Case Manini Manufacturing

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1 Case 06-5 Manini Manufacturing Manini Manufacturing ( Manini ), a U.S. SEC registrant, develops, manufactures, sells, installs and provides maintenance and support services for precision manufacturing equipment used in semiconductor manufacturing. Manini is experienced in, and has a history of successfully installing, the precision equipment. Prior to shipment from the factory, Manini performs extensive factory tests to evaluate whether the equipment will meet the agreed-upon specifications of the equipment. Generally, these tests take up to 30 days to perform. After it is determined that the equipment has completed all factory tests, the test data is delivered to the customer. The customer evaluates the data and may require Manini to repeat some of the tests. However, before the equipment is shipped, the customer must review the completed factory test data, and approve the shipment of the equipment. After customer approval is obtained, the equipment is disassembled and shipped to the customer. Upon receipt of the equipment by the customer, Manini performs the installation, which includes reassembling, adjusting, and testing the equipment at various points during the installation process. This process is fairly complex and generally takes anywhere from 60 to 100 days. Due to the nature of the equipment and the level of precision necessary for the equipment to function at the specified performance levels, specialists are required to perform the installation. Proper installation and testing is critical to ensuring that the equipment will operate at the manufacturer s published specifications. Although installation by a third party is possible, customers historically retain Manini for this purpose. On a few occasions, a third party has performed installation of Manini equipment purchased in the used-equipment market. For installation of used equipment, the third party installers have charged approximately $150,000. Manini also has installed equipment for customers who have purchased Manini s equipment in the used-equipment market, and has charged approximately $150,000. Final customer acceptance is contingent upon the equipment meeting manufacturerpublished specifications. Manini has a strong history of successfully completing the installation and ensuring that the equipment meets those specifications. Manini also can provide ongoing maintenance and support services related to the equipment. These services are optional and are priced on a per annum and per location basis, at a rate that Manini considers to reflect what other companies in the industry charge for similar services. Manini entered into a standard sales agreement with Ulua, Inc., on January 2, The agreement is provided in Appendix 1, and covers the sale, installation and servicing of one unit of NXPR 101 precision semiconductor manufacturing equipment, which has a cost of $300,000.

2 Case 06-5: Manini Manufacturing Page 2 Appendix 1 Manini Manufacturing Sales Agreement This is an agreement ( Agreement ), dated January 2, 2003, between Manini Manufacturing ( Manini, we, or us ) and Ulua, Inc. ( you ). Manini will provide you with the Equipment and Maintenance and Support Services described herein, under the terms and prices set forth in this Agreement. Defined terms shall be as set forth herein or as defined in Section 8 below. 1. Manini Equipment and Services: We will manufacture, test, deliver and install one unit of the Equipment. We will include one copy of the applicable user manual. Prior to delivery and installation of the Equipment, we will deliver to you the test data for your evaluation. Upon your approval, we will then ship the Equipment and complete the installation process. Title to the equipment will pass to you at the U.S. FOB shipping point. So long as you comply with the terms set forth in this Agreement, we will provide Maintenance and Support Services. Maintenance and Support Services can be renewed on an annual basis through payment of the applicable Maintenance and Support Service Fee set forth in Exhibit A. 2. Scope of Maintenance and Support Services: Conditioned upon timely payment of the applicable Maintenance and Support Service Fee set forth in Exhibit A, and while you are not otherwise in default under this Agreement, Manini will provide the Maintenance and Support Services described herein. We will provide to you reasonable amounts of consultation and technical assistance during our regular working hours. If you experience a problem with the Equipment, you may call Manini at 1 (800) 1MA-NINI (during Manini s regular working hours: 8:30 am to 5:00 pm., local time, Monday through Friday, excluding holidays). We will assist you via the telephone to diagnose the problem with the Equipment. In addition, our technicians will visit your site on a monthly basis to perform preventive maintenance services and a Movement Check. We will, on a best-efforts basis, correct errors or malfunctions in the Equipment to enable the Equipment to perform the functions described in the operating manuals as soon as practicable after you notify us of such error or malfunction. If the Equipment is diagnosed as non-functioning, we will repair the non-functioning components. Maintenance and Support Services provided by us under this Agreement do not include repair or correction of any Equipment damage or malfunctions caused by (a) accident, negligence, theft, vandalism, operator error or misuse, failure of, or surges in, electrical power, air conditioning or humidity control, abnormal conditions, acts of God, or cause other than normal use; and (b) modifications, attachments, repairs or parts replacements performed by you. 3. Payment: You agree to pay us the applicable fees set forth in Exhibit A to this Agreement (the Fees ). If applicable, a one-time Initial Fee will be due upon execution of this Agreement. All other Fees, except for the recurring Fees, will be invoiced to you upon shipment of the applicable items or provision of the applicable services. The recurring Fees will be charged on an annual basis. You must pay for any freight and sales and/or use taxes. Payments are due within 30 days of the invoice date. If you do

3 Case 06-5: Manini Manufacturing Page 3 not pay any amount by the due date, we may impose a late charge of 5 percent of the unpaid amount. You hereby grant Manini a purchase money security interest in the Equipment to secure payment and appoint Manini as your attorney-in-fact to sign and file any documents necessary to perfect that interest, until the amount owed by you is paid. 4. Term and Termination: Maintenance and Support Services will commence on completion of Installation and will be renewed on an annual basis conditioned upon timely payment of the applicable Annual Maintenance and Support Fee, as set forth in Exhibit A. If you terminate Maintenance and Support Services under this Agreement and later desire to reinstate them, you may receive the services if you sign a new agreement with Manini, and pay Manini the then-current applicable fees. This Agreement and your receipt of the Maintenance and Support Services, as set forth herein may be immediately terminated by us at any time prior to the end of the Term: (a) if you do not comply with your obligations under this Agreement, including failure to pay amounts due; or (b) for reasons relating to applicable state or federal law. In any of the foregoing circumstances, we may, without liability, immediately terminate this Agreement upon notice to you, immediately cease providing services, and obtain any other remedies available. All unpaid amounts are due immediately and payable on default. All our rights and remedies are cumulative. 5. Guarantees: We guarantee that for a period of one (1) year following delivery to you, the Equipment will not have defects in material and workmanship and will be able to perform the functions described in the applicable operating manuals. You may only make claims under this guarantee by promptly notifying us after you learn of the facts supporting the claim. We will either repair or replace the non-complying Equipment. Downtime, for any reason, is not a breach of this Agreement by us, and will not entitle you to any refunds or credits. 6. Limitation of Liability: We will not be liable for consequential, special, indirect, or incidental damages, including lost profits, even if we are told those damages may occur. Our liability under contract, tort, strict liability, or other legal theory cannot exceed the amount you pay us under this Agreement before the liability accrues. 7. Arbitration: Any controversy between you and us, related directly or indirectly to the Equipment or services, will be settled by binding arbitration under the commercial rules of the American Arbitration Association. 8. Definitions: The following definitions apply: (a) Equipment NXPR 101 precision semiconductor manufacturing equipment; (b) Maintenance and Support Services those services described in section 2 above; (c) Movement Check services performed to test the basic operations of the equipment to identify internal system irregularities. Manini Manufacturing: By: /s/ Morton N. Webb Date: 1/2/03 Ulua, Inc.: By: /s/ Weber N. Young Date: 1/2/03

4 Case 06-5: Manini Manufacturing Page 4 Exhibit A Equipment, Installation, and Service Fees Initial Fee due upon Contract Signing* $50,000 Delivery of Test Data* $150,000 Delivery of Equipment (NXPR 101)* $300,000 Completion of Installation* $500,000 Total Equipment and Installation Fee* $1,000,000 Recurring Fees: Annual Maintenance and Support Fee* $50,000 *All fees exclude freight charges and sales/use taxes. $500,000 of the fee is due and payable upon final customer acceptance.

5 Case 06-5: Manini Manufacturing Page 5 Appendix 2 Summary of Billing/Payment Information Due Upon: Amount Date Billed Date Pmt Rec d Contract Signing $50,000 1/2/03 1/3/03 Delivery of Test Data $150,000 1/31/03 2/21/03 Shipment of Equipment $300,000 2/25/03 3/10/03 Completion of Installation $500,000 4/15/03 4/22/03 Maintenance & Support $50,000 4/15/03 4/22/03

6 Case 06-5: Manini Manufacturing Page 6 Appendix 3 Accounts Receivable Confirmation Ulua, Inc. 111 Island Blvd Kailua, HI Dear Mr. Young: In connection with the audit of our financial statements, please confirm directly to our auditors, TNT LLP, 10 Eastern Blvd, Los Angeles, CA, 98452, the amount owed to us as of February 28, 2003, was $300,000. If the amount shown is in agreement with your records, please check A below. If the amount is not in agreement with your records, please check and complete B below. After selecting the appropriate response, please sign and date your reply and mail it directly to our auditors in the enclosed self-addressed envelope. Your prompt attention to this request will be appreciated. This confirmation is not a request for payment; please DO NOT SEND PAYMENTS to our auditors. Yours very truly, Manini Manufacturing CONFIRMATION A. The balance above agrees with my records. B. My records show a balance of $. The difference may be due to the following: /s/ Weber Young Weber Young 3/25/03 Date

7 Case 06-5: Manini Manufacturing Page 7 Required: Is the arrangement a multiple element arrangement? If so, what elements of the arrangement would qualify for, and be accounted as, separate units of accounting? If the arrangement consists of more than one unit of accounting, how should the arrangement fee be allocated between the separate units of accounting? Assume Manini early adopted the provisions of EITF Issue No , Revenue Arrangements With Multiple Deliverables. How much revenue, if any, should be recognized in the fiscal year ended February 28, 2003 and 2004, respectively? How would your responses to Issues 1 and 2 change, if the customer had a specific right of return such that the customer may receive a refund of amounts paid upon contract signing, delivery of test data, and delivery of equipment, if Manini fails to complete the installation process?

TERMS AND CONDITIONS FOR EQUIPMENT RENTAL Page 1 of 6

TERMS AND CONDITIONS FOR EQUIPMENT RENTAL Page 1 of 6 General Terms for Sales, Rentals, and Service The following are the terms and conditions applicable to rental, sales, and service of equipment from