SUBORDINATION AGREEMENT



         THIS SUBORDINATION AGREEMENT (this "Agreement"), dated as of October 1,
2002,  is entered into by and between GE CAPITAL  COMMERCIAL  SERVICES,  INC., a
North Carolina corporation  ("Lender"),  with a place of business located at 505
N. Brand  Boulevard,  Suite 1100,  Glendale,  California  91203,  and WILLIAM M.
HAWKINS,  III ("Junior  Creditor"),  whose mailing  address is 200 Cardinal Way,
Redwood City,  California  94063, in light of the following facts (certain terms
used in the following recitals are defined in Paragraph 1 below):

         WHEREAS, Junior Creditor is prepared to make a loan to THE 3DO COMPANY,
a California corporation ("Borrower"), in the amount of $3,000,000.00, evidenced
by the Junior Creditor Note.

         WHEREAS,  as a  condition  to making the loan  evidenced  by the Junior
Creditor  Note,  Junior  Creditor  requires that Lender  consent to such loan to
Borrower and the granting of a security interest in assets of Borrower to secure
the repayment of such loan.

         WHEREAS,  Lender has agreed to  consent  to the loan  evidenced  by the
Junior  Creditor  Note and the granting of collateral to secure such loan on the
condition  that  Junior  Creditor  subordinate  its  right to  repayment  of the
obligations  evidenced by the Junior  Creditor Note and the collateral  securing
such obligations owing to Junior Creditor, to the Lender Obligations.

         WHEREAS, Junior Creditor and Lender desire to enter into this Agreement
in  order to set  forth  the  terms  and  conditions  of the  Junior  Creditor's
subordination  in favor of Lender and Lender's  consent to the loan evidenced by
the Junior Creditor Note and the granting of collateral for such loan.

         NOW, THEREFORE, Junior Creditor and Lender agree as follows:

         1. In addition to the defined  terms  contained in the first  paragraph
above and in the recitals,  as used herein,  the following  terms shall have the
following definitions:

                  A.  "Collateral"  shall have the same  definition  ascribed to
this term in the Loan Agreement.

                  B. "Junior  Creditor  Note" means that certain  Secured Bridge
Note,  dated October 1, 2002, in the original  principal  amount of  $3,000,000,
executed by Borrower to the order of Junior Creditor.

                  C.  "Junior  Creditor   Obligations"   means  the  Obligations
(including principal and interest) evidenced by the Junior Creditor Note.

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                  D. "Junior  Creditor  Security  Agreement"  means that certain
Security  Agreement,  dated as of  October 1, 2002,  from  Borrower  in favor of
Junior Creditor.

                  E. "Loan  Agreement"  means  that  certain  Loan and  Security
Agreement,  dated as of June 27, 2002, between Borrower and Lender, as it may be
amended and/or supplemented from time to time.

                  F. "Loan Documents" shall have the same definition ascribed to
this term in the Loan Agreement.

                  G. "Obligations" is used in this Agreement in its broadest and
most comprehensive sense and means all present and future indebtedness which may
be from time to time, directly or indirectly,  incurred by Borrower,  including,
but not  limited  to,  indebtedness  evidenced  by or  arising  pursuant  to any
instruments,  loan  agreements,  chattel  paper,  guarantees,  leases,  purchase
agreements,  consulting  agreements,  license  agreements,  royalty  agreements,
indemnification  agreements,  reimbursement  agreements or any other agreements,
whether oral or written,  and further including without limitation,  obligations
owed or to  become  owing,  including  interest,  principal,  costs,  and  other
charges, and all claims, rights, causes of action, judgments, decrees, remedies,
security interests,  or other obligations of Borrower of any kind whatsoever and
howsoever arising, whether voluntary,  involuntary,  absolute, contingent, or by
operation of law.

                  H. "Revolving  Credit Advances" shall have the same definition
ascribed to this term in the Loan Agreement.

                  I. "Lender Obligations" means,  collectively,  all Obligations
owing to Lender by  Borrower,  including  without  limitation,  the  present and
future Obligations arising pursuant to the Loan Documents.

         2. Lender hereby  consents to Borrower  incurring  the Junior  Creditor
Obligations  and the  granting  to Junior  Creditor of a security  interest  the
collateral  described in the Junior Creditor  Security  Agreement.  In the event
Junior Creditor breaches any of the terms,  covenants or agreements contained in
this  Agreement,  the  foregoing  consent of Lender shall be deemed  immediately
revoked.

         3. Any and all  Junior  Creditor  Obligations  are  hereby  irrevocably
subordinated and subject to any and all Lender Obligations,  including,  without
limitation, the Lender Obligations arising pursuant to the Loan Documents.

         4. This Agreement  constitutes a continuing  irrevocable  subordination
agreement which shall remain effective until all of the Lender  Obligations have
been  repaid  in full and  Lender  no  longer  has any  obligation  to  consider
Borrower's requests for Lender to extend additional Revolving Credit Advances to
Borrower  pursuant to the Loan Documents.  In this  connection,  Junior Creditor
waives any and all rights that he may have to terminate this Agreement  prior to
such time as all of the Lender  Obligations  have been repaid in full and Lender
no longer has any obligation to extend  additional  Revolving Credit Advances to
Borrower pursuant to the Loan Documents.

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         5. So long as any of the Lender  Obligations remain unpaid, in whole or
in part,  or so long as Lender  is  committed  or  otherwise  obligated  to make
Revolving  Credit Advances to Borrower  pursuant to the Loan  Documents,  Junior
Creditor  agrees:  (i) subject to the  provisions  of Paragraph 7 below,  not to
collect,  or to receive  payment upon, by setoff or in any other manner,  all or
any  portion  of the  Junior  Creditor  Obligations;  (ii) not to sell,  assign,
transfer, pledge, or give a security interest in the Junior Creditor Obligations
(except subject expressly to this Agreement);  (iii) not to enforce or apply, or
take  any  steps  to  enforce  or  apply,  any  security,  including  any of the
Collateral, now or hereafter existing, for the Junior Creditor Obligations; (iv)
not to  commence,  prosecute  or  participate  in any  administrative,  legal or
equitable action against Borrower or in any  administrative,  legal or equitable
action  regarding the Junior Creditor  Obligations  that might adversely  affect
Borrower  or its  interest;  (v)  not to join in any  petition  for  bankruptcy,
assignment for the benefit of creditors,  or creditors'  agreement  based on the
Junior Creditor  Obligations;  (vi) except for the collateral  granted to Junior
Creditor  pursuant to the Junior Creditor  Security  Agreement,  not to take any
lien or security on any of Borrower's  property,  real or personal to secure the
Junior Creditor Obligations; and (vii) not to incur any obligation to or receive
any loans, advances or gifts from Borrower which would violate any of the terms,
covenants or conditions contained in the Loan Documents.

         6. Subject to the  provisions  of Paragraph 7 below,  all of the Lender
Obligations now or hereafter existing shall be first paid by Borrower before any
payment  shall be made by  Borrower  on the Junior  Creditor  Obligations.  This
priority of payment shall apply at all times until all of the Lender Obligations
have been repaid in full, and in the event of any assignment by Borrower for the
benefit of Borrower's creditors,  of any bankruptcy proceedings instituted by or
against Borrower,  of the appointment of any receiver for Borrower or Borrower's
business or assets,  or of any dissolution or other winding up of the affairs of
Borrower or of  Borrower's  business,  and in all such cases  respectively,  the
officers of Borrower and any  assignee,  trustee in  bankruptcy,  receiver,  and
other person or persons in charge, are hereby directed to pay to Lender the full
amount of the  Lender  Obligations  before  making  any  payments  on the Junior
Creditor Obligations.

         7. So long as no Event of Default  (as that term is defined in the Loan
Agreement)  has occurred and is  continuing,  Borrower  shall be entitled to pay
scheduled  interest  payments  under the  Junior  Creditor  Note.  In  addition,
regardless  of  whether  an Event of  Default  has  occurred  or is  continuing,
Borrower  may repay  the  Junior  Creditor  Obligations  in full  from  proceeds
received  by The  3DO  Company,  a  Delaware  corporation,  in  connection  with
additional equity  investments or subordinated debt issuances,  as measured from
the date of this Agreement, of not less than Six Million Dollars ($6,000,000) so
long as such equity investments and/or  subordinated debt issuances are on terms
and conditions satisfactory to Lender.

         8. As additional security for the Lender Obligations, and to secure the
performance of all of Junior  Creditor's  obligations to Lender arising pursuant
to this Agreement, Junior Creditor hereby transfers, grants to Lender a security
interest  in,  and  assigns  to Lender  all of Junior  Creditor's  rights to any
payments or distributions which might otherwise be due to Junior Creditor on the
Junior  Creditor  Obligations.  Lender is  hereby  irrevocably  constituted  and
appointed the  attorney-in-fact of Junior Creditor to file any and all proofs of
claim,  financing  statements,  and any  other  documents  and to take all other
action,  either in  Lender's  name or in

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the name of Junior Creditor, which in Lender's opinion is necessary or desirable
to enable Lender to obtain all such payments on the Junior Creditor Obligations.

         9. Junior Creditor shall place or cause to be placed on the face of the
Junior Creditor Note a legend stating that the payment thereof is subject to the
terms of this  Agreement and is  subordinate to the payment of all of the Lender
Obligations  and, if requested  by Lender,  shall  deliver the  original  Junior
Creditor Note to Lender.

         10. Junior  Creditor  agrees that Lender shall have the absolute  power
and discretion,  without notice to Junior  Creditor,  to deal in any manner with
the Lender  Obligations  (including,  interest,  costs and  expenses  payable by
Borrower  to  Lender)  and  any  security  and  guarantees  therefor.   In  this
connection,  Lender  shall have  absolute  power and  discretion  to release any
Collateral or obligor, to surrender  Collateral,  to extend payment and maturity
dates, to renew any or all Lender  Obligations,  to accelerate any or all Lender
Obligations,  to  compromise  any or all  Lender  Obligations,  or to accept the
substitution of any Collateral or any obligor. Junior Creditor hereby waives and
agrees not to assert against Lender any rights which a guarantor or surety could
exercise,  however, nothing in this Agreement shall constitute Junior Creditor a
guarantor or surety.  Junior Creditor hereby subordinates in favor of Lender any
security  interests he may have in the  Collateral to the security  interests of
Lender therein,  and Junior Creditor hereby waives the right, if any, to require
that  Lender  marshal or  otherwise  proceed to  dispose  of or  foreclose  upon
Collateral in any manner or order.

         11.  If, at any time  hereafter,  Lender,  in its sole and  independent
judgment,  elects  to  discontinue  the  extension  of credit to or on behalf of
Borrower,  Lender may do so. This Agreement,  the obligations of Junior Creditor
owing to Lender,  and Lender's  rights and privileges  hereunder  shall continue
until  payment in full of all of the  Lender  Obligations,  notwithstanding  any
action or  nonaction  by Lender  with  respect  thereto  or with  respect to any
Collateral therefor or any guarantees thereof.  All rights,  powers and remedies
hereunder  shall  apply to all past,  present  and  future  Lender  Obligations,
including under successive  transactions  which may continue,  renew,  increase,
decrease or from time to time create new Lender Obligations.

         12.  Junior  Creditor  further  agrees  that,  other than the  security
interests granted under the Junior Creditor Security  Agreement,  in case Junior
Creditor  should take or receive  any  security  interest  in, or lien by way of
attachment,  execution  or  otherwise  on  any of the  Collateral  or any  other
property,  real or personal,  of  Borrower,  or should take or join in any other
measure  or  advantage  contrary  to this  Agreement,  at any time  prior to the
payment in full of all of the Lender  Obligations,  Lender  shall be entitled to
have the same vacated,  dissolved and set aside by such  proceedings  at law, or
otherwise, as Lender may deem proper, and this Agreement shall be and constitute
full  and  sufficient  grounds  therefor.  In  furtherance  of  Lender's  rights
hereunder, Lender shall be entitled to become a party to any proceedings at law,
or  otherwise,  initiated  by Junior  Creditor or by any other party in order to
enable Lender,  as it deems proper, to protect its interests  hereunder.  Junior
Creditor agrees that if Junior Creditor violates this Agreement, Junior Creditor
shall be liable to Lender  for all  losses and  damages  sustained  by Lender by
reason  of such  breach,  including  Lender  attorneys'  fees in any such  legal
action.

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         13.  (a)  Upon  the  payment  in full  of all  Lender  Obligations  and
termination of all Loan Documents, the holder of the Junior Creditor Obligations
shall be  subrogated  to the  rights  of  Lender  to  receive  all  payments  or
distributions  of assets  of  Borrower  applicable  to the  Lender  Obligations,
including  payments to Lender under the Loan Agreement.  As between Borrower and
its creditors, other than Lender and Junior Creditor, no payment or distribution
made to Lender by virtue of this Agreement, which otherwise would have been made
to Junior  Creditor,  as holder of the  Junior  Creditor  Obligations,  shall be
deemed to be a payment on account of the Lender Obligations.

                  (b) Nothing in this  Agreement  is intended  to, nor shall it,
impair as between  Borrower  and its  creditors,  other  than  Lender and Junior
Creditor,  the obligations of Borrower to pay Junior Creditor,  as holder of the
Junior  Creditor  Obligations,  the  principal  of, and  interest on, the Junior
Creditor Obligations, as and when the same shall become due.

                  (c) It is understood  that the purpose of this Agreement is to
define the relative rights of Junior Creditor,  as holder of the Junior Creditor
Obligations, on the one hand and Lender, as holder of the Lender Obligations, on
other hand.

                  (d)  In  the  event  that  it  is   determined   by  a  court,
administrative  body,  arbitrator  or other  tribunal that (i) the holder of the
Junior  Creditor  Obligations  is not deemed to be  subrogated  to the rights of
Lender under the  conditions  set forth in  subparagraph  (a) above,  or (ii) as
between Borrower and its creditors, payments received by Lender which would have
otherwise been paid to Junior Creditor but for this Agreement are deemed to be a
payment on account of the Lender  Obligations,  or (iii) as between Borrower and
its creditors,  this Agreement is deemed to impair rights of Junior Creditor, as
holder of Junior  Creditor  Obligations,  to receive  payments of principal  and
interest on the Junior Creditor Obligations (the foregoing  determinations shall
be referred to  collectively  as "Adverse  Determinations"),  then Lender  shall
nonetheless be entitled to all rights and remedies  granted to Lender under this
Agreement  and the  Adverse  Determinations  shall not impair in any  respect or
manner such rights and remedies of Lender under this Agreement.

         14. Except as otherwise  expressly agreed to herein, if Junior Creditor
shall receive any payments,  security interests, or other rights in any property
of Borrower in violation of this  Agreement,  such payment or property  shall be
received by Junior Creditor in trust for Lender and shall forthwith be delivered
and transferred to Lender.

         15.  No  subordinations   of  the  Junior  Creditor   Obligations  have
previously  been executed by Junior Creditor for the benefit of anyone else, and
any such  subordinations  hereafter  executed will be, and shall be expressed to
be, subject and subordinate to the terms of this Agreement. This Agreement shall
continue  in full force and effect,  and it shall not be  canceled or  otherwise
rendered  ineffective,  until Lender has received  payment in full of all of the
Lender  Obligations  and all Loan  Documents  have  been  terminated.

         16. This  Agreement  shall be binding  upon the heirs,  administrators,
personal  representatives,  successors and assigns of Junior Creditor, and shall
inure to the benefit of Lender's successors and assigns.

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         17. The validity of this Agreement,  its  construction,  interpretation
and enforcement,  and the rights of the parties  hereunder,  shall be determined
under,  governed by, and construed in  accordance  with the laws of the State of
California.  The  parties  agree  that all  actions  or  proceedings  arising in
connection  with this  Agreement  shall be tried and litigated only in the state
and federal  courts  located in the County of Los Angeles,  State of California.
Junior Creditor waives any right he may have to assert the doctrine of forum non
conveniens  or to object to such venue and hereby  consents to any court ordered
relief.

         18. In the event it becomes  necessary  for any party to  commence  any
proceedings or actions to enforce the provisions of this Agreement, the court or
body before  which the same shall be tried shall award to the  prevailing  party
all costs and  expenses  thereof,  including,  but not  limited  to,  reasonable
attorneys' fees, the usual customary and lawfully  recoverable  court costs, and
all other expenses in connection therewith.

         19. The parties intend and agree that their respective rights,  duties,
liabilities,  obligations  and  discretion  shall be performed,  discharged  and
exercised in good faith.

         20.  JURY  TRIAL.   JUNIOR  CREDITOR  AND  LENDER  HEREBY  WAIVE  THEIR
RESPECTIVE  RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN JUNIOR CREDITOR AND LENDER
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT,  WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE.  JUNIOR CREDITOR AND LENDER EACH ACKNOWLEDGE THAT THIS WAIVER
IS A MATERIAL  INDUCEMENT TO ENTERING INTO THIS  AGREEMENT,  THAT EACH OF JUNIOR
CREDITOR  AND LENDER HAS ALREADY  RELIED ON THIS  WAIVER IN  ENTERING  INTO THIS
AGREEMENT  AND THAT EACH OF JUNIOR  CREDITOR AND LENDER WILL CONTINUE TO RELY ON
THIS WAIVER IN ANY RELATED FUTURE  DEALINGS  BETWEEN JUNIOR CREDITOR AND LENDER.
JUNIOR  CREDITOR  AND  LENDER  FURTHER  WARRANT  AND  REPRESENT  THAT  THEY EACH
KNOWINGLY AND VOLUNTARILY  WAIVE THEIR  RESPECTIVE  JURY TRIAL RIGHTS  FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THE PARTIES HERETO EXPRESSLY AGREE TO WAIVE ANY
AND ALL RIGHTS  THEY MAY HAVE TO A TRIAL BY JURY IN  CONNECTION  WITH ANY MATTER
RELATING TO THIS AGREEMENT.


         IN WITNESS WHEREOF, the parties hereto entered into this Agreement.


                                        /S/ WILLIAM M. HAWKINS, III _
                                        ---------------------------
                                        WILLIAM M. HAWKINS, III

                                        GE CAPITAL COMMERCIAL
                                        SERVICES, INC

                                        By: /s/ Michael Gardner
                                           -------------------------------------
                                        Michael Gardner, Vice President
                                        ----------------------------------------

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         The undersigned,  THE 3DO COMPANY, a California corporation,  being the
Borrower  named in the foregoing  Subordination  Agreement,  hereby  accepts and
consents thereto and agrees to be bound by all of the provisions  thereof and to
recognize  all  priorities  and  other  rights  granted  thereby  to GE  CAPITAL
COMMERCIAL SERVICES, INC. ("Lender"), and to pay Lender in accordance therewith.

DATED: October 7, 2002                THE 3DO COMPANY,
                                      a California corporation

                                      By: /s/ Richard A. Gelhaus
                                          --------------------------------------
                                               Richard A. Gelhaus

                                      Title: Chief Financial Officer
                                             -----------------------------------




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Source: OneCLE Business Contracts.