GMAC Commercial Credit LLC
                           1290 Avenue of the Americas
                               New York, NY 10104



September 23, 2002



JACO ELECTRONICS, INC. ("Jaco")
145 Oser Avenue
Hauppauge, NY  11788

NEXUS CUSTOM ELECTRONICS, INC. ("Nexus")
Prospect Street
Brandon, VT  05733

INTERFACE ELECTRONICS CORP. ("Interface")
124 Grove Street
Franklin, MA  02028


Gentlemen:

                  Reference is made to the Second Restated and Amended Loan and
Security Agreement in effect between us as successor by merger to BNY Financial
Corporation ("GMAC") as Agent and Lender, and Fleet Bank, N.A., f/k/a Natwest
Bank, N.A ("Fleet") as Lender, and Jaco, Nexus and Interface, dated September
13, 1995, as supplemented and amended from time to time, (the "Agreement"). Both
GMAC and Fleet may hereinafter be referred to jointly as the "Lenders", and
individually, as a "Lender" and GMAC may also be herein referred to as "Agent"
when acting in such capacity, as the case may be. Initially capitalized terms
not defined herein shall have the meanings ascribed to such terms in the
Agreement. Jaco, Nexus and Interface may hereinafter and in the Agreement, be
referred to jointly and severally as "Debtors", and each individually as a
"Debtor".

                  WHEREAS, the Lenders and Jaco, Nexus, and Interface have
         requested and agreed to certain changes and amendments to the
         Agreement, as here and after described; and

                  WHEREAS, pursuant to such amendments the Maximum Loan Amount
         for each Lender will be reduced from $35,000,000 to $22,500,000, for a
         total amount of $45,000,000;

                  NOW THEREFORE IT IS HEREBY AGREED AS FOLLOWS:

1.                         Effective as of the date hereof, the Agreement shall
                           be amended by replacing the phrase (as previously
                           amended) "$35,000,000" appearing next to the phrase
                           "Maximum Loan Amount" underneath the signature of
                           each Lender, with the phrase "$22,500,000".

2.                         The phrase (as previously amended) of "$30,000,000"
                           appearing on the 8th line of Section 4(a) of the
                           Agreement shall be deleted in its entirety, and
                           replaced with the phrase "$25,000,000".

3.                         The definition of "Contract Rate" as set forth in
                           paragraph 1 of the Agreement, as amended by Amendment
                           letters dated August 1, 1997, June 6, 2000 and
                           November 14, 2001, is hereby deleted and replaced
                           with the following:

                                    " 'Contract Rate' means an interest rate per
                           annum equal to the applicable LIBO Rate plus the
                           margin ("LIBO Margin") stated opposite the ratio
                           range of Funded Debt to net earnings before interest,
                           taxes, depreciation, amortization, extraordinary
                           gains and non-cash losses and all other non-cash
                           charges on a consolidated basis ("EBITDA") during the
                           immediately preceding four fiscal quarters as stated
                           in the table immediately below:

                                    Funded Debt/EBITDA      LIBO Margin
                                    ------------------      -----------

                                    greater than 3.0 to 1         2 3/4%

                                    2.0 to 2.99 to 1              2 1/2%

                                    less than 2.0 to 1            2 1/4%

                    The  Contract  Rate  applicable  to LIBO Rate Loans shall be
                    adjusted quarterly. "

                    4.   The definition of "Inventory  Borrowing Base" appearing
                         in Section 1 of the Agreement,  shall be amended, as of
                         the date hereof,  so that the percentage (as previously
                         amended) of "55%"  appearing  in the first line of such
                         definition,  shall  be  replaced  with  the  percentage
                         "50%".

                    5.   You hereby  agree to pay us a closing fee of $22,500 on
                         the date of closing of this amendment.

                    6.   Section  4(a) of the  Agreement  shall  be  amended  by
                         deleting the following  phrase stated on the eighth and
                         ninth lines of such Section 4(a) of the Agreement "plus
                         (C), the lesser of (x) the Equipment  Borrowing Base or
                         (y)  $500,000;"  . It is the  intent of this  amendment
                         that the  Lenders  will not make any  additional  loans
                         based on or  calculated  with respect to the  Equipment
                         Borrowing Base.

                    7.   Section  5(b)(i) of the Agreement is hereby  amended by
                         deleting  the  phrase  "2/10  of  one  percent   (.2%)"
                         appearing on the third line of such Section 5(b)(i) and
                         replacing  it with  the  phrase  "4/10  of one  percent
                         (.4%)".

                    8.   Section  17(d) of the  Agreement  as  amended  shall be
                         deleted in its entirety and replaced by the following:

                           "(d)   INTENTIONALLY LEFT BLANK."

                    9.   Section 17(e) of the Agreement shall be amended to read
                         in its entirety as follows:

                           "(e) Maintain at all times consolidated net worth
                           (all amounts which would be included under
                           shareholder's equity on a consolidated balance sheet
                           of Debtor, determined in accordance with generally
                           accepted accounting principles), in an amount not
                           less than those set forth on the table below opposite
                           the corresponding calendar quarter:

                                    Quarter Ending                   Net Worth
                                    --------------                  ---------
                                         9/30/02                    $47,000,000

                                        12/31/02                    $45,750,000

                                         3/31/03 and
                                    anytime thereafter              $45,000,000

                           For purposes of calculating this covenant, any
                           writedown for impairment of goodwill, will not be
                           taken into account in making the calculation under
                           this covenant."

                    10.  Section  17(f) of the  Agreement  as  amended  shall be
                         deleted in its entirety and replaced by the following:

                           "(f)   INTENTIONALLY LEFT BLANK."

                    11.  Section  18(g) of the  Agreement  as  amended  shall be
                         deleted in its entirety and replaced by the following:



<PAGE>


                           "(g) The Debtors shall attain at the end of each
                           quarter, on a consolidated basis, EBITDA for such
                           quarter, in amounts of no less than the amounts
                           stated opposite the fiscal quarters stated below:

                          Fiscal Quarter              Minimum EBITDA Amount
                          -----------------           ---------------------
                                 9/30/02                    ($800,000)

                                 12/31/02                   ($400,000)

                                 3/31/03                     $300,000

                         6/30/03 and at the end of each
                         Fiscal Quarter thereafter at least        $600,000"

                    12.  Section  18(e) of the  Agreement  as  amended  shall be
                         deleted in its entirety and replaced by the following:

                           "(e)   INTENTIONALLY LEFT BLANK."

                    13.  Inconsideration  of the  execution and delivery of this
                         amendment and  compliance  with the terms hereof by the
                         Debtors, the Lenders hereby agree to waive a default by
                         the Debtors of the EBITDA covenant of the Debtors under
                         Section 18(g) of the  Agreement for the fiscal  quarter
                         ending  June 30,  2002.  This  waiver  is and  shall be
                         effective  only with  respect  to the  specific  waiver
                         described  herein above and only for the fiscal quarter
                         ending  June 30,  2002 and shall not be deemed a waiver
                         of any  other  covenant,  representation,  warranty  or
                         Event of Default under the Agreement.

                    14.  The   Debtors   shall   hire  or  retain  a   financial
                         consultant,  acceptable to the Lenders in all respects,
                         by October 31, 2002.

                    15.  As an additional  condition  precedent to the execution
                         of the amendment,  Debtors shall provide and deliver to
                         the  Agent  $800,000  in  cash or  cash  equivalent  as
                         collateral  for the payment of six months  interest for
                         the pro-rata benefit of the Lenders to be maintained in
                         an  account  (if in cash) open in the name of the Agent
                         with Fleet.



<PAGE>


                    16.  Additionally,  the Debtors shall also  deliver,  to the
                         Agent and the  Lenders,  ratifications  and consents by
                         the  Guarantors  of the  amendment to the Agreement and
                         ratification  of the security  interests of the Lenders
                         in form and substance satisfactory to the Lenders.

                    17.  It is hereby  agreed by and  between  us that as of the
                         date  hereof,  the first  sentence of Section 21 of the
                         Agreement  as amended is hereby  deleted,  and replaced
                         with the following sentence:

                           "This Second Restated and Amended Loan and Security
                           Agreement shall (subject to compliance with
                           Conditions Precedent) become effective on the closing
                           date hereof, without any interruption or break in
                           continuity (as more fully described in the second
                           paragraph hereof) and shall continue until March 31,
                           2004."

                    18.  By their  signatures  below,  Jaco, Nexus and Interface
                         hereby ratify the Agreement and agree to be jointly and
                         severally   liable  for  all   Obligations   under  the
                         Agreement and agree that all of the outstanding amounts
                         of the  Loans  under  the  Agreement,  as of  the  date
                         hereof,  shall be valid and binding Obligations of each
                         of them,  and shall be deemed  Obligations  outstanding
                         under the  Agreement,  and hereby  agree and promise to
                         repay to the Agent,  for the  benefit  of the  Lenders,
                         such  Obligations  (including  but not  limited  to all
                         applicable  interest) in  accordance  with the terms of
                         the  Agreement,   but  in  no  event,  later  than  the
                         Termination  Date (for  purposes  hereof,  "Termination
                         Date" shall mean March 31, 2004 (which for all purposes
                         of the Agreement shall be deemed to be the last date of
                         the Term),  or any extended  termination  date,  or any
                         earlier  termination  date,  whether by acceleration or
                         otherwise).

                  19.      By their signatures below, Jaco, Nexus and Interface
                           hereby ratify and affirm to the Agent that as of the
                           date hereof, they are in full compliance with all
                           covenants under the Agreement and certify that all
                           representations and warranties of the Agreement are
                           true and accurate as of the date hereof, with the
                           same effect as if they had been made as of the date
                           hereof.

                  Except as herein specifically amended, the Agreement shall
remain in full force and effect in accordance with its original terms, except as
previously amended.




<PAGE>


If the foregoing accurately reflects our understanding, kindly sign the enclosed
copy of this letter and return it to our office as soon as practicable.

                               Very truly yours,
                               GMAC COMMERCIAL CREDIT LLC
                               (as Agent and Lender)


                               By: /s/ Frank Imperto
                                       ----------------------
                                       Frank Imperto
                               Title:Senior Vice Presidnet
AGREED AND ACCEPTED:
JACO ELECTRONICS, INC.                               FLEET BANK, N.A.


By:/s/ Jeffrey D. Gash                  By: /s/ Stephen Hill
       ----------------------                   ----------------------
        Jeffrey D. Gash                         Stephen Hill
Title: Executive Vice President             Title: Vice President

NEXUS CUSTOM ELECTRONICS, INC.              INTERFACE ELECTRONICS CORP.

By:/s/ Jeffrey D. Gash                   By:/s/ Jeffrey D. Gash
       ----------------------                   ----------------------
        Jeffrey D. Gash                          Jeffrey D. Gash
Title: Executive Vice President          Title: Executive Vice President

                            RATIFICATION OF GUARANTOR
By its signature below, Jaco Overseas, Inc. hereby ratifies its guaranty of the
Agreement, as such Agreement has been amended from time to time, including but
not limited to certain amendments dated June 6, 2000, September 28, 2000,
January 31, 2001, June 12, 2001, July 1, 2001, November 14, 2001 and February 6,
2002, (the "Amendments") and hereby agrees to be liable for all of the
Obligations under the Guaranty with respect to the Agreement as amended from
time to time, including but not limited to by this amendment and the Amendments,
and hereby agrees that the said Guaranty shall continue to apply and remain in
full force and effect with respect to the amended Agreement and hereby agrees
and consents that a certain General Loan and Security Agreement dated January
20, 1989, shall continue to be in full force and effect and apply to the amended
Agreement, and it further hereby agrees to make all payments of all its
Obligations under the said Guaranty and General Loan and Security Agreement to
GMAC Commercial Credit LLC as Agent and Lender, and to Fleet Bank, N.A. as
Lender, as successors in interest to the previous Agent and Lenders
respectively.

RATIFIED, ACCEPTED AND CONSENTED:
JACO OVERSEAS, INC.

By:/s/ Jeffrey D. Gash
       ----------------------
        Jeffrey D. Gash
Title: Executive Vice President