Amendment #4 To Loan Security Agreement

AMENDMENT NUMBER FOUR
TO LOAN AND SECURITY AGREEMENT


This AMENDMENT NUMBER FOUR TO LOAN AND SECURITY AGREEMENT (this "Amendment") is entered into as of August 14, 2001, among the lenders identified on the signature pages hereof (the "Lenders"), FOOTHILL CAPITAL CORPORATION, a California corporation, as the arranger and administrative agent for the Lenders (the "Agent"), THE 3DO COMPANY, a California corporation ("Borrower"), THE 3DO COMPANY, a Delaware corporation ("Parent"), and 3DO EUROPE, LTD., a company incorporated under the laws of England ("UK Sub"), with reference to the following:


WHEREAS, the Obligors have previously entered into that certain Loan and Security Agreement, dated as of April 6, 2000, as amended by that certain Amendment Number One to Loan and Security Agreement, dated as of June 9, 2000, by that certain Amendment Number Two to Loan and Security Agreement, dated as of September 18, 2000, and by that certain Amendment Number Three to Loan and Security Agreement, dated as of December 1, 2000 (as so modified and as otherwise heretofore amended, modified or supplemented from time to time, the "Agreement"), with the Lender Group, pursuant to which the Lender Group has made certain loans and financial accommodations available to the Obligors. Terms used herein without definitions shall have the meanings ascribed to them in the Agreement;


WHEREAS, certain Events of Default have occurred and are continuing;


WHEREAS, the Obligors have requested that Agent and the Lenders waive such Events of Default and amend the Agreement in accordance with the terms and conditions hereof; and


WHEREAS, Agent and the Lenders are willing to waive such Events of Default and amend the Agreement in accordance with the terms and conditions hereof.


NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:


1. Amendments To The Agreement.


(a) Section 1.1 of the Agreement hereby is amended by adding the following definition in the proper alphabetical order:


"Unrestricted Cash" means, as of any date of determination, all cash that is not supporting a Letter of Credit.


(b) The following definitions contained in Section 1.1 of the Agreement hereby are amended and restated in their entirety to read as follows:


"Borrower Seasonal Reserve" means, as of any date of determination, an amount equal to 5% of the gross sales of Borrower for the 45 days immediately preceding the date of determination (the percentage amount of the Borrower Seasonal Reserve may be adjusted, at the election of the Agent in its sole discretion, for the 2001/2002 season based upon the actual amount of Borrower's Dilution during the 2000/2001 season); provided, however, that the Borrower Seasonal Reserve shall be reduced on a Dollar-for-Dollar basis for each credit issued by Borrower on or after March 31 immediately following such period until the Borrower Seasonal Reserve has been reduced to zero and, in any event, the Borrower Seasonal Reserve shall be reduced to zero on June 1 of each year.


"Tangible Net Worth" means, as of any date of determination, the amount equal to (a) Parent's total consolidated stockholder's equity, minus (b) all Intangible Assets of Parent and its Subsidiaries.


"UK Sub Seasonal Reserve" means, as of any date of determination, an amount equal to 5% of the gross sales of the UK Sub for the 45 days immediately preceding the date of determination (the percentage amount of the UK Sub Seasonal Reserve may be adjusted, at the election of the Agent, for the 2001/2002 season based upon the actual amount of the UK Sub's Dilution during the 2000/2001 season); provided, however, that the UK Sub Seasonal Reserve shall be reduced on a Dollar-for-Dollar basis for each credit issued by UK Sub on or after March 31 immediately following such period until the UK Sub Seasonal Reserve has been reduced to zero and, in any event, the UK Sub Seasonal Reserve shall be reduced to zero on June 1 of each year.


(c) Subsections (a)(x) and (a)(y) of Section 2.1 of the Agreement are hereby amended and restated in their entirety to read as follows:


(x) the result of 85% of Eligible Borrower
Accounts, minus the amount, if any, of the Borrower
Dilution Reserve, minus, during the period from
November 15 to June 1, the amount, if any, of the
Borrower Seasonal Reserve, plus


(y) on and after the UK Sub Closing Date,
the least of


(i) the result of 75% of the amount
of Eligible UK Sub Accounts, minus
the amount, if any, of the UK Sub
Dilution Reserve, minus, during the
period from November 15 to June 1,
the amount, if any, of the UK Sub
Seasonal Reserve, and


(ii) an amount equal to 20% of the
Availability provided by subsection
(x) above, and


(iii) $10,000,000, minus


(d) Section 6.2 of the Agreement is hereby amended and restated in its entirety to read as follows:


6.2 Collateral Reporting. Provide Agent (with copies for each Lender) with the following documents at the following times in form reasonably satisfactory to Agent:


========================== ===================================================== Daily (a) a sales journal, collection journal, and credit
register since the last such schedule and a
calculation of the Borrowing Base as of such date,


(b) notice of all returns, disputes, or claims,


(c) a report of daily cash balances in Obligors' bank
accounts summarized from statements generated by the
banks where such accounts are located, -------------------------- ----------------------------------------------------- Monthly (not later than (d) a detailed calculation of the Borrowing Base, the 10th day of each month) (e) a detailed aging, by total, of the Accounts,
together with a reconciliation to the detailed
calculation of the Borrowing Base previously provided
to Agent,


(f) a summary and detailed listing, by vendor, of the
Obligors' accounts payable and any book overdraft,


(g) a report of all new copyrightable or patentable
materials generated by the Obligors during the prior
month identifying all such copyrightable materials
that are required to be registered pursuant to
Section 6.19, and patentable materials with respect
to which applications are required to by filed
pursuant to Section 6.20


(h) a detailed listing of all copyright applications
filed and all copyrights granted ...