8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report: December 1, 2005

(Date of earliest event reported)

HAUPPAUGE DIGITAL, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	1-13559	11-3227864
(State or Other Jurisdiction of Incorporation)	(Commission File No.)	(IRS Employer Identification Number)

91 Cabot Court, Hauppauge, NY         11788

(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (631) 434-1600

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01.Entry into a Material Definitive Agreement.

On December 1, 2005, Hauppauge Computer Works, Inc. (“HCW”), a wholly-owned subsidiary of Hauppauge Digital, Inc. (the “Company”), executed a Promissory Note (the “Note”) made payable to the order of JPMorgan Chase Bank, N.A. (the “Bank”) in the original principal amount of up to Three Million Dollars ($3,000,000) based upon borrowings made under the Note which may be made from time to time by HCW (each, a “Loan”).  The Note matures on March 31, 2006 (the “Maturity Date”) and principal payments are due on the Maturity Date, and thereafter on demand.  Until the Maturity Date, Loans made under the Note bear interest annually at HCW’s option of (i) the Adjusted Eurodollar Rate (as defined in the Note) plus one and 85/100 percent (1.85%) (each, a “Eurodollar Loan”) or (ii) the Prime Rate (as defined in the Note) minus one percent (1.0%) (each, a “Prime Loan”).  Interest is payable with respect to each Eurodollar Loan at the end of one month after the date of such Loan (the “Interest Period”), provided that, upon the expiration of the first Interest Period and each Interest Period thereafter, each Eurodollar Loan will be automatically continued with an Interest Period of the same duration, unless HCW notifies the Bank that it intends to convert a Eurodollar Loan to a Prime Loan or if the Bank is prohibited from making Eurodollar Loans, and with respect to each Prime Loan the last day of each calendar month during the term of the Note and on the date on which a Prime Loan is converted to a Eurodollar Loan, until such Loan(s) shall be due and payable. Interest due after the Maturity Date shall be payable at a rate of three percent (3.00%) per annum over the Bank’s prime rate.  In the event of default under the Note, including, but not limited to, a default by HCW in the punctual payment of any sum payable with respect to, or in the observance of any terms or conditions of the Note, or any other agreement by HCW with or in favor of the Bank, or a default by HCW in any other material indebtedness exceeding $25,000 in the aggregate, or if any warranty, representation or statement of fact made by HCW in writing to the Bank is false or misleading in any material respect when made, or HCW’s dissolution, or HCW’s insolvency, or if a default or event of default shall occur under the Guaranty or the Share Pledge Agreement, or if any provision of the Note, the Guaranty or the Share Pledge Agreement shall, for any reason, cease to be in full force and effect in accordance with its terms, or if any of the foregoing events shall occur with respect to the Company or any other guarantor of HCW’s obligations under the Note, the Bank may accelerate the Maturity Date and declare any and all amounts owing under the Note due and payable and further, the Bank shall have a right to set off against the Note and/or any liabilities of HCW to the Bank all monies owed by the Bank in any capacity to HCW.

In connection with making Loans under the Note the Company has entered into a Guaranty with the Bank dated as of December 1, 2005 (the “Guaranty”) and entered into a Share Pledge Agreement among the Company, the Bank and Hauppauge Digital Europe S.àr.l., a wholly owned subsidiary of the Company (“Digital Europe”), dated as of December 1, 2005 (the “Share Pledge Agreement”).

Pursuant to the Guaranty, the Company guarantees to the Bank the payment of all liabilities of HCW to the Bank, secured by a continuing lien and right of set-off for the amount of the liabilities of HCW to the Bank upon any and all monies, securities, property, deposits and credits of the Company with the Bank, J.P. Morgan Securities Inc. or any other affiliate of the Bank.

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Pursuant to the Share Pledge Agreement, the Company granted a first priority right of pledge on approximately two-thirds of the outstanding capital shares of Digital Europe in favor of the Bank as security for the payment under the Note or the Share Pledge Agreement.

Item 2.03.Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information described in Item 1.01 above is incorporated herein by reference.

Item 9.01.Financial Statements and Exhibits.

(d)Exhibits

10.1	Promissory Note, dated as of December 1, 2005, made payable by Hauppauge Computer Works, Inc. to the order of JPMorgan Chase Bank, N.A. in the original principal amount of Three Million ($3,000,000) Dollars.
10.2	Guaranty, dated as of December 1, 2005, by Hauppauge Digital, Inc. in favor of JPMorgan Chase Bank, N.A.
10.3	Share Pledge Agreement, dated as of December 1, 2005, among Hauppauge Digital, Inc., JPMorgan Chase Bank, N.A. and Hauppauge Digital Europe S. àr.l.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	HAUPPAUGE DIGITAL, INC.
Dated: December 1, 2005	By:	/s/ Gerald Tucciarone
		Gerald Tucciarone
		Chief Financial Officer

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EX-10.1

Exhibit 10.1

PROMISSORY NOTE

$3,000,000	Nassau County, New York
	As of December 1, 2005

FOR VALUE RECEIVED, HAUPPAUGE COMPUTER WORKS, INC., a New York corporation (the “Borrower”), HEREBY PROMISES TO PAY to the order of JPMORGAN CHASE BANK, N.A. (the “Bank”), at its offices located at 395 North Service Road, Melville, New York 11747, or at such other place as the Bank or any holder hereof may from time to time designate, the principal sum of THREE MILLION DOLLARS ($3,000,000), or such lesser amount as may constitute the outstanding balance hereof, in lawful money of the United States, on March 31, 2006 or earlier as hereinafter referred to, and to pay interest in like money at such office or place from the date hereof on the unpaid principal balance of each Loan (as hereinafter defined) at the Eurodollar Rate or the Prime Rate (as hereinafter defined and provided for in the following paragraph) per annum, which shall be payable at the end of each Interest Period (as hereinafter defined) until such Loan(s) shall be due and payable (whether at maturity, by acceleration or otherwise) and thereafter, on demand.  Interest after maturity shall be payable at a rate threepercent (3%) per annum above the Bank’s Prime Rate which rate shall be computed for actual number of days elapsed on the basis of a 360-day year and shall be adjusted as of the date of each such change, but in no event higher than the maximum permitted under applicable law.  “Prime Rate” shall mean the rate of interest as is publicly announced at the Bank’s principal office from time to time as its Prime Rate.

The Borrower shall give the Bank irrevocable written notice (or telephonic notice promptly confirmed in writing) not later than 11:00 a.m., New York, New York time, three Business Days prior to the date of each proposed Eurodollar Loan (as hereinafter defined) or prior to 11:00 a.m. New York, New York time on the date of each proposed Prime Loan (as hereinafter defined).  Such notice shall be irrevocable and shall specify (i) the amount and whether the proposed borrowing shall be a Eurodollar Loan or a Prime Rate Loan, (ii) the initial Interest Period if a Eurodollar Loan, and (iv) the proposed date of borrowing.  Each borrowing of a Eurodollar Loan shall be in an amount not less than $500,000 or, if greater, whole multiples of $100,000 in excess thereof.  The Bank is authorized to enter on the Grid Schedule attached hereto (i) the amount of each loan made from time to time hereunder (the “Loan”), (ii) the date on which each Loan is made, (iii) the date on which each Loan shall be due and payable to the Bank, which date shall be March 31, 2006 (“Maturity Date”), (iv) the applicable interest rate to be paid on each Loan which shall, at the Borrower’s option in accordance herewith, be at (a) the Adjusted Eurodollar Rate plus one and 85/100 percent (1.85%) (the “Eurodollar Rate”) or (b) the Prime Rate minus one percent (1.0%) (such Loans, the “Eurodollar Loan” or the “Prime Loan”), (v) the amount of each payment made hereunder, and (vi) the outstanding principal balance of the Loans hereunder from time to time, all of which entries, in the absence of manifest error, shall be conclusive and binding on the Borrower; provided, however, that the failure of the Bank to make any such entries shall not relieve the Borrower from its obligation to pay any amount due hereunder.

Prepayment

(a)No prepayments shall be permitted hereunder on any Loan while the Eurodollar Rate shall be applicable to such Loan on any date other than the last day of the applicable Interest Period.  A Loan may be prepaid at any time while the Prime Rate shall be applicable to such Loan upon two days prior notice.

(b)The Borrower shall reimburse the Bank on demand for any loss incurred or to be incurred by it in the reemployment of funds released by any prepayment of the Loan made in contravention of the terms hereof.  Such loss shall be the difference as reasonably determined by the Bank between the cost of obtaining the funds for the Loan and any lesser amount which may be realized by the Bank in reemploying the funds received in prepayment during the period from the date of prepayment to the end of the current Interest Period of such Loan.

Increased Costs

If at any time after the date hereof, the Board of Governors of the Federal Reserve System or any political subdivision of the United States of America or any other government, governmental agency or central bank shall impose or modify any reserve or capital requirement on or in respect of loans made by or deposits with the Bank or shall impose on the Bank any other conditions affecting Eurodollar Loans, and the result of the foregoing is to increase the cost to (or, in the case of Regulation D, to impose a cost on the Bank of making or maintaining any Eurodollar Loans or to reduce the amount of any sum receivable by the Bank in respect thereof, by an amount deemed by the Bank to be material, then, within 30 days after notice and demand by the Bank, the Borrower shall pay to the Bank such additional amounts as will compensate the Bank for such increased cost or reduction; provided, that the Borrower shall not be obligated to compensate the Bank for any increased cost resulting from the application of Regulation D as required by the definitions of Adjusted Eurodollar Rate.  Any such obligation by the Borrower to the Bank shall not be due and owing until the Bank has delivered written notice to the Borrower.  Failure by the Bank to provide such notice shall not be deemed a waiver of any of its rights hereunder.  A certificate of the Bank claiming compensation hereunder and setting forth the additional amounts to be paid to it hereunder and the method by which such amounts were calculated shall be conclusive in the absence of manifest error.

Indemnity

The Borrower shall indemnify the Bank against any net loss or expense which the Bank may sustain or incur as a consequence of the occurrence of any default hereunder or any loss or reasonable expense sustained or incurred in liquidating or employing deposits from third parties acquired to effect or maintain any Eurodollar Loan or any part thereof which the Bank may sustain or incur as a consequence of any default in payment of the principal amount of the Loan or any part thereof or interest accrued thereon.  The Bank shall provide to the Borrower a statement, supported where applicable by documentary evidence, explaining the amount of any such loss or expense, which statement shall be conclusive absent manifest error.

Change In Legality

(a)Notwithstanding anything to the contrary contained elsewhere in this Note, if any change after the date hereof in any law or regulation or in the interpretation thereof by any governmental authority charged with the administration thereof shall make it unlawful (based on the opinion of any counsel, whether in-house, special or general, for the Bank) for the Bank to make or maintain any

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Eurodollar Loan or to give effect to its obligations as contemplated hereby with respect to any Eurodollar Loan, then, by written notice to the Borrower by the Bank, the Bank may require that all outstanding Eurodollar Loans made hereunder be converted to Prime Loans, whereupon all such Eurodollar Loans shall be automatically converted to Prime Loans as of the effective date of such notice as provided in paragraph (b) below.

(b)For purposes of this Section, a notice to the Borrower by the Bank pursuant to paragraph (a) above shall be effective, if lawful and if any Eurodollar Loans shall then be outstanding, on the last day of the then current Interest Period; otherwise, such notice shall be effective on the date of receipt by the Borrower.

Events of Default.

If the Borrower shall default in the punctual payment of any sum payable with respect to, or in the observance or performance of any of the terms and conditions of this Note, or any other agreement with or in favor of the Bank, or if a default or event of default that is accelerated shall occur for any reason under any such agreement, or in the event of default in any other material indebtedness of the Borrower exceeding $25,000 in the aggregate, or if any warranty, representation or statement of fact made in writing to the Bank at any time by an officer, partner or other designated representative of the Borrower is false or misleading in any material respect when made, or the Borrower fails on request to furnish any financial information or permit the inspection of its books or records, or if the Borrower shall be dissolved or shall fail to maintain its existence in good standing, or if the usual business of the Borrower shall be suspended or terminated, or if any levy, execution, seizure, attachment or garnishment shall be issued, made or filed on or against any material portion of the property of the Borrower, or if the Borrower shall become insolvent (however defined or evidenced), make an assignment for the benefit of creditors or make or send a notice of intended bulk transfer, or if a committee of creditors is appointed for, or any petition or proceeding for any relief under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, receivership, liquidation or dissolution law or statute now or hereafter in affect (whether at law or in equity) is filed or commenced by or against the Borrower or any material portion of its property which, as to involuntary proceeding(s) are not dismissed within thirty (30) days, or if any trustee or receiver is appointed for the Borrower or any such property, or if a default or event of default shall occur under the Guaranty or the Pledge Agreement, or if any provision of this Note, the Guaranty or the Pledge Agreement shall, for any reason, cease to be in full force and effect in accordance with its terms or the Borrower or the Guarantor shall so assert in writing, or any of the foregoing events shall occur with respect to the Guarantor or any other guarantor of the Borrower’s obligations hereunder (each an “Event of Default”) - then and in any such event, which non-monetary Events of Default continue unremedied for fifteen (15) days (except for voluntary bankruptcy which is an automatic Event of Default hereunder), in addition to all rights and remedies of the Bank under applicable law and otherwise, all such rights and remedies cumulative, not exclusive and enforceable alternatively, successively and concurrently, the Bank shall have the right immediately to set off against this note and/or any liabilities of the Borrower to the Bank all monies owed by the Bank in any capacity to the Borrower, whether or not due, and the Bank shall be deemed to have exercised such right to set off and to have made a charge against any such money immediately upon the occurrence of any of the foregoing events of default even though such charge is made or entered on the books of the Bank subsequent to those events.  Further the Bank may, at its option, declare any and all of the amounts owing under this Note to be due and payable, whereupon the maturity of the then unpaid balance hereof shall be accelerated and the same, together with all interest accrued hereon, shall forthwith become due and payable.

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Definitions

A.Adjusted Eurodollar Rate

“Adjusted Eurodollar Rate” shall mean, with respect to any Eurodollar Loan for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/8 of 1%) equal to (i) the Eurodollar Rate in effect for such Interest Period and (ii) Statutory Reserves.

“Eurodollar Rate” shall mean, with respect to any Eurodollar Loan for any Interest Period, the rate (rounded upwards, if necessary, to the next 1/8 of 1%) at which dollar deposits approximately equal in principal amount to the Bank’s Eurodollar Loan and for the maturity equal to the applicable Interest Period are offered by the Bank in immediately available funds in an Interbank Market for Eurodollars at approximately 11:00 a.m., New York City time, two Business Days prior to the commencement of such Interest Period.

B.Assessment Rate

“Assessment Rate” shall mean for any date the annual rate (rounded upwards, if necessary, to the next higher 1/100 of 1%) most recently estimated by the Bank as the then current net annual assessment rate that will be employed for determining amounts payable by the Bank to the Federal Deposit Insurance Corporation (or any successor) for insurance by such Corporation (or such successor) of time deposits made in dollars at the Bank’s domestic offices.

C.Business Day

“Business Day” shall mean any day other than a Saturday, Sunday or other day on which the Bank is authorized or required by law or regulation to close, and which is a day on which transactions in dollar deposits are being carried out in London, England for Eurodollar Loans and New York City for Prime Loans.

D.Eurodollar Loan

“Eurodollar Loan” shall mean a Loan bearing interest at the Eurodollar Rate plus 1.85%.

E.Guarantor

“Guarantor” shall mean Hauppauge Digital, Inc., a Delaware corporation.

F.Guaranty

“Guaranty” shall mean the Guaranty, dated as of the date hereof, by the Guarantor wherein the Guarantor guaranteed the obligations of the Borrower owing to the Bank, as amended, restated, supplemented or otherwise modified, from time to time.

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G.Interest Period

(i) For Eurodollar Loans, Interest Period shall mean the period commencing on the date of such Loan and ending 1 month after the date of such Loan (as selected by the Borrower and recorded on the Grid Schedule attached hereto), provided that.   upon the expiration of the first Interest Period and each Interest Period thereafter, each Eurodollar Loan will be automatically continued with an Interest Period of the same duration, unless the Borrower shall notify the Bank that it intends to convert a Eurodollar Loan to a Prime Loan or if the Bank is prohibited from making Eurodollar Loans, in accordance with provisions set forth in this Note.

(ii) For Prime Loans, Interest Period shall mean the last day of each calendar month during the term hereof and on the date on which an Prime Loan is converted to a Eurodollar Loan.

No Interest Period shall extend past the Maturity Date.  In addition, if any Interest Period would end on a day which shall not be a Business Day, such Interest Period shall be extended to the next succeeding Business Day.

H.Prime Loan

“Prime Loan” shall mean a Loan bearing interest at the Prime Rate.

I.Pledge Agreement

“Pledge Agreement” shall mean the Share Pledge Agreement, dated as of the date hereof, between the Guarantor and the Bank, as amended, restated, supplemented or modified, from time to time.

J.Statutory Reserves

“Statutory Reserves” shall mean a fraction (expressed as a decimal, the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including, without limitation, any marginal, special emergency or supplemental reserves) expressed as a decimal established by the Board of Governors of the Federal Reserve System and any other banking authority to which the Bank is subject for Eurocurrency Liabilities as defined in Regulation D.  Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities and as such shall be deemed to be subject to such reserve requirements without benefit of or credit for proration, exceptions or offsets which may be available from time to time to the Bank under such Regulation D.  Statutory Reserves shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

Miscellaneous

The Borrower hereby gives to the Bank a lien on, security interest in and right of set-off against all moneys, securities and other property of the Borrower and the proceeds thereof, now or hereafter

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delivered to, remaining with or in transit in any manner to the Bank, its correspondents, affiliates or its agents from or for the Borrower, whether for safekeeping, custody, pledge, transmission, collection or otherwise or coming into possession, control or custody of the Bank in any way, and also, any balance of any deposit accounts and credits of the Borrower with, and any and all claims of the Borrower against the Bank at any time existing, as collateral security for the payment of this Note and of all other liabilities and obligations now or hereafter owed by the Borrower to the Bank, contracted with or acquired by the Bank, whether joint, several, absolute, contingent, secured, unsecured, matured or unmatured (all of which are hereafter collectively called “Liabilities”), hereby authorizing the Bank at any time or times, without prior notice, to apply such balances, credits or claims, or any part thereof, to such Liabilities in such amounts as it may select, whether contingent, unmatured or otherwise and whether any collateral security therefor is deemed adequate or not.  The collateral security described herein shall be in addition to any collateral security described in any separate agreement executed by the Borrower, including, without limitation, the Pledge Agreement.

Notices

Any notices, requests and demand to or upon the respective parties hereto to be effective shall be in writing (or by telex, fax or similar electronic transfer confirmed in writing), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made (a) when delivered by hand or (b) if given by mail, on the third business day after deposited in the mails by certified mail, return receipt requested, or (c) if by telex, fax or similar electronic transfer, when sent and receipt has been confirmed, addressed as follows:

(i)if to the Bank to:

JPMorgan Chase Bank, N.A.

395 North Service Road, Suite 302

Melville, New York 10004-1699

Telephone #(631) 755-5078

Fax #(631) 755-0137

Attention:Christopher Jantzen, Vice President

(ii)if to the Borrower to:

Hauppauge Computer Works, Inc.

91 Cabot Court

Hauppauge, NY 11788

Telephone #(631) 434-1600

Fax #(631) 434-3198

Attention:Gerald Tucciarone, Assistant Secretary

(iii)As to each such party at such other address as such party shall have designated to the other in a written notice comply with the provisions hereof.

The Borrower hereby waives diligence, demand, presentment, protest and notice of any kind, and assents to extensions of the time of payment, release, surrender or substitution of security, or forbearance or other indulgence, without notice.

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This Note may not be changed, modified or terminated orally, but only by an agreement in writing signed by the party to be charged and consented to in writing by the party hereof.

In the event the Bank or any holder hereof shall refer this Note to an attorney for collection, the Borrower agrees to pay, in addition to unpaid principal and interest, all the costs and expenses incurred in attempting or effecting collection hereunder, including reasonable attorney’s fees, whether or not suit is instituted.

In the event of any litigation with respect to this Note, THE BORROWER WAIVES THE RIGHT TO A TRIAL BY JURY and all rights of setoff and rights to interpose counter-claims and cross-claims.  The Borrower hereby irrevocably consents to the jurisdiction of the courts of the State of New York and of any Federal court located in such State in connection with any action or proceeding arising out of or relating to this Note.  This Note shall be governed by and construed in accordance with the laws of the State of New York applicable to contract made and to be performed in such State, and shall be binding upon the successors and assigns of the Borrower and inure to the benefit of the Bank, its successors, endorsees and assigns.

If any term or provision of this Note shall be held invalid, illegal or unenforceable the validity of all other terms and provisions hereof shall in no way be affected thereby.

DATED: December 1, 2005	HAUPPAUGE COMPUTER WORKS, INC.
	By:	/s/ Gerald Tucciarone
	Name: Gerald Tucciarone
	Title: Assistant Secretary

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]

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GRID SCHEDULE

		APPLICABLE		INTEREST
DATE	TYPE	INTEREST RATE	AMOUNT	PERIOD

EX-10.2

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,

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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

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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]

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EX-10.3

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

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:

1DEFINITIONS

1.1Unless 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.

1.2Unless 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.

1.3The 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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2PLEDGE

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.

3PERFECTION OF THE PLEDGE

3.1The 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

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

3.3Upon 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.

3.4As 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.

4CONTINUING AND ADDITIONAL SECURITY

4.1The 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.

4.2The 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.

4.3The 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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4.4The 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.

4.5To 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.

4.6The 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

5.1Until 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.

5.2The 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).

5.3The 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

6.1If 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.

6.2Upon 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:

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

11.1Upon 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.

11.2Without 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.

11.3In 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.

11.3Any 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

12.1This 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.

12.2Upon 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

13.1The 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.

13.2The 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

17.1In 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.

17.2The 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

18.1This Agreement will be governed by and construed in accordance with the laws of the Grand Duchy of Luxembourg.

18.2The 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

19.1This 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.

19.2Any 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.

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”

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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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