Note & Warrant Purchase Agreement

NOTE AND WARRANT PURCHASE AGREEMENT


This Note and Warrant Purchase Agreement, dated as of December 27, 2002, (this "Agreement") is entered into by and among The 3DO Company, a Delaware corporation, (the "Company"), The 3DO Company, a California corporation ("Subsidiary") and William M. Hawkins, III (the "Purchaser"). The parties, intending to be legally bound, hereby agree as follows:


1. Definitions. As used in this Agreement, the following capitalized terms have the following meanings:


(a) "Notes" means the First Note, the Second Note, the amended and
restated Previous Note, and the Subsequent Notes (as defined below).


(b) "Security Agreement" means the Amended and Restated Security
Agreement dated as of December 27, 2002 between Company and Investor.


(c) All capitalized terms not otherwise defined herein shall have the
respective meanings given in the Notes or the Security Agreement.


2. Sale of Notes.


(a) Loan Commitment Amount. During the period beginning on the date
hereof and ending on June 30, 2003 (the "Borrowing Period"), the Subsidiary
will sell to Purchaser certain Notes for an aggregate principal amount of
up to $8,000,000 (the "Loan Commitment Amount"), including the principal
amount of the Previous Note, the First Note and the Second Note described
below.


(b) First Note. Upon execution of this Agreement, the Subsidiary shall
issue a secured subordinated promissory note substantially in the form
attached hereto as Exhibit A in the principal amount of $1,800,000 (the
"First Note"). The parties acknowledge that the Purchaser delivered to the
Subsidiary the purchase price of the First Note on December 9, 2002.


(c) Second Note. Upon execution of this Agreement, the Subsidiary
shall issue a secured subordinated promissory note substantially in the
form attached hereto as Exhibit B in the principal amount of $1,400,000
(the "Second Note"). The parties acknowledge that the Purchaser delivered
to the Subsidiary the purchase price of the Second Note on December 18,
2002.


(d) Previous Note. The parties acknowledge that the Subsidiary issued
a Secured Bridge Note (the "Previous Note") in the principal amount of
$3,000,000 on October 1, 2002. The Company, Subsidiary and Purchaser agree
to amend and restate the Previous Note in the form attached as Exhibit C
and the Subsidiary shall issue the amended and restated Previous Note upon
execution of this Agreement. The Subsidiary and Purchaser shall amend and
restate the Security Agreement dated October 1, 2002 by the Subsidiary in
favor of the Purchaser in the form attached hereto as Exhibit D. The
Subsidiary acknowledges that the Subordination


Agreement between GE Capital Commercial Services, Inc. and the Purchaser
dated October 1, 2002 is no longer effective.


(e) Initial Closing. The execution of this Agreement and the closing
of the purchase and sale of the First Note and Second Note and the issuance
of the amended and restated Previous Note to the Purchaser hereunder shall
be held at the offices of the Company on the date and time upon which the
Company, Subsidiary and Purchaser sign this Agreement (the "Initial
Closing"). At the Initial Closing, the Subsidiary shall deliver to the
Purchaser the executed First Note, Second Note and the amended and restated
Previous Note, and the Purchaser shall deliver to the Subsidiary the
Previous Note for cancellation.


(f) Subsequent Closing(s). During the Borrowing Period, the Subsidiary
may further issue and sell notes to Purchaser (the "Subsequent Closings")
for additional draw amounts (each respectively, a "Subsequent Draw Down
Amount") not to exceed the Loan Commitment Amount in the aggregate
(including the principal amount of the First Note, Second Note, the
Previous Note and any Subsequent Notes (as defined below)) by giving notice
thereof to Purchaser (each, a "Notice"). Within five (5) business days
after a Notice is received by Purchaser, the Purchaser will lend to the
Subsidiary, and the Subsidiary will borrow from Purchaser, an amount equal
to such Purchaser's Subsequent Draw Down Amount as set forth in the Notice.
In consideration therefor, the Company will issue to Purchaser a secured
promissory note for a principal amount equal to such Subsequent Draw Down
Amount (each, a "Subsequent Note") in the form attached as Exhibit E.


(g) Delivery. At each closing of the sale of a Note to the Purchaser,
the Subsidiary will deliver to the Purchaser a Subsequent Note in the
principal amount of the Subsequent Draw Down Amount dated as of the date of
each closing, in exchange for cash, check or forgiveness of indebtedness in
an amount equal to the principal amount of the Subsequent Note.


3. Registration Rights Agreement. Simultaneous with the execution of this Agreement, the Company and the Purchaser shall enter into the Amended and Restated Registration Rights Agreement in substantially the form attached hereto as Exhibit F.


4. Warrant. In consideration of Purchaser's commitment to purchase up to the Loan Commitment Amount of Notes from Subsidiary, Company shall issue a warrant to Purchaser in the form attached hereto as Exhibit G (the "Warrant").


5. Representations and Warranties of Company and Subsidiary. Company and Subsidiary represent and warrant to Purchaser as of the date hereof and each Subsequent Closing that:


(a) Due Incorporation, Qualification, etc. Each of Company and
Subsidiary (i) is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation; (ii) has the
power and authority to own, lease and operate its properties and carry on
its business as now conducted; and (iii) is duly qualified, licensed to do
business and in good standing as a foreign corporation in each jurisdiction
where the failure to be so qualified or licensed could reasonably be
expected to have a Material Adverse Effect.


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(b) Authority.


(1) Corporate Authorization. The execution, delivery and performance by Company and Subsidiary of each Transaction Document to be executed by Company or Subsidiary and the consummation of the transactions contemplated thereby (i) are within the power of Company and Subsidiary; and (ii) have been duly authorized by all necessary actions on the part of Company and Subsidiary, except that the approval by the Company's stockholder of the exercise of the Warrant, if applicable, has not been obtained.


(2) Valid Issuance. The Warrant, and the shares of Common Stock issued upon exercise of the Warrant (collectively, the "Securities"), when issued in compliance with the provisions of this Agreement and the Warrant will be validly issued and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein, and as may be required by future changes in such laws.


(c) Enforceability. Each Transaction Document executed, or to be
executed, by Company or Subsidiary has been, or will be, duly executed and
delivered by Company and Subsidiary and constitutes, or will constitute, a
legal, valid and binding obligation of Company and Subsidiary, enforceable
against Company and Subsidiary in accordance with its terms, except as
limited by (i) bankruptcy, insolvency or other laws of general application
relating to or affecting the enforcement of creditors' rights generally and
general principles of equity and (ii) limitations on the enforceability of
the indemnification provisions of the Registration Rights Agreement as
limited by applicable securities laws.


(d) Non-Contravention. The execution and delivery by Company and
Subsidiary of the Transaction Documents executed by Company and Subsidiary
and the performance and consummation of the transactions contemplated
thereby do not and will not (i) violate the Articles of Incorporation or
Certificate of Incorporation, as applicable, or Bylaws of Company or
Subsidiary or any material judgment, order, writ, decree, statute, rule or
regulation applicable to Company or Subsidiary; (ii) violate any provision
of, or result in the breach or the acceleration of, or entitle any other
Person to accelerate (whether after the giving of notice or lapse of time
or both), any material mortgage, indenture, agreement, instrument or
contract to which Company or Subsidiary is a party or by which it is bound;
or (iii) result in the creation or imposition of any Lien upon any
property, asset or revenue of Company or Subsidiary (other than any Lien
arising under the Transaction Documents) or the suspension, revocation,
impairment, forfeiture, or nonrenewal of any material permit, license,
authorization or approval applicable to Company or Subsidiary, its business
or operations, or any of its assets or properties.


(e) Approvals. No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental authority or
other Person (including the shareholders of any Person) is required in
connection with the executi ...