SUBLEASE

     THIS SUBLEASE is dated and effective as of June 1, 2000 by and between BANG
& OLUFSEN  AMERICA,  INC.,  a  Delaware  corporation  ("Sublessor")  and  HARVEY
ELECTRONICS, INC., a New York corporation ("Sublessee").

                                    RECITALS

     A. Sublessor leases certain retail space consisting of approximately  1,600
square feet  located in the ground floor of the  southerly  side of the building
commonly known as 86 Greenwich Avenue,  Greenwich,  Connecticut  pursuant to the
terms of a Lease dated April 3, 2000 (as the same may be amended,  supplemented,
restated,  renewed  and/or  extended from time to time,  the  "Overlease")  with
Greenwich  Avenue Limited  Partnership  ("Landlord").  Said retail space is more
particularly  described  in the  Overlease  and is  referred  to  herein  as the
"Premises."

     B. Sublessee desires to sublet the Premises from Sublessor and Sublessor is
willing  to  sublease  the  Premises  to  Sublessee,  subject  to the  terms and
conditions hereinafter set forth.

     NOW THEREFORE,  in consideration of the foregoing  Recitals,  the covenants
and agreements hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

     1. Defined Terms;  Other Words and Phrases.  Capitalized  terms used herein
and not otherwise defined in this Sublease shall have the meanings  specified in
the  Overlease.  Whenever  it is provided  in this  Sublease  that a party "may"
perform an act or do anything,  it shall be construed  that such party "may, but
shall not be obligated to," so perform or so do. The following words and phrases
shall be construed  as follows:  (i) "at any time" shall be construed as "at any
time or from time to time;"  (ii)  "any"  shall be  construed  as "any and all;"
(iii) "include" and "including" shall be construed as "including but not limited
to;" and (iv) "will" and "shall" shall each be construed as mandatory. Except as
otherwise  specifically  indicated,  all  references  to  paragraph  numbers and
letters  shall  refer to  paragraphs  of this  Sublease  and all  references  to
Exhibits  shall  refer  to the  Exhibits  attached  to this  Sublease.  The word
"hereby",  "hereof",  "hereto",  "herein" and  "hereunder" and any similar terms
shall refer to this Sublease as a whole and not to any particular paragraph. The
word  "hereafter"  shall  mean  after the  effective  date  hereof  and the word
"heretofore"  shall  mean  before  the  effective  date  hereof.  Words  of  the
masculine,  feminine or neuter  gender shall mean and include the  corresponding
words of other genders,  and words  implying the singular  number shall mean and
include the plural number and vice versa. The paragraph headings are inserted in
this  Sublease  for  convenience  only and are not intended to, and shall not be
construed  to limit,  enlarge or affect the scope or intent of this  Sublease or
the meaning of any provision hereof.

     2. Sublease of Premises.  In  consideration  of the rents  reserved in this
Sublease and the  obligations  herein to be observed and  performed by Sublessor
and  Sublessee,  Sublessor  hereby  demises  and  subleases  to  Sublessee,  and
Sublessee  hereby sublets from Sublessor,  the Premises for the term hereinafter
provided.  Except  as may be  specifically  provided  to the  contrary  in  this
Sublease,  the Premises are hereby  demised and subleased  pursuant to the terms
and conditions of the Overlease,  a copy of which is attached  hereto as Exhibit
A.  Sublessee  hereby (i) assumes all of the terms,  covenants and conditions of
Sublessor,  as Tenant,  under the Overlease,  (ii) adopts and makes, for itself,
all waivers and  releases set forth in the  Overlease  and (iii)  covenants  and
agrees to strictly (x) observe, pay and perform all of Sublessor's  obligations,
as Tenant, under the Overlease and (y) comply with all covenants, agreements and
undertakings  made by Sublessor,  as Tenant,  in the  Overlease.  The covenants,
agreements and undertakings of Sublessee set forth in the immediately  preceding
sentence (including the assumption of the terms, covenants and conditions of the
Overlease) are being made for the express benefit of, and may be relied upon by,
Sublessor and Landlord.

     3. Term.  The term of this Sublease  shall  commence on the date hereof and
shall end one day immediately before the regularly  scheduled  expiration of the
initial term of the Overlease, unless sooner terminated as provided herein. This
Sublease  shall  automatically  terminate  on the  earlier  to  occur of (i) the
termination  of the Licensed  Dealer  Agreement  dated as of June 1, 2000 by and
between  Sublessor  and  Sublessee  (as the same may be  amended,  supplemented,
restated,  renewed and/or  extended from time to time, the "Dealer  Agreement"),
whether  such  termination  occurs  due to lapse of time,  a  default  or breach
thereof by either party thereto,  or otherwise;  or (ii) the  termination of the
Overlease,  whether such  termination  occurs due to lapse of time, a default or
breach thereof by either party thereto, or otherwise.

     4. Specific Covenants. Without limiting the generality of the covenants and
agreements  of  Sublessee  contained  herein in respect of the  performance  and
observance of Sublessor's  obligations as Tenant under the Overlease,  Sublessee
covenants and agrees to (i) use and occupy the  Premises,  and shall conduct its
business  at the  Premises,  strictly in  accordance  with the uses set forth in
Article 10 of the Overlease  and (ii) deliver  copies of any notices it receives
relating to, or otherwise affecting,  the Premises to Sublessor immediately upon
Sublesse's  receipt thereof.  Sublessee further covenants and agrees that in any
action or proceeding  involving Landlord,  Sublessor and Sublessee,  any claims,
causes of action and issues  between  Sublessor and  Sublessee  shall be severed
from such action or proceeding and shall be separately heard.

     5. Rent. (a) Sublessee shall pay to Sublessor as the minimum monthly rental
hereunder  the sum of  $8,666.67  per  month  commencing  on July  1,  2000  and
continuing on the first day of each succeeding month thereafter  during the term
of this  Sublease  (the  "Basic  Monthly  Rent").  Basic  Monthly  Rent shall be
adjusted from time to time in accordance with the provisions in the Overlease in
respect  of  adjustments  to  "fixed  rent"  (as  that  term is  defined  in the
Overlease) as provided in Article 1 thereof,  such that Basic Monthly Rent shall
at all times during the term of the Sublease equal the monthly  installments  of
fixed rent due from time to time under the Overlease. Basic Monthly Rent for any
partial  month shall be prorated at the rate of 1/30th of the Basic Monthly Rent
counting the actual number of days elapsed.

     (b)  Sublessee  shall pay during the term of this  Sublease,  as additional
rental  hereunder  (hereinafter  referred to as "Additional  Rent"),  before any
fine, penalty, interest or cost may be added thereto for the nonpayment thereof,
(i) all real estate taxes, special assessments,  water rates and charges,  sewer
rates and charges (including any sum or sums payable for present or future sewer
or water  capacity),  charges  for public  utilities,  street  lighting,  excise
levies, licenses,  permits, inspection fees, other governmental charges, and all
other charges or burden of whatsoever kind and nature  (including  costs,  fees,
and expenses of complying with any restrictive  covenants or similar  agreements
to which the Premises and/or the real property on which the Premises are located
are subject) incurred in the use, occupancy,  ownership,  operation,  leasing or
possession of the Premises  and/or  arising  under or related to this  Sublease,
whether any of the foregoing be general or special,  ordinary or  extraordinary,
foreseen  or  unforseen  (all of which are  collectively  referred  to herein as
"Impositions"), which at any time during the term hereof may have been or may be
assessed, levied, confirmed,  imposed upon, or become a lien on the Premises, or
any portion thereof, or any appurtenance  thereto, or this Sublease or the rents
or income  therefrom and (ii) any other amounts due Landlord  under the terms of
the  Overlease  (other than minimum  rent),  including  common area  maintenance
costs, promotional charges,  marketing charges and all other taxes, assessments,
levies and charges of any nature  whatsoever  required  to be paid by  Sublessor
under the Overlease (collectively, the "Overlease Charges"). Sublessee shall pay
to Sublessor any taxes or increases in taxes which result from any  improvements
to the  Premises  which  Sublessee  makes at any time  during  the term  hereof.
Sublessee  shall pay to Sublessor  (a) all  Impositions,  whether  heretofore or
hereafter levied for assessed upon the Premises, or any portion thereof,  and/or
this  Sublease  which are due and  payable  during the term of this  Sublease to
Sublessor within five days of receipt of a statement specifying such amount from
Sublessor and (b) all Overlease Charges at the times and in the manner specified
therefor in the  Overlease.  Anything  herein to the  contrary  notwithstanding,
Sublessor  shall pay its prorata  portion of any  Impositions  and/or  Overlease
Charges due and payable with respect to the  Premises,  or any portion  thereof,
and/or this  Sublease  during the years in which the term hereof both  commences
and ends based on the  number of days in each said year  within the term of this
Sublease,  and Sublessor  shall pay the balance of any such  Impositions  during
said years.

     (c) Basic Monthly Rent and Additional Rent shall be payable to Sublessor in
US Dollars at the  address  hereinafter  set  forth,  or at such other  place as
Sublessor  may designate  from time to time.  All payments of Basic Monthly Rent
and Additional  Rent shall be made without any prior demand therefor and without
any deductions or setoffs  whatsoever.  At Sublessor's option, all Basic Monthly
Rent and Additional Rent shall be paid by Sublessee  directly to the Landlord at
the address and in the manner specified therefor in the Overlease, in which case
Sublessee  shall furnish  Sublessor  with written  evidence of each such payment
promptly following payment thereof.

     6.  Events of  Default;  Remedies.  (a) It shall be an  "Event of  Default"
hereunder if (i)  Sublessee  fails to make any payment of Basic  Monthly Rent or
any Additional  Rent when due or (ii)  Sublessee  breaches any of its covenants,
obligations or undertakings  hereunder  (other than as described in clause (i)),
or (iii)  Sublessee  breaches any of its covenants,  obligations or undertakings
under the Dealer  Agreement or any other  agreement,  instrument,  note or other
document executed by Sublessee and delivered to Sublessor from time to time, and
in any such event,  such breach  continues  beyond any applicable  grace or cure
period specified in the Dealer  Agreement or such other  agreement,  instrument,
note or other  document,  or the Dealer  Agreement is terminated  for any reason
whatsoever,  or (iv) Sublessee  shall be dissolved or shall become unable to pay
its debts as they become due, or shall make a general assignment for the benefit
of  creditors or shall file any  voluntary  petition in  bankruptcy  or shall be
adjudicated  a  bankrupt  or  insolvent  or shall  file any  petition  or answer
seeking,   consenting  to,  or  acquiescing  in   reorganization,   arrangement,
adjustment, composition,  liquidation,  dissolution or similar relief, under any
applicable law, statute,  ordinance, order, decree, rule or regulation, or shall
file an answer  admitting  or shall fail to deny the  material  allegation  of a
petition against it for any such relief; or (v) any proceeding against Sublessee
of the  type  referred  to in  clause  (iv)  seeking  any such  relief  shall be
commenced, or (vi) a trustee, receiver, or liquidator of Sublessee of all or any
substantial  part of its properties or assets shall be appointed with or without
the  consent or  acquiescence  of  Sublessee,  or (vii) any  default or event of
default  occurs under the Overlease as a result of  Sublessee's  act or omission
(other than any of the  occurrences or events  enumerated in clauses (i) through
(vi) of this paragraph 6(a).

     (b) Upon the occurrence of any Event of Default,  Sublessor  shall have all
rights  and  remedies  available  to it at law or in equity  and all  rights and
remedies  available to the Landlord under the Overlease,  including the right to
terminate this Sublease.

     7. No Assumption of Obligations.  Sublessor hereby disclaims any obligation
to perform any of the covenants or  agreements  of Landlord  under the Overlease
and Sublessee hereby waives,  releases and discharges Sublessor from and against
any liability or  responsibility  for the  performance of any such covenants and
agreements.  Sublessee shall indemnify,  defend and hold harmless Sublessor, its
shareholders,  directors,  officers,  employees  and agents from and against any
claims, losses, liability, damages, fines, penalties, settlements, awards, costs
and expenses (including reasonable attorneys' fees and expenses) which Sublessor
may incur as a result of the  execution  and  delivery  of this  Sublease or the
subtenancy created hereby or Sublessee's  possession or use of the Premises.  If
Landlord  breaches any of its obligations  under the Overlease,  Sublessor shall
cooperate  with  Sublessee in enforcing  any of  Sublessee's  rights or remedies
against Landlord;  provided,  however,  that Sublessee shall reimburse Sublessor
for  any  reasonable  costs  and  expenses  incurred  in  connection  therewith,
including reasonable attorneys' fees and disbursements.

     8. No Representations or Warranties. Sublessee acknowledges and agrees that
it (i) has  inspected the Premises and is relying  solely on that  inspection in
entering  into this  Sublease and (ii) is accepting the Premises "AS IS" without
any representation or warranty  whatsoever made by Sublessor,  either express or
implied.  Sublessor hereby expressly  disclaims any warranties in respect of the
Premises or this  Sublease,  either  express or implied,  including  the implied
warranty of tenantability or fitness for a particular purpose.

     9.  Conflicting  Terms. In the event of any conflict  between the terms and
conditions of this Sublease and the terms and conditions of the  Overlease,  the
terms and  conditions of this Sublease  shall govern and be  controlling  in all
respects.

     10.  Notices.  Any  notice,  consent  or other  communication  required  or
permitted  to be given  hereunder  shall be in writing  and shall be sent by (i)
personal delivery,  (ii) a nationally  recognized  overnight delivery service or
(iii) telephonic facsimile and addressed as follows:

                  If to Sublessor:          Bang & Olufsen America, Inc.
                                            1200 Business Center Drive
                                            Suite 100
                                            Mt. Prospect, Illinois 60056
                                            Attn: President
                                            Telephonic Facsimile: (847) 699-1475

                  With a copy to:  Jay A. Lipe, Esq. and Michael F. Sexton, Esq.
                                   Rooks, Pitts and Poust
                                   10 South Wacker Drive
                                   Suite 2300
                                   Chicago, Illinois 60606
                                   Telephonic Facsimile: (312) 876-1155

                  If to Sublessee:  Harvey Electronics, Inc.
                                    205 Chubb Avenue
                                    Lyndhurst, New Jersey 07071
                                    Attn: President
                                    Telephonic Facsimile: (201) 842-0060

or to such  other  address  as either  party  from time to time may  specify  in
writing to the other. Any such notice,  consent or other  communication shall be
deemed to have been given (i) in the case of personal delivery,  when personally
delivered, or (ii) in the case of overnight delivery, as of the date of delivery
was first attempted, or (iii) in the case of telephonic facsimile, upon receipt.

     12. Providing Notices.  Sublessor shall forward to Sublessee promptly after
receipt  thereof  copies of all notices and demands  from  Landlord to Sublessor
with respect to the Overlease or the use and occupancy of the Premises.

     13.  Right to Cure.  Sublessee  shall have the right to cure any default of
Sublessor  under the Overlease upon delivery of ten days prior notice thereof to
Sublessor  and any sums paid by  Sublessee  in curing  any such  default  may be
deducted by Sublessee  from the rentals  otherwise due Sublessor  from Sublessee
hereunder.  Notwithstanding  the  foregoing,  Sublessee  shall  have no right to
attempt to cure any such default if (i) Sublessor  notifies Sublessee that it is
contesting  such  default by  appropriate  proceedings  and  Sublessor  provides
Sublessee with  reasonable  assurances that  Sublessee's  tenancy created hereby
will not be disturbed  during the pendency of such  proceedings or (ii) an Event
of Default has occurred or an event  exists  that,  with the giving of notice or
lapse of time, or both, would constitute an Event of Default.

     14. Assignment and Subletting.  (a)  Notwithstanding  anything contained in
the Overlease to the contrary,  Sublessee  shall not,  without the prior written
consent of  Sublessor,  which consent shall not be  unreasonably  withheld,  (i)
assign, transfer,  mortgage,  pledge,  hypothecate or encumber, or subject to or
permit to exist or be  subjected  to, any lien or charge,  this  Sublease or any
interest  under it,  (ii) allow to exist or occur any  transfer  of or lien upon
this Sublease or Sublessee's  interest  herein by operation of law, (iii) sublet
the  Premises or any portion  thereof or (iv) permit the use or occupancy of the
Premises or any portion thereof by any person, corporation, partnership, limited
liability  company,  trust or other legal  entity  (each,  a  "Person")  for any
purpose not provided for hereunder or under the  Overlease  (each of the actions
or events  described  in clauses  (i) through  (iv) are  referred to herein as a
"Transfer").  No consent  on the part of  Sublessor  in respect of any  Transfer
shall relieve or release (x) Sublessee from obtaining the consent of Landlord in
respect of such  Transfer  as  provided in the  Overlease  or (y) any  assignee,
transferee or sublessee  from obtaining the consent of Sublessor and Landlord in
respect of any other  Transfer.  Any  purported  Transfer in  violation  of this
paragraph 14(a) shall be null and void.

     Sublessee   acknowledges   that  (i)  the  location  of  the  Premises  was
specifically  selected by Sublessor  for the purpose of opening and  operating a
Bang & Olufsen store,  (ii) Sublessor has invested a significant  amount of time
and money in identifying this location and entering into the Overlease and (iii)
the unique  location of the  Premises  is a material  component  of  Sublessor's
business plan for the  development and operation of Bang & Olufsen stores in the
United  States in general,  and the  particular  geographic  region in which the
Premises are located.  Accordingly,  for purposes of this  paragraph  14(a),  it
shall not be deemed  unreasonable  of  Sublessor  to withhold its consent to any
Transfer if any of the following conditions are not satisfied: (A) the Person to
whom such Transfer is proposed to be made (a "Transferee")  agrees in writing to
continue to use the Premises  solely for the uses set forth in Article 10 of the
Overlease  and can  demonstrate  to  Sublessor's  reasonable  satisfaction  that
Transferee has the experience and know-how  necessary to successfully  operate a
retail  outlet for the sale of Bang &  Olufsen(R)  products  and  services;  (B)
Transferee furnishes Sublessor with copies of Transferee's  financial statements
covering  such  time  periods  as  Sublessor  may  reasonably  require,  in form
reasonably acceptable to Sublessor,  which establish that Transferee's financial
condition is at least as good as the financial  condition of the Sublessee as of
the  date  hereof;  (C)  Transferee  agrees  in  writing  to  assume  all of the
obligations,  liabilities and responsibilities of Sublessee  hereunder;  and (D)
the Landlord consents to the proposed Transfer and the proposed  Transferee,  if
such consent is required under the terms of the Overlease.

     For purposes of this Sublease, any change in ownership or active management
of Sublessee  shall be deemed an assignment or transfer which requires the prior
consent of Sublessor; provided, however, that so long as Sublessee is a publicly
traded  company,  any  transfer  or  series  of  transfers  as part of a  single
transaction,  of the  common  stock of  Sublessee  shall not  require  the prior
consent  of  Sublessor  unless,  as a  result  of such  transfer  or  series  of
transfers,  control of  Sublessee  is acquired by any  manufacturer  of consumer
electronics  products having annual sales in the United States of $10,000,000 or
more. For purposes of the immediately  preceding sentence,  "control" shall mean
the  possession,  directly  or  indirectly,  of the power to direct or cause the
direction of the  management  and  policies of  Sublessee,  whether  through the
ownership of voting securities, by contract or otherwise.

     (b)  Sublessor  may  assign  its  interest  herein  to any  Person  without
Sublessee's consent;  provided,  however,  that the provisions of this paragraph
14(b)  shall in no way  limit  or  modify  the  provisions  of`Article  3 of the
Overlease.

     15. Alterations and Improvements. (a) Notwithstanding anything contained in
the  Overlease  to the  contrary,  Sublessee  shall  not make  any  alterations,
modifications,   additions  or  improvements  to  the  Premises  (including  any
decorating)  without  Sublessor's  prior  consent,  which  consent  shall not be
unreasonably  withheld;   provided,   however,  that  it  shall  not  be  deemed
unreasonable  for  Sublessor to withhold its consent if (i) Landlord  refuses to
consent to any such  alterations,  modifications,  additions or  improvements or
(ii) any such alterations,  modifications,  additions or improvements (x) relate
to or affect any  structural  elements of the building in which the Premises are
located (the  "Building") or any mechanical,  electrical or plumbing  systems or
fixtures within, attached to or otherwise forming a part of, the Building or (y)
are  inconsistent  with Sublessor's  guidelines,  conditions and rules in effect
from time to time  with  respect  to stores  selling  Sublessor's  products  and
services under the terms of the Dealer  Agreement as in effect from time to time
or any other agreement or arrangement similar thereto.  Nothing contained herein
shall relieve  Sublessee  from the  obligation to obtain  Landlord's  consent in
respect of any such alterations, modifications, additions or improvements to the
Premises under the terms of the Overlease.

     (b) All  alterations,  modifications,  additions and  improvements  made by
Sublessor to the Premises shall be made in strict compliance with the provisions
of the Overlease,  including Article 8 thereof. Title to any improvements to the
Premises made by Sublessee (other than Sublessee's trade fixtures and equipment)
shall be vested in, and such  improvements  shall be the  property of, the party
designated in the Overlease,  and in the absence of any such designation,  title
to any such improvement shall vest in Sublessor. Any trade fixtures or equipment
installed  by  Sublessee  shall  remain  its  property,  but shall be  otherwise
governed by the terms of the Overlease.

     16. Miscellaneous. (a) This Sublease shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.

     (b) This Sublease may be amended or modified  only by a written  instrument
executed by Sublessor and Sublessee and acknowledged in writing by Landlord.

     (c) This Sublease shall be governed by and construed in accordance with the
law of the state in which the Premises are located  without  reference to choice
of law or conflicts of law principles.

     (d) The commercial general liability  insurance  maintained by Sublessee as
required under the terms of the Overlease shall name Sublessor,  the Overlessor,
its asset  manager (if  applicable)  and its property  manager as an  additional
insureds thereunder.  Without limiting  Sublessee's  obligations with respect to
insurance  under the Overlease,  Sublessee shall furnish  Sublessor,  concurrent
with the execution and delivery of this Sublease and thereafter at least 30 days
prior to the  expiration  of any such  commercial  general  liability  insurance
policy,  with a certificate  of insurance  with respect  thereto,  together with
evidence that all premiums  therefor have been paid in full,  which confirms the
policy  limits in the  amount(s)  required  under the terms of the Overlease and
names  Sublessor,  the  Overlessor,  its asset manager (if  applicable)  and its
property manager as an additional insureds thereunder.

     (e) This Sublease may be executed in multiple  counterparts,  each of which
shall be deemed an original,  but all of which taken together  shall  constitute
one and the same instrument.

     (f) Time is of the essence in respect of the  performance and observance of
each and every  provision of this Sublease in which the time of performance is a
factor.

     (g) The waiver by either party  hereto of any breach or any term,  covenant
or condition  herein  contained shall not be deemed to be a waiver of such term,
covenant or  condition on any  subsequent  breach of the same or any other term,
covenant or condition herein contained.  The subsequent acceptance of any rental
hereunder  by  Sublessor  shall not be  deemed  to be a waiver of any  preceding
breach of Sublessee of any term,  covenant or condition of this Sublease,  other
than  the  failure  of  Sublessee  to pay the  particular  rental  so  accepted,
regardless  of  Sublessor's  knowledge of such  preceding  breach at the time of
acceptance of such rental. No covenant, term or condition of this Sublease shall
be deemed to have been waived by the non-breaching  party, unless such waiver be
in writing signed by such non-breaching party.

     (h)  Sublessee  acknowledges  that (i) the  initial  term of the  Overlease
expires  April 3, 2005 and that  Sublessor  has the right to renew the Overlease
for an  additional  five-year  period upon four months prior  written  notice to
Landlord and (ii) if the renewal  option is  exercised,  the renewal term of the
Overlease  expires  January 1, 2010.  Sublessor  agrees to exercise such renewal
option at Sublessee's  written  direction,  provided (i) no Event of Default has
occurred and is continuing,  (ii) no event has occurred and no condition exists,
that with the giving of notice or lapse of time,  or both,  would  constitute an
Event  of  Default,  and  (iii)  Sublessee  delivers  its  irrevocable,  written
direction to Sublessor at least 15 days prior to the date  Sublessor is required
to give its renewal notice to Landlord.  In the event  Sublessee fails to direct
Sublessor to exercise the renewal  option,  Sublessor may  nevertheless do so in
its sole discretion.

     (i) As a material  inducement to Sublessor  entering into this Sublease and
agreeing to exercise the renewal  option  contained in the Overlease as provided
in the immediately preceding sentence, Sublessee acknowledges, covenants, agrees
and confirms  with  Sublessor  that,  at least 15 days but not more than 60 days
prior to the  expiration of the initial term of the  Overlease,  Sublessor  will
assign all of its right, title and interest therein to Sublessee,  and Sublessee
will  accept  such  assignment  and  assume  all of  Sublessor's  liability  and
obligations  under the  Overlease  that first arise from and after the effective
date of such  assignment.  Such  assignment,  acceptance and assumption shall be
effective  as of the last day of the initial  term of the  Overlease;  provided,
however,  that if an Event of Default has occurred and is  continuing  as of the
last day of the initial term of this Sublease,  such assignment,  acceptance and
assumption may be terminated by Sublessor in its sole discretion.

     (j)  Subject  to the rights of the  Landlord  under the  Overlease  and the
terms,  conditions and limitations  contained therein,  Sublessor covenants that
Sublessee shall have the right to peaceably and quietly have, hold and enjoy the
Premises during the term of this Sublease so long as Sublessee pays and performs
all of its obligations and liabilities  hereunder in strictly in accordance with
the terms hereof.

     17. Initial Build-Out. (a) Sublessee covenants and agrees that it shall, at
its  sole  cost and  expense,  perform  all work  necessary  or  appropriate  to
construct  and equip the  Premises  as a Bang & Olufsen  store  (the  "Work") in
accordance with the plans and specifications  therefor (the "Plans") approved by
Sublessor and Landlord.  Without  limiting the generality of the foregoing,  the
Work shall include installation of the storefront and storefront signs, customer
entrance door(s),  floor coverings,  plastering,  interior decorating,  wall and
ceiling  treatment,  completion  of  mechanical,   electrical,   plumbing,  fire
sprinkler, and heating, ventilating and air conditioning systems (as necessary),
installation  of electric  lights and fixtures (as necessary) and all other work
(whether structural or non-structural) necessary or required.

     (b) Prior to commencing  any portion of the Work,  Sublessee  shall prepare
and  submit  proposed  Plans to  Sublessor  and  Landlord  for their  review and
approval, which approval shall not be unreasonably withheld or delayed. Approval
of the Plans by Sublessor and/or Landlord shall not create any responsibility by
either of them for the accuracy,  sufficiency or  completeness  of the Plans, or
the compliance with any applicable laws, statutes,  ordinances, orders, decrees,
codes, rules or regulations (collectively, the "Laws"). The final Plans shall be
prepared  by a  registered  architect  of the  state in which the  Premises  are
located and licensed engineers for all items of the Work.

     (c)  Sublessee  shall not commence any portion of the Work prior to receipt
of the Landlord's  and  Sublessor's  approval of the Plans.  Upon receipt of the
approvals  from  Sublessor  and  Landlord,  Sublessee  shall  promptly  commence
construction  of the Work and shall  prosecute the same with due diligence  such
that Work shall be completed in time to permit the Premises to open for business
as a Bang & Olufsen  store on September 1, 2000 (the "Opening  Date").  The Work
shall be performed in compliance  with all applicable Laws  (including,  without
limitation,  the Americans  with  Disabilities  Act of 1990),  the Plans and the
terms of the Lease.  Sublessee  shall, at its sole cost and expense,  obtain all
permits,  approvals and consents  from any  governmental  or  quasi-governmental
authority having jurisdiction  therefor that may be required in order to perform
any portion of the Work.  During  construction of the Work,  Sublessee agrees to
keep the Premises free of trash or other debris.

     (d) Sublessee  shall obtain a certificate of occupancy  promptly  following
completion of the Work and shall  promptly  forward of copy of same to Sublessor
prior to the Opening Date. Further, as promptly as possible following completion
of the Work,  Sublessee  shall  furnish  Sublessor  with an original,  notarized
contractor's affidavit, all subcontractor's  affidavits and original,  notarized
final  waivers of lien from all  contractors  and  subcontractors  who  supplied
labor,  materials or supplies in connection with the performance of the Work. If
Sublessee or its contractor  fails to perform the Work, or any portion  thereof,
in a manner  that is  reasonably  satisfactory  to  Sublessor  or  Landlord  (as
applicable),  Sublessee shall correct, or cause to be corrected, all of the Work
as to which Sublessor or Landlord (as  applicable)  objects in writing within 20
days after receipt of such objection.

     (e) The Work shall be performed so as to avoid a labor dispute.  If a labor
dispute arises, Sublessee shall, at its sole cost and expense,  immediately take
such action as may be necessary or appropriate to end such dispute.

     (f) All Work,  including any repairs or corrections  to the Work,  shall be
performed in a first-class, workmanlike manner and shall be in a good and usable
condition upon completion thereof. All materials supplied in connection with the
Work and/or incorporated into the Premises, shall be new or like-new.  Sublessee
shall require any person or legal entity  performing  any portion of the Work to
warrant and guarantee that such Work is free from and all defects in workmanship
and materials for a period of one year from the date of completion thereof.  All
such warranties and guaranties for materials or workmanship  with respect to any
portion of the Work shall be set forth in the contract  with the  contractor  or
subcontractor,  as  applicable,  and shall  expressly  inure to the  benefit  of
Sublessor.

     (g)  Neither  Landlord  nor  Sublessor  shall be  liable  for any  labor or
materials  furnish  to or  for  the  benefit  of  Sublessee  on  credit,  and no
mechanic's  or  materialman's  lien for labor or  materials  shall  attach to or
affect any  interest  of Landlord or  Sublessor  in the  Premises or the land on
which the Premises are located.

     (h)   Sublessee's   contractor   must  fulfill  the   following   insurance
requirements  prior to  commencement  of any  portion  of the  Work,  and  shall
maintain, at such contractor's sole cost and expense, the following:

     (i) Worker's  Compensation  Insurance with statutory  limits and Employer's
Liability Insurance of not less than $100,000;

     (ii) General  Liability  Insurance with limits of not less than  $2,000,000
combined single limit for bodily injury and property damage,  including personal
injury,  Contractual  Liability  coverage  specifically  endorsed  to cover  the
indemnity  provisions  contained herein, and Contractor's  Protective  Liability
coverage if contractor uses any subcontractors;

     (iii) Motor Vehicle Liability Insurance in the contractor's name, including
owned,  non-owned,  leased and hired car coverage,  with limits of not less than
$2,000,000  combined  single limit per occurrence for bodily injury and property
damage.

     Sublessee shall cause each contractor to agree to name Landlord, Sublessor,
and their respective parents, subsidiaries and affiliates as additional insureds
on the General Liability Insurance and the Motor Vehicle Liability Insurance.

     (i)  Sublessee  shall  maintain  Builder's  Risk  Insurance  for  the  full
replacement value of the cost of the Work.

     (j)  Certificates  evidencing the required  insurance shall be furnished to
Sublessor  prior to  commencement  of any  portion  of the Work.  All  insurance
carriers shall have a Best's rating of A-VII or better,  and shall be registered
or authorized to do business in the state in which the Premises are located.

     (k) Each of  Sublessee's  contractors  shall also,  to the  fullest  extent
permitted under applicable Laws,  protect,  defend,  save harmless and indemnify
Landlord,  Sublessor and their respective  parents,  subsidiaries and affiliates
from and  against  any and all  liability,  claims,  losses,  fines,  penalties,
damages,  awards,  costs or expenses (including  reasonable  attorneys' fees and
disbursements)  incurred  as a result of any injury or damage,  alleged or real,
arising out of or in any way connected  with, any act or omission on the part of
such contractor.  Such indemnification  obligations shall be expressly set forth
in each contract between Sublessee and a contractor, and shall provide that such
obligations  inure to the  direct  benefit  of  Landlord,  Sublessor  and  their
respective parents, subsidiaries and affiliates.

     (l) Within ten days afer the opening for business,  Sublessor shall provide
Sublessee  with  one  set of  "as-built"  drawings  and  specifications  for the
Premises.


                            [SIGNATURE PAGE FOLLOWS]
<PAGE>



     IN WITNESS  WHEREOF,  the parties  hereto  have caused this  Sublease to be
executed as of the date first written above.

:                                         SUBLESSOR:

                                          BANG & OLUFSEN AMERICA, INC.


                                          By:
                                              ------------------------
                                          Its:
                                              ------------------------


                                          SUBLESSEE:

                                          HARVEY ELECTRONICS, INC.


                                          By:
                                              ------------------------
                                          Its:
                                              ------------------------