Joint Venture Agreement

EXHIBIT 10.26


JOINT VENTURE AGREEMENT


This JOINT VENTURE AGREEMENT is made and entered into this ___th day of ________, 1998, ("Effective Date") by and between PRI Automation, Inc., a Massachusetts corporation with its principal offices located at 805 Middlesex Turnpike, Billerica MA 01821, USA, ("PRI"), and Chung Song System Co., Ltd., a South Korean corporation with its principal offices located at 33, Jije-Dong, Pyungtaek, Kyungki-Do, Korea ("CSSC"), and Shinsung Eng. Co., Ltd., a South Korean corporation with its principal place of business located at 327 DagsonDong, 6Ka, Yeongdeungpo-Ku, Seoul, 150-046, Korea, ("SEC") with reference to the following facts:


RECITALS


A. PRI designs and manufactures factory automation systems primarily used by
semiconductor manufacturers to automate the fabrication of integrated
circuits.


B. CSSC and SEC are companies with substantial prior experience in the
development and marketing of products and services for the semiconductor
industry within South Korea.


C. Mr. S.K. Suh ("Suh") is an officer and employee of CSSC, and is a highly
qualified business executive with experience and expertise in the area of
promoting the sale of semiconductor equipment and other products to
semiconductor manufacturers within South Korea.


D. PRI, on the one hand, and CSSC and SEC, on the other hand, wish to act as
equal participants in the formation and operation of a company within South
Korea for the purpose of marketing, selling, installing and supporting PRI
products within South Korea and for the purpose of jointly developing a
manufacturing strategy to be implemented by the joint venture company upon
agreement by the partners.


E. PRI, CSSC and SEC wish to appoint Suh as the initial chief executive
officer of such company, once the company is formed pursuant to the terms
of this Agreement.


Now, therefor, in consideration of the promises and mutual covenants and agreements set forth in this Agreement, PRI, CSSC and SEC agree as follows:


1. Definitions.


1.1 All defined terms used in this Agreement will be identified by the use
of initial capitalization and will have the meaning ascribed to them
by the Schedule of Defined Terms attached as Exhibit A to this
Agreement.


2. Formation of the Company.


2.1 Within ninety (90) days of the execution of this Agreement, PRI, CSSC
and SEC will cause to be formed a company (the "Company") pursuant to
the terms of this Agreement with its principal place of business
located in the City of Seoul, South Korea adopting as its Articles of
Incorporation attached to this Agreement as Exhibit B.


2.2 All costs and fees associated with the formation of the Company will
be borne by the Company. Such fees include, without limitation, any
applicable Registration Tax, Education, Tax, Public Bond, Notarization
Fee, Stamp Fees, and any other costs or fees recognized by law in
South Korea. Each party will bear its own legal fees.


3. Capitalization of the Company.


3.1 Contemporaneous with, and in connection with, the formation of the
Company pursuant to Section 2, the Company will be capitalized as
follows.


3.2 Subject to the terms and conditions of this Agreement, and subject to
Governmental Approval in form and substance satisfactory to PRI, CSSC
and SEC, PRI and CSSC will each subscribe to the equity capital of the
Company as follows. CSSC will contribute capital in the form of two
hundred and sixty million South Korean won (KW260,000,000) in cash and
will receive 260 shares of the common stock of the Company. SEC will
contribute capital in the form of two hundred and sixty million South
Korean won (KW260,000,000) in cash and will receive 260 shares of the
common stock of the Company. PRI will contribute capital in the form
of two billion and eighty million South Korean won (KW2,080,000,000)
in cash and will receive 2,080 shares of the common stock of the
Company.


3.3 During the period that expires two years after the Effective Date CSSC
and SEC will each have, at their sole discretion, the option each to
purchase up to seven hundred and eighty (780) additional shares of the
common stock of the Company, subject to the following terms and
conditions:


3.3.1 The option price is one million South Korean won (KW1,000,000)
per share of common stock, and the purchaser must purchaser a
minimum of one hundred and ninety five (195) in any one purchase
event.


3.3.2 The purchase option may only be exercised upon thirty (30) days
prior written notice to PRI and the Company.


3.3.3 SEC and CSSC must exercise the option to purchase shares


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simultaneously, and at no point will either SEC or CSSC acquire
a larger percentage of issued shares than the percentage owned
by the other.


3.3.4 The Company's actual receipt of the purchase money from the
purchaser in a commercially reasonable form designated by the
Company, and SEC's and CSSC's good faith performance of all of
their obligations under this Agreement, jointly and severally,
are express conditions precedent to SEC's and CSSC's right to
purchase shares pursuant to this Section 3.3.


3.4 Other than the purchase of shares of common stock by SEC and CSSC
pursuant to Section 3.3 above, if at any time after the issuance of
shares as provided in Section 3.2 the Company increases the number of
equity shares or other equity securities issued, then PRI, CSSC and
SEC will each have the right, but not the obligation, to subscribe to
such new issuance and pay fully at par value for such shares or other
equity security, up to the number of shares required to maintain the
subscribing party's percentage ownership of the total outstanding
shares issued by the Company at the time of the subsequent offering.


3.5 PRI, CSSC and SEC will each make their cash contributions by making
payment to the Company at the time of the incorporation of the Company
in a commercially reasonable manner chosen by the Company consistent
with the requirements of South Korean law.


4. Acquisition of Assets by Purchase.


4.1 Within sixty (60) days of the formation and capitalization of the
Company the Company will enter into the Purchase and Sale Agreement
attached hereto as Exhibit C, and will purchase the specified assets
and materials from PRI pursuant to the terms of the Purchase and Sale
Agreement. The completion of the Purchase and Sale Agreement and the
transactions contemplated therein are an express condition of the
effectiveness of this Agreement.


5. Conditions Subsequent.


5.1 The formation of the Company pursuant to Section 2, CSSC's, SEC's, and
PRI's contribution of cash pursuant to Section 3, and the unanimous
approval of the Business Plan by the shareholders pursuant to Section
11 of this Agreement, are each conditions subsequent to the
effectiveness of this Agreement. The failure of any party to perform
such acts will not give rise to any claim against the other party,
including, without limitation, claims for damages based upon alleged
breach of contract, but such failure will cause this Agreement to
expire and have no further effect except for those provisions
specified in Section 17.6 which will survive the termination or
expiration of this Agreement. There are no other


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conditions subsequent in this Agreement other than those expressly
described in this Section 5.


6. Purpose of the Company; Strategic Alliance with PRI.


6.1 The purpose of the Company will be to market, sell, install and
support PRI's factory automation products within the Territory,
including, without limitation, PRI's hardware and software products,
and to provide services to consumers of such products within the
Territory including, without limitation, installation and operational
support, repair, and responding to customer queries. The parties will
jointly develop a strategy for expanding the activities of the Company
to include manufacturing to be implemented by the Company upon
agreement by the venture partners.


6.2 In furtherance of the purposes of the Company, within thirty (30) days
of the formation of the Company, or such further time as may be
required by South Korean law, the parties will cause the Company to
execute and enter into the Strategic Alliance Agreement attached as
Exhibit D to this Agreement and to perform the obligations and duties
stated therein. The acts and performances required by the Strategic
Alliance Agreement are cumulative and in addition to the acts and
performances required by this Agreement. In the event of any
unavoidable conflict between the terms of the Strategic Alliance
Agreement and the terms of this Agreement, then this Agreement will
control. If this Agreement is terminated, expires and becomes of no
further effect for any reason, then the Strategic Alliance Agreement
will also and simultaneously terminate, expire, and be of no further
effect.


7. Restrictions on the Transfer of shares.


7.1 In addition to such restrictions on the transfer of shares as may be
provided in the Articles of Incorporation of the Company at the time
of the Company's formation or in the future, the shareholders agree to
the following.


7.2 PRI, CSSC and SEC each agree not to voluntarily transfer, pledge or
encumber shares in the Company held by such shareholder without the
prior written consent of the other shareholder. Any transfer in
violation of Section 7 of this Agreement gives rise to an action for
damages in the Company and in the shareholder not in violation of
Section 7, and all such additional relief or remedies as may be
provided for or permitted by South Korean law as of the date of the
violation of Section 7.


7.3 Since damages arising from a breach of the above mentioned obligations
under this Section 7 may be difficult to determine with precision, the
shareholders agree


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that the shareholder who breaches the terms of this Section 7 shall
pay to the other shareholder as liquidated damages a sum equivalent to
twice the fair market value of the shares, as determined in Section
8.5, sold, transferred or otherwise disposed of or twice the proceeds
received by the breaching shareholder in the transaction whereby the
breach occurred, whichever is greater. The shareholders agree that
such liquidated damages are fair and reasonable and will be without
prejudice to, and cumulative with other remedies provided by law or
this Agreement.


7.4 In the event of an involuntary transfer of shares in the Company held
by PRI, CSSC or SEC, the shareholders will have the rights set forth
in Section 8 of this Agreement.


7.5 In subscribing to shares in the Company, PRI, CSSC and SEC each
represent and warrant that: (i) such shares were acquired by such
shareholder solely for such shareholder's own account and not with a
view to, or for resale in connection with, the distribution or other
disposition thereof; (ii) such shareholder is intimately familiar with
the prospects of the Company and the significant risks associated with
an investment in the shares of the Company; and (iii) an investment in
such shares may not be liquidated by the holder thereof, even in an
emergency.


7.6 Any certificates evidencing PRI's, CSSC's or SEC's shares in the
Company will bear the following legend, along with such security law
legends as counsel for the Company may deem necessary or appropriate:


"ANY TRANSFER OR SALE OF THE SHARES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO CERTAIN CONDITIONS CONTAINED IN THAT JOINT VENTURE
AGREEMENT BY AND BETWEEN PRI AUTOMATION, INC., CHUNG SONG SYSTEM CO.,
LTD AND SHINSUNG ENG. CO., LTD. DATED AS OF THE ___ DAY OF ___ 1998,
AND APPROVAL BY THE BOARD OF DIRECTORS IN ACCORDANCE WITH THE ARTICLES
OF INCORPORATION OF THE COMPANY, COPIES OF WHICH ARE AVAILABLE FOR
REVIEW AT THE REGISTERED HEADQUARTERS OF THE COMPANY. ANY TRANSFER OR
SALE OF THESE SHARES OR ANY INTEREST THEREIN, IN VIOLATION OF THE SAID
CONDITIONS SHALL BE AND IS PROHIBITED."


8. Buy-Sell Agreement.


8.1 As to CSSC and SEC only, and expressly excluding PRI, each of the
following will be "Triggering Events": (i) a written notice of
Triggering Event from any party to the other parties upon the death or
adjudication of incompetency of Suh; (ii) Suh ceasing to devote a
significant portion of his time to the business of the Company for any
reason; (iii) the disability (defined to mean failure by reason of


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physical or mental impairment to perform material duties of his
position for the Company for a period of four continuous months or
four non-continuous months over an 18-month period) of Suh; (iv) a
change in ownership control of CSSC or SEC; and (v) the transfer of
more than 33% of all outstanding issued shares in CSSC or SEC to a
third party.


8.2 As to CSSC, SEC and PRI, each of the following will be "Triggering
Events": (i) a notice of Triggering Event from a non-breaching party
identifying a material breach of the terms this Agreement, which
breach was not cured within thirty (30) days of prior written notice
thereof; and (ii) any involuntary transfer of the respective
shareholder's shares in the Company.


8.3 Upon the occurrence of a Triggering Event, the following will apply:


8.3.1 If the shareholder causing the Triggering Event or to whom the
Triggering Event applies is SEC alone (or the recipient of the
shares from SEC in the event of an involuntary transfer) then
SEC will be obligated to sell, and PRI and CSSC will be
obligated to buy in quantities that will maintain the 2 to 1
ratio of the relative ownership positions of PRI and CSSC
respectively, all of the shares of the Company held by the SEC
(or said recipient of shares) upon written notice ("Purchase
Notice") to SEC within thirty (30) days from the date on which
PRI and CSSC became aware of the occurrence of the Triggering
Event. Said purchase and sale will occur thirty days after the
Purchase Notice; provided, however, that if SEC may not legally
sell, or either or both of the purchasing shareholders may
not legally purchase such shares, such purchase and sale will
take place as soon as the shareholders are legally permitted to
effect such purchase.


8.3.2 If the shareholder causing the Triggering Event or to whom the
Triggering Event applies is CSSC alone, or CSSC and SEC together
or contemporaneously (or the recipient of the shares from CSSC
and/or SEC in the event of an involuntary transfer or transfers)
then CSSC and SEC will be obligated to sell, and PRI will have
the option, at its sole discretion, to buy, all of the shares of
the Company held by the SEC and CSSC (and/or said recipient of
shares) upon written notice ("Purchase Notice") to SEC and CSSC
within thirty (30) days from the date on which PRI became aware
of the occurrence of the Triggering Event. Said purchase and
sale will occur thirty days after the Purchase Notice; provided,
however, that if SEC or CSSC may not legally sell, or PRI may
not legally purchase such shares, such purchase and sale will
take place as soon as the shareholders are legally permitted to
effect such purchase.


8.3.3 If the shareholder causing the Triggering Event or to whom the
Triggering


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Event applies is PRI (or the recipient of shares from PRI in the
event of an involuntary transfer or transfers) then PRI will be
obligated to sell, and CSSC and SEC will be jointly and
severally have the option, at their sole discretion, to buy, all
shares of the Company held by PRI (or the recipient of shares)
upon written notice ("Purchase Notice") to PRI within thirty
(30) days from the date on which CSSC and SEC became aware of
the occurrence of the Triggering Event. Said purchase and sale
will occur thirty days after the Purchase Notice; provided,
however, that if PRI may not legally sell, or CSSC or SEC may
not legally purchase such shares, such purchase and sale will
take place as soon as the shareholders are legally permitted to
effect such purchase.


8.3.4 With regard to any purchase and sale carried out pursuant to any
provision of this Section 8.3, at the closing of the purchase
and sale, the selling shareholder or shareholders (and/or the
recipient of shares in an involuntary transfer) will deliver
certificates representing the shares duly endorsed for transfer,
together with any applicable transfer taxes, against payment by
the purchasing shareholder for such shares as provided in this
Agreement. The purchasing shareholder may assign his or its
rights to purchase shares so long as it guarantees payment of
any note issued in connection with the purchase of shares.


8.4 The purchase price for shares of the Company to be purchased as
provided in any portion of this Section 8, above, will be as follows.
In the event of a purchase triggered by a Triggering Event, the price
per share will be the fair market value of each share as determined:
(i) by the written agreement of the parties, (ii) if no written
agreement is reached within ten (10) business days of the date on
which the purchase notice is given, then by an independent appraiser
agreed to in writing by the parties, or (iii) if no agreement is
reached as to value or an independent appraiser, then by the
Accountant of Company (as defined in Section 12.4) applying, first,
the terms of this Agreement and, second, generally accepted methods
for conducting such a valuation. The cost of the appraisal will be
paid by the Company. For the purposes of this Section 8 "fair market
value" means the price paid by a willing buyer to an unrelated willing
seller in an arm's length transaction, taking into account the purpose
of the Company to sell and support PRI products and the unique
services provided by Suh to the Company, but without regard to number
of shares at issue or whether such shares do or do not constitute a
controlling block of shares in the Company.


8.5 In order to confirm proper payments and share deliveries pursuant to
this Section 8 above, a shareholder having rights to receive payments
or shares pursuant to this Section 8 will have the right to audit the
relevant books and records of the Company after commercially
reasonable advance notice, at the Company's main


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offices during the Company's ordinary business hours. In performing
any such audit, the relevant shareholder will maintain the
confidentiality of all information obtained as a result of such audit,
will use such information only for the purposes of enforcing rights
hereunder and will conduct such audit in a manner that causes a
minimum disruption to the business. The costs of any such audit will
be borne by the shareholder requesting the audit.


8.6 The remedies under this Section 8 will be in addition to, but not in
lieu of, the remedies or relief as may be provided for or permitted
under the South Korean laws, the Article of Incorporation or other
provisions of this Agreement. In the event of any conflict between the
provisions of this Section 8 and the provisions of any other Section
of this Agreement, the provisions of this Section 8 will control.


9. Governance of the Company.


9.1 Board of Directors.


9.1.1 Unless otherwise agreed in writing by PRI, CSSC and SEC, the
Company will have five directors, of whom two will be designated
by PRI at the sole discretion of PRI ("PRI Directors"), one will
be designated by CSSC at the sole discretion of CSSC ("CSSC
Director"), one will be designated by SEC at the sole discretion
of SEC ("SEC Director") and one of whom will be appointed
jointly by PRI and CSSC ("Fifth Director"). PRI, CSSC and SEC
agree to vote all shares of the Company owned or controlled by
them, and otherwise to use their respective best efforts, to
elect directors as specified in the preceding sentence. The
initial directors of the Company will be as follows. PRI
designates Mitchell G. Tyson and Robert G. Postle as the PRI
Directors. CSSC designates S.K. Suh as the CSSC Director. SEC
desi ...