HIRSCH INTERNATIONAL CORP
EXHIBIT 10.1
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<TYPE>EX-10
<SEQUENCE>2
<FILENAME>ex101.txt
<DESCRIPTION>EXHIBIT 10.1
<TEXT>

           Exhibit 10.1
           ------------


                 AMENDMENT NO. 4 TO LOAN AND SECURITY AGREEMENT
                 ----------------------------------------------

     AMENDMENT NO. 4 TO LOAN AND SECURITY AGREEMENT (this "Amendment"), dated as
of August  31,  2004,  by and  among  Hirsch  International  Corp.,  a  Delaware
corporation  ("Borrower"),  HAPL Leasing Co.,  Inc.  ("HAPL"),  Hirsch  Business
Concepts,  LLC  ("HBC"),  Sedeco,  Inc.  ("Sedeco")  and Hometown  Threads,  LLC
("Hometown",  and  together  with HAPL,  HBC and  Sedeco,  individually,  each a
"Guarantor" and collectively,  "Guarantors") and Congress Financial Corporation,
a Delaware corporation ("Lender").

                              W I T N E S S E T H :
                               - - - - - - - - - -

     WHEREAS,  Lender and  Borrower  have entered  into  financing  arrangements
pursuant to which  Lender has made and may make loans and  advances  and provide
other financial accommodations to Borrower as set forth in the Loan and Security
Agreement,  dated as of November 26, 2002, as amended by Amendment No. 1 to Loan
and Security Agreement,  dated as of April 28, 2003, Amendment No. 2 to Loan and
Security  Agreement,  dated as of July 16, 2003, and Amendment No. 3 to Loan and
Security  Agreement,  dated as of April 30, 2004, by and among Lender,  Borrower
and  Guarantors  (as  amended  hereby and as the same may  hereafter  be further
amended, modified,  supplemented,  extended,  renewed, restated or replaced, the
"Loan  Agreement"),  and the  agreements,  documents and instruments at any time
executed   and/or   delivered  in  connection   therewith  or  related   thereto
(collectively, together with the Loan Agreement, the "Financing Agreements");

     WHEREAS,  Borrower and Guarantors  have requested that Lender amend certain
provisions of the Loan Agreement;

     WHEREAS,  Lender is  willing  to agree to such  amendments,  subject to the
terms and conditions set forth herein; and

     WHEREAS,  by this  Amendment,  Lender,  Borrower and Guarantors  desire and
intend to evidence such amendments;

     NOW THEREFORE,  in consideration of the foregoing and the mutual agreements
and covenants contained herein, the parties hereto agree as follows:

     1.   Definitions.

          (a)  Additional  Definition.  As used herein,  the term "Fee Reduction
               Period" shall mean the period commencing on September 1, 2004 and
               ending on the earlier of (i) the occurrence of a Default or Event
               of Default and (ii) February 28, 2005.

          (b)  Interpretation.  For purposes of this Amendment, unless otherwise
               defined herein, all terms used herein, including, but not limited
               to, those terms used and/or defined in the recitals above,  shall
               have the respective  meanings  assigned to such terms in the Loan
               Agreement.

     2.   Servicing Fee.  Notwithstanding  anything to the contrary contained in
          Section 3.3 of the Loan  Agreement,  during the Fee Reduction  Period,
          the amount of the monthly  servicing fee payable by Borrower to Lender
          under such  section  shall be reduced to $2,000 in respect of Lender's
          services  for each month (or part  thereof).  After the Fee  Reduction
          Period, such servicing fee shall be payable in the amount set forth in
          Section 3.3 of the Loan Agreement.

     3.   Unused Line Fee. Notwithstanding anything to the contrary contained in
          Section 3.4 of the Loan  Agreement,  during the Fee Reduction  Period,
          Borrower  shall  not be  required  to make any  payment  to  Lender in
          respect of the unused  line fee  provided  for in such  section of the
          Loan  Agreement.  After the Fee Reduction  Period,  Borrower  shall be
          required to pay the unused line fee as set forth in Section 3.4 of the
          Loan Agreement.

     4.   Letter  of  Credit  Fee.  Notwithstanding  anything  to  the  contrary
          contained  in  Section  2.2(b) of the Loan  Agreement,  during the Fee
          Reduction  Period,  the letter of credit and acceptance fee payable by
          Borrower   to  Lender  in   connection   with  the  Letter  of  Credit
          Accommodations,  other than Letter of Credit Accommodations consisting
          of banker's  acceptances,  shall be reduced to a rate equal to one and
          one-half (1 1/2%) percent per annum on the daily  outstanding  balance
          of such  Letter of  Credit  Accommodations.  After  the Fee  Reduction
          Period,  such letter of credit and  acceptance fee shall be payable in
          the amount set forth in Section 2.2(b) of the Loan Agreement.

     5.   Collateral  Reporting.   Notwithstanding   anything  to  the  contrary
          contained in Section  7.1(a)(i) of the Loan Agreement,  during the Fee
          Reduction Period, Borrower shall only be required to provide to Lender
          schedules of sales made,  collections received and credit memos issued
          for the immediately  preceding month as soon as possible after the end
          of each month (but in any event  within five (5)  Business  Days after
          the end thereof), or more frequently as Lender may request at any time
          that  Excess  Availability  is less than  $5,000,000,  or a Default or
          Event of Default shall exist or have occurred and be continuing, or at
          any time that  Borrower  has  requested  any  Loans or as  Lender  may
          otherwise request.  After the Fee Reduction Period,  Borrower shall be
          required  to  provide  such  schedules  in  accordance   with  Section
          7.1(a)(i) of the Loan Agreement.

     6.   Field  Examinations.  Unless and until Borrower may request a Loan, so
          long as no Default or Event of Default  exists or has  occurred and is
          continuing,  Lender  will  not  conduct  a  field  examination  of the
          business or assets of Borrower.

     7.   Additional Conditions Precedent.

          (a)  In  addition  to the  satisfaction  of  each  of  the  conditions
               precedent to the making of any Loans or  providing  any Letter of
               Credit  Accommodations  set  forth  in  Section  4.2 of the  Loan
               Agreement,  on  and  after  the  date  hereof,  it  shall  be  an
               additional  condition  precedent  to the making of any Loan that:
               (a) Lender shall have  received a written  request from  Borrower
               for such Loan not less  than  forty  five (45) days  prior to the
               date of making such Loan,  and (b) Lender shall have  completed a
               field  examination  of the  business  and assets of  Borrower  in
               accordance  with  its  customary  practices  or as  is  otherwise
               required  by Lender  under the  circumstances  and the results of
               such field  examination  shall in all respects be satisfactory to
               Lender (or Lender may at its  option  reduce the  advance  rates,
               establish  reserves or otherwise  modify the terms under which it
               is  willing  to make  any  Loans  or  provide  Letter  of  Credit
               Accommodations  based on the  results of such field  examination)
               and (c) as to any Letter of Credit  Accommodation,  Lender  shall
               have received and be in  possession  of Collateral  consisting of
               cash of  Borrower  in an amount  equal to one  hundred ten (110%)
               percent of the face amount of the Letter of Credit  Accommodation
               requested.

     8.   EBITDA.  Section 9.17 of the Loan  Agreement is hereby  deleted in its
          entirety and replaced with the following:

                 "9.17 Minimum EBITDA. As of the last day of the fiscal quarter
                 of Borrower ending on January 31, 2005 and as of the last day
                 of each fiscal quarter of Borrower thereafter, the EBITDA of
                 Borrower and its Subsidiaries for the immediately preceding
                 four (4) consecutive fiscal quarters (treated as a single
                 accounting period) shall be not less than negative $2,950,000."

     9.   Minimum Excess Availability.  Notwithstanding anything to the contrary
          contained  in  Section  9.19 of the  Loan  Agreement,  during  the Fee
          Reduction  Period,  Borrower  shall not be required to comply with the
          maintenance of the minimum Excess  Availability  provided for therein.
          After the end of the Fee Reduction Period,  Borrower shall be required
          to comply with Section 9.19 of the Loan  Agreement in accordance  with
          its terms.

     10.  Cash Collateral.  Without limiting any other rights of Lender,  or the
          prior  grant to Lender of any  security  interest  in the  Collateral,
          Borrower  hereby  confirms  and agrees that it has granted to Lender a
          security  interest  in and lien upon,  and pledge of, cash at any time
          now or  hereafter  held or received by or in transit to Lender from or
          for the  account of  Borrower as  collateral  security  for the prompt
          performance, observance and indefeasible payment in full of all of the
          Obligations.  With  respect  to any  Letter of  Credit  Accommodations
          provided  as of the  date  hereof  and at any  time on or prior to the
          request by  Borrower of any Letter of Credit  Accommodation  after the
          date  hereof,  Borrower  shall  deliver,  or cause to be  delivered to
          Lender,  additional  cash in an amount not less than one  hundred  ten
          (110%)  percent of the  amount of the  Letter of Credit  Accommodation
          requested.  Such cash  shall be  collateral  security  for the  prompt
          performance, observance and indefeasible payment in full of all of the
          Obligations.  All of such cash  described  in this  Section 10 whether
          delivered  to Lender  prior to or after the date hereof is referred to
          herein as the "Cash Collateral".  The Cash Collateral shall be held by
          Lender in an account  designated  by Lender for such  purposes  in its
          books and  records  and may be  commingled  with  Lender's  own funds.
          Borrower  shall  have no right  to be paid or to draw  upon any of the
          Cash Collateral  until all of the Obligations  have been  indefeasibly
          paid and  satisfied in full. If and when all of the  Obligations  have
          been  indefeasibly  paid and satisfied in full (or sooner if Lender so
          determines),  any  sums  still  held  by  Lender  as  Cash  Collateral
          hereunder shall be returned to Borrower  (subject to applicable law or
          court order).

     11.  Additional  Representations,  Warranties and  Covenants.  Borrower and
          each Guarantor  represents,  warrants and covenants with and to Lender
          as  follows,  which  representations,  warranties  and  covenants  are
          continuing  and shall survive the execution and delivery  hereof,  and
          the truth and accuracy of, or compliance with each,  together with the
          representations,  warranties  and  covenants  in the  other  Financing
          Agreements,  being a  continuing  condition  of the making of Loans or
          Letter of Credit Accommodations by Lender to Borrower:

          (a)  After giving effect to the provisions of this Amendment, no Event
               of  Default  exists  or has  occurred  as of  the  date  of  this
               Amendment.

          (b)  This  Amendment  has been duly executed and delivered by Borrower
               and each Guarantor and is in full force and effect as of the date
               hereof and the  agreements  and  obligations of Borrower and each
               Guarantor  contained herein constitute  legal,  valid and binding
               obligations  of Borrower and each Guarantor  enforceable  against
               each of them in accordance with their respective terms.


     12.  Conditions  Precedent.  The effectiveness of the amendments  contained
          herein  shall be  subject to the  receipt by Lender of this  Amendment
          duly authorized, executed and delivered by the parties hereto.

     13.  Effect of this  Amendment.  Except as expressly set forth  herein,  no
          other amendments,  consents, changes or modifications to the Financing
          Agreements  are  intended or implied,  and in all other  respects  the
          Financing  Agreements are hereby specifically  ratified,  restated and
          confirmed by all parties  hereto as of the  effective  date hereof and
          Borrower and Guarantors  shall not be entitled to any other or further
          amendment or consent by virtue of the  provisions of this Amendment or
          with respect to the subject matter of this Amendment. To the extent of
          conflict  between the terms of this Amendment and the other  Financing
          Agreements,  the  terms  of this  Amendment  shall  control.  The Loan
          Agreement  and  this  Amendment  shall be read  and  construed  as one
          agreement.

     14.  Governing Law. The validity,  interpretation  and  enforcement of this
          Amendment and the other  Financing  Agreements and any dispute arising
          out  of  the  relationship  between  the  parties  hereto  whether  in
          contract, tort, equity or otherwise, shall be governed by the internal
          laws  of the  State  of New  York  but  excluding  any  principles  of
          conflicts of law or other rule of law that would cause the application
          of the law of any jurisdiction other than the laws of the State of New
          York.

     15.  Binding Effect.  This Amendment shall be binding upon and inure to the
          benefit of each of the parties hereto and their respective  successors
          and assigns.

     16.  Headings.  The headings listed herein are for convenience  only and do
          not constitute matters to be construed in interpreting this Amendment.

     17.  Counterparts.  This  Amendment  may  be  executed  in  any  number  of
          counterparts,  but all of such counterparts shall together  constitute
          but one and the same agreement.  In making proof of this Amendment, it
          shall  not be  necessary  to  produce  or  account  for more  than one
          counterpart thereof signed by each of the parties hereto.  Delivery of
          an executed  counterpart of this Amendment by telefacsimile shall have
          the  same  force  and  effect  as  delivery  of an  original  executed
          counterpart  of this  Amendment.  Any  party  delivering  an  executed
          counterpart of this Amendment by  telefacsimile  also shall deliver an
          original  executed  counterpart of this Amendment,  but the failure to
          deliver  an  original  executed   counterpart  shall  not  affect  the
          validity,  enforceability,  and binding effect of this Amendment as to
          such party or any other party.

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


                                                 CONGRESS FINANCIAL CORPORATION

                                                     By:/s/ Dionne S. Rice
                                                     ----------------------
                                                     Title:Vice-President
                                                     --------------------

                                                     HIRSCH INTERNATIONAL CORP.

                                                     By:/s/ Beverly Eichel
                                                     ---------------------

                                                     Title:V.P. & CFO
                                                     ----------------

                                                     HAPL LEASING CO., INC.

                                                     By:/s/Beverly Eichel
                                                     --------------------

                                                     Title:V.P. & CFO
                                                     ----------------

                                                     SEDECO, INC.

                                                     By:/s/Beverly Eichel
                                                     --------------------

                                                     Title:V.P. & CFO
                                                     ----------------

                                                  HIRSCH BUSINESS CONCEPTS, LLC

                                                     By:/s/Beverly Eichel
                                                     --------------------

                                                     Title:V.P. & CFO
                                                     ----------------

                                                     HOMETOWN THREADS, LLC

                                                     By:/s/Beverly Eichel
                                                     --------------------

                                                     Title:V.P. & CFO
                                                     ----------------








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