SECOND AMENDMENT AGREEMENT


     THIS SECOND AMENDMENT  AGREEMENT (this "Second  Amendment") is entered into
as of  January  20,  2006 by and  among  Harvey  Electronics,  Inc.,  a New York
corporation ("Borrower"), and Webster Business Credit Corporation ("Lender").

                                  Introduction

     Borrower and Lender are parties to a Loan and Security  Agreement  dated as
of November 21, 2003 (as amended through the date hereof and as further amended,
restated,  supplemented  or  otherwise  modified  from  time to time,  the "Loan
Agreement")  pursuant to which Lender has agreed to make revolving  credit loans
and to provide certain other financial accommodations to Borrower.

     Borrower has requested certain amendments to the Loan Agreement.  Lender is
willing to effect the amendments of the Loan Agreement  requested by Borrower on
the terms and conditions hereinafter set forth.

     NOW, THEREFORE,  in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency  of which are hereby  acknowledged,  Borrower  and  Lender  agree as
follows:

     1.  Amendments  to the  Loan  Agreement.  Upon the date  that  this  Second
Amendment  shall  have  been  executed  by each of the  parties  hereto  and all
conditions set forth in Section 3 of this Second  Amendment have been satisfied,
Borrower and Lender agree that the Loan Agreement shall be amended as follows:

     (a) Section 7.21 of the Loan  Agreement is hereby  amended by deleting such
Section  7.21 in its entirety and  inserting in lieu thereof the  following  new
Section 7.21:

     7.21 Financial Covenants.

     (a) Minimum EBITDA. Measured as of the last day of each fiscal month, allow
(A) EBITDA for such fiscal month to vary  negatively  by more than $187,500 from
the EBITDA  projected  for such fiscal month in the Business Plan and (B) EBITDA
for the  rolling-three  fiscal month period ended on the last day of each fiscal
month to vary  negatively by more than  $375,000  from the EBITDA  projected for
such rolling-three  fiscal month period in the Business Plan. In the case of the
first two fiscal months covered by the Business Plan, the  calculation in clause
(B) shall be made using the  applicable  months from the prior  year's  Business
Plan.

     (b) Capital  Expenditures.  Make capital  expenditures  (other than capital
expenditures made with proceeds of Permitted Purchase Money Indebtedness) in any
fiscal year in excess of $1,000,000.

     (c)  Covenant  levels with respect to EBITDA and capital  expenditures  for
periods beyond those set forth in the foregoing  subsections (a) and (b) will be
set at a later date and based upon the  applicable  Business  Plans  approved by
Lender. Borrower shall submit each such Business Plan in accordance with Section
6.3(c).  If Borrower fails to deliver an updated  Business Plan  satisfactory to
Lender in its  Permitted  Discretion  or if  Borrower  and  Lender are unable to
mutually  agree  upon  covenant  levels  with  respect  to  EBITDA  and  capital
expenditures  by October 15 of any fiscal year, the minimum Excess  Availability
at all times thereafter shall be no less than $1,500,000."

     (d) 2006  Business  Plan.  Borrower has delivered to Lender a business plan
and set of Projections  for its fiscal quarter ending [October 31, 2006], a copy
of which is attached  hereto as Exhibit A (the "2006  Business  Plan").  For the
period from the date that this Second  Amendment is effective  through  [October
31, 2006],  the term  "Business  Plan" shall mean the 2006 Business Plan for all
purposes of the Loan Agreement (as amended hereby).

     2. Lender's Rights. Lender expressly reserves the full extent of its rights
under the Loan  Agreement,  the other Loan  Documents  and  applicable  law with
respect to any Default or Event of Default existing on the date hereof.

     3. Conditions  Precedent to Second  Amendment.  The satisfaction of each of
the following,  unless waived or deferred by Lender in its Permitted  Discretion
constitute conditions precedent to the effectiveness of this Second Amendment:

     (a) Lender shall have  received  this Second  Amendment,  duly  executed by
Borrower;

     (b) the representations  and warranties in this Second Amendment,  the Loan
Agreement,  as amended  hereby,  and the other Loan Documents  shall be true and
correct in all  respects  on and as of the date  hereof,  as though made on such
date  (except to the extent  that such  representations  and  warranties  relate
solely to an earlier date);

     (c) no Default or Event of Default shall have occurred and be continuing on
the date  hereof,  and no  Default  or Event of Default  shall  result  from the
consummation of the transactions contemplated herein;

     (d) no injunction,  writ,  restraining  order, or other order of any nature
prohibiting,  directly  or  indirectly,  the  consummation  of the  transactions
contemplated  herein  shall have been issued and remain in force by any court or
other governmental authority against Borrower or Lender; and

     (e)  Lender  shall  have  received  payment  in full  of its  out-of-pocket
expenses  (including  reasonable  attorneys'  fees  and  expenses)  incurred  in
connection with  the Loan Agreement and this Second Amendment.

     4. Representations and Warranties.  Borrower hereby represents and warrants
to the Lender that:

     (a) the execution,  delivery, and performance of this Second Amendment, the
Loan Agreement and the other Loan Documents (i) are within Borrower's  corporate
powers, (ii) have been duly authorized by all necessary corporate action,  (iii)
do not  require  any  approval  or consent of any Person  under any  contractual
obligation  of the Borrower and (iv) do not  contravene  (A) any law,  rule,  or
regulation, or any order, judgment,  decree, writ or injunction, or award of any
arbitrator,  court,  or  Governmental  Authority,  (B) the terms of its charter,
bylaws  or  other  operative  or  formative  documents  or (C) any  contract  or
undertaking  to which it is a party or by  which  any of its  properties  may be
bound or affected;

     (b) this Second Amendment has been duly executed and delivered by Borrower;

     (c)  this  Second  Amendment  and the Loan  Agreement  and the  other  Loan
Documents,  each  as  previously  amended  and  as  amended  hereby,  constitute
Borrower's legal, valid, and binding  obligations,  enforceable against Borrower
in accordance with their respective terms;

     (d)  Borrower is in  compliance  with all of the terms and  provisions  set
forth in the  Loan  Agreement  and each of the  other  Loan  Documents,  each as
previously  amended  and as  amended  hereby,  on its  part  to be  observed  or
performed on or prior to the date hereof; and

     (e) no Default or Event of Default has occurred and is continuing under the
Loan Agreement or any other Loan Document.

     5.  Reaffirmation.  Borrower further reaffirms all of its obligations under
the Loan Agreement and the other Loan Documents,  each as previously amended and
as amended hereby.

     6. Effect on Loan  Agreement.  Except as  expressly  provided  herein,  the
execution,  delivery, and performance of this Second Amendment shall not operate
as a waiver or an amendment of any right,  power,  or remedy of the Lender under
the Loan  Agreement or any other Loan Document.  Except to the extent  expressly
amended  hereby,  the Loan  Agreement  and all  other  Loan  Documents  shall be
unaffected  hereby,  shall continue in full force and effect,  are hereby in all
respects ratified and confirmed,  and shall constitute the legal, valid, binding
and enforceable obligations of Borrower to the Lender.

     7. No Novation;  Entire Agreement.  This Second Amendment  evidences solely
the amendment of certain terms and  provisions of Borrower's  obligations  under
the Loan Agreement expressly set forth herein and is not a novation or discharge
thereof. There are no other understandings,  express or implied,  between Lender
and Borrower regarding the subject matter hereof.

     8. Choice of Law. The validity of this Second Amendment,  its construction,
interpretation and enforcement,  and the rights of the parties hereunder,  shall
be determined  under,  governed by, and construed in accordance with the laws of
The  Commonwealth  of   Massachusetts   without  regard  to  conflicts  of  laws
principles.

     9. Definitions and Construction.

     (a) Capitalized  terms used but not otherwise defined herein shall have the
respective  meanings  given  to such  terms in the Loan  Agreement,  as  amended
hereby.

     (b) Upon  and  after  the  effectiveness  of this  Second  Amendment,  each
reference in the Loan  Agreement  to "this  Agreement",  "hereunder",  "herein",
"hereof"  or words of like  import  referring  to the Loan  Agreement,  and each
reference  in the other Loan  Documents to "the Loan  Agreement",  "thereunder",
"therein",  "thereof",  or words of like import referring to the Loan Agreement,
shall mean and be a reference to the Loan Agreement as amended hereby.

     10.  Counterparts;  Telefacsimile  Execution.  This Second Amendment may be
executed  in any number of  counterparts  and by  different  parties in separate
counterparts,  each of which when so executed and delivered,  shall be deemed an
original,  and all of which,  when taken together,  shall constitute one and the
same instrument. Delivery of an executed counterpart of a signature page to this
Second  Amendment by  facsimile  shall be as effective as delivery of a manually
executed counterpart of this Second Amendment.  Any party delivering an executed
counterpart of this Second  Amendment by facsimile also shall deliver a manually
executed  counterpart  of this  Second  Amendment  but the  failure to deliver a
manually executed counterpart shall not affect the validity, enforceability, and
binding effect of this Second Amendment.

                    [Signatures appear on thefollowing page.]

<PAGE>
                                 SIGNATURE PAGE


     IN WITNESS WHEREOF,  Borrower and Lender caused this Second Amendment to be
executed as of the date first above written.

                                BORROWER:

                                HARVEY ELECTRONICS, INC.


                                By:/s/ Joseph J. Calabrese
                                   Name:  Joseph J. Calabrese
                                   Title: Executive Vice President and
                                          Chief Financial Officer


                               LENDER:

                               WEBSTER BUSINESS CREDIT CORPORATION


                               By:/s/_____________________________
                                  Name:________________________
                                  Title:_________________________

<PAGE>
                                    EXHIBIT A

                               2006 Business Plan