EX-10.3 4 file004.htm AMENDMENT TO FACTORING AGREEMENT


                                                              September 30, 2004

Majesco Sales, Inc.
160 Raritan Center Parkway
Edison, NJ 08837

Gentlemen:

         Reference is made to the Factoring Agreement entered into between us
dated April 24, 1989, as amended and/or supplemented (the "Factoring
Agreement"). This will confirm that the Factoring Agreement is hereby amended,
effective November 1, 2004, as follows:


1.       The following is added at the end of Paragraph 5:

         "You warrant that (i) you shall have on the last day of (x) the first
         six months of each of your fiscal years and (y) the end of each of your
         fiscal years (i) Tangible Net Worth in an amount not less than
         $10,000,000 and (ii) your Operating Losses shall not exceed $1,000,000
         during any of your fiscal quarters, unless cumulatively for a rolling
         12 month period Operating Losses have not exceeded $4 million.

         For the purpose hereof the following terms shall have the following
         definitions:

         "CURRENT  ASSETS" at a particular  date shall mean your cash  accounts
         and inventory.

         "CURRENT LIABILITIES" at a particular date shall mean all amounts which
         would, in conformity with GAAP, be included under current liabilities
         or duplications, the amounts of (a) all indebtedness payable on demand,
         or at the option of the person or entity to whom such indebtedness is
         owed, not more than twelve (12) months after such date, (b) any
         payments in respect of any indebtedness (whether installment, serial
         maturity, sinking fund payment or otherwise) required to be made not
         more than twelve (12) months after such date, (c) all reserves in
         respect of liabilities or indebtedness payable on demand or, at the
         option of the person or entity to whom such indebtedness is owed, not
         more than twelve (12) months after such date, the validity which is not
         contested to such date, (d) all accruals for federal or other taxes
         measured by income payable within twelve (12) months of such date and
         (e) all outstanding indebtedness to us.

         "GAAP" shall mean generally accepted accounting principles in the
         United States of America in effect on the date hereof.

         "OPERATING LOSSES" shall mean the amount, if any, by which operating
         expenses as determined in accordance with GAAP (excluding depreciation
         and amortization, nonrecurring expenses, charges related to EITF 00-19,
         noncash expenses, interest and finance costs and income taxes) exceed
         gross profit as determined in accordance with GAAP.

         "TANGIBLE NET WORTH" shall mean, at a particular date (a) the aggregate
         amount of all of your assets as may be properly classified as such in
         accordance with GAAP consistently applied including prepaid license
         fees and development costs, less (b) the aggregate amount of all of
         your liabilities (excluding subordinated liabilities to us and the
         waarant liability arising out of EITF-0019) determined in accordance
         with GAAP.


                                       -2-



2.       The following is hereby added as a new Paragraph 6(g) after Paragraph
         6(f): "6(g). You shall pay to us a facility fee (the "Facility Fee")
         of (i) 0.5% of $30,000,000 (the "Maximum Credit Facility") on
         November 1, 2004; and (ii) 0.25% of the Maximum Credit Facility on
         each November 1 thereafter.

3.       The following is added to the end of Paragraph 7(c): "and in addition
         all expenses and costs from time to time hereafter incurred by us
         during the course of periodic examinations of your books and records
         and operation, not to exceed more than three examinations per calendar
         year, unless your are in default under this Agreement in which event no
         such limitation shall apply, plus a per diem charge at our then
         standard rate per person, per day, for our examiners in the field and
         office. Our current standard rate is $850.00 per person, per day."

4.       The first sentence of Paragraph 9 is deleted and the following is
         substituted in its place and stead: "This Agreement shall commence on
         the date hereof, and shall continue until October 31, 2005, and
         automatically from year to year thereafter, unless you give us notice
         in writing, by registered or certified mail, sixty days prior to the
         expiration of the original term of this Agreement (or any renewal term
         thereof), of your intention to terminate this Agreement as at the end
         of such term, with the understanding that we may terminate this
         Agreement at any time upon thirty days notice to you by registered or
         certified mail."

         Except as hereinabove specifically set forth, the Factoring Agreement
         shall continue unmodified.



                                       Very truly yours,

                                       ROSENTHAL & ROSENTHAL, INC.

                                       By: /s/ Jerry Sandak
                                           ----------------------------------
                                           Name: JERRY SANDAK
                                           Title:  SENIOR EXECUTIVE PRESIDENT

Agreed:

MAJESCO SALES INC.

By: /s/ Jesse Sutton
    ----------------------------------
    Name: Jesse Sutton
    Title: President