**Exhibit 10.12**

 

 

DATED    June 24,  2004

 

 

BURDALEFINANCIAL LIMITED

 

 

and

 

 

VIEWSONICEUROPE LIMITED

 

 

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PLEDGEAGREEMENT

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NabarroNathanson

LaconHouse

Theobald’sRoad

London  WC1X 8RW

 

Tel:  0207524 6000

 

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**PLEDGE AGREEMENT**

 

**DATE JUNE 24, 2004**

 

**PARTIES**

 

(1)                        BURDALE FINANCIAL LIMITED of53 Queen Anne Street, London, W1G 9HP (the **“Pledgee”**); and

 

(2)                        VIEWSONIC EUROPE LIMITED(Company registration No. 03131161), a company organised and existing under thelaws of England (the **“Pledgor”**).

 

**RECITALS**

 

(A)                    The Pledgor has entered intoan agreement dated 24 June 2004 (the **“CreditAgreement”**) under the terms of which the Pledgee has agreed to makeavailable to the Pledgor a facility of up to twenty million US dollars(US$20,000,000).

 

(B)                      The Pledgor has agreed toexecute this Pledge Agreement by way of security for its obligations under theCredit Agreement.

 

(C)                      This Pledge Agreement relatesto all of the Pledgor’s present and future inventory/trading stock and othermoveable assets located in the Netherlands, including computer monitors and allother inventory (together, the **“Goods”**).

 

(D)                     With respect to any Goods,from time to time stored in each of the Warehouses  (as defined below), Pledgor and Pledgee will enter into a thirdparty pledgeholder agreement with Furness Logistics Moerdijk B.V. (the “**Third Party**”)thus converting the non-possessory right of pledge created under this Agreementinto a possessory right of pledge.

 

**IT IS AGREED ASFOLLOWS:**

 

# **1.**                            DEFINITION

 

## 1.1                                          In this pledge agreement the term “Warehouses”means the warehouses, operated by Furness Logistics Moerdijk B.V., a privatelimited liability company (*besloten vennootschap met beperkte aansprakelijkheid*),incorporated and existing under the laws of the Netherlands and having itsregistered seat at Moerdijk, located at:

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## (i)   Tradeboulevard 4, Havennummer 528, 4761 RLMoerdijk; and

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## (ii)  other premises of the Third Party locatedat  Moerdijk

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## 1

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# **2.**                            AGREEMENT TO PLEDGE

 

## 2.1                                          The Pledgor and the Pledgee hereby agree,in order to secure to the Pledgee the prompt payment in full of the SecuredObligations (as defined below), that the Pledgor will create a first rankingnon-possessory right of pledge on the Goods in the manner set forth in Clause2.

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## 2.2                                          If and to the extent at any time it shallappear that any right of pledge created hereby or pursuant hereto shall nothave the ranking as referred to above, the Pledgor and the Pledgee confirm, and- to the extent necessary - hereby further agree, that a valid right of pledgehas or shall nevertheless have been created. In that case the right of pledgeshall have the highest possible rank.

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# **3.**                            RIGHT OF NON-POSSESSORY PLEDGE

# ** **

## 3.1                                          As a further security for the due andpunctual payment of the amounts owing pursuant to the Credit Agreement (the **“Secured Obligations”**) , the Pledgor herebygrants a first ranking non-possessory right of pledge (*bezitloos pandrecht eerste in rang*)or, as the case may be, the Pledgor grants in advance a first rankingnon-possessory right of pledge (*bezitloos pandrecht eerste in rang*) on theGoods to the Pledgee and the Pledgee hereby accepts such right of pledge. Withrespect to any Goods located at the Warehouses (the “**Warehouse Goods**”) thisnon-possessory right of pledge shall be converted into a possessory right ofpledge in the manner provided for in Clause 3.

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## 3.2                                          The pledge is vested, at the option of thePledgee, by way of registering this deed or by way of notarial deed. ThePledgee is authorised to register this deed. The Pledgor grants the Pledgee anirrevocable power of attorney tovest the pledge by way of notarial deed, evenif the deed has been registered, in which case the Pledgee is authorised torepresent the Pledgor.

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# **4.**                            POSSESSORY  PLEDGE

 

## 4.1                                          The right of pledge on the Warehouse Goodsshall be converted into a first ranking possessory right of pledge by bringingthe Warehouse Goods in the control (*feitelijke macht*) of the Third Party. Thiswill be done:

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### 4.1.1                                                    With respect to the Goods thatare present in the Warehouses at the time of execution of the Third PartyPledgeholder Agreement by the Third Party, by the agreement of the Third Partyto hold such Warehouse Goods pursuant to the Third Party Pledgeholder Agreementas a third party within the meaning of article 3:236 paragraph 1 of theDutch Civil Code; and

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### 4.1.2                                                    With respect to any Goodswhich arrive at the Warehouses after the execution of the Third PartyPledgeholder Agreement by the Third Party, by the acceptance by the Third Partyof such Warehouse Goods into its custody pursuant to the Third PartyPledgeholder Agreement as a third party within the meaning ofarticle 3:236 paragraph 1 of the Dutch Civil Code.

 

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## 4.2                                          The first ranking possessory right of pledgeon the Warehouse Goods shall be governed by the terms and conditions of thisAgreement and, upon the execution by the parties thereto, the Third PartyPledgeholder Agreement. In case of any inconsistency between this agreement andthe Third Party Pledgeholder Agreement, the terms of the former shall prevail.

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## 4.3                                          For the avoidance of doubt,  if and to the extent the Third PartyPledgeholder Agreement and the mechanisms set out in this Agreement fail tocreate a valid possessory right of pledge on behalf of the Pledgee, the Goodslocated at the Warehouses will still be and stay subject to the non-possessoryright of pledge created pursuant to this Agreement.

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# **5.**                            DELIVERY OF GOODS TO WAREHOUSES

 

## 5.1                                          The Pledgor undertakes to procure deliveryof any and all Goods, destined to be destributed in or from the Netherlands toany of the Warehouses, listed in clause 1.1.

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# **6.**                            WARRANTIES

 

## 6.1                                          The Pledgor represents and warrants, to andagrees with the Pledgee:

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### 6.1.1                                                    that it has the full ownershipof and legal title to the present Goods;

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### 6.1.2                                                    that it has the full power andauthority (*isvolledig beschikkingsbevoegd*) to pledge the present Goods;

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### 6.1.3                                                    that the present Goods are notsubject to any attachments or limited property rights (in Dutch: *beperkte rechten*) in favour of thirdparties; and

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### 6.1.4                                                    that there are no rights ofretention on or against the Goods (other than those notified to the Pledgee inaccordance with the Credit Agreement).

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## 6.2                                          The Pledgor hereby covenants and agreesthat the representations and warranties set forth in Subclause 6.1 shall bedeemed made by it with respect to each of the future Goods in each instance,and upon the moment, when the Pledgor becomes the owner of such Goods.

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## 6.3                                          The Pledgor further declares that it hasnot previously or in advance transferred or created limited property rights onor against the Goods, either in whole or in part, to or in favour of any thirdparties.

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# **7.**                            RESERVED RIGHTS

 

## 7.1                                          The Pledgor shall ensure in so far aspossible that, upon its acquisition of any of the Goods, the transferor of suchGoods shall not reserve title to any of the Goods or any limited propertyrights in respect of any of the Goods. The Pledgor shall notify the Pledgee of any reservation of titleaffecting the Goods in accordance with the Credit Agreement.

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## 7.2                                          If and to the extent that the acquisitionby the Pledgor of the full and unencumbered ownership of any of the Goods issubject to the Pledgor (further) performing any act or

 

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## makingany payment, the Pledgor hereby undertakes to perform such act or to make suchpayment when due.

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# **8.**                            DUTY OF CARE

 

ThePledgor shall take good care of the Goods and must take all measures necessaryor desired by the Pledgee. The Pledgor may not perform or neglect to performany acts which may prejudice the interests of the Pledgee. If the Pledgor is indefault with respect to any of these obligations, the Pledgee may, at theexpense of the Pledgor, do all that it deems necessary, without prejudice to anyof the Pledgee’s other rights.

 

# **9.**                            SPECIFICATION

 

## 9.1                                          The Pledgor shall, upon first requestthereto of the Pledgee, immediately provide the Pledgee with a specification ofthe Goods and/or of the location of the Goods.

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## 9.2                                          The Pledgee or any persons appointed by thePledgee shall at any time be allowed to enter the places where the Goods arelocated, in order to inspect and check the state of the Goods.

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# **10.**                     OTHER DOCUMENTS

 

## 10.1                                    The Pledgor hereby agrees that, to theextent the Goods are or shall be represented by documents of title or shippingdocuments, such as warehouse receipts and bills of lading or other commercialdocuments, the right of pledge created hereby shall encompass such documents.

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## 10.2                                    The Pledgor shall, upon first demand of thePledgee, deliver such documents in so far as not yet pledged hereunder, thuscreating a right pledge in favour of the Pledgee, endorsed if necessary toeffect such pledge, to the Pledgee.

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# **11.**                     INSURANCE

 

## 11.1                                    The Pledgor shall, for its own account,insure and keep the Goods insured under normal conditions. The Pledgor shallprovide the Pledgee with the insurance policies at the Pledgee’s first request.In the event the Pledgor fails to provide the Pledgee with the insurancepolicies, the Pledgee shall be authorised to insure the Goods itself for theaccount of the Pledgor in such manner and under such conditions as the Pledgeedeems appropriate.

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## 11.2                                    In the event the Pledgor becomes aware of aright of pledge on the insurance proceeds as referred to in Article 3:229of the Netherlands Civil Code coming into existence, the Pledgor shall notifythe insurance company and the Pledgee without delay.

 

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# **12.**                     SALE OF THE GOODS

 

ThePledgor may not sell, transfer, lease or otherwise grant possession of theGoods to third parties, without permission of the Pledgee. The Pledgee herebygrants the Pledgor its permission to transfer the Goods in the ordinary courseof business for a commercially sound and arm’s length price and subject to theterms of the Third Party Pledgeholder Agreement, entered into between (i) thePledgee (ii) the Pledgor and (iii) the Third Party on.....June  2004 .The Pledgee can revoke its permission at any time by giving written notice ofthe revocation to the Pledgor. This permission automatically terminates in caseof the occurrence of an Event of Default.The pledge shall remain vested untilthe transfer and delivery of the Goods has taken place.

 

# **13.**                     NOTIFICATION

 

## 13.1                                    The Pledgor shall promptly inform thePledgee of any event or the receipt of any notice which may be of relevance forthe position of the Pledgee as pledgee hereunder or which may affect thefulfilment by the Pledgor of any of its covenants or obligations hereunder, ormay effect its ability to carry on its business or the security created hereby,including events when another person seeks possession of any of the Goods,claims a right of retention with respect to any of the Goods, or when thePledgor’s bankruptcy, suspension of payments, or liquidation is ordered. Ineach such situation the Pledgor shall inform such other person about the rightof pledge created hereby.

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## 13.2                                    The Pledgor shall promptly inform thePledgee if a situation arises whereby the Pledgor is forced to inform the authoritieswho collect social security premiums or taxes that it is not or no longer in aposition to pay its debts in respect of these social security premiums or taxeswhen the same fall due.

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## 13.3                                    The Pledgor shall not pledge or encumberwith other limited property rights any of the Goods without the prior writtenapproval of the Pledgee.

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# **14.**                     POSSESSION

 

ThePledgee is at all times entitled to take possession of the Goods or partthereof, either directly or by ordering a third party to take possession.

 

# **15.**                     COLLECTION BY PLEDGOR

 

## 15.1                                    In the event the Pledgor is in defaulthereunder or with respect to the Obligations, the Pledgee shall be entitled tosell the Goods and to take recourse against the proceeds.

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## 15.2                                    The Pledgee shall be under no obligation tonotify the Pledgor or any other person who has any limited property right orwho has levied an attachment on or against the Goods or any party thereof ofits intention to sell the Goods.

 

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## 15.3                                    The Pledgor hereby renounces its right torequest the President of the District Court to order that the Goods be sold ina manner which differs from the public auction, described in Article 3:250of the Netherlands Civil code.

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# **16.**                     CONTINUING AND INDEPENDENT SECURITY

 

## 16.1                                    This Agreement and the security herebycreated shall be:

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### 16.1.1                                              a continuing security for theObligations and in particular, but without limitation, shall not be, nor beconsidered as satisfied by any intermediate payment or satisfaction on account ofany of the moneys and liabilities hereby secured or any settlement of accountsbetween the Pledgor or any other party that has assumed liability for, and/orprovided security in respect of, the Obligations; and

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### 16.1.2                                              in addition to, andindependent of and shall not operate so as to prejudice or affect or merge inany other security which the Pledgee may hold at any time for the Obligations.

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## 16.2                                    Where any discharge (whether in respect ofthis Agreement, any other security for the Obligations or otherwise) is made inwhole or in part or any arrangement is made on the faith of any payment,security or other disposition which is subsequently avoided or must be restoredon bankruptcy, liquidation or otherwise without limitation, the liability ofthe Pledgor under this Agreement and the security interests hereby createdshall continue as if there had been no discharge or arrangement. The Pledgeeshall be entitled to concede or compromise any claim that any such payment,security or other disposition is liable to avoidance or repayment.

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## 16.3                                    To the extent possible under the laws ofThe Netherlands, the security created hereby shall not be prejudiced, affectedor diminished by any act, omission or circumstance which, but for thisprovision, might operate to release, discharge or otherwise exonerate thePledgor from its liability to the Pledgee in respect of any of the Obligationsor affect such obligations, including without limitation:

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### 16.3.1                                              any extension or postponementof the time of payment or other indulgence granted to or any acceptance ofpartial payment by or any settlement, composition or adjustment with thePledgor or any other person;

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### 16.3.2                                              any, amendment or variation ofor extension of the due date for performance of any term of the Credit Agreementor any other agreement in connection with the Obligations or any increase,reduction, exchange, acceleration, renewal, surrender, release or loss of orfailure to perfect any of the Obligations or any security therefore or anynon-presentment or non-observance of any formality in respect of anyinstruments;

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### 16.3.3                                              the transfer by the Pledgee ofany of its rights, benefits or obligations under the Credit Agreement or anyother agreement to which it is a party to another person or entity;

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### 16.3.4                                              any irregularity,unenforceability or invalidity of any (but not all) of the Secured Obligationsor of the obligations of any other person or any present or future law or orderof any government or authority (whether of right or in fact) purporting toreduce or otherwise affect any of such obligations to the intent that thePledgor’s obligations under this Agreement shall remain in full force and thisAgreement and the term “Secured

 

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### Obligations”shall be construed accordingly as if there were no such irregularity,unenforceability, invalidity, law or order;

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### 16.3.5                                              the bankruptcy or liquidationor any change in the name or constitution of the Pledgor, or any other person;or

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### 16.3.6                                              the taking, variation, compromise,renewal or release of or refusal or neglect to perfect or enforce any rights,remedies or securities against or granted by the Pledgor or any other person.

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To theextent possible under the laws of The Netherlands, the term “SecuredObligations” shall include all items which would be Secured Obligations but forthe liquidation, absence of legal personality or incapacity of the Pledgor orany statute of limitation.

 

# **17.**                     COSTS

 

Allreasonable costs, charges and expenses, including the fees and expenses ofcounsel, which the Pledgee may incur in connection with the exercise of any ofthe rights of pledge under this Agreement shall be borne by the Pledgor.

 

# **18.**                     POWERS OF ATTORNEY

 

ThePledgor hereby grants irrevocable and unconditional power of attorney to thePledgee to execute and deliver any documents, instructions, agreements or otherinstruments on its behalf and to do everything on its behalf which the Pledgeeconsiders in its sole and absolute discretion necessary or advisable for thepurpose of effecting and or perfecting the right of pledge created pursuant tothis Agreement.

 

# **19.**                     CURRENCY INDEMNITY

 

If anysum due from the Pledgor under this Agreement or any order or judgment given ormade in relation hereto has to be converted from the currency (the firstcurrency) in which the same is payable hereunder or

 

undersuch order or judgment into another currency (the second currency) for thepurpose of:

 

## 19.1                                    making or filing a claim or proof againstthe Pledgor;

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## 19.2                                    obtaining an order or judgment in any courtor other tribunal;

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## 19.3                                    enforcing any order or judgment given ormade in relation hereto applying the same in satisfaction of any of theObligations,

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thePledgor shall as a separate and independent obligation indemnify and holdharmless the Pledgee from and against any loss suffered as a result of anydiscrepancy between:

 

### 19.3.1                                              the rate of exchange used forsuch purpose to convert the sum in question from the first currency into thesecond currency; and

 

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### 19.3.2                                              the rate or rates of exchangeat which the Pledgee may in the ordinary course of business purchase the firstcurrency with the second currency upon receipt of a sum paid to it insatisfaction, in whole or in part, of such order, judgment, claim or proof orfor application in satisfaction of the Obligations.

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# **20.**                     TAXES, DEDUCTIONS AND WITHHOLDINGS

 

Allpayments made by the Pledgor under this Agreement shall be made free and clearof and without deduction or withholding for or on account of, any present orfuture income, stamp or other taxes, levies, imposts, duties, charges, fees,deductions or withholdings, now or hereafter imposed, levied, imposts, duties,charges, fees, deductions or withholdings, now or hereafter imposed, levied,collected, withheld or assessed by any governmental authority, excluding netincome taxes and franchise taxes (imposed in lieu of net income taxes) imposedon the Pledgee as a result of a present or former connection between thePledgee and the jurisdiction of the governmental authority imposing such tax orany political subdivision or taxing authority thereof or therein (other thanany such connection arising solely from the Pledgee having executed, deliveredor performed its obligations or received a payment under, or enforced, theCredit Agreement). If any such non-excluded taxes, levies, imposts, duties,charges, fees deductions or withholdings **“Non-ExcludedTaxes”** are required to be withheld from any amounts payable to thePledgee hereunder the amounts so payable to the Pledgee shall be increased tothe extent necessary to yield to the Pledgee (after payment of all Non-ExcludedTaxes) a net sum equal to the sum which it would have received and retained hadno such deduction or withholding been made or required to be made. Whenever anyNon-Excluded Taxes are payable by the Pledgor, as promptly as possiblethereafter the Pledgor shall send to the Pledgee a certified copy of anoriginal official receipt received by the Pledgor showing payment thereof. Ifthe Pledgor fails to pay any Non-Excluded Taxes when due to the appropriatetaxing authority or fails to remit to the Pledgee the required receipts orother required documentary evidence, the Pledgor shall indemnify the Pledgeefor the incremental taxes, interest or penalties that may become payable by thePledgee as a result of any such failure. The agreements in thissubsection shall survive the termination of this Agreement and the paymentof all amounts payable hereunderRESCISSION

 

ThePledgor hereby waives its right to rescind *(ontbinden)*or, to the extent allowed under Dutch law, have nullified *(vernietigen)* the legal acts *(rechtshandelingen)* represented by thisAgreement which waiver is hereby accepted by the Pledgee.

 

# **21.**                     POWER TO ASSIGN

 

ThePledgee shall be entitled to assign or transfer the whole or any part of thebenefit of this Agreement to any assignee or transferee of all or part of itsrights and obligations under the Credit Agreement and the Pledgor hereby givesits irrevocable consent and continuing agreement to any such assignment ortransfer hereunder. The Pledgee shall be entitled to disclose any informationconcerning the Pledgor to any successor or proposed successor or to any personwho may otherwise enter into contractual relations with the Pledgee in relationto this Agreement.

 

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# **22.**                     LAW AND JURISDICTION

 

## 22.1                                    This Agreement shall be governed by andconstrued in accordance with the laws of The Netherlands.

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## 22.2                                    The competent court in Amsterdam, TheNetherlands, has non-exclusive jurisdiction to settle any disputes which mayarise in connection with this Agreement.

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## 22.3                                    The Pledgor irrevocably waives anyobjections on the ground of venue or forum non conveniens or any similargrounds.

 

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**IN WITNESS**whereof the parties hereto have executed this PledgeAgreement this 24 June 2004.

 

 
| BURDALE  FINANCIAL LIMITED |
|----------------------------|
|                       |
| By:                        | /s/ Nigel B.  Hogg |   |
|                       |
| Name: Nigel  B. Hogg       |
|                       |
| Title:  Director      |

 

 
| VIEWSONIC  EUROPE LIMITED |
|---------------------------|
|                      |
| By:                       | /s/  Christopher Franey |   |
|                      |
| Name:  Christoper Franey  |
|                      |
| Title:  President         |

 

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