Collateral Assignment Agreement

DISTRIBUTION AGREEMENT

BETWEEN

INFOGRAMES ENTERTAINMENT S.A.

AND

GT INTERACTIVE SOFTWARE CORP.

This Distribution Agreement (this "Agreement") is entered into by and between Infogrames Multimedia S.A. and Infogrames Entertainment S.A. (collectively, "Infogrames") and GT Interactive Software Corp. ("GTIS") as of (the "Effective Date").

Whereas, GTIS is in the business of publishing and marketing Products and wishes to license Infogrames to distribute, publish and market Products owned or controlled by GTIS; and

Whereas, Infogrames wishes to obtain the right to distribute, publish and market Products owned or controlled by GTIS;

NOW THEREFORE, in consideration of the mutual covenants contained herein, the parties hereby agree as follows:

1. Definitions

(a) "Chargeback" means deductions customers take against an Infogrames invoice for price protection, promotions or markdowns.

(b) "Confidential Information" means trade secrets, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, diagrams, data, computer programs, business activities and operations.

(c) "Manufacturing Costs" means all reasonable direct costs of manufacturing, including license fees paid to console product manufacturers and in-bound transportation costs, for Products sold and not returned.

(d) "Master" means a gold master CD-ROM, cartridge or other appropriate electronic medium of delivery which is of sufficient quality to allow reproduction of the applicable software product without any material degradation, plus the applicable user manual and any and all documentation reasonably necessary to exercise Infogrames' rights under this Agreement.

(e) "Merchandise" means goods and sundries bearing the names, characters, themes or based on the storylines related to any Product.

(f) "Net Revenues" means gross revenues received by Infogrames from third parties, less any returns, Chargebacks, discounts, rebates, Manufacturing Costs, taxes, duties, commissions, insurance and transportation costs.

(g) "Products" means the Products (in any format, e.g. PC, Macintosh, console, video, online play) to which GTIS has the right to distribute such Products in the Territory, whether licensed or owned by GTIS, and any demonstration versions and derivative works thereof.

(h) "Trademarks" means the trademarks, logos, service marks, trade names and other proprietary markings owned by or licensed to GTIS in connection with any Product.

(i) "Territory" means all countries currently comprising Europe, including without limitation all countries included in the European Union.

(j) All capitalized terms not defined herein are as defined in the Securities Purchase Agreement between the parties dated as of November 15, 1999.

2. License

GTIS hereby grants to Infogrames the exclusive right to publish, manufacture, have manufactured, localize, adapt, market, advertise, promote, publicize, distribute, sell, sublicense or otherwise exploit the Products through all channels of distribution in the Territory, subject to rights granted in any license agreement dated prior to November 11, 1999.

3. Trademark License

GTIS hereby grants to Infogrames a royalty-free, non-exclusive, non-transferable license to use GTIS' Trademarks in connection with the exercise of the license granted to Infogrames pursuant to this Agreement.

4. Termination of License Agreements

Immediately after the Closing, GTIS agrees to terminate any and all license agreements between GTIS and any European Company Subsidiary effective as of such date that Infogrames and GTIS mutually agree Infogrames will commence publishing and distributing GTIS' Products, but in no event later than March 31, 2000.

5. Purchase of Prepackaged Products

If GTIS offers prepackaged Products, Infogrames shall be entitled to purchase such prepackaged Products at GTIS' actual direct cost of manufacture, F.O.B. GTIS' warehouse.

6. Return of Prepackaged Products

Infogrames shall be entitled to return prepackaged Products purchased from GTIS to GTIS for a full refund or credit, at Infogrames' option.

7. Delivery of Non-Prepackaged Products

GTIS will deliver as soon as practicable a complete Master of any Product which is licensed to Infogrames under this Agreement for manufacture by or for Infogrames pursuant to this Agreement.

8. Royalties on Products

Infogrames will pay to GTIS a royalty on distribution of Products which are manufactured by or for Infogrames pursuant to the license granted herein calculated as follows:

(a) If a third party is entitled to royalties based on Infogrames' distribution of the specific Product, then the royalty will be the greater of (i) 30% of the Net Revenues Infogrames actually receives from the distribution of such Product or (ii) 130% of the royalty due to such third party.

(b) If the Product is internally developed by GTIS, or any of its subsidiaries, then the royalty will be 30% of the Net Revenues Infogrames actually receives from the distribution of the Product.

(c) No royalties will be due from Infogrames to GTIS for up to 500 units of each Product, to be used for promotional and demonstration purposes.

(d) No royalties will be due from Infogrames to GTIS for any transfer or payment amongst Infogrames Entertainment S.A. and its subsidiaries.

9. Obligation to Release Product

Infogrames shall actively commence marketing and selling the Products within the Territory in reasonable commercial quantities within three (3) months following Infogrames' receipt of Masters.

10. Anti-Export Protection

Infogrames shall use commercially reasonable efforts not to sublicense, distribute or sell any Products to any distributor or customer who intends to resell or export the Products outside of the Territory.

11. Prohibition of Sublicensing; Derivative Works

Infogrames shall not sublicense any of the rights granted to Infogrames hereunder without GTIS' prior written consent, nor exploit derivative works related to the Products without GTIS' prior written consent.

12. Approval Rights

The Products as manufactured, advertised, sold, distributed or otherwise disposed of by Infogrames under this Agreement shall be of customary quality and shall be sold and distributed in packaging acceptable to GTIS and bearing GTIS' Trademarks and trade names.

13. Ownership of Intellectual Property Rights

All artwork, designs and computer software embodying the intellectual property embodied in the Products, or any reproduction thereof, or any packaging or advertising materials, which are designed, developed and/or created by Infogrames hereunder shall be and remain GTIS' sole and exclusive property.

14. Taxes

All amounts due hereunder include any applicable taxes and duties.

15. Payment Procedures

Infogrames will report to GTIS the amount of royalties due within sixty (60) days after the end of each calendar quarter, and each such report will be accompanied by payment of such amount.

16. Audit

Infogrames will keep accurate records of the basis for the royalty determination and will make such records available to an independent certified public accountant mutually agreed upon by the parties for inspection during normal business hours.

17. GTIS Warranties and Indemnity

GTIS warrants and represents that GTIS has sufficient rights to the Products to grant Infogrames the licenses under this Agreement and that any Product provided to Infogrames under this Agreement does not and will not infringe any third party proprietary right.

18. Infogrames Warranties and Indemnity

Infogrames warrants and represents that it has the full power and authority to enter into this Agreement and will use its reasonable best efforts to protect GTIS' and any applicable third party's intellectual property rights covered by this Agreement in the Territory against infringement.

19. Conditions on Indemnity Obligations

The indemnity obligations set forth in this Agreement are conditioned upon the party claiming indemnification promptly notifying the indemnifying party of the claim, allowing the indemnifying party to control any defense or settlement of such claim and assisting the indemnifying party in the defense or settlement.

20. Term

The term of this Agreement will be the later of seven years or the period of time during which Infogrames and its subsidiaries hold at least twenty-five percent (25%) of the voting stock of GTIS.

21. Termination

This Agreement may be terminated by Infogrames in its sole discretion upon ninety (90) days written notice to GTIS.

22. Effect of Termination

Upon termination of this Agreement, the licenses granted hereunder will terminate, provided however, that in the event such termination is for other than a breach by Infogrames, the licenses will continue to the extent necessary for a period of up to six (6) months.

23. Assignment

Infogrames may assign all or a portion of its rights under this Agreement to its affiliates or, in the event of a change in control, to the successor entity or any of its affiliates.

24. Disposition of European Operations

GTIS agrees that upon execution of this Agreement, it will take all actions necessary to dispose, as soon as practicable, of its existing publishing and distribution operations in the Territory.

25. Confidentiality

Each party agrees that it will hold in strict confidence and not disclose the Confidential Information of the other party to any third party and to use the Confidential Information of the other party for no purpose other than the purposes expressly permitted by this Agreement.

26. Governing Law

The laws of France shall govern this Agreement, without regard to conflicts of laws provisions thereof and without regard to the United Nations Convention on Contracts for the International Sale of Goods.

27. Relationship of Parties

The parties hereto expressly understand and agree that the parties are independent contractors in the performance of each and every part of this Agreement.

28. Amendment and Waiver

Any provision of this Agreement may be amended and the observance of any provision of this Agreement may be waived only with the written consent of the parties.

29. Headings

Headings and captions are for convenience only and are not to be used in the interpretation of this Agreement.

30. Notices

All notices, statements, and reports required or permitted by this Agreement shall be in writing and deemed to have been effectively given and received.

31. Entire Agreement

This Agreement supersedes all proposals, oral or written, all negotiations, conversations, or discussions between or among parties relating to the subject matter of this Agreement and all past dealing or industry custom.

32. Severability

If any provision of this Agreement is held to be illegal or unenforceable, that provision shall be limited or eliminated to the minimum extent necessary so that this Agreement shall otherwise remain in full force and effect and enforceable.

33. Counterparts

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Parties have executed this Distribution Agreement on the Effective Date.