AMENDED AND RESTATED
                               SECURITY AGREEMENT


         This  Amended  and  Restated   Security   Agreement   (this   "Security
Agreement"),  dated as of  December  27,  2002,  is between THE 3DO  COMPANY,  a
California corporation  ("Company"),  and William M. Hawkins, III, an individual
("Investor").

                                    RECITALS

         A.  Company  has  issued  to  Investor  a  secured  bridge  note in the
aggregate principal amount of $3,000,000 on October 1, 2002.

         B. Company entered into a Security Agreement (the "Previous Agreement")
dated as of October 1, 2002 in favor of Investor.

         C.  Company  wishes  to  issue  additional  notes  up to  an  aggregate
principal amount of $8,000,000, including the previously issued notes.

         D. Investor is willing to purchase  additional notes pursuant to a Note
and Warrant  Purchase  Agreement  of even date  herewith  (the "Note and Warrant
Purchase Agreement") only if he is granted a security interest in the Collateral
described below and the Previous  Agreement is amended and restated on the terms
specified in this Security Agreement.

                                    AGREEMENT

         NOW,  THEREFORE,  in  consideration of the above recitals and for other
good and  valuable  consideration,  the receipt and adequacy of which are hereby
acknowledged,  Company  and  Investor  hereby  agree to amend  and  restate  the
Previous Agreement as follows:

         1.  Definitions  and   Interpretation.   When  used  in  this  Security
Agreement, the following terms have the following respective meanings:

                   "Accounts"  means all  "accounts," as such term is defined in
the  Code,  now owned or  hereafter  acquired  by  Company,  including:  (a) all
accounts  receivable,   other  receivables,   book  debts  and  other  forms  of
obligations  (other  than forms of  obligations  evidenced  by Chattel  Paper or
Instruments)  (including any such  obligations  that may be  characterized as an
account or contract right under the Code);  (b) all of Company's  rights in, to,
and under,  all purchase  orders or receipts  for goods or services;  (c) all of
Company's  rights to any goods  represented  by any of the foregoing  (including
unpaid  sellers'  rights of rescission,  replevin,  reclamation  and stoppage in
transit and rights to returned,  reclaimed or repossessed goods); (d) all rights
to payment due to Company for Goods or other  property sold,  leased,  licensed,
assigned or otherwise  disposed  of, for a policy of  insurance  issued or to be
issued,  for a  secondary  obligation  incurred  or to be  incurred,  for energy
provided or to be  provided,  for the use or hire of a vessel under a charter or
other  contract,  arising out of the use of a credit card or charge card, or for
services  rendered or to be rendered by Company or in connection  with any other
transaction (whether or not yet earned by performance on the part of


                                       2
<PAGE>

Company);  (e) all health care  insurance  receivables;  and (f) all  collateral
security  of any kind  given by any  Account  Debtor  or any other  Person  with
respect to any of the foregoing.

                   "Account  Debtor"  means  any  Person  who is or  may  become
obligated  with  respect  to, or on account  of, an  Account,  Chattel  Paper or
General Intangibles (including a Payment Intangible).

                   "Books and Records" means all books, records,  board minutes,
contracts,  licenses, insurance policies,  environmental audits, business plans,
files,  computer files,  computer discs and other data and software  storage and
media devices,  accounting books and records,  financial  statements (actual and
pro forma), filings with Governmental  Authorities,  and any and all records and
instruments relating to the Collateral or Company's business.

                   "Chattel  Paper" means all  "chattel  paper," as such term is
defined in the Code,  including electronic chattel paper, now owned or hereafter
acquired by any Person.

                   "Code"  means the  Uniform  Commercial  Code as the same may,
from time to time, be in effect in the State of California;  provided,  that if,
by  reason  of  mandatory  provisions  of  law,  any or  all of the  attachment,
perfection or priority of, or remedies with respect to,  Investor's  Lien on any
Collateral  is  governed  by the  Uniform  Commercial  Code  as in  effect  in a
jurisdiction other than the State of California,  the term "Code" shall mean the
Uniform  Commercial Code as in effect in such other jurisdiction for purposes of
the  provisions  of  this  Security   Agreement  relating  to  such  attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions;  provided,  further,  that to the  extent  that  the Code is used to
define any term herein or in any  Transaction  Document and such term is defined
differently  in different  Articles or Divisions of the Code,  the definition of
such term contained in Article or Division 9 shall govern.

                   "Collateral" is defined in Section 2.

                   "Contracts"  means  all  the  contracts,   undertakings,   or
agreements  (other  than  rights  evidenced  by  Chattel  Paper,   Documents  or
Instruments)  in or under which any Person may now or hereafter  have any right,
title or interest,  including any agreement  relating to the terms of payment or
the terms of performance of any Account.

                   "Copyright  License" means rights under any written agreement
now owned or  hereafter  acquired  by any Person  granting  the right to use any
Copyright or Copyright registration.

                   "Copyright  Office" means the United States Copyright Office,
and any successor office or agency thereto.

                   "Copyrights"   means  all  of  the  following  now  owned  or
hereafter  acquired by any Person:  (a) all  copyrights  in any original work of
authorship  fixed in any  tangible  medium  of  expression,  now  known or later
developed,  all  registrations  and  applications  for  registration of any such
copyrights   in  the   Copyright   Office  or  any  other   country,   including
registrations,  recordings and  applications,  and  supplemental  registrations,
recordings,   and  applications  in  the  Copyright  Office  and  including  all
Copyrights  listed  in  Schedule  A;  and (b)  all  Proceeds  of the  foregoing,
including license royalties and proceeds of infringement suits, the right to sue
for past, present and future


                                       3
<PAGE>

infringements,  all rights  corresponding  thereto  throughout the world and all
renewals and extensions thereof.

                   "Deposit  Accounts" means all "deposit accounts" as such term
is defined in the Code, now or hereafter held in the name of any Person.

                   "Documents" means all "documents," as such term is defined in
the Code,  now owned or  hereafter  acquired  by any Person,  wherever  located,
including all bills of lading, dock warrants, dock receipts, warehouse receipts,
and other documents of title, whether negotiable or non-negotiable.

                   "General  Intangibles"  means all "general  intangibles,"  as
such term is defined in the Code,  now owned or  hereafter  owned by any Person,
including  all right,  title and interest  that such Person may now or hereafter
have  in or  under  any  Contract,  all  Payment  Intangibles,  customer  lists,
Licenses,  Intellectual Property, interests in partnerships,  joint ventures and
other business associations,  permits,  proprietary or confidential information,
inventions  (whether or not  patented  or  patentable),  technical  information,
procedures,  designs,  knowledge,  know-how,  software, data bases, data, skill,
expertise,  experience,   processes,  models,  drawings,  materials,  Books  and
Records,  Goodwill  (including  the Goodwill  associated  with any  Intellectual
Property),  all  rights  and claims in or under  insurance  policies  (including
insurance for fire,  damage,  loss,  and  casualty,  whether  covering  personal
property,  real property,  tangible rights or intangible  rights, all liability,
life,  key-person,   and  business  interruption  insurance,  and  all  unearned
premiums), uncertificated securities, choses in action, deposit accounts, rights
to  receive  tax  refunds  and other  payments,  rights to  received  dividends,
distributions,   cash,   Instruments   and  other   property,   and   rights  of
indemnification.

                   "Goods"  means all  "goods,"  as such term is  defined in the
Code, now owned or hereafter owned by any Person,  wherever  located,  including
equipment, embedded software to the extent included in "goods" as defined in the
Code,  manufactured homes,  standing timber that is cut and removed for sale and
unborn young of animals.

                   "Goodwill" means all goodwill, trade secrets,  proprietary or
confidential information,  technical information,  procedures, formulae, quality
control standards,  designs, operating and training manuals, customer lists, and
distribution agreements now owned or hereafter owned by any Person.

                   "Governmental Authority" means any nation or government,  any
state or other  political  subdivision  thereof,  and any agency,  department or
other  entity  exercising  executive,   legislative,   judicial,  regulatory  or
administrative functions of or pertaining to government.

                   "Hazardous  Waste"  shall have the  meaning  ascribed to such
term in the Resource  Conservation  and Recovery Act (42  U.S.C.ss.ss.  6901 et.
seq.).

                   "Instruments"  means  all  "instruments,"  as  such  term  is
defined  in the  Code,  now owned or  hereafter  owned by any  Person,  wherever
located, including all certificated securities and


                                       3
<PAGE>

all notes and other  evidences  of  indebtedness,  other than  instruments  that
constitute, or are a part of a group of writings that constitute, Chattel Paper.

                   "Intellectual   Property"   means   any  and  all   Licenses,
Copyrights, Patents, Trademarks, Trade Secrets and customer lists.

                   "Inventory" means all "inventory," as such term is defined in
the  Code,  now  owned or  hereafter  owned  by any  Person,  wherever  located,
including all inventory, merchandise, goods and other personal property that are
held by or on behalf of such Person for sale or lease or are furnished or are to
be furnished under a contract of service or that constitute raw materials,  work
in process,  finished  goods,  returned  goods,  or materials or supplies of any
kind,  nature or description  used or consumed or to be used or consumed in such
Person's  business  or in  the  processing,  production,  packaging,  promotion,
delivery or shipping of the same, including all supplies and embedded software.

                   "Investment  Property"  means all  "investment  property," as
such term is defined  in the Code,  now or  hereafter  acquired  by any  Person,
wherever located.

                   "Letter-of-Credit  Rights" means "letter-of-credit rights" as
such term is defined in the Code, now owned or hereafter acquired by any Person,
including rights to payment or performance under a letter of credit,  whether or
not such Person,  as beneficiary,  has demanded or is entitled to demand payment
or performance.

                   "License"  means  any  Copyright  License,   Patent  License,
Trademark  License or other license of rights or interests now held or hereafter
held by any Person.

                   "Notes"  means the First Note,  Second Note,  the amended and
restated  Previous Note and the Subsequent Notes issued pursuant to the Note and
Warrant Purchase Agreement.

                   "Obligations" means all loans, advances,  debts,  liabilities
and obligations,  howsoever  arising,  owed by Company to Investor of every kind
and description  (whether or not evidenced by any note or instrument and whether
or not for the payment of money),  now  existing or hereafter  arising  under or
pursuant  to the  terms  of the  Notes  and  the  other  Transaction  Documents,
including, all interest, fees, charges, expenses,  attorneys' fees and costs and
accountants'  fees and costs chargeable to and payable by Company  hereunder and
thereunder.  The term  Obligations  includes  all such  amounts,  in each  case,
whether direct or indirect,  absolute or  contingent,  due or to become due, and
whether or not arising after the  commencement of a proceeding under Title 11 of
the United  States Code (11 USC Section  101 et seq.),  as amended  from time to
time (including  post-petition interest) and whether or not allowed or allowable
as a claim in any such proceeding.

                   "Patent  Applications"  means all applications  previously or
hereafter made by, or on behalf of, a Person to the PTO or to any similar office
or agency of any  foreign  country  or  political  subdivision  thereof  for the
registration of Patents.

                   "Patent License" means rights under any written agreement now
held or  hereafter  held by any Person  granting  any right with  respect to any
invention on which a Patent is in existence.


                                       4
<PAGE>


                   "Patents"  means all of the following in which any Person now
holds or hereafter  holds any  interest:  (a) all Patent  Applications;  (b) all
letters patent of any country and all registrations and recordings thereof;  and
(c) all reissues, continuations, continuations-in-part or extensions thereof.

                   "Payment Intangibles" means all "payment intangibles" as such
term is defined in the Code, now owned or hereafter owned by any Person.

                   "Permitted   Liens"   means  (a)  Liens  for  taxes  not  yet
delinquent or Liens for taxes being  contested in good faith and by  appropriate
proceedings  for which  adequate  reserves have been  established;  (b) Liens in
respect of property or assets imposed by law which were incurred in the ordinary
course  of  business,  such  as  carriers',  warehousemen's,  materialmen's  and
mechanics'  Liens and other  similar  Liens  arising in the  ordinary  course of
business which are not delinquent or remain payable without penalty or which are
being contested in good faith and by appropriate  proceedings for which adequate
reserves  have been  established;  (c) Liens  incurred or  deposits  made in the
ordinary   course  of  business  in  connection   with  workers'   compensation,
unemployment insurance and other types of social security, and mechanic's Liens,
carrier's Liens and other Liens to secure the performance of tenders,  statutory
obligations,  contract bids,  government  contracts,  performance  and return of
money bonds and other similar obligations, in each case incurred in the ordinary
course of business,  whether pursuant to statutory  requirements,  common law or
consensual  arrangements;  (d) Liens in favor of  Investor;  (e) Liens  securing
obligations  under a capital lease if such Liens do not extend to property other
than the property leased under such capital lease;  (f) Liens upon any equipment
acquired or held by Company or any of its  Subsidiaries  to secure the  purchase
price of such  equipment  or  indebtedness  incurred  solely for the  purpose of
financing the acquisition of such  equipment,  so long as such Lien extends only
to the equipment financed, and any accessions,  replacements,  substitutions and
proceeds (including  insurance  proceeds) thereof or thereto;  (g) Liens arising
from  judgments,   decrees  or  attachments  in  circumstances  where  they  are
undischarged  for not more  than 30 days;  (h)  Liens  in favor of  customs  and
revenue  authorities  arising as a matter of law to secure  payments  of customs
duties in connection with the importation of goods,  (i) Liens which  constitute
rights of setoff of a customary nature or banker's liens, whether arising by law
or by contract;  (j) Liens on insurance proceeds in favor of insurance companies
granted  solely as security for financed  premiums;  (k) Leases or subleases and
licenses or sublicenses  granted in the ordinary  course of Company's  business;
and (l) Senior Liens.

                   "Proceeds"  means  "proceeds," as such term is defined in the
Code  and,  in any  event,  shall  include:  (a)  any and  all  proceeds  of any
insurance,  indemnity, warranty or guaranty payable to Company from time to time
with  respect  to any  Collateral;  (b)  any  and  all  payments  (in  any  form
whatsoever)  made or due and payable to Company from time to time in  connection
with any requisition,  confiscation,  condemnation, seizure or forfeiture of any
Collateral by any governmental body, authority,  bureau or agency (or any person
acting under color of governmental authority); (c) any recoveries by the Company
against third parties with respect to any  litigation or dispute  concerning any
Collateral,  including  claims  arising  out of the  loss or  nonconformity  of,
interference  with the use of,  defects  in, or  infringement  of rights  in, or
damage to,  Collateral;  (d) all amounts collected on, or distributed on account
of, other  Collateral;  and (e) any and all other amounts,  rights to payment or
other  property  acquired  upon the  sale,  lease,  license,  exchange  or other
disposition of Collateral and all rights arising out of Collateral.


                                       5
<PAGE>


                   "PTO" means the United States  Patent and  Trademark  Office,
and any successor office or agency thereto.

                   "Senior  Liens" means,  the Liens  securing  indebtedness  of
Company, to banks, commercial finance lenders,  insurance companies,  leasing or
equipment financing institutions or other lending institutions regularly engaged
in the business of lending money (excluding venture capital,  investment banking
or similar  institutions  which sometimes engage in lending activities but which
are primarily  engaged in investments in equity  securities),  under an accounts
receivable line of credit or a purchase order financing line of credit; provided
that the aggregate principal amount of the indebtedness  secured by Senior Liens
shall not exceed $20,000,000."

                   "Supporting  Obligations" means all "supporting  obligations"
as such term is defined in the Code,  including letters of credit and guaranties
issued in support of Accounts,  Chattel Paper,  Documents,  General Intangibles,
Instruments, or Investment Property.

                   "Trademark  License" means rights under any written agreement
now held or hereafter held by any Person granting any right to use any Trademark
or Trademark registration.

                   "Trademarks"   means  all  of  the  following  now  owned  or
hereafter owned by any Person: (a) all trademarks, trade names, corporate names,
business names,  trade styles,  service marks,  logos,  other source or business
identifiers,  prints and labels on which any of the  foregoing  have appeared or
appear,  designs  and  general  intangibles  of like  nature,  now  existing  or
hereafter adopted or acquired, all registrations and recordings thereof, and all
applications in connection  therewith,  including all registrations,  recordings
and  applications  in the PTO or in any  similar  office or agency of the United
States,  any State or Territory  thereof,  or any other country or any political
subdivision thereof, and (b) all reissues, extensions or renewals thereof.

                   "Trade  Secrets"  all  proprietary   information,   including
formulas,  patterns,  compilations,  programs,  devices, methods,  techniques or
processes that derives independent economic value, actual or potential, from not
being  generally known to, and not being readily  ascertainable  by proper means
by, other Persons who can obtain  economic value from its disclosure or use, all
whether now owned or hereafter owned by any Person.

                   "Transaction  Documents"  means the Note and Warrant Purchase
Agreement,  the Notes, this Security Agreement (and each UCC financing statement
or  notice  of  security   interest  filed  in  connection  with  this  Security
Agreement), the Warrant, and the Registration Rights Agreement.

         All  capitalized  terms not  otherwise  defined  herein  shall have the
respective  meanings  given  in the  Notes  or the  Note  and  Warrant  Purchase
Agreement.  Unless otherwise defined herein,  all terms defined in the Code have
the respective meanings given to those terms in the Code.


         2. Grant of Security Interest. As security for the Obligations, Company
hereby  pledges to Investor  and grants to  Investor a security  interest in all
right,  title and  interests  of Company  in and to the  property  described  in
Attachment  1,  whether now  existing or  hereafter  from time to time  acquired
(collectively, the "Collateral").


                                       6
<PAGE>


         3. General  Representations  and  Warranties.  Company  represents  and
warrants to Investor  that,  as of the date hereof:  (a) Company is the owner of
the  Collateral  (or,  in the  case of  after-acquired  Collateral,  at the time
Company  acquires rights in the Collateral,  will be the owner thereof) and that
no other Person has (or, in the case of after-acquired  Collateral,  at the time
Company acquires rights therein,  will have) any right, title, claim or interest
(by way of Lien or  otherwise)  in,  against  or to the  Collateral,  other than
Permitted  Liens;  (b) upon the  filing  of UCC-1  financing  statements  in the
appropriate  filing  offices,  Investor  has (or in the  case of  after-acquired
Collateral,  at the time Company  acquires  rights  therein,  will have) a first
priority  perfected  security  interest in the  Collateral  to the extent that a
security interest in the Collateral can be perfected by such filing,  except for
Permitted  Liens; (c) information set forth in Schedule A is true and correct in
all material respects.

         4.  Representations  and Warranties  Regarding  Intellectual  Property.
Company represents and warrants to Investor that, as of the date hereof:

          (a) (i) Company does not own any  Patents,  Trademarks  or  Copyrights
     registered  in the PTO or the  Copyright  Office or any similar  offices or
     agencies in any other country or any political  subdivision thereof,  other
     than those  described on Schedule A; (ii) Company has, except for Permitted
     Liens, the sole, full and unencumbered  right, title and interest in and to
     each of the Patents,  Trademarks and Copyrights shown on Schedule A and the
     registrations  thereof  are valid  and  enforceable  and in full  force and
     effect;  and (iii) Company has, except for Permitted  Liens, the sole, full
     and unencumbered right, title and interest in and to each of its Trademarks
     and Copyrights not listed on Schedule A.

          (b) To Company's knowledge,  there is no claim by any third party that
     any Patents,  Trademarks or Copyrights are invalid and  unenforceable or do
     or may violate the rights of any Person.

          (c) Company has obtained from each employee who may be considered  the
     inventor  of  patentable  inventions  (invented  within  the  scope of such
     employee's  employment)  an  assignment  to  Company  of all rights to such
     inventions, including Patents.

          (d) Company has taken all steps  reasonably  necessary  to protect the
     secrecy  and  the  validity  under  applicable  law of all  material  Trade
     Secrets.

         5. Covenants  Relating to Collateral  Generally.  Company hereby agrees
(a) to perform all acts that may be reasonably necessary to maintain,  preserve,
protect and perfect the Collateral, the Lien granted to Investor therein and the
perfection and first priority of such Lien,  except for Permitted Liens; (b) not
to use or permit any  Collateral  to be used (i) in  violation  in any  material
respect of any applicable  law, rule or regulation,  or (ii) in violation of any
policy of insurance  covering the  Collateral;  (c) to pay when due all material
taxes and other governmental  charges except taxes being contested in good faith
and  by  appropriate   proceedings   for  which  adequate   reserves  have  been
established;  (d) without 10 days' written notice to Investor, (i) not to change
Company's  name or place of business  (or, if Company has more than one place of
business,  its chief executive office), or the office in which Company's records
relating to accounts  receivable and payment  intangibles are kept, and (ii) not
to change Company's state of incorporation; (e) to procure,


                                       7
<PAGE>

execute and deliver from time to time any endorsements,  assignments,  financing
statements  and other  writings  reasonably  deemed  necessary  by  Investor  to
perfect,  maintain and protect its Lien hereunder and the priority thereof;  (f)
to appear in and defend any action or  proceeding  which may affect its title to
or Investor `s interest in a material portion of the Collateral; (g) if Investor
gives value to enable Company to acquire rights in or the use of any Collateral,
to use such value for such purpose;  (h) not to surrender or lose  possession of
(other than to  Investor or holders of Senior  Liens),  sell,  encumber,  lease,
rent,  license,  or otherwise  dispose of or transfer any Collateral or right or
interest therein,  and to keep the Collateral free of all Liens except Permitted
Liens;  provided that Company may sell,  lease,  transfer,  license or otherwise
dispose of any of the Collateral in the ordinary course of business as presently
conducted;  and (i) to permit Investor and his representatives the right, during
normal business hours,  upon reasonable  prior notice,  to visit and inspect the
properties of Company and its corporate, financial and operating records, and to
discuss Company's  affairs,  finances and accounts with its directors,  officers
and   independent   public   accountants;   provided   that   Investor  and  his
representatives shall maintain the confidentiality of any non-public information
regarding Company acquired during such visit.

         6. Covenants Regarding Intellectual Property Collateral.

          (a)  Perfection.  Company  will  perform  all  acts  and  execute  all
     documents, including notices of security interest for:

               (i) each  registered  Patent and Trademark in forms  suitable for
          filing with the PTO; and

               (ii)  each  registered  Copyright  in the  form of  Attachment  3
          hereto,

in each case that may be  reasonably  necessary to record,  maintain,  preserve,
protect and perfect Investor's  interest in the Collateral,  the Lien granted to
Investor in the Collateral  and the priority of such Lien,  subject to Permitted
Liens.

          (b) Notice  Regarding  Intellectual  Property.  Company will within 20
     Business Days notify Investor upon the filing, either by Company or through
     any agent,  employee,  licensee or designee,  of (i) an application for the
     registration of any Patent or Trademark, with the PTO or any similar office
     or agency in any other country or any political  subdivision  thereof,  and
     (ii) any  assignment of any Patent or Trademark,  which Company may acquire
     from a third  party,  with the PTO or any  similar  office or agency in any
     country or any political  subdivision  thereof.  In addition,  Company will
     provide Investor with at least 30 Business Days prior notice of the filing,
     either by Company or through any agent, employee,  licensee or designee, of
     any  Copyright  registration  not listed on  Schedule A with the  Copyright
     Office  or any  similar  office  or  agency  in any  other  country  or any
     political subdivision thereof. Upon the request of Investor,  Company shall
     execute  and  deliver  any and all  assignments,  agreements,  instruments,
     documents  and  papers as  Investor  may  reasonably  request  to  evidence
     Investor's security interest in such Patents,  Trademarks (and the goodwill
     and  general   intangibles  of  Company  relating  thereto  or  represented
     thereby).


          (c) Actions Regarding Intellectual Property. Except to the extent that
     Investor shall give its prior written consent,


                                       8
<PAGE>

               (i) Company (either itself or through licensees) will continue to
          use the Trademarks in connection  with each and every  trademark class
          of goods or services  applicable  to its current  line as reflected in
          its current catalogs,  brochures,  price lists or similar materials in
          order to maintain  the  Trademarks  in full force and effect free from
          any claim of  abandonment  for nonuse,  and Company will not (and will
          not permit any licensee thereof to) do any act or knowingly omit to do
          any act whereby any Trademark may become invalidated; and

               (ii)  Company  will not do any act, or omit to do any act whereby
          any Patent or  Copyright  may become  abandoned  or  dedicated  or the
          remedies available against potential  infringers  materially  weakened
          and shall notify  Investor  immediately if Company knows of any reason
          or has  reason  to know  that  any  Patent  or  Copyright  may  become
          abandoned or dedicated.

         7. Lien  Subordination.  Investor agrees that the Lien granted to it on
the assets  Company  shall be  subordinate  to any Liens  granted to a holder of
Senior  Liens  by  Company  or by law,  notwithstanding  the  date or  order  of
attachment or perfection  of any such Lien or the  provisions of any  applicable
law. Investor agrees to execute and deliver customary forms of security interest
subordination  agreements as requested  from time to time by holder(s) of Senior
Liens;  provided  that such  forms  shall  not  impose on  Investor  terms  less
favorable than those provided herein.

         8. Authorized Action by Investor.

          (a) General Power of Attorney.  Company  hereby  irrevocably  appoints
     Investor as its  attorney-in-fact  (which  appointment  is coupled  with an
     interest) and agrees that  Investor may perform (but Investor  shall not be
     obligated  to and shall incur no liability to Company for the failure so to
     do) any act which  Company  is  obligated  by this  Security  Agreement  to
     perform,  and to exercise such rights and powers as Company might  exercise
     with respect to the Collateral, including the right to (a) collect by legal
     proceedings  or  otherwise  and  endorse,   receive  and  receipt  for  all
     dividends,  interest, payments, proceeds and other sums and property now or
     hereafter  payable on or on account of the  Collateral;  (b) enter into any
     extension,   reorganization,   deposit,  merger,   consolidation  or  other
     agreement pertaining to, or deposit, surrender, accept, hold or apply other
     property  in  exchange  for the  Collateral;  (c)  make any  compromise  or
     settlement,  and take any action it deems  advisable,  with  respect to the
     Collateral;  (d) insure,  process and preserve the Collateral;  (e) pay any
     indebtedness  of  Company  relating  to the  Collateral;  and  (f)  execute
     financing statements pursuant to the Code and other documents,  instruments
     and agreements required hereunder;  provided,  however, that Investor shall
     not exercise any such powers granted  pursuant to  subsections  (a) through
     (c) prior to the  occurrence of an Event of Default and shall only exercise
     such  powers  during the  continuance  of an Event of Default  after  prior
     notice to Company of its intent to exercise the same. It is further  agreed
     and understood  between the parties hereto that such care as Investor gives
     to the  safekeeping  of its own  property  of like  kind  shall  constitute
     reasonable care of the Collateral when in Investor's possession.

          (b) Special Power of Attorney.  Company  agrees to execute and deliver
     to Investor three originals of a Special Power of Attorney in substantially
     the form of Attachment 2 to this Security  Agreement for the implementation
     of the recording,  giving of notice of security interest,  assignment, sale
     or other disposal of the certain Collateral pursuant to Section 6 or 10.


                                       9
<PAGE>


         9. Litigation and Other Proceedings.

          (a) Rights of Company.  Company shall have the right and obligation to
     commence and diligently prosecute such suits,  proceedings or other actions
     for infringement or other damage, or reexamination or reissue  proceedings,
     or opposition or cancellation  proceedings as are reasonable to protect any
     material portion of the Patents, Trademarks, Copyrights, and Trade Secrets.

          (b)  Rights  of  Investor.   Upon  the   occurrence   and  during  the
     continuation of an Event of Default,  Investor shall have the right but not
     the  obligation  to  bring  suit or  institute  proceedings  in the name of
     Company or Investor to enforce any rights in the Collateral,  including any
     license thereunder, in which event Company shall at the request of Investor
     do any and all lawful  acts and execute  any and all  documents  reasonably
     required by Investor in aid of such enforcement.  If Investor elects not to
     bring suit to enforce any right under the Collateral, including any license
     thereunder, Company agrees to use all reasonable measures, whether by suit,
     proceeding or other  action,  to prevent the material  infringement  of any
     right under the  Collateral  by any Person and for that  purpose  agrees to
     diligently  maintain any action,  suit or proceeding  against any Person so
     infringing reasonably necessary to prevent such infringement.

         10. Default and Remedies.

          (a) Default.  Company  shall be deemed in default  under this Security
     Agreement  upon the  occurrence  and during the  continuance of an Event of
     Default.

          (b) Remedies.  Upon the occurrence  and during the  continuance of any
     Event of  Default,  Investor  shall have the  rights of a secured  creditor
     under the Code and all rights  granted by this  Security  Agreement  and by
     law, including the right to:

               (i)  Require  Company  to  assemble  the  Collateral  and make it
          available to Investor at a place to be designated by Investor;

               (ii) Prior to the disposition of the Collateral,  store, process,
          repair or  recondition it or otherwise  prepare it for  disposition in
          any  manner  and to  the  extent  Investor  deems  appropriate  and in
          connection with such preparation and disposition,  without charge, use
          any trademark, trade name, copyright, patent or technical process used
          by Company;

               (iii) Upon thirty  (30) days,  prior  notice to  Company,  direct
          Company not to make any further use of the Patents, the Trademarks (or
          any mark  similar  thereto),  the  Copyrights  (or any  work  deriving
          therefrom) or Trade Secrets (or any work deriving  therefrom)  for any
          purpose;

               (iv) At any time and from time to time,  upon  thirty  (30) days'
          prior  notice  to  Company,   license,  whether  general,  special  or
          otherwise,  and whether on an exclusive or nonexclusive  basis, any of
          the Patents,  Trademarks,  Copyrights or Trade Secrets, throughout the
          world for such term or terms, on such conditions,  and in such manner,
          as Investor shall reasonably determine;

               (v) At any time and from time to time,  enforce  (and upon notice
          to Company have the exclusive  right to enforce)  against any licensee
          or sublicensee all rights and

                                       10

<PAGE>

          remedies  of  Company  in,  to  and  under  any  one or  more  license
          agreements  with  respect  to the  Collateral  (without  assuming  any
          obligations or liability thereunder),  and take or refrain from taking
          any action under any thereof; and

               (vi) In  addition to the  foregoing,  in order to  implement  the
          assignment, sale or other disposal of any of the Collateral consisting
          of Intellectual Property pursuant to this Section 10, Investor may, at
          any time,  pursuant to the authority  granted in the Power of Attorney
          executed  pursuant to Section  8(b),  execute and deliver on behalf of
          Company,  one or  more  instruments  of  assignment  of  the  Patents,
          Trademarks,  or  Copyrights  or (or any  application  or  registration
          thereof),  in form suitable for filing,  recording or  registration in
          any country.

          (c) Company Cooperation. In the event of any license, assignment, sale
     or other disposition of the Collateral,  or any of it, after the occurrence
     or during the continuance of an Event of Default,  Company shall supply its
     know-how and expertise relating to the manufacture and sale of the products
     bearing or in connection with which the Trademarks,  Patents, Copyrights or
     Trade Secrets are used, and its customer  lists and other records  relating
     to  the   Trademarks,   Patents,   Copyrights  and  Trade  Secrets  to  the
     distribution of products or the provisions of services,  to Investor or its
     designee.  Company hereby agrees that ten (10) days' notice of any intended
     sale or disposition of any Collateral is reasonable.

          (d) Application of Collateral Proceeds.  The proceeds and/or avails of
     the Collateral, or any part thereof, and the proceeds and the avails of any
     remedy hereunder (as well as any other amounts of any kind held by Investor
     at the time of, or received by Investor  after,  the occurrence of an Event
     of Default) shall be paid to and applied as follows:

               (i) First,  to the  payment  of  reasonable  costs and  expenses,
          including   all  amounts   expended  to  preserve  the  value  of  the
          Collateral,  of  foreclosure or suit, if any, and of such sale and the
          exercise  of any other  rights or  remedies,  and of all proper  fees,
          expenses,  liability  and  advances  incurred  or  made  hereunder  by
          Investor;

               (ii) Second,  to the payment to Investor of the amount then owing
          or unpaid on the Notes;

               (iii)  Third,  to the payment of other  amounts  then  payable to
          Investor under any of the Transaction Documents; and

               (iv) Fourth,  to the payment of the surplus,  if any, to Company,
          its successors and assigns,  or to whomsoever may be lawfully entitled
          to receive the same.

         11. Miscellaneous.

          (a)  Notices.  Except  as  otherwise  provided  herein,  all  notices,
     requests,  demands,  consents,  instructions or other  communications to or
     upon Company or Investor under this Security  Agreement shall be in writing
     and faxed, mailed or delivered to each party to the facsimile number or its
     address  set forth below (or to such other  facsimile  number or address as
     the recipient of any notice shall have notified the other in writing).  All
     such notices and communications shall be effective (a) when sent by Federal
     Express or other overnight service of recognized standing, on the


                                       11
<PAGE>


     business day following the deposit with such service;  (b) when mailed,  by
     registered or certified mail,  first class postage prepaid and addressed as
     aforesaid through the United States Postal Service,  upon receipt; (c) when
     delivered by hand, upon delivery;  and (d) when faxed, upon confirmation of
     receipt.

         Investor:
                                    William M. Hawkins, III
                                    c/o THE 3DO COMPANY
                                    200 Cardinal Way
                                    Redwood City, California 94063
                                    Telephone: (650) 385-3000
                                    Facsimile: (650) 385-3183

         Company:
                                    THE 3DO COMPANY
                                    200 Cardinal Way
                                    Redwood City, California 94063
                                    Attn:  James Alan Cook
                                    Telephone:  (650) 385-3000
                                    Facsimile: (650) 385-3183

          (b)  Nonwaiver.  No failure or delay on Investor's  part in exercising
     any right hereunder shall operate as a waiver thereof or of any other right
     nor shall any single or partial  exercise  of any such right  preclude  any
     other further exercise thereof or of any other right.

          (c) Amendments and Waivers. This Security Agreement may not be amended
     or  modified,  nor  may any of its  terms  be  waived,  except  by  written
     instruments  signed by Company and  Investor.  Each waiver or consent under
     any provision  hereof shall be effective only in the specific  instance and
     purpose for which given.

          (d) No Third Party Rights.  Nothing expressed in or to be implied from
     this Security Agreement is intended to give, or shall be construed to give,
     any  Person,  other than  Company  and  Investor,  any  benefit or legal or
     equitable  right,  remedy  or claim  under or by  virtue  of this  Security
     Agreement or under or by virtue of any provision  herein.

          (e)  Assignments.  The rights and  obligations of Company and Investor
     under  this  Security  Agreement  shall be  binding  upon and  benefit  the
     successors,  assigns, heirs, administrators and transferees of the parties;
     provided  that  Company  may not  assign or  transfer  any of its rights or
     obligations under this Security Agreement or any other Transaction Document
     without the prior  written  consent of  Investor.  Investor may at any time
     sell, assign,  grant  participations in, or otherwise transfer to any other
     Person  all or part of the  obligations  of  Company  under  this  Security
     Agreement. All references in this Security Agreement to any Person shall be
     deemed to include all permitted successors and assigns of such Person.

          (f)  Cumulative  Rights,  etc.  The  rights,  powers and  remedies  of
     Investor under this Security  Agreement shall be in addition to all rights,
     powers and remedies given to Investor by virtue of any applicable law, rule
     or regulation of any governmental  authority,  any Transaction


                                       12
<PAGE>


     Document or any other agreement,  all of which rights, powers, and remedies
     shall be  cumulative  and may be  exercised  successively  or  concurrently
     without impairing Investor's rights hereunder.

          (g) Payments  Free of Taxes,  Etc. All payments  made by Company under
     the  Transaction  Documents  shall be made by Company free and clear of and
     without  deduction  for any and  all  present  and  future  taxes,  levies,
     charges,  deductions and withholdings.  In addition, Company shall pay upon
     demand any stamp or other taxes, levies or charges of any jurisdiction with
     respect  to  the  execution,   delivery,   registration,   performance  and
     enforcement of this Security Agreement.

          (h) Expenses. Company shall pay on demand, (a) all reasonable fees and
     expenses,  including reasonable  attorneys' fees and expenses,  incurred by
     Investor in connection with the preparation, execution and delivery of, and
     the exercise of its rights and duties under,  this  Security  Agreement and
     the other  Transaction  Documents,  and the  preparation  of amendments and
     waivers hereunder and thereunder; and (b) all reasonable fees and expenses,
     including reasonable attorneys' fees and expenses,  incurred by Investor in
     connection with custody, preservation, or sale of, or other realization on,
     any of the Collateral,  or the enforcement or attempt to enforce any of the
     Obligations  which is not  performed as and when  required by this Security
     Agreement or the other Transaction Documents.

          (i) Partial Invalidity.  If at any time any provision of this Security
     Agreement is or becomes  illegal,  invalid or  unenforceable in any respect
     under  the law or any  jurisdiction,  neither  the  legality,  validity  or
     enforceability of the remaining  provisions of this Security  Agreement nor
     the legality, validity or enforceability of such provision under the law of
     any other jurisdiction shall in any way be affected or impaired thereby.

          (j)  Construction.  Each  of this  Security  Agreement  and the  other
     Transaction  Documents is the result of  negotiations  among,  and has been
     reviewed by, Company,  Investor and their respective counsel.  Accordingly,
     this Security Agreement and the other Transaction Documents shall be deemed
     to be the  product of  Company  and  Investor,  and no  ambiguity  shall be
     construed in favor of or against Company or Investor.

          (k) Entire Agreement.  This Security Agreement taken together with the
     other Transaction  Documents constitute and contain the entire agreement of
     Company  and  Investor  and  supersede   any  and  all  prior   agreements,
     negotiations,  correspondence,  understandings and communications among the
     parties, whether written or oral, respecting the subject matter hereof.

          (l)  Other  Interpretive  Provisions.   References  in  this  Security
     Agreement  and each of the other  Transaction  Documents  to any  document,
     instrument  or agreement  (a) includes all  exhibits,  schedules  and other
     attachments thereto, (b) includes all documents,  instruments or agreements
     issued or executed in  replacement  thereof,  and (c) means such  document,
     instrument or agreement, or replacement or predecessor thereto, as amended,
     modified  and  supplemented  from  time to time and in  effect at any given
     time. The words  "hereof,"  "herein" and  "hereunder"  and words of similar
     import  when  used in this  Security  Agreement  or any  other  Transaction
     Document  refer  to  this  Security  Agreement  or such  other  Transaction
     Document,  as the  case  may  be,  as a  whole  and  not to any  particular
     provision of this Security Agreement or such other Transaction Document, as
     the case may be.  References  in this  Security  Agreement  to  "Sections,"
     "Attachments" or


                                       13
<PAGE>


     "Schedules"  are to sections,  attachments  or  schedules  herein or hereto
     unless otherwise  indicated.  The words "include" and "including" and words
     of  similar  import  when  used in this  Security  Agreement  or any  other
     Transaction  Document  shall not be construed to be limiting or  exclusive.
     The word "or" when used in this  Security  Agreement  shall mean  either as
     well as both.  Headings in this Security  Agreement are for  convenience of
     reference only and are not part of the substance hereof.  All terms defined
     in this  Security  Agreement  in the  singular  form shall have  comparable
     meanings when used in the plural form and vice versa.

          (m)  Governing  Law;  Jurisdiction.  This  Security  Agreement and all
     actions arising out of or in connection with this Security  Agreement shall
     be governed by and  construed in  accordance  with the laws of the State of
     California  without  reference  to  conflict  of laws rules  (except to the
     extent governed by the Code). Any action or proceeding  relating in any way
     to this  Security  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.  Any such process or
     summons in connection  with any such action or proceeding  may be served by
     mailing  a  copy  thereof  by  certified  or   registered   mail,   or  any
     substantially  similar  form of mail,  addressed  to Company or Investor as
     provided for notices hereunder.

         IN WITNESS  WHEREOF,  Company and  Investor  have caused this  Security
Agreement to be executed as of the day and year first above written.

                                      THE 3DO COMPANY, a California corporation


                                      By:    /s/ James A. Cook
                                          -------------------------------------
                                      Name:      James A. Cook
                                            -----------------------------------
                                      Title:     Executive Vice President
                                             ----------------------------------


                                      WILLIAM M. HAWKINS, III


                                      /s/ William M. Hawkins, III
                                      -----------------------------------------



                                       14