CHASE                                                THE CHASE MANHATTAN BANK

                                    GUARANTY


                                              New York, New York, July 12, 2000



     WHEREAS,  HAUPPAUGE  DIGITAL,  INC. and  HAUPPAUGE  COMPUTER  WORKS,  INC.,
(together hereinafter called the "Borrower"),  desires to transact business with
and  to  obtain  credit  or  a  continuation   of  credit  or  other   financial
accommodations  from THE CHASE  MANHATTAN  BANK, a New York banking  corporation
(hereinafter called the "Bank"); and

     WHEREAS,  the Bank is  unwilling  to extend or continue  credit to or other
financial  accommodations  to the  Borrower,  unless it receives  the  following
guaranty of the undersigned;

     NOW,  THEREFORE,  in  consideration  of the  premises and of other good and
valuable consideration and in order to induce the Bank from time to time, in its
discretion,  to extend or continue credit or other financial  accommodations  to
the Borrower, the undersigned hereby guarantees, absolutely and unconditionally,
to the  Bank the  payment  of all  liabilities  of the  Borrower  to the Bank of
whatever nature,  whether now existing or thereafter  incurred,  whether created
directly or acquired by the Bank by assignment or otherwise,  whether matured or
unmatured  and  whether  absolute  or-contingent  (all of which are  hereinafter
collectively referred to as the "Liabilities of the Borrower").

     In order to further secure the payment of the  Liabilities of the Borrower,
the undersigned does hereby give the Bank a continuing lien and right of set-off
for the  amount of the  Liabilities  of the  Borrower  upon any and all  monies,
securities  arid any and all other property of the  undersigned and the proceeds
thereof,  now or hereafter actually or constructively  held or received by or in
transit in any manner to or from the Bank,  Chase  Securities Inc., or any other
affiliate  of the Bank from or for the  undersigned,  whether  for  safekeeping,
custody,  pledge,  transmission,  collection  or  otherwise  or coming  into the
possession of the Bank,  Chase  Securities  Inc., or any other  affiliate of the
Bank in any way,  or placed in any safe  deposit  box leased by the Bank,  Chase
Securities Inc., or any other affiliate of the Bank to the undersigned. The Bank
is also  given a  continuing  lien and right of  set-off  for the amount of said
Liabilities of the Borrower upon any and all deposits  (general and special) and
credits of, or for the benefit of the  undersigned  with, and any and all claims
of the  undersigned  against,  the Bank,  Chase  Securities  Inc.,  or any other
affiliate  of the Bank at any time  existing,  provided  an event of default has
occurred.  The Bank is hereby  authorized  at any time or times,  without  prior
notice,  to  apply  such  deposits  or  credits,  or any part  thereof,  to such
Liabilities of the Borrower and,  although said  Liabilities of the Borrower may
be contingent  or unmatured,  and whether the  collateral  security  therefor is
deemed adequate or not. The undersigned authorizes the Bank to deliver a copy of
this guaranty to others as written notification of the undersigned's transfer of
a security interest in the collateral described herein to the Bank.

     The  undersigned  agrees  that,  with or  without  notice  or  demand,  the
undersigned  shall  reimburse  the Bank for all the Bank's  reasonable  expenses
(including reasonable fees of counsel for the Bank who may be employees thereof)
incurred  in  connection  with any of the  Liabilities  of the  Borrower  or the
collection thereof.

     This  guaranty is a continuing  guaranty and shall remain in full force and
effect  irrespective  of any  interruptions  in the  business  relations  of the
Borrower with the Bank; provided,  however,  that the undersigned may, by notice
in writing,  delivered  personally or received by certified mail, return receipt
requested,  addressed to the Bank's  office at 52 Broadway,  New York,  New York
10004,  Loan  Services,  Attention:  Daniel Papa,  terminate  this guaranty with
respect  to all  Liabilities  of the  Borrower  incurred  or  contracted  by the
Borrower  or  acquired  by the Bank  after the date on which  such  notice is so
delivered or received.

     All monies available to the Bank for application in payment or reduction of
the Liabilities of the Borrower may be applied by the Bank in such manner and in
such  amounts  and at such  time or  times as it may see fit to the  payment  or
reduction of such of the Liabilities of the Borrower as the Bank may elect.

     The  undersigned  hereby waives:  (a) notice of acceptance of this guaranty
and of extensions of credit or other financial accommodations by the Bank to the
Borrower;  (b)  presentment  and demand for payment of any of the Liabilities of
the Borrower;  (c) protest and notice of dishonor or default to the  undersigned
or to any other party with respect to any of the  Liabilities  of the  Borrower;
(d) all other notices to which the  undersigned  may otherwise be entitled;  and
(e) any demand for payment hereunder.

     All  liabilities  of the  undersigned  to the Bank  hereunder or otherwise,
whether or not then due or  absolute  or  contingent,  shall  without  notice or
demand become due and payable  immediately upon the occurrence of any default or
event of  default  with  respect  to any  Liabilities  of the  Borrower  (or the
occurrence of any other event which results in  acceleration  of the maturity of
any thereof) or the occurrence of any default  hereunder.  This is a guaranty of
payment and not of collection  and the  undersigned  further waives any right to
require  that any action be brought  against the Borrower or any other person or
to require  that resort be had to any  security or to any balance of any deposit
account or credit on the books of the Bank in favor of the Borrower or any other
person.

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     The undersigned hereby consents that from time to time, before or after any
default by the  Borrower or any notice of  termination  hereof,  with or without
further notice to or assent from the undersigned,  any security at any time held
by or available to the Bank for any obligation of the Borrower,  or any security
at any time held by or  available  to the Bank for any  obligation  of any other
person  secondarily  or  otherwise  liable  for  any of the  Liabilities  of the
Borrower,  may be exchanged,  surrendered  or released and any obligation of the
Borrower,  or of any  such  other  person,  may be  changed,  altered,  renewed,
extended, continued, surrendered, compromised, waived, discharged or released in
whole or in part (including without limitation any such event resulting from any
insolvency, bankruptcy, reorganization or other similar proceeding affecting the
Borrower or its assets) or any default with respect thereto waived, and the Bank
may fail to set off and may  release,  in whole or in part,  any  balance of any
deposit  account or credit on the Bank's books in favor of the  Borrower,  or of
any such other person, and may extend further credit in any manner whatsoever to
the Borrower,  and generally deal or take action or no action with regard to the
Borrower or any such  security or other  person as the Bank may see fit; and the
undersigned  shall remain  bound under this  guaranty  notwithstanding  any such
exchange,   surrender,   release,  change,   alteration,   renewal,   extension,
continuance,  compromise,  waiver,  discharge,  inaction,  extension  of further
credit or other dealing.

     The obligations of the undersigned are absolute and  unconditional  and are
valid  irrespective of any other agreement or circumstance which might otherwise
constitute  a defense to the  obligations  hereunder  or to the  obligations  of
others  related  thereto  and the  undersigned  irrevocably  waives the right to
assert defenses,  set-offs and counterclaims in any litigation  relating to this
guaranty and the  Liabilities  of the  Borrower.  This  guaranty  sets forth the
entire  understanding of the parties,  and the undersigned  acknowledges that no
oral or other agreements, conditions, promises, understandings,  representations
or  warranties  exist in  regard  to the  obligations  hereunder,  except  those
specifically set forth herein.

     The undersigned irrevocably waives and shall not seek to enforce or collect
upon any rights which it now has or may acquire against the Borrower,  either by
way of  subrogation,  indemnity,  reimbursement  or  contribution,  or any other
similar  right,  for any amount paid under this  guaranty or by way of any other
obligations whatsoever of the Borrower to the undersigned. In the event either a
petition  is filed  under the  Bankruptcy  Code in regard to the  Borrower or an
action or  proceeding  is  commenced  for the  benefit of the  creditors  of the
Borrower,  this  agreement  shall at all times  thereafter  remain  effective in
regard to any payments or other transfers of assets to the Bank received from or
on behalf of the Borrower  prior to notice of  termination  of this guaranty and
which are or may be held voidable or otherwise subject to recission or return on
the grounds of preference,  fraudulent  conveyance or otherwise,  whether or not
the Liabilities of the Borrower have been paid in full.

     Each reference herein to the Bank shall be deemed to include its successors
and assigns,  in whose favor the  provisions of this guaranty  shall also inure.
Each reference  herein to the undersigned  shall be deemed to include the heirs,
executors, administrators, legal representatives,  successors and assigns of the
undersigned, all of whom shall be bound by the provisions of this guaranty.

     The term  "undersigned"  as used herein shall, if this instrument is signed
by more  than one  party,  mean  the  "undersigned  and  each of them"  and each
undertaking  herein  contained  shall be their  joint and  several  undertaking,
provided,  however,  that in the  next  succeeding  paragraph  hereof  the  term
"undersigned"  shall mean the  "undersigned or any of them". If any party hereto
shall  be a  partnership,  the  agreements  and  obligations  on the part of the
undersigned  herein  contained shall remain in force and applicable  against the
partnership  and  all  of  its  partners  (notwithstanding  any  changes  in the
individuals  composing the  partnership  or any release of one or more partners)
and the term "undersigned"  shall include any altered or successive  partnership
but,  the  predecessor  partnerships  and their  partners  shall not  thereby be
released from any obligation or liability.

     No delay on the part of the Bank in  exercising  any  rights  hereunder  or
failure to exercise the same shall operate as a waiver of such rights; no notice
to or demand on the undersigned shall be deemed to be a waiver of the obligation
of the  undersigned  or of the right of the Bank to take further  action without
notice or demand as provided herein;  nor in any event shall any modification or
waiver of the provisions of this guaranty be effective  unless in writing signed
by an  authorized  officer of the Bank;  nor shall any such waiver be applicable
except in the specific instance for which given.

     This guaranty is, and shall be deemed to be, a contract  entered into under
and  pursuant to the laws of the State of New York and shall be in all  respects
governed,  construed,  applied and enforced in accordance  with the laws of said
State; and no defense given or allowed by the laws of any other State or Country
shall be  interposed  in any action  hereon unless such defense is also given or
allowed by the laws of the State of New York.

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     The undersigned  hereby  unconditionally  WAIVES ANY RIGHT TO JURY TRIAL in
connection  with actions by or against the Bank arising out of or in  connection
with the Liabilities of the Borrower and this guaranty.

                                       HCW DISTRIBUTING CORP.


                                       By /s/ Kenneth R. Aupperle
                                         ------------------------------------
                                            Name: Kenneth R. Aupperle
                                            Title: President


                                       By /s/ Kenneth Plotkin
                                         ------------------------------------
                                            Name: Kenneth Plotkin
                                            Title: Chairman and CEO

                                     Address:  91 Cabot Court
                                               Hauppauge, NY 11788


                                               (AFFIX CORPORATE SEAL HERE)

 Acknowledgment


 STATE OF            )
                     )SS:
 COUNTY OF           )

On the  _______  day  of  _____________________,  before  me  personally  came ,
_______________________________  to me  known,  who,  being  by me  duly  sworn,
________________________________________  did  depose  and say  that  he/she  is
__________________________  the  of  HCW  DISTRIBUTING  CORP.,  the  corporation
described in and which executed the above instrument; that he/she knows the seal
of said corporation;  that the seal affixed to said instrument is such corporate
seal;  that it was so  affixed  by  order  of the  board  of  directors  of said
corporation, and that he/she signed his name thereto by like order.



                                          -------------------------------
                                          Notary Public

                                          My commission expires:






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