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3do Purchase Agreement 12-27-2002

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


<PAGE>


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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<PAGE>


(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 execution and delivery of the Transaction Documents

executed by Company and Subsidiary and the performance and consummation of

the transactions contemplated thereby, except such consents, approvals,

orders, authorizations, registrations, declarations or filings that are so

required and which have been



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<PAGE>



obtained and are in full force and effect, except that the approval by the

Company's stockholder of the exercise of the Warrant, if applicable, has

not been obtained.


(f) No Violation or Default. Neither Company nor Subsidiary is in

violation of or in default with respect to (i) its Articles of

Incorporation or Certificate of Incorporation, as applicable or Bylaws or

any material judgment, order, writ, decree, statute, rule or regulation

applicable to such Company or Subsidiary; or (ii) any material mortgage,

indenture, agreement, instrument or contract to which Company or Subsidiary

is a party or by which it is bound (nor is there any waiver in effect

which, if not in effect, would result in such a violation or default),

where, in each case, such violation or default, individually, or together

with all such violations or defaults, could reasonably be expected to have

a Material Adverse Effect.


(g) Litigation. Except as set forth in Item 4(g) of Schedule I, no

actions (including derivative actions), suits, proceedings or

investigations are pending or, to the knowledge of Company, threatened

against Company or Subsidiary at law or in equity in any court or before

any other governmental authority which (i) if adversely determined could

reasonably be expected to (alone or in the aggregate) have a Material

Adverse Effect; or (ii) seeks to enjoin, either directly or indirectly, the

execution, delivery or performance by Company or Subsidiary of the

Transaction Documents or any of the transactions contemplated thereby.


(h) Accuracy of Information Furnished. None of the Transaction

Documents and none of the other certificates, statements or information

furnished to Purchaser by or on behalf of Company or Subsidiary in

connection with the Transaction Documents or the transactions contemplated

thereby contains or will contain any untrue statement of a material fact or

omits or will omit to state a material fact necessary to make the

statements therein, in light of the circumstances under which they were

made, not misleading.


(i) Government Consent, Etc. No consent, approval, order or

authorization of, or designation, registration, declaration or filing with,

any federal, state, local or other governmental authority on the part of

Company or Subsidiary is required in connection with the valid execution

and delivery of this Agreement, the Notes, the Warrant or the offer, sale

or issuance of the Securities, other than, if required, filings or

qualifications under the California Corporate Securities Law of 1968, as

amended (the "California Law"), or other applicable blue sky laws, which

filings or qualifications, if required, will be timely filed or obtained by

Company.


6. Representations and Warranties by Purchaser. Purchaser represents

and warrants to Company and Subsidiary as of the Closing Date as follows:


(a) Investment Intent: Authority. This Agreement is made with

Purchaser in reliance upon Purchaser's representation to Company and

Subsidiary, evidenced by Purchaser's execution of this Agreement, that

Purchaser is acquiring the Securities for investment for Purchaser's own

account, not as nominee or agent, for investment and not with a view to, or

for resale in connection with, any distribution or public offering thereof

within the meaning of the Securities Act of 1933, as amended, (the

"Securities Act") or the California Law. Purchaser has the full right,

power, authority and capacity to enter into and perform this



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<PAGE>


Agreement and the Agreement will constitute a valid and binding obligation

upon Purchaser, except as the same may be limited by bankruptcy,

insolvency, moratorium, and other laws of general application affecting the

enforcement of creditors' rights.


(b) Securities Not Registered. Purchaser understands and acknowledges

that the offering of the Securities pursuant to this Agreement will not be

registered under the Securities Act or qualified under the California Law

on the grounds that the offering and sale of securities contemplated by

this Agreement are exempt from registration under the Securities Act and

exempt from qualification pursuant to section 25102(f) of the California

Law, and that Company's reliance upon such exemptions is predicated upon

Purchaser's representations set forth in this Agreement. Purchaser

acknowledges and understands that resale of the Securities may be

restricted indefinitely unless the Securities are subsequently registered

under the Securities Act and qualified under the California Law or an

exemption from such registration and such qualification is available.

Purchaser acknowledges that Company is under no obligation to effect any

registration with respect to the Securities or to file for or comply with

any exemption from registration, except as provided in Section 3.


(c) Transfer Restrictions. Purchaser covenants that in no event will

it sell, transfer or otherwise dispose of any of the Securities other than

in conjunction with an effective registration statement for the Securities

under the Securities Act or pursuant to an exemption therefrom, or in

compliance with Rule 144 promulgated under the Securities Act or to a

person related to or an entity affiliated with said Purchaser and other

than in compliance with the applicable securities regulation laws of any

state.


(d) Knowledge and Experience. Purchaser (i) has such knowledge and

experience in financial and business matters as to be capable of evaluating

the merits and risks of Purchaser's prospective investment in the

Securities; (ii) has the ability to bear the economic risks of Purchaser's

prospective investment; (iii) has had all questions which have been asked

by Purchaser satisfactorily answered by Company; and (iv) has not been

offered the Securities by any form of advertisement, article, notice or

other communication published in any newspaper, magazine, or similar media

or broadcast over television or radio, or any seminar or meeting whose

attendees have been invited by any such media. Purchaser represents and

warrants that he is an "accredited investor" within the meaning of Rule 501

of Regulation D of the Securities Act.


7. Legends. Company will place the following legends on each

certificate representing Securities:


THESE SECURITIES HAVE 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.



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<PAGE>


8. Miscellaneous.


(a) Waivers and Amendments. Any provision of this Agreement may be

amended, waived or modified upon the written consent of Company, Subsidiary

and Purchaser.


(b) Governing Law. This Agreement, the Notes, the Warrant, the other

Transaction Documents, and all actions arising out of or in connection

herewith or therewith shall be governed by and construed in accordance with

the laws of the State of California, without regard to the conflicts of law

provisions of the State of California or of any other state. Any action or

proceeding relating in any way to this Agreement or the other Transaction

Documents may be brought and enforced in the courts of the State of

California or of the United States for the Northern District of California.


(c) Entire Agreement. This Agreement together with the exhibits

attached hereto constitute the full and entire understanding and agreement

between the parties with regard to the subjects hereof and thereof.


(d) Survival. The representations, warranties, covenants and

agreements made herein shall survive the execution and delivery of this

Agreement.


(e) Expenses. Company shall pay on demand all reasonable fees and

expenses incurred by Purchaser, including reasonable legal fees and

expenses in connection with the preparation, execution and delivery of this

Agreement and the other Transaction Documents.


(f) Notices, etc. Any notice, request or other communication required

or permitted hereunder shall be in writing and shall be deemed to have been

duly given (i) upon receipt if personally delivered, (ii) three (3) days

after being mailed by registered or certified mail, postage prepaid, or

(iii) one day after being sent by recognized overnight courier or by

facsimile, if to Purchaser, at c/o Company at 200 Cardinal Way, Redwood

City, California 94063, or at such other address or number as Purchaser

shall have furnished to Company in writing, or if to Company or Subsidiary,

at 200 Cardinal Way, Redwood City, California 94063 or at such other

address or number as Company shall have furnished to Purchaser in writing.


(g) Validity. If any provision of this Agreement, the Notes or the

Warrant shall be judicially determined to be invalid, illegal or

unenforceable, the validity, legality and enforceability of the remaining

provisions shall not in any way be affected or impaired thereby.


(h) Counterparts. This Agreement may be executed in any number of

counterparts, each of which shall be an original, but all of which together

shall be deemed to constitute one instrument.


(i) Assignment. The terms and conditions of this Agreement shall inure

to the benefit of and be binding upon the respective successors and assigns

of the parties. Nothing in this Agreement, express or implied, is intended

to confer upon any party other than the parties hereto or their respective

successors and assigns any rights, remedies, obligations, or liabilities

under or by reason of this Agreement, except as expressly provided in this

Agreement.



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9. Additional Assurances. Investor agrees to negotiate in good faith

with Company and Subsidiary with respect to additional financial assistance to

Company and Subsidiary on terms to be discussed among the parties that the

parties currently contemplate may provide up to an additional $2,000,000 of

financial assistance to Company and Subsidiary.


10. Future Financing.


(a) Participation in Qualified Financing. In the event Company

consummates or proposes to consummate, prior to March 31, 2003, an equity

or debt financing (a "Qualified Financing"), then the Subsidiary shall have

the option of causing Purchaser to purchase (solely through cancellation of

principal and accrued interest under the Notes) up to an aggregate of

$3,000,000 of securities issued in the Qualified Financing (the "Financing

Securities") at the same price and on the same terms as the other investors

in the Qualified Financing, or, if there are no other investors, at such

price and on such terms as are acceptable to Purchaser and Subsidiary. In

conjunction with such purchase, the Purchaser shall become a party and

shall execute all related Qualified Financing documentation. Purchaser

agrees that any subsequent holder of the Notes shall be bound by the

provisions of this Section 10 .


(b) Procedures. If Notes are to be cancelled pursuant to this Section

10, written notice shall be delivered to Purchaser at the address last

shown on the records of Subsidiary for Purchaser or given by Purchaser to

Subsidiary for the purpose of notice or, if no such address appears or is

given, at the place where the principal executive office of Subsidiary is

located, notifying Purchaser of the Qualified Financing, the terms of the

Qualified Financing, the principal amount and interest of the Notes to be

cancelled, the date on which such cancellation is expected to occur and

calling upon Purchaser to surrender to Subsidiary, in the manner and at the

place designated, the Notes. Upon such cancellation of the Notes, Purchaser

shall surrender the Notes, duly endorsed, at the office of Subsidiary.

Subsidiary shall, or shall cause Company to, as soon as practicable

thereafter, issue and deliver at such office to Purchaser a certificate or

certificates for the Financing Securities to which Purchaser shall be

entitled (bearing such legends as are required by the Qualified Financing

documentation and applicable state and federal securities laws in the

opinion of counsel to Subsidiary), together with replacement Notes (if any

principal amount and accrued interest is not cancelled) and any other

securities and property to which Purchaser is entitled under the terms of

the Notes, including a check payable to Purchaser for any cash amounts

payable as described in Section 10(c), if applicable. The cancellation

shall be deemed to have been made immediately prior to the close of

business on the date of the surrender of the Notes, and the Person or

Persons entitled to receive the Financing Securities upon such conversion

shall be treated for all purposes as the record investor or investors of

such Financing Securities as of such date.


(c) Fractional Shares; Interest; Effect. No fractional shares shall be

issued upon cancellation of the Notes pursuant to Section 10. In lieu of

Company issuing any fractional shares of Financing Securities to Purchaser

upon cancellation of the Notes, Subsidiary shall pay to Purchaser the cash

value of the fraction of a share not issued pursuant to the previous

sentence, if a replacement Note is not issued pursuant to Section 10(b). In

addition, Subsidiary shall pay to Purchaser any interest accrued on the

amount cancelled and on the amount to be paid to Subsidiary pursuant to the

previous sentence, if accrued interest is not cancelled.



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<PAGE>



Upon cancellation of the Notes in full and the payment of the amounts

specified in this Section 10(c), Subsidiary shall be forever released from

all its obligations and liabilities under the Notes.


(d) Limitation on Qualified Financing. Company shall not issue any

Financing Securities pursuant to this Section 10 if the issuance of such

Financing Securities would cause the Company to exceed that number of

shares of Common Stock or securities convertible into Common Stock which

Company may issue upon cancellation of the Notes (the "Exchange Cap")

without breaching Company's obligations, if applicable, under the rules or

regulations of the Nasdaq National Market, except that such limitation

shall not apply in the event that Company (a) obtains the approval of its

stockholders as required by the Nasdaq National Market (or any successor

rule or regulation) for issuances of Common Stock in excess of such amount,

(b) obtains a written opinion from outside counsel to the Subsidiary that

such approval is not required, which opinion shall be reasonably

satisfactory to the holder of the Note, or (c) adequate provisions similar

to those contained in this section are contained in the Qualified Financing

documentation.



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<PAGE>







IN WITNESS WHEREOF, the parties have caused this Agreement to be duly

executed and delivered by their proper and duly authorized officers as of the

date and year first written above.


COMPANY:


THE 3DO COMPANY

a Delaware corporation



By: /s/ James A. Cook

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


Name: James A. Cook

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


Title: Secretary

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




SUBSIDIARY:


THE 3DO COMPANY

a California corporation



By: /s/ James A. Cook

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


Name: James A. Cook

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


Title: Executive Vice President

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



The 3DO Company

Signature Page to the

Note and Warrant Purchase Agreement



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<PAGE>



PURCHASER:


William M. Hawkins, III




/s/ William M. Hawkins, III

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



Trip Hawkins

Signature Page to the

Note and Warrant Purchase Agreement



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<PAGE>


EXHIBIT A


FIRST NOTE






<PAGE>


EXHIBIT B


SECOND NOTE








<PAGE>

EXHIBIT C


AMENDED AND RESTATED

PREVIOUS NOTE







<PAGE>


EXHIBIT D


AMENDED AND RESTATED

SECURITY AGREEMENT




<PAGE>


EXHIBIT E


FORM OF SUBSEQUENT NOTE





<PAGE>


EXHIBIT F


AMENDED AND RESTATED

REGISTRATION RIGHTS AGREEMENT





<PAGE>


EXHIBIT G


WARRANT