Document:

EX-10.5

 

Exhibit 10.5

BOB EVANS FARMS, INC.

2006 EQUITY AND CASH INCENTIVE PLAN

CASH-BASED AWARD AGREEMENT

(For Employees — PIP Award)

     In recognition of your participation in the Bob Evans Farms, Inc. Performance Incentive Plan,
Bob Evans Farms, Inc. (“we” or “us”) has granted to you a Cash-Based Award (the “Award”), subject
to the terms and conditions described in the Bob Evans Farms, Inc. 2006 Equity and Cash Incentive
Plan (the “Plan”) and this Cash-Based Award Agreement (this “Award Agreement”).

     To ensure you fully understand the terms and conditions of your Award, you should read the
Plan and this Award Agreement carefully. Capitalized terms that are not defined in this Award
Agreement have the same meanings as in the Plan.

     You should return a signed copy of this Award Agreement to:

[Insert title]

Bob Evans Farms, Inc.

3776 S. High St.

Columbus, Ohio 43207

1. Summary of Your Award

     Grant Date: [insert Grant Date].

     Amount of Award: $[___]

2. Vesting

     (a) Subject to the provisions of the Plan and this Award Agreement (including Section 3), your
Award will become fully vested with respect to:

	 	(i)	 	$[___] on the first anniversary of the Grant Date;
	 
	 	(ii)	 	$[___] on the second anniversary of the Grant Date; and
	 
	 	(iii)	 	$[___] on the third anniversary of the Grant Date.

     (b) Notwithstanding the foregoing and unless otherwise specified in a separate change in
control agreement (or written agreement of similar import) between you and us or any Related
Entity, your Award will become fully vested if a Business Combination or Change in Control occurs
and:

     (i) We are not the surviving corporation following such Business Combination or Change
in Control; or

 

 

     (ii) Within 24 months following such Business Combination or Change in Control, the
Plan is terminated and not replaced simultaneously with a similar program providing
comparable benefits; or

     (iii) Within 24 months following such Business Combination or Change in Control, your
employment is Terminated by us and the Related Entities without Cause or by you for Good
Reason (as defined below).

Unless otherwise specified in an employment agreement or change in control agreement between you
and us or any Related Entity, “Good Reason” means, without your written consent, (I) our or a
Related Entity’s failure to pay or cause to be paid your base salary or bonus (to the extent earned
in accordance with the terms of any applicable arrangement), if any, when due, (II) any substantial
and sustained diminution in your authority or responsibilities with us or any Related Entity or
(III) we or a Related Entity require you to relocate more than 50 miles from your principal place
of employment on the Grant Date; provided that the events described in clauses (I), (II)
and (III) will constitute Good Reason only if we fail to cure such event within 30 days after we
receive from you written notice of the event which constitutes Good Reason. “Good Reason” will
cease to exist for an event on the 60th day following the later of its occurrence or
your knowledge thereof, unless you have given us written notice thereof prior to such date.

     (c) Notwithstanding the foregoing, your Award will become fully vested on the date (i) you
reach age 55 and have been credited with at least ten years of service with the Group or (ii)(A)
the sum of your age (measured in whole years only) and years of service (measured in whole years
only) with the Group equals 70 and (B) you have been credited with at least ten years of service
with the Group.

3. Effect of Termination on Your Award

     (a) Death or Disability: If you Terminate due to your death or Disability, your Award will
become fully vested on your Termination date.

     (b) Termination for Cause or Any Reason Other Than Death or Disability: If you Terminate for
Cause or, except as set forth in Section 2(b), Terminate for any reason other than due to your
death or Disability, the unvested portion of your Award will be forfeited on your Termination date.

4. Distribution of Your Award

If all applicable terms and conditions have been satisfied, the vested portion of your Award will
be distributed to you in cash as soon as administratively feasible, but no later than 30 days,
after it vests.

2

 

5. Restrictive Covenants

Unless we or a Related Entity otherwise agree in writing, any outstanding portion of your Award
will be forfeited if you:

	 	•	 	Serve (or agree to serve) as an officer, director, manager, consultant or
employee of any proprietorship, partnership, corporation or limited liability
company or become the owner of a business or a member of a partnership or limited
liability company that competes with any portion of our or a Related Entity’s
business or renders any service to entities that compete with any portion of our or
a Related Entity’s business;
	 
	 	•	 	Refuse or fail to consult with, supply information to, or otherwise cooperate
with, us or any Related Entity after having been requested to do so; or
	 
	 	•	 	Deliberately engage in any action that the Committee concludes could harm us or
any Related Entity.

6. Other Rules Affecting Your Award

     (a) Beneficiary Designation: You may name a beneficiary or beneficiaries to receive any
portion of your Award that has not been distributed at the time of your death by completing a
Beneficiary Designation Form. If you have not completed a Beneficiary Designation Form or if you
wish to change your beneficiary, you may complete the Beneficiary Designation Form attached to this
Award Agreement as Exhibit A. The Beneficiary Designation Form does not need to be
completed now and is not required to be completed as a condition of receiving your Award. However,
if you die without completing a Beneficiary Designation Form or if you do not complete the form
correctly, your beneficiary will be your surviving spouse or, if you do not have a surviving
spouse, your estate.

     (b) Tax Withholding: You may be required to pay to us or a Related Entity and we or any
Related Entity will have the right and are hereby authorized to withhold from any amount payable
under this Award Agreement or under the Plan or from any compensation or other amount owing to you,
applicable withholding taxes with respect to your Award and to take such action as may be necessary
in our opinion to satisfy all obligations for the payment of such taxes.

     (c) Transferring Your Award: In general, your Award may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, except by will or the laws of descent and
distribution. However, as described in Section 6(a), you may complete a Beneficiary Designation
Form to name the person who may receive any portion of your Award that is distributed after you
die. Also, with the Committee’s consent, you may be allowed to transfer your Award to certain
Permissible Transferees (as defined in the Plan). Contact us at the address given on the first
page of this Award Agreement if you are interested in transferring your Award to a Permissible
Transferee.

3

 

     (d) Governing Law: This Award Agreement will be construed in accordance with and governed by
the laws (other than laws governing conflicts of laws) of the State of Ohio except to the extent
that the Delaware General Corporation Law is mandatorily applicable.

     (e) Other Agreements: Your Award will be subject to the terms of any other written agreements
between you and us to the extent that those other agreements do not directly conflict with the
terms of the Plan or this Award Agreement.

     (f) Other Terms and Conditions: Your Award is subject to the terms and conditions described
in this Award Agreement and the Plan, which is incorporated by reference into and made a part of
this Award Agreement. You should read the Plan carefully to ensure you fully understand all the
terms and conditions of your Award. In the event of a conflict between the terms of the Plan and
the terms of this Award Agreement, the terms of the Plan will govern. The Committee has the sole
responsibility of interpreting the Plan and this Award Agreement, and its determination of the
meaning of any provision in the Plan or this Award Agreement shall be binding on you.

     (g) Signature in Counterparts: This Award Agreement may be signed in counterparts, each of
which will be deemed an original, but all of which will constitute one and the same instrument.

* * * * *

Your Acknowledgment

By signing below as the “Participant,” you acknowledge and agree that:

	 	•	 	A copy of the Plan has been made available to you; and
	 
	 	•	 	You understand and accept the terms and conditions placed on your Award.

	 	 	 	 	 
	PARTICIPANT
	 	 	 	 
	 
	 	 	 	 
	 

	 	Date:	 	 
	 	 	 	 	 
	Signature
	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	Print Name
	 	 	 	 

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	BOB EVANS FARMS, INC.	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	 	 	Date:	 	 
	 	 	 	 	 	 	 
	 	 	[Insert name and title]	 	 	 	 

4

 

EXHIBIT A

BOB EVANS FARMS, INC.

2006 EQUITY AND CASH INCENTIVE PLAN

BENEFICIARY DESIGNATION FORM

Primary Beneficiary Designation. I designate the following person(s) as my primary beneficiary or
beneficiaries, in the proportion specified, to receive or to exercise any vested Awards under the
Bob Evans Farms, Inc. 2006 Equity and Cash Incentive Plan (the “Plan”) that are unpaid or
unexercised at my death:

	 	 	 	 	 
	 
	 	 	 	 
	     % to
	 	 	 	 
	 	 	 	 	 
	 

	 	(Name)
	 	(Relationship)
	 
	 	 	 	 
	Address:
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	     % to
	 	 	 	 
	 	 	 	 	 
	 

	 	(Name)
	 	(Relationship)
	 
	 	 	 	 
	Address:
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	     % to
	 	 	 	 
	 	 	 	 	 
	 

	 	(Name)
	 	(Relationship)
	 
	 	 	 	 
	Address:
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	     % to
	 	 	 	 
	 	 	 	 	 
	 

	 	(Name)
	 	(Relationship)
	 
	 	 	 	 
	Address:
	 	 	 	 
	 	 	 

Note: You are not required to name more than one primary beneficiary but, if you do, the sum of
these percentages may not be greater than 100 percent.

Contingent Beneficiary Designation. If one or more of my primary beneficiaries dies before I die,
I direct that any vested Awards under the Plan that are unpaid or unexercised at my death and that
might otherwise have been paid to that beneficiary be:

	 	 	 	 	 
	 
	 	 	 	 
	      Allocated to my other named primary beneficiaries in proportion to the allocation
given above (ignoring the interest allocated to the deceased primary beneficiary); or
	 
	 	 	 	 
	      Allocated, in the proportion specified, among the following contingent beneficiaries:
	 
	 	 	 	 
	     % to
	 	 	 	 
	 	 	 	 	 
	 

	 	(Name)
	 	(Relationship)
	 
	 	 	 	 
	Address:
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	     % to
	 	 	 	 
	 	 	 	 	 
	 

	 	(Name)
	 	(Relationship)
	 
	 	 	 	 
	Address:
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	     % to
	 	 	 	 
	 	 	 	 	 
	 

	 	(Name)
	 	(Relationship)
	 
	 	 	 	 
	Address:
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	     % to
	 	 	 	 
	 	 	 	 	 
	 

	 	(Name)
	 	(Relationship)
	 
	 	 	 	 
	Address:
	 	 	 	 
	 	 	 

Note: You are not required to name more than one contingent beneficiary but, if you do, the sum
of these percentages may not be greater than 100 percent.

	 	 	 
	 
	 	 
	 	 	 
	(Signature)

	 	(Date)
	 
	 	 
	 
	 	 
	 	 	 
	(Print Name)
	 	 

Please return an executed copy of this form to us at the following address: [Insert Title],
Bob Evans Farms, Inc., 3776 S. High St., Columbus, Ohio 43207.N E W S T R E A M

                                  C A P I T A L

June 18, 2007

Harvey Electronics, Inc.
205 Chubb Avenue
Lyndhurst. NJ 0701

Re:      Commitment For $7,500,000 Senior Secured Revolving Credit Facility
         ------------------------------------------------------------------

Dear Martin:

New Stream Commercial Finance, LLC ("Lender") is pleased to offer its commitment
to provide,  on the terms and subject to the conditions set forth in this letter
(together with Schedule A attached hereto, this "Commitment  Letter"),  a Senior
Secured  Revolving  Loan  Facility  up to a maximum  amount of  $7,500,000  (the
"Financing") to Harvey Electronics, Inc.  ("Borrower") and which will be used to
refinance  Borrower's  existing debt and for general working capital needs along
with related closing costs.

SUMMARY OF FINANCING TERMS. See Schedule A attached hereto.

LOAN  DOCUMENTATION.  The loan  documents  will  contain  conditions  precedent,
affirmative,  negative and financial covenants,  representations and warranties,
indemnities,  events of default, remedies and other provisions,  all as required
by Lender.  All relevant  debt and other  documents,  intercreditor  agreements,
equity or  stockholder  agreements,  incentive and  employment  agreements,  tax
agreements and other material agreements to be acceptable to Lender. Lender will
receive  opinions of counsel from  Borrower's  counsel as requested by Lender in
its sole discretion in a form reasonably acceptable to Lender.

     EXPENSES.  By signing  this  letter,  regardless  of whether the  Financing
closes,  Borrower agrees to pay to Lender,  upon demand, all expenses (including
all  costs  and fees of  internal  and  external  legal  counsel,  environmental
consultants,  appraisers,  auditors and other consultants and advisors) incurred
in connection with this Commitment Letter, including without limitation, any due
diligence related to this Commitment Letter and the Financing (and documentation
thereof).

Lender's commitment under this Commitment Letter is subject to the execution and
delivery of final legal  documents  acceptable  to Lender and its  counsel,  the
satisfactory completion of its legal and business due diligence and satisfaction
of all the  Conditions  Precedent  set forth in Schedule A attached  hereto.  If
through such due diligence or otherwise we obtain  information  which we believe
has had or could have a material adverse effect on Borrower,  or which indicates
that any  information  used by us in our  financial  analysis  and  approval was
materially inaccurate or contained material omissions, we may decline to provide
the Financing.  To assist us in our  evaluation,  you will provide to Lender all
access which we may require or reasonably request to your facilities,  personnel
and accountants,  and copies of all documents which we may reasonably request or
which you have available, including business plans, financial statements (actual
and pro forma), and books and records.

This Commitment Letter is being provided to you on the condition that neither it
nor its  contents  will be  disclosed  publicly  or  privately  except  to those

<PAGE>

individuals who are your officers, employees or advisors who have a need to know
of them as a result of their being  specifically  involved in the  Financing and
then only on the condition that such matters may not be further disclosed.  None
of such  persons  shall  use the name of,  or refer  to,  Lender,  or any of its
affiliates, in any correspondence, discussions, advertisement or disclosure made
in connection with the Financing without the prior written consent of Lender.

Regardless of whether the Financing closes, the Borrower shall indemnify, defend
and hold harmless  Lender,  its affiliates and  subsidiaries and its affiliates'
and subsidiaries respective shareholders, directors, officers, employees, agent,
consultants,  accountants,  attorneys  and  representatives  (collectively,  the
"Indemnitees")   from  and  against  any  loss,  claim,   liability  or  expense
(including, without limitation,  reasonable legal fees and disbursements) to the
extent incurred in connection with, arising out of, or in any way related to the
execution and delivery of this Commitment  Letter, the services and functions to
be provided hereunder or any of the transactions contemplated hereby, including,
without limitation,  any such loss, claim,  liability or expense incurred by any
of the Indemnitees in connection with any investigation,  testimony, subpoena or
litigation,  provided that the Borrower  shall not be obligated to indemnify any
Indemnitee  to the extent  such  loss,  claim,  liability  or expense is finally
determined by a court of competent  jurisdiction to have been incurred primarily
and directly as a result of the gross  negligence  or willful  misconduct of the
Lender.  Under no  circumstances  shall  Lender  or any of its  subsidiaries  or
affiliates  be liable for any  punitive,  exemplary,  consequential  or indirect
damages  which  may be  alleged  to  result  from this  Commitment  Letter,  the
Financing, any transactions contemplated thereby, or any other financing.

To become  effective  and create a binding  commitment  by Lender to provide the
Financing on the terms and subject to  conditions  set forth in this  Commitment
Letter,  this Commitment  Letter must be accepted by you and a signed copy of an
original returned to us at or before 5:00 p.m. (New York Time) on June 20, 2007.

Upon the  effectiveness  of this Commitment  Letter in accordance with the above
paragraph,  the commitment of Lender  hereunder shall remain in effect until the
earlier of: (a) the date 30 days from the date of this Commitment Letter, or (b)
Lender's written notice to Borrower that any term or condition  described herein
will not or cannot be fulfilled to Lender's satisfaction in its sole discretion;
and, in either case,  that Lender has  terminated  its  commitment  hereunder by
reason  thereof.  Notwithstanding  the  expiration  or  termination  of Lender's
commitment  hereunder,  the provisions set forth herein regarding the Commitment
Fee, fee and expense  reimbursement,  indemnities and confidentiality and waiver
of jury trial shall survive such expiration or termination.

By your  acceptance of this  Commitment  Letter,  you agree that this Commitment
Letter  supersedes  any and all  discussions,  negotiations,  understandings  or
agreements,  written or oral, express or implied, between us, including, without
limitation.  THIS  COMMITMENT  LETTER MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY
ACTUAL  OR  ALLEGED  PRIOR,  CONTEMPORANEOUS  OR  SUBSEQUENT  UNDERSTANDINGS  OR
AGREEMENTS  OF THE PARTIES,  WRITTEN OR ORAL,  EXPRESS OR IMPLIED,  OTHER THAN A
WRITING WHICH EXPRESSLY AMENDS OR SUPERSEDES THIS COMMITMENT  LETTER.  ALL OTHER
WRITINGS PRIOR TO THE DATE HEREOF, ARE NULL AND VOID AND OF NO EFFECT. THERE ARE
NO UNWRITTEN ORAL UNDERSTANDINGS OR AGREEMENTS BETWEEN THE PARTIES.

THIS COMMITMENT  LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH,
THE INTERNAL LAWS OF THE STATE OF CONNECTICUT WITHOUT REFERENCE TO PRINCIPLES OF
CONFLICTS OF LAW.

This Commitment  Letter may be executed in counterparts,  each of which shall be
deemed an original and all of which  counterparts  shall  constitute one and the
same document.

BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX  FINANCIAL  TRANSACTIONS ARE

<PAGE>

MOST QUICKLY AND  ECONOMICALLY  RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND
THE  PARTIES  WISH  APPLICABLE  STATE AND  FEDERAL  LAWS TO APPLY  (RATHER  THAN
ARBITRATION  RULES),  THE PARTIES  DESIRE  THAT THEIR  DISPUTES BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE,  TO ACHIEVE THE BEST COMBINATION
OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION (WITHOUT SUBMITTING TO
ARBITRATION), THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT,  OR PROCEEDING  BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES  UNDER
THIS COMMITMENT LETTER OR ANY OF THE DEFINITIVE DOCUMENTATION.

To confirm your agreement that Lender should proceed on this basis,  please sign
and  return the  enclosed  copy of this  Commitment  Letter  accompanied  by the
amounts  specified in Schedule A to the  attention of the  undersigned.  By your
signature hereto,  you authorize  Lender,  its agents and  representatives,  any
credit  bureau,  or any other entity  contacted by Lender,  to  investigate  and
release data to Lender  relating to all aspects of the financial and operational
condition of the Borrower,  Guarantor and all of their  respective  subsidiaries
and affiliates.

We look  forward  to  continuing  to  work  with  you  towards  completing  this
Financing.

Sincerely,

NEW STREAM COMMERCIAL FINANCE, LLC

By:    /s/ James McKay
       ------------------------
Name:  James McKay
Its:   President

AGREED AND ACCEPTED THIS 18TH DAY OF JUNE, 2007.

By:/s/Michael E. Recca
   ------------------------------
By:   Michael E. Recca
Its:  Interim Chief Executive Officer

Date: June 18, 2007

<PAGE>

SCHEDULE A

This Attachment is a confidential  summary of the indicative  terms with respect
to the Commitment Letter dated June 18, 2007. The terms and conditions  outlined
herein  are not  intended  to be all  inclusive,  but rather set forth a general
framework from which a mutually  satisfactory  transaction and the documentation
related  thereto may be  structured.  Further,  the terms and conditions of this
Commitment Letter are subject to legal review and documentation  satisfactory to
Lender in its sole  discretion.  This  Attachment  supersedes  any prior oral or
written  agreements,  proposals  or  understandings  with respect to the matters
described herein.

Borrower:           Harvey Electronics, Inc. and its subsidiaries.

Guarantor(s):       All subsidiaries.

Lender:             New   Stream   Commercial   Finance,   LLC  or  any  of  its
                    subsidiaries or affiliates.

Facility:           Senior Secured Revolving Loan Facility (Loan Facility) up to
                    a maximum amount of $7,500,000 ("Maximum Funding Amount").

Funding Detail:     The Borrower may draw-down an initial principal amount under
                    the Loan  Facility on the Closing Date (which amount may not
                    exceed the Maximum Funding Amount less any reserves or other
                    availability  holdbacks which may be determined by Lender in
                    its  sole  discretion.   Thereafter,  Borrower  may  request
                    additional  fundings  which  cannot be in  amount  less than
                    $50k;  provided  however  that  no  funding  will be made by
                    Lender  which  causes the total debt  outstanding  under the
                    Loan Facility to exceed the Availability. Availability shall
                    be  determined  by Lender  at the time of each such  funding
                    request based on the amounts  available for funding pursuant
                    to the terms of the  Facility  Documents  and  after  giving
                    effect to the  outstanding  balance of the Loan  Facility at
                    that  time  against  the  Maximum  Funding  Amount  and  any
                    reserves or other availability holdbacks then in effect.

Availability:       Up to 85% of the net orderly liquidation value on Borrower's
                    inventory  based  on the  appraised  value  plus  85% of the
                    Borrower's eligible credit card accounts receivable.

Interest:           The  interest  rate shall  equal the  prevailing  LIBOR,  as
                    determined  and  adjusted  pursuant  to  the  terms  of  the
                    Facility  Documentation,  plus a borrowing  spread of 3.00%;
                    provided  however that the minimum interest rate on the Loan
                    Facility shall not be less than 8.50% per annum.

                    Interest  will  be  due  and  payable  at the  end  of  each
                    applicable  interest  period as  specified  in the  Facility
                    Documentation.  Interest shall be calculated on the basis of
                    a 360-day year.

Closing Date:       On or about June 29, 2007.

Maturity:           The initial  term shall be 12 months from the Closing  Date.
                    Upon  expiration of the initial term, and conditioned on the
                    Lender's and Borrowers  mutual  agreement  and consent,  the
                    Loan  Facility  may be  renewed  1 time,  for an  additional
                    twelve-month period.

Security:           The Loan  Facility  shall be  secured  by a  first-priority,
                    perfected lien and security  interest in favor of the Lender

<PAGE>

                    with  respect  to  all of  Borrower's  existing  and  future
                    assets.   All  security   interests  shall  be  pursuant  to
                    documents,  searches and UCC filings as are  satisfactory to
                    Lender and its counsel.

Closing Fee:        The  Borrower  shall pay to Lender a Closing Fee which shall
                    be equal to 2.00% of $7,500,000.  Such fee will be earned at
                    closing. Such Closing Fee will be payable with half (1%) due
                    at closing and the other half (1%) due on July 31, 2007.

Commitment Fee:     2.00%  of   $7,500,000   which  shall  be  earned  upon  the
                    acceptance of the Commitment Letter and this Schedule by the
                    Borrower and payable at Closing of the Loan Facility. Should
                    the  Borrower  not fulfill its  obligations  under the terms
                    cited  herein or choose  not to close the  transaction,  the
                    Commitment Fee shall become due and payable immediately.

Unused Commitment
Fee:                Borrower will pay a per annum Commitment Fee of 0.50% on the
                    unused portion of the Loan Facility  (without  giving effect
                    to  the  limitation  imposed  by  the  applicable  Financial
                    Covenants  or  Availability  then in  effect).  Such  Unused
                    Commitment  Fee shall be payable  monthly in arrears  and on
                    the Maturity Date.

Collateral Monitoring
Fee:                $2,500 to be paid on the  closing  date and on the first day
                    of each month, thereafter.

Exit Fee:           Borrower  will  pay an  Exit  Fee  equal  to five  5.00%  of
                    $7,500,000.  The Exit Fee will be due and  payable  upon the
                    early termination of Facility or the Maturity Date.

Break-up Fees:      Should  Harvey  Electronics,   Inc.  decide  to  discontinue
                    negotiations ("Harvey Electronics,  Inc.  Termination") with
                    respect to the transaction contemplated by this Letter after
                    executing this agreement for any reason  whatsoever,  Harvey
                    Electronics,  Inc agrees that New Stream Commercial  Finance
                    will be entitled to a Break-up Fee which shall be calculated
                    as follows:

                    (a) Should Harvey Electronics,  Inc. Termination occur prior
                    to the date that New  Stream  Commercial  Finance  obtains a
                    credit  approval  with  respect  to  the  transaction,   the
                    Break-up Fee shall equal $75,000.00.

                    (b)  Should  Harvey  Electronics,   Inc.  Termination  occur
                    subsequent  to the date that New Stream  Commercial  Finance
                    obtains a credit  approval,  the  Break-up  fee shall  equal
                    $150,000.

                    (c)  Should  New  Stream  terminate   subsequent  to  credit
                    approval their will be no Break-up fee.

Covenants:          Lender  anticipates  that covenants shall be incorporated in
                    the Loan  Facility  documents as are customary and usual for
                    financing  transactions  similar to the transaction proposed
                    herein.

Blocked Account
Agreement:          Borrower will execute a blocked  Account/lock  box agreement
                    with the bank of Borrower's  choosing.  This  agreement will
                    direct all  remittances  to  Borrower on a daily basis to an
                    account designated by Lender. It will also serve as the Bank
                    to which Lender will advance all funds  requested  under the
                    Agreement.
<PAGE>

Conditions
Precedent:          Customary  conditions  precedent to a Closing shall include,
                    but not be limited to the following  matters or items,  each
                    to be in the scope,  manner, form and substance,  and having
                    the results, satisfactory to Lender in its sole discretion:

                    (A) the  completion of any remaining due diligence  required
                    by Lender in its sole discretion including,  but not limited
                    to,  the  satisfactory  review  of the  following:  (i)  all
                    organizational   documentation,   intercompany   agreements,
                    licenses  and  other  documentation  of or  relating  to the
                    Borrower  which  Lender deems  material,  (ii) the terms and
                    provisions  of all other  debt,  leases,  and  equity of the
                    Borrower, (iii) the terms of any other agreements (including
                    all consulting,  site acquisition,  construction management,
                    general  contracting,  build-to-suit,  site  management,  or
                    other  contracts)  pertaining  to the Borrower  which Lender
                    deems  material and which are not otherwise  included in the
                    above,  (v)  satisfactory  background and reference  checks,
                    with respect to key  management  personnel of the  Borrower,
                    (vi)  all  environmental   reports  currently   existing  or
                    required  by  Lender  with   respect  to  the  property  and
                    operations  of the  Borrower,  which  shall show no material
                    violations or spills,  (vii) insurance  certificates listing
                    the  Lenders  as loss  payee and  additional  insureds,  and
                    (viii) all UCC, tax lien and judgment/bankruptcy searches on
                    the Borrower, the investors and their assets as Lender deems
                    necessary  or prudent;  (B) receipt of credit  approval  and
                    completion  of all loan and credit  documentation  and other
                    documentation related to the transaction contemplated hereby
                    (collectively,  the "Facility  Documents"),  which is deemed
                    necessary  or  prudent  by  Lender,  in form  and  substance
                    satisfactory to Lender; including,  without limitation:  (i)
                    any  legal  opinions  required  by  Lender,   and  (ii)  all
                    documentation required to establish and protect the Lenders'
                    rights and security interests;  (C) receipt of all necessary
                    governmental,   shareholder,   corporate   and  third  party
                    consents and approvals in form and substance satisfactory to
                    Lender;  (D) evidence of no litigation  against the Borrower
                    deemed  material  by Lender and no material  adverse  change
                    including  no  material  pending or  threatened  litigation,
                    bankruptcy or other  proceeding in the financial  condition,
                    operations, business prospects or assets of the Borrower, as
                    determined by Lender in its  discretion;  and (E) payment of
                    all  reasonable  fees and  expenses  due to  Lender  and its
                    counsel.

                    Additionally,  the following terms will represent conditions
                    precedent to the Closing of the Facility:

                    o    Satisfactory   completion   of  all  legal  review  and
                         documentation.
                    o    Implementation   of   lockbox   and   blocked   account
                         agreements  whereby  all  of  Harvey  Electronics,  Inc
                         receipts  will be paid and will  firstly  be applied to
                         the amount due and owing under the Loan  Facility.  All
                         blocked accounts to be zero balance accounts.
                    o    Financial  and tax review of Harvey  Electronics,  Inc.
                         and its subsidiaries,  and affiliates  performed by New
                         Stream Commercial Finance with results  satisfactory to
                         New Stream Commercial Finance on or prior to Closing.
                    o    Minimum excess  availability  (including cash) at close
                         to be $1,500,000  without any  deterioration of working
                         capital.

<PAGE>

Reporting
Requirements:       Within 30 days of the end of each fiscal month, the Borrower
                    will  supply  the  Lender  with  a  monthly  summary  income
                    statement, balance sheet, operating cash flow statement, and
                    performance to budget and prior year analyses.

                    The  Borrower  will  supply  the  Lender,  for  each  fiscal
                    quarter,  with a quarterly income statement,  balance sheet,
                    and operating cash flow statement (the foregoing compared to
                    the prior years same quarter  results) within 45 days of the
                    end of the fiscal  quarter.  The statements will be prepared
                    in  accordance  with  GAAP  and  contain  a full  compliance
                    certificate   executed  by  an  authorized  officer  of  the
                    Borrower.

                    Within  105 days of the  Borrower's  fiscal  year  end,  the
                    Borrower  will  supply to the  Lender  unqualified,  annual,
                    audited  consolidated  financial  statements  accompanied by
                    their  respective  consolidating  statements and a financial
                    compliance  certificate executed by an authorized officer of
                    the Borrower and Guarantor,  respectively. The audit will be
                    from an  independent  public  accounting  firm of recognized
                    national standing.

                    Within 30 days of each fiscal year  beginning,  the Borrower
                    will supply to the Lender a summary  annual  budget for such
                    fiscal year, the format of which will be satisfactory to the
                    Lenders.

                    Additional  reports will be provided that are customary to a
                    financing  of this nature as well as such other  information
                    respecting  the  condition or operations of the Borrower and
                    Guarantor,   financial  or  otherwise,  as  the  Lender  may
                    reasonably request.

Syndication:        Syndication  and/or  Participation  of all or a part  of the
                    Facility may be done at Lender's sole discretion.

Confidentiality:    This Commitment Letter and this Schedule is delivered to the
                    Borrower with the understanding that neither this Commitment
                    Letter  nor this  Schedule  nor their  terms and  conditions
                    shall be  disclosed  by the  Borrower  to any third  parties
                    other than its agents, its attorneys or its  representatives
                    under an  obligation to keep this proposal and its terms and
                    conditions  strictly  confidential  except  as  approved  by
                    Lender.

Documentation:      All parties to the  transaction  contemplated  hereby  would
                    have  to  negotiate  mutually  acceptable  definitive  final
                    written documentation.

Representations and
Warranties:         Customary for facilities of this nature,  including, but not
                    limited to, corporate existence;  corporate and governmental
                    authorization;  enforceability;  financial  information;  no
                    material adverse change; compliance with laws and agreements
                    (including   environmental   laws);   compliance   with  all
                    applicable  communications  laws and regulations  (including
                    federal and state  regulations and orders);  compliance with
                    ERISA; no material litigation;  payment of taxes;  financial
                    condition; and full disclosure.

Yield Protection:   Standard yield protection  provisions  covering such matters
                    as increased costs  (including,  without  limitation,  those
                    relating   to   capital   adequacy,   funding   losses   and
                    illegality),  payments  grossed  up to  the  extent  of  any
                    withholding taxes, and similar provisions.
<PAGE>

Events of Default:  Customary  for   transactions  of  this  nature,   including
                    cross-defaults to other indebtedness (or capital leases).

Default Rates:      Upon the occurrence and  continuation of an event of default
                    under the  Facility  Documents,  applicable  Interest  Rates
                    shall increase by 2.00%; provided, however, that in an event
                    of default related to interest,  fee or principal  payments,
                    applicable   interest   rates   shall   increase  by  4.00%.

Allocation  of
Compensation:       Notwithstanding   any  specific   allocation   of  any  fees
                    described  above,  all fees and other amounts payable as set
                    forth above may be  allocated  between and among  Lender and
                    its  affiliates  in the  sole  and  absolute  discretion  of
                    Lender.

Governing Law:      Connecticut  Law.  Each party  shall  waive any right it may
                    have to a trial by jury.

Expenses:           Borrower agrees that it will provide additional underwriting
                    deposits when  requested by Lender as it deems  necessary to
                    pay the expenses  specified  herein.  The  Borrower  will be
                    responsible for all reasonable costs and expenses associated
                    with documenting and closing of the transaction,  including,
                    but not limited to, the reasonable  costs! fees and expenses
                    of attorneys,  investigative!  solvency,  environmental  (if
                    applicable) and other  consultants and collateral audit tees
                    and expenses incurred or paid by Lender,  whether or not the
                    transaction   contemplated   hereby  closes  or  is  funded.
                    Underwriting,   audit,  and  syndication  services  will  be
                    charged to Borrower as needed to conclude the transaction at
                    the  following  rates:  Senior  Lender  $5,000/day,   Senior
                    Underwriter  $3,000/day,  and Auditors per amount charged by
                    outside   audit   firm.   New  Stream   Commercial   Finance
                    underwriting  cost  (Senior  Lender and Senior  Underwriter)
                    will  not  exceed  $40,000.   The  Borrower  shall  also  be
                    responsible for all reasonable fees and expenses incurred or
                    in connection with syndicating,  administering,  amending or
                    modifying  any  transaction   documentation,   or  enforcing
                    rights,  remedies  and actions  taken under the  Facilities.
                    Lender  will use its best  efforts to give  Borrower  and/or
                    Guarantor weekly reports on expenses  incurred (which may be
                    estimated  in some  cases)  through the  Closing  Date.  The
                    Borrower  will  also  be  responsible   for  any  reasonable
                    periodic  fees  and  expenses  incurred  after  Closing.  By
                    execution of the Commitment  Letter,  the Borrower expressly
                    agrees to perform  and be bound by the terms and  conditions
                    of this paragraph.

It should be understood  that Lender and its  subsidiaries  and  affiliates  are
under no legal or other  obligations  (conditional or otherwise) with respect to
the Facility or the matters contemplated hereby, unless and until the conditions
contained  in the  Commitment  Letter  and this  Attachment  and the  conditions
specified  in any executed  final  Facility  Documents  are  fulfilled.  By your
signature hereto,  you agree not to discuss or solicit any competing proposal or
offer, or enter into any agreement relating to any other senior debt financings,
unless and until this Commitment Letter is terminated by Lender.

Lender hereby notifies each of the Borrower and any  Guarantor(s)  that pursuant
to the  requirements of the USA PATRIOT Act (Title III of Pub.L.  107-56 (signed
into law October 26,  2001) (the  "Act'),  it is required to obtain,  verify and
record  information  that  identifies  each person or  corporation  who opens an

<PAGE>

account and/or enters into a business  relationship  with it, which  information
includes the name and address of each  Borrower and any  Guarantor(s)  and other
information  that will allow Lender to identify such person in  accordance  with
the Act Each of the Borrower and any  Guarantor(s)  are hereby advised that this
proposal is subject to satisfactory results of such verification.

The parties  acknowledge  that this Schedule A has not been fully negotiated and
that a number of terms described herein are subject to further discussion

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