Default and Acceleration Letter Agreement between YA Global Investments, L.P. and Harvey Electronics, Inc. (December 19, 2007)

Summary

YA Global Investments, L.P. notified Harvey Electronics, Inc. that an event of default occurred under a secured convertible debenture due to Harvey's stock being delisted from Nasdaq. As a result, the full unpaid principal, interest, and other amounts are immediately due. YA Global may remove $375,000 from escrow to apply toward the debt and will refrain from further collection actions for up to 10 days, unless bankruptcy proceedings begin sooner. Both parties agreed to these terms by signing the letter.

EX-10.1 2 defaultletter.txt DEFAULT LETTER [Yorkville Advisors Letterhead] December 19, 2007 VIA FACSIMILE Harvey Electronics, Inc. 205 Chubb Avenue Lyndhurst, NJ 07071 Attention: Michael E. Recca, CEO Joseph J. Calabrese. Executive Vice President & CFO Re: Harvey Electronics, Inc. Secured Convertible Debenture No. HRVE-1-3, dated August 21, 2007, issued to YA Global Investments, L.P. (the "Debenture") Gentlemen: Capitalized terms not defined herein shall have the meaning assigned them in the Debenture. As you are aware, by reason of the Common Stock of Harvey Electronics, Inc. (the "Company") having been delisted from, or no longer quoted for, trading on the Nasdaq Capital Market, an Event of Default has occurred under section 2(a)(iv) of the Debenture. As a consequence of this Event of Default, YA Global Investments, LP, ("YA") and the Company agree that, notwithstanding any provisions of the Debenture or any other agreement, document or instrument to the contrary: (a) the full unpaid Principal amount of the Debenture, together with interest and other amounts owing in respect thereof, is hereby immediately due and payable in cash, without the necessity of the passage of additional time; (b) YA may remove from escrow the sum of $375,000.00 that had been placed in escrow pursuant to section 4(d) of the Securities Purchase Agreement dated as of August 21, 2007 and apply such amount to the accelerated indebtedness under the Debenture; and (c) YA shall refrain from pursuing further collection rights and remedies under the Debenture, the Security Agreement dated as of August 21, 2007, or any other agreement, document or instrument for a period of not more than ten (10) days from the date hereof, but in any event no later than the date upon which the Company may commence, or have commenced against the Company, proceedings for relief under the bankruptcy or similar laws relating to debtor or creditor relief. If you are in agreement with the foregoing terms, kindly execute this letter agreement where indicated below and return the executed original and a copy to me as soon as possible. Sincerely, YA GLOBAL INVESTMENTS, L.P. By: Yorkville Advisors, LLC, its Investment Manager By: /s/David Gonzalez --------------------------------- David Gonzalez, General Counsel ACKNOWLEDGED AND AGREED: HARVEY ELECTRONICS, INC. By: /s/Michael Recca ------------------------------ Title: Interim CEO