HARVEY ELECTRONICS, INC.

                                                        October 2006

Michael E. Recca
949 Edgewood Avenue
Pelham, NY  10803

Dear Mike:

     This letter sets forth the  agreement  between you and Harvey  Electronics,
Inc.  and  its  affiliates  (collectively,   the  "Company")  relating  to  your
termination as the Company's Chairman of the Board.

     1.  Termination.  Effective as of the closing of the Transaction as defined
in the Company's  definitive  proxy  materials (the "Proxy") dated September 21,
2006 and filed with the Securities and Exchange Commission, all of your offices,
directorships and memberships on managing bodies which you hold with the Company
and its  affiliates  have been  terminated;  provided,  that you shall  remain a
director of the Company  pursuant to the terms and  conditions  set forth in the
Proxy.

     2. Payments and Benefits.  In  consideration of your agreement to the terms
of this  letter  agreement,  your  termination  from all offices and the release
incorporated  herein,  as well as your  commitment to abide by these terms,  the
Company,  upon the full execution and delivery of this  Agreement,  will pay you
the sum of One Hundred  Thousand  ($100,000)  Dollars plus such amounts equal to
sixty (60%) percent of the medical insurance  premiums payable under COBRA, less
required deductions,  for a period of twelve months. You agree that you shall be
responsible  for the  remaining  forty (40%)  percent of the  medical  insurance
premiums payable under COBRA for the twelve month period.

     3.  Cooperation.  You  acknowledge  and  agree  that as a  director  of the
Company,  you have  continuing  fiduciary and other  obligations  to the Company
which will  continue  irrespective  of the  execution of this letter  agreement.
Following the execution of this letter  agreement  and any  termination  of your
directorship  with the  Company,  you agree to provide  assistance  to and shall
cooperate with the Company upon its  reasonable  request with respect to matters
within the scope of your duties and responsibilities  during your service to the
Company as Chairman.  The Company agrees and acknowledges  that it shall, to the
maximum extent possible under then prevailing circumstances, coordinate any such
request with your other commitments and  responsibilities to minimize the degree
to which such request interferes with such commitments and responsibilities. The
Company agrees that it will reimburse you for reasonable  travel expenses (i.e.,
travel,  meals,  and lodging) that you may incur in providing  assistance to the
Company hereunder.

     4.  Nondisclosure and  Nondisparagement.  Following any termination of your
directorship,  unless  required by law,  you will not, for yourself or any other
person or entity,  directly or  indirectly,  divulge,  communicate or in any way
make  use  of  any  confidential  or  proprietary  information  acquired  in the
performance  of  your  services  for  the  Company  or  any  of  its  affiliates
(including,  without  limitation,  your service as Chairman),  without the prior
written consent of the Chairman of the Board.  You agree that, upon request from
the  Company,  all  documents  and  property of the  Company and its  affiliates
including  those  containing  confidential or proprietary  information,  will be
returned to the Company  promptly.  Except as  otherwise  required by law, or as
permitted in the immediately succeeding sentence, you agree to keep confidential
the  existence  and terms and  content of this letter  agreement  as well as the
amount of the Company's  payments and benefits  provided to you  hereunder.  You
represent  that you have not disclosed,  and will not disclose such  information
except for (i)  private  conversation  with  members of your  family who are not
members of the media or stock analyst community, (ii) private conversations with
your personal accountant, and tax and legal adviser(s), and (iii) communications
to a prospective  new employer about the existence of this letter  agreement and
the covenants by which you are bound hereunder,  and without the Chairman of the
Board's consent, you will not disclose the specific economic terms or amounts of
your payments and benefits hereunder, other than to the parties described in the
immediately preceding clauses (i) and (ii). You agree that you will not make any
statements,  written or oral,  which would be reasonably  likely to disparage or
damage the Company, its affiliates or the personal or professional reputation of
any present or former employees,  officers or members of the board or committees
of the Company or its affiliates.  The Company agrees that it will instruct each
of its  officers  and  members  of its  board  of  directors  not  to  make  any
statements,  written or oral,  which would be reasonably  likely to disparage or
damage you or your personal or professional reputation and no director,  officer
or employee of the Company will be authorized  on the  Company's  behalf to make
any such disparaging communications regarding you.

     Notwithstanding  the foregoing,  nothing contained in this Letter Agreement
will  prohibit  you,  the Company or any other party from  complying  with legal
process to the extent required by applicable law,  provided,  however,  that (1)
you must  provide the  Company,  and (2) the Company  shall  provide  you,  with
written  notice  of any such  process  as soon as  practicable  upon your or the
Company's receipt of such process.

     5.  Nonsolicitation and Noncompetition.  You agree that for a period of two
(2) years from the date hereof, you will not (a) solicit or recruit any employee
of the Company or any affiliate  for the purpose of being  employed by you or by
any entity other than the Company or a Company  subsidiary,  or employ or engage
or cause  to be  employed  or  engaged  any  such  employee  as an  employee  or
independent  contractor  of any  person or entity  other  than the  Company or a
Company subsidiary,  and (b) you will not solicit or entice any current customer
of the Company to become a customer of yourself or any future  employer or refer
any customer of the Company to any competitor of the Company within  one-hundred
fifty (150) miles of New York City.

     6.  Release.  You  release  and  waive  all  claims  and  causes  of action
(including,  without  limitation,  any claims  under the Age  Discrimination  in
Employment  Act)  which you have or may have  against  the  Company,  directors,
officers and employees,  any party  participating in any way in the Transaction,
and their respective affiliates  (collectively,  the "Released Parties") arising
out of your service as Chairman and the termination of such service in each case
on or prior to the date  hereof,  other than such  claims or causes of action as
may arise under the terms of this letter agreement.

     You  acknowledge  that you have been  advised by the  Company to, and have,
consulted with an attorney in connection  with this  Agreement.  You acknowledge
that you fully understand the terms,  conditions,  significance and consequences
of this Agreement. You further acknowledge that you have had at least 21 days in
which to consider,  execute,  and return this  Agreement.  Notwithstanding  your
right to consider this Agreement for 21 days, if you sign this Agreement  before
the  expiration  of the  21-day  period,  you will  have done so  knowingly  and
voluntarily,  and  will  have  expressly  waived  your  right to  consider  this
Agreement for the balance of the 21-day period.

     7. Other Agreements.  Effective as of the date hereof, all prior agreements
relating to your  engagement  by the Company  and your  service as an  employee,
director,  consultant or other independent contractor to the Company and each of
its  affiliates  will terminate and be no further force or effect and you hereby
waive all rights, benefits, claims and causes of action under those agreements.

     8. Governing Law and Jurisdiction.  This letter agreement will be construed
and enforced in  accordance  with the laws of New York,  without  regard for the
conflicts of law  principles  thereof.  The parties  irrevocably  agree that any
legal  action  or  proceeding  with  respect  to this  letter  agreement  or for
recognition and enforcement of any judgment in respect hereof brought by a party
hereto or its  successors  or assigns may be brought and  determined  in any New
York state court or Federal  court  sitting in the State of New York,  County of
Nassau or the Eastern  District of New York,  and each of the parties hereby (x)
irrevocably  submits with regard to any such action or proceeding for itself and
in respect to its  property,  generally  and  unconditionally,  to the exclusive
personal  jurisdiction  of the aforesaid  courts in the event any dispute arises
out of this  letter  agreement,  (y) agrees  that it will not attempt to deny or
defeat such personal  jurisdiction by motion or other request for leave from any
such court and (z) agrees  that it will not bring any  action  relating  to this
letter agreement or any transaction  contemplated hereby in any court other than
any New York state or Federal court sitting in the State of New York,  County of
Nassau.  Any service of process to be made in such action or  proceeding  may be
made by delivery of process in accordance with the notice  provisions  contained
in paragraph 9 hereof.

     9.  Notices.  Except  as  otherwise  explicitly  provided  in  this  letter
agreement,  any  notice  provided  hereunder  will be  deemed  to be given  when
delivered  in writing by hand or sent by overnight  courier.  All notices to the
Company will be addressed to Joseph J.  Calabrese,  with a copy sent by the same
means to Ruskin Moscou  Faltischek,  P.C., 1425 Reckson Plaza,  East Tower, 15th
Floor,  Uniondale,  New York 11556,  Attn:  Seth I. Rubin,  Esq.,  or such other
persons or  addresses  as the Company may provide from time to time by notice to
you. All notices to you will be addressed to you and sent to your home  address,
as on file with the Company as of the date hereof,  or such other address as you
may  provide  from time to time by notice  to the  Company,  with a copy to such
persons  or  addresses  as you may  request  from  time to time by notice to the
Company.

     10. Taxes. The Company makes no  representations or warranties with respect
to the tax  consequences  of the  payment  of any sums to you under the terms of
this  Agreement.  You agree and understand that you are responsible for payment,
if any, of local,  state and/or  federal taxes on the sums paid hereunder by the
Company and any penalties or assessments thereon. You further agree to indemnify
and hold the Company harmless from any claims, demands, deficiencies, penalties,
assessments,  executions,  judgments,  or  recoveries by any  government  agency
against the Company  for any amounts  claimed due on account of your  failure to
pay federal or state taxes or damages  sustained by the Company by reason of any
such claims, including reasonable attorneys' fees.

     11. No  Representations.  Each party hereto  represents that it has had the
opportunity to consult with an attorney,  and has carefully read and understands
the scope and effect of the  provisions  of this  Agreement.  Neither  party has
relied upon any  representations  or  statements  made by the other party hereto
which are not specifically set forth in this Agreement.

     12.  Severability.  In the event that any  provision  hereof  becomes or is
declared by a court of competent  jurisdiction to be illegal,  unenforceable  or
void,  this  Agreement  shall  continue  in full force and effect  without  said
provision.

     13. Payment of Compensation. Except for those items specifically identified
herein,  you  acknowledge  and  represent  that the Company has paid all salary,
wages, bonuses, accrued vacation, commissions and any and all other benefits due
to you up through and including the date hereof.

     This  letter  agreement  may be  executed in  counterparts,  including  via
facsimile.

                                     HARVEY ELECTRONICS, INC.


                                     By:/s/D. Andrew Stackpole
                                        ------------------------------------
                                        Name: D. Andrew Stackpole
                                        Title: Chairman of the Board

Accepted and Agreed:

By:  /s/ Michael E. Recca
     ---------------------
     Michael E. Recca