AMENDMENT NO. 1 TO
                                CREDIT AGREEMENT



                                                         As of January 23, 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").

         The Borrowers have requested that the Agent and Required Lenders agree
to various amendments to the Credit Agreement, 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.

         In consideration of the premises and the mutual covenants contained
herein and in the Financing Agreement, the parties hereto agree as follows:

1.       Defined Terms

         (a) Capitalized terms used and not otherwise defined herein shall have
their respective meanings as defined in the Credit Agreement.

         (b) Section 1.01 of the Credit Agreement is hereby amended by adding
the following defined term, in proper alphabetical order, as follows:

                  "Aggregate Revolving Credit Exposure" means, at any time, the
                  aggregate Revolving Credit Exposure of all Revolving Lenders.

2.       Amendments to Defined Terms

          (a) The first sentence of the definition of the term "Applicable Rate"
set forth in Section 1.01 of the Credit Agreement is hereby amended and restated
in its entirety as follows:

         "Applicable Rate" means, for any day, with respect to any ABR Loan or
         Eurodollar Loan payable hereunder, as the case may be, the applicable
         rate per annum set forth below under the caption "ABR Spread" or
         "Eurodollar Spread," as the case may be, based upon the Fixed Charge
         Coverage Ratio on the last day of each of the three most recently ended
         calendar months, with such rates to be effective on the first day of
         the calendar month following Agent's receipt of Borrowers' financial
         statements for such three most recently ended calendar months; provided
         that such rate adjustments shall not apply to existing Eurodollar
         Loans:

          (b) The definition of the term "Credit Exposure" set forth in Section
1.01 of the Credit Agreement is hereby amended and restated in its entirety as
follows:

         "Credit Exposure" means, as to any Lender at any time, such Lender's
         Revolving Credit Exposure at such time.

          (c) Subsection (c) of the definition of the term "Eligible Accounts"
set forth in Section 1.01 of the Credit Agreement is hereby amended and restated
in its entirety as follows:

         "(c) with respect to which more than 90 days have elapsed since the
         date of the original invoice therefore or which is more than 60 days
         past the original due date for payment;"

           (d) Subsection (g) of the definition of the term "Eligible Inventory"
set forth in Section 1.01 of the Credit Agreement is hereby amended and restated
in its entirety as follows:

         "(g) which is not located in the U.S. or Canada or is in transit with a
         common carrier from vendors and suppliers, except, that, Inventory
         located in Singapore may be deemed eligible for the purposes of this
         clause (g) up to an aggregate amount of $1,000,000 provided that (i)
         Agent receives a Collateral Access Agreement, (ii) under applicable
         law, Agent has a first priority perfected Lien on such Inventory and
         (iii) Agent receives such other documentation (including, upon Agent's
         reasonable request, opinion letter(s)) as Agent may require;"



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3. Amendment to Overadvance Section. Section 2.02(c) of the Credit Agreement is
hereby amended and restated in its entirety as follows:

                  "(c) Overadvances. If the Aggregate Revolving Credit Exposure
                  exceeds the Borrowing Base at any time (an "Overadvance"),
                  such excess amount shall be payable by Borrowers on demand by
                  the Agent. All Overadvances shall constitute Obligations
                  secured by the Collateral and entitled to all benefits of the
                  Loan Documents. Unless its authority has been revoked in
                  writing by Required Lenders, the Agent may require Revolving
                  Lenders to honor requests for Overadvance Loans and to forbear
                  from requiring Borrowers to cure an Overadvance, as long as
                  (i) the Overadvance does not continue for more than 30
                  consecutive days (and no Overadvance may exist for at least
                  five consecutive days thereafter before further Overadvance
                  Loans are required), (ii) the Overadvance, together with any
                  Protective Advances made pursuant to Section 2.06(a)(i) and
                  (ii), do not exceed $5,000,000, and (c) no more than three (3)
                  Overadvance Loans will be permitted in any given calendar
                  year. Overadvance Loans may be made even if the conditions
                  precedent set forth in Section 4.02 have not been satisfied.
                  In no event shall Overadvance Loans be required that would
                  cause the Aggregate Revolving Credit Exposure to exceed the
                  Aggregate Commitments. Any funding of an Overadvance Loan or
                  sufferance of an Overadvance shall not constitute a waiver by
                  the Agent or Revolving Lenders of the Event of Default caused
                  thereby. In no event shall any Borrower or other Loan Party be
                  deemed a beneficiary of this Section 2.03(c) nor authorized to
                  enforce any of its terms."

4. Amendment to Investments Section. Section 6.04(i) of the Credit Agreement is
hereby amended and restated in its entirety as follows:

                  "(i) investments incurred in order to consummate Acquisitions
                  provided, that, (i) the Fixed Charge Coverage Ratio, as of the
                  last day of the Fiscal Quarter ended immediately prior to the
                  date of consummation of such Acquisition (for which Fiscal
                  Quarter financial statements have been delivered) and after
                  giving pro forma effect to such Acquisition, is at least
                  1.5:1.0, (ii) the Borrowers' Average 20-Day Availability is
                  not less than $5,000,000, and after giving effect to such
                  Acquisition, the Borrowers shall have a minimum pro forma
                  Availability as of the date of consummation of such
                  Acquisition (after giving effect to the funding of all
                  Revolving Loans and the issuance of all Letters of Credit to
                  be funded or issued as of such date) of not less than
                  $5,000,000, (iii) the Borrowers shall have obtained the prior,
                  effective written consent or approval to such Acquisition of
                  the board of directors or equivalent governing body of the
                  Person being acquired or whose assets are being acquired, (iv)
                  the Person or business which is the subject of such
                  Acquisition is in the same or similar line of business as the
                  Borrowers, (v) all governmental and material third-party
                  approvals necessary in connection with such Acquisition shall
                  have been obtained and be in full force and effect, (vi) if
                  acquiring a Person, such Person becomes a wholly owned
                  Subsidiary of a Borrower and a Loan Party, (vii) the Agent
                  shall be reasonably satisfied with the form and substance of
                  the purchase or acquisition agreement executed in connection
                  with such Acquisition and with all other material agreements,
                  instruments and documents implementing such Acquisition or
                  executed in connection therewith and such Acquisition shall be
                  consummated in accordance with the terms of such documents and
                  in compliance with applicable law and regulatory approvals,
                  (viii) no Default or Event of Default shall have occurred and
                  be continuing or would result therefrom and all
                  representations and warranties contained in this Agreement
                  shall be true and correct in all material respects on the date
                  of the consummation of such Acquisition, and (ix) on or before
                  the date of consummation of such Acquisition, the Agent shall
                  have received (A) all documents required by the provisions of
                  Section 5.11 with respect to any Person purchased or formed in
                  connection with such Acquisition and which will become a
                  Subsidiary of a Borrower and (B) if requested by the Agent, a
                  certificate from the Administrative Borrower executed by an
                  Authorized Officer of the Administrative Borrower certifying
                  to the Agent and the Lenders as to the matters set forth in
                  the foregoing clauses (i) through (viii) (each such
                  acquisition, a "Permitted Acquisition" and collectively,
                  "Permitted Acquisitions");"

5. Amendment to Financial Covenants Section. Section 6.11 of the Credit
Agreement is hereby amended and restated in its entirety as follows:

                           "(a) Fixed Charge Coverage Ratio. In the event that
                  the Borrowers' Availability, for any five (5) consecutive
                  days, is less than $5,000,000 (the "Trigger Event"), Borrowers
                  will not permit the Fixed Charge Coverage Ratio as of the last
                  day of any Fiscal Quarter, commencing as of the end of the
                  Fiscal Quarter immediately preceding the Fiscal Quarter in
                  which the Trigger Event occurred (for which Fiscal Quarter
                  financial statements have been delivered to Agent), to be less
                  than 1.1:1.0."

6. Amendment to Events of Default Section. Section 7.01(d) of the Credit
Agreement is hereby amended and restated in its entirety as follows:

                  "(d) any Loan Party shall fail to observe or perform any
                  covenant, condition or agreement contained in Sections 5.01,
                  5.02(a), 5.03 (with respect to a Loan Party's existence),
                  5.06, 5.08 or in Article VI;"

7. 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.

8. 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; and

(b) Agent shall have received all related agreements, documents and instruments
as may be requested by Agent.

9. No Other Changes. Except as specifically modified pursuant hereto, no other
changes or modifications to the Loan Documents are intended or implied and in
all other respects, the 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 Loan Documents, the terms
of this Amendment shall control.

10. 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.

11. 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.

12. 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]


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                                 Very truly yours,

                                 THE CIT GROUP/BUSINESS CREDIT, INC., as Agent

                                 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
    --------------------------------
ame:    Jeffrey D. Gash
      ------------------------------
Title: EVP
       -----------------------------