Sample Business Contracts


Affiliation Agreement for DBS Satellite Exhibition of Cable Programming [Amendment No. 4] - Playboy Entertainment Group Inc. and DirecTV Inc.



                FOURTH AMENDMENT TO AFFILIATION AGREEMENT FOR DBS
            SATELLITE EXHIBITION OF CABLE PROGRAMMING BY AND BETWEEN
              PLAYBOY ENTERTAINMENT GROUP, INC. AND DIRECTV, INC.

      This Fourth Amendment (the "Fourth Amendment") to that certain AFFILIATION
AGREEMENT FOR DBS SATELLITE EXHIBITION OF CABLE PROGRAMMING dated as of November
15, 1993 by and between Playboy Entertainment Group, Inc. ("Programmer") and
DirecTV, Inc. ("Affiliate"), as amended and supplemented, including by that
certain First Amendment dated as of April 19, 1994, that certain Second
Amendment dated July 26, 1995, and that certain Third Amendment dated August 26,
1997 (such Affiliation Agreement, as amended and supplemented, is referred to as
the "Agreement"), is made and entered into as of March 15, 1999, with reference
to the following facts (all defined terms used in this Fourth Amendment but not
defined in this Fourth Amendment are defined in the Agreement):

      A.    Affiliate currently exercises reasonable commercial efforts to
            maximize the number of Service Subscribers and Gross Receipts. Such
            efforts currently include exhibiting in excess of four hundred (400)
            thirty (30)-second cross-channel promotional advertising spots (the
            "Cross-Channel Spots") for each month of the Term, and in excess of
            Two Thousand Four Hundred (2,400) thirty (30) and/or sixty (60)
            second promotional advertising spots for each month of the Term on
            Affiliate's pay-per-view preview channel (the "Preview Channel
            Spots"), all at no charge to Programmer. Affiliate and Programmer
            mutually determine in their reasonable business judgment the other
            Affiliate channels over which to exhibit the Cross-Channel Spots,
            based on whether such other channels have a likely target audience
            for the Service and are not channels where the Cross-Channel Spots
            might be objectionable to the DirecTV viewing audience. Such channel
            selection for the Cross-Channel Spots also is subject to third party
            programmers' limitations on adult-oriented promotional spots.

      B.    Affiliate currently participates in and promotes at least one (1) of
            Programmer's national free or discounted preview promotions each
            calendar year of the Term.

      C.    Affiliate currently promotes Programmer and the Service in each of
            Affiliate's monthly printed pay-per-view bill inserts at no cost to
            Programmer.


                                                                               1
<PAGE>

      D.    Affiliate currently lists the program titles and program
            descriptions of the Service in printed and electronic program
            guides.

      E.    Pursuant to a Merger Agreement dated as of May 29, 1998, Playboy
            Enterprises, Inc. has agreed to merge (the "Merger") with Spice
            Entertainment Companies, Inc.

      Accordingly, for good and valuable consideration, the receipt and adequacy
of which hereby is acknowledged, Affiliate and Programmer hereby amend,
supplement and ratify the Agreement as follows:

      1. Continuation of Efforts. Affiliate shall continue to exercise
      reasonably similar levels of commercial efforts to maximize the number of
      Service Subscribers and Gross Receipts as Affiliate currently exercises,
      and Affiliate agrees to perform the same type of promotional activities
      referred to in Paragraphs A through D above throughout the remainder of
      the Term; provided, however, that Affiliate shall not be obligated to
      exhibit in any particular month of the Term any minimum number of
      Cross-Channel Spots or Preview Channel Spots.

      2. Term Extension. The current Term of the Agreement hereby is extended to
      March 31, 2002.

      3. Revised Exhibit A. Conditioned on the consummation of the Merger on or
      before March 31, 1999, and further conditioned on the satisfaction of the
      following conditions (the "Discount Conditions") at all times during the
      applicable calendar month, the Exhibit A of the Agreement, "Programmer's
      Rate Card for Non-Hotel/Motel Distribution," hereby is amended and revised
      for all PPV Offerings and all Subscription Offerings transacted in a
      particular calendar month on or after April 1, 1999, to read as set forth
      in the attached Revised Exhibit A, in replacement of any other Exhibit A
      to the Agreement for such calendar month:

      (a) ***

      (b) Affiliate offers the Service for reception on a digital basis to a
      minimum of four million (4,000,000) DirecTV Subscribers who are capable of
      ordering the Service on both a PPV Offerings and a Subscription

----------
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.


                                                                               2
<PAGE>

      Offerings basis (such a DirecTV Subscriber is referred to as an "Eligible
      Service Customer").

      (c) Affiliate uses commercially reasonable efforts to offer the Service
      for reception to one hundred percent (100%) of all DirecTV Subscribers in
      residential households via the DBS Distribution System (subject only to,
      in the case of PPV Offerings, such households maintaining a land-based
      phone line necessary to purchase impulse pay-per-view programming),
      twenty-four (24) hours per day, seven (7) days per week, on both a PPV
      Offerings and a Subscription Offerings basis, except where not offered
      solely on account of obscenity concerns, or where Affiliate's distribution
      may be limited (in geographical scope or hours per day) in Affiliate's
      reasonable business judgment, based on applicable and binding state or
      federal law restricting distribution of "indecent" material, or otherwise
      pursuant to Section 17 of the Agreement.

      (d) Affiliate establishes and maintains the "Co-Op Marketing Funds"
      defined in Paragraph 4 below.

      4. Co-Op Marketing Funds. Commencing with Affiliate's monthly reporting
      period under the Agreement for the month of April 1999, Affiliate shall
      set aside in a separate accounting entry, a sum equal to one percent (1%)
      of all Gross Receipts for such monthly reporting period and all subsequent
      monthly reporting periods during the Term (the "Co-Op Marketing Funds").
      Affiliate and Programmer agree with respect to the Co-Op Marketing Funds
      as follows:

      (a) The Co-Op Marketing Funds for a particular monthly reporting period
      shall not be included in the Gross Receipts used for calculating the
      applicable percentage of Gross Receipts retained by Affiliate and payable
      to Programmer for such monthly reporting period under the Agreement, and
      instead shall be treated as an "off-the-top" deduction for purposes of
      such calculations.

      (b) The Co-Op Marketing Funds shall be used to pay for certain marketing
      activities and expenditures undertaken by Affiliate and Programmer to
      promote the sale of the Service, such as print advertisements in program
      guides, customized on-air promotional advertisements, customer service
      representative incentive contests, sales incentive premiums, retention or
      promotional direct mail efforts and specific retail subscription efforts
      including such support for the


                                                                               3
<PAGE>

      promotions in preamble A, all as mutually determined and agreed or later
      confirmed in writing by Affiliate and Programmer.

      (c) Affiliate shall administer and account for the Co-Op Marketing Funds
      in a manner mutually acceptable to Affiliate and Programmer, but whatever
      portion of the aggregate Co-Op Marketing Funds that has been accrued
      through the monthly reporting period for the month of December (or the
      last month of the Term in the event of early termination of the Agreement)
      of a particular calendar year of the Term but that has not actually been
      expended as of December 31 of such calendar year of the Term (or the last
      month of the Term in the event of early termination of the Agreement) on
      mutually agreed activities (including reserves for expenses accrued prior
      to December 31, as mutually agreed), based on a "first in, first out"
      accounting basis for the expenditures, shall be liquidated and paid to
      Affiliate and Programmer within thirty (30) days of such December 31 or
      earlier termination of the Agreement, in accordance with the applicable
      percentage split of Gross Receipts in effect for PPV Offerings and
      Subscription Offerings transacted in the calendar month corresponding to
      the monthly reporting period for which each particular portion of
      unexpended Co-Op Marketing Funds was first accrued.

      (d) Thus, commencing with the monthly reporting period for January of the
      calendar year 2000 and each calendar year or portion thereof thereafter
      during the Term, the Co-Op Marketing Funds shall start new yearly accruals
      from a zero balance, other than mutually agreed reserves from the prior
      year.

      (e) In addition to the Co-Op Marketing Funds, each of Affiliate and
      Programmer may elect in its discretion to fund other promotional efforts
      in connection with the Service, through Affiliate or otherwise, during the
      Term.

      5. No Other Amendment or Modification. Except as specifically provided in
      this Fourth Amendment, the Agreement is not otherwise modified in any
      respect, and as so modified by this Fourth Amendment, all terms and
      provisions of the Agreement are ratified and confirmed and shall remain in
      full force and effect.


                                                                               4
<PAGE>

      6. Counterparts. This Fourth Amendment may be executed in counterparts,
      each of which shall be deemed an original, and all of such counterparts
      taken together shall constitute one and the same instrument.

      IN WITNESS WHEREOF, Affiliate and Programmer have executed this Fourth
      Amendment through their respective duly authorized representatives as of
      March 15, 1999.


      ACCEPTED AND AGREED TO:


      PLAYBOY ENTERTAINMENT GROUP, INC.   DIRECTV, INC.


       By: /s/ Douglas H. Lindquist            By: /s/ Michael Thornton
           --------------------------------        -----------------------------
           Douglas H. Lindquist                    Michael Thornton
           Executive Vice President                Vice President
           Satellite Sales and                     Program Acquisition
           International Network Operations


                                                                               5
<PAGE>

                      FOURTH AMENDMENT - REVISED EXHIBIT A
             PROGRAMMER'S RATE CARD FOR NON-HOTEL/MOTEL DISTRIBUTION

      Gross Receipts Split, Subject to the Discount Conditions and Co-Op
      Marketing Funds Allotment, as Applicable:

      Calendar Month of          Affiliate's Share of     Programmer's Share
      PPV Offering or            Gross Receipts for       of Gross Receipts for
      Subscription Offering      PPV Offerings and        PPV Offerings and
                                 Subscription Offerings   Subscription Offerings

      April 1, 1999 through      ***                      ***
      December 31, 1999.

      January 1, 2000 through    ***                      ***
      the end of the Term,
      unless the 5.5MM Bonus
      Split (as defined below)
      is applicable.

      Beginning January 1,       ***                      ***
      2001, for all calendar
      months through the
      end of the Term in
      which the average
      number of Eligible
      Service Customers for
      such calendar month
      exceeds 5,500,000
      (the Gross Receipts
      split for each such
      calendar month is
      referred to as the
      "5.5MM Bonus Split").

----------
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.


                                                                               6

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<DESCRIPTION>PROGRAM SUPPLY AGREEMENT
<TEXT>


                                   SEI Inc ApS

                                  June 30, 1999

Mr. William Asher
Manager
SEI 1 ApS
c/o Budde Schou A/S
Vestigrade 31
DK - 1456
Copenhagen, DK

Re: Program Supply Agreement

Dear Bill:

      This letter will confirm the terms of our agreement (the "Agreement")
regarding the monthly slate of programming to be provided by SEI Inc ApS
("Licensor") to SEI 1 ApS ("Licensee"):

      1.    Monthly Programming Slate. Subject to paragraph 4, Licensee shall
            license certain feature-length movies (the "Pictures") each calendar
            month from Licensor during the Term (as defined below) of this
            Agreement. The Pictures that shall be the subject of this Agreement
            shall be those certain feature-length Pictures that are broadcast by
            the United States pay television networks currently identified as
            "Spice" and "Spice 2". In no event shall the minimum number of
            titles licensed to Licensee each month be less than twenty-nine (29)
            premieres for both networks.

      2.    Output Term. The term of this Agreement (the "Term") shall be March
            15, 1999 through March 14, 2009. The Term shall be automatically
            renewed for additional three (3) year periods at the expiration of
            the initial and any renewal Term unless one party delivers notice of
            termination to the other no later than ninety (90) days prior to the
            expiration of the initial or any renewal Term.

      3.    Picture Term. The term for each Picture licensed hereunder (the
            `Picture Term") shall be equivalent to the term that was granted to
            Licensor, provided that no Picture Term shall extend beyond the Term
            of this Agreement.

      4.    Rights. Licensor grants Licensee the exclusive right to broadcast,
            or to license a third party to broadcast, the "hot" or "enhanced"
            version of the Pictures, as those terms are currently commonly
            understood in the adult movie business, on the pay television
            networks currently identified as "The Hot Network" and "The Hot
            Zone" (individually "Service", collectively "Services") in the
            Territory (as defined below).

      5.    Territory. Licensee may exploit the Pictures in the fifty (50)
            United States, Canada (to the extent such rights are available), and
            all of their territories and possessions.

      6.    Exhibitions. Each Picture may be exhibited only simultaneously with
            the exhibition of the same Picture on "Spice", in the case of
            Pictures exhibited on "The Hot Network", and on "Spice 2", in the
            case of Pictures exhibited on "The Hot Zone", but in no event shall
            the number of permissible exhibitions be less than the number of
            times per month that a premiere airs on "Spice" or "Spice 2"
            respectively.


                                       1
<PAGE>

      7.    License Fee. The License Fee for the Pictures, as calculated over
            twelve (12) months, shall be the greater of the Combined Monthly
            Slate Fee over the twelve (12) month period, or the Minimum License
            Fee.

            a)    The Combined Monthly Slate Fee shall be calculated as follows:

                  1)    For each Service, the monthly license fee shall be the
                        sum of three (3) separate slate fees: Satellite, Analog
                        Cable and Digital Cable (see attached pricing grid).
                  2)    *** Year 1 shall be defined as March 15, 1999 to March
                        14, 2000, and each subsequent year shall run from March
                        15 to the following March 14.
                  3)    The Combined Monthly Slate Fee is the sum of six (6)
                        separate slate fees: three (3) for "The Hot Network" and
                        three (3) for "The Hot Zone".

            b)    The Minimum License Fee per year shall be as follows:

                  1)    ***
                  2)    ***
                  3)    ***

            Licensee shall pay no later than the fifteenth (15th) day of each
            month: 1) the slate fee for amounts collected for Analog and Digital
            Cable during the preceding month; 2) any slate fee amounts collected
            from Satellite as of the tenth (10th) of each month. Such payments
            shall be made by wire transfer to:

                              ABN AMRO Bank N.V.
                              Midtermolen 7
                              DK - 2100 Copenhagen O
                              Denmark
                              Account:     SEI Inc ApS
                              Account No.: 62059254

            In the event that Licensee's collections for Satellite arrive after
            the 10th of any given month, Licensee shall remit the slate fee
            applicable to Satellite within five (5) days of the receipt of such
            payment. At the end of each quarter ending March 31, June 30,
            September 30 and December 31, if the Combined Monthly Slate Fees
            paid to Licensor that quarter are less than the prorata Minimum
            License Fee payable that quarter, then Licensee shall true up the
            difference, provided that in no event shall such true up payment be
            greater than the amount necessary to achieve the prorata Minimum
            License Fee payable for the portion of the twelve (12) month period
            that has elapsed thus far.

            Twice per year, approximately September 15 and March 15, Licensor
            and Licensee shall review market conditions to determine whether the
            PVP Slate Fees need to be revised to account for changing market
            conditions. If so, Licensor and Licensee shall mutually agree upon
            such revised PVP Slate Fees.

            Subject to the immediately preceding paragraph, Licensor and
            Licensee have agreed upon the first four (4) years of PVP Slate
            Fees. At the end of such four (4) years, Licensor and Licensee shall
            agree upon new PVP Slate Fees for a period going forward, provided
            that the first year of such new PVP Slate Fees cannot be less than
            the PVP Slate Fees for the immediately preceding period (as revised
            per the above paragraph, if applicable).

----------
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.


                                       2
<PAGE>

            Licensor or its designated representative shall have the right to
            audit Licensee once every six (6) months during normal business
            hours. In the event that such audit reveals errors prejudicial to
            Licensor, all sums which may be due to Licensor as a result of such
            errors, plus interest at the prime rate in effect through the
            applicable period, shall be paid immediately, and in the event such
            audit reveals errors prejudicial to Licensor of an amount greater
            than five percent (5%), the cost of each such audit shall be
            entirely charged to Licensee.

      8.    Access to Masters. Licensee shall access the masters it needs
            directly from the producer of the Picture or storage facility for
            such producer (the "Producer"). In the event there is any charge for
            such dubs from the Producer, Licensee shall pay those charges
            directly to such Producer. After Licensee has created its "enhanced"
            or "hot" version, Licensee shall deliver such masters to Licensor's
            address and bill Licensor quarterly for such dubbing and delivery
            costs (at cost).

      9.    Materials. In the event that Licensee requires access to any
            materials other than the master for any Picture, Licensor shall
            facilitate such access, and the materials shall be provided to
            Licensee at no cost.

      10.   Child Protection Act Records. Licensor acknowledges that records are
            being kept in accordance with the Child Protection Restoration and
            Penalties Enhancement Act of 1990, where applicable. Licensor will
            furnish copies of the records for any Picture licensed hereunder
            upon Licensee's reasonable request.

      11.   Default. In the event Licensee is in default of any payment
            hereunder, Licensor shall notify Licensee in writing of such
            default. If such default is not cured within fifteen (15) business
            days of such notice, Licensor shall have the right to terminate this
            Agreement, and all Minimum License Fee amounts payable during the
            balance of the initial Term shall become immediately payable, and
            Licensor may seek equitable relief to obtain such payments. In the
            event this Agreement is terminated, all rights granted pursuant to
            this Agreement shall revert to Licensor.

      12.   Arbitration. If either party to this Agreement has any claim, right
            or cause of action against the other arising out of this Agreement
            which the parties shall be unable to settle by agreement between
            themselves, such claim, right or cause of action shall be determined
            by arbitration in accordance with the UNCITRAL Arbitration Rules.
            The American Arbitration Association shall serve as the appointing
            authority. Arbitration shall take place in the State of California,
            the United States of America and shall be conducted in the English
            language.

      13.   Miscellaneous.

            a)    Licensor and Licensee each represent that it has acquired all
                  rights necessary to enter into and perform this Agreement.

            b)    Neither Licensor nor Licensee shall disclose information
                  regarding this Agreement to any third party (affiliated
                  companies shall not be deemed third parties hereunder) except
                  to the extent necessary to comply with law or the valid order
                  of a court of competent jurisdiction; as part of its normal
                  reporting requirements including to auditors and attorneys, in
                  which case such persons shall agree to be bound by the
                  provisions of this subparagraph; and in order to enforce its
                  rights pursuant to this Agreement.

            c)    This Agreement shall be construed in accordance with the laws
                  of California and any action arising out of this Agreement
                  shall be tried in a court residing in Los Angeles, California.


                                       3
<PAGE>

            d)    This Agreement shall not constitute any relationship of
                  partnership, joint venture or agency between the parties.

      If the above accurately represents our agreement, please sign where
      indicated below. Upon your execution of this document, I will direct our
      counsel to begin preparing a long-form document. Until such time as that
      long-form is executed, however, this letter agreement shall be binding.

                                       Very truly yours,

                                       SEI INC ApS

      AGREED AND ACCEPTED:


                                       /s/ Alexandra Shepard
                                       -------------------------------
                                       Alexandra Shepard, Manager
      SEI 1 ApS


      /s/ William Asher
      -----------------------------
      William Asher, Manager


                                       4
<PAGE>

                                    Exhibit A

           ----------------------------------------------------------
                                  SEI Inc ApS
                                  -----------
           ----------------------------------------------------------

                       Per Viewer Programming Slate Fees:

                            Year 1     Year 2     Year 3     Year 4

            Cable Analog      ***        ***        ***        ***

            Cable Digital     ***        ***        ***        ***

            Satellite         ***        ***        ***        ***

           ----------------------------------------------------------


----------
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.


                                       5

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<DESCRIPTION>STOCK INCENTIVE PLAN
<TEXT>


                                                                    Exhibit 10.3

                              AMENDED AND RESTATED
                            PLAYBOY ENTERPRISES, INC.
                            1995 STOCK INCENTIVE PLAN

            Playboy Enterprises, Inc., a corporation organized under the laws of
the State of Delaware (the "Company"), hereby adopts this Amended and Restated
Playboy Enterprises, Inc. 1995 Stock Incentive Plan.

            The purposes of this Plan are as follows:

            (1) To further the growth, development and financial success of the
Company by providing additional incentives to certain of its key employees
through the ownership of Company stock and/or rights which recognize such
growth, development and financial success.

            (2) To enable the Company to obtain and retain the services of key
employees considered essential to the long-range success of the Company by
providing and offering them an opportunity to own stock in the Company and/or
rights which will reflect the growth, development and financial success of the
Company.

                                   ARTICLE 1.

                                   DEFINITIONS

            Whenever the following terms are used in this Plan they shall have
the meaning specified below, unless the context clearly indicates otherwise.

            Section 1.1 Board. "Board" shall mean the Board of Directors of the
Company.

            Section 1.2 Change of Control. "Change of Control" shall mean the
occurrence of any of the following events: (i) except in a transaction described
in clause (iii) below, Hugh M. Hefner, Christie Hefner, the Hugh M. Hefner 1991
Trust (for so long as Hugh M. Hefner and Christie Hefner are joint trustees or
one of them is sole trustee), and the Hugh M. Hefner Foundation (for so long as
Hugh M. Hefner and Christie Hefner are joint trustees or one of them is sole
trustee) cease collectively to own a majority of the total number of votes that
may be cast for the election of directors of the Company; or (ii) a sale of
Playboy magazine by the Company; or (iii) the liquidation or dissolution of the
Company, or any merger, consolidation or other reorganization involving the
Company unless (x) the merger, consolidation or other reorganization is
initiated by the Company, and (y) is one in which the stockholders of the
Company immediately prior to such reorganization become the majority
stockholders of a successor or ultimate parent corporation of the Company
<PAGE>
                                                                               2


resulting from such reorganization and (z) in connection with such event,
provision is made for an assumption of outstanding Options and rights or a
substitution thereof of a new Option or right in such successor or ultimate
parent of substantially equivalent value.

            Section 1.3 Code. "Code" shall mean the Internal Revenue Code of
1986, as amended.

            Section 1.4 Committee. "Committee" shall mean a committee of the
Board of Directors comprised of persons who are both non-employee directors
within the meaning of Rule 16b-3 which has been adopted by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, as
such rule or its equivalent is then in effect ("Rule 16b-3") and "outside
directors" within the meaning of Section 162(m) of the Code.

            Section 1.5 Common Stock. "Common Stock" shall mean the Class B
Common Stock, par value $.01 per share, of the Company.

            Section 1.6 Company. "Company" shall mean Playboy Enterprises, Inc.,
a Delaware corporation.

            Section 1.7 Deferred Stock. "Deferred Stock" shall mean Common Stock
awarded under Article VII of the Plan.

            Section 1.8 Director. "Director" shall mean a member of the Board.

            Section 1.9 Employee. "Employee" shall mean any officer or other
employee (as defined in accordance with the Regulations and Revenue Rulings then
applicable under Section 3401(c) of the Code) of the Company or any Subsidiary.

            Section 1.10 ERISA. "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.

            Section 1.11 Exchange Act. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.

            Section 1.12 Grantee. "Grantee" shall mean an Employee granted a
Performance Award, Stock Payment, Section 162(m) Performance Award, Section
162(m) Stock Payment, or an award of Deferred Stock or Section 162(m) Deferred
Stock, under this Plan.

            Section 1.13 Incentive Stock Option. "Incentive Stock Option" shall
mean an Option which conforms to the applicable provisions of Section 422 of the
Code and which is designated as an Incentive Stock Option by the Committee.
<PAGE>
                                                                               3


            Section 1.14 Non-Qualified Option. "Non-Qualified Option" shall mean
an Option which is not designated as an Incentive Stock Option by the Committee.

            Section 1.15 Officer. "Officer" shall mean an officer of the
Company.

            Section 1.16 Option. "Option" shall mean a stock option granted
under Article III of this Plan. An Option granted under this Plan shall, as
determined by the Committee, be either a Non-Qualified Stock Option or an
Incentive Stock Option.

            Section 1.17 Optionee. "Optionee" shall mean an Employee to whom an
Option is granted under the Plan.

            Section 1.18 Performance Award. "Performance Award" shall mean a
cash bonus, stock bonus or other performance or incentive award that is paid in
cash, Common Stock or a combination of both, awarded under Article VII of this
Plan.

            Section 1.18A Performance Criteria. "Performance Criteria" shall
mean objective performance criteria established pursuant to this Plan with
respect to awards of Section 162(m) Restricted Stock, Section 162(m) Performance
Awards, Section 162(m) Stock Payments and Section 162(m) Deferred Stock.
Performance Criteria shall be measured in terms of one or more of the following
objectives, described as such objectives relate to corporation-wide objectives
or objectives that are related to the performance of the individual Employee or
of the Subsidiary, division, department or function with the Company or
Subsidiary in which the participant is employed:

                        (i)     market value;

                        (ii)    book value;

                        (iii)   earnings per share;

                        (iv)    market share;

                        (v)     operating profit;

                        (vi)    net income;

                        (vii)   cash flow;

                        (viii)  return on capital;

                        (ix)    return on assets;

                        (x)     return on equity;
<PAGE>
                                                                               4


                        (xi)    margins;

                        (xii)   shareholder return;

                        (xiii)  sales or product volume growth;

                        (xiv)   productivity improvement; or

                        (xv)    costs or expenses.

            Each grant of Section 162(m) Restricted Stock, Section 162(m)
Performance Awards, Section 162(m) Stock Payments, and Section 162(m) Deferred
Stock shall specify the Performance Criteria to be achieved, a minimum
acceptable level of achievement below which no payment or award will be made,
and a formula for determining the amount of any payment or award to be made if
performance is at or above the minimum acceptable level but falls short of full
achievement of the specified Performance Criteria.

            If the Committee determines that a change in the business,
operations, corporate structure or capital structure of the Company, or the
manner in which it conducts its business, or other events or circumstances
render the Performance Criteria to be unsuitable, the Committee may modify such
Performance Criteria or the related minimum acceptable level of achievement, in
whole or in part, as the Committee deems appropriate and equitable; provided,
however, that no such modification shall be made if the effect would be to cause
the award to fail to qualify for the performance-based compensation exception to
Section 162(m) of the Code. In addition, at the time the award subject to
Performance Criteria is made and performance goals established, the Committee is
authorized to determine the manner in which the Performance Criteria will be
calculated or measured to take into account certain factors over which the
Employees have no or limited control including market related changes in
inventory value, changes in industry margins, changes in accounting principles,
and extraordinary changes to income.

            Section 1.19 Plan. "Plan" shall mean the Amended and Restated
Playboy Enterprises, Inc. 1995 Stock Incentive Plan.

            Section 1.20 Restricted Stock. "Restricted Stock" shall mean Common
Stock awarded under Article VII of this Plan.

            Section 1.21 Restricted Stockholder. "Restricted Stockholder" shall
mean an Employee granted an award of Restricted Stock under Article VI of this
Plan.

            Section 1.22 Secretary. "Secretary" shall the Secretary of the
Company.
<PAGE>
                                                                               5


            Section 1.22A 162(m) Deferred Stock. "Section 162(m) Deferred Stock"
shall mean Common Stock awarded under Article VII-A of this Plan.

            Section 1.22B Section 162(m) Performance Award. "Section 162(m)
Performance Award" shall mean a cash bonus, stock bonus, or other performance or
incentive award that is paid in cash, Common Stock or a combination of both,
awarded under Article VII-A of this Plan.

            Section 1.22C Section 162(m) Restricted Stock. "Section 162(m)
Restricted Stock" shall mean Common Stock awarded under Section VI-A of this
Plan.

            Section 1.22D Section 162(m) Restricted Stockholder. "Section 162(m)
Restricted Stockholder" shall mean an Employee granted an award of Section
162(m) Restricted Stock under Article VI-A of this Plan.

            Section 1.22E Section 162(m) Stock Payment. "Section 162(m) Stock
Payment" shall mean (i) a payment in the form of Common Stock, or (ii) an option
or other right to purchase shares of Common Stock, as part of a deferred
compensation arrangement, made in lieu of all or any portion of the
compensation, including without limitation, salary, bonuses and commissions,
that would otherwise become payable to a key Employee in cash, awarded under
Article VII-A of this Plan.

            Section 1.23 Securities Act. "Securities Act" shall mean the
Securities Act of 1933, as amended.

            Section 1.24 Stock Payment. "Stock Payment" shall mean (i) a payment
in the form of shares of Common Stock, or (ii) an option or other right to
purchase shares of Common Stock, as part of a deferred compensation arrangement,
made in lieu of all or any portion of the compensation, including without
limitation, salary, bonuses and commissions, that would otherwise become payable
to a key Employee in cash, awarded under Article VII-A of this Plan.

            Section 1.25 Subsidiary. "Subsidiary" shall mean any corporation in
an unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain then owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.

            Section 1.26 Termination of Employment. "Termination of Employment"
shall mean the time when the employee-employer relationship between the
Optionee, Grantee, Restricted Stockholder, or Section 162(m) Restricted
Stockholder and the Company or any Subsidiary is terminated, voluntarily or
involuntarily, for any reason, with or without Cause (as defined below),
including, but not by way of resignation, discharge, death, disability or
retirement, but excluding any
<PAGE>
                                                                               6


termination where there is a simultaneous reemployment by the Company or a
Subsidiary. The Committee, subject to the definition of Cause below, shall
determine the effect of all other matters and questions relating to Termination
of Employment, including, but not by way of limitation, the question of whether
particular leaves of absence constitute Terminations of Employment; provided,
however, that, with respect to Incentive Stock Options, a leave of absence shall
constitute a Termination of Employment if, and to the extent that, such leave of
absence interrupts employment for the purposes of Section 422(a)(2) of the Code
and the then applicable regulations and revenue rulings under said Section. For
purposes of the Plan, "Cause" shall mean an Employee's (a) gross negligence in
the performance of the responsibilities of such Employee's office or position;
(b) any act of dishonesty or moral turpitude materially adversely affecting the
Company or the Company's reputation; (c) commission of any other willful or
intentional act that could reasonably be expected to injure materially the
reputation, business or business relationships of the Company or any Subsidiary,
or (d) conviction of a felony or of any crime involving moral turpitude, fraud
or misrepresentation.

                                   ARTICLE 2.

                             SHARES SUBJECT TO PLAN

            Section 2.1 Shares Subject to Plan.

                  (a) The shares of stock subject to Options, or awards of
Restricted Stock, Section 162(m) Restricted Stock, Performance Awards, Section
162(m) Performance Awards, Deferred Stock, Section 162(m) Deferred Stock, Stock
Payments, or Section 162(m) Stock Payments shall be Common Stock. The aggregate
number of shares which may be issued upon exercise of such Options or rights or
upon any such awards under the Plan shall not exceed 3,703,000 shares of Common
Stock.

                  (b) The maximum number of shares of Common Stock which may be
subject to Options, rights or other awards granted under the Plan to any
Employee in any calendar year shall not exceed 250,000, and the method of
counting such shares shall conform to any requirements applicable to
performance-based compensation under Section 162(m) of the Code. The shares of
Common Stock issuable upon exercise of such Options or rights or upon any such
awards may be either previously authorized but unissued shares or treasury
shares.

                  (c) With regard to Section 162(m) Performance Awards that are
cash bonuses or other performance or incentive awards expressed as cash awards
(without regard to whether such bonuses or awards are ultimately paid in the
form of cash, stock, or a combination of both as descried in Section 7.7A), an
Employee may
<PAGE>
                                                                               7


not be granted during any calendar year such Section 162(m) Performance Awards
in an amount in excess of $1,000,000.

            Section 2.2 Unexercised Options and Awards. If any Option, or other
right to acquire shares of Common Stock under any other award under this Plan,
expires or is canceled without having been fully exercised (including Restricted
Stock, Section 162(m) Restricted Stock or any other award that is forfeited
before applicable vesting requirements are met or transfer restrictions have
lapsed), the number of shares subject to such Option or other right but as to
which such Option or other right was not exercised (or vested or delivered
without restriction, as the case may be) prior to its expiration or cancellation
may again be optioned, granted or awarded hereunder, subject to the limitations
of Section 2.1.

            Section 2.3 Adjustments in Outstanding Options or Rights. Subject to
Section 4.2(c), in the event that the outstanding shares of the Common Stock
subject to Options or other rights are changed into or exchanged for a different
number or kind of shares of the Company or other securities of the Company by
reason of a recapitalization, reclassification, stock split, stock dividend or
combination of shares or similar transaction, the Committee shall make an
appropriate and equitable adjustment in the number and kind of shares as to
which all outstanding Options or rights, or portions thereof then unexercised,
shall be exercisable, so that the Optionee's, Grantee's, Restricted
Stockholder's or Section 162(m) Restricted Stockholder's proportionate interest
shall be maintained. Such adjustments shall be made without change in the total
price applicable to the unexercised portion of the Option or right (except for
any change in the aggregate price resulting from rounding-off of share
quantities or prices) and with any necessary corresponding adjustment in price
per share; provided, however, that in the case of Incentive Stock Options, each
such adjustment shall be made in such manner as not to constitute a
"modification" within the meaning of Section 424(h)(3) of the Code. Any such
adjustment made by the Committee shall be final and binding upon all Optionees,
Grantees, Restricted Stockholders, Section 162(m) Restricted Stockholders, the
Company or any Subsidiary, their representatives and all other interested
persons. Such adjustments will also be made in determining Section 2.1
limitations on maximum number and kind of shares which may be issued on exercise
of Options, Restricted Stock, Section 162(m) Restricted Stock or other awards.
The shares of Class B Common Stock reserved under this Plan will be reduced as
Options, Restricted Stock, Section 162(m) Restricted Stock or other awards are
granted or issued so that the aggregate number of any single Class of Stock will
never exceed the total amount of shares authorized under the Plan.
<PAGE>
                                                                               8


                                   ARTICLE 3.

                               GRANTING OF OPTIONS

            Section 3.1 Eligibility. Any key Employee of the Company or a
Subsidiary except Hugh M. Hefner shall be eligible to be granted Options.

            Section 3.2 Qualification of Incentive Stock Options. No Incentive
Stock Option shall be granted unless such Option, when granted, qualifies as an
"incentive stock option" under Section 422 of the Code. Without limitation of
the foregoing, no person shall be granted an Incentive Stock Option under this
Plan if such person, at the time the Incentive Stock Option is granted, owns
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company unless such Incentive Stock Option
conforms to the applicable provisions of Section 422 of the Code.

            Section 3.3 Granting of Options.

                  (a) The Committee shall from time to time, in its absolute
discretion:

                        (i) Determine which Employees are "key Employees" and
            select from among the key Employees (including those to whom Options
            and/or rights have been previously granted under the Plan or any
            other stock- option or other plan of the Company) such of them as in
            its opinion should be granted Options; and

                        (ii) Determine for each Employee the number of shares to
            be subject to such Options; and

                        (iii) Determine whether such Options are to be Incentive
            Stock Options or Non-Qualified Options; and

                        (iv) Determine the terms and conditions of such Options,
            consistent with the Plan.

                  (b) Upon the selection of a key Employee to be granted an
Option, the Committee shall instruct the Secretary or other authorized officer
to execute and deliver a Stock Option Agreement, and may impose such conditions
on the grant of such Option as it deems appropriate, not inconsistent with this
Plan. Without limiting the generality of the preceding sentence, the Committee
may, in its discretion and on such terms as it deems appropriate, require as a
condition on the grant of an Option to an Employee that the Employee surrender
for cancellation some or all of the unexercised Options, awards of Restricted
Stock, Section 162(m) Restricted Stock,
<PAGE>
                                                                               9


Deferred Stock or Section 162(m) Deferred Stock, Performance Awards, Section
162(m) Performance Awards, Stock Payments or Section 162(m) Stock Payments or
other rights which have been previously granted to him. An Option, the grant of
which is conditioned upon such surrender, may have an Option price lower (or
higher) than the Option price of the surrendered Option, may cover the same (or
a lesser or greater) number of shares as the surrendered Option, may contain
such other terms as the Committee deems appropriate and be exercise in
accordance with its terms, without regard to the number of shares, price, Option
period or any other term or condition of such surrendered Option or award.

                  (c) Stock Option Agreements evidencing Incentive Stock Options
shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code. Any Incentive Stock Option
granted under this Plan may be modified by the Committee to disqualify such
option from treatment as an "incentive stock option" under Section 422 of the
Code.

                  (d) Options granted hereunder shall be consideration for the
future performance of services by the Optionee to the Company or a Subsidiary,
as applicable.

                                   ARTICLE 4.

                                TERMS OF OPTIONS

            Section 4.1 Option Price.

                  (a) The price of the shares subject to each Non-Qualified
Option shall not be less than 100% of the fair market value of such shares at
the end of the business day immediately preceding the day such Option is
granted.

                  (b) For purposes of the Plan, the fair market value ("Fair
Market Value") of a share of the Company's Common Stock as of a given date shall
be: (i) the closing price of a share of such class of the Company's Common Stock
on the principal exchange on which shares of the Company's Common Stock are then
trading, if any, on the day previous to such date, or, if shares were not traded
on the day previous to such date, then on the next preceding trading day during
which a sale occurred; or (ii) if such Common Stock is not traded on an exchange
but is quoted on NASDAQ or a successor quotation system, (1) the last sales
price (if the Company's Common Stock is then listed as a National Market Issue
under the NASD National Market System) or (2) the mean between the closing
representative bid and asked prices (in all other cases) for the Company's
Common Stock on the day previous to such date as reported by NASDAQ or such
successor quotation system or (iii) if such Common Stock is not publicly traded
on an exchange and not quoted on NASDAQ or a successor
<PAGE>
                                                                              10


quotation system, the mean between the closing bid and asked prices for the
Company's Common Stock, on the day previous to such date, as determined in good
faith by the Committee; or (iv) if the Company's Common Stock is not publicly
traded, the fair market value established by the Committee acting in good faith.

                  (c) The price of the shares subject to Incentive Stock Options
shall not be less than the greater of (i) 100% of the Fair Market Value of a
share of Common Stock on the date the Incentive Stock Option is granted, or (ii)
110% of the fair market value of a share of Common Stock on the date such
Incentive Stock Option is granted in the case of an individual then owning
(within the meaning of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or any Subsidiary.

            Section 4.2 Commencement of Exercisability; Change of Control.

                  (a) Subject to the provisions of Section 4.2(b) and 9.3,
Options shall become exercisable at such times and in such installments (which
may be cumulative) as the Committee shall provide in the terms of each
individual Option; provided, however, that by a resolution adopted after an
Option is granted the Committee may, on such terms and conditions as it may
determine to be appropriate and subject to Sections 4.2 and 9.3, accelerate the
time at which such Option or any portion thereof may be exercised; provided
further, however, that all outstanding Options shall become fully vested and
exercisable as of immediately prior to a Change of Control.

                  (b) No portion of an Option which is unexercisable at
Termination of Employment shall thereafter become exercisable, except as may be
otherwise provided by the Committee either in the Stock Option Agreement or in a
resolution adopted following the grant of the Option. Except as limited by
requirements of Section 422 of the Code and regulations and rulings thereunder
applicable to Incentive Stock Options, the Committee may extend the term of any
outstanding Option in connection with any Termination of Employment of the
Optionee, or amend any other term or condition of such Option relating to such a
termination.

                  (c) To the extent that the aggregate Fair Market Value of
stock with respect to which "incentive stock options" (within the meaning of
Section 422 of the Code, but without regard to Section 422(d) of the Code) are
exercisable for the first time by an Optionee during any calendar year (under
the Plan and all other incentive stock option plans of the Company and any
subsidiary) exceeds $100,000, such Options shall be treated as Non-Qualified
Options to the extent required by Section 422 of the Code. The rule set forth in
the preceding sentence shall be applied by taking Options into account in the
order in which they were granted. For
<PAGE>
                                                                              11


purposes of this Section 4.2(c), the Fair Market Value of stock shall be
determined as of the time the Option with respect to such stock is granted.

            Section 4.3 Expiration of Options.

                  (a) Unless an Option expires earlier or later pursuant to the
terms of a Stock Option Agreement, each Option may be exercised any time until
the first of the following events, after which such Option will become
unexercisable:

                        (i) The expiration of ten (10) years from the date the
            Option was granted if the Employee is still employed by the Company
            or any Subsidiary; or

                        (ii) The expiration of three (3) months from the
            Employee's Termination of Employment if such Termination of
            Employment results from such Employee's retirement or such
            Employee's being discharged not for Cause, unless the Employee dies
            within said three-month period; or

                        (iii) The effective date of (i) a Termination of
            Employment for Cause, (ii) the Employee's resignation, or (iii) a
            Change of Control specified in clause (iii) of the definition of
            such term; or

                        (iv) In the case of an Optionee who is disabled (within
            the meaning of Section 22(e)(3) of the Code), the expiration of one
            (1) year from the date of the Optionee's Termination of Employment;
            provided, however, that subsection (iv) shall not apply if the
            Optionee dies within said one-year period; or

                        (v) One (1) year from the date of the Optionee's death.

                  (b) Subject to the provisions of Section 4.3(a), the Committee
shall provide, in the terms of each individual Option, when such Option expires
and becomes unexercisable; and (without limiting the generality of the
foregoing) the Committee may provide in the terms of individual Options that
said Options expire immediately upon a Termination of Employment for any reason.

                  (c) The term of any Incentive Stock Option shall not be more
than five (5) years from such date if the Incentive Stock Option is granted to
an individual then owning (within the meaning of Section 424(d) of the Code)
more than 10% of the total combined voting power of all classes of capital stock
of the Company or any Subsidiary.

            Section 4.4 No Right to Continued Employment. Nothing in this Plan
or in any Stock Option Agreement hereunder shall confer upon any Optionee any
right
<PAGE>
                                                                              12


to continue in the employ of the Company or any Subsidiary or as a director of
the Company, or shall interfere with or restrict in any way the rights of the
Company and any of its Subsidiaries, which are hereby expressly reserved, to
discharge any Optionee at any time for any reason whatsoever, with or without
Cause.

            Section 4.5 Reload Options. Options may, in the discretion of the
Committee, be granted under the Plan to permit a participant to reacquire any
shares such participant delivered to the Company as payment of the exercise
price (as described in Section 5.3) in connection with the exercise of an Option
hereunder or to reacquire any shares retained by the Company to satisfy the
participant's withholding obligation in connection with the exercise of an
Option hereunder (a "Reload Option"). The terms of a Reload Option shall be
identical in all material respects to the terms of the Option as to which such
Reload Option was granted, provided, however, that the exercise price for each
share granted under the Reload Option shall be the Fair Market Value of a share
at the time such Reload Option is granted.

                                   ARTICLE 5.

                               EXERCISE OF OPTIONS

            Section 5.1 Person Eligible to Exercise.

                  (a) Subject to Section 5.1(b), during the lifetime of an
Optionee, only such Optionee may exercise an Option (or any portion thereof)
granted to such Optionee. After the death of the Optionee, any exercisable
portion of an Option may, within the time frame allowed, be exercised by his
personal representative or by any person empowered to do so under the deceased
Optionee's will or under the then applicable laws of descent and distribution.
To the extent Rule 16b-3 as then in effect permits transfers of Options, the
Committee may approve such transfers in its discretion.

                  (b) Should the Optionee be determined under applicable law to
have become a disabled person or the equivalent thereof, the then-vested portion
of the Option may, prior to the time when such Option becomes unexercisable
pursuant to the Plan or the applicable Stock Option Agreement, be exercised by
the Optionee's guardian or by any other person empowered to do so under the then
applicable laws of guardianship. For purposes of this Section 5.1(b), "disabled
person" shall mean a person who (1) because of mental deterioration or physical
incapacity is not fully able to manage such person's person or estate or (ii) is
mentally ill and who because of such person's mental illness is not fully able
to manage such person's person or estate.

            Section 5.2 Partial Exercise. An exercisable Option may be exercised
in whole or in part. However, an Option shall not be exercisable with respect to
<PAGE>
                                                                              13


fractional shares and the Committee may require that, by terms of the Option, a
partial exercise be with respect to a number of shares.

            Section 5.3 Manner of Exercise. All or a portion of an exercisable
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company or the Secretary's office:

                  (a) A written notice signed by the Optionee (or other person
then entitled to exercise such Option or portion), stating that such Option or
portion thereof is being exercised and such notice complies with all applicable
rules established by the Committee; and

                  (b) Payment in full for the exercised shares:

                        (i) In cash or by certified or cashier's check; or

                        (ii) In shares of the same class of the Company's Common
            Stock owned by the Optionee; provided, however, that the Optionee
            may use Common Stock in payment of the exercise price only if the
            shares so used are considered "mature" for purposes of generally
            accepted accounting principles, i.e., (x) they have been held by the
            Optionee free and clear for at least six months prior to the use
            thereof to pay part of an Option exercise price, (y) they have been
            purchased by the Optionee in other than a compensatory transaction,
            or (z) they meet any other requirements for "mature" shares as may
            exist on the date of the use thereof to pay part of an Option
            exercise price, as determined by the Committee; further provided,
            however, that the Optionee may use Common Stock in payment of the
            exercise price by means of attestation to the Company of his
            ownership of sufficient shares in a manner reasonably acceptable to
            the Committee. Shares actually delivered to the Company (i.e.,
            shares for which the attestation mechanism is not used) must be duly
            endorsed for transfer to the Company. Shares used to pay all or part
            of the Option exercise price pursuant to this provision will be
            credited at their Fair Market Value on the date of delivery; or

                        (iii) With the consent of the Committee and at the sole
            discretion of the Company, by a full recourse promissory note
            bearing interest (at no less than such rate as shall then preclude
            the imputation of interest under the Code or successor provision)
            and payable upon such terms as may be prescribed by the Committee.
            The Committee may also prescribe the form of such note and the
            security to be given for such note. No Option may, however, be
            exercised by delivery of a promissory note or by a loan from the
            Company when or where such loan or other extension of credit is
            prohibited by law; or
<PAGE>
                                                                              14


                        (iv) Any combination of the consideration provided in
            the foregoing subsections (i), (ii), and (iii); or

                        (v) To the extent permitted by law (including then
            existing interpretations of Rule 16b-3) a "cashless exercise
            procedure" satisfactory to the Committee which permits the Optionee
            to deliver an exercise notice to a broker-dealer, who then sells the
            Option shares, delivers the exercise price and withholding taxes to
            the Company and

                        (vi) delivers the excess funds less commission and
            withholding taxes to the Optionee; and
<PAGE>
                                                                              15


                  (c) Such representations and documents as the Committee, in
its absolute discretion, deems necessary or advisable to effect compliance with
all applicable provisions of the Securities Act and any other federal or state
securities laws or regulations. The Committee may, in its absolute discretion,
also take whatever additional actions it deems appropriate to effect such
compliance including, without limitation, placing legends on share certificates
and issuing stop-transfer orders to transfer agents and registrars; and

                  (d) Appropriate proof of the right of such person or persons
to exercise the option or portion thereof in the event that the Option or
portion thereof shall be exercised pursuant to Section 5.1 by any person or
persons other than the Optionee; and

                  (e) Full payment of all amounts which, under federal state or
local law, it is required to withhold upon exercise of the Option. With the
consent of the Committee, shares of the Company's Common Stock owned by the
Employee duly endorsed for transfer or shares of the Company's Common Stock
issuable to the Employee upon exercise of the Option, valued in accordance with
Section 4.1(b) of the Plan at the date of Option exercise, may be used to make
all or part of such payment.

            Section 5.4 [RESERVED]

            Section 5.5 Additional Conditions to Issuance of Stock Certificates.
The shares of Common Stock able and deliverable upon the exercise of an Option
shall be fully paid and non-assessable. In addition to satisfaction of the
conditions specified in Section 5.3 and, the Company shall not be required to
issue or deliver any certificate or certificates for shares of stock purchased
upon the exercise of any Option or portion thereof prior to fulfillment of all
of the following conditions:

                  (a) The completion of any registration or other qualification
of such shares under any state or federal law or under the rulings or
regulations of the Securities and Exchange Commission or of any other
governmental regulatory body, which the Committee shall, in its absolute
discretion, deem necessary or advisable; and

                  (b) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shalt in its absolute
discretion, determine to be necessary or advisable; and

                  (c) The lapse of such reasonable period of time following the
exercise of the Option as the Committee or Board may establish from time to time
for reasons of administrative convenience.

            Section 5.6 Rights as Stockholders. The holders of Options shall not
be, nor have any of the rights or privileges of, stockholders of the Company in
respect of any shares purchasable upon the exercise of any part of an Option
unless and until
<PAGE>
                                                                              16


certificates representing such shares have been issued by the Company to such
holders or the Company's stock record books reflect the Optionee as a
stock-holder pursuant to any book entry procedure approved by the Secretary.

            The Committee, in its absolute discretion, may impose such other
restrictions on the transferability of the shares purchasable upon the exercise
of an Option as it deems appropriate. Any such other restriction shall be set
forth in the respective Stock Option Agreement and may be referred to on the
certificates evidencing such shares. The Committee may require the Employee to
give the Company prompt notice of any disposition of shares of Common Stock,
acquired by exercise of an Incentive Stock Option, within (i) two years from the
date of granting such Option or (ii) one year after the transfer of such shares
to such Employee. The Committee may direct that the certificates evidencing
shares acquired by exercise of an Option refer to such requirement to give
prompt notice of disposition.

                                   ARTICLE 6.

                            AWARD OF RESTRICTED STOCK

            Section 6.1 Award of Restricted Stock.

                  (a) The Committee shall from time to time, in its absolute
discretion:

                        (i) Select from among the key Employees (including
            Employees who have previously received other awards under this Plan
            or any other stock option plan of the Company) such of them as in
            its opinion should be awarded Restricted Stock; and

                        (ii) Determine the purchase price, if any, and other
            terms and conditions applicable to such Restricted Stock, consistent
            with this Plan.

                  (b) In all cases, legal consideration meeting the requirements
of Delaware law shall be required for each issuance of Restricted Stock.

                  (c) Upon the selection of a key Employee to be awarded
Restricted Stock, the Committee shall instruct the Secretary of the Company to
issue such Restricted Stock and may impose such conditions on the issuance of
such Restricted Stock as it deems appropriate.

            Section 6.2 Restricted Stock Agreement. Restricted Stock shall be
issued only pursuant to a written Restricted Stock Agreement, which shall be
executed by the selected key Employee and an authorized officer of the Company
and which
<PAGE>
                                                                              17


shall contain such terms and conditions as the Committee shall determine,
consistent with this Plan.

            Section 6.3 No Right to Continued Employment. Nothing in this Plan
or in any Restricted Stock Agreement hereunder shall confer on any Restricted
Stockholder any right to continue in the employ of the Company or any Subsidiary
or shall interfere with or restrict in any way the rights of the Company and any
Subsidiary, which are hereby expressly reserved, to discharge any Restricted
Stockholder at any time for any reason whatsoever, with or without good cause.

            Section 6.4 Rights as Stockholders. Upon delivery of any shares of
Restricted Stock that are certificated to the escrow holder pursuant to Section
6.7, and upon issuance thereof, if uncertificated, the Restricted Stockholder
shall have, unless otherwise provided by the Committee, all the rights of a
stockholder with respect to said shares, subject to the restrictions in the
Restricted Stock Agreement, including the right to receive all dividends and
other distributions paid or made with respect to the shares; provided, however,
that in the discretion of the Committee, any extraordinary distribution with
respect to the Common Stock shall be subject to the restrictions set forth in
Section 6.5.

            Section 6.5 Restrictions. All shares of Restricted Stock issued
under this Plan (including any shares received by holders thereof with respect
to shares of Restricted Stock as a result of stock dividends, stock splits or
any other form of recapitalization) shall, in the terms of each individual
Restricted Stock Agreement, be subject to such restrictions as the Committee
shall provide, which restrictions may include, without limitation, restrictions
concerning voting rights and transferability and restrictions based on duration
of employment with the Company or a Subsidiary, Company performance, individual
performance, or a change of control; provided, however, that by a resolution
adopted after the Restricted Stock is issued, the Committee may, on such terms
and conditions as it may determine to be appropriate, remove any or all of the
restrictions imposed by the terms of the Restricted Stock Agreement. Restricted
Stock may not be sold or encumbered until all restrictions are terminated or
expire. Unless provided otherwise by the Committee, if no consideration (other
than services) was paid by the Restricted Stockholder upon issuance, a
Restricted Stockholder's rights in unvested Restricted Stock shall lapse upon
Termination of Employment for any reason at any time or prior to any date the
Committee may establish.

            Section 6.6 Repurchase of Restricted Stock. If consideration (other
than services) was paid for Restricted Stock, the Committee shall provide in the
terms of each individual Restricted Stock Agreement that the Company shall have
the right to repurchase from the Restricted Stockholder the Restricted Stock
then subject to restrictions under the Restricted Stock Agreement immediately
upon a Termination of Employment at a cash price per share equal to the price
paid by the Restricted Stockholder for such Restricted Stock or such other price
as may be specified in the
<PAGE>
                                                                              18


Restricted Stock Agreement; provided, however, that provision may be made in the
Restricted Stock Agreement in the Committee's discretion that no such right of
repurchase shall exist in the event of a Termination of Employment without
Cause, or following a Change in Control of the Company or because of the
Restricted Stockholder's retirement, death or disability, or otherwise.

            Section 6.7 Escrow. The Secretary of the Company or such other
escrow holder as the Committee may appoint shall retain physical custody of each
certificate representing Restricted Stock until all of the restrictions imposed
under the Restricted Stock Agreement with respect to the shares evidenced by
such certificate expire or shall have been removed (or the Secretary shall
establish book entry procedures sufficient to prevent unauthorized transfers of
the Restricted Stock).

            Section 6.8 Legend. In order to enforce the restrictions imposed
upon shares of Restricted Stock hereunder, the Committee shall cause a legend or
legends to be placed on certificates representing all certificated shares of
Restricted Stock that are still Subject to restrictions under Restricted Stock
Agreements, or stop transfer instructions with respect to book entry procedures,
which legend, legends or instructions shall make appropriate reference to the
conditions imposed hereby.

                                  ARTICLE VI- A

                    AWARD OF SECTION 162(m) RESTRICTED STOCK

            Section 6.lA Award of Section 162(m) Restricted Stock.

                  (a) The Committee shall from time to time, in its absolute
discretion:

                        (i) Select from among the key Employees (including
            Employees who have previously received other awards under this Plan
            or any other stock option plan of the Company) such of them as in
            its opinion should be awarded Section 162(m) Restricted Stock; and

                        (ii) Determine the purchase price, if any, and other
            terms and conditions applicable to such Section 162(m) Restricted
            Stock, consent with this Plan.

                  (b) In all cases, legal consideration meeting the requirements
of Delaware law shall be required for each issuance of Section 162(m) Restricted
Stock.

                  (c) Upon the selection of a key Employee to be awarded Section
162(m) Restricted Stock, the Committee shall instruct the Secretary of the
Company to issue such Section 162(m) Restricted Stock and may impose such
<PAGE>
                                                                              19


conditions on the issuance of such Section 162(m) Restricted Stock as it deems
appropriate.

            Section 6.2A Section 162(m) Restricted Agreement. Section 162(m)
Restricted Stock shall be issued only pursuant to a written Section 162(m)
Restricted Stock Agreement, which shall be executed by the selected key Employee
and an authorized officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan.

            Section 6.3A No Right to Continued Employment. Nothing in this Plan
or in any Section 162(m) Restricted Stock Agreement hereunder shall confer on
any Section 162(m) Restricted Stockholder any right to continue in the employ of
the Company or any Subsidiary or shall interfere with or restrict in any way the
rights of the Company and any Subsidiary, which are hereby expressly reserved,
to discharge any Section 162(m) Restricted Stockholder at any time for any
reason whatsoever, with or without good cause.

            Section 6.4A Rights as Stockholders. Upon delivery of any shares of
Section 162(m) Restricted Stock that are certificated to the escrow holder
pursuant to Section 6.7A, and upon issuance thereof, if uncertificated, the
Section 162(m) Restricted Stockholder shall have, unless otherwise provided by
the Committee, all the rights of a stockholder with respect to said shares,
subject to the restrictions in the Section 162(m) Restricted Stock Agreement,
including the right to receive all dividends and other distributions paid or
made with respect to the shares; provided, however, that in the discretion of
the Committee, any extraordinary distribution with respect to the Common Stock
shall be subject to the restrictions set forth in Section 6.5A.

            Section 6.5A Restrictions. All shares of Section 162(m) Restricted
Stock issued under this Plan (including any shares received by holders thereof
with respect to shares of Section 162(m) Restricted Stock as a result of stock
dividends, stock splits or any other form of recapitalization) shall, in the
terms of each individual Section 162(m) Restricted Stock Agreement, be subject
to such restrictions as the Committee shall provide, which restrictions may
include, without limitation, restrictions concerning voting rights and
transferability. The Section 162(m) Restricted Stock Agreement shall provide
that a Section 162(m) Restricted Stockholder's rights in Section 162(m)
Restricted Stock shall not vest unless one or more specified Performance
Criteria established by the Committee shall have been achieved. Section 162(m)
Restricted Stock may not be sold or encumbered until all restrictions are
terminated or expire. Unless provided otherwise by the Committee, if no
consideration (other than services) was paid by the Section 162(m) Restricted
Stockholder upon issuance, a Section 162(m) Restricted Stockholder's rights in
unvested Section 162(m) Restricted Stock shall lapse upon Termination of
Employment for any reason at any time or prior to any date the Committee may
establish.
<PAGE>
                                                                              20


            Section 6.6A Repurchase of Section 162(m) Restricted Stock. If
consideration (other than services) was paid for Section 162(m) Restricted Stock
the Committee shall provide in the terms of each individual Section 162(m)
Restricted Stock Agreement that the Company shall have the right to repurchase
from the Section 162(m) Restricted Stockholder the Section 162(m) Restricted
Stock then subject to restrictions under the Section 162(m) Restricted Stock
Agreement immediately upon a Termination of Employment at a cash price per share
equal to the price paid by the Section 162(m) Restricted Stockholder for such
Section 162(m) Restricted Stock or such other price as may be specified in the
Section 162(m) Restricted Stock Agreement; provided, however, that provision may
be made in the Section 162(m) Restricted Stock Agreement in the Committee's
discretion that no such right of repurchase shall exist in the event of a
Termination of Employment without Cause, or following a Change in Control of the
Company or because of the Section 162(m) Restricted Stockholder's retirement,
death or disability, or otherwise.

            Section 6.7A Escrow. The Secretary of the Company or such other
escrow holder as the Committee may appoint shall retain physical custody of each
certificate representing Section 162(m) Restricted Stock until all of the
restrictions imposed under the Section 162(m) Restricted Stock Agreement with
respect to the shares evidenced by such certificate expire or shall have been
removed (or the Secretary shall establish book entry procedures sufficient to
prevent unauthorized transfers of the Section 162(m) Restricted Stock).

            Section 6.8A Legend. In order to enforce the restrictions imposed
upon shares of Section 162(m) Restricted Stock hereunder, the Committee shall
cause a legend or legends to be placed on certificates representing all
certificated shares of Section 162(m) Restricted Stock that are still subject to
restrictions under Section 162(m) Restricted Stock Agreements, or stop transfer
instructions with respect to book entry procedures, which legend, legends or
instructions shall make appropriate reference to the conditions imposed hereby.

                                   ARTICLE 7.

               PERFORMANCE AWARDS, DEFERRED STOCK, STOCK PAYMENTS

            Section 7.1 Performance Award. Any key Employee selected by the
Committee may be granted one or more Performance Awards. The value of such
Performance Awards may be linked to the market value, book value, net profits or
other measure of the value of Common Stock or other specific performance
criteria determined to be appropriate by the Committee, in each case on a
specified date or dates or over any period or periods determined by the
Committee, or may be based upon the appreciation in the market value, book
value, net profits or other measure of the value of a specified number of shares
of Common Stock over a fixed period or periods determined by the Committee. In
making such determinations, the Committee
<PAGE>
                                                                              21


shall consider (among such other factors as it deems relevant in light of the
specific type of award) the contributions, responsibilities and other
compensation of the particular key Employee.

            Section 7.2 Stock Payments. Any key Employee selected by the
Committee may receive Stock Payments in the manner determined from time to time
by the Committee. In particular, any person designated by the Committee as a
participant in the Company's Key Executive Incentive Bonus Plan (the "Bonus
Plan") or under the Company Service Award Program (the "Service Award Program")
in accordance with the terms thereof, and whose bonus or service award
thereunder is comprised wholly or partially in shares of Common Stock, shall be
deemed to have been selected to participate in this Plan, and shall receive such
Common Stock-denominated bonus as a Stock Payment in accordance with and under
the provisions of this Section 7.2. The number of shares shall be determined by
the Committee and may be based upon the Fair Market Value, book value, net
profits or other measure of the value of Common Stock or other specific
performance criteria determined appropriate by the Committee, determined on the
date such Stock Payment is made or on any date thereafter.

            Section 7.3 Deferred Stock. Any key Employee selected by the
Committee may be granted an award of Deferred Stock in the manner determined
from time to time by the Committee. The number of shares of Deferred Stock shall
be determined by the Committee and may be linked to the market value, book
value, net profits or other measure of the value of Common Stock or other
specific performance criteria, in each case on a specified date or dates or over
any period or periods determined by the Committee. Common Stock underlying a
Deferred Stock award will not be issued until the Deferred Stock award has
vested, pursuant to a vesting schedule or performance criteria set by the
Committee. Unless otherwise provided by the Committee, a Grantee of Deferred
Stock shall have no rights as a Company stockholder with respect to such
Deferred Stock until such time as the award has vested and the Common Stock
underlying, the award has been issued.

            Section 7.4 Performance Award Agreement, Deferred Stock Agreement,
Stock Payment Agreement. Each Performance Award, Deferred Stock Award and/or
Stock Payment shall be evidenced by a written agreement, which shall be executed
by the Grantee and an authorized Officer of the Company and which shall contain
such terms and conditions as the Committee shall determine, consistent with this
Plan.

            Section 7.5 Term. The term of a Performance Award Agreement,
Deferred Stock Award and/or Stock Payment shall be set by the Committee in its
discretion.

            Section 7.6 Exercise Upon Termination of Employment. A Performance
Award, Deferred Stock Award and/or Stock Payment is exercisable or payable only
while the Grantee is an Employee; provided that the Committee may
<PAGE>
                                                                              22


determine that the Performance Award, Deferred Stock Award and/or Stock Payment
may be exercised or paid subsequent to Termination of Employment without cause,
or following a Change in Control of the Company, or because of the Grantee's
death or disability.

            Section 7.7 Payment. Payment of the amount determined under Section
7.1 above shall be in cash, in Common Stock or a combination of both, as
determined by the Committee. To the extent any payment under this Article VII is
effected in Common Stock, it shall be made subject to satisfaction of all
provisions of Sections 5.3 and 5.5.

            Section 7.8 No Right to Continued Employment. Nothing in this Plan
or in any agreement hereunder shall confer on any Grantee any right to continue
in the employ of the Company or any Subsidiary or shall interfere with or
restrict in any way the rights of the Company and any Subsidiary, which are
hereby expressly reserved, to discharge any Grantee at any time for any reason
whatsoever, with or without good cause

                                  ARTICLE VII-A

                   SECTION 162(m) PERFORMANCE AWARDS, SECTION
              162(m) DEFERRED STOCK, SECTION 162(m) STOCK PAYMENTS

            Section 7.1A Section 162(m) Performance Awards. Any key Employee
selected by the Committee may be granted one or more Section 162(m) Performance
Awards. The right to a Section 162(m) Performance Award shall not vest unless
one or more specified Performance Criteria established by the Committee shall
have been achieved.

            Section 7.2A Section 162(m) Stock Payments. Any key Employee
selected by the Committee may be granted one or more Section 162(m) Stock
Payments. The right to a Section 162(m) Stock Payment shall not vest unless one
or more specified Performance Criteria established by the Committee shall have
been achieved.

            Section 7.3A Section 162(m) Deferred Stock. Any key Employee
selected by the Committee may be granted an award of Section 162(m) Deferred
Stock. An award of Section 162(m) Deferred Stock shall not vest unless one or
more specified Performance Criteria established by the Committee shall have been
achieved. Common Stock underlying a Section 162(m) Deferred Stock award will not
be issued until the Section 162(m) Deferred Stock award has vested. Unless
otherwise provided by the Committee, a Grantee of Section 162(m) Deferred Stock
shall have no rights as a Company stockholder with respect to such Section
162(m) Deferred Stock until such
<PAGE>
                                                                              23


time as the award has vested and the Common Stock underlying the award has been
issued.

            Section 7.4A Section 162(m) Performance Award Agreement, Section
162(m) Deferred Stock Agreement, Section 162(m) Stock Payment Agreement. Each
Section 162(m) Performance Award, Section 162(m) Deferred Stock Award and/or
Section 162(m) Stock Payment shall be evidenced by a written agreement, which
shall be executed by the Grantee and an authorized Officer of the Company and
which shall contain such terms and conditions as the Committee shall determine,
consistent with this Plan.

            Section 7.5A Term. The term of a Section 162(m) Performance Award
Agreement, Section 162(m) Deferred Stock Award and/or Section 162(m) Stock
Payment shall be set by the Committee in its discretion.

            Section 7.6A Exercise Upon Termination of Employment. A Section
162(m) Performance Award, Section 162(m) Deferred Stock Award and/or Section
162(m) Stock Payment is exercisable or payable only while the Grantee is an
Employee; provided that the Committee may determine that the Section 162(m)
Performance Award, Section 162(m) Deferred Stock Award and/or Section 162(m)
Stock Payment may be exercised or paid following a Change in Control of the
Company, or because of the Grantee's death or disability.

            Section 7.7A Payment. Payment of the amount determined under Section
7.1A above shall be in cash, in Common Stock or a combination of both, as
determined by the Committee. To the extent any payment under this Article VII-A
is effected in Common Stock, it shall be made subject to satisfaction of all
provisions of Sections 5.3 and 5.5.

            Section 7.8A No Right to Continued Employment. Nothing in this Plan
or in any agreement hereunder shall confer on any Grantee any right to continue
in the employ of the Company or any Subsidiary or shall interfere with or
restrict in any way the rights of the Company and any Subsidiary, which are
hereby expressly reserved, to discharge any Grantee at any time for any reason
whatsoever, with or without good cause.

                                   ARTICLE 8.

                                 ADMINISTRATION

            Section 8.1 Duties and Powers of Committee. It shall be the duty of
the Committee to conduct the general administration of the Plan in accordance
with its provisions. The Committee shall have the power to interpret the Plan
and the agreements pursuant to which Options, awards of Restricted Stock,
Deferred Stock,
<PAGE>
                                                                              24


Section 162(m) Restricted Stock or Section 162(m) Deferred Stock, Performance
Awards, Stock Payments, Section 162(m) Performance Awards, or Section 162(m)
Stock Payments are granted and awarded and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
herewith and to interpret, amend or revoke any such rules. Options, awards of
Section 162(m) Restricted Stock, Section 162(m) Deferred Stock, Section 162(m)
Performance Awards and Section 162(m) Stock Payments are intended to qualify as
performance-based compensation under Section 162(m) of the Code, and the
Committee shall grant or award such Options, rights or other awards in a manner
consistent with the rules Governing performance-based compensation under Section
162(m) of the Code. Any such interpretations and rules in regard to Incentive
Stock Options shall be consistent with the basic purpose of the Plan to grant
"incentive stock options" within the meaning of Section 422 of the Code. In its
absolute discretion, the Board may at any time and from time to time exercise
any and all rights and duties of the Committee under this Plan except with
respect to matters which under Rule 16b-3 or Section 162(m) of the Code, or any
regulations or rules issued thereunder, are required to be determined in the
sole discretion of the Committee.

            Section 8.2 Majority Rule. The Committee shall act by a majority of
its members in attendance at a meeting at which a quorum is present or by a
memorandum or other written instrument signed by all members of the Committee.

            Section 8.3 Compensation; Professional Assistance; Good Faith
Action. Members of the Committee shall receive such compensation for their
services as members as may be dated by the Board. All expenses and liabilities
incurred by members of the Committee in connection with the administration of
the Plan, shall be borne by the Company. The Committee may employ attorneys,
consultants, accountants, appraisers, brokers or other persons. The Committee,
the Company and its Officers and Directors shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All actions taken and all
interpretations and determination made by the Committee in good faith shall be
final and binding upon all Optionees, Grantees, Restricted Stockholders, Section
162(m) Restricted Stockholders, the Company and all other interested persons. No
member of the Committee shall be personally liable for any action,
determination, or interpretation made in good faith with respect to the Plan or
the Options or other awards, and all members of the Committee shall be fully
protected by the Company in respect to any such action, determination or
interpretation.

                                   ARTICLE 9.

                                OTHER PROVISIONS

            Section 9.1 Options and Other Rights Are Not Transferable. No
Options, Performance Awards, Stock Payments, Section 162(m) Performance Awards,
<PAGE>
                                                                              25


Section 162(m) Stock Payments, Restricted Stock, Section 162(m) Restricted
Stock, Deferred Stock Awards or Section 162(m) Deferred Stock Awards or interest
under this Plan or part thereof shall be liable for the debts, contracts or
engagements of any Optionee, Grantee, Restricted Stockholder or their respective
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law, by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that nothing in this
Section 9.1 shall prevent transfer by will, by the applicable laws of descent
and distribution or by the approval of the Committee as described in Section
5.1(a) of the Plan.

            Section 9.2 Amendment, Suspension or Termination of the Plan;
Modification of Options. The Board may at any time terminate the Plan. With the
express written consent of an individual participant, the Board or the Committee
may cancel or reduce or otherwise alter outstanding Options or other awards. The
Board or the Committee may, at any time, or from time to time, amend or suspend
and, if suspended, reinstate, the Plan in whole or in part; provided that any
such amendment shall be contingent on obtaining the approval of the shareholders
of the Company if the Committee determines that such approval is necessary to
comply with any requirement of law or any rule of any stock exchange on which
the Company's equity securities are traded, or in order for Options or other
awards to qualify for an exception from Section 162(m) of the Code (to the
extent they would so qualify but for the absence of shareholder approval).
Neither the amendment, suspension nor termination of the Plan shall, without the
consent of the holder of an Option, Restricted Stock, Section 162(m) Restricted
Stock or award, alter or impair any rights or obligations under any such Option,
Restricted Stock, Section 162(m) Restricted Stock or award. No Option,
Restricted Stock, Section 162(m) Restricted Stock or award may be granted during
any period of suspension nor after termination of the Plan, and in no event may
any Option be granted under this Plan after the expiration of ten years from the
date the Plan is approved by the Company's stockholders under Section 9.3. An
Option, Restricted Stock, Section 162(m) Restricted Stock or award shall be
subject in all events to the condition that, if at any time the Board shall
determine, in its discretion, that the listing, registration or qualification of
any of the Company's securities upon any securities exchange or under any law,
regulation or other requirement of any governmental authority is necessary or
desirable, or that any consent or approval from any governmental authority is
necessary or desirable, then the Board may modify the terms of any Option,
Restricted Stock, Section 162(m) Restricted Stock or other award granted under
the Plan, without the consent of the Optionee, Grantee, Restricted Stockholder
or Section 162(m) Restricted Stockholder in any manner which the Board deems
necessary or desirable in order to improve the Company's ability to obtain such
listing, registration, qualification, consent or approval.
<PAGE>
                                                                              26


            Section 9.3 Approval of Plan by Stockholders. The Plan shall become
effective as of the date of Board approval (the "Effective Date"), subject to
the approval of the Company's stockholders within 12 months after the Effective
Date; provided, however, that notwithstanding anything herein or in any award
agreement to the contrary, all Section 162(m) Performance Awards, Section 162(m)
Stock Payments, Section 162(m) Restricted Stock, and Section 162(m) Deferred
Stock awarded prior to such stockholder approval shall be void if such approval
has not been obtained at the end of said 12-month period.

            Section 9.4 Effect of Plan Upon Other Option and Compensation Plans.
The adoption of this Plan shall not affect any other compensation or incentive
plans in effect for the Company or any Subsidiary. Nothing in this Plan shall be
construed to limit the right of the Company or any Subsidiary (a) to establish
any other forms of incentives or compensation for employees of the Company or
any Subsidiary or (b) to grant or assume options otherwise than under this Plan
in connection with any proper corporate purpose, including, but not by way of
limitation, the grant or assumption of options in connection with the
acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, film or association.

            Section 9.5 No Obligation to Register. The Company shall not be
deemed, by reason of the granting of any Option or any other award hereunder, to
have any obligation to register the shares of Common Stock subject to such
Option or award under the Securities Act or to maintain in effect any
registration of such shares which may be made at any time under the Securities
Act.

            Section 9.6 Tax Withholding. The Company shall be entitled to
require payment in cash or deduction from other compensation payable to each
Optionee, Grantee, Restricted Stockholder or Section 162(m) Restricted
Stockholder of any sums required by federal, state or local tax law to be
withheld with respect to the issuance, vesting or exercise of any Option,
Restricted Stock, Deferred Stock, Performance Award, Stock Payment, Section
162(m) Restricted Stock, Section 162(m) Deferred Stock, Section 162(m)
Performance Award, or Section 162(m) Stock Payment.

            Section 9.7 Loans. The Committee may permit, in its discretion, and
subject to the Company's approval, the extension by the Company of one or more
loans to key Employees in connection with the exercise or receipt of an Option,
Performance Award, Stock Payment, Section 162(m) Performance Award, or Section
162(m) Stock Payment granted under this Plan, or the issuance of Restricted
Stock, Deferred Stock, Section 162(m) Restricted Stock, or Section 162(m)
Deferred Stock awarded under this Plan. The terms and conditions of any such
loan shall be set by the Committee, subject to the Company's approval.
<PAGE>
                                                                              27


            Section 9.8 Limitations Applicable to Section 16 Persons and
Performance-Based Compensation. Notwithstanding any other provision of this
Plan, any Option, Performance Award, Stock Payment, Section 162(m) Performance
Award, or Section 162(m) Stock Payment granted, or Restricted Stock, Deferred
Stock, Section 162(m) Restricted Stock, or Section 162(m) Deferred Stock
awarded, to a key Employee who is then subject to Section 16 of the Exchange
Act, shall be subject to any additional limitations set forth in any applicable
exemptive rule under Section 16 of the Exchange Act (including any amendment to
Rule 16b-3 of the Exchange Act) that are requirements for the application of
such exemptive rule, and this Plan shall be deemed amended to the extent
necessary to conform to such limitations. Furthermore, notwithstanding any other
provision of this Plan, any Option, right or award intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code
shall be subject to any additional limitations set forth in Section 162(m) of
the Code (including any amendment to Section 162(m) of the Code) or any
regulations or rulings issued thereunder that are requirements for qualification
as performance-based compensation as described in Section 162(m)(4)(C) of the
Code, and this Plan shall be deemed amended to the extent necessary to conform
to such requirements.

            Section 9.9 Compliance with Laws. This Plan, the granting and
vesting of Options, Restricted Stock awards, Deferred Stock awards, Performance
Awards, Stock Payments, Section 162(m) Restricted Stock awards, Section 162(m)
Deferred Stock awards, Section 162(m) Performance Awards, or Section 162(m)
Stock Payments under this Plan and the issuance and delivery of shares of Common
Stock and the payment of money under this Plan or under Options, Performance
Awards, Stock Payments, Section 162(m) Performance Awards, or Section 162(m)
Stock Payments granted or Restricted Stock, Deferred Stock, Section 162(m)
Restricted Stock, or Section 162(m) Deferred Stock awarded hereunder are subject
to compliance with all applicable federal and state laws, rules and regulations
(including but not limited to state and federal securities laws and federal
requirements) and to such approvals by any listing, regulatory or governmental
authority as may, in the opinion of counsel for the Company, be necessary or
advisable in connection therewith. Any securities delivered under this Plan
shall be subject to such restrictions, and the person acquiring such securities
shalt if requested by the Company, provide such assurances and representations
to the Company as the Company may deem necessary or desirable to assure
compliance with all applicable legal requirements. To the extent permitted by
applicable law, the Plan, Options, Restricted Stock awards, Deferred Stock
awards, Performance Awards, Stock Payments, Section 162(m) Restricted Stock
awards, Section 162(m) Deferred Stock awards, Section 162(m) Performance Awards,
or Section 162(m) Stock Payments granted or awarded hereunder shall be deemed
amended to the extent necessary to conform to such laws, rules and regulations.

            Section 9.10 Noncompetition Provisions. The Committee, as a
condition of issuing any award under the Plan, may include in any agreement
evidencing such award such noncompetition and/or nonsolicitation provisions as
it may
<PAGE>
                                                                              28


deem appropriate, in its sole discretion, and any award containing such
provisions shall not be effective until and unless the grantee thereof
acknowledges by written consent his or her obligation to be bound thereby.

            Section 9.11 Titles. Titles are provided herein for convenience only
and are not to serve as a basis for interpretation or construction of the Plan.

            Section 9.12 Governing Law. The laws of the State of Delaware shall
govern the interpretation, validity, administration, enforcement and performance
of the terms of this Agreement regardless of the law that might be applied under
principles of conflicts of laws.

<PAGE>
                                                                              29


            I hereby certify that the foregoing Plan was duly adopted by the
Board of Directors of Playboy Enterprises, Inc. on ________, 199_.

            Executed on this ____ day of ________, 199_.


                                    -------------------------
                                    Assistant Secretary


                                     * * * *

            I hereby certify that the foregoing Plan was duly approved by the
shareholders of Playboy Enterprises, Inc. on ___________, 199_.

            Executed on this ____ day of ___________, 199_.


                                    -----------------------
                                    Secretary

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<DESCRIPTION>EMPLOYEE STOCK PURCHASE PLAN
<TEXT>


                                                                    Exhibit 10.4

                                  Amendment to
                          the Playboy Enterprises, Inc.
                          Employee Stock Purchase Plan

1. Effective as of January 1, 1999, the first sentence of the first paragraph of
Section 2 of the ESPP shall be amended to read in its entirety as follows:

            The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors, comprised of persons who are both
non-employees directors within the meaning of Rule 16b-3 which has been adopted
by the Securities and Exchange Commission under the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, as such rule
or its equivalent is then in effect ("Rule 16b-3") and "outside directors"
within the meaning of Section 162(m) of the Code.

2. Effective as of April 1, 1999, Section 4(a) of the ESPP shall be amended to
substitute the number "15" for "10", wherever it appears in such paragraph.

3. Effective as of April 1, 1999, the second paragraph of Section 4(b) of the
ESPP shall be amended to read in its entirety as follows:

            For purposes of this Plan, the term "compensation" means an eligible
employee's bi-weekly compensation.

4. Effective as of January 1, 1999, Section 5 of the ESPP shall be amended to
substitute the number "140,000" for "50,000."

5. Effective as of April 1, 1999, Section 6(b) of the ESPP shall be amended to
substitute the number "15" for "10", wherever it appears in such paragraph.

6. Effective as of April 1, 1999, the second sentence of Section 6(b)(ii) of the
ESPP shall be amended to read in its entirety as follows:
<PAGE>

            An employee shall have the right to cancel his or her subscription
in whole and to obtain a refund of amounts withheld from his or her compensation
by submitting a written request to the Corporation at least 15 business days
before any Purchase Date.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>6
<DESCRIPTION>LETTER AGREEMENT
<TEXT>


                                                                    Exhibit 10.5

                            PLAYBOY ENTERPRISES, INC.

                                  May 24, 1999

Herb Laney
Playboy Enterprises, Inc.
680 North Lake Shore Drive
Chicago, IL. 60611

Dear Herb:

This is to confirm the following new compensation arrangements which we have put
in place for you:

1.    If all or any portion of the Catalog Group is sold during the term of your
      employment, you will receive two and one-half percent (2.5%) of the book
      gain which Playboy Enterprises, Inc. ("Playboy") realizes on such sale or
      sales. Book gain means the excess of the fair market value of the total
      consideration received by Playboy over the book value of the assets sold.
      You and Playboy have agreed on the amount of the approximate book value
      for the two Catalog Group businesses which are most likely to be sold
      (i.e., the "Critics' Choice" video and "Collectors' Choice" music
      businesses) as of June 30, 1998. That book value, and the corresponding
      calculation of the book gain, will be subject to adjustment for legal,
      investment banking and accounting fees incurred and to be incurred in
      connection with a sale or sales, as well as any other adjustments in
      accordance with generally accepted accounting principles. In the event of
      a partial sale, book value and all relevant adjustments will be allocated
      in a reasonable manner. Your 2.5% of book gain will be paid to you in cash
      when and as Playboy receives the consideration for the sale or sales.

2.    If the buyer of all or a portion of the Catalog Group does not hire you
      and Playboy terminates your employment, Playboy will pay you twelve (12)
      months severance at your then current salary.

3.    If you are offered a job by the buyer of all or a portion of the Catalog
      Group and you accept employment with that buyer, you will be entitled to
      receive from Playboy only the payment described in paragraph 1. above. If
      you choose not to work for that buyer, you will be entitled to terminate
      your employment with Playboy upon the closing of the sale of all or any
      portion
<PAGE>

May 24, 1999
Herb Laney
Page Two

      of the Catalog Group (the "Closing") and, if you so terminate, you will
      receive from Playboy twelve (12) months severance at your then current
      salary starting upon the Closing and payable monthly in accordance with
      Playboy's ordinary practices.

4.    In the event of a sale that results in your termination/separation from
      employment with Playboy, you will be entitled to exercise for three (3)
      months after the date of termination/separation those Playboy stock
      options in which you were fully vested on the effective date of the
      termination/separation.

5.    If your termination/separation from employment with Playboy occurs in the
      last quarter of our fiscal year, Playboy will also pay you a pro rata
      portion of your incentive compensation for that fiscal year (at the time
      incentive compensation is payable to other executives at Playboy).

If you agree that the foregoing properly describes the additional arrangements,
please sign, date and return to me the enclosed copy of this letter. You are
also, of course, welcome to call me with any questions about these arrangements.

                                           Very truly yours,

                                           PLAYBOY ENTERPRISES, INC.


                                           /s/ Howard Shapiro

                                           Howard Shapiro
                                           Executive Vice President

ACCEPTED AND AGREED TO:


/s/ Herb Laney
----------------------------
       Herb Laney


Date       6-2-99
----------------------------


ClubJuris.Com