Document:

Exhibit 10.62

     EXHIBIT
      10.62

     

    EMPLOYMENT
      AGREEMENT

    

    EMPLOYMENT
      AGREEMENT dated as of October 18, 2004, among NATIONAL PENN BANCSHARES, INC.,
      a
      Pennsylvania business corporation and registered bank holding company (“NPB”);
      NATIONAL PENN BANK, a national banking association (“Bank”); and H. Anderson
      Ellsworth (“Officer”) (NPB and Bank are sometimes referred to herein
      collectively as “Employer”).

     

    BACKGROUND

    

    1. Officer
      is an officer, director and shareholder of Ellsworth, Carlton, Mixell &
Waldman, P.C. (“ECM&W”), a law firm headquartered in Wyomissing,
      Pennsylvania.

    

    2. ECM&W
      provides numerous legal services to NPB and Bank as general counsel, including
      advice regarding various Federal and state securities law compliance
      issues.

    

    3. In
      his
      capacity as an attorney with ECM&W, Officer is primarily responsible for
      supervising and performing the various legal services involved in connection
      with providing NPB and Bank with such securities law legal advice.

    

    4. Given
      the
      current securities law regulatory environment, NPB and Bank have determined
      that
      it is in NPB’s and Bank’s best interests to employ a securities law compliance
      director to concentrate solely on securities law compliance
      matters.

    

    5. NPB
      and
      Bank desire to employ Officer as Senior Vice President - SEC Compliance Director
      and Officer desires to be employed by NPB and Bank as Senior Vice President
      -
      SEC Compliance Director, on the terms and conditions set forth
      herein.

     

    AGREEMENT

    

    NOW,
      THEREFORE, in consideration of the mutual promises contained herein, and each
      intending to be legally bound, NPB, Bank and Officer agree as
      follows:

    

    1. Background.
      The
      matters set forth in the “Background” section of this Agreement are incorporated
      by reference herein.

    

    2. Position,
      Duties.

    

    (a) During
      the time this Agreement is in effect, NPB and Bank will employ Officer as Senior
      Vice President - SEC Compliance Director, or in such other comparable or higher
      ranking senior officer position as may from time to time be assigned to Officer
      by executive management of NPB or Bank. Officer accepts such employment, with
      such powers and duties as may from time to time be determined by an executive
      officer of
      NPB or
      Bank. Officer’s duties shall include compliance with Employer’s Code of Conduct
      as in effect from time to time.

     

     

    
      
        
        

      

      
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    (b) Officer
      will devote substantially all his time and attention to, and will use his best
      energies and abilities in the performance of, his duties and responsibilities
      as
      prescribed in this Section 2, and will not engage in consulting work or any
      trade or business for his own account or for or on behalf of any other person,
      firm or corporation which competes, conflicts, or interferes with the
      performance of his duties hereunder in any way. 

    

    3. Compensation.
      For all
      services to be rendered by Officer pursuant to Section 2, Employer will pay
      Officer a base salary of One Hundred Fifty Thousand Dollars ($150,000.00) per
      year (“Base Salary”). Employer shall pay such salary to Officer in approximately
      equal installments during each year on the customary salary payment dates of
      Employer, and such salary shall be subject to applicable income tax withholding,
      deductions required by law, and other deductions authorized by Officer. Employer
      will evaluate Officer’s performance annually, and Officer may be eligible for
      annual merit increases in base salary. A base salary increase shall, when it
      takes effect, become the new Base Salary for purposes of this
      Agreement.

    

    4. Health
      Insurance; Other Benefits.
      In
      addition to the compensation payable to Officer pursuant to Section 3 hereof,
      Officer shall be entitled during the time this Agreement is in effect:

    

    (a) To
      participate in all health insurance and benefit plans, group insurance, pension
      or profit-sharing plans, or other plan or plans providing benefits applicable
      generally to employees of NPB or Bank which are presently in force or which
      may
      hereafter be adopted by NPB or Bank.

    

    (b) To
      the
      receipt of a cell phone allowance, in such amount as shall be determined by
      Employer from time to time, in Employer’s sole discretion, but in no event less
      than $30 per month; and

    

    (c) To
      reasonable vacation and sick leave in accordance with Employer policy, as the
      same may be revised from time to time.

    

    5. Bonuses.
      As
      additional compensation for services rendered hereunder, Officer shall be
      entitled during the time this Agreement is in effect:

    

    (a) To
      participate as a “Type C Participant” in NPB’s Executive Incentive Plan,
      assuming such plan remains in effect, or at an equivalent level in any successor
      executive bonus plan covering the officers of NPB or Bank which may be adopted
      by NPB or Bank; and

    

    (b) To
      receive any discretionary bonus that may be awarded to him under the Executive
      Incentive Plan or such successor executive bonus plan.

     

     

    
      
        
        

      

      
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    Officer
      acknowledges that this Section 5 does not preclude NPB’s or Bank’s Board of
      Directors, as the case may be, from amending or terminating the Executive
      Incentive Plan or any other executive bonus plan in accordance with its
      terms.

    

    6. Equity-Based
      Compensation Program.
      Officer
      shall be eligible during the time this Agreement is in effect to participate
      in
      NPB’s long-term equity-based compensation program as in effect on the date
      hereof or as may hereafter be amended or modified from time to time. Any
      discretionary terms of grants or awards to Officer under such program (other
      than with respect to amount) shall be consistent with grants or awards to other
      senior officers generally.

    

    Officer
      acknowledges that this Section 6 does not preclude NPB’s Board of Directors from
      amending or terminating NPB’s long-term equity compensation program at any
      time.

    

    7. Change
      in Control.

    

    (a) If
      a
      Change in Control (defined in Section 7(b)) shall occur during the time this
      Agreement is in effect
      and if
      within one hundred eighty (180) days after the effective date of a Change in
      Control (or thirty (30) days after the completion of the conversion of the
      computer systems if such conversion is later than one hundred eighty (180)
      days
      after the effective date of a Change in Control, in either event, the
“Transition Period”) there shall be:

    

    (i) Any
      involuntary termination of Officer’s Employment (defined in Section 7(c)) (other
      than for Cause (defined in Section 8(c));

    

    (ii) Any
      reduction in Officer’s title, responsibilities or authority, including such
      title, responsibilities or authority as such may be increased from time to
      time;

    

    (iii) Any
      reduction in Officer’s Base Salary in effect immediately prior to a Change in
      Control, or any failure to provide Officer with benefits at least as favorable
      as those enjoyed by Officer under any of the pension, life insurance, medical,
      health and accident, disability or other employee plans of NPB or Bank in which
      Officer participated immediately prior to a Change in Control, or the taking
      of
      any action that would materially reduce any of such compensation or benefits
      in
      effect at the time of the Change in Control, unless such reduction relates
      to a
      reduction applicable to all employees generally;

    

    (iv) Any
      reassignment of Officer beyond a thirty (30) mile commute by automobile from
      Boyertown, Pennsylvania; or

    

    (v) Any
      requirement that Officer travel in performance of his duties on behalf of NPB
      or
      Bank for a greater period of time during any year than was required of Officer
      during the year preceding the year in which the Change in Control occurred
      (each
      of the foregoing, a “Triggering Event”); 

     

     

    
      
        
        

      

      
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    then,
      at
      the option of Officer, exercisable by Officer within one hundred eighty (180)
      days of the occurrence of any Triggering Event within the Transition Period,
      Officer may resign from Employment (or, if involuntarily terminated, give notice
      of intention to collect benefits hereunder) by delivering a notice in writing
      to
      NPB, in which case Officer shall be entitled to a lump sum cash severance
      payment equal to 100% of Officer’s Base Salary in effect immediately prior to a
      Change in Control, which Employer shall pay to Officer within fifteen (15)
      days
      of Officer’s termination of Employment.

    

    (b) “Change
      in Control” means:

    

    (i) An
      acquisition by any “person” or “group” (as those terms are defined or used in
      Section 13(d) of the Exchange Act) of “beneficial ownership” (within the meaning
      of Rule 13d-3 under the Exchange Act) of securities of NPB representing 24.99%
      or more of the combined voting power of NPB’s securities then
      outstanding;

    

    (ii) A
      merger,
      consolidation or other reorganization of Bank, except where the resulting entity
      is controlled, directly or indirectly, by NPB;

    

    (iii) A
      merger,
      consolidation or other reorganization of NPB, except where shareholders of
      NPB
      immediately prior to consummation of any such transaction continue to hold
      at
      least a majority of the voting power of the outstanding voting securities of
      the
      legal entity resulting from or existing after any transaction and
      a
      majority of the members of the Board of Directors of the legal entity resulting
      from or existing after any such transaction are former members of NPB’s Board of
      Directors;

    

    (iv) A
      sale,
      exchange, transfer or other disposition of substantially all of the assets
      of
      Bank to another entity, except to an entity controlled, directly or indirectly,
      by NPB;

    

    (v) A
      sale,
      exchange, transfer or other disposition of substantially all of the assets
      of
      NPB to another entity, or a corporate division involving NPB; or

    

    (vi) A
      contested proxy solicitation of the shareholders of NPB that results in the
      contesting party obtaining the ability to cast 25% or more of the votes entitled
      to be cast in an election of directors of NPB.

    

    (c) “Employment”
      means
      Officer’s employment by NPB and Bank at any particular time in the capacity
      described in Section 2 of this Agreement, or in such other comparable or higher
      ranking senior officer position.

     

     

     

    
      
        
        

      

      
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    (d) Officer
      shall not be required to mitigate the amount of any payment provided for in
      Section 7(a) by seeking other employment or otherwise, nor shall the amount
      of
      any payment or benefit provided for in Section 7(a) be reduced by any
      compensation earned by Officer as the result of employment by another employer
      or by reason of Officer’s receipt of or right to receive any retirement or other
      benefits after the date of termination of employment or otherwise.

    

    8. Term.
      

    

    (a) This
      Agreement shall be for a term of three years, beginning on October 18, 2004
      and
      ending on October 17, 2007, subject to earlier termination in the event of
      default by either party, or the sickness, disability, incapacity or other
      inability on the part of Officer to provide all or a substantial portion of
      the
      services pursuant to Section 2 hereof.

    

    (b) Officer
      may terminate his employment with Employer at any time. In such
      event:

    

    (i) This
      Agreement shall terminate at that time; and 

    

    (ii) Employer
      shall not be obligated to pay Officer any further compensation pursuant to
      Section 3, any further benefits pursuant to Sections 4 or 6, or any further
      bonuses pursuant to Section 5, in any case except for such compensation,
      benefits or bonuses, if any, accrued and unpaid through the date of
      termination.

    

    (c) Nothing
      contained in this Agreement shall be construed to prevent Employer from
      terminating this Agreement, and thus the Employment of Officer hereunder, at
      any
      time for “Cause.”

    

    As
      used
      in this Agreement, “Cause” means the occurrence of either of the
      following:

    

    (i) Officer’s
      conviction of, or plea of guilty or nolo contendere to, a felony or a crime
      of
      falsehood or involving moral turpitude; or

    

    (ii) The
      willful failure by Officer to substantially perform his duties to Employer,
      other than a failure resulting from Officer’s incapacity as a result of the
      Officer’s disability, which willful failure results in demonstrable material
      injury and damage to Employer. 

    

    Notwithstanding
      the foregoing, Officer’s Employment shall not be deemed to have been terminated
      for cause if such termination took place as a result of:

    

    (i) Questionable
      judgment on the part of Officer;

    

    (ii) Any
      act
      or omission believed by Officer in good faith, to have been in or not opposed
      to
      the best interests of Employer; or

     

     

     

     

    
      
        
        

      

      
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    (iii) Any
      act
      or omission in respect of which a determination could properly be made that
      Officer met the applicable standard of conduct prescribed for indemnification
      or
      reimbursement or payment of expenses under the Bylaws of NPB or Bank or the
      laws
      of the Commonwealth of Pennsylvania, or the directors and officers’ liability
      insurance of NPB or Bank, in each case as in effect at the time of such act
      or
      omission.

    

    In
      such
      event:

    

    (i) Employer
      shall give Officer a written notice of termination effective on the date
      specified by Employer in such notice, which notice shall contain a full
      statement of the facts and reasons for such termination;

    

    (ii) This
      Agreement shall terminate on the effective date specified in such notice;
      and

    

    (iii) Employer
      shall not be obligated to pay Officer any further compensation pursuant to
      Section 3, any further benefits pursuant to Sections 4 or 6, or any further
      bonuses pursuant to Section 5, in any case except for such compensation,
      benefits or bonuses, if any, accrued and unpaid through the date of
      termination.

    

    (d) Employer
      may terminate Officer’s employment without “Cause” at any time. In such
      event:

    

    (i) This
      Agreement shall remain in effect for the remainder of the term set forth in
      subsection 8(a);

    

    (ii) Employer
      shall continue to pay Officer the compensation set forth in Section 3 for the
      remainder of the term of this Agreement, at the times set forth in Section
      3;

    

    (iii) Employer
      shall continue to provide Officer with the health insurance benefits then being
      provided to Officer pursuant to Section 4(a) of this Agreement; and

    

    (iv) If
      a
      Change in Control (defined in Section 7(b)) shall occur prior to the end of
      the
      term of this Agreement, Employer shall pay to Officer the payment to which
      Officer would otherwise be entitled pursuant to Section 7(a).

    

    For
      purposes of this subsection 8(d), a termination of Officer’s employment due to
      his death or total disability shall be treated as if Officer was terminated
      without “Cause”, and Employer shall pay to Officer’s spouse the amounts that
      would be payable to Officer pursuant to subsections 8(d)(ii) and (iii) at the
      times set forth in such subsections. For purposes of this Section 8,
“Disability” means that, because of Officer’s injury or sickness, Officer cannot
      perform each of the material duties of his regular occupation, as determined
      by
      Employer in good faith. 

     

     

    
      
        
        

      

      
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    9. Non-Competition.
      Officer
      acknowledges that NPB is a registered bank holding company and financial
      services company engaged principally in the commercial and retail banking
      business through its ownership, support, operation and management of its banking
      subsidiary, Bank, and its other direct and indirect non-bank subsidiaries.
      Officer also acknowledges that NPB is a publicly traded company whose shares
      are
      listed on the National
      Market tier of The Nasdaq Stock Market. Officer acknowledges that his primary
      responsibilities for Employer as SEC Compliance Director include responsibility
      for ensuring that NPB remains compliant with the rules and regulations of the
      Securities and Exchange Commission under the Securities Act of 1933, as amended,
      and the Securities Exchange Act of 1934, as amended (the “Restricted Business”).
      Accordingly, during
      the longer of

    

    
      	(i)  	
              the
                time this Agreement is in effect,
                and

            

    

    
      

      	(ii)  	
              if
                Officer’s employment with Employer is voluntarily terminated by
                Officer

            

       

    

    and
      for a
      period of twenty four months thereafter, Officer shall not, directly or
      indirectly, acting alone or in conjunction with others:

    

    (a) Engage
      as
      a director, officer, employee, partner, member, five percent (5%) or more
      shareholder, agent, consultant or in any other capacity in the Restricted
      Business for any business that is in the financial services industry in any
      location that is within fifty (50) miles of Wyomissing, Berks County,
      Pennsylvania (it being understood that nothing in this Section 9(a) shall
      prevent Officer from becoming a director, officer, employee, partner, member,
      five percent (5%) or more shareholder, agent, consultant or engaging in any
      other capacity of or for an established law firm providing legal advice in
      the
      Restricted Business to financial service companies during the twenty four month
      period referenced above);

    

    (b) Request
      any customers of NPB or Bank to curtail or cancel their business with NPB or
      Bank;

    

    (c) Solicit,
      canvass or accept any business or transaction for any other person, firm,
      corporation, partnership or business similar to that of NPB or
      Bank;

    

    (d) Induce,
      or attempt to influence, any employee of NPB or Bank to terminate employment
      with NPB or Bank, or to enter into any employment or other business relationship
      with any other person (including Officer), firm, corporation or partnership;
      or

    

    (e) Act
      or
      conduct himself in any manner which he shall have reason to believe is inimical
      or contrary to the best interests of NPB or Bank.

     

     

     

    
      
        
        

      

      
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    Employer
      may enforce the provisions of this Section 9 by suit for damages, injunction,
      or
      both. Officer agrees that Employer would be irreparably injured by the breach
      of
      any provision of this Section 9, and money damages alone would not be an
      appropriate measure of the harm to Employer from such continuing breach.
      Therefore, equitable relief, including specific performance of the provisions
      of
      this Section 9 by injunction, would be an appropriate remedy for the breach
      of
      these provisions.

    

    10. Non-Disclosure.
      During
      the longer of

    

    
      	(i)  	
              the
                time this Agreement is in effect,
                and

            

    

    
      

      	(ii)  	
              the
                period of Officer’s employment with
                Employer

            

       

    

    and
      for a
      period of twenty four months thereafter, Officer shall not, directly or
      indirectly, acting alone or in conjunction with others, disclose to any person,
      firm or corporation any of the following information which is not otherwise
      in
      the public domain: any trade secret, any details of organization or business
      affairs, any names of past or present customers or employees of NPB, Bank or
      any
      other entity controlled by NPB or Bank, or any other information relating to
      the
      business of NPB, Bank or any other entity controlled by NPB or Bank.

    

    Employer
      may enforce the provisions of this Section 10 by suit for damages, injunction,
      or both. Officer agrees that Employer would be irreparably injured by the breach
      of any provision of this Section 10, and money damages alone would not be an
      appropriate measure of the harm to Employer from such continuing breach.
      Therefore, equitable relief, including specific performance of the provisions
      of
      this Section 10 by injunction, would be an appropriate remedy for the breach
      of
      these provisions.

    

    11.
      Release
      of Non-Competition Covenant.
      Notwithstanding Section 9 of this Agreement, if Employer terminates Officer's
      employment without cause pursuant to Section 8(d) of this Agreement, Officer
      may, at his option, at any time prior to termination of this Agreement pursuant
      to Section 8(a), elect to accept a position in the Restricted Business with
      another business that is in the financial services industry otherwise prohibited
      by Section 9(a) of this Agreement, in which case:

    

    (a) Officer
      shall concurrently give Employer written notice of such election;

    

    (b) This
      Agreement shall terminate immediately, including without limitation Section
      9
      hereof; and

    

    (c) Employer
      shall immediately cease making any payments or providing any health insurance
      benefits pursuant to Sections 8(d)(2), (3) or (4) of this
      Agreement.

    

    
      
         

        
        

      

      
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    12. Binding
      Effect, Assignment.

    

    (a) This
      Agreement shall be binding upon and inure to the benefit of NPB and Bank, and
      it
      shall be assignable to any corporation, bank or other entity which may acquire
      NPB’s or Bank’s business or all or substantially all of the assets of NPB or
      Bank, or with or into which NPB or Bank may be merged or consolidated, as
      provided in Section 12(b).

    

    (b) Each
      of
      NPB and Bank shall require any successor (whether direct or indirect, by
      purchase, merger, consolidation or otherwise) to all or substantially all of
      the
      business and/or assets of NPB or Bank to expressly assume and agree to perform
      this Agreement in the same manner and to the same extent that NPB or Bank would
      be required to perform it if no such succession had taken place. Failure to
      obtain such assumption and agreement prior to the effectiveness of any such
      succession shall constitute a breach of this Agreement, in which case a “Change
      in Control” (as defined in Section 7(b)) shall be deemed to have occurred and
      Officer shall have the immediate right to take the actions and receive the
      payments provided in Section 7 hereof. As used in this Agreement, “NPB” and
“Bank” shall mean NPB and Bank as previously defined and any successor to the
      business and/or assets of NPB or Bank as aforesaid which assumes and agrees
      to
      perform this Agreement by operation of law or otherwise.

    

    (c) This
      Agreement shall be binding upon and inure to the benefit of Officer, his
      personal and legal representatives, heirs, distributees, devisees and assigns.
      Notwithstanding the foregoing, the obligations and duties of Officer hereunder
      shall be personal and not assignable or delegable by him in any manner
      whatsoever.

    

    13. Notices.
      All
      notices or other communications hereunder shall be in writing and shall be
      deemed given upon delivery if delivered personally or two business days after
      mailing if mailed by prepaid, registered or certified mail, return receipt
      requested, addressed as follows:

    

    

      
        	                                             If
                to NPB, to:
	 	 
	 	
                Wayne
                  R. Weidner

              
	 	
                Chairman,
                  and Chief Executive Officer

              
	 	
                National
                  Penn Bancshares, Inc.

              
	 	
                Reading
                  and Philadelphia Avenues

              
	 	
                Boyertown,
                  PA 19512

              
	 	 
	                                             If
                to Bank, to:
	 	 
	 	
                Glenn
                  E. Moyer

              
	 	
                President
                  and Chief Executive Officer

              
	 	
                National
                  Penn Bank

              
	 	
                Reading
                  and Philadelphia Avenues

              
	 	
                Boyertown,
                  PA 19512

              

      

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    

      
        	                                             If
                to Officer, to:
	 	 
	 	
                H.
                  Anderson Ellsworth

              
	 	
                65
                  Wellington Boulevard

              
	 	
                Wyomissing,
                  PA 19610

              

      

    or
      to
      such other address as may have been previously furnished by the party to the
      other by notice given in the manner provided herein.

    

    14. Entire
      Agreement.
      This
      Agreement is intended by the parties to constitute and does constitute the
      entire agreement between NPB, Bank and Officer with respect to the employment
      of
      Officer by NPB and Bank. This Agreement supersedes any and all prior agreements,
      understandings, negotiations and discussions of the parties, whether oral or
      written.

    

    15. Amendment.
      This
      Agreement may be amended, modified, waived, discharged or terminated only by
      an
      instrument in writing signed by Officer, an authorized officer of NPB or an
      authorized officer of Bank, as the case may be, against whom or which
      enforcement of the amendment, modification, waiver, discharge or termination
      is
      sought.

    

    16. Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the domestic
      internal law of the Commonwealth of Pennsylvania.

    

    17. Interpretation
      of Provisions.
      Wherever possible, each provision of this Agreement shall be interpreted in
      such
      manner as to be effective and valid under applicable law, but if any provision
      of this Agreement shall be prohibited by or invalid under applicable law, such
      provision shall be ineffective to the extent of such prohibition or invalidity,
      without invalidating the remainder of such provision or the remaining provisions
      of this Agreement.

    

    18. Captions.
      The
      captions contained in this Agreement are for reference purposes only and are
      not
      part of this Agreement.

    

    19. Joint
      and Several Obligations.
      All
      obligations of NPB and Bank herein shall be joint and several
      obligations.

    

    

    

    

    [THE
      REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

    
      
         

        
        

      

      
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    20. Survival.
      Notwithstanding any termination of this Agreement, the provisions of Sections
      7,
      9 and 10 shall, except as otherwise expressly provided herein, survive such
      termination and remain in full force and effect.

    

     

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

    
 

    
      
        	 	
                NATIONAL
                  PENN BANCSHARES, INC.

              
	 	 
	 	 
	 	
                By:
                  /s/
                  Wayne R. Weidner

              
	 	
                Name:
                  Wayne R. Weidner

              
	 	
                Title:
                  Chairman/CEO

              
	 	 
	 	 
	 	
                NATIONAL
                  PENN BANK

              
	 	 
	 	 
	 	
                By:
                  /s/
                  Glenn E. Moyer

              
	 	
                Name:
                  Glenn E. Moyer

              
	 	
                Title:
                  President/CEO

              
	 	 
	 	 
	
                Witness:
                  /s/
                  Sandra L. Spayd

              	
                /s/
                  H. Anderson Ellsworth

              
	 	
                H.
                  Anderson Ellsworth

              

      

    

     

     

    11Exhibit 10.3

                            THIRD AMENDMENT AGREEMENT

     THIS THIRD AMENDMENT  AGREEMENT (this "Third Amendment") is entered into as
of  February  17,  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  Third
Amendment  shall  have  been  executed  by each of the  parties  hereto  and all
conditions set forth in Section 3 of this Third  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 on the last day of each fiscal month,  allow
EBITDA for such fiscal month to vary negatively by more than the following:

                  Month Ending:                      Amount:
                  ------------                       ------

                  November, 2005                     $188,000
                  December, 2005                     $188,000
                  January, 2006                      $188,000
                  February, 2006                     $165,000
                  March, 2006                        $165,000
                  April, 2006                        $165,000
                  May, 2006                          $165,000
                  June, 2006                         $165,000
                  July, 2006                         $165,000
                  August, 2006                       $165,000
                  September, 2006                    $165,000
                  October, 2006                      $165,000

     (b) EBITDA for the rolling  three fiscal month period ended on the last day
of each fiscal month to vary negatively by more than the following:

                  Month Ending:                      Amount:
                  ------------                       ------

                  November, 2005                     $375,000
                  December, 2005                     $375,000
                  January, 2006                      $375,000
                  February, 2006                     $330,000
                  March, 2006                        $330,000
                  April, 2006                        $330,000
                  May, 2006                          $330,000
                  June, 2006                         $330,000
                  July, 2006                         $330,000
                  August, 2006                       $330,000
                  September, 2006                    $330,000
                  October, 2006                      $330,000

     (b)  Subsection  7.21 of the Loan  Agreement is hereby  further  amended by
adding the following clause (d) thereto:

          (d)(i) Minimum EBITDA (Section 7.2 1(a)): Excess Availability.  Lender
               agrees that the one month  Minimum  EBITDA  covenant set forth at
               Section  7.21(a)  above  will not be tested as of the last day of
               any fiscal month during which the Borrower's average daily Excess
               Availability was equal to or greater than $1,500,000.

          (ii) Additional   Capital.  If  at  any  time  the  Borrower  receives
               additional capital in the form of equity or subordinated debt, in
               either  instance  on terms  and  conditions  satisfactory  to the
               Lender in its Permitted  Discretion,  in the minimum gross amount
               of  $3,500,000,   then  the   $1,500,000   average  daily  Excess
               Availability  referred to in the foregoing clause (d)(i) shall be
               deemed reduced to $1,000,000.

     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 Third 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 Third Amendment:

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

     (b) the  representations  and warranties in this Third 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 Third Amendment.

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

     (a) the execution,  delivery, and performance of this Third 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 Third Amendment has been duly executed and delivered by Borrower;

     (c)  this  Third  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 Third 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 Third 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 Third 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  Third  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 Third  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
Third  Amendment  by  facsimile  shall be as effective as delivery of a manually
executed  counterpart of this Third Amendment.  Any party delivering an executed
counterpart  of this Third  Amendment by facsimile also shall deliver a manually
executed  counterpart  of this  Third  Amendment  but the  failure  to deliver a
manually executed counterpart shall not affect the validity, enforceability, and
binding effect of this Third Amendment.

                   [Signatures appear on the following page.]

<PAGE>

     IN WITNESS  WHEREOF,  Borrower and Lender caused this Third 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/ Patrick Wallace
                                ------------------------------------------
                                Name: Patrick Wallace
                                Title:    Senior Vice President

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