AMENDMENT NUMBER THREE TO
                           LOAN AND SECURITY AGREEMENT


THIS AMENDMENT NUMBER THREE TO LOAN AND SECURITY  AGREEMENT (this  "Amendment"),
is entered into as of December ___,  2000,  among the lenders  identified on the
signature pages hereof (individually and collectively, the "Lenders"),  FOOTHILL
CAPITAL CORPORATION, a California corporation, as agent for the Lenders (in such
capacity,  together with its successors in such capacity, "Agent"; together with
the  Lenders,  individually  and  collectively,  the  "Lender  Group"),  THE 3DO
COMPANY, a California corporation ("Borrower"),  and THE 3DO COMPANY, a Delaware
corporation  ("Parent"),  and 3DO EUROPE, LTD., a company incorporated under the
laws of England ("UK Sub";  together with Borrower and Parent,  individually and
collectively,   jointly  and  severally,  "Obligors"),  with  reference  to  the
following facts:

WHEREAS,  the Lender  Group and  Obligors  are parties to that  certain Loan and
Security  Agreement,  dated as of April 6,  2000  (as  amended  by that  certain
Amendment Number One to Loan and Security  Agreement,  dated as of June 9, 2000,
as amended by that certain Amendment Number Two to Loan and Security  Agreement,
dated as of September 18, 2000, and as otherwise amended,  restated, or modified
from time to time, the "Agreement");

WHEREAS,  the Lender Group has requested  that the Obligors  amend the Agreement
to, among other things, decrease the maximum availability; and

WHEREAS,  the Obligors are willing to so amend the Agreement in accordance  with
the terms and conditions hereof.

NOW,  THEREFORE,  in consideration of the above recitals and the mutual promises
contained herein, the Lender Group and Obligors hereby agree as follows:

   Defined Terms. All capitalized terms used herein and not otherwise defined
  herein shall have the meanings ascribed to them in the Agreement, as amended
                      hereby. Amendments to the Agreement.

Section  1.1  of the  Agreement  hereby  is  amended  by  adding  the  following
definition thereto:

                     "Line Block Amount" means $20,000,000.


                                      -63-
<PAGE>

Section 2.1(a) of the Agreement  hereby is amended by deleting the text "(i) the
Maximum  Amount less the then extant Letter of Credit  Usage"  appearing in such
section and inserting the text "(i) the Maximum  Amount less the sum of the then
extant Letter of Credit Usage and the Line Block Amount" in lieu thereof.

       Representations  and  Warranties.  Each  Obligor  hereby  represents  and
warrants to the Lender Group that: the execution,  delivery,  and performance of
this Amendment and of the Agreement,  as amended by this  Amendment,  are within
its corporate  powers,  have been duly  authorized  by all  necessary  corporate
action,  and are not in  contravention  of any law, rule, or regulation,  or any
order, judgment, decree, writ, injunction, or award of any arbitrator, court, or
governmental  authority,  or of the terms of its  charter or  bylaws,  or of any
contract or undertaking to which it is a party or by which any of its properties
may be bound or affected;  and this Amendment and the  Agreement,  as amended by
this Amendment,  constitute  Borrower's  legal,  valid, and binding  obligation,
enforceable against Borrower in accordance with its terms.

Reaffirmation  of Guaranties.  Parent hereby confirms and agrees that the Parent
Guaranty  is, and shall  continue  to be, in full force and effect and is hereby
ratified and confirmed in all respects.  UK Sub hereby  confirms and agrees that
the UK Sub Guaranty  is, and shall  continue to be, in full force and effect and
is hereby  ratified  and  confirmed  in all  respects.  Conditions  Precedent to
Amendment. The satisfaction of each of the following, on or before December ___,
2000,  shall  constitute  conditions  precedent  to the  effectiveness  of  this
Amendment:

Agent  shall have  received a duly  executed  copy of this  Amendment,  and such
document shall be in full force and effect; The  representations  and warranties
in this  Amendment,  the Agreement as amended by this  Amendment,  and the other
Loan  Documents  shall be true and correct in all respects on and as of the date
hereof,   as  though  made  on  such  date  (except  to  the  extent  that  such
representations and warranties relate solely to an earlier date);

No Event of Default or event  which with the giving of notice or passage of time
would  constitute  an Event of Default  shall have occurred and be continuing on
the date hereof,  nor shall  result from the  consummation  of the  transactions
contemplated herein;

No  injunction,   writ,   restraining  order,  or  other  order  of  any  nature
prohibiting,  directly  or  indirectly,  the  consummation  of the  transactions
contemplated  herein  shall  have  been  issued  and  remain  in  force  by  any
governmental authority against Borrower or the Lender Group; and

All other  documents  and legal  matters  in  connection  with the  transactions
contemplated by this Amendment shall have been delivered or executed or recorded
and shall be in form and substance satisfactory to Agent and its counsel.

                                 Miscellaneous.

Upon the  effectiveness  of this  Amendment,  each reference in the Agreement to
"this  Agreement",  "hereunder",  "herein",  "hereof"  or words  of like  import
referring to the  Agreement  shall mean and refer to the Agreement as amended by
this Amendment.

Upon the  effectiveness of this Amendment,  each reference in the Loan Documents
to the "Loan  Agreement",  "thereunder",  "therein",  "thereof" or words of like
import  referring  to the  Agreement  shall mean and refer to the  Agreement  as
amended by this Amendment.

This Amendment shall be governed by and construed in accordance with the laws of
the  State of  California.

This  Amendment may be executed in any number of  counterparts  and by different
parties on separate  counterparts,  each of which,  when executed and delivered,
shall be deemed to be an original, and all of which, when taken together,  shall
constitute but one and the same Amendment.  Delivery of an executed  counterpart
of this Amendment by telefacsimile  shall be equally as effective as delivery of
a manually  executed  counterpart  of this  Amendment.  Any party  delivering an
executed  counterpart  of this Amendment by  telefacsimile  also shall deliver a
manually  executed  counterpart  of this  Amendment but the failure to deliver a
manually executed counterpart shall not affect the validity, enforceability, and
binding effect of this Amendment.

                  [Remainder of page left intentionally blank]

                                      -64-
<PAGE>


IN WITNESS  WHEREOF,  the parties  hereto have caused this  Amendment to be duly
executed as of the date first written above.

                           THE 3DO COMPANY,
                           a California corporation


                           By:     /s/ Kathy McElwee
                              ------------------------------------------------
                           Name:
                                ----------------------------------------------
                           Title:
                                 ---------------------------------------------


                           THE 3DO COMPANY,
                           a Delaware corporation


                           By:     /s/ Kathy McElwee
                              ------------------------------------------------
                           Name:
                                ----------------------------------------------
                           Title:
                                 ---------------------------------------------


                           3DO EUROPE, LTD., ,
                           a company incorporated under the laws of England


                           By:     /s/ Steve Fowler
                              ------------------------------------------------
                           Name:
                                ----------------------------------------------
                           Title:
                                 ---------------------------------------------


                           FOOTHILL CAPITAL CORPORATION,
                           a California corporation, as Agent and a Lender


                           By:
                              ------------------------------------------------
                           Name:
                                ----------------------------------------------
                           Title:
                                 ---------------------------------------------

                                      -65-

Source: OneCLE Business Contracts.