AMENDMENT NO. 3 TO CONSENT TO SUPPLEMENTAL LOAN
UNDER LOAN AND SECURITY AGREEMENT

As of July 24, 2007

JACO ELECTRONICS, INC.
145 Oser Avenue
Hauppauge, New York 11778

Ladies and Gentlemen:

The CIT Group/Business Credit, Inc. (“CIT”), in its capacity as agent pursuant
to the Credit Agreement (as hereinafter defined) acting for and on behalf of the
financial institutions which are parties thereto as lenders (in such capacity,
“Agent”), and the financial institutions which are parties to the Credit
Agreement as lenders (each a “Lender” and collectively, “Lenders”) have entered
into certain financing arrangements pursuant to which Agent and Lenders may make
loans and advances and provide other financial accommodations to Jaco
Electronics, Inc., a New York corporation, and Interface Electronics Corp., a
Massachusetts corporation (collectively, the “Borrowers”) as set forth in the
Credit Agreement, dated as of December 22, 2006, by and among the Borrowers,
Agent and Lenders (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, the “Credit Agreement”),
and other agreements, documents and instruments referred to therein or at any
time executed and/or delivered in connection therewith or related thereto (all
of the foregoing, together with the Credit Agreement, as the same now exist or
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, being collectively referred to herein as the “Loan Documents”).
 
Agent and Borrowers executed a Consent to Supplemental Loan Under Loan and
Security Agreement dated March 5, 2007(as amended, the “Consent”), pursuant to
which Agent and Lenders agreed to extend to Borrowers a Supplemental Loan (as
defined in the Consent).
 
The Borrowers have requested that the Agent and Required Lenders agree to
various amendments to the Consent, and Agent and Required Lenders are agreeable
to all of the foregoing, on and subject to the terms and conditions set forth in
this Amendment No. 3 to Consent to Supplemental Loan under Loan and Security
Agreement (this “Amendment”).
 
In consideration of the premises and the mutual covenants contained herein and
in the Credit Agreement and the Consent, the parties hereto agree as follows:
 
1.  Defined Terms
 
.  Capitalized terms used and not otherwise defined herein shall have their
respective meanings as defined in the Loan Agreement and the Consent.
 
2.  Amendments to Consent
 
.  Sections 2.1, 2.2 and 2.3 of the Consent are hereby amended and restated in
its entirety as follows:
 
“2.1           Consent to Supplemental Loan.  Agent, for the sole account of The
CIT Group/Business Credit, Inc. (“CIT”), as a Lender, hereby consents to extend
to Borrowers a Supplemental Loan under the Loan Agreement (but in no event shall
the Revolving Loans plus the Supplemental Loan exceed the Revolving Commitment)
in an amount equal to $3,000,000 beginning on the date hereof and continuing up
to April 1, 2009 (the “Supplemental Loan Repayment Date”).  If the Supplemental
Loan is not repaid in full by the Supplemental Loan Repayment Date or if the
Borrowers fail to make any payment required to be made under Section 2.3 below,
Borrowers acknowledge, confirm and agree that any such event shall constitute an
Event of Default under the Loan Agreement.  The Supplemental Loan shall be for
the sole account of CIT.
 
2.2           Interest on Supplemental Loan.  Interest shall accrue on the
Supplemental Loan at a rate equal to the LIBO Rate plus five percent (5%), and
shall be paid in accordance with the terms of the Loan Agreement.
 
2.3           Repayment of Supplemental Loan.
 
(a)           The Supplemental Loan shall be repaid in seven (7) quarterly
installments as follows:
 
(i)           The first (1st) installment shall be payable on October 1, 2007 in
the amount of $300,000;
 
(ii)           The second (2nd) installment shall be payable on January 1, 2008
in the amount of $300,000;
 
(iii)           The third (3rd) installment shall be payable on April 1, 2008 in
the amount of $400,000;
 
(iv)           The fourth (4th) installment shall be payable on July 1, 2008 in
the amount of $500,000;
 
(v)           The fifth (5th) installment shall be payable on October 1, 2008 in
the amount of $500,000;
 
(vi)           The sixth (6th) installment shall be payable on January 1, 2009
in the amount of $500,000; and
 
(vii)           The seventh (7th) and last installment shall be payable on April
1, 2009 in the amount of $500,000.
 
(b)           In addition to the scheduled installment payments as set forth in
Section 2.3(a) above, Borrowers shall make the following mandatory prepayments
in respect of the Supplemental Loan:
 
(i)           For Borrowers’ Fiscal Year ending June 30, 2008 and for each
fiscal year thereafter, Borrowers’ shall make a mandatory prepayment in respect
of the Supplemental Loan in an amount equal to fifty percent (50%) of Excess
Cash Flow (as defined in Section 2.3(b)(iii) below for each such Fiscal Year
payable upon delivery of the annual financial statements required to be
delivered under Section 5.01(a) of the Loan Agreement (the  “Audited Financial
Statements”), but in any event not later than one hundred (100) days after the
end of each such Fiscal Year (the “50% Excess Cash Flow Mandatory
Prepayment”).  The 50% Excess Cash Flow Mandatory Prepayment shall be applied by
Agent, for the account of the CIT, pro rata, against the principal installments
of the Supplemental Loan in the inverse order of maturity thereof.  The
Borrowers’ obligation to remit to Agent, for the account of CIT, any prepayments
in respect of Excess Cash Flow shall terminate upon payment in full of the
Supplemental Loan; and
 
(ii)           Borrowers shall remit to Agent, for the benefit of CIT, and as a
mandatory prepayment in respect of the Supplemental Loan, the net proceeds
received by Borrowers (the “Designated Inventory Proceeds”) from the sale or
disposition of the Designated Inventory (as defined below).  The Designated
Inventory Proceeds shall be remitted to Agent, promptly upon receipt by the
Borrowers, but no less frequently than monthly, and shall be applied by Agent,
for the account of the CIT, pro rata, first, against the outstanding principal
installments of the Supplemental Loan in the inverse order of maturity thereof,
and second, the other Obligations as provided under the Loan Agreement.
 
(iii)           As used in this Section 2.3(b):
 
(A)  “Excess Cash Flow” shall mean, for any Fiscal Year, the sum for such Fiscal
Year of: (1) EBITDA; minus (2) (w) Capital Expenditures made in cash by the
Borrowers and their Subsidiaries not in excess of the amounts permitted by the
Agreement; plus (x) all prepayments and repayments of  the Supplemental Loans;
plus (y) all income taxes actually paid in cash during such Fiscal Year by the
Borrowers and their Subsidiaries; plus (z) Interest Expense paid in cash; and
 
(B)  “Designated Inventory” shall mean the Inventory set forth on Schedule A
annexed to Amendment No. 3 to Consent to Supplemental Loan under Loan and
Security Agreement among Borrowers, Lenders and Agent dated as of July 24, 2007.
 
(c)           The prepayment of the Supplemental Loan, in whole or in part,
shall be without premium or penalty.”
 
3.  Increase in the Availability Block under Loan Agreement
 
.  So long as the Supplemental Loan remains outstanding, notwithstanding
anything to the contrary contained in the Loan Agreement, the Availability Block
shall be increased from $500,000 to $750,000 or such lesser amount as Agent, in
its Permitted Discretion, shall determine.  After payment in full of the
Supplemental Loan, the Availability Block shall be as set forth in the Loan
Agreement as in effect on the date hereof.
 
4.  Amendment to Waterfall under Loan Agreement
 
.  So long as the Supplemental Loan remains outstanding, notwithstanding
anything to the contrary contained in Section 7.02 of the Loan Agreement, after
(a) an Event of Default has occurred and is continuing and the Agent so elects
or the Required Lenders so direct and (b) the exercise of remedies provided for
in Article VII of the Loan Agreement (or after the Loans have automatically
become immediately due and payable and the Letter of Credit Obligations have
automatically been required to be cash collateralized as set forth in Section
7.01), any amounts received on account of the Obligations shall be applied by
the Agent in the following order:
 
first, to pay any fees, indemnities, expense reimbursements or other Obligations
then due to the Agent in its capacity as such,
 
second, to pay all amounts then due and payable to the Agent on account of
Protective Advances,
 
third, to pay all amounts then owed to the Swingline Lender on account of
Swingline Loans,
 
fourth, to ratably pay all amounts owed to the Issuing Bank(s) on account of
Letter of Credit Obligations,
 
fifth, to ratably pay all interest and fees owed on account of the Revolving
Loans (other than the Supplemental Loan),
 
sixth, to ratably pay all principal amounts of the Revolving Loans (other than
the Supplemental Loan) then outstanding,
 
seventh, to provide cash collateral for any outstanding Letters of Credit,
 
eighth, to ratably pay all interest and fees owed on account of the Supplemental
Loan,
 
ninth, to ratably pay all principal amounts of the Supplemental Loan then
outstanding,
 
tenth, to ratably pay any other expense reimbursements or other Obligations then
due and payable to the Lenders (other than with respect to Banking Services
Obligations and Swap Obligations), and
 
eleventh, to ratably pay of any amounts owing by the Borrowers with respect to
Banking Services Obligations and Swap Obligations.
 
The Agent and the Lenders shall have the continuing and exclusive right to apply
and reverse and reapply any and all such proceeds and payments to any portion of
the Obligations owing to the Agent and Lenders.
 
After payment in full of the Supplemental Loan, any amounts received on account
of the Obligations shall be as set forth in Section 7.02 of the Loan Agreement
as in effect on the date hereof.
 
5.  Amendment Fee.  In addition to any other fees payable under the Loan
Agreement, in consideration of the Supplemental Loan provided for hereunder,
Borrowers shall jointly and severally pay to Agent, for the sole account of  The
CIT Group/Business Credit, Inc., an amendment fee in the amount of $25,000.  The
amendment fee shall be fully earned and payable as of the date hereof and may be
charged by Agent to any account of Borrowers maintained by Agent.
 
6.  Representations, Warranties and Covenants
 
.  Each of the Borrowers represents, warrants and covenants with and to Agent
and Lenders as follows, which representations, warranties and covenants are
continuing and shall survive the execution and delivery hereof, the truth and
accuracy of, or compliance with each, together with the representations,
warranties and covenants in the other Loan Documents, being a condition of the
effectiveness of this Amendment and a continuing condition of the making or
providing of any Loans or other financial accommodations by Agent and Lenders to
the Borrowers:
 
(a)  This Amendment has been duly authorized, executed and delivered by all
necessary action of each of the Borrowers and is in full force and effect, and
the agreements and obligations of each of the Borrowers contained herein
constitute legal, valid and binding obligations of each of the Borrowers,
enforceable against each of the Borrowers in accordance with their terms; and
 
(b)  All of the representations and warranties set forth in the Credit
Agreement, as amended hereby, and in the other Loan Documents, are true and
correct in all material respects after giving effect to the provisions of this
Amendment, except to the extent any such representation or warranty is made as
of a specified date, in which case such representation or warranty shall have
been true and correct as of such date.
 
7.  Conditions Precedent
 
.  This Amendment shall not become effective unless all of the following
conditions precedent have been satisfied in full, as determined by Agent:
 
(a)  Agent shall have received an original of this Amendment (or an executed
copy hereof by facsimile or by email), duly authorized, executed and delivered
by each of the Borrowers;
 
(b)  Agent shall have received the amendment fee payable under Section 5 above;
and
 
(c)  Agent shall have received all related agreements, documents and instruments
as may be requested by Agent.
 
8.  No Other Changes
 
.  Except as specifically modified pursuant hereto, no other changes or
modifications to the Consent are intended or implied and in all other respects,
the Consent and other Loan Documents are hereby ratified, restated and confirmed
by all parties hereto as of the date hereof.  To the extent of any conflicts
between the terms of this Amendment and the Consent, the terms of this Amendment
shall control.
 
9.  Successors and Assigns
 
.  This Amendment shall be binding upon and inure to the benefit of each of the
parties hereto and its respective successors and assigns.
 
10.  Counterparts
 
. This Amendment may be executed in any number of counterparts, but all of such
counterparts shall together constitute but one and the same agreement.
 
11.  Required Lender Authorization
 
.  Agent is executing this Amendment at the request and on behalf of Required
Lenders in accordance with Section 9.03 of the Credit Agreement.
 
[SIGNATURE PAGE FOLLOWS]
Very truly yours,

By: /s/ George Louis
McKinley                                                                           

Name: George Louis
McKinley                                                                           

Title:                      Vice President

 
Read and Agreed to:

 
JACO ELECTRONICS, INC.

By: /s/ Jeffrey D.
Gash                                                                

Name:                      Jeffrey D.
Gash                                                      

Title:                      CFO                                                      

 
INTERFACE ELECTRONICS CORP.

By: /s/ Jeffrey D.
Gash                                                                

Name:                      Jeffrey D.
Gash                                                      

Title:                      CFO                                                      

Acknowledged and Agreed to:

 
BANK OF AMERICA, N.A., as a Lender

By: /s/                      Robert
Mahoney                                                      

Name:                      Robert
Mahoney                                                      

Title:                      Sr. Vice
President                                                      

THE CIT GROUP/BUSINESS CREDIT, INC., as a Lender

By: /s/ George Louis
McKinley                                                                           

Name: George Louis
McKinley                                                                           

Title:                      Vice
President                                                                

Schedule A

Designated Inventory

See Attached