii) borrow or raise in excess of US$100,000 in any single transaction or
          in excess of US$150,000 in aggregate outstanding at any one time other
          than in the ordinary course of business;

     (ix) initiation  or  settlement of any claim,  litigation,  arbitration  or
          other judicial or administrative  proceedings  against any third party
          where the amount at issue exceeds US$ 20,000 or its  equivalent in any
          currency;

     (x)  any  authorization,  declaration  or payment of any  dividend or other
          distribution  on any shares of JV Stock;

     (xi) enter into equity joint  venture  arrangements  or  agreements  in any
          market or  country;

     (xii)acquire or dispose of any interest in any other  company,  partnership
          or business;

     (xiii) enter into or modify agreements  between the JV and a Stockholder of
          the JV;

     (xiv)establish  depreciation policy rates and accruals;

     (xv) grant a power of attorney or powers of delegation or similar powers to
          any person if such power or delegation  relates to any matter which is
          subject to the voting  requirement  of these  provisions;

     (xvi)enter  into  any  contract  or  series  of  related  contracts  with a
          duration of more than one (1) year other than  contracts or agreements
          executed  contemporaneously  herewith  related to this JV Agreement or
          otherwise in the ordinary course of business;

     (xvii) guarantee or lend any money;

     (xviii) set the terms and  jurisdiction  for any initial public offering of
          JV  Stock,  and



                                       4
<PAGE>


     (xix)purchase,  sell,  mortgage charge or rent any property,  any assets or
          group of related  assets or any  interest  of JV or its  subsidiaries;

     (xx) approval of any  material  changes to the product  range of JV;

     (xxi)appointment or dismissal of external auditors;

     (xxii) the  appointment  or dismissal of JV's legal counsel or the adoption
          or  modification  of  any  material  accounting  or tax  principle  or
          practice of JV;

     (xxiii) the entry by JV into any significant  business activity not related
          to the Project;

     (xxiv) any matter  proposed at a meeting of the Board of Directors that was
          not contained in the agenda for such meeting  previously  furnished to
          each Director in accordance with Section 2.2(a); and

     (xxv)any  other  transactions  not  occurring  in the  ordinary  course  of
          business or issues  which as a matter of Turkish  legislation  require
          the approval of the Board of Directors.


     (c) The  Chairman of the Board of  Directors  shall have the power to break
ties in the event of a deadlock among the Directors. The Vice Chairman shall not
have the power to break ties.

     (d) No  fees  shall  be paid to  Directors  for  serving  on the  Board  of
Directors.

     2.3.  Election  of  Directors.   (a)  Directors  and  alternates  shall  be
designated as follows:  (i) Cone and Isko shall each have the right to designate
two  Directors  and two  alternates  and  (ii)  any  positions  on the  Board of
Directors (including  alternates) not filled by persons designated in accordance
with the foregoing clause (i) shall be elected by the Stockholders in accordance
with the Articles of Association at a duly convened  Stockholders'  meeting. The
initial Directors and their respective alternates are set forth on Schedule I.

     (b) Each  Stockholder  shall vote its shares of JV Stock so as to elect and
continue in office the Directors and  alternates  designated in accordance  with
this  Section  2.3.  Each  Stockholder   entitled  to  designate  directors  and
alternates  pursuant  to clause (i) of  Section  2.3 (a) shall have the right to
replace  any of its  designees  at any time by notice to the other  Stockholders
and, in such event, such other Stockholders shall take such



                                       5
<PAGE>


actions as are necessary in order to elect such replacement as promptly as
practicable, including without limitation by convening and holding a meeting of
Stockholders.

     (c)  In the  event  a  Stockholder  entitled  to  designate  Directors  and
alternates  pursuant to clauses (i) or (ii) of Section 2.3 (a) is not  permitted
to do so as a result of any foreign  investment or other  applicable laws or any
provision  of the  Articles of  Association  restricting  ownership of different
classes or series of JV Stock,  each Stockholder  shall use its best efforts and
take such actions as are necessary to cause such  Stockholder's  designees to be
elected as Directors and alternates as promptly as practicable  and to otherwise
give effect to the provisions of Sections 2.3 (a) and (b).

     (d) Cone shall have the right to  designate  the  Chairman  of the Board of
Directors,  and to replace  such  Chairman at any time by notice to the Board of
Directors and Isko.  Isko shall have the right to designate the Vice Chairman of
the Board of Directors,  and to replace such Vice Chairman at any time by notice
to the Board of Directors and Cone.

     2.4. Adoption of Initial Business Plan. Isko and Cone shall cause the Board
of Directors to adopt, as promptly as practicably  possible, a business plan for
JV covering the period from the  Commercial  Operation Date until the end of the
third full fiscal year of JV.


                                   ARTICLE III
                                    OFFICERS

     3.1. Nomination of Officers.  (a) The chief executive officer "CEO" and the
chief  financial  officer  "CFO" shall be  appointed  as  follows:  (i) Cone may
propose,  for  approval  by the  Board of  Directors,  candidates  for the chief
executive  officer,  who shall also be a Director;  and (ii) Isko shall propose,
for  approval  by the Board of  Directors,  candidates  for the chief  financial
officer.

     (b) In addition to the CFO's primary duties, the CFO together with a second
officer of the JV, shall be  authorized  to represent  and  administer  the JV's
business affairs,  through a "Signature  Circular" which addresses the following
authorizations:

     i)   to  purchase  products  for the JV,  sell and invoice to LSE and remit
          payments  pursuant to the  Transfer  Price  Agreement  upon receipt of
          funds  from LSE;

     ii)  to represent JV for JV's business  affairs in  government  and private
          offices,  banks,  with real  persons and legal  entities,  to sign all
          documents,  checks,  agreements and contracts;

     iii) to represent  JV in cashing  checks up to $ 10,000,  making  payments,
          making  transfers  between JV's bank accounts,  nullify issued payment
          warnings,  instructing  transfers for matters,

     iv)  to represent JV in JV's following matters:



                                       6
<PAGE>


          1.   Deposit and/or withdrawal of guarantees;

          2.   Official     correspondence     and    declarations     including
               administrative;   financial,   general  formal  governmental  and
               institutional   declarations,   payroll,  balance  sheet,  income
               statements, and accounting status;

          3.   Receipts and required statements for banks, producers,  suppliers
               and customers;

          4.   Preparation  of customs  declaration  forms and all other customs
               related processes and documentation;

          5.   Correspondence  and  resolution  of all  matters  with the Social
               Security Administration and The Regional Labor Department;

          6.   Agreements and resolution of all matters with Water, Electricity,
               Natural   Gas,   Power,   PTT    (communications),    and   alike
               organizations;

          7.   All  correspondence  and  resolution  of  all  matters  with  the
               transportation   and   logistics   companies   related   to   all
               import/export activities;

          8.   Insurance  policies,  and  resolution  of all matters  related to
               damage, damage control, and compensations; and

          9.   Acceptance of guarantee letters, cashing of guarantee letters;

     v)   to represent  JV in  transferring  and wiring funds  between JV's bank
          accounts and  resolving  all matters  related to the subjects  between
          JV's bank accounts.

     (b) The other senior  officers  shall be nominated and elected by the Board
of Directors  pursuant to Section 2.2 (b) and in accordance with the Articles of
Association.

     (c)  The  chief  executive  officer  and  chief  financial  officer  can be
terminated only for provable cause.


                                   ARTICLE IV
                              CAPITAL CONTRIBUTIONS

     4.1. Initial Capital Contributions. On or prior to the date hereof, each of
Isko and Cone has contributed to JV $ 49,000 and $ 51,000, respectively, in cash
in  consideration  for the  shares  of JV Stock for  which  they have  initially
subscribed.

     4.2.  Additional Capital  Contributions.  From time to time upon receipt of
written notice from JV (the "Contribution Notice"), each of Isko and Cone shall,
on the tenth day following receipt of the Contribution Notice or such later date
as specified  therein,  contribute in cash in such additional  amounts (each, an
"Additional



                                       7
<PAGE>


Contribution") as directed by JV in the Contribution Notice; provided that the
aggregate amount contributed to JV by each of Isko and Cone under this Article
IV shall not exceed $ 50,000.


                                    ARTICLE V
                              TRANSFER OF JV STOCK

     5.1. Restrictions on Transfer of JV Stock. (a) No Stockholder may, directly
or indirectly, sell, transfer, assign, pledge, option, mortgage,  hypothecate or
otherwise  dispose of or encumber  (collectively,  "transfer")  any shares of JV
Stock to any Person,  except (i) at any time following the fourth anniversary of
the date hereof,  upon  compliance  with  Sections 5.1 (b) and (c), or (ii) to a
Permitted Transferee of such Stockholder upon compliance with Section 5.1 (b).

     (b) No  Stockholder or any of its successors in interest shall transfer any
shares of JV Stock to any Person  pursuant to clauses (i) or (ii) of Section 5.1
(a) unless  and until all other  Stockholders  grant  written  consent  and such
Person  shall  have  agreed  in  writing,  in a  manner  acceptable  in form and
substance to each other  Stockholder,  to accept such shares of JV Stock subject
to the terms and  conditions  of and to be bound by this  Agreement.  Each party
hereto shall be, and shall remain,  obligated for the performance by any of such
party's  Permitted  Transferees of its  obligations  hereunder in the event of a
transfer of any shares of JV Stock to such Permitted Transferee.  Upon execution
and delivery of a writing meeting the requirements of the first sentence of this
Section 5.1 (b), any such  transferee  shall  constitute a  Stockholder  for all
purposes of this Agreement.

     (c) Any transfer of JV Stock in accordance with Section  5.1(a)(i) shall be
pursuant to the following process:

     (i)  If any  Stockholder  desires to  transfer  JV Stock,  the  independent
          auditors of JV ("Auditor") will be retained to administer the transfer
          process;

     (ii) The  Stockholder  seeking to  transfer JV Stock (the  "Seller")  shall
          notify the  Auditor in  writing of its  intention  to sell and at what
          price per share;

     (iii)Auditor   will   notify   the   other   Stockholder(s)   (the   "Other
          Stockholder(s)")  of the Seller's  intent to sell and the price within
          five days;

     (iv) Upon receipt of such notice,  the Other  Stockholder(s)  shall have 30
          days within  which to inform  Auditor if they wish to buy  Seller's JV
          Stock or to sell their JV Stock for the same price. Failure to respond
          within the 30-day  period  following  receipt of notice is  considered
          notice by any Other Stockholder(s) that they wish to sell all their JV
          Stock;



                                       8
<PAGE>


     (v)  Should any Other  Stockholder(s)  wish to sell,  and there be no Other
          Stockholder(s) desiring to buy, Seller shall be required to buy all JV
          Stock sought to be sold by such Other Stockholder(s);

     (vi) Should  there be more than one Other  Stockholder(s)  desiring  to buy
          Seller's JV Stock (the  "Buyer(s)"),  the shares will be  allocated to
          the Buyers in proportion to their  respective  holdings of outstanding
          JV Stock;

     (vii)Should any Other  Stockholder(s) wish to sell, the Buyer(s) shall have
          to purchase all JV Stock from the Seller and the Other  Stockholder(s)
          wishing  to sell at the  Seller's  original  price per share  when the
          process was initiated in proportion  to their  respective  holdings of
          outstanding JV Stock;

     (viii) Auditor shall complete the  transaction  within 30 days.  Should any
          Buyer(s)  be unable to pay the  purchase  price for the JV Stock to be
          purchased,  Seller  and  Other  Stockholder(s)  wishing  to  sell  can
          purchase each Buyer(s) JV Stock for book value in accordance  with the
          U.S. GAAP in proportion to their respective holdings of outstanding JV
          Stock;

     (ix) The  process  may be  initiated  at any time so long as there  are two
          Stockholders;

     (x)  Costs of Auditor in administering the process shall be borne by Seller
          and selling Other  Stockholder(s)  in  proportion to their  respective
          holdings of initiating JV Stock.

In addition to this process, with respect to its JV Stock, Cone is granted a put
option to Isko, with the share price to be determined by the book value per
share of JV in accordance with U.S. GAAP. Valuation will be performed by
Auditor.

     5.2.  Notification  of Transfer  Restrictions.  Each of Isko and Cone shall
cause  (i)  appropriate  notations  and  entries  to be made in the  JV's  share
registry and the Articles of Association to reflect that the JV Stock is subject
to transfer restrictions contained in this Agreement,  and (ii) the certificates
representing JV Stock to bear legends reflecting this Agreement.

                                   ARTICLE VI
                        CERTAIN CONVENANTS AND AGREEMENTS

     6.1. Financial and Other  Information.  (a) The Stockholders shall cause JV
to prepare and deliver to each Stockholder:

     (i)  As soon as available  and in any event within 20 days after the end of
          each  fiscal  year  of JV,  an  audited  balance  sheet  of JV and its
          subsidiaries as at the



                                       9
<PAGE>


         end of such fiscal year, and the related audited consolidated
         statements of income, stockholders' equity and changes in financial
         position of JV and its subsidiaries for such fiscal year, setting forth
         in each case in comparative form the figures for the previous fiscal
         year (to the extent applicable), prepared both in Turkish in accordance
         with Turkish GAAP and in English in accordance with U.S. GAAP, each
         consistently applied, and all in reasonable detail;

     (ii) As soon as available  and in any event within 15 days after the end of
          each of the  first  three  quarters  of  each  fiscal  year  of JV,  a
          consolidated balance sheet of JV and its subsidiaries as of the end of
          such  quarter,  and the  related  consolidated  statements  of income,
          stockholders'  equity and changes in the financial  position of JV and
          its  subsidiaries  for such quarter and for the current fiscal year to
          date,  setting forth in each case in comparative  form the figures for
          the  corresponding  quarter  in  the  previous  fiscal  year  and  the
          corresponding  portion  of JV's  previous  fiscal  year (to the extent
          applicable),  prepared both in Turkish in accordance with Turkish GAAP
          and in  English  in  accordance  with  U.S.  GAAP,  each  consistently
          applied, subject to changes resulting from year-end audit adjustments,
          all in  reasonable  detail and  certified  by the chief  financial  or
          accounting officer of the Company; and

     (iii)With reasonable promptness,  such other information with respect to JV
          and  its  subsidiaries  as any  Stockholder  may  from  time  to  time
          reasonable request.

     (b) JV shall permit any Stockholder and its respective employees, agents or
representatives  to  visit  and  inspect  any of the  properties  of JV and  its
subsidiaries,  including  its books of account,  and to discuss its  operations,
financial  condition and accounts with JV's officers and its independent  public
accountants,  all at such  reasonable  times and as often as any Stockholder may
reasonably request.  The cost of such visits and inspections will be born by the
requesting party.

     (c)  The  foregoing  provisions  shall  not  limit  any  rights  which  any
Stockholder may have as a shareholder of JV under applicable laws.

     6.2.  Confidentiality.  Each  Stockholder  shall not use or disclose to any
third party (other than their respective financial advisors, attorneys and other
agents and representatives) any information relating to JV, this Agreement,  the
business and operations of JV or the transactions  contemplated  hereby,  except
such  information  as is required to be  disclosed  by  applicable  law or is or
becomes  generally  available  to the public other than through a breach of this
Agreement ("Confidential Information").  Each Stockholder shall, and shall cause
each of its Affiliates to, take such reasonable  precautions as are necessary to
prevent use or disclose of Confidential Information by or to others.



                                       10
<PAGE>


     6.3. Public Announcements.  Except as ordered or required by any applicable
law or competent judicial, governmental or other authority or in accordance with
the  requirements  of any stock exchange,  no Stockholder  shall issue any press
release or make any other public statement  relating to this Agreement or any of
the  transactions  contemplated  by this Agreement  without  obtaining the prior
written  approval of each other  Stockholder,  where such approval  shall not be
unreasonably  withheld,  as to the contents and the manner of  presentation  and
publication of such press release or public statement.

     6.4. Compliance with Laws. Isko and Cone shall, and each shall cause JV to,
comply  in all  material  respects  with  applicable  Turkish  and U.S.  laws in
carrying out the Project,  conducting  the business and operations of the JV and
consummating the transactions contemplated hereby or ancillary hereto.

                                   ARTICLE VII
                                  MISCELLANEOUS

     7.1 Definitions.  (a) Each of the following terms is defined in the section
set forth below opposite such term:

     Additional Contribution........................................4.2
     Auditor  5.1
     Board of Directors.............................................1.1
     Articles of Association........................................Recital E
     Cone...........................................................Introduction
     Confidential Information.......................................6.2
     Contribution Notice............................................4.2
     CEO............................................................2.3
     CFO............................................................2.3
     Director.......................................................2.1
     Extraordinary Action...........................................1.2
     Fundamental Action.............................................2.2b
     Initial Business Plan..........................................2.4
     Isko...........................................................Introduction
     JV.............................................................Recital B
     JV Stock.......................................................Recital C
     Ordinary Action................................................1.1
     Other Stockholder(s)...........................................5.1
     Project........................................................Recital A
     Signature Circular.............................................3.1(b)

     (b) The following terms, as used herein, have the following meanings:

     "Administrative  Services  Agreement"  means  the  Administrative  Services
Agreement,  dated as of the date  hereof,  between  Isko and JV, as amended from
time to time.



                                       11
<PAGE>


     "Annual Business Plan" means the annual business plan for JV for any fiscal
year,  including  without  limitation  the operating and capital budget for such
fiscal year, in substantially the format and level of detail as is set forth for
the first full  fiscal  year  following  the  Commercial  Operation  Date in the
Initial  Business Plan (except that pursuant to Section 2.4, the Annual Business
Plan for the  second  and third  full  fiscal  years  following  the  Commercial
Operation  Date may have less  detail  than the plan for the first  full  fiscal
year).

     "Business  Plan" means the  Initial  Business  Plan or any Annual  Business
Plan.

     "Chairman"  means the director of JV named by the directors of JV appointed
by Cone to perform that function in respect of JV.

     "Commercial Agreement" means the Commercial Agreement, dated as of the date
hereof, among Isko, Cone and JV, as amended from time to time.

     "Commercial Operation Date" means the date on which JV commences commercial
sales, as specified in a resolution of the Board of Directors.

     "License  Agreement"  means  the  License  Agreement,  dated as of the date
hereof, among JV, Isko, and Cone, as amended from time to time.

     "Lien" means any mortgage, lien, pledge, security interest,  encumbrance or
other adverse claim,  as expressly  created by this Agreement or the Articles of
Association.

     "Permitted  Transferee" means, with respect to any Stockholder,  any direct
or indirect  wholly owned  subsidiary of such  Stockholder,  any Person of which
such  Stockholder  is the direct or indirect  wholly owned  subsidiary,  and any
Person  which is a direct or indirect  wholly  owned  subsidiary  of a Person of
which such  Stockholder is the direct or indirect wholly owned  subsidiary.  For
purposes of  determining  whether a subsidiary  is wholly  owned,  directors' or
other statutory qualifying shares shall not be taken into account.

     "Person"  means an  individual,  corporation,  partnership,  trust or other
entity,  including a  governmental  or political  subdivision or an agency or an
instrumentality thereof.

     "Stockholder" means any holder of JV Stock.

     "US$" means United States Dollars.

     "TL" means Turkish Lira.



                                       12
<PAGE>


     "Transfer Price Agreement" means the Transfer Price Agreement,  dated as of
the date hereof, between JV, Cone and Isko, as amended from time to time.

     "U.S.  GAAP"  means the  accounting  principles  generally  accepted in the
United States of America from time to time.

     "Turkish GAAP" means the accounting  principles  generally  accepted in the
Republic of Turkey from time to time.


     7.2.  Termination.  (a) This Agreement  shall  terminate (i) at any time by
mutual  written  agreement  of all  Stockholders,  (ii) in the event  Isko is no
longer a Stockholder,  upon notice by Cone to the other  Stockholders,  (iii) in
the event  Cone is no  longer a  Stockholder,  upon  notice by Isko to the other
Stockholders, (iv) at the option of a Stockholder when there shall be a material
breach  by any  other  Stockholder  of any  provision  of  this  Agreement  or a
substantial  failure  by any other  Stockholder  to  perform  one or more of its
obligations under this Agreement,  which shall not have been cured within thirty
(30) days after written notice  specifying the nature of such breach or failure,
or (v) upon  Isko's  request,  should LSE not order at least 6 million  yards as
contemplated  by this  Agreement  during any 12-month  period ending on or after
April 1, 2004,  or (vi) upon the earlier of June 17,  2007,  as that  expiration
date may be  extended as  described  in Section  7.2 (b) or its  termination  in
accordance with this Section 7.2 (a) (i), (ii), (iii), (iv) or (v).

     (b) Unless this  Agreement  has or is to be  terminated as described in 7.2
(a) (i),  (ii),  (iii),  (iv) or (v),  the term  (the  expiration  date) of this
Agreement  shall,  upon May 15,  2007,  be  automatically  extended by one year,
unless Cone or Isko  provides  written  notice to the other  during the month of
April of the prior year, of its desire not to extend the term (for  example,  if
such  notice  of  non-extension  is not  given in April  2006,  the term of this
Agreement  shall  automatically  be  extended  to May 15,  2008).  If  notice of
non-extension  is  given,  the  term  of  the  Agreement  shall  expire  on  the
then-effective expiration date.

     (c) It is understood  and agreed that,  with respect to the  termination of
this  Agreement,  the parties  shall be bound to perform  their  obligations  in
respect of orders outstanding as of the date of termination.

     (d)  Liquidation:  (i) In the event that this  Agreement is  terminated  in
accordance  with the  provisions  of  Section  7.2 or upon the  occurrence  of a
mandatory  liquidation event under the Turkish Commercial Code, the Stockholders
agree to call an extraordinary  Stockholders Meeting and vote their JV Stock for
the  dissolution  and  liquidation  of JV and its assets in accordance  with the
provisions of the Turkish  Commercial  Code and to take and cause JV to take all
action necessary to ensure prompt liquidation of JV.



                                       13
<PAGE>


     (ii) In the  event  of  liquidation  of JV,  the  members  of the  Board of
Directors  at the time of such  liquidation  shall  act as  liquidators  and the
proceeds from the liquidation of JV shall be distributed to the  Stockholders in
proportion to their shareholdings in JV at such time.


     7.3.  Governing Law. This  Agreement  shall be governed by and construed in
accordance with the laws of Turkey, without giving effect to the conflict of law
rules thereof.

     7.4.  Arbitration.  (a) Any  and all  disputes,  controversies  and  claims
arising out of,  involving,  or relating to the Agreement  shall be referred to,
settled and  finally  resolved  exclusively  by  arbitration  under the Rules of
Conciliation and Arbitration of the  International  Chamber of Commerce by three
arbitrators  appointed in accordance  with such rules.  Cone and Isko shall each
appoint one  arbitrator  and a third  arbitrator  will be  appointed  by the two
arbitrators  appointed by the  parties.  The place of the  arbitration  shall be
Zurich,  Switzerland.  The language to be used in the arbitral proceedings shall
be English.

     7.5. Recapitalizations,  Exchanges, etc. Affecting JV Stock. The provisions
of this Agreement  shall apply, to the full extent set forth herein with respect
to any and all shares of capital  stock of JV or any  successor  or assign of JV
(whether by merger, consolidation, sale of assets otherwise) which may be issued
in respect of, in exchange  for, or in  substitution  of shares of JV Stock,  by
reason   of   any   stock   dividend,   split,   reverse   split,   combination,
recapitalization, reclassification, merger, consolidation or otherwise.

     7.6. Amendment, Assignment, etc. Neither this Agreement nor any term hereof
may be amended, changed, waived, discharged or terminated orally, but only by an
instrument in writing,  signed by the party against  which  enforcement  of such
amendment,  change,  waiver,  discharge or termination is sought. This Agreement
shall be binding upon the  respective  successors  and permitted  assigns of the
parties hereto. This Agreement shall not be assignable or otherwise transferable
by a party without the prior written consent of the other parties hereto and any
attempt to so assign or transfer  this  Agreement  without such consent shall be
void and of no effect.

     7.7. Notices. All notices, consents, requests, instructions,  approvals and
other communications provided for herein shall be in writing and shall be deemed
validly given upon personal  delivery or one day after being sent by telecopy or
overnight courier service:

     (a)  if to Isko, at:
          Isko  Dokuma  Isletmeleri  Sanayi  ve  Ticaret  A.S.
          Organize Sanayi Bolgesi
          3. Cadde 16425
          Inegol/BURSA



                                       14
<PAGE>


          Telecopy: +90-224-714-8016

     (b)  if to Cone, at:
          c/o Cone Mills  Corporation
          804 Green  Valley  Road
          Greensboro,  North Carolina 27408
          Attention: General Counsel Telecopy:
          336-379-6972

or at such other address and telecopy number as Cone or Isko may designate by
written notice to the other Stockholders; and if to any other, at such address
and telecopy number as such Stockholder may designate by written notice to the
other Stockholders.

     7.8.  Permitted  Transferee  Shares.  References  herein to any Stockholder
(including Isko and Cone) shall be interpreted to include Permitted  Transferees
of such Stockholder holding shares of JV Stock.

     7.9. Expenses. Except as otherwise specifically provided in this Agreement,
each party  hereto  shall pay all its own costs and  expenses  incident  to this
Agreement  and  the  transactions   contemplated  hereby,  including  legal  and
accounting fees and disbursements.

     7.10. Severability;  Invalidity.  (a) If any provision of this Agreement is
held to be  unenforceable  for any  reason,  it shall be  adjusted  rather  than
voided,  if  possible,  in order to achieve  the  intent of the  parties to this
Agreement  to  the  extent   possible.   In  any  event,   the   invalidity   or
unenforceability  of any provision of this Agreement in any  jurisdiction  shall
not affect the validity or  enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of this Agreement, including
that provision, in any other jurisdiction.

     (b) If any  provision  of the  Articles  of  Association  is at any time in
conflict with any of the  provisions of this  Agreement,  the provisions of this
Agreement  shall  prevail and the parties  shall  exercise  all voting and other
rights and powers  available to them as stockholders and otherwise so as to give
effect to the  provisions  of this  Agreement and shall  further,  if necessary,
procure any  required  amendment of the Articles of  Association  provided  that
nothing contradicts with the applicable Turkish Law.

     7.11.  No Third  Party  Beneficiaries.  Nothing in this  Agreement  will be
construed  as  giving  any  Person,  other  than the  parties  hereto  and their
successors and permitted assigns, any right, remedy or claim under or in respect
of this Agreement or any provision hereof.



                                       15
<PAGE>


     7.12.  Translation.  This  Agreement  has  been  concluded  in the  English
language  and in the event of any  inconsistency  between the  original  English
version and any translation, such English version shall govern.

     7.13.  Integration;  Section  Headings;  Counterparts;  etc. This Agreement
(including the Schedules and Exhibits hereto) and the other documents  delivered
pursuant hereto  constitute the entire  agreement of the parties relating to the
subject matter hereof and supersede any and all prior  agreements,  arrangements
and understandings  relating thereto. The section headings of this Agreement are
for  convenience  of reference  only and are not to be  considered in construing
this  Agreement.  This  Agreement may be executed in any number of  counterparts
each of which shall be an original,  but all of which together shall  constitute
one and  the  same  instrument.  Neither  this  Agreement  nor  any  transaction
contemplated  by the Project shall create the  relationship  of partners,  joint
venturers or principal and agent among the parties  hereto,  except as expressly
provided  herein or therein.  None of the parties  hereto have any  authority to
represent or bind the other parties in any manner  whatever,  except as provided
expressly herein or otherwise agreed in writing among the parties.




                                       16
<PAGE>


     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed as of the date first above written.

                         ISKO DOKUMA ISLETMELERI SANAYI
                           VE TICARET A.S.


                         By /s/Zekeriye Konukoglu
                         Name: Zekeriye Konukoglu
                         Title:


                         CONE MILLS CORPORATION


                         By s/s Neil W. Koonce
                         Name: Neil W. Koonce
                         Title: Vice President


                         Zekeriye Konukoglu


                         By /s/ Zekeriye Konukoglu
                         Name: Zekeriye Konukoglu
                         Title:


                         Fatih Konukoglu


                         By /s/ Fatih Konukoglu
                         Name: Fatih Konukoglu
                         Title:


                         Oguzhan Gurdogan


                         By /s/ Oguzhan Gurdogan
                         Name: Oguzhan Gurdogan
                         Title: Dep. V. P.

                                       17


</TEXT>
</DOCUMENT>
