Execution
Version





SECOND AMENDMENT TO CREDIT
AGREEMENT





THIS
SECOND AMENDMENT TO CREDIT AGREEMENT, dated as of February 12, 2008 (this “Amendment”), is made
by and among JACO ELECTRONICS, INC., a New York corporation (“Jaco”), INTERFACE
ELECTRONICS CORP., a Massachusetts corporation (“Interface” and,
together with Jaco, collectively, the “Borrowers”), THE CIT
GROUP/BUSINESS CREDIT, INC., a New York corporation, as a Lender, and BANK OF
AMERICA, N.A., as a Lender.





RECITALS:





A.           The
Borrowers, Agent and Lenders are parties to that certain Credit Agreement, dated
as of December 22, 2006 (as amended, modified, restated or supplemented prior to
the date hereof, the “Existing Credit
Agreement”), pursuant to which, among other things, the Lenders extended
to the Borrowers a revolving credit.





B.           The
Borrowers have requested that the Existing Credit Agreement be
amended.





C.           The
Lenders party hereto have agreed to such request, upon the terms and subject to
the conditions and limitations set forth herein, and, to accomplish the
foregoing, the Borrowers and the Lenders party hereto have agreed to execute
this Amendment to the Existing Credit Agreement (as so amended, and as further
amended, modified, restated or supplemented from time to time after the date
hereof, the “Credit
Agreement”).





D.           All
capitalized terms used herein without definition shall have the meanings
ascribed to such terms in the Existing Credit Agreement, unless otherwise
defined herein.





AGREEMENTS:





Accordingly,
in consideration of the premises and the mutual covenants contained herein, and
for other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:





ARTICLE
I





AMENDMENTS





1.1  Amendment to Article
I.  The definition of “Fixed Charge Coverage Ratio” in Section
1.01 of the Existing Credit Agreement is hereby amended by inserting the
following proviso at the end thereof:




“;
provided that for any applicable period of determination, beginning with the
four Fiscal Quarter period ended December 31, 2007, the write-offs in connection
with the sale by the Borrowers of Nexus Custom Electronics, Inc. and the
transactions related thereto shall be excluded from EBITDA solely for purposes
of calculating the Fixed Charge Coverage Ratio for such period”.










ARTICLE
II





REPRESENTATIONS AND
WARRANTIES





The
Borrowers hereby represent and warrant to the Lenders party hereto as
follows:





2.1            Compliance with Credit
Agreement and Other Loan Documents.  After giving effect to
this Amendment, the Borrowers are in compliance with all of the terms and
provisions set forth in the Credit Agreement and in the other Loan Documents to
be observed or performed by the Borrowers.





2.2            Representations in Credit
Agreement and Other Loan Documents.  The representations and
warranties of the Borrowers set forth in the Credit Agreement and the other Loan
Documents are true and correct in all material respects.





2.3            No Event of
Default.  No Default or Event of Default exists under the
Credit Agreement and the other Loan Documents, except as have been previously
waived by the Lenders.





2.4           Material Adverse
Change.  Since June 30, 2006, there has been no change in the
business, assets, operations or financial condition of the Parent and its
subsidiaries, taken as a whole, which could reasonably be expected to have a
Material Adverse Effect.





2.5           Authority.  The
execution and delivery by each Borrower of this Amendment and the performance by
each Borrower of its agreements and obligations under this Amendment and the
Credit Agreement (i) are within the corporate authority of such Borrower, (ii)
have been duly authorized by all necessary corporate action of such Borrower,
(iii) do not conflict with or result in any breach or contravention of any
provision of law, statute, rule or regulation to which such Borrower is subject
or any judgment, order, writ, injunction, license or permit applicable to such
Borrower and (iv) do not conflict with the terms of any provision of the
corporate charter or by-laws of such Borrower, or any material agreement or
other material instrument binding upon such Borrower.





2.6           Binding
Obligation.  This Amendment and the other Loan Documents
constitute the legal, valid and binding obligations of each Borrower,
enforceable against such Borrower in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors’ rights generally or by
equitable principles relating to enforceability.





2.7           Corporate
Documents.  The articles of incorporation or other charter
document and the bylaws of each Borrower have not been amended or modified since
the Effective Date.








ARTICLE
IIII





AFFIRMATION AND
ACKNOWLEDGEMENT





Each
Borrower hereby ratifies and confirms all of its Obligations and each Loan
Document and hereby affirms its absolute and unconditional promise to pay all
Obligations under the Credit Agreement.  Each Borrower hereby confirms
that the Obligations under the Credit Agreement are and remain secured pursuant
to the Loan Documents and the Liens granted thereunder as security for the
Obligations are and shall remain in full force and effect.





ARTICLE
IV





CONDITIONS
PRECEDENT





This
Amendment shall become effective and be deemed effective as of the date hereof
(the “Second Amendment
Effective Date”) upon the satisfaction by the Borrowers or waiver by the
Agent of the following conditions precedent:





(a)           Receipt
by Agent of this Amendment, duly executed by the Borrowers and Required
Lenders.





(b)           Each
of the representations and warranties of the Borrowers set forth in this
Amendment shall be true and correct on and as of the date hereof as if made on
and as of such date.





(c)           Receipt
by Agent, in consideration of the preparation of this Amendment by Agent’s
in-house legal department, of a documentation fee of $500.  Such fee
shall be due and payable in full on the date hereof and may, at Agent’s option,
be charged to the Borrowers’ account on the due date thereof.





(c)           
Receipt by Agent of such other documents, instruments, and agreements as Agent
and its counsel may reasonably request.








ARTICLE
V





MISCELLANEOUS





5.1           Full Force and
Effect.  As expressly amended hereby, the Credit Agreement
shall continue in full force and effect in accordance with the provisions
thereof.  As used in the Credit Agreement, “hereinafter”, “hereto”,
“hereof” or words of similar import, shall, unless the context otherwise
requires, mean the Credit Agreement as amended by this Amendment.





5.2           Applicable
Law.  This Amendment shall be governed by and construed in
accordance with the internal laws and judicial decisions of the State of New
York.





5.3           Counterparts.  This
Amendment may be executed in one or more counterparts, each of which shall
constitute an original, but all of which when taken together shall constitute
but one and the same instrument.  Delivery of an executed counterpart
by facsimile or other electronic transmission shall be effective as delivery of
a manually executed counterpart.





5.4           Expenses.  The
Borrowers shall reimburse Agent for all reasonable legal fees (including fees
for the use of Agent’s in-house counsel) and expenses, all recordation, filing,
and other fees and expenses incurred by Agent in connection with the
preparation, negotiation, execution and delivery of this Amendment and all other
agreements and documents or contemplated hereby.





5.5           Headings.  The
headings in this Amendment are for the purpose of reference only and shall not
affect the construction of this Amendment.





5.6           Waiver of Jury
Trial.  TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
BORROWERS AND LENDERS PARTY HERETO EACH WAIVE THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED
TO THIS AMENDMENT, THE CREDIT AGREEMENT OR THE OTHER LOAN
DOCUMENTS.





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of page intentionally left blank]








IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their respective proper and duly authorized officers
as of the day and year first above written.








JACO
      ELECTRONICS, INC.





By: /s/ Jeffery D.
Gash





Name:
Jeffrey D.
Gash





Title:
CFO





INTERFACE
      ELECTRONICS CORP.





By: /s/ Jeffery D.
Gash





Name:
Jeffrey D.
Gash





Title:
CFO








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





By:           /s/ Andrew
Hausspiegel





Name:       Andrew
Hausspiegel





Title:         Vice
President








BANK OF AMERICA, N.A.,
      as a Lender





By: /s/ Robert
Mahoney





Name:
Robert
Mahoney





Title:
Senior Vice
President