Exhibit 4.2

         THIS  WARRANT AND ANY  SECURITIES  ACQUIRED  UPON THE  EXERCISE OF THIS
WARRANT HAVE NOT BEEN  REGISTERED  UNDER THE  SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES  ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES
NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT  PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT UNDER SUCH
ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS.


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


                                 THE 3DO COMPANY

                          COMMON STOCK PURCHASE WARRANT


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

         This  certifies  that,  for good and  valuable  consideration,  The 3DO
Company,  a  Delaware  corporation  (the  "Company"),  grants to  Gerard  Klauer
Mattison & Co., Inc., or registered assigns (the "Warrantholder"),  the right to
subscribe for and purchase  from the Company  Three  Hundred Six Thousand  Eight
Hundred Forty-Two (306,842) validly issued,  fully paid and nonassessable shares
(the "Warrant  Shares") of the Company's Common Stock, par value $0.01 per share
(the "Common Stock"),  at the purchase price per share of Two and 48/100 Dollars
($2.48)  (the  "Exercise  Price"),  from time to time,  prior to 5:00 PM Eastern
Standard Time on December 10, 2006 (the "Expiration  Date"),  all subject to the
terms, conditions and adjustments herein set forth. Capitalized terms shall have
the meanings set forth in Section 18 of this Warrant.




Certificate No.:  WA-16


Number of Warrant Shares:  306,842


Name of Warrantholder:  Gerard Klauer Mattison & Co., Inc.




<PAGE>

         1. Duration and Exercise of Warrant; Limitation on Exercise; Payment of
Taxes.

            1.1  Duration  and  Exercise  of  Warrant.  Subject to the terms and
conditions set forth herein, the Warrant may be exercised,  in whole or in part,
by the Warrantholder by:

                 (a) the  surrender of this Warrant to the Company,  with a duly
executed  Exercise Form specifying the number of Warrant Shares to be purchased,
during normal  business hours on any Business Day prior to the Expiration  Date;
and

                 (b) the delivery of payment to the Company,  for the account of
the Company,  by cash, by wire  transfer of  immediately  available  funds or by
certified  or bank  cashier's  check,  of the  Exercise  Price for the number of
Warrant  Shares  specified  in the  Exercise  Form in lawful money of the United
States of America.  The Company  agrees that such Warrant Shares shall be deemed
to be issued to the Warrantholder as the record holder of such Warrant Shares as
of the close of  business  on the date on which  this  Warrant  shall  have been
surrendered and payment made for the Warrant Shares as aforesaid (or as provided
in Section 1.2 below).

            1.2 Conversion Right (Cashless Exercise).

                 (a)  In  lieu  of  the  payment  of  the  Exercise  Price,  the
Warrantholder  shall have the right  (but not the  obligation),  to require  the
Company to convert  this  Warrant,  in whole or in part,  into  shares of Common
Stock (the  "Conversion  Right")  as  provided  for in this  Section  1.2.  Upon
exercise of the Conversion Right, the Company shall deliver to the Warrantholder
(without payment by the  Warrantholder  of any of the Exercise Price;  provided,
however,  that the Warrantholder  shall be required to pay the par value for any
shares of Common Stock so delivered) that number of shares of Common Stock equal
to the  quotient  obtained by dividing  (i) the value of the Warrant at the time
the  Conversion  Right is exercised  (determined  by  subtracting  the aggregate
Exercise  Price in effect  immediately  prior to the exercise of the  Conversion
Right  from the  aggregate  Fair  Market  Value for the  shares of Common  Stock
issuable upon exercise of the Warrant  immediately  prior to the exercise of the
Conversion  Right) by (ii) the Fair  Market  Value of one share of Common  Stock
immediately prior to the exercise of the Conversion Right.


                 (b) The Conversion Right may be exercised by the  Warrantholder
on any  Business  Day prior to the  Expiration  Date by  delivering  the Warrant
Certificate,  together with a duly executed  Exercise Form (with the  conversion
section  completed),  to  the  Company,  exercising  the  Conversion  Right  and
specifying the total number of shares of Common Stock the Warrantholder  will be
issued pursuant to such conversion.


                 (c)  Fair  Market  Value  of a share  of  Common  Stock as of a
particular date (the "Determination Date") shall mean:

                      (i) If the Common Stock is listed on a national securities
exchange, then the Fair Market Value shall be the average of the "daily sales
prices" of the Common Stock on the  principal  national  securities  exchange on
which the Common  Stock is listed or  admitted  for  trading on each of the last
five (5)  Business  Days prior to the  Determination  Date,  or if not listed or
traded on any such exchange,  then the Fair Market Value shall be the average of
the "daily  sales


                                      -2-

<PAGE>


prices" of the Common Stock on the National  Market (the  "National  Market") of
the National  Association  of Securities  Dealers  Automated  Quotations  System
("Nasdaq") on each of the last five (5) Business Days prior to the Determination
Date.  The "daily sales price" shall be the closing price of the Common Stock at
the end of each day.


                      (ii) If the Common  Stock is not so listed or  admitted to
unlisted  trading  privileges or if no such sale is made on at least four (4) of
such days,  then the Fair  Market  Value  shall be the fair value as  reasonably
determined in good faith by the Company's Board of Directors or a duly appointed
committee of the Board (which  determination shall be described in detail in the
written  notice  delivered to the  Warrantholder  together with the Common Stock
certificates).  If the Warrantholder objects to the fair value determined by the
Company's Board of Directors,  the Warrantholder shall have the right to appoint
an independent appraiser (mutually consented to by the Company, such consent not
to be  unreasonably  withheld)  to  determine  the fair value.  The  independent
appraiser shall be a nationally recognized investment banking firm or nationally
recognized  expert  experienced  in the  valuation of  companies  engaged in the
business  conducted  by the  Company.  The  determination  of  such  independent
appraiser  as to the fair value shall be  controlling.  The fees and expenses of
the  independent  appraiser  shall be paid by the Company  unless the fair value
determined by the Company's Board of Directors  equals or exceeds the fair value
determined by the independent appraiser.

            1.3  Limitations  on  Exercise.   Notwithstanding  anything  to  the
contrary  herein,  this Warrant may be  exercised  only upon the delivery to the
Company of any  certificates  or other  documents  reasonably  requested  by the
Company to satisfy the Company that the proposed exercise of this Warrant may be
effected without registration under the Securities Act.

            1.4 Warrant Shares Certificate.  A stock certificate or certificates
for the Warrant Shares  specified in the Exercise Form shall be delivered to the
Warrantholder  within ten (10)  Business Days after receipt of the Exercise Form
and  the  Investment  Representation  Statement  and,  if such  exercise  is not
pursuant  to Section  1.2,  receipt of payment of the  purchase  price.  If this
Warrant shall have been exercised  only in part, the Company shall,  at the time
of  delivery  of  the  stock   certificate  or  certificates,   deliver  to  the
Warrantholder  a new Warrant  evidencing  the rights to purchase  the  remaining
Warrant  Shares,  which new Warrant shall in all other  respects be identical to
this Warrant.

            1.5  Payment of Taxes.  The  issuance  of  certificates  for Warrant
Shares shall be made without charge to the  Warrantholder for any stock transfer
or  other  issuance  tax  in  respect  thereto;  provided,   however,  that  the
Warrantholder shall be required to pay any and all taxes which may be payable in
respect of any transfer involved in the issuance and delivery of any certificate
in a name other than that of the then  Warrantholder as reflected upon the books
of the Company.

            1.6 Divisibility of Warrant; Transfer of Warrant.

                 (a) Subject to the provisions of this Section 1.6, this Warrant
may be  divided  into  warrants  of one  thousand  (1,000)  shares or  multiples
thereof,  upon surrender at the principal office or the Company,  without charge
to any  Warrantholder.  Upon such  division,  the Warrants may be transferred of
record as the then Warrantholder may specify without charge to such



                                       -3-
<PAGE>


Warrantholder  (other than any applicable transfer taxes). In addition,  subject
to the  provisions  of this Section 1.6, the  Warrantholder  shall also have the
right to transfer this Warrant in its entirety to any person or entity.

                 (b) Upon  surrender  of this Warrant to the Company with a duly
executed  Assignment  Form and funds  sufficient  to pay any  transfer  tax, the
Company shall, without charge,  execute and deliver a new Warrant or Warrants of
like tenor in the name of the assignee named in such  Assignment  Form, and this
Warrant shall promptly be canceled.  Each Warrantholder agrees that prior to any
proposed  transfer  (whether as the result of a division or  otherwise)  of this
Warrant,  such  Warrantholder  shall give written  notice to the Company of such
Warrantholder's  intention  to effect  such  transfer.  Each such  notice  shall
describe the manner and  circumstances  of the proposed  transfer in  sufficient
detail, and, if reasonably  requested by the Company,  shall be accompanied by a
written  opinion of legal  counsel,  which  opinion  shall be  addressed  to the
Company and be  reasonably  satisfactory  in form and substance to the Company's
counsel,  to the  effect  that the  proposed  transfer  of this  Warrant  may be
effected  without  registration  under the  Securities  Act.  In  addition,  the
Warrantholder  and the  transferee  shall execute any  documentation  reasonably
required by the Company to ensure  compliance  with the Securities Act. The term
"Warrant"  as used in this  Agreement  shall be deemed to include  any  Warrants
issued in substitution or exchange for this Warrant.

         2. Restrictions on Transfer;  Restrictive Legends.  Except as otherwise
permitted by this Section 2, each  Warrant  shall (and each Warrant  issued upon
direct or indirect  transfer  or in  substitution  for any  Warrant  pursuant to
Section 1.6 or Section 4 shall) be stamped or otherwise  imprinted with a legend
in substantially the following form:

            THIS WARRANT AND ANY  SECURITIES  ACQUIRED UPON THE EXERCISE OF THIS
         WARRANT HAVE NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS
         AMENDED,  OR ANY STATE  SECURITIES  LAWS AND NEITHER THE SECURITIES NOR
         ANY  INTEREST  THEREIN MAY BE OFFERED,  SOLD,  TRANSFERRED,  PLEDGED OR
         OTHERWISE  DISPOSED  OF EXCEPT  PURSUANT TO AN  EFFECTIVE  REGISTRATION
         STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION
         UNDER SUCH ACT AND SUCH LAWS.

         Except as otherwise permitted by this Section 2, each stock certificate
for  Warrant  Shares  issued  upon the  exercise  of any  Warrant and each stock
certificate  issued  upon the direct or indirect  transfer  of any such  Warrant
Shares shall be stamped or otherwise  imprinted  with a legend in  substantially
the following form:

            THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE BEEN ACQUIRED
         FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION  WITH, THE SALE
         OR  DISTRIBUTION  THEREOF,  AND  HAVE  NOT BEEN  REGISTERED  UNDER  THE
         SECURITIES ACT OF 1933, AS AMENDED,  OR ANY STATE  SECURITIES  LAWS AND
         NEITHER THE SECURITIES NOR ANY INTEREST  THEREIN MAY BE OFFERED,  SOLD,
         TRANSFERRED,  PLEDGED OR  OTHERWISE  DISPOSED OF EXCEPT  PURSUANT TO AN
         EFFECTIVE  REGISTRATION



                                       -4-
<PAGE>


         STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION
         UNDER SUCH ACT AND SUCH LAWS.

         Notwithstanding  the  foregoing,  the  Warrantholder  may  require  the
Company to issue a Warrant or a stock  certificate for Warrant  Shares,  in each
case without a legend,  if: (i) such Warrant or such Warrant Shares, as the case
may be, have been  registered  for resale  under the  Securities  Act,  (ii) the
Warrantholder  has delivered to the Company an opinion of legal  counsel,  which
opinion shall be addressed to the Company and be reasonably satisfactory in form
and substance to the Company's counsel,  to the effect that such registration is
not required  with respect to such Warrant or such Warrant  Shares,  as the case
may be, or (iii) such Warrant or Warrant Shares, as the case may be, may be sold
without restriction  (including,  without limitation,  as to volume) pursuant to
Rule 144(k).

         3.  Company  Representations,  Warranties  and  Covenants.  The Company
hereby represents, warrants, covenants and agrees as follows:

            3.1 All Warrant  Shares  which are issued upon the  exercise of this
Warrant will, upon issuance,  be validly issued,  fully paid, and nonassessable,
not subject to any preemptive rights, and free from all taxes,  liens,  security
interests,  charges,  and other  encumbrances with respect to the issue thereof,
other than taxes with respect to any transfer occurring  contemporaneously  with
such issue.

            3.2 During the period  within which this  Warrant may be  exercised,
the Company will at all times have  authorized and reserved,  and keep available
free from preemptive  rights,  a sufficient  number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant.

            3.3 This  Warrant  has been  duly  authorized  and  executed  by the
Company and is a valid and binding  obligation  of the  Company  enforceable  in
accordance with its terms,  except to the extent that enforcement thereof may be
limited by (i)  bankruptcy,  insolvency,  reorganization,  moratorium or similar
laws now or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is considered
in a  proceeding  at law or in equity)  and except to the extent  that rights to
indemnification  and  contribution  contained  in this Warrant may be limited by
federal or state securities laws on public policy relating thereto.

            3.4 The  execution  and  delivery of this  Warrant are not,  and the
issuance of the Warrant Shares upon exercise of this Warrant in accordance  with
the terms hereof (i) will not be in violation of the  Company's  certificate  of
incorporation  or  bylaws,  (ii)  do  not  and  will  not  contravene  any  law,
governmental  rule or regulation,  judgment or order  applicable to the Company,
(iii) do not and will not  conflict  with or  contravene  any  provision  of, or
constitute a material default under, any material indenture,  mortgage, contract
or other  instrument  of which the Company is a party or by which it is bound or
(iv)  require  the  consent  or  approval  of,  the  giving  of notice  to,  the
registration or filing with or the taking of any action in respect of or by, any
federal,  state or  local  government  authority  or  agency  (other  than  such
consents,  approvals,  notices, actions or filings as have already been obtained
or made);  except in the case of each of clauses (ii),  (iii) and (iv), as could
not,



                                       -5-
<PAGE>

individually or in the aggregate,  reasonably be expected to have or result in a
material  adverse  effect on the Company's  ability to perform fully on a timely
basis all of its obligations under this Warrant.

            3.5 The  Company  shall not,  by  amendment  of its  certificate  of
incorporation  or through  any  reorganization,  transfer  of  assets,  spinoff,
consolidation,  merger,  dissolution,  issue or sale of  securities or any other
action or inaction,  seek to avoid the  observance or  performance of any of the
terms of this Warrant, and shall at all times in good faith assist in performing
and giving  effect to the terms  hereof and in the taking of all such actions as
may reasonably be requested by the  Warrantholder in order to protect the rights
of the Warrantholder against dilution or other impairment.

         4.  Warrantholder   Representations,   Warranties  and  Covenants.  The
Warrantholder represents and warrants to the Company that:

            4.1  Authorization.  The person  signing this Warrant has full power
and  authority to enter into this Warrant on behalf of the  Warrantholder.  When
executed and delivered,  this Warrant will constitute the Warrantholder's  valid
and legally binding  obligation,  except to the extent that enforcement  thereof
may be limited by (i)  bankruptcy,  insolvency,  reorganization,  moratorium  or
similar laws now or hereafter in effect relating to creditors'  rights generally
and (ii) general principles of equity  (regardless of whether  enforceability is
considered  in a  proceeding  at law or in equity) and except to the extent that
rights to  indemnification  and  contribution  contained  in this Warrant may be
limited by federal or state securities laws on public policy relating thereto.

         4.2 Investment Representations.

                 (a) The  Warrantholder  understands  that the  Warrant  and the
Warrant Shares have not been  registered  under the Securities  Act, and will be
issued  pursuant to an exemption from  registration  contained in the Securities
Act  based  in part  upon the  representations  of the  Warrantholder  contained
herein,  and can be transferred in the absence of registration  only pursuant to
an exemption  from  registration,  Rule 144 under the  Securities  Act or if the
Company receives an opinion of counsel that such registration is not required.

                 (b) The  Warrantholder is acquiring the Warrant and the Warrant
Shares  solely for its own  account and not as a nominee for any other party and
not with a view toward the resale or  distribution  thereof in  violation of the
securities laws; provided,  however, that by making the representations  herein,
the  Warrantholder  does not agree to hold this  Warrant  or any of the  Warrant
Shares for any minimum or other  specific term and reserves the right to dispose
of this  Warrant  and the  Warrant  Shares  at any  time in  accordance  with or
pursuant to a registration statement or an exemption under the Securities Act.

                 (c) The  Warrantholder  is experienced in evaluating  companies
such  as  the  Company,  is  able  to  fend  for  the  Warrantholder's  self  in
transactions such as the one contemplated by the Warrant, has such knowledge and
experience in financial and business  matters that the  Warrantholder is capable
of evaluating the merits and risks of the Warrantholder's prospective investment
in the  Company,  and  has  the  ability  to  bear  the  economic  risks  of the
investment,  including a complete loss of the  Warrantholder's  investment.  The
Warrantholder has been afforded


                                       -6-
<PAGE>

an  opportunity  to ask such  questions of the  Company's  officers,  employees,
agents,  accountants  and  representatives  concerning  the Company's  business,
operations,  financial condition, assets, liabilities and other relevant matters
as it has deemed necessary or desirable.  The Warrantholder has received all the
information it considers  necessary or appropriate to decide whether to purchase
the Warrant and the Warrant Shares.

                 (d) The Warrantholder  acknowledges that this Warrant satisfies
the Company's  obligations to issue to the  Warrantholder a warrant  pursuant to
Section 4(b) of the letter  agreement,  dated July 5, 2001,  between the Company
and Gerard Klauer Mattison & Co., Inc., as amended.

                 (e)  Warrantholder  is an  "accredited  investor" as defined in
Rule 501(a) under the Securities Act.

                 (f) Warrantholder is not purchasing the Warrant and the Warrant
Shares as a result of or subsequent  to any  advertisement,  article,  notice or
other  communication  regarding the Warrant and the Warrant Shares  published in
any newspaper,  magazine or similar media or broadcast over  television or radio
or  presented  at any  seminar  or any other  general  solicitation  or  general
advertisement.

         5. Loss or  Destruction  of  Warrant.  Upon  receipt by the  Company of
evidence  reasonably  satisfactory  to it of the  loss,  theft,  destruction  or
mutilation of this Warrant and, in the case of loss,  theft or  destruction,  of
such bond or indemnification as the Company may reasonably require,  and, in the
case of such mutilation,  upon surrender and  cancellation of this Warrant,  the
Company will execute and deliver a new Warrant of like tenor.

         6.  Ownership of Warrant.  The Company may deem and treat the person in
whose  name  this  Warrant  is   registered  as  the  holder  and  owner  hereof
(notwithstanding  any  notations of  ownership or writing  hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the  contrary,  until  presentation  of  this  Warrant  for  registration  of
transfer.

         7. Certain Adjustments.

            7.1 The number of Warrant  Shares  purchasable  upon the exercise of
this Warrant and the Exercise Price shall be subject to adjustment as follows:

                 (a)  Stock  Dividends.  If at any  time  after  the date of the
issuance  of this  Warrant  (i) the  Company  shall  fix a  record  date for the
issuance  of any stock  dividend  payable in shares of Common  Stock or (ii) the
number of shares of Common Stock shall have been  increased by a subdivision  or
split-up  of shares of Common  Stock,  then,  on the  record  date fixed for the
determination  of holders of Common Stock  entitled to receive such  dividend or
immediately  after the effective  date of such  subdivision  or split up, as the
case may be, the number of shares to be delivered  upon exercise of this Warrant
will be  increased  so that the  Warrantholder  will be  entitled to receive the
number of shares of Common  Stock  that  such  Warrantholder  would  have  owned



                                       -7-
<PAGE>

immediately  following  such  action had this  Warrant  been  exercised  in full
immediately  prior thereto,  and the Exercise Price will be adjusted as provided
below in paragraph (g).

                 (b)  Combination  of Stock.  If the  number of shares of Common
Stock  outstanding  at any time after the date of the  issuance of this  Warrant
shall have been decreased by a combination of the  outstanding  shares of Common
Stock,  then,  immediately  after the effective  date of such  combination,  the
number of shares of Common Stock to be delivered  upon  exercise of this Warrant
will be  decreased  so that the  Warrantholder  thereafter  will be  entitled to
receive the number of shares of Common Stock that such Warrantholder  would have
owned immediately  following such action had this Warrant been exercised in full
immediately  prior thereto,  and the Exercise Price will be adjusted as provided
below in paragraph (g).

                 (c) Reorganization,  Merger, etc. If any capital reorganization
of the Company,  any  reclassification of the Common Stock, any consolidation of
the Company with or merger of the Company with or into any other person,  or any
sale or lease or other transfer of all or substantially all of the assets of the
Company to any other person (each, a "Transaction"), shall be effected in such a
way that the holders of Common Stock shall be entitled to receive  stock,  other
securities or assets (whether such stock,  other securities or assets are issued
or distributed by the Company or another  person) with respect to or in exchange
for Common Stock, then, upon exercise of this Warrant,  the Warrantholder  shall
have the right to receive  the kind and  amount of stock,  other  securities  or
assets  receivable upon such  Transaction by a holder of the number of shares of
Common Stock that such  Warrantholder  would have been  entitled to receive upon
exercise of this  Warrant had this Warrant  been  exercised in full  immediately
before  such  Transaction.   The  Company  shall  execute  and  deliver  to  the
Warrantholder   at  least  ten  (10)  Business  Days  prior  to  effecting  such
Transaction a certificate setting forth the Warrantholder's  rights as set forth
in the preceding  sentence.  No Transaction shall be consummated unless adequate
provision (in the reasonable  opinion of the Warrantholder) has been made in the
definitive  agreement for the adjustments set forth herein and for the successor
entity in any such  Transaction to assume the Company's  obligations  hereunder.
The  provisions  of this Section  7.1(c)  shall  similarly  apply to  successive
Transactions.

                 (d) Stock and Rights Offering at Less than Fair Market Value or
Exercise Price.

                      (i) If at any  time  after  the date of  issuance  of this
Warrant,  the Company shall issue or sell  Additional  Securities at a price per
share (or having a  conversion,  exchange or  exercise  price per share) that is
less than (x) the  Exercise  Price or (y) the Fair  Market  Value (as defined in
Section 1.2(c)  hereof),  in either case on the date of such issuance or sale or
on such record date then, immediately after the date of such issuance or sale or
such record  date,  the  Exercise  Price shall be adjusted by reducing it to the
lower of the following prices:

                         (I) the  price  calculated  by  dividing  (A) an amount
         equal  to the  sum  of  (x)  the  number  of  shares  of  Common  Stock
         outstanding immediately prior to such issue or sale or fixing of record
         date (on an as if converted  basis,  including  the number of shares of
         Common Stock issuable upon  conversion or exchange of any  obligations,
         any  shares  of stock or other  security  of the  Company  or any other
         security  convertible into or


                                       -8-
<PAGE>


         exchangeable  for any security  convertible  into or  exchangeable  for
         Common Stock of the Company),  multiplied by the then existing Exercise
         Price,  plus (y) the aggregate  consideration,  if any, received by the
         Company  upon such issue or sale,  by (B) the total number of shares of
         Common Stock outstanding immediately after such issue or sale or fixing
         of record date (on an as if converted  basis,  including  the number of
         shares of Common  Stock  issuable  upon  conversion  or exchange of any
         obligations,  any shares of stock or other  security  of the Company or
         any other security  convertible  into or exchangeable  for any security
         convertible into or exchangeable for Common Stock of the Company); and

                         (II)  the  price  calculated  by  multiplying  the then
         existing  Exercise  Price by a fraction,  (A) the numerator of which is
         the sum of (x)  the  number  of  shares  of  Common  Stock  outstanding
         immediately prior to such issue or sale or fixing of record date (on an
         as if converted  basis,  including the number of shares of Common Stock
         issuable upon conversion or exchange of any obligations,  any shares of
         stock  or  other   security  of  the  Company  or  any  other  security
         convertible into or exchangeable  for any security  convertible into or
         exchangeable  for Common Stock of the Company)  multiplied  by the Fair
         Market Value per share of Common Stock  immediately prior to such issue
         or sale or  fixing  of  record  date  plus (y) the  cash  consideration
         received  by  the  Company  upon  such  issue  or  sale,  and  (B)  the
         denominator  of which is the total  number  of  shares of Common  Stock
         outstanding  immediately  after  such issue or sale or fixing of record
         date (on an as if converted  basis,  including  the number of shares of
         Common Stock issuable upon  conversion or exchange of any  obligations,
         any  shares  of stock or other  security  of the  Company  or any other
         security  convertible into or exchangeable for any security convertible
         into or  exchangeable  for Common Stock of the Company)  times the Fair
         Market Value per share of Common Stock  immediately prior to such issue
         or sale or fixing of record date.



                      (ii) If the Company  shall,  at any time after the date of
issuance of this Warrant,  fix a record date to distribute to all holders of its
Common  Stock any shares of capital  stock of the  Company  (other  than  Common
Stock) or evidences of its indebtedness or assets  (including all cash dividends
or other  distributions,  whether paid from retained  earnings of the Company or
otherwise)  or  rights or  warrants  to  subscribe  for or  purchase  any of its
securities  (excluding  those referred to in paragraph  (d)(i) above),  then the
Warrantholder shall be entitled to receive,  upon exercise of the Warrant,  that
portion  of such  distribution  to which it would  have  been  entitled  had the
Warrantholder  exercised  its  Warrant  immediately  prior  to the  date of such
distribution.  At the time it fixes the record date for such  distribution,  the
Company  shall  allocate  sufficient  reserves  to ensure  the  timely  and full
performance  of the  provisions  of this Section  7.1(d)(ii).  The Company shall
promptly  (but in any case no later  than five (5)  Business  Days  prior to the
record date of such distribution) mail by first class,  postage prepaid,  to the
Warrantholder, notice that such distribution will take place.

                 (e) Fractional  Shares. No fractional shares of Common Stock or
scrip shall be issued to any  Warrantholder  in connection  with the exercise of
this  Warrant.  Instead  of any  fractional  shares of Common  Stock  that would
otherwise  be  issuable  to such  Warrantholder,  the  Company  will pay to such
Warrantholder  a cash  adjustment in respect of such  fractional  interest in an
amount equal to that  fractional  interest of the then current Fair Market Value
per share of Common Stock.


                                       -9-
<PAGE>


                 (f)  Carryover.  Notwithstanding  any other  provision  of this
Section 7, no  adjustment  shall be made to the number of shares of Common Stock
to be  delivered  to the  Warrantholder  (or  to the  Exercise  Price)  if  such
adjustment  represents  less than 1% of the number of shares to be so delivered,
but any lesser adjustment shall be carried forward and shall be made at the time
and  together  with the  next  subsequent  adjustment  which  together  with any
adjustments  so  carried  forward  shall  amount to 1% or more of the  number of
shares to be so delivered.

                 (g) Exercise Price  Adjustment.  Whenever the number of Warrant
Shares  purchasable upon the exercise of this Warrant is adjusted as provided in
this Section 7.1 (other than  pursuant to Section  7.1(h)),  the Exercise  Price
payable upon the exercise of this Warrant shall be adjusted by multiplying  such
Exercise Price immediately prior to such adjustment by a fraction,  of which the
numerator shall be the number of Warrant Shares purchasable upon the exercise of
the Warrant  immediately prior to such adjustment,  and of which the denominator
shall be the number of Warrant Shares purchasable immediately thereafter.

                 (h)  Adjustment of Number of Warrant Shares  Purchasable.  Upon
any adjustment of the Exercise Price as provided in this Section 7.1 (other than
pursuant to Section  7.1(g)),  the holder hereof shall thereafter be entitled to
purchase,  at the Exercise Price resulting from such  adjustment,  the number of
shares of Common Stock  (calculated to the nearest .001 of a share)  obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares of Common Stock purchasable  hereunder immediately prior to
such adjustment and dividing the product thereof by the Exercise Price resulting
from such adjustment.

            7.2 Notice of Adjustments.  Whenever the number of Warrant Shares or
the Exercise Price of such Warrant Shares is adjusted,  as herein provided,  the
Company  shall  promptly  mail  by  first  class,   postage   prepaid,   to  the
Warrantholder,  notice of such  adjustment or adjustments and a certificate of a
firm of independent public accountants of recognized  national standing selected
by the  Board  of  Directors  of the  Company  (who  shall be  appointed  at the
Company's expense and who may be the independent  public  accountants  regularly
employed  by the  Company)  setting  forth in  reasonable  detail  the number of
Warrant  Shares  and the  Exercise  Price  of such  Warrant  Shares  after  such
adjustment,  a brief statement of the facts requiring such  adjustment,  and the
computation by which such adjustment was made.

            7.3 Notice of Extraordinary  Corporate  Events.  In case the Company
after the date hereof shall  propose to (a)  distribute  any  dividend  (whether
stock or cash or  otherwise) to the holders of shares of Common Stock or to make
any other  distribution  to the holders of shares of Common Stock,  (b) offer to
the holders of shares of Common Stock  rights to  subscribe  for or purchase any
additional  shares of any class of stock or any other rights or options,  or (c)
effect any  reclassification  of the Common Stock (other than a reclassification
involving merely the subdivision or combination of outstanding  shares of Common
Stock),  any capital  reorganization,  any consolidation or merger (other than a
merger in which no distribution of securities or other property is to be made to
holders of shares of Common Stock),  any sale,  transfer or other disposition of
all  or  substantially  all  of  its  property,  assets  and  business,  or  the
liquidation,  dissolution or winding up of the Company, then, in each such case,
the Company shall mail to each  Warrantholder  notice of such  proposed  action,
which notice shall  specify the date on which (i) the books of the Company shall
close, or (ii) a record


                                      -10-
<PAGE>


shall be taken for  determining  the holders of Common Stock entitled to receive
such stock dividends or other  distribution or such rights or options,  or (iii)
such reclassification,  reorganization,  consolidation,  merger, sale, transfer,
other  disposition,  liquidation,  dissolution or winding up shall take place or
commence,  as the case may be, and the date,  if any, as of which it is expected
that holders of record of Common  Stock shall be entitled to receive  securities
or other property  deliverable upon such action.  Such notice shall be mailed at
least ten (10) days prior to the record date for  determining  holders of Common
Stock for purposes of receiving such payment or offer.

            7.4 Effect of Failure to Notify.  Failure to file any certificate or
notice or to mail any  notice,  or any  defect  in any  certificate  or  notice,
pursuant  to Sections  7.2 and 7.3 shall not affect the  legality or validity of
the  adjustment to the Exercise  Price,  the number of shares  purchasable  upon
exercise of this Warrant, or any transaction giving rise thereto.

            7.5  Other  Dilutive  Events.  If  any  event  occurs  of  the  type
contemplated by the provisions of Section 7.1 but not expressly  provided for by
such  provisions   (including,   without  limitation,   the  granting  of  stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company's Board of Directors will make an appropriate adjustment in the
Exercise Price and the number of shares of Common Stock obtainable upon exercise
of this  Warrant so as to protect  the  rights of the  holders of this  Warrant;
provided that no such  adjustment  will increase the Exercise  Price or decrease
the number of shares of Common Stock obtainable as otherwise determined pursuant
to this Section 7.

         8. Registration Rights.

            8.1 Form S-3 Registration.  Reference is hereby made to that certain
Registration  Rights  Agreement  dated as of the date hereof (the  "Registration
Rights  Agreement"),  by and  among  the  Company  and the  Buyers  (as  defined
therein).  The  Warrantholder  shall have the same Form S-3 registration  rights
with respect to the Registrable  Securities as the "Investors" (as defined under
the Registration Rights Agreement) under the Registration Rights Agreement,  and
the terms and  provisions  of  Sections  2(a)-(e),  3 and 4 of the  Registration
Rights Agreement (captioned "Registration") shall apply to the Warrantholder and
its Registrable Securities with the Warrantholder holding the same rights as the
"Investors"  under  Sections  2(a)-(e),  3  and  4 of  the  Registration  Rights
Agreement;  provided,  that, for purposes of such  application,  "Legal Counsel"
shall  mean  Morrison  &  Foerster  LLP or  such  other  counsel  as  thereafter
designated by the holders of a majority of the Registrable Securities.

            8.2 Incidental Registration.

                 (a)  Notice  of  Registration.  If at any time or from  time to
time, the Company shall determine to register any of its securities,  either for
its  own  account  or  the  account  of a  security  holder  other  than  (i)  a
registration  relating  solely to employee  benefit  plans,  (ii) a registration
relating  solely to a merger,  acquisition  or  exchange,  (iii) a  registration
relating  solely  to  a  convertible   debt  transaction  or  (iv)  a  Form  S-3
registration pursuant to Section 8.1, the Company will:

                      (i) promptly give to the Holders  written notice  thereof;
and


                                      -11-
<PAGE>


                      (ii)  include  in  such   registration  (and  any  related
qualification under blue sky laws or other compliance),  and in any underwriting
involved therein, all the Registrable  Securities specified in a written request
or requests made within  twenty (20) days after  receipt of such written  notice
from the Company by any Holder.

                 (b)  Underwriting.  If the  registration  of which the  Company
gives notice is for a registered public offering involving an underwriting,  the
Company  shall so advise  the  Holders  as a part of the  written  notice  given
pursuant  to  Section  8.2(a)(i).  In such  event,  the  right of any  Holder to
registration  pursuant to Section 8.2 shall be  conditioned  upon such  Holder's
participation in such  underwriting and the inclusion of Registrable  Securities
in the  underwriting to the extent  provided  herein.  All Holders  proposing to
distribute their securities  through such underwriting  shall (together with the
Company  and the  other  holders  distributing  their  securities  through  such
underwriting)  enter into an  underwriting  agreement in customary form with the
managing  underwriter  selected for such  underwriting by the Company (or by the
holders   who  have   demanded   such   registration,   as  the  case  may  be).
Notwithstanding  any  other  provision  of this  Section  8.2,  if the  managing
underwriter  determines in its sole discretion that marketing  factors require a
limitation of the number of shares to be underwritten,  the Company will include
in such registration and  underwriting,  to the extent of the number and type of
securities that the Company is so advised can be sold in (or during the time of)
such offering,  first, all securities proposed by the Company to be sold for its
own account,  second, such other securities  requested to be registered on a pro
rata  basis  based  on  the  total  number  of  securities  (including,  without
limitation,  Registrable Securities owned by each participating Holder) entitled
to be included in such registration,  third, all Other Securities proposed to be
registered.  To facilitate the allocation of shares in accordance with the above
provisions,  the  Company  or the  underwriters  may round the  number of shares
allocated to any Holder or other holder to the nearest 100 shares. If any Holder
or other holder disapproves of the terms of any such underwriting, he or she may
elect to withdraw  therefrom  by written  notice to the Company and the managing
underwriter.  Any securities  excluded or withdrawn from such underwriting shall
be withdrawn  from such  registration,  and shall not be transferred in a public
distribution  prior to ninety  (90) days after the date of the final  prospectus
included in the registration statement relating thereto.

                 (c) Right to Terminate Registration. The Company shall have the
right to  terminate  or withdraw  any  registration  initiated  by it under this
Section 8.2 prior to the effectiveness of such registration,  whether or not any
Holder has elected to include securities in such registration.

         9. Obligations of the Company.

         In connection with the  registration  of the Registrable  Securities as
contemplated by Section 8.2, the Company shall:

            9.1  Prepare  and file with the SEC a  Registration  Statement  with
respect to the  securities to be sold by the Company or on account of a security
holder  together with the  Registrable  Securities to be sold by the  requesting
Holders, promptly (and in any event within forty-five (45) days of delivery of a
written notice from a requesting Holder to register Registrable  Securities) and
thereafter  use its best efforts to cause the  Registration  Statement to become
effective, which Registration Statement (including any amendments or supplements
thereto and prospectuses


                                      -12-
<PAGE>

contained  therein),  in each case,  shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading;

            9.2  Prepare  and  file  with  the SEC  such  amendments  (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus  used  in  connection  with  the  Registration  Statement  as  may be
necessary to keep the  Registration  Statement  effective and to comply with the
provisions  of  the  Securities  Act  with  respect  to the  disposition  of all
Registrable  Securities covered by the Registration Statement until such time as
all of such Registrable  Securities have been disposed of in accordance with the
intended  methods of disposition  by the seller or sellers  thereof set forth in
the Registration Statement;

            9.3 Furnish to each Holder whose Registrable Securities are included
in the  Registration  Statement  (without  charge to the Holders) such number of
copies of a prospectus,  including a preliminary  prospectus  and all amendments
and supplements thereto and such other documents,  as such Holder may reasonably
request in order to facilitate  the  disposition of the  Registrable  Securities
owned by such Holder;  the Company consents to the use of the prospectus and any
amendment or supplement  thereto by each Holder in connection  with the offering
and the sale of the  Registrable  Securities  covered by the  prospectus  or any
amendment or supplement thereto;

            9.4 Use its best efforts to (a) register and qualify the Registrable
Securities covered by the Registration  Statement under such other securities or
Blue Sky laws of such  jurisdictions  as the  Holders  who  hold a  majority  in
interest of the Registrable  Securities reasonably request, (b) prepare and file
in  those  jurisdictions  all  required  amendments  (including   post-effective
amendments) and supplements,  (c) take such other actions as may be necessary to
maintain  such  registrations  and  qualifications  in  effect  at all times the
Registration  Statement is in effect and (d) take all other actions necessary or
advisable  to  enable  the   disposition   of  such   securities   in  all  such
jurisdictions;  provided,  however,  that the  Company  shall not be required in
connection  therewith or as a condition thereto to qualify to do business in any
jurisdiction  where it would not  otherwise  be required to qualify but for this
Section 9.4;

            9.5 In the event of an underwritten offering, enter into and perform
its obligations under an underwriting agreement with the managing underwriter of
such  offering,  in usual and customary  form,  including,  without  limitation,
customary indemnification and contribution  obligations,  and in the case of any
non-underwritten  offering,  provide  to  broker-dealers  participating  in  any
distribution of Registrable Securities reasonable indemnification  substantially
similar to that provided by Section 12.1;

            9.6  Promptly  notify each Holder of the  happening  of any event of
which the Company has knowledge, as a result of which the prospectus included in
the Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements  therein,  in light of the  circumstances  then
existing,  not  misleading,  and use its best  efforts  to  prepare  promptly  a
supplement  or  amendment to the  Registration  Statement to correct such untrue
statement  or  omission,  and deliver a number of copies of such  supplement  or
amendment to each Holder as such Holder may reasonably request;


                                      -13-
<PAGE>

            9.7  Promptly  notify each Holder who holds  Registrable  Securities
being  sold  (and,  in the  event  of an  underwritten  offering,  the  managing
underwriters)  of the issuance by the SEC of any stop order or other  suspension
of  effectiveness  of the  Registration  Statement,  and use its best efforts to
obtain  the  withdrawal  of  any  order  suspending  the  effectiveness  of  the
Registration Statement at the earliest possible time;

            9.8  Permit  a  single  firm  of  counsel   designated   as  selling
stockholders'  counsel by the  Holders  who hold a majority  in  interest of the
Registrable  Securities being sold to review the Registration  Statement and all
amendments and  supplements  thereto a reasonable  period of time prior to their
filing  with the SEC,  and shall not file any  document  in a form to which such
counsel reasonably objects;

            9.9 Make  generally  available  to its  security  holders as soon as
practicable,  but not later than  ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 under the Securities Act) covering a twelve-month  period beginning not
later than the first day of the  Company's  fiscal  quarter next  following  the
effective date of the Registration Statement;

            9.10 At the reasonable request of the Holders who hold a majority in
interest of the  Registrable  Securities  being  sold,  furnish on the date that
Registrable  Securities are delivered to an  underwriter  for sale in connection
with  the  Registration  Statement  (a) a  letter,  dated  such  date,  from the
Company's independent certified public accountants,  in form and substance as is
customarily given by independent certified public accountants to underwriters in
an  underwritten  public  offering,  addressed to the  underwriters;  and (b) an
opinion,  dated such date, from counsel representing the Company for purposes of
such  Registration  Statement,  in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters;

            9.11 Make  available for inspection by any Holder,  any  underwriter
participating in any disposition pursuant to the Registration Statement, and any
attorney,  accountant, or other agent retained by any such Holder or underwriter
(collectively,  the  "Inspectors"),  all pertinent  financial and other records,
pertinent  corporate  documents  and  properties  of the  Company,  as  shall be
reasonably  necessary to enable each  Inspector  to exercise  its due  diligence
responsibility,  and cause the  Company's  officers,  directors and employees to
supply all information  reasonably requested by any such Inspector in connection
with the Registration Statement;

            9.12 Use its best  efforts  either to (a) cause all the  Registrable
Securities  covered  by the  Registration  Statement  to be listed on a national
securities exchange and on each additional national securities exchange on which
similar securities issued by the Company are then listed, if any, if the listing
of such  Registrable  Securities  is then  permitted  under  the  rules  of such
exchange or (b) secure designation of all the Registrable  Securities covered by
the  Registration  Statement as a Nasdaq  "National  Market Security" within the
meaning  of  Rule  11Aa2-l  of the  SEC and  the  quotation  of the  Registrable
Securities on the Nasdaq National Market;

            9.13 Provide a transfer agent and  registrar,  which may be a single
entity, for the Registrable  Securities not later than the effective date of the
Registration  Statement;


                                      -14-
<PAGE>


            9.14  Cooperate  with the  Holders who hold  Registrable  Securities
being sold and the managing  underwriter or underwriters,  if any, to facilitate
the timely preparation and delivery of certificates (not bearing any restrictive
legends)  representing  Registrable  Securities  to  be  sold  pursuant  to  the
Registration  Statement and enable such certificates to be in such denominations
or amounts,  as the case may be, and  registered  in such names as the  managing
underwriter or underwriters, if any, or the Holders may reasonably request;

            9.15  Promptly  notify  each  Holder  when  the  prospectus  or  any
prospectus  supplement  or  post-effective  amendment  has been filed,  and with
respect to the Registration  Statement or any post-effective  amendment thereto,
when the same has become effective;  and 9.16 Take all other reasonable  actions
necessary  to  expedite  and  facilitate  disposition  by  the  Holders  of  the
Registrable Securities pursuant to the Registration Statement.

         10. Obligations of the Holders.

         In  connection  with the  registration  of  Registrable  Securities  as
contemplated by Section 8.2, each Holder agrees as follows:

            10.1 Each Holder,  by its acceptance of the Registrable  Securities,
agrees  to  reasonably  cooperate  with  the  Company  in  connection  with  the
preparation and filing of any  registration  statement under Section 8.2, unless
such Holder has decided not to participate.

            10.2 No Holder  may  participate  in any  underwritten  registration
hereunder  unless  such  Holder  (a)  agrees to sell such  Holder's  Registrable
Securities on the basis provided in any  underwriting  arrangements set forth in
Section  8.2(b),  (b)  completes  and  executes  all  questionnaires,  powers of
attorney,  indemnities,  underwriting  agreements and other documents reasonably
required under the terms of such underwriting arrangements and (c) agrees to pay
such Holder's pro rata portion of all underwriting discounts and commissions.

            10.3 Holder agrees that the Company may suspend  offers and sales or
delay the  effectiveness  of any registration  statement,  an aggregate of up to
twenty (20) Business Days in any 12-month period  (provided no suspension  shall
exceed five  consecutive  Business  Days),  if the Company's  Board of Directors
determines, in good faith, that such delay would be necessary to avoid premature
disclosure of any material acquisition,  disposition,  business combination,  or
other material  transaction or information or  circumstances  exist that make it
impractical or inadvisable to amend or supplement the registration statement.

         11. Expenses of  Registration.  All Registration  Expenses  incurred in
connection with  registrations  pursuant to Section 8.1 or 8.2 shall be borne by
the  Company.   Unless  otherwise  stated,  all  Selling  Expenses  relating  to
securities  registered on behalf of the Holders shall be borne by the Holders of
the registered securities included in such registration pro rata on the basis of
the number of shares so registered.



                                      -15-
<PAGE>


         12.  Indemnification.  In the  event  any  Registrable  Securities  are
included in a Registration Statement under this Agreement:


            12.1 To the extent  permitted by law, the Company will indemnify and
hold harmless each Holder who holds such Registrable Securities,  the directors,
if any, of such  Holder,  the  officers,  if any, of such  Holder,  who sign the
Registration Statement, and each person, if any, who controls such Holder (each,
an  "Indemnified  Holder"),  against  any  losses,  claims,  damages,  expenses,
liabilities (joint or several) (collectively, "Claims") to which any of them may
become subject under the Securities Act or the Securities  Exchange Act of 1934,
as amended (the "Exchange Act") or otherwise, insofar as such Claims (or actions
or proceedings,  whether commenced or threatened,  in respect thereof) arise out
of or are based upon any of the  following  statements,  omissions or violations
(collectively,  a  "Violation"):  (a) any untrue  statement  or  alleged  untrue
statement  of a material  fact  contained in the  Registration  Statement or any
post-effective  amendment thereof,  or the omission or alleged omission to state
therein a material fact  required to be stated  therein or necessary to make the
statements  therein not misleading,  (b) any untrue  statement or alleged untrue
statement of a material  fact  contained in any  preliminary  prospectus if used
prior to the effective date of such Registration  Statement, or contained in the
final  prospectus (as amended or supplemented if the Company files any amendment
thereof or supplement thereto with the SEC), or the omission or alleged omission
to state therein a material fact required to be stated therein,  or necessary in
order to make the statements  therein, in light of the circumstances under which
they were made, not misleading, or (c) any violation or alleged violation by the
Company of the Securities  Act, the Exchange Act, any state  securities  law, or
any rule or regulation  promulgated  under the Securities Act, the Exchange Act,
or any state  securities law.  Subject to the  restrictions set forth in Section
12.3 with respect to the number of legal  counsel,  the Company shall  reimburse
the Holders and each such  underwriter or controlling  person,  promptly as such
expenses  are  incurred  and are due and  payable,  for any legal  fees or other
reasonable  expenses  incurred  by  them in  connection  with  investigating  or
defending any such Claim, whether or not such claim, investigation or proceeding
is brought or initiated by the Company or a third party.  If multiple claims are
brought  against  an  Indemnified  Holder  in  an  arbitration  proceeding,  and
indemnification is permitted under applicable law and is provided for under this
Section 12 with respect to at least one such claim,  the Company agrees that any
arbitration award shall be conclusively deemed to be based on claims as to which
indemnification  is  permitted  and  provided  for,  except  to the  extent  the
arbitration  award expressly states that the award, or any portion  thereof,  is
based  solely  on  a  claim  as  to  which  indemnification  is  not  available.
Notwithstanding  anything to the contrary contained herein, the  indemnification
agreement  contained in this Section 12.1 (w) shall not apply to a Claim arising
out of or based upon a Violation  which  occurs  solely in reliance  upon and in
conformity  with  information  furnished  in  writing  to  the  Company  by  any
Indemnified  Holder  expressly for use in connection with the preparation of the
Registration  Statement or any such amendment thereof or supplement thereto; (x)
with respect to any  preliminary  prospectus,  shall not inure to the benefit of
any such  person from whom the person  asserting  any such Claim  purchased  the
Registrable  Securities  that are the subject  thereof (or to the benefit of any
person  controlling such person) if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected in the prospectus, as
then amended or  supplemented,  if such  prospectus was timely made available by
the Company  pursuant to Section 3(d) of the  Registration  Rights  Agreement or
Section 9.3, and the Indemnified  Holder was promptly  advised in writing not to
use the  incorrect  prospectus  prior to the use giving rise to a violation  and
such Indemnified Holder,  notwithstanding such advice, used it;


                                      -16-
<PAGE>

(y) shall not be available to the extent such Claim is based on a failure of the
Investor to deliver or to cause to be delivered the prospectus made available by
the  Company,  if such  prospectus  was timely  made  available  by the  Company
pursuant to Section 3(d) of the  Registration  Rights  Agreement or Section 9.3;
and (z) shall  not  apply to  amounts  paid in  settlement  of any Claim if such
settlement is effected  without the prior written consent of the Company,  which
consent shall not be unreasonably withheld.  Such indemnity shall remain in full
force and effect  regardless  of any  investigation  made by or on behalf of the
Indemnified Holder and shall survive the transfer of the Registrable  Securities
by the Holders pursuant to Section 15.

            12.2 In connection with any Registration Statement in which a Holder
is participating, each such Holder agrees to indemnify and hold harmless, to the
same extent and in the same manner set forth in Section 12.1, the Company,  each
of its directors, each of its officers who sign the Registration Statement, each
person,  if any, who controls the Company  within the meaning of the  Securities
Act or the  Exchange  Act, any  underwriter  and any other  stockholder  selling
securities  pursuant to the  Registration  Statement or any of its  directors or
officers or any person who controls such  stockholder  or  underwriter  (each, a
"Company  Indemnified  Party" and  collectively and together with an Indemnified
Holder,  an  "Indemnified  Party"),  against  any Claim to which any of them may
become subject, under the Securities Act, the Exchange Act or otherwise, insofar
as such Claim arises out of or is based upon any Violation,  in each case to the
extent (and only to the extent) that such  Violation  occurs  solely in reliance
upon and in conformity with written information furnished to the Company by such
Holder  expressly for use in connection with such  Registration  Statement;  and
such Holder will  reimburse any legal or other expenses  reasonably  incurred by
them in connection  with  investigating  or defending any such Claim;  provided,
however,  that the indemnity  agreement contained in this Section 12.2 shall not
apply to amounts paid in settlement of any Claim if such  settlement is effected
without the prior  written  consent of such Holder,  which  consent shall not be
unreasonably withheld;  provided,  further, that the Holder shall in no event be
liable  under this  Section  12.2 for any amount of a Claim that exceeds the net
proceeds  to such  Holder  as a  result  of the sale of  Registrable  Securities
pursuant  to  such  Registration  Statement.  Notwithstanding  anything  to  the
contrary  contained  herein,  the  indemnification  agreement  contained in this
Section 12.2 with respect to any preliminary  prospectus  shall not inure to the
benefit of any Company  Indemnified Party if the untrue statement or omission of
material fact contained in the preliminary  prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented.

            12.3  Promptly  after  receipt by an  Indemnified  Party  under this
Section  12  of  notice  of  the  commencement  of  any  action  (including  any
governmental  action),  such  Indemnified  Party  shall,  if a Claim in  respect
thereof is to be made  against any  indemnifying  party  under this  Section 12,
deliver to the indemnifying party a written notice of the commencement  thereof,
and the  indemnifying  party shall have the right to participate in, and, to the
extent the indemnifying  party so desires,  jointly with any other  indemnifying
party similarly  noticed,  to assume control of the defense thereof with counsel
satisfactory to the Indemnified Parties; provided,  however, that an Indemnified
Party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying  party, if, in the reasonable  opinion of counsel
for the  Indemnified  Party,  representation  of such  Indemnified  Party by the
counsel retained by the indemnifying  party would be inappropriate due to actual
or potential  differing  interests  between such Indemnified Party and any other
party  represented  by  such  counsel  in such  proceeding.  The  failure  by an
Indemnified  Party to deliver written notice to the indemnifying  party within a
reasonable  time of the  commencement  of any such


                                      -17-
<PAGE>


action  shall  not  relieve  such  indemnifying  party of any  liability  to the
Indemnified  Party under this Section 12, except to the extent that such failure
to notify  results in the  forfeiture by the  indemnifying  party of substantive
rights or  defenses.  The  indemnification  required by this Section 12 shall be
made by  periodic  payments  of the  amount  thereof  during  the  course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.

         13. Contribution.  To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable  under  Section 12 to the  fullest  extent  permitted  by law;  provided,
however,  that (a) no contribution shall be made under  circumstances  where the
maker would not have been liable for  indemnification  under the fault standards
set forth in  Section  12,  (b) no seller of  Registrable  Securities  guilty of
fraudulent  misrepresentation  (within  the  meaning  of  Section  11(f)  of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities  who was not  guilty  of such  fraudulent  misrepresentation  and (c)
contribution by any seller of Registrable  Securities shall be limited in amount
to the net amount of  proceeds  received  by such  seller  from the sale of such
Registrable Securities.

         14.  Reports.  Under  Securities  Exchange Act of 1934.  With a view to
making  available to the Holders the benefits of Rule 144 promulgated  under the
Securities  Act or any other  similar rule or  regulation of the SEC that may at
any time  permit the  Holders to sell  securities  of the  Company to the public
without registration ("Rule 144"), the Company agrees to:

                 (a) comply with the  requirements  of paragraph (c) of Rule 144
with respect to current public information about the Company;

                 (b) file with the SEC in a timely  manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and

                 (c)  furnish  to  each  Holder  so long  as  such  Holder  owns
Registrable  Securities,  promptly upon request,  (i) a written statement by the
Company that it has complied with the  requirements  of said Rule 144(c) and the
reporting  requirements  of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements),  (ii) a copy of the
most recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company,  and (iii) such other  information  as may be
reasonably  requested  to permit  the  Holders to sell such  securities  without
registration.

         15.  Assignment of Registration  Rights.  The right to have the Company
register Registrable  Securities pursuant to this Warrant shall be automatically
assigned by the Holders to  transferees  or  assignees  of this  Warrant or such
Registrable  Securities,  provided that  immediately  following such transfer or
assignment,  the further  disposition  of such  securities by the  transferee or
assignee would be subject to  restrictions  under the  Securities  Act. The term
"Holders" as used herein shall include permitted assignees and transferees.

         16. Amendments.  Any provision of this Warrant (including  registration
rights)  may be  amended  and  the  observance  thereof  may be  waived  (either
generally or in a particular instance and


                                      -18-
<PAGE>

either  retroactively  or  prospectively),  only with the written consent of the
Company and the  Holders  who hold a majority  in  interest  of the  Registrable
Securities.  Any amendment or waiver effected in accordance with this Section 16
shall be binding upon each Holder and the Company.

         17. Expiration of the Warrant. The right to exercise this Warrant shall
terminate on the Expiration  Date.  All terms of this Warrant  applicable to the
Warrant Shares, including, without limitation, Sections 8 through 16, inclusive,
shall survive exercise and/or expiration of this Warrant.

         18. Definitions. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:

            Additional  Securities:  all shares  (including  treasury shares) of
Common  Stock,  rights,  options,   warrants,  or  convertible  or  exchangeable
securities  containing  the right to subscribe for or purchase  shares of Common
Stock, issued or sold by the Company after the date hereof,  excluding:  (i) the
Warrant Shares; (ii) any options (or shares of Common Stock issued upon exercise
of such options) issued to any employee,  officer, director or consultant of the
Company  pursuant  to a stock  option  plan  which is  approved  by the Board of
Directors   of   the   Company;   (iii)   securities   issued   pursuant   to  a
recapitalization,  reorganization  or  merger,  the sole  purpose of which is to
effect a change in the Company's jurisdiction of incorporation;  (iv) securities
issued pursuant to the bona fide  acquisition of another  business entity by the
Company by merger,  purchase of  substantially  all of the assets or shares,  or
other reorganization whereby the Company or its stockholders own not less than a
majority of the voting power of the  surviving or successor  corporation  or the
entity that controls such surviving or successor corporation;  (v) capital stock
issued in connection with any stock split, stock dividend or recapitalization by
the  Company;  (vi)  securities  issued  in  connection  with  the  transactions
contemplated by the Securities Purchase Agreement, dated as of even date hereof,
between the Company and certain purchasers  thereto,  including shares of Common
Stock issuable upon conversion or exercise of securities issued pursuant to such
Securities Purchase Agreement; and (vii) securities issued in a firm commitment,
underwritten  public  offering  with net  proceeds  to the  Company  of at least
$25,000,000.

            Assignment  Form: an Assignment  Form in the form annexed  hereto as
Exhibit C.

            Business  Day:  any day other  than a  Saturday,  Sunday or a day on
which  national  banks are  authorized  by law to close in The City of New York,
State of New York.

            Claims: the meaning specified in Section 12.1.

            Common Stock: the meaning specified on the cover of this Warrant.

            Company: the meaning specified on the cover of this Warrant.

            Company Indemnified Party: the meaning specified in Section 12.2.

            Determination Date: the meaning specified in Section 1.2(c).

            Exchange  Act: the meaning  specified in Section 12.1 or any similar
Federal statute, and the rules and regulations of the SEC thereunder, all as the
same shall be in effect at the time.


                                      -19-
<PAGE>


Reference to a particular  section of the Exchange Act shall include a reference
to a comparable section, if any, of any such similar Federal statute.

            Exercise  Form:  an  Exercise  Form in the form  annexed  hereto  as
Exhibit A.

            Exercise Price: the meaning specified on the cover of this Warrant.

            Expiration Date: the meaning specified on the cover of this Warrant.

            Fair Market Value: the meaning specified in Section 1.2(c).

            Holder(s): holder(s) of Registrable Securities.

            Indemnified Holder: the meaning specified in Section 12.1.

            Indemnified Party: the meaning specified in Section 12.2.

            Inspectors: the meaning specified in Section 9.11.

            Investment   Representation   Statement:    means   the   investment
representation statement attached hereto as Exhibit B.

            Nasdaq: the meaning specified in Section 1.2(c)(i).

            National Market: the meaning specified in Section 1.2(c)(i).

            Other  Securities:  any stock and other  securities  of the  Company
(other than Common  Stock) or of any other entity which shall become  subject to
issue or sale upon the  conversion or exchange of any stock or other  securities
of the Company.

            Registration  Expenses:  all  reasonable  expenses  incurred  by the
Company  in  complying  with  Sections  8.1 or 8.2  hereof,  including,  without
limitation, all registration,  qualification and filing fees, printing expenses,
escrow fees, fees and  disbursements  of counsel for the Company,  blue sky fees
and expenses,  the expense of any special audits  incident to or required by any
such  registration  (but excluding the compensation of regular  employees of the
Company which shall be paid in any event by the Company) and all reasonable fees
and  disbursements  of one  special  counsel for all of the Holders who elect to
include their Registrable Securities in any such registration up to a maximum of
$10,000 for such special counsel.

            Registration  Statement:  a registration  statement or  registration
statements  of  the  Company  filed  under  the   Securities  Act  covering  the
Registrable Securities.

            Registrable Securities:  (i) the Warrant Shares and other securities
issued or issuable upon exercise of the Warrants and (ii) any securities  issued
or issuable with respect to any Common Stock or other securities  referred to in
subdivision  (i) by way of stock dividend or stock split or in connection with a
combination or other reorganization or otherwise.

            Rule 144: the meaning specified in Section 14.



                                      -20-
<PAGE>


            SEC: the  Securities  and Exchange  Commission  or any other Federal
agency  at the  time  administering  the  Securities  Act or the  Exchange  Act,
whichever is the relevant statute for the particular purpose.

            Securities Act: the meaning  specified on the cover of this Warrant,
or any  similar  Federal  statute,  and the  rules  and  regulations  of the SEC
thereunder,  all as the same  shall be in  effect at the  time.  Reference  to a
particular  section  of the  Securities  Act shall  include a  reference  to the
comparable section, if any, of any such similar Federal statute.

            Selling  Expenses  shall mean all  underwriting  discounts,  selling
commissions and stock transfer taxes applicable to the securities  registered by
the Holders and all fees and  disbursements  of special  counsel for the Holders
(but only to the extent  such fees and  disbursements  of such  special  counsel
exceed $10,000).

            Transaction: the meaning specified in Section 7.1(c).

            Violation: the meaning specified in Section 12.1.

            Warrantholder: the meaning specified on the cover of this Warrant.

            Warrant Shares: the meaning specified on the cover of this Warrant.

         19. Miscellaneous.

            19.1 Entire Agreement. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to the Warrants.

            19.2 Binding  Effects;  Benefits.  This  Warrant  shall inure to the
benefit of and shall be binding upon the Company and the Warrantholder and their
respective heirs, legal representatives, successors and assigns. Nothing in this
Warrant,  expressed  or implied,  is  intended to or shall  confer on any person
other than the Company and the  Warrantholder,  or their respective heirs, legal
representatives,  successors or assigns,  any rights,  remedies,  obligations or
liabilities under or by reason of this Warrant.

            19.3  Section and Other  Headings.  The  section and other  headings
contained  in this  Warrant  are for  reference  purposes  only and shall not be
deemed to be a part of this  Warrant or to affect the meaning or  interpretation
of this Warrant.

            19.4 Pronouns.  All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.

            19.5 Further  Assurances.  Each of the Company and the Warrantholder
shall do and  perform all such  further  acts and things and execute and deliver
all such other  certificates,  instruments  and  documents as the Company or the
Warrantholder  may,  at any time and from time to time,  reasonably  request  in
connection with the performance of any of the provisions of this Agreement.


                                      -21-
<PAGE>


            19.6  Notices.  All  notices  and other  communications  required or
permitted to be given under this Warrant shall be in writing and shall be deemed
to have been duly given if delivered  personally  or sent by United States mail,
postage  prepaid,  to the parties  hereto at the following  addresses or to such
other address as any party hereto shall hereafter specify by notice to the other
party hereto:

                 (a) if to the Company, addressed to:

                     The 3DO Company
                     100 Cardinal Way
                     Redwood City, California 84063

                 (b) if to the Warrantholder, addressed to:

                     the address of such Warrantholder
                     appearing on the signature page to this Warrant.

         Except  as   otherwise   provided   herein,   all  such   notices   and
communications  shall be deemed to have been  received  on the date of  delivery
thereof, if delivered personally, or on the third Business Day after the mailing
thereof.

            19.7  Separability.  Any term or provision of this Warrant  which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,  be
ineffective  to the  extent  of  such  invalidity  or  unenforceability  without
rendering  invalid or unenforceable  the terms and provisions of this Warrant or
affecting  the validity or  enforceability  of any of the terms or provisions of
this Warrant in any other jurisdiction.

            19.8  Governing  Law.  This Warrant shall be deemed to be a contract
made under the laws of Delaware  and for all  purposes  shall be governed by and
construed  in  accordance  with  the  laws  of  such  State  applicable  to such
agreements made and to be performed entirely within such State.


            19.9 No Rights or Liabilities as Stockholder.  Nothing  contained in
this Warrant shall be determined as conferring upon the Warrantholder any rights
as a  stockholder  of  the  Company  or  as  imposing  any  liabilities  on  the
Warrantholder  to purchase any securities  whether such liabilities are asserted
by the Company or by creditors or stockholders of the Company or otherwise.

                                      -22-

<PAGE>


         IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.

                                        THE 3DO COMPANY



                                        By: /s/ James Alan Cook
                                            ------------------------------------
                                            Name:  James Alan Cook
                                            Title: Executive Vice President and
                                                   Secretary



                                        Gerard Klauer Mattison & Co., Inc.



                                        Name: /s/ Dominic Petito
                                              ----------------------------------
                                              Title: Senior Managing Director

                                        Address:
                                                   529 Fifth Avenue
                                        ----------------------------------------
                                                   New York, New York 10017
                                        ----------------------------------------


                                         Facsimile:      212-338-8991
                                                    ----------------------------

                                         Phone:          212-885-4100
                                                --------------------------------

                                         Attention:      Dominic Petito
                                                    ----------------------------


Dated: December 10, 2001

                                      -23-

<PAGE>


                                    EXHIBIT A

                               NOTICE OF EXERCISE

TO:      THE 3DO COMPANY


         1. The  undersigned  Warrantholder  hereby elects to purchase  ________
shares of Common Stock of The 3DO Company (the "Common  Stock")  pursuant to the
terms of the attached Warrant.

         2. Method of Exercise (Please initial the applicable blank):

            ___ The undersigned elects to exercise the attached Warrant by means
                of a cash payment,  and tenders herewith payment in full for the
                purchase price of the shares being purchased,  together with all
                applicable  transfer taxes,  if any. The undersigned  represents
                that the aforesaid shares of Common Stock are being acquired for
                the account of the  undersigned  for  investment  and not with a
                view to, or for  resale in  connection  with,  the  distribution
                thereof and that the  undersigned  has no present  intention  of
                distributing or reselling such shares.  In support thereof,  the
                undersigned has executed an Investment  Representation Statement
                attached hereto as Exhibit B.

            ___ The undersigned elects to exercise the attached Warrant by means
                of the net exercise provisions of Section 1.2 of the Warrant.

         3. Please issue a certificate or certificates  representing said shares
of Common Stock in the name of the undersigned Warrantholder:


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

                               ----------------------------------------
                                       (Address)


                                           -------------------------------------
                                           Name of Warrantholder


                                           -------------------------------------
                                           Signature of Authorized Signatory


                                           -------------------------------------
                                           Print Name and Title


                                           -------------------------------------
                                           Date



<PAGE>


                                    EXHIBIT B

                       INVESTMENT REPRESENTATION STATEMENT

                                               _______ Shares of Common Stock of
                                                                 The 3DO Company


         In  connection  with the  acquisition  of the  above-listed  securities
pursuant to the exercise of the Warrant,  dated as of December 10, 2001,  issued
by The 3DO Company (the  "Company")  to the  undersigned  (the  "Warrant"),  the
undersigned  hereby  represents  to the  Company as follows:  (Unless  otherwise
defined, capitalized terms referred to herein have the meanings set forth in the
Warrant.)

         1. Investment Representations.

            (A) The  undersigned  understands  that the Warrant  Shares have not
been  registered  under the  Securities  Act, and will be issued  pursuant to an
exemption from  registration  contained in the Securities Act based in part upon
the representations of the undersigned  contained herein, and can be transferred
in the absence of registration only pursuant to an exemption from  registration,
Rule 144 or if the Company receives an opinion of counsel that such registration
is not required.

            (B) The  undersigned  is acquiring the Warrant Shares solely for its
own  account and not as a nominee for any other party and not with a view toward
the  resale  or  distribution  thereof  in  violation  of the  securities  laws;
provided,  however,  that by making the representations  herein, the undersigned
does not  agree to hold  any of the  Warrant  Shares  for any  minimum  or other
specific  term and  reserves  the right to dispose of the Warrant  Shares at any
time in accordance with or pursuant to a registration  statement or an exemption
under the Securities Act.

            (C) The  undersigned is experienced in evaluating  companies such as
the Company,  is able to fend for the undersigned's self in transactions such as
the one  contemplated  by the Warrant,  has such  knowledge  and  experience  in
financial and business matters that the undersigned is capable of evaluating the
merits and risks of the undersigned's prospective investment in the Company, and
has the  ability  to bear the  economic  risks of the  investment,  including  a
complete  loss  of such  undersigned's  investment.  The  undersigned  has  been
afforded  an  opportunity  to ask  such  questions  of the  Company's  officers,
employees,  agents,  accountants  and  representatives  concerning the Company's
business,  operations,   financial  condition,  assets,  liabilities  and  other
relevant  matters as it has  deemed  necessary  or  desirable.  The  undersigned
believes  that it has received  all the  information  it considers  necessary or
appropriate to decide whether to purchase the Warrant Shares.

            (D)  Warrantholder  is an  "accredited  investor" as defined in Rule
501(a) under the Securities Act.

            (E)  Warrantholder  is not purchasing the Warrant Shares as a result
of or subsequent to any advertisement,  article,  notice or other  communication
regarding the Warrant  Shares  published in any  newspaper,  magazine or similar
media or broadcast  over  television or radio or presented at any seminar or any
other general solicitation or general advertisement.



<PAGE>



                                    --------------------------------------------
                                    Name of Warrantholder


                                    --------------------------------------------
                                    Signature of Authorized Signatory


                                    --------------------------------------------
                                    Print Name and Title


                                    --------------------------------------------
                                    Date



<PAGE>


                                    EXHIBIT C

                                 ASSIGNMENT FORM

               (To be executed only upon transfer of this Warrant)


         For value  received,  the undersigned  registered  holder of the within
Warrant  hereby sells,  assigns and transfers  unto  ______________________  the
right represented by such Warrant to purchase  __________ shares of Common Stock
of The 3DO Company to which such  Warrant  relates  and all other  rights of the
Warrantholder  under the within  Warrant  (including,  without  limitation,  the
registration  rights provided in Section 8 of the within Warrant),  and appoints
______________________  Attorney  to make such  transfer on the books of The 3DO
Company  maintained  for such purpose,  with full power of  substitution  in the
premises.

Dated: ___________________

                                       Signature
                                                 -------------------------------


                                                 -------------------------------
                                                          (Print Name)


                                                 -------------------------------
                                                        (Street Address)


                                                 -------------------------------
                                                 (City)     (State)   (Zip Code)

Signed in the presence of:


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