EXHIBIT 10.6 SECURITY AGREEMENT

EXHIBIT 10.6

SECURITY AGREEMENT

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THIS SECURITY AGREEMENT (this "Agreement"), is entered into and made

effective as of August 22, 2007, by and between HARVEY ELECTRONICS, INC., a New

York corporation with its principal place of business located at 205 Chubb

Avenue Lyndhurst, NJ 07071 (the "Company") in favor of the BUYER(S) (the

"Secured Party") listed on Schedule I attached to the Securities Purchase

Agreement (the "Securities Purchase Agreement") dated the date hereof between

the Company and the Secured Party.

WHEREAS, the Company shall issue and sell to the Secured Party, as provided

in the Securities Purchase Agreement, and the Secured Party shall purchase, up

to Six Million Dollars ($6,000,000) of secured convertible debentures (the

"Convertible Debentures"), which shall be convertible into shares of the

Company's common stock, par value $0.01, in the respective amounts set forth

opposite each Buyer(s) name on Schedule I attached to the Securities Purchase

Agreement;

WHEREAS, to induce the Secured Party to enter into the transaction

contemplated by the Securities Purchase Agreement, the Convertible Debentures,

the Investor Registration Rights Agreement of even date herewith between the

Company and the Secured Party (the "Investor Registration Rights Agreement"),

and the Irrevocable Transfer Agent Instructions among the Company, the Secured

Party, the Company's transfer agent, and David Gonzalez, Esq. (the "Transfer

Agent Instructions") (collectively referred to as the "Transaction Documents"),

each Company hereby grants to the Secured Party a security interest in and to

the pledged property of each Company identified on Exhibit A hereto

(collectively referred to as the "Pledged Property") to secure all of the

Obligations (as defined below);

NOW, THEREFORE, in consideration of the promises and the mutual covenants

herein contained, and for other good and valuable consideration, the adequacy

and receipt of which are hereby acknowledged, the parties hereto hereby agree as

follows:

ARTICLE 1.

DEFINITIONS AND INTERPRETATIONS

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Section 1.1. Recitals.

The above recitals are true and correct and are incorporated herein, in

their entirety, by this reference.

Section 1.2. Interpretations.

Nothing herein expressed or implied is intended or shall be construed to

confer upon any person other than the Secured Party any right, remedy or claim

under or by reason hereof.

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Section 1.3. Obligations Secured.

The security interest created hereby in the Pledged Property constitutes

continuing collateral security for all of the obligations of the Company now

existing or hereinafter incurred to the Buyers, whether oral or written and

whether arising before, on or after the date hereof including, in connection

with the Convertible Debentures, the Securities Purchase Agreement, and/or any

of the other Transaction Documents without limitation following obligations

(collectively, the "Obligations"):

(a) for so long as the Convertible Debentures are outstanding, the payment

by the Company, as and when due and payable (by scheduled maturity,

acceleration, demand or otherwise), of all amounts from time to time owing by it

in respect of the Securities Purchase Agreement, the Convertible Debentures and

the other Transaction Documents; and

(b) for so long as the Convertible Debentures are outstanding, the due

performance and observance by the Company of all of its other obligations from

time to time existing in respect of any of the Transaction Documents, including

without limitation, the Company's obligations with respect to any conversion or

redemption rights of the Secured Party under the Convertible Debentures.

ARTICLE 2.

PLEDGED PROPERTY; EVENT OF DEFAULT

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Section 2.1. Pledged Property.

(a) As collateral security for all of the Obligations, the Company hereby

pledges to the Secured Party, and creates in the Secured Party for its benefit,

a continuing security interest in and to all of the Pledged Property whether now

owned or hereafter acquired.

(b) Simultaneously with the execution and delivery of this Agreement, the

Company shall make, execute, acknowledge, file, record and deliver to the

Secured Party any documents reasonably requested by the Secured Party to perfect

its security interest in the Pledged Property. Simultaneously with the execution

and delivery of this Agreement, the Company shall make, execute, acknowledge and

deliver to the Secured Party such documents and instruments, including, without

limitation, financing statements, certificates, affidavits and forms as may, in

the Secured Party's reasonable judgment, be necessary to effectuate, complete or

perfect, or to continue and preserve, the security interest of the Secured Party

in the Pledged Property, and the Secured Party shall hold such documents and

instruments as secured party, subject to the terms and conditions contained

herein.

(c) Establishment of a Lockbox Account, Dominion Account. As of the date

hereof the Company, and the Secured Party shall have establish or designated all

of the Company's bank accounts, except for the Company's operating account at

Bank of America, listed in the Disclosure Schedule, attached to the Securities

Purchase Agreement, as (i) a depository account, dominion account or such other

"blocked account" established at a bank or banks (each such bank, a "Blocked

Account Bank") pursuant to an arrangement with such Blocked Account Bank as well

as a (ii) lock box account (collectively the a depository account, dominion

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account and the lock box account shall be referred to as "Blocked Accounts") or

such other account as may be selected by the parties hereto for the deposit of

all cash and all collections and proceeds from the Accounts to be deposited into

the deposit Account and/or lock Box, as applicable, together with the proceeds

thereof, all goods represented by such Accounts and all such goods that may be

returned by the Company's and each Subsidiaries customers, and all proceeds of

any insurance thereon, and all guarantees, securities and liens which the

Company may hold for the payment of any such Accounts including, without

limitation, all rights of stoppage in transit, replevin and reclamation and as

an unpaid vendor and/or lienor, all of which the Company represents and warrants

will be bona fide and existing obligations of its respective customers, arising

out of the sale of goods by the Company in the ordinary course of business into

any accounts other than the Deposit and/or the Lockbox Accounts, as applicable

The parties hereto and each Blocked Account Bank shall enter into a deposit

account control agreement in form and substance satisfactory to Secured Party

directing such Blocked Account Bank, upon notification by the Secured Party of

an Event of Default as defined herein, to transfer such funds so deposited into

the Blocked Accounts, either to any account maintained by the Secured Party at

said Blocked Account Bank or by wire transfer to appropriate account(s) the

Secured Party directs and providing the Secured Party such control over the

Blocked Accounts until the earlier of the Event of Default being cured or

repayment of the Obligations. Upon an Event of Default all funds deposited in

such Blocked Accounts shall immediately become the property of the Secured Party

and the parties hereto shall obtain the agreement by such Blocked Account Bank

to waive any offset rights against the funds so deposited.

Section 2.2. Event of Default

An "Event of Default" shall be deemed to have occurred under this Agreement

upon an Event of Default under and as defined in the Convertible Debentures.

ARTICLE 3.

ATTORNEY-IN-FACT; PERFORMANCE

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Section 3.1. Secured Party Appointed Attorney-In-Fact.

Upon the occurrence and during the continuance of an Event of Default: (a)

the Company hereby appoints the Secured Party as its attorney-in-fact, with full

authority in the place and stead of the Company and in the name of the Company

or otherwise, from time to time in the Secured Party's discretion to take any

action and to execute any instrument which the Secured Party may reasonably deem

necessary to accomplish the purposes of this Agreement, including, without

limitation, to receive and collect all instruments made payable to the Company

representing any payments in respect of the Pledged Property or any part thereof

and to give full discharge for the same; (b) the Secured Party may demand,

collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize

on the Pledged Property as and when the Secured Party may determine, and (c) to

facilitate collection, the Secured Party may notify account debtors and obligors

on any Pledged Property to make payments directly to the Secured Party.

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Section 3.2. Secured Party May Perform.

If the Company fails to perform any agreement contained herein, the Secured

Party, at its option, may itself perform, or cause performance of, such

agreement, and the expenses of the Secured Party incurred in connection

therewith shall be included in the Obligations secured hereby and payable by the

Company under Section 8.3.

ARTICLE 4.

REPRESENTATIONS AND WARRANTIES

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Section 4.1. Authorization; Enforceability.

Each of the parties hereto represents and warrants that it has taken all

action necessary to authorize the execution, delivery and performance of this

Agreement and the transactions contemplated hereby; and upon execution and

delivery, this Agreement shall constitute a valid and binding obligation of the

respective party, subject to applicable bankruptcy, insolvency, reorganization,

moratorium and similar laws affecting creditors' rights or by the principles

governing the availability of equitable remedies.

Section 4.2. Ownership of Pledged Property.

The Company represents and warrants that, it is the legal and beneficial

owner of the Pledged Property free and clear of any lien, security interest,

option or other charge or encumbrance (each, a "Lien") except for the security

interest created by this Agreement and other Permitted Liens. For purposes of

this Agreement, "Permitted Liens" means: (1) the security interest created by

this Agreement, (2) existing Liens disclosed by the Company to the Secured

Party; (3) inchoate Liens for taxes, assessments or governmental charges or

levies not yet due, as to which the grace period, if any, related thereto has

not yet expired, or being contested in good faith and by appropriate proceedings

for which adequate reserves have been established in accordance with GAAP; (4)

Liens of carriers, materialmen, warehousemen, mechanics and landlords and other

similar Liens which secure amounts which are not yet overdue by more than 60

days or which are being contested in good faith by appropriate proceedings; (5)

licenses, sublicenses, leases or subleases granted to other Persons not

materially interfering with the conduct of the business of the Company; (6)

Liens securing capitalized lease obligations and purchase money indebtedness

incurred solely for the purpose of financing an acquisition or lease; (7)

easements, rights-of-way, restrictions, encroachments, municipal zoning

ordinances and other similar charges or encumbrances, and minor title

deficiencies, in each case not securing debt and not materially interfering with

the conduct of the business of the Company and not materially detracting from

the value of the property subject thereto; (8) Liens arising out of the

existence of judgments or awards which judgments or awards do not constitute an

Event of Default; (9) Liens incurred in the ordinary course of business in

connection with workers compensation claims, unemployment insurance, pension

liabilities and social security benefits and Liens securing the performance of

bids, tenders, leases and contracts in the ordinary course of business,

statutory obligations, surety bonds, performance bonds and other obligations of

a like nature (other than appeal bonds) incurred in the ordinary course of

business (exclusive of obligations in respect of the payment for borrowed

money); (10) Liens in favor of a banking institution arising by operation of law

encumbering deposits (including the right of set-off) and contractual set-off

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rights held by such banking institution and which are within the general

parameters customary in the banking industry and only burdening deposit accounts

or other funds maintained with a creditor depository institution; (11) usual and

customary set-off rights in leases and other contracts; and (12) escrows in

connection with acquisitions and dispositions.

Section 4.3. Name Change. The Company has only effectuated changes their

respective corporate names as designated in Schedule 4.3 herein.

ARTICLE 5.

DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL

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Section 5.1 Method of Realizing Upon the Pledged Property: Other Remedies.

If any Event of Default shall have occurred and be continuing:

(a) The Secured Party may exercise in respect of the Pledged Property, in

addition to any other rights and remedies provided for herein or otherwise

available to it, all of the rights and remedies of a secured party upon default

under the Uniform Commercial Code (whether or not the Uniform Commercial Code

applies to the affected Pledged Property), and also may (i) take absolute

control of the Pledged Property, including, without limitation, transfer into

the Secured Party's name or into the name of its nominee or nominees (to the

extent the Secured Party has not theretofore done so) and thereafter receive,

for the benefit of the Secured Party, all payments made thereon, give all

consents, waivers and ratifications in respect thereof and otherwise act with

respect thereto as though it were the outright owner thereof, (ii) require the

Company to assemble all or part of the Pledged Property as directed by the

Secured Party and make it available to the Secured Party at a place or places to

be designated by the Secured Party that is reasonably convenient to both

parties, and the Secured Party may enter into and occupy any premises owned or

leased by the Company where the Pledged Property or any part thereof is located

or assembled for a reasonable period in order to effectuate the Secured Party's

rights and remedies hereunder or under law, without obligation to the Company in

respect of such occupation, and (iii) without notice except as specified below

and without any obligation to prepare or process the Pledged Property for sale,

(A) sell the Pledged Property or any part thereof in one or more parcels at

public or private sale, at any of the Secured Party's offices or elsewhere, for

cash, on credit or for future delivery, and at such price or prices and upon

such other terms as the Secured Party may deem commercially reasonable and/or

(B) lease, license or dispose of the Pledged Property or any part thereof upon

such terms as the Secured Party may deem commercially reasonable. The Company

agrees that, to the extent notice of sale or any other disposition of the

Pledged Property shall be required by law, at least ten (10) days' notice to the

Company of the time and place of any public sale or the time after which any

private sale or other disposition of the Pledged Property is to be made shall

constitute reasonable notification. The Secured Party shall not be obligated to

make any sale or other disposition of any Pledged Property regardless of notice

of sale having been given. The Secured Party may adjourn any public or private

sale from time to time by announcement at the time and place fixed therefor, and

such sale may, without further notice, be made at the time and place to which it

was so adjourned. The Company hereby waives any claims against the Secured Party

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arising by reason of the fact that the price at which the Pledged Property may

have been sold at a private sale was less than the price which might have been

obtained at a public sale or was less than the aggregate amount of the

Obligations, even if the Secured Party accepts the first offer received and does

not offer such Pledged Property to more than one offeree, and waives all rights

that the Company may have to require that all or any part of such Pledged

Property be marshaled upon any sale (public or private) thereof. The Company

hereby acknowledges that (i) any such sale of the Pledged Property by the

Secured Party may be made without warranty, (ii) the Secured Party may

specifically disclaim any warranties of title, possession, quiet enjoyment or

the like, and (iii) such actions set forth in clauses (i) and (ii) above shall

not adversely affect the commercial reasonableness of any such sale of Pledged

Property.

(b) Upon an Event of Default all funds deposited in the Blocked Accounts

shall immediately become the property of the Buyer. The Secured Party shall

direct the applicable Blocked Account Bank, to transfer such funds so deposited

into the Blocked Accounts, either to any account maintained by the Secured Party

at said Blocked Account Bank or by wire transfer to appropriate account(s) the

Secured Party directs and providing the Secured Party such control over the

Blocked Accounts until the earlier of the Event of Default being cured or

repayment of the Obligations.

(c) Any cash held by the Secured Party as Pledged Property and all cash

proceeds received by the Secured Party in respect of any sale of or collection

from, or other realization upon, all or any part of the Pledged Property shall

be applied (after payment of any amounts payable to the Secured Party pursuant

to Section 8.3 hereof) by the Secured Party against, all or any part of the

Obligations in such order as the Secured Party shall elect, consistent with the

provisions of the Securities Purchase Agreement. Any surplus of such cash or

cash proceeds held by the Secured Party and remaining after the indefeasible

payment in full in cash of all of the Obligations shall be paid over to

whomsoever shall