Document:

EXHIBIT 10.1

                             Payment of this Bridge Note is subject to the terms
                                 of the Subordination Agreement between Investor
                             and GE, and is subordinate to the payment of all of
                                          the obligations owed by Company to GE.

                                 THE 3DO COMPANY

                               SECURED BRIDGE NOTE

$3,000,000                                                       October 1, 2002
                                                        Redwood City, California

         FOR  VALUE   RECEIVED  The  3DO  Company,   a  California   corporation
("Company")  promises to pay to William M.  Hawkins,  III  ("Investor"),  or its
registered assigns, the principal sum of Three Million Dollars ($3,000,000),  or
such  lesser  amount as shall equal the  outstanding  principal  amount  hereof,
together with interest from the date of this Bridge Note on the unpaid principal
balance  at a rate  equal to nine and  one-half  percent  (9  1/2%)  per  annum,
computed  on the basis of the actual  number of days  elapsed  and a year of 365
days. All unpaid  principal,  together with any then unpaid and accrued interest
and other amounts payable hereunder,  shall be due and payable on the earlier of
(i) March 31, 2003,  or (ii) when,  upon or after the  occurrence of an Event of
Default  (as  defined  below),  such  amounts  are  declared  due and payable by
Investor  or made  automatically  due and payable in  accordance  with the terms
hereof.  In  addition,  this Bridge Note shall be subject to  prepayment  as set
forth  below.  Company  will make all  payments  due under this  Bridge  Note in
immediately  available United States dollars, by 11:00 A.M. (California time) on
the date such  payment is due in the manner and at the address for such  purpose
specified by Investor from time to time in writing.

         The  following  is a  statement  of the  rights  of  Investor  and  the
conditions to which this Bridge Note is subject,  and to which Investor,  by the
acceptance of this Bridge Note, and Company agree:

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

                  (a) "Business Day" means any day other than a Saturday, Sunday
or public holiday under the laws of California.

                  (b)  "Change of  Control"  means a merger,  stock  transfer or
issuance  of  voting  securities,  in one or more  related  transactions,  which
results  in  Company's  or  Parent's,  as  applicable,  stockholders  before the
transaction(s)  owning voting securities after the transactions(s)  representing
the right to elect less than half of the  directors  of  Company  or Parent,  as
applicable,  (in  a  reverse  merger,  stock  transfer  or  issuance  of  voting
securities)  or  successor  entity  (in a  forward  merger or the sale of all or
substantially all of Company's or Parent's assets, in one or more transactions).
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                  (c) "Event of Default" is defined in Section 6.

                  (d) "GE" means GE Capital Commercial Services, Inc.

                  (e) "GE Facility" means the Loan and Security Agreement, dated
as of June 27, 2002,  between GE, as Lender, and Company,  as Borrower,  and any
related agreements entered into by GE and Company.

                  (f) "Lien" means,  with respect to any property,  any security
interest,  mortgage, pledge, lien, claim, charge or other encumbrance in, of, or
on such property or the income therefrom,  including the interest of a vendor or
lessor  under a  conditional  sale  agreement,  capital  lease  or  other  title
retention agreement,  or any agreement to provide any of the foregoing,  and the
filing of any  financing  statement  or  similar  instrument  under the  Uniform
Commercial Code or comparable law of any jurisdiction.

                  (g) "Material  Adverse Effect" means a material adverse effect
on (a) the business,  prospects,  assets,  operations or financial  condition of
Company or Parent;  (b) the ability of Company to pay or perform the Obligations
in accordance with the terms of this Bridge Note and the Security Agreement;  or
(c) the rights and  remedies  of  Investor  under this  Bridge  Note,  the other
Transaction Documents or any related document, instrument or agreement.

                  (h)   "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 this  Bridge  Note 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.

                  (i) "Parent" means The 3DO Company, a Delaware corporation.

                  (j) "Person" means an individual, a partnership, a corporation
(including  a  business  trust),  a joint  stock  company,  a limited  liability
company,  an  unincorporated  association,  a joint  venture or other  entity or
governmental authority.

                  (k)  "Preferred  Stock" means  Parent's  Series A  Convertible
Preferred  Stock,  par value $0.01, as described in the Parent's  Certificate of
Designations  filed with the  Secretary  of State of Delaware as of December 10,
2001 ("Parent's Certificate of Designations").

                  (l) "Security Agreement" means the Security Agreement dated as
of the date of this Bridge Note from Company in favor of Investor.

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                  (m)  "Transaction  Documents"  means  this  Bridge  Note,  the
Security  Agreement  and each UCC  financing  statement  or notice  of  security
interest filed in connection with the Security Agreement.

         All  capitalized  terms not  otherwise  defined  herein  shall have the
respective meanings given in the Security Agreement.

         2. Interest.  Accrued interest on this Bridge Note shall be payable ten
days after the last day of each calendar quarter until the outstanding principal
amount  hereof  shall be paid in full,  with the first such payment due ten days
after December 31, 2002. Interest shall be payable in cash.

         3. Prepayment.

                  (a)  Optional  Prepayment.  Upon five (5) days  prior  written
notice to  Investor,  Company  may prepay  this Bridge Note in whole or in part;
provided  that any such  prepayment  will be  applied  first to the  payment  of
expenses due under this Bridge Note,  second to interest  accrued on this Bridge
Note and  third,  if the  amount of  prepayment  exceeds  the amount of all such
expenses and accrued interest, to the payment of principal of this Bridge Note.

                  (b) Mandatory Prepayment.

                           (i) Equity Financing. If Parent hereafter receives at
least three million dollars  ($3,000,000) of total Net Proceeds  (defined below)
from equity or convertible or subordinated  debt  financings,  then Company must
prepay  this  Bridge  Note in an amount  equal to any Net  Proceeds in excess of
three  million  dollars  ($3,000,000)  received  by  Parent  from any  equity or
convertible or  subordinated  debt financing.  Such prepayment  shall be made no
later than the second  (2nd)  Business  Day  following  the  closing of any such
transaction.  Any  such  prepayment  will be  applied  first to the  payment  of
expenses due under this Bridge Note,  second to interest  accrued on this Bridge
Note and  third,  if the  amount of  prepayment  exceeds  the amount of all such
expenses and accrued interest, to the payment of any outstanding principal under
this Bridge Note.  "Net  Proceeds"  means,  with respect to any Parent equity or
convertible or subordinated debt financing, the total proceeds of such financing
less any related  underwriting  discounts or commissions and any related broker,
placement agent or finder's fees, in each case paid by Parent.

                           (ii)  Change of  Control.  Company  must  prepay this
Bridge Note in whole, including all expenses and accrued interest,  concurrently
with the closing of any transaction that constitutes a Change of Control.

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

                  (a) Due Incorporation, Qualification, etc. Each of Company and
Parent  (i) is a  corporation  duly  organized,  validly  existing  and in  good
standing  under the laws of its state of  incorporation;  (ii) has the power and
authority to own,  lease and operate its properties and carry on its business as
now conducted; and (iii) is duly qualified,  licensed to do business and in good

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<PAGE>

standing as a foreign  corporation in each jurisdiction  where the failure to be
so qualified or licensed could reasonably be expected to have a Material Adverse
Effect.

                  (b)  Authority.  The  execution,  delivery and  performance by
Company  of  each  Transaction  Document  to be  executed  by  Company  and  the
consummation of the transactions  contemplated  thereby (i) are within the power
of Company;  and (ii) have been duly authorized by all necessary  actions on the
part of Company and Parent.

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

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

                  (e) Approvals.  No consent,  approval,  order or authorization
of, or registration,  declaration or filing with, any governmental  authority or
other  Person  (including  the  shareholders  of  any  Person)  is  required  in
connection with the execution and delivery of the Transaction Documents executed
by Company and the performance and consummation of the transactions contemplated
thereby, except such consents, approvals, orders, authorizations, registrations,
declarations  or filings that are so required  and which have been  obtained and
are in full force and effect.

                  (f) No Violation or Default.  Neither Company nor Parent is in
violation of or in default with respect to (i) its Articles of  Incorporation or
Certificate of Incorporation,  as applicable or Bylaws or any material judgment,
order, writ, decree,  statute,  rule or regulation applicable to such Company or
Parent; (ii) any material mortgage, indenture, agreement, instrument or contract
to which  Company or Parent is a party or by which it is bound (nor is there any
waiver in effect  which,  if not in effect,  would result in such a violation or
default),  where,  in each case,  such  violation or default,  individually,  or
together with all such violations or defaults,  could  reasonably be expected to
have a Material Adverse Effect.

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                  (g)  Litigation.  Except as set forth in Item 4(g) of Schedule
I,  no  actions   (including   derivative   actions),   suits,   proceedings  or
investigations  are pending or, to the knowledge of Company,  threatened against
Company  or  Parent  at law or in  equity  in any  court  or  before  any  other
governmental  authority which (i) if adversely  determined  could  reasonably be
expected to (alone or in the aggregate) have a Material Adverse Effect;  or (ii)
seeks to enjoin,  either  directly or  indirectly,  the  execution,  delivery or
performance by Company of the Transaction  Documents or any of the  transactions
contemplated thereby.

                  (h) Accuracy of Information Furnished. None of the Transaction
Documents  and  none  of  the  other  certificates,  statements  or  information
furnished to Investors by or on behalf of Company or Parent in  connection  with
the Transaction  Documents or the transactions  contemplated thereby contains or
will contain any untrue  statement  of a material  fact or omits or will omit to
state a material fact necessary to make the statements  therein, in light of the
circumstances under which they were made, not misleading.

         5. Certain Covenants.

                  (a) Use of Proceeds.  Company  will use the proceeds  from the
sale of the Note for general corporate purposes and working capital.

                  (b)  Financial   Information.   Company  agrees  to  send  the
following to Investor:  (i) unless the  following are filed with the SEC through
EDGAR and are  available to the public  through  EDGAR,  within two (2) Business
Days after the filing thereof with the SEC, a copy of Parent's Annual Reports on
Form 10-K, its Quarterly  Reports on Form 10-Q, any Current  Reports on Form 8-K
and any  registration  statements  (other than on Form S-8) or amendments  filed
pursuant to the Securities Act of 1933, as amended;  (ii) on the same day as the
release  thereof,  facsimile  copies of all press releases  issued by Company or
Parent;  and (iii) copies of any notices and other information made available or
given to the stockholders of Parent generally, contemporaneously with the making
available or giving thereof to the stockholders.

                  (c) Notice of Defaults.  Promptly upon the occurrence thereof,
Company shall provide  written  notice of the occurrence of any Event of Default
hereunder.

         6. Events of Default.  The  occurrence  of any of the  following  shall
constitute  an  "Event  of  Default"  under  this  Bridge  Note  and  the  other
Transaction Documents:

                  (a) Failure to Pay. Company shall fail to pay (i) when due any
principal  or  interest  payment  on the due date  hereunder;  or (ii) any other
payment  required  under the terms of this Bridge Note or any other  Transaction
Document on the date due and such  payment  shall not have been made within five
(5) days of Company's  receipt of Investor's  written  notice to Company of such
failure to pay; or

                  (b)  Breaches of  Covenants.  Company or Parent  shall fail to
observe  or perform  any other  covenant,  obligation,  condition  or  agreement
contained  in this Bridge Note or the other  Transaction  Documents  (other than
those specified in Section 6(a)) and (i) such failure shall

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continue  for fifteen (15) days,  or (ii) if such failure is not curable  within
such fifteen (15) day period,  but is  reasonably  capable of cure within thirty
(30) days,  either (A) such failure  shall  continue for thirty (30) days or (B)
Company shall not have commenced a cure in a manner  reasonably  satisfactory to
Investor within the initial fifteen (15) day period; or

                  (c)  Representations   and  Warranties.   Any  representation,
warranty,  certificate,  or other  statement  (financial or  otherwise)  made or
furnished  by or on  behalf of  Company  or Parent to  Investor  in  writing  in
connection with this Bridge Note or any of the other Transaction  Documents,  or
as an  inducement  to  Investor  to enter  into this  Bridge  Note and the other
Transaction Documents,  shall be false,  incorrect,  incomplete or misleading in
any material respect when made or furnished; or

                  (d) Other Payment Obligations. Either (i) a "Triggering Event"
(as defined in the Parent's  Certificate  of  Designations)  shall have occurred
with  respect to the  Preferred  Stock;  (ii) Parent  shall have failed to pay a
dividend in a proper and timely manner to the holders of the Preferred Stock; or
(iii) Company shall (A) fail to make any payment when due under the terms of the
GE Facility and such failure shall continue  beyond any period of grace provided
with respect thereto (and such failure is not waived by the appropriate  parties
or subsequently  cured by Company prior to acceleration of this Bridge Note), or
(B) default in the  observance or performance  of any other  agreement,  term or
condition  contained  in the GE  Facility,  and the  effect of such  failure  or
default is to cause, or permit the creditor thereof to cause, the obligations of
Company  with  respect  thereto  to  become  due prior to their  stated  date of
maturity  thereto (and such default is not waived by the appropriate  parties or
subsequently cured by Company prior to acceleration of this Bridge Note); or

                  (e) Voluntary Bankruptcy or Insolvency Proceedings. Company or
Parent shall (i) apply for or consent to the appointment of a receiver, trustee,
liquidator  or  custodian  of  itself  or of all or a  substantial  part  of its
property,  (ii) be unable,  or admit in writing its inability,  to pay its debts
generally as they mature, (iii) make a general assignment for the benefit of its
or any of its creditors,  (iv) be dissolved or liquidated,  (v) become insolvent
(as such term may be defined or interpreted under any applicable statute),  (vi)
commence   a   voluntary   case  or  other   proceeding   seeking   liquidation,
reorganization  or other  relief  with  respect to itself or its debts under any
bankruptcy,  insolvency  or other  similar  law now or  hereafter  in  effect or
consent to any such relief or to the appointment of or taking  possession of its
property by any official in an involuntary  case or other  proceeding  commenced
against  it, or (vii) take any action for the  purpose of  effecting  any of the
foregoing; or

                  (f)   Involuntary   Bankruptcy  or   Insolvency   Proceedings.
Proceedings for the appointment of a receiver,  trustee, liquidator or custodian
of Company or Parent or of all or a substantial part of the property thereof, or
an involuntary case or other proceedings seeking liquidation,  reorganization or
other  relief with respect to Company or Parent or the debts  thereof  under any
bankruptcy,  insolvency or other similar law now or hereafter in effect shall be
commenced  and an order  for  relief  entered  or such  proceeding  shall not be
dismissed or discharged within thirty (30) days of commencement; or

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                  (g)  Judgments.  A final  judgment or order for the payment of
money in excess of Two Hundred Fifty Thousand Dollars  ($250,000)  (exclusive of
amounts  covered by insurance)  shall be rendered  against Company or Parent and
the same shall remain undischarged for a period of thirty (30) days during which
execution shall not be effectively  stayed, or any judgment,  writ,  assessment,
warrant of attachment, or execution or similar process shall be issued or levied
against a  substantial  part of the  property  of  Company  or  Parent  and such
judgment,  writ, or similar  process shall not be released,  stayed,  vacated or
otherwise dismissed within thirty (30) days after issue or levy; or

                  (h) Transaction  Documents.  Any  Transaction  Document or any
material  term thereof shall cease to be, or be asserted by Company not to be, a
legal,  valid and binding  obligation of Company  enforceable in accordance with
its terms or if the Liens of Investor on the Collateral pursuant to the Security
Agreement  shall cease to be or shall not be valid,  perfected,  first  priority
(subject to Permitted  Liens) Liens or Company  shall assert that such Liens are
not valid and perfected,  first priority  (subject to Permitted  Liens) Liens on
the Collateral; or

                  (i) Nasdaq  Listing.  Parent's  common stock is suspended from
trading or no longer listed on the Nasdaq National Market.

         7. Rights of Investor upon Default. Upon the occurrence or existence of
any Event of Default  (other  than an Event of  Default,  referred to in Section
6(e) or 6(f)) and at any time thereafter during the continuance of such Event of
Default,  Investor  may by written  notice to Company,  declare all  outstanding
Obligations  payable by Company  hereunder  to be  immediately  due and  payable
without  presentment,  demand,  protest or any other notice of any kind,  all of
which are hereby  expressly  waived,  anything  contained herein or in the other
Transaction  Documents to the contrary  notwithstanding.  Upon the occurrence or
existence of any Event of Default described in Section 6(e) or 6(f), immediately
and without notice,  all outstanding  Obligations  payable by Company  hereunder
shall  automatically  become immediately due and payable,  without  presentment,
demand,  protest  or any  other  notice of any  kind,  all of which  are  hereby
expressly  waived,  anything  contained  herein  or  in  the  other  Transaction
Documents  to  the  contrary  notwithstanding.  In  addition  to  the  foregoing
remedies, upon the occurrence or existence of any Event of Default, Investor may
exercise  any other  right  power or  remedy  granted  to it by the  Transaction
Documents or otherwise  permitted to him by law,  either by suit in equity or by
action at law, or both.

         8.  Successors and Assigns.  The rights and  obligations of Company and
Investor  under  this  Bridge  Note  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 any 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 Bridge Note and the other  Transaction  Documents.  All references in
this  Bridge  Note to any  Person  shall be  deemed  to  include  all  permitted
successors  and assigns of such  Person.  Transfers of this Bridge Note shall be
registered upon  registration  books maintained for such purpose by or on behalf
of Company.

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         9.  Waiver  and  Amendment.  This  Bridge  Note 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.

         10.  Notices.   Except  as  otherwise  provided  herein,  all  notices,
requests,  demands,  consents,  instructions or other  communications to or upon
Company or Investor under this Bridge Note 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 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

         11. Default Rate; Usury. During any period in which an Event of Default
has  occurred  and is  continuing,  Company  shall pay  interest  on the  unpaid
principal  balance  hereof  at a rate per  annum  equal  to the  rate  otherwise
applicable  hereunder  plus two percent  (2%).  If any  interest is paid on this
Bridge Note is deemed to be in excess of the then legal maximum rate,  then that
portion of the  interest  payment  representing  an amount in excess of the then
legal  maximum rate shall be deemed a payment of principal  and applied  against
the principal of this Bridge Note.

         12.  Governing  Law;  Jurisdiction.  This  Bridge  Note and all actions
arising out of or in  connection  with this Bridge Note shall be governed by and
construed in accordance with the laws of the State of California, without regard
to the conflict of laws  provisions of the State of California,  or of any other
state.  Any action or proceeding  relating in any way to this Bridge Note 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

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or registered  mail,  or any  substantially  similar form of mail,  addressed to
Company or Investor as provided for notices hereunder.

         13. Indemnity.

                  (a) Indemnity. In consideration of Investor's purchase of this
Bridge Note and in  addition to all of  Company's  other  obligations  under the
Transaction  Documents,  Company  shall  defend,  protect,  indemnify  and  hold
harmless Investor and all of its stockholders,  officers,  directors,  employees
and  direct  or  indirect  investors  and  any of  Investors'  agents  or  other
representatives  (including  those retained in connection with the  transactions
contemplated by the Transaction  Documents)  (collectively,  the  "Indemnitees")
from and against any and all actions,  causes of action, suits, claims,  losses,
costs,  penalties,  fees,  liabilities  and damages,  and expenses in connection
therewith  (irrespective of whether any such Indemnitee is a party to the action
for  which  indemnification  hereunder  is  sought),  and  including  reasonable
attorneys' fees and disbursements (collectively, the "Indemnified Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to any
matter or thing or  action or  failure  to act by  Indemnitees,  or any of them,
arising out of or relating to the  Transaction  Documents,  including any use by
Company of any proceeds from the sale of this Bridge Note,  except to the extent
such  liability  arises from the gross  negligence or willful  misconduct of the
Indemnitees.  To the extent  that the  foregoing  undertaking  by Company may be
unenforceable for any reason, Company shall make the maximum contribution to the
payment  and  satisfaction  of  each of the  Indemnified  Liabilities  which  is
permissible under applicable law.

                  (b) Process.  Upon receiving  knowledge of any suit,  claim or
demand  asserted  by a third  party that  Investor  believes  is covered by this
indemnity (a "Claim"),  Investor  shall give Company notice of the matter and an
opportunity to defend it, at Company's sole cost and expense, with legal counsel
satisfactory to Investor.  However, the Indemnitees may retain their own counsel
with the fees and expenses of not more than one counsel for the  Indemnitees  to
be paid by  Company,  if, in the  reasonable  opinion  of  counsel  retained  by
Company, the representation by such counsel of the Indemnitees and Company would
be inappropriate  due to actual or potential  differing  interests  between such
Indemnitees  and any other party  represented by such counsel.  The  Indemnitees
shall, at Company's expense, cooperate fully with Company in connection with any
negotiation  or  defense  of any  Claim  by  Company.  Company  shall  keep  the
Indemnitees  fully  apprized as to the status of the  defense or any  settlement
negotiations  with  respect  thereto.  Company  shall  not  be  liable  for  any
settlement of any Claim effected  without its prior written  consent,  provided,
however,  that Company shall not unreasonably  withhold,  delay or condition its
consent.   Company  shall  not,   without  the  prior  written  consent  of  the
Indemnitees,  consent to entry of any judgment or enter into any  settlement  or
other  compromise  which does not include as an  unconditional  term thereof the
giving by the  claimant or plaintiff  to the  Indemnitees  of a release from all
liability  in respect to such Claim.  Any failure or delay of Investor to notify
Company of any Claim shall not  relieve  Company of its  obligations  under this
Section,  but shall  reduce such  obligations  to the extent of any  increase in
those  obligations  caused  solely by an  unreasonable  failure  or  delay.  The
indemnification  required by this Section shall be made by periodic  payments of
the amount thereof  during the course of the  investigation  or defense,  as and
when bills are received or Indemnified  Liabilities are incurred.  The

                                       9
<PAGE>

indemnity  agreements  contained herein shall be in addition to (i) any cause of
action or similar right of an Indemnitee has against Company or others, and (ii)
any  liabilities  Company may be subject to pursuant to the law. The obligations
of the parties under this Section shall survive the payment and  performance  of
the Obligations.

         14. No Third Party Rights.  Nothing  expressed in or to be implied from
this Bridge Note is intended to give, or shall be construed to give, any Person,
other  than the  parties  hereto  and their  permitted  successors  and  assigns
hereunder,  any benefit or legal or equitable right, remedy or claim under or by
virtue of this Bridge Note or under or by virtue of any provision herein.

         15. 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  Bridge  Note 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 the enforcement or attempt
to enforce any of the Obligations which is not performed as and when required by
this Bridge Note or the other Transaction Documents.

         16. Cumulative Rights, etc. The rights, powers and remedies of Investor
under this Bridge Note 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 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.

         17. 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 Bridge Note.

         18.  Partial  Invalidity.  If at any time any  provision of this Bridge
Note 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  Bridge  Note  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.

         19. Interpretive  Provisions.  References in this Bridge Note 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  Bridge Note or any
other  Transaction  Document refer to this Bridge Note or such other Transaction
Document,  as the case may be, as a whole and not to any particular

                                       10
<PAGE>

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

         20.  Construction.  Each of this Bridge Note and the other  Transaction
Documents  is the  result  of  negotiations  among,  and has been  reviewed  by,
Company,  Investor and their respective counsel.  Accordingly,  this Bridge Note
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.

         IN WITNESS WHEREOF, Company has caused this Bridge Note to be issued as
of the date first written above.

                                      THE 3DO COMPANY
                                      a California corporation

                                      By: /s/ Richard A. Gelhaus
                                          --------------------------------------
                                               Richard A. Gelhaus
                                      Title: Chief Financial Officer
                                             -----------------------------------

                                       11EXHIBIT 10.2

                               SECURITY AGREEMENT

         This  Security  Agreement  (this  "Security  Agreement"),  dated  as of
October 1, 2002,  is  executed  by THE 3DO  COMPANY,  a  California  corporation
("Company"), in favor of William M. Hawkins, III, an individual ("Investor").

                                    RECITALS

         A.  Company has issued to Investor a secured  bridge note (the  "Bridge
Note") in the aggregate principal amount of $3,000,000.

         B.  Investor  is willing  to  purchase  the  Bridge  Note only if he is
granted a security interest in the Collateral described below.

                                    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 hereby agrees for the benefit of Investor 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 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.

                                       1
<PAGE>

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

                                       2
<PAGE>

                  "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 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.

                                       3
<PAGE>

                  "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.

                  "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.

                  "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

                                       4
<PAGE>

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  not constituting an Event of Default under Section
6(g) of the Bridge Note;  (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) Liens
securing obligations under the GE Facility.

                  "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.

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

                  "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

                                       5
<PAGE>

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.

         All  capitalized  terms not  otherwise  defined  herein  shall have the
respective  meanings given in the Bridge Note.  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").

         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.

                                       6
<PAGE>

                  (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, 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 GE pursuant to the GE Facility),  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. Company hereby
agrees:

                  (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,

                                       7
<PAGE>

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,

                           (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. 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;

                                       8
<PAGE>

(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 9.

         8. 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.

         9. 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

                                       9
<PAGE>

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  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 9, Investor may, at
any time,  pursuant to the authority  granted in the Power of Attorney  executed
pursuant to Section 7(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;

                                       10
<PAGE>

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

                           (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.

         10. 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 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.

                                       11
<PAGE>

                  (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 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

                                       12
<PAGE>

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  "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 has caused this Security  Agreement to be
executed as of the day and year first above written.

                          THE 3DO COMPANY, a California corporation

                          By: /s/ Richard A. Gelhaus
                              --------------------------------------------------
                                 Richard A. Gelhaus
                          Title: Chief Financial Officer
                                 -----------------------------------------------

                                       13

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