Exhibit
10.3
 
 Portions
of this Exhibit have been omitted pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission.  The
omissions have been indicated by asterisks (“*****”), and the omitted text has
been filed separately with the Securities and Exchange Commission.


AMENDED
AND RESTATED


AFFILIATION
AND LICENSE AGREEMENT


FOR
DTHSATELLITE
EXHIBITION


OF PROGRAMMING
































PLAYBOY
TV, TWO ADULT MOVIE CHANNELS AND PLAYBOY TV EN ESPAÑOL


























DIRECTV, INC.





and





PLAYBOY ENTERTAINMENT GROUP, INC.
and


SPICE HOT ENTERTAINMENT,
INC.











AMENDED AND RESTATED


AFFILIATION AND LICENSE
AGREEMENT


FORDTHSATELLITE
EXHIBITION


OF PROGRAMMING








AMENDED AND RESTATED AGREEMENT
made as of August 1, 2007 (the “Effective Date”), by and
between PLAYBOY ENTERTAINMENT GROUP, INC.,  and SPICE HOT
ENTERTAINMENT, INC., each of which is a Delaware corporation having an office
located at Media Center Drive., Los Angeles, California 90065 (collectively
referred to herein as “Programmer”), and DIRECTV,
INC., a California corporation, having an office located at 2230 East Imperial Hwy., El Segundo,
California  90245 (“Affiliate”).





WITNESSETH:




WHEREAS, Affiliateand Programmer entered into a written
agreement entitledAmended
and RestatedAffiliationand LicenseAgreement for DTH Satellite Exhibition ofProgramming datedSeptember 16, 2006 (the “Current Playboy
Agreement”),whereby Programmer grantedAffiliatethe right to distributevarious televisionnetworks owned and operated by
Programmerthat feature
adult films, related programming and interstitial material(individually the “Service,” or
collectively the “Services”, as defined in Section
1(b)below) via the DTH
Distribution System (as
defined in Section 1(a)(ii)below) in the United States(the “Territory”) as
restricted herein;





WHEREAS, the parties desire to amend various terms
of the Agreement and herein restate the Agreement in its entirety; and




WHEREAS,
this Agreement supersedes all prior understandings and agreements relating to
the subject matter herein, including without limitation, the Current Playboy
Agreement and any amendments or extensions thereto;





NOW, THEREFORE, FOR GOOD AND VALUABLE
CONSIDERATION, THE RECEIPT AND ADEQUACY OF WHICH ARE HEREBY ACKNOWLEDGED, IT IS
MUTUALLY AGREED AS FOLLOWS:





1.           Grant of
Rights.





(a)       Distribution;
Certain Definitions.





(i)           Programmer hereby grants to
Affiliate, and Affiliate hereby accepts, the non-exclusive right to distribute
the Service in the Territory via the DTH Distribution System (as defined
below) to DIRECTV Subscribers
during the Term (as




2




defined in Section 6(a) below), as
follows: (i) with respect to the Playboy TV Service (as defined in Section 1(b)
below), distribution shall include residential subscribers, hotels, motels,
private offices, multiple dwelling facilities and oil rigs (provided, however,
that Affiliate shall not have the right to distribute the Service in any common
areas to which the public has free access) on a subscription (a la carte or
package) basis (the “Subscription
Offerings”) and on a
pay-per-view, pay-per-block and pay-per-night basis (collectively, the
“PPV
Offerings”), in blocks ofat least sixty (60) minutes each (or such period as the parties shall
agree) for up to twenty four (24) hours; provided, however, that any partial
exhibition of the Service which consistsonlyof motion pictures must be no shorter
than sixty (60) minutes (any block of time, a “PPV Program”); and (ii) with
respect to each ofMovie Channel 1, Movie Channel 2 and Playboy TV en
Español Services (as each is defined in Section 1(b) below), distribution may
include Subscription Offerings and PPV Offerings to residential subscribers, hotels, motels,
private offices, multiple dwelling facilities and oil rigs (provided, however,
that Affiliate shall not have the right to distribute the Service in any common
areas to which the public has free access).  Affiliate shall
determine in its sole discretion whether to sell Subscription Offerings on an a
la carte or package basis.  Affiliate shall have the non-exclusive
right to use the name of or logo for “Playboy TV,” “Club Jenna,” “Spice:Xcess,”
and “Playboy TV en Español” as such names or logos may be changed, altered and
amended by Programmer, or the names, titles or logos of the Service or any of
its programs, or the names, voices, photographs, music, likenesses or
biographies of any individual participant or performer in, or contributor to,
any program or any variations thereof, all of which are being licensed
exclusively for use in connection with the distribution, promotion, marketing
and sale of the Service as provided herein.  Any further use shall
require Affiliate’s notification to Programmer and Programmer’s written
approval, not to be unreasonably withheld.





(ii)          The
term “DTH Distribution System” shall mean the distribution system for video and
other programming services whereby the programming satellite signal or feed is
received from Programmer’s delivery source  by a DIRECTV turnaround
earth-station facility which compresses and processes the signal or feed and
then uplinks it to a DTH communications satellite (a “DTH Satellite”) for
transmission to DIRECTV Subscribers.  DTH Distribution System shall
also include any other method of distribution that Affiliate currently and/or
subsequently uses to deliver the Service feed(s) to DIRECTV Subscribers as part
of Affiliate’s provision of television services consisting of multi-channel
linear programming (which may be combined with other services), including,
without limitation, MMDS and territorial-based transmission infrastructures such
as Internet protocol (excluding distribution via the Internet or the World Wide
Web; provided that if at any time Programmer offers the right to distribute the
Service via the Internet or World Wide Web to any other distributor of the
Service, Programmer will offer the same rights on the same terms and conditions
to distribute the Service on the Internet or the World Wide Web to Affiliate)),
fiber optic, twisted pairs and coaxial cable, provided that in connection with
such delivery methods, Affiliate complies with the following:  (i) the
end users to whom Affiliate distributes the Service are DIRECTV
Subscribers;  (ii) the branding and packaging that is received by such
DIRECTV Subscribers is substantially the same as the branding and packaging
received by DIRECTV Subscribers that receive the Service via Affiliate’s direct
to home satellites.  During the Term (as defined in Section 6(a)), the
Service (as defined below)




3




shall
be distributed via a DTH Satellite at the orbital location which transmits to
the greatest number of DIRECTV Subscribers.  “DIRECTV Subscribers”
shall mean those customers (both residential and non-residential) authorized by
Affiliate to receive a DIRECTV branded DTH service via the DTH Distribution
System to a customer’s Set-Top Box (as defined below), provided that nothing
herein shall prohibit the transfer of Service programming by a DIRECTV
Subscriber from such Subscriber’s Set-Top Box to a portable viewing
device.  “Service Subscribers” shall mean DIRECTV Subscribers
authorized by Affiliateto receive
the Subscription Offerings and/or PPV Offerings.  "Internet"
shall mean the electronic communications network that connects computer networks
and organizational computer facilities around the world. "World Wide Web" means
the hypertext transfer protocol-based, distributed information system that
facilitates sharing information and content via the Internet.  A
“Set-Top Box” means a device that connects to, or is integrated as part of, a
television or other video output display device (“Display Device”) and also
connects to the source of Affiliate’s audio/visual signal, the content of which
then is displayed on the Display Device.





(iii)         *****





(iv)Affiliate
shall have the right, but not the obligation, exercisable in its absolute sole
discretion, to distribute the programming service commonly known as “Playboy en
Español” upon delivery to Programmer of not less than thirty (30) days prior
written notice thereof.  References throughout this Agreement to
Playboy en Español shall be applicable only upon Affiliate’s launch, if any, of
Playboy en Español via the DTH Distribution System.





(v)Affiliate shall be permitted to authorize satellite master antenna
television system (“SMATV”) operators (including
telephone companies and similar service providers) that serve multiple dwelling
unit buildings or complexes, commercial or business establishments with multiple
television viewing sites or master planned communities and the like to
distribute the Service in the Territory via such SMATV systems directly to end
users within such buildings or establishments for DTH reception only,provided, however, that:  (i)
such SMATV operator shall not have the right to distribute the Service in any
common areas to which the public has free access and (ii)Affiliate shall
be responsible for each such SMATV operator’s compliance with all the terms and
conditions of this Agreement including but not limited to, the service charge
due for each individual purchase of the Service, whether on a PPV Offering or
Subscription Offering basis.





(b)       The
Service.  The
“Service” shall, individually and collectively,
mean and consist of the national feed (or, ifProgrammer uses multiple
feeds for the Service for the purpose of serving multiple time zones, such other
of such multiple feeds designated by Affiliate) of the three programming
services described in clauses (i) through (iii) below, and Playboy TV en Español
and the VOD Service at such time, if any, that Affiliate elects to launch
Playboy TV en Español and/or the VOD Service.  Each Service, except
the VOD Service, shall be presented on a 24-hour per day, 7 days a week
schedule, as described below and in the “Descriptions and Limitations of the
Service,” attached hereto as Exhibit A.  The




4




Service
shall be delivered to Affiliate in its entirety, meaning that the programming
(including, without limitation, all other information related thereto (e.g.,
data)) on the Service as received by any Service Subscriber at a given point
intime shall be the same as the
programming received by all other subscribers to the Service at such point in
time (excluding insertions by individual video service providers to permit the
customization of a feed with respect topromoting suchvideo service providernot to exceed four minutes per hour;
provided that the insertions do not change the content of a Program, and only
preempt interstitial programming).In the event that Programmer grants
individual service providers the right to insert customized insertions as
provided hereinabove, Programmer shall notify Affiliate and Affiliate shall be
granted the same such rights.





(i)           Playboy TV.The programming service
commonly known as “Playboy TV” (“Playboy TV”) shall consist of
entertainment programming for adult audiences as more fully described in the
“Description and Limitation of the Services” Section attached hereto as Exhibit
A.    Affiliate shall refer toPlayboy TVas “Playboy TV,” or other name mutually
agreed to by the parties, and may listPlayboy TVon the program guide as“PBTV.”Affiliate shall include a
marketing description of Playboy TV in Affiliate’s programming guide that is
viewed by Subscribers that is mutually agreed upon by the parties.





(ii)          Movie
Channel 1.  The service known as “Movie Channel 1” (“Movie Channel
1”)  shall consist of entertainment programming for adult
audiences as more fully described in the “Description and Limitation of the
Services” Section attached hereto as Exhibit A.  Affiliate shall refer
to Movie Channel 1 as “Club Jenna,” or other name approved by Affiliate, and may
list Movie Channel 1 on the program guide as “JENNA”or as otherwise agreed to by the
Parties.  Affiliate shall include a marketing description of
Movie Channel 1 in the programming guide that is viewed by Subscribers that is
mutually agreed upon by the parties.  Notwithstanding the foregoing, upon
thirty (30) dayspriorwritten noticeby Affiliateto Programmer,Affiliateshall have therighttopermanently replace the programming
currently distributed on Movie Channel 1 (i.e., “Club Jenna”)withthe Programmer controlled service
currently known as “Fresh!”.





(iii)        
Movie Channel 2.  The service known as “Movie Channel 2” (“Movie Channel 2”) shall
consist of entertainment programming for adult audiences as more fully described
in the “Description and Limitation of the Services” Section attached hereto as
Exhibit A.  Affiliate
shall refer toMovie Channel 2 as“Spice:Xcess”, and may listMovie Channel 2
on the program guideas “XCSS”or as otherwise agreed to by the
Parties.Affiliate shall include a
marketing description of Movie Channel 2 in the programming guide that is viewed
by Subscribers that is mutually agreed upon by the parties.  Movie Channel 1 and Movie
Channel 2 may be referred to collectively as the “Movie
Channels”.




(iv)         [This
section intentionally left blank.]
 
 (v)       
  [This
section intentionally left blank.]
  5


(vi)         Playboy
TV en Español.  Playboy TV en Español shall consist of native and
dubbed Spanish-language entertainment programming for adult audiences as more
fully described in the “Description and Limitation of the Services” Section
attached hereto as Exhibit A.  Affiliate shall refer to the Service as
“Playboy en Español,” or other name mutually agreed to by the parties, and may
list the channel on the program guide as “PBE”  Affiliate shall
include a marketing description of Playboy TV en Español in the programming
guide that is mutually agreed upon by the parties.





(vii)       
VOD Service.  The collection of VOD Packages (as defined herein)
offered to distributors of the Service for use in the distributors’
Video-On-Demand service, wherein each Package is offered in its entirety to a
subscriber’s premises by means of the DTH Distribution System for use in an
“On-Demand” environment where the subscriber can start and stop video
programming at any time and the content is delivered to subscribers as part of
the same service that the subscriber receives his or her linear television
service (specifically excluding delivery via the Internet/World Wide
Web.)  A VOD Package is defined as those bundles of adult programs
consisting of adult content offered to multi-channel video distributors of
television in the Territory (for example any cable operator, satellite
television provider, or other facilities-based provider such as Verizon, Bell
South or AT&T, in connection with such other provider’s multi-channel video
distribution business, but not such other provider’s cellular phone, World Wide
Web, Internet or wireless businesses (an “MCVP”)) for distribution on a
VOD basis to subscribers with specific distribution requirements including
requirements with respect to the user interface.  Notwithstanding the
terms of this paragraph, upon Affiliate’s election and written request,
Programmer agrees to provide customized VOD Packages for use by Affiliate in its
VOD service offered to Subscribers to the extent that use of Programmer’s VOD
Packages as set forth above is commercially unreasonable given the technology
deployed by Affiliate for so long as Affiliate’s use of Programmer’s VOD
Packages remains commercially unreasonable.





(viii)       [This
section intentionally left blank.]





(ix)         Programmer
represents and warrants that (A) it reviews all programming contained in the
Service for compliance with the
restrictions and limitations set forth in Exhibit A, and (B) the Service shall
reflect adult content subject to the restrictions and limitations set forth in
Exhibit A, and shall not contain or depict any acts otherwise prohibited by
Exhibit A.





(x)         All
right, title and interest in and to the entire contents of the Service,
including, but not limited to, films and recordings thereof, title or titles,
names, trademarks, concepts, stories, plots, incidents, ideas, formulas,
formats, general content and any other literary, musical, artistic, or other
creative material included therein shall, as between Programmer and Affiliate,
remain vested in Programmer.





(xi)         Each
of the Playboy TV, Movie Channel 1, Movie Channel 2 and Playboy TV en Español
(if applicable) shall be offered on a simultaneous basis




6




and
distributed by Affiliate to its Subscribers a minimum of 24 hours per day, seven
days per week, on a separate and distinct channel.





(xii)        At
any time during the Term and in any portion of the Territory, Affiliate shall be
permitted to offer other “branded” or “unbranded” adult programming competitive
to the Service, it being acknowledged and agreed by the parties that Affiliate’s
offering of such other adult programming shall not constitute a breach of this
Agreement.





(xiii)       Programmer
shall not propose or impose upon Affiliate, nor shall Affiliate be obligated to
pay, any surcharge or other cost (other than the License Fees provided for in
Section 2 hereof) for receipt and distribution of the Service.








(c)       Other
Distribution Rights and Obligations.  In addition, the parties
agree as follows:





(i)           Subject to Programmer’s obligations
hereunder and Affiliate’s rights under Section 17, Affiliate shall distribute
the Service as transmitted by Programmer, in its entirety, in the order and at
the time transmitted by Programmer without any intentional and willful editing,
delays, alterations, interruptions,deletions or additions (“Alterations”), excepting: (A)
Affiliate’s commercial or other announcements, only if permitted under Section 3
hereof, (B) Affiliate’s electronic guides (including without limitation, any
mosaic or similar guides), (C) news bulletins and other public announcements as
may be required by emergencies or applicable law; and (D) the use of digital
video recorders at the DIRECTV Subscriber’s premises for playback either on a
television display or a mobile device (“DVRs”), videocassette
recorders (“VCRs”), or
other similar devices by DIRECTV Subscribers.  Programmer acknowledges
that the DTH System requires and applies digital compression and encryption
processes prior to transmission and decryption and decompression processes upon
reception and agrees that such processing does not constitute an Alteration of
the Service.  Programmer shall fully encrypt the satellite signal of
the Service utilizing encryption technology commonly used in the satellite
distribution industry.  Affiliate shall at all times provide Affiliate
with two operational receivers and decoders per Service as necessary to receive
and decode the Service.





(ii)           Subject
to the terms and conditions of this Agreement, the terms and conditions upon
which Affiliate distributes the Service to Service Subscribers, including,
without limitation, the
packaging of the Service and retail price charged, shall be determined by
Affiliate in its sole discretion.  Affiliate shall use reasonable
efforts to provide Programmer with sixty (60) days’ prior written notice of any
retail price change.





(iii)           Subject
to the limitations contained in Section 17 below, and Exhibit B, as applicable,
with respect to the PPV Offerings, Affiliate may offer a multiple channel
offering, such that for a single paymenta purchasing Subscriber is permitted to
view Movie Channel 1 and Movie Channel 2 and/or Playboy TV together with other
adult




7




channels as determined by Affiliate (as
restricted by Section 17 herein) (the “Cascade”), all for one fee (the “Cascade
Fee”).





Notwithstanding Affiliate’s
current intention, Affiliate shall not be obligated to offer the Service using
the purchasing mechanism set forth in this Section
1(c)(iii).





(iv)         Programmer shall make the Service
available via satellite signal from a domestic communications satellite commonly
used for the delivery of television programming which must be viewable with
existing equipment from Affiliate’s broadcast center in Los Angeles, California
(the “Broadcast Center”).  As of the Effective Date, the feeds of the
Service are or will be available onIntelsat Americas 13(“Programmer’s U.S.
Satellite”).  Programmer may, from time
to time, in its sole discretion, change the satellite being used for delivery of
the Service to Affiliate;provided,however, that any satellite used by Programmer
to transmit the Service shall be a domestic communications satellite commonly
used for the delivery of television programming which must be viewable with
existing equipment from the Broadcast Center without Affiliate incurring
additional costs or requiring Affiliate to enter into any third-party
arrangements (e.g., HITS) for receipt of the signals.  In the event
Programmer either (i) changes Programmer’s U.S. Satellite to a satellite or
other transmission medium not susceptible to viewing or utilization by
Affiliate’s then-existing earth station equipment without affecting the receipt
of the signals of any other programming or other services then received (or
committed to be received) by suchAffiliate, (ii) changes the technology
used by Programmer to encrypt the Service to a technology not compatible with
Affiliate’s then-existing descrambling equipment, or (iii) compresses, digitizes
or otherwise modifies the signal of the Service in such a manner that it cannot
be received or utilized by Affiliate, then Affiliate shall have the right to
discontinue carriage of the Service, immediately; provided that this right of
discontinuance and deletion shall not apply to Affiliate if Programmer agrees
to: (I) provide Affiliate with the necessary additional equipment required to
receive the Service from the new satellite; and (II) promptly reimburse
Affiliate for the actual out of pocket cost to acquire and install equipment
necessary for Affiliate to descramble, receive and/or utilize the signal of the
Service from such new satellite or other transmission medium, and/or the actual
out of pocket cost to acquire and install equipment necessary for Affiliate to
descramble, receive and/or utilize the signal of the
Service.  Programmer agrees to use commercially reasonable efforts to
provide Affiliate with at least one hundred twenty (120) days’ prior written
notice of any satellite or technology change.  Programmer, or its
designee, shall maintain appropriate back-up satellite protection arrangements
in accordance with customary industry standards.  Programmer and
Affiliate shall use their respective commercially reasonable efforts to maintain
for the Service a high quality of signal transmission in accordance with their
respective technical standards and procedures.





(v)          The parties hereby acknowledge and
understand that the overall terms and conditions of this Agreement, including
without limitation,*****, are
expressly conditioned upon Affiliate’s distribution of each of the ***** to all
residential DIRECTV Subscribers, excluding DIRECTV Subscribers restricted from
receiving the




8




applicable
Services as set forth in ***** and/or
those Subscribers who have elected not to have the option of purchasing adult
programming and/or have been excluded from the purchase of transactional
programming.





(d)       Rights with
Respect to Channel Capacity.  Affiliate shall have the
right, in its sole discretion and for Affiliate’s sole benefit as between
Programmer and Affiliate, to utilize the channel capacity used to transmit the
Service during any hours which (i) the Service, or any significant portion
thereof, is not being transmitted to Affiliate for any reason; or (ii) the
transmission of the Service, or any significant portion thereof, has been
suspended or terminated by Affiliate pursuant to Section
17.  Programmer acknowledges that it has no ownership rights in, or
right to use, any channelor any amount of capacity on any DTH
Satellite.








2.         Compensation;
Most Favored Nation; Programming Account.





(a)       Compensation.  As full and complete
compensation for Affiliate’s right to distribute the Service, Affiliate shall
pay to Programmer the applicable percentage of Gross Receipts (as defined below)
for each month, as such percentage is calculated as set forth on Exhibit
B.





(i)  “Gross
Receipts” are defined as
the sum of all monies billed to Subscribers by Affiliate during any month (not
including amounts owed by Affiliate due to taxes other than income or franchise
taxes) for receiving any part of the Service;provided,
however, that Gross
Receipts shall in no event include (i) any charge specifically made for access
to programming other than for the Service or any general access charge, hardware
licensing charge or other charge made on a “blanket” basis (whichshall
mean that such charge will relate to access to all program services available
from Affiliate by means of the DTH Distribution System); or (ii) any charges
made for ordering the Service via telephone as a PPV Offering, which charges are
additional to the charges for
ordering the Service without using the telephone.  Affiliate shall
have the right to offer Movie Channel 1, Movie Channel 2 and/or Playboy TV as
part of the Cascade, as set forth above, in which case each such Service’s
Allocable Cascade Gross Receipts shall equal Programmer’s *****.  For
purposes hereof, “Allocable Cascade
Gross Receipts” per Service
included in the Cascade shall be equal to *****.  Other than as set
forth above, Affiliate shall notify Programmer prior to packaging the
Subscription Offerings with any other programming services.  If,
however, Affiliate packages the Subscription Offerings with other non-adult
premium subscription programming services, then Affiliate shall determine the
Service’s allocable share of revenues from such package by application of the
following formula:




*****


For the avoidance of doubt, an example
of such calculation is as follows:  Affiliate packages the
Subscription Offerings with programming service X and programming service Y and
each




9




of the foregoing has an a la carte
retail price of*****.The retail price for the entire package
is*****.  Programmer’s allocable
share of the revenues from such package would be*****.





(ii)          To the extent that a Subscriber prepays
any portion of monies  solely in connection with Affiliate’s
distribution of the Service, then the amount prepaid shall be included in Gross
Receipts for the month in which such payment was received; provided that,
Affiliate’s billing system has the capability to account for such
prepayments.  Affiliate shall deduct the amount of any Credit
Transaction (as defined below in Section 2(a)(ii)), as such amount is reasonably
determined by Affiliate, from the Gross Receipts of the month in which such
Credit Transaction occurs.





(iii)          “Credit
Transaction” shall mean any
refund (or other payment or credit) to a DIRECTV Subscriber in connection
with (A) prepayments for the Service, (B) Programmer’s inability to transmit the
Service to Affiliate for distribution via the DTH Distribution System for any
reason other than Affiliate’s non-performance of an obligation hereunder, (C) a
Force Majeure Event or (D) credits (excluding Discounted Previews of the Service
not authorized by Programmer) allowed by Affiliate in its commercially
reasonable judgment consistent with Affiliate’s policies and procedures applied
consistently to Programmer and Affiliate’s other sources of programming
services.





(iv)         Affiliate
shall be responsible for the accounting for all Gross Receipts and shall account
to Programmer with regard to the Gross Receipts for the Service on a monthly
basis, not later than *****
after the last day of the month in which the Gross Receipts are accrued by
Affiliate.  Affiliate shall provide a separate accounting for the
Playboy TV, Movie Channel 1, Movie Channel 2 and Playboy TV en Español (if
applicable) Services.  Each such accounting shall
include:




(A)
                    the aggregate Gross Receipts for
      such month;(B)
                    the origin (categorized separately
      by residential subscribers (which includes multiple dwelling facilities,
      private offices and oil rigs) and hotels/motels, if any) of all Gross
      Receipts for Subscription Offerings for such
  month;(C)
                    the number of residential DIRECTV
      Subscribers as of approximately the fifteenth calendar day of such
      calendar month;(D)
                    the applicable Programmer Share
      from Exhibit B;(E)
                    the dollar amount of Programmer’s
      share of Gross Receipts for such month;(F)
                    the number of Service Subscribers
      as of approximately the 15thday of such calendar month;
      and
  10
 (G)
                for each PPV Offering, the number
      of Service Subscribers purchasing such PPV Offering on each calendar day
      of such month; and(H)
                Hotel/Motel License Fee (as
      defined below in Section
2(c)).




(v)           Programmer and Affiliate shall accord
confidential treatment to any information contained in the aforementioned
statement in accordance with Section 15.  At Programmer’s request and
at reasonable times, upon reasonable advance written notice and during normal
business hours at Affiliate’s offices,  Affiliate shall permit
Programmer’s representatives to review, one time per each year of the Term and
one time during the year immediately after the termination or expiration of this
Agreement, those books and records maintained according to Affiliate’s standard
accounting practices which are generally in accordance with GAAP required to
verify License Fees and reports made hereunder.  Programmer shall
audit each calendar year of the Term, if at all, within one (1) year following
the end of such calendar year, with such review limited to those records for
those months of the prior calendar year which have not been previously reviewed
and those past months of the current calendar year for which records are
available.  Programmer shall report promptly (but no later than 30
days following completion) to Affiliate the results of such audit, including any
deficiency in payment of License Fees that Programmer believes were revealed by
such audit, and shall make any claim against Affiliate with respect to the
results of such audit within one (1) year after reporting such results to
Affiliate.  From and after Programmer’s audit of a particular period
of the Term, such period shall be deemed closed by the parties and, except as
may be demonstrated by such audit, Affiliate shall have no further
liability in respect of License Fees for such period.  Programmer may
not commence a new audit until all prior audits have been closed and the results
have been presented to Affiliate.  Any such review shall be at
Programmer’s sole cost and expense; provided, however, if such review discloses
an underpayment greater than *****of the
actual amount due (which amount is not subject to a bona fide dispute by
Affiliate), Affiliate shall reimburse Programmer for its reasonable
out-of-pocket costs and expenses incurred to discover such
underpayment.  The information derived from and theprocess of such review shall be subject
to the confidentiality provisions of Section
15.Notwithstanding anything herein to the contrary, any audit
conducted pursuant to this Section 2(a)(v) shall be conducted by a reputable,
industry recognized third party auditor or another firm approved in advance by
Affiliate, which shall have first entered into a confidentiality agreement with
Affiliate.





(b)       License
Fee.  As full and
complete compensation for the rights granted Affiliate hereunder, Affiliate
shall pay to Programmer, on a monthly basis, the “License
Fees,” calculated pursuant
to Programmer’s Cable Rate Card in Exhibit B, subject to reduction and offset
for any credits, discounts, and reimbursements set forth in Exhibit B, annexed
hereto, and a*****.As used in this Section 2
and elsewhere in this Agreement (including Exhibit “B”) when referring to the
payment of License Fees or the provision of subscriber reports by Affiliate to
Programmer, unless expressly modified by “calendar,” the term “month” shall
refer to Affiliate’s accounting month, which is the approximately thirty




11




(30)
day period commencing on approximately the middle of each month and ending on
approximately the middle of the next succeeding month.  Affiliate
acknowledges that it is being extended the License Fees herein in exchange for
offering*****to all residential DIRECTV
Subscribers, excluding DIRECTV Subscribers restricted from receiving the
applicable Services as set forth in *****and/or
those Subscribers who have elected not to have the option of purchasing adult
programming and/or have been excluded from the purchase of transactional
programming.





(c)       Hotel/Motel
License Fee.  The
parties understand and agree that the terms of this Section 2(c), and not
Section 2(a), shall govern the case of monies received from the distribution of
the Service to hotels or motels.  In no event shall Affiliate pay any
fees or other charges on any Gross Receipts pursuant to both this Section 2(c)
and any other section of this Agreement.  Affiliate shall pay to
Programmer a license fee (the “Hotel/Motel License
Fee”) simultaneously with
the accounting rendered to Programmer as set forth in Section
2(a)(iv).  The Hotel/Motel License Fee shall be equal to the license
fee set forth on Exhibit D attached to this Agreement.





(d)       Late or
Non-Payments.  Any amounts not paid
hereunder by the date payment is due, and which are not paid within ten Business
Days after receipt of a notice from the obligee thereof stating that such
amounts have not been paid and are overdue, shall, at Programmer’s option,
accrue interest at the rate of*****or at the highest lawful rate, whichever
shall be the lesser, from the date notice was given that such amounts were
overdue until they are paid.  “Business Day” shall mean a day that is
not a Saturday, Sunday or day on which banks are generally closed for business
in the State of California.





*****





(iii)         Intentionally
Omitted.





*****





(vi)         Programmer
hereby grants to Affiliate, and Affiliate hereby accepts from Programmer, the
non-exclusive right to distribute the VOD Services that Programmer makes
available for distribution on a Video On Demand basis (whereby a consumer
selects the viewing of a program on an unscheduled real time basis (as opposed
to selection of a viewing time by such consumer from a pre-determined schedule
of viewing times) (“VOD”)) at such time that
Affiliate has the capability to distribute programming services via VOD to
DIRECTV Subscribers.  *****





(f)        Titanium
Subscribers.  Notwithstanding any other provisions of this
Agreement, Affiliate may offer the Service as part of Affiliate’s planned
premium programming package offering subscribers the right to receive all or
substantially all of Affiliate’s programming (including premium and pay-per-view
programming) *****, which
package is tentatively branded as the “Titanium Package” (the subscribers to
which package shall be referred to as “Titanium Subscribers”), and Affiliate
shall ***** for the
distribution of such package so long as the total number of Titanium Subscribers
does not exceed *****.




12




In
the event that Affiliate obtains more than ***** Titanium Subscribers,
Affiliate and Programmer ***** to be paid to Programmer by
Affiliate for those subscribers in excess of *****.Affiliate will
provide Titanium Subscribers with the opportunity to opt out of receiving the
Service at any time.





(g)     
  Programming
Account/Marketing Fund.





(i)        
 The parties hereby acknowledge that pursuant to all predecessor agreements
(including, without limitation, the Current Playboy Agreement), and
notwithstanding any previous accounting of the amounts in question, all amounts
set aside by Affiliate for marketing and promotion of channels provided to
Affiliate by Programmer are ***** (the “Programming Account”) and that
the following shall constitute full satisfaction of the parties’ respective
obligations with respect to such Programming Account: Affiliate may spend the
Programming Account funds on any marketing campaigns or initiatives related to
the Services or Programmer *****; provided, however, that
the parties agree that if any Programming Account funds are not utilized by the
end of the Term, then such amounts will be paid to Programmer.





(ii)         Commencing
as of ***** and continuing
throughout the Term of this Agreement, Programmer shall contribute *****to a specific special
purpose marketing support account (the “Marketing Account”); provided
that Programmer shall contribute ***** to the Marketing Account
for the period from the Effective Date through *****.  Affiliate may
spend up to *****of the
Marketing Account funds on any marketing campaigns or initiatives related to the
Services or Programmer as determined *****.  Affiliate
agrees that all other funds in this account ***** will be used on campaigns
designed to drive DIRECTV Subscribers to Playboy TV or the Movie Channels as
mutually agreed to by the Parties.  In addition, Programmer agrees to
*****.





(iii)       
 Affiliate shall provide a quarterly accounting of amounts spent pursuant
to the above Sections 2(g)(i) and (ii).





3.         Commercial
Announcements and Other Advertising.





(a)           Commercial
Announcements.  Programmer hereby
represents and warrants that it does not make available to any Other Distributor
of any Service commercial announcements of any nature in the schedule of such
Service(s).  If at any time during the Term, Programmer provides to
any Other Distributor the right to make commercial announcements within any
Service, then Programmer shall offer such right to Affiliate on terms and
conditions no less favorable than those offered to such Other Distributor of the
Service(s).  In any event, the rights with respect to commercial or
promotional announcementsprovided by Programmer to Affiliate
shall be no less favorable, in terms of the nature, use, scheduling,
availability, length of the
announcementsand so
forth(including, without
limitation, the right to cover Programmer’s commercial or promotional
announcements),
than those provided to any
Other Distributor.




13




(b)       Advertising.  If Programmer offers any
Other Distributor the opportunity to advertise, or includes any Other
Distributor in any advertisement(s), whether or not in connection with the
Service, in any publication, recording, service, visual work or audiovisual
work, whether or not Programmer controls it, then Programmer shall provide
Affiliate with the opportunity to elect to be included in such advertisement, if
such advertisement is in connection with advertising the Service, or an
opportunity to elect to be included in a similar advertisement, if such
advertisement is not in connection with advertising the Service, on at least as
favorable terms as such Other Distributor.  Programmer shall not
include Affiliate, or advertise Affiliate, by any means without Affiliate’s
prior written consent, which may be given or withheld by Affiliate in its sole
discretion.





4.         Marketing
and Promotion of the Service.





(a)  Affiliate shall market and promote the
Service in a similar manner as Affiliate markets and promotes other similar
premium programming services; provided, however, that Affiliate may market and
promote any other such premium programming service differently and/or more
frequently, if such service provider provides Affiliate with material
consideration or compensation therefore.  In connection therewith,
Programmer shall provide Affiliate, upon Affiliate’s request, with promotional
and marketing advice.  ***** parties understand and agree that
Affiliate currently expects to usea range of promotional media
(including, without limitation, print advertising and cross-channel promotional
spots on the DTH Distribution System) to market and promote the
Service.  Affiliate shall publicize the schedule of the Service in the
Territory in a manner similar to that which it employs, and based on the same
factors, it considers, in publicizing the schedule of other similar premium
programming services distributed via the DTH Distribution System, including,
without limitation, the publication of the Service programming schedule in the
television listings and program guides which Affiliate, as applicable,
distributes.





(b)  Subject
to Sections 6 and 17, Affiliate shall not at any time during the Term (i) cease
marketing or promoting the Service or (ii) withdraw distribution of the Service
in any area of the Territory after the introduction thereof in such area;
provided that, Affiliate may cease marketing and promoting the Service if
Affiliate, in its absolute sole determination, reasonably believes that
marketing or promoting the Service may be politically harmful to Affiliate or
its Affiliated Companies or adversely affect the corporate image that Affiliate
or its Affiliated Companies desires to maintain at such time, provided however,
that should Affiliate cease marketing and/or promoting the Service for the
aforementioned reason, Affiliate may not market and/or promote any other adult
services comparable to the Service provided by Programmer hereunder for so long
as Affiliate ceases marketing and/or promoting the Service.





(c)  Affiliate
may expend such amounts *****, during any ***** period (with each ***** starting on the Effective
Date as defined in Section 6(a) or the anniversary thereof) *****for marketing, advertising
and promoting of distribution of Playboy TV via the DTH Distribution
System.  Subject to the terms and conditions of this Agreement, *****, including, without
limitation, the selection of promotional media (such as print advertising,




14




direct
mail pieces, cross-channel promotional spots on the DTH Distribution System,
etc.) and the scheduling of such marketing, advertising and promotional
activities.





(d)  [This
section intentionally left blank.]





(e)  From
time to time, Programmer may offer Affiliate an opportunity to exhibit the
Service discounted to DIRECTV Subscribers (“Discounted
Previews”).  Discounted Previews shall be made only with
Programmer’s prior written authorization and shall be offered to Affiliate on a
frequency and basis no less favorable than those offered to any Other
Distributor of the Service (or any portion thereof).  The retail price
for Discounted Previews shall be no less than ninety-nine cents ($.99) per programming block and shall be
paid to Programmer in a similar manner as provided in Section
2.





(f)         Program
Guide.  Duringthe Term, Programmer shall provide the daily programming schedule for the
Service to Tribune Media Service (or such other service designated by Affiliate)
in order that Affiliate may access the program schedule for purposes of the
on-screen program guide.





5.         Representations.
Warranties and Covenants.





(a)       
By
Affiliate.  Affiliate warrants,
represents and covenants to Programmer that:





(i)  to its best knowledge after diligent
review and receipt of advice of legal counsel with experience in such matters,
it is in compliance with and will comply with all material“Laws”(as defined below)with respect to its rights and
obligations under this Agreement, including without limitation, all relevant
provisions of the Cable Television Consumer Protection and Competition Act of
1992 which are applicable to Affiliate,the Communications Act of 1934,
the Communications Decency Act of 1996 (as any or all may be amended and any
successor, replacement or similar Laws or statutes), and any and all regulations
issued pursuant to any of the foregoing.  As used in this Agreement,
“Laws” mean and include relevant federal, state, municipal or local statutes,
laws, rules, regulations, ordinances, codes, directives and orders, including
administrative rules or policies and court orders;





(ii)          it has the power and authority to enter
into this Agreement and to fully perform its obligations
hereunder;





(iii)          it shall distribute the Service in the
Territory in accordance with and subject to the terms and conditions set forth
in this Agreement;





(iv)         it shall not, without Programmer’s prior
written approval, use the name of or logo for “Playboy TV,”“Spice Wild,”
“The Hot Network,” “The Hot Zone,” “Fresh!,” “Club Jenna’, “Spice:Xcess” or
“Playboy TV en Español,” or the names, titles or logos of the Service (or any
successors thereto) or any of its programs, or the names, voices,




15




photographs,
likenesses or biographies of any individual participant or performer in, or
contributor to, any program or any variations thereof, for any purpose other
than in material intended to advise Service Subscribers or potential Service
Subscribers of the availability and scheduling of the Service or as a channel
identifier.  Affiliate shall not publish or disseminate any material
that violates restrictions imposed by Programmer or Programmer’s suppliers and
disclosed upon reasonable advance written notice to Affiliate by
Programmer.  The restrictions set forth in this Section 5(a) (iv)
shall apply only to the extent they are applied by Programmer uniformly with
respect to all of its distributors of the Service, and shall not apply if
Affiliate has received a valid written authorization from a third party for any
of the uses described in this Section 5(a)(iv);





(v)          it
has obtained, and shall maintain in full force during the Term hereof, such
federal, state and local authorizations as are material and necessary to operate
the business it is conducting in connection with its rights and obligations
under this Agreement;





(vi)         it
has no knowledge of any misrepresentation, breach of warranty or covenant made
by Programmer hereunder;





(vii)        the
individual executing this Agreement on its behalf has the authority to do
so.





(b)       By
Programmer.  Programmer warrants,
represents and covenants to Affiliate that:





(i)           to its best knowledge after diligent
review and receipt of advice of legal counsel with experience in such matters,
it is in compliance with and will throughout the Term continue to comply with
all material Laws applicable to, or with respect to, the Service and the
provision of the Service to Affiliate, and Programmer’s rights and obligations
under this Agreement with respect to the Service and Programmer’s obligations
hereunder, including without limitation, FCC rules and regulations governing the
Service, if any, all relevant provisions of the Cable Television Consumer
Protection and Competition Act of 1992, and the Communications Act of 1934, the
effective portions of the Communications Decency Act of 1996 (as any or all may
be amended and any successor, replacement or similar Laws) and any regulations
promulgated under any applicable law or any of the
foregoing;





(ii)          it has the power and authority to enter
into this Agreement and to fully perform its obligations
hereunder;





(iii)          it shall provide the Service for the
Territory, at its sole cost and expense (together with any necessary equipment,
including without limitation, backup or reserve equipment), in accordance with
and subject to the terms and conditions set forth in this Agreement, including,
without limitation, that it shall (A) arrange and pay for the transmission of
the Service from Programmer’s U.S. Satellite to the Broadcast Center, (B)




16




encode and scramble the Service at its
sole expense, (C) cause its uplink authorization center to authorize and enable
Affiliate’s descramblers to receive and descramble the Service, and (D) provide
to Affiliate*****;





(iv)         it shall promptly provide Affiliate with
any and all promotional materials of the Service which it generally provides to
any other distributor of the Service, at Programmer’s sole cost and expense; and
if Affiliate shall request additional such materials, then Programmer shall
promptly provide such materials to Affiliate and Affiliate shall reimburse
Programmer for the reasonable actual costs thereof;





(v)          it has obtained, and shall maintain in
full force during the Term hereof, such federal, state and local authorizations
as are necessary to comply with Laws or which are material and necessary to
operate the business it is conducting in connection with its rights and
obligations under this Agreement;





(vi)         it has obtained or will obtain at its
sole expense all rights necessary for Affiliate to use and enjoy its rights in
connection with its distribution of the Service, including, without limitation,
obtaining all necessary trademarks, copyrights, licenses and any and all other
proprietary, intellectual, property and other use rights necessary in
connection with, or for Affiliate’s distribution of the Service, and at all
times during the Term “PLAYBOY TV,” “SPICE WILD,” “THE HOT NETWORK,” “FRESH!,”
“CLUB JENNA”, “SPICE:XCESS” or “PLAYBOY TV EN ESPAÑOL” or the names, titles or
logos of the Service (or any successors thereto) or any of their programs, or
the names, voices, photographs, music, likenesses or biographies of any
individual participant or performer in, or contributor to, any program or any
variations thereof) and to perform its obligations hereunder and grant the
rights granted pursuant to Section 1;





(vii)        there
are no (and it covenants that it shall not enter into directly or indirectly,
allow or otherwise permit any) affiliation, distribution or any other
agreements, whether written or oral, granting to distributors and/or any other
third party, person or entity any form or type of exclusive or other rights that
would limit or restrict in any way Affiliate’s rights to distribute the Service
in the Territory;





(viii)        it
shall not, without Affiliate’s prior written approval, use the name of or logo
for “DIRECTV,” or any variations thereof, for any purpose, without Affiliate’s
prior written consent;





(ix)         there
is no actual and, to Programmer’s knowledge, there is no pending investigation
(including, without limitation, a grand jury investigation) involving the
Service (or any content included in the Service) or any pending proceeding
against Programmer (or any of its principals or Affiliated Companies) for the
violation of any federal, state or local law or regulation, as applicable,
concerning illegal, indecent or obscene material or the transmission thereof
(the “Obscenity
Laws”);





17




(x)          it
will notify Affiliate as soon as reasonably practical, but in no event more than
two Business Days, after receiving notification of, or becoming aware of, any
pending investigation by any governmental authority, or any pending criminal
proceeding against Programmer (or any of its principals or Affiliated Companies
(as defined in Section 8(a)), which investigation or proceeding concerns
distribution of the Service or programming in the Service, including without
limitation, investigations any/or proceedings concerning potential violations of
Obscenity Laws.  For purposes of this Section 5(b)(x), Programmer
shall be deemed to be aware of any such investigation or proceeding if any of
the directors, officers, agents, representatives or employees of managerial
functions of Programmer or an Affiliated Company has received any communication
about or otherwise becomes aware of any such investigation or
proceeding;





(xi)         to
the best of Programmer’s knowledge after diligent review and advice of counsel
with experience in such matters, the programming Service and all programming
provided as part thereof that Programmer provides Affiliate hereunder complies
with Obscenity Laws and is not violative of Obscenity Laws in any jurisdiction
in the Territory;





(xii)        it
solely and exclusively possesses, and will at all times during the Term so
possess, any and all rights necessary to grant Affiliate the right to distribute
the Service and all programming provided as part thereof, as a whole or in
parts, as Subscription Offering(s) and PPV Offering(s), as the case may be, in
the Territory (it being understood and agreed that Programmer has granted and
may grant similar rights to other third parties);





(xiii)        nothing
contained in the Service or in any other material supplied by Programmer to
Affiliate violates, infringes, or conflicts with any rights of any person or
entity (including, without limitation, copyright, trademark, music performance
and all other proprietary and/or intellectual rights);





(xiv)       there
are no outstanding (or, to the best of Programmer’s knowledge, threatened)
judgments or pending claims, liens, charges, restrictions, or encumbrances on or
related to the Service or any programming provided as part thereof that may
materially interfere with the rights of Affiliate under this
Agreement;





(xv)        Programmer
is the sole entity that has entered into and shall enter into agreements and
obligations with other distributors with respect to the Service and to any and
all programming provided as part of the Service;





(xvi)       exceptto the extent expresslypermittedhereunder, during the Term, the Service shall not
include any direct sales, advertising or infomercials;





(xvii)       the
individual executing this Agreement on its behalf has the authority to do
so;




(xviii)      to
its best knowledge after diligent review and receipt of advice of legal counsel
with experience in such matters, it is in compliance with and will throughout




18




the
Term continue to comply with18 USC
2257 or 28 CFR 75 or any successor legislation or code.  Programmer has
prepared, maintained and executed, and at all times during the Term and for a
period of seven (7) years thereafter shall, prepare, maintain and execute any
documents or records, and provide Affiliate with copies of any documents or
records which are required by Title 18, U.S.C. § 2257, as amended, and/or the
associated regulations found at 28 C.F.R. 75.1 et. seq., as amended, and/or any
successor statute or regulation (“Section 2257”). 
Programmer warrants and represents that it is in possession of such documents
and records, and maintains them in accordance with Section 2257.
 Programmer agrees to appoint a “record custodian” as required under
Section 2257, and will keep Affiliate apprised of the physical address where all
required records are compiled and maintained pursuant to Section 2257, along
with the name of the records custodian.  Programmer will display a
conspicuous disclosure statement on all depictions of ‘actual sexually explicit
conduct’ contained in the Services as required by Section 2257, which statement
identifies the records custodian for the content and describes the physical
location where the records relating to the content may be inspected as required
under applicable law.  If required by law, Programmer will be identified as
a “primary producer” in any and all disclosure statements associated with the
Services pursuant to Section 2257.  Programmer further agrees to cooperate
with Affiliate in connection with any inspections or government inquiries
initiated pursuant to Section 2257.   Affiliate shall have the right
to inspect such documents and records at any time during regular business hours
at Programmer’s location for maintaining the records with five (5) business
days’ prior written notice from Affiliate.





6.         
Term;
Effective Date; Termination.





(a)       Term;
Effective Date.Subject to certain rights of
termination set forth in this Agreement, the term of theAgreement shall
be for the period commencing on the Effective Date and continuing through
October 14, 2009 (the “Term”).





(b)       Termination
for Breach or Bankruptcy.  This Agreement may be
terminated by either party (the “Affected
Party”), in its discretion,
at any time after any of the following occurrences with respect to the other
party (the “Other
Party”):





(i)           the breach of any representation,
warranty or covenant of the Other Party or failure by the Other Party, its
successors or assigns to perform any material obligation hereunder which is not
cured within thirty (30) days after receipt of written notice thereof from the
Affected Party or as to which reasonable steps to cure have not been commenced
within such period (or are not thereafter diligently pursued and completed
within an additional thirty (30) days); or





(ii)          the filing of a petition in bankruptcy
or for reorganization by or against the Other Party under any bankruptcy act;
the assignment by the Other Party for the benefit of its creditors, or the
appointment of a receiver, trustee, liquidator or custodian for all or a
substantial part of the Other Party’s property, and the order of appointment is
not vacated within thirty (30) days; or the assignment or encumbrance by the
Other Party of this Agreement contrary to the terms hereof;
or





19




(c)           Termination
by Affiliate.  Affiliate may terminate
this Agreement:





(i)          subject to Section 1(b)(viii),
immediately upon prior written notice, if the Service, or any programming
provided as part thereof (including, without limitation, advertising, if any),
fails to comply in any material way with Exhibit A hereto and the definition of
“Service” in Section 1(b) hereof, as reasonably determined by Affiliate,if Programmer is unable to curesuch materialfailurewithin fifteen (15) days upon
notice(specifying such
failure)thereof;





(ii)          if Affiliatediscontinues
operation of the DTH System, immediately upon such discontinuance;





(iii)         according to the provisions of Section
6(d) or Section 17 hereof;





(iv)         immediately following written notice to
Programmer of Programmer’s failure to comply with any material Laws, if
Programmer is unable to cure or eliminate the failure to comply with such
material Laws in any material respect within fifteen (15) days upon notice(specifying such failure)thereof;
or





(v)    
     on
ninety (90) days’ prior written notice in the event Programmer, or all or
substantially all of its stock or assets, is/are acquired (directly or
indirectly) by a third party who is an “Industry Acquirer” (as defined below),
whether by way of a purchase of assets, purchase of a majority of the
outstanding stock of Programmer, merger, consolidation or otherwise, after which
such acquiring party has the right or ability by virtue of such acquisition to
control (directly or indirectly) Programmer and/or those assets (including
without limitation, to direct the creation and operation of the Service) used in
the performance of Programmer’s obligations hereunder (each a “Change in
Control”), unless Affiliate
provides written consent, in its absolute sole discretion, to such Change in
Control.  If such a Change in Control is consummated without
Affiliate’s prior written consent, then Affiliate shall have the right, in its
absolute sole discretion, to terminate this Agreement in its
entirety.  As used herein, “Industry
Acquirer” shall mean,
whether directly or indirectly, a third party or an Affiliated Company (as
defined in Section 8(a) hereof) of such third party: (x) engaged in the “adult”
industry in any manner whatsoever (by way of example and not in limitation of
the foregoing, Hustler, Penthouse, etc.); (y) directly engaged in the
distribution of regularly scheduled programming networks or services (e.g., a
collection of programs) via television (broadcast, cable or satellite); or (z)
competitors of Affiliate engaged in multichannel television (i.e., satellite,
cable or telco) distribution (e.g., Echostar, cable companies) or is a broadcast
television station or owns broadcast television station(s); provided that, with
respect to the businesses described in clauses (y) and (z) (a “Programmer/Distributor”), Affiliate’s termination right shall
not be exercisable unless the acquirer (or Affiliated Company) has an ownership
interest in a Programmer/Distributor (directly or




20




indirectly) that is equal to or greater
than 30% of such Programmer/Distributor’s outstanding stock or if the acquirer
(or Affiliated Company) has the ability (directly or indirectly) to control (by
reason of voting stock ownership, contract or otherwise) such
Programmer/Distributor.  Notwithstanding the foregoing, a Change in
Control wherein the acquiring entity is a third party that is not an Industry
Acquirer (or an Affiliated Company thereof), shall not require Affiliate’s
consent so long as such acquirer assumes in writing all of Programmer’s
obligations and liabilities under this Agreement, such acquirer agrees in
writing to maintain the quality of the Service consistent with the standards
utilized by Programmer as in effect immediately prior to the effective date of
such Change in Control, and such acquirer has a net worth which is at least
equal to the greater of (x) Programmer’s net worth immediately prior to the
effective date of such Change in Control or (y) $50 million; and provided
further, that a Change in Control resulting directly from the initial public
offering of Programmer shall be excluded from the provisions of this Section
6(c)(v), so long as the controlling stockholder(s) of Programmer and
substantially all of the members of management of the Programmer remain the same
following the initial public offering and for the duration of the
Term.





(d)       Force
Majeure.  Notwithstanding any other
provision in this Agreement, neither Programmer nor Affiliate shall have any
liability to the other or any other person or entity with respect to any failure
of Programmer or Affiliate, as the case may be, to transmit or distribute the
Service or perform its obligations hereunder if such failure is due to any
failure or degradation in performance of Programmer’s U.S. Satellite or
Affiliate’s DTH Satellite(s) or transponders on any such satellites (as
applicable) or of the DTH System (in which case, Affiliate shall be excused from
its distribution obligations under this Agreement), or of any failure of
scrambling/descrambling equipment or any other equipment owned or maintained by
others (including, without limitation, Affiliate’s automated billing and
authorization systems), any failure at the origination and uplinking center used
by Programmer or Affiliate, any labor dispute, fire, flood, riot, legal
enactment, government regulation, Act of God, or any cause beyond the reasonable
control of Programmer or Affiliate, as the case may be (a “Force Majeure”), and such
non-performance shall be excused for the period of time such failure(s) causes
such non-performance *****; provided,
however, that if Affiliate determines in its sole discretion that it is
commercially or technically unfeasible to cure a Force Majeure with respect to
the DTH System or one or more DTH Satellites and so notifies Programmer, then
either party may terminate this Agreement effective upon written notice to the
other party.  The parties acknowledge and agree that although the
Service may at any given time be uplinked to only one of several DTH Satellites,
failure or degradation in any of such DTH Satellites may require Affiliate to
reduce the number of programming services (in particular the number of PPV
and/or adult services) available for allocation among all of the DTH Satellites,
with such reduction including, without limitation, curtailment or termination of
the distribution of the Service by Affiliate, at Affiliate’s sole
discretion.  Accordingly, Programmer further acknowledges and agrees
that the provisions set forth in the first sentence of this Section 6(d) shall
apply and shall exculpate Affiliate and excuse the performance of Affiliate
hereunder in the event of such a failure or degradation of any of the DTH
Satellites or the transponders on any such satellite, regardless of whether the
satellite to which the Service is uplinked at the time ofsuch failure or degradation is itself
the subject of such failure or degradation.  In the event Affiliate
determines in its sole discretion that it is unable to cure, or it is
commercially




21




impracticable to cure, such Force
Majeure during the remaining Term of this Agreement, then Affiliate may
terminate this Agreement immediately upon notice to
Programmer.





(e)       Survival.  Termination of this
Agreement pursuant to this Section 6 shall not relieve either party of any of
its liabilities or obligations under this Agreement, including without
limitation those set forth below in Section 8, which shall have accrued on or
prior to the date of such termination.





(f)        License Fee
Reduction.  In addition to its remedies set forth in this
Agreement, Affiliate may receive credit against theLicense Fees in the proportion that the
hours of programming each day materially deviates from the programming required
in Section 1(b), as determined by Affiliate in its sole discretion, bears to the
total hours the Service is transmitted each day, such credit to be applied
against the License Fees, but only for the applicable number of days such
deviation occurs in any month. Affiliate shall notify Programmer in writing in
advance of any such reduction it intends to make, and Programmer shall have
fifteen (15) days from the date of such notice to cure such programming
deviation prior to Affiliate effecting any such reductions if the deviation is
not cured during the fifteen (15) day period.





(g)       Rights to
Limit Distribution.  Programmer shall have the
rights to limit distribution of Movie Channel 1 and Movie Channel 2 as set forth
in Exhibit B hereof.





7.         Separate
Entities.  No
officer, employee, agent, servant or independent contractor of either party
hereto or their respective subsidiaries or affiliates shall at any time be
deemed to be an employee, servant or agent of the other party for any purpose
whatsoever, and the parties shall use commercially reasonable efforts to prevent
any such misrepresentation.  Nothing in this Agreement shall be deemed
to create any joint-venture, partnership or principal-agent relationship between
Programmer and Affiliate, and neither shall hold itself out in its advertising
or in any other manner which would indicate any such relationship with the
other.





8.         Indemnification;
Limitation of Liability.





(a)       By
Programmer.  Programmer shall indemnify,
defend and hold harmless each of Affiliate, its Affiliated Companies (as defined
below) and the directors, officers, employees, and agents of Affiliate and its
Affiliated Companies (collectively, the “Affiliate
Indemnitees”) from, against
and with respect to any and all claims, criminal and civil liabilities, costs
and expenses (including reasonable attorneys’ and experts’ fees) (“Claims”) incurred to third parties (including
without limitation, any Governmental Authorities) in connection with any claim
against any of the Affiliate Indemnitees arising out of (i) Programmer’s breach
of its representations, warranties and covenants set forth in this Agreement,
(ii) the Service or material or programming supplied by Programmer pursuant to
this Agreement, (iii) the distribution or cablecast of any programming of the
Service which violates or requires payment for use or performance of any
copyright, right of privacy or literary, music performance or dramatic right,
(iv) Programmer’s advertising and marketing




22




of the Service, (v) any acts or
omissions by audio text suppliers (including, without limitation, the content of
any of the audio text service) and all employees and contractors thereof, (vi)
any other materials, including advertising or promotional copy, supplied or
permitted by Programmer, and/or (vii) any claim for payment by a third party as
a result of Affiliate’s distribution of the Service.  As used in this
Agreement, “Affiliated
Company(ies)” shall mean,
with respect to any person or entity, any other person or entity directly or
indirectly controlling, controlled by or under common control (i.e., the power to direct affairs by reason
of ownership of voting stock, by contract or otherwise) with such person or
entity and any member, director, officer or employee of such person or
entity.





(b)       By
Affiliate.  Affiliate shall indemnify,
defend and hold harmless each of Programmer, Programmer’s Affiliated Companies
and the directors, officers, employees and agents of Programmer and Programmer’s
Affiliated Companies (collectively, the “Programmer
Indemnitees”) from, against
and with respect to any and all claims, liabilities, costs and expenses
(including reasonable attorneys’ and experts’ fees) incurred to third parties
arising out of (i) Affiliate’s breach of its representations, warranties and
covenants set forth in this Agreement,(ii) Affiliate’s distribution of
the Service by means of the DTH Distribution System (except with respect to
claims relating to the content of the Service, including advertising or
promotional copy supplied or permitted by Programmer), (iii) Affiliate’s
advertising and marketing of the Service and the DTH System, and (iii) any other
materials used by Affiliate,
including advertising or promotional copy, not supplied or permitted by
Programmer.





(c)       Procedure
for Indemnification Claims.  The respective
indemnification obligations of each of the parties pursuant to Sections 8(a) and
8(b), above, shall be conditioned upon strict compliance with the following
procedures for indemnification claims based upon or arising out of any claim,
action or proceeding by any person not a party to this Agreement.  If
at any time a claim shall be made, or an action or proceeding shall be
commenced, against a party to this Agreement (the “Aggrieved
Party”) which could result
in liability of the other party (the “Indemnifying
Party”) under its
indemnification obligations under this Agreement, the Aggrieved Party shall give
to the Indemnifying Party notice of that claim, action or proceeding within five
(5) Business Days following receipt of service of any claim, action or
proceeding by the Party (except that failure to give that notice shall not
excuse the Indemnifying Party except to the extent that it is materially
prejudiced by that failure).  The notice shall state the basis for the
claim, action or proceeding and the amounts claimed, (to the extent that amount
is determined at the time when the notice is given) and shall permit the
Indemnifying Party to assume the defense of any such claim, action or proceeding
(including any action or proceeding resulting from any such claim) with counsel
which is reasonably acceptable to the Aggrieved Party.  Failure by the
Indemnifying Party to notify the Aggrieved Party of its election to defend the
claim, action or proceeding within a reasonable time, but in no event more than
fifteen (15) days after the notice shall have been given to the Indemnifying
Party, shall be deemed a waiver by the Indemnifying Party of its right to defend
the claim, action or proceeding;provided,however, that the Indemnifying Party shall not
be deemed to have waived the right to contest and defend against any claim of




23




the Aggrieved Party for indemnification
under this Agreement based upon or arising out of that claim, action or
proceeding.





(i)           Right of
Set-Off.  Notwithstanding the
foregoing and without limiting Affiliate’s other rights and remedies, pending
the resolution of any claim in respect of which Affiliate is entitled to be
indemnified, Affiliate may, in the event Programmer has not assumed the defense
of all claims on behalf of Affiliate and any Affiliate Indemnitees as set forth
above, and following written notice to Programmer, withhold License Fees which
would otherwise be payable to Programmer under this Agreement in an amount
consistent with Affiliate Indemnitees’ anticipated reasonable and actual out of
pocket legal fees and costs associated with Affiliate’s receipt of service of
any such claim.  Without limiting Affiliate’s other rights and
remedies, Affiliate may offset and retain from such withheld monies (i) the
amount of legal fees and costs the Affiliate Indemnitees expend in connection
with such claims during the pendency thereof, and (ii) the actual amount(s) to
settle such claims and/or to pay any judgments in connection therewith (subject
to the last sentence of this Section 8(c)(i)).  Affiliate shall
provide Programmer with a written accounting sufficiently detailed to allow
Programmer to ascertain such expenditures.  If no action or other
proceeding for recovery on such a claim has been commenced within twelve (12)
months after its assertion, Affiliate shall not in connection with that
particular claim under this paragraph continue to withhold such monies (that
were not so offset) and shall remit to Programmer all such withheld monies
otherwise due Programmer unless Affiliate believes, in its reasonable judgment,
that such a proceeding is likely to be instituted notwithstanding the passage of
that time.  Under no circumstances shall Programmer have the right to
settle or dispose of any claim under this paragraph without Affiliate’s prior
written consent.





(d)       NOTWITHSTANDING ANYTHING TO THE CONTRARY
IN THIS AGREEMENT:





(1)          IN NO EVENT SHALL ANY PARTY BE LIABLE
FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER FORESEEABLE OR NOT,
OCCASIONED BY ANY FAILURE TO PERFORM OR THE BREACH OF ANY OBLIGATION UNDER THIS
AGREEMENT FOR ANY CAUSE WHATSOEVER INCLUDING NEGLIGENCE.  EACH OF THE
PARTIES HAVE READ AND UNDERSTANDS AND EXPRESSLY WAIVES AND RELEASES ANY AND ALL
RIGHTS AND BENEFITS WHICH THE RESPECTIVE PARTIES MAY HAVE HAD UNDER SECTION 1542
OF THE CIVIL CODE OF THE STATE OF CALIFORNIA (THE “CIVIL CODE”), AND ANY SIMILAR
PRINCIPLES OF LAW OR EQUITY, TO THE FULL EXTENT THAT THEY MAY HAVE SUCH RIGHTS
AND BENEFITS PERTAINING TO SUCH DAMAGES THE PARTIES ARE HEREBY
WAIVING.  SECTION 1542 OF THE CIVIL CODE PROVIDES AS
FOLLOWS:





“A GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IS KNOWN




24




BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.”





(2)           ANY AND ALL EXPRESS AND IMPLIED
WARRANTIES, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR ANY PURPOSE OR USE, ARE EXPRESSLY EXCLUDED AND DISCLAIMED BY
AFFILIATE.





(3)           IN NO EVENT SHALL ANY PROJECTIONS,
FORECASTS, ESTIMATIONS OF SALES AND/OR MARKET SHARE OR EXPECTED PROFITS, OR
OTHER ESTIMATIONS OR PROJECTIONS BY AFFILIATE OR ANY OF ITS DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS OR AFFILIATES, REGARDING OR RELATED TO AFFILIATE’SDTHBUSINESS BE BINDING AS
COMMITMENTS OR, IN ANY WAY, PROMISES BY AFFILIATE.





(e)        For
and in consideration of the terms and conditions set forth herein, Programmer
hereby RELEASES, ACQUITS, and FOREVER DISCHARGES Affiliate, its respective
parents, subsidiaries and affiliate companies, successors and assigns, and its
respective employees, officers and directors, of and from any and all claims,
actions or causes of action, demands, damages, penalties, costs, judgments,
expenses, liabilities, attorneys' fees, and legal costs (all of the above known
or unknown, suspected or unsuspected) in connection with any programming
licensed by *****.  Notwithstanding
the release set forth in this paragraph, nothing herein shall be interpreted as
releasing *****, its
parents, subsidiaries and affiliate companies, successors and assigns, and its
respective employees, officers and directors from any claims, actions or causes
of action, demands, damages, penalties, costs, judgments, exprenses,
liabilities, attorneys’ fees or legal costs.





9.         Notices.  Except as set forth below,
all notices hereunder shall be in writing and delivered by hand or sent by
certified mail, return receipt requested, fax, an overnight delivery service to
the receiving party at its address set forth above or as otherwise designated by
written notice.  Notice to Programmer shall be provided as
follows:





If by mail,
      facsimile
            PlayboyEntertainment
      Group, Inc.or
      overnight or
            2706
      Media Center Drive.personal
      delivery:
            Los
      Angeles, California 90065Attention:  Senior
      Vice President,Business
      and Legal AffairsFax:  (323)
      276-4502PlayboyEntertainment
      Group, Inc.2706
      Media Center Drive.Los
      Angeles, California 90065Attention:  Executive
      Vice President,Sales
      and Affiliate RelationsFax:  (323)
      276-4505




25




With
      a courtesy copy to:
            Playboy
      Enterprises, Inc.680
      N. Lake Shore DriveChicago,
      Illinois 60611Attn:  General
      CounselFax:  (312)
      266-2042Notice
      to Affiliate shall be provided as follows:If
      by mail
            DIRECTV,
      Inc.or
      facsimile:
            P.O.
      Box 92424Los
      Angeles, California 90009Attention:  Executive
      Vice President, ProgrammingFax:  (310)
      535-5416cc:  General
      CounselFax:  (310)
      964-4991cc:  Legal
      & Business AffairsFax:  (310)
      964-4880If
      by overnight or
            DIRECTV,
      Inc.personal
      delivery:
            2230
      East Imperial HighwayEl
      Segundo, California 90245Attention:
      Executive Vice President, Programmingcc:  General
      Counselcc:  Legal
      & Business Affairs





Notice
given by mail shall be considered to have been given five (5) days after the
date of mailing, postage prepaid certified or registered mail.  Notice
given by facsimile machine shall be considered to have been given on the date
receipt thereof is electronically acknowledged.  Notice given by
anovernight delivery service
shall be considered to have been given on the next business
day.





10.        Waiver.  The failure of any party to
insist upon strict performance of any provision of this Agreement shall not be
construed as a waiver of any subsequent breach of the same or similar
nature.  Subject to Section 8(d) above, all rights and remedies
reserved to either party shall be cumulative and shall not be in limitation of
any other right or remedy which such party may have at law or in
equity.





11.        Binding
Agreement; Assignment.  This Agreement shall be
binding upon the parties hereto and their respective successors and assigns,
except that it may not be assigned by transfer, by operation of law or
otherwise, without the prior written consent of the non-transferring party,
which shallnot be unreasonably withheld; provided, however, that (i)
Affiliate may assign its rights and obligations under this Agreement, in whole
or in part (including without limitation, Affiliate’s right to distribute the
Service) (A) to a successor entity to Affiliate’s DTH business; (B) to a third
party as part of preparing to go or going public; or (C) to a third party,
provided Affiliate remains primarily liable for the performance of such third
party’s obligations hereunderand
(ii) Programmer may assign its rights and obligations under this Agreement, in
whole or in part, (A) to a successor entity to Programmer’s business; provided,
however, that such assignment shall be subject to the limitations relating to
Change in Control set forth in Section 6(c)(v) hereof); or (B) to a third party
as part of preparing to go or going




26




public, so long as the controlling
stockholder(s) of Programmer and substantially all of the members of management
of the Programmer remain the same following the initial public offering and for
the duration of the Term.





12.        Laws of
California; Consent to California Jurisdiction.  This Agreement shall be
governed by and construed in accordance with the laws of the State of California
applicable to contracts made and fully performed therein, except to the extent
that the parties’ respective rights and obligations are subject to mandatory
local, State and Federal laws or regulations.  All actions relating to
this Agreement shall be brought, and the parties hereto consent to exclusive
jurisdiction (in personam and in rem) and venue for all actions relating to this
Agreement, in the courts located in Los Angeles County, California;provided,however, that any judgments or court orders
obtained may be enforced in any other jurisdiction.  Programmer
represents that CT Corporation System is its authorized agent for service of
process in Los Angeles, California.





13.        Entire
Agreement and Section Headings.  This Agreement sets forth
the entire agreement and understanding of the parties relating to the subject
matter hereof, and supersedes all prior agreements, arrangements,or
understandings relating to the subject matter hereof (whether written, oral or
implied), including, without limitation, the Current Playboy Agreement and any
amendments thereto.  This Agreement shall not be modified other than
in a writing, signed by each of the parties hereto.  The section
headings hereof are for the convenience of the parties only and shall not be
given any legal effect or otherwise affect the interpretation of this
Agreement.





14.        Severability.  The parties agree that each
provision of this Agreement shall be construed as separable and divisible from
every other provision and that the enforceability of any one provision shall not
limit the enforceability, in whole or in part, of any other provision
hereof.  In the event that a court of competent jurisdiction
determines that a restriction contained in this Agreement shall be unenforceable
because of the extent of time or geography, such restriction shall be deemed
amended to conform to such extent of time and/or geography as such court shall
deem reasonable.








15.        Confidentiality.





(a)       Generally.  The parties agree that they
and their employees have maintained and will maintain, in confidence, the terms
and provisions of this Agreement, as well as all data, summaries, reports,
proprietary information, trade secrets and information of all kinds, whether
oral or written, acquired or devised or developed in any manner from the other
party’s personnel or files or any proprietary or subscriber information provided
by one




27




party to the other party (the
“Confidential
Information”), and that
they have not and will not reveal the same to any persons not employed by the
other party except: (i) (A) at the written direction of such party; (B) to the
extent necessary to comply with the law or the valid order of a court of
competent jurisdiction, in which event the disclosing party shall so notify the
other party as promptly as practicable (and, if possible, prior to making any
disclosure) and shall seek confidential treatment of such information, or in
connection with any arbitration proceeding; (C) as part of its normal reporting
or review procedure to its parent company, its financial advisors, auditors and
its attorneys, and such parent company, financial advisors, auditors and
attorneys agree to be bound by the provisions of this Section 15; (D) to
independent contractors hired by either party in the ordinary course of
business, bona fide potential investors, insurers and financing entities;
provided, however, that such persons described above agree to be bound by the
provisions of this Section 15; or (E) in order to enforce any of its
rights pursuant to this Agreement;
however, that such person described above agrees to be bound by the provisions
of this Section 15; or (ii)(A) at the time of disclosure to the recipient the
Confidential Information is in the public domain; or (B) after disclosure to the
recipient the Confidential Information becomes part of the public domain by
written publication through no fault of the recipient.  During the
Term, neither party shall issue an independent press release, or discuss with a
member of the press, this Agreement or the transactions contemplated hereby
without the prior written consent of the other party.





(b)       Programmer’s
Further Obligations.  Notwithstanding Section
15(a), Programmer specifically acknowledges and agrees that any lists of
Affiliate’s customers or users, and all information related to such customers
and users, is confidential and proprietary information of Affiliate and cannot
be disclosed by Programmer or used by Programmer for any purpose or use
whatsoever, other than for its review at Affiliate’s offices as part of
Programmer’s audit rights hereunder to determine if Programmer has been paid the
License Fees due to it by Affiliate.  Also notwithstanding Section
15(a), Programmer further acknowledges and agrees that under no circumstances
will it in any way: disclose information (whether personally identifiable or
not) to any third party regarding Affiliate’s customers or users or engage in
any direct mailing or telephone solicitation which Affiliate’s customers or
users do not previously and expressly approve (whether orally or in writing) or
previously and expressly request (whether orally or in writing), or which
Affiliate does not previously and expressly approve in writing in Affiliate’s
sole discretion.





16.       Injunctive
Relief.Notwithstanding anything in this
Agreement to the contrary, Programmer and Affiliate each shall have the right to
obtain injunctive relief, if necessary, in order to prevent the other party from
willfully breaching its obligations under this Agreement.





17.       Cessation of
Program Distribution.  If Affiliate in good faith
reasonably believes that Affiliate’s provision of any of the programming on the
Service either violates any material Law or could be found by a court or
administrative agency to violate any material Law (a “Law Violation” or
“Potential Law Violation”) or reasonably believes in good faith at any time that
any of the programming on the Service is adversely affecting the corporate image
that Affiliate desires to maintainat such time (an “Image Problem”) then,




28




notwithstanding
anything to the contrary in this Agreement, (a) immediately following written
notice to Programmer in the case of a Law Violation or Potential Law Violation,
or (b) no sooner than thirty (30) days following written notice to Programmer in
the case of an Image Problem and only after consultation with Programmer and providing Programmer the
opportunity to propose a plan to resolve the Image Problem (if Affiliate elects
to terminate this Agreement as provided in this Section 17);Affiliate may terminate this Agreement,
or Affiliate may cease distributing the offending programming or the Service (in
any portion of the Territory, or the entire Territory, as Affiliate shall
determine in its sole discretion based on the genesis of the Law Violation;
Potential Law Violation or Image Problem) until Affiliate determines in
Affiliate’s sole discretion that there will be no Image Problem because the
Service programming at that subsequent time is consistent with the corporate
image that Affiliate then desires to maintain or Affiliate reasonably determines
that a Law Violation or Potential Law Violation will not again
occur.  If Affiliate, pursuant to this Section 17 and due to an Image
Problem, desires to cease distributing the Service, Affiliate shall provide
Programmer with notice thereof setting forth in reasonable detail the nature of
Affiliate’s concerns and provide Programmer with the opportunity to propose
changes in the Service to address Affiliate’s concerns.





18.       Survival of
Representations and Warranties.  All representations and
warranties contained herein or made by the parties, and each of them, in
connection herewith shall survive any independent investigation made by either
party.





19.       Counterparts.  This Agreement may be
executed in several counterparts, each of which shall be deemed an original and
all such counterparts together shall constitute but one and the same
instrument.  The parties also agree that this Agreement shall be
binding upon the faxing by each party of a signed signature page thereof to the
other party.  If such a


faxing occurs, the parties agree that
they will each also immediately post, by Federal Express, a fully executed
original counterpart of the Agreement to the other party.





29




IN WITNESS WHEREOF, the undersigned
parties have caused this Agreement to be executed by their duly authorized
representatives as of the day and year first above written.





DIRECTV, INC.








By:__/s/Toby
Berlin________________________





Toby
Berlin


Vice President, Programming
Acquisitions








PLAYBOY ENTERTAINMENT GROUP,
INC.








By:_/s/
Jonathan Blinderman_________________








SPICE HOT ENTERTAINMENT,
INC.








By:_/s/
Jonathan Blinderman_________________











30




EXHIBIT
A








DESCRIPTIONS AND
LIMITATIONSOFTHE
SERVICE





From and after the Effective Date and at
all times during the Term, the Service (including Playboy TV En Español, if
applicable) shall be provided by Programmer to Affiliate on a full-time
turnaround basis (i.e., 24 hours per day, seven days a week)





The programming content of the Service
shall comply with the following limitations and
restrictions:





(i)          With respect to the services making up
the Service, the programming contained therein shall (subject to specific
channel descriptions set forth in this Agreement):





(A)           Consist
of uninterrupted movies and shows of the adult genre (subject to the description
and limitations set forth in Exhibit A), together with interstitials, public
service announcements, behind the scenes spots and spots promoting upcoming
programming on the Service; provided that any such spots, permitted commercial
announcements and/or interstitial programming shall be first class broadcast
quality  for the adult television industry and shall not promote a
competitive multi-channel video distribution service or denigrate direct
satellite distribution.  The Service shall not contain any advertising
except that during the “breaks”
between movies and/or shows (and with respect to the VOD Services, before and/or
after the program), the Service may contain spots promoting Programmer’s
audiotext (i.e., “900” number) offerings  (the “AudiotextSpots”) as follows: (x) if the break is less
than or equal to*****in length, Audiotext Spots not
exceeding*****in the aggregate during such break; and
(y) if the break is greater than*****in length, Audiotext Spots not
exceeding*****in the aggregate during such break;
provided that, in either case, Programmer shall not interrupt any movies or
shows to air the Audiotext Spots.  The quality of all interstitial,
promos, station I.D.s, public service announcements, or other permitted
insertions shall be of a production quality equal to, if not greater than, those
airing on each of the Services as of the date of this
Agreement.  Notwithstanding the foregoing, Programmer shall have the
right to include third party advertising on each of the Services up to a total
of*****of programming; provided that, if
Programmer elects to include such advertising, Affiliate shall have the right to
cover*****if Programmer inserts less than*****via the insertion of its own commercial
or other announcements (including, without limitation, promotions for any or all
adult programming services distributed by DIRECTV).  In the event
Programmer elects to include advertising in a Service, Programmer shall properly
“tone switch”, using industry recognized equipment, via inaudible signals, all
Avails to enable Affiliate to insert its commercial
announcements.  Notwithstanding the foregoing, under no circumstances
shall the Service be permitted to include, directly or indirectly,
advertisements promoting any competitor of Affiliate (e.g., any satellite
television provider; cable operator; telco provider such as*****in connection with such other
provider’s multi-channel video distribution business; or any other distributor
of video content, including via cellular phone, World Wide Web, Internet and/or
wireless technology); provided that the content of the Service may contain
references to




31




Programmer’s owned or operated websites,
and other incidental references to where a viewer can receive additional
information or content with respect to an individual appearing in the program or
a topic covered in the program; and provided further than any such incidental
reference shall not be provided in exchange for
consideration.





(B)           Only contain programming that is of a
production quality at least comparable to, if not better than, the production
quality of each applicable programming service contained in the Service as of
August 1, 2007.





(C)           Not
include any violence, any activity that equates sexuality with violent behavior,
any scenes of non-consenting sexual activity, incest, sadism, sadomasochism or
forced bondage, as presented in the programming and promotional materials of the
Service during the Term.





(D)           Not
include any scenes of bestiality, any scenes of sexual activity with children
(including “play-acting”), or any acts depicting male homosexuality, unless
approved by Affiliate in advance.





(E)           Include
differentiated programming among the various programming services making up the
Service so that each programming service is a distinct and independent service
and are not a monthly multiplex or timeshifted version of any other
service.





(F)           Shall
adhere to the industry’s standards and practices (the “Industry’s Standards and
Practices”) for adult programming distributed via television services, and shall
comply with the below described standards and practices (the “Standards and
Practices”) that shall control if they conflict with the Industry’s Standards
and Practices.  Any act or portrayal that is prohibited to be
presented on the Service as provided below or which the Industry’s Standards and
Practices prohibit to be presented in audiovisual material, is hereinafter
referred to as a “Prohibited Act.”





(ii)          All programming services
may:





(A)           Include
nudity and sexual situations as a matter of course; however, there shall be no
depiction of any sexual acts prohibited by this Exhibit A.





(B)           Include
explicit and graphic language; provided however that the Service and promotional
materials of the Service shall not include during the Term descriptive dialogue
that is more sexist, racist, violent, threatening or patently offensive than
such language that has been presented on the Service as of August 1, 2007.





(iii)         The Movie Channels shall comply with the
following:





(A)           Movies on the Movie Channels shall be
scheduled to start every 90 minutes, and on a staggered basis, with attention
given to creating appealing double feature, three-hour
blocks.





32




(B)           The movies broadcast on the Movie
Channels shall generally range from 70 to 85 minutes in
length.





*****





(iii)         Subject to specific channel descriptions
set forth in this Agreement,Programmer may determine the content ofits programmingservicesin its sole discretion, including the
substitution or withdrawal of scheduled programs, and of commercial, promotional
or other announcements,
consistent with the terms and conditions of this Agreement.





(v)         Programming
Service Specific Restrictions.





(A)           Playboy
TV.  *****





(B)           Movie Channel 1.
*****





(C)           Movie Channel
2.  *****





(D)           Playboy TV
en Español Service.*****





(E)           *****





A description of each of these offerings
is as follows:





TITLE                      DESCRIPTION





Peep
      Show
            Set
      in a sexy peep show booth with velvet lined walls & surveillance
      cameras.  Singles or horny couples are all caught on tape and
      we'll always be watching through our live feed...even when they think we
      aren't.The
      AuditionRoom
            These
      auditions are down and dirty, and the viewer can vote or call in to rate
      the hottest and newest talent.MoviePreviews
            Preview
      the nastiest and most anticipated movies, and watch your favorite clips in
      this quick hit format.Behind
      TheScenes
            Get
      a VIP pass onto the sets of Adult's biggest shoots.  We go
      behind the scenes to watch what really goes on when the cameras are off,
      and we speak to the biggest sex
stars.








33




EXHIBIT A
(continued)





PROGRAMMING
STANDARDS





*****





An * indicates that the described
activity appears in the particular version.






34




EXHIBIT
B








PROGRAMMER’S
CABLE RATE CARD FOR NON-HOTEL/MOTEL DISTRIBUTION








Affiliate’s
      Share of
              Gross
      Receipts
            Programmer’s
      Share of
              Gross
      ReceiptsPlayboy
      TV
            *****
            *****Movie
      Channel 1
            *****
            *****Movie
      Channel 2
            *****
            *****





A.  Cascade
Payments:  In each month that Affiliate offers a Cascade
including the Services, or any combination of such Services, together with other
third party adult programming services, Affiliate shall determine the
corresponding License Fee payable to Programmer by use of the following
formula(s):





*****





and/or





*****




(i)
                The
      Movie Channels will be included in the Cascade (or any bundle of adult PPV
      services offered by Affiliate) unless one of such Services is terminated
      by Affiliate pursuant to Affiliate’s rights under this Exhibit
      B;(ii)
                Affiliate
      will make Playboy TV, Movie Channel 1 and Movie Channel 2 available for
      purchase to all residential DIRECTV Subscribers receiving content from
      Affiliate’s DTH Distribution System (except with respect to DIRECTV
      Subscribers who have elected not to have the option of purchasing adult
      programming and/or have been excluded from the purchase of transactional
      programming and those DIRECTV Subscribers residing in geographical areas
      where Affiliate systematically blacks out programming services pursuant to
      its rights under Section 17) unless one of such Movie Channels is
      terminated by Affiliate pursuant to Affiliate’s rights under this Exhibit
      B;(iii)
                Affiliate
      may determine in its reasonable discretion the retail prices of the
      Services and/or the Cascade; provided, however, that any change in such
      retail prices shall be commercially reasonably designed to maximize Gross
      Receipts of the Services and/or the Cascade;(iv)
                All
      adult linear services will be offered in the same neighborhood of
      channels;
  35
 
 (v)
                Affiliate
      will not engage in any sale of assets that would have the effect of
      materially reducing the number of DIRECTV Subscribers during the Term;
      and(vi)
                The
      Service will be treated no less favorably in marketing, advertising and
      promotional activities than any other adult service offered to DIRECTV
      Subscribers by Affiliate; provided that Affiliate shall be deemed to have
      complied with this requirement if it implements substantially similar
      activities on behalf of the Service as on behalf of such other adult
      service(s).  The foregoing requirement shall not apply to
      promotions or other marketing consideration purchased from Affiliate by
      the provider of another adult service so long as Programmer is offered
      similar opportunities on the same terms and conditions; provided that the
      costs associated with any such offer that is accepted by Programmer may be
      paid for by Programmer out of the portion of the Marketing Account set
      aside for mutually agreed upon promotional campaigns ***** to
      the extent that such funds are available, and, if such funds are not
      available, Programmer shall cover any additional such
    costs.




Subject to the foregoing, in the event
that the*****are met for only a portion of the First
or Second Contract Year, Programmer’s respective*****obligations for either such period
shall apply on a pro rata basis to those portions of such years during which the*****have been met.





The*****are only applicable toProgrammer’s payment of ***** payments
and/or sub-section (F) below, and
a failure of Affiliate to meet such requirements shall not be treated as a
breach of the Agreement.





*****







36





EXHIBIT
C





MONTHLY
PROGRAM SCHEDULES FOR THE SERVICE








(see attached)








37








EXHIBIT
D





PROGRAMMER’S
RATE CARD FOR HOTEL/MOTEL DISTRIBUTION








Affiliate’s
      Share of
              Gross
      Receipts
            Programmer’s
      Share of
              Gross
      ReceiptsPlayboy
      TV
            *****
            *****Movie
      Channel 1
            *****
            *****Movie
      Channel 2
            *****
            *****











38





EXHIBIT
E





PROGRAMMERS RATE CARD FOR
PLAYBOY TV EN ESPAÑOL (IF APPLICABLE)








Affiliate’s Share
      of
              Gross
      Receipts
            Programmer’s Share
      of
              Gross
      ReceiptsPlayboy TV en Español
      Service
            *****
            *****







39