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                                                                   EXHIBIT 10.11

                           PRIVATE MEDIA GROUP, INC.
                        1999 EMPLOYEE STOCK OPTION PLAN


    1.    Purpose.
          ------- 

          This Employee Stock Option Plan (the "Plan") is intended to allow
designated employees, executive officers, directors, consultants, advisors and
other corporate and divisional officers (all of whom are sometimes collectively
referred to herein as "Employees") of Private Media Group, Inc., a Nevada
corporation ("Private"), and its subsidiaries which it may have from time to
time (Private and such subsidiaries being together referred to herein as the
"Company") to receive certain options ("Stock Options") to purchase Private's
common stock, $.001 par value ("Common Stock"), as herein provided. The purpose
of the Plan is to provide Employees with additional incentives to make
significant and extraordinary contributions to the long-term performance and
growth of the Company and to attract and retain Employees of exceptional
ability.

    2.    Administration.
          -------------- 

          (a) The Plan shall be administered by a Committee of three or more
persons ("Committee") established by the Board of Directors of Private (the
"Board") from time to time, which may consist of the Compensation Committee, the
full Board of Directors or such persons as the Board shall designate. A majority
of its members shall constitute a quorum. The Committee shall be governed by the
provisions of Private's By-Laws and of Nevada law applicable to the Board,
except as otherwise provided herein or determined by the Board.

          (b) The Committee shall have full and complete authority, in its
discretion, but subject to the express provisions of the Plan: to approve the
Employees nominated by the management of the Company to be granted Stock
Options; to determine the number of Stock Options to be granted to an Employee;
to determine the time or times at which Stock Options shall be granted; to
establish the terms and conditions upon which Stock Options may be exercised; to
remove or adjust any restrictions and conditions upon Stock Options; to specify,
at the time of grant, provisions relating to the exercisability of Stock Options
and to accelerate or otherwise modify the exercisability of any Stock Options;
and to adopt such rules and regulations and to make all other determinations
deemed necessary or desirable for the administration of the Plan. All
interpretations and constructions of the Plan by the Committee, and all of its
actions hereunder, shall be binding and conclusive on all persons for all
purposes.

          (c) The Company hereby agrees to indemnify and hold harmless each
Committee member and each employee of the Company, and the estate and heirs of
such Committee member or employee, against all claims, liabilities, expenses,
penalties, damages or other pecuniary losses, including legal fees, which such
Committee member or employee or his or her estate or heirs may suffer as a
result of his or her responsibilities, obligations or duties in connection with
the Plan, to the extent that insurance, if any, does not cover the payment of
such items.
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     3.   Eligibility and Participation.
          ----------------------------- 

          Employees eligible under the Plan shall be approved by the Committee
from those Employees who, in the opinion of the management of the Company, are
in positions which enable them to make significant and extraordinary
contributions to the long-term performance and growth of the Company. In
selecting Employees to whom Stock Options may be granted, consideration shall be
given to factors such as employment position, duties and responsibilities,
ability, productivity, length of service, morale, interest in the Company and
recommendations of supervisors.

     4.   Grants.
          ------ 

          The Committee may grant Stock Options in such amounts, at such times,
and to such Employees nominated by the management of the Company as the
Committee, in its discretion, may determine. Stock Options granted under the
Plan shall constitute non-statutory stock options. Subject to the provisions of
paragraph 11 hereof, the number of shares of Common Stock issued and issuable
pursuant to the exercise of Stock Options granted hereunder shall not exceed One
Million Two Hundred Thousand (1,200,000). Each Stock Option shall be evidenced
by a written agreement (the "Option Agreement") in a form approved by the
Committee, which shall be executed on behalf of the Company and by the Employee
to whom the Stock Option is granted. If a Stock Option expires, terminates or is
cancelled for any reason without having been exercised in full, the shares of
Common Stock not purchased thereunder shall again be available for purposes of
the Plan.

     5.   Purchase Price.
          -------------- 

          The purchase price (the "Exercise Price") of shares of Common Stock
subject to each Stock Option ("Option Shares") shall be determined by the
Committee at the time of the grant of the Stock Option and shall be equal to or
greater than the fair market value ("Fair Market Value") of such shares on the
date of grant of such Stock Option (which date of grant may be the date the
Committee approves the issuance of the Stock Option or such later date or dates
as the Committee may specify. The Fair Market Value of a share of Common Stock
on any date shall be equal to the closing bid price of the Common Stock for the
last preceding day on which Private's shares were traded, and the method for
determining the closing bid price shall be determined by the Committee.

     6.   Option Period.
          ------------- 

          The Stock Option period (the "Term") shall commence on the date of
grant of the Stock Option and shall be five (5) years or such shorter period as
is determined by the Committee. Notwithstanding the foregoing, but subject to
the provisions of paragraphs 2(b) and 11(c), Stock Options granted to Employees
who are subject to the reporting requirements of Section 16(a) of the U.S.
Securities Exchange Act of 1934 ("Section 16 Reporting Persons") shall not be
exercisable until at least six months and one day from the date the Stock Option
is granted, or, if later, from the date of stockholder approval of the Plan. If
an Employee shall not in any period

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purchase all of the Option Shares which the Employee is entitled to purchase in
such period, the Employee may purchase all or any part of such Option Shares at
any time prior to the expiration of the Stock Option.

     7.   Exercise of Options.
          ------------------- 

          (a) Each Stock Option may be exercised in whole or in part (but not as
to fractional shares) by delivering it for surrender or endorsement to the
Company, attention of the Corporate Secretary, at the principal office of the
Company, together with payment of the Exercise Price and an executed Notice and
Agreement of Exercise in the form prescribed by paragraph 7(b). Payment may be
made in cash, by cashier's or certified check.

          (b) The exercise of each Stock Option is conditioned upon the
agreement of the Employee to the terms and conditions of this Plan and of such
Stock Option as evidenced by the Employee's execution and delivery of a Notice
and Agreement of Exercise in a form to be determined by the Committee in its
discretion. Such Notice and Agreement of Exercise shall set forth the agreement
of the Employee that: (a) no Option Shares will be sold or otherwise distributed
in violation of the Securities Act of 1933 (the "Securities Act") or any other
applicable federal or state securities laws, (b) each Option Share certificate
may be imprinted with legends reflecting any applicable federal and state
securities law restrictions and conditions, (c) the Company may comply with said
securities law restrictions and issue "stop transfer" instructions to its
Transfer Agent and Registrar without liability, (d) if the Employee is a Section
16 Reporting Person, the Employee will furnish to the Company a copy of each
Form 4 or Form 5 filed by said Employee and will timely file all reports
required under federal securities laws, and (e) the Employee will report all
sales of Option Shares to the Company in writing on a form prescribed by the
Company.

          (b) No Stock Option shall be exercisable unless and until any
applicable registration or qualification requirements of federal and state
securities laws, and all other legal requirements, have been fully complied with
The Company will use reasonable efforts to maintain the effectiveness of a
Registration Statement under the Securities Act for the issuance of Stock
Options and shares acquired thereunder, but there may be times when no such
Registration Statement will be currently effective. The exercise of Stock
Options may be temporarily suspended without liability to the Company during
times when no such Registration Statement is currently effective, or during
times when, in the reasonable opinion of the Committee, such suspension is
necessary to preclude violation of any requirements of applicable law or
regulatory bodies having jurisdiction over the Company. If any Stock Option
would expire for any reason, then if the exercise of such Stock Option is duly
tendered before its expiration, such Stock Option shall be exercisable and
exercised (unless the attempted exercise is withdrawn) as of the first day after
the end of such suspension. The Company shall have no obligation to file any
Registration Statement covering resales of Option Shares.

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     8.   Continuous Employment.
          --------------------- 

          Except as provided in paragraph 10 below or unless otherwise provided
by the Committee, an Employee may not exercise a Stock Option unless from the
date of grant to the date of exercise such Employee remains continuously in the
employ of the Company. For purposes of this paragraph 8, the period of
continuous employment of an Employee with the Company shall be deemed to include
(without extending the term of the Stock Option) any period during which such
Employee is on leave of absence with the consent of the Company, provided that
such leave of absence shall not exceed three (3) months and that such Employee
returns to the employ of the Company at the expiration of such leave of absence.
If such Employee fails to return to the employ of the Company at the expiration
of such leave of absence, such Employee's employment with the Company shall be
deemed terminated as of the date such leave of absence commenced. The continuous
employment of an Employee with the Company shall also be deemed to include any
period during which such Employee is a member of the military, provided that
such Employee returns to the employ of the Company within ninety (90) days (or
such longer period as may be prescribed by law) from the date such Employee
first becomes entitled to discharge. If an Employee does not return to the
employ of the Company within ninety (90) days (or such longer period as may be
prescribed by law) from the date such Employee first becomes entitled to
discharge, such Employee's employment with the Company shall be deemed to have
terminated as of the date such Employee's military service ended.

     9.   Restrictions on Transfer.
          ------------------------ 

          Options granted under this Plan shall be transferable only by will or
the laws of descent and distribution unless otherwise determined by the
Committee at any time at or after the date of grant of the Option, provided such
transfer does not conflict with applicable securities laws or render the Company
ineligible to use Form S-8 or any successor form to register the Options. No
interest of any Employee under the Plan shall be subject to attachment,
execution, garnishment, sequestration, the laws of bankruptcy or any other legal
or equitable process. Each Stock Option granted under this Plan shall be
exercisable during an Employee's lifetime (or in the event of the death of
Employee, by his or her legal representative) only by such Employee or such
Employee's permitted transferees or legal representative.

     10.  Termination of Employment.
          ------------------------- 

          (a) Upon an Employee's Retirement, Disability or death: (a) all Stock
Options to the extent then presently exercisable shall remain in full force and
effect and may be exercised pursuant to the provisions thereof, including
expiration at the end of the fixed term thereof, and (b) unless otherwise
provided by the Committee, all Stock Options to the extent not then presently
exercisable by such Employee shall terminate as of the date of such termination
of employment and shall not be exercisable thereafter.

          (b) Upon  the  termination of the employment of an Employee with the
Company for any 

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reason other than the reasons set forth in paragraph 10(a) hereof, unless
otherwise provided by the Committee, (a) all Stock Options to the extent then
presently exercisable by such Employee shall remain exercisable only for a
period of ninety (90) days after the date of such termination of employment
(except that the ninety (90) day period shall be extended to twelve (12) months
if the Employee shall die during such ninety (90) day period), and may be
exercised pursuant to the provisions thereof, including expiration at the end of
the fixed term thereof, and (b) all Stock Options to the extent not then
presently exercisable by such Employee shall terminate as of the date of such
termination of employment and shall not be exercisable thereafter.

          (c) For purposes of this Plan:

              (i)  "Retirement" shall mean an Employee's  retirement from  the
employ  of  the Company  on or after the date on which such Employee attains the
age of sixty-five (65) years; and

              (ii) "Disability" shall mean total and permanent incapacity of an
Employee, due to physical impairment or legally established mental incompetence,
to perform the usual duties of such Employee's employment with the Company,
which disability shall be determined on medical evidence by a licensed physician
designated by the Committee.

     11.  Adjustments Upon Change in Capitalization.
          ----------------------------------------- 

          (a) The number and class of shares subject to each outstanding Stock
Option, the Exercise Price thereof (but not the total price) and the maximum
number of Stock Options that may be granted under the Plan shall be
proportionately adjusted in the event of any increase or decrease in the number
of the issued shares of Common Stock which results from a split-up or
consolidation of shares, payment of a stock dividend or dividends exceeding a
total of two and one-half percent (2.5%) for which the record dates occur in any
one fiscal year, a recapitalization (other than the conversion of convertible
securities according to their terms), a combination of shares or other like
capital adjustment, so that upon exercise of the Stock Option, the Employee
shall receive the number and class of shares such Employee would have received
had such Employee been the holder of the number of shares of Common Stock for
which the Stock Option is being exercised upon the date of such change or
increase or decrease in the number of issued shares of the Company.

          (b) Upon a reorganization, merger or consolidation of the Company with
one or more corporations as a result of which Private is not the surviving
corporation or in which Private survives as a wholly-owned subsidiary of another
corporation, or upon a sale of all or substantially all of the property of the
Company to another corporation, or any dividend or distribution to shareholders
of more than ten percent (10%) of the Company's assets, adequate adjustment or
other provisions shall be made by the Company or other party to such transaction
so that there shall remain and/or be substituted for the Option Shares provided
for herein, the shares, securities or assets which would have been issuable or
payable in respect of or in exchange for such Option Shares then remaining, as
if the Employee had been the owner of such Option Shares as of the applicable
date. Any securities so substituted shall be subject to similar successive

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adjustments.

          (c) In the sole discretion of the Committee, Stock Options may include
provisions, on terms authorized by the Committee in its sole discretion, that
accelerate the Employees' rights to exercise Stock Options upon a sale of
substantially all of the Company's assets, the dissolution of Private or upon a
change in the controlling shareholder interest in Private resulting from a
tender offer, reorganization, merger or consolidation or from any other
transaction or occurrence, whether or not similar to the foregoing (each, a
"Change in Control").

     12.  Withholding Taxes.
          ----------------- 

          The Company shall have the right at the time of exercise of any Stock
Option to make adequate provision for any federal, state, local or foreign taxes
which it believes are or may be required by law to be withheld with respect to
such exercise ("Tax Liability"), to ensure the payment of any such Tax
Liability. The Company may provide for the payment of any Tax Liability by any
of the following means or a combination of such means, as determined by the
Committee in its sole and absolute discretion in the particular case: (i) by
requiring the Employee to tender a cash payment to the Company, (ii) by
withholding from the Employee's salary, (iii) by withholding from the Option
Shares which would otherwise be issuable upon exercise of the Stock Option that
number of Option Shares having an aggregate Fair Market Value as of the date the
withholding tax obligation arises that is equal to the Employee's Tax Liability
or (iv) by any other method deemed appropriate by the Committee. Satisfaction of
the Tax Liability of a Section 16 Reporting Person may be made by the method of
payment specified in clause (iii) above upon satisfaction of such additional
conditions as the Committee shall deem in its sole and absolute discretion as
appropriate in order for such withholding of Option Shares to qualify for the
exemption provided for in Section 16b-3 of the Exchange Act.

     13.  Relationship to Other Employee Benefit Plans.
          -------------------------------------------- 

          Stock Options granted hereunder shall not be deemed to be salary or
other compensation to any Employee for purposes of any pension, thrift, profit-
sharing, stock purchase or any other employee benefit plan now maintained or
hereafter adopted by the Company.

     14.  Amendments and Termination.
          -------------------------- 

          The Board of Directors may at any time suspend, amend or terminate
this Plan. No amendment or modification of this Plan may be adopted, except
subject to shareholder approval, which would: (a) materially increase the
benefits accruing to Employees under this Plan, (b) materially increase the
number of securities which may be issued under this Plan or (c) materially
modify the requirements as to eligibility for participation in the Plan.

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     15.  Successors in Interest.
          ---------------------- 

          The provisions of this Plan and the actions of the Committee shall be
binding upon all heirs, successors and assigns of the Company and of Employees.

     16.  Other Documents.
          --------------- 

          All documents prepared, executed or delivered in connection with this
Plan shall be, in substance and form, as established and modified by the
Committee or by persons under its direction and supervision; provided, however,
that all such documents shall be subject in every respect to the provisions of
this Plan, and in the event of any conflict between the terms of any such
document and this Plan, the provisions of this Plan shall prevail. All Stock
Options granted under the Plan shall be evidenced by written agreements executed
by the Company and the Employees to whom the Stock Options have been granted.

     17.  No Obligation to Continue Employment.
          ------------------------------------ 

          This Plan and grants hereunder shall not impose any obligation on the
Company to continue to employ any Employee. Moreover, no provision of this Plan
or any document executed or delivered pursuant to this Plan shall be deemed
modified in any way by any employment contract between an Employee (or other
employee) and the Company.

     18.  Term of Plan.
          ------------ 

          This Plan was adopted by the Board effective March 1, 1999. No Stock
Options may be granted under this Plan after March 1, 2004.

     19.  Governing Law.
          ------------- 

           This Plan shall be construed in accordance with, and governed by, the
laws of the State of Nevada.

     20.  Stockholder Approval.
          -------------------- 

          No Stock Option shall be exercisable unless and until the stockholders
of the Company have approved this Plan and all other legal requirements have
been fully complied with.

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     21.  Privileges of Stock Ownership.
          ----------------------------- 

          The holder of a Stock Option shall not be entitled to the privileges
of stock ownership as to any shares of the Company common stock not actually
issued to such holder.

          IN WITNESS WHEREOF, this Plan has been executed effective as of the
first day of March, 1999.

                                           PRIVATE MEDIA GROUP, INC.



                                           By_________________________
                                              Berth Milton, President

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