Warrant To Purchase Shares

EXHIBIT 10.3


THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH RESPECT THERETO.


WARRANT TO PURCHASE
SHARES OF COMMON STOCK OF
THE 3DO COMPANY


Issue Date: February 21, 2003


______ Shares of Common Stock


Warrant No. CW-_____


1. Issuance. This Warrant is issued to _____________ (the "Holder"), by The 3DO Company, a Delaware corporation (hereinafter with its successors called the "Company") pursuant to the Securities Purchase Agreement of even date herewith (the "Purchase Agreement"). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Purchase Agreement.


2. Purchase Price; Number of Shares. Subject to the exercise restriction provided for in Section 6 hereof, this Warrant certifies that, for value received, the Holder of this Warrant is entitled upon surrender of this Warrant with the subscription form annexed hereto as Appendix 1 duly executed, at the principal office of the Company, to purchase from the Company _____________ fully paid and nonassessable shares of Common Stock of the Company (the "Common Stock") at a price per share (the "Purchase Price") of $____________, subject to adjustment pursuant to Sections 8 and 9 below.


3. Payment of Purchase Price. Subject to Section 4, the Purchase Price may be paid (i) in cash or by certified check or wire transfer, (ii) by the cancellation, surrender or forgiveness by the Holder to the Company of any promissory notes or other obligations issued by the Company, with all such notes and obligations so surrendered being credited against the Purchase Price in an amount equal to the principal amount thereof plus accrued interest to the date of surrender, or (iii) by any combination of the foregoing.


4. Net Issue Election. Notwithstanding any provisions herein to the contrary, the Holder may elect to receive, without the payment by the Holder of any additional consideration, shares of Common Stock equal to the value (as determined below) of this Warrant by the surrender of this Warrant to the Company, with the net issue election notice set forth in Appendix 1 annexed hereto duly executed, at the principal office of the Company. Thereupon, the Company shall issue to the


Holder such number of fully paid and nonassessable shares of Common Stock as is computed using the following formula:


X = Y(A-B)
------
A


where:


X = the number of shares of Common Stock to be issued to the
Holder pursuant to this Section 4.


Y = the number of shares of Common Stock covered by this
Warrant or, if only a portion of the Warrant is being exercised, the
portion of the Warrant being exercised at the time the net issue
election is made pursuant to this Section 4.


A = the fair market value of one share of Common Stock,
determined as follows: (i) if at such time the Common Stock is listed
on a national securities exchange or on the over-the-counter market,
then the closing price of the Common Stock on the business day
immediately prior to the date of exercise or, if no sale of the Common
Stock was made on such day, the first business day immediately
preceding such day upon which a sale was made, or (ii) if at such time
the Common Stock is not listed on a national securities exchange or on
the over-the-counter market, then as determined in good faith by the
Board and agreed to by Holder at the time the net issue election is
made pursuant to this Section 4.


B = the Purchase Price in effect under this Warrant at the
time the net issue election is made pursuant to this Section 4.


5. Fractional Shares. No fractional shares shall be issued upon exercise of this Warrant. The Company shall, in lieu of issuing any fractional share, pay the holder entitled to such fraction a sum in cash equal to such fraction multiplied by the then effective Purchase Price.


6. Exercise.


(a) Expiration Date. Holder's rights under this Warrant expire at 5:00 p.m. Pacific Time on the fourth anniversary of the date of this Warrant (the "Expiration Date") and shall be void thereafter. At the Expiration Date, the portion of this Warrant not exercised prior thereto shall be and become void and of no value, provided, that if the closing sales price of the Common Stock on the date of expiration of this Warrant is greater than 102% of the Purchase Price on the date of expiration, then this Warrant shall be deemed to have been exercised in full (to the extent not previously exercised) on a "cashless exercise" basis. The Company may not call or redeem all or any portion of this Warrant without the prior written consent of the Holder.


(b) Delivery. To effect conversions hereunder, the Holder shall not be required to physically surrender this Warrant unless the aggregate shares represented by this Warrant are being exercised. Upon delivery of the Form of Election to Purchase to the Company (with the attached Shares Exercise Log) at its address for notice set forth herein and upon payment of the Purchase Price multiplied by the number of shares of Common Stock that the Holder intends to purchase


2


hereunder, the Company shall promptly (but in no event later than three business days after the date of exercise) issue and deliver to the Holder, a certificate for the shares of Common Stock issuable upon such exercise, which, unless otherwise required by the Purchase Agreement, shall be free of restrictive legends. The Company shall, upon request of the Holder and subsequent to the date on which a registration statement covering the resale of the shares of Common Stock has been declared effective by the Securities and Exchange Commission, deliver shares of Common Stock electronically through the Depository Trust Corporation or another established clearing corporatio ...