<PAGE>

                              AMENDMENT NUMBER 2
                    OF INTERNATIONAL DISTRIBUTION AGREEMENT

     This Amendment Number 2 of International Distribution Agreement (this
"Amendment") is entered into as of January 1, 2000, by Interplay Entertainment
Corp., a Delaware corporation ("Interplay") and Virgin Interactive Entertainment
Limited, a corporation formed under the laws of England and Wales ("Virgin"),
with reference to the following facts:

     A.  The parties have entered into that certain International Distribution
Agreement dated February 10, 1999, subsequently amended under that certain
Amendment Number 1 of International Distribution Agreement dated July 1, 1999
(collectively, the "Agreement"), under which Virgin obtained from Interplay the
right to distribute Interplay products in certain territories.

     B.  The parties desire to amend the Agreement.

     Therefore, the parties agree as follows:

I.   Section 5(e) of the Agreement is deleted in its entirety and replaced with
     the following:

          "(e)  No Reserves.  Virgin shall not deduct or retain reserves from
                -----------
      payments due to Interplay under this Agreement. Within ten business days
      after the date of this Amendment, Virgin shall pay to Interplay any
      reserves that Virgin currently retains, to the extent that such currently-
      retained reserves exceed the amount of markdown allowances, returns, or
      credits as of December 31, 1999, that have not already been accounted for
      through a deduction from the amount of Virgin's payments owed or paid to
      Interplay."

II.   Section 5(f) of the Agreement is deleted in its entirety and replaced with
      the following:

          "(f)  Returns.  Virgin may not grant any markdown allowance, price
                -------
      protection or other credit for Products without the prior written consent
      of Interplay, not to be unreasonably withheld or delayed. For any calendar
      month during the term of this Agreement, the amount of any Interplay-
      approved markdown allowances and returns resulting from Virgin's
      distribution of Products may be deducted by Virgin from its payments to
      Interplay under Exhibit `B' for that month; provided, however, that (i)
                      -----------                 ------------------
      any allowances and returns so deducted shall have been processed by Virgin
      during that month, and (ii) Virgin shall provide Interplay with a
      statement of any such markdown allowances and returns, itemized by Product
      and customer."

III.  Section 13(a) of the Agreement is deleted in its entirety and replaced
      with the following:

          "(a)  Term.  This Agreement shall become effective on the date hereof,
                ----
      and unless sooner terminated pursuant to the terms of this Agreement,
      shall continue in full force and effect until February 10, 2007, on which
      date this Agreement shall expire."
<PAGE>

IV.  Section 1 of Exhibit "B" of the Agreement is deleted in its entirety and
     replaced with the following:

          "1.  Virgin Sales Targets and Payments to Interplay.
               ----------------------------------------------

               (a) For each calendar year, Virgin and Interplay shall agree upon
          a target amount of Net Sales (as defined below) for the year. Such
          target amount of Net Sales shall be referred to herein as the `Base
          Plan Net Sales' and shall be set forth on Schedule `B-1' attached
          hereto.

               (b) Virgin shall pay to Interplay, in the time and manner set
          forth in subsection (c) below, a percentage of Net Sales (such payment
          to Interplay shall be referred to herein as the `Pass-Through Amount')
          based upon whether, and to what extend, Virgin has exceeded the Base
          Plan Net Sales for the year. The Pass-Through Amount shall be
          calculated as follows:

<TABLE>
<CAPTION>
                                                             The Pass-Through
       For Net Sales in a Calendar Year That Are:            Amount Shall Be:
--------------------------------------------------------------------------------
<S>                                                        <C>
                100% of BPNS* or less                      85% of such Net Sales
In excess of 100% of BPNS but not more than 105% of BPNS   84% of such Net Sales
In excess of 105% of BPNS but not more than 110% of BPNS   83% of such Net Sales
In excess of 110% of BPNS but not more than 115% of BPNS   82% of such Net Sales
In excess of 115% of BPNS but not more than 120% of BPNS   81% of such Net Sales
              In excess of 120% of BPNS                    80% of such Net Sales
</TABLE>

*"BPNS" means the Base Plan Net Sales for the applicable year.

          (c) Within 50 days after the end of each calendar month during the
     term of this Agreement, Virgin shall pay Interplay the Pass-Through Amount
     for Net Sales during the month.

          (d) "Net Sales" shall mean the gross wholesale price of the Products
     invoiced or shipped by Virgin in the distribution of the Products less:

              (i)  Any applicable taxes on the sale or license of the Products,
     other than taxes based solely on Virgin's income and tax withholdings to
     the extent creditable by Virgin.

              (ii) Any Interplay-authorized markdown allowances and/or
     retroactive discounts and rebates, on the terms set forth in Section 5(f)
     of this Agreement.

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<PAGE>

              (iii) Amounts for returns, such as credits or defectives, on the
      terms set forth in Section 5(f) of this Agreement.

              (iv)  Agency commissions on Products sold in Austria and Spain."

V.    Section 2 of Exhibit "B" of the Agreement is deleted in its entirety and
replaced with the following:


      "2.  COGS and Marketing Reimbursement.  Within 10 days after the end of
           --------------------------------
      each calendar month during the term of this Agreement, Virgin shall
      deliver to Interplay an itemized statement of Virgin's cost of goods sold
      (including shipping, handling and insurance) with respect to Products sold
      during that month and marketing expenses paid during that month. Within 60
      days of Interplay's receipt of such statement, Interplay shall either pay
      to Virgin the amount stated, or state specific reasons for deduction or
      denial. If Interplay states deductions or a denial Virgin may request an
      audited verification under Section 6 of this Agreement. With the sole
                                 ---------
      exception of credits for returns and markdowns in accordance with
      Section 5(f) of this Agreement, Virgin shall not deduct from its payments
     ------------
      to Interplay any of its costs, including, without limitation, the cost of
      goods sold and marketing costs."

VI.   Section 3 of Exhibit "B" of the Agreement is deleted in its entirety and
replaced with the following: "Intentionally deleted."

VII.  Section 4 of Exhibit "B" of the Agreement, is deleted in its entirety and
replaced with the following: "Intentionally deleted."

VIII. Section 5 of Exhibit "B" of the Agreement is deleted in its entirety, and
replaced with the following:

          "5.  As of the date of this Amendment, the previously-applicable
      provision for Interplay's payment of Minimum Distribution Fee is
      eliminated. For purposes of clarification only, the provision applicable
      during 1999 for a 4.5 million British Pound Minimum Distribution Fee is
      prorated for the 46 weeks out of the 52 week year during which Virgin
      performed distribution services for Interplay under this Agreement,
      resulting in a Minimum Distribution Fee for 1999 of 3.98 million British
      Pounds."

IX.   Section 6 of Exhibit "B" of the Agreement is added, as follows:

          "6.  Credit for Compensation Contribution.  Virgin shall credit
               ------------------------------------
      Interplay for any compensation contribution due after December 31, 1999
      under Section 16.4 of that certain February 10, 1999 Amended and Restated
      Operating Agreement between VIE Acquisition Holdings LLC and Interplay, as
      amended."

X.    Miscellaneous.  The Agreement and this Amendment constitute the entire
      -------------
agreement between the parties on the subject matter hereof and thereof, and no
amendment of the terms

                                      -3-
<PAGE>

herein or therein shall be valid unless made in a writing signed by the parties.
California law shall govern the interpretation and enforcement of this Amendment
without regard to conflicts of laws principles. Unless otherwise defined herein,
terms used herein shall bear the same respective meanings ascribed to such terms
in the Agreement. Except as amended hereby, the Agreement remains in full force
and effect. This Amendment may be executed in counterparts.

     Wherefore, the parties hereto have executed this Amendment as of the date
first written above.

                                        "VIRGIN"

                                        Virgin Interactive Entertainment Limited



                                        By:  /s/ Herve Caen
                                            ------------------------------------

                                        Its:      Authorized Officer
                                            ------------------------------------

                                        "INTERPLAY"

                                        Interplay Entertainment Corp.



                                        By:  /s/ Brian Fargo
                                            ------------------------------------

                                        Its:     Chief Executive Officer
                                            ------------------------------------

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