Document:

Exhibit 10.2

 

GUARANTY

 

Nassau County, New
York

December 1, 2005

 

WHEREAS, HAUPPAUGE COMPUTER WORKS, INC., a
New York corporation (hereinafter called the “Borrower”), desires to transact
business with and to obtain credit or a continuation of credit or other
financial accommodations from JPMORGAN CHASE
BANK, N.A., a banking association organized under the laws of the
United States (hereinafter called the “Bank”); and

 

WHEREAS, the Bank is
unwilling to extend or continue to extend 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 hereafter
incurred, whether created directly or acquired by the Bank by assignment or
otherwise, whether matured or unmatured, joint, several or joint and several,
secured or unsecured and whether absolute or contingent, including, without limitation,
all interest or other claims which may accrue or arise after the commencement
of bankruptcy, insolvency, reorganization, liquidation or other similar
proceedings (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 and 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, J.P. Morgan 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, J.P. Morgan
Securities Inc., or any other affiliate of the Bank in any way, or placed in
any safe deposit box leased by the Bank, J.P. Morgan 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, J.P. Morgan Securities Inc., or any other affiliate of the
Bank at any time existing. 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 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 395
North Service Road, Melville, New York 11747, Attention: Christopher
Jantzen/Relationship Officer - Hauppauge Computer Works, Inc., terminate
this guaranty, but any such termination shall have no effect with respect to
the Liabilities of the Borrower (including contingent liabilities) existing on
the date on which such notice is so delivered or received or which on such date
the Bank is obligated (including on a conditional basis) to provide or acquire
thereafter, or with respect to any interest, fees, indemnities, charges,
expenses or costs payable thereon or attributable thereto even if arising or
incurred after such date, and this guaranty and the obligations of the undersigned
hereunder with respect to the foregoing Liabilities of the Borrower shall
continue notwithstanding any such termination until all such amounts are fully
and finally paid.

 

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 unconditionally and irrevocably 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 any other property or asset 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 prior to any payment under this guaranty being
made or enforced.

 

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, 

 

2

 

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 amendment, modification,
waiver, consent or other change, discharge or release (including by operation
of law, regulation or legal proceedings) with respect to, or any lack of
validity or enforceability of, any Liabilities of the Borrower, or with respect
to any other guaranty thereof or other credit support thereto or any collateral
securing any of the foregoing, or any other agreement or circumstance which might
otherwise constitute a defense to the obligations hereunder to any of the
Liabilities of the Borrower or to the obligations of others related hereto or
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 

 

3

 

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 the State of New York; 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.

 

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.

 

	
   

  	
   

  	
  Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HAUPPAUGE DIGITAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Gerald Tucciarone

  	
   

  
	
   

  	
   

  	
   

  	
   Name: Gerald
  Tucciarone

  
	
   

  	
   

  	
   

  	
   Title: Chief
  Financial Officer and Treasurer

  

 

 

[Corporate Seal]

 

4

 

Corporate Acknowledgment

 

	
  STATE OF NEW YORK

  	
  )

  	
   

  
	
   

  	
  )

  	
  SS:

  
	
  COUNTY OF NASSAU

  	
  )

  	
   

  

 

On
the 1st day of December in the year 2005 before me, the undersigned,
personally appeared Gerald Tucciarone, personally known to me or proved to me
on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his capacity, and that by his signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument.

 

 

	
   

  	
   

  	
  /s/ Fred S. Skolnik

  	
   

  
	
   

  	
   

  	
  Notary Public

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Notary Stamp]

  

 

5Exhibit 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

 

 

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

  

 

1

 

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 

 

1

 

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.

 

2

 

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.

 

3

 

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.

 

4

 

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 

 

5

 

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:

 

6

 

(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.

 

7

 

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 

 

8

 

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 

 

9

 

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.

 

10

 

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.

 

11

 

	
  For and on behalf of

  	
   

  
	
  Hauppauge
  Digital Europe S.àr.l.

  	
   

  
	
  as the Company

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Kenneth Plotkin

  	
   

  
	
  Name:

  	
  Kenneth Plotkin

  	
   

  
	
  Title:

  	
  Manager

  	
   

  

 

12

 

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”

 

13

 

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

  

 

14

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