10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2005 Commission File No. 000-51128

Majesco Entertainment Company

(Exact name of registrant as specified in its charter)

DELAWARE				606-1529524
(State or Other Jurisdiction of Incorporation or Organization)				(I.R.S. Employer Identification No.)

160 Raritan Center Parkway, Edison, NJ 08837
(Address of principal executive offices)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (732) 225-8910

Majesco Holdings Inc.

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes           No   

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

Yes           No   

As of June 13, 2005, there were 22,226,230 shares of the Registrant's common stock outstanding.

MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
APRIL 30, 2005 QUARTERLY REPORT ON FORM 10-Q
INDEX

								Page
PART I – FINANCIAL INFORMATION
Item 1.				Financial Statements:
				Condensed Consolidated Balance Sheet as of April 30, 2005 (unaudited) and October 31, 2004					1
				Condensed Consolidated Statement of Operations for the three and six months ended April 30, 2005 and 2004 (unaudited)					2
				Condensed Consolidated Statement of Cash Flows for the six months ended April 30, 2005 and 2004 (unaudited)					3
				Condensed Consolidated Statement of Stockholders' Equity for the six months ended April 30, 2005 (unaudited)					4
				Notes to Condensed Consolidated Financial Statements (unaudited)					5
Item 2.				Management's Discussion and Analysis of Financial Condition and Results of Operations					12
Item 3.				Quantitative and Qualitative Disclosures about Market Risk
Item 4.				Controls and Procedures					20
PART II – OTHER INFORMATION
Item 1.				Legal Proceedings					20
Item 2.				Unregistered Sales of Equity Securities and Use of Proceeds					20
Item 5.				Other Information
Item 6.				Exhibits					21
SIGNATURES
CERTIFICATIONS

MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except share amounts)

				April 30, 2005				October 31, 2004
				(unaudited)
ASSETS
Current assets
Cash and cash equivalents				$	16,038			$	4,170
Due from factor					23,402				9,491
Inventory – principally finished goods					13,311				12,755
Capitalized software development costs and prepaid license fees – current portion					21,637				10,574
Prepaid expenses					6,353				831
Total current assets					80,741				37,821
Property and equipment – net					834				798
Capitalized software development costs and prepaid license fees					12,507				4,952
Other assets					691				381
Total assets				$	94,773			$	43,952
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses				$	15,263			$	19,985
Inventory financing payable					3,107				6,750
Advances from customers					198				2,171
Total current liabilities					18,568				28,906
Dividend payable in common stock					—				1,261
Commitments and contingencies
Stockholders' equity:
Common stock – $.001 par value; 250,000,000 shares authorized; 22,226,230 and 15,403,704 issued and outstanding at April 30, 2005 and October 31, 2004, respectively					22				15
Additional paid in capital					91,814				29,194
Accumulated deficit					(15,599	)			(15,388	)
Accumulated other comprehensive loss					(32	)			(36	)
Total stockholders' equity					76,205				13,785
Total liabilities and stockholders' equity				$	94,773			$	43,952

See accompanying notes

1

MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share amounts)

				Three Months Ended April 30								Six Months Ended April 30
				2005				2004				2005				2004
				(unaudited)
Net revenues				$	19,855			$	17,049			$	50,574			$	41,668
Cost of sales
Product costs					8,633				10,021				25,357				25,212
Software development costs and license fees					2,808				1,592				5,838				3,524
					11,441				11,613				31,195				28,736
Gross profit					8,414				5,436				19,379				12,932
Operating expenses
Research and development					982				689				1,796				1,263
Selling and marketing					3,839				2,239				9,115				5,037
General and administrative					2,017				1,280				4,170				2,965
Non-cash compensation					465				—				930				—
Depreciation and amortization					290				97				577				187
					7,593				4,305				16,588				9,452
Operating income					821				1,131				2,791				3,480
Other costs and expenses
Interest expense and financing costs					527				667				1,261				1,302
(Gain) loss on foreign exchange contract					(21	)			(233	)			48				82
Merger costs					—				—				—				342
Change in fair value of warrants					—				49,205				—				49,205
Income (loss) before income taxes					315				(48,508	)			1,482				(47,451	)
Provision for income taxes					126				489				593				489
Net income (loss)					189				(48,997	)			889				(47,940	)
Fair value charge for warrants exercised at a discount					—				—				1,100				—
Deemed dividend to preferred stockholders					—				759								759
Preferred stock dividend					—				339								339
Net income (loss) attributable to common stockholders				$	189			$	(50,095	)		$	(211	)		$	(49,038	)
Net income (loss) attributable to common stockholders per share
Basic				$	0.01			$	(8.35	)		$	(0.01	)		$	(9.59	)
Diluted				$	0.01			$	(8.35	)		$	(0.01	)		$	(9.59	)
Weighted average shares outstanding
Basic					22,146,616				5,995,961				19,111,443				5,112,129
Diluted					22,957,439				5,995,961				19,111,443				5,112,129

See accompanying notes

2

MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in thousands)

				Six Months Ended April 30
CASH FLOWS FROM OPERATING ACTIVITIES				2005				2004
				(unaudited)
Net income (loss)				$	889			$	(47,940	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Change in fair value of warrants					—				49,205
Depreciation and amortization					577				187
Non-cash compensation expense					986				26
Changes in operating assets and liabilities
(Increase) in due from factor					(14,911	)			(8,370	)
(Increase) decrease in inventory					(556	)			6,268
(Increase) in capitalized software development costs and prepaid license fees					(18,868	)			(5,324	)
(Increase) in prepaid expenses					(5,522	)			(658	)
(Increase) decrease in other assets					(372	)			8
(Decrease) in accounts payable and accrued expenses					(5,957	)			(604	)
(Decrease) in advances from customers					(973	)			(4,928	)
Payment of settlement obligations					—				(4,000	)
Net cash (used in) provided by operating activities					(44,707	)			(16,130	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment					(301	)			(95	)
Net cash (used in) investing activities					(301	)			(95	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from secondary offering					41,925				—
Net proceeds from exercise of warrants at discount					6,482				—
Net proceeds from exercise of warrants					12,108				—
Repayment of inventory financing					(3,643	)			(2,039	)
Proceeds from private placement, net of expenses					—				21,489
Convertible loan from related party					—				1,000
Repayments of loans from stockholders – net					—				(2,562	)
Repayment to officer – net					—				(200	)
Net cash provided by investing activities					56,872				17,688
Effect of exchange rates on cash and cash equivalents					4				(17	)
Net increase in cash					11,868				1,446
Cash and cash equivalents – beginning of period					4,170				314
Cash and cash equivalents – end of period				$	16,038			$	1,760
SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING AND FINANCING ACTIVITIES
Fair value charge for warrants exercised at discount				$	1,100			$	—
Issuance of common stock in connection of 7% Preferred Stock dividend				$	(1,261	)		$	—
Fair value of warrants issued in connection with sale of units				$	—			$	20,730
Issuance of 100 units of the 7% preferred stock and warrants in connection with settlement of loans from stockholders				$	—			$	1,000
Issuance of 285,714 shares of common stock as repayment of loan from related party				$	—			$	1,000
Deemed dividend arising from beneficial conversion feature of the preferred stock				$	—			$	759

See accompanying notes

3

MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(in thousands, except share amounts)

				Common Stock - $.001 per share								Additional Paid in Capital				Accum. Deficit				Accum. Other Comp. Loss				Total Stockholders' Equity
				Shares				Amount
Balance — October 31, 2004					15,403,704			$	15			$	29,194			$	(15,388	)		$	(36	)		$	13,785
Issuance of common stock in connection with:
Secondary offering (net of underwriting discounts, commissions and expenses of $4,102)					3,682,176				4				41,921				—				—				41,925
Exercise of warrants at $5.95 (net of expenses of $488)					1,171,418				1				6,481				—				—				6,482
Exercise of warrants at $7.00 (net of expenses of $1,121)					1,889,985				2				12,106				—				—				12,108
7% Preferred Stock					78,283				0				1,261				—				—				1,261
Settlement obligation related to predecessor company					664				—				(1,235	)			—				—				(1,235	)
Non-cash compensation charge					—				—				986				—				—				986
Fair value charge for warrants exercised at discounted strike price					—								1,100				(1,100	)							—
Net income					—				—				—				889				—				889
Foreigh currency translation adjustment					—				—				—				—				4				4
Total comprehensive income																									893
Balance — April 30, 2005					22,226,230			$	22			$	91,814			$	(15,599	)		$	(32	)		$	76,205

See accompanying notes

4

MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1.    PRINCIPAL BUSINESS ACTIVITY AND BASIS OF PRESENTATION

Majesco Entertainment Company (formerly Majesco Holdings Inc.) and subsidiary ("Majesco" or "Company") is an innovative provider of diversified products and content for digital entertainment platforms. The Company's three main product lines include games, which includes titles such as Advent Rising, Psychonauts and Jaws Unleashed; video, which highlights the Company's platform-independent compression technology; and gadgets, which includes innovative digital entertainment products like Frogger TV Arcade. The Company's diverse products provide it with multiple opportunities to capitalize on the large and growing installed base of digital entertainment platforms and an increasing number of digital entertainment enthusiasts. The Company sells its products directly and through resellers primarily to U.S. retail chains, including Electronics Boutique, GameStop, Kmart, Target, Toys "R" Us and Wal-Mart.

On December 5, 2003, Majesco Holdings Inc. ("MHI"), (formerly ConnectivCorp) consummated a merger (the "Merger") with Majesco Sales Inc. ("MSI"). Pursuant to the Merger, MSI became a wholly-owned subsidiary of MHI. The operations of the resulting company have been conducted principally through MSI.

As a result of the Merger, the former stockholders of MSI were the controlling stockholders of the Company. Additionally, prior to the Merger, ConnectivCorp had no substantial assets. Accordingly, the transaction was treated for accounting purposes as a reverse acquisition of a public shell, and the transaction has been accounted for as a recapitalization of MSI, rather than a business combination. Therefore, the historical financial statements of MSI are the historical financial statements of the Company and historical stockholders' equity of MSI has been restated to reflect the recapitalization. Pro forma information has not been presented since the transaction is not a business combination.

Costs incurred by MSI, principally professional fees in connection with the Merger, amounting to $342,000, were charged to operations during the three month period ended January 31, 2004.

All amounts of common stock have been retroactively restated throughout these consolidated financial statements to give effect to the one-for-seven reverse stock split which was effectuated on December 31, 2004.

On April 4, 2005, MSI was merged into MHI, and, in connection with this merger, MHI changed its name to Majesco Entertainment Company.

The accompanying interim consolidated financial statements of the Company are unaudited, but in the opinion of management, reflect all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results for the interim period. Accordingly, they do not include all information and notes required by generally accepted accounting principles for complete financial statements. The results of operations for interim periods are not necessarily indicative of results to be expected for the entire fiscal year or any other period. These interim consolidated financial statements should be read in conjunction with the Company's consolidated financial statements and notes for the year ended October 31, 2004 filed on Form 10-K on January 31, 2005.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation.    The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. Significant intercompany accounts and transactions have been eliminated in consolidation.

Revenue Recognition.    The Company recognizes revenue upon shipment of its product as title and risk of loss are transferred at such time. In order to recognize revenue, the Company must not have any continuing obligations and it must also be probable that the Company will collect the accounts receivable. Revenues, including sales to resellers and distributors, are recognized when these conditions are met.

5

MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

For those agreements that provide customers with the right to multiple copies in exchange for guaranteed minimum royalty amounts, revenue is recognized at delivery of the product master or the first copy since the Company has no continuing obligations, including requirements for duplication. Royalties on sales that exceed the guaranteed minimum are recognized as earned.

The Company generally sells its products on a no-return basis, although in certain instances the Company may provide price protection or other allowances on certain unsold products. Price protection, when granted and applicable, allows customers a partial credit against amounts owed to the Company for merchandise unsold by them. Revenue is recognized net of estimates of these allowances.

The Company estimates potential future product price protection and other allowances related to current period product revenue. The Company analyzes historical experience, current sell through of retailer inventory of the Company's products, current trends in the video game market, the overall economy, changes in customer demand and acceptance of the Company's products and other related factors when evaluating the adequacy of price protection and other allowances.

Sales incentives or other consideration given by the Company to customers that are considered adjustments of the selling price of its products, such as rebates and product placement fees, are reflected as reductions of revenue. Sales incentives and other consideration that represent costs incurred by the Company for assets or services received, such as the appearance of the Company's products in a customer's national circular ad, are reflected as selling and marketing expenses.

Shipping and handling, which consist principally of packaging and transportation charges incurred to move finished goods to customers, amounted to $1.1 million and $817,000 and are included in selling expenses for the six months ended April 30, 2005 and 2004, respectively.

Software Development Costs and Prepaid License Fees.    Software development costs include milestone payments made to independent software developers. Software development costs are capitalized once technological feasibility of a product is established and such costs are determined to be recoverable against future revenues. For products where proven game engine technology exists, this may occur early in the development cycle. Technological feasibility is evaluated on a product-by-product basis. Amounts related to software development that are not capitalized are charged immediately to development costs. Prepaid license fee costs represent fees paid to intellectual property rights holders for use of their trademarks or copyrights in the development of the Company's products. Minimum guaranteed royalty payments for intellectual property licenses are initially recorded as an asset (prepaid license fees), and a current liability (accrued royalties payable), at the contractual amount upon execution of the contract when no significant performance remains with the licensor. Capitalized software development costs classified as non-current relate to titles for which the Company estimates the release date to be more than one year from the balance sheet date.

Commencing upon the related product's release, capitalized software development costs and prepaid license fees are amortized to cost of sales based upon the higher of the ratio of current revenue to total projected revenue or on the straight line method. The amortization period is usually no longer than one year from the initial release of the product. The recoverability of capitalized software development costs and prepaid license fees is evaluated based on the expected performance of the specific products for which the costs relate. The following criteria are used to evaluate expected product performance: historical performance of comparable products using comparable technology; orders for the product prior to its release; and estimated performance of a sequel product based on the performance of the product on which the sequel is based.

Advertising Expenses.    The Company generally expenses advertising costs as incurred except for production costs associated with media campaigns which are deferred and charged to expense at the first run of the ad. Advertising costs charged to operations were $2.3 million and $1.3 million for the six months ended April 30, 2005 and 2004, respectively.

6

MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Income taxes.    The provision for income taxes is based on the Company's estimated annualized effective tax rate for the year.

Stock Based Compensation.    The Company follows the provisions of SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123") and SFAS No. 148, "Accounting for Stock-Based Compensation, Transition and Disclosure" ("SFAS 148"). The provisions of SFAS 123 allow companies either to expense the estimated fair value of stock options or to continue to follow the intrinsic value method set forth in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and disclose the pro forma effects on net income (loss) had the fair value of the options been expensed. The Company has elected to apply APB 25 in accounting for its stock option incentive plans. The provisions of SFAS 148 require that disclosures of the pro forma effect of using the fair value method of accounting for stock-based employee compensation be displayed prominently and in a tabular format. See the table below for the disclosures required by SFAS 123 and SFAS 148.

In accordance with APB 25 and related interpretations, compensation expense for stock options is recognized in income based on the excess, if any, of the quoted market price of the stock at the grant date of the award or other measurement date over the amount an employee must pay to acquire the stock. Generally, the exercise price for stock options granted to the Company's employees equals or exceeds the fair market value of the Company's common stock at the date of grant, thereby resulting in no recognition of compensation expense. For awards that generate compensation expense as defined under APB 25, the Company calculates the amount of compensation expense and recognizes the expense over the vesting period of the award.

Had compensation cost for the Company's stock option plan been determined based on the fair value method set forth in SFAS 123, the Company's net income (loss) and per share amounts for the three and six months ended April 30, 2005 and April 30, 2004 would approximate the pro forma amounts indicated below:

				(in thousands, except per share amounts)
				Three Months Ended April 30, 2005				Three Months Ended April 30, 2004				Six Months Ended April 30, 2005				Six Months Ended April 30, 2004
Net income (loss) – as reported				$	189			$	(50,095	)		$	889			$	(49,038	)
Add: Intrinsic value of stock based compensation included in net income (loss) as reported, net of related tax effect					279				—				558				—
Less: Stock based employee compensation determined under fair value based method net of income tax effect					510				133				1,044				133
Net income (loss) – pro forma				$	(42	)		$	(50,228	)		$	403			$	(49,171	)
Net income (loss) attributable to common stockholders per share:
As reported:
Basic				$	.01			$	(1.19	)		$	(.01	)		$	(1.37	)
Diluted				$	.01			$	(1.19	)		$	(.01	)		$	(1.37	)
Pro forma:
Basic				$	—			$	(1.20	)		$	.02			$	(1.37	)
Diluted				$	—			$	(1.20	)		$	.02			$	(1.37	)

7

MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Risk free interest rate (annual)				Various rates ranging from 2.71% to 3.83% at date of grant
Expected volatility				30% and 50%
Expected life				5 years
Assumed dividends				None

Cash and cash equivalents.    Cash equivalents consist of highly liquid investments with insignificant rate risk and with maturities of three months or less at the date of purchase.

At various times, the Company had deposits in excess of the Federal Deposit Insurance Corporation limit. The Company has not experienced any losses on these accounts.

Inventory.    Inventory, which principally consists of finished goods, is stated at the lower of cost as determined by the first-in, first-out method, or market. The Company estimates the net realizable value of slow-moving inventory on a title-by-title basis and charges the excess of cost over net realizable value to cost of sales.

Property and equipment.    Property and equipment is stated at cost. Depreciation and amortization is being provided for by the straight-line method over the estimated useful lives of the assets. Amortization of leasehold improvements is provided for over the shorter of the term of the lease or the life of the asset.

Estimates.    The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities or the disclosure of gain or loss contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Among the more significant estimates included in these financial statements are the estimated customer allowances, the valuation of inventory and the recoverability of advance payments for software development costs and intellectual property licenses. Actual results could differ from those estimates.

Foreign Currency Translation.    The functional currency of the Company's foreign subsidiary is its local currency. All assets and liabilities of the Company's foreign subsidiary are translated into U.S. dollars at the exchange rate in effect at the end of the year, and revenue and operating expenses are translated at weighted average exchange rates during the year. The resulting translation adjustments are included in other comprehensive loss in the statement of stockholders' equity (deficiency).

Earnings (loss) per share.    For the three months ended April 30, 2005, earnings per common share is computed by dividing net income applicable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted earnings per share for the three months ended April 30, 2005 is computed by dividing net income applicable to common stockholders by the weighted-average number of common stock and common stock equivalents (297,857 stock options; 1,440,687 warrants and 662,858 placement agent warrants). For the six months ended April 30, 2005 and the three and six months ended April 30, 2004, loss per common share is computed by dividing the net loss applicable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted loss per common share for the same periods has not been presented because the impact of the conversion or exercise, as applicable, of the warrants, stock options and placement agent warrants would be antidilutive

Recent accounting pronouncements.    In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share Based Payment" ("SFAS 123(R)"). SFAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements

8

MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

based on their fair values. SFAS 123(R) is effective for the Company beginning November 1, 2005. The new standard allows for two transition alternatives, either the modified-prospective method or the modified-retrospective method. The Company has not completed its evaluation of SFAS 123(R) and therefore has not selected a transition method or determined the impact that adopting SFAS 123(R) will have on its results of operations.

The Company does not believe that any other recently issued but not yet effective accounting standards will have a material effect on the Company's financial position or results of operations.

3.    SECONDARY OFFERING AND RELATED WARRANT EXERCISE

On January 31, 2005, the Company completed a $75 million secondary offering, resulting in approximately $41.9 million in net proceeds to the Company through the sale of 3,682,176 shares of common stock. In addition, certain existing stockholders sold an aggregate of 2,317,824 shares in the offering for which the Company did not receive the proceeds. However, the Company received approximately $11.3 million of net proceeds from the exercise of 1,768,559 warrants by the selling stockholders at an exercise price of $7 per share, which were previously issued in the Company's February 2004 private placement., In April 2005, the Company's common stock began trading on the NASDAQ National Market System under the ticker symbol "COOL".

In December 2004, the Company offered certain holders who were eligible, in accordance with rules promulgated by the Securites and Exchange Commission, the right to exercise warrants to purchase 1,171,418 shares of common stock at a reduced exercise price of $5.95 per share. The warrants were initially issued in the February 2004 private placement and exercisable at $7.00 per share. The Company received proceeds from the exercise of $6.5 million. As a result of this transaction, the Company recorded a non-cash charge to "Additional Paid in Capital" of $1.1 million to recognize the exercise of warrants at a reduced exercise price. This charge is also reflected in net loss attributable to common stockholders in the calculation of earnings (loss) per share.

During the three months ended April 30, 2005 the Company received $790,000 from the exercise of 121,426 warrants which were issued in the private placement. Any warrants that have not been previously exercised are eligible to be called by the Company at a price of $0.007 subject to any contractual restrictions. To avoid their warrants being called, holders may exercise the warrants, which would at this time result in net proceeds to the Company of approximately $6.7 million.

4.    DUE FROM FACTOR

Due from factor consists of the following (in thousands):

				April 30, 2005				October 31, 2004
Outstanding accounts receivable sold to factor, net of allowances of $3,088 and $4,860, respectively				$	23,402			$	31,794
Less: advances from factor					—				22,303
				$	23,402			$	9,491

9

MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The following table sets forth the adjustments to the price protection and other customer sales incentive allowances included as a reduction of the amounts due from factor:

				Six Months Ended April 30, (in thousands)
				2005				2004
Balance — beginning of period				$	(4,860	)		$	(2,173	)
Add: provision for price protection and other allowances					(2,604	)			(1,546	)
Less: amounts charged against allowance					4,376				2,578
Balance — end of period				$	(3,088	)		$	(1,141	)

5.    ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consists of the following (in thousands):

				April 30, 2005				October 31, 2004
Accounts payable-trade				$	10,880			$	9,373
Royalties					1,369				5,777
Income taxes					739				1,271
Sales commissions					1,317				1,255
Salaries and other compensation					662				1,154
Litigation settlements					—				778
Other accruals					296				377
				$	15,263			$	19,985

6.    CONTINGENCIES AND COMMITMENTS

At April 30, 2005, the Company was committed under agreements with certain developers for future milestone and license fee payments aggregating $42.9 million, respectively, of which $21.5 are payable through October 31, 2005 and $21.4 is payable through October 31, 2006. Milestone payments represent scheduled installments due to the Company's developers based upon the developers providing the Company certain deliverables, as predetermined in the Company's contracts. The milestone payments also represent advances against royalties to developers. The Company may have to pay additional amounts to the developers for royalties, based upon product sales, but only after the Company has recouped all amounts advanced as milestone payments.

At April 30, 2005, the Company had open letters of credit aggregating $1.5 million for inventory purchases to be delivered during the subsequent quarter.

The Company has entered into "at will" employment agreements with several key executives. These employment agreements include provisions for, among other things, annual compensation, bonus arrangements and stock option grants. These agreements also contain provisions related to severance terms and change of control provisions.

Contingencies

On September 20, 2002, Rage Games Limited filed a complaint against the Company based on claims of breach of contract and other claims and sought $6 million in damages. On December 28, 2004, the parties entered into a settlement agreement, and, in February 2005, the Company paid $650,000 in accordance with the agreement for a full and complete settlement of the litigation, including all claims and counterclaims.

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MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

On December 17, 2003, the Company received a letter from the NASD's Market Regulation Department stating that the NASD was conducting a review of unusual trading activity in the Company's common stock between the time of the signing of the letter of intent with respect to the Merger and the date that the Company announced that a letter of intent was signed. There also appeared to have been unusual trading activity around the time of the signing of the definitive agreement for the Merger and prior to the announcement of such signing.

By letter dated April 22, 2004, the NASD indicated that it had concluded its review and thanked the Company for its cooperation in the review. The letter indicated that the NASD referred the matter to the Securities and Exchange Commission ("SEC") for action, if any, the SEC deems appropriate. The letter concluded that "This referral should not be construed as indicating that any violations of the federal securities laws or the NASD Conduct Rules have occurred, or as a reflection upon the merits of the security involved or upon any person who effected transactions in such security." If the Company is sanctioned or otherwise held liable for this trading any such sanctions could have a material adverse effect on the Company's reputation, listing, financial condition, results of operations and liquidity. In addition, it is possible that such matters may give rise to civil or criminal actions.

On September 1, 2004, Entertainment Finance International, LLC ("EFI") commenced a breach of contract action relating to an outstanding warrant held by EFI. EFI alleged that pursuant to the terms of the warrant, the Company was obligated to pay $1,750,000 for the repurchase of the shares underlying the warrant. In July 2004, the Company issued 21,018 shares of Majesco stock pursuant to the exercise of the warrant. Pursuant to a settlement agreement dated January 10, 2005, the Company paid $250,000 to EFI, and, in February 2005, paid an additional $985,000 from the proceeds raised in the secondary offering. The settlement is reflected as an adjustment to "Additional paid in capital", since the alleged obligation existed prior to the Merger.

The Company is party to other routine claims and suits brought by the Company and against the Company in the ordinary course of business, including disputes arising over contractual claims and collection matters. In the opinion of management, after consultation with legal counsel, the outcome of such routine claims will not have a material adverse effect on the Company's business, financial condition, and results of operations or liquidity. However, the costs and other effects of pending or future litigation, governmental investigations, legal and administrative cases and proceedings (whether civil or criminal), settlements, judgments and investigations, claims and changes in those matters (including those matters described above), and developments or assertions by or against the Company relating to intellectual property rights and intellectual property licenses, could have a material adverse effect on the Company's business, financial condition, and results of operations or liquidity.

7.    RELATED PARTIES

The Company receives printing and packaging services from a business of which the brother of Morris Sutton, the Company's Chairman Emeritus, is a principal. During the three and six months ended April 30, 2005 the Company was charged $465,000 and $1.7 million, respectively compared to $887,000 and $1.4 million, respectively, for the three and six months ended April 30, 2004. These charges are included in product costs in the accompanying consolidated statement of operations. Such charges are, to the Company's knowledge, on terms no less favorable to what the Company could receive from providers of similar services. At April 30, 2005, there was $393,000 due under these arrangements, which is included in accounts payable and accrued expenses in the accompanying consolidated balance sheet.

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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

Overview

We are an innovative provider of diversified offerings for digital entertainment platforms. Our offerings include games, which includes titles such as Advent Rising, Psychonauts, and Jaws Unleashed; video, which highlights our platform-independent video compression technology; and gadgets, which includes innovative digital entertainment products like Frogger TV Arcade. Our diverse products provide us with multiple opportunities to capitalize on the large and growing installed base of digital entertainment platforms and an increasing number of digital entertainment enthusiasts. We sell our products directly and through resellers primarily to U.S. retail chains, including Electronics Boutique, GameStop, Kmart, Target, Toys "R" Us and Wal-Mart.

All financial information presented reflects the results of Majesco Entertainment Company. as if Majesco Sales Inc. had acquired ConnectivCorp on December 5, 2003 (See Note 1 to the Condensed Consolidated Financial Statements). The primary components of our consolidated statement of operations include the following:

Net Revenues.    Our revenues are derived from three general types of offerings:

•

Games.    Our video games consist of "premium" titles and "value" titles. Premium-priced video games typically involve higher development and marketing costs. We work with leading development studios to develop our own proprietary titles and we also license rights to well-known properties from third parties. Value titles are typically sold at retail prices below $20 and typically involve lower development and marketing costs than our premium titles;

•	Videos.    Our Game Boy Advance (GBA) Video titles utilize our proprietary compression technology that enables users to view color video content with stereo audio on their GBA, using a standard GBA cartridge, with no additional hardware required. We license rights to entertainment properties from entertainment industry leaders for GBA Video content; and

•

Gadgets.    Our gadgets consist of a variety of digital media peripherals and applications. Our gadgets for the GBA include headphones, "wireless link" and "wireless messenger." Our stand-alone TV Arcade "plug-and-play" video game systems consist of a firmware-enabled joystick that connects directly to a user's television and plays pre-installed video games without the need for a dedicated console.

Historically, most of our revenues were derived from being a leading distributor of value video game titles. Although sales of value titles will continue to constitute a significant portion of our revenues, we are diversifying our sources of revenue and have introduced or expanded our other offerings. For instance, during fiscal 2004 we launched additional premium-priced titles, our GBA video titles and our gadgets. We expect value products to decrease as a percentage of our revenues as we generate significantly more revenues from these additional product areas. The continued diversification of our revenue sources and our revenue growth are dependent upon our ability to provide a wide variety of appealing products at different price points aimed at different demographics. Our revenues are recognized net of reserves for price protection and other allowances. See "Critical Accounting Policies" below.

Cost of Sales.    Cost of sales consists of product costs and amortization of software development costs and license fees. A significant component of our cost of sales is product costs. These are comprised primarily of manufacturing and packaging costs of the disc or cartridge media, royalties to the platform manufacturer and manufacturing and packaging costs of digital media peripherals and applications. Commencing upon the related product's release, capitalized software development and intellectual property license costs are amortized to cost of sales.

Gross Profit.    Our gross profit is directly affected by the mix of revenues from our products. Gross profit margins have the potential to be substantially higher from publishing our premium-priced titles given the higher sales prices. If a premium title is a highly successful "hit" and manufacturing and licensing costs are recouped, economies of scale occur as the incremental sales of a

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premium-priced game produce greater profitability. Our value titles are generally characterized as having lower gross profit margin potential than premium-priced titles as a result of their lower sales price. Gross profit margins from our GBA products generally are the lowest of our products given the high manufacturing and licensing costs associated with these products, particularly GBA video titles. Our experience to date has been that gross margins for gadget products are generally higher than those for our value video games and GBA video titles. We believe our overall gross profit and gross profit margins will increase as we increase our sales of premium-priced video games and gadgets.

Product Research and Development Expenses.    Product research and development expenses relate principally to our cost of supervision of the third-party developers of our video games and the technologies related to GBA video and gadgets, testing new products and conducting quality evaluations during the development cycle. Costs incurred are employee related, may include equipment and are not allocated to cost of sales. With the expansion of our product offerings, our expenditures for product research and development are expected to increase.

Selling and Marketing Expenses.    Selling and marketing expenses consist of marketing and promotion expenses, the cost of shipping products to customers and related employee costs. The largest component of this expense relates to marketing and promotion expenses, which includes certain customer marketing allowances. Marketing and promotion expenses associated with premium titles are significantly higher than those associated with our other offerings. As we increase the number of our premium-priced titles and seek to increase awareness of our video content and gadgets, our marketing and promotion expenses will rise accordingly.

General and Administrative Expenses.    General and administrative expenses primarily represent employee related costs, including corporate executive and support staff, general office expenses, professional fees and various other overhead charges. We expect that our personnel costs, the largest component of our general and admistrative expenses, will increase as our business continues to grow. Professional fees, including legal and accounting expenses, typically represent the second largest component of our general and administrative expenses. These fees are partially attributable to our required activities as a publicly traded company, such as SEC filings and Sarbanes-Oxley compliance. We expect to incur increased costs for personnel and consultants in connection with our required compliance as a public company with new regulations regarding corporate governance and accounting.

Interest and Financing Costs.    Interest and financing costs are directly attributable to our factoring and purchase-order financing arrangements. We expect that as a result of our recently completed secondary offering, we will be able to lessen both our need to take advances from the factor and to use the finance company for letters of credit, and therefore, we expect our interest and financing costs to decrease, at least on a temporary basis. Interest expense is net of interest income we earn on funds invested from the proceeds of our equity raises.

Warrant Accounting and Other Non-Cash Compensation.    In accordance with Emerging Issues Task Force Issue EITF 00-19, "Accounting for Derivative Financial Instruments Indexed To, and Potentially Settled in, a Company's Own Stock," we initially accounted for the fair value of $21 million for the warrants issued in connection with our February 2004 private placement as a liability since we would have incurred substantial penalties if we had not complied on a timely basis with the warrantholders' registration rights. We subsequently recorded changes in the fair value of warrants as non-cash charges or gains on a quarterly basis through October 29, 2004, the effective date of the resale registration statement. The fair value of the warrants was calculated using the Black-Scholes option-pricing model. As a result of changes in the market value our common stock from the closing date through April 30, 2004, we recorded a non-cash charge of $49.2 million to reflect the associated change in fair value of the warrants during the period.

During December 2004, a portion of the warrants issued in connection with our February 2004 private placement were exercised at a reduced exercise price. Accordingly, we recorded a non-cash charge of $1.1 million to recognize the exercise of these warrants at a reduced price during the six months ended April 30, 2005. This charge reduced net income attributable to common stockholders in the calculation of earnings per share.

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We granted options to purchase 992,856 shares of common stock to Carl Yankowski in connection with his employment as our Chief Executive Officer in August 2004. A portion of the option grant, 297,857 shares, was at an exercise price of $7.00 per share, a 64% discount to the market price of our common stock on the date of grant (the balance of the options were granted at or above the then market price). As a result of this issuance, we incurred non-cash compensation expense of $930,000 for the six months ended April 30, 2005 ($465,000 for the three months then ended) and will additionally charge operations $465,000 for each of the succeeding five quarters.

Critical Accounting Policies

Our discussion and analysis of the financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from these estimates under different assumptions or conditions.

We have identified the policies below as critical to our business operations and the understanding of our financial results. The impact and any associated risks related to these policies on our business operations is discussed throughout management's discussion and analysis of financial condition and results of operations where such policies affect our reported and expected financial results.

Reserves for Price Protection and Other Allowances.    We derive revenue from the sale of packaged video game software designed for play on consoles such as PlayStation 2, Xbox and GameCube, and hand-held game devices, principally the GBA. We generally sell our products on a no-return basis, although in certain instances, we may provide price protection or other allowances on certain unsold products in accordance with industry practices. Price protection, when granted and applicable, allows customers a partial credit with respect to merchandise unsold by them. Revenue is recognized net of estimates of these allowances. Sales incentives and other consideration that represent costs incurred by us for assets or services received, such as the appearance of our products in a customer's national circular advertisement, are reflected as selling and marketing expenses. We estimate potential future product price protection and other discounts related to current period product revenue. Generally our price protection for premium-priced titles is higher than that needed for our value titles. Our reserves for price protection and other allowances fluctuate over periods as a result of a number of factors including analysis of historical experience, current sell through of retailer inventory of our products, current trends in the video game market, the overall economy, changes in customer demand and acceptance of our products and other related factors. However, actual allowances granted could materially exceed our estimates as unsold products in the distribution channels are exposed to rapid changes in consumer preferences, market conditions or technological obsolescence due to new platforms, product updates or competing products. For example, the risk of requests for allowances may increase as consoles pass the midpoint of their lifecycle and an increasing number of competitive products heighten pricing and competitive pressures. While management believes it can make reliable estimates regarding these matters, these estimates are inherently subjective. Accordingly, if our estimates change, this will result in a change in our reserves, which would impact the net revenues and/or selling and marketing expenses we report. For the six months ended April 30, 2005 and 2004, we provided allowances for future price protection and other allowances of $2.6 million and $1.5 million, respectively. The fluctuations in the provisions reflected our estimates of future price protection based on the factors discussed above. We do not have significant exposure to credit risk as the factor generally buys our receivables without recourse; however, during the six months ended April 30, 2004, we recorded a charge for an accounts receivable write-off of $577,000 as a result of the January 2004 bankruptcy filing of Kay-Bee Toys, because sales to this customer were not factored.

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Software development costs and prepaid license fees.    Software development costs include milestone payments made to independent software developers under development arrangements. Software development costs are capitalized once technological feasibility of a product is established and it is determined that such costs should be recoverable against future revenues. For products where proven game engine technology exists, this may occur early in the development cycle. Technological feasibility is evaluated on a product-by-product basis. Amounts related to software development that are not capitalized are charged immediately to product research and development costs. Prepaid license fees represent license fees paid to intellectual property rights holders for use of their trademarks or copyrights in the development of our products. Minimum guaranteed royalty payments for intellectual property licenses are initially recorded as an asset (prepaid license fees) and a current liability (accrued royalties payable) at the contractual amount upon execution of the contract when no significant performance remains with the licensor. Capitalized software development costs classified as non-current relate to titles for which we estimate the release date to be more than one year from the balance sheet date.

Commencing upon the related product's release, capitalized software development and prepaid license fees are amortized to cost of sales based upon the higher of (i) the ratio of current revenue to total projected revenue or (ii) the straight-line method. The amortization period is usually no longer than one year from the initial release of the product. The recoverability of capitalized software development costs and prepaid license fees is evaluated based on the expected performance of the specific products for which the costs relate. The following criteria are used to evaluate expected product performance: historical performance of comparable products using comparable technology; orders for the product prior to its release; and estimated performance of a sequel product based on the performance of the product on which the sequel is based.

Accounting for Stock-Based Compensation.    In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share Based Payment" ("SFAS 123(R)"). SFAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. SFAS 123(R) is effective for us beginning in November 2005. The new standard allows for two transition alternatives, either the modified-prospective method or the modified-retrospective method. We have not completed our evaluation of SFAS 123(R) and therefore have not selected a transition method or determined the impact that adopting SFAS 123(R) will have on our results of operations.

Results of operations

Three months ended April 30, 2005 versus three months ended April 30, 2004

Net revenues.    Net revenues for the three months ended April 30, 2005 increased to $19.9 million from $17.0 million in the comparable quarter last year. The net increase was driven by the launch of Psychonauts, for Xbox and PC, Double game packs, or 2 in 1 games, for the Game Boy Advance, and our Frogger TV Arcade. In the three months ended April 30, 2005 the sales mix attributable to games, videos and gadgets was 77%, 8% and 15%, respectively, compared to 82% for games and 18% for video in the same period last year. Our gadget offerings were not launched until the second half of 2004.

Gross profit.    Gross profit for the three months ended April 30, 2005 increased to $8.4 million from $5.4 million in the second quarter last year while the profit margin increased to 42.4% from 31.9% in the prior year. This improvement is attributable to the launch of our new games as well as sales of Frogger TV Arcade.

Product Research and Development Expenses.    For the three months ended April 30, 2005 product research and development costs increased to $982,000 from $689,000 in the comparable 2004 period. The increase is mostly attributable to employee related costs which include the hiring of additional quality control personnel, necessary to support the increased number of projects currently in the development cycle.

Selling and Marketing Expenses.    In the three months ended April 30, 2005 total selling and marketing expenses increased 71.5% to $3.8 million from $2.2 million in the same three month period

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in 2004, an increase of $1.6 million. The increase was principally the result of media advertising campaigns to promote the launch of our new products.

General and Administrative Expenses.    For the three month period ended April 30. 2005 general and administrative expenses increased approximately $737,000, or 57.5%, to $2.0 million from $1.3 million in the comparable 2004 period. As expected, we have incurred increased costs to build our infrastructure to support current and future growth, as well as compliance costs for Sarbanes Oxley.

Other Operating Expenses.    In the three months ended April 30, 2005 we recorded a non-cash compensation charge of $465,000 related to a below market stock option grant in connection with an employment agreement. There was no comparable charge in the same period last year.

Depreciation and Amortization Expenses.    For the three months ended April 30, 2005 depreciation and amortization expense was $290,000 compared to $97,000 in the comparable 2004 period. Depreciation and amortization expense increased due to additional office and computer equipment acquired and as a result of the amortization of a non-compete agreement and tooling costs.

Operating Income.    For the three month period ended April 30, 2005 operating income decreased approximately $310,000 to $821,000 from $1.1 million in the 2004 period. The decrease in operating income was due to the planned increases in our infrastructure to support current and future growth, as well as increased costs related to becoming a NASDAQ-listed company. Although there can be no assurance, we anticipate that these higher levels of expenditures will be offset by higher gross margins in the latter part of the year, during the seasonal peak sales periods.

Interest and Financing Costs.    For the three months ended April 30, 2005 interest and financing costs decreased approximately $140,000 to $527,000 from $667,000 in 2004. This decrease is due primarily to interest income earned on invested funds raised in the secondary offering, partially offset by incremental factoring costs on higher sales volumes.

Other Non-Operating Expenses.    In the three months ended April 30, 2005 we recorded income of $21,000 related to a foreign exchange contract. For the three months ended April 30, 2004 a comparable charge of $48,000 was recorded. During the three months ended April 30, 2004 we recorded a non-cash charge of $49.2 million related to the valuation of the warrants issued in the February 2004 private placement. There was no comparable charge in the three months ended April 30, 2005.

Income Taxes.    Federal and state income taxes has been provided for at a combined effective rate of 40%.

Net Income.    For the three month period ended April 30, 2005 we generated net income of $189,000 compared to net loss of $49.0 million in 2004. For the three months ended April 30, 2004 the net loss attributable to common stockholders of $50.1 million includes the net loss of $49.0 million, a $759,000 non-cash charge related to a deemed dividend to the holders of the 7% convertible preferred stock and a $339,000 preferred stock dividend payable in common stock. The deemed dividend represents the beneficial conversion feature of the 7% preferred stock, after taking into account the value of the warrants issued.

Six months ended April 30, 2005 versus six months ended April 30, 2004

Net revenues.    Net revenues for the six months ended April 30, 2005 increased to $50.6 million from $41.7 million in the comparable period last year. The $8.9 million net increase is principally attributable to sales of gadget products, which were not launched until the second half of last year, partially offset by a decline in sales of value games. For the six months ended April 30, 2005 the sales mix attributable to games, videos and gadgets was 58%, 15% and 27%, respectively, compared to 93% for games and 7% for video in the same period last year.

Gross profit.    Gross profit for the six months ended April 30, 2005 increased to $19.4 million from $12.9 million in the comparable period last year while the profit margin increased to 38.3% from 31% in the prior year. This improvement is primarily attributable to sales of premium games and gadgets.

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Product Research and Development Expenses.    For the six months ended April 30, 2005 product research and development costs increased to $1.8 million from $1.3 in the comparable 2004 period. The increase is mostly attributable to employee related costs which include the hiring of additional quality control personnel, necessary to support the increased number of projects currently under development.

Selling and Marketing Expenses.    In the six months ended April 30, 2005 total selling and marketing expenses increased 82.0% to $9.1 million from $5.0 million in the same six month period in 2004, an increase of $4.1 million. Approximately $3.7 million of the increase is the result of in-store promotions incurred over the holiday season in support of our products and media advertising campaigns to promote the retail launch of our products during the period.

General and Administrative Expenses.    For the six month period ended April 30. 2005 general and administrative expenses increased approximately $1.2 million, or 40.6%, to $4.2 million from $3.0 million in the comparable 2004 period. As expected, our cost base has increased as a result of becoming a NASDAQ-listed company, and by continuing to build our infrastructure to support current and future growth.

Other Operating Expenses.    In the six months ended April 30, 2005 we recorded a non-cash compensation charge of $930,000 related to a below market stock option grant in connection with an employment agreement. There was no comparable charge in the same period last year.

Depreciation and Amortization Expenses.    For the six months ended April 30, 2005 depreciation and amortization expense was $577,000 compared to $187,000 in the comparable 2004 period. Depreciation and amortization expense increased due to additional office and computer equipment acquired and as a result of the amortization of a non-compete agreement and tooling costs.

Operating Income.    For the six month period ended April 30, 2005 operating income decreased approximately $689,000 to $2.8 million from $3.5 million in 2004. The decrease in operating income was due to the planned increases in our infrastructure to support current and future growth as well as increased costs related to becoming a NASDAQ-listed company. Although there can be no assurance, we anticipate that these higher levels of expenditures will be offset by the higher gross margin in the latter part of the year, during the seasonal peak sales periods.

Interest and Financing Costs.    For the six months ended April 30, 2005 and April 30, 2004, interest and financing costs remained relatively unchanged at $1.3 million. For the six months ended April 30, 2005 increased interest and financing charges related to purchase order financing, as well as incremental factoring costs, which were offset by interest income on invested funds raised in the secondary offering.

Other Non-Operating Expenses.    In the six months ended April 30, 2005 we recorded a charge of $48,000 related to the termination of a foreign exchange contract. For the six months ended April 30, 2004 a charge of $82,000 was recorded in connection with this contract. Merger costs, principally professional fees, of $342,000 were recorded during the six month period ended April 30, 2004. During the six months ended April 30, 2004 we recorded a $49.2 million non-cash charge related to the valuation of the warrants issued in connection with the February 2004 private placement.

Income Taxes.    Federal and state income taxes has been provided for at a combined effective rate of 40%.

Net Income.    For the six month period ended April 30, 2005 we generated a net profit of $889,000 compared to a net loss of $47.9 million in 2004. For the six months ended April 30, 2005, the net loss attributable to common stockholders of $211,000 includes the net profit after taxes of $889,000 net of a $1.1 million charge related to an incentive granted to certain holders for the exercise of warrants. For the six months ended April 30, 2004, the net loss attributable to common stockholders of $49.0 million includes the net loss of $47.9 million, a $759,000 non-cash charge related to a deemed dividend to the holders of the 7% convertible preferred stock and a $339,000 preferred stock dividend payable in common stock. The deemed dividend represents the beneficial conversion feature of the 7% preferred stock, after taking into account the value of the warrants issued.

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Liquidity and Capital Resources

Historically, we have met our capital needs through our factoring and purchase order financing arrangements, loans from related persons and advances from customers. In addition, as a result of a series of transactions during our fiscal year 2004 and during the six months ended April 30, 2005, primarily our February 2004 private placment and our recently completed secondary public offering, in which we sold equity securities, including issuances upon the exercise of warrants, we received aggregate net proceeds of approximately $81 million. These proceeds were used to reduce indebtedness, to satisfy certain settlements in connection with litigation, and to fund the growth of our business, as well as for general corporate purposes, including working capital.

Our cash and cash equivalents balance was $16.0 million at April 30, 2005. We expect continued volatility in the use and availability of cash due to the seasonality of our business, timing of receivables collections and working capital needs necessary to finance our business and growth objectives. Although there can be no assurance, management believes that there will be sufficient capital resources from our operations and financing arrangements in order to meet our requirements for development, production, marketing, purchases of equipment, and the acquisiiton of intellectual property rights for future products for the next twelve months.

If unforeseen events occur that require us to locate additional funding, we may be required to issue additional equity or undertake debt financing and/or loans from financial institutions. However, there can be no assurance that these funds will be available to us on acceptable terms, if at all. Failure to obtain such financing or obtaining it on terms not favorable to us could have a material adverse effect on future operating prospects and continued growth. Management believes it can operate under a curtailed operating plan if suitable financing is not available.

Factoring and Purchase Order Financing.    We do not have any bank debt. To satisfy our liquidity needs, we factor our receivables. We also utilize purchase order financing through the factor and through a finance company to provide funding for the manufacture of our products. In connection with these arrangements, the finance company and the factor have a security interest in substantially all of our assets. In addition, certain of our officers provide personal guarantees in connection with these arrangements.

Under the terms of our factoring agreement, we assign our accounts receivable to the factor. The factor, in its sole discretion, determines whether or not it will accept a receivable based on its assessment of its credit risk. Once a receivable is accepted by the factor, the factor assumes substantially all of the credit risk associated with the receivable. The factor is required to remit payments to us for the assigned accounts receivable in accordance with the terms of the assigned invoice, regardless of whether the factor receives payment on the receivable, so long as the customer does not have a valid dispute related to the invoice. The amount remitted to us by the factor equals the invoiced amount adjusted for allowances and discounts we have provided to the customer. The factor charges 0.5% of invoiced amounts for these credit and collection services.

In addition, we may request that the factor provide us with cash advances based on our accounts receivable and inventory. The factor may either accept or reject our request for advances in its discretion. Amounts to be paid to us by the factor for any assigned receivable are offset by any amounts previously advanced by the factor. As our needs require, we may request that the factor advance 80% of the eligible receivables and advance 50% of inventory, up to a maximum of $1 million. Total advances under the factor arrangement, including letters of credit for purchase order financing is limited to $30 million in the aggregate. The interest rate for advances taken is prime plus 1%.

We utilize purchase order financing arrangements in order to enable us to provide letters of credit necessary for the manufacture of our products. Manufacturers require us to present a letter of credit in order to manufacture the products required under a purchase order. Currently, we utilize letters of credit from a finance company which charges 3.3% of the purchase order amount for each transaction for 60 days. Our factor also provides purchase order financing at a cost of 0.5% of the purchase order amount for each transaction for 30 days. Additional charges are incurred under both arrangements if letters of credit remain outstanding in excess of the original time period.

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Advances From Customers.    On a case by case basis, distributors and other customers have agreed to provide us with cash advances on their orders. These advances are then applied against future sales to these customers. In exchange for these advances, we offer these customers beneficial pricing or other considerations.

Commitments and Contingencies.    At April 30, 2005, we are committed under agreements with certain developers and content providers for milestone and license fee payments aggregating $21.5 million payable through October 31, 2005 and $21.4 million payable through October 31, 2006.

We do not currently have any material commitments with respect to any capital expenditures.

At April 30, 2005, we had open letters of credit aggregating $1.5 million for inventory purchases to be delivered during the subsequent quarter.

As of April 30, 2005 we had entered into "at will" employment agreements with several key executives. These employment agreements include provisions for, among other things, annual compensation, bonus arrangements and stock option grants. These agreements also contain provisions related to severance terms and change of control provisions.

As of April 30, 2005 we were committed under operating leases for office space and equipment for approximately $1.7 million through July 2009.

We are party to other routine claims and suits brought by us and against us in the ordinary course of business, including disputes arising over contractual claims and collection matters. In the opinion of management, after consultation with legal counsel, the outcome of such routine claims will not have a material adverse effect on our business, financial condition, and results of operations or liquidity. In addition, the costs and other effects of pending or future litigation, governmental investigations, legal and administrative cases and proceedings (whether civil or criminal), settlements, judgments and investigations, claims and changes in those matters (including those matters described above), and developments or assertions by or against the Company relating to intellectual property rights and intellectual property licenses, could have a material adverse effect on the Company's business, financial condition, and results of operations or liquidity.

Cash Flows

Cash and cash equivalents were $16.0 million at April 30, 2005 compared to $4.2 million at October 31, 2004. Working capital at April 30, 2005 was of $62.1 million compared to $8.9 million at October 31, 2004.

Operating Cash Flows.    For the six months ended April 30, 2005, we used cash of $44.7 million in operating activities. The principal operating use of cash was expenditures of $18.9 million for capitalized software development costs and prepaid license fees related to new games, videos and gadgets in development for sale in 2005 and later periods and an increase in due from factor of $14.9 million. Other uses of cash included $5.5 million of other prepayments, primarily for future television and print media advertising time and space, an increase in inventory of $557,000, a decrease in accounts payable and accrued expenses of $6.2 million, a decrease in other assets of $372,000 and a decrease in advances from customers of $973,000. Cash was provided by net income of $889,000 generated during the period, adjusted for non-cash charges of $1.5 million related to depreciation, amortization and officer compensation.

Investing Cash Flows.    Cash used in investing activities for the six months ended April 30, 2005 consists primarily of purchases of upgraded computer equipment and leasehold improvements necessary to accommodate our infrastructure growth.

Financing Cash Flows.    Net cash generated from financing activities for the six month period ended April 30, 2005 was $56.9 million and consisted of (i) net proceeds of $41.9 million from the sale of stock in the secondary public offering; (ii) net proceeds from the exercise of stockholder and placement agent warrants, issued in the February 2004 private placement of $12.1 million; and (iii) net proceeds of $6.5 million from the exercise of warrants at a discount, partially offset by (iv) repayment of $3.6 million of inventory financing.

19

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

We are exposed to various market risks, including the changes in foreign currency exchange rates and interest rates. Market risk is the potential loss arising from changes in market rates and prices. Foreign exchange contracts used to hedge foreign currency exposure are subject to market risk. We do not enter into derivatives or other financial instruments for trading or speculative purposes. We had an outstanding foreign currency forward exchange contract which expired on March 31, 2005 and, in connection therewith, we recorded a gain of $21,000 in the three months ended April 30, 2005.

Item 4.    Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.    As of April 30, 2005, with the participation of our management, our Chief Executive Officer and Chief Financial Officer evaluated our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 (the "Exchange Act") Rules 13a-15(c) and 15d-1.5(e)). In designing and evaluating our disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of April 30, 2005, our disclosure controls and procedures were effective, in that they provide reasonable assurance that information required to he disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that management is timely alerted to material information relating to the company during the period when our periodic reports are being prepared.

As a closely-held company with no public reporting obligations prior to our merger with ConnectivCorp in December 2003, we had previously committed limited personnel and resources to the development of our internal financial controls and systems. In addition, as of October 31, 2005, we will become subject to the heightened internal control and procedure requirements of Section 404 of the Sarbanes-Oxley Act. Therefore, management has intensified its review and documentation of our disclosure controls and procedures, including our internal controls and procedures for financial reporting, and is focused on a number of areas that we would like to improve, including the segregation of duties in key functions; the creation of formal accounting controls, policies and procedures; the hiring of additional management and staff experienced in financial reporting; and finalizing documentation of our accounting and disclosure internal controls and procedures. Further, management continues to look for methods to ensure that our systems evolve with our business and to improve our overall system of control. In order to aid management in these efforts, we have recently retained consultants to assist in the assessment of our internal accounting and disclosure controls and to make recommendations for timely corrective actions.

Changes in Internal Controls.    No change in our internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) occurred during the fiscal quarter ended April 30, 2005 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.    OTHER INFORMATION

Item 1.    Legal Proceedings

On April 14, 2005, we initiated legal proceedings in the U.S. District Court for the District of New Jersey against Jack of All Games, Inc. to recover amounts due for the sale of merchandise. Jack of All Games has historically acted as our distributor. Our complaint seeks relief in the amount of $5,305,438.32 relating to merchandise sold to Jack of All Games and alleges breach of contract and other claims. On May 26, 2005, Jack of All Games filed an answer generally denying our allegations and making counterclaims and claims for setoff.

We are party to other routine claims and suits brought by us and against us in the ordinary course of business, including disputes arising over contractual claims and collection matters. In the opinion of management, after consultation with legal counsel, the outcome of such routine claims will not have a material adverse effect on our business, financial condition, and results of operations or liquidity.

20

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

On February 22, 2005, in connection with a termination agreement related to a consulting arrangement, we issued a warrant to purchase 7,142 shares of common stock, par value $.001 per share, at an exercise price of $11.30 per share. The warrant is not exercisable until February 22, 2006. The warrants and the common stock issuable upon the exercise thereof have not been registered under the Securities Act of 1933, as amended (the "Act"), and therefore cannot be offered or sold in the absence of an effective registration statement or exemption from registration requirements. We believe that the sale and issuance of the warrants and the underlying common Stock upon exercise are exempt from registration under the "Act" by virtue of satisfaction of the conditions of Section 4(2) thereof.

Item 5.    Other Information

On June 8, 2005, at the Annual Meeting of Stockholders, our stockholders approved the Majesco Entertainment Company Amended and Restated 2004 Employee, Director and Consultant Incentive Plan, or the Plan. The Plan amends and restates in its entirety the Majesco Holdings Inc. 2004 Employee, Director and Consultant Stock Plan. The Plan authorizes the grant of up to 6,142,857 shares for the issuance of incentive stock options, nonqualified stock options, stock grants, other stock-based awards and cash awards to our employees, directors and certain consultants. A copy of the Plan is furnished with this quarterly report as Exhibit 10.1. Our Board of Directors approved the form of Non-Qualified Stock Option Agreement and form of Incentive Stock Option Agreement to grants under the Plan. A copy of the form of Non-Qualified Stock Option Agreement is furnished pursuant with this quarterly report as Exhibit 10.2, and a copy of the form of Incentive Stock Option Agreement is furnished with this quarterly report as Exhibit 10.3 to this Current Report on Form 8-K.

Item 6.    Exhibits

3.1				Restated Certificate of Incorporation, dated June 13, 2005
3.2				Restated Bylaws
10.1				Amended and Restated 2004 Employee, Director and Consultant Incentive Plan
10.2				Form of Non-Qualified Stock Option Agreement
10.3				Form of Incentive Stock Option Agreement
10.4				Director Compensation Arrangements
31.1				Certification of Carl Yankowski pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2				Certification of Jan E. Chason pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1				Certification of Carl Yankowski pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2				Certification of Jan E. Chason pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

21

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MAJESCO ENTERTAINMENT COMPANY

/s/ Jan E. Chason                    
Jan E. Chason
Chief Financial Officer

Date: June 14, 2005

22

EX-3.1

                                    RESTATED
                          CERTIFICATE OF INCORPORATION
                                       OF
                          MAJESCO ENTERTAINMENT COMPANY
                (Originally incorporated as ConnectivCorp in 1998
                    under the laws of the State of Delaware.)


     FIRST: The name of the corporation is Majesco Entertainment Company (the
"Corporation").

     SECOND: The name and address of the Corporation's registered agent in the
State of Delaware is Corporation Service Company, 2711 Centerville Road,
Wilmington, Delaware 19808.

     THIRD: The purpose of the Corporation is to engage in any lawful act or
activity or carry on any business for which corporations may be organized under
the Delaware General Corporation Law or any successor statue.

     FOURTH:

     A.   Designation and Number of Shares.

     The total number of shares of all classes of stock which the Corporation
shall have the authority to issue is 260,000,000 shares, consisting of
250,000,000 shares of common stock, par value $0.001 per share (the "Common
Stock") and 10,000,000 shares of Preferred Stock, par value $0.001 per share
(the "Preferred Stock").

     B.   Preferred Stock

          1. Shares of Preferred Stock may be issued in one or more series at
such time or times and for such consideration as the Board of Directors may
determine.

          2. Authority is hereby expressly granted to the Board of Directors to
fix from time to time, by resolution or resolutions providing for the
establishment and/or issuance of any series of Preferred Stock, the designation
and number of the shares of such series and the powers, preferences and rights
of such series, and the qualifications, limitations or restrictions thereof, to
the fullest extent such authority may be conferred upon the Board of Directors
under the Delaware General Corporation Law.

     The number of authorized shares of Common Stock or Preferred Stock may be
increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the voting
power of all of the outstanding shares of capital stock then entitled to vote,
voting together as a single class, without a separate class vote of the


                                       1


holders of the Common Stock or Preferred Stock, or of any series thereof, unless
a vote of any such holders is required pursuant to the terms of any Preferred
Stock designation.

     C.   Common Stock.

     The holders of the Common Stock are entitled to one vote for each share
held; provided, however, that, except as otherwise required by law, holders of
Common Stock shall not be entitled to vote on any amendment to this Restated
Certificate of Incorporation (including any certificate of designation relating
to Preferred Stock) that relates solely to the terms of one or more outstanding
series of Preferred Stock if the holders of such affected series are entitled,
either separately or together as a class with the holders of one or more other
such series, to vote thereon by law or pursuant to this Restated Certificate of
Incorporation (including any certificate of designation relating to Preferred
Stock).

     FIFTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:

     A. The business and affairs of the Corporation shall be managed by or under
the direction of the Board of Directors. In addition to the powers and authority
expressly conferred upon them by statute or by this Restated Certificate of
Incorporation or the Bylaws of the Corporation as in effect from time to time,
the directors are hereby empowered to exercise all such powers and do all such
acts and things as may be exercised or done by the Corporation.

     B. The directors of the Corporation need not be elected by written ballot
unless the Bylaws so provide.

     C. Any action required or permitted to be taken by the stockholders of the
Corporation may be effected only at a duly called annual or special meeting of
stockholders of the Corporation and not by written consent.

     D. Special meetings of the stockholders may only be called by the Board of
Directors acting pursuant to a resolution adopted by a majority of the Whole
Board and at least one-quarter (1/4) of the voting power of all of the then
outstanding shares of the capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class, shall
be required for the stockholders to call a special meeting. For the purposes of
this Restated Certificate of Incorporation, the term "Whole Board" shall mean
the total number of authorized directors whether or not there exist any
vacancies in previously authorized directorships.

     SIXTH:

     A. Subject to the rights of the holders of shares of any series of
Preferred Stock then outstanding to elect additional directors under specified
circumstances, the number of directors shall be fixed from time to time
exclusively by the Board of Directors pursuant to a resolution adopted by a
majority of the Whole Board.


                                       2


     B. Subject to the rights of the holders of shares of any series of
Preferred Stock then outstanding to elect additional directors under specified
circumstances, the Board of Directors of the Corporation shall be divided into
three classes, with the term of office of the first class to expire at the first
annual meeting of stockholders following the initial classification of
directors, the term of office of the second class to expire at the second annual
meeting of stockholders, following the initial classification of directors, and
the term of office of the third class to expire at the third annual meeting of
stockholders following the initial classification of directors. At each annual
meeting of stockholders, directors elected to succeed those directors whose
terms expire, other than directors elected by the holders of any series of
Preferred Stock, shall be elected for a term of office to expire at the third
succeeding annual meeting of stockholders after their election and until their
successors are duly elected and qualified.

     C. Subject to the rights of the holders of any series of Preferred Stock
then outstanding, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause shall, unless otherwise required by law or by resolution
of the Board of Directors, be filled only by a majority vote of the directors
then in office even though less than a quorum, or by a sole remaining director,
and not by stockholders, and directors so chosen shall serve for a term expiring
at the annual meeting of stockholders at which the term of office of the class
to which they have been chosen expires or until such director's successor shall
have been duly elected and qualified. No decrease in the authorized number of
directors shall shorten the term of any incumbent director.

     D. Advance notice of stockholder nominations for the election of directors
and of business to be brought by stockholders before any meeting of the
stockholders of the Corporation shall be given in the manner provided in the
Bylaws of the Corporation.

     E. Subject to the rights of the holders of any series of Preferred Stock
then outstanding, any director, or the entire Board of Directors, may be removed
from office at any time only for cause and only by the affirmative vote of the
holders of at least two-thirds (2/3) of the voting power of all of the
outstanding shares of capital stock then entitled to vote at an election of the
directors, voting together as a single class.

     F. At any meeting of the Board of Directors, a majority of the total number
of the Whole Board shall constitute a quorum for all purposes. At any meeting of
the Board of Directors, all matters shall be determined by the vote of a
majority of the directors present, except as otherwise provided herein or
required by law.

     SEVENTH: The Board of Directors is expressly empowered to adopt, amend or
repeal Bylaws of the Corporation. Any adoption, amendment or repeal of the
Bylaws of the Corporation by the Board of Directors shall require the approval
of a majority of the Whole Board. The stockholders shall also have power to
adopt, amend or repeal the Bylaws of the Corporation; provided, that in addition
to any vote of the holders of any class or series of stock



                                       3


of the Corporation required by law or by this Restated Certificate of
Incorporation, the affirmative vote of the holders of at least two-thirds (2/3)
of the voting power of all of the then outstanding shares of the capital stock
of the Corporation entitled to vote generally in the election of directors,
voting together as a single class, shall be required for the stockholders to
adopt, amend or repeal any provision of the Bylaws of the Corporation.

     EIGHTH:

     A. Each person who was or is made a party or is threatened to be made a
party to or is otherwise involved (including, without limitation, as a witness)
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or an officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, or trustee of another corporation, or of a partnership, joint
venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "Indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a director, officer or
trustee or in any other capacity while serving as a director, officer or
trustee, shall be indemnified and held harmless by the Corporation to the
fullest extent permitted by the Delaware General Corporation Law, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than such law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) reasonably incurred or suffered by such Indemnitee in
connection therewith; provided, however, that, except with respect to
proceedings to enforce rights to indemnification or as otherwise required by
law, the Corporation shall not be required to indemnify or advance expenses to
any such Indemnitee in connection with a proceeding (or part thereof) initiated
by such Indemnitee unless such proceeding (or part thereof) was authorized by
the Board of Directors of the Corporation.

     B. The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article EIGHTH shall not be deemed exclusive of any other
rights to which a person seeking indemnification or advancement of expenses may
be entitled under any Bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in such person's official capacity and
as to action in another capacity while holding such office.

     C. The Corporation shall have the power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, trustee, employee or agent of another corporation, or of a
partnership, joint venture, trust or other enterprise, against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the Corporation
would have the power to indemnify such person against such liability under this
Article EIGHTH.

     D. The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article EIGHTH shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person. No repeal or amendment of
this Article EIGHTH shall adversely affect any



                                       4


rights of any person pursuant to this Article EIGHTH which existed at the time
of such repeal or amendment with respect to acts or omissions occurring prior to
such repeal or amendment.

     NINTH: No director shall be personally liable to the Corporation or its
stockholders for any monetary damages for breaches of fiduciary duty as a
director; provided that this provision shall not eliminate or limit the
liability of a director, to the extent that such liability is imposed by
applicable law, (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders; (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (iii) under
Section 174 or successor provisions of the Delaware General Corporation Law; or
(iv) for any transaction from which the director derived an improper personal
benefit. No amendment to or repeal of this provision shall apply to or have any
effect on the liability or alleged liability of any director for or with respect
to any acts or omissions of such director occurring prior to such amendment or
repeal. If the Delaware General Corporation Law is amended to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended. All references in this Article NINTH to a
director shall also be deemed to refer to any such director acting in his or her
capacity as a Continuing Director (as defined in Article TWELFTH).

     TENTH: The Corporation reserves the right to amend or repeal any provision
contained in this Restated Certificate of Incorporation in the manner prescribed
by the Delaware General Corporation Law and all rights conferred upon
stockholders are granted subject to this reservation; provided that in addition
to the vote of the holders of any class or series of stock of the Corporation
required by law or by this Restated Certificate of Incorporation, the
affirmative vote of the holders of shares of voting stock of the Corporation
representing at least two-thirds (2/3) of the voting power of all of the then
outstanding shares of the capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class, shall
be required to amend, alter or repeal, or adopt (whether by merger,
consolidation or otherwise) any provision inconsistent with, Articles FIFTH,
SIXTH, SEVENTH, EIGHTH, NINTH, this Article TENTH and Article TWELFTH of this
Restated Certificate of Incorporation.

     ELEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths (3/4) in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as



                                       5


consequence of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the creditors or
class of creditors, and/or on all the stockholders or class of stockholders, of
this Corporation, as the case may be, and also on this Corporation.

     TWELFTH: The Board of Directors is expressly authorized to cause the
Corporation to issue rights pursuant to Section 157 of the Delaware General
Corporation Law and, in that connection, to enter into any agreements necessary
or convenient for such issuance, and to enter into other agreements necessary
and convenient to the conduct of the business of the Corporation. Any such
agreement may include provisions limiting, in certain circumstances, the ability
of the Board of Directors of the Corporation to redeem the securities issued
pursuant thereto or to take other action thereunder or in connection therewith
unless there is a specified number or percentage of Continuing Directors then in
office. Pursuant to Section 141(a) of the Delaware General Corporation Law, the
Continuing Directors shall have the power and authority to make all decisions
and determinations, and exercise or perform such other acts, that any such
agreement provides that such Continuing Directors shall make, exercise or
perform. For purposes of this Article TWELFTH and any such agreement, the term,
"Continuing Directors," shall mean (1) those directors who were members of the
Board of Directors of the Corporation at the time the Corporation entered into
such agreement and any director who subsequently becomes a member of the Board
of Directors, if such director's nomination for election to the Board of
Directors is recommended or approved by the majority vote of the Continuing
Directors then in office or (2) such members of the Board of Directors
designated in, or in the manner provided in, such agreement as Continuing
Directors.

     IN WITNESS WHEREOF, this Restated Certificate of Incorporation, which
restates and integrates and further amends the provisions of the Certificate of
Incorporation of this Corporation, and which has been duly adopted in accordance
with Sections 242 and 245 of the Delaware General Corporation Law, has been
executed by its duly authorized Chief Executive Officer this 13th day of June,
2005.


                                        MAJESCO ENTERTAINMENT COMPANY



                                         By: /s/ Carl Yankowski
                                             ---------------------------------
                                         Carl Yankowski
                                         Chief Executive Officer




                                       6

EX-3.2

                          MAJESCO ENTERTAINMENT COMPANY

                                 RESTATED BYLAWS



                            ARTICLE I - STOCKHOLDERS

     Section 1. Annual Meeting.

     An annual meeting of the stockholders, for the election of directors to
succeed those whose terms expire and for the transaction of such other business
as may properly come before the meeting, shall be held at such place, on such
date, and at such time as the Board of Directors shall fix each year.

     Section 2. Special Meetings.

     Special meetings of stockholders of the Corporation may be called only by
the Board of Directors pursuant to a resolution adopted by a majority of the
Whole Board and upon written request from the Secretary, who shall be required
to submit such a request stating the purpose of such a meeting, if at least
one-quarter (1/4) of the voting power of all of the then outstanding shares of
the capital stock of the Corporation entitled to vote generally in the election
of directors, requesting together as a single class, call for a special meeting.
For the purposes of these Restated Bylaws, the term "Whole Board" shall mean the
total number of authorized directors whether or not there exist any vacancies in
previously authorized directorships. Special meetings of the stockholders may be
held at such place within or without the State of Delaware as may be stated in
such resolution.

     Section 3. Notice of Meetings.

     Notice of the place, if any, date, and time of all meetings of the
stockholders, and the means of remote communications, if any, by which
stockholders and proxyholders may be deemed to be present in person and vote at
such meeting, shall be given, not less than ten (10) nor more than sixty (60)
days before the date on which the meeting is to be held, to each stockholder
entitled to vote at such meeting, except as otherwise provided herein or
required by law (meaning, here and hereinafter, as required from time to time by
the Delaware General Corporation Law or the Certificate of Incorporation of the
Corporation, as amended and restated from time to time).

     When a meeting is adjourned to another place, date or time, notice need not
be given of the adjourned meeting if the place, if any, date and time thereof,
and the means of remote



                                       -1-


communications, if any, by which stockholders and proxyholders may be deemed to
be present in person and vote at such adjourned meeting, are announced at the
meeting at which the adjournment is taken; provided, however, that if the date
of any adjourned meeting is more than thirty (30) days after the date for which
the meeting was originally noticed, or if a new record date is fixed for the
adjourned meeting, notice of the place, if any, date, and time of the adjourned
meeting, and the means of remote communications, if any, by which stockholders
and proxyholders may be deemed to be present in person and vote at such
adjourned meeting, shall be given in conformity herewith. At any adjourned
meeting, any business may be transacted which might have been transacted at the
original meeting.

     Section 4. Quorum.

     At any meeting of the stockholders, the holders of a majority of all of the
shares of the stock entitled to vote at the meeting, present in person or by
proxy, shall constitute a quorum for all purposes, unless or except to the
extent that the presence of a larger number may be required by law. Where a
separate vote by a class or classes is required, a majority of the shares of
such class or classes present in person or represented by proxy shall constitute
a quorum entitled to take action with respect to that vote on that matter.

     If a quorum shall fail to attend any meeting, the chairman of the meeting
or the holders of a majority of the shares of stock entitled to vote who are
present, in person or by proxy, may adjourn the meeting to another place, date,
or time.

     Section 5. Organization and Conduct of Business.

     The Chairman of the Board of Directors or, in his or her absence, the Chief
Executive Officer of the Corporation or, in his or her absence, the President
or, in his or her absence, such person as the Board of Directors may have
designated, shall call to order any meeting of the stockholders and shall
preside at and act as chairman of the meeting. In the absence of the Secretary
of the Corporation, the secretary of the meeting shall be such person as the
chairman of the meeting appoints. The chairman of any meeting of stockholders
shall determine the order of business and the procedures at the meeting,
including such regulation of the manner of voting and the conduct of discussion
as he or she deems to be appropriate. The chairman of any meeting of
stockholders shall have the power to adjourn the meeting to another place and
time. The date and time of the opening and closing of the polls for each matter
upon which the stockholders will vote at the meeting shall be announced at the
meeting.

     Section 6. Intentionally Omitted.

     Section 7. Notice of Stockholder Business and Nominations.

                                       -2-


     A.   Annual Meetings of Stockholders.

          Nominations of persons for election to the Board of Directors and the
proposal of business to be considered by the stockholders may be made at an
annual meeting of stockholders (a) pursuant to the Corporation's notice of
meeting, (b) by or at the direction of the Board of Directors or (c) by any
stockholder of the Corporation who was a stockholder of record at the time of
giving of notice provided for in this Section, who is entitled to vote at the
meeting and who complies with the notice procedures set forth in this Section.

     B.   Special Meetings of Stockholders.

          Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
notice of meeting given pursuant to Section 2 above. Nominations of persons for
election to the Board of Directors may be made at a special meeting of
stockholders at which directors are to be elected (a) by or at the direction of
the Board of Directors or (b) provided that the Board of Directors has
determined that directors shall be elected at such meeting, by any stockholder
of the Corporation who is a stockholder of record at the time of giving of
notice provided for in this Section, who shall be entitled to vote at the
meeting and who complies with the notice procedures set forth in this Section.

     C.   Certain Matters Pertaining to Stockholder Business and Nominations.

          (1) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (c) of paragraph A of this
Section or a special meeting pursuant to paragraph B of this Section, (1) the
stockholder must have given timely notice thereof in writing to the Secretary of
the Corporation, (2) such other business must otherwise be a proper matter for
stockholder action under the Delaware General Corporation Law, (3) if the
stockholder, or the beneficial owner on whose behalf any such proposal or
nomination is made, has provided the Corporation with a Solicitation Notice, as
that term is defined in this paragraph, such stockholder or beneficial owner
must, in the case of a proposal, have delivered a proxy statement and form of
proxy to holders of at least the percentage of the Corporation's voting shares
required under applicable law to carry any such proposal, or, in the case of a
nomination or nominations, have delivered a proxy statement and form of proxy to
holders of a percentage of the Corporation's voting shares reasonably believed
by such stockholder or beneficial holder to be sufficient to elect the nominee
or nominees proposed to be nominated by such stockholder, and must, in either
case, have included in such materials the Solicitation Notice and (4) if no
Solicitation Notice relating thereto has been timely provided pursuant to this
Section, the stockholder or beneficial owner proposing such business or
nomination must not have solicited a number of proxies sufficient to have
required the delivery of such a Solicitation Notice under this Section. To be
timely, a stockholder's notice pertaining to an annual meeting shall be
delivered to the Secretary at the principal executive offices of the Corporation
not less than forty-five (45) or more than seventy-five (75) days prior to the
first

                                       -3-


anniversary (the "Anniversary") of the date on which the Corporation first
mailed its proxy materials for the preceding year's annual meeting; provided,
however, that in the event that the date of the annual meeting is more than
thirty (30) days before or more than thirty (30) days after the anniversary date
of the preceding year's annual meeting, notice by the stockholder to be timely
must be so delivered not earlier than the close of business on the ninetieth
(90) day prior to such annual meeting and not later than the close of business
on the later of the sixtieth (60th) day prior to such annual meeting or the
close of business on the tenth (10th) day following the day on which public
announcement of the date of such meeting is first made by the Corporation. Such
stockholder's notice for an annual meeting or a special meeting shall set forth:
(a) as to each person whom the stockholder proposes to nominate for election or
reelection as a director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case, pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such
person's written consent to being named in the proxy statement as a nominee and
to serving as a director if elected); (b) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (c) as to the stockholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made (i) the name and
address of such stockholder, as they appear on the Corporation's books, and of
such beneficial owner, (ii) the class and number of shares of the Corporation
that are owned beneficially and held of record by such stockholder and such
beneficial owner, and (iii) whether either such stockholder or beneficial owner
intends to deliver a proxy statement and form of proxy to holders of, in the
case of a proposal, at least the percentage of the Corporation's voting shares
required under applicable law to carry the proposal or, in the case of a
nomination or nominations, a sufficient number of holders of the Corporation's
voting shares to elect such nominee or nominees (an affirmative statement of
such intent, a "Solicitation Notice").

          (2) Notwithstanding anything in the second sentence of paragraph C (1)
of this Section to the contrary, in the event that the number of directors to be
elected to the Board of Directors of the Corporation is increased and there is
no public announcement by the Corporation naming all of the nominees for
director or specifying the size of the increased Board of Directors at least
fifty-five (55) days prior to the Anniversary (or, if the annual meeting is held
more than thirty (30) days before or sixty (60) days after the first anniversary
of the preceding year's annual meeting, at least seventy (70) days prior to such
annual meeting), a stockholder's notice required by this Section shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive office of the Corporation not later than the close of
business on the tenth (10th) day following the day on which such public
announcement is first made by the Corporation.



                                       -4-


          (3) In the event the Corporation calls a special meeting of
stockholders for the purpose of electing one or more directors to the Board of
Directors, any such stockholder may nominate a person or persons (as the case
may be), for election to such position(s) as specified in the Corporation's
notice of meeting, if the stockholder's notice required by paragraph C(1) of
this Section shall be delivered to the Secretary at the principal executive
offices of the Corporation not earlier than the ninetieth (90th) day prior to
such special meeting nor later than the close of business on the later of the
sixtieth (60th) day prior to such special meeting, or the tenth (10th) day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting.

     D.   General.

          (1) Only such persons who are nominated in accordance with the
procedures set forth in this Section shall be eligible to serve as directors and
only such business shall be conducted at a meeting of stockholders as shall have
been brought before the meeting in accordance with the procedures set forth in
this Section. Except as otherwise provided by law or these Bylaws, the chairman
of the meeting shall have the power and duty to determine whether a nomination
or any business proposed to be brought before the meeting was made or proposed,
as the case may be, in accordance with the procedures set forth in this Section
and, if any proposed nomination or business is not in compliance herewith, to
declare that such defective proposal or nomination shall be disregarded.

          (2) For purposes of this Section, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.

          (3) Notwithstanding the foregoing provisions of this Section, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth herein. Nothing in this Section shall be deemed to affect any rights (i)
of stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders
of any series of Preferred Stock to elect directors under specified
circumstances.


     Section 8. Proxies and Voting.

     At any meeting of the stockholders, every stockholder entitled to vote may
vote in person or by proxy authorized by an instrument in writing or by a
transmission permitted by law filed in accordance with the procedure established
for the meeting. Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission created pursuant to this Section may
be substituted or used in lieu of the original writing or transmission for any



                                     - 5 -


and all purposes for which the original writing or transmission could be used,
provided that such copy, facsimile telecommunication or other reproduction shall
be a complete reproduction of the entire original writing or transmission.

     All voting, including on the election of directors but excepting where
otherwise required by law, may be by voice vote. Any vote not taken by voice
shall be taken by ballots, each of which shall state the name of the stockholder
or proxy voting and such other information as may be required under the
procedure established for the meeting. The Corporation may, and to the extent
required by law, shall, in advance of any meeting of stockholders, appoint one
or more inspectors to act at the meeting and make a written report thereof. The
Corporation may designate one or more persons as alternate inspectors to replace
any inspector who fails to act. If no inspector or alternate is able to act at a
meeting of stockholders, the person presiding at the meeting may, and to the
extent required by law, shall, appoint one or more inspectors to act at the
meeting. Each inspector, before entering upon the discharge of his duties, shall
take and sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his ability.

     Except as otherwise provided in the terms of any class or series of
Preferred Stock of the Corporation, all elections at any meeting of stockholders
shall be determined by a plurality of the votes cast, and except as otherwise
required by law or as provided herein, all other matters determined by
stockholders at a meeting shall be determined by a majority of the votes cast
affirmatively or negatively.

     Section 9. Action Without Meeting.

     Any action required or permitted to be taken by the stockholders of the
Corporation may be effected only at a duly called annual or special meeting of
stockholders of the Corporation and may not be effected by written consent.

     Section 10. Stock List.

     A complete list of stockholders entitled to vote at any meeting of
stockholders, arranged in alphabetical order for each class of stock and showing
the address of each such stockholder and the number of shares registered in his
or her name, shall be made in the manner specified by law.

     The stock list shall also be kept at the place of the meeting during the
whole time thereof and shall be open to the examination of any such stockholder
who is present. Such list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by
each of them.


                                       -6-


                         ARTICLE II - BOARD OF DIRECTORS

     Section 1. General Powers, Number, Election, Tenure and Qualification.

     A. The business and affairs of the Corporation shall be managed by or under
the direction of its Board of Directions.

     B. Subject to the rights of the holders of any series of Preferred Stock
then outstanding to elect additional directors under specified circumstances,
the number of directors shall be fixed from time to time exclusively by the
Board of Directors pursuant to a resolution adopted by a majority of the Whole
Board.

     C. Subject to the rights of the holders of shares of any series of
Preferred Stock then outstanding to elect additional directors under specified
circumstances, the Board of Directors of the Corporation shall be divided into
three classes, with the term of office of the first class to expire at the first
annual meeting of stockholders following the initial classification of
directors, the term of office of the second class to expire at the second annual
meeting of stockholders, following the initial classification of directors, and
the term of office of the third class to expire at the third annual meeting of
stockholders following the initial classification of directors. At each annual
meeting of stockholders, directors elected to succeed those directors whose
terms expire, other than directors elected by the holders of any series of
Preferred Stock, shall be elected for a term of office to expire at the third
succeeding annual meeting of stockholders after their election and until their
successors are duly elected and qualified.

     Section 2. Vacancies and Newly Created Directorships.

     Subject to the rights of the holders of any series of Preferred Stock then
outstanding, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause shall, unless otherwise required by law or by resolution
of the Board of Directors, be filled only by a majority vote of the directors
then in office even though less than a quorum, or by a sole remaining director
and not by stockholders, and directors so chosen shall serve for a term expiring
at the annual meeting of stockholders at which the term of office of the class
to which they have been chosen expires or until such director's successor shall
have been duly elected and qualified. No decrease in the authorized number of
directors shall shorten the term of any incumbent director. In the event of a
vacancy in the Board of Directors, the remaining directors, except as otherwise
provided by law, may exercise the powers of the full Board of Directors until
the vacancy is filled.



                                       -7-


     Section 3. Resignation and Removal.

     Any director may resign at any time upon notice given in writing or by
electronic transmission to the Corporation at its principal place of business or
to the Chairman of the Board, Chief Executive Officer, President or Secretary.
Such resignation shall be effective upon receipt unless it is specified to be
effective at some other time or upon the happening of some other event. Subject
to the rights of the holders of any series of Preferred Stock then outstanding,
any director, or the entire Board of Directors, may be removed from office at
any time only for cause and only by the affirmative vote of the holders of at
least two-thirds (2/3) of the voting power of all of the then outstanding shares
of the Corporation then entitled to vote at an election of directors, voting
together as a single class.

     Section 4. Regular Meetings.

     Regular meetings of the Board of Directors shall be held at such place or
places, on such date or dates, and at such time or times as shall have been
established by the Board of Directors and publicized among all directors. A
notice of each regular meeting shall not be required.

     Section 5. Special Meetings.

     Special meetings of the Board of Directors may be called by the Chairman of
the Board of Directors or the Chief Executive Officer, and shall be called by
the Secretary if requested by a majority of the Whole Board , and shall be held
at such place, on such date, and at such time as he or she or they shall fix.
Notice of the place, date, and time of each such special meeting shall be given
to each director by whom it is not waived by mailing written notice not less
than two (2) days before the meeting or orally, by telegraph, telex, cable,
telecopy or electronic transmission given not less than twelve (12) hours before
the meeting. Unless otherwise indicated in the notice thereof, any and all
business may be transacted at a special meeting.

     Section 6. Quorum.

     At any meeting of the Board of Directors, a majority of the total number of
the Whole Board shall constitute a quorum for all purposes. If a quorum shall
fail to attend any meeting, a majority of those present may adjourn the meeting
to another place, date, or time, without further notice or waiver thereof.

     Section 7. Action by Consent.

     Unless otherwise restricted by the Certificate of Incorporation or these
Bylaws, any action required or permitted to be taken at any meeting of the Board
of Directors may be taken without a meeting, if all members of the Board consent
thereto in writing or by electronic transmission, and the writing or writings or
electronic transmission or transmissions are filed with the minutes


                                       -8-


of proceedings of the Board. Such filing shall be in paper form if the minutes
are maintained in paper form and shall be in electronic form if the minutes are
maintained in electronic form.


     Section 8. Participation in Meetings By Conference Telephone.

     Members of the Board of Directors, or of any committee thereof, may
participate in a meeting of such Board or committee by means of conference
telephone or other communications equipment by means of which all persons
participating in the meeting can hear each other and such participation shall
constitute presence in person at such meeting.

     Section 9. Conduct of Business.

     At any meeting of the Board of Directors, business shall be transacted in
such order and manner as the Board may from time to time determine, and all
matters shall be determined by the vote of a majority of the directors present,
except as otherwise provided herein or required by law.

     Section 10. Powers.

     The Board of Directors may, except as otherwise required by law, exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation, including, without limiting the generality of the foregoing,
the unqualified power:

          (1)  To declare dividends from time to time in accordance with law;

          (2)  To purchase or otherwise acquire any property, rights or
               privileges on such terms as it shall determine;

          (3)  To authorize the creation, making and issuance, in such form as
               it may determine, of written obligations of every kind,
               negotiable or non-negotiable, secured or unsecured, to borrow
               funds and guarantee obligations, and to do all things necessary
               in connection therewith;

          (4)  To remove any officer of the Corporation with or without cause,
               and from time to time to devolve the powers and duties of any
               officer upon any other person for the time being;

          (5)  To confer upon any officer of the Corporation the power to
               appoint, remove and suspend subordinate officers, employees and
               agents;


                                       -9-



          (6)  To adopt from time to time such stock, option, stock purchase,
               bonus or other compensation plans for directors, officers,
               employees and agents of the Corporation and its subsidiaries as
               it may determine;

          (7)  To adopt from time to time such insurance, retirement, and other
               benefit plans for directors, officers, employees and agents of
               the Corporation and its subsidiaries as it may determine; and,

          (8)  To adopt from time to time regulations, not inconsistent with
               these Bylaws, for the management of the Corporation's business
               and affairs.

     Section 11. Compensation of Directors.

     Directors, as such, may receive, pursuant to a resolution of the Board of
Directors, fixed fees and other compensation for their services as directors,
including, without limitation, their services as members of committees of the
Board of Directors.


                            ARTICLE III - COMMITTEES

     Section 1. Committees of the Board of Directors.

     The Board of Directors, by a vote of a majority of the Board of Directors,
may from time to time designate committees of the Board, with such lawfully
delegable powers and duties as it thereby confers, to serve at the pleasure of
the Board and shall, for those committees and any others provided for herein,
elect a director or directors to serve as the member or members, designating, if
it desires, other directors as alternate members who may replace any absent or
disqualified member at any meeting of the committee. Any such committee, to the
extent provided in the resolution of the Board of Directors, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation to the fullest extent
authorized by law. In the absence or disqualification of any member of any
committee and any alternate member in his or her place, the member or members of
the committee present at the meeting and not disqualified from voting, whether
or not he or she or they constitute a quorum, may by unanimous vote appoint
another member of the Board of Directors to act at the meeting in the place of
the absent or disqualified member.

     Section 2. Conduct of Business.

     Each committee may determine the procedural rules for meeting and
conducting its business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate provision shall be made
for notice to members of all meetings; one-third (1/3) of the members of any
committee shall constitute a quorum unless the committee shall consist of



                                      -10-


one (1) or two (2) members, in which event one (1) member shall constitute a
quorum; and all matters shall be determined by a majority vote of the members
present. Action may be taken by any committee without a meeting if all members
thereof consent thereto in writing or by electronic transmission, and the
writing or writings or electronic transmission or transmissions are filed with
the minutes of the proceedings of such committee. Such filing shall be in paper
form if the minutes are maintained in paper form and shall be in electronic form
if the minutes are maintained in electronic form.


                              ARTICLE IV - OFFICERS

     Section 1. Enumeration.

     The officers of the Corporation shall consist of a Chairman of the Board,
Chief Executive Officer, President, Chief Financial Officer, Treasurer,
Secretary and such other officers as the Board of Directors or the Chief
Executive Officer may determine, including, but not limited to, one or more Vice
Presidents, Assistant Treasurers and Assistant Secretaries.

     Section 2. Election.

     The Chairman of the Board, Chief Executive Officer, President, Chief
Financial Officer, Treasurer and the Secretary shall be elected annually by the
Board of Directors at their first meeting following the annual meeting of the
stockholders. The Board of Directors or the Chief Executive Officer, may, from
time to time, elect or appoint such other officers as it or he or she may
determine, including, but not limited to, one or more Vice Presidents, Assistant
Treasurers and Assistant Secretaries.

     Section 3. Qualification.

     The Chairman of the Board, if any, and any Vice Chairman appointed to act
in the absence of the Chairman, if any, shall be elected by and from the Board
of Directors, but no other officer need be a director. Two or more offices may
be held by any one person. If required by vote of the Board of Directors, an
officer shall give bond to the Corporation for the faithful performance of his
or her duties, in such form and amount and with such sureties as the Board of
Directors may determine. The premiums for such bonds shall be paid by the
Corporation.

     Section 4. Tenure and Removal.

     Each officer elected or appointed by the Board of Directors shall hold
office until the first meeting of the Board of Directors following the next
annual meeting of the stockholders and until his or her successor is elected or
appointed and qualified, or until he or she dies, resigns, is removed or becomes
disqualified, unless a shorter term is specified in the vote electing or


                                      -11-


appointing said officer. Each officer appointed by the Chief Executive Officer
shall hold office until his or her successor is elected or appointed and
qualified, or until he or she dies, resigns, is removed or becomes disqualified,
unless a shorter term is specified by any agreement or other instrument
appointing such officer. Any officer may resign by giving written notice of his
or her resignation to the Chief Executive Officer, the President, or the
Secretary, or to the Board of Directors at a meeting of the Board, and such
resignation shall become effective at the time specified therein. Any officer
elected or appointed by the Board of Directors may be removed from office with
or without cause only by vote of a majority of the directors. Any officer
appointed by the Chief Executive Officer may be removed with or without cause by
the Chief Executive Officer or by vote of a majority of the directors.

     Section 5. Chairman of the Board.

     The Chairman of the Board, if any, shall preside at all meetings of the
Board of Directors and stockholders at which he or she is present and shall have
such authority and perform such duties as may be prescribed by these Bylaws or
from time to time be determined by the Board of Directors.

     Section 6. Chief Executive Officer.

     The Chief Executive Officer shall be the chief executive officer of the
Corporation and shall, subject to the direction of the Board of Directors, have
general supervision and control of its business. Unless otherwise provided by
resolution of the Board of Directors, in the absence of the Chairman of the
Board, the Chief Executive Officer shall preside at all meetings of the
stockholders and, if a director, meetings of the Board of Directors. The Chief
Executive Officer shall have general supervision and direction of all of the
officers, employees and agents of the Corporation. The Chief Executive Officer
shall also have the power and authority to determine the duties of all officers,
employees and agents of the Corporation, shall determine the compensation of any
officers whose compensation is not established by the Board of Directors and
shall have the power and authority to sign all stock certificates, contracts and
other instruments of the Corporation which are authorized.

     Section 7. President.

     Except for meetings at which the Chief Executive Officer or the Chairman of
the Board, if any, presides, the President shall, if present, preside at all
meetings of stockholders, and if a director, at all meetings of the Board of
Directors. The President shall, subject to the control and direction of the
Chief Executive Officer and the Board of Directors, have and perform such powers
and duties as may be prescribed by these Bylaws or from time to time be
determined by the Chief Executive Officer or the Board of Directors. The
President shall have power to sign all stock certificates, contracts and other
instruments of the Corporation which are authorized. In the absence of a Chief
Executive Officer, the President shall be the chief executive officer of the




                                      -12-


Corporation and shall, subject to the direction of the Board of Directors, have
general supervision and control of its business and shall have general
supervision and direction of all of the officers, employees and agents of the
Corporation.

     Section 8. Vice Presidents.

     The Vice Presidents, if any, in the order of their election, or in such
other order as the Board of Directors or the Chief Executive Officer may
determine, shall have and perform the powers and duties of the President (or
such of the powers and duties as the Board of Directors or the Chief Executive
Officer may determine) whenever the President is absent or unable to act. The
Vice Presidents, if any, shall also have such other powers and duties as may
from time to time be determined by the Board of Directors or the Chief Executive
Officer.

     Section 9. Chief Financial Officer, Treasurer and Assistant Treasurers.

     The Chief Financial Officer shall, subject to the control and direction of
the Board of Directors and the Chief Executive Officer, be the chief financial
officer of the Corporation and shall have and perform such powers and duties as
may be prescribed in these Bylaws or be determined from time to time by the
Board of Directors and the Chief Executive Officer. All property of the
Corporation in the custody of the Chief Financial Officer shall be subject at
all times to the inspection and control of the Board of Directors and the Chief
Executive Officer. The Chief Financial Officer shall have the responsibility for
maintaining the financial records of the Corporation. The Chief Financial
Officer shall make such disbursements of the funds of the Corporation as are
authorized and shall render from time to time an account of all such
transactions and of the financial condition of the Corporation. Unless the Board
of Directors has designated another person as the Corporation's Treasurer, the
Chief Financial Officer shall also be the Treasurer. Unless otherwise voted by
the Board of Directors, the Treasurer (if different than the Chief Financial
Officer) and each Assistant Treasurer, if any, shall have and perform the powers
and duties of the Chief Financial Officer whenever the Chief Financial Officer
is absent or unable to act, and may at any time exercise such of the powers of
the Chief Financial Officer , and such other powers and duties, as may from time
to time be determined by the Board of Directors, the Chief Executive Officer or
the Chief Financial Officer.

     Section 10. Secretary and Assistant Secretaries.

     The Board of Directors or the Chief Executive Officer shall appoint a
Secretary and, in his or her absence, an Assistant Secretary. Unless otherwise
directed by the Board of Directors, the Secretary or, in his or her absence, any
Assistant Secretary, shall attend all meetings of the directors and stockholders
and shall record all votes of the Board of Directors and stockholders and
minutes of the proceedings at such meetings. The Secretary or, in his or her
absence, any Assistant Secretary, shall notify the directors of their meetings,
and shall have and perform such other powers and duties as may from time to time
be determined by the Board of Directors. If



                                     - 13 -


the Secretary or an Assistant Secretary is elected but is not present at any
meeting of directors or stockholders, a temporary Secretary may be appointed by
the directors or the Chief Executive Officer at the meeting.

     Section 11. Bond.

     If required by the Board of Directors, any officer shall give the
Corporation a bond in such sum and with such surety or sureties and upon such
terms and conditions as shall be satisfactory to the Board of Directors,
including without limitation a bond for the faithful performance of the duties
of his office and for the restoration to the Corporation of all books, papers,
vouchers, money and other property of whatever kind in his or her possession or
under his control and belonging to the Corporation.

     Section 12. Action with Respect to Securities of Other Corporations.

     Unless otherwise directed by the Board of Directors or the Chief Executive
Officer, the Chief Executive Officer, the President, the Chief Financial Officer
and/or Treasurer shall have power to vote and otherwise act on behalf of the
Corporation, in person or by proxy, at any meeting of stockholders of or with
respect to any action of stockholders of any other corporation in which this
Corporation may hold securities and otherwise to exercise any and all rights and
powers which this Corporation may possess by reason of its ownership of
securities in such other corporation.


                                ARTICLE V - STOCK

     Section 1. Certificates of Stock.

     Each stockholder shall be entitled to a certificate signed by, or in the
name of the Corporation by the Chairman of the Board of Directors, or the
President or a Vice President, and by the Treasurer or an Assistant Treasurer,
or the Secretary or an Assistant Secretary, certifying the number of shares
owned by him or her. Any or all of the signatures on the certificate may be by
facsimile.

     Section 2. Transfers of Stock.

     Transfers of stock shall be made only upon the transfer books of the
Corporation kept at an office of the Corporation or by transfer agents
designated to transfer shares of the stock of the Corporation. Except where a
certificate is issued in accordance with Section 4 of this Article of these
Bylaws, an outstanding certificate for the number of shares involved shall be
surrendered for cancellation before a new certificate is issued therefor.


                                      -14-


     Section 3. Record Date.

     In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders, or to receive payment of
any dividend or other distribution or allotment of any rights or to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix a record
date, which record date shall not precede the date on which the resolution
fixing the record date is adopted and which record date shall not be more than
sixty (60) nor less than ten (10) days before the date of any meeting of
stockholders, nor more than sixty (60) days prior to the time for such other
action as hereinbefore described; provided, however, that if no record date is
fixed by the Board of Directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the day next preceding the day
on which the meeting is held, and, for determining stockholders entitled to
receive payment of any dividend or other distribution or allotment of rights or
to exercise any rights of change, conversion or exchange of stock or for any
other purpose, the record date shall be at the close of business on the day on
which the Board of Directors adopts a resolution relating thereto.

     A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.

     Section 4. Lost, Stolen or Destroyed Certificates.

     In the event of the loss, theft or destruction of any certificate of stock,
another may be issued in its place pursuant to such regulations as the Board of
Directors may establish concerning proof of such loss, theft or destruction and
concerning the giving of a satisfactory bond or bonds of indemnity.

     Section 5. Regulations.

     The issue, transfer, conversion and registration of certificates of stock
shall be governed by such other regulations as the Board of Directors may
establish.

     Section 6. Interpretation.

     The Board of Directors shall have the power to interpret all of the terms
and provisions of these Bylaws, which interpretation shall be conclusive.


                                      -15-


                              ARTICLE VI - NOTICES

     Section 1. Notices.

     If mailed, notice to stockholders shall be deemed given when deposited in
the mail, postage prepaid, directed to the stockholder at such stockholder's
address as it appears on the records of the Corporation. Without limiting the
manner by which notice otherwise may be given effectively to stockholders, any
notice to stockholders may be given by electronic transmission in the manner
provided in Section 232 of the Delaware General Corporation Law.

     Section 2. Waiver of Notice.

     A written waiver of any notice, signed by a stockholder or director, or
waiver by electronic transmission by such person, whether before or after the
time of the event for which notice is to be given, shall be deemed equivalent to
the notice required to be given to such person. Neither the business nor the
purpose of any meeting need be specified in such a waiver. Attendance at any
meeting shall constitute waiver of notice except attendance for the sole purpose
of objecting to the timeliness of notice.


             ARTICLE VII -INDEMNIFICATION OF DIRECTORS AND OFFICERS

     Section 1. Right to Indemnification.

     Each person who was or is made a party or is threatened to be made a party
to or is otherwise involved (including, without limitation, as a witness) in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or an officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, or trustee of another corporation, or of a partnership, joint
venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "Indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a director, officer or
trustee or in any other capacity while serving as a director, officer or
trustee, shall be indemnified and held harmless by the Corporation to the
fullest extent permitted by the Delaware General Corporation Law, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than such law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) reasonably incurred or suffered by such Indemnitee in
connection therewith; provided, however, that, except as provided in Section 3
of this Article with respect to proceedings to enforce rights to indemnification
or as otherwise required by law, the Corporation shall not be required to
indemnify or advance



                                      -16-


expenses to any such Indemnitee in connection with a proceeding (or part
thereof) initiated by such Indemnitee unless such proceeding (or part thereof)
was authorized by the Board of Directors of the Corporation.

     Section 2. Right to Advancement of Expenses.

     The right to indemnification conferred in Section 1 of this Article shall
include the right to be paid by the Corporation the expenses (including
attorney's fees) incurred in defending any such proceeding in advance of its
final disposition; provided, however, that, if the Delaware General Corporation
Law requires, an advancement of expenses incurred by an Indemnitee in his
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such Indemnitee, including, without limitation,
service to an employee benefit plan) shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such Indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal that such Indemnitee is
not entitled to be indemnified for such expenses under this Section 2 or
otherwise. The rights to indemnification and to the advancement of expenses
conferred in Sections 1 and 2 of this Article shall be contract rights and such
rights shall continue as to an Indemnitee who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the Indemnitee's
heirs, executors and administrators. Any repeal or modification of any of the
provisions of this Article shall not adversely affect any right or protection of
an Indemnitee existing at the time of such repeal or modification.

     Section 3. Right of Indemnitees to Bring Suit.

     If a claim under Section 1 or 2 of this Article is not paid in full by the
Corporation within sixty (60) days after a written claim has been received by
the Corporation, except in the case of a claim for an advancement of expenses,
in which case the applicable period shall be twenty (20) days, the Indemnitee
may at any time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim. If successful in whole or in part in any such suit,
or in a suit brought by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the Indemnitee shall also be entitled
to be paid the expenses of prosecuting or defending such suit. In (i) any suit
brought by the Indemnitee to enforce a right to indemnification hereunder (but
not in a suit brought by the Indemnitee to enforce a right to an advancement of
expenses) it shall be a defense that, and (ii) in any suit brought by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the Corporation shall be entitled to recover such expenses upon a
final adjudication that, the Indemnitee has not met any applicable standard for
indemnification set forth in the Delaware General Corporation Law. Neither the
failure of the Corporation (including its directors who are not parties to such
action, a committee of such directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the Indemnitee is proper in the circumstances
because the Indemnitee has met



                                      -17-


the applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its directors who
are not parties to such action, a committee of such directors, independent legal
counsel, or its stockholders) that the Indemnitee has not met such applicable
standard of conduct, shall create a presumption that the Indemnitee has not met
the applicable standard of conduct or, in the case of such a suit brought by the
Indemnitee, be a defense to such suit. In any suit brought by the Indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or brought by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking, the burden of proving that the Indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this
Article or otherwise shall be on the Corporation.

     Section 4. Non-Exclusivity of Rights.

     The rights to indemnification and to the advancement of expenses conferred
in this Article shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, the Corporation's Certificate of
Incorporation as amended from time to time, these Bylaws, any agreement, any
vote of stockholders or disinterested directors or otherwise.

     Section 5. Insurance.

     The Corporation may maintain insurance, at its expense, to protect itself
and any director, officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
Delaware General Corporation Law.

     Section 6. Indemnification of Employees and Agents of the Corporation.

     The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification and to the advancement of
expenses to any employee or agent of the Corporation to the fullest extent of
the provisions of this Article with respect to the indemnification and
advancement of expenses of directors and officers of the Corporation.


                       ARTICLE VIII - CERTAIN TRANSACTIONS

     Section 1. Transactions with Interested Parties.

     No contract or transaction between the Corporation and one or more of its
directors or officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director
or



                                     - 18 -


officer is present at or participates in the meeting of the Board or committee
thereof which authorizes the contract or transaction or solely because the votes
of such director or officer are counted for such purpose, if:

          (a) The material facts as to his or her relationship or interest and
     as to the contract or transaction are disclosed or are known to the Board
     of Directors or the committee, and the Board or committee in good faith
     authorizes the contract or transaction by the affirmative votes of a
     majority of the disinterested directors, even though the disinterested
     directors be less than a quorum; or

          (b) The material facts as to his or her relationship or interest and
     as to the contract or transaction are disclosed or are known to the
     stockholders entitled to vote thereon, and the contract or transaction is
     specifically approved in good faith by vote of the stockholders; or

          (c) The contract or transaction is fair as to the Corporation as of
     the time it is authorized, approved or ratified, by the Board of Directors,
     a committee thereof, or the stockholders.

     Section 2. Quorum.

     Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.


                           ARTICLE IX - MISCELLANEOUS

     Section 1. Facsimile Signatures.

     In addition to the provisions for use of facsimile signatures elsewhere
specifically authorized in these Bylaws, facsimile signatures of any officer or
officers of the Corporation may be used whenever and as authorized by the Board
of Directors or a committee thereof.

     Section 2. Corporate Seal.

     The Board of Directors may provide a suitable seal, containing the name of
the Corporation, which seal shall be in the charge of the Secretary. If and when
so directed by the Board of Directors or a committee thereof, duplicates of the
seal may be kept and used by the Treasurer or by an Assistant Secretary or
Assistant Treasurer.


                                      -19-


     Section 3. Reliance upon Books, Reports and Records.

     Each director, each member of any committee designated by the Board of
Directors, and each officer of the Corporation shall, in the performance of his
or her duties, be fully protected in relying in good faith upon the books of
account or other records of the Corporation and upon such information, opinions,
reports or statements presented to the Corporation by any of its officers or
employees, or committees of the Board of Directors so designated, or by any
other person as to matters which such director or committee member reasonably
believes are within such other person's professional or expert competence and
who has been selected with reasonable care by or on behalf of the Corporation.

     Section 4. Fiscal Year.

     Except as otherwise determined by the Board of Directors from time to time,
the fiscal year of the Corporation shall end on the last day of October of each
year.

     Section 5. Time Periods.

     In applying any provision of these Bylaws which requires that an act be
done or not be done a specified number of days prior to an event or that an act
be done during a period of a specified number of days prior to an event,
calendar days shall be used, the day of the doing of the act shall be excluded,
and the day of the event shall be included.

     Section 6. Pronouns.

     Whenever the context may require, any pronouns used in these Bylaws shall
include the corresponding masculine, feminine or neuter forms.


                             ARTICLE X - AMENDMENTS

     These Bylaws may be amended or repealed by the affirmative vote of a
majority of the Whole Board or by the affirmative vote of the holders of at
least two-thirds (2/3) of the voting power of all of the outstanding shares of
capital stock then entitled to vote at an election of the directors, voting
together as a single class, at any meeting at which a proposal to amend or
repeal these Bylaws is properly presented.




                                      -20-

EX-10.1

                          MAJESCO ENTERTAINMENT COMPANY

   AMENDED AND RESTATED 2004 EMPLOYEE, DIRECTOR AND CONSULTANT INCENTIVE PLAN

     This Amended and Restated 2004 Employee, Director and Consultant Incentive
Plan amends and restates in its entirety the Majesco Holdings Inc. 2004
Employee, Director and Consultant Stock Plan.

     1.   DEFINITIONS.

     Unless otherwise specified or unless the context otherwise requires, the
     following terms, as used in this Majesco Entertainment Company Amended and
     Restated 2004 Employee, Director and Consultant Incentive Plan, have the
     following meanings:

          Administrator means the Board of Directors, unless it has delegated
          power to act on its behalf to the Committee, in which case the
          Administrator means the Committee.

          Affiliate means a corporation which, for purposes of Section 424 of
          the Code, is a parent or subsidiary of the Company, direct or
          indirect.

          Agreement means an agreement between the Company and a Participant
          delivered pursuant to the Plan, in such form as the Administrator
          shall approve.

          Board of Directors means the Board of Directors of the Company.

          Cash Award shall mean an award of cash granted pursuant to the Plan.

          Code means the United States Internal Revenue Code of 1986, as
          amended.

          Committee means the committee of the Board of Directors to which the
          Board of Directors has delegated power to act under or pursuant to the
          provisions of the Plan.

          Common Stock means shares of the Company's common stock, $0.001 par
          value per share.

          Company means Majesco Entertainment Company, a Delaware corporation.

          Disability or Disabled means permanent and total disability as defined
          in Section 22(e)(3) of the Code.

          Employee means any employee of the Company or of an Affiliate
          (including, without limitation, an employee who is also serving as an
          officer or director of the Company or of an Affiliate), designated by
          the Administrator to be eligible to be granted one or more Cash Awards
          or Stock Rights under the Plan.



          Fair Market Value of a Share of Common Stock means:

          (1) If the Common Stock is listed on a national securities exchange or
          traded in the over-the-counter market and sales prices are regularly
          reported for the Common Stock, the closing or last price of the Common
          Stock on the Composite Tape or other comparable reporting system for
          the trading day immediately preceding the applicable date;

          (2) If the Common Stock is not traded on a national securities
          exchange but is traded on the over-the-counter market, if sales prices
          are not regularly reported for the Common Stock for the trading day
          referred to in clause (1), and if bid and asked prices for the Common
          Stock are regularly reported, the mean between the bid and the asked
          price for the Common Stock at the close of trading in the
          over-the-counter market for the trading day on which Common Stock was
          traded immediately preceding the applicable date; and

          (3) If the Common Stock is neither listed on a national securities
          exchange nor traded in the over-the-counter market, such value as the
          Administrator, in good faith, shall determine.

          ISO means an option meant to qualify as an incentive stock option
          under Section 422 of the Code.

          Non-Qualified Option means an option which is not intended to qualify
          as an ISO.

          Option means an ISO or Non-Qualified Option granted under the Plan.

          Participant means an Employee, director or consultant of the Company
          or an Affiliate to whom one or more Cash Awards and/or Stock Rights
          are granted under the Plan. As used herein, "Participant" shall
          include "Participant's Survivors" where the context requires.

          Performance Goal means the goal or goals, if any, established by the
          Administrator based on one or more of the following business criteria
          that are to be achieved during a Performance Cycle determined by the
          Administrator: Earnings per share, operating income, net income, cash
          flow, gross profit, return on investment, gross margin, working
          capital, earnings before interest and tax (EBIT), earnings before
          interest, tax, depreciation and amortization (EBITDA), return on
          equity, return on assets, return on capital, revenue growth, total
          shareholder return, and economic value added, customer satisfaction,
          technology leadership, number of new patents, employee retention,
          market share, market segment share, product release schedules, new
          product innovation, product cost reduction through advanced
          technology, brand recognition/acceptance, and product ship targets.
          Performance Goals may be based (as the Administrator deems
          appropriate) on (a) Company-wide performance, (b) performance of a
          subsidiary, division, region, department, function, plant, facility or
          other operational unit of the Company, (c) individual performance (if
          applicable), or (d)


                                       2



          any combination of the foregoing. Performance Goals may be set in any
          manner determined by the Administrator, including looking to
          achievement on an absolute basis or on a relative basis to prior
          periods or in relation to peer group, indexes or other external
          measure of the selected criteria. When the Administrator sets
          Performance Goals that are intended for "performance-based
          compensation" within the meaning of Section 162(m) of the Code, the
          Administrator shall establish the general objective rules that the
          Administrator will use to determine the extent, if any, that such
          Performance Goals have been met. In establishing the objective rules,
          the Administrator may take into account any extraordinary or one-time
          or other non-recurring items of income or expense or gain or loss or
          any events, transactions or other circumstances that the Administrator
          deems relevant in light of the nature of the Performance Goals set for
          the Participant or the assumptions made by the Administrator regarding
          such goals.

          Performance Cycle means the period selected by the Administrator
          during which performance is measured for the purpose of determining
          the extent to which a Performance Goal has been achieved.

          Plan means this Majesco Entertainment Company Amended and Restated
          2004 Employee, Director and Consultant Incentive Plan.

          Shares means shares of the Common Stock as to which Stock Rights have
          been or may be granted under the Plan or any shares of capital stock
          into which the Shares are changed or for which they are exchanged
          within the provisions of Paragraph 3 of the Plan. The Shares issued
          under the Plan may be authorized and unissued shares or shares held by
          the Company in its treasury, or both.

          Specified Employee means a key employee of the Company or an Affiliate
          as defined in Section 416(i) of the Code without regard to paragraph
          (5) thereof.

          Stock Appreciation Right means the right to receive an amount equal to
          the excess of the Fair Market Value of a share of Common Stock (as
          determined on the date of exercise) over the purchase price of a share
          of Common Stock on the date a stock appreciation right is granted.

          Stock-Based Award means a grant by the Company under the Plan of an
          equity award or equity based award which is not an Option or Stock
          Grant.

          Stock Grant means a grant by the Company of Shares under the Plan.

          Stock Right means a right to Shares or the value of Shares of the
          Company granted pursuant to the Plan -- an ISO, a Non-Qualified
          Option, a Stock Grant or a Stock-Based Award.

          Survivor means a deceased Participant's legal representatives and/or
          any person or persons who acquired the Participant's rights to a Cash
          Award or Stock Right by will or by the laws of descent and
          distribution.

                                       3



     2.   PURPOSES OF THE PLAN.

     The Plan is intended to encourage ownership of Shares by Employees and
directors of and certain consultants to the Company in order to attract such
people, to induce them to work for the benefit of the Company or of an Affiliate
and to provide additional incentive for them to promote the success of the
Company or of an Affiliate. The Plan provides for the granting of ISOs,
Non-Qualified Options, Stock Grants, Stock-Based Awards and Cash Awards.


     3.   SHARES SUBJECT TO THE PLAN.

     (a) The number of Shares which may be issued from time to time pursuant to
this Plan shall be 6,142,857 (after taking into account the 1 for 7 stock split
which occurred on December 31, 2004), or the equivalent of such number of Shares
after the Administrator, in its sole discretion, has interpreted the effect of
any future stock split, stock dividend, combination, recapitalization or similar
transaction in accordance with Paragraph 25 of the Plan.

     (b) The grant of any Stock Right other than an Option or a Stock
Appreciation Right shall for purposes of Paragraph 3(a), reduce the number of
Shares available for issuance under this Plan by 1.3 Shares for each such Share
actually subject to the Stock Right and shall be deemed for purposes of this
Paragraph 3, as a Stock Right of 1.3 Shares for each such Share actually subject
to the Stock Right. The grant of an Option or a Stock Appreciation Right shall
be deemed for purposes of this Paragraph 3, as a Stock Right for one Share for
each such Share actually subject to the Stock Right. Notwithstanding the
foregoing, Stock Appreciation Rights to be settled in shares of Common Stock
shall be counted in full against the number of Shares available for issuance
under the Plan, regardless of the number of exercise gain shares issued upon the
settlement of the Stock Appreciation Right.

     (c) If an Option ceases to be "outstanding", in whole or in part (other
than by exercise), or if the Company shall reacquire (at no more than its
original issuance price) any Shares issued pursuant to a Stock Grant or Stock
Based Award, or if any Stock Right expires or is forfeited, cancelled, or
otherwise terminated or results in any Shares not being issued, the unissued
Shares which were subject to such Stock Right shall again be available for
issuance from time to time pursuant to this Plan and in accordance with the
provision of Paragraph 3(b) above.

     4.   ADMINISTRATION OF THE PLAN.

     The Administrator of the Plan will be the Board of Directors, except to the
extent the Board of Directors delegates its authority to the Committee, in which
case the Committee shall be the Administrator. Subject to the provisions of the
Plan, the Administrator is authorized to:

     a.   Interpret the provisions of the Plan and all Stock Rights and Cash
          Awards and make all rules and determinations which it deems necessary
          or advisable for the administration of the Plan;

     b.   Determine which Employees, directors and consultants shall be granted
          Stock Rights and Cash Awards;

                                       4



     c.   Determine the number of Shares for which a Stock Right or Stock Rights
          shall be granted, provided, however, that in no event shall Stock
          Rights with respect to more than 1,000,000 Shares be granted to any
          Participant in any fiscal year. Determine the amount of any Cash
          Award, provided, however the maximum payment which may become payable
          to a Participant with respect to a Cash Award in any calendar year is
          $2,000,000.

     d.   Specify the terms and conditions upon which Stock Rights and Cash
          Awards may be granted; and

     e.   Adopt any sub-plans applicable to residents of any specified
          jurisdiction as it deems necessary or appropriate in order to comply
          with or take advantage of any tax or other laws applicable to the
          Company or to Plan Participants or to otherwise facilitate the
          administration of the Plan, which sub-plans may include additional
          restrictions or conditions applicable to Cash Awards, Stock Rights or
          Shares issuable pursuant to a Stock Right.

provided, however, that all such interpretations, rules, determinations, terms
and conditions shall be made and prescribed in the context of preserving the tax
status under Section 422 of the Code of those Options which are designated as
ISOs. Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Cash Award or Stock Right
granted under it shall be final, unless otherwise determined by the Board of
Directors, if the Administrator is the Committee. In addition, if the
Administrator is the Committee, the Board of Directors may take any action under
the Plan that would otherwise be the responsibility of the Committee.

     If permissible under applicable law, the Board of Directors or the
Committee may allocate all or any portion of its responsibilities and powers to
any one or more of its members and may delegate all or any portion of its
responsibilities and powers to any other person selected by it. Any such
allocation or delegation may be revoked by the Board of Directors or the
Committee at any time.

     5.   ELIGIBILITY FOR PARTICIPATION.

     The Administrator will, in its sole discretion, name the Participants in
the Plan, provided, however, that each Participant must be an Employee, director
or consultant of the Company or of an Affiliate at the time a Stock Right or
Cash Award is granted. Notwithstanding the foregoing, the Administrator may
authorize the grant of a Stock Right or Cash Award to a person not then an
Employee, director or consultant of the Company or of an Affiliate; provided,
however, that the actual grant of such Stock Right or Cash Award shall be
conditioned upon such person becoming eligible to become a Participant at or
prior to the time of the execution of the Agreement evidencing such Stock Right
or Cash Award. ISOs may be granted only to Employees. Non-Qualified Options,
Stock Grants, Stock-Based Awards and Cash Awards may be granted to any Employee,
director or consultant of the Company or an Affiliate. The granting of any Stock
Right or Cash Award to any individual shall neither entitle that individual to,
nor disqualify him or her from, participation in any other grant of any Stock
Right or Cash Award.

                                       5



     6.   TERMS AND CONDITIONS OF OPTIONS.

     Each Option shall be set forth in writing in an Option Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Administrator may provide that Options be
granted subject to such terms and conditions, consistent with the terms and
conditions specifically required under this Plan, as the Administrator may deem
appropriate including, without limitation, subsequent approval by the
shareholders of the Company of this Plan or any amendments thereto. The Option
Agreements shall be subject to at least the following terms and conditions:

     A.   Non-Qualified Options: Each Option intended to be a Non-Qualified
          Option shall be subject to the terms and conditions which the
          Administrator determines to be appropriate and in the best interest of
          the Company, subject to the following minimum standards for any such
          Non-Qualified Option:

          a.   Option Price: Each Option Agreement shall state the option price
               (per share) of the Shares covered by each Option, which option
               price shall be determined by the Administrator but shall not be
               less than the Fair Market Value per share of Common Stock.

          b.   Number of Shares: Each Option Agreement shall state the number of
               Shares to which it pertains;

          c.   Option Periods: Each Option Agreement shall state the date or
               dates on which it first is exercisable and the date after which
               it may no longer be exercised, and may provide that the Option
               rights accrue or become exercisable in installments over a period
               of months or years, or upon the occurrence of certain conditions
               or the attainment of stated goals or events including, but not
               limited to, the Performance Goals; and

          d.   Option Conditions: Exercise of any Option may be conditioned upon
               the Participant's execution of a Share purchase agreement in form
               satisfactory to the Administrator providing for certain
               protections for the Company and its other shareholders, including
               requirements that:

               i.   The Participant's or the Participant's Survivors' right to
                    sell or transfer the Shares may be restricted; and

               ii.  The Participant or the Participant's Survivors may be
                    required to execute letters of investment intent and must
                    also acknowledge that the Shares will bear legends noting
                    any applicable restrictions.

          e.   Each Non-Qualified Option shall terminate not more than seven
               years from the date of the grant or at such earlier time as the
               Option Agreement may provide.

                                       6




     B.   ISOs: Each Option intended to be an ISO shall be issued only to an
          Employee and be subject to the following terms and conditions, with
          such additional restrictions or changes as the Administrator
          determines are appropriate but not in conflict with Section 422 of the
          Code and relevant regulations and rulings of the Internal Revenue
          Service:

          a.   Minimum standards: The ISO shall meet the minimum standards
               required of Non-Qualified Options, as described in Paragraph 6(A)
               above, except clause (a) thereunder.

          b.   Option Price: Immediately before the ISO is granted, if the
               Participant owns, directly or by reason of the applicable
               attribution rules in Section 424(d) of the Code:

               i.   10% or less of the total combined voting power of all
                    classes of stock of the Company or an Affiliate, the Option
                    price per share of the Shares covered by each ISO shall not
                    be less than 100% of the Fair Market Value per share of the
                    Shares on the date of the grant of the Option; or

               ii.  More than 10% of the total combined voting power of all
                    classes of stock of the Company or an Affiliate, the Option
                    price per share of the Shares covered by each ISO shall not
                    be less than 110% of the said Fair Market Value on the date
                    of grant.

          c.   Term of Option: For Participants who own:

               i.   10% or less of the total combined voting power of all
                    classes of stock of the Company or an Affiliate, each ISO
                    shall terminate not more than seven years from the date of
                    the grant or at such earlier time as the Option Agreement
                    may provide; or

               ii.  More than 10% of the total combined voting power of all
                    classes of stock of the Company or an Affiliate, each ISO
                    shall terminate not more than five years from the date of
                    the grant or at such earlier time as the Option Agreement
                    may provide.

          d.   Limitation on Yearly Exercise: The Option Agreements shall
               restrict the amount of ISOs which may become exercisable in any
               calendar year (under this or any other ISO plan of the Company or
               an Affiliate) so that the aggregate Fair Market Value (determined
               at the time each ISO is granted) of the stock with respect to
               which ISOs are exercisable for the first time by the Participant
               in any calendar year does not exceed $100,000.

                                       7




     7.   TERMS AND CONDITIONS OF STOCK GRANTS.

     Each offer of a Stock Grant to a Participant shall state the date prior to
which the Stock Grant must be accepted by the Participant, and the principal
terms of each Stock Grant shall be set forth in an Agreement, duly executed by
the Company and, to the extent required by law or requested by the Company, by
the Participant. The Agreement shall be in a form approved by the Administrator
and shall contain terms and conditions which the Administrator determines to be
appropriate and in the best interest of the Company, subject to the following
minimum standards:

     (a)  Each Agreement shall state the purchase price (per share), if any, of
          the Shares covered by each Stock Grant, which purchase price shall be
          determined by the Administrator but shall not be less than the minimum
          consideration required by the Delaware General Corporation Law on the
          date of the grant of the Stock Grant;

     (b)  Each Agreement shall state the number of Shares to which the Stock
          Grant pertains; and

     (c)  Each Agreement shall include the terms of any right of the Company to
          restrict or reacquire the Shares subject to the Stock Grant, including
          the time and events upon which such reacquisition rights shall accrue
          including, but not limited to, the attainment of any Performance
          Goals, and the purchase price therefor, if any.


     8.   TERMS AND CONDITIONS OF OTHER STOCK-BASED AWARDS.

     The Board shall have the right to grant other Stock-Based Awards based upon
the Common Stock having such terms and conditions as the Board may determine,
including, without limitation, the grant of Shares based upon certain conditions
including, but not limited to, the Performance Goals, the grant of securities
convertible into Shares and the grant of Stock Appreciation Rights, phantom
stock awards or stock units. The principal terms of each Stock-Based Award shall
be set forth in an Agreement, duly executed by the Company and, to the extent
required by law or requested by the Company, by the Participant. The Agreement
shall be in a form approved by the Administrator and shall contain terms and
conditions which the Administrator determines to be appropriate and in the best
interest of the Company. Notwithstanding the foregoing, each Stock Appreciation
Right shall terminate not more than seven years from the date of the grant or at
such earlier time as the Agreement therefor may provide.

     To the extent a Stock-Based Award is subject to Section 409A of the Code,
such Stock-Based Award shall be paid as provided in the Agreement on the
earliest to occur of:

o    death,

o    disability within the meaning of Section 409A of the Code,

o    separation from service with the Company and all of its Affiliates or, in
     the case of a Specified Employee, 6 months after a separation from service
     with the Company and all of its Affiliates,

o    a "change in control event" within the meaning of Section 409A of the Code,
     or

o    a fixed date as specified by the Administrator in the applicable Agreement.


                                       8



     Payment of a Stock-Based Award subject to Section 409A of the Code shall
not be accelerated, except as provided in regulations issued by the Secretary of
the Treasury under Section 409A of the Code.

     The Company intends that the Plan and any Stock-Based Awards granted
hereunder be exempt from the application of Section 409A of the Code or meet the
requirements of paragraphs (2), (3) and (4) of subsection (a) of Section 409A of
the Code (and any successor provisions of the Code) and the regulations and
other guidance issued thereunder (the "Requirements"), to the extent applicable,
and be operated in accordance with such Requirements so that any compensation
deferred under any Stock-Based Award (and applicable investment earnings) shall
not be included in income under Section 409A of the Code. Any ambiguities in the
Plan shall be construed to effect the intent as described in this Paragraph 8.
If any provision of the Plan is found to be in violation of the Requirements,
then such provision shall be deemed to be modified or restricted to the extent
and in the manner necessary to render such provision in conformity with the
Requirements, or shall be deemed excised from the Plan, and the Plan shall be
construed and enforced to the maximum extent permitted by the Requirements as if
such provision had been originally incorporated in the Plan as so modified or
restricted, or as if such provision had not been originally incorporated in the
Plan, as the case may be.

     9.   TERMS AND CONDITIONS OF CASH AWARDS.

     The Administrator is authorized, subject to limitations under applicable
law, to grant to any Participant a Cash Award, including as a short-term
incentive bonus award, whether awarded separately or as a supplement to any
Stock Right. The Administrator shall determine the terms and conditions of such
Cash Awards. The Administrator acting in its absolute discretion may make Cash
Awards subject to one or more Performance Goals that the Administrator deems
appropriate for Participants generally or for a Participant in particular, and
shall establish the Performance Cycle for satisfying the same. If the Cash Award
is a short-term incentive bonus that is intended to qualify as
"performance-based compensation" under Section 162(m) of the Code, the right to
receive such Cash Award shall be conditional upon the achievement of objective
Performance Goals that have been established by the Administrator in writing not
later than the earlier of (i) 90 days after the beginning of a Performance Cycle
and (ii) the date by which no more than 25% of a Performance Cycle has elapsed.

     The Administrator shall certify in writing the extent, if any, to which the
Performance Goals for a Performance Cycle of a short-term incentive bonus that
is intended to qualify as "performance-based compensation" under Section 162(m)
of the Code have been met and shall determine the Cash Award payable to a
Participant based on the extent to which he or she met his or her Performance
Goals. If the Administrator certifies that a Cash Award is payable to a
Participant for any Performance Cycle, such Cash Award shall be paid as soon as
practical after such certification has been made, but in no event later than 2
1/2 months after the end of the calendar year in which the Performance Cycle
ends. However, to the extent permitted by applicable law, no Participant shall
have a nonforfeitable right to the payment of a bonus for any Performance Cycle
if his or her employment with the Company has terminated for any reason
whatsoever (other than death, Disability or retirement) before the date the
bonus actually is paid.

                                       9



It is intended that a Cash Award be exempt from the application of Section 409A
of the Code as a "short-term deferral."

     10.  EXERCISE OF OPTIONS AND ISSUE OF SHARES.

     An Option (or any part or installment thereof) shall be exercised by giving
written notice to the Company or its designee, together with provision for
payment of the full purchase price in accordance with this Paragraph for the
Shares as to which the Option is being exercised, and upon compliance with any
other condition(s) set forth in the Agreement. Such notice shall be signed by
the person exercising the Option, shall state the number of Shares with respect
to which the Option is being exercised and shall contain any representation
required by the Plan or the Agreement. Payment of the purchase price for the
Shares as to which such Option is being exercised shall be made (a) in United
States dollars in cash or by check, or (b) at the discretion of the
Administrator, through delivery of shares of Common Stock having a Fair Market
Value equal as of the date of the exercise to the cash exercise price of the
Option, or (c) at the discretion of the Administrator, by having the Company
retain from the shares otherwise issuable upon exercise of the Option, a number
of shares having a Fair Market Value equal as of the date of exercise to the
exercise price of the Option, or (d) at the discretion of the Administrator, by
delivery of the grantee's personal recourse note, bearing interest payable not
less than annually at no less than 100% of the applicable Federal rate, as
defined in Section 1274(d) of the Code, with or without the pledge of such
Shares as collateral, or (e) at the discretion of the Administrator, in
accordance with a cashless exercise program established with a securities
brokerage firm, and approved by the Administrator, or (f) at the discretion of
the Administrator, by any combination of (a), (b), (c), (d) and (e) above, or
(g) at the discretion of the Administrator, payment of such other lawful
consideration as the Board may determine. Notwithstanding the foregoing, the
Administrator shall accept only such payment on exercise of an ISO as is
permitted by Section 422 of the Code.

     The Company shall then reasonably promptly deliver the Shares as to which
such Option was exercised to the Participant (or to the Participant's Survivors,
as the case may be). In determining what constitutes "reasonably promptly," it
is expressly understood that the issuance and delivery of the Shares may be
delayed by the Company in order to comply with any law or regulation (including,
without limitation, state securities or "blue sky" laws) which requires the
Company to take any action with respect to the Shares prior to their issuance.
The Shares shall, upon delivery, be fully paid, non-assessable Shares.

     The Administrator shall have the right to accelerate the date of exercise
of any installment of any Option; provided that the Administrator shall not
accelerate the exercise date of any installment of any Option granted to an
Employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to Paragraph 28) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in Paragraph
6.B.d.

     The Administrator may, in its discretion, amend any term or condition of an
outstanding Option provided (i) such term or condition as amended is permitted
by the Plan, (ii) any such amendment shall be made only with the consent of the
Participant to whom the Option was granted, or in the event of the death of the
Participant, the Participant's Survivors, if the


                                       10


amendment is adverse to the Participant, and (iii) any such amendment of any ISO
shall be made only after the Administrator determines whether such amendment
would constitute a "modification" of any Option which is an ISO (as that term is
defined in Section 424(h) of the Code) or would cause any adverse tax
consequences for the holder of such ISO.

     11.  ACCEPTANCE OF STOCK GRANTS AND STOCK-BASED AWARDS AND ISSUE OF SHARES.

     A Stock Grant or Stock-Based Award (or any part or installment thereof)
shall be accepted by executing the applicable Agreement and delivering it to the
Company or its designee, together with provision for payment of the full
purchase price, if any, in accordance with this Paragraph for the Shares as to
which such Stock Grant or Stock-Based Award is being accepted, and upon
compliance with any other conditions set forth in the applicable Agreement.
Payment of the purchase price for the Shares as to which such Stock Grant or
Stock-Based Award is being accepted shall be made (a) in United States dollars
in cash or by check, or (b) at the discretion of the Administrator, through
delivery of shares of Common Stock having a Fair Market Value equal as of the
date of acceptance of the Stock Grant or Stock-Based Award to the purchase price
of the Stock Grant or Stock-Based Award, or (c) at the discretion of the
Administrator, by delivery of the grantee's personal note, for full or partial
recourse as determined by the Administrator, bearing interest payable not less
than annually at no less than 100% of the applicable Federal rate, as defined in
Section 1274(d) of the Code, or (d) at the discretion of the Administrator, by
any combination of (a), (b) and (c) above.

     The Company shall then, if required pursuant to the applicable Agreement,
reasonably promptly deliver the Shares as to which such Stock Grant or
Stock-Based Award was accepted to the Participant (or to the Participant's
Survivors, as the case may be), subject to any escrow provision set forth in the
applicable Agreement. In determining what constitutes "reasonably promptly," it
is expressly understood that the issuance and delivery of the Shares may be
delayed by the Company in order to comply with any law or regulation (including,
without limitation, state securities or "blue sky" laws) which requires the
Company to take any action with respect to the Shares prior to their issuance.

     The Administrator may, in its discretion, amend any term or condition of an
outstanding Stock Grant, Stock-Based Award or applicable Agreement provided (i)
such term or condition as amended is permitted by the Plan, and (ii) any such
amendment shall be made only with the consent of the Participant to whom the
Stock Grant or Stock-Based Award was made, if the amendment is adverse to the
Participant.

     12.  RIGHTS AS A SHAREHOLDER.

     No Participant to whom a Stock Right has been granted shall have rights as
a shareholder with respect to any Shares covered by such Stock Right, except
after due exercise of the Option or acceptance of the Stock Grant or as set
forth in any Agreement and tender of the full purchase price, if any, for the
Shares being purchased pursuant to such exercise or acceptance and registration
of the Shares in the Company's share register in the name of the Participant.


                                       11


     13.  ASSIGNABILITY AND TRANSFERABILITY.

     By its terms, a Cash Award or Stock Right granted to a Participant shall
not be transferable by the Participant other than by will or by the laws of
descent and distribution. The designation of a beneficiary of a Cash Award or
Stock Right by a Participant, with the prior approval of the Administrator and
in such form as the Administrator shall prescribe, shall not be deemed a
transfer prohibited by this Paragraph. Except as provided above, a Cash Award or
Stock Right shall only be exercisable or may only be accepted, during the
Participant's lifetime, only by such Participant (or by his or her legal
representative) and shall not be assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of any Cash Award or Stock Right or
of any rights granted thereunder contrary to the provisions of this Plan, or the
levy of any attachment or similar process upon a Cash Award or Stock Right,
shall be null and void.


     14.  EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE" OR
          DEATH OR DISABILITY.

     Except as otherwise provided in a Participant's Option Agreement, in the
event of a termination of service (whether as an employee, director or
consultant) with the Company or an Affiliate before the Participant has
exercised an Option, the following rules apply:

     a.   A Participant who ceases to be an employee, director or consultant of
          the Company or of an Affiliate (for any reason other than termination
          "for cause", Disability, or death for which events there are special
          rules in Paragraphs 15, 16, and 17, respectively), may exercise any
          Option granted to him or her to the extent that the Option is
          exercisable on the date of such termination of service, but only
          within such term as the Administrator has designated in a
          Participant's Option Agreement.

     b.   Except as provided in Subparagraph (c) below, or Paragraph 16 or 17,
          in no event may an Option intended to be an ISO, be exercised later
          than three months after the Participant's termination of employment.

     c.   The provisions of this Paragraph, and not the provisions of Paragraph
          16 or 17, shall apply to a Participant who subsequently becomes
          Disabled or dies after the termination of employment, director status
          or consultancy, provided, however, in the case of a Participant's
          Disability or death within three months after the termination of
          employment, director status or consultancy, the Participant or the
          Participant's Survivors may exercise the Option within one year after
          the date of the Participant's termination of service, but in no event
          after the date of expiration of the term of the Option.

     d.   Notwithstanding anything herein to the contrary, if subsequent to a
          Participant's termination of employment, termination of director
          status or termination of consultancy, but prior to the exercise of an
          Option, the Board of Directors determines that, either prior or
          subsequent to the Participant's termination, the


                                       12


          Participant engaged in conduct which would constitute "cause", then
          such Participant shall forthwith cease to have any right to exercise
          any Option.

     e.   A Participant to whom an Option has been granted under the Plan who is
          absent from work with the Company or with an Affiliate because of
          temporary disability (any disability other than a permanent and total
          Disability as defined in Paragraph 1 hereof), or who is on leave of
          absence for any purpose, shall not, during the period of any such
          absence, be deemed, by virtue of such absence alone, to have
          terminated such Participant's employment, director status or
          consultancy with the Company or with an Affiliate, except as the
          Administrator may otherwise expressly provide.

     f.   Except as required by law or as set forth in a Participant's
          Agreement, Options granted under the Plan shall not be affected by any
          change of a Participant's status within or among the Company and any
          Affiliates, so long as the Participant continues to be an employee,
          director or consultant of the Company or any Affiliate.


     15.  EFFECT ON OPTIONS OF TERMINATION OF SERVICE "FOR CAUSE".

     Except as otherwise provided in a Participant's Option Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated "for
cause" prior to the time that all his or her outstanding Options have been
exercised:

     a.   All outstanding and unexercised Options as of the time the Participant
          is notified his or her service is terminated "for cause" will
          immediately be forfeited.

     b.   For purposes of this Plan, "cause" shall include (and is not limited
          to) dishonesty with respect to the Company or any Affiliate,
          insubordination, substantial malfeasance or non-feasance of duty,
          unauthorized disclosure of confidential information, breach by the
          Participant of any provision of any employment, consulting, advisory,
          nondisclosure, non-competition or similar agreement between the
          Participant and the Company, and conduct substantially prejudicial to
          the business of the Company or any Affiliate. The determination of the
          Administrator as to the existence of "cause" will be conclusive on the
          Participant and the Company.

     c.   "Cause" is not limited to events which have occurred prior to a
          Participant's termination of service, nor is it necessary that the
          Administrator's finding of "cause" occur prior to termination. If the
          Administrator determines, subsequent to a Participant's termination of
          service but prior to the exercise of an Option, that either prior or
          subsequent to the Participant's termination the Participant engaged in
          conduct which would constitute "cause", then the right to exercise any
          Option is forfeited.


                                       13


     d.   Any definition in an agreement between the Participant and the Company
          or an Affiliate, which contains a conflicting definition of "cause"
          for termination and which is in effect at the time of such
          termination, shall supersede the definition in this Plan with respect
          to that Participant.

     16.  EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.

     Except as otherwise provided in a Participant's Option Agreement, a
Participant who ceases to be an employee, director or consultant of the Company
or of an Affiliate by reason of Disability may exercise any Option granted to
such Participant:

     a.   To the extent that the Option has become exercisable but has not been
          exercised on the date of Disability; and

     b.   In the event rights to exercise the Option accrue periodically over
          time, to the extent of a pro rata portion through the date of
          Disability of any additional vesting rights that would have accrued on
          the next vesting date had the Participant not become Disabled. The
          proration shall be based upon the number of days accrued in the
          current vesting period prior to the date of Disability.

     A Disabled Participant may exercise such rights only within the period
ending one year after the date of the Participant's termination of employment,
directorship or consultancy, as the case may be, notwithstanding that the
Participant might have been able to exercise the Option as to some or all of the
Shares on a later date if the Participant had not become Disabled and had
continued to be an employee, director or consultant or, if earlier, within the
originally prescribed term of the Option.

     The Administrator shall make the determination both of whether Disability
has occurred and the date of its occurrence (unless a procedure for such
determination is set forth in another agreement between the Company and such
Participant, in which case such procedure shall be used for such determination).
If requested, the Participant shall be examined by a physician selected or
approved by the Administrator, the cost of which examination shall be paid for
by the Company.

     17.  EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

         Except as otherwise provided in a Participant's Option Agreement, in
the event of the death of a Participant while the Participant is an employee,
director or consultant of the Company or of an Affiliate, such Option may be
exercised by the Participant's Survivors:

     a.   To the extent that the Option has become exercisable but has not been
          exercised on the date of death; and

     b.   In the event rights to exercise the Option accrue periodically over
          time, to the extent of a pro rata portion through the date of death of
          any additional vesting


                                       14


          rights that would have accrued on the next vesting date had the
          Participant not died. The proration shall be based upon the number of
          days accrued in the current vesting period prior to the Participant's
          date of death.

     If the Participant's Survivors wish to exercise the Option, they must take
all necessary steps to exercise the Option within one year after the date of
death of such Participant, notwithstanding that the decedent might have been
able to exercise the Option as to some or all of the Shares on a later date if
he or she had not died and had continued to be an employee, director or
consultant or, if earlier, within the originally prescribed term of the Option.

     18.  EFFECT OF TERMINATION OF SERVICE ON UNACCEPTED STOCK GRANTS AND
          STOCK-BASED AWARDS.

     In the event of a termination of service (whether as an employee, director
or consultant) with the Company or an Affiliate for any reason before the
Participant has accepted a Stock Grant or Stock-Based Award, such offer shall
terminate.

     For purposes of this Paragraph 18 and Paragraph 19 below, a Participant to
whom a Stock Grant or Stock-Based Award has been offered and accepted under the
Plan who is absent from work with the Company or with an Affiliate because of
temporary disability (any disability other than a permanent and total Disability
as defined in Paragraph 1 hereof), or who is on leave of absence for any
purpose, shall not, during the period of any such absence, be deemed, by virtue
of such absence alone, to have terminated such Participant's employment,
director status or consultancy with the Company or with an Affiliate, except as
the Administrator may otherwise expressly provide.

         In addition, for purposes of this Paragraph 18 and Paragraph 19 below,
any change of employment or other service within or among the Company and any
Affiliates shall not be treated as a termination of employment, director status
or consultancy so long as the Participant continues to be an employee, director
or consultant of the Company or any Affiliate.

     19.  EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN "FOR
          CAUSE" OR DEATH OR DISABILITY.

     Except as otherwise provided in a Participant's Agreement, in the event of
a termination of service (whether as an employee, director or consultant), other
than termination "for cause," Disability, or death for which events there are
special rules in Paragraphs 20, 21, and 22, respectively, before all Company
rights of repurchase shall have lapsed, then the Company shall have the right to
repurchase that number of Shares subject to a Stock Grant as to which the
Company's repurchase rights have not lapsed.


                                       15


     20.  EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE "FOR CAUSE".

     Except as otherwise provided in a Participant's Agreement, the following
rules apply if the Participant's service (whether as an employee, director or
consultant) with the Company or an Affiliate is terminated "for cause":

     a.   All Shares subject to any Stock Grant shall be immediately subject to
          repurchase by the Company at the purchase price, if any, thereof.

     b.   For purposes of this Plan, "cause" shall include (and is not limited
          to) dishonesty with respect to the employer, insubordination,
          substantial malfeasance or non-feasance of duty, unauthorized
          disclosure of confidential information, breach by the Participant of
          any provision of any employment, consulting, advisory, nondisclosure,
          non-competition or similar agreement between the Participant and the
          Company, and conduct substantially prejudicial to the business of the
          Company or any Affiliate. The determination of the Administrator as to
          the existence of "cause" will be conclusive on the Participant and the
          Company.

     c.   "Cause" is not limited to events which have occurred prior to a
          Participant's termination of service, nor is it necessary that the
          Administrator's finding of "cause" occur prior to termination. If the
          Administrator determines, subsequent to a Participant's termination of
          service, that either prior or subsequent to the Participant's
          termination the Participant engaged in conduct which would constitute
          "cause," then the Company's right to repurchase all of such
          Participant's Shares shall apply.

     d.   Any definition in an agreement between the Participant and the Company
          or an Affiliate, which contains a conflicting definition of "cause"
          for termination and which is in effect at the time of such
          termination, shall supersede the definition in this Plan with respect
          to that Participant.

     21.  EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY.

     Except as otherwise provided in a Participant's Agreement, the following
rules apply if a Participant ceases to be an employee, director or consultant of
the Company or of an Affiliate by reason of Disability: to the extent the
Company's rights of repurchase have not lapsed on the date of Disability, they
shall be exercisable; provided, however, that in the event such rights of
repurchase lapse periodically over time, such rights shall lapse to the extent
of a pro rata portion of the Shares subject to such Stock Grant through the date
of Disability as would have lapsed had the Participant not become Disabled. The
proration shall be based upon the number of days accrued prior to the date of
Disability.

     The Administrator shall make the determination both of whether Disability
has occurred and the date of its occurrence (unless a procedure for such
determination is set forth in another agreement between the Company and such
Participant, in which case such procedure shall be used for such determination).
If requested, the Participant shall be examined by a physician


                                       16


selected or approved by the Administrator, the cost of which examination shall
be paid for by the Company.

     22.  EFFECT ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR
          CONSULTANT.

     Except as otherwise provided in a Participant's Agreement, the following
rules apply in the event of the death of a Participant while the Participant is
an employee, director or consultant of the Company or of an Affiliate: to the
extent the Company's rights of repurchase have not lapsed on the date of death,
they shall be exercisable; provided, however, that in the event such rights of
repurchase lapse periodically over time, such rights shall lapse to the extent
of a pro rata portion of the Shares subject to such Stock Grant through the date
of death as would have lapsed had the Participant not died. The proration shall
be based upon the number of days accrued prior to the Participant's death.

     23.  PURCHASE FOR INVESTMENT.

     Unless the offering and sale of the Shares to be issued upon the particular
exercise or acceptance of a Stock Right shall have been effectively registered
under the Securities Act of 1933, as now in force or hereafter amended (the
"1933 Act"), the Company shall be under no obligation to issue the Shares
covered by such exercise unless and until the following conditions have been
fulfilled:

     a.   The person(s) who exercise(s) or accept(s) such Stock Right shall
          warrant to the Company, prior to the receipt of such Shares, that such
          person(s) are acquiring such Shares for their own respective accounts,
          for investment, and not with a view to, or for sale in connection
          with, the distribution of any such Shares, in which event the
          person(s) acquiring such Shares shall be bound by the provisions of
          the following legend which shall be endorsed upon the certificate(s)
          evidencing their Shares issued pursuant to such exercise or such
          grant:

               "The shares represented by this certificate have been taken for
               investment and they may not be sold or otherwise transferred by
               any person, including a pledgee, unless (1) either (a) a
               Registration Statement with respect to such shares shall be
               effective under the Securities Act of 1933, as amended, or (b)
               the Company shall have received an opinion of counsel
               satisfactory to it that an exemption from registration under such
               Act is then available, and (2) there shall have been compliance
               with all applicable state securities laws."

     b.   At the discretion of the Administrator, the Company shall have
          received an opinion of its counsel that the Shares may be issued upon
          such particular exercise or acceptance in compliance with the 1933 Act
          without registration thereunder.


                                       17


     24.  DISSOLUTION OR LIQUIDATION OF THE COMPANY.

     Upon the dissolution or liquidation of the Company, all Options granted
under this Plan which as of such date shall not have been exercised and all
Stock Grants and Stock-Based Awards which have not been accepted will terminate
and become null and void; provided, however, that if the rights of a Participant
or a Participant's Survivors have not otherwise terminated and expired, the
Participant or the Participant's Survivors will have the right immediately prior
to such dissolution or liquidation to exercise or accept any Stock Right to the
extent that the Stock Right is exercisable or subject to acceptance as of the
date immediately prior to such dissolution or liquidation. Upon the dissolution
or liquidation of the Company, any outstanding Cash Awards or Stock-Based Awards
shall immediately terminate unless otherwise determined by the Administrator or
specifically provided in the applicable Agreement.

     25.  ADJUSTMENTS.

     Upon the occurrence of any of the following events, a Participant's rights
with respect to any Stock Right granted to him or her hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in a
Participant's Agreement:

     A. Stock Dividends and Stock Splits. If (i) the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, or (ii) additional shares or new or different shares
or other securities of the Company or other non-cash assets are distributed with
respect to such shares of Common Stock, the number of shares of Common Stock
deliverable upon the exercise of an Option or acceptance of a Stock Grant may be
appropriately increased or decreased proportionately, and appropriate
adjustments may be made including, in the purchase price per share, to reflect
such events. The number of Shares subject to the limitations in Paragraphs 3 and
4(c) shall also be proportionately adjusted upon the occurrence of such events.

     B. Corporate Transactions. If the Company is to be consolidated with or
acquired by another entity in a merger, sale of all or substantially all of the
Company's assets other than a transaction to merely change the state of
incorporation (a "Corporate Transaction"), the Administrator or the board of
directors of any entity assuming the obligations of the Company hereunder (the
"Successor Board"), shall, as to outstanding Options, either (i) make
appropriate provision for the continuation of such Options by substituting on an
equitable basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Corporate Transaction or securities of any successor or
acquiring entity; or (ii) upon written notice to the Participants, provide that
all Options must be exercised (either to the extent then exercisable or, at the
discretion of the Administrator, or, upon a change of control of the Company,
all Options being made fully exercisable for purposes of this Subparagraph),
within a specified number of days of the date of such notice, at the end of
which period the Options shall terminate; or (iii) terminate all Options in
exchange for a cash payment equal to the excess of the Fair Market Value of the
Shares subject to such Options (either to the extent then exercisable or, at the
discretion of the Administrator, all Options being made fully exercisable for
purposes of this Subparagraph) over the exercise price thereof.



                                       18


     With respect to outstanding Stock Grants, the Administrator or the
Successor Board, shall either (i) make appropriate provisions for the
continuation of such Stock Grants by substituting on an equitable basis for the
Shares then subject to such Stock Grants either the consideration payable with
respect to the outstanding Shares of Common Stock in connection with the
Corporate Transaction or securities of any successor or acquiring entity; or
(ii) upon written notice to the Participants, provide that all Stock Grants must
be accepted (to the extent then subject to acceptance) within a specified number
of days of the date of such notice, at the end of which period the offer of the
Stock Grants shall terminate; or (iii) terminate all Stock Grants in exchange
for a cash payment equal to the excess of the Fair Market Value of the Shares
subject to such Stock Grants over the purchase price thereof, if any. In
addition, in the event of a Corporate Transaction, the Administrator may waive
any or all Company repurchase rights with respect to outstanding Stock Grants.

     C. Recapitalization or Reorganization. In the event of a recapitalization
or reorganization of the Company other than a Corporate Transaction pursuant to
which securities of the Company or of another corporation are issued with
respect to the outstanding shares of Common Stock, a Participant upon exercising
an Option or accepting a Stock Grant after the recapitalization or
reorganization shall be entitled to receive for the purchase price paid upon
such exercise or acceptance the number of replacement securities which would
have been received if such Option had been exercised or Stock Grant accepted
prior to such recapitalization or reorganization.

     D. Adjustments to Cash Awards and Stock-Based Awards. Upon the happening of
any of the events described in Subparagraphs A, B or C above, any outstanding
Cash Award and Stock-Based Award shall be appropriately adjusted to reflect the
events described in such Subparagraphs. The Administrator or the Successor Board
shall determine the specific adjustments to be made under this Paragraph 25 and,
subject to Paragraph 4, its determination shall be conclusive.

     E. Modification of ISOs. Notwithstanding the foregoing, any adjustments
made pursuant to Subparagraph A, B or C above with respect to ISOs shall be made
only after the Administrator determines whether such adjustments would
constitute a "modification" of such ISOs (as that term is defined in Section
424(h) of the Code) or would cause any adverse tax consequences for the holders
of such ISOs. If the Administrator determines that such adjustments made with
respect to ISOs would constitute a modification of such ISOs, it may refrain
from making such adjustments, unless the holder of an ISO specifically requests
in writing that such adjustment be made and such writing indicates that the
holder has full knowledge of the consequences of such "modification" on his or
her income tax treatment with respect to the ISO.

     26.  ISSUANCES OF SECURITIES.

     Except as expressly provided herein, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Stock Rights. Except as
expressly provided herein, no adjustments shall be made for


                                       19


dividends paid in cash or in property (including without limitation, securities)
of the Company prior to any issuance of Shares pursuant to a Stock Right.

     27.  FRACTIONAL SHARES.

     No fractional shares shall be issued under the Plan and the person
exercising a Stock Right shall receive from the Company cash in lieu of such
fractional shares equal to the Fair Market Value thereof.

     28.  CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.

     The Administrator, at the written request of any Participant, may in its
discretion take such actions as may be necessary to convert such Participant's
ISOs (or any portions thereof) that have not been exercised on the date of
conversion into Non-Qualified Options at any time prior to the expiration of
such ISOs, regardless of whether the Participant is an employee of the Company
or an Affiliate at the time of such conversion. At the time of such conversion,
the Administrator (with the consent of the Participant) may impose such
conditions on the exercise of the resulting Non-Qualified Options as the
Administrator in its discretion may determine, provided that such conditions
shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to
give any Participant the right to have such Participant's ISOs converted into
Non-Qualified Options, and no such conversion shall occur until and unless the
Administrator takes appropriate action. The Administrator, with the consent of
the Participant, may also terminate any portion of any ISO that has not been
exercised at the time of such conversion.

     29.  WITHHOLDING.

     In the event that any federal, state, or local income taxes, employment
taxes, Federal Insurance Contributions Act ("F.I.C.A.") withholdings or other
amounts are required by applicable law or governmental regulation to be withheld
from the Participant's salary, wages or other remuneration in connection with
the exercise or acceptance of a Cash Award or Stock Right or in connection with
a Disqualifying Disposition (as defined in Paragraph 30) or upon the lapsing of
any right of repurchase, the Company may withhold from the Participant's
compensation, if any, or may require that the Participant advance in cash to the
Company, or to any Affiliate of the Company which employs or employed the
Participant, the statutory minimum amount of such withholdings unless a
different withholding arrangement, including the use of shares of the Company's
Common Stock or a promissory note, is authorized by the Administrator (and
permitted by law). For purposes hereof, the fair market value of the shares
withheld for purposes of payroll withholding shall be determined in the manner
provided in Paragraph 1 above, as of the most recent practicable date prior to
the date of exercise. If the fair market value of the shares withheld is less
than the amount of payroll withholdings required, the Participant may be
required to advance the difference in cash to the Company or the Affiliate
employer. The Administrator in its discretion may condition the exercise of an
Option for less than the then Fair Market Value on the Participant's payment of
such additional withholding.


                                       20


     30.  NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.

     Each Employee who receives an ISO must agree to notify the Company in
writing immediately after the Employee makes a Disqualifying Disposition of any
shares acquired pursuant to the exercise of an ISO. A Disqualifying Disposition
is defined in Section 424(c) of the Code and includes any disposition (including
any sale or gift) of such shares before the later of (a) two years after the
date the Employee was granted the ISO, or (b) one year after the date the
Employee acquired Shares by exercising the ISO, except as otherwise provided in
Section 424(c) of the Code. If the Employee has died before such stock is sold,
these holding period requirements do not apply and no Disqualifying Disposition
can occur thereafter.

     31.  TERMINATION OF THE PLAN.

     The Plan will terminate on February 13, 2014, the date which is ten years
from the earlier of the date of its initial adoption by the Board of Directors
and the date of its approval by the shareholders. The Plan may be terminated at
an earlier date by vote of the shareholders or the Board of Directors of the
Company; provided, however, that any such earlier termination shall not affect
any Agreements executed prior to the effective date of such termination.

     32.  AMENDMENT OF THE PLAN AND AGREEMENTS.

     The Plan may be amended by the shareholders of the Company. The Plan may
also be amended by the Administrator, including, without limitation, to the
extent necessary to qualify any or all outstanding Stock Rights granted under
the Plan or Stock Rights to be granted under the Plan for favorable federal
income tax treatment (including deferral of taxation upon exercise) as may be
afforded incentive stock options under Section 422 of the Code, and to the
extent necessary to qualify the shares issuable upon exercise or acceptance of
any outstanding Stock Rights granted, or Stock Rights to be granted, under the
Plan for listing on any national securities exchange or quotation in any
national automated quotation system of securities dealers. Any amendment
approved by the Administrator which the Administrator determines is of a scope
that requires shareholder approval shall be subject to obtaining such
shareholder approval. Any modification or amendment of the Plan shall not,
without the consent of a Participant, adversely affect his or her rights under a
Cash Award or Stock Right previously granted to him or her. With the consent of
the Participant affected, the Administrator may amend outstanding Agreements in
a manner which may be adverse to the Participant but which is not inconsistent
with the Plan. In the discretion of the Administrator, outstanding Agreements
may be amended by the Administrator in a manner which is not adverse to the
Participant.

     33.  EMPLOYMENT OR OTHER RELATIONSHIP.

     Nothing in this Plan or any Agreement shall be deemed to prevent the
Company or an Affiliate from terminating the employment, consultancy or director
status of a Participant, nor to prevent a Participant from terminating his or
her own employment, consultancy or director status


                                       21


or to give any Participant a right to be retained in employment or other service
by the Company or any Affiliate for any period of time.

     34.  GOVERNING LAW.

     This Plan shall be construed and enforced in accordance with the law of the
State of Delaware.


                                       22

EX-10.2

                      NON-QUALIFIED STOCK OPTION AGREEMENT

                          MAJESCO ENTERTAINMENT COMPANY

     AGREEMENT made as of the __ day of _________ 200_, between Majesco
Entertainment Company (the "Company"), a Delaware corporation having a principal
place of business in _________, _____________, and _______________ of
___________ (the "Participant").

     WHEREAS, the Company desires to grant to the Participant an Option to
purchase shares of its common stock, $0.001 par value per share (the "Shares"),
under and for the purposes set forth in the Company's Amended and Restated 2004
Employee, Director and Consultant Incentive Plan (the "Plan");

     WHEREAS, the Company and the Participant understand and agree that any
terms used and not defined herein have the same meanings as in the Plan; and

     WHEREAS, the Company and the Participant each intend that the Option
granted herein shall be a Non-Qualified Option.

     NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto agree as
follows:

     1.   GRANT OF OPTION.

     The Company hereby grants to the Participant the right and option to
purchase all or any part of an aggregate of _______________ Shares, on the terms
and conditions and subject to all the limitations set forth herein, under United
States securities and tax laws, and in the Plan, which is incorporated herein by
reference. The Participant acknowledges receipt of a copy of the Plan.

     2.   PURCHASE PRICE.

     The purchase price of the Shares covered by the Option shall be $_____ per
Share, subject to adjustment, as provided in the Plan, in the event of a stock
split, reverse stock split or other events affecting the holders of Shares after
the date hereof (the "Purchase Price"). Payment shall be made in accordance with
Paragraph 10 of the Plan.

     3.   EXERCISABILITY OF OPTION.

     Subject to the terms and conditions set forth in this Agreement and the
Plan, the Option granted hereby shall become exercisable as follows:

On the first anniversary of the date          up to ____________ Shares
  of this Agreement




On the second anniversary of the date         an additional __________ Shares
  of this Agreement

On the third anniversary of the date          an additional __________ Shares
  of this Agreement


     The foregoing rights are cumulative and are subject to the other terms and
conditions of this Agreement and the Plan.

     4.   TERM OF OPTION.

     The Option shall terminate seven years from the date of this Agreement, but
shall be subject to earlier termination as provided herein or in the Plan.

     If the Participant ceases to be an employee, director or consultant of the
Company or of an Affiliate (for any reason other than the death or Disability of
the Participant or termination of the Participant for "cause" (as defined in the
Plan)), the Option may be exercised, if it has not previously terminated, within
three months after the date the Participant ceases to be an employee, director
or consultant of the Company or an Affiliate, or within the originally
prescribed term of the Option, whichever is earlier, but may not be exercised
thereafter. In such event, the Option shall be exercisable only to the extent
that the Option has become exercisable and is in effect at the date of such
cessation of employment, directorship or consultancy.

     Notwithstanding the foregoing, in the event of the Participant's Disability
or death within three months after the termination of employment, directorship
or consultancy, the Participant or the Participant's Survivors may exercise the
Option within one year after the date of the Participant's termination of
employment, directorship or consultancy, but in no event after the date of
expiration of the term of the Option.

     In the event the Participant's employment, directorship or consultancy is
terminated by the Company or an Affiliate for "cause" (as defined in the Plan),
the Participant's right to exercise any unexercised portion of this Option shall
cease immediately as of the time the Participant is notified his or her
employment, directorship or consultancy is terminated for "cause," and this
Option shall thereupon terminate. Notwithstanding anything herein to the
contrary, if subsequent to the Participant's termination, but prior to the
exercise of the Option, the Board of Directors of the Company determines that,
either prior or subsequent to the Participant's termination, the Participant
engaged in conduct which would constitute "cause," then the Participant shall
immediately cease to have any right to exercise the Option and this Option shall
thereupon terminate.

     In the event of the Disability of the Participant, as determined in
accordance with the Plan, the Option shall be exercisable within one year after
the Participant's termination of service or, if earlier, within the term
originally prescribed by the Option. In such event, the Option shall be
exercisable:

     (a)  to the extent that the Option has become exercisable but has not been
          exercised as of the date of Disability; and


                                       2


     (b)  in the event rights to exercise the Option accrue periodically over
          time, to the extent of a pro rata portion through the date of
          Disability of any additional vesting rights that would have accrued on
          the next vesting date had the Participant not become Disabled. The
          proration shall be based upon the number of days accrued in the
          current vesting period prior to the date of Disability.

     In the event of the death of the Participant while an employee, director or
consultant of the Company or of an Affiliate, the Option shall be exercisable by
the Participant's Survivors within one year after the date of death of the
Participant or, if earlier, within the originally prescribed term of the Option.
In such event, the Option shall be exercisable:

     (x)  to the extent that the Option has become exercisable but has not been
          exercised as of the date of death; and

     (y)  in the event rights to exercise the Option accrue periodically over
          time, to the extent of a pro rata portion through the date of death of
          any additional vesting rights that would have accrued on the next
          vesting date had the Participant not died. The proration shall be
          based upon the number of days accrued in the current vesting period
          prior to the Participant's date of death.

     5.   METHOD OF EXERCISING OPTION.

     Subject to the terms and conditions of this Agreement, the Option may be
exercised by written notice to the Company or its designee, in substantially the
form of Exhibit A attached hereto. Such notice shall state the number of Shares
with respect to which the Option is being exercised and shall be signed by the
person exercising the Option. Payment of the purchase price for such Shares
shall be made in accordance with Paragraph 10 of the Plan. The Company shall
deliver such Shares as soon as practicable after the notice shall be received,
provided, however, that the Company may delay issuance of such Shares until
completion of any action or obtaining of any consent, which the Company deems
necessary under any applicable law (including, without limitation, state
securities or "blue sky" laws). The Shares as to which the Option shall have
been so exercised shall be registered in the Company's share register in the
name of the person so exercising the Option (or, if the Option shall be
exercised by the Participant and if the Participant shall so request in the
notice exercising the Option, shall be registered in the Company's share
register in the name of the Participant and another person jointly, with right
of survivorship) and shall be delivered as provided above to or upon the written
order of the person exercising the Option. In the event the Option shall be
exercised, pursuant to Section 4 hereof, by any person other than the
Participant, such notice shall be accompanied by appropriate proof of the right
of such person to exercise the Option. All Shares that shall be purchased upon
the exercise of the Option as provided herein shall be fully paid and
nonassessable.

     6.   PARTIAL EXERCISE.

     Exercise of this Option to the extent above stated may be made in part at
any time and from time to time within the above limits, except that no
fractional share shall be issued pursuant to this Option.


                                       3


     7.   NON-ASSIGNABILITY.

     The Option shall not be transferable by the Participant otherwise than by
will or by the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act or the rules thereunder. However, the
Participant, with the approval of the Administrator, may transfer the Option for
no consideration to or for the benefit of the Participant's Immediate Family
(including, without limitation, to a trust for the benefit of the Participant's
Immediate Family or to a partnership or limited liability company for one or
more members of the Participant's Immediate Family), subject to such limits as
the Administrator may establish, and the transferee shall remain subject to all
the terms and conditions applicable to the Option prior to such transfer and
each such transferee shall so ACKNOWLEDGE in writing as a condition precedent to
the effectiveness of such transfer. The term "Immediate Family" shall mean the
Participant's spouse, former spouse, parents, children, stepchildren, adoptive
relationships, sisters, brothers, nieces, nephews and grandchildren (and, for
this purpose, shall also include the Participant.) Except as provided in the
previous sentence, the Option shall be exercisable, during the Participant's
lifetime, only by the Participant (or, in the event of legal incapacity or
incompetency, by the Participant's guardian or representative) and shall not be
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar process.
Any attempted transfer, assignment, pledge, hypothecation or other disposition
of the Option or of any rights granted hereunder contrary to the provisions of
this Section 7, or the levy of any attachment or similar process upon the Option
shall be null and void.

     8.   NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE.

     The Participant shall have no rights as a stockholder with respect to
Shares subject to this Agreement until registration of the Shares in the
Company's share register in the name of the Participant. Except as is expressly
provided in the Plan with respect to certain changes in the capitalization of
the Company, no adjustment shall be made for dividends or similar rights for
which the record date is prior to the date of such registration.

     9.   ADJUSTMENTS.

     The Plan contains provisions covering the treatment of Options in a number
of contingencies such as stock splits and mergers. Provisions in the Plan for
adjustment with respect to stock subject to Options and the related provisions
with respect to successors to the business of the Company are hereby made
applicable hereunder and are incorporated herein by reference.

     10.  TAXES.

     The Participant acknowledges that upon exercise of the Option the
Participant will be deemed to have taxable income measured by the difference
between the then fair market value of the Shares received upon exercise and the
price paid for such Shares pursuant to this Agreement. The Participant
acknowledges that any income or other taxes due from him or her with respect to
this Option or the Shares issuable pursuant to this Option shall be the
Participant's responsibility.


                                       4


     The Participant agrees that the Company may withhold from the Participant's
remuneration, if any, the minimum statutory amount of federal, state and local
withholding taxes attributable to such amount that is considered compensation
includable in such person's gross income. At the Company's discretion, the
amount required to be withheld may be withheld in cash from such remuneration,
or in kind from the Shares otherwise deliverable to the Participant on exercise
of the Option. The Participant further agrees that, if the Company does not
withhold an amount from the Participant's remuneration sufficient to satisfy the
Company's income tax withholding obligation, the Participant will reimburse the
Company on demand, in cash, for the amount under-withheld.

     11.  PURCHASE FOR INVESTMENT.

     Unless the offering and sale of the Shares to be issued upon the particular
exercise of the Option shall have been effectively registered under the
Securities Act of 1933, as now in force or hereafter amended (the "1933 Act"),
the Company shall be under no obligation to issue the Shares covered by such
exercise unless and until the following conditions have been fulfilled:

     (a)  The person(s) who exercise the Option shall warrant to the Company, at
          the time of such exercise, that such person(s) are acquiring such
          Shares for their own respective accounts, for investment, and not with
          a view to, or for sale in connection with, the distribution of any
          such Shares, in which event the person(s) acquiring such Shares shall
          be bound by the provisions of the following legend which shall be
          endorsed upon the certificate(s) evidencing the Shares issued pursuant
          to such exercise:

               "The shares represented by this certificate have been taken for
               investment and they may not be sold or otherwise transferred by
               any person, including a pledgee, unless (1) either (a) a
               Registration Statement with respect to such shares shall be
               effective under the Securities Act of 1933, as amended, or (b)
               the Company shall have received an opinion of counsel
               satisfactory to it that an exemption from registration under such
               Act is then available, and (2) there shall have been compliance
               with all applicable state securities laws;" and

     (b)  If the Company so requires, the Company shall have received an opinion
          of its counsel that the Shares may be issued upon such particular
          exercise in compliance with the 1933 Act without registration
          thereunder. Without limiting the generality of the foregoing, the
          Company may delay issuance of the Shares until completion of any
          action or obtaining of any consent, which the Company deems necessary
          under any applicable law (including without limitation state
          securities or "blue sky" laws).

     12.  RESTRICTIONS ON TRANSFER OF SHARES.

     12.1 If, in connection with a registration statement filed by the Company
pursuant to the Securities Act, the Company or its underwriter so requests, the
Participant will agree not to sell any Shares for a period not to exceed 180
days following the effectiveness of such registration.


                                       5


     12.2 The Participant acknowledges and agrees that neither the Company, its
shareholders nor its directors and officers, has any duty or obligation to
disclose to the Participant any material information regarding the business of
the Company or affecting the value of the Shares before, at the time of, or
following a termination of the employment of the Participant by the Company,
including, without limitation, any information concerning plans for the Company
to make a public offering of its securities or to be acquired by or merged with
or into another firm or entity.

     13.  NO OBLIGATION TO MAINTAIN RELATIONSHIP.

     The Company is not by the Plan or this Option obligated to continue the
Participant as an employee, director or consultant of the Company or an
Affiliate. The Participant acknowledges: (i) that the Plan is discretionary in
nature and may be suspended or terminated by the Company at any time; (ii) that
the grant of the Option is a one-time benefit which does not create any
contractual or other right to receive future grants of options, or benefits in
lieu of options; (iii) that all determinations with respect to any such future
grants, including, but not limited to, the times when options shall be granted,
the number of shares subject to each option, the option price, and the time or
times when each option shall be exercisable, will be at the sole discretion of
the Company; (iv) that the Participant's participation in the Plan is voluntary;
(v) that the value of the Option is an extraordinary item of compensation which
is outside the scope of the Participant's employment contract, if any; and (vi)
that the Option is not part of normal or expected compensation for purposes of
calculating any severance, resignation, redundancy, end of service payments,
bonuses, long-service awards, pension or retirement benefits or similar
payments.

     14.  NOTICES.

     Any notices required or permitted by the terms of this Agreement or the
Plan shall be given by recognized courier service, facsimile, registered or
certified mail, return receipt requested, addressed as follows:


If to the Company:
                               Majesco Entertainment Company
                               -------------------------------------------------
                               160 Raritan Center Parkway
                               -------------------------------------------------
                               Edison, New Jersey 08837
                               -------------------------------------------------
                               Attn: Joseph Tuchinsky, General Counsel
                               -------------------------------------------------


If to the Participant:

                               -------------------------------------------------

                               -------------------------------------------------

                               -------------------------------------------------

or to such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given upon
the earlier of receipt, one


                                       6


business day following delivery to a recognized courier service or three
business days following mailing by registered or certified mail.

     15.  GOVERNING LAW.

     This Agreement shall be construed and enforced in accordance with the law
of the State of Delaware, without giving effect to the conflict of law
principles thereof. For the purpose of litigating any dispute that arises under
this Agreement, the parties hereby consent to exclusive jurisdiction in the
State of New Jersey and agree that such litigation shall be conducted in the
courts of Newark, New Jersey or the federal courts of the United States for the
District of New Jersey.

     16.  BENEFIT OF AGREEMENT.

     Subject to the provisions of the Plan and the other provisions hereof, this
Agreement shall be for the benefit of and shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.

     17.  ENTIRE AGREEMENT.

     This Agreement, together with the Plan, embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement not expressly set forth in this Agreement shall affect or
be used to interpret, change or restrict, the express terms and provisions of
this Agreement, provided, however, in any event, this Agreement shall be subject
to and governed by the Plan.

     18.  MODIFICATIONS AND AMENDMENTS.

     The terms and provisions of this Agreement may be modified or amended as
provided in the Plan.

     19.  WAIVERS AND CONSENTS.

     Except as provided in the Plan, the terms and provisions of this Agreement
may be waived, or consent for the departure therefrom granted, only by written
document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.

     20.  DATA PRIVACY.

     By entering into this Agreement, the Participant: (i) authorizes the
Company and each Affiliate, and any agent of the Company or any Affiliate
administering the Plan or providing Plan recordkeeping services, to disclose to
the Company or any of its Affiliates such information


                                       7


and data as the Company or any such Affiliate shall request in order to
facilitate the grant of options and the administration of the Plan; (ii) waives
any data privacy rights he or she may have with respect to such information; and
(iii) authorizes the Company and each Affiliate to store and transmit such
information in electronic form.

                  [Remainder of Page Intentionally Left Blank]



                                       8


     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer, and the Participant has hereunto set his or her
hand, all as of the day and year first above written.


                                                MAJESCO ENTERTAINMENT COMPANY


                                                By:
                                                    ----------------------------
                                                    Name:
                                                    Title:



                                                --------------------------------
                                                Participant


                                       9


                                                                       Exhibit A
                                                                       ---------

                NOTICE OF EXERCISE OF NON-QUALIFIED STOCK OPTION



TO:  MAJESCO ENTERTAINMENT COMPANY

Ladies and Gentlemen:

I hereby exercise my Non-Qualified Stock Option to purchase _________ shares
(the "Shares") of the common stock, $0.001 par value, of Majesco Entertainment
Company (the "Company"), at the exercise price of $________ per share, pursuant
to and subject to the terms of that certain Non-Qualified Stock Option Agreement
between the undersigned and the Company dated _______________, 200_.

     I understand the nature of the investment I am making and the financial
risks thereof. I am aware that it is my responsibility to have consulted with
competent tax and legal advisors about the relevant national, state and local
income tax and securities laws affecting the exercise of the Option and the
purchase and subsequent sale of the Shares.

     I am paying the option exercise price for the Shares as follows:



                         ------------------------------

     Please issue the Shares (check one):

     [ ] to me; or

     [ ] to me and ____________________________, as joint tenants with right
         of survivorship,


     at the following address:


     -------------------------------------------

     -------------------------------------------

     -------------------------------------------



                                       10


     My mailing address for shareholder communications, if different from the
address listed above, is:



     -------------------------------------------

     -------------------------------------------

     -------------------------------------------



                                             Very truly yours,


                                             -----------------------------------
                                             Participant (signature)


                                             -----------------------------------
                                             Print Name


                                             -----------------------------------
                                             Date


                                             -----------------------------------
                                             Social Security Number




                                       11

EX-10.3

                        INCENTIVE STOCK OPTION AGREEMENT

                          MAJESCO ENTERTAINMENT COMPANY


     AGREEMENT made as of the ___ day of _______ 200_, between Majesco
Entertainment Company (the "Company"), a Delaware corporation having a principal
place of business in __________, _____________, and ____________ of
____________, an employee of the Company (the "Employee").

     WHEREAS, the Company desires to grant to the Employee an Option to purchase
shares of its common stock, $0.001 par value per share (the "Shares"), under and
for the purposes set forth in the Company's Amended and Restated 2004 Employee,
Director and Consultant Incentive Plan (the "Plan");

     WHEREAS, the Company and the Employee understand and agree that any terms
used and not defined herein have the same meanings as in the Plan; and

     WHEREAS, the Company and the Employee each intend that the Option granted
herein qualify as an ISO.

     NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto agree as
follows:

     1.   GRANT OF OPTION.

     The Company hereby grants to the Employee the right and option to purchase
all or any part of an aggregate of ________________ Shares, on the terms and
conditions and subject to all the limitations set forth herein, under United
States securities and tax laws, and in the Plan, which is incorporated herein by
reference. The Employee acknowledges receipt of a copy of the Plan.

     2.   PURCHASE PRICE.

     The purchase price of the Shares covered by the Option shall be $____ per
Share, subject to adjustment, as provided in the Plan, in the event of a stock
split, reverse stock split or other events affecting the holders of Shares after
the date hereof (the "Purchase Price"). Payment shall be made in accordance with
Paragraph 10 of the Plan.

     3.   EXERCISABILITY OF OPTION.

     Subject to the terms and conditions set forth in this Agreement and the
Plan, the Option granted hereby shall become exercisable as follows:

On the first anniversary of the date         up to _________ Shares
  of this Agreement




On the second anniversary of the date        an additional _________ Shares
  of this Agreement

On the third anniversary of the date         an additional _________ Shares
  of this Agreement


     The foregoing rights are cumulative and are subject to the other terms and
conditions of this Agreement and the Plan.

     4.   TERM OF OPTION.

     The Option shall terminate seven years from the date of this Agreement or,
if the Employee owns as of the date hereof more than 10% of the total combined
voting power of all classes of capital stock of the Company or an Affiliate,
five years from the date of this Agreement, but shall be subject to earlier
termination as provided herein or in the Plan.

     If the Employee ceases to be an employee of the Company or of an Affiliate
(for any reason other than the death or Disability of the Employee or
termination of the Employee's employment for "cause" (as defined in the Plan)),
the Option may be exercised, if it has not previously terminated, within three
months after the date the Employee ceases to be an employee of the Company or an
Affiliate, or within the originally prescribed term of the Option, whichever is
earlier, but may not be exercised thereafter. In such event, the Option shall be
exercisable only to the extent that the Option has become exercisable and is in
effect at the date of such cessation of employment.

     Notwithstanding the foregoing, in the event of the Employee's Disability or
death within three months after the termination of employment, the Employee or
the Employee's Survivors may exercise the Option within one year after the date
of the Employee's termination of employment, but in no event after the date of
expiration of the term of the Option.

     In the event the Employee's employment is terminated by the Employee's
employer for "cause" (as defined in the Plan), the Employee's right to exercise
any unexercised portion of this Option shall cease immediately as of the time
the Employee is notified his or her employment is terminated for "cause," and
this Option shall thereupon terminate. Notwithstanding anything herein to the
contrary, if subsequent to the Employee's termination as an employee, but prior
to the exercise of the Option, the Board of Directors of the Company determines
that, either prior or subsequent to the Employee's termination, the Employee
engaged in conduct which would constitute "cause," then the Employee shall
immediately cease to have any right to exercise the Option and this Option shall
thereupon terminate.

     In the event of the Disability of the Employee, as determined in accordance
with the Plan, the Option shall be exercisable within one year after the
Employee's termination



of employment or, if earlier, within the term originally prescribed by the
Option. In such event, the Option shall be exercisable:

     (a)  to the extent that the Option has become exercisable but has not been
          exercised as of the date of Disability; and

     (b)  in the event rights to exercise the Option accrue periodically over
          time, to the extent of a pro rata portion through the date of
          Disability of any additional vesting rights that would have accrued on
          the next vesting date had the Employee not become Disabled. The
          proration shall be based upon the number of days accrued in the
          current vesting period prior to the date of Disability.

     In the event of the death of the Employee while an employee of the Company
or of an Affiliate, the Option shall be exercisable by the Participant's
Survivors within one year after the date of death of the Employee or, if
earlier, within the originally prescribed term of the Option. In such event, the
Option shall be exercisable:

     (x)  to the extent that the Option has become exercisable but has not been
          exercised as of the date of death; and

     (y)  in the event rights to exercise the Option accrue periodically over
          time, to the extent of a pro rata portion through the date of death of
          any additional vesting rights that would have accrued on the next
          vesting date had the Employee not died. The proration shall be based
          upon the number of days accrued in the current vesting period prior to
          the Employee's date of death.

     5.   METHOD OF EXERCISING OPTION.

     Subject to the terms and conditions of this Agreement, the Option may be
exercised by written notice to the Company or its designee, in substantially the
form of Exhibit A attached hereto. Such notice shall state the number of Shares
with respect to which the Option is being exercised and shall be signed by the
person exercising the Option. Payment of the purchase price for such Shares
shall be made in accordance with Paragraph 10 of the Plan. The Company shall
deliver such Shares as soon as practicable after the notice shall be received,
provided, however, that the Company may delay issuance of such Shares until
completion of any action or obtaining of any consent, which the Company deems
necessary under any applicable law (including, without limitation, state
securities or "blue sky" laws). The Shares as to which the Option shall have
been so exercised shall be registered in the Company's share register in the
name of the person so exercising the Option (or, if the Option shall be
exercised by the Employee and if the Employee shall so request in the notice
exercising the Option, shall be registered in the name of the Employee and
another person jointly, with right of survivorship) and shall be delivered as
provided above to or upon the written order of the person exercising the Option.
In the event the Option shall be exercised, pursuant to Section 4 hereof, by any



person other than the Employee, such notice shall be accompanied by appropriate
proof of the right of such person to exercise the Option. All Shares that shall
be purchased upon the exercise of the Option as provided herein shall be fully
paid and nonassessable.

     6.   PARTIAL EXERCISE.

     Exercise of this Option to the extent above stated may be made in part at
any time and from time to time within the above limits, except that no
fractional share shall be issued pursuant to this Option.

     7.   NON-ASSIGNABILITY.

     The Option shall not be transferable by the Employee otherwise than by will
or by the laws of descent and distribution. The Option shall be exercisable,
during the Employee's lifetime, only by the Employee (or, in the event of legal
incapacity or incompetency, by the Employee's guardian or representative) and
shall not be assigned, pledged or hypothecated in any way (whether by operation
of law or otherwise) and shall not be subject to execution, attachment or
similar process. Any attempted transfer, assignment, pledge, hypothecation or
other disposition of the Option or of any rights granted hereunder contrary to
the provisions of this Section 7, or the levy of any attachment or similar
process upon the Option shall be null and void.

     8.   NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE.

     The Employee shall have no rights as a stockholder with respect to Shares
subject to this Agreement until registration of the Shares in the Company's
share register in the name of the Employee. Except as is expressly provided in
the Plan with respect to certain changes in the capitalization of the Company,
no adjustment shall be made for dividends or similar rights for which the record
date is prior to the date of such registration.

     9.   ADJUSTMENTS.

     The Plan contains provisions covering the treatment of Options in a number
of contingencies such as stock splits and mergers. Provisions in the Plan for
adjustment with respect to stock subject to Options and the related provisions
with respect to successors to the business of the Company are hereby made
applicable hereunder and are incorporated herein by reference.

     10.  TAXES.

     The Employee acknowledges that any income or other taxes due from him or
her with respect to this Option or the Shares issuable pursuant to this Option
shall be the Employee's responsibility.




     In the event of a Disqualifying Disposition (as defined in Section 15
below) or if the Option is converted into a Non-Qualified Option and such
Non-Qualified Option is exercised, the Company may withhold from the Employee's
remuneration, if any, the minimum statutory amount of federal, state and local
withholding taxes attributable to such amount that is considered compensation
includable in such person's gross income. At the Company's discretion, the
amount required to be withheld may be withheld in cash from such remuneration,
or in kind from the Shares otherwise deliverable to the Employee on exercise of
the Option. The Employee further agrees that, if the Company does not withhold
an amount from the Employee's remuneration sufficient to satisfy the Company's
income tax withholding obligation, the Employee will reimburse the Company on
demand, in cash, for the amount under-withheld.

     11.  PURCHASE FOR INVESTMENT.

     Unless the offering and sale of the Shares to be issued upon the particular
exercise of the Option shall have been effectively registered under the
Securities Act of 1933, as now in force or hereafter amended (the "1933 Act"),
the Company shall be under no obligation to issue the Shares covered by such
exercise unless and until the following conditions have been fulfilled:

     (a)  The person(s) who exercise the Option shall warrant to the Company, at
          the time of such exercise, that such person(s) are acquiring such
          Shares for their own respective accounts, for investment, and not with
          a view to, or for sale in connection with, the distribution of any
          such Shares, in which event the person(s) acquiring such Shares shall
          be bound by the provisions of the following legend which shall be
          endorsed upon the certificate(s) evidencing the Shares issued pursuant
          to such exercise:

               "The shares represented by this certificate have been taken for
               investment and they may not be sold or otherwise transferred by
               any person, including a pledgee, unless (1) either (a) a
               Registration Statement with respect to such shares shall be
               effective under the Securities Act of 1933, as amended, or (b)
               the Company shall have received an opinion of counsel
               satisfactory to it that an exemption from registration under such
               Act is then available, and (2) there shall have been compliance
               with all applicable state securities laws;" and

     (b)  If the Company so requires, the Company shall have received an opinion
          of its counsel that the Shares may be issued upon such particular
          exercise in compliance with the 1933 Act without registration
          thereunder. Without limiting the generality of the foregoing, the
          Company may delay issuance of the Shares until completion of any
          action or obtaining of any consent, which the Company deems necessary
          under any applicable law (including without limitation state
          securities or "blue sky" laws).




     12.  RESTRICTIONS ON TRANSFER OF SHARES.

     12.1 If, in connection with a registration statement filed by the Company
pursuant to the Securities Act, the Company or its underwriter so requests, the
Employee will agree not to sell any Shares for a period not to exceed 180 days
following the effectiveness of such registration.

     12.2 The Employee acknowledges and agrees that neither the Company, its
shareholders nor its directors and officers, has any duty or obligation to
disclose to the Employee any material information regarding the business of the
Company or affecting the value of the Shares before, at the time of, or
following a termination of the employment of the Employee by the Company,
including, without limitation, any information concerning plans for the Company
to make a public offering of its securities or to be acquired by or merged with
or into another firm or entity.

     13.  NO OBLIGATION TO EMPLOY.

     The Company is not by the Plan or this Option obligated to continue the
Employee as an employee of the Company or an Affiliate. The Employee
acknowledges: (i) that the Plan is discretionary in nature and may be suspended
or terminated by the Company at any time; (ii) that the grant of the Option is a
one-time benefit which does not create any contractual or other right to receive
future grants of options, or benefits in lieu of options; (iii) that all
determinations with respect to any such future grants, including, but not
limited to, the times when options shall be granted, the number of shares
subject to each option, the option price, and the time or times when each option
shall be exercisable, will be at the sole discretion of the Company; (iv) that
the Employee's participation in the Plan is voluntary; (v) that the value of the
Option is an extraordinary item of compensation which is outside the scope of
the Employee's employment contract, if any; and (vi) that the Option is not part
of normal or expected compensation for purposes of calculating any severance,
resignation, redundancy, end of service payments, bonuses, long-service awards,
pension or retirement benefits or similar payments.

     14.  OPTION IS INTENDED TO BE AN ISO.

     The parties each intend that the Option be an ISO so that the Employee (or
the Employee's Survivors) may qualify for the favorable tax treatment provided
to holders of Options that meet the standards of Section 422 of the Code. Any
provision of this Agreement or the Plan which conflicts with the Code so that
this Option would not be deemed an ISO is null and void and any ambiguities
shall be resolved so that the Option qualifies as an ISO. Nonetheless, if the
Option is determined not to be an ISO, the Employee understands that neither the
Company nor any Affiliate is responsible to compensate him or her or otherwise
make up for the treatment of the Option as a Non-qualified Option and not as an
ISO. The Employee should consult with the Employee's own tax advisors regarding
the tax effects of the Option and the requirements



necessary to obtain favorable tax treatment under Section 422 of the Code,
including, but not limited to, holding period requirements.

     15.  NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.

     The Employee agrees to notify the Company in writing immediately after the
Employee makes a Disqualifying Disposition of any of the Shares acquired
pursuant to the exercise of the Option. A Disqualifying Disposition is defined
in Section 424(c) of the Code and includes any disposition (including any sale)
of such Shares before the later of (a) two years after the date the Employee was
granted the Option or (b) one year after the date the Employee acquired Shares
by exercising the Option, except as otherwise provided in Section 424(c) of the
Code. If the Employee has died before the Shares are sold, these holding period
requirements do not apply and no Disqualifying Disposition can occur thereafter.

     16.  NOTICES.

     Any notices required or permitted by the terms of this Agreement or the
Plan shall be given by recognized courier service, facsimile, registered or
certified mail, return receipt requested, addressed as follows:

If to the Company:
                                Majesco Entertainment Company
                                ------------------------------------------------
                                160 Raritan Center Parkway
                                ------------------------------------------------
                                Edison, New Jersey 08837
                                ------------------------------------------------
                                Attn: Joseph Tuchinsky, General Counsel
                                ------------------------------------------------


If to the Employee:

                                ------------------------------------------------

                                ------------------------------------------------

                                ------------------------------------------------

or to such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given upon
the earlier of receipt, one business day following delivery to a recognized
courier service or three business days following mailing by registered or
certified mail.

     17.  GOVERNING LAW.

     This Agreement shall be construed and enforced in accordance with the law
of the State of Delaware, without giving effect to the conflict of law
principles thereof. For the purpose of litigating any dispute that arises under
this Agreement, the parties hereby consent to exclusive jurisdiction in the
State of New Jersey and agree that such litigation shall be conducted in the
courts of Newark, New Jersey or the federal courts of the United States for the
District of New Jersey.




     18.  BENEFIT OF AGREEMENT.

     Subject to the provisions of the Plan and the other provisions hereof, this
Agreement shall be for the benefit of and shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.

     19.  ENTIRE AGREEMENT.

     This Agreement, together with the Plan, embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement not expressly set forth in this Agreement shall affect or
be used to interpret, change or restrict, the express terms and provisions of
this Agreement, provided, however, in any event, this Agreement shall be subject
to and governed by the Plan.

     20.  MODIFICATIONS AND AMENDMENTS.

     The terms and provisions of this Agreement may be modified or amended as
provided in the Plan.

     21.  WAIVERS AND CONSENTS.

     Except as provided in the Plan, the terms and provisions of this Agreement
may be waived, or consent for the departure therefrom granted, only by written
document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.

     22.  DATA PRIVACY.

     By entering into this Agreement, the Employee: (i) authorizes the Company
and each Affiliate, and any agent of the Company or any Affiliate administering
the Plan or providing Plan recordkeeping services, to disclose to the Company or
any of its Affiliates such information and data as the Company or any such
Affiliate shall request in order to facilitate the grant of options and the
administration of the Plan; (ii) waives any data privacy rights he or she may
have with respect to such information; and (iii) authorizes the Company and each
Affiliate to store and transmit such information in electronic form.

     [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]





     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer, and the Employee has hereunto set his or her hand,
all as of the day and year first above written.


                                            MAJESCO ENTERTAINMENT COMPANY


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:



                                            ------------------------------------
                                            Employee




                                                                       Exhibit A
                                                                       ---------

                  NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION


TO: MAJESCO ENTERTAINMENT COMPANY

Ladies and Gentlemen:

     I hereby exercise my Incentive Stock Option to purchase _________ shares
(the "Shares") of the common stock, $0.001 par value, of Majesco Entertainment
Company (the "Company"), at the exercise price of $________ per share, pursuant
to and subject to the terms of that certain Incentive Stock Option Agreement
between the undersigned and the Company dated _______________, 200_.

     I understand the nature of the investment I am making and the financial
risks thereof. I am aware that it is my responsibility to have consulted with
competent tax and legal advisors about the relevant national, state and local
income tax and securities laws affecting the exercise of the Option and the
purchase and subsequent sale of the Shares.

I AM PAYING THE OPTION EXERCISE PRICE FOR THE SHARES AS FOLLOWS:



                        ---------------------------------

     Please issue the Shares (check one):

     [ ] to me; or

     [ ] to me and ____________________________, as joint tenants with right of
         survivorship,

     at the following address:


     -----------------------------------------------

     -----------------------------------------------

     -----------------------------------------------

MY MAILING ADDRESS FOR SHAREHOLDER COMMUNICATIONS, IF DIFFERENT FROM THE ADDRESS
LISTED ABOVE, IS:


     -----------------------------------------------

     -----------------------------------------------

     -----------------------------------------------




                                            Very truly yours,


                                            ------------------------------------
                                            Employee (signature)


                                            ------------------------------------
                                            Print Name


                                            ------------------------------------
                                            Date


                                            ------------------------------------
                                            Social Security Number

EX-10.4

DIRECTOR COMPENSATION ARRANGEMENTS


Majesco Entertainment Company's director compensation arrangements are as
follows:

The Lead Director will receive an annual retainer of $60,000 (in lieu of other
amounts paid to committee chairs or other non-employee directors).

The Chair of the Audit Committee will receive an annual retainer of $50,000 (in
lieu of other amounts paid to non-employee directors).

Each other non-employee director will receive an annual retainer of $40,000.

In addition to the annual cash retainer, non-employee directors shall receive
annual equity grants valued at the following amounts:

     Lead Director: $80,000
     Audit Committee Chair: $60,000
     Compensation Committee Chair: $60,000
     Nominating and Governance Committee Chair: $50,000
     Other non-employees directors: $40,000

The equity grants shall be made pursuant to the 2004 Employee, Director and
Consultant Stock Plan (the "Plan") and shall be a mix of 2/3 restricted stock
and 1/3 options to purchase common stock. The restricted stock shall be awarded
quarterly with the number of shares determined by dividing the applicable dollar
amount by the fair market value (as determined under the Plan) of the Company's
common stock as of the quarterly grant date. The stock options will be awarded
annually with the number of shares determined by using the black scholes
formula. The stock options shall have an exercise price equal to fair market
value as determined under the Plan. The shares of restricted stock shall vest
and become exercisable six months following the grant date. The stock options
shall vest and become exercisable over two years, with half vesting on each of
the first and second anniversaries of the grant date.

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Carl Yankowski, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ending April 30, 2005, of Majesco Entertainment Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function);

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: June 14, 2005

By: /s/ Carl Yankowski                
Name: Carl Yankowski
Title: Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Jan E. Chason, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ending April 30, 2005, of Majesco Entertainment Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function);

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: June 14, 2005

By: /s/ Jan E. Chason                                                
Name: Jan E. Chason
Title: Chief Financial Officer
(Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF THE CEO OF MAJESCO ENTERTAINMENT COMPANY PURSUANT
TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO 906 OF
THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Majesco Entertainment Company (the "Company") on Form 10-Q for the period ending April 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Carl Yankowski, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

By:				/s/ Carl Yankowski
				Name: Carl Yankowski
				Title: Chief Executive Officer

Date: June 14, 2005

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF THE CFO OF MAJESCO ENTERTAINMENT COMPANY PURSUANT
TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO 906 OF
THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Majesco Entertainment Company (the "Company") on Form 10-Q for the period ending April 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jan E. Chason, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

By:				/s/ Jan E. Chason
				Name: Jan E. Chason
				Title: Chief Financial Officer

Date: June 14, 2005