Exhibit 10.3

 

Dated December 1, 2005

 

 

Hauppauge Digital,Inc.

as Pledgor

 

JPMorgan Chase Bank, N.A.

as Pledgee

 

and

 

Hauppauge Digital Europe S.àr.l.

as the Company

 

 

SHARE PLEDGE AGREEMENT

 

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TABLE OF CONTENTS

 

1.

DEFINITIONS

1

2.

PLEDGE

3

3.

PERFECTION OF THE PLEDGE

3

4.

CONTINUING AND ADDITIONAL SECURITY

3

5.

VOTING RIGHTS

4

6.

DISTRIBUTIONS

5

7.

SUBSCRIPTION RIGHTS

5

8.

REPRESENTATIONS AND WARRANTIES

5

9.

UNDERTAKINGS AND COVENANTS

6

10.

SHAREHOLDER APPROVAL

7

11.

ENFORCEMENT

7

12.

TERMINATION

8

13.

LIABILITY AND INDEMNITY

8

14.

WAIVERS, REMEDIES CUMULATIVE

8

15.

COSTS

8

16.

NOTICES

8

17.

ASSIGNMENT

9

18.

GOVERNING LAW AND JURISDICTION

10

19.

AMENDMENTS

10

20.

COUNTERPARTS

11

21.

SEVERABILITY

11

 

EXECUTION PAGE

11

 

SCHEDULE 1

13

 

SCHEDULE 2

14

 

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THIS SHARE PLEDGE AGREEMENT (this “Agreement”) was made on this 1st day of
December 2005

 

BETWEEN:

 

1.             Hauppauge Digital, Inc., a company organised and existing under
the laws of New York and having its principal place of business at New York,
11788, 91, Cabot Court, Hauppauge (the “Pledgor”); and

 

2.             JPMorgan Chase Bank, N.A., a national banking association
organised and existing under the federal laws of the United States of America
and having its registered office at 395 North Service Road, Melville, New York,
11747 (the “Pledgee”).

 

IN THE PRESENCE OF:

 

3.             Hauppauge Digital Europe S.àr.l., a private limited liability
company (société à responsabilité limitée) organised and existing under the laws
of the Grand Duchy of Luxembourg, having its registered office at 12, rue Léon
Thyes, L-2636 Luxembourg, Grand Duchy of Luxembourg and registered with the
commercial registry of Luxembourg under no. B 71.905 (the “Company”).

 

WHEREAS:

 

(A)          The Pledgor owns 100 per cent (100%) of the share capital and the
voting rights of the Company.

 

(B)           The Pledgee has made, and may from time to time make, loans to
Hauppauge Computer Works, Inc., (the “Borrower”), which loans are or shall be
evidenced by one or more promissory notes (the “Notes”) and pursuant to which
the Borrower will incur obligations owing to the Pledgee (the “Obligations”).

 

(C)           The Pledgor has guaranteed the Obligations of the Borrower
pursuant to a guarantee agreement dated on the date hereof (as amended, restated
or supplemented, from time to time, the “Guarantee”).

 

(D)          As a condition to the making of such loans under the Notes and to
accept the Guarantee of the Pledgor, the Pledgor is required to create a first
priority right of pledge over the Pledged Assets (as defined below) in favour of
the Pledgee in accordance with the terms set forth herein.

 

NOW IT IS AGREED AS FOLLOWS:

 

1              DEFINITIONS

 

1.1           UNLESS OTHERWISE DEFINED HEREIN, CAPITALISED TERMS AND EXPRESSIONS
USED IN THIS AGREEMENT (INCLUDING THE RECITALS HERETO) WILL HAVE THE SAME
RESPECTIVE MEANINGS AS SET FORTH IN THE GUARANTEE AND THE NOTES. IN ADDITION,
THE FOLLOWING CAPITALISED TERMS AND EXPRESSIONS WILL HAVE

 

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THE FOLLOWING MEANINGS:

 

“Business Day” means a day on which the banks are open for general business in
Luxembourg and New York.

 

“Pledged Assets” means the Shares together with any present or future rights
attached thereto (including, but not limited to, any voting rights and rights of
pre-emption), any cash distributions on the Shares, including dividends or
redemption proceeds of such Shares, or any other values, securities, rights or
property received in respect of the Shares.

 

“Right of Pledge” means the right of pledge created by this Agreement in
accordance with Clause 2.

 

“Shares” means:

 

(a)           eight thousand twenty three (8023) registered shares in the
capital of the Company with a nominal value of thirty euro (EUR 30.-) each; and

 

(b)           any and all shares in the capital of the Company which are
acquired or offered in substitution or in addition to such shares, including
those which may be subscribed by the Pledgor in the case of an increase of the
share capital of the Company, following exchange, merger, consolidation,
division, issue or stock dividend, subscription for cash or otherwise after the
date of this Agreement.

 

“Secured Obligations” means any and all obligations and liabilities of the
Pledgor to the Pledgee, whether present or future, whether actual or contingent,
whether for principal, interest, costs, charges and expenses in connection with
(i) the Guarantee and the Notes or (ii) this Agreement, each as amended,
supplemented, restated or novated from time to time, as well as any indemnities
due thereunder.

 

1.2           UNLESS OTHERWISE DEFINED HEREIN, ANY REFERENCE IN THIS AGREEMENT
TO:

 

(A)           THE PLEDGOR, THE PLEDGEE, THE COMPANY AND ANY OTHER PERSON WILL BE
CONSTRUED SO AS TO INCLUDE ANY SUBSEQUENT SUCCESSORS AND PERMITTED ASSIGNS AND
TRANSFEREES IN ACCORDANCE WITH THEIR RESPECTIVE INTERESTS;

 

(B)           A “CLAUSE” OR A “SCHEDULE” WILL, SUBJECT TO ANY CONTRARY
INDICATION, BE CONSTRUED AS A REFERENCE TO A CLAUSE OF OR A SCHEDULE TO THIS
AGREEMENT;

 

(C)           THIS AGREEMENT, THE GUARANTEE, THE NOTES OR ANY OTHER AGREEMENT OR
DOCUMENT WILL BE CONSTRUED AS A REFERENCE TO THIS AGREEMENT, THE GUARANTEE, THE
NOTES OR, AS THE CASE MAY BE, SUCH OTHER AGREEMENT OR DOCUMENT AS THE SAME MAY
HAVE BEEN, OR MAY FROM TIME TO TIME BE, AMENDED, VARIED, NOVATED, SUPPLEMENTED
OR REPLACED.

 

1.3           THE TITLES AND HEADINGS OF THE CLAUSES ARE FOR CONVENIENCE ONLY
AND DO NOT FORM PART OF THIS AGREEMENT AND SHALL IN NO WAY AFFECT THE
INTERPRETATION OF THIS AGREEMENT.

 

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2              PLEDGE

 

AS SECURITY FOR THE DUE AND FULL PAYMENT AND DISCHARGE OF THE SECURED
OBLIGATIONS, THE PLEDGOR AGREES TO GRANT AND HEREBY GRANTS TO THE PLEDGEE A
CONTINUING FIRST PRIORITY PLEDGE (GAGE DE PREMIER RANG) OVER THE PLEDGED ASSETS
(THE “PLEDGE”) IN ACCORDANCE WITH ARTICLES 3 AND FOLLOWING OF THE LAW ON
FINANCIAL COLLATERAL DATED 5 AUGUST 2005 (LOI DE 5 AOÛT 2005 SUR LES CONTRATS DE
GARANTIE FINANCIÈRE) (THE “FINANCIAL COLLATERAL LAW”), AND THE PLEDGEE AGREES TO
ACCEPT AND HEREBY ACCEPTS SUCH PLEDGE.

 

3              PERFECTION OF THE PLEDGE

 

3.1           The Pledge is perfected by the acknowledgement and acceptance
thereof by the Company and the entry (inscription) of the Pledge in the
Company’s shareholders’ register (registre des associés) at the date of
execution of this Agreement

 

3.2           The Company, by executing this Agreement, hereby expressly
acknowledges and accepts the Pledge.

 

3.3           Upon the signing of this Agreement, the Pledgor shall inure the
Company to (i) record the Pledge in the Company’s shareholders’ register by
completing and inserting the wording of Schedule 1 to this Agreement, opposite
the name of the respective Pledgor and Shares and (ii) confirm, immediately upon
registration, in writing to the Pledgee that registration of the Pledge in the
Company’s shareholders’ register has been done by the execution and delivery of
a letter, substantially in the form of Schedule 2 to this Agreement, to the
Pledgee together with a photocopy of the relevant pages of the shareholders’
register.

 

3.4           AS SOON AS A PLEDGOR WILL ACQUIRE PLEDGED ASSETS AFTER THE DATE OF
THIS AGREEMENT, THE PLEDGOR SHALL INURE THE COMPANY TO FORTHWITH REGISTER THE
PLEDGE WITH RESPECT TO THOSE PLEDGED ASSETS IN THE COMPANY’S SHAREHOLDERS’
REGISTER.

 

4              CONTINUING AND ADDITIONAL SECURITY

 

4.1           THE PLEDGE WILL BE A CONTINUING SECURITY AND SHALL NOT BE
CONSIDERED AS SATISFIED BY ANY INTERMEDIATE PAYMENT, SATISFACTION OR SETTLEMENT
OF ANY PART OF THE SECURED OBLIGATIONS UNTIL EXPRESSLY RELEASED IN ACCORDANCE
WITH CLAUSE 12.1 OF THIS AGREEMENT, AND SHALL  REMAIN IN FULL FORCE AND EFFECT
UNTIL THE DUE AND FULL PAYMENT AND DISCHARGE OF THE SECURED OBLIGATIONS.

 

4.2           THE PLEDGE WILL BE CUMULATIVE, IN ADDITION TO AND INDEPENDENT OF
ANY OTHER SECURITY OR SECURITY INTEREST NOW OR HEREAFTER HELD BY THE PLEDGEE AS
SECURITY FOR THE SECURED OBLIGATIONS OR ANY RIGHTS, POWERS AND REMEDIES PROVIDED
BY LAW AND SHALL NOT OPERATE SO AS IN ANY WAY TO PREJUDICE OR AFFECT OR BE
PREJUDICED OR AFFECTED BY ANY SECURITY INTEREST OR OTHER RIGHT OR REMEDY WHICH
THE PLEDGEE MAY NOW OR IN THE FUTURE HAVE IN RESPECT OF THE SECURED OBLIGATIONS.

 

4.3           THE PLEDGOR HEREBY WAIVES ANY RIGHTS IT MAY HAVE OF FIRST
REQUIRING THE PLEDGEE TO PROCEED AGAINST OR CLAIM PAYMENT FROM ANY OTHER PERSON
OR ENFORCE ANY GUARANTEE OR SECURITY BEFORE ENFORCING THE PLEDGE. THE RIGHTS OF
THE PLEDGEE HEREUNDER ARE IN ADDITION TO AND NOT EXCLUSIVE OF THOSE PROVIDED BY
LAW.

 

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4.4           THE PLEDGE SHALL NOT BE DISCHARGED BY THE ENTRY OF ANY SECURED
OBLIGATIONS INTO ANY CURRENT ACCOUNT, IN WHICH CASE THE PLEDGE SHALL SECURE ANY
BALANCE OF SUCH CURRENT ACCOUNT UP TO THE AMOUNT IN WHICH THE SECURED
OBLIGATIONS WERE ENTERED THEREIN.

 

4.5           TO THE EXTENT PERMITTED BY LAW, THE PLEDGOR RECOGNISES THAT THE
PLEDGE WILL NOT IN ANY WAY BE PREJUDICED OR AFFECTED BY ANY CHANGE IN THE
ARTICLES OF ASSOCIATION OR STATUS OF THE PLEDGOR OR BY ANY LIMITATION,
DISABILITY, INCAPACITY OR OTHER CIRCUMSTANCES RELATING TO THE PLEDGOR OR ANY
OTHER PERSON, BY ANY INVALIDITY, ILLEGALITY OR UNENFORCEABILITY OF THE
OBLIGATION OF THE PLEDGOR OR ANY OTHER PERSON, AND THE PLEDGOR AGREES TO KEEP
THE PLEDGEE FULLY INDEMNIFIED AGAINST ANY LOSS SUFFERED AS A RESULT OF ANY
FAILURE BY THE PLEDGOR TO PERFORM ANY SUCH OBLIGATION OR PURPORTED OBLIGATION.

 

4.6           THE PLEDGEE MAY AT ANY TIME WITHOUT DISCHARGING OR IN ANY WAY
AFFECTING THE PLEDGE CREATED HEREBY (A) GRANT THE PLEDGOR ANY TIME OR
INDULGENCE, (B) CONCUR IN ANY MORATORIUM OF THE SECURED OBLIGATIONS, (C) AMEND
THE TERMS AND CONDITIONS OF THE SECURED OBLIGATIONS, (D) ABSTAIN FROM TAKING OR
PERFECTING ANY OTHER SECURITY AND DISCHARGE ANY OTHER SECURITY AND (E) ABSTAIN
FROM EXERCISING ANY RIGHT OR RECOURSE OR FROM PROVING OR CLAIMING ANY DEBT AND
WAIVE ANY RIGHT OR RECOURSE.

 

5.             VOTING RIGHTS

 

5.1           Until the occurrence of an Event of Default, the Pledgor shall be
entitled to exercise all voting rights in relation to the Shares in a manner
which does not adversely affect this Pledge or cause an Event of Default to
occur. After the occurrence of an Event of Default, the Pledgor shall not,
without the prior written consent of the Pledgee, exercise any voting rights or
otherwise in relation to the Shares and undertakes to request such consent in
writing.

 

5.2           The Pledgee shall be entitled, after an Event of Default has
occurred, to request the Pledgor to exercise the voting rights (to the extent
permitted by law) or to appoint the Pledgee (or any person designed to the
Pledgor by the Pledgee) as the Pledgor’s irrevocable proxy to represent the
Pledgor at the relevant shareholders’ meeting and exercise the voting rights in
any manner the Pledgee deems fit for the purpose of protecting and/or enforcing
its rights hereunder. The Pledgor shall do whatever is necessary in order to
ensure that the exercise of the voting rights in these circumstances is
facilitated and becomes possible for the Pledgee or such other person, including
the issuing of a writte proxy in any form required under applicable law.

 

The Pledgor hereby expressly acknowledges that, after the occurrence of an Event
of Default, the Pledgee shall be totally and unconditionally authorised to
exericse the voting rights attached to the Shares in any manner necessary or
useful for the pusposed of ensuring the complete satisfaction of the Secured
Obligations and hereby waives any claim it may have in this respect in
particular with respect to the liability of the Pledgee or such other person
(save for events of wilful misconduct, gross negligence or bad faith).

 

5.3           THE COMPANY WILL, FOLLOWING THE NOTIFICATION BY THE PLEDGEE OF THE
OCCURRENCE OF AN EVENT OF DEFAULT, FORTHWITH SEND TO THE PLEDGEE A COPY OF ALL
AGENDAS FOR FUTURE SHAREHOLDERS’ MEETINGS AND OTHER DOCUMENTS RELEVANT TO SUCH
FUTURE SHAREHOLDERS’ MEETINGS, NOTICES AND COMMUNICATIONS WHICH IT SENDS TO
SHAREHOLDERS OF THE COMPANY, AS WELL AS COPIES OF ALL RESOLUTIONS THAT WILL BE
ADOPTED BY FUTURE SHAREHOLDERS’ MEETINGS.

 

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6.             DISTRIBUTIONS

 

6.1           If and as long as no Event of Default has occurred and is
continuing, all distributions on the Shares, including dividends, will remain
vested in the Pledgor.

 

6.2           UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, WHICH IS CONTINUING,
ANY DISTRIBUTIONS ON THE SHARES, INCLUDING DIVIDENDS, SHALL BE PAID TO THE
PLEDGEE WHICH SHALL APPLY THESE DISTRIBUTIONS EXCLUSIVELY TOWARDS THE DISCHARGE
OF THE SECURED OBLIGATIONS.

 

7.             SUBSCRIPTION RIGHTS

 

Unless agreed otherwise by the Pledgee, the Pledgor shall exercise all
subscription rights to which the Shares may be entitled. The shares obtained by
exercising these subscription rights shall be part of the Shares and the Pledge
with respect of those Shares shall be registered in the Company’s shareholders’
register in accordance with Clause 2.

 

8.             REPRESENTATIONS AND WARRANTIES

 

In addition to the representations and warranties made in the Guarantee, the
Pledgor hereby represents and warrants for the benefit of the Pledgee that:

 

(a)           the Pledgor and the Company are duly incorporated and validly
existing under the laws of their jurisdiction of incorporation, have the power
to enter into this Agreement and to exercise and perform their rights and
obligations hereunder and have taken all corporate and other actions required
for the execution, delivery and performance of this Agreement;

 

(b)           the granting of the pledge falls within the corporate purpose of
the Pledgor, which has also satisfied itself that the benefits it expects to
derive from the Guarantee and the Notes are an adequate consideration for it to
grant this Pledge;

 

(c)           no demand, order or resolution for the winding-up or liquidation
has been made or filed or is currently pending before the court in relation to
the Pledgor or the Company and neither the Pledgor nor the Company are subject
to any bankruptcy proceedings or proceedings for concordat préventif de
faillite, gestion contrôlée or sursis de paiement;

 

(d)           the Shares represent, on the date of execution of this Agreement,
sixty-five per cent (65%) of the issued share capital of the Company, are
validly issued and fully paid up, and no dividends have been distributed on the
Shares which remain unpaid on the date hereof;

 

(e)           on the date of execution of this Agreement, the Shares are, and
shall remain, in registered form until the date upon which the Secured
Obligations have been unconditionally and irrevocably paid and discharged in
full;

 

(f)            the Pledgor is, on the date of execution of this Agreement, the
registered and absolute legal owner and beneficial owner of the Shares, duly
registered in the Company’s

 

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shareholders’ register. The Company’s shareholders’ register accurately reflects
the number of shares held by the shareholders;

 

(g)           the Pledged Assets are free from any security interest, lien or
encumbrance of any kind, except for the Pledge. The business of the Pledgor is
not subject to a floating charge (gage sur fonds de commerce), similar foreign
law security or any mandate to create the same, save as required or permitted
under the Guarantee and/or  the Notes;

 

(h)           none of the rights attached to the Pledged Assets, and in
particular voting rights or rights to dividends, have been transferred to any
other shareholder or any other third party or may be exercised by any other
party, by virtue of a power of attorney, a proxy or a similar authorisation;

 

(i)            this Agreement constitutes the legal, valid and binding
obligations of the Pledgor, enforceable in accordance with its terms save
(i) that an order for specific performance is at the discretion of the courts
and (ii) for all laws affecting creditor’s rights generally.

 

9.             UNDERTAKINGS AND COVENANTS

 

IN ADDITION TO ANY COVENANTS AND UNDERTAKINGS MADE BY THE PLEDGOR IN
THEGUARANTEE, THE PLEDGOR HEREBY UNDERTAKES AND COVENANTS THE FOLLOWING:

 

(a)           to preserve and maintain its Pledged Assets until all Secured
Obligations which have arisen have been unconditionally and irrevocably paid and
discharged in full, as set forth in Clause 12, and not to waive, without the
prior written consent of the Pledgee, any rights attached to its Shares and in
general not to perform any acts which result in a reduction of the value of its
Pledged Assets;

 

(b)           to give, execute, deliver, file, register and record, authorise or
obtain all such notices, instruments, documents, agreements, or other papers,
and take such other action, as may be necessary or desirable (in the reasonable
judgement of the Pledgee) to create, preserve, publish notice of, perfect,
validate or preserve the priority of the Pledge or to enable the Pledgee to
exercise and enforce its rights hereunder with respect to such pledge and to do
all such acts as to facilitate, to the extent permitted by law, the
appropriation of the Pledged Assets or any part thereof in the manner
contemplated by this Agreement;

 

(c)           without prejudice to Clause 5.1, not to vote in any manner that is
inconsistent with the terms of this Agreement,  the Guarantee or the Notes and
not to exercise its voting rights in any way which might affect the Pledge or
the rights of the Pledgee under this Agreement, the Guarantee and the Notes;

 

(d)           in the event that a Pledgor foresees or reasonably should foresee
that the Pledgee’s interest would be affected by the exercise of voting rights,
to consult with the Pledgee, prior to exercising its voting rights, on the
resolution to be passed and subsequently vote in accordance with the
instructions of the Pledgee;

 

(e)           not, without the express prior written consent of the Pledgee:

 

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(i)            create or permit to subsist any security interest, pledge or
encumbrance on or over the Pledged Assets or any part thereof or interest
therein, other than the Pledge;

 

(ii)           permit the Company to cancel, reduce, increase, redeem, create or
issue or put under option any shares or other securities of the Company, or
securities convertible or exchangeable into shares or other securities of the
Company, or to make otherwise any alteration to, or reorganise, the capital of
the Company; or

 

(iii)          permit any modification of the articles of association of the
Company which could have an adverse impact on the rights of the Pledgee under
this Agreement,  the Guarantee and the Notes;

 

(f)            to take all such other measures as may reasonably be required to
protect the Pledgee’s interest in the Pledged Assets and to ensure that the
security constituted by this Agreement and its undertakings and obligations
under this Agreement will inure to the benefit of any such assignee of the
Pledgee as is referred to in Clause 17.

 

10.          SHAREHOLDER APPROVAL

 

The enforcement of the Pledge created hereunder may result in the transfer of
the Shares to a third party and as shareholder of the Company on the date
hereof, the Pledgor hereby expressly and specifically, approves and accepts such
transfer and such transferee(s) as new shareholder(s) of the Company, whoever
it, he, she or they may be, and the Pledgor undertakes to take all necessary and
possible steps, if and when so required, to reiterate this approval and
acceptance, respectively, by way of a formal shareholder’s resolution.

 

11.          ENFORCEMENT

 

11.1         UPON THE OCCURRENCE OF AN EVENT OF DEFAULT AND AT ANY TIME
THEREAFTER FOR SO LONG AS SUCH AN EVENT OF DEFAULT IS CONTINUING, THE PLEDGEE
SHALL BE ENTITLED TO EXERCISE ALL ITS RIGHTS AND POWERS BY VIRTUE OF THIS
AGREEMENT, WITHOUT PRIOR NOTICE.

 

11.2         WITHOUT LIMITING THE GENERALITY OF THE FORGOING, THE PLEDGEE SHALL
BE ENTITLED TO REALISE THE PLEDGED ASSETS IN ANY MANNER AS PROVIDED FOR, OR
PERMITTED BY LUXEMBOURG LAW OR TO REQUEST ATTRIBUTION BY THE COMPETENT COURT, IN
ALL CASES, WITHOUT PREJUDICE TO ANY RIGHTS OF APPROPRIATION IN RELATION TO THE
PLEDGED ASSETS ARISING UNDER THIS AGREEMENT OR ANY APPLICABLE LAWS.

 

11.3         IN CASE OF A PRIVATE APPROPRIATION OF THE PLEDGED ASSETS (TO THE
EXTENT PERMITTED BY APPLICABLE LAW), THE PLEDGED ASSETS SHALL BE VALUED BY AN
INDEPENDENT EXPERT, APPOINTED UPON THE REQUEST OF ANY OF THE PARTIES BY THE
PRESIDENT OF THE INSTITUT LUXEMBOURGEOIS DES RÉVISEURS D’ENTREPRISES.

 

11.3         ANY MONEYS RECEIVED BY THE PLEDGEE UPON ENFORCEMENT OF THE PLEDGE
IN ACCORDANCE WITH THE PROVISIONS OF THIS CLAUSE 11 SHALL BE APPLIED TO PAY ALL
OR ANY PART OF THE THEN OUTSTANDING SECURED OBLIGATIONS.

 

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12.          TERMINATION

 

12.1         THIS AGREEMENT AND THE PLEDGE WILL BE AND REMAIN IN FULL FORCE AND
EFFECT UNTIL ALL SECURED OBLIGATIONS HAVE BEEN FULLY REPAID OR DISCHARGED TO THE
SATISFACTION OF THE PLEDGEE.

 

12.2         UPON TERMINATION OF THIS AGREEMENT AND OF THE PLEDGE IN ACCORDANCE
WITH CLAUSE 12.1, THE PLEDGEE WILL, AT THE REASONABLE REQUEST OF THE PLEDGOR,
ISSUE A NOTICE OF CONFIRMATION OF RELEASE TO THE PLEDGOR.

 

13.          LIABILITY AND INDEMNITY

 

13.1         The Pledgee shall not be liable for any losses arising in
connection with the exercise of any of its rights, powers and discretions
hereunder save for liabilities and expenses arising from the gross negligence or
wilful default of the Pledgee.

 

13.2         The Pledgor will indemnify the Pledgee and every attorney which may
be appointed from time to time in respect of all liabilities and reasonable
documented expenses incurred by it, him, her or them in the execution of any
rights, powers or discretions vested in it, him, her or them pursuant hereto
save for liabilities and expenses arising from the gross negligence or wilful
default of the Pledgee or its attorneys or both.

 

14.          WAIVERS, REMEDIES CUMULATIVE

 

No waiver of any of the terms hereof shall be effective unless in writing signed
by the Pledgee. No delay in or non-exercise of any right by the Pledgee shall
constitute a waiver. Any waiver may be on such terms as the Pledgee sees fit.
The rights, powers and discretions of the Pledgee herein are additional to and
not exclusive of those provided by law, by any agreement with or other security
in favour of the Pledgee.

 

15.          COSTS

 

(a)           The Pledgor will reimburse the Pledgee:

 

(i)            for all documented charges and expenses incurred in the
negotiation, preparation and execution of this Agreement and all waivers,
discharges, amendments and other documents in connection herewith (including,
but not limited to, the fees and expenses of legal advisers and any VAT
thereon); and

 

(ii)           subject to clause 13, for all charges and expenses incurred by
the Pledgee in connection with the enforcement of or preservation of any rights
under this Agreement (including, but not limited to, the fees and expenses of
legal advisers and any VAT thereon).

 

(b)           The Pledgor will pay or procure the payment when due of all
present and future registration fees, stamp duties and other imposts or
transaction taxes in relation to this Agreement and keep the Pledgee indemnified
against any failure or delay in paying the same.

 

16.          NOTICES

 

Any notice or other communication required or permitted to be given hereunder
shall be in

 

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writing and shall be delivered in person or sent by registered mail, charges
prepaid, or by facsimile, addressed as follows:

 

(i)            to the Pledgor in the English language at:

 

Hauppauge Digital, Inc.

91 Cabot Court

Hauppauge New York 11788

Fax number:  631 434 3198

Att.:  Gerald Tucciarone

 

(ii)           to the Pledgee, in the English language at:

 

JPMorgan Chase Bank, N.A.

395 North Service Road, Suite 302

Melville New York 11747

Fax number:  631 755-0137

Att.:    Relationship Manager – Hauppauge Computer Works, Inc.

 

(iii)          to the Company in the English language at:

 

Hauppauge Digital Europe S.àr.l

12, rue Léon Thyes

L-2636 Luxembourg

Fax number: 49 2161 694 888

Att.:    Chris Strijbosch

 

Any such notice or other communication shall be deemed to have been given and
received on the day on which it was delivered (in person) or dispatched by
facsimile if so delivered or dispatched prior to 6:00 p.m. local time at the
place of receipt (or, if such day is not a Business Day or such communication is
delivered or dispatched after 6:00 p.m. local time at the place of receipt, on
the next following Business Day) or, if mailed, on the third Business Day after
having been posted.

 

Each party may at any time change its address for service from time to time by
giving notice to the other parties to this Agreement in accordance with this
clause.

 

17.          ASSIGNMENT

 

17.1         In the case of an assignment, transfer or novation by any party to
the Guarantee and the Notes to

 

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one or several transferees of all or any part of its rights and obligations
under the Guarantee and the Notes, the Pledgee and the Pledgor hereby agree that
in such event, to the extent required under applicable laws, the security
interest created hereunder shall be preserved for the benefit of the Pledgee as
expressly permitted under articles 1278 to 1281 of the Luxembourg civil code.

 

17.2         The Pledgor may not assign any of its rights under this Agreement
without the prior written consent of the Pledgee. The Pledgee may assign all or
any part of its rights under this Agreement. Such assignment by the Pledgee
shall be enforceable towards the Pledgor pursuant to the provisions of
article 1690 of the Luxembourg civil code.

 

18.          GOVERNING LAW AND JURISDICTION

 

18.1         THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE GRAND DUCHY OF LUXEMBOURG.

 

18.2         THE COURTS OF THE DISTRICT OF LUXEMBOURG CITY ARE TO HAVE NON-
EXCLUSIVE JURISDICTION TO SETTLE ANY DISPUTES WHICH MAY ARISE IN CONNECTION WITH
THIS AGREEMENT.

 

19.          AMENDMENTS

 

19.1         This Agreement will not be amended, modified or rescinded except in
writing and duly signed by authorised signatories of the Pledgor, the Company
and the Pledgee.

 

19.2         Any amendment, addendum and schedule so signed will constitute part
of this Agreement.

 

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20.          COUNTERPARTS

 

At least three counterparts of this Agreement have been executed by the parties
hereto, each of which will be deemed to be an original but all of which taken
together will constitute a single agreement.

 

21.          SEVERABILITY

 

Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction will, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction will
not invalidate or render unenforceable such provision in any other jurisdiction.

 

IN WITNESS WHEREOF the parties hereto have executed this Agreement in three
counterparts on the date first above written by attaching their respective
signatures to the following page.

 

EXECUTION PAGE TO THE SHARE PLEDGE AGREEMENT DATED DECEMBER 1, 2005

 

For and on behalf of

 

Hauppauge Digital, Inc.

 

as Pledgor

 

 

 

 

 

/s/ Kenneth Plotkin

 

Name:

Kenneth Plotkin

 

Title:

President

 

 

 

 

 

For and on behalf of

 

JPMorgan Chase Bank, N.A.

 

as Pledgee

 

 

 

 

 

/s/ Christopher Jantzen

 

Name:

Christopher Jantzen

 

Title:

Vice President

 

 

The Pledge created by this Agreement and (so far as the Company is concerned)
the terms and conditions thereof are hereby expressly accepted by the Company.

 

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For and on behalf of

 

Hauppauge Digital Europe S.àr.l.

 

as the Company

 

 

 

 

 

/s/ Kenneth Plotkin

 

Name:

Kenneth Plotkin

 

Title:

Manager

 

 

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Schedule 1

 

“Eight thousand twenty three (8023)  of the above shares held by Hauppauge
Digital, Inc. are subject to a first priority pledge in favour of JPMorgan Chase
Bank, N.A. pursuant to a share pledge agreement dated December 1, 2005 made
between Hauppauge Digital, Inc., as pledgor and JPMorgan Chase Bank, N.A., as
pledgee”

 

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Schedule 2

 

Hauppauge Digital Europe S.àr.l.

12, rue Léon Thyes

L-2636 Luxembourg

 

To:

JPMorgan Chase Bank, N.A.

 

395 North Service Road, Suite 302

 

Melville New York 11747

 

 

Date:

December 1, 2005

 

Dear Sirs,

 

We write with reference to the share pledge agreement of even date herewith
entered into between you as pledgee, Hauppauge Digital Inc., as pledgor and
ourselves (the “Share Pledge Agreement”).

 

We hereby inform you that:

 

(a)           the pledge on eight thousand twenty three (8023) registered
shares, granted to you in accordance with the Share Pledge Agreement, by
Hauppauge Digital, Inc. has been duly registered on the date of this letter in
the shareholders’ register; and

 

(b)           our shareholders’ meeting has duly approved the creation of such
pledge in accordance with article 189 of the law on commercial companies dated
10 August 1915, as amended and article 7 of the articles of association of our
company and has agreed that the effect of such approval shall extend to any
transfer of shares that may take place as a result of the enforcement of the
pledge.

 

Duly certified copies of the relevant entries into the shareholders’ register,
as made on the date hereof, and the minutes of the shareholders meeting are
attached for your records.

 

We hereby agree to inform you of any further changes made or to be made in the
shareholders’ register.

 

This letter is construed and shall be governed in accordance with the laws of
Luxembourg.

 

Truly yours,

 

 

 

 

Hauppauge Digital Europe S.àr.l.

By: Kenneth Plotkin

Title: Manager

 

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