EMPLOYMENTAGREEMENT

        EMPLOYMENTAGREEMENT, effective as of July 1, 2001 by and between JacoElectronics, Inc., a New York corporation having offices at 145 Oser Avenue,Hauppauge, New York 11788 (“Jaco”), and Joel H. Girsky, residing at 29Winter Lane, Dix Hills, New York 11746 (“Girsky”). 

        WHEREAS,Girsky’s last written employment agreement with Jaco was effective as ofJuly 1, 1997 and was amended effective as of April 1, 2000; 

        WHEREAS,Jaco and Girsky have agreed to further amend the employment agreement consistentwith the terms hereof (the employment agreement as amended and restated ishereinafter referred to as the “Employment Agreement”); and 

        WHEREAS,Jaco desires to have the continued services of Girsky, and Girsky desires tocontinue to be employed by Jaco, on the terms and conditions hereinafter setforth. 

        NOW,THEREFORE, in consideration of the mutual covenants and agreements hereincontained, the parties agree as follows: 

        1.1Jaco hereby employs Girsky as Chairman and President of Jaco, and Girsky herebyagrees to serve Jaco in such capacities and to perform such duties consistenttherewith as Jaco’s Board of Directors from time to time shall determinefor a period commencing on July 1, 1997 (the “Effective Date”) andending on the fourth (4th) anniversary of the Effective Date (the “InitialTerm”), provided, however, the term of this Employment Agreement shall beautomatically extended after each anniversary date of the Effective Date for anadditional one year period following the Initial Term, unless either Jaco orGirsky shall provide a notice of non-renewal to the other party (the“Notice of Non-Renewal”), which notice shall be in writing and shallbe delivered not less than 90 days prior to an anniversary date after theEffective Date (the “Employment Period”). In the event that a Noticeof Non-Renewal is delivered by either party, this Employment Agreement shallcontinue for a period of three (3) years following the anniversary date whichfollows immediately after the date that a valid and effective Notice ofNon-Renewal is delivered. By way of example, if the Notice of Non-Renewal isdelivered after the third anniversary date and not less than 90 days prior tothe fourth anniversary date of the Effective Date, this Employment Agreementshall continue until the seventh anniversary date of the Effective Date. 

        Notwithstandinganything contained herein to the contrary, in the event that a Notice ofNon-Renewal is delivered by either party at such time as Girsky is at least 70years of age, then this Employment Agreement shall continue for a period of onlyone (1) year following the anniversary date which follows immediately after thedate that a valid and effective Notice of Non-Renewal is delivered. 

        2.1For all services rendered pursuant to the terms hereof, Girsky shall receive abase salary of $325,000 for each of the 12 month periods (a “ContractYear”) ending on or before June 30, 2001, and effective July 1, 2001,Girsky shall receive a base salary of $375,000 for each Contract Year endingJune 30, 2002, and each June 30, thereafter (“Base Salary”), whichBase Salary shall be paid to Girsky in equal periodic installments not lessfrequently than monthly. In addition and not in lieu thereof, Girsky shall beentitled to receive such fringe benefits and to participate in such benefitplans and programs as are generally made available by Jaco to other seniorexecutive employees, including, but not limited to, health insurance. 

        2.2Girsky shall receive a cash bonus (the “Cash Bonus”) for each ContractYear equal to (i) four percent (4%) of Jaco’s annual earnings before incometaxes for the corresponding fiscal year if such earnings before income taxes arein excess of $1,000,000, and not more than $2,500,000 or (ii) six percent (6%)of Jaco’s earnings before income taxes for the corresponding fiscal year ifsuch earnings before income taxes are in excess of $2,500,000 up to a maximumannual Cash Bonus of $720,000. If Jaco’s earnings before income taxes arein excess of $12,000,000 for any such fiscal year, in addition to the Cash Bonusof $720,000, Girsky shall receive such number of common stock options of Jaco asshall be negotiated between Girsky and Jaco at such time (the “OptionBonus” and, together with the Cash Bonus, the “PerformanceBonus”). As used herein, the term “earnings before income taxes”shall mean the income of Jaco before extraordinary items and before payment ofincome taxes as shown on Jaco’s consolidated financial statements preparedin accordance with generally accepted accounting principles. The PerformanceBonus shall be payable every year on November 1 for the preceding fiscal year. 

        2.3In addition to the Base Salary and Performance Bonus and not in lieu thereof, inaccordance with Section 2.4 hereof, Girsky shall receive as additionalcompensation the product of $50,000, multiplied by the number of years whichshall have passed since July 1, 1984 and until the end of the last day on whichGirsky shall be employed hereunder (“Deferred Compensation”). Jacomay, but shall not be obligated to, set aside funds with which to pay theDeferred Compensation, it being understood and agreed that such funds are andshall be the sole and exclusive property of Jaco, free from any lien or claim ofGirsky. Should Girsky so request, Jaco, in its sole and absolute discretion,may, but shall not be obligated to, invest such funds in one or more nationallyrecognized, institutionally managed mutual funds which invest in publicly tradedequity or debt securities. Should Girsky make any such request and should Jacomake any such investment in accordance with such request, the DeferredCompensation shall be increased by an amount equal to any after tax gain orafter tax income realized therefrom or reduced by an amount equal to any lossrealized therefrom, as the case may be. For purposes of calculating after taxgain, income or loss for purposes of this Section 2.3, it shall be assumed thatJaco is taxable on its income at the highest applicable marginal rates. 

        2.4The Deferred Compensation shall become payable to Girsky in its entirety notlater than January 15th of the year next following Girsky’s cessation ofemployment hereunder for any reason; provided, however, if Girsky continues tobe employed by Jaco after the expiration of this Employment Agreement in asubstantially similar executive position to that provided for hereunder, theDeferred Compensation shall not become payable to him until cessation of suchemployment, whether or not such employment is pursuant to a written agreement. 

        2.5(a) Upon Girsky’s death during the term hereof, his legal representative(s)shall be paid the sum of $375,000 (the “Death Benefit”), payable intwelve (12) equal monthly installments, commencing within thirty (30) days afterGirsky’s death. In addition, upon Girsky’s death during the termhereof and to the extent that Girsky was eligible, his legal representative(s)shall be entitled to receive any other death benefits as are generally madeavailable by Jaco to other senior executive employees, including, but notlimited to, group term life insurance. 

        2.6Jaco shall use its best efforts to purchase insurance against Girsky becomingdisabled (collectively, “Policies”), in sufficient amounts fully tofund its obligations to Girsky under Section 2.5(b) above. All such Policiesshall be and shall remain the property of Jaco. Girsky shall cooperate fullywith Jaco to enable Jaco to obtain such Policies. 

        2.7The obligations of Jaco to Girsky hereunder are general unsecured obligations ofJaco to Girsky, and Girsky shall have no security interest or other interest ofany nature whatsoever in the Policies or the proceeds thereof (except asprovided in Section 2.8 below), or in any other assets of Jaco. Jaco, in itsabsolute discretion, may establish any reserves or special accounts or segregateassets to fund such obligations. Girsky shall not sell, transfer, assign,pledge, encumber, hypothecate or otherwise alienate any right or entitlement ofhis hereunder. No such purported sale, transfer, assignment, pledge,encumbrance, hypothecation or other alienation shall have any force or effect orin any way be binding upon or be enforceable against Jaco. Except as otherwiseprovided by law, no such right or entitlement shall be subject to attachment orgarnishment. 

        2.8If, at any time, Girsky ceases to be an employee of Jaco other than on accountof death or retirement on account of permanent disability, Jaco, atGirsky’s option, shall transfer and assign to Girsky all its right, titleand interest in the Policies and Jaco shall cause the premiums on the Policiesto be fully paid up to the date of Girsky’s termination. Girsky shallrefund to Jaco the pro rata portion (determined by the straight-line method) ofpremiums on the Policies, if any, paid by Jaco for any period beyond thetermination date. Upon such termination of Girsky’s employment and uponcomplete assignment of all of the Policies to Girsky, Jaco shall have no furtherliability to Girsky for payment of premiums under the Policies or otherwise inrespect of its obligations under Sections 2.5 and 2.6 hereof. 

        3.1Girsky shall devote his best efforts and substantially all of his working timeto the business of Jaco. 

        3.2Girsky shall perform all duties, obligations, and responsibilities assigned tohim by the Board of Directors and ordinarily performed by a person employed as asenior executive officer, and shall devote his full attention to the performanceof the duties assigned to him. 

        3.3If duly elected, Girsky shall also serve as a director of Jaco and as an officerand/or director of any of its subsidiaries, whether now existing or hereafterestablished or acquired, and he shall perform such duties as are assigned tohim, from time to time, by the Board of Directors of Jaco or any of itssubsidiaries. 

        4.1During the Employment Period, Girsky’s employment may be terminated by theBoard of Directors of Jaco on the occurrence of any one or more of the followingevents: 

        4.2If Girsky becomes mentally or physically disabled for a period of six (6)consecutive months so that he is not able to perform his duties substantially ascontemplated herein (“Disability”), Jaco’s obligations to pay theBase Salary and the Performance Bonus shall cease from and after the last day ofsuch six (6) month period and shall not be resumed unless and until Girsky shallhave returned to his duties on a full time basis for a period of two (2)consecutive months. During such two (2) month period, Girsky shall be paid atthe rates of Base Salary and Performance Bonus which would then have beenprevailing hereunder had he not become so disabled. If Girsky’s Disabilitybecomes permanent, Jaco, at its option, may terminate Girsky’s employmentwith Jaco and its obligation hereunder to pay the Base Salary and thePerformance Bonus. Girsky’s Disability shall be deemed to have becomepermanent when, as a result of the injury or sickness, Girsky becomes wholly andcontinuously disabled and is thus prevented from performing the material andsubstantial duties of his employment as set forth in Section 1.1 above and whileunder the care of a physician. 

5. **Reimbursement ofExpenses.** Jaco shall reimburse Girsky for all reasonable expensesincurred in connection with the promotion of the business of Jaco, includingexpenses for travel, entertainment and similar expenses incurred by Girsky onJaco’s behalf. No such reimbursement shall be made except upon thepresentation by Girsky of an itemized account of such expenses or other evidencethereof for which reimbursement then is being sought, all in form reasonablysatisfactory to Jaco. 

6. **Indemnity.**Jaco, to the maximum extent it may provide indemnification to an officer ordirector under applicable law, shall indemnify Girsky and hold him harmless fromany and all liability arising out of any act or failure to act undertaken by himin good faith while performing services for Jaco, and shall use its best effortsto obtain coverage for him under any insurance policy now in force or hereafterobtained during the Employment Period covering officers and directors of Jacoagainst claims made against them or any of them for any act or failure to act insuch capacities. Jaco shall pay all expenses, including reasonableattorneys’ fees, actually or necessarily incurred by Girsky in connectionwith the defense of any action, suit, or proceeding arising out of any suchclaim and in connection with any appeal arising therefrom. 

7. **Disclosure ofInformation**. All memoranda, notes, records, or other documentsmade or compiled by Girsky or made available to him during the course of hisemployment with Jaco concerning the business of Jaco shall be Jaco’sproperty and shall be delivered to Jaco by Girsky on the termination ofGirsky’s employment. Unless authorized by Jaco, Girsky shall not use forhimself or others or divulge to others, any proprietary or confidentialinformation of Jaco obtained by him as a result of his employment. For purposesof this Section 7, the term “proprietary or confidential information”shall mean all information which (i) is known only to Girsky or to Girsky andemployees, former employees, consultants of Jaco, or others in a confidentialrelationship with Jaco, (ii) relates to specific matters such as trade secrets,customers, potential customers, vendor lists, pricing and credit techniques,research and development activities, books and records, and commissionschedules, as they may exist from time to time, which Girsky may have acquiredor obtained by virtue of work heretofore or hereafter performed for or on behalfof Jaco or which he may acquire or may have acquired knowledge of during theperformance of such work, and (iii) is not readily available to others. In theevent of a breach or a threatened breach by Girsky of the provisions of thisSection 7, Jaco shall be entitled to an injunction restraining Girsky fromdisclosing, in whole or in part, the aforementioned proprietary or confidentialinformation of Jaco, or from rendering any services to any person, firm,corporation, association, or other entity to whom or to which such proprietaryor confidential information, in whole or in part, has been disclosed or isthreatened to be disclosed. Nothing contained herein shall be construed asprohibiting Jaco from pursuing any other remedies available to Jaco for suchbreach or threatened breach, including the recovery of damages from Girsky. 

        8.1Girsky hereby acknowledges and recognizes the highly competitive nature ofJaco’s business and, accordingly, in consideration of the premisescontained herein, agrees that during the Employment Period and thereafter untilthe Designated Date (as hereinafter defined) he will not: (i) directly orindirectly engage in any Competitive Activity (as hereinafter defined), whethersuch engagement shall be as an officer, director, employee, consultant, agent,lender, stockholder, or other participant; or (ii) assist others in engaging inany Competitive Activity. The term “Competitive Activity” shall meanand shall include soliciting, raiding, enticing, or inducing, individually or inconcert with others, (i) any person or entity to be a customer for the same orsimilar services for which that person or entity engaged Jaco, if such person orentity 

        (a)was a customer of Jaco’s during the Employment Period or at any timethereafter prior to the Designated Date, or (b) was solicited by Jaco to be acustomer during the one-year period prior to the termination of this EmploymentAgreement; (ii) any manufacturer or supplier whose products are distributed byJaco at the time this Employment Agreement is terminated to act as amanufacturer or supplier for any other party of the same or similar goods thatit supplies to Jaco; or (iii) any employee of Jaco to leave Jaco or to dobusiness with any enterprise or business which competes with Jaco. 

        8.2As used in this Section 8, the “Designated Date” shall mean any of thefollowing dates: 

        8.3It is the desire and intent of the parties that the provisions of this Section 8shall be enforced to the fullest extent permissible under the laws and publicpolicies applied in each jurisdiction in which enforcement is sought.Accordingly, if any provision of this Section 8 shall be adjudicated to beinvalid or unenforceable in any such jurisdiction, such provision of thisSection 8 shall be deemed amended to delete therefrom the portion thusadjudicated to be invalid or unenforceable, such deletion to apply only withrespect to the operation of such provision of this Section 8 in the particularjurisdiction in which such adjudication is made. In addition, if the scope ofany restriction contained in this Section 8 is adjudicated to be too broad topermit enforcement thereof to its fullest extent, then such restriction shall beenforced to the maximum extent permitted by law, and Girsky hereby consents andagrees that such scope may be judicially modified accordingly in any proceedingbrought to enforce such restriction. 

        8.4In the event of a breach or threatened breach by Girsky of the provisions ofthis Section 8, Jaco shall be entitled to an injunction restraining him fromsuch breach. Nothing contained herein shall be construed as prohibiting Jacofrom pursuing any other remedies available to it for such breach or threatenedbreach or any other breach of this Employment Agreement. 

        9.1In the event of any consolidation or merger of Jaco into or with anothercorporation during the Employment Period, and Jaco is not the surviving entity,or the sale of all or substantially all of the assets of Jaco to anothercorporation during the Employment Period, or in the event that fifty (50%)percent or more of the voting common stock of Jaco shall be owned by one or moreindividuals or entities, who are acting in concert or as part of an affiliatedgroup (other than a group one of the members of which is Girsky) at any timeduring the Employment Period, (the occurrence of any of the foregoing, a“Change of Control”), then (i) within thirty (30) days of theoccurrence of such event, Jaco shall pay or cause to be paid to Girsky acertified or cashier’s check in an amount equal to two hundred andninety-nine percent (299%) of the average of Girsky’s “BaseAmount” as computed in accordance with the Internal Revenue Code of 1986(the “Code”) Section 280G(b)(3),and (ii) this Employment Agreement maybe assigned by Jaco or any such successor or surviving corporation with theprior written consent of Girsky. 

10. **Continuing HealthBenefits**. Commencing upon the termination of Girsky’semployment with Jaco, and ending on the later to occur of (i) Girsky’sdeath, or (ii) the death of his spouse, Jaco shall permit Girsky, and to theextent eligible, his spouse, to participate in the regular health and medicalbenefit program provided by Jaco to the senior executive officers of Jaco assame may be amended from time to time, which health and medical benefits shallbe paid for by Jaco, it being understood that Girsky and/or his spouse shall becovered under any prevailing health and medical program for which he/she/they isor are medically qualified at the same level as such benefits are provided toother senior executive officers. 

11. **Notices.**Any notices required or permitted to be given under the provisions of thisEmployment Agreement shall be in writing and delivered personally, sent byrecognized overnight courier or mailed by certified or registered mail, returnreceipt requested, postage prepaid to the persons and at the addresses first setforth above, or to such other person at such other address as any party mayrequest by notice in writing to the other party to this Employment Agreement.Notices which are hand delivered or delivered by recognized overnight couriershall be effective on delivery. Notices which are mailed shall be effective onthe third day after mailing. 

13. **Successors andAssigns**. This Employment Agreement shall be binding on thesuccessors and assigns of Jaco and shall inure to the benefit and be enforceableby and against its successors and assigns. This Employment Agreement is personalin nature and may not be assigned or transferred by Girsky without the priorwritten consent of Jaco. 

14. **EntireAgreement.** This Employment Agreement contains the entire understandingand agreement between the parties relating to the subject matter hereof, andneither this Employment Agreement nor any provision hereof may be waived,modified, amended, changed, discharged, or terminated, except by an agreement inwriting signed by the party against whom enforcement of any waiver,modification, change, amendment, discharge, or termination is sought. 

        INWITNESS WHEREOF, the parties have executed this Agreement as of the date firstabove written.