<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended June 30, 1997
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to _________________
COMMISSION FILE NUMBER 0-25524
HELLO DIRECT, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-3043208
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5893 RUE FERRARI 95138-1858
SAN JOSE, CALIFORNIA (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (408) 972-1990
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No .
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class July 31, 1997
----- -------------
Common Stock, Par Value $.001 5,030,567
<PAGE>
HELLO DIRECT, INC.
FORM 10-Q QUARTERLY REPORT
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. -- Financial Statements
Condensed Balance Sheets as of June 30, 1997 and December 31, 1996..... 3
Condensed Statements of Operations for the Three and Six Months Ended
June 30, 1997 and 1996.......................................... 4
Condensed Statements of Cash Flows for the Six Months Ended
June 30, 1997 and 1996.......................................... 5
Notes to Condensed Financial Statements................................ 6
Item 2. -- Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations.................................................. 7
Liquidity and Capital Resources........................................ 9
Additional Factors Affecting Future Performance........................ 10
PART II - OTHER INFORMATION
Items 1 through 3 and Item 5 are not applicable with respect to the current
reporting period.
Item 4 - Submission of matters to a vote of security holders............. 13
Item 6. - Exhibits and Reports on Form 8-K............................... 14
Signatures............................................................... 15
<PAGE>
ITEM 1. - FINANCIAL STATEMENTS
HELLO DIRECT, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,007,000 $ 2,492,000
Short-term investments 3,607,000 6,007,000
Trade accounts receivable, less allowance for returns and
doubtful accounts 5,829,000 4,852,000
Inventories 6,093,000 5,287,000
Deferred tax assets 677,000 628,000
Other current assets 2,349,000 1,339,000
----------- -----------
Total current assets 20,562,000 20,605,000
Notes receivable 4,724,000 3,497,000
Property and equipment, net 5,069,000 3,792,000
Long-term deferred tax assets 659,000 1,072,000
----------- -----------
Total assets $31,014,000 $28,966,000
=========== ===========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C> <C>
Current liabilities:
Accounts payable $ 4,741,000 $ 3,839,000
Accrued expenses 865,000 484,000
----------- -----------
Total current liabilities 5,606,000 4,323,000
Stockholders' equity:
Common stock 5,000 5,000
Additional paid-in capital 27,902,000 27,807,000
Accumulated deficit (2,054,000) (2,724,000)
Less treasury stock, at cost (445,000) (445,000)
----------- -----------
Total stockholders' equity 25,408,000 24,643,000
----------- -----------
Total liabilities and stockholders' equity $31,014,000 $28,966,000
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
HELLO DIRECT, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
Three Months Ended Six months Ended
------------------ ----------------
June 30, June 30,
-------- --------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $15,318,000 $12,382,000 $31,254,000 $24,455,000
Cost of goods sold 7,542,000 5,898,000 15,395,000 11,621,000
----------- ----------- ----------- -----------
Gross profit 7,776,000 6,484,000 15,859,000 12,834,000
Selling, general and administrative expenses 6,923,000 5,613,000 14,264,000 11,196,000
Product development expenses 371,000 540,000 781,000 1,075,000
----------- ----------- ----------- -----------
Operating income 482,000 331,000 814,000 563,000
Other income - net 152,000 178,000 321,000 371,000
----------- ----------- ----------- -----------
Income before income taxes 634,000 509,000 1,135,000 934,000
Income taxes 264,000 204,000 465,000 374,000
----------- ----------- ----------- -----------
Net income $ 370,000 $ 305,000 $ 670,000 $ 560,000
=========== =========== =========== ===========
Net income per share $ 0.07 $ 0.06 $ 0.13 $ 0.11
=========== =========== =========== ===========
Weighted average shares outstanding 5,110,000 5,037,000 5,089,000 5,025,000
=========== =========== =========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
HELLO DIRECT, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
Six Months Ended
----------------
June 30,
--------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 670,000 $ 560,000
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 584,000 132,000
Deferred income taxes 364,000 368,000
Allowance for returns and doubtful accounts 109,000 (5,000)
Changes in items affecting operations:
Trade accounts receivable (1,086,000) (868,000)
Inventories (806,000) 233,000
Other current assets (1,010,000) (721,000)
Accounts payable and accrued expenses 1,301,000 (381,000)
------------ ------------
Net cash provided (used) in operating activities 126,000 (682,000)
------------ ------------
Cash flows from investing activities:
Purchases of property and equipment (1,861,000) (910,000)
Decrease in investments 2,400,000 -
Increase in notes receivable (1,227,000) 544,000
------------ ------------
Net cash used in investing activities (688,000) (366,000)
------------ ------------
Cash flows from financing activities:
Payments on capital lease obligations (18,000) (11,000)
Sale of common stock, net 95,000 85,000
------------ ------------
Net cash provided by financing activities 77,000 74,000
------------ ------------
Net decrease in cash and cash equivalents (485,000) (974,000)
Cash and cash equivalents at beginning of period 2,492,000 3,487,000
------------ ------------
Cash and cash equivalents at end of period $ 2,007,000 $ 2,513,000
============ ============
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
HELLO DIRECT, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Interim Financial Statements
In the opinion of the management of Hello Direct, Inc. (the "Company"), the
accompanying unaudited financial statements include all adjustments, consisting
only of normal recurring adjustments necessary to present fairly the financial
information set forth therein.
The condensed financial statements have been prepared by the Company without
audit and are subject to year-end adjustment. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange Commission.
It is suggested that these interim statements be read in conjunction with the
audited financial statements and notes thereto included in the Company's annual
report (Commission File Number 0-25524) filed on Form 10-K for the fiscal year
ended December 31, 1996.
Results of operations for the three and six-month periods ended June 30, 1997
are not necessarily indicative of future financial results.
2. Net Income Per Share
Net income per share has been computed using the weighted average number of
common and common equivalent shares outstanding when dilutive.
<PAGE>
ITEM 2. -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
This Management's Discussion and Analysis section contains forward-looking
- --------------------------------------------------------------------------
statements that involve risks and uncertainties. The Company's actual results
- ------------------------------------------------------------------------------
may differ significantly from the results discussed in the forward-looking
- --------------------------------------------------------------------------
statements. Factors that might cause such a difference include, but are not
- ----------------------------------------------------------------------------
limited to, those discussed below and in the Company's reports filed with the
- -----------------------------------------------------------------------------
Securities and Exchange Commission including the Company's Annual Report on Form
- --------------------------------------------------------------------------------
10-K for the year ended December 31, 1996 (the "Form 10-K"). Readers are
- -------------------------------------------------------------------------
cautioned not to place undue reliance on these forward-looking statements, which
- --------------------------------------------------------------------------------
speak only as of the date hereof. Forward-looking statements are identified
- ----------------------------------------------------------------------------
with an asterisk (*).
- --------------------
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996
Net Sales. Net sales reflect total sales less a provision for returns. Net
- ---------
sales increased $2,936,000 or 23.7% to $15,318,000 in the three-month period
ended June 30, 1997, from $12,382,000 for the comparable period in 1996. This
increase was primarily attributable to a 24.5% increase in the number of
catalogs mailed, to 6.6 million from 5.3 million, and a 9.2% increase in the
average catalog order size, to $238 from $218. During the quarter, the Company
continued to use a 60 page prospecting catalog (introduced Spring 1996) in
addition to the full line catalog of 88 pages which is mailed to the house list.
Gross Profit. Gross profit increased $1,292,000 or 19.9% to $7,776,000 in the
- ------------
three-month period ended June 30, 1997, from $6,484,000 for the comparable
period in 1996. The gross margin for the three-month period was 50.8% for 1997
versus 52.4% for 1996. This decrease in gross margin was the result of a shift
in product mix toward a larger percentage of branded and private label products,
which carry lower gross margins.
Selling, General and Administrative Expenses. Selling, general and
- --------------------------------------------
administrative expenses increased $1,310,000 or 23.3% to $6,923,000 in the three
month period ended June 30, 1997, from $5,613,000 for the comparable period in
1996. The dollar increase for the three-month period in 1997 expense compared
to 1996 was the result of planned headcount additions to the Company's
administrative management group, product management team, and customer care
activities coupled with the higher cost of the new and larger corporate
headquarters facility. As a percentage of net sales, these expenses for the
three-month period declined to 45.2% in 1997 as compared to 45.3% for the same
three-month period in 1996. A significant portion of the Company's selling,
general and administrative expenses are related to the production, printing and
distribution of its catalog. Recent savings in catalog production and printing
costs contributed to the lower selling, general and administrative expenses as a
percentage of net sales. Any significant
<PAGE>
increases in the cost of paper or postage, or deterioration in the response
rates to mailings, would have a material adverse effect on the Company's
operating results.
Product Development Expenses. Product development expenses decreased $169,000
- ----------------------------
or 31.3% to $371,000 for the three-month period ended June 30, 1997, from
$540,000 for the comparable period in 1996. As a percentage of net sales, these
expenses for the three-month period were 2.4% for 1997 versus 4.4% for the same
three-month period in 1996. The decline was due to the completion of
development of two new products that were introduced in the October 1996
catalog. It is anticipated these expenses will fluctuate from time to time
based upon the number and character of the products being developed, however,
the Company believes these expenses, as a percentage of net sales, will be
approximately the same for the year ending December 31, 1997, as they were for
the year ended December 31, 1996.*
Other Income-net. Other income includes interest income of $152,000 for the
- ----------------
three-month period ended June 30, 1997 versus $175,000 for the comparable period
in 1996. The interest income relates to interest earned on the remaining
proceeds from the Company's initial public offering in April 1995.
Net Income. Net income increased $65,000 or 21.3% to $370,000 in the three
- ----------
month period ended June 30, 1997, from $305,000 for the comparable period in
1996. This increase was due to the reasons discussed above.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
Net Sales. Net sales increased $6,799,000 or 27.8% to $31,254,000 in the six-
- ---------
month period ended June 30, 1997, from $24,455,000 for the comparable period in
1996.
Gross Profit. Gross profit increased $3,025,000 or 23.6% to $15,859,000 in the
- ------------
six-month period ended June 30, 1997, from $12,834,000 for the comparable period
in 1996. The gross margin for the six-month period was 50.7% for 1997 versus
52.5% for 1996. This decrease in gross margin was the result of a shift in
product mix toward a larger percentage of branded and private label products,
which carry lower gross margins.
Selling, General and Administrative Expenses. Selling, general and
- --------------------------------------------
administrative expenses increased $3,068,000 or 27.4% to $14,264,000 in the six-
month period ended June 30, 1997, from $11,196,000 for the comparable period in
1996. The dollar increase for the six-month period in 1997 expense compared to
1996 was the result of planned headcount additions to the Company's
administrative management group, product
- ----------------------------------
* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations due to factors
described in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Additional Factors Affecting Future Performance"
herein and in the Form 10-K.
<PAGE>
management team, and customer care activities coupled with the Company's move
into its new headquarters facility. However, as a percentage of net sales, these
expenses for the six-month period declined to 45.6% in 1997 as compared to 45.8%
for the same six-month period in 1996.
Product Development Expenses. Product development expenses decreased $294,000
- ----------------------------
or 27.3% to $781,000 for the six-month period ended June 30, 1997, from
$1,075,000 for the comparable period in 1996. As a percentage of net sales,
these expenses for the six-month period were 2.5% for 1997 versus 4.4% for the
same six-month period in 1996. The decline was due to the completion of
development of two new products that were introduced in the October 1996
catalog. It is anticipated these expenses will fluctuate from time to time
based upon the number and character of the products being developed, however,
the Company believes these expenses, as a percentage of net sales, will be
approximately the same for the year ending December 31, 1997, as they were for
the year ended December 31, 1996.*
Other Income-net. Other income includes interest income of $152,000 for the
- ----------------
three-month period ended June 30, 1997 versus $175,000 for the comparable period
in 1996. The interest income relates to interest earned on the remaining
proceeds from the Company's initial public offering in April 1995.
Net Income. Net income increased $65,000 or 21.3% to $370,000 in the three
- ----------
month period ended June 30, 1997, from $305,000 for the comparable period in
1996. This increase was due to the reasons discussed above.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
Net Sales. Net sales increased $6,799,000 or 27.8% to $31,254,000 in the six-
- ---------
month period ended June 30, 1997, from $24,455,000 for the comparable period in
1996.
Gross Profit. Gross profit increased $3,025,000 or 23.6% to $15,859,000 in the
- ------------
six-month period ended June 30, 1997, from $12,834,000 for the comparable period
in 1996. The gross margin for the six-month period was 50.7% for 1997 versus
52.5% for 1996. This decrease in gross margin was the result of a shift in
product mix toward a larger percentage of branded and private label products,
which carry lower gross margins.
Selling, General and Administrative Expenses. Selling, general and
- --------------------------------------------
administrative expenses increased $3,068,000 or 27.4% to $14,264,000 in the six-
month period ended June 30, 1997, from $11,196,000 for the comparable period in
1996. The dollar increase for the six-month period in 1997 expense compared to
1996 was the result of planned headcount additions to the Company's
administrative management group, product
- ----------------------------------
* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations due to factors
described in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Additional Factors Affecting Future Performance"
herein and in the Form 10-K.
<PAGE>
management team, and customer care activities coupled with the Company's move
into its new headquarters facility. However, as a percentage of net sales, these
expenses for the six-month period declined to 45.6% in 1997 as compared to 45.8%
for the same six-month period in 1996.
Product Development Expenses. Product development expenses decreased $294,000
- ----------------------------
or 27.3% to $781,000 for the six-month period ended June 30, 1997, from
$1,075,000 for the comparable period in 1996. As a percentage of net sales,
these expenses for the six-month period were 2.5% for 1997 versus 4.4% for the
same six-month period in 1996. The decline was due to the completion of
development of two new products that were introduced in the October 1996
catalog. It is anticipated these expenses will fluctuate from time to time
based upon the number and character of the products being developed, however,
the Company believes these expenses, as a percentage of net sales, will be
approximately the same for the year ending December 31, 1997, as they were for
the year ended December 31, 1996.*
Other Income-net. Other income includes interest income of $320,000 for the
- ----------------
six-month period ended June 30, 1997 versus $372,000 for the comparable period
in 1996. The interest income relates to interest earned on the remaining
proceeds from the Company's initial public offering in April 1995.
Net Income. Net income increased $110,000 or 19.6% to $670,000 in the six-month
- ----------
period ended June 30, 1997, from $560,000 for the comparable period in 1996.
This increase was due to the reasons discussed above.
Quarterly and Seasonal Fluctuations. The Company has experienced in the past
- -----------------------------------
and will experience in the future quarterly variations in net sales and net
income as a result of many factors, including the timing of catalog mailings;
catalog response rates; product mix; the level of selling, general and
administrative expenses; the timing and level of product development expenses;
and the timing and success of new product introductions by the Company or its
competitors.* The Company's planned operating expenditures are
based on sales forecasts. If net sales are below expectations in any given
quarter, operating results would be materially adversely affected. Due to the
foregoing factors, it is possible that in some future quarter the Company's
operating results will be below the expectations of public market analysts and
investors. In such event, the price of the Company's common stock would likely
be materially adversely affected.
LIQUIDITY AND CAPITAL RESOURCES
- ----------------------------------
* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations due to factors
described in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Additional Factors Affecting Future Performance"
herein and in the Form 10-K.
<PAGE>
The Company's primary sources of liquidity have been cash flow from operations,
proceeds from its initial public offering, venture capital equity and debt
financing, and borrowings under its revolving bank line of credit.
Cash provided by operating activities during the six-month period ended June 30,
1997 was $126,000. This was the result of $1,727,000 provided by operations
including net income, depreciation and amortization and other non-cash charges
offset by $1,601,000 of changes in operating assets and liabilities. Cash used
by investing activities for the six-month period ended June 30, 1997 was
$688,000, due primarily to purchases of property and equipment of $1,861,000 and
funding of $1,227,000 for the financing of the Company's new facility discussed
below, offset by a decrease of $2,400,000 in short-term investments. Cash
provided by financing activities during the six-month period ended June 30, 1997
was $77,000, relating primarily to the issuance of common stock pursuant to the
Company's employee stock purchase plan.
Additions to equipment during the six-month period ended June 30, 1997 were
$1,861,000 compared to $910,000 for same period in the prior year. This
increase was anticipated and reflects the Company's investment in its new
facility, a new automated call distribution phone system to support the growth
in sales activity and the tooling requirements for new product introductions.
The Company plans to expend between $2,300,000 and $2,500,000 for capital
equipment for the year ending December 31, 1997.*
In July 1996, the Company entered into a customized financing arrangement for
the construction of a new corporate headquarters building, call center and
distribution facility intended to serve the Company's long-term expansion
needs.* Under the arrangement, the Company committed $5,000,000 in financing
for the construction of a new facility at a fixed interest rate of 7.5% for a
period of 12 years. Effective January 1, 1997, the Company entered into a
15-year lease agreement for the facility. As of June 30, 1997, the Company had
advanced all of the financing commitment. The long term portion of the
financing commitment ($4,664,000) is reflected in the financial statements as
a part of notes receivable and the current portion of the financing commitment
($271,000) is reflected in the financial statements as a part of trade
accounts receivable.
The Company believes funds generated from operations, together with available
funds remaining from the net proceeds of its initial public offering, will be
sufficient to finance its working capital needs for the foreseeable future.*
Should the Company require
- ----------------------------------
* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations due to factors
described in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Additional Factors Affecting Future Performance"
herein and in the Form 10-K.
<PAGE>
additional funds, it has available through a financial institution a $5,000,000
unsecured revolving line of credit at that institution's prime lending rate.
During the six-month period ended June 30, 1997, the Company did not directly
borrow against this credit facility.
ADDITIONAL FACTORS AFFECTING FUTURE PERFORMANCE
Approximately 53% of the Company's sales for the six months ended June 30, 1997
were derived from sales of the Company's proprietary products (mainly telephone
headset products) which have a higher gross margin than its other products. The
Company anticipates that these headset products will continue to account for a
significant portion of its net sales and profits in the foreseeable future.*
If net sales of the Company's proprietary products were to decline significantly
for any reason, or gross margins on such products were to decrease significantly
for any reason, including competitive pressures or technological obsolescence,
the Company's operating results would be materially adversely affected.
A substantial portion of the Company's purchases of brand name and private label
products are concentrated with a relatively small number of manufacturers.
However, the Company believes that alternate sources of supply are available for
virtually every third-party product it carries. Sales of brand name products
represented approximately 47% of sales in the first six months of 1997. The
failure of an existing significant supplier to provide products would materially
adversely affect the Company's operating results until it could develop an
alternate source of supply or an alternate product.
All of the Company's proprietary products are manufactured by independent
contractors according to specifications and conditions set by the Company. Each
independent contractor must meet the Company's specifications relating to the
manufacturing process and quality assurance before such contractor is selected
by the Company to manufacture Hello Direct products. The Company's strategy is
to continue using independent contractors to meet manufacturing
requirements.
- ----------------------------------
* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations due to factors
described in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Additional Factors Affecting Future Performance"
herein and in the Form 10-K.
<PAGE>
A substantial portion of the Company's private label and proprietary products
are manufactured by a relatively small number of manufacturers and most of such
products, including all proprietary headset products, are manufactured by only
three sources. One of the three manufacturers is currently being replaced. To
date, the Company has been able to obtain adequate supplies of these products,
although on occasion the Company has incurred additional delivery costs to air
ship products to obtain inventory in a timely manner. The Company's inability in
the future to obtain sufficient quantities of sole or limited source products,
or to develop alternate sources, would result in shortages of such products,
which would have a material adverse effect on the Company's net sales and
operating results.
A substantial portion of Hello Direct's proprietary products are manufactured to
its specifications by Seo Won K-Tec, Inc ("Seo Won"), located in South Korea,
and Sinoca Enterprises Co. ("SEC"), Ltd., located in Taiwan. The Company
recently signed an agreement with Transtech Electronics Pte Ltd located in
Singapore for contract manufacturing services. Transtech replaces Sinoca
Electronics Group ("SEG"), which is located in Singapore. The Company has no
long-term contracts with these manufacturing sources and competes with other
companies for production facilities. Although the Company believes that it has
established close relationships with its foreign manufacturing sources, the
Company's future success will depend in large measure upon its ability to
maintain such relationships. The Company's business is subject to the risks
generally associated with doing business abroad, such as foreign governmental
regulations, political unrest, disruptions or delays in shipments and changes in
economic conditions in countries in which the Company's manufacturing sources
are located. The Company cannot predict the effect that such factors will have
on its business arrangements with foreign manufacturing sources. If any such
factors were to render the conduct of business in a particular country
undesirable or impractical, or if the Company's current foreign manufacturing
sources were to cease doing business with the Company for any reason, the
Company's business and operating results could be adversely affected. Further,
the Company cannot predict whether additional United States quotas, duties,
taxes or other charges or restrictions will be imposed upon the importation of
its products in the future, or what effect any such actions would have on its
business, financial condition and results of operations.
Catalog production, printing and distribution costs represent a significant
portion of the Company's selling, general and administrative costs. Increases
in postal rates, paper and printing costs increase the cost of the Company's
catalog mailings. An increase in postal rates or higher than anticipated paper
costs would have a material adverse effect on the Company's financial position
and results of operations to the extent that the Company is unable to pass such
increase directly on to customers by raising prices or to offset such increase
by implementing more efficient mailing, and delivery systems. The Postal
Service recently proposed an increase in rates that when effective will increase
the cost of mailing the Company's catalogs.
The Company's sales volume is highly dependent on the quantity of catalogs
mailed and timing of those mailings. In the event the Company is unable to
timely obtain and distribute printed catalogs in appropriate quantities, the
Company's financial position and results of operations would be materially
adversely affected.
<PAGE>
PART II -- OTHER INFORMATION
Items 1 through 3 are not applicable with respect to the current reporting
period.
Item 4 - Submission of matters to a vote of security holders
At the Annual Meeting of Stockholders of the Company, held on April 30, 1997, in
San Jose, California, the stockholders elected five directors to serve until the
next Annual Meeting of Stockholders; ratified and approved an amendment to the
Company's 1995 Stock Plan increasing the number of shares of Common Stock
reserved for issuance thereunder by 500,000 to a total of 900,000; ratified and
approved an amendment to the Company's Employee Stock Purchase Plan increasing
the number of shares of Common Stock reserved for issuance thereunder by 80,000
to a total of 155,000; and ratified the appointment of KPMG Peat Marwick LLP as
independent public accountants of the Company for the fiscal year ending
December 31, 1997.
Results of the stockholder vote:
<TABLE>
<CAPTION>
Item For Against Abstain Broker
---- --- ------- ------- ------
Non-Vote
---------
Election of Directors
- -----------------------
<S> <C> <C> <C> <C>
C. Allen Batts 4,280,294 6,510 - -
John B. Mumford 4,280,294 6,510 - -
Deepak Kamra 4,280,294 6,510 - -
William P. Sousa 4,280,294 6,510 - -
John W. Combs 4,280,294 6,510 - -
</TABLE>
<TABLE>
<CAPTION>
Amendment to 1995 Stock Plan
- ----------------------------
<S> <C> <C> <C> <C>
3,000,616 380,491 3,250 902,447
</TABLE>
<TABLE>
<CAPTION>
Amendment to 1995 Stock Purchase Plan
- -------------------------------------
<S> <C> <C> <C> <C>
3,319,315 120,342 3,250 843,897
</TABLE>
<TABLE>
<CAPTION>
KPMG Peat Marwick LLP
- ---------------------
<S> <C> <C> <C> <C>
4,282,504 1,850 2,450 -
</TABLE>
Item 5 - Not applicable.
<PAGE>
Item 6. -- Exhibits and Reports on Form 8-K:
a. Exhibits
10.1 + Agreement Between Hello Direct, Inc. and Transtech Electronics
(S) Pte Ltd.
11.1 Computation of net income per share.
27.1 Financial Data Schedule
b. Reports on Form 8-K.
No reports on Form 8-K were filed with the Securities and Exchange
Commission during the quarter ended June 30, 1997.
+Confidential treatment requested for portions of this document.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed by on its
behalf by the undersigned thereunto duly authorized.
HELLO DIRECT, INC.
(Registrant)
August 10, 1997 /s/ Raymond E. Nystrom
- --------------- --------------------------
Date Raymond E. Nystrom
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Document
- ------ -----------------------
10.1 + Agreement Between Hello Direct, Inc. and Transtech Electronics (S)
Pte. Ltd.
11.1 Computation of net income per share.
27.1 Financial Data Schedule
+ Confidential treatment requested for portions of this document.
<PAGE>
EXHIBIT 10.1
------------
AGREEMENT
BETWEEN
HELLO DIRECT, INC.
AND
TRANSTECH ELECTRONICS (S) PTE LTD
* CERTAIN INFORMATION IN THIS EXHIBIT INDICATED BY * HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<C> <S> <C>
NUMBER ARTICLE PAGE
1 Term 1
2 Products 1
3 Obligations of TTE 1
4 License and Technology 3
5 Price 3
6 Payment Terms 4
7 Purchase Orders 4
8 Forecasts 4
9 Delivery 5
10 Product Transfers 5
11 Warranty 5
12 Raw Materials 6
13 Engineering Changes 7
14 Quality Assurance 8
15 Product Acceptance 9
16 Packing 10
17 Records and Reporting 10
18 Spare Parts Availability 11
19 Tools, Fixtures and Jigs 11
20 Confidentiality 12
21 Product Rights/Exclusivity 13
22 Trademarks 14
23 Infringement of Trademarks and Other Proprietary Rights 15
24 Relationship of Parties 16
25 Termination 16
26 Effect of Termination 17
27 Insurance 18
28 Addresses, Contacts and Meetings 19
29 Waiver 20
30 Non-Assignment 20
31 Arbitration 20
32 Patent and Copyright Indemnity 20
33 Indemnification 21
34 Force Majeure 21
35 Severability 22
36 Governing Law 22
37 Entirety of Agreement 22
38 Language 22
39 Headings 22
Signatures 22
APPENDICES
A Products
B Product Transfer Plan
C Engineering Change Form
D Quality Inspection Definitions
E Tools, Jigs and Fixtures
</TABLE>
<PAGE>
AGREEMENT
This Agreement is entered this 16th day of May 1997 between:
HELLO DIRECT, INC.
5893 Rue Ferrari
San Jose, California 95138-1858
United States Of America
a company organized and existing under the laws of the State of Delaware
(hereinafter called "HDI"); and
TRANSTECH ELECTRONICS (S) PTE LTD
7, International Business Park
Jurong East
Singapore 609919
a company organized and existing under the laws of the Republic of Singapore
(hereinafter called "TTE").
NOW THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto agree as follows:
1. TERM
This Agreement shall be effective for a term of * from the date hereof,
which shall be automatically extended for successive periods of * each
unless either party hereto gives the other a written notice of his
intention to the contrary. Such notice shall be no less than * prior to
the expiration of the original term or any extended term.
2. PRODUCTS
TTE agrees to manufacture, assemble and supply and HDI agrees to
purchase, subject to the terms and conditions hereof, the products
(hereinafter call the "Products") originally designed by HDI and described in
Appendix A, attached hereto. The Products shall be produced and supplied by
TTE in accordance with the Product specifications provided to TTE by HDI
("Specifications"). Such Specifications shall be incorporated and form part
of this Agreement.
Other Products not described in Appendix A may be added if TTE and HDI
mutually agree in writing.
3. OBLIGATIONS OF TTE
3.1 TTE agrees with HDI to:
(a) appoint the necessary dedicated staff to the manufacture,
assembly and supply of the Products. TTE shall consult with HDI
on the appointment of or any changes to the key management staff.
Any staff appointed by TTE
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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<PAGE>
shall be the employee of TTE and HDI shall not be liable to TTE
or its employees for any loss, damage, claim or expense arising
from or in connection with such appointment;
(b) handle all customs clearance formalities in Singapore for all
materials and equipment used in manufacturing and assembling the
Products and for the finished Products;
(c) assist HDI to obtain such immigration passes or equivalent
consents, if any, which may be required to enable HDI's
employees, visitors, customers or representatives to visit TTE
from time to time;
(d) ensure that all finished Products meet with the Specifications
and Quality Plan (as referred to in clause 14 of this Agreement)
and strictly follow such manufacturing and assembly practices and
systems and abide by the highest industry standards as shall be
mutually determined by the Parties from time to time with respect
to each Product;
(e) obtain any and all export/import licenses to import/export the
tools, fixtures and jigs or other equipment (referred to in
clause 19 of this Agreement) and the Products into and from
Singapore, during the term of and upon the termination or
expiration of this Agreement;
(f) assist in obtaining duty and sales tax exemption for the
import/export of the tools, fixtures and jigs or other equipment
(referred to in clause 19 of this Agreement), and the Products
into and from Singapore, during the term and upon the termination
or expiry of this Agreement;
(g) take all appropriate measures to safeguard the tools, fixtures
and jigs or other equipment (referred to in clause 19 of this
Agreement), semi-finished Products and finished Products at all
times during the period of control by TTE from and against any
and all damage by any person and claims of third parties;
(h) obtain and maintain in effect at all times all necessary
manufacturing and other licenses, consents, authorizations and
permits, governmental or otherwise, which may be required to
enable TTE to carry out properly the provisions of this
Agreement;
(i) disclose in writing to HDI details of any customer or proposed
customer of TTE wishing to manufacture products similar to the
Products and to obtain HDI's written consent before undertaking
any contract or other assignment from any such customer or
proposed customer of TTE's during the term of this Agreement;
(j) ensure that all Improvements and new designs and their subsequent
implementation for mass production meet with HDI's quality
standards and strictly follow such practices and systems and
abide by the highest industry standards as shall be mutually
determined by the Parties from time to time with respect to each
Improvement.
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<PAGE>
4. LICENSE AND TECHNOLOGY
4.1 HDI grants to TTE a non-exclusive license to utilize such of the
unpatented or patented inventions, trade secrets, formulae,
specifications, data, documents, manufacturing procedures and methods of
HDI for the manufacture of the Products, other procedures and other data
relating to the testing and packaging of the Products (the "Technology")
made available to TTE pursuant to clause 4.2 for the manufacture and
assembly of the Products strictly in accordance with the terms of this
Agreement only.
4.2 HDI shall make available to TTE such Technology as it shall, in its sole
discretion, deem necessary or appropriate to enable the manufacture and
assembly of the Products.
4.3 HDI shall make available to TTE such technical services and assistance in
support of or ancillary to the Technology as it shall, in its sole
discretion, deem necessary or appropriate.
4.4 All discoveries and/or improvements, excluding the manufacturing process
unless unique to HDI's Products, made by TTE in connection with the
Product, the Technology or in any way related to this Agreement and any
information concerning the same of which TTE becomes possessed shall
forthwith be disclosed in confidence to HDI and shall belong to and be
the absolute property of HDI including the right to apply for and own
intellectual property and/or industrial property deriving therefrom
without further payment to TTE for any invention concerning the same and
made during the continuance of this Agreement.
5. PRICE
5.1 The price for each Product is shown in Appendix A. All prices shown in
Appendix A are in U.S. Dollars and are *. TTE or HDI may request a
review of the price every * if the total material price as defined in
the Bill of Materials or USA/Singapore currency exchange rate changes
more than * percent (%), and remains at the new level for at least
* aggregate for the preceding * period.
5.2 TTE shall make available promptly on request such information as HDI
shall reasonably require (provided such information does not breach any
agreement of secrecy and confidentiality between TTE and any third party)
concerning the elements of cost, if necessary by component, constituting
the price of each Product as well as information relating to any
incentives available to or obtained by TTE. HDI will not disclose any
part of the Bill of Material costs to any third party unless mutually
agreed to in writing.
5.3 HDI shall not be obliged to make any payment for any Product which does
not conform to the Specifications or the Quality Plan (referred to in
clause 14), or any Product with a defect that appears in more than *
percent (%) of the Products in any shipment.
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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<PAGE>
6. PAYMENT TERMS
Payment shall be made to TTE by HDI in U.S. Dollars, [*] after the
date of shipment from Singapore, and after receipt by HDI of the original
documents referred to clauses 6.1, 6.2, and 6.3. HDI's payment will be made
by Telegraphic Transfer to TTE's designated bank.
TTE will send to HDI, via a courier service, the following documents:
6.1 Invoices in triplicate.
6.2 Packing Lists in triplicate.
6.3 Original Bill of Lading in triplicate if shipment is by seafreight, or
air waybill in duplicate if shipment is by airfreight.
TTE shall, as soon as practicable after shipment, also transmit via
facsimile to HDI at least one copy of each document.
7. PURCHASE ORDERS
7.1 HDI shall order Products by submitting a signed HDI Purchase Order to TTE
at least * days prior to HDI's requested delivery date. TTE, within
* days from receipt of HDI's Purchase Order, shall accept or reject the
Purchase Order. Upon acceptance of the Purchase Order, TTE shall state
the delivery date for the Products on the Purchase Order, and return to
HDI a counter-signed, accepted copy of the Purchase Order, which shall
not, save where there are grounds, reasonably acceptable to HDI, vary
from the date indicated by HDI in this Purchase Order by more than *
before or after that date.
7.2 TTE shall not perform any work or produce any Products without a Purchase
order as described in clause 7.1 or written authorization from HDI. HDI
shall not be liable for any expenses incurred by TTE if any work is
performed by TTE without first receiving a Purchase Order; or written
authorization from HDI, unless covered by the terms of the Purchase
Order. TTE shall not sell to any third party any of the Products without
the prior written consent of HDI, which consent shall be at the absolute
discretion of HDI.
7.3 TTE shall maintain the ability to increase its manufacturing capacity for
any or all of the Products described in Appendix A. Such ability to
increase its manufacturing capacity shall, at a minimum, be * percent (%)
more than the amount forecasted by HDI with * advance notice.
8. FORECASTS
On a monthly basis, HDI shall submit to TTE its written, good faith
estimates of its monthly requirements for the Product for the * period
commencing from the month HDI's forecast is submitted. That is, the *
months from the forecast month will be confirmed orders, the * month is a
forecast of the next
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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<PAGE>
HDI order that may be adjusted * percent (%) when confirmed, and the *
through * are non binding, adjustable order projections.
9. DELIVERY
9.1 Products purchased under this Agreement shall be shipped in accordance
with HDI's instruction. Delivery terms are * and delivery details
shall be advised to TTE for each delivery.
9.2 If TTE fails to ship the Product by the confirmed shipment date and the
delay is due to causes other than those stipulated in the Article
entitled "Force Majeure", HDI will have the right at its absolute
discretion to:
9.2.1 Require the delayed portion of the order to be shipped by
airfreight at TTE's expense; or
9.2.2 Extend the shipment date to a mutually agreed later date.
9.3 TTE or HDI may request a shipment delay of all or part of a purchase to
no later than the fifteenth (15th) date of the month following the
confirmed ship date.
9.4 Products are to be invoiced, and property and title to the Products
shall pass immediately upon passing shipping release. Risk in the
Products shall pass immediately upon delivery at * Port and HDI shall
thereafter accept responsibility for any loss, damage or destruction
to the Products (without prejudice to any claim which HDI may have
for breach of Agreement including but not limited to breach by TTE of
any terms to appropriate packaging of the Products).
10. PRODUCT TRANSFERS
If HDI desires to transfer to TTE, and TTE accepts the transfer of,
existing products for manufacture by TTE, the transfer schedule, Non-
Recurring Engineering (NRE) costs, and responsible parties are shown on
Appendix B attached hereto.
11. WARRANTY
11.1 TTE expressly warrants that all Products supplied by TTE to HDI
(including repairs and replacements) shall comply with Product
Specifications provided by HDI pursuant to clause 2 and clause 13 and
shall be free from defects in workmanship and components for a period
of * from date of delivery for the * and, thereafter, * from date of
delivery.
11.2 If TTE is in breach of this warranty, HDI may, at HDI's option:
11.2.1. Return the defective Products to TTE for repair or replacement
at TTE's expense. TTE will be responsible for airfreight
expenses of new Products if additional Products are required
to meet HDI's sales demand. Or
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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<PAGE>
11.2.2 Repair the defective Products using HDI's alternate sources,
and TTE shall reimburse HDI for the cost of such repairs. HDI
shall, before releasing defective Products to HDI's sources,
secure TTE's approval for the total cost of labor, materials
and other expenses.
11.3 The warranty provided hereunder shall not apply to any defect resulting
from abuse, misuse, alteration, neglect, unauthorized repair or
installation of Products, improper or inadequate maintenance by HDI,
operation outside of the specified environments, or improper site,
preparation or maintenance. The warranty does not apply to returns of
working product by virtue of HDI's return policy or any other
administrative arrangements between HDI and its customers.
11.4 The above warranty period shall not be extended beyond the period
referred in clause 10.1 if repairs are performed by HDI's sources.
12. RAW MATERIALS
12.1 TTE will work with its material suppliers to reduce the order lead time
to within * unless otherwise approved by HDI. However, in addition to
maintaining parts for HDI's Purchase Orders and forecast, TTE shall
also maintain a * revolving stock of all custom parts and other long-
lead parts required to produce the Products. Long-lead parts are
defined as those generally available to TTE * after TTE places its
parts order with its parts supplier.
12.2 If any of the Products, or parts for the Products, are discontinued by
HDI, TTE shall:
12.2.1 Use its best efforts to return to TTE's suppliers for full
credit any non-custom parts. HDI shall reimburse TTE such
reasonable restocking fees assessed by TTE's suppliers for the
return of non-custom parts.
12.2.2 Use its best efforts to transfer any non-custom parts to other
products manufactured for TTE's other customers.
For non-custom parts that are not returnable to TTE's suppliers, or
cannot be transferred to other products, HDI will purchase such parts
from TTE at TTE's cost plus * (%) for TTE's handling charges. HDI's
requirement to purchase non-custom parts will apply only to the
revolving long-lead parts stock determined in Article 12.1 herein.
12.3 For custom parts not returnable to TTE's suppliers or which cannot be
transferred to other products manufactured by TTE, HDI shall
reimburse TTE, at TTE's cost as evidence by invoices or other
documentary proof reasonable acceptable to HDI plus * percent (%) for
TTE's handling charges. HDI's reimbursement for custom parts will be
limited to the revolving stock of long-lead parts stock determined in
Article 10.1 herein.
12.4 If either party discovers an alternate source which may benefit or
lower the cost of bill of materials, proposal for such alternate
sourcing may be brought up for
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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mutual agreement between HDI and TTE. The benefits, expressed either in
dollar sense or whichever way, resulted from the alternate sourcing,
shall be shared equally between both parties. HDI shall be the sole
beneficiary of any parts cost reduction if the reduction is the result
of a design change initiated by or paid for by HDI.
12.5 TTE and HDI will be jointly responsible for initial qualification of
parts suppliers. Such qualification will include, but is not limited
to, first article samples, parts deliveries, parts quality, parts
reliability, and compliance with specifications. TTE will be solely
responsible for on going supplier qualification save that TTE shall
inform HDI in writing where there is a change in any of the Suppliers.
12.6 Subject to TTE's parts suppliers' agreements to waive TTE's commitment
of orders and or for orders already placed, procured materials which
are due to HDI's rescheduling resulting in forecast quantities varying
more than the * percent (%) allowance will need to be used in HDI's
production in the following *. A finance charge of * percent (%)
per month of the surplus material cost which remains outstanding will
be added to the cost of any unused materials that exceed the * percent
(%) allowance effective on the first day of the *.
13. ENGINEERING CHANGES
13.1 The term "Engineering Change" shall mean any change which, if made to
the Products, changes the Product's specification as provided to TTE
pursuant to clause 2 hereof.
13.2 HDI may propose Engineering Changes be made to Products, in which event
TTE will be notified in writing. TTE agrees that HDI shall have the
right to require such Engineering Changes and TTE shall, within *
of its receipt of such notification, give a written detailed appraisal
of the Engineering Changes stating the cost increase or cost savings
involved and the effect on the price and delivery of the Products. The
approved cost of special fixture(s) and test equipment; and type
approval (eg. Federal Communications Commission, Underwriters
Laboratories, etc) and its associated expense; due to the engineering
change will be paid by HDI and shall be the property of HDI.
13.3 TTE is entitled to submit for HDI's approval Engineering Change
Requests to improve manufacturing ease, improve quality, alternate
components, etc. The non-recurring expense costs relating to
Engineering Change Requests submitted by TTE for these purposes shall
be borne by TTE. No Engineering Change shall be implemented by TTE
unless approval in writing by HDI has been granted.
13.4 In calculating the cost impact involved in any Engineering Change, TTE
shall use the same parameters as used in the latest accepted quotation
for that product. This information shall include specific details as to
the proposed point of implementation and indicate the levels of
redundant/surplus material and parts. This information shall also
include a statement on the impact of the proposed change to
requirements for new or modified jigs, fixtures and any
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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consequences for changes in test software with reference to the current
specification.
13.5 If HDI requires the Engineering Change to be implemented to finished
Products requiring rework by TTE, and the rework is not due to TTE's
workmanship or TTE's obligations of ongoing supplier qualification,
rework shall be paid for by HDI and performed by TTE at cost. Such
costs shall be in the appropriate cost impact sections of the
Engineering Change form, a sample attached hereto as Appendix C.
13.6 TTE will maintain and supply weekly, a written report detailing all
Engineering Changes that have not been implemented with a target date
for implementation.
14. QUALITY ASSURANCE
14.1 A Quality Plan will be submitted by TTE for approval by HDI. Any
modifications to the approved Quality Plan will only be implemented
after the prior written agreement of both parties. Acceptance of
reasonable modifications will not be withheld by either party.
14.2 TTE shall permit visits by HDI personnel, HDI guests and officers for
the purpose of inspecting the manufacturing process, provided that in
the case of HDI guests, the names of the guests and the companies they
represent are given to TTE at least 48 hours in advance.
14.3 HDI and TTE agree that their respective quality departments will
cooperate to improve the acceptable quality level of Products by the
full disclosure of all relevant information.
14.4 TTE guarantees that the Products to be manufactured under this
agreement shall be produced under strict accordance with the
Specifications, the quality control standards and test procedures,
which standards of quality are to be submitted by TTE to HDI for
approval at least thirty (30) days before first mass production.
14.5 TTE may use a sub-contractor to provide sub-assemblies of the products.
If it does, the sub-contractor's facilities shall be considered the
same as TTE's facilities. TTE shall assume full responsibility for the
sub-assembly quality supplied by its sub-contractor.
14.6 If any Product manufactured or packaged by TTE fails to comply in whole
or in part with the Specifications, the Quality Plan or the Technology
or any directions to TTE by HDI or its employees and agents, TTE shall
immediately at its expense:
14.6.1 either destroy or dispose of in a manner acceptable to HDI or,
only if HDI consents in writing, re-work or reprocess (at the
cost of TTE) the defective Products in a manner acceptable to
HDI; or
14.6.2 if HDI consents in writing, dispose of the defective Products
through a marketing channel mutually agreed by HDI and TTE.
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<PAGE>
TTE shall not manufacture, sell or deal with any of the defective
Products in breach of this clause 14.6.
14.7 At the written request of HDI, TTE shall promptly send for testing,
representative samples of the Products at any state of manufacture or
packaging, or samples of specific Products manufactured by TTE, to a
quality control institute or company in Singapore or elsewhere
specified by HDI, at HDI's expense.
15. PRODUCT ACCEPTANCE
15.1 For outgoing Acceptance Quality Level ("AQL") inspection level, the
inspection shall be conducted in accordance with Military Standard
105D, Level II. The definition of the product acceptance are as
follows:
Major Defects: * production *% AQL
* production *% AQL
Minor Defects: * production *% AQL
* production *% AQL
For definition of major and minor defects refer to Appendix-D
For specification requirements, HDI will establish guard band limits,
such that TTE will test at outgoing Quality Acceptance to tighter
limits than those HDI applies at its Incoming Inspection.
15.2 TTE is required to re-work any product at TTE's expense for those
Products that are in noncompliance of the AQL level in effect at the
relevant time.
15.3 Corrective Action Request shall be acted upon within * of receipt by
TTE. TTE shall submit a Corrective Action Plan which will redress the
deficiency within *. This does not stipulate that the correction be
completed in * as the Corrective Action Plan is project complexity
dependent. If the deficiency is not corrected by TTE within a
reasonable period of time, TTE shall reimburse HDI for HDI's reasonable
costs to correct the deficiency, including parts, labor inspection and
other expenses.
15.4 HDI may utilize a sub-contractor for source inspection. HDI's sub-
contractor will only inspect for shipment acceptance, not product
acceptance.
15.5 HDI will bear all expenses for incoming inspection, if the Product
meets the agreed upon AQL levels in clause 15.1. If the order in
question fails the incoming inspection at the agreed upon AQL, TTE will
reimburse HDI for its full expenses for inspection, rework and
airfreight of new Products if additional Products are required to meet
HDI's sales demand.
15.6 If any two successive production lots of at least * units fails HDI's
incoming inspection of major defects, TTE will pay for *% of costs of
inspection by HDI's inspector at TTE's facility including but not
limited to costs of transport or
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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accomodation and HDI's incoming inspection, until such time that two
(2) successive production lots meets the major defect AQL levels.
16. PACKING
16.1 TTE shall be responsible for proper packing to protect the Products
against rough handling damage, loss and pilfering occurring during
transportation from TTE's facility. Bales and packages shall be durable
and appropriate for export to and appropriate for storage at the
destination. As a minimum, TTE shall tape wrap the shipping cartons
with a special printed tape to seal the shipping carton.
16.2 Shipping cartons will be marked, at a minimum, with the following
information:
16.2.1 Hello Direct, Inc.
San Jose, CA USA
16.2.2 HDI's purchase order number
16.2.3 HDI's product catalog number
16.2.4 Quantity
16.2.5 Carton number
16.2.6 Country of Origin (example, "Made in Singapore")
16.3 The Products purchased, repaired or replaced under warranty shall be
packed and exported by TTE at no additional charge.
17. RECORDS AND REPORTING
17.1 During the term of this Agreement and for two (2) years thereafter TTE
shall maintain complete and accurate Production and Quality records in
relation to materials and components, test equipment calibration
records, production tests and inspection in connection with this
Agreement in line with its usual record retention procedure. HDI or its
sub-contractor, shall have access to such records during normal
business hours upon giving reasonable prior notice.
17.2 TTE will submit to HDI, for each production lot during the first three
(3) months of this Agreement, weekly Printed Circuit Board Manual
Assembly (PCBMA), Parts Per Million (PPM), In-Circuit Tester (ICT)
yield, final assembly yield, Quality Assurance/Outgoing Quality
Assurance (QA/OQA) level reports together with corrective action plans.
Commencing on the fourth (4th) month of this Agreement, these reports
will be submitted every other production lot, and following lots with
product revision level changes.
17.3 TTE shall furnish and render additional reports as may be requested
from time to time by HDI.
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<PAGE>
17.4 TTE shall provide monthly inventory reports to HDI within the first
week of each following month.
18. SPARE PARTS AVAILABILITY
18.1 TTE shall supply spare parts to HDI, until * after the date of the
last delivery of the Products to HDI. TTE is not required to physically
purchase the parts, but shall maintain the vendor base and contact for
the * period. TTE shall allow HDI to purchase sufficient quantities of
spare parts which HDI deems necessary to maintain and support the
Products which HDI has previously purchased. Such parts shall be
supplied by TTE to HDI at TTE's cost, based on prevailing prices quoted
by TTE's suppliers, plus *% for handling and reasonable profit.
18.2 In the event that TTE is unable to supply such spare parts, or TTE is
unable to obtain another source of supply for HDI, then such inability
shall be considered non-compliance with this Article, and TTE shall,
without obligation or charge to HDI, provide HDI with technical
information, or any rights required, so that HDI can manufacture or
obtain parts from other sources.
19. TOOLS, FIXTURES AND JIGS
19.1 The tools, fixtures and jigs uniquely required for each Product is
shown in Appendix E attached hereto. New tools, fixtures and jigs to be
produced, or existing tool, fixtures and jigs requiring rework by TTE
shall be paid by HDI to TTE as follows:
(i) Total cost of US$* or less, within * after acceptance by HDI of
first tooling article samples or when the fixtures or jigs are
successfully functioning in a manner that meets Product
Specifications.
(ii) Total cost of US$* or more:
A) *% deposit when HDI submits its purchase for tooling,
fixtures, or jigs.
B) *% upon acceptance by HDI of first tooling article
samples, and after all critical dimensional discrepancies
of the tooled parts are resolved, or when the fixtures or
jigs are successfully functioning in a manner that meets
Product Specifications.
19.2 TTE shall submit a minimum of * pieces of each tooled part for HDI
acceptance with TTE's "First Article Report" detailing parts or
dimensions found to be out of specification and TTE's recommendation of
corrective action(s). If TTE does not submit a First Article Report,
HDI, at its option, will have the measurements made and the reasonable
costs for such measurements will be subtracted from the final tooling
payment to TTE.
19.3 All new tools created by TTE shall be guaranteed for a minimum life of
* cycles. It is expected that the life of the tools are subject to
normal usage and environmental wear and tear. During this period of
tools custody with TTE, TTE
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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<PAGE>
shall monitor tooling performance and shall notify HDI when the tooling
no longer produces parts meeting dimensional specifications. TTE shall,
at the beginning of each quarter, submit to HDI TTE's report of tool
condition and the remaining parts life of the tool.
19.4 Any and all tools, jigs and fixtures paid for by HDI shall be and
remain the sole property of HDI. In addition, any existing tools, jigs
or fixtures supplied to TTE by HDI shall remain the sole property of
HDI. Further, TTE shall at it's own cost keep said tools, jigs and
fixtures in good repair at all times and shall be responsible for their
safekeeping. HDI may at any reasonable time inspect the tools, jigs and
fixtures to ensure they are in proper order. HDI may require the
return, or transfer to a third party of the tools, jigs and fixtures to
which request TTE shall promptly comply. TTE shall install, label and
adequately identify as the property of HDI and keep and maintain so
labelled and identified any tools, jigs, fixtures and other equipment
belonging to HDI pursuant to this provision or otherwise.
19.5 TTE shall issue a "Certificate of Ownership" to HDI for all tools, jigs
and fixtures paid for by HDI or supplied to TTE.
20. CONFIDENTIALITY
20.1 Each party agrees for the term of this Agreement and for a period of
* thereafter to treat information, both oral and written, disclosed to
by the other party or otherwise during the term of this Agreement
(the "Information") as strictly confidential and undertakes as follows:
20.1.1 To use the Information only for the purpose specified in this
Agreement.
20.1.2 Not to make use of the Information except as contemplated by the
intent of this Agreement, without the express written consent of
the disclosing party.
20.1.3 Not to disclose the Information to any third party, without the
express consent of the disclosing party. For this purpose,
employees and consultants bound by obligations of secrecy no
less strict than those set out herein shall not be regarded as
third parties.
20.1.4 If so requested by the disclosing party, to return or destroy
any documents containing the Information supplied by the
disclosing party or any copies thereof or extracts therefrom
made by the receiving party and any samples of materials
supplied by the disclosing party.
20.1.5 Not to copy any documents containing the Information, nor to
take any extracts from such documents without the prior written
consent of the disclosing party and then only on such terms as
the disclosing party shall stipulate.
20.2 For purposes hereof, "Confidential Information" shall mean all data and
information of a confidential nature relating to the Products and/or
the business
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
Page 12
<PAGE>
or affairs of either party which is disclosed to one party prior to or
during the term of this Agreement, including (a) information concerning
the disclosing party's customers or markets; (b) information concerning
the composition, manufacture or development of the Products or other
products of either party; and (c) any technical information, know-how,
trade secrets or proprietary information of the disclosing party.
Confidential Information may be communicated orally, visually, in
writing or any other recorded or tangible form. The above shall not
apply to information or data designated as non-confidential by the
disclosing party in writing and to data and information which the
receiving party can show:
20.2.1 Has become generally available to the public otherwise than
through violation of this undertaking; or
20.2.2 Was already in the receiving party's rightful possession prior
to its acquisition from the disclosing party; or
20.2.3 Has been received from a third party who rightfully disclosed it
provided the receiving party complies with restrictions imposed
by the third party.
21. PRODUCT RIGHTS/EXCLUSIVITY
21.1 TTE understakes that it will use the Technology and all information of
a confidential nature owned, developed, controlled or otherwise
acquired by or licensed to TTE, including patents and the Technology;
information and know-how concerning the research, development and
manufacture of the Products (and any other custom products); formulae
and specifications; technology and technical and production data;
drawings, flow charts, instructions and sketches; manufacturing and
assembly processes and techniques; methods, policies, processes and
data techniques; operation, and manufacturing conditions; inventions
and Improvements whether patentable or not; written materials provided
by TTE whether subject to copyright or not including explanatory
manuals; information concerning suppliers and costs of materials;
customer lists, marketing structures, surveys; packaging and labelling
information; product inspection procedures; testing procedures and
standards and methods of quality control; information relative to the
advertising, marketing, sale, lease or other dispostion of the
Products; research and development projects and new or proposed
products and designs undertaken by TTE or any other persons; and
management and financial information relative to HDI (the "Proprietary
Information") communicated or furnished to it, only for the purposes
stated in this Agreement, and subject to the terms of this Agreement.
TTE agrees that all Proprietary Information and all copyright, patents
and design rights including copyright and design rights in packaging,
containers and labels (registered or unregistered), owned, developed,
controlled or otherwise licensed to HDI, and any other intellectual
property rights (anywhere) in any Proprietary Information (including
translations thereof whether or not effected by TTE or other persons)
(the Proprietary Information) shall remain the exclusive property of
HDI. TTE shall not acquire by performance of this Agreement any vested
or proprietary rights (in Singapore or elsewhere) in the Proprietary
Information and each
Page 13
<PAGE>
undertakes and agrees that any reproductions, notes, summaries or
similar documents relating to the Technology or any other Proprietary
Information shall immediately, upon their creation become and remain
the property of HDI, and shall be conspicuously marked so as to
indicate their confidential character. TTE understakes and agrees that
it shall have no right, title or interest nor claim any right, title or
interest in any Proprietary Rights or Proprietary Information, or
assist in any claim to any right, title or interest in and to any
Proprietary Rights or Proprietary Information adversely to HDI, or do
or permit any act which is directly or indirectly likely to prejudice
the ownership, title and other right of HDI in any Proprietary Rights
or Proprietary Information.
21.2 Any rights in any Improvements or the new designs produced or
implemented under this Agreement by TTE (including the right to apply
for protection of intellectual property rights derived therefrom) shall
belong to and be the exclusive property of HDI. Without further payment
to TTE or any other persons, TTE shall execute all documents, take all
steps and do all acts and things as may be reasonably required by HDI
to procure that HDI obtains or retains such protection. All such
Improvements and new designs produced under this Agreement shall be
deemed included in the definition of "Technology" and subject to all
provisions of this Agreement.
22. TRADEMARKS
22.1 TTE may be permitted to use such of the Trademarks as shall have the
prior approval in writing from HDI. Subject to the constraints and
directions of such approval and this Agreement, TTE shall affix
Trademarks only on Products approved in writing by HDI. TTE shall not
use or permit to be used, whether for marketing, advertising, publicity
purposes or otherwise, any Trademarks (or on its letterhead paper,
invoices, and at its business premises) unless specifically authorized
in writing in particular instances by HDI (prior to such use) as
regards each use.
22.2 TTE shall confirm to and observe such standards as HDI may from time to
time prescribe relative to the form, manner, size, design, position,
appearance, marking or color of Trademarks (including the form, manner,
extent and wording of all advertising and promotional materials,
brochures, memoranda, notices and other communications referencing
Trademarks). TTE shall not use any Trademarks as part of its corporate
or business name unless approved in writing by HDI.
22.3 TTE acknowledges HDI's exclusive right, title and interest in and to
the Trademarks and undertakes and agrees not to challenge the validity
of ownership of any Trademarks nor claim adversely to HDI any right,
title or interest in and to any Trademarks, nor assist directly or
indirectly with any such claim. Neither this Agreement nor any other
agreement, nor performance of any aspect of this Agreement or any other
agreement shall confer on TTE any right, title or interest in any
Trademarks. TTE neither has nor will acquire by performance of this
Agreement any vested or proprietary rights (in Singapore or elsewhere)
in any of the Trademarks. TTE shall cease use of all Trademarks
Page 14
<PAGE>
immediately (including any affixation of Trademarks on Products or
packaging) upon notification to that effect by HDI (and in any case no
later than seven (7) days after such notification). TTE shall not
remove, deface or alter or permit to be removed, defaced, altered or
otherwise obscured, Trademarks on any Products.
22.4 TTE shall not:
(a) register, apply for registration or (subject to this clause 22)
use;
(b) attempt to register, apply for registration or to use; or
(c) aid any third party in registering, applying to register, using
or attempting to register, apply for registration or to use,
any Trademarks or any words or marks which resemble or are identical or
similar to any Trademarks, in any jurisdiction.
22.5 TTE shall not do or permit to be done any act which would or might
jeopardize or invalidate any registration of registered Trademarks,
do or permit any act which might assist or give rise to any
application to remove any of the registered Trademarks from the
relevant register, or do any act or thing impairing or likely to
impair the distinctiveness or validity of, or any right of HDI in any
Trademarks (registered or not), or detrimental to the reputation and
goodwill of HDI in the Products (as reasonably instructed by HDI).
TTE shall not use any Trademarks in relation to products other than
the Products.
22.6 TTE shall as requested by HDI cooperate and take all steps necessary
in joining with or assisting HDI in the filing of any application for
registered user in Singapore or recording HDI as a registered user of
the Trademarks (where registered).
23. INFRINGMENT OF TRADEMARKS AND OTHER PROPRIETARY RIGHTS
23.1 TTE shall immediately notify HDI of any actual, threatened or suspected
infringement or improper, wrongful or unauthorized use of any
Proprietary Rights (including Technology) or any Trademarks or any
challenge to the validity of any Proprietary Rights (including
Technology) or Trademarks or HDI's ownership of the same or any claim
that the development or manufacture of the Products infringes any
rights of any other person. TTE shall provide HDI with full particulars
of each such matter. Without limitation, TTE agrees to notify HDI
immediately of all applications for registration and registrations of
words or marks the same as or similar to any Trademarks which come to
its attention.
23.2 TTE shall promptly take at the request of HDI (at the expense of TTE)
or in cases which HDI deems appropriate, all relevant steps or procure
that all steps are taken to protect the Proprietary Rights or
Trademarks against third party infringment or improper, wrongful or
unauthorized use of Proprietary Rights or Trademarks and to maintain
the validity and enforceability of all Proprietary Rights and
Trademarks or to defend the Proprietary Rights and Trademarks,
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<PAGE>
including the institution of legal proceedings. Provided that HDI may
take, at its option, conduct of such proceedings. Nothing herein shall
oblige HDI to take any legal proceedings.
24. RELATIONSHIP OF PARTIES
24.1 TTE shall operate as an independent contractor and not as an agent,
partner, or employee of HDI. TTE has no express or implied
authorization to incur any obligation or in any manner otherwise make
any commitments on behalf of HDI. TTE shall employ its own personnel
and shall be responsible for them and their acts and in no way shall
HDI be liable to TTE, its employees or third parties for any losses,
injuries, damages or the like occasioned by TTE's activities in
connection with this Agreement, except as expressly provided herein.
24.2 HDI shall operate as an independent customer of TTE, and not as an
agent, partner, or employee of TTE. HDI has no express or implied
authorization to incur any obligation or in any manner otherwise make
any commitments on behalf of TTE. HDI shall employ its own personnel
and shall be responsible for them and their acts and in no way shall
TTE be liable to HDI, its employees or third parties for any losses,
injuries, damages or the like occasioned by HDI's activities in
connection with this Agreement, except as expressly provided herein.
25. TERMINATION
25.1 HDI may terminate this Agreement by giving not less than * written
notice to TTE such notice to expire at the end of the original term or
any extended term. In the event of termination by HDI, HDI shall pay
TTE for all Products complying with and delivered in accordance with
this Agreement up to the effective date of termination. HDI will accept
financial liability for all components purchased or ordered by TTE in
line with lead times relevant at the time to meet HDI's approved
forecast provided TTE has made every reasonable effort to mitigate such
expense by cancellation of outstanding orders not needed to fulfill
purchase orders and utilization of components in other products or
otherwise.
25.2 TTE may terminate this Agreement upon giving not less than * written
notice to HDI such notice to expire at the end of the original term or
any extended term. In the event of notice of termination being given by
TTE, TTE shall accept all orders up to the approved forecast at the
time of termination and shall further ensure monthly capacity (of at
least the level indicated for the final month of the forecast supplied
under Paragraph 6) is available and shall accept orders at least up to
that level for any notice period not covered by the forecast.
25.3 HDI may terminate this Agreement without prior notice if:
25.3.1 TTE is in default of any of its obligations under this Agreement
and TTE fails to remedy such default within thirty (30) days of
receiving written notice from HDI to remedy the default.
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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25.3.2 TTE elects to close or dissolve its operation or is wound up and
dissolved, becomes insolvent, or repeatedly fails to pay its
debts as they become due, makes an assignment for the benefit of
its creditors, files a voluntary petition in bankruptcy or for
reorganization or is adjucated as bankrupt or insolvent, or has
a liquidator or trustee appointed over its affairs and such
appointment shall not have been terminated and discharged within
thirty (30) days thereof.
25.3.3 A receiver, judicial manager or similar officer is appointed in
respect of any part of TTE's assets.
26. EFFECT OF TERMINATION
26.1 Upon termination of this Agreement, TTE shall:
(a) immediately (but no later than fourteen (14) days subsequent to
the date of termination of this Agreement or the fulfillment of
the last Purchase Order, if any) cease using the Technology and
any other Proprietary Information in any way whatsoever, and also
cease development or manufacturing (as the case may be) all
Products, Improvements and new designs;
(b) immediately (but no later than fourteen (14) days subsequent to
the date of termination of this Agreement or the fulfillment of
the last Purchase Order, if any) destroy or (as instructed by
HDI) otherwise dispose of any Products, Improvements and new
designs (including all samples and consigned merchandise); or if
HDI so chooses, it may purchase all or any Products then
remaining in the possession or control of TTE at the invoice
value therefore paid by TTE (less any deductions for damage,
length of storage or other factors quantified in accordance with
HDI's usual practice); completion of the sale shall occur at the
date and upon terms and conditions specified by HDI;
(c) immediately (but no later than fourteen (14) days subsequent to
the date of termination of this Agreement or the fulfillment of
the last Purchase Order, if any) sell to HDI (at HDI's option)
any raw materials purchase by TTE and unutilized on hand as at
the effective date of termination of this Agreement, at the
invoice value therefore paid by TTE (less any deductions for
damage, length of storage or other factors quantified in
accordance with HDI's usual practice); completion of the sale
shall occur at the date and upon such other terms and conditions
specified by HDI;
(d) immediately (but no later than fourteen (14) days subsequent to
the date of termination of this Agreement or the fulfillment of
the last Purchase Order, if any), return, forward or transfer to
HDI (at TTE's cost) all Proprietary Information (including
reproductions, notes, summaries and similar documents or
literature related to the Technology), and notes, summaries,
price books, dealer manuals, data, promotional and advertising
materials, sales aids, display drawings, brochures, and any other
materials with any references to the Trademarks, which may be in
TTE's possession of control;
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(e) immediately (but no later than fourteen (14) days subsequent to
the date of termination of this Agreement or the fulfillment of
the last Purchase Order, if any) cease using all Trademarks; and
(f) immediately (but no later than fourteen (14) days subsequent to
the date of termination of this Agreement or the fulfillment of
the last Purchase Order, if any) surrender to HDI all
certificates and notifications of Product registrations with any
governmental department or agency procured in connection with
this Agreement or the Products, and all applications filed and
correspondence in connection with such registrations; TTE shall
immediately upon request by HDI (and no later than fourteen (14)
days following such request) execute all documents, and effect
all acts including notifications or deregistrations with any
government department or agency required or expedient to (i)
reflect that TTE is no longer associated with or has rights to
develop or manufacture the Products or (as applicable) the
materials, and that HDI or other person (including a company) is
the owner or beneficiary of such registration or registrant of
the Products; and (ii) reflect that TTE is no longer the owner of
or beneficially entitled to Product registrations, or the
registrant as regards any registrations or notifications or
similar procedures made or effected concerning the Products or
materials; and (iii) terminate or transfer (as requested by HDI)
any registrations or other interests as regards the manufacture
of the Products, to HDI or such other person (including a
company) designated by HDI.
26.2 HDI may (at its sole discretion) permit or direct (subject to
compliance and observance by TTE of the terms of, and all obligations
imposed by, this Agreement as though this Agreement had not been
terminated and subject to the payment of all invoices for materials or
otherwise immediately upon request and subject to HDI obtaining such
security or guarantee of performance by TTE as HDI considers
appropriate in the circumstance) TTE to manufacture the Products only
as to the Purchase Orders for Products received and accepted by TTE to
the date of notice of termination or expiry of this Agreement.
26.3 Termination of this Agreement shall be without prejudice to the right
of any party in relation to a default by a Party under this Agreement,
or in relation to any other obligations surviving termination of this
Agreement, including full payment of any payments due under this
Agreement.
26.4 Any amounts spent by TTE are spent with the knowledge that this
Agreement may be terminated in accordance with its terms. TTE waives
any claim against or liability of HDI with respect to TTE's investment,
amounts spent for advertising or hiring or otherwise in anticipation of
continuation of this Agreement. Any statement to the contrary by an
agent or employee of HDI is strictly unauthorized and shall not be
binding upon HDI. Each of the Parties hereby specifically disclaim any
rights to compensation whatsoever (including special, consequential or
incidental damages) as a result of any termination effected in
accordance with this Agreement (without prejudice to clause 26.3).
27. INSURANCE
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27.1 TTE shall, at its own expense, keep itself insured in an appropriate
amount against any third-party claims which may be brought against it,
including without limitation, any claim in respect to a third person as
a result of the use of any Products, and shall effect such insurance
under a valid and enforceable policy issued by an insurer of recognized
responsibility. TTE shall deliver a copy of all such policies to HDI
together with a copy of each receipt issued from time to time by the
insurer with respect of the payment of premium thereon if HDI requests.
27.2 HDI shall, at its own expense, keep itself insured in an appropriate
amount against any third-party claims which may be brought against it,
including without limitation, any claim in respect to a third person as
a result of the use of any Products, and shall effect such insurance
under a valid and enforceable policy issued by an insurer of recognized
responsibility. HDI shall deliver a copy of all such policies to TTE
together with a copy of each receipt issued from time to time by the
insurer with respect of the payment of premium thereon if TTE requests.
28. ADDRESSES, CONTACTS AND MEETINGS
28.1 Any notice to be given under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered to the party
concerned or, if sent, by prepaid post, facsimile or other agreed
electronic means of communication to such party's address as shown in
clauses 28.2 and 28.3.
28.2 All notices and communications from TTE to HDI, unless notified
otherwise, shall be addressed to:
Hello Direct, Inc.
5893 Rue Ferrari
San Jose, California 95138-1858
United States Of America
Attention: Donald Chiang
Tel: 408-363-2008
Fax: 408-363-2020
28.3 All notices and communications from HDI to TTE unless notified
otherwise shall be addressed to:
Transtech Electronics (S) Pte Ltd.
7, International Business Park
Jurong East
Singapore 609919
Attention: Benny Ong or Quek Tiang Yew
Tel: 65-564-2168
Fax: 65-561-4280
28.4 The parties hereby agree to hold meetings at the request of either
party to discuss topics relevant to this Agreement. The frequency and
the location will be agreed
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from time to time. Meetings may, if deemed appropriate by both parties,
be held by means of conference telephone or other similar
communications equipment by means of which all parties participating in
the meetings can hear each other without being in the physical presence
of each other.
29. WAIVER
The failure on the part of either party hereto to exercise or enforce
any right conferred upon it under this Agreement shall not be a waiver of
any such right nor operate to bar the exercise or enforcement thereof at any
time thereafter.
30. NON-ASSIGNMENT
Each of the Parties shall not, save as otherwise expressly provided in
this Agreement, transfer, assign, license, charge, contract, sub-license,
sub-contract, or in any way dispose of rights, obligations, or liabilities
or other interests under this Agreement, or appoint any sub-contractor, sub-
distributor, dealer or agent, by operation of law or otherwise, without the
other Parties' prior written consent.
31. ARBITRATION
31.1 All disputes, controversies or differences which may arise between the
parties out of or in relation to or in connection with this Agreement
which cannot be satisfactorily resolved by the parties themselves shall
be finally settled by arbitration under the rules of conciliation and
arbitration of the International Chamber of Conference by which each
party hereto is bound.
31.2 If HDI seeks resolution by arbitration, the arbitration shall be held
in Singapore and one arbitrator, who shall be a qualified arbitrator
and engineer with experience in the electronic industry in Singapore
shall be nominated by mutual agreement. If the parties cannot agree on
an arbitrator, the President of the Singapore International Arbitration
Centre shall make a nomination at HDI's request and his nomination
shall be final and binding. If TTE seeks resolution by arbitration, the
arbitration shall be held in San Jose, CA., U.S.A and one arbitrator,
who shall be a qualified arbitrator and engineer with experience in the
electronic industry in the USA shall be nominated by mutual agreement.
If the parties cannot agree on an arbitrator, the American Arbitration
Association shall make a nomination at TTE's request and their
nomination shall be final and binding. All arbitration shall be
performed in English and when finalized shall be binding on both
parties.
32. PATENT AND COPYRIGHT INDEMNITY
32.1 HDI warrants that it owns or is entitled to exercise all rights for all
purposes in the Products and will protect, indemnify and hold TTE
harmless from all costs, damages, expenses, claims and other
liabilities as a result of or arising out of any claims by third
parties that the Products infringe third parties' intellectual property
rights, unless such infringement is the result of any of TTE's patented
technology incorporated in the product.
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32.2 HDI reserves the right to defend, at its own expense, any suit brought
against HDI insofar as based upon a claim that the Products infringe
any intellectual property right and shall indemnify TTE against any
final award of damages and cost in such suit. This indemnity is
conditional upon TTE giving HDI notice within seven (7) days in writing
of any suit for infringement, authority as described above to settle or
conduct the defence thereof and full assistance and cooperation in said
defence. No cost or expense shall be incurred on HDI's behalf without
HDI's prior written consent and no admission shall be made by TTE of
liability.
33. INDEMNIFICATION
33.1 TTE shall indemnify and hold HDI harmless from any and all liability or
expense herewith, including attorneys' fees, resulting from damage to
property or from injuries or death to all persons arising from any
occurrence caused by any negligent act or omission to act on the part
of TTE. TTE shall at its expense defend any suit, or other proceedings
brought against HDI on account such negligent act or omission act, and
shall pay all expenses and satisfy all judgements which may be incurred
or rendered against them in connection therewith.
33.2 HDI shall indemnify and hold TTE harmless from any and all liability or
expense herewith, including attorneys' fees, resulting from damage to
property or from injuries or death to all persons arising from any
occurrence caused by any negligent act or omission to act on the part
of HDI. HDI shall at its expense defend any suit, or other proceedings
brought against TTE on account such negligent act or omission act, and
shall pay all expenses and satisfy all judgements which may be incurred
or rendered against them in connection therewith.
34. FORCE MAJEURE
34.1 If the performance of any of the obligations hereunder by either party
is prevented or delayed by acts of civil or military authority
(including governmental priorities), flood, fire, epidemic, war which
prevention or delay cannot be averted by diligence on the part of the
party affected, that party shall immediately notify the other party,
and upon receipt of such notice shall be excused from further
performance during the continuance of any such event; provided,
however, that if such delay extends for more than thirty (30) calendar
days, the other party at its discretion may terminate its obligations
hereunder without liability to the extent that the affected party's
performance has been prevented or delayed.
34.2 Neither party shall be deemed to be in breach of this Agreement or
otherwise be liable to the other, by reason of any delay in
performance, or non-performance, of any of its obligations hereunder to
the extent that such delay or non-performance is due to any Force
Majeure of which it has notified the other party; and the time for
performance of that obligation shall be extended accordingly.
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34.3 If the Force Majeure in question prevails for a continuous period in
excess of *, the parties shall enter into good faith
discussions with a view to alleviating its effects, or to agreeing upon
such alternative arrangements as may be fair and reasonable.
35. SEVERABILITY
The invalidity of any provision of this Agreement or portion of a
provision shall not affect the validity of any other portion of this
Agreement or the remaining portion of the applicable provision. If any
provision of the Agreement or portion thereof is held invalid, then in good
faith the parties shall negotiate and prepare and sign a document which
amends this Agreement to comply with the applicable law, and accomplishes as
nearly as possible the original intent of the provision or portion in
question.
36. GOVERNING LAW
This Agreement shall be subject to and be construed in accordance with
the laws of the STATE OF CALIFORNIA, UNITED STATES OF AMERICA.
37. ENTIRETY OF AGREEMENT
This Agreement constitutes the full understanding of the parties hereto
as to the subject matter hereof. It supersedes all previous agreements, is a
complete and exclusive statement of the terms of their agreements, and shall
not be modified, rescinded or waived except in writing signed by duly
authorized representatives of both parties hereto.
38. LANGUAGE
During the performance of this Agreement, the language employed in all
communications, including reports and provision of any and all data shall be
English.
39. HEADINGS
Headings in this Agreement are for convenience only and shall not affect
its interpretation.
Signed for and on behalf of: Signed for and on behalf of:
HELLO DIRECT, INC. TRANSTECH ELECTRONICS (S) PTE LTD
by /s/Donald Chiang by /s/Quek Tiang Yew
--------------------------------- ---------------------------------
Donald Chiang Quek Tiang Yew
Procurement Manager Director
Date: May 16, 1997 Date: May 16, 1997
--------------------------------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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APPENDIX A
This Appendix is attached to and is made a part of the Agreement entered into
as of the 16th day of May, 1997 between Transtech Electronics (S) Pte Ltd.
(TTE) and Hello Direct, Inc. (HDI).
PRODUCTS DESCRIPTION
Products are defined by the compliance specification given in and included as
part of the top-level list which follows.
<TABLE>
<CAPTION>
TOP LEVEL LIST CATALOG NO. PRODUCT NAME/DESCRIPTION * COST
- -------------- ----------- ------------------------ ------
<S> <C> <C> <C>
00-1741-02 1741 Office Rover (Cordless Headset) US$*
01-1742-02 1742 Office Rover, Base Unit US$: (To be advised)
01-1743-02 1743 Office Rover, Remote Unit US$: (To be advised)
</TABLE>
* COST NOTES:
------------
1. The US$* Model 1741 Office Rover cost is effective for the first three
(3) months of production after transfer.
2. TTE will initiate Value Engineering (VE) and Design for Everything (DFX)
efforts (see Appendix B) to reduce the Office Rover product cost for a lower
* cost, commencing with the fourth (4th) month production
HELLO DIRECT, INC. TRANSTECH ELECTRONICS (S) PTE LTD
by /s/Donald Chiang by /s/Quek Tiang Yew
--------------------------------- ---------------------------------
Donald Chiang Quek Tiang Yew
Procurement Manager Director
Date: May 16, 1997 Date: May 16, 1997
-----------------------------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
Page 1
<PAGE>
APPENDIX B
This Appendix is attached to and is made a part of the Agreement entered into
as of the 16th day of May, 1997 between Transtech Electronics (S) Pte Ltd.
(TTE) and Hello Direct, Inc. (HDI).
PRODUCT TRANSFER PLAN
- ---------------------
TTE RESPONSIBILITIES:
1. Value Engineering (VE) and DFX review to identify areas of improvement, to
include but not limited to ease of manufacturability, quality and
reliability, cost reduction. TTE may use a sub-contractor to provide all or
part of the VE and DFX review.
2. Purchasing and logistics management.
3. Industrial and Production Engineering to include, but not limited to capacity
planning, line set-up and equipment procurement and planning.
4. Production
PROJECT SCHEDULE:
1st Mass Production Start 70 to 84 calendar days
(from transfer acceptance)
NON-RECURRING ENGINEERING (NRE) CHARGES
<TABLE>
<CAPTION>
<S> <C>
1. Fixture improvement and processing qualification: US$*
2. Additional materials at cost plus * (%), not to exceed: US$*
(Copy invoices, receipts or other documentary evidence
will be provided by TTE to HDI.)
3. Pilot/Test production units (cost each): US$*
(Maximum of * units, with * units to be sent to HDI and
* units to be retained by TTE for reliability testing,
"golden" reference units, etc.)
</TABLE>
HELLO DIRECT, INC. TRANSTECH ELECTRONICS (S) PTE LTD
by /s/Donald Chiang by /s/Quek Tiang Yew
--------------------------------- ---------------------------------
Donald Chiang Quek Tiang Yew
Procurement Manager Director
Date: May 16, 1997 Date: May 16, 1997
-----------------------------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
Page 1
<PAGE>
[HELLO DIRECT LOGO]
APPENDIX C
ENGINEERING CHANGE REQUEST ECR#
----
DO NOT MAKE CHANGES WITHOUT PROPER AUTHORIZATION
- --------------------------------------------------------------------------------
Products Affected HDI ECR Number
Requested By Priority
Date of Request High [_] Medium [_] Low [_]
------ ------ ------
- --------------------------------------------------------------------------------
Documents Affected / Revisions
- --------------------------------------------------------------------------------
RELATED ECOs
- --------------------------------------------------------------------------------
REASON FOR THE CHANGE
SEE ATTACHED [_] By
- --------------------------------------------------------------------------------
Description of the Change to be made
Running Change? Yes [_] No [_] TBD [_]
Explain
Production Implementation Date
SEE ATTACHED [_] For additional information By
- --------------------------------------------------------------------------------
Impact of the Change/What the End User may notice
SEE ATTACHED [_] By
- --------------------------------------------------------------------------------
APPROVALS
- --------------------------------------------------------------------------------
[_] Engineering Date [_] Quality Date
- --------------------------------------------------------------------------------
[_] Product Marketing Date [_] Purchasing Date
- --------------------------------------------------------------------------------
[_] Operations Date
- --------------------------------------------------------------------------------
[_] Manufacturing Partner-1 Date [_] Manufacturing Partner-2 Date
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
When approved, this ECR becomes Engineering Change Order (ECO) Number ECO #
- --------------------------------------------------------------------------------
Page 1
<PAGE>
[HELLO DIRECT LOGO]
APPENDIX C (CONTINUED)
ENGINEERING CHANGE REQUEST ECR#
----
DO NOT MAKE CHANGES WITHOUT PROPER AUTHORIZATION
- --------------------------------------------------------------------------------
Distribution Date:
Engr [_] Quality [_] Prod Mktg [_] Oper [_] QA Rep [_] Mrgr 1 [_] Mrgr 2 [_]
- --------------------------------------------------------------------------------
Worksheet
Material Description of new parts
Costs & Lead Time
New piece part
Tooling
Modification
Material Description of old parts
Inventory / Disposition
Unit Cost of old parts
SEE ATTACHED [_] By
- --------------------------------------------------------------------------------
Page 2
<PAGE>
APPENDIX D
This Appendix is attached to and is made a part of the Agreement entered into
as of the 16th day of May, 1997 between Transtech Electronics (S) Pte Ltd.
(TTE) and Hello Direct, Inc. (HDI).
<TABLE>
<CAPTION>
QUALITY INSPECTION DEFECT DEFINITION FOR
MAJOR, MINOR, AND NOTICE MAJOR MINOR NOTICE
----- ----- ------
<S> <C> <C> <C>
1. Carton, gift box wrong .
incorrect printing .
legible printing defect . .
broken . .
wrong/missing product or assemblies .
2. Operating Manual/Card wrong .
printing defect . .
3. Printing missing .
wrong color .
discoloration . .
printing defect greater than 2 mm .
printing defect greater than 1 mm .
printing defect less than 1mm .
4. Function defective .
5. Assembly error unit not assembled properly .
6. Electrical Test Parameters out of limits greater than 10% .
out of limits less than 10% .
7. Appearance defective wrong color .
discoloration greater than 2.5 (Delta E) .
discoloration less than 2.5 (Delta E) .
contamination, cleaning not possible .
contamination, cleaning not easy .
contamination, cleaning easy by dry cloth .
</TABLE>
Page 1
<PAGE>
APPENDIX D (CONTINUED)
<TABLE>
<CAPTION>
QUALITY INSPECTION DEFECT DEFINITION FOR
MAJOR, MINOR, AND NOTICE MAJOR MINOR NOTICE
----- ----- ------
<S> <C> <C> <C>
8. Screw screw missing .
screw loose .
9. Surface damage Visual inspection
damage visible from distance of:
Primary Surface greater than 30 cm .
greater than 20 cm .
Secondary Surface greater than 60 cm .
greater than 40 cm .
10. Plastic injection defective worse
than approved golden sample
prevents proper assembly .
cosmetic .
11. Foreign material inside unit, metal dimension: greater than 10 mm .
5 - 10 mm .
less than 5 mm .
non-metal .
12. Safety of user .
</TABLE>
HELLO DIRECT, INC. TRANSTECH ELECTRONICS (S) PTE LTD
by /s/Donald Chiang by /s/ Quek Tiang Yew
---------------------------------- ----------------------------------
Donald Chiang Quek Tiang Yew
Procurement Manager Director
Date: May 16, 1997 Date: May 16, 1997
------------------------------
Page 2
<PAGE>
APPENDIX E
This Appendix is attached to and is made a part of the Agreement entered into
as of the 16th day of May, 1997 between Transtech Electronics (S) Pte Ltd.
(TTE) and Hello Direct, Inc. (HDI). This Appendix is amended this 17th day of
June, 1997, and supercedes Appendix E dated the 16th of May, 1997.
<TABLE>
<CAPTION>
TOOLS, JIGS AND FIXTURES
TOOLS:
Tool No. Description Product
-------- ----------- --------
<S> <C> <C>
9501399N Housing Front, Base Station Office Rover
9501400N Housing Rear, Base Station Office Rover
9501402N Housing Front and Housing Rear, Remote Office Rover
9501403N Housing Front and Housing Rear, Office Rover
Battery Pack
9501411N Button 2, 3, 4 Office Rover
95014112N Cradle, Plate and Clip Office Rover
9501414N Light Pipe Office Rover
9600437N Charger Plate, Pocket Pack Office Rover
0250061 Charge Contact, Positive, Remote Office Rover
0250062 Charge Contact, Negative, Remote Office Rover
0250063 Charge Contact Office Rover
43-0034-01 RF Shield, 0.20mm SPTE Office Rover
43-0035-01 RF Shield, 0.20mm SPTE Office Rover
N/A Reset Actuation Lever Cordless 100LX
FIXTURES:
Tool No. Description Product
-------- ----------- --------
58-0011-01 Base RF Test & Tune Fixture* Office Rover
58-0012-01 Switch Box: Base RF Test & Tune Fixture* Office Rover
58-0013-01 Base RF Test & Tune Fixture# Office Rover
58-0014-01 Switch Box: Base RF Test & Tune Fixture# Office Rover
58-0015-01 Remote RF Test & Tune Fixture* Office Rover
58-0016-01 Switch Box: Remote RF Test & Tune Fixture* Office Rover
58-0017-01 Remote RF Test & Tune Fixture# Office Rover
58-0018-01 Switch Box: Remote RF Test & Tune Fixture# Office Rover
58-0019-01 I/O PCB Test & Tune Fixture Office Rover
58-0020-01 Switch Box: I/O PCB Test & Tune Fixture Office Rover
58-0021-01 Bottom Plate Heat Stake Fixture Office Rover
</TABLE>
Page 1
<PAGE>
APPENDIX E (CONTINUED)
<TABLE>
<CAPTION>
FIXTURES (CONTINUED):
Tool No. Description Product
-------- ----------- --------
<S> <C> <C>
58-0022-01 Base Cradle Heat Stake Fixture Office Rover
58-0023-01 Auxiliary Contact Plate Heat Stake Fixture Office Rover
58-0024-01 Remote Belt Clip Insert Press Fit Fixture Office Rover
58-0025-01 Base Final Test Fixture Office Rover
58-0026-01 Remote Final Test Fixture Office Rover
58-0027-01 Paired Base & Remote Final Test Fixture Office Rover
---------- Base Antenna Assembly Holder Office Rover
01-1646-01 Cordless 100 Busy Indicator Office Rover
and Cordless 100
Headset
</TABLE>
Fixture Note:
* Refers to product or assembly test function without RF Shield Can
installed
# Refers to product or assembly test function with RF Shield Can
installed
HELLO DIRECT, INC. TRANSTECH ELECTRONICS (S) PTE LTD
by /s/Donald Chiang by /s/ Quek Tiang Yew
---------------------------------- ----------------------------------
Donald Chiang Quek Tiang Yew
Procurement Manager Director
Date: May 16, 1997 Date: 23/6/97
------------------------------
Page 2
<PAGE>
APPENDIX E
This Appendix is attached to and is made a part of the Agreement entered into
as of the 16th day of May, 1997 between Transtech Electronics (S) Pte Ltd.
(TTE) and Hello Direct, Inc. (HDI).
<TABLE>
<CAPTION>
TOOLS, JIGS AND FIXTURES
TOOLS:
Tool No. Description Product
-------- ----------- --------
<S> <C> <C>
9501399N Housing Front, Base Station Office Rover
9501400N Housing Rear, Base Station Office Rover
9501402N Housing Front and Housing Rear, Remote Office Rover
9501403N Housing Front and Housing Rear, Office Rover
Battery Pack
9501411N Button 2, 3, 4 Office Rover
95014112N Cradle, Plate and Clip Office Rover
9501414N Light Pipe Office Rover
9600437N Charger Plate, Pocket Pack Office Rover
0250061 Charge Contact, Positive, Remote Office Rover
0250062 Charge Contact, Negative, Remote Office Rover
0250063 Charge Contact Office Rover
43-0034-01 RF Shield, 0.20mm SPTE Office Rover
43-0035-01 RF Shield, 0.20mm SPTE Office Rover
N/A Reset Actuation Lever Cordless 100LX
FIXTURES:
Tool No. Description Product
-------- ----------- --------
<S> <C> <C>
58-0011-01 Base RF Test & Tune Fixture* Office Rover
58-0012-01 Switch Box: Base RF Test & Tune Fixture* Office Rover
58-0013-01 Base RF Test & Tune Fixture# Office Rover
58-0014-01 Switch Box: Base RF Test & Tune Fixture# Office Rover
58-0015-01 Remote RF Test & Tune Fixture* Office Rover
58-0016-01 Switch Box: Remote RF Test & Tune Fixture* Office Rover
58-0017-01 Remote RF Test & Tune Fixture# Office Rover
58-0018-01 Switch Box: Remote RF Test & Tune Fixture# Office Rover
58-0019-01 I/O PCB Test & Tune Fixture Office Rover
58-0020-01 Switch Box: I/O PCB Test & Tune Fixture Office Rover
58-0021-01 Bottom Plate Heat Stake Fixture Office Rover
</TABLE>
Page 1
<PAGE>
APPENDIX E (CONTINUED)
<TABLE>
<CAPTION>
FIXTURES (CONTINUED):
Tool No. Description Product
-------- ----------- --------
<S> <C> <C>
58-0022-01 Base Cradle Heat Stake Fixture Office Rover
58-0023-01 Auxiliary Contact Plate Heat Stake Fixture Office Rover
58-0024-01 Remote Belt Clip Insert Press Fit Fixture Office Rover
58-0025-01 Base Final Test Fixture Office Rover
58-0026-01 Remote Final Test Fixture Office Rover
58-0027-01 Paired Base & Remote Final Test Fixture Office Rover
</TABLE>
Fixture Note:
* Refers to product or assembly test function without RF Shield Can
installed
# Refers to product or assembly test function with RF Shield Can
installed
HELLO DIRECT, INC. TRANSTECH ELECTRONICS (S) PTE LTD
by /s/Donald Chiang by /s/ Quek Tiang Yew
---------------------------------- ----------------------------------
Donald Chiang Quek Tiang Yew
Procurement Manager Director
Date: May 16, 1997 Date: 16-May-1997
------------------------------
Page 2
<PAGE>
SPECIFICATIONS
(ON FOLLOWING PAGES FOR)
HELLO DIRECT OFFICE ROVER
FOR
AGREEMENT 0096-97, DATED MAY 16, 1997
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
- --------------------------------------------------------------------------------
REV ECO DESCRIPTION DRAFT APPD DATE
- --------------------------------------------------------------------------------
07 none Final changes and release to Sinoca. WDC EKM 9/16/96
- --------------------------------------------------------------------------------
08 084 * AMPk
- --------------------------------------------------------------------------------
OFFICE ROVER
[HELLO DIRECT LOGO]
BASE RF PCB ASSY PROPRIETARY
TEST PROCEDURE
PROPRIETARY INFORMATION
The information contained in this document is the exclusive property of Hello
Direct Inc. and should not be disclosed to any third party without the written
consent of Hello Direct Inc.
PREPARED BY : W. D. CROOK 3/29/96
- --------------------------------------------------------------------------------
APPROVALS REQUIRED [X]
- --------------------------------------------------------------------------------
[X] ENGINEERING DATE [_] OPERATIONS DATE
/s/ ERIC MAXON 12-3-96
- --------------------------------------------------------------------------------
[_] MARKETING DATE [_] QUALITY DATE
- --------------------------------------------------------------------------------
[_] PURCHASING DATE [X] DOCUMENTATION DATE
/s/ ANNA MARIE KIRKHAM 12/2/96
- --------------------------------------------------------------------------------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 1 OF 12
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
1. SCOPE 3
-----
2. REFERENCES 3
----------
3. REQUIREMENTS 3
------------
4. TEST PREPARATION 3
----------------
5. VCO ALIGNMENT 4
-------------
6. TRANSMITTER TESTS 5
-----------------
7. RECEIVER TESTS 6
--------------
8. POST SHIELD INSTALLATION TESTS 7
------------------------------
9. TEST DATA SHEET - OFFICE ROVER BASE RF UNIT 12
-------------------------------------------
PAGE 2 OF 12
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
1. SCOPE
- -- -------
1.1 This document defines the board level tests to be performed on the
OfficeRover Base RF Unit Transceiver.
2. REFERENCES
- -- ----------
2.1 16-0017-00 Schematic, CT1 Base RF Unit
-- ---- --
2.2 __-____-__ PCB Assembly Drawing, CT1 Base RF Unit
2.3 13-0022-01 PCB Assembly, CT1 Base RF Unit
-- ---- --
2.4 60-0018-00 Office Rover Compliance Specification
-- ---- --
3. REQUIREMENTS
- -- ------------
3.1 All test equipment used to perform the bench level testing shall have
evidence of current calibration. Equipment not requiring calibration
shall be so labeled.
3.2 The following list of equipment is necessary to perform the board level
testing. In the event that one of the pieces of equipment listed is
unavailable, an equivalent test instrument may be substituted.
* * *
* * *
* * *
* * *
* * *
* * *
* * *
4. TEST PREPARATION
- -- ----------------
4.1 To assure accurate frequency and power measurements, apply AC power to
the test equipment and allow the RF Communications Test Set and Power
Meter to warm up for a minimum of 30 minutes before making any
measurements.
4.2 *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
4.3 * *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 3 OF 12
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
4.4 *
* *
* *
* *
* *
* *
4.5 *
4.6 *
4.7 *
4.8 *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
4.9 *
5. VCO ALIGNMENT
- -- -------------
5.1 *
5.2 *
*
5.3 *
5.4 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 4 OF 12
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
5.5 *
*
5.6 *
5.7 *
5.8 *
*
6. TRANSMITTER TESTS
- -- -----------------
6.1 *
6.2 *
*
6.3 *
6.4 *
6.5 *
6.6 *
6.7 *
*
6.8 *
6.9 *
6.10 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 5 OF 12
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
6.11 *
6.12 *
6.13 *
6.14 *
6.15 *
6.16 *
6.17 *
6.18 *
*
7. RECEIVER TESTS
- -- --------------
7.1 *
7.2 *
*
7.3 *
7.4 *
7.5 *
*
7.6 *
7.7 *
7.8 *
*
7.9 *
*
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 6 OF 12
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
7.10 *
7.11 *
7.12 *
*
7.13 *
7.14 *
7.15 *
7.16 *
7.17 *
7.18 *
8. POST SHIELD INSTALLATION TESTS
- -- ------------------------------
8.1 *
8.2 *
8.3 *
*
8.4 *
8.5 *
8.6 *
8.7 *
*
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 7 OF 12
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
8.8 *
8.9 *
8.10 *
8.11 *
8.12 *
*
8.13 *
8.14 *
*
8.15 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 8 OF 12
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
*
FIGURE 1
--------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 9 OF 12
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
*
FIGURE 2
--------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 10 OF 12
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
*
FIGURE 3
--------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 11 OF 12
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
9. TEST DATA SHEET - OFFICE ROVER BASE RF UNIT
- -- -------------------------------------------
DATE: _____ TESTED BY: _____
UUT SN: _____
5.2 ____ *
5.5 ____ *
5.8 ____ *
6.6 ____ *
6.7 ____ *
6.8 ____ *
6.12 ____ *
6.16 ____ *
6.19 ____ *
7.8 ____ *
7.10 ____ *
7.12 ____ *
7.14 ____ *
7.15 ____ *
7.17 ____ *
7.18 ____ *
8.7 ____ *
8.9 ____ *
8.10 ____ *
8.15 ____ *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 12 OF 12
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
- --------------------------------------------------------------------------------
REV ECO DESCRIPTION DRAFT APPD DATE
- --------------------------------------------------------------------------------
07 none Final changes and release to Sinoca WDC EKM 9/16/96
- --------------------------------------------------------------------------------
08 084 *
* AMPk
- --------------------------------------------------------------------------------
OFFICE ROVER
[HELLO DIRECT LOGO]
REMOTE PCB ASSY PROPRIETARY
TEST PROCEDURE
PROPRIETARY INFORMATION
The information contained in this document is the exclusive property of Hello
Direct Inc. and should not be disclosed to any third party without the written
consent of Hello Direct Inc.
PREPARED BY : W. D. CROOK 3/28/96
- --------------------------------------------------------------------------------
APPROVALS REQUIRED [X]
- --------------------------------------------------------------------------------
[X] ENGINEERING DATE [_] OPERATIONS DATE
/s/ERIC MAXON 12-5-96
- --------------------------------------------------------------------------------
[_] MARKETING DATE [_] QUALITY DATE
- --------------------------------------------------------------------------------
[_] PURCHASING DATE [X] DOCUMENTATION DATE
/s/ANNA MARIE KIRKHAM 12/2/96
- --------------------------------------------------------------------------------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 1 OF 12
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
1. SCOPE
-----
This document defines the board level tests to be performed on the
OfficeRover Remote Unit Transceiver.
2. REFERENCES
- -- ----------
2.1 16-0019-00 Schematic, CT1 Remote Unit
-- ---- --
2.2 - - PCB Assembly, CT1 Remote Unit
-- ---- --
2.3 13-0023-01 BOM, CT1 Remote Unit
-- ---- --
2.4 60-0018-00 Office Rover Compliance Specification
-- ---- --
3. REQUIREMENTS
- -- ------------
3.1 All test equipment used to perform the board level testing shall have
evidence of current calibration. Equipment not requiring calibration
shall be so labeled.
3.2 The following list of equipment is necessary to perform the board level
testing. In the event that one of the pieces of equipment listed is
unavailable, an equivalent test instrument may be substituted. *
* * *
* * *
* * *
* * *
* * *
* *
4. TEST PREPARATION
- -- ----------------
4.1 To assure accurate frequency and power measurements, apply AC power to
the test equipment and allow the RF Communications Test Set and Power
Meter to warm up for a minimum of 30 minutes before making any
measurements.
4.2 *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
4.3 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 2 OF 13
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
4.4 *
* *
* *
* *
* *
* *
4.5 *
4.6 *
4.7 *
4.8 *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
4.9 *
5. VCO ALIGNMENT
- -- -------------
5.1 *
5.2 *
5.3 *
5.4 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 3 OF 13
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
5.5 *
5.6 *
5.7 *
5.8 *
6. TRANSMITTER TESTS
- -- -----------------
6.1 *
6.2 *
6.3 *
6.4 *
6.5 *
6.6 *
6.7 *
6.8 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 4 OF 13
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
6.9 *
6.10 *
6.11 *
6.12 *
6.13 *
6.14 *
6.15 *
6.16 *
6.17 *
6.18 *
6.19 *
6.20 *
7. RECEIVER TESTS
- -- --------------
7.1 *
7.2 *
7.3 *
7.4 *
7.5 *
7.6 *
7.7 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
7.8 *
7.9 *
7.10 *
7.11 *
7.12 *
7.13 *
7.14 *
7.15 *
7.16 *
7.17 *
7.18 *
7.19 *
7.20 *
7.21 *
7.22 *
7.23 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 6 OF 13
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
7.24 *
7.25 *
8. POST SHIELD INSTALLATION TESTS
- -- ------------------------------
8.1 *
8.2 *
8.3 *
8.4 *
8.5 *
8.6 *
8.7 *
8.8 *
8.9 *
8.10 *
8.11 *
8.12 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 7 OF 13
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
8.13 *
8.14 *
8.15 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 8 OF 13
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
*
FIGURE 1
--------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 9 OF 13
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
*
FIGURE 2
--------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 10 OF 13
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
*
FIGURE 3
--------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 11 OF 13
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
9. TEST DATA SHEET - OFFICE ROVER REMOTE UNIT
- -- ------------------------------------------
DATE: ______ TESTED BY: _______
UUT SN: ______
5.2 ____ *
5.5 ____ *
5.8 ____ *
6.6 ____ *
6.7 ____ *
6.8 ____ *
6.9 ____ *
6.10 ____ *
6.13 ____ *
6.17 ____ *
6.20 ____ *
7.8 ____ *
7.10 ____ *
7.12 ____ *
7.14 ____ *
7.15 ____ *
7.17 ____ *
7.18 ____ *
7.20 ____ * __ %
____ __ %
____ __ %
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
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PAGE 12 OF 13
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
10. TEST DATA SHEET - OFFICE ROVER REMOTE UNIT
- --- ------------------------------------------
DATE: __________ TESTED BY: __________
UUT SN: __________
7.20 ____ * __ %
____ * __ %
____ * __ %
7.24 ____ *
7.25 ____ *
8.7 ____ *
8.9 ____ *
8.10 ____ *
8.15 ____ *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 13 OF 13
<PAGE>
[HELLO DIRECT LOGO]
TEST PROCEDURE
- --------------------------------------------------------------------------------
REV ECO DESCRIPTION DRAFT APPD DATE
- --------------------------------------------------------------------------------
07 none Final changes and release to Sinoca WDC 9/16/96
- --------------------------------------------------------------------------------
OFFICE ROVER
BASE I/O PCB ASSY [HELLO DIRECT LOGO]
PROPRIETARY
TEST PROCEDURE
PROPRIETARY INFORMATION
The information contained in this document is the exclusive property of Hello
Direct Inc. and should not be disclosed to any third party without the written
consent of Hello Direct Inc.
PREPARED BY : W. D. CROOK 4/8/96
- --------------------------------------------------------------------------------
APPROVALS REQUIRED [X]
- --------------------------------------------------------------------------------
[X] ENGINEERING DATE [_] OPERATIONS DATE
/s/ERIC MAXON 9/19/96
- --------------------------------------------------------------------------------
[_] MARKETING DATE [_] QUALITY DATE
- --------------------------------------------------------------------------------
[_] PURCHASING DATE [X] DOCUMENTATION DATE
- --------------------------------------------------------------------------------
PAGE 1 OF 15
<PAGE>
[HELLO DIRECT LOGO]
TEST PROCEDURE
PAGE 2 OF 15
<PAGE>
[HELLO DIRECT LOGO]
TEST PROCEDURE
1. SCOPE
- -- -----
This document defines the board level tests to be performed on the
OfficeRover I/O board.
2. REFERENCES
- -- ----------
2.1 16-0018-00 Schematic, CT1 Base I/O Unit
2.2 __-____-__ PCB Assembly Drawing, CT1 Base I/O Unit
2.3 13-0022-01 PCB Assembly, CT1 Base I/O Unit
2.4 60-0018-00 Office Rover Compliance Specification
3. REQUIREMENTS
- -- ------------
3.1 All test equipment used to perform the board level testing shall have
evidence of current calibration. Equipment not requiring calibration
shall be so labeled.
3.2 The following list of equipment is necessary to perform the board level
testing. In the event that one of the pieces of equipment listed is
unavailable, an equivalent test instrument may be substituted.
3.2.1 *
3.2.2 *
3.2.3 *
3.2.4 *
3.2.5 *
4. TEST PREPARATION
- -- ----------------
4.1 To assure accurate audio measurements, apply AC power to the test
equipment and allow the scope and function generator to warm up for a
minimum of 30 minutes before making any measurements.
4.2 *
4.3 *
4.4 *
4.5 *
5. POWER SUPPLY TESTS
- -- ------------------
5.1 *
5.2 *
5.3 *
5.4 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 3 OF 15
<PAGE>
TEST PROCEDURE
5.5 *
6. AUDIO BUFFER TESTS
- -- ------------------
6.1 *
6.2 *
6.3 *
6.4 *
6.5 *
6.6 *
6.7 *
6.8 *
6.9 *
6.10 *
6.11 *
6.12 *
6.13 *
7. BATTERY CHARGER TESTS
- -- ---------------------
7.1 *
7.2 *
7.3 *
7.4 *
7.5 *
7.6 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 4 OF 15
<PAGE>
TEST PROCEDURE
8. RINGDET, OFFHOOK, DATA TESTS
- -- ----------------------------
8.1 *
8.2 *
8.3 *
8.4 *
8.5 *
8.6 *
8.7 *
8.8 *
8.9 *
8.10 *
9. AUDIO SLIDE POT TEST
- -- --------------------
9.1 *
9.2 *
9.3 *
9.4 *
9.5 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 5 OF 15
<PAGE>
[HELLO DIRECT LOGO]
TEST PROCEDURE
*
FIGURE 1
--------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 6 OF 15
<PAGE>
[HELLO DIRECT LOGO]
TEST PROCEDURE
*
Figure 2
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THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
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PAGE 7 OF 15
<PAGE>
[HELLO DIRECT LOGO]
TEST PROCEDURE
*
FIGURE 3
--------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 8 OF 15
<PAGE>
[HELLO DIRECT LOGO]
TEST PROCEDURE
*
FIGURE 4
--------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 9 OF 15
<PAGE>
[HELLO DIRECT LOGO]
TEST PROCEDURE
*
FIGURE 5
--------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 10 OF 15
<PAGE>
[HELLO DIRECT LOGO]
TEST PROCEDURE
*
FIGURE 6
--------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 11 OF 15
<PAGE>
[HELLO DIRECT LOGO]
TEST PROCEDURE
*
FIGURE 7
--------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 12 OF 15
<PAGE>
[HELLO DIRECT LOGO]
TEST PROCEDURE
*
FIGURE 8
--------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 13 OF 15
<PAGE>
[HELLO DIRECT LOGO]
TEST PROCEDURE
*
FIGURE 9
--------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 14 OF 15
<PAGE>
TEST PROCEDURE
10. TEST DATA SHEET - OFFICE ROVER I/O UNIT
- --- ---------------------------------------
DATE: ____ TESTED BY: __
UUT SN: ____
5.2 ____ *
5.3 ____ *
5.4 ____ *
5.5 ____ *
6.4 ____ *
6.6 ____ *
6.8 ____ *
6.11 ____ *
6.13 ____ *
7.2 ____ * _________ * _________ *
7.3 ____ * _________ * _________ *
7.5 ____ * _________ *
7.6 ____ * _________ *
8.4 ____ * _______ * _________ *
8.7 ____ * _______ * _________ *
8.10 ____ * _______ * _________ *
9.4 ____ *
9.5 ____ *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
Page 15 of 15
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
- --------------------------------------------------------------------------------
REV ECO DESCRIPTION DRAFT APPD DATE
- --------------------------------------------------------------------------------
01 none CREATE WDC WDC 7/2/96
- --------------------------------------------------------------------------------
02 none Modified to eliminate the RMS*SQRT2 detector WDC WDC 7/15/96
- --------------------------------------------------------------------------------
03 none Final changes and release to Sinoca WDC EKM 9/16/96
- --------------------------------------------------------------------------------
04 084 * AMPk EKM 12//96
- --------------------------------------------------------------------------------
05 089 Replace all "talk" with "ON/OFF" JN
- --------------------------------------------------------------------------------
OFFICE ROVER REMOTE
FINAL TEST PROCEDURE
[HELLO DIRECT LOGO]
ITEM #1743 PROPRIETARY
PROPRIETARY INFORMATION
The information contained in this document is the exclusive property of Hello
Direct Inc. and should not be disclosed to any third party without the written
consent of Hello Direct Inc.
PREPARED BY : W. D. CROOK 7/2/96
- --------------------------------------------------------------------------------
APPROVALS REQUIRED [X]
- --------------------------------------------------------------------------------
[X] ENGINEERING DATE [_] OPERATIONS DATE
/s/ERIC MAXON 5-Dec-96
- --------------------------------------------------------------------------------
[_] MARKETING DATE [_] QUALITY DATE
- --------------------------------------------------------------------------------
[_] PURCHASING DATE [X] DOCUMENTATION DATE
/s/ANNA MARIE KIRKAM 5-Dec-96
- --------------------------------------------------------------------------------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 1 OF 6
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
1. SCOPE
- -- -----
This document defines the final level tests to be performed on the Office
Rover Remote Unit Transceiver.
2. REFERENCES
- -- ----------
2.1 16-0019-00 Schematic, CT1 Remote Unit
2.2 __-____-__ PCB Assembly Drawing, CT1 Remote Unit
2.3 13-0023-01 PCB Assy, CT1 Remote Unit
2.4 60-0018-00 Office Rover Compliance Specification
3. REQUIREMENTS
- -- ------------
3.1 All test equipment used to perform the final level testing shall have
evidence of current calibration. Equipment not requiring calibration
shall be so labeled.
3.2 The following list of equipment is necessary to perform the board level
testing. In the event that one of the pieces of equipment listed is
unavailable, an equivalent test instrument may be substituted.
*
4. TEST PREPARATION
- -- ----------------
4.1 To assure accurate frequency and power measurements, apply AC power to
the test equipment and allow the RF Communications Test Set to warm up
for a minimum of 30 minutes before making any measurements.
4.2 *
4.3 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS6
PAGE OF 2 OF 6
<PAGE>
TEST PROCEDURE
4.4 *
4.5 *
4.6 *
*
5. TRANSMITTER TESTS
- -- -----------------
5.1 *
5.2 *
5.3 *
5.4 *
5.5 *
5.6 *
5.7 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 3 OF 6
<PAGE>
TEST PROCEDURE
5.8 *
5.9 *
5.10 *
5.11 *
5.12 *
5.13 *
5.14 *
*
6. RECEIVER TESTS
- -- --------------
6.1 *
6.2 *
6.3 *
6.4 *
6.5 *
6.6 *
6.7 *
6.8 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 4 OF 6
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
*
FIGURE 1
--------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 5 OF 6
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
- --------------------------------------------------------------------------------
REV ECO DESCRIPTION DRAFT APPD DATE
- --------------------------------------------------------------------------------
01 none CREATE WDC WDC 7/2/96
- --------------------------------------------------------------------------------
02 none Modified to eliminate the RMS*SQRT2 detector WDC WDC 7/15/96
- --------------------------------------------------------------------------------
03 none Final changes and release to Sinoca WDC EKM 9/16/96
- --------------------------------------------------------------------------------
04 084 * AMPk
- -------------------------------------------------------------------------------
OFFICE ROVER BASE
[HELLO DIRECT LOGO]
FINAL TEST PROCEDURE PROPRIETARY
ITEM #1742
PROPRIETARY INFORMATION
The information contained in this document is the exclusive property of Hello
Direct Inc. and should not be disclosed to any third party without the written
consent of Hello Direct Inc.
PREPARED BY : W. D. CROOK 7/2/96
- --------------------------------------------------------------------------------
APPROVALS REQUIRED [X]
- --------------------------------------------------------------------------------
[X] ENGINEERING DATE [_] OPERATIONS DATE
/s/ERIC MAXON 12-5-97
- --------------------------------------------------------------------------------
[_] MARKETING DATE [_] QUALITY DATE
- --------------------------------------------------------------------------------
[_] PURCHASING DATE [X] DOCUMENTATION DATE
/s/ANNA MARIE KIRKHAM 12/3/96
- --------------------------------------------------------------------------------
PAGE 1 OF 7
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
1. SCOPE 3
-----
2. REFERENCES 3
----------
3. REQUIREMENTS 3
------------
4. TEST PREPARATION 3
----------------
5. TRANSMITTER TESTS 4
-----------------
6. RECEIVER TESTS 5
--------------
7. TEST DATA SHEET - OFFICE ROVER BASE UNIT FINAL TEST 7
---------------------------------------------------
PAGE 2 OF 7
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
1. SCOPE
- -- -----
This document defines the final level tests to be performed on the
OfficeRover Base Unit Transceiver.
2. REFERENCES
- -- ----------
2.1 16-0017-00 Schematic, CT1 Base RF Unit
-- ---- --
2.2 __-____-__ PCB Assembly Drawing, CT1 Base RF Unit
2.3 13-0021-01 PCB Assembly, CT1 Base RF Unit
-- ---- --
2.4 16-0018-00 Schematic, CT1 Base I/O Unit
-- ---- --
2.5 __-____-__ PCB Assembly Drawing, CT1 Base I/O Unit
2.6 13-0022-01 PCB Assembly, CT1 Base I/O Unit
-- ---- --
2.7 01-1742-A1 Base Assembly, Office Rover
-- ---- --
2.8 60-0018-00 Office Rover Compliance Specification
-- ---- --
3. REQUIREMENTS
- -- ------------
3.1 All test equipment used to perform the final level testing shall have
evidence of current calibration. Equipment not requiring calibration
shall be so labeled.
3.2 The following list of equipment is necessary to perform the board level
testing. In the event that one of the pieces of equipment listed is
unavailable, an equivalent test instrument may be substituted.
*
4. TEST PREPARATION
- -- ----------------
4.1 To assure accurate frequency and power measurements, apply AC power to
the test equipment and allow the RF Communications Test Set to warm up
for a minimum of 30 minutes before making any measurements.
4.2
*
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 3 OF 7
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
4.3 *
4.4 *
4.5 *
4.6 *
4.7 *
4.8 *
4.9 *
4.10 *
4.11 *
5. TRANSMITTER TESTS
- -- -----------------
5.1 *
5.2 *
5.3 *
5.4 *
5.5 *
5.6 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 4 OF 7
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
5.7 *
5.8 *
5.9 *
5.10 *
5.11 *
6. RECEIVER TESTS
- -- --------------
6.1 *
6.2 *
6.3 *
6.4 *
6.5 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 5 OF 7
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
*
FIGURE 1
--------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 6 OF 7
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
7. TEST DATA SHEET - OFFICE ROVER BASE UNIT FINAL TEST
- -- ---------------------------------------------------
DATE: TESTED BY:
----- -----
UUT SN:
-----
5.4 *
-----
5.5 *
-----
5.9 *
-----
5.11 *
-----
6.2 *
-----
6.4 *
-----
6.5 *
-----
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 7 OF 7
<PAGE>
[LOGO OF HELLO DIRECT]
TEST OF PROCEDURE
- --------------------------------------------------------------------------------
REV ECO DESCRIPTION DRAFT APPD DATE
- --------------------------------------------------------------------------------
01 none CREATE WDC 9/16/96
- --------------------------------------------------------------------------------
OFFICE ROVER
[HELLO DIRECT LOGO]
QUALTIY FINAL PROPRIETARY
TEST PROCEDURE
PROPRIETARY INFORMATION
The information contained in this document is the exclusive property of Hello
Direct Inc. and should not be disclosed to any third party without the written
consent of Hello Direct Inc.
PREPARED BY : W. D. CROOK 9/16/96
- --------------------------------------------------------------------------------
APPROVALS REQUIRED [X]
- --------------------------------------------------------------------------------
[X] ENGINEERING DATE [_] OPERATIONS DATE
/s/ERIC MAXON 9/19/96
- --------------------------------------------------------------------------------
[_] MARKETING DATE [_] QUALITY DATE
- --------------------------------------------------------------------------------
[_] PURCHASING DATE [X] DOCUMENTATION DATE
- --------------------------------------------------------------------------------
PAGE 1 OF 8
<PAGE>
[LOGO OF HELLO DIRECT]
TEST OF PROCEDURE
1. SCOPE 3
-----
2. REFERENCES 3
----------
3. REQUIREMENTS 3
------------
4. TEST PREPARATION 3
----------------
5. TRANSMIT TESTS (HANDSET TO BASE) 4
-------------------------------
6. RECEIVE TESTS (BASE TO HANDSET) 5
------------------------------
7. RING INITIATOR AND BUSY INDICATOR TEST 6
--------------------------------------
8. SPARE BATTERY CHARGING INDICATOR TEST 6
-------------------------------------
9. TEST DATA SHEET - OFFICE ROVER FINAL/SOURCE QA INSPECTION 8
---------------------------------------------------------
PAGE 2 OF 8
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
1. SCOPE
- -- -----
This document defines the tests to be performed on the OfficeRover Remote
Assembly /Base Assembly Transceiver pair at a final or incoming QA station.
2. REFERENCES
- -- ----------
2.1 16-0019-00 Schematic, CT1 Remote Unit
-- ---- --
2.2 __-____-__ PCB Assembly Drawing, CT1 Remote Unit
2.3 13-0023-01 PCB Assembly, CT1 Remote Unit
-- ---- --
2.4 01-1743-A1 Remote Assy, Office Rover
-- ---- --
2.5 16-0017-00 Schematic, CT1 Base Unit
-- ---- --
2.6 __-____-__ PCB Assembly, CT1 Base Unit
2.7 13-0021-01 PCB Assembly, CT1 Base Unit
-- ---- --
2.8 16-0018-00 Schematic, CT1 Base I/O Unit
-- ---- --
2.9 __-____-__ PCB Assembly Drawing, CT1 Base I/O Unit
2.10 13-0022-01 PCB Assembly, CT1 Base I/O Unit
-- ---- --
2.11 01-1742-A1 Base Assembly, Office Rover
-- ---- --
2.12 60-0018-00 Pocket Pack Compliance Specification
-- ---- --
3. REQUIREMENTS
- -- ------------
3.1 All test equipment used to perform the final level testing shall have
evidence of current calibration. Equipment not requiring calibration
shall be so labeled.
3.2 The following list of equipment is necessary to perform the board level
testing. In the event that one of the pieces of equipment listed is
unavailable, an equivalent test instrument may be substituted.
*
4. TEST PREPARATION
- -- ----------------
4.1 To assure accurate frequency and power measurements, apply AC power to
the test equipment and allow the RF Communications Test Set to warm up
for a minimum of 30 minutes before making any measurements.
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 3 OF 8
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
4.2 *
4.3 *
4.4 *
4.5 *
4.6 *
4.7 *
5. TRANSMIT TESTS (HANDSET TO BASE)
- -- --------------------------------
5.1 *
5.2 *
5.3 *
5.4 *
5.5 *
5.6 *
5.7 *
5.8 *
5.9 *
5.10 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 4 OF 8
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
5.11 *
5.12 *
5.13 *
5.14 *
5.15 *
5.16 *
5.17 *
5.18 *
6. RECEIVE TESTS (BASE TO HANDSET)
- -- -------------------------------
6.1 *
6.2 *
6.3 *
6.4 *
6.5 *
6.6 *
6.7 *
6.8 *
6.9 *
6.10 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 5 OF 8
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
6.11 *
7. RING INITIATOR AND BUSY INDICATOR TEST
- -- --------------------------------------
7.1 *
7.2 *
7.3 *
7.4 *
7.5 *
8. SPARE BATTERY CHARGING INDICATOR TEST
- -- -------------------------------------
8.1 *
8.2 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 6 OF 8
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
*
FIGURE 1
--------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 7 OF 8
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
9. TEST DATA SHEET - OFFICE ROVER FINAL/SOURCE QA INSPECTION
- -- ---------------------------------------------------------
DATE: ____ TESTED BY: ____
REMOTE SN: ____ BASE SN: ____
5.9 ____ *
5.10 ____ *
5.11 ____ * __ %
____ * __ %
____ * __ %
5.13 ____ *
5.14 ____ *
5.16 ____ *
5.17 ____ *
6.6 ____ *
6.7 ____ *
6.9 ____ *
6.10 ____ *
7.2 ____ *
7.4 ____ *
8.1 ____ *
8.2 ____ *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 8 OF 8
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
- --------------------------------------------------------------------------------
REV ECO DESCRIPTION DRAFT APPD DATE
- --------------------------------------------------------------------------------
01 none CREATE WDC WDC 7/2/96
- --------------------------------------------------------------------------------
02 none Final changes and release to Sinoca WDC EKM 9/16/96
- --------------------------------------------------------------------------------
03 078 REVISE TOLERANCE SEC. 5.9 AMPk EKM 10/17/96
- --------------------------------------------------------------------------------
04 081 REVISE TOLERANCES SEC 5.13, 5.14, 6.9, 6.10 AMPk EKM 10/23/96
- --------------------------------------------------------------------------------
05 089 Change references to "TALK" Button AMPk EKM 12/96
090 SEC. 5.6 - Add time to link test.
- --------------------------------------------------------------------------------
06 115 Add Section 9 for Microphonics testing AMPk
- --------------------------------------------------------------------------------
OFFICE ROVER PAIRED
FINAL TEST PROCEDURE
ITEM #1741
PROPRIETARY INFORMATION
The information contained in this document is the exclusive property of Hello
Direct Inc. and should not be disclosed to any third party without the written
consent of Hello Direct Inc.
PREPARED BY : W. D. Crook 7/2/96
- --------------------------------------------------------------------------------
APPROVALS REQUIRED [X]
- --------------------------------------------------------------------------------
[X] ENGINEERING DATE [_] OPERATIONS DATE
/s./ERIC MAXON 5/9/97
- --------------------------------------------------------------------------------
[_] MARKETING DATE [_] QUALITY DATE
- --------------------------------------------------------------------------------
[_] PURCHASING DATE [X] DOCUMENTATION DATE
- --------------------------------------------------------------------------------
PAGE 1 OF 8
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
1. SCOPE 3
------
2. REFERENCES 3
-----------
3. REQUIREMENTS 3
-------------
4. TEST PREPARATION 3
----- -----------
5. TRANSMIT TESTS (HANDSET TO BASE) 4
--------- ----- -------- -- -----
6. RECEIVE TESTS (BASE TO HANDSET) 5
-------- ----- ----- -- --------
7. RING INITIATOR AND BUSY INDICATOR TEST 6
----- --------- --- ---- --------- ----
8. SPARE BATTERY CHARGING INDICATOR TEST 6
------ ------- -------- --------- ----
9. TEST DATA SHEET - OFFICE ROVER PAIRED UNIT FINAL TEST 8
----- ---- ----- - ------ ----- ------ ---- ----- ----
PAGE 2 OF 8
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
1. SCOPE
- -- -----
This document defines the final level tests to be performed on the Office
Rover Remote Assembly /Base Assembly Transceiver pair.
2. REFERENCES
- -- ----------
2.1 16-0019-00 Schematic, CT1 Remote Unit
-- ---- --
2.2 __-____-__ PCB Assembly Drawing, CT1 Remote Unit
2.3 13-0023-01 PCB Assembly, CT1 Remote Unit
-- ---- --
2.4 01-1743-A1 Remote Assy, Office Rover
-- ---- --
2.5 16-0017-00 Schematic, CT1 Base Unit
-- ---- --
2.6 __-____-__ PCB Assembly, CT1 Base Unit
2.7 13-0021-01 PCB Assembly, CT1 Base Unit
-- ---- --
2.8 16-0018-00 Schematic, CT1 Base I/O Unit
-- ---- --
2.9 __-____-__ PCB Assembly Drawing, CT1 Base I/O Unit
2.10 13-0022-01 PCB Assembly, CT1 Base I/O Unit
-- ---- --
2.11 01-1742-A1 Base Assembly, Office Rover
-- ---- --
2.12 60-0018-00 Pocket Pack Compliance Specification
-- ---- --
3. REQUIREMENTS
- -- ------------
3.1 All test equipment used to perform the final level testing shall have
evidence of current calibration. Equipment not requiring calibration
shall be so labeled.
3.2 The following list of equipment is necessary to perform the board level
testing. In the event that one of the pieces of equipment listed is
unavailable, an equivalent test instrument may be substituted.
*
4. TEST PREPARATION
- -- ----------------
4.1 To assure accurate frequency and power measurements, apply AC power to
the test equipment and allow the RF Communications Test Set to warm up
for a minimum of 30 minutes before making any measurements.
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 3 OF 8
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
4.2 *
4.3 *
4.4 *
4.5 *
4.6 *
4.7 *
5. TRANSMIT TESTS (HANDSET TO BASE)
- -- --------------------------------
5.1 *
5.2 *
5.3 *
5.4 *
5.5 *
5.6 *
5.7 *
5.8 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 4 OF 8
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
5.9 *
5.10 *
5.11 *
5.12 *
5.13 *
5.14 *
5.15 *
5.16 *
5.17 *
5.18 *
6. RECEIVE TESTS (BASE TO HANDSET)
- -- -------------------------------
6.1 *
6.2 *
6.3 *
6.4 *
6.5 *
6.6 *
6.7 *
6.8 *
6.9 *
6.10 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 5 OF 8
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
6.11 *
7. RING INITIATOR AND BUSY INDICATOR TEST
- -- --------------------------------------
7.1 *
7.2 *
7.3 *
7.4 *
7.5 *
8. SPARE BATTERY CHARGING INDICATOR TEST
- -- -------------------------------------
8.1 *
8.2 *
9. MICROPHONICS & NOISE TEST
- -- -------------------------
9.1 Adjust the unit for the following settings:
9.1.1 *
9.1.2 *
9.1.3 *
9.2 *
9.3 *
9.4 *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 6 OF 8
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
*
FIGURE 1
--------
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 7 OF 8
<PAGE>
[LOGO OF HELLO DIRECT]
TEST PROCEDURE
10. TEST DATA SHEET - OFFICE ROVER PAIRED UNIT FINAL TEST
- --- -----------------------------------------------------
DATE: __________ TESTED BY: __________
REMOTE SN: __________ BASE SN: __________
5.9 ____ *
5.10 ____ *
5.11 ____ * __ %
____ * __ %
____ * __ %
5.13 ____ *
5.14 ____ *
6.6 ____ *
6.7 ____ *
6.9 ____ *
6.10 ____ *
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
PAGE 8 OF 8
<PAGE>
EXHIBIT 11.1
- --------------------------------------------------------------------------------
HELLO DIRECT, INC.
COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
Three months Ended Six Months Ended
------------------ ----------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $ 370,000 $ 305,000 $ 670,000 $ 560,000
========== ========== ========== ==========
Weighted average common shares outstanding 5,031,000 4,979,000 5,023,000 4,967,000
Common stock equivalents:
Common stock options, utilizing treasury stock method
when dilutive 79,000 58,000 66,000 58,000
---------- ---------- ---------- ----------
Weighted average shares outstanding 5,110,000 5,037,000 5,089,000 5,025,000
========== ========== ========== ==========
Net income per share $ 0.07 $ 0.06 $ 0.13 $ 0.11
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,007
<SECURITIES> 3,607
<RECEIVABLES> 5,829
<ALLOWANCES> 617
<INVENTORY> 6,093
<CURRENT-ASSETS> 20,562
<PP&E> 6,970
<DEPRECIATION> 1,901
<TOTAL-ASSETS> 31,014
<CURRENT-LIABILITIES> 5,606
<BONDS> 0
0
0
<COMMON> 5
<OTHER-SE> 27,902
<TOTAL-LIABILITY-AND-EQUITY> 31,014
<SALES> 15,318
<TOTAL-REVENUES> 15,318
<CGS> 7,542
<TOTAL-COSTS> 7,294
<OTHER-EXPENSES> (152)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1
<INCOME-PRETAX> 634
<INCOME-TAX> 264
<INCOME-CONTINUING> 370
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 370
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
