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EFiled: Oct 24 2019 03:42PM EDT

Transaction ID 64349914
Case No. 2019-0848-
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
JAMES RIVEST, )
)
Plaintiff, )
)
v. ) C.A. No. _______
)
HAUPPAUGE DIGITAL INC., )
)
Defendant. )

VERIFIED COMPLAINT TO COMPEL INSPECTION OF BOOKS


AND RECORDS UNDER 8 DEL. C. § 220

Plaintiff, James Rivest (“Plaintiff”), by and through his undersigned counsel,

submits this Verified Complaint to Compel Inspection of Books and Records under

8 Del. C. § 220, upon personal knowledge as to himself and his own actions, and

upon information and belief as to all other matters, and alleges as follows:

1. This is a summary action under Section 220 of the Delaware General

Corporation Law (“DGCL”) seeking an order requiring Defendant Hauppauge

Digital Inc. (“HAUP” or the “Company”) to allow Plaintiff to inspect and copy

books and records of the Company.

PARTIES
2. Plaintiff is a resident of Florida, and is the beneficial holder of

200,000 shares of common stock of HAUP.

3. Defendant HAUP, a Delaware corporation, has its principal place of

business in Hauppauge, New York. The Company develops, manufactures and


sells personal computer based television tuners, data broadcast receivers and video

capture products. HAUP also operates Hauppauge Computer Works, a PCTV

tuner products division. In July 2014, the Company’s registration statement was

terminated and its stock was delisted. Accordingly, the Company’s financial

results and related information are not reported publicly.

JURISDICTION
4. Subject matter jurisdiction appropriately lies in the Delaware Court of

Chancery under 8 Del. C. § 220(c).

5. The Delaware Court of Chancery has personal jurisdiction over the

Defendant, which is incorporated in Delaware.

PREVIOUS DEMAND
6. By letter dated July 29, 2019 (the “July Demand”), Plaintiff wrote to

Defendant demanding an inspection of the following books and records:

Financial statements for the Company for the past three


fiscal years, including balance sheets, profit and loss
statements, cash flow statements, footnotes, and auditor’s
opinion.

7. The stated purpose of the July Demand, which was made under oath,

was to value Plaintiff’s stock. Plaintiff offered to sign an appropriate

confidentiality agreement if requested and to bear reasonable costs incurred by the

Company in providing the requested records. The July Demand was directed to

the Company at its principal place of business.

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8. Defendant failed to respond to the July Demand.

THE CURRENT DEMAND


9. By letter dated October 8, 2019 (the “October Demand,”1 and

collectively with the July Demand, the “Demands”), Plaintiff, by and through his

undersigned counsel, wrote to Defendant demanding an inspection of the following

books and records of HAUP:

(a) Monthly, quarterly and annual financial statements and

financial reports, including income statements, balance sheets, statements of cash

flow and all similar documents for the Company for the years 2016, 2017 and 2018;

and

(b) Appraisals, valuations or analyses mentioning or otherwise

referring or relating to the value of the Company, its stock or any of its assets.

10. The stated purpose for the October Demand, which was made under

oath, was to ascertain the value of Plaintiff’s stock. Plaintiff offered to sign an

appropriate confidentiality agreement if requested and to bear reasonable costs

incurred by the Company in providing the requested records. The October

Demand was directed to HAUP at its principal place of business.

1
Exhibit A hereto.

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11. Although Delaware law required Defendant to respond to the October

Demand within five business days, as of this filing, Defendant has failed to

respond in any way to the October Demand.

12. Under Delaware law, Defendant is deemed to have refused the

October Demand.

13. Plaintiff therefore is entitled to a summary proceeding in this Court

and an order compelling the inspection of the requested books and records.

COUNT ONE

Relief Under 8 Del. C. § 220

14. Plaintiff repeats and re-alleges all allegations in the preceding

paragraphs.

15. Plaintiff is a beneficial owner of common stock of Defendant HAUP.

16. On July 29, 2019 and October 8, 2019, Plaintiff demanded under oath

an inspection of the Defendant’s 2016, 2017 and 2018 financial statements and

reports, including income and cash flow statements, balance sheets, and similar

documents, as well as valuation analyses and appraisals relating to the value of the

Company, its stock and assets.

17. Plaintiff’s Demands on the Company for an inspection of books and

records complied with the form and manner requirements of Section 220.

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18. Plaintiff’s Demands stated a proper purpose for inspection of the

Company’s books and records by its stockholder.

19. Defendant failed to respond to Plaintiff’s Demands within five

business days, and therefore refused to provide Plaintiff with a reasonable

inspection of the books and records properly demanded.

20. Pursuant to Section 220, in the event that a corporation refuses to

permit an inspection properly sought by its stockholder, this Court is authorized to

compel such an inspection.

21. By reasons of the foregoing and pursuant to Section 220, Plaintiff is

entitled to an order against Defendant compelling an inspection of the books and

records identified in Plaintiff’s Demands.

22. Plaintiff has no adequate remedy at law.

WHEREFORE, Plaintiff demands judgment against Defendant as follows:

A. Declaring that (i) Plaintiff is a beneficial owner of common stock of

Defendant; (ii) Plaintiff has stated a proper purpose for inspection of Defendant’s

books and records; (iii) Plaintiff has perfected its rights to an inspection, and (iv)

Defendant has failed to establish an affirmative defense to Plaintiff’s right of

inspection;

B. Ordering Defendant to provide to Plaintiff the books and records that

Plaintiff has demanded for an inspection and to allow Plaintiff to make copies

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thereof, with Plaintiff to pay reasonable costs incurred by Defendant in providing

the requested information; and

C. Granting such other and further relief as the Court may deem just and

proper.

PRICKETT, JONES & ELLIOTT, P.A.

By: /s/ Marcus E. Montejo


Marcus E. Montejo (#4890)
Jason W. Rigby (#6458)
1310 King Street
Wilmington, Delaware 19801
(302) 888-6500

Attorneys for Plaintiff


Dated: October 24, 2019

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EFiled: Oct 24 2019 03:42PM EDT
Transaction ID 64349914
Case No. 2019-0848-

EXHIBIT A
PRICKETT, JONES & ELLIOTT
A PROFESSIONAL ASSOCIATION

Writer's Direct Dial:


1310 KING STREET, BOX 1328
Writer's E-Mail Address:
(302) 888-6539 WILMINGTON, DELAWARE 19899 memontejo@prickett.com
TEL: (302) 888-6500
FAX: (302) 658-8111
http://www.prickett.com

October 8, 2019
BY EMAIL
AND FEDEX
Hauppauge Digital, Inc.
c/o Gerald Tucciarone
Chief Financial Officer
909 Motor Parkway
Hauppauge, NY 11788
(jtucciarone@hauppauge.com)

RE: Section 220 Demand for Inspection of Books and Records of


Hauppauge Digital, Inc.

Dear Mr. Tucciarone:

I represent James Rivest, a beneficial holder of shares of common stock of Hauppauge


Digital, Inc. (“Hauppauge”or the “Company”). My client hereby demands, pursuant to 8 Del. C.
§220, to inspect the books and records of the Company described below.

Enclosed herewith is a true and correct copy of the Power of Attorney authorizing Prickett,
Jones & Elliott, P.A. (“Prickett Jones”) and anyone it may designate, to act on my client’s behalf
in connection with this demand. Also enclosed is an affirmation pursuant to which my client
deposes and says under oath that the facts and statements contained in this demand letter are true
and correct, and provides evidence of my client’s beneficial ownership of common stock of the
Company.

My client demands the right to inspect the following books and records of the Company:

1. Monthly, quarterly and annual financial statements and financial reports, including
income statements, balance sheets, statements of cash flow and all similar
documents for the Company for the years 2016, 2017 and 2018.

2. Appraisals, valuations or analyses mentioning or otherwise referring or relating to


the value of the Company, its stock or any of its assets.

My client makes this demand for the proper purpose of ascertaining the value of his
Hauppauge stock. This is a proper purpose that is reasonably related to my client’s interests as a
stockholder of the Company. See Kosinksi v. GGP, Inc., 2019 WL 4052054, at *10 (Del. Ch. Aug.
28, 2019); Polygon Global Opp. Master Fund v. West Corp., 2006 WL 2947486, at *3 (Del. Ch.
Hauppauge Digital, Inc.
c/o Gerald Tucciarone
October 8, 2019
Page 2

Oct. 12, 2006) (“It is settled law in Delaware that valuation of one’s shares is a proper purpose for
the inspection of corporate books and records.”).

Please contact me immediately to arrange for the inspection of the demanded books and
records. To the extent the Company is concerned about confidentiality, my client is prepared to
agree to appropriate and reasonable confidentiality terms in connection with the review of these
documents. To the extent the Company is concerned about costs, my client is prepared to bear the
reasonable costs incurred by the Company in connection with the production of the above
information.

In the event that the Company does not respond to this letter or fails to permit inspection
and copying of the demanded documents within five business days from the date of receipt of this
demand, we will seek appropriate relief to the fullest extent permitted under the law.

Very truly yours,

Marcus E. Montejo

MEM/jwr
Enclosures

cc: Mr. James Rivest