AMENDMENT #3 TO THE THIRD RESTATED AND AMENDED LOAN AND SECURITY AGREEMENT


February 11, 2005


JACO ELECTRONICS, INC. ("Jaco")
145 Oser Avenue
Hauppauge, NY  11778

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

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

Gentlemen:

      Reference is made to the Third Restated and Amended Loan and Security
Agreement in effect between GMAC Commercial Finance LLC, as successor by merger
to GMAC Commercial Credit LLC, which was the successor in interest to BNY
Financial Corporation ("GMAC CF"), as Agent and Lender, and PNC Bank, National
Association ("PNC") as Lender and Co-Agent, Jaco, Nexus, Interface and Jaco de
Mexico, Inc., dated December 22, 2003 ( as restated, supplemented, extended,
renewed, amended and otherwise modified from time to time, the "Agreement").
Reference is also made to Amendment #1 to the Agreement, dated September 20,
2004, and to Amendment # 2 to the Agreement, dated November 23, 2004 (together,
the "Amendments"). Both GMAC CF and PNC may hereafter be referred to jointly as
the "Lenders", and individually, as a "Lender" and GMAC CF may also be herein
referred to as "Agent" when acting in such capacity, as the case may be, and PNC
may also herein be referred as "Co-Agent" when acting in such capacity, as the
case may be. Each capitalized term herein not otherwise defined herein shall
have the meanings ascribed to such term in the Agreement. Jaco, Nexus and
Interface may hereinafter and in the Agreement, be referred to jointly and
severally as "Borrowers", and each individually as a "Borrower".

               It is hereby agreed, among the parties to the Agreement, that the
Agreement, as heretofore amended, is hereby further amended as follows,
effective as of the date hereof:

              1.Definitions. (a) Section 1.2 of the Agreement (General Terms) is
hereby amended by the addition thereto of the following defined terms:

                  "Initial Sales Projection" shall mean, with respect to any
     given week, the sales projected for such week in the first Weekly Forecast,
     as defined below, in which sales projections for such week appear.

                   "Market Value" shall mean, with respect to any Marketable
     Security, as of any given day, the closing price therefor on the
     immediately preceding Business Day published in the Wall Street Journal or
     any other publicly available reliable quotation source (such as Yahoo
     Finance)."

                   "Marketable Securities" shall mean publicly traded
     securities, solely to the extent and for so long as (i) such securities are
     wholly owned beneficially by Jaco, (ii) such securities may be transferred
<PAGE>


     or otherwise disposed of by Agent in accordance with the terms hereof
     without restriction, (iii) current prices for such securities are published
     on each Business Day in the Wall Street Journal or in any other publicly
     available and reliable quotation service such as Yahoo Finance, and (iv)
     such securities are subject to a Control Agreement, satisfactory in form
     and substance to Agent (or other document satisfactory to Agent in its sole
     discretion), granting to Agent, until all of the Obligations are paid or
     otherwise satisfied in full, control over the transfer and disposition
     thereof."

                    "Marketable Securities Availability" shall mean Revolving
     Advances against Marketable Securities which Lenders may, from time to time
     during the term of this Agreement, make available to Borrowers, in an
     amount up to seventy-five percent (75%) of the Market Value of the
     Marketable Securities."

                     " LCD Inventory" shall mean Jaco Eligible Inventory
     consisting of LCD Panels that are (i) the subject of, and are saleable
     pursuant to, that certain Contract No.4600000002, dated July 9, 2004, with
     the Specified Customer., as in effect on the date hereof, and (ii) sold
     prior to June 30, 2005, it being understood that, anything in the Agreement
     to the contrary notwithstanding, any of the LCD Panels referred to in
     clause (i) above that remain in inventory after June 30, 2005 shall not be
     deemed Eligible Inventory."

                    "Specified Customer" shall mean the Customer specified by
separate letter agreement.

                           (b) The definition of the term "Contract Rate" is
hereby amended to read in its
entirety as follows:

                    "Contract Rate" shall mean, as applicable, with respect to
     Revolving Advances, an Interest Rate per annum equal to:

          (A) the Base Rate,  plus (x) until July 1, 2005,  one and  one-quarter
     (1.25%)  percent,  and (y) from and  after  July1,  2005,  (i) if the Fixed
     Charge  Coverage  Ratio  for  the  two  consecutive  full  fiscal  quarters
     immediately  preceding the date of calculation was equal to or greater than
     1.1 to 1.0,  three-quarters  of one (0.75%)  percent,  or (ii) if the Fixed
     Charge  Coverage  Ratio  for  the  two  consecutive  full  fiscal  quarters
     immediately preceding the date of calculation was less than 1.1 to 1.0, one
     and one-quarter (1.25%) percent ;or

          (B)  the  Eurodollar  Rate,  plus  (x)  until  July1,2005,  three  and
     three-quarters  (3.75%) percent, and (y) from and after July1,2005,  (i) if
     the  Fixed  Charge  Coverage  Ratio  for the two  consecutive  full  fiscal
     quarters  immediately  preceding  the date of  calculation  was equal to or
     greater than 1.1 to 1.0, three and one-quarter  (3.25%) percent, or (ii) if
     the  Fixed  Charge  Coverage  Ratio  for the two  consecutive  full  fiscal
     quarters immediately preceding the date of calculation was less than 1.1 to
     1.0, three and three-quarters (3.75%) percent."


          (c)  Subparagraph  (f) and  subparagraph  (g) of the definition of the
     term  "Eligible  Receivables"  are each amended to read in their  entirety,
     respectively, as follows:

                                    "(f) the sale is to a Customer outside the
     continental United States of
     America, unless the sale is on letter of credit, guaranty, acceptance terms
     or is covered by credit insurance, in each case acceptable to Agent in its
     Reasonable Discretion; provided, however, that until March 13, 2005,
     Receivables of a foreign Customer to be identified by separate letter
     agreement, of an aggregate maximum of $5,000,000, shall not be disqualified
     as Eligible Receivables solely by virtue of this subparagraph (f) if, and
     solely for so long as (but not beyond March 13, 2005), such Receivables
     remain covered by credit insurance issued by Continental Casualty Company
     of not less than $3,000,000 and satisfactory to Agent in the exercise of
     its Reasonable Discretion;
<PAGE>

                                     (g) the sale to the Customer is on a
     bill-and-hold, guaranteed sale,
     sale-and-return, sale on approval, consignment or any other repurchase or
     return basis or is evidenced by chattel paper; provided, however, that if
     Jaco delivers to Agent a letter in the form of Exhibit I hereto, duly
     executed by Jaco and the Specified Customer, with respect to Receivables,
     of an aggregate maximum of $2,212,000, arising from the sale of LCD
     Inventory, such Receivables as are the subject of such letter shall not be
     disqualified as Eligible Receivables solely by virtue of this subparagraph
     (g);"

                            (d) "Inventory Availability is hereby amended to
read in its entirety as follows:

     "Inventory Availability" shall mean the Revolving Advances against Eligible
     Inventory which Lenders may from time to time during the Term make
     available to Borrowers, in an amount up to the least of (a) $17,000,000
     (the "Inventory Sublimit") or (b) the sum of (i) 31% of Jaco Eligible
     Inventory other than LCD Inventory, plus, (ii) until June 30, 2005, 47.5%
     of LCD Inventory ( but after June 30, 2005, 0% ) (clauses (i) and (ii)
     collectively, the "Jaco Inventory Advance Rate"), or (c) eighty-five (85%)
     percent of the net orderly liquidation value of such Jaco Eligible
     Inventory (calculated as of the date of any calculation), (the Jaco
     Inventory Advance Rate, as subject to the limitation percentage described
     in (c) above, shall be referred to herein as the "Inventory Advance Rate").
     Such Inventory Advance Rate shall be calculated on the cost of such
     Eligible Inventory, on a first-in, first-out basis."

            2. Formula Amount Section 2.1 of the Agreement (Revolving Advances)
is hereby amended by the deletion of clause (y) in its entirety from Section 2.1
(a) and the substitution of the following therefor:

                          "(y)      an amount equal to the sum of: (i)
                                    Receivables Availability, plus (ii)
                                    Inventory Availability, plus (iii)
                                    Marketable Securities Availability, minus
                                    (iv) the amount of any outstanding Letters
                                    of Credit, minus (v) Reserves."

            3. Financial Covenants Sections 6.9 of the Agreement (Financial
Covenants), Section 6.10 of the Agreement (Minimum Net Worth) and Section 6.12
of the Agreement (Permanent Undrawn Availability) are each hereby amended in
their entirety to read as follows:

                           "6.9     Financial Covenants.

     (a) EBITDA. Maintain EBITDA for the Loan Parties on a Consolidated Basis as
     of the end of each fiscal quarter set forth below for the respective fiscal
     periods set forth below ending on the last day of such fiscal quarter in an
     amount not less than the amount set forth below:

                  Quarter Ended              Minimum EBITDA
                  -------------              --------------
                  December 31, 2004             $(1,450,000)
                  March 31, 2005                  $260,000
                  June 30, 2005                   $830,000
                  September 30, 2005            $1,000,000

     (b) Fixed Charge  Coverage  Ratio.  Maintain,  as of the end of the quarter
     ended  December  31,  2005,  and  as of  the  end of  each  fiscal  quarter
     thereafter, on a four-quarter rolling basis for the previous four quarters,
     a Fixed Charge Coverage Ratio for the Loan Parties on a Consolidated  Basis
     of not less than 1.1 to 1.0.
<PAGE>

     (c) Minimum  Sales.  Maintain  bona fide sales of Inventory in the ordinary
     course of  business  by the Loan  Parties in the  aggregate  (exclusive  of
     inter-Borrower  sales or sales to any other direct or indirect Affiliate of
     a Loan Party),  for each four-week period on a weekly rolling basis for the
     previous four calendar weeks, commencing with the four calendar weeks ended
     January  28,  2005,  of not less than  eighty-  five  percent  (85%) of the
     aggregate Initial Sales Projections for such four weeks."

                      "6.10    Minimum Net Worth.

         Maintain at all times a minimum Net Worth of at least $44,475,000, to
     be (x) increased as of the end of each fiscal year by sixty-five (65%)
     percent of such fiscal year's year-end net profit, if any, and (y) reduced
     by the amount of (i) any charge for impairment of goodwill, and (ii) any
     write-off of the note executed by the buyer of Nexus' assets for the
     benefit of Jaco (during the fiscal year of any such write-off) ."

                      "6.12    Permanent Undrawn Availability.

         Maintain at all times (for all Loan Parties) an aggregate
     Undrawn Availability of not less than $1,500,000."

                4. Capital Expenditures. Section 7.6 of the Agreement (Capital
Expenditures) is hereby amended to read in its entirety as follows:

                        "7.6. Capital Expenditures.

                              "Contract for, purchase or make any net Capital
Expenditures in an amount exceeding
     (i) $1,150,000, for the fiscal year ending June 30, 2005, and (ii)
     $500,000, for each fiscal year thereafter."

                5. Accounts and Inventory Reports. The first sentence of
Paragraph (b) of Section 9.2 of the Agreement (Schedules) is hereby amended to
read in its entirety as follows:

                              "Deliver to Agent:
                               (1) on or before the twentieth (20th) day of each
                            month as and for the prior month, (i) accounts
                            receivable agings, accompanied by a reconciliation
                            of such agings with the accounts receivable
                            information contained in the Borrowing Base
                            Certificate most recently delivered to Agent and
                            with the general ledgers of the Loan Parties,
                            respectively, and (ii) accounts payable agings;
                                (2) on each Monday for the prior week, Inventory
                            reports, with the last Inventory report delivered in
                            each calendar month accompanied by a reconciliation
                            of the information contained therein with the
                            perpetual inventories of the Loan Parties,
                            respectively;
                                (3) on each Monday, a reconciliation of the
                            Receivables from Customers outside the continental
                            United States ("Foreign Receivables") reported in
                            the Borrowing Base Certificate most recently
                            delivered to Agent, and the amount of credit
                            insurance coverage in effect on such date with
                            respect to each of such Foreign Receivables;
                                (4) on each Monday, a rolling cash flow forecast
                            for the following thirteen (13) weeks in the form
                            attached hereto as Schedule 9.2(b) (each such cash
                            flow forecast, a " Weekly Forecast"); and
                                 (5) on each Monday, a reconciliation of actual
                            sales for the prior rolling four-week period with
                            the Initial Sales Projections for such four-week
                            period. "
<PAGE>

                      6. Expenses. Paragraph (c) of Section 16.10 of the
Agreement (Expenses) is hereby
amended by the addition thereto of the following:

          "...including,  without limitation,  in connection with the engagement
     by Lenders of a financial  consultant,  selected by Lenders in the exercise
     of their sole  discretion,  to verify and confirm the cash flow projections
     of the Loan Parties and to provide  such  additional  financial  consulting
     services  concerning  the Loan  Parties  as  Lenders  may from time to time
     request  (it  being  further  agreed  by the  Loan  Parties  that  any such
     financial  consultant shall, as a representative  of the Lenders,  have the
     same rights of access,  audit and  inspection as are enjoyed by the Lenders
     pursuant to Section  4.10 hereof and shall be provided  with full access to
     the accounts,  books and records of the Loan Parties no later than February
     15, 2005)";

                 7. Ratifications. (a) By their signatures below, Jaco, Nexus
and Interface hereby ratify the Agreement ( as hereby amended) 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
dated 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.

     (b) By their signatures below,  Jaco, Nexus and Interface hereby ratify and
affirm to the Agent and the Lenders that as of the date hereof, they are in full
compliance with all covenants under the Agreement (except as waived above),  and
certify (i) 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, (ii) no Default or Event of Default has occurred and
is continuing,  or would result from the execution,  delivery and performance by
Borrowers of this  Amendment or the  Agreement  (as amended by this  Amendment),
except as specifically waived herein;  (iii) each Borrower has full power, right
and legal authority to execute,  deliver and perform its obligations  under this
Amendment;  (iv) each  Borrower has taken all action  necessary to authorize the
execution and delivery of, and the  performance  of its  obligations  under this
Amendment;  and (v) this  Amendment  constitutes  a  legal,  valid  and  binding
obligation of each Borrower enforceable against each Borrower in accordance with
its  terms,  and  does  not  constitute  a  breach  of any  other  agreement  or
understanding  to which such  Borrower  is a party or by which its  property  is
bound.

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

              9. Amendment Fee. In consideration of the Lenders' consent to the
foregoing, the Loan parties agree to pay to the Agent for the ratable benefit of
the Lenders, concurrently with their execution hereof, a fee in the amount of
$50,000. The Loan Parties hereby authorize the Lenders to automatically charge
to Borrowers' account the amount of such fee.

         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 FINANCE LLC
                                         (as Agent and Lender)

                                         By: /s/ Daniel Murray
                                             ---------------------
                                        Title: 1st VP

                            [Signatures Continued on Next Page]


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                                     [Signatures Continued From Previous Page]



                                     PNC BANK, NATIONAL ASSOCIATION
                                     (as Lender)

                                     By: /s/ Wing Louie
                                        --------------
                                    Title: VP



AGREED AND ACCEPTED:

JACO ELECTRONICS, INC.

By:/s/ Jeffrey D, Gash
     ----------------------
Title: VP Finance

NEXUS CUSTOM ELECTRONICS, INC.

By:/s/ Jeffrey D, Gash
     ----------------------
Title: VP Finance

INTERFACE ELECTRONICS, INC.

By:/s/ Jeffrey D, Gash
     ----------------------
Title: VP Finance