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Escrow Agreement - GT Interactive Software Corp., WizardWorks Group inc. and Republic National Bank of New York

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                                ESCROW AGREEMENT

     This ESCROW AGREEMENT dated June 24, 1996 is among GT Interactive  Software
Corp.  ("GT"), a Delaware  corporation,  Paul D. Rinde, as the representative of
the stockholders (the "Stock- holder Representative") of WizardWorks Group, Inc.
("WizardWorks"),  a Minnesota  corporation,  and Republic  National  Bank of New
York, as escrow agent (the "Escrow Agent").

                              PRELIMINARY STATEMENT

     Pursuant to an Agreement  and Plan of  Reorganization  dated as of June 24,
1996  (the  "Merger  Agreement"),   by  and  among  GT,  WizardWorks,   and  the
stockholders of WizardWorks,  GT is acquiring  WizardWorks through the merger of
WizardWorks into a wholly owned subsidiary of GT.  Capitalized terms used herein
and not  otherwise  defined  have the  meanings  assigned  to them in the Merger
Agreement.

     The holders of the WizardWorks Stock  outstanding  immediately prior to the
Effective  Time (the  "Stockholders"),  jointly  and  severally,  have agreed to
indemnify GT as provided in the Merger Agreement  through the deposit of 235,000
shares of GT Common Stock (the "Escrow  Shares")  pursuant to Section 2.7 of the
Merger Agreement.  A list of all Stockholders and their pro rata interest in the
Escrow Shares is attached hereto as Schedule 1.

     The Escrow Agent is not a party to any agreement between GT and WizardWorks
and shall not be required to interpret the terms of any such agreement, it being
agreed  that all of Escrow  Agent's  duties and  obligations  are stated in this
Agreement. 

     The parties hereto agree as follows:

     1.  Establishment  of Escrow.  GT has delivered to the Escrow Agent and the
Escrow Agent  acknowledges  receipt of the Escrow Shares in the form of a single
stock certificate.  The Escrow Shares shall be held in escrow in the name of the
Escrow  Agent or its  nominee,  subject  to the terms and  conditions  set forth
herein.  Unless and until the Escrow  Shares are  returned to GT or delivered to
the  Stockholders  pursuant  to the  terms of this  Agreement,  the  Stockholder
Representative shall vote the Escrow Shares.

     2. Amounts Earned on Escrow Shares; Tax Matters.  All amounts earned on the
Escrow Shares (dividends or other  distributions)  shall be distributed pro rata
to  the  Stockholders  from  time  to  time  upon  the  written  request  of the
Stockholder  Representative and GT. Notwithstanding the foregoing, any dividends
or other  distributions  shall be distributed or retained in accordance with the
distribution of the Escrow Shares to which such dividend or distribution relates
upon the  termination  of this  Agreement.  The parties agree that to the extent
permitted by


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applicable law,  including Section 468B(g) of the Internal Revenue Code of 1986,
as amended (the "Code"), the Stockholders will include all amounts earned on the
Escrow  Shares in their gross  income for  federal,  state and local  income tax
(collectively,   "income  tax")  purposes  and  pay  any  income  tax  resulting
therefrom.  The Escrow Agent has been previously  furnished with all information
necessary  to enable it to comply  with the  reporting  and  backup  withholding
requirements  of  the  Code  and  all  reporting  and  withholding  information,
including  1099s (which will be reported  under GT's federal tax  identification
number), will be delivered to GT.

     3. Claims Against Escrow Shares.

     (a) At any time or times prior to June 24, 1997, GT may make claims against
the Escrow  Shares for amounts due for  indemnification  under Section 11 of the
Merger Agreement. GT shall notify the Stockholder  Representative and the Escrow
Agent in writing of each such claim, including a brief description of the amount
and nature of such claim.  Each such notice  delivered to the Escrow Agent by GT
shall  contain a  representation  from GT to the effect that GT has  delivered a
copy of such notice to the Stockholder Representative prior to or simultaneously
with its  delivery to the Escrow  Agent.  The Escrow Agent shall have no duty to
ascertain whether the Stockholder Representative received the notice. The Escrow
Agent shall advise GT and the Stockholder Representative of the date on which it
received  notice from GT of such claim which date shall be  conclusively  deemed
correct.  In the event that the amount subject to the claim is unliquidated,  GT
shall make a good faith  estimate as to the amount of the claim for  purposes of
determining  the number of Escrow  Shares,  if any, to be withheld by the Escrow
Agent if such claim is not resolved or otherwise  adjudicated  by the Expiration
Date (as defined in Section 5 below).  If the Stockholder  Representative  shall
dispute such claim the  Stockholder  Representative  shall give  written  notice
thereof to GT and to the Escrow Agent so that the written  notice is received by
GT and the  Escrow  Agent  within  thirty  (30) days after the date on which the
Escrow Agent received GT's notice (if the Escrow Agent receives the  Stockholder
Representative's  notice within the aforesaid time period,  the Escrow Agent may
conclusively  presume  that the notice was  received by GT within the  aforesaid
time period),  in which case the Escrow Agent shall  continue to hold the Escrow
Shares in accordance  with the terms of this  Agreement;  otherwise,  such claim
shall be deemed to have been  acknowledged  to be  payable  in shares out of the
Escrow  Shares  in the full  amount  thereof  as set  forth in the claim and the
Escrow  Agent  shall use its best  efforts to  promptly  pay such claim from the
Escrow Shares to GT after expiration of said thirty day period. The Escrow Agent
shall effect such  payment of Escrow  Shares to GT by  surrendering  such Escrow
Shares to GT's transfer  agent (Fleet  National Bank,  111  Westminster  Street,
Providence,  Rhode  Island  02903) for  cancellation  upon receipt by the Escrow
Agent of a copy of a letter from GT to GT's  transfer  agent,  instructing  such
transfer agent to

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issue a new  certificate  to the Escrow Agent for the  remaining  Escrow  Shares
after  giving  effect to such  payment.  If the amount of the claim  exceeds the
aggregate  value of the Escrow Shares,  the Escrow Agent shall have no liability
or responsibility  for any deficiency.  The value per share of the Escrow Shares
for purposes of this Agreement shall be $19.89 (the "Closing Market Value"). The
Escrow  Agent shall rely on the written  instructions  of GT with respect to the
amount of shares and the pro rata allocation required to pay a claim. The Escrow
Agent shall have no  liability  or  responsibility  for the  performance  of any
calculations  pursuant  to this  Section 3,  including  any  determination  with
respect to the number of Escrow Shares  required to pay a claim pursuant to this
Section 3. All  claims  paid out of the  Escrow  Shares  shall be rounded to the
nearest  whole  share.  Other than  pursuant  to  Section  11  hereof,  under no
circumstances shall the Stockholders or the Stockholder  Representative have any
right to  substitute  other  property for the Escrow Shares or to change the per
share value stated herein.

     4. Disputed Claims.

     (a) If the  Stockholder  Representative  shall  dispute an  indemnification
claim of GT as above  provided and subject to Section 3 above,  the Escrow Agent
shall set aside a portion of the Escrow  Shares equal to the amount of the claim
as set forth in the notice of the claim (the "Set Aside  Amount").  In the event
GT  notifies  the  Escrow  Agent  in  writing  that  it has  made  out-of-pocket
expenditures or anticipates that it will incur legal expenses in connection with
any such disputed  claim with respect to which it is entitled to be  indemnified
under  the  Merger  Agreement,  a portion  of the  Escrow  Shares  equal to such
incurred or  anticipated  expenditures  shall also be set aside and added to and
become a part of the Set Aside Amount which  aggregate Set Aside Amount shall be
set  forth in a  written  notice  to the  Escrow  Agent  executed  by GT and the
Stockholder Representative;  provided, that in the event that it shall be agreed
(as  evidenced  by  a  written  notice   executed  by  GT  and  the  Stockholder
Representative  as  described  in  Section  3 above)  or  determined  through  a
proceeding  described  in  Section  4(b)  below  that  GT  is  not  entitled  to
indemnification  with  respect to such  claim,  GT shall not be entitled to such
shares.

     (b) If the Escrow Agent has not received  written notice executed by GT and
the  Stockholder  Representative  within thirty (30) days after the  Stockholder
Representative  sends  notice of such  dispute to the effect  that the  disputed
indemnification claim has been resolved, the Escrow Agent shall continue to hold
the Set Aside  Amount  until  directed  to dispose of it pursuant to (i) a final
non-appealable  order of a court of competent  jurisdiction or (ii) instructions
or directions furnished in writing signed by both the Stockholder Representative
and GT.  In no event  shall  the  Escrow  Agent be  responsible  for any fees or
expenses of any party to any litigation proceeding.


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<PAGE>

     5.  Termination.  This  Agreement  shall  terminate  on June 25,  1997 (the
"Expiration Date") provided that there are no outstanding indemnification claims
as to which the Escrow Agent has received notice pursuant to Section 3 hereof on
or prior to the Expiration  Date;  otherwise  this  Agreement  shall continue in
effect until the resolution of all such indemnification claims. GT shall provide
the Escrow Agent with reasonable advance notice of the expected  Expiration Date
and shall confirm the occurrence of such as soon as practicable  thereafter.  On
the Expiration Date or as soon  thereafter as is  practicable,  the Escrow Agent
shall  distribute the Escrow Shares less (i) the amount of any then existing Set
Aside Amount and (ii) the amount specified in any notice of a claim delivered to
the Escrow Agent on or within 30 days prior to the Expiration  Date with respect
to which no Set Aside Amount has yet been  established  and the Escrow Agent has
not otherwise been instructed by GT and the Stockholder Representative, pursuant
to and in accordance  with written  instructions  of both GT and the Stockholder
Representative.  At such time thereafter as any remaining  indemnification claim
hereunder has been  resolved and the Escrow Agent has received a written  notice
executed by GT and the Stockholder  Representative  to that effect (or a copy of
an arbitration award pursuant to Section 4(b) to that effect) and any amounts to
be  distributed  to GT in connection  therewith  have been so  distributed,  the
Escrow Agent shall  distribute  any portion of the  remaining  Escrow Shares pro
rata to the Stockholders. Upon the resolution of all outstanding indemnification
claims  hereunder,  the Escrow Agent shall distribute the remaining  amount,  if
any, of the Escrow Shares pro rata to the  Stockholders and this Agreement shall
terminate.  GT shall not be required to issue certificates for fractional shares
in any  distribution  of Escrow Shares  pursuant to this  Agreement;  but rather
shall pay to the Escrow Agent for  distribution to the Stockholders an amount in
cash (without interest) determined by multiplying each Stockholder's  fractional
interest  by the  Closing  Market  Value.  The Escrow  Agent  shall  effect such
distributions  of Escrow  Shares as it is required  to make to the  Stockholders
under this Agreement by  surrendering  such Escrow Shares to GT's stock transfer
agent for  cancellation  upon  receipt by the Escrow Agent of a copy of a letter
from GT to GT's transfer  agent,  instructing  such transfer agent to issue such
share pro rata to the Stockholders.

     6. The Escrow Agent.

     (a) Notwithstanding anything herein to the contrary, the Escrow Agent shall
promptly dispose of all or any part of the Escrow Shares in accordance with this
Agreement.  The  reasonable  fees and expenses of the Escrow Agent in connection
with its execution and  performance of this Agreement as set forth on Schedule 2
hereto shall be borne by GT and the  Stockholders  equally which amount shall be
due and payable upon the signing of this  Agreement and on the first day of each
subsequent  year  during  which this  Agreement  remains  in  effect;  provided,
however, GT shall be responsible for the delivery to the Escrow Agent of

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<PAGE>

such fees and  expenses.  The  Escrow  Agent  shall not be liable for any act or
omission to act under this Agreement,  including any and all claims made against
the Escrow  Agent as a result of its holding the Escrow  Shares in its own name,
except  for  its  own  gross  negligence  or  willful  misconduct.  GT  and  the
Stockholders,  jointly and severally,  agree to indemnify and hold harmless from
and against any and all claims,  losses,  costs,  liabilities,  damages,  suits,
demands,  judgments  or  expenses  (including  but  not  limited  to  reasonable
attorney's  fees) claimed against or incurred by the Escrow Agent arising out of
or related,  directly or  indirectly,  to this  Agreement,  except acts of gross
negligence or willful misconduct.  The Escrow Agent may decline to act and shall
not be  liable  for  failure  to act if in doubt  as to its  duties  under  this
Agreement. The Escrow Agent may act upon any instrument or signature believed by
it to be genuine and may assume that any person purporting to give any notice or
instruction hereunder, reasonably believed by it to be authorized, has been duly
authorized to do so. The Escrow  Agent's  duties shall be  determined  only with
reference to this  Agreement and  applicable  laws,  and the Escrow Agent is not
charged with knowledge of or any duties or  responsibilities  in connection with
any other  document  or  agreement,  including,  but not  limited to, the Merger
Agreement.  In the event  that the Escrow  Agent  shall be  uncertain  as to its
duties or rights  hereunder,  the Escrow Agent shall be entitled to refrain from
taking any action other than to keep safely the Escrow Shares until it shall (i)
receive written instructions signed by GT and the Stockholder Representative; or
(ii) is directed otherwise by a court of competent jurisdiction.

     (b) The Escrow Agent may act in reliance  upon any  instructions  signed on
signature  believed by it to be genuine,  and may assume that any person who has
been  designated  by GT or the  Stockholder  Representative  to give any written
instructions,  notice or receipt,  or make any statements in connection with the
provisions hereof has been duly authorized to do so. The Escrow Agent shall have
no duty to make  inquiry as to the  genuineness,  accuracy  or  validity  of any
statements or instructions or any signatures on statements or instructions.  The
name and true  signatures of each  individual  authorized to act on behalf of GT
and the  Stockholder  Representative  are stated in Exhibit A which is  attached
hereto and made a part hereof.

     (c) The Escrow  Agent shall have the right at any time to resign  hereunder
by giving  written  notice of its  resignation  to the  parties  hereto,  at the
addresses  set forth  herein  or at such  other  address  as the  parties  shall
provide,  at  least  thirty  (30)  days  prior to the  date  specified  for such
resignation  to take effect.  In such event GT shall appoint a successor  escrow
agent within said thirty (30) days; if GT does not designate a successor  escrow
agent within such period, the Escrow Agent may appoint a successor escrow agent.
Upon the effective date of such resignation, the Escrow Shares together with all
cash and  other  property  then  held by the  Escrow  Agent  hereunder  shall be
delivered by it to such successor escrow agent. In the event the

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<PAGE>

Escrow Agent does not appoint a successor  escrow agent within thirty (30) days,
the Escrow Shares and all cash and other property held by the Escrow Agent shall
be delivered to and deposited with a court of competent  jurisdiction  to act as
successor escrow agent.  Upon the delivery of the Escrow Shares pursuant to this
Section 6(c) to a successor  escrow agent, the Escrow Agent shall be relieved of
all liability hereunder.

     (d) In the event that the  Escrow  Agent  should at any time be  confronted
with  inconsistent or conflicting  claims or demands by the parties hereto,  the
Escrow  Agent shall have the right to  interplead  said  parties in any court of
competent  jurisdiction  and request that such court  determine  the  respective
rights of such parties with respect to this  Agreement  and,  upon doing so, the
Escrow Agent shall be released from any obligations or liability to either party
as a consequence of any such claims or demands.

     (e) The Escrow  Agent may  execute  any of its  powers or  responsibilities
hereunder and exercise any rights  hereunder,  either  directly or by or through
its agents or attorneys. The Escrow Agent shall not be responsible for and shall
not be under a duty to examine, inquire into or pass upon the validity,  binding
effect,  execution  or  sufficiency  of this  Agreement  or of any  amendment or
supplement hereto.

     7. Stockholder Representative.

     (a) In the  event  the  Stockholder  Representative  shall die or resign or
otherwise  terminate his status as such, his successor  shall be any Stockholder
appointed by the Stockholder  Representative or, in the case of the death of the
Stockholder  Representative  or where the  Stockholder  Representative  fails to
appoint a  successor  after a vacancy has been  created,  elected by the vote or
written  consent  of  a  majority  in  interest  of  the  Stockholders.  If  the
Stockholders fail for any reason to elect a new Stockholder  Representative  and
during any period in which a vacancy  exists,  Paul D. Rinde  shall serve as the
Stockholder  Representative  until a new Stockholder  Representative is elected.
All  decisions  of the  Stockholder  Representative  shall be  binding  upon the
Stockholders.   The  Stockholder  Representative  shall  keep  the  Stockholders
reasonably informed of his or her decisions of a material nature.

     (b) The Stockholder  Representative is authorized to take any action deemed
by him appropriate or necessary to carry out the provisions of, and to determine
the  rights  of  the   Stockholders   under  this  Agreement.   The  Stockholder
Representative  shall serve as the agent of the  Stockholders  for all  purposes
related to this Agreement,  including without limitation service of process upon
the  Stockholders.  By his or her execution of this  Agreement,  the Stockholder
Representative  accepts  and  agrees to  diligently  discharge  the  duties  and
responsibilities of the Stockholder  Representative set forth in this Agreement.
The

                                      - 6 -


<PAGE>

authorization  and  designation  of the  Stockholder  Representative  under this
Section  7(b)  shall  be  binding  upon  the  successors  and  assigns  of  each
Stockholders.  GT and the  Escrow  Agent  shall be  entitled  to rely  upon such
authorization  and  designation and shall be fully protected in dealing with the
Stockholder Representative, and shall have no duty to inquire into the authority
of  any  person  reasonably  believed  by  any of  them  to be  the  Stockholder
Representative.

     (c)  The   Stockholder   Representative   shall  not  be  entitled  to  any
compensation for services hereunder.

     8.  Governing  Law.  This  Agreement  is  governed  by the laws of New York
without regard to its conflict of law provisions, and shall inure to the benefit
of  and  be  binding   upon  the   successors,   assigns,   heirs  and  personal
representatives of the parties hereto.

     9.   Counterparts.   This   Agreement  may  be  executed  in  one  or  more
counterparts,  all of which  documents  shall be  consid-  ered one and the same
document.

     10.  Notices.  Any  notice or other  communication  required  or  permitted
hereunder  shall be in writing and shall be deemed  given when so  delivered  in
person, by overnight courier, by facsimile  transmission (with receipt confirmed
by  telephone or by automatic  transmission  report) or two business  days after
being sent by registered  or certified  mail (postage  prepaid,  return  receipt
requested), as follows:

                        TO GT:

                                    GT Interactive Software Corp.
                                    16 East 40th Street
                                    New York, New York  10016
                                    Attention:
                                    Fax:  (212) 679-6850

                        In each case with a copy to:

                                    Kramer, Levin, Naftalis & Kamin
                                    919 Third Avenue
                                    New York, New York  10022
                                    Attention:  David P. Levin
                                    Fax:  (212) 715-8000

                        TO THE STOCKHOLDER REPRESENTATIVE:

                                    Paul D. Rinde
                                    961C Longwood Road
                                    Amery, Wisconsin  54001


                        With a copy to:

                                      - 7 -


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                                    W. Terry Olson
                                    13238 Island View
                                    Elk River, MN  55330

                                    Robert J. Armstrong
                                    7920 94th West
                                    Bloomington, MN  55438

                                    Doherty, Rumble & Butler
                                    150 South Fifth Street
                                    Minneapolis, Minnesota  55402
                                    Attention: Frank V. Vargas, III
                                    Fax:  (612) 340-5584

                        TO ESCROW AGENT:

                                    Republic National Bank of New York
                                    452 Fifth Avenue
                                    New York, New York  10018
                                    Attention:  Joseph Collins
                                    Fax:(212) 525-6878



Addresses may be changed by written notice given  pursuant to this section.  Any
notice  given  hereunder  may be given on behalf of any party by his  counsel or
other authorized representative.

     11. In any case where the date for  payment  of Escrow  Shares or notice or
any other date hereunder  shall be a Saturday,  Sunday or legal holiday or a day
on which banking  institutions  in the City of New York are authorized by law to
close,  then the date for  payment of Escrow  Shares or notice or any other date
may be made on the next succeeding business day.

     12. This Agreement may be amended,  modified,  superseded or canceled,  and
any  of the  terms  or  conditions  hereof  may be  waived,  only  by a  written
instrument  executed  by each party  hereto or, in the case of a waiver,  by the
party  waiving  compliance.  The  failure  of any  party at any time or times to
require  performance of any provision hereof shall in no manner affect its right
at a later time to enforce the same. No waiver of any party of any condition, or
of the breach of any term  contained  in this  Agreement,  whether by conduct or
otherwise,  in any one or more instances shall be deemed to be or construed as a
further or continuing  waiver of any such condition or breach or a waiver of any
other condition or of the breach of any other term of this  Agreement.  No party
may assign any rights,  duties or obligations hereunder unless all other parties
have given their prior written consent.

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<PAGE>

     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement under
seal as of the date first stated above.

                                             GT INTERACTIVE SOFTWARE CORP.


                                             By: /s/ RONALD CHAIMOWITZ
                                                ----------------------
                                                Name: Ronald Chaimowitz
                                                Title:Chief Executive Officer
                                                      and President

                                             STOCKHOLDER REPRESENTATIVE


                                             By: /s/ PAUL D. RINDE
                                                ----------------------
                                                Name: Paul D. Rinde
                                                Title:Vice President and
                                                      Secretary

                                             REPUBLIC NATIONAL BANK OF NEW YORK,
                                             as Escrow Agent


                                             By: /s/ MARK KARLIN
                                                ----------------------
                                                Name: Mark Karlin
                                                Title:Trust Officer

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