Document:

<PAGE>
                                                                 EXHIBIT 10.5

                              STOCKHOLDER AGREEMENT

                                      among

                            P.N.Y. ELECTRONICS, INC.,

                          GS CAPITAL PARTNERS II, L.P.

                             AND AFFILIATED PARTIES

                                       and

                                   GADI COHEN

                           Dated as of August 4, 1995
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                                TABLE OF CONTENTS

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SECTION 1. Certain Definitions............................................................................................1

           1.1.      Affiliate............................................................................................1

           1.2.      Associate............................................................................................1

           1.3.      Beneficially Own or Beneficial Ownership.............................................................1

           1.4.      Capitalized Lease Obligations........................................................................1

           1.5.      Cohen Affiliates.....................................................................................2

           1.6.      Cohen Parties........................................................................................2

           1.7.      Common Stock.........................................................................................2

           1.8.      Common Stock Equivalents.............................................................................2

           1.9.      Control Transaction..................................................................................2

           1.10.     Current Indebtedness.................................................................................2

           1.11.     Designated Parties...................................................................................2

           1.12.     Dividend Remittitur and Pledge Agreement.............................................................2

           1.13.     EBIT.................................................................................................2

           1.14.     Exchange Act.........................................................................................2

           1.15.     Fair Market value....................................................................................3

           1.16.     Funded Indebtedness..................................................................................3

           1.17.     GSCP Affiliates......................................................................................3

           1.18.     GSCP Parties.........................................................................................3

           1.19.     Interest Charges.....................................................................................3

           1.20.     Management Stockholder Agreement.....................................................................4

           1.21.     Net Earnings.........................................................................................4

           1.22.     Notes................................................................................................4

           1.23.     Other Stockholders...................................................................................4

           1.24.     Person...............................................................................................4

           1.25.     Pro Forma Interest Charges...........................................................................4

           1.26.     Public Sale..........................................................................................5

           1.27.     Qualified IPO........................................................................................5

           1.28.     Registration Rights Agreement........................................................................5
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           1.29.     Securities Act.......................................................................................5

           1.30.     Sell.................................................................................................5

           1.31.     Senior Debt..........................................................................................5

           1.32.     Stock................................................................................................5

           1.33.     Stockholders.........................................................................................5

           1.34.     Ten Percent Sale.....................................................................................5

SECTION 2. Methodology for Calculations...................................................................................6

SECTION 3. Limitations on Sales of Stock..................................................................................6

SECTION 4. Rights of First Offer..........................................................................................7

SECTION 5. Tag-Along and Change of Control Rights........................................................................10

SECTION 6. Bring-Along Rights............................................................................................11

SECTION 7. Preemptive Rights.............................................................................................12

SECTION 8. Corporate Governance..........................................................................................13

            8.1.     Board of Directors Prior to Qualified IPO...........................................................13

            8.2.     Board of Directors In General.......................................................................15

            8.3.     Vacancies...........................................................................................15

            8.4.     Committees; Subsidiaries............................................................................15

            8.5.     Removal.............................................................................................15

            8.6.     Directors' Indemnification..........................................................................15

            8.7.     Expenses............................................................................................16

            8.8.     Attendance..........................................................................................16

            8.9.     Voting Arrangement..................................................................................16

SECTION 9.  Major Transactions...........................................................................................16

SECTION 10. Representations and Warranties...............................................................................20

SECTION 11. No Inconsistent Agreements...................................................................................20

SECTION 12. Further Assurances...........................................................................................21

SECTION 13. Duration of Agreement........................................................................................21

SECTION 14. Legends......................................................................................................21

SECTION 15. Severability.................................................................................................22
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SECTION 16.  Governing Law...............................................................................................22

SECTION 17.  Successors and Assigns......................................................................................22

SECTION 18.  Notices.....................................................................................................23

SECTION 19.  Amendments..................................................................................................24

SECTION 20.  Headings....................................................................................................24

SECTION 21.  Nouns and Pronouns..........................................................................................25

SECTION 22.  Entire Agreement............................................................................................25

SECTION 23.  Third Parties...............................................................................................25

SECTION 24.  Counterparts................................................................................................26

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Schedules
---------

1.11(a)         Pre-IPO Designated Parties
1.11(b)         Post-IPO Designated Parties
7               Outstanding Securities
10              Representations

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                          FORM OF STOCKHOLDER AGREEMENT
                          -----------------------------

                     STOCKHOLDER AGREEMENT, dated as of August 4, 1995, among
P.N.Y. ELECTRONICS, INC., a Delaware corporation (the "Corporation"), GS CAPITAL
PARTNERS II, L.P., a Delaware limited partnership ("GSCP"), GS CAPITAL PARTNERS
II OFFSHORE, L.P., GOLDMAN, SACHS & CO. VERWALTUNGS GmbH, STONE STREET FUND
1995, L.P. and BRIDGE STREET FUND 1995, L.P. (collectively referred to as the
"GSCP Investors") and GADI COHEN ("Cohen").

                              W I T N E S S E T H:
                              - - - - - - - - - -

                     WHEREAS, the Corporation, GSCP, the GSCP Investors and
Cohen are parties to that certain Preferred Stock and Warrant Purchase
Agreement, dated as of the date hereof (the "Purchase Agreement"), pursuant to
which GSCP and the GSCP Investors have purchased shares of Series A Convertible
Preferred Stock, par value $.01 per share (the "Preferred Stock"), and warrants
to purchase shares of the Corporation's Common Stock, par value $.01 per share
("Warrants"); and

                     WHEREAS, the Purchase Agreement contemplates that the
parties hereto will enter into this Stockholder Agreement and the parties hereto
deem it to be in their best interests to establish and set forth their agreement
with respect to certain rights and obligations associated with ownership of
shares of Stock (as hereinafter defined);

                     NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and obligations hereinafter set forth, the parties hereto
hereby agree as follows:

                     SECTION 1. Certain Definitions. As used herein, the
                                -------------------
following terms shall have the following meanings (terms used herein and not
defined herein shall have the meaning assigned each such term in the Purchase
Agreement):

           1.1.       Affiliate shall mean, (i) with respect to any Person, any
                      ---------
                      other Person directly or indirectly controlling or
                      controlled by or under direct or indirect common control
                      with such specified Person and (ii) with respect to any
                      individual, shall also mean the spouse, child or parent of
                      such Person or any trust or similar entity of which there
                      are no principal beneficiaries other than such Person
                      and/or one or more of such relatives. Notwithstanding the
                      foregoing, neither the Corporation nor any Person
                      controlled by the Corporation shall be deemed to be an
                      Affiliate of Cohen or an Affiliate of GSCP for purposes of
                      this Agreement.

           1.2.       Associate shall have the meanings ascribed to such term in
                      ---------
                      Rule 12b-2 of the General Rules and Regulations under the
                      Exchange Act.

           1.3.       Beneficially Own or Beneficial Ownership shall have the
                      ----------------    --------------------
                      meaning set forth in Rule l3d-3 under the Exchange Act.

           1.4.       Capitalized Lease Obligations of any Person shall mean and
                      -----------------------------
                      include, as of any date as of which the amount thereof is
<PAGE>
                      to be determined, the amount of the liability capitalized
                      or disclosed (or which should be disclosed) in a balance
                      sheet of such Person in respect of any lease or any other
                      agreement for the use of property which, in accordance
                      with generally accepted accounting principles, should be
                      capitalized on the lessee's or user's balance sheet.

           1.5.       Cohen Affiliates shall mean Affiliates of Cohen.
                      ----------------

           1.6.       Cohen Parties shall mean Cohen, together with the Cohen
                      -------------
                      Affiliates.

           1.7.       Common Stock shall mean any shares of Common Stock, par
                      ------------
                      value $.01 per share, of the Corporation.

           1.8.       Common Stock Equivalents shall mean securities convertible
                      ------------------------
                      into, or exchangeable or exercisable for, shares of Common
                      Stock.

           1.9.       Control Transaction shall mean a Sale by Cohen or any
                      -------------------
                      Cohen Affiliate, as a result of which Sale (i) the Cohen
                      Parties cease to Beneficially Own at least 50% of the
                      outstanding Stock of the Corporation (on a fully diluted
                      basis) and (ii) the transferee in such Sale (considered
                      together with its Affiliates) becomes the Beneficial
                      Owner, directly or indirectly, of 30% or more of the
                      outstanding Stock of the Corporation (on a fully diluted
                      basis).

           1.10.      Current Indebtedness of any Person shall mean the
                      --------------------
                      indebtedness of such Person for borrowed money (including
                      Capitalized Lease Obligations) which does not constitute
                      Funded Indebtedness.

           1.11.      Designated Parties shall mean (i) prior to a Qualified
                      ------------------
                      IPO, any Person set forth or described on Schedule 1.11(a)
                      hereto and any Affiliate of any such Person and (ii)
                      following a Qualified IPO, any Person set forth or
                      described on Schedule 1.11(b) hereto and any Affiliate of
                      any such Person.

           1.12.      Dividend Remittitur and Pledge Agreement shall mean the
                      ----------------------------------------
                      Dividend Remittitur and Pledge Agreement, dated as of the
                      business date immediately prior to the date hereof,
                      between Cohen and the Corporation.

           1.13.      EBIT of any Person shall mean, for any period for which
                      ----
                      the amount thereof is to be determined, the Net Earnings
                      of such Person for such period, plus the aggregate amounts
                      deducted in determining such Net Earnings in respect of
                      (i) Interest Charges and (ii) income taxes and other taxes
                      measured by income taxes or profits in respect of such
                      Person for such period.

           1.14.      Exchange Act shall mean the Securities Exchange Act of
                      ------------
                      1934, as amended.

                                       2
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           1.15.      Fair Market Value shall mean the average of the closing
                      -----------------
                      sale prices during the 30-day period immediately preceding
                      the date in question of a share of such stock on the
                      Composite Tape for New York Stock Exchange-Listed Stocks,
                      or, if such stock is not quoted on the Composite Tape, on
                      the New York Stock Exchange, or, if such stock is not
                      listed on such Exchange, on the principal United States
                      securities exchange registered under the Exchange Act on
                      which such stock is listed, or, if such stock is not
                      listed on any such exchange, the average of the closing
                      bid quotations with respect to a share of such stock
                      during the 30-day period preceding the date in question on
                      the National Association of Securities Dealers, Inc.
                      Automated Quotations System or any system then in use.

           1.16.      Funded Indebtedness of any Person shall mean, as of any
                      -------------------
                      date as of which the amount thereof is to be determined,
                      all indebtedness for borrowed money (including Capitalized
                      Lease Obligations) of such Person, whether secured or
                      unsecured, which by its terms has a final maturity,
                      duration or payment date more than one year from the date
                      on which Funded Indebtedness is to be determined (other
                      than that portion of the principal of such Funded
                      Indebtedness due within one year from such date of
                      determination, but including any indebtedness of such
                      Person having a final maturity, duration or payment date
                      within one year from such date which, pursuant to the
                      terms of a revolving credit or similar agreement or
                      otherwise may be renewed or extended at the option of such
                      Person for more than one year from such date, whether or
                      not theretofore renewed or extended).

           1.17.      GSCP Affiliates shall mean (a) prior to a Qualified IPO,
                      ---------------
                      Affiliates of GSCP and (b) after a Qualified IPO, one or
                      more partnerships, corporations, trusts or other
                      organizations which are controlled by, control or are
                      under common control with GSCP or one or more of the then
                      current, former or future partners of GSCP to the extent
                      that they receive Stock as a distribution in kind on a pro
                      rata basis upon or after a Qualified IPO.

           1.18.      GSCP Parties shall mean GSCP, together with the GSCP
                      ------------
                      Affiliates.

           1.19.      Interest Charges of any Person shall mean, for any period
                      ----------------
                      for which the amount thereof is to be determined, the sum
                      of (i) all interest paid or prepaid or scheduled to be
                      paid by such Person on Current or Funded Indebtedness
                      during such period, plus (ii) all rentals imputed as
                      interest paid or scheduled to be paid on Capitalized Lease
                      Obligations during such period by such Person, plus (iii)
                      all fees paid, or scheduled to be paid with respect to
                      Current or Funded Indebtedness during such period by such
                      Persons, plus (iv) all debt discount and expense amortized
                      in respect of Current or Funded Indebtedness or scheduled
                      to be amortized in respect of Current or Funded
                      Indebtedness during such period by such Person. For the
                      purpose of this definition, the rate of interest payable

                                       3
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                      during any period on Current or Funded Indebtedness
                      bearing interest at a variable rate or at different fixed
                      rates, or on Current or Funded Indebtedness on which
                      interest does not become payable until a specified date
                      more than twelve (12) months after the date of
                      determination, shall be the interest rate per annum then
                      payable on such Current or Funded Indebtedness.

           1.20.      Management Stockholder Agreement shall mean an agreement
                      --------------------------------
                      to be entered into by and among the Corporation, some or
                      all of the members of key management of the Corporation
                      named therein ("Management"), GSCP and Cohen, as
                      contemplated by Section 4.3 of the Purchase Agreement.

           1.21.      Net Earnings of any Person shall mean, for any period for
                      ------------
                      which the amount thereof is to be determined, the net
                      earnings of such Person for such period, as determined by
                      Ernst & Young, LLP in accordance with generally accepted
                      accounting principles consistently applied (or any
                      successor accounting firm which is a nationally recognized
                      accounting firm).

           1.22.      Notes shall mean (a) the Subordinated Note of the
                      -----
                      Corporation, dated August 3, 1995, in the initial
                      principal amount of $5,140,000 payable to Cohen (the
                      "$5,140,000 Note") and (b) the Subordinated Note of the
                      Corporation, dated August 3, 1995, in the amount of
                      $15,000,000 payable to Cohen.

           1.23.      Other Stockholders, with respect to any selling
                      ------------------
                      Stockholder, shall mean the Stockholders other than the
                      selling Stockholder or its Affiliates.

           1.24.      Person shall mean any individual, corporation, limited
                      ------
                      liability company, limited or general partnership, joint
                      venture, association, joint-stock company, trust,
                      unincorporated organization or government or any agency or
                      political subdivisions thereof.

           1.25.      Pro Forma Interest Charges of any Person shall mean, as of
                      --------------------------
                      any date as of which the amount thereof is to be
                      determined, the sum of (i) all Interest Charges on Funded
                      Indebtedness payable during the twelve (12) month period
                      immediately succeeding the date of any determination
                      hereunder, after giving effect to Interest Charges on
                      Funded Indebtedness proposed to be created on such date
                      and to the concurrent retirement of any other Funded
                      Indebtedness, plus (ii) all Interest Charges on Current
                      Indebtedness for the most recently completed twelve (12)
                      month period, after eliminating the Interest Charges on
                      any such Current Indebtedness which was actually retired
                      during such period or which is actually being retired on
                      such date out of the proceeds of any Funded Indebtedness
                      the Interest Charges on which are included in the amount
                      determined pursuant to clause (i).

                                       4
<PAGE>
           1.26.      Public Sale shall mean a Sale pursuant to a bona fide
                      -----------
                      underwritten public offering pursuant to an effective
                      registration statement filed under the Securities Act or
                      pursuant to Rule 144 under the Securities Act.

           1.27.      Qualified IPO shall mean a bona fide, firm commitment,
                      -------------
                      underwritten public offering pursuant to an effective
                      registration statement under the Securities Act resulting
                      in at least $15,000,000 of gross proceeds to the sellers
                      (including the Corporation) before deducting underwriting
                      discounts and commissions and offering expenses.

           1.28.      Registration Rights Agreement shall mean the Registration
                      -----------------------------
                      Rights Agreement, dated as of the date hereof, among the
                      Corporation, GSCP and Cohen.

           1.29.      Securities Act shall mean the Securities Act of 1933, as
                      --------------
                      amended.

           1.30.      Sell, as to any Stock, shall mean to sell, or in any other
                      ----
                      way directly or indirectly transfer, assign, distribute,
                      encumber or otherwise dispose of, either voluntarily or
                      involuntarily, Beneficial Ownership of such Stock; and the
                      terms Sale and Sold shall have meanings correlative to the
                      foregoing.

           1.31.      Senior Debt shall mean borrowings pursuant to that certain
                      -----------
                      Accounts Financing Agreement, dated January 29, 1993, as
                      amended, with Congress Financial Corporation and any
                      renewal, extension or replacement thereof.

           1.32.      Stock shall mean (i) any shares of Common Stock and (ii)
                      -----
                      any Common Stock Equivalents, in either case, whether
                      owned on the date hereof or acquired hereafter (and the
                      Common Stock issuable or purchasable upon the conversion,
                      exchange or exercise of such Common Stock Equivalents).
                      For purposes of this Agreement, all references to the
                      amount of Stock owned or held by any Stockholder shall,
                      with respect to a Stockholder who owns or holds Common
                      Stock Equivalents, be deemed to be a reference to the
                      number of shares of Common Stock into which the Common
                      Stock Equivalents owned or held by such Stockholder are
                      then convertible. Any percentage of the outstanding Stock
                      as of a specified date referred to herein shall be
                      computed on the basis that each Common Stock Equivalent
                      represents the number of shares of Common Stock into which
                      it is then convertible in accordance with its terms.

           1.33.      Stockholders shall mean the parties to this Agreement
                      ------------
                      (other than the Corporation) and any other holder of Stock
                      who is required to execute and agree to be bound by the
                      terms of this Agreement.

           1.34.      Ten Percent Sale shall mean a Sale of Stock by any
                      ----------------
                      Stockholder, other than a Sale which is a Public Sale or a
                      Sale to an Affiliate of such Stockholder, pursuant to
                      which any Person (other than a Cohen Party) would, to the
                      actual knowledge of the selling Stockholder, after due

                                       5
<PAGE>
                      inquiry, become the Beneficial Owner of 10% or more of the
                      outstanding shares of Stock (on a fully diluted basis).

                     SECTION 2. Methodology for Calculations. For purposes of
                                ----------------------------
this Agreement, the Sale of a Common Stock Equivalent shall be treated as the
Sale of the shares of Common Stock into which such Common Stock Equivalent can
be converted, exchanged or exercised. Except as otherwise provided in this
Agreement, all calculations under this Agreement (including, without limitation,
calculations to determine the Beneficial Ownership of Stock of any Stockholder,
the percentage of outstanding Stock Beneficially Owned by any Stockholder, and
the percentage of Stock Beneficially Owned by any Stockholder) shall be made in
accordance with Regulation 13D under the Exchange Act, except that for purposes
of any such calculation all Common Stock Equivalents (regardless of the holder
thereof) shall be treated as having been converted, exchanged or exercised.

                     SECTION 3. Limitations on Sales of Stock. (a) Subject to
                                -----------------------------
subsections (b), (c), (d) and (e) below, the GSCP Parties shall not Sell any
Stock, other than:

                      (i)        by Sale in accordance with Sections 4, 5 and 6
                                 hereof;

                      (ii)       by Sale to another GSCP Party; or

                      (iii)      in a Public Sale.

                     (b) In addition to the restrictions set forth in paragraph
(a) above, the GSCP Parties shall not Sell any Stock for a period of two (2)
years from the date hereof (the "Mandatory Holding Period"); provided, however,
                                                             --------  -------
that the foregoing restriction shall not apply to any Sale by the GSCP Parties
(i) to another GSCP Party, (ii) in connection with the GSCP Parties' exercise of
Tag-Along Rights (as defined in Section 5 hereof), (iii) as a result of any
required Sale pursuant to Section 6 hereof or (iv) with respect to which all of
the following conditions are met: (a) the Sale of such Stock is a sale of Common
Stock pursuant to an underwritten public offering registered under the
Securities Act in accordance with the terms of the Registration Rights
Agreement; and (b) immediately following such Sale, the GSCP Parties continue to
own shares of Stock (excluding for this purpose any Warrants and any Common
Stock issuable upon exercise of such Warrants) representing at least 50% of the
shares of Common Stock (treating for this purpose the Preferred Stock as having
been converted into Common Stock) purchased by the GSCP Parties on the date
hereof.

                     (c) Except as specifically contemplated hereby, no
Stockholder shall grant any proxy or enter into or agree to be bound by any
voting trust with respect to any Stock or enter into any stockholder agreements
or arrangements of any kind with any Person (other than Affiliates of such
Stockholder) with respect to any Stock which would result in any action which is
inconsistent with the provisions of this Agreement, including, but not limited
to, agreements or arrangements with respect to the acquisition, disposition or
voting of Stock, nor shall any Stockholder act, for any reason, as a member of a
group or in concert with any other Persons (other than Affiliates of such
Stockholder) in connection with the acquisition, disposition or voting of Stock
in any manner which would result in any action which is inconsistent with the
provisions of this Agreement.

                                       6
<PAGE>
                     (d) Notwithstanding any other provision of this Agreement
to the contrary, other than pursuant to a Public Sale or with the prior written
consent of the Corporation, no Stockholder (other than any Cohen Party) shall
Sell any Stock to any Person unless, after due inquiry, such Person is not known
to such Stockholder to be a Direct Competitor.

                     (e) Notwithstanding any other provision of this Agreement
to the contrary, and except in the case of a Public Sale, no Stockholder shall
Sell any Stock to any Person, including any Affiliate (all Persons acquiring
Stock from a Stockholder other than pursuant to a Public Sale, regardless of the
method of transfer, being referred to herein collectively as "Transferees" and
individually as a "Transferee"), unless:

                      (i) the certificates representing such Stock bear legends
           as provided in Section 14 hereof; and

                      (ii) such Transferee shall have executed and delivered to
           the Corporation, as a condition precedent to any acquisition of
           Stock, an instrument in form and substance satisfactory to the
           Corporation confirming that such Transferee takes such Stock subject
           to all the terms and conditions of this Agreement and Section 4.14 of
           the Purchase Agreement, and agrees to be bound by the terms of this
           Agreement and such terms and conditions of the Purchase Agreement.

                     (f) In the case of any Sale of Stock to a Cohen Party or a
GSCP Party, the Transferee of such Stock shall have the rights of, and be
subject to the obligations of, a Cohen Party or a GSCP Party, respectively,
under this Agreement. In the case of any other Sale of Stock by any Stockholder,
the Transferee of such Stock shall have the rights of, and be subject to the
obligations of, a Stockholder under this Agreement.

                     (g) Notwithstanding any other provision of this Agreement
to the contrary, following a Qualified IPO, there shall be no restrictions on
Sales by the GSCP Parties except (i) as set forth in Sections 3(b), 3(c), 3(d)
and 3(e) and (ii) Ten Percent Sales, which shall require compliance with Section
4 of this Agreement.

                     SECTION 4. Rights of First Offer. In addition to and not in
                                ---------------------
limitation of any other restrictions on Sales of Stock contained in this
Agreement, any Sale by a Stockholder shall be solely for cash consideration (or
publicly-traded securities, valued at Fair Market Value) and shall be
consummated only in accordance with the following procedures:

                      (a) The selling Stockholder wishing to Sell Stock shall
           first deliver to the Corporation a written notice (a "Section 4 Offer
           Notice"), which shall (i) state the selling Stockholder's intention
           to Sell Stock to one or more Persons, the amount and type of Stock
           intended to be Sold (the "Subject Stock"), the proposed purchase
           price therefor and a summary of the other material terms of the
           proposed Sale and (ii) offer the Corporation the option to acquire
           all or a portion of such Subject Stock upon the terms and subject to
           the conditions of the proposed Sale as set forth in the Section 4
           Offer Notice (the "Section 4 Offer"), provided that such Section 4
           Offer may provide that it must be accepted by the Corporation and the

                                       7
<PAGE>
           other Stockholders on an all or nothing basis (an "All or Nothing
           Sale"). The Section 4 Offer shall remain open and irrevocable for the
           periods set forth below (and, to the extent the Section 4 Offer is
           accepted during such periods, until the consummation of the Sale
           contemplated by the Section 4 Offer). The Corporation, acting only
           through a majority of the members of the Board of Directors of the
           Corporation who were not designated by the selling Stockholder or its
           or his Affiliates pursuant to Section 8 of this Agreement shall have
           the right and option, for a period of 60 days after delivery of the
           Section 4 Offer Notice (the "Section 4(a) Acceptance Period"), to
           accept all or any part of the Subject Stock at the purchase price, in
           cash, and on the terms stated in the Section 4 Offer Notice;
           provided, however, that, if the Section 4 Offer contemplated an All
           or Nothing Sale, the Corporation may accept, during
           the Section 4(a) Acceptance Period, all, but not less than all of the
           Subject Stock, at the purchase price and on the terms stated in the
           Section 4 Offer Notice. The Corporation shall have the right to
           assign its rights to purchase the Subject Stock pursuant to a Section
           4 Offer to any other Person. If a Section 4 Offer is accepted,
           notwithstanding any assignment pursuant to the preceding sentence,
           the Corporation shall be irrevocably obligated to consummate (or to
           have its assignees consummate) the purchase as set forth in Section
           4(d) below. Such acceptance shall be made by delivering a written
           notice to the selling Stockholder and each of the Other Stockholders
           within the Section 4(a) Acceptance Period.

                      (b) If the Corporation shall fail to accept, or shall
           reject in writing, all of the Subject Stock offered for Sale pursuant
           to the Section 4 Offer, then, upon the earlier of the expiration of
           the Section 4(a) Acceptance Period or the receipt of a written notice
           of rejection by the Corporation, each Other Stockholder shall have
           the right and option, for a period of 10 days thereafter (the
           "Section 4(b) Acceptance Period"), to accept all or any part of the
           Subject Stock so offered and not accepted by the Corporation (the
           "Refused Stock") at the purchase price, in cash, and on the terms
           stated in the Section 4 Offer Notice. Such acceptance shall be made
           by delivering a written notice to the Corporation and the selling
           Stockholder within the Section 4(b) Acceptance Period specifying the
           maximum number of shares such Other Stockholder will purchase (the
           "First Offer Shares"). If, upon the expiration of the Section 4(b)
           Acceptance Period, the aggregate amount of First Offer Shares exceeds
           the amount of Refused Stock, the Refused Stock shall be allocated
           among the Other Stockholders as follows: (i) First, each Stockholder
           shall be entitled to purchase up to its Proportionate Percentage of
           Refused Stock; (ii) Second, if any shares of Refused Stock have not
           been allocated for purchase pursuant to (i) above (the "Remaining
           Shares"), each Stockholder (an "Oversubscribed Stockholder") which
           had offered to purchase a number of shares of Refused Stock in excess
           of the amount of Stock allocated for purchase to it in accordance
           with previous allocations, shall be entitled to purchase an amount of
           Remaining Shares equal to up to its Proportionate Percentage
           (treating only Oversubscribed Stockholders as Stockholders for these
           purposes) of the Remaining Shares; and (iii) Third, the process set
           forth in (ii) above shall be repeated with respect to any shares of
           Refused Stock not allocated for purchase until all shares of Refused
           Stock are allocated for purchase.

                                       8
<PAGE>
                      (c) If effective acceptance shall not be received pursuant
           to Sections 4(a) and 4(b) above with respect to all of the Subject
           Stock offered for Sale pursuant to the Section 4 Offer Notice, then
           the selling Stockholder may Sell all or any portion of the Stock so
           offered for Sale and not so accepted, at a price not less than the
           price, and on terms not more favorable to the purchaser thereof than
           the terms, stated in the Section 4 Offer Notice at any time within 90
           days after the expiration of the Section 4(b) Acceptance Period (the
           "Sale Period"). To the extent the selling Stockholder Sells all or a
           portion of the Stock so offered for Sale during the Sale Period, the
           selling Stockholder shall promptly notify the Corporation, and the
           Corporation shall promptly notify the Other Stockholders, as to (i)
           the number of shares of Stock, if any, that the selling Stockholder
           then owns, (ii) the number of shares of Stock that the selling
           Stockholder has Sold, (iii) the terms of such Sale and (iv) the
           identity of the purchaser(s) of any shares of Stock Sold. In the
           event that all of the Stock is not Sold by the Selling Stockholder
           during the Sale Period, the right of the selling Stockholder to Sell
           such Stock shall expire and the obligations of this Section 4 shall
           be reinstated; provided, however, that, in the event that the selling
                          --------  -------
           Stockholder determines, at any time during the Sale Period, that the
           Sale of all of the Stock on the terms set forth in the Section 4
           Offer Notice is impractical, the selling Stockholder may terminate
           the offer and reinstate the procedure provided in this Section 4
           without waiting for the expiration of the Sale Period; and provided
                                                                      --------
           further, however, that the selling Stockholder shall not give a
           -------  -------
           Section 4 Offer Notice with respect to a transaction which would
           require compliance with this Section 4 for a period of at least 75
           days from the first day of the Sale Period.

                      (d) All Sales of Subject Stock to the Corporation or to
           one or more Other Stockholders subject to any one Section 4 Offer
           Notice shall be consummated at the offices of the Corporation on the
           later of (i) a mutually satisfactory business day within 20 days
           after the expiration of the Section 4(b) Acceptance Period or (ii)
           the fifth business day following the expiration or termination of all
           waiting periods under the Hart-Scott-Rodino Antitrust Improvements
           Act of 1976, as amended ("HSR"), applicable to such sales, or at such
           other time and/or place as the parties to such sales may agree. The
           delivery of certificates or other instruments evidencing such Subject
           Stock duly endorsed for transfer shall be made on such date against
           payment of the purchase price for such Subject Stock.

                      (e) Anything contained herein to the contrary
           notwithstanding, the selling Stockholder shall, in addition to
           complying with the provisions of this Section 4 in the event of a
           proposed Sale of Stock, comply with the provisions of Section 5
           hereof applicable to such Sale of Stock.

                      (f) The requirements of this Section 4 shall not apply to
           (i) any Sale of Stock by a Stockholder to an Affiliate of such
           Stockholder, (ii) any Sale of Stock by a Cohen Party, (iii) any Sale
           of Stock pursuant to Sections 5 or 6 of this Agreement, (iv) any Sale
           of Stock which is a Public Sale, (v) any Sale of Stock following the
           completion of a Qualified IPO, unless such Sale is a Ten Percent

                                       9
<PAGE>
           Sale, and (vi) any other Sale as to which the Corporation, GSCP and
           Cohen waive compliance with this Section 4.

                     SECTION 5. Tag-Along and Change of Control Rights. (a) In
                                --------------------------------------
the event that, following compliance with the provisions of Section 4 hereof (if
applicable), one or more of the Cohen Parties or the GSCP Parties proposes to
Sell (other than pursuant to a Public Sale) any Stock to a Person other than an
Affiliate of such Stockholder and other than a Person who is a Cohen Party or a
GSCP Party (a "Purchaser") (a "Disposition"), such party(ies) (the "Proposing
Holder(s)") shall provide notice (a "Proposal Notice") of such proposed
Disposition to the Other Stockholders no later than twenty (20) days prior to
the proposed closing of such Disposition (which 20 day period may run
concurrently with the periods set forth in Section 4, to the extent applicable).
Each Proposal Notice shall describe in reasonable detail the proposed terms of
the proposed Disposition (which 20 day period may run concurrently with the
periods set forth in Section 4, to the extent applicable, including, without
limitation, (i) the identity and address of the Purchaser, (ii) the proposed
amount to be paid by the Purchaser to the Proposing Holder(s), (iii) the amount
and type of Stock proposed to be Sold and (iv) any other material terms or
conditions of such proposed Disposition, and shall include a statement to the
effect that the Purchaser has been informed of the Tag-Along Rights (as defined
herein) and an acknowledgment by the Purchaser indicating that it has been so
informed and agrees to such terms. A copy of the Proposal Notice shall promptly
be sent to the Corporation.

                     (b) With respect to each proposed Disposition, the
Stockholders shall have the following right (the "Tag-Along Right"):

                                 (i) subject to Section 5(f) hereof, in the case
                      in which the Proposing Holder(s) is one or more of the
                      Cohen Parties, each Other Stockholder shall have the right
                      to require the Purchaser to purchase from such Other
                      Stockholder and at the Disposition Price (as defined
                      below) all or a portion of the number of shares of Common
                      Stock which, in accordance with Section 2 hereof,
                      represents the number of shares of Common Stock obtained
                      by multiplying (A) a fraction, the numerator of which is
                      the number of shares of Common Stock represented by the
                      Stock proposed to be sold (as indicated in the Proposing
                      Notice) and the denominator of which is the number of
                      shares of Common Stock Beneficially Owned by the Cohen
                      Parties as of the date of the Proposal Notice, times (B)
                      the number of shares of Common Stock Beneficially Owned by
                      the Other Stockholder as of the date of the Proposal
                      Notice; and

                                 (ii) in the case in which the Proposing
                      Holder(s) is one or more of the GSCP Parties, each Cohen
                      Party shall have the right to require the Purchaser to
                      purchase from such Cohen Party and at the Disposition
                      Price a number of shares of Common Stock which represents
                      the product of (a) the aggregate number of shares of Stock
                      proposed to be sold by the GSCP Parties by (b) a fraction,
                      the numerator of which is (i) the number of shares of
                      Stock Beneficially Owned by such Cohen Party and the
                      denominator of which is (ii) the number of shares of Stock
                      Beneficially Owned by all Cohen Parties.

                                       10
<PAGE>
                     (c) For purposes of this Agreement, the following terms
shall have the meanings set forth below:

                     "Disposition Price" shall mean (i) with respect to a share
of Common Stock, the Per Share Price and (ii) with respect to a Common Stock
Equivalent, an amount substantially equal to the Per Share Price taking into
account any other relevant factors with respect to such Common Stock Equivalent.

                     "Per Share Price" shall mean an amount equal to the
quotient obtained by dividing (i) the number of shares of Common Stock
(including shares of Common Stock obtainable upon the conversion or exercise of
Common Stock Equivalents) proposed to be sold by the Proposing Holder as set
forth in the Proposal Notice by (ii) the aggregate purchase price to be paid by
the Purchaser in respect of such Stock.

                     (d) Each Stockholder electing to exercise its or his
Tag-Along Rights shall give written notice of its or his election to the
Proposing Holder(s) no later than ten (10) days after its receipt of a Proposal
Notice (the "Expiration Date").

                     (e) All Sales of Stock to the Purchaser shall be
consummated contemporaneously at the offices of the Corporation on the later of
(i) a mutually satisfactory business day as soon as practicable, but in no event
more than 60 days after the Expiration Date or (ii) the fifth business day
following the expiration or termination of all waiting periods under HSR
applicable to such sales, or at such other time and/or place as the parties to
such sales may agree. The delivery of certificates or other instruments
evidencing such Stock duly endorsed for transfer shall be made on such date
against payment of the purchase price for such Stock.

                     (f) Notwithstanding the other provisions of this Section 5,
in the case of a Disposition proposed by one or more of the Cohen Parties which,
if consummated, would be a Control Transaction, the Tag-Along Right of the Other
Stockholders shall be a right to require the Purchaser to purchase from the
Other Stockholders all of the Common Stock Beneficially Owned by the Other
Stockholders at a per share purchase price equal to the average of the per share
prices paid over the preceding 18 months and proposed to be paid in the
Disposition by the Purchaser to the Cohen Parties for Stock.

                     SECTION 6. Bring-Along Rights. (a) If, at any time prior to
                                ------------------
the completion of a Qualified IPO, the Cohen Parties shall, whether alone or in
concert with any other Stockholder, propose to Sell to any Person or Persons who
are not, and following such Sale will not be, affiliated with any of such
Stockholder(s) (collectively, a "Buying Stockholder"), in a bona fide
arm's-length transaction or series of transactions, including by way of a
purchase agreement, tender offer, merger or other business combination
transaction or otherwise, 50% or more in aggregate of the then outstanding
Common Stock on a fully diluted basis (any such transaction being referred to
herein as an "Exit Sale"), then the Cohen Parties may elect to require all other
Stockholders to Sell all shares of Stock Beneficially Owned by each of them
concurrently with such Exit Sale to such Buying Stockholder at the same purchase
price per share (and, in the case of Common Stock Equivalents, such purchase
price per share multiplied by the number of shares of Common Stock issuable upon
the conversion, exchange or exercise of such Common Stock Equivalent) and upon
the same terms and subject to the conditions of the Exit Sale, provided that the

                                       11
<PAGE>
Cohen Parties may make such election only if all other holders of Stock other
than Stockholders are similarly required to Sell all shares of Stock
Beneficially Owned by each of them concurrently with the Exit Sale.

                     (b) The rights set forth in Section 6(a) shall be exercised
by giving written notice (the "Section 6 Notice") to each Stockholder setting
forth in detail the terms of the proposed Sale and the proposed closing date of
the Exit Sale, which proposed date shall not be less than 15 or more than 60
days after such Section 6 Notice is delivered to the Stockholders.

                     (c) All Sales of Stock to the Buying Stockholder pursuant
to this Section 6 shall be consummated contemporaneously at the offices of the
Corporation on the later of (i) a business day not less than 15 or more than 60
days after the Section 6 Notice is delivered to the Stockholders or (ii) the
fifth business day following the expiration or termination of all waiting
periods under HSR applicable to such sales, or at such other time and/or place
as the parties to such sales may agree. The delivery of certificates or other
instruments evidencing such Stock duly endorsed for transfer shall be made on
such date against payment of the purchase price for such Stock.

                     (d) Anything contained herein to the contrary
notwithstanding, if Cohen proposes to Sell Stock in a Sale that would be subject
to this Section 6, Cohen shall, in addition to complying with the provisions of
this Section 6, comply with the provisions of Section 5 hereof.

                     SECTION 7. Preemptive Rights. Subject to the terms and
                                -----------------
conditions specified in this Section 7, prior to the completion of a Qualified
IPO, in the event that the Corporation proposes to offer any shares of Common
Stock or any Common Stock Equivalents (a "Preemptive Issuance"), the Corporation
shall make an offering of such securities to each of the Stockholders in
accordance with the following provisions:

                     (a) The Corporation shall deliver a notice (the "Notice")
to each of the Stockholders stating (i) its bona fide intention to offer such
securities, (ii) the number of such securities to be offered and (iii) the price
and terms, if any, upon which it proposes to offer such securities.

                     (b) By written notification received by the Corporation,
within fifteen (15) calendar days after giving of the Notice, each of the
Stockholders may elect to purchase or obtain, at the price (the "Price") and on
the terms specified in the Notice, up to that number or amount of such new
Common Stock or Common Stock Equivalents, such that (x) the percentage of the
outstanding Stock Beneficially Owned by such Stockholder and its Affiliates
after the Preemptive Issuance (assuming full conversion of all convertible
securities, but not taking into account with respect to any Preemptive Issuance
any unexercised Warrants with an exercise price greater than the Price and after
giving effect to any adjustments in the number of shares of Common Stock

                                       12
<PAGE>
issuable upon exchange or conversion of any Common Stock Equivalent which will
result from the Preemptive Issuance), equals (y) the percentage of the
outstanding Stock Beneficially Owned by such Stockholder and its Affiliates
immediately prior to the Preemptive Issuance (assuming full conversion of all
convertible securities, but not taking into account with respect to any
Preemptive Issuance any unexercised Warrants with an exercise price greater than
the Price, and after giving effect to any adjustments in the number of shares of
Common Stock issuable upon exchange or conversion of any Common Stock Equivalent
which will result from the Preemptive Issuance). Any Stockholder may assign his
or its right to purchase Common Stock or Common Stock Equivalents hereunder to
his or its respective Affiliates.

                     (c) If all securities referred to in the Notice which the
Stockholders are entitled to purchase pursuant to subsection (b) are not elected
to be purchased as provided in subsection (b), the Corporation may, during the
one hundred twenty (120) day period following the expiration of the twenty (20)
day period provided in subsection (b) hereof, offer the remaining unsubscribed
portion of such securities to any Person or Persons at a price not less than the
Price, and upon terms no more favorable to the offeree than those specified in
the Notice. If the Corporation does not enter into an agreement for the sale of
such securities within such period, or if such agreement is not consummated
within sixty (60) days of the execution thereof, the right provided thereunder
shall be deemed to be revived and such securities shall not be offered unless
first reoffered in accordance with this Section 7.

                     (d) This Section 7 shall not be applicable with respect to:

                                 (i) Common Stock and/or Common Stock
                      Equivalents issuable or issued to employees or outside
                      directors of the Corporation directly or pursuant to a
                      stock option plan, restricted stock plan or similar
                      employee plan or agreement (including any employment
                      agreement) approved by the Board in accordance with
                      Section 9 hereof, the primary purpose of which is not to
                      raise additional equity capital for the Corporation;

                                 (ii) Common Stock issued or issuable upon
                      conversion or exercise of any securities outstanding on
                      the date hereof and set forth on Schedule 7 hereto, upon
                      conversion or exercise of the Common Stock Equivalents
                      referred to in clauses (i), (iii), (iv) or (v) hereof or
                      upon exercise of securities issued or issuable pursuant to
                      this Agreement:

                                 (iii) Common Stock and/or Common Stock
                      Equivalents issued or issuable as direct consideration for
                      the acquisition by the Corporation of capital stock or
                      assets of another business entity or in connection with a
                      merger or consolidation;

                                 (iv) Common Stock and/or Common Stock
                      Equivalents issued in any registered public offering of
                      the Corporation's securities; or

                                 (v) Preferred Stock issued or issuable to key
                      members of management, as contemplated by the Purchase
                      Agreement, the total number of such shares not to exceed
                      1% of the number of shares of Common Stock outstanding
                      (the "Management Shares").

                     SECTION 8. Corporate Governance.
                                --------------------

                     8.1. Board of Directors Prior to Qualified IPO. (a) (i)
                          -----------------------------------------
Except as otherwise set forth in this Section 8, pursuant to the By-Laws of the
Corporation, prior to a Qualified IPO, the number of members of the Board of

                                       13
<PAGE>
Directors of the Corporation shall be four (4), of whom three (3) shall be
designated by Cohen (the "Cohen Directors") and one (1) shall be designated by
GSCP. Simultaneously with the execution and delivery of this Agreement, the
Stockholders have elected Robert R. Grusky as the designee of GSCP to the Board
of Directors of the Corporation (the "Board").

                     (ii) Subject to subsections (iii), (iv) and (v) below, for
so long as the GSCP Parties shall Beneficially Own at least 5% of the
outstanding Common Stock of the Corporation ("Minimum Ownership"), (A) GSCP
shall be entitled to nominate one person to serve as a director at each meeting
of stockholders of the Corporation for the election of directors of the
Corporation and (B) in addition, GSCP shall have the right to designate an
additional representative to attend and observe Board of Directors meetings.

                     (iii) Pursuant to the By-Laws of the Corporation, the
initial quorum required for action by the Board of Directors of the Corporation
shall be a majority of the entire Board of Directors; provided, however, that at
                                                      --------  -------
least one GSCP Designee shall be present (in person or by telephone) at any
meeting of the Board of Directors of the Corporation to constitute a quorum.
GSCP shall be entitled to waive the requirements of this Section 8.1(a)(iii),
retroactively or prospectively, with respect to any particular meeting of the
Board of Directors.

                     (iv) GSCP and Cohen acknowledge that it would be beneficial
for the Corporation to add two (2) independent directors to the Board of
Directors and agree to cooperate with each other to select such additional
directors for addition to the Board of Directors at such time as GSCP and Cohen
shall agree (each such director, an "Independent Director"). Each Independent
Director shall be designated by Cohen and consented to by GSCP, which consent
will not be unreasonably withheld. In the event that two Independent Directors
are added to the Board of Directors, the number of members of the Board of
Directors of the Corporation shall be increased from four (4) to seven (7) and
the number of directors that Cohen shall be entitled to designate shall increase
from three (3) to four (4); provided, however, that, in the event that GSCP and
                            --------  -------
Cohen are able to agree upon the appointment of one Independent Director but not
two Independent Directors, the number of members of the Board of Directors of
the Corporation shall be increased from four (4) to five (5) and the number of
directors that Cohen shall be entitled to designate shall not increase.

                     (v) Notwithstanding the foregoing, in the event that Cohen
shall no longer serve as Chief Executive Officer of the Corporation or Cohen
ceases to have the sole right to vote in the aggregate at least 25% of the
number of shares of Common Stock Beneficially Owned by the Cohen Parties as of
the date hereof, or the Cohen Parties cease to Beneficially Own in the aggregate
at least 50% of the number of shares of Common Stock Beneficially Owned by the
Cohen Parties as of the date hereof: (x) GSCP shall be entitled to designate two
(2) directors; and (y)(A) if two Independent Directors were elected to the Board
prior thereto, pursuant to subsection (iv) above, the size of the Board of
Directors shall remain at seven (7), and Cohen shall thereafter be entitled to
designate three (3) directors, (B) if one Independent Director was elected to
the Board prior thereto, pursuant to subsection (iv) above, the size of the
Board shall remain at five (5), and Cohen shall thereafter be entitled to
designate two (2) directors, and (C) if Independent Directors were not yet
elected to the Board prior thereto, the size of the Board of Directors shall
remain at four (4), and Cohen shall be entitled to designate two (2) directors,

                                       14
<PAGE>
and Cohen and GSCP shall expeditiously cooperate to select two Independent
Directors agreeable to both of them, at which time Cohen shall be entitled to
designate three (3) directors and the size of the Board shall be increased to
seven (7).

                     (b) The provisions of this Section 8.1 shall terminate upon
the completion of a Qualified IPO or at such time as the GSCP Parties shall
cease to have Minimum Ownership.

                     8.2. Board of Directors In General. Notwithstanding any
                          -----------------------------
termination of the provisions of Section 8.1 pursuant to Section 8.1(b) above,
for a period of two years from the date hereof, GSCP shall designate one nominee
and the Corporation shall nominate such nominee of GSCP to be elected to the
Board. GSCP's designee(s) to the Board pursuant to Section 8.1 or this Section
8.2 are referred to as the "GSCP Designees." GSCP agrees that each GSCP Designee
shall be a partner or employee of Goldman, Sachs & Co. and shall otherwise be,
at the time he or she is designated by GSCP, reasonably acceptable to Cohen. Any
GSCP Designees shall have access to all information which is available to other
members of the Board of Directors in their capacity as such.

                     8.3. Vacancies. So long as GSCP is entitled to nominate one
                          ---------
or more directors pursuant to Sections 8.1 or 8.2 of this Agreement, each GSCP
Designee shall hold his office until his death or resignation or until his
successor shall have been duly elected and qualified. If any GSCP Designee shall
cease to serve as a director of the Corporation for any reason, the vacancy
resulting thereby shall be filled by another person designated by GSCP.

                     8.4. Committees; Subsidiaries. For so long as a GSCP
                          ------------------------
Designee shall serve on the Board of Directors of the Corporation:

                     (a) The Corporation shall cause a GSCP Designee determined
by GSCP or the sole GSCP Designee, as applicable, to be appointed to each of the
committees of the Board (other than any special Committee formed for the purpose
of acting with respect to transactions between the Corporation and GSCP or any
of its Affiliates) and to the Board of Directors of each subsidiary of the
Corporation.

                     (b) If the GSCP Designee serving on any such committee or
any such Board of Directors of a subsidiary shall cease to serve as a director
of the Corporation for any reason or otherwise is unable to fulfill his or her
duties on any such committee or Board of Directors, he or she shall be succeeded
by a GSCP Designee determined by GSCP.

                     8.5. Removal. The Corporation and each Stockholder agrees
                          -------
that no GSCP Designee shall be removed from office without the consent of GSCP.

                     8.6. Directors' Indemnification. (a) The Corporation shall
                          --------------------------
obtain and cause to be maintained in effect, with financially sound insurers, a
policy of directors' and officers' liability insurance upon such terms and in
such amount as is reasonably acceptable to GSCP.

                     (b) The Corporation's Certificate of Incorporation or
By-Laws, or both, shall provide for indemnification of, and advancement of
expenses to, the directors of the Corporation to the fullest extent permitted by
law, which provisions shall not be amended, repealed or otherwise modified in

                                       15
<PAGE>
any manner adverse to the directors until at least 6 years following the date
that GSCP is no longer entitled to nominate directors pursuant to this Section
8.

                     8.7. Expenses. The Corporation shall pay all reasonable
                          --------
travel expenses and other out-of-pocket disbursements incurred by any GSCP
Designee or any observer appointed by GSCP to attend meetings of the Board of
Directors or any Cohen Director in connection with attending meetings of the
Board of Directors of the Corporation.

                     8.8. Attendance. GSCP shall use its reasonable best efforts
                          ----------
to cause any GSCP Designee to be present (in person or via telephone) at every
meeting of the Board of Directors and of each committee established by the
Board.

                     8.9. Voting Arrangement. So long as GSCP is entitled to
                          ------------------
nominate one or more persons to serve as directors pursuant to Sections 8.1 and
8.2 hereof, each Stockholder agrees to vote all shares of capital stock of the
Corporation Beneficially Owned by it with respect to the election or removal, to
or from the Board of Directors of the Corporation, of the Cohen Designees and
the GSCP Designees in a manner to effectuate the provisions of this Section 8.

                     SECTION 9. Major Transactions. (a) So long as GSCP shall
                                ------------------
have the right, pursuant to Section 8.1, to nominate one or more persons to
serve as directors of the Corporation, and until the completion of a Qualified
IPO, the Corporation shall not, and shall cause its subsidiaries (if any) not
to, directly or indirectly, take any of the following actions without the prior
written approval of at least 51% of the Board of Directors of the Corporation,
which must include the approval of at least one GSCP Designee (except as
expressly permitted by this Agreement and except that the taking of the
following actions shall not require such approval if such actions are
specifically approved as part of an annual budget of the Corporation as to which
such consent has been given):

                                 (i) consolidate or merge into or with any other
                      Person, or enter into any other similar business
                      combination transaction;

                                 (ii) liquidate, dissolve or wind up, either
                      voluntarily or involuntarily;

                                 (iii) purchase, acquire or obtain any capital
                      stock or other proprietary interest, directly or
                      indirectly, in any other entity or all or substantially
                      all of the business or assets of another Person for
                      consideration (including assumed liabilities) in excess of
                      $1,000,000 (other than any such acquisition effected for
                      the sole purpose of acquiring supplies or inventories and
                      in which no material liabilities are assumed, directly or
                      indirectly, by the Corporation);

                                 (iv) enter into any material joint ventures or
                      partnerships or establish any non-wholly-owned
                      subsidiaries, in each case where the contribution or
                      investment by the Corporation is in excess of $1,000,000
                      in cash or assets;

                                 (v) expand into new lines of business
                      subtantially unrelated to the Corporation's existing lines
                      of business, other than any such expansion as does not
                      involve expenditures by the Corporation, or the incurrence
                      of obligations or commitments by the Corporation, of an

                                       16
<PAGE>
                      aggregate amount in excess of $100,000 in any twelve (12)
                      month period;

                                 (vi) sell, lease, transfer or otherwise dispose
                      of any asset or group of assets (other than sales of
                      inventory to customers in the ordinary course of
                      business), in one transaction or a series of related
                      transactions, for consideration in excess of $1,000,000 in
                      any twelve (12) month period;

                                 (vii) create, incur, assume or suffer to exist
                      any indebtedness of the Corporation for borrowed money
                      (which shall include for purposes hereof Capitalized Lease
                      Obligations and guarantees or other contingent obligations
                      for indebtedness for borrowed money), (A) unless such
                      indebtedness constitutes (x) Senior Debt of the
                      Corporation, (y) Capitalized Lease Obligations of the
                      Corporation not in excess of $1 million or short-term
                      Capitalized Lease Obligations of the Corporation in any
                      amount or (z) the Notes or any notes issued to holders of
                      Preferred Stock in respect of dividend obligations; (B) if
                      as a result thereof the aggregate amount of Senior Debt of
                      the Corporation outstanding would exceed 200% of EBIT of
                      the Corporation for the period of the twelve (12) then
                      most recently completed months; or (C) if as a result
                      thereof EBIT of the Corporation for the period of the
                      twelve (12) then most recently completed months would be
                      less than 300% of the Pro Forma Interest Charges of the
                      Corporation;

                                 (viii) mortgage, encumber, or create or incur
                      liens on, its assets, except in connection with any
                      indebtedness permitted under subclause (vii) or as may be
                      imposed by operation of law;

                                 (ix) enter into or materially amend any
                      contract (other than any purchase order or any contract
                      the purchase obligation pursuant to which does not extend
                      over a period of more than 30 days) with a vendor which
                      relates, together with all other contracts (other than
                      those referred to in the previous parenthetical) with such
                      vendor, to 25% or more of the Corporation's annual supply
                      or inventory of computer chips, or any material license
                      agreement as to which the Corporation is the licensee and
                      which involves payments in excess of $300,000 or more in
                      any twelve (12) month period;

                                 (x) pay, or set aside any sums for the payment
                      of, any dividends (other than payments made or proposed to
                      be made with respect to the Dividend, as defined in the
                      Purchase Agreement), or make any distribution on, any
                      shares of its capital stock or redeem, repurchase or
                      otherwise acquire any outstanding shares of its capital
                      stock or any other of its outstanding securities or debt
                      for borrowed money (including capital leases) (except for
                      indebtedness to the extent it becomes due in accordance
                      with its terms or except as contemplated or permitted by
                      this Agreement or any stock-based employee plan) or issue,
                      sell or grant any capital stock or other securities (other
                      than the Management Shares, upon conversion of the
                      Preferred Stock or exercise of the Warrants or pursuant to
                      previously approved employee benefit, compensation or
                      incentive plans or agreements) except for dividends or

                                       17
<PAGE>
                      other distributions payable on the Common Stock solely in
                      the form of additional shares of Common Stock and except
                      for (A) the purchase of shares of capital stock from
                      former members of key management of the Corporation who
                      acquired such shares directly from the Corporation, if
                      each such purchase is made pursuant to contractual rights
                      or obligations of the Corporation relating to the
                      termination of employment of such former employee, (B) the
                      issuance to a member of key management of the Corporation
                      of shares of capital stock previously repurchased by the
                      Corporation from any other key management stockholder or
                      (C) any substantial concurrent purchase of shares of
                      capital stock from a management stockholder and sale of
                      the shares so repurchased to one or more other members of
                      key management of the Corporation;

                                 (xi) make or commit to make capital
                      expenditures in excess of $1,000,000 per occurrence or
                      capital expenditures in any twelve (12) month period in an
                      aggregate amount in excess of $4,000,000;

                                 (xii) register any securities under the
                      Securities Act (other than Management Shares or pursuant
                      to registration rights granted under the Registration
                      Rights Agreement or any employee benefit, compensation or
                      incentive plan or agreement), or grant any registration
                      rights (other than registration rights granted under the
                      Registration Rights Agreement or any employee benefit,
                      compensation or incentive plan or agreement);

                                 (xiii) enter into any transaction with Cohen or
                      any Cohen Affiliate (other than transactions in the
                      ordinary course of business with respect to less than
                      $50,000 annually or pursuant to the terms of existing
                      contracts or instruments contemplated by or referred to in
                      the Purchase Agreement or disclosed in the Schedules
                      thereto);

                                 (xiv) amend the Corporation's Certificate of
                      Incorporation (or file any Certificate of Designation) or
                      By-Laws, the Notes or the Dividend Remittitur and Pledge
                      Agreement, amend, modify or waive any provision of this
                      Agreement or the Registration Rights Agreement which
                      adversely affects the rights of GSCP Parties, or become a
                      party to any agreement which by its terms restricts the
                      Corporation's performance of, the terms of this Agreement,
                      the Registration Rights Agreement or any other material
                      documentation relating hereto the Notes, the Dividend
                      Remittitur and Pledge Agreement, the Certificate of
                      Incorporation or the By-Laws, including, without
                      limitation, any change in the number of directors
                      comprising the Board of Directors;

                                 (xv) change the independent certified
                      accountants of the Corporation;

                                 (xvi) approve the Corporation's annual budget;

                                 (xvii) adopt or make any material amendment to
                      any employee benefit plan of the Corporation; provided,
                      however, that, other than with respect to any
                      stock-related employee benefit plan, such approval will
                      not be required unless such adoption or amendment

                                       18
<PAGE>
                      materially increases the aggregate compensation-related
                      costs of the Corporation;

                                 (xviii) increase the total annual cash
                      compensation of Cohen to in excess of $1,000,000;

                                 (xix) appoint or remove any person to or from
                      the positions of Chief Executive Officer (other than
                      Cohen), President, Chief Financial Officer, Chief
                      Operating Officer or General Counsel of the Corporation,
                      or enter into an employment agreement with any person
                      selected for, or holding, any such office, it being
                      understood that such approval will not be required for any
                      determination regarding the rate, amount or form of
                      compensation or benefits (other than stock-based
                      compensation or benefits) payable to any such employee,
                      other than as set forth in such employment agreement; or

                                 (xx) optionally prepay either of the Notes.

Notwithstanding the above, no approval otherwise required by this Section 9(a)
shall be required for (A) any action or transaction which will not become
effective until or following the consummation of a Qualified IPO, to the extent
that such action or transaction does not (i) adversely affect in any material
respect the Corporation's ability to consummate a Qualified IPO or (ii)
adversely affect a GSCP Party's rights under the Registration Rights Agreement
or (B) the Corporation to agree to an increase or decrease of the interest rate
payable under the $5,140,000 Note.

                     (b) Following the completion of a Qualified IPO, for so
long as the GSCP Parties own any Stock of the Corporation, without the approval
of two-thirds of the Board members not affiliated with Cohen or not employed by
the Corporation, the Corporation shall not, and shall cause its subsidiaries (if
any), not to, enter into (i) any sale, lease, exchange, mortgage, pledge, grant
of a security interest, transfer or other disposition (in one transaction or a
series of transactions) of assets of the Corporation (including, without
limitation, any voting securities of a subsidiary) or any subsidiary to or from
any Cohen Party (other than pursuant to this Agreement), (ii) any merger or
consolidation of the Corporation or a subsidiary with any Cohen Affiliate, (iii)
the issuance or transfer by the Corporation or any subsidiary (in one
transaction or a series of transactions) of any securities of the Corporation or
any subsidiary, or both, to or from any Cohen Party, (iv) the adoption of any
plan or proposal for the liquidation or dissolution of the Corporation, or (v)
any reclassification of securities (including any reverse stock split), or
recapitalization of the Corporation, or any merger or consolidation of the
Corporation with any of its subsidiaries or any other transaction with any Cohen
Party which has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any subsidiary directly or
indirectly beneficially owned by Cohen or an Affiliate of Cohen.

                     (c) Notwithstanding any provision hereof to the contrary,
(i) all references to the Corporation in this Section 9 shall be deemed to be
references to the Corporation and its direct and indirect subsidiaries
considered on a consolidated basis, (ii) any transactions, agreements or
arrangements between or among the Corporation and/or direct or indirect
wholly-owned subsidiaries of the Corporation shall not be subject to any of the

                                       19
<PAGE>
approvals contemplated by this Section 9, and (iii) for purposes of the
foregoing, PNY Electronics Europe S.A. shall be deemed to be a wholly-owned
subsidiary of the Corporation.

                     (d) The Corporation shall, at the request of a GSCP
Designee, give notice to Cohen of the extension of the maturity date of the Note
pursuant to Section 1.4 of the $5,140,000 Note.

                     SECTION 10. Representations and Warranties. (a) Each party
                                 ------------------------------
hereto represents and warrants to the other parties hereto as follows:

                                 (i) It has full power and authority to execute,
                      deliver and perform its obligations under this Agreement.

                                 (ii) This Agreement has been duly and validly
                      authorized, executed and delivered by it, and constitutes
                      a valid and binding obligation of it, enforceable against
                      it in accordance with its terms except to the extent that
                      enforceability may be limited by bankruptcy, insolvency or
                      other similar laws affecting creditors' rights generally.

                                 (iii) The execution, delivery and performance
                      of this Agreement by it does not (x) violate, conflict
                      with, or constitute a breach of or default under its
                      organizational documents, if any, or any material
                      agreement to which it is a party or by which it is bound
                      or (y) violate any law, regulation, order writ, judgment,
                      injunction or decree applicable to it.

                                 (iv) No consent or approval of, or filing with,
                      any governmental or regulatory body is required to be
                      obtained or made by it in connection with the transactions
                      contemplated hereby.

                     (b) Cohen represents and warrants to GSCP and the GSCP
Investors as follows:

                                 (i) Schedule 10 hereto sets forth a list of all
                      securities of the Corporation (including, without
                      limitation, shares of capital stock, convertible
                      securities, debentures, etc.) held of record or
                      Beneficially Owned by him as of the date hereof.

                                 (ii) Except as set forth on Schedule 10 hereto,
                      he is not a party to any contract or agreement, written or
                      oral, (i) with respect to the securities of the
                      Corporation (including, without limitation, any voting
                      agreement, voting trust, stockholder's agreement,
                      registration rights agreement, etc.) or (ii) otherwise
                      with or relating to the Corporation.

                     SECTION 11. No Inconsistent Agreements. Neither the
                                 --------------------------
Corporation nor any Stockholder shall take any action or enter into any
agreement which is inconsistent with the rights of any party hereunder or
otherwise conflicts with the provisions hereof.

                                       20
<PAGE>
                     SECTION 12. Further Assurances. (a) At any time or from
                                 ------------------
time to time, the parties agree to cooperate with each other, and at the request
of any other party, to execute and deliver any further instruments or documents
and to take all such further action as the other party may reasonably request in
order to evidence or effectuate the consummation of the transactions
contemplated hereby and to otherwise carry out the intent of the parties
hereunder.

                     (b) At any time or from time to time, the parties agree to
take all action including, without limitation, voting to approve any amendment
to the Articles of Incorporation or the By-Laws, required to increase the
authorized number of shares of Common Stock, if necessary to permit the
conversion of all outstanding shares of Series A Preferred Stock, or to reflect
changes in the size of the Board of Directors pursuant to Section 8 hereof.

                     SECTION 13. Duration of Agreement. (a) Subject to Sections
                                 ---------------------
13(b), (c) and (d) and to Section 8.2, the rights and obligations of each
Stockholder under this Agreement shall terminate as to such Stockholder upon the
earlier to occur of (a) such Stockholder no longer being the Beneficial Owner of
any shares of Stock, and (b) the twenty-first anniversary of the date hereof
(subject to extension if and to the extent permitted under applicable state
law).

                     (b) The rights and obligations of the parties hereto under
Sections 6, 7 and 9(a) of this Agreement shall terminate upon the closing of the
sale of shares of Common Stock in a Qualified IPO.

                     (c) In the event that the GSCP Parties cease to have
Minimum Ownership, the rights and obligations of the parties hereto under
Sections 7, 8 and 9 of this Agreement shall terminate.

                     (d) In the event that (i) Cohen ceases to have the sole
right to vote in the aggregate at least 25%, or the Cohen Parties cease to
Beneficially Own in the aggregate at least 50%, of the number of shares of
Common Stock Beneficially Owned by the Cohen Parties as of the date hereof or
(ii) Cohen ceases to serve as the Chief Executive Officer of the Corporation,
all of the restrictions on Sales of Stock applicable to GSCP Parties under
Sections 3, 4, 5 and 6 of this Agreement, except the restrictions set forth in
Sections 3(d) and 3(e), shall terminate as to the GSCP Parties.

                     SECTION 14. Legends. Each certificate representing Warrants
                                 -------
or shares of Preferred Stock or, upon exercise of Warrants, Common Stock issued
thereunder held by a Stockholder shall bear a legend containing the following
words:

                      "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
                      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
                      AMENDED. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
                      AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
                      EXCEPT IN COMPLIANCE WITH SUCH ACT."

                      "IN ADDITION, THE SECURITIES REPRESENTED BY THIS
                      CERTIFICATE ARE SUBJECT TO THE RESTRICTIONS ON TRANSFER
                      AND CERTAIN VOTING REQUIREMENTS SET FORTH IN THE PREFERRED

                                       21
<PAGE>
                      STOCK AND WARRANT PURCHASE AGREEMENT, DATED AS OF AUGUST
                      4, 1995, AND IN THE STOCKHOLDER AGREEMENT, DATED AS OF
                      AUGUST 4, 1995, BY AND AMONG P.N.Y. ELECTRONICS, INC.,
                      GADI COHEN, G.S. CAPITAL PARTNERS II, L.P., GS CAPITAL
                      PARTNERS II OFFSHORE, L.P., GOLDMAN, SACHS & CO.
                      VERWALTUNGS GmbH, STONE STREET FUND 1995, L.P. AND BRIDGE
                      STREET FUND 1995, L.P., COPIES OF WHICH ARE ON FILE IN THE
                      OFFICE OF P.N.Y. ELECTRONICS, INC."

                     The requirement that the above legend be placed upon
certificates evidencing any such securities shall cease and terminate upon the
earliest of the following events: (i) when such shares are transferred in an
underwritten public offering, (ii) when such shares are transferred pursuant to
Rule 144 under the Securities Act and (iii) the termination of this Agreement.
Upon the occurrence of such event, the Corporation, upon the surrender of
certificates containing such legend, shall, at its own expense, deliver to the
holder of any such shares as to which the requirement for such legend shall have
terminated, one or more new certificates evidencing such shares not bearing such
legend.

                     SECTION 15. Severability. Whenever possible, each provision
                                 ------------
of this Agreement shall be interpreted in such manner as to be effective and
valid, but if any provision of this Agreement is held to be invalid or
unenforceable in any respect, such invalidity or unenforceability shall not
render invalid or unenforceable any other provision of this Agreement.

                     SECTION 16. Governing Law. This Agreement shall be governed
                                 -------------
by and construed in accordance with the laws of the State of New York without
giving effect to the principles of conflicts of law. Each of the parties hereto
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of New York and of the United States of
America, in each case located in the County of New York, for any action,
proceeding or investigation in any court or before any governmental authority
("Litigation") arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any Litigation relating thereto
except in such courts), and further agrees that service of any process, summons,
notice or document by U.S. registered mail to its respective address set forth
in this Agreement shall be effective service of process for any Litigation
brought against it in any such court. Each of the parties hereto hereby
irrevocably and unconditionally waives any objection to the laying of venue of
any Litigation arising out of this Agreement or the transactions contemplated
hereby in the courts of the State of New York or the United States of America,
in each case located in the County of New York, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such Litigation brought in any such court has been brought in an
inconvenient forum.

                     SECTION 17. Successors and Assigns. This Agreement shall
                                 ----------------------
inure to the benefit of and shall be binding upon the parties hereto and their
respective successors, heirs, personal representatives and permitted assigns.
Except pursuant to a Sale of Stock by a Stockholder to an Affiliate of such
Stockholder, no Stockholder shall have the right to assign its rights and
obligations under this Agreement without the consent of the GSCP Parties, the

                                       22
<PAGE>
Cohen Parties and the Corporation. The parties further acknowledge that any GSCP
Party and any Cohen Party, as the case may be, may transfer and assign all or a
part of its rights and obligations (to the extent legally permissible) under
this Agreement to one or more other GSCP Parties or Cohen Parties, respectively,
without the consent of the Corporation or any other Stockholder; upon any such
assignment, such assignee shall have and be able to exercise those rights of the
assigning Stockholder so assigned.

                     SECTION 18. Notices. All notices, requests, consents and
                                 -------
other communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or by telecopy, nationally
recognized overnight courier or first class registered or certified mail, return
receipt requested, postage prepaid, addressed to such party at the address set
forth below or such other address as may hereafter be designated in writing by
such party to the other parties:

                     (i) if to the Corporation, to:

                                P.N.Y. Electronics, Inc.
                                200 Anderson Avenue
                                Moonachie, New Jersey  07074
                                Telecopy:  (201) 438-9097
                                Attention:  Mr. Gadi Cohen

                                with copies to:

                                Klein & Hill
                                521 Fifth Avenue
                                New York, New York  10175
                                Telecopy:  (212) 697-9570
                                Attention:  Reuven Klein, Esq.
                                            Gadi Hill, Esq.

                                and

                                Milbank, Tweed, Hadley & McCloy
                                One Chase Manhattan Plaza
                                New York, New York  10005
                                Telecopy:  (212) 530-5219
                                Attention:  Michael W. Goroff, Esq.

                     (ii) if to GSCP or any GSCP Party, to:

                                GS Capital Partners II, L.P.
                                85 Broad Street
                                New York, New York 10004
                                Telecopy:  (212) 902-3000
                                Attention:  Robert R. Grusky

                                       23
<PAGE>
                                with a copy to:

                                Fried, Frank, Harris, Shriver & Jacobson
                                One New York Plaza
                                New York, New York  10004
                                Telecopy:  (212) 820-8586
                                Attention:  Paul M. Reinstein, Esq.

                     (iii) if to Cohen or any Cohen Party, to:

                                Gadi Cohen
                                8 Shinnecock Trail
                                Franklin Lakes, New Jersey 07417

                                with copies to:

                                Klein & Hill
                                521 Fifth Avenue
                                New York, New York  10175
                                Telecopy:  (212) 697-9570
                                Attention:  Reuven Klein, Esq.
                                            Gadi Hill, Esq.

                                and

                                Milbank, Tweed, Hadley & McCloy
                                One Chase Manhattan Plaza
                                New York, New York  10005
                                Telecopy:  (212) 530-5219
                                Attention:  Michael W. Goroff, Esq.

All such notices, requests, consents and other communications shall be deemed to
have been given when received.

                     SECTION 19. Amendments. The terms and provisions of this
                                 ----------
Agreement may be modified or amended, or any of the provisions hereof waived,
temporarily or permanently, pursuant to the written consent of the parties
hereto or, in the case of a waiver by a particular party of any specific right
of such party hereunder, pursuant to a written waiver or consent executed by
such party and delivered to the Corporation. In addition, to the extent any
modification, amendment or waiver does not adversely affect any other
Stockholder, the terms and provisions of this Agreement may be modified or
amended, or any of the provisions hereof waived, temporarily or permanently,
pursuant to the written consent of GSCP and Cohen.

                     SECTION 20. Headings. The headings of the Sections of this
                                 --------
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.

                                       24
<PAGE>
                     SECTION 21. Nouns and Pronouns. Whenever the context
                                 ------------------
requires, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of names and pronouns shall
include the plural and vice-versa.

                     SECTION 22. Entire Agreement. This Agreement and the other
                                 ----------------
writings referred to herein or delivered pursuant hereto which form a part
hereof contain the entire agreement among the parties hereto with respect to the
subject matter hereof and supersede all prior and contemporaneous agreements and
understandings with respect thereto.

                     SECTION 23. Third Parties. Except as specifically set forth
                                 -------------
or referred to herein, nothing herein expressed or implied is intended or shall
be construed to confer upon or give to any person or corporation, other than the
parties hereto and their successors or permitted assigns, any rights or remedies
under or by reason of this Agreement.

                     SECTION 24. Counterparts. This Agreement may be executed in
                                 ------------
any number of counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.

                                       25
<PAGE>
                     IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.

                  P.N.Y. ELECTRONICS, INC.

                  By:  /s/ Gadi Cohen
                       --------------------------------------------------------
                       Gadi Cohen, President and Chief
                       Executive Officer

                  GS CAPITAL PARTNERS II, L.P.

                  By:  GS Advisors, L.P., its general partner
                         By:  GS Advisors, Inc., its general partner

                  By:  /s/ Joseph P. DiSabato
                       --------------------------------------------------------
                         Joseph P. DiSabato, attorney-in-fact

                  GS CAPITAL PARTNERS II OFFSHORE, L.P.

                  By:  GS Advisors, II (Cayman), L.P., its general partner
                       By:  GS Advisors II, Inc., its general partner

                  By:  /s/ Joseph P. DiSabato
                       --------------------------------------------------------
                       Joseph P. DiSabato, attorney-in-fact

                  GOLDMAN, SACHS & CO. VERWALTUNGS GmbH

                  By:  /s/ Joseph P. DiSabato
                       --------------------------------------------------------
                       Joseph P. DiSabato, attorney-in-fact

                  and

                  By:  /s/ Terence O'Toole
                       --------------------------------------------------------
                       Terence O'Toole, Managing Director

                  STONE STREET FUND 1995, L.P.

                  By: Stone Street Value Corp., General Partner

                  By:  /s/ Joseph P. DiSabato
                       --------------------------------------------------------
                       Joseph P. DiSabato, attorney-in-fact

                                       26
<PAGE>
                  BRIDGE STREET FUND 1995, L.P.

                  By: Stone Street Value Corp., Managing General Partner

                  By:  /s/ Joseph P. DiSabato
                       --------------------------------------------------------
                       Joseph P. DiSabato, attorney-in-fact

                  /s/ Gadi Cohen
                  -------------------------------------------------------------
                  GADI COHEN

                                       27
<PAGE>
                                                              SCHEDULE 1.11(a)

                           Pre-IPO Designated Parties
                           --------------------------

1.         Kingston Technology
           Fountain Valley, Calif.

2.         Micron Semiconductor, Inc.

3.         Texas Instruments

4.         Samsung

5.         Hyundai
<PAGE>
                                                               SCHEDULE 1.11(b)

                           Post-IPO Designated Parties
                           ---------------------------

1.         Kingston Technology
           Fountain Valley, Calif.

2.         Micron Semiconductor, Inc.

3.         Texas Instruments

4.         Samsung

5.         Hyundai

6.         Any other company or other entity that is engaged in or is about to
           become engaged, directly or indirectly, in a business or operation
           which is engaged in the marketing, manufacture, production, service
           or other use of memory modules or memory upgrades or other brokerage
           of any semi-conductor chip or is otherwise in competition with, or in
           the same line or lines of business as, the Corporation.
<PAGE>
                                                                    SCHEDULE 7

                             Outstanding Securities
                             ----------------------

Gadi Cohen                     -     86,000 shares of Common Stock

GSCP and Affiliates            -     13,000 shares of Preferred Stock and
                                     Warrants to Purchase 4,875 shares of
                                     Common Stock
<PAGE>
                                                                   SCHEDULE 10

                                 Representations
                                 ---------------

(i)        86,000 shares of Common Stock

(ii)       Stockholder Agreement, dated as of August 4, 1995

           Registration Rights Agreement, dated as of August 4, 1995

           $15,000,000 Subordinated Note

           $5,140,000 Subordinated Note

           Dividend Remittitur and Pledge Agreement

           Loan Account with the Corporation<PAGE>
                                                                 EXHIBIT 10.6

$9,810,000.00                                                  December 5, 2000

                                Subordinated Note

                     FOR VALUE RECEIVED, PNY Technologies, Inc., a Delaware
corporation (together with its successors and permitted assigns, the "Company"),
                                                                     ---------
hereby unconditionally promises to pay to the order of Ruth Cohen (the
"Holder"), the principal sum equal to Nine Million Eight Hundred and Ten
--------
Thousand Dollars ($9,810,000.00), in the manner described below and to pay to
the Holder interest on the unpaid principal amount of this Note in the manner
described below. Subject to extension as provided in Section 1.3 hereof, the
principal amount of this Note shall be payable on December 31, 2004 (the
"Scheduled Payment Date"). Interest shall accrue on the unpaid principal amount
------------------------
of this Note at a rate per annum equal to 7.00%. Accrued interest shall be
payable in arrears on each Semi-Annual Date, the Scheduled Payment Date and, if
applicable, each Extended Payment Date. Interest on this Note shall be computed
on the basis of a year of 365 or 366 days (as the case may be) and actual days
elapsed (including the first day but excluding the last day) occurring in the
period for which payable. Capitalized terms used but not otherwise defined
herein have the respective meanings given to such terms in Article 4 hereof.

                                   ARTICLE 1

                      PAYMENTS AND PREPAYMENTS; EXTENSIONS

                     Section 1.1 Payments Generally. All payments of principal
                                 ------------------
and interest to be made by the Company under this Note shall be made in Dollars,
in immediately available funds, by wire transfer to an account at a commercial
bank located in the United States of America (which account shall be identified
in a notice to the Company not later than two Business Days prior to the date of
such payment, or if no notice shall have been delivered prior to such date of
payment, such account as shall have been identified in the notice most recently
delivered), not later than 11:00 a.m. New York time on the date on which such
payment shall become due (each such payment made after such time on such due
date to be deemed to have been made on the next succeeding Business Day). If the
due date of any payment under this Note would otherwise fall on a day that is
not a Business Day, such due date shall be extended to the next Business Day,
and interest shall be payable on any principal so extended for the period of
such extension. All amounts payable under this Note shall be paid free and clear
of, and without reduction by reason of, any deduction, set-off or counterclaim.
Any prepayment of this Note shall be applied first to the accrued and unpaid
interest hereon and then to the unpaid principal hereof.

                     Section 1.2 Prepayments. (a) Upon its receipt of proceeds
                                 -----------
from an initial underwritten public offering of shares of common stock or other
equity securities issued by the Company pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Initial Public
                                                             --------------
Offering"), if any, the Company shall prepay this Note in an amount (up to but
---------
not exceeding the unpaid principal amount hereof and any accrued interest
hereon) equal to the amounts so received.

                     (b) The Company may at any time and from time to time, at
its option, prepay this Note (in an amount up to but not exceeding the unpaid
principal amount hereof and any accrued interest hereon) in whole or in part.
<PAGE>
                     Section 1.3 Extension. The Company may, by delivering a
                                 ---------
notice to the Holder in the manner described in Section 8.1 hereof not later
than 90 days prior to the Scheduled Payment Date, extend the date on which the
principal amount of this Note is payable to the fifth anniversary of the date
hereof (the "First Extended Payment Date"). By delivering a notice to the Holder
             ----------------------------
in the manner described in Section 8.1 hereof not later than 90 days prior to
the First Extended Payment Date, the Company may further extend the date on
which the principal amount of this note is payable to the seventh anniversary of
the date hereof (the "Second Extended Payment Date"). By delivering a notice to
                      -----------------------------
the Holder in the manner described in Section 8.1 hereof not late than 90 days
prior to the Second Extended Payment Date, the Company may finally extend the
date on which the principal amount of this Note is payable to the ninth
anniversary of the date hereof (the "Third Extended Payment Date"). In no event
                                     ----------------------------
may the date on which the principal amount of this Note is payable be extended
beyond the tenth anniversary date hereof without the consent of the Holder.

                     Section 1.4 Set-Off. The Company agrees that, in addition
                                 -------
to (and without limitation of) any right of set-off the Holder may otherwise
have, the Holder shall be entitled, at its option, to offset amounts owing by
the Holder to the Company, in Dollars or in any other currency (regardless of
whether such amounts are then due to the Company), against any amount payable by
the Company to the Holder under this Note; provided that nothing contained
                                           --------
herein shall require the Holder to exercise any such right.

                                    ARTICLE 2

                                  SUBORDINATION

                     Section 2.1 Subordination. The Company, for itself and its
                                 -------------
successors, covenants and agrees, and the Holder, by acceptance of this Note,
covenants and agrees that the payment of the principal of and interest on this
Note is hereby expressly made subordinate and junior to the prior payment in
full of all Designated Senior Indebtedness, all as hereinafter provided in this
Article 2.

                     This Article shall constitute a continuing offer to all
Persons who, in reliance upon such provisions, become holders of, or continue to
hold, Designated Senior Indebtedness, and such provisions are made for the
benefit of the holders of Designated Senior Indebtedness (as defined in Article
4), and such holders are made obligees hereunder and any one or more of them may
enforce such provisions.

                     Section 2.2 Prior Notice to Designated Senior Creditors.
                                 -------------------------------------------
Notwithstanding anything contained in this Note to the contrary, so long as the
Company shall be prohibited pursuant to Section 2.4(a) hereof from making any
payment on account of the principal of and interest on this Note (the
"Subordinated Indebtedness"), the Holder shall not (a) demand, sue for, take or
---------------------------
receive from the Company, by setoff, judgment or in any other manner, the whole
or any part of the Subordinated Indebtedness, other than the receipt when due of
any scheduled payment of principal of or interest on this Note, (b) take any
action to collect or enforce any of the Subordinated Indebtedness from or
against the Company for any Subordinated Indebtedness, in each case, unless and
until (i) a Proceeding (as defined in Section 2.3 hereof) shall have been
commenced or (ii) the maturity of Designated Senior Indebtedness in an aggregate

                                       2
<PAGE>
amount of $1,000,000 or more shall have been accelerated, provided that in any
event the Subordinated Indebtedness may only be accelerated, if at all, after at
least 10 days' prior written notice shall have been given to the Designated
Senior Creditors (or any trustee or agent acting on their behalf, each, a
"Representative").
----------------

                     Section 2.3 Payment Over of Proceeds Upon Insolvency, Etc.
                                 ---------------------------------------------
In the event of any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to creditors upon (a) any
insolvency or bankruptcy case or proceeding, or any receivership, liquidation,
arrangement, reorganization or other similar case or proceeding in connection
therewith, relative to the Company or to its creditors, as such, or to its
assets, (b) any total or partial liquidation, reorganization, dissolution or
other winding up of the Company, whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy or (c) any assignment for the benefit of
creditors or any other marshalling of assets and liabilities of the Company
(each, a "Proceeding"), then and in any such event, the holder of Designated
         ------------
Senior Indebtedness shall be entitled to receive payment in full in cash or cash
equivalents of all amounts due or to become due on or in respect of all
Designated Senior Indebtedness, before the Holder is entitled to receive any
payment (whether in cash, property or securities) on account of the Subordinated
Indebtedness, and the Holder shall direct that such amount be paid directly to
the holders of Designated Senior Indebtedness entitled thereto.

                     Section 2.4 Subordination upon Default in Designated Senior
                                 -----------------------------------------------
Indebtedness. (a) In the event that any event of default shall have occurred and
------------
be continuing permitting the holders of Designated Senior Indebtedness to
declare such Designated Senior Indebtedness due and payable prior to the date on
which it would otherwise have become due and payable, and such default shall not
have been cured or waived, or the benefits of this Section 2.4 shall not have
been waived, in writing by or on behalf of the holders (or their
Representatives) of Designated Senior Indebtedness, then no payment (whether in
cash, property or securities) shall be made by the Company on account of the
Subordinated Indebtedness unless and until all Designated Senior Indebtedness
shall have been paid in full in cash or cash equivalents and the loan agreements
with respect thereto have been terminated.

                     (b) In the event that, notwithstanding the foregoing, the
Company shall make any payment (whether in cash, property or securities) to the
Holder prohibited by Section 2.4(a) hereof, then and in such event such payment
shall be received and held in trust for the holders of Designated Senior
Indebtedness and shall be paid over and delivered forthwith to the holders (or
their Representatives) of the Designated Senior Indebtedness remaining unpaid,
to the extent necessary to pay all such Designated Senior Indebtedness in full
in cash or cash equivalents after giving effect to any concurrent payment or
distribution to the holders of such Designated Senior Indebtedness, for
application to the payment in full of such Designated Senior Indebtedness.

                     Section 2.5 Subordination Unconditional; Etc.
                                 --------------------------------

                     (a) Unconditional Subordination. The Holder agrees that the
                         ---------------------------
provisions of this Article 2 shall not be affected or impaired by (i) any
extension of the time for payment of the Designated Senior Indebtedness, (ii)
any other alteration of the terms of the Designated Senior Indebtedness, (iii)
any exchange, sale, release or other action with respect to any security for any

                                       3
<PAGE>
of the Designated Senior Indebtedness or (iv) any release of any balance of
funds of the Company, in each case, without notice to the Holder.

                     (b) Limitation on Waivers. No waiver shall be deemed to be
                         ---------------------
made by any holder of Designated Senior Indebtedness (or by its Representative)
of any of its rights under this Article 2 unless the same shall be in writing
and signed on its behalf, and any such waiver shall be a waiver only with
respect to the specific matter or matters to which the waiver relates and shall
in no way impair the rights or obligations of such holder in any other respect
at any other time. No amendment or modification of the Subordinated Indebtedness
of this Note shall be effective as against any holder of Designated Senior
Indebtedness (other than any amendment to reduce the amount of any payments
hereunder or to defer or extend the due date or maturity date of any of the
Subordinated Indebtedness) unless the same shall be in writing and signed on its
behalf.

                     (c) Undertakings of the Company. The Company shall not make
                         ---------------------------
any payment (whether in cash, property or securities) or take any other action
that would be inconsistent with this Article 2. Each of the Company and the
Holder agrees to take such actions, and execute such other documents, as may be
reasonably requested by any Designated Senior Creditor (or its Representative)
in order to effectuate the provisions of this Article 2.

                     (d) Subrogation. Subject to the prior payment in full in
                         -----------
cash or cash equivalents of all Designated Senior Indebtedness, the Holder shall
be subrogated to the rights of the holders of Designated Senior Indebtedness to
receive payments and distributions of cash, property and securities applicable
to the Designated Senior Indebtedness until all Subordinated Indebtedness shall
be paid in full. No payment or distribution of cash, property or other
securities made to holders of Designated Senior Indebtedness by virtue of this
Article 2 which otherwise would have been made to the Holder shall be deemed to
be a payment by the Company on account of the Subordinated Indebtedness.

                     (e) Reliance on Notices. The Holder shall be entitled to
                         -------------------
rely on the delivery to it of a written notice by a Person representing to be a
holder of Designated Senior Indebtedness to establish that such notice has been
given by a holder of Designated Senior Indebtedness. In the event that the
Holder determines in good faith that further evidence is required with respect
to the right of any Person as a holder of Designated Senior Indebtedness to
participate in any payment or distribution pursuant to this Article 2, the
Holder may request such Person to furnish evidence to the reasonable
satisfaction of the Holder as to the amount of Designated Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article 2, and if such evidence is not furnished, the
Holder may defer any payment to such Person pending judicial determination as to
the right of such Person to receive such payment.

                     (f) Reinstatement. If at any time any payment in respect of
                         -------------
Designated Senior Indebtedness is rescinded or must otherwise be restored or
returned by the holder of such Designated Senior Indebtedness in connection with
any Proceeding, or upon or as a result of the appointment of a receiver,
intervener or conservator of, or trustee or similar officer for, the Company or
any substantial part of the Company's property, the obligations of the Holder

                                       4
<PAGE>
and the Company under this Article 2 shall continue to be effective, or be
reinstated as of the time such payment in respect of Designated Senior
Indebtedness is so rescinded or must otherwise be restored, as the case may be,
all as though such payment had not then been made.

                     Section 2.6 Provisions Solely to Define Relative Rights.
                                 -------------------------------------------
The provisions of this Article 2 are and are intended solely for the purpose of
defining the relative rights of the Holder on the one hand and the holders of
Designated Senior Indebtedness on the other hand. Nothing contained in this
Article 2 is intended to or shall: (a) impair, as among the Company, the Holder
and the other creditors of the Company (other than the holders of Designated
Senior Indebtedness), the obligations of the Company, which are absolute and
unconditional, to pay the Subordinated Indebtedness as and when the same shall
become due and payable in accordance with its terms; (b) affect the relative
rights against the Company of the Holder and Company's other creditors (other
than the holders of Designated Senior Indebtedness); or (c) except as provided
in Section 2.2 hereof, prevent the Holder from exercising all remedies otherwise
permitted by applicable law upon default in respect of the Subordinated
Indebtedness under this Article 2.

                                    ARTICLE 3

                                EVENTS OF DEFAULT

                     Section 3.1 Events of Default. The occurrence of one or
                                 -----------------
more of the following events shall constitute an "Event of Default" for the
                                                 ------------------
purpose of this Note:

                      (a)        the Company fails to pay any amount owing under
                                 this Note when due (whether at stated maturity,
                                 by acceleration, upon mandatory prepayment or
                                 otherwise);

                      (b)        the Company shall default in the performance
                                 of, or shall breach, any covenant or warranty
                                 of the Company under or in respect of this
                                 Note;

                      (c)        the Company shall (i) apply for or consent to
                                 the appointment of, or the taking of possession
                                 by, a receiver, custodian, trustee, examiner or
                                 liquidator of itself or of all or a substantial
                                 part of its assets or property, (ii) make a
                                 general assignment for the benefit of its
                                 creditors, (iii) commence a voluntary case
                                 wider the Federal Bankruptcy Code, (iv) file a
                                 petition seeking to take advantage of any other
                                 law relating to bankruptcy, insolvency,
                                 reorganization, liquidation, dissolution,
                                 arrangement or winding-up, composition or
                                 readjustment of debts, (v) fail to controvert
                                 in a timely and appropriate manner, or
                                 acquiesce in writing to, any petition filed
                                 against it in an involuntary case under the
                                 Federal Bankruptcy Code or (vi) take any
                                 corporate action for the purpose of effecting
                                 any of the foregoing; or

                      (d)        a proceeding or case shall be commence, without
                                 the application or consent of the Company, in
                                 any court of competent jurisdiction, seeking
                                 (i) its reorganization, liquidation,
                                 dissolution, arrangement or winding-up, or the

                                       5
<PAGE>
                                 composition or readjustment of its debts, (ii)
                                 the appointment of a receive, custodian,
                                 trustee, examiner, liquidator of the like of
                                 the Company or of all or any substantial part
                                 of its property, or (iii) similar relief in
                                 respect of the Company under any law relating
                                 to bankruptcy, insolvency, reorganization,
                                 winding-up, or composition or adjustment of
                                 debts, and such proceeding or case shall
                                 continue undismissed, or an order, judgement or
                                 decree approving or ordering any of the
                                 foregoing shall be entered and continue
                                 unstayed and in effect, for a period of 60 or
                                 more days; or an order for relief against the
                                 Company shall be entered in an involuntary case
                                 under the Federal Bankruptcy Code.

                     Section 3.2 Acceleration of Maturity; Rescission and
                                 ----------------------------------------
Annulment. Subject to Section 2.4, if any Event of Default occurs and is
---------
continuing then and in every such case the Holder may declare the principal of
this Note and interest thereon to be due and payable immediately, by a notice in
writing to the Company, and upon any such declaration such principal shall
become due and payable immediately without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Company.

                     Notwithstanding any of the foregoing, at any time after
such a declaration of acceleration has been made and before a judgment or decree
for payment of the money due has been obtained, the Holder may rescind and annul
such declaration and its consequences if it so notifies the Company of its
desire to do so. No such rescission and annulment shall affect any subsequent
default or impair any right consequent thereon.

                     The Company agrees to pay or reimburse the Holder for
paying: (a) all costs and expenses of the Holder (including, without limitation,
reasonable counsels' fees) in connection with any default and any enforcement or
collection proceedings resulting therefrom; and (b) all transfer, stamp,
documentary or other similar taxes, assessments or charges levied by any
governmental or revenue authority in respect of this Note or any other document
referred to herein.

                                    ARTICLE 4

                                   DEFINITIONS

                     Section 4.1 Definitions. The following terms shall have the
                                 -----------
meaning set forth below:

                     "Business Day" means any day (other than a day which is a
                     --------------
Saturday, Sunday or legal holiday in the State of New York) on which banks are
open for business in New York City.

                     "Designated Senior Creditor" means any holder of Designated
                     ----------------------------
Senior Indebtedness.

                     "Designated Senior Indebtedness" means any and all
                     --------------------------------
obligations, liabilities and indebtedness of every kind, nature and description
owing by the Company to Working Capital Lender, including principal, interest,
charges, fees, indemnities and expenses, however evidenced, whether as
principal, guarantor or otherwise, arising under any agreements between Working

                                       6
<PAGE>
Capital Lender and the Company, whether now existing or hereafter arising,
whether arising before, during or after the initial or any renewal term of the
agreements between Working Capital Lender and the Company or after the
commencement of any case with respect to the Company under the U.S. Bankruptcy
Code or any state insolvency law or similar statute (and including, without
limitation, any principal, interest, fees, costs, expenses and other amounts,
which would accrue and become due but for the commencement of such case, whether
or not such amounts are allowed or allowable in whole or in part in any such
case), whether direct or indirect, absolute or contingent, joint or several, due
or not due, primary or secondary, liquidated or unliquidated, secured or
unsecured, and whether arising directly or howsoever acquired by Working Capital
Lender.

                     "Dollar" and "$" shall mean lawful money of the United
                     --------     ---
States of America.

                     "Extended Payment Date" means the First Extended Payment
                     -----------------------
Date, the Second Extended Payment Date or the Third Extended Payment Date, as
the case may be.

                     "Note" means this Subordinated Note, as modified and
                     ------
supplemented and in effect from time to tune.

                     "Person" means any individual, corporation, partnership,
                     --------
joint venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.

                     "Semi-Annual Date" means the last Business Day of June and
                     ------------------
December in each year, commencing with June 29, 2001 and ending with the last
such day prior to the Scheduled Payment Date, or, if the date on which the
principal amount of this Note is payable its extended pursuant to Section 1.4
hereof, the last Extended Payment Date.

                     "Working Capital Lender" means Congress Financial
                     ------------------------
Corporation, a Delaware corporation, and its successors and assigns (including
any other lender or group of lenders that at any time succeeds to it or
refinances, replaces or substitutes for all or any portion of the Designated
Senior Indebtedness owing to it at any time and from time to time).

                                    ARTICLE 5

                        CERTAIN COVENANTS OF THE COMPANY

                     Section 5.1 Covenants. The Company hereby covenants with
                                 ---------
the Holder of this Note as follows:

                     (a) with respect to this Note, the Company will duly and
punctually pay the principal of and interest on this Note in accordance with the
terms of this Note, and will duly comply with all the other terms, agreements
and conditions in, or made in this Note for the benefit of the Holder of this
Note;

                     (b) the Company will do, or cause to be done, all things
necessary to preserve and keep in full force and effect its corporate existence;
and

                                       7
<PAGE>
                     (c) the Company will upon demand by the Holder mail the
Holder, at the Holder's address for notices provided for in Section 8.1 hereof,
the Company's audited consolidated balance sheet, statement of income and
statement of changes in financial position for the most recently completed
fiscal year and the Company's unaudited consolidated balance sheet statement of
income, and statement of changes in financial position for any completed
semi-annual period ending after the date of the most recently completed fiscal
year.

                                    ARTICLE 6

                                  REGISTRATION

                     Section 6.1 Registration. This Note shall be registered in
                                 ------------
the name(s) of the beneficial owner(s) thereof and not in "street" or "nominee"
names.

                                    ARTICLE 7

                              WAIVER AND AMENDMENT

                     Section 7.1 Amendment. No amendment of this Note shall be
                                 ---------
effective unless in writing and signed by the Holder and the Company.

                     Section 7.2 Waiver. No waiver of any provisions of this
                                 ------
Note shall be effective unless in writing and signed by the Holder.

                     Section 7.3 Restoration of Rights and Remedies. If the
                                 ----------------------------------
Holder has instituted any proceeding to enforce any right or remedy under this
Note and such proceeding has been discontinued or abandoned for any reason, or
has been determined adversely to the Holder, then and in every such case the
Company and the Holder shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Holder shall continue as through no
such proceeding had been instituted.

                     Section 7.4 Rights and Remedies Cumulative. No right or
                                 ------------------------------
remedy herein conferred upon or reserved to the Holder right or remedy herein
conferred upon or reserved to the Holder is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now hereafter existing at law or in equity or otherwise, The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.

                     Section 7.5 Delay or Omission Not Waiver. No delay or
                                 ----------------------------
omission of the Holder to exercise any right or remedy accruing upon any Event
of Default shall impair any such right or remedy of constitute a waiver of any
such Event of Default or any acquiescence therein.

                     Section 7.6 Waiver of Past Defaults. The Holder may waiver
                                 -----------------------
any past default hereunder and its consequences. Upon and to the extent of any
such waiver, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this Note, but

                                       8
<PAGE>
no such waiver shall extend to any subsequent or other default or impair any
right consequent thereon.

                                    ARTICLE 8

                                  MISCELLANEOUS

                     Section 8.1 Notices. All notices and other communications
                                 -------
in respect of this Note (including, without limitation, any modifications of, or
requests, waivers or consents under, this Note) shall be given or made in
writing (including, without limitation, be telecopy) to the Company or the
Holder, as the case may be, at the "Address for Notices" specified below his
name on the signature pages hereof; or at such other address as shall be
designated by any such party in a notice to the other party. Except as otherwise
provided in this Note, all such communications shall be deemed to have been duly
given when transmitted by telecopier or personally delivered or, in the case of
a mailed notice, upon receipt, in each case given or addressed as aforesaid.

                     Section 8.2 Governing Law; Submission to Jurisdiction;
                                 -----------------------------------------
Venue. This Note shall be governed by, and construed in accordance with, the law
-----
of the State of New York without regard to the conflicts of laws provisions
thereof. The Company hereby submits to the non-exclusive jurisdiction of the
United States District Court for the Southern District of New York and of any
New York State court sitting in New York County for the purposes of all legal
proceedings arising out of or relating to this Note. The Company irrevocably
waives, to the fullest extent permitted by applicable law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum.

                     Section 8.3 No Adverse Interpretation of Other Agreements.
                                 ---------------------------------------------
No other indenture, loan or debt agreement of the Company may be used to
interpret this Note.

                     Section 8.4 Successors. All agreements of the Company in
                                 ----------
this Note shall bind its successors an assigns.

                     Section 8.5 Severability. In case any provisions in this
                                 ------------
Note shall be invalid, illegal or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

                     Section 8.6 Headings, Etc. The headings of the Articles and
                                 -------------
Sections of this Note have been inserted for convenience of reference only, are
not to be considered a part hereof, and shall in no way modify or restrict any
of the terms or provisions hereof.

                     Section 8.7 Assignment. The Holder may not transfer or
                                 ----------
assign this Note without the prior written consent of the Company, except for
transfers by will or the laws of descent.

                                       9

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