THIS  WARRANT  HAS NOT BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS
AMENDED (THE "ACT"),  OR ANY APPLICABLE  STATE  SECURITIES  LAWS, AND MAY NOT BE
SOLD,  OFFERED  FOR SALE OR  TRANSFERRED  UNLESS  SUCH  SALE OR  TRANSFER  IS IN
ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR
AN EXEMPTION FROM THE REGISTRATION  REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS
IS AVAILABLE WITH RESPECT THERETO.


                               WARRANT TO PURCHASE
                            SHARES OF COMMON STOCK OF
                                 THE 3DO COMPANY


                                                      Issue Date: March 19, 2003


Warrant No. CW-31                                  75,000 Shares of Common Stock


     1.  Issuance.  This  Warrant is issued to IIG Capital LLC, as agent for the
IIG Trade  Opportunities  Fund,  N.V.  (the  "Holder"),  by The 3DO  Company,  a
Delaware  corporation  (hereinafter  with its  successors  called the "Company")
pursuant  to the  Securities  Purchase  Agreement  of even  date  herewith  (the
"Purchase  Agreement").  Capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to them in the Purchase Agreement.

     2. Purchase Price;  Number of Shares.  Subject to the exercise  restriction
provided  for in  Section 6  hereof,  this  Warrant  certifies  that,  for value
received,  the Holder of this Warrant is entitled upon surrender of this Warrant
with the  subscription  form annexed hereto as Appendix 1 duly executed,  at the
principal office of the Company,  to purchase from the Company 75,000 fully paid
and nonassessable  shares of Common Stock of the Company (the "Common Stock") at
a price  per share  (the  "Purchase  Price")  of $2.50,  subject  to  adjustment
pursuant to Sections 9, 10 and 11 below.

     3. Payment of Purchase Price.  Subject to Section 4, the Purchase Price may
be  paid  (i) in cash  or by  certified  check  or  wire  transfer,  (ii) by the
cancellation,  surrender  or  forgiveness  by the  Holder to the  Company of any
promissory notes or other obligations issued by the Company, with all such notes
and obligations so surrendered  being credited  against the Purchase Price in an
amount equal to the principal  amount thereof plus accrued  interest to the date
of surrender, or (iii) by any combination of the foregoing.

     4.  Net  Issue  Election.  Notwithstanding  any  provisions  herein  to the
contrary, the Holder may elect to receive,  without the payment by the Holder of
any  additional  consideration,  shares of Common  Stock  equal to the value (as
determined  below) of this  Warrant  by the  surrender  of this  Warrant  to the
Company,  with the net issue  election  notice  set forth in  Appendix 1 annexed
hereto duly executed,  at the principal  office of the Company.  Thereupon,  the
Company shall issue to the


<PAGE>

Holder such number of fully paid and nonassessable  shares of Common Stock as is
computed using the following formula:


                                        X =  Y(A-B)
                                            -------
                                               A


where:                      X = the  number  of  shares  of  Common  Stock to be
                  issued to the Holder pursuant to this Section 4.

                            Y = the number of shares of Common Stock  covered by
                  this  Warrant  or, if only a portion  of the  Warrant is being
                  exercised,  the portion of the Warrant being  exercised at the
                  time the net issue  election is made  pursuant to this Section
                  4.

                            A = the fair  market  value of one  share of  Common
                  Stock,  determined as follows:  (i) if at such time the Common
                  Stock is listed on a national  securities  exchange  or on the
                  over-the-counter  market, then the closing price of the Common
                  Stock on the  business  day  immediately  prior to the date of
                  exercise  or, if no sale of the Common  Stock was made on such
                  day, the first  business day  immediately  preceding  such day
                  upon which a sale was made, or (ii) if at such time the Common
                  Stock is not listed on a national  securities  exchange  or on
                  the over-the-counter  market, then as determined in good faith
                  by the Board and agreed to by Holder at the time the net issue
                  election is made pursuant to this Section 4.

                            B = the Purchase  Price in effect under this Warrant
                  at the time the net issue  election  is made  pursuant to this
                  Section 4.

     5. Fractional Shares. No fractional shares shall be issued upon exercise of
this Warrant.  The Company shall, in lieu of issuing any fractional  share,  pay
the  holder  entitled  to such  fraction  a sum in cash  equal to such  fraction
multiplied by the then effective Purchase Price.

     6. Exercise.

         (a) Expiration Date.  Holder's rights under this Warrant expire at 5:00
p.m.  Pacific  Time on the third  anniversary  of the date of this  Warrant (the
"Expiration Date") and shall be void thereafter.

         (b)  Delivery.  Upon the  exercise  of the rights  represented  by this
Warrant,  the Company  shall use good faith  efforts to issue and deliver to the
Holder a certificate  or  certificates  for the shares of Common Stock  issuable
upon exercise of this Warrant so  purchased,  in the name of the Holder within a
reasonable time after the rights  represented by this Warrant shall have been so
exercised  and in any event within  twenty (20) days after receipt of the Notice
of Exercise and, unless the Warrant has been fully  exercised or expired,  a new
warrant  representing  the remaining  portion of the Warrant and the  underlying
Common  Stock,  if any,  with respect to which this Warrant  shall not have been
exercised  shall  also be issued to the  Holder as soon as  possible  and in any
event within such twenty (20) day.



                                      -2-
<PAGE>

         (c) Failure to Deliver.  If by the third  business day after a exercise
of the warrant,  the Company  fails to deliver the required  number of shares of
Common Stock in the manner required  pursuant to Section 6(b), and if after such
third business day and prior to the receipt of such shares, the Holder purchases
(in an open market  transaction or otherwise)  shares of Common Stock to deliver
in  satisfaction  of a sale by the Holder of the shares of Common Stock issuable
upon  exercise of the Warrant  ("Warrant  Share")  which the Holder  anticipated
receiving  upon such  exercise (a "Buy In"),  then the Company  shall (1) pay in
cash to the Holder the amount by which (x) the  Holder's  total  purchase  price
(including  brokerage  commissions,  if any) for the  shares of Common  Stock so
purchased  exceeds  (y) the amount  obtained  by  multiplying  (A) the number of
Warrant  Shares  that the  Company  was  required  to  deliver  to the Holder in
connection with the exercise at issue by (B) the closing bid price of the Common
Stock at the time of the obligation giving rise to such purchase  obligation and
(2) at the option of the Holder, either reinstate the portion of the Warrant and
equivalent  number of Warrant  Shares for which such exercise was not honored or
deliver to the Holder the number of shares of Common  Stock that would have been
issued  had  the  Company  timely   complied  with  its  exercise  and  delivery
obligations  hereunder.  The Holder  shall  provide the Company  written  notice
indicating the amounts payable to the Holder in respect of the Buy In.

         (d) Remedies.  The Company's  obligations to issue and deliver  Warrant
Shares in  accordance  with the terms  hereof are  absolute  and  unconditional,
irrespective  of any action or inaction  by the Holder to enforce the same,  any
waiver or consent  with  respect to any  provision  hereof,  the recovery of any
judgment  against any Person or any action to enforce  the same,  or any setoff,
counterclaim,  recoupment,  limitation or termination,  or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company or any
violation  or alleged  violation of law by the Holder or any other  Person,  and
irrespective  of  any  other  circumstance  which  might  otherwise  limit  such
obligation  of the  Company to the Holder in  connection  with the  issuance  of
Warrant Shares.  Nothing herein shall limit a Holder's right to pursue any other
remedies  available  to it  hereunder,  at law or in equity  including,  without
limitation,  a decree of  specific  performance  and/or  injunctive  relief with
respect to the Company's  failure to timely  deliver  certificates  representing
shares of Common Stock upon exercise of the Warrant as required  pursuant to the
terms hereof.

     7. Reserved Shares;  Valid Issuance.  The Company covenants that it will at
all times from and after the date hereof  reserve and keep available such number
of its  authorized  shares  of  Common  Stock  of the  Company,  free  from  all
preemptive  or  similar  rights  therein,  as will be  sufficient  to permit the
exercise of this Warrant in full. If at any time between the date hereof and the
Expiration  Date, the number of authorized  but unissued  shares of Common Stock
shall not be  sufficient to permit  exercise of this  Warrant,  the Company will
take such  corporate  action as may be necessary to increase its  authorized but
unissued  shares of Common Stock to such number of shares as shall be sufficient
for such  purposes.  The Company  further  covenants  that such shares as may be
issued  pursuant  to such  exercise  will,  upon  issuance,  be duly and validly
issued,  fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issuance thereof.

     8. Registration Rights. The Company agrees that the Common Stock shall have
certain  registration  rights  pursuant  to and as set  forth  in  that  certain
Registration  Rights Agreement  between the Company and Holder,  dated as of the
date hereof.


                                      -3-
<PAGE>

     9. Stock Splits and  Dividends.  If after the date hereof the Company shall
subdivide the Common Stock,  by stock split or otherwise,  or combine the Common
Stock, or issue additional shares of Common Stock in payment of a stock dividend
on the  Common  Stock,  the  number of shares of Common  Stock  issuable  on the
exercise of this Warrant  shall  forthwith be  proportionately  increased in the
case of a subdivision or stock  dividend,  or  proportionately  decreased in the
case of a combination, and the Purchase Price shall forthwith be proportionately
decreased in the case of a subdivision  or stock  dividend,  or  proportionately
increased in the case of a combination.

     10. Adjustments for Diluting  Issuances.  The Purchase Price and the Common
Stock  issuable upon exercise of this Warrant,  shall be subject to  adjustment,
from time to time in the manner set forth in Appendix III to this Warrant.

     11.  Mergers  and  Reclassifications.  If after the date hereof the Company
shall  enter  into any  Reorganization  (as  hereinafter  defined),  then,  as a
condition of such  Reorganization,  lawful  provisions  shall be made,  and duly
executed  documents  evidencing the same from the Company or its successor shall
be delivered to the Holder,  so that the Holder shall  thereafter have the right
to  purchase,  at a total price not to exceed that  payable upon the exercise of
this  Warrant  in  full,  the kind and  amount  of  shares  of stock  and  other
securities and property  receivable upon such  Reorganization by a holder of the
number of shares of Common  Stock which might have been  purchased by the Holder
immediately  prior  to such  Reorganization,  and in any such  case  appropriate
provisions  shall be made with  respect to the rights and interest of the Holder
to the end that the provisions hereof (including without limitation,  provisions
for the  adjustment  of the  Purchase  Price and the  number of shares  issuable
hereunder)  shall thereafter be applicable in relation to any shares of stock or
other securities and property  thereafter  deliverable upon exercise hereof. For
the purposes of this Section 11, the term "Reorganization" shall include without
limitation any reclassification,  capital reorganization or change of the Common
Stock (other than as a result of a  subdivision,  combination  or stock dividend
provided for in Section 9 hereof),  or any consolidation of the Company with, or
merger of the Company into, another  corporation or other business  organization
(other than a merger in which the Company is the surviving corporation and which
does not  result in any  reclassification  or change of the  outstanding  Common
Stock),  or any sale or  conveyance  to another  corporation  or other  business
organization of all or substantially all of the assets of the Company.

     12. No Voting or Dividend Rights.  Nothing  contained in this Warrant shall
be  construed  as  conferring  upon the  Holder  hereof  the right to vote or to
consent  or to  receive  notice as a  shareholder  of the  Company  or any other
matters or any rights  whatsoever as a  shareholder  of the Company prior to the
exercise of the Holder's  rights to purchase  shares of Common Stock as provided
for herein.  No dividends or interest  shall be payable or accrued in respect of
this  Warrant  or the  interest  represented  hereby or the  shares  purchasable
hereunder  until,  and only to the extent  that,  this  Warrant  shall have been
exercised.

     13. Amendment. The terms of this Warrant may be amended, modified or waived
only with the written consent of the Holder.

     14. Notices,  Etc. Any notice,  request or other communication  required or
permitted  hereunder  shall be in writing  and shall be deemed to have been duly
given (i) upon receipt if personally delivered,  (ii) three (3) days after being
mailed by registered or certified mail, postage prepaid,  or (iii) one day after
being sent by recognized  overnight  courier or by facsimile,  if to Holder,  at
__________________________,  or at such


                                      -4-
<PAGE>

other address or number as Holder shall have furnished to Company in writing, or
if to Company,  at 200 Cardinal Way,  Redwood City,  California 94063 or at such
other address or number as Company shall have furnished to Holder in writing.

     15. Descriptive Headings and Governing Law. The descriptive headings of the
several  sections and  paragraphs  of this Warrant are inserted for  convenience
only and do not constitute a part of this Warrant.  This Warrant and all actions
arising  out of or in  connection  with this  Warrant  shall be  governed by and
construed in accordance  with the laws of the State of Delaware,  without regard
to the conflicts of law provisions of the State of Delaware.

     16.  Successors  and  Assigns.  Holder may not sell,  transfer or otherwise
dispose of the Securities  except in accordance with the restrictions set out in
the Purchase  Agreement.  The rights and obligations of Company and Holder shall
be binding upon and benefit the successors,  assigns, heirs,  administrators and
transferees of the parties.

     17. Limitation on Number of Warrant Shares. Notwithstanding anything to the
contrary  contained  herein,  the  number of shares of Common  Stock that may be
acquired  by the Holder  upon any  exercise of this  Warrant  (or  otherwise  in
respect  hereof)  shall be  limited  to the  extent  necessary  to insure  that,
following  such  exercise  (or other  issuance),  the total  number of shares of
Common Stock then  beneficially  owned by such Holder and its affiliates and any
other  persons  whose  beneficial  ownership of Common Stock would be aggregated
with the Holder's for purposes of Section 13(d) of the  Securities  Exchange Act
of 1934 ("Exchange  Act"),  does not exceed 9.999% of the total number of issued
and outstanding shares of Common Stock (including for such purpose the shares of
Common  Stock  issuable  upon  such  exercise).  For such  purposes,  beneficial
ownership  shall be determined in accordance  with Section 13(d) of the Exchange
Act and the rules and  regulations  promulgated  thereunder.  Each delivery of a
Form of Election to Purchase  hereunder will constitute a representation  by the
Holder that it has  evaluated  the  limitation  set forth in this  paragraph and
determined  that issuance of the full number of shares of Common Stock requested
in such Form of Election to Purchase is  permitted  under this  paragraph.  This
provision shall not restrict the number of shares of Common Stock which a Holder
may receive or  beneficially  own in order to determine the amount of securities
or other  consideration that such Holder may receive in the event of a merger or
other  business  combination  or  reclassification   involving  the  Company  as
contemplated in Section 11 of this Warrant.


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


Dated March 19, 2003                        The 3DO Company




                                            Name:
                                                  -----------------------------

                                            Title:
                                                   ----------------------------


                                      -5-
<PAGE>


                                   APPENDIX 1

                          FORM OF ELECTION TO PURCHASE


                                                             Date: _____________

The 3DO Company
200 Cardinal Way
Redwood City, CA 94063

Ladies and Gentlemen:

The undersigned hereby elects:

     ____  to  exercise  the  warrant  issued  to it by  The  3DO  Company  (the
     "Company")  and  dated  March  __,  2003 (the  "Warrant")  and to  purchase
     ____________  shares of the  Common  Stock of the  Company  (the  "Shares")
     purchasable  thereunder at a purchase price of _______________  ($____) per
     Share (the "Purchase  Price")  pursuant to the terms of the Warrant and the
     undersigned  delivers  the  Purchase  Price  herewith in full in cash or by
     certified  check or wire  transfer or as  otherwise  permitted  pursuant to
     Section 3 of the Warrant.

     ____ to purchase _______ shares of the Common Stock of the Company pursuant
     to the terms of the net exercise  provisions  set forth in Section 4 of the
     Warrant.

     The  undersigned  also makes the  representations  set forth on  Appendix 2
attached to the Warrant.

     The  certificate(s)  for such  shares  shall be  issued  in the name of the
undersigned or as otherwise indicated below:


                                                     Very truly yours,

                                                     [Purchaser]

                                                     ___________________________




<PAGE>



                                   APPENDIX 2

                               WARRANT CERTIFICATE


THIS AGREEMENT  MUST BE COMPLETED,  SIGNED AND RETURNED TO THE 3DO COMPANY ALONG
WITH THE FORM OF ELECTION TO PURCHASE  BEFORE THE SHARES  ISSUABLE UPON EXERCISE
OF THE WARRANT CERTIFICATE WILL BE ISSUED.


                                                            Date: _____________
The 3DO Company
200 Cardinal Way
Redwood City, CA 94063

     The  undersigned,  ("Purchaser"),  intends to acquire _______ shares of the
Common Stock (the "Shares") of The 3DO Company (the  "Company") from the Company
pursuant  to the  exercise  of a certain  Warrant  to  purchase  Shares  held by
Purchaser. The Shares will be issued to Purchaser in a transaction not involving
a public  offering  and  pursuant to an exemption  from  registration  under the
Securities  Act of 1933,  as  amended  (the  "1933  Act") and  applicable  state
securities  laws. In  connection  with such purchase and in order to comply with
the  exemptions  from  registration  relied  upon  by  the  Company,   Purchaser
represents, warrants and agrees as follows:

     1.  Purchaser  is  acquiring  the Shares for its own  account,  to hold for
investment, and Purchaser shall not make any sale, transfer or other disposition
of the Shares in violation of the 1933 Act or the General Rules and  Regulations
promulgated  thereunder by the Securities and Exchange Commission (the "SEC") or
in violation of any applicable state securities law;

     2.  Purchaser  has been  advised  that the Shares have not been  registered
under the 1933 Act or state  securities laws on the ground that this transaction
is exempt from registration, and that reliance by the Company on such exemptions
is predicated in part on Purchaser's representations set forth in this letter;

     3.  Purchaser has been informed that under the 1933 Act, the Shares must be
held  indefinitely  unless it is subsequently  registered  under the 1933 Act or
unless an exemption from such registration  (such as Rule 144) is available with
respect to any proposed transfer or disposition by Purchaser of the Shares;

     4. The Company may refuse to permit Purchaser to sell,  transfer or dispose
of the Shares  (except as permitted  under Rule 144) unless there is in effect a
registration  statement under the 1933 Act and any applicable  state  securities
laws covering such transfer, or unless Purchaser furnishes an opinion of counsel
reasonably  satisfactory  to counsel  for the  Company,  to the effect that such
registration is not required;

     5.  Purchaser has invested in  securities  of companies in the  development
stage and acknowledges that it is able to fend for itself, can bear the economic
risk of its investment, and has

<PAGE>

such  knowledge  and  experience  in  financial  or business  matters that it is
capable of  evaluating  the merits and risks of the  investment  in the  Shares.
Purchaser represents and warrants that it is an "accredited investor" within the
meaning of Rule 501 of Regulation D of the 1933 Act.

     Purchaser  also  understands  and  agrees  that there will be placed on the
certificate(s) for the Shares, or any substitutions therefor, legends stating in
substance:

     "These  securities  have not been  registered  under the  Securities Act of
     1933, as amended (the "Act"),  or any applicable state securities laws, and
     may not be  sold,  offered  for sale or  transferred  unless  such  sale or
     transfer is in accordance  with the  registration  requirements of such Act
     and applicable laws or an exemption from the  registration  requirements of
     such Act and applicable laws is available with respect thereto."

     Any legend required pursuant to applicable state securities laws.

     Purchaser has carefully read this letter and has discussed its requirements
and other  applicable  limitations  upon  Purchaser's  resale of the Shares with
Purchaser's counsel.


                                              Very truly yours,

                                              [Purchaser]



                                              __________________________________


                                      -2-

<PAGE>


                                  APPENDIX III


                       ADJUSTMENTS FOR DILUTING ISSUANCES


1.   Capitalized Terms. Capitalized terms used in this Appendix III that are not
     otherwise  defined  herein shall have the respective  meanings  assigned to
     them in the Warrant to which this Appendix III is attached.

2.   Adjustment  of  Purchase  Price upon  Issuance  of  Additional  Stock.  The
     Purchase Price shall be subject to adjustment from time to time as follows:

     a.   Upon each  issuance by the  Company of any  Additional  Stock  without
          consideration or for a consideration  per share less than the Purchase
          Price in effect  immediately  prior to the issuance of such Additional
          Stock,  the Purchase  Price in effect  immediately  prior to each such
          issuance shall forthwith (except as otherwise provided in this Section
          2) be adjusted to a price determined by multiplying the Purchase Price
          by a fraction, the numerator of which shall be the number of shares of
          Common Stock outstanding or deemed to be outstanding immediately prior
          to such issuance  plus the number of shares of Additional  Stock which
          could  be  purchased   were  the  then  Purchase  Price  used  instead
          (calculated by dividing the total  consideration to be received by the
          Company  in  such  issuance  by  the  then  Purchase  Price)  and  the
          denominator  of which  shall be the  number of shares of Common  Stock
          outstanding  or deemed  to be  outstanding  immediately  prior to such
          issuance plus the number of shares of such Additional  Stock issued in
          such issuance. For purposes of this Section 2, the number of shares of
          Common  Stock  outstanding  or  deemed  to  be  outstanding  shall  be
          calculated on a fully diluted basis, as if all convertible  securities
          had been fully converted into shares of Common Stock immediately prior
          to such issuance and any outstanding warrants, options or other rights
          for the purchase of shares of common stock or  convertible  securities
          had been fully exercised  immediately  prior to such issuance (and the
          resulting  securities  fully converted into shares of Common Stock, if
          so convertible) as of such date.

     b.   No  adjustment  of the Purchase  Price shall be made in an amount less
          than one cent per share,  provided that any adjustments  which are not
          required  to be made by  reason  of this  sentence  shall  be  carried
          forward  and shall be either  taken  into  account  in any  subsequent
          adjustment  made  prior  to one (1) year  from  the date of the  event
          giving rise to the adjustment being carried forward,  or shall be made
          at the end of one (1) year from the date of the event  giving  rise to
          the  adjustment  being carried  forward.  Except to the limited extent
          provided  for  in  subsections   2(d)(iii)  and  2(d)(iv)   below,  no
          adjustment of the Purchase Price  pursuant to subsection  2(a) of this
          Appendix III shall have the effect of  increasing  the Purchase  Price
          above  the  Purchase  Price  in  effect   immediately  prior  to  such
          adjustment.


<PAGE>

     c.   In the case of  issuance  by the  Company  of  Additional  Stock for a
          consideration  in whole or in part other than cash, the  consideration
          other  than  cash  shall be  deemed to be the fair  value  thereof  as
          determined in good faith by the Board of Directors of the Company.

     d.   In the case of the  issuance  (whether  before,  on or after the Issue
          Date) of options to purchase or rights to subscribe  for Common Stock,
          securities by their terms  convertible into or exchangeable for Common
          Stock  or  options  to  purchase  or  rights  to  subscribe  for  such
          convertible or exchangeable securities, the following provisions shall
          apply for all purposes of this Section 2:

          i.   The   aggregate   maximum   number  of  shares  of  Common  Stock
               deliverable  upon  exercise (to the extent then  exercisable)  of
               such options to purchase or rights to subscribe  for Common Stock
               shall be deemed to have been  issued at the time such  options or
               rights  were  issued  and  for  a  consideration   equal  to  the
               consideration  (determined in a manner consistent with subsection
               2(c) of this Appendix III), if any,  received by the Company upon
               issuance  of such  options or rights  plus the  minimum  Purchase
               Price  provided in such  options or rights  (without  taking into
               account potential antidilution  adjustments) for the Common Stock
               covered thereby.

          ii.  The   aggregate   maximum   number  of  shares  of  Common  Stock
               deliverable  upon conversion of or in exchange for (to the extent
               then  convertible or  exchangeable)  convertible or  exchangeable
               securities  or upon  exercise of options to purchase or rights to
               subscribe for such  convertible  or  exchangeable  securities and
               subsequent conversion or exchange thereof shall be deemed to have
               been  issued  at the time  such  securities  were  issued or such
               options or rights  were issued and for a  consideration  equal to
               the  consideration,  if any, received by the Company for any such
               securities  and  related  options or rights  (excluding  any cash
               received on account of accrued  interest  or accrued  dividends),
               plus the minimum additional consideration, if any, to be received
               by  the   Company   (without   taking  into   account   potential
               antidilution adjustments) upon the conversion or exchange of such
               securities or the exercise of any related  options or rights (the
               consideration   in  each  case  to  be  determined  in  a  manner
               consistent with subsection 2(c) of this Appendix III).

          iii. In the  event of any  change  in the  number  of shares of Common
               Stock deliverable or in the consideration  payable to the Company
               upon exercise of such options or rights or upon  conversion of or
               in exchange  for such  convertible  or  exchangeable  securities,
               excluding  a  change  resulting  from   antidilution   provisions
               thereof, the Purchase Price, to the extent in any way affected by
               or computed using such options,  rights or  securities,  shall be
               adjusted  based upon the actual  issuance of Common  Stock or any
               payment  of such  consideration  upon  the  exercise  of any such
               options  or  rights  or  the   conversion  or  exchange  of  such
               securities.

                                      -2-

<PAGE>


          iv.  Upon  the   expiration  of  any  such  options  or  rights,   the
               termination of any such options or rights to convert or exchange,
               or the  expiration  of any  options  or  rights  related  to such
               convertible or  exchangeable  securities,  the Purchase Price, to
               the extent in any way affected by or computed using such options,
               rights  or  securities  or  options  or  rights  related  to such
               securities,  shall be  recomputed to reflect the issuance of only
               the  number  of  shares  of  Common  Stock  (and  convertible  or
               exchangeable  securities  which remain in effect) actually issued
               upon the exercise of such options or rights,  upon the conversion
               or  exchange  of such  securities  or upon  the  exercise  of the
               options or rights related to such securities.

          v.   The  number  of  shares of Common  Stock  deemed  issued  and the
               consideration   deemed  paid  therefor  pursuant  to  subsections
               2(d)(i) and 2(d)(ii) of this Appendix III shall be  appropriately
               adjusted to reflect any change,  termination or expiration of the
               type described in either subsection 2(d)(iii) or 2(d)(iv) hereof.

     e.   "Additional  Stock"  shall mean any shares of Common  Stock issued (or
          deemed  to  have  been  issued  pursuant  to  subsection  2(d) of this
          Appendix III) by this Company after the Issue Date other than:

          i.   Shares of Common Stock issued pursuant to a transaction described
               in  Sections  9 and 11 of  the  Warrant,

          ii.  upon exercise or conversion of  outstanding  options or warrants,
               or

          iii. Shares of Common Stock issuable or issued to officers, employees,
               consultants   or   directors   of  the  Company   pursuant  to  a
               compensatory benefit plan.

     f.   Upon each adjustment of the Purchase Price pursuant to this Section 2,
          the number of shares of Common Stock  issuable  upon  exercise  hereof
          shall be equal to (x) the  product  of the  number of shares of Common
          Stock the holder was  entitled  to  purchase  immediately  before such
          adjustment times the Purchase Price in effect  immediately before such
          adjustment  divided by (y) the  Purchase  Price in effect after giving
          effect to such adjustment.


                                      -3-

Source: OneCLE Business Contracts.