REPURCHASE AGREEMENT

     THIS REPURCHASE  AGREEMENT (this  "Agreement") is dated and effective as of
June __, 2000 by and among BANG & OLUFSEN AMERICA,  INC., a Delaware corporation
("BOA"),  PARAGON,  LLC, a Delaware  limited  liability  company  ("Lender") and
HARVEY ELECTRONICS, INC., a New York corporation ("Harvey").

                                    Recitals

     A. Harvey and Bender Realty,  ("Landlord")  have entered into a lease dated
December 23, 1999  (together with all  amendments  and  supplements  thereto and
restatements,  modifications,  extensions, renewals and/or replacements thereof,
the  "Lease")  in respect of the retail  store  location  commonly  known as 927
Broadway, New York, New York (the "New York Store").

     B.  Harvey and BOA have  entered  into a sublease  dated as of June 1, 2000
(together  with  all  amendments  and  supplements   thereto  and  restatements,
modifications, extensions, renewals and/or replacements thereof, the "Sublease")
in respect of the retail store location  commonly known as 86 Greenwich  Avenue,
Greenwich,  Connecticut  (the  "Greenwich  Store" and together with the New York
Store, the "Premises").

     C. Harvey and BOA have entered into (1) a Licensed  Dealer  Agreement dated
as of June 1, 1999 (together with all  amendments  and  supplements  thereto and
restatements,  modifications,  extensions, renewals and/or replacements thereof,
the "New York Dealer  Agreement")  with  respect to the New York Store and (2) a
Licensed Dealer Agreement dated as of June 1, 2000 (together with all amendments
and supplements thereto and restatements,  modifications,  extensions,  renewals
and/or replacements  thereof, the "Greenwich Dealer Agreement" and together with
the New York Dealer  Agreement,  the "Dealer  Agreements")  with  respect to the
Greenwich Store.

     D.  Pursuant  to the terms and  conditions  of the Dealer  Agreements,  BOA
appointed  Harvey as an authorized  Bang & Olufsen(R)  dealer for the purpose of
selling audio and video  products  produced by Bang & Olufsen a/s and sold under
the trademark  "Bang & Olufsen(R)"  or under other  proprietary  marks of Bang &
Olufsen Holding a/s (collectively, the "Products") at the Premises.

     E. In connection with Harvey's development and operation of the Business at
the  Premises,  Lender has agreed to make certain  financial  accommodations  to
Harvey pursuant to the terms and conditions of certain documents, agreements and
instruments  between  Lender  and  Harvey  (together  with  all  amendments  and
supplements thereto and restatements, modifications, extensions, renewals and/or
replacements thereof, the "Credit Documents"). Pursuant to the Credit Documents,
Harvey has granted a lien and security interest in and to certain of its assets,
including without  limitation,  all Products now owned or hereafter  acquired by
Harvey (as the same may be modified or extended from time to time, the "Security
Interest").

     F.  Harvey,   BOA  and  Lender  desire  to  establish  certain  rights  and
obligations in respect of the Products and the Premises.

     NOW  THEREFORE,  in  consideration  of the foregoing  Recitals,  the mutual
covenants  and  agreements  hereinafter  set forth,  and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, Lender, Harvey and BOA agree as follows:

     1. Repurchase by BOA.

     (a) If Harvey,  with the consent of Lender,  undertakes the  liquidation of
the Products  following any default under the Credit Documents or otherwise,  or
if Lender exercises its rights under the Credit Documents and obtains possession
of the  Products  for  purposes of  liquidation  of the  Products  after  Harvey
defaults under its obligations under the Credit Documents,  Harvey or Lender, as
the case may be, shall give BOA prompt notice thereof (the "Sale  Notice").  The
Sale Notice shall be accompanied by a complete list of all Non-Current  Products
(as defined in paragraph 1(c)) in Harvey's possession as of the date of the Sale
Notice (the "Non-Current Products Inventory List").

     (b) BOA  hereby  agrees  that  upon  receipt  of the Sale  Notice,  it will
purchase all Current  Products (as defined in paragraph  1(c)) in the possession
of Harvey as of the date of the Sale Notice, subject to the terms and conditions
of this  paragraph 1. BOA shall pay Lender as the purchase price for the Current
Products (the "Current  Products  Purchase Price") an amount equal to the amount
invoiced to Harvey by BOA for the Current  Products,  net of any ordinary course
discounts  received by Harvey in  connection  with Harvey's  acquisition  of the
Current Products.

     (c) As used herein, (i) the term "Current Products" means Products that are
among the authorized  Products  designated in Exhibit A-1 of the Licensed Dealer
Agreements  in effect as of the date of the Sale  Notice  and  contained  in the
original,  factory-sealed  packaging  and (ii) the term  "Non-Current  Products"
means Products  means  Products that bear a Bang & Olufsen serial number,  other
than Current Products.

     (d) In addition to BOA's  obligation  to purchase  the Current  Products as
provided in paragraph  1(b),  BOA shall have the option and first right (but not
the  obligation)  to  repurchase  all, but not less than all of the  Non-Current
Products  owned by Harvey  as of the date of the Sale  Notice  (the  "Repurchase
Option").  The  Repurchase  Option shall be  exercisable by BOA upon delivery of
notice  thereof to Lender and Harvey (a "Notice of Exercise") at any time within
three  business  days after the later to occur of (i) BOA's  receipt of the Sale
Notice or (ii) BOA's receipt of the  Non-Current  Products  Inventory  List (the
"Option  Period").  The Notice of Exercise  shall state the purchase price which
BOA is willing to pay for the Non-Current  Products.  Within three business days
after receipt of the Notice of Exercise, Lender shall deliver notice to BOA that
Lender  will  either  accept or reject  BOA's  proposed  purchase  price for the
Non-Current Products. If Lender fails to deliver such notice, it shall be deemed
to have rejected  BOA's  proposed  purchase  price.  If BOA fails to deliver the
Notice of  Exercise as provided  in this  paragraph  1(d) or if Lender  fails to
accept BOA's proposed  purchase price for the  Non-Current  Products,  BOA shall
have no further rights or obligations  in respect of the  Non-Current  Products;
provided,  however,  that BOA shall  still  purchase  the  Current  Products  in
accordance with this paragraph 1.

     (e) If Lender  accepts BOA's proposed  purchase  price for the  Non-Current
Products as set forth in the Notice of Exercise, BOA agrees that upon receipt of
such acceptance from Lender,  BOA will purchase all of the Non-Current  Products
owned by  Harvey  as of the date of the Sale  Notice,  subject  to the terms and
conditions  of this  paragraph  1. As used  herein,  (i) the  term  "Non-Current
Products  Purchase  Price"  shall mean the  purchase  price for the  Non-Current
Products  set forth in BOA's  Notice of Exercise and accepted by Lender and (ii)
the term "Purchase Price" shall mean the Current Products Purchase Price and, if
BOA is  obligated  to  purchase  the  Non-Current  Products  as provided in this
paragraph 1(e), the Non-Current Products Purchase Price.

     (f)  Settlement of the  obligations of the parties hereto in respect of the
sale,  conveyance  and  delivery  of  the  Purchased  Products  (as  hereinafter
defined),  and payment of the  Purchase  Price,  shall occur no later than three
business  days after the date BOA  delivers the Notice of Exercise to Lender and
Harvey (the "Closing").  As used herein, the term "Purchased Products" means the
Current  Products and, if BOA is obligated to purchase the Non-Current  Products
as provided in paragraph 1(e) above, the Non-Current Products.

     (g) BOA's  obligation to pay the Purchase Price shall be  conditioned  upon
delivery of the Purchased  Products to BOA at the Premises free and clear of all
liens and  encumbrances.  To the extent that Harvey  retains the right to occupy
the  Premises,  Harvey  hereby  covenants  agrees that delivery of the Purchased
Products  shall occur at the Premises and shall  cooperate  with the parties and
use its best efforts to effect such delivery at the Premises.

     (h) At Closing, BOA shall pay the Purchase Price to Lender by wire transfer
in accordance with Lender's written  instructions which shall be provided to BOA
at least  one  business  day  prior to  Closing.  The cost of all  handling  and
shipping costs, if any, arising out of the repurchase of the Purchased  Products
by BOA  pursuant  to this  paragraph 1 shall be borne  solely by Harvey.  Harvey
hereby  waives any and all right to  payment in respect of the sale,  conveyance
and delivery of the Purchased  Products to BOA as provided in this  paragraph 1.
The parties hereto agree that the sale of the Purchased  Products  hereunder and
the method of  establishing  the  Purchase  Price  therefor are for all purposes
commercially reasonable.

     (i) To protect and preserve  BOA's rights under this  Agreement,  if Lender
issues a Sale Notice, Lender covenants and agrees that it shall take such action
as may be reasonably  necessary,  but only to the extent permitted by applicable
law,  to  effect  a  secured  party  sale of the  Purchased  Products  to BOA in
accordance with the terms and conditions  hereof,  and of the applicable  Credit
Documents and provisions of the Uniform  Commercial Code. All costs and expenses
incurred by Lender in connection therewith shall be paid by Harvey. Any sale and
conveyance to BOA by Harvey or by Lender  hereunder shall be "as is" and without
recourse to Lender or Harvey.

     (j) If  after  Harvey  or  Lender  issues a Sale  Notice,  (i) BOA does not
deliver an  Exercise  Notice  within the  Option  Period;  or (ii) fails for any
reason,  including,  without  limitation,  failure of any of the  conditions set
forth in  subsection  1(g) hereof,  to pay the Purchase  Price at Closing,  then
Lender may, in its discretion,  exercise any and all of its rights  hereunder or
under  the  Credit  Documents  with  respect  to the  Products  without  further
obligation to BOA.  Notwithstanding the terms and conditions of the Lease or the
Sublease,  BOA shall  cooperate with Lender and shall not impair or interfere in
any way with  Lender's  right to take  possession  of the Products and any other
collateral, and remove same from the Premises.

     (k) BOA hereby  consents to the sale of any  Products  or other  collateral
which Lender is entitled to take  possession  of as provided in  paragraph  1(j)
and/or paragraph 2 at any location,  including without limitation,  any store or
other location at which Harvey conducts business (excluding the Premises).

     2.  Possession of the Premises.  In no event shall Lender have the right to
take  possession  of the  Premises,  notwithstanding  anything  to the  contrary
contained  in the  Credit  Documents  or any  other  agreement  between  Lender,
Landlord and/or BOA;  provided,  however,  that if a default has occurred and is
continuing  under any of the Credit  Documents,  Lender  shall have the right to
enter onto the Premises for a reasonable  period of time to take  possession  of
any Products (other than the Purchased  Products) or any other of its collateral
which may be located on the Premises, subject to the terms and conditions of the
Lease.  Subject to Lender's  right to enter onto the Premises as provided in the
immediately preceding sentence and/or in paragraph 1(h) (if applicable),  Lender
acknowledges  that BOA shall have the sole and exclusive  right to possession of
the Premises,  subject to the terms and conditions of (i) in the case of the New
York Store, the Lease and any other documents  between Landlord and BOA and (ii)
in the case of the Greenwich Store, the lease between BOA and its landlord.

     3. Notice of Amendment or  Termination.  Harvey shall give Lender notice of
any material  waiver,  amendment or other  modification  of either of the Dealer
Agreements  or of the  intention of Harvey to exercise its rights to terminate a
Dealer Agreement simultaneously with the giving of such notice to BOA.

     4. Status of Various  Agreements.  Harvey represents and warrants to Lender
and BOA that (i) no default or event of default  exists  under any of the Credit
Documents,  the Dealer  Agreements,  the Lease or the Sublease and (ii) no event
has occurred and no condition  exists which,  with the giving of notice or lapse
of time,  or both,  would  constitute a default or event of default under any of
the Credit Documents, the Dealer Agreements, the Lease or the Sublease.

     5. Notice of Default under Credit  Documents.  Harvey shall give BOA notice
if Harvey is at any time in default of any of its obligations under the Lease or
any of the Credit  Documents and Harvey has notice from  Landlord or Lender,  as
applicable,  that Landlord or Lender,  as applicable,  intends to take action to
enforce  its rights  pursuant  to the Lease or any of the Credit  Documents,  as
applicable.

     6. Method of Notice. Any notice, demand, or other communication
required or permitted to be given by any provision of this Agreement shall be in
writing addressed as follows:

                  If to BOA:           Bang & Olufsen America, Inc.
                                       1200 Business Center Drive
                                       Suite 100
                                       Mount Prospect, Illinois 60056
                                       Attention: President
                                       Facsimile Number: (847) 699-1475

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

                  If to Lender:        Paragon Capital, LLC
                                       Hillsite Office Building
                                       75 Second Avenue
                                       Suite 400
                                       Needham, Massachusetts 02494
                                       Attention: Mr. Andrew H. Moser, President
                                       Facsimile: (781) 707-2107

                  With copy to:        Ms. Mary Ellen Rogers
                                       Shapiro Israel & Weiner, P.C.
                                       100 North Washington Street
                                       Boston, Massachusetts 02114
                                       Facsimile: (617) 742-2355

                  If to Harvey:        Mr. Franklin Karp
                                       Harvey Electronics, Inc.
                                       205 Chubb Avenue
                                       Lyndhurst, New Jersey 07071
                                       Facsimile: (201) 842-0860

                  With copy to:        Mr. Richard Kaplan
                                       Rubin, Kaplan & Associates
                                       501 Hoes Lane
                                       Suite 100
                                       Piscataway, New Jersey 08854
                                       Facsimile: (732) 463-7648

Any such  notice,  demand  or other  communication  shall be deemed to have been
sufficiently  given or served for all purposes  upon:  (i) the actual receipt by
the  recipient,  if notice  is given by  personal  delivery  or any  method  not
described  below;  (ii) one  business day after  mailing,  if notice is given by
reputable overnight  commercial courier service;  (iii) five business days after
mailing,  if  notice  is given  by U.S.  mail,  postage  prepaid,  certified  or
registered,  return receipt requested; and (iv) when sent, if notice is given by
facsimile  and a  confirmation  copy of such  notice is  simultaneously  sent as
described in clauses (ii) or (iii) of this paragraph 6.

     7. Governing Law. This  Agreement  shall be governed by and  interpreted in
accordance with the laws of the Commonwealth of Massachusetts  without reference
to choice of law or conflict of law principles.

     8. Amendments.  This Agreement may be amended or modified only by a written
instrument executed by all of the parties hereto.

     9. No Reliance.  (i) Each of Lender, Harvey and BOA represents to the other
that:  (a) it is entering  into this  Agreement  on its own  account;  (b) it is
entering  into this  Agreement  in  accordance  with all laws,  regulations  and
statutes  affecting  or  otherwise  applicable  to it; (c) it has  reviewed  and
approved this Agreement and all of its agreements with any of the parties hereto
; (d) it has previously  entered into similar  agreements and made agreements of
the type and kind and  nature of those set forth in any of its  agreements  with
any of the  parties  hereto ; (e) it is  aware of and able to bear the  economic
risks involved in entering into this  Agreement and its  agreements  with any of
the parties  hereto and does not foresee the occurrence of any event which would
alter said ability; and (ii) Each of Lender and BOA represent to the other that:
(a) it has been given  adequate  opportunity  to review,  and have  reviewed all
financial  and  other  data  and  information  relating  to  Harvey  as it deems
necessary for it to make a determination to enter into this arrangement;  (b) it
has not relied upon the credit  judgment  or  analysis  of the other  concerning
Harvey  and has  independently  reached  its own  decision,  based  upon its own
assessment  and analysis of the financial  condition and affairs of Harvey,  and
(c)  agrees  that,  on a going  forward  basis,  it will not rely on the  credit
judgment  of the  other  concerning  Harvey  and will  continue  to make its own
decisions, based upon its own assessment and analysis of the financial condition
and  affairs  of  Harvey  when  determining  whether  to take or not to take any
discretionary  action under this Agreement or any of its agreements with Harvey.
(iii) Under no  circumstances  shall Lender have any  obligation  to provide BOA
with any  notice  of any  default  of  Harvey  under  the  Credit  Documents  or
otherwise.


                            [SIGNATURE PAGE FOLLOWS]
<PAGE>

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

                                       Bang & Olufsen America, Inc.


                                    By:_______________________
                                       Ole Bek, President


                                       Paragon Capital, LLC



                                    By:_______________________
                                   Its:_______________________

                                       Harvey Electronics, Inc.



                                    By:_______________________
                                       Franklin Karp, President