Document:

Exhibit 10.27(a)

                    AMENDED AND RESTATED SEVERANCE AGREEMENT

            THIS AMENDED AND RESTATED  SEVERANCE  AGREEMENT (this  "Agreement"),
dated as of September 1, 2008, is by and between  Playboy  Enterprises,  Inc., a
Delaware  corporation (the "Company"),  and ____________,  (the "Executive") and
is, effective as of January 1, 2008, hereby amending,  restating and superseding
that prior Severance  Agreement between the parties dated November 29, 2001, for
compliance  with Section 409A of the Internal  Revenue Code of 1986,  as amended
(the "Code").

                                   WITNESSETH:

            WHEREAS,  the Executive is a senior executive or key employee of the
Company and has made and is expected to continue to make major  contributions to
the short- and long-term  profitability,  growth and  financial  strength of the
Company;

            WHEREAS,  the  Company  recognizes  that,  as is the  case  for most
publicly-held companies, the possibility of a Change in Control exists;

            WHEREAS,  the Company  desires to assure  itself of both present and
future  continuity  of  management  and  desires to  establish  certain  minimum
severance  benefits for certain of its senior  executive  officers and other key
employees,  including  the  Executive,  applicable  in the  event of a Change in
Control;

            WHEREAS, the Company wishes to ensure that its senior executives and
other key employees are not practically  disabled from discharging  their duties
in respect of a proposed  or actual  transaction  involving a Change in Control;
and

            WHEREAS,  the Company desires to provide  additional  inducement for
the Executive to continue to remain in the ongoing employ of the Company;

            NOW, THEREFORE, the Company and the Executive agree as follows:

          1.   Certain  Defined  Terms:  In addition to terms defined  elsewhere
herein,  the  following  terms  have the  following  meanings  when used in this
Agreement with initial capital letters:

                    (a) "Base Pay" means the Executive's annual base salary at a
          rate not less than the Executive's  annual fixed or base  compensation
          as in effect for Executive  immediately  prior to the  occurrence of a
          Change in Control or such higher rate as may be  determined  from time
          to time by the Board of Directors  of the Company  (the  "Board") or a
          Committee thereof.

                    (b)  "Change  in  Control"   means  any  of  the   following
          occurrences during the Term:

                              (i) Hugh M. Hefner directly or as beneficial owner
                    and Christie  Hefner cease  collectively to hold over 50% of
                    the combined voting power of the then-outstanding securities
                    entitled to vote  generally  in the election of directors of
                    the Company ("Voting Stock"); or

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                              (ii) except pursuant to a transaction described in
                    the proviso to Section 1(b)(iv) or (v), a sale,  exchange or
                    other disposition of PLAYBOY Magazine; or

                              (iii) except  pursuant to a transaction  described
                    in the proviso to Section  1(b)(iv) or (v), the  liquidation
                    or dissolution of the Company; or

                              (iv)  the  Company  is  merged,   consolidated  or
                    reorganized into or with another  corporation or other legal
                    person;   provided,    however,   that   no   such   merger,
                    consolidation or reorganization  will constitute a Change in
                    Control if the merger,  consolidation or  reorganization  is
                    initiated  by the  Company  and as a result of such  merger,
                    consolidation or reorganization  not less than a majority of
                    the combined voting power of the then-outstanding securities
                    of the surviving,  resulting or ultimate parent corporation,
                    as the case may be,  immediately  after such  transaction is
                    held in the  aggregate  by persons  who held not less than a
                    majority of the  combined  voting  power of the  outstanding
                    Voting  Stock  of the  Company  immediately  prior  to  such
                    transaction; or

                              (v) the Company  sells or otherwise  transfers all
                    or substantially all of its assets to another corporation or
                    other legal person; provided,  however, that no such sale or
                    transfer will  constitute a Change in Control if the sale or
                    transfer is initiated by the Company and as a result of such
                    sale or transfer  not less than a majority  of the  combined
                    voting  power  of the  then-outstanding  securities  of such
                    corporation  or  other  legal  person,  as the  case may be,
                    immediately  after  such  sale  or  transfer  is held in the
                    aggregate  by persons  who held not less than a majority  of
                    the combined voting power of the outstanding Voting Stock of
                    the Company immediately prior to such sale or transfer; or

                              (vi) an equity or other investment in the Company,
                    the result of which is that Christie  Hefner ceases to serve
                    as the Company's  Chief  Executive  Officer or  relinquishes
                    upon  request  or  is  divested  of  any  of  the  following
                    responsibilities:

                                        (A) functioning as the person  primarily
                              responsible for establishing  policy and direction
                              for the Company; or

                                        (B) being the  person to whom the senior
                              executives of the Company report; or

                              (vii) the  adoption  by the Board of a  resolution
                    that,  for purposes of this  Agreement,  a Change in Control
                    has occurred.

          For purposes of Section 1(b)(i),  any Voting Stock  beneficially owned
          (as such term is defined  under Rule  13d-3 or any  successor  rule or
          regulation under the Securities  Exchange Act of 1934, as amended (the
          "Exchange  Act")) by the Hugh M. Hefner  Foundation shall be deemed to
          be held by Christie Hefner if and so long as she has sole voting power
          with respect to such Voting Stock.

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                    (c) "Cause" means that, prior to any termination pursuant to
          Section 3(b) hereof, the Executive shall have:

                              (i)  been   convicted  of  a  criminal   violation
                    involving dishonesty, fraud or breach of trust; or

                              (ii)  willfully   engaged  in  misconduct  in  the
                    performance of Executive's  duties that  materially  injures
                    the Company or any entity in which the  Company  directly or
                    indirectly  beneficially  owns  50% or  more  of the  voting
                    securities (a "Subsidiary").

                    (d) "Disability" means a condition whereby the Executive:

                              (i) is unable to engage in any substantial gainful
                    activity by reason of any medically determinable physical or
                    mental  impairment  which can be expected to result in death
                    or can be  expected to last for a  continuous  period of not
                    less than 12 months; or

                              (ii) is, by reason of any  medically  determinable
                    physical  or  mental  impairment  which can be  expected  to
                    result in death or can be expected to last for a  continuous
                    period  of  not  less  than  12  months,   receiving  income
                    replacement  benefits for a period of not less than 3 months
                    under an accident and health plan covering  employees of the
                    Executive's employer.

                    (e) "Employee Benefits" means the perquisites,  benefits and
          service  credit for  benefits as provided  under any and all  employee
          retirement  income and welfare benefit  policies,  plans,  programs or
          arrangements in which Executive is entitled to participate,  including
          without   limitation   any  stock  option,   stock   purchase,   stock
          appreciation,  savings, pension, supplemental executive retirement, or
          other  retirement  income or welfare benefit,  deferred  compensation,
          incentive compensation,  group or other life, health, medical/hospital
          or other insurance (whether funded by actual insurance or self-insured
          by  the   Company),   disability,   salary   continuation,   executive
          protection, expense reimbursement and other employee benefit policies,
          plans,  programs or arrangements  that may now exist or any equivalent
          successor  policies,  plans,  programs  or  arrangements  that  may be
          adopted hereafter by the Company, providing perquisites,  benefits and
          service  credit for benefits at least as great in the aggregate as are
          provided thereunder immediately prior to a Change in Control.

                    (f) "Incentive Pay" means bonus, incentive or other payments
          of cash  compensation,  in addition to Base Pay, made or to be made in
          regard  to  services  rendered  pursuant  to  any  bonus,   incentive,
          profit-sharing,  performance,  discretionary pay or similar agreement,
          policy,  plan,  program or arrangement  (whether or not funded) of the
          Company, or any successor thereto providing benefits at least as great
          as the benefits provided  thereunder  immediately prior to a Change In
          Control.

                    (g)  "Potential  Change in Control"  shall be deemed to have
          occurred  if  the  event  set  forth  in  any  one  of  the  following
          subsections shall have occurred:

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                              (i) the  Company  enters  into an  agreement,  the
                    consummation  of which would result in the  occurrence  of a
                    Change in Control;

                              (ii) the Company or any Person publicly  announces
                    an intention to take or to consider taking actions which, if
                    consummated, would constitute a Change in Control; or

                              (iii) the Board adopts a resolution  to the effect
                    that, for purposes of this Agreement,  a Potential Change in
                    Control has occurred.

                    (h) "Potential Change in Control Period" shall commence upon
          the  occurrence of a Potential  Change in Control and shall lapse upon
          the occurrence of a Change in Control or, if earlier:

                              (i) with respect to a Potential  Change in Control
                    occurring pursuant to Section l(f)(i),  immediately upon the
                    abandonment or termination of the applicable agreement;

                              (ii) with respect to a Potential Change in Control
                    occurring  pursuant to Section l(f)(ii),  immediately upon a
                    public  announcement by the applicable party that such party
                    has  abandoned  its  intention  to take or  consider  taking
                    actions  which if  consummated  would  result in a Change in
                    Control; or

                              (iii)  with  respect  to  a  Potential  Change  in
                    Control occurring  pursuant to Section  l(f)(iii),  upon the
                    one year anniversary of the occurrence of a Potential Change
                    in Control (or such earlier date as may be determined by the
                    Board).

                    (i) "Severance  Period" means the period of time  commencing
          on the date of each  occurrence of a Change in Control and  continuing
          until the earliest of:

                              (i) eighteen  months  following the  occurrence of
                    the Change in Control; or

                              (ii) the Executive's death;

          provided,  however,  that commencing on each anniversary of the Change
          in Control, the Severance Period will automatically be extended for an
          additional  eighteen  months unless,  not later than 120 calendar days
          prior to such date,  either the  Company or the  Executive  shall have
          given written notice to the other that the Severance  Period is not to
          be so extended.

                    (j) "Term" means the period commencing as of the date hereof
          and expiring as of the later of:

                              (i) the close of business on December 31, 2008; or

                              (ii) the expiration of the Severance Period;

          provided,  however, that the term of this Agreement will automatically
          be extended  each year for an additional  year unless,  not later than
          September 30 of the immediately preceding year,

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          the Company or the  Executive  shall have given  notice that it or the
          Executive,  as the  case  may be,  does  not  wish to  have  the  Term
          extended.  Notwithstanding  the  foregoing,  if,  prior to a Change in
          Control,  the Executive ceases for any reason to be an employee of the
          Company or any Subsidiary,  thereupon without further action, the Term
          shall be deemed to have expired and this  Agreement  will  immediately
          terminate  and be of no further  effect.  For purposes of this Section
          1(i),  the  Executive  shall  not be  deemed  to have  ceased to be an
          employee of the Company or any Subsidiary by reason of the transfer of
          Executive's  employment  between the Company  and any  Subsidiary,  or
          among any Subsidiaries.

                    (k)  "Targeted  Bonus"  shall  mean the  targeted  bonus for
          Executive's position as set forth in the Company's Executive Incentive
          Compensation Plan ("EICP")  established for the then applicable fiscal
          year,  which shall be equal to fifty  percent  (50%) times the maximum
          amount  which  Executive  could  earn  under the EICP with  respect to
          established quantifiable and objective financial goals.

          2.  Operation of  Agreement:  This  Agreement  will be  effective  and
binding immediately upon its execution,  but, anything in this Agreement, to the
contrary  notwithstanding,  will not be  operative  unless and until a Change in
Control  occurs,  whereupon  without  further action this Agreement shall become
immediately operative.

          3. Termination Following a Change in Control:

                    (a) In the event of the  occurrence  of a Change in Control,
          the Executive's employment may be terminated by the Company during the
          Severance  Period  and the  Executive  shall  not be  entitled  to the
          benefits provided by Section 4 only upon the occurrence of one or more
          of the following events:

                              (i) The Executive's death;

                              (ii) The Executive's Disability; or

                              (iii) Cause.

          If,  during  the  Severance  Period,  the  Executive's  employment  is
          terminated  by the Company  other than  pursuant  to Section  3(a)(i),
          3(a)(ii) or 3(a)(iii),  the Executive will be entitled to the benefits
          provided by Section 4 hereof.

                    (b) In the event of the  occurrence  of a Change in Control,
          the  Executive  may  terminate  employment  with the  Company  and any
          Subsidiary  during the  Severance  Period with the right to  severance
          compensation  as provided in Section 4 upon the  occurrence  of one or
          more of the following "Good Reason" events  (regardless of whether any
          other  reason,  other than  Cause as  hereinabove  provided,  for such
          termination exists or has occurred, including without limitation other
          employment) which occur without the Executive's consent:

                              (i) the Executive is not elected to, or is removed
                    from, any elected  office of the Company and/or  Subsidiary,
                    as the case may be,  which the  Executive  held  immediately
                    prior to the Change of Control; or

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                              (ii)  the  Executive  is not  re-nominated  by the
                    Board  as a  Director  of  the  Company  (or  any  successor
                    thereto) if the Executive  shall have been a Director of the
                    Company immediately prior to the Change in Control; or

                              (iii)  the  assignment  to  the  Executive  of any
                    duties  inconsistent  in any  respect  with the  Executive's
                    position,  authority,  duties or responsibilities  which the
                    Executive held  immediately  prior to the Change of Control,
                    or any  other  action  by the  Company  which  results  in a
                    diminution   in  such   position,   authority,   duties   or
                    responsibilities,  excluding  for this  purpose an isolated,
                    insubstantial and inadvertent  action not taken in bad faith
                    and which is remedied by the Company  promptly after receipt
                    of notice thereof given by the Executive; or

                              (iv) any failure by the Company to comply with any
                    of the provisions of this Agreement, other than an isolated,
                    insubstantial  and inadvertent  failure not occurring in bad
                    faith and which is remedied by the  Company  promptly  after
                    receipt of notice thereof given by the Executive; or

                              (v) a material  reduction in the  aggregate of the
                    Executive's  Base  Pay  and  Incentive  Pay  payable  to the
                    Executive by the Company and any Subsidiary; or

                              (vi)   the   failure   of  a   successor/tranferee
                    organization  to assume all duties  and  obligations  of the
                    Company  under this  Agreement  pursuant  to  Section  10(a)
                    following    the    liquidation,     dissolution,    merger,
                    consolidation or  reorganization  of the Company or transfer
                    of all or  substantially  all of its business and/or assets,
                    and   where   the   Executive   has   no   employee/employer
                    relationship  with  such  successor/transferee  organization
                    following the Change of Control; or

                              (vii)  The  Company  or any  of  its  Subsidiaries
                    requires  the  Executive  regularly  to perform  Executive's
                    duties  of   employment   beyond  a   materially   different
                    geographic   radius  from  the   location   of   Executive's
                    employment  immediately  prior to the  Change in  Control or
                    requires  the  Executive  to travel  away  from  Executive's
                    office   in   the   course   of   discharging    Executive's
                    responsibilities  or duties  hereunder at least 50% more (in
                    terms  of  aggregate  days  in any  calendar  year or in any
                    calendar  quarter when annualized for purposes of comparison
                    to any prior year) than was  required of Executive in any of
                    the three  full  years  immediately  prior to the  Change of
                    Control.

                    (c) A termination by the Company pursuant to Section 3(a) or
          3(d) or by the  Executive  pursuant  to Section  3(b) or 3(d) will not
          affect any rights or benefits which the Executive may have pursuant to
          any  agreement,  policy,  plan,  program or arrangement of the Company
          providing Employee Benefits (an "Other Arrangement"), which rights and
          benefits  shall be governed by the terms thereof,  including,  without
          limitation, rights to payments under the Company's bonus and incentive
          plans for prior  fiscal  years which have been earned but not yet paid
          to Executive.  Notwithstanding the foregoing, if the Executive has any
          rights to severance  compensation upon termination of employment under
          any  employment  agreement  Executive may have with the Company or any
          Other Arrangement,  such rights shall, during the Severance Period, be
          completely  superseded by this Agreement;  for the

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          avoidance of doubt,  Executive can only receive severance compensation
          under this Agreement or under the Other Arrangement, not both.

                    (d)  For  purposes  of  this  Agreement,  a  termination  of
          Executive's employment during a Potential Change in Control Period: (

                              (i) by the  Company  other  than  pursuant  to the
                    events described in Section 3(a)(i),  3(a)(ii) or 3(a)(iii);
                    or

                              (ii) by Executive  following the occurrence of one
                    of the events described in Section 3(b)(i) through (vii),

          shall be deemed to be a termination of Executive's  employment  during
          the  Severance  Period  entitling  Executive  to benefits  provided by
          Section 4.

          4. Severance Compensation:

                    (a) If, following the occurrence of a Change in Control, the
          Company  terminates the  Executive's  employment  during the Severance
          Period  other than  pursuant  to  Section  3(a),  or if the  Executive
          terminates  Executive's  employment  pursuant  to  Section  3(b),  the
          Company will pay to the Executive the following:

                              (i) an amount (the  "Severance  Payment") equal to
                    three times the sum of:

                                        (A) Base Pay, plus

                                        (B) the greater of:

                                                  (I) the average  actual  bonus
                                        earned by the Executive  pursuant to any
                                        annual   bonus   or    incentive    plan
                                        maintained  by the Company in respect of
                                        the   three    fiscal    years    ending
                                        immediately  prior to the fiscal year in
                                        which occurs such Change in Control (or,
                                        such lesser number of years during which
                                        the   Executive   was  employed  by  the
                                        Company  and  annualized  in the case of
                                        any  such  bonus  paid in  respect  of a
                                        portion of a fiscal year); and

                                                  (II)   the   Targeted    Bonus
                                        (determined  in accordance  with Section
                                        1(j) of this Agreement

                    (the  greater  of  Subclause  (I) and  Subclause  (II) being
                    hereinafter   referred   to   as   the   "Highest   Bonus");

          such Severance Payment,  as permitted pursuant to Treasury  Regulation
          Section  1.409A-1(b)(9)(iii),  shall be payable in three  payments  as
          follows:

                              (1) an amount equal to the lesser of:

                                        (a)   fifty   percent   (50%)   of   the
                              Executive's  annual  Base  Pay as of his  date  of
                              termination; or

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                                        (b) two (2) times the compensation limit
                              of Code  Section  401(a)(17)  (i.e.,  $460,000 for
                              2008)

                    shall be paid to  Executive  equally  over the number of pay
                    periods between the Executive's  date of termination and the
                    seventh  month   anniversary  of  the  Executive's  date  of
                    termination; and

                              (2) an amount,  if any,  equal to the  Executive's
                    annual Base Pay as of the  Executive's  date of  termination
                    reduced by the amount paid to the  Executive  under Item (1)
                    immediately  above will be paid  equally  over the number of
                    pay  periods   between   the   Executive's   seventh   month
                    anniversary  of his  date of  termination  and the 12  month
                    anniversary of his date of termination; and

                              (3) the  remainder,  if any,  which  is an  amount
                    equal to the Severance Payment reduced by the amount paid to
                    Executive under Items (1) and (2) immediately  above,  shall
                    be paid to Executive in a lump sum no later than the seventh
                    month anniversary of his date of termination;

                              (ii) for 36 months  following the Termination Date
                    (the  "Continuation  Period"),  the Company  will arrange to
                    provide  the  Executive  with  Employee  Benefits  that  are
                    welfare  benefits  (but not stock  option,  stock  purchase,
                    stock appreciation or similar compensatory benefits) no less
                    favorable  than those which the  Executive  was receiving or
                    entitled  to receive  immediately  prior to the  Termination
                    Date,   including  benefits  provided  under  the  Company's
                    Executive  Protection  Plan.  If and to the extent  that any
                    benefit  described in this Section 4(a)(ii) is not or cannot
                    be paid or  provided  under any  policy,  plan,  program  or
                    arrangement  of the Company or any  Subsidiary,  as the case
                    may be, then the Company  will itself pay or provide for the
                    payment to the  Executive,  or  Executive's  dependents  and
                    beneficiaries,  of such Employee Benefits. Without otherwise
                    limiting  the  purpose  or effect  of  Section  5,  Employee
                    Benefits  otherwise  receivable by the Executive pursuant to
                    this  Section   4(a)(ii)  will  be  reduced  to  the  extent
                    comparable  welfare  benefits are  actually  received by the
                    Executive  from  another  employer  during the  Continuation
                    Period. Such welfare benefits shall be provided and paid for
                    the  Executive  per  regular  payroll  period of the Company
                    commencing  with the  first  payroll  period  following  the
                    Executive's  termination of employment and continuing for 36
                    month  thereafter.  Medical  expenses  (as  defined  in Code
                    Section 213(d)) paid pursuant to this  subparagraph (ii) are
                    intended to be exempt from Code  Section  409A to the extent
                    permitted         under         Treasury          Regulation
                    ss.ss.1.409A-1(b)(9)(v)(B) and -3(i)(1)(iv)(B).  However, to
                    the extent any welfare  benefits  provided  pursuant to this
                    subparagraph  (ii) do not qualify for  exemption  under Code
                    Section 409A,  the Company shall  provide  Executive  with a
                    lump sum payment in an amount  equal to the number of months
                    of  coverage  to  which  he  is  entitled   times  the  then
                    applicable  premium for the  relevant  benefit plan in which
                    Executive  participated.  Such lump sum amount  will be paid
                    during the second  month  following  the month in which such
                    coverage expires.

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                              (iii)  Notwithstanding any provision of any annual
                    or long-term  incentive  plan to the  contrary,  the Company
                    shall pay to the Executive a lump sum amount, in cash, equal
                    to the sum of:

                                        (A) any  unpaid  incentive  compensation
                              which  has  been   allocated  or  awarded  to  the
                              Executive  for a  completed  fiscal  year or other
                              measuring  period  preceding the Termination  Date
                              under  any  such  plan  and   which,   as  of  the
                              Termination  Date,  is  contingent  only  upon the
                              continued   employment   of  the  Executive  to  a
                              subsequent date; and

                                        (B) the product of the Highest Bonus and
                              a fraction,  the  numerator of which is the number
                              of  days  in  the   fiscal   year  in  which   the
                              Termination  Date occurs prior to the  Termination
                              Date and the denominator of which is 365.

                    Such amount  shall be paid to the  Executive  in  accordance
                    with  the  terms  of  the  relevant   underlying   incentive
                    compensation  plan at the time all other executives are paid
                    pursuant  to such plan with  respect  to any such  incentive
                    compensation  for such year which includes  Executive's date
                    of termination under this Section 4(a).

                              (iv)  Notwithstanding  the terms or  conditions of
                    any awards  relating to a grant of  restricted  shares,  all
                    restricted shares which are not vested as of the Termination
                    Date shall become fully vested.

                              (v) The Company shall  provide the Executive  with
                    outplacement  services suitable to the Executive's position.
                    The Executive  shall commence the  outplacement  services no
                    later than sixty (60) days  following his  termination  date
                    under this Section 4(a), but in no event shall such services
                    be provided  beyond December 31 of the second year following
                    the year of termination or, if earlier, the first acceptance
                    by the Executive of an offer of employment..

                    (b) There  will be no right of set-off  or  counterclaim  in
          respect of any claim,  debt or  obligation  against  any payment to or
          benefit for the Executive  provided for in this  Agreement,  except as
          expressly provided in Section 4(a)(ii).

                    (c) Without  limiting the rights of the  Executive at law or
          in equity,  if the  Company  fails to make any  payment or provide any
          benefit  required to be made or provided  hereunder on a timely basis,
          the Company  will pay  interest on the amount or value  thereof at the
          prime  rate in effect  at the First  National  Bank of  Chicago.  Such
          interest  will be payable as it accrues on demand.  Any change in such
          prime rate will be effective on and as of the date of such change.

                    (d) Notwithstanding any other provision hereof, the parties'
          respective  rights  and  obligations  under  this  Section 4 and under
          Sections 6 and 7 will survive any  termination  or  expiration of this
          Agreement  following  a Change in  Control or the  termination  of the
          Executive's  employment  following  a Change in Control for any reason
          whatsoever.

          5. No Mitigation  Obligation:  The Company hereby acknowledges that it
will be difficult and may be impossible:

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                    (a)  for  the  Executive  to  find   reasonably   comparable
          employment following the Termination Date; and

                    (b) to measure  the amount of damages  which  Executive  may
          suffer as a result of termination of employment hereunder.

Accordingly,  the payment of the  severance  compensation  by the Company to the
Executive in accordance with the terms of this Agreement is hereby  acknowledged
by the  Company  to be  reasonable  and  will  be  liquidated  damages,  and the
Executive  will not be required to mitigate  the amount of any payment  provided
for in this  Agreement by seeking other  employment  or otherwise,  nor will any
profits,  income,  earnings or other benefits from any source  whatsoever create
any  mitigation,  offset,  reduction or any other  obligation on the part of the
Executive  hereunder or otherwise reduce any payments or benefits to be provided
to Executive hereunder, except as expressly provided in Section 4(a)(ii).

          6. Certain Additional Payments by the Company:

                    (a) In the event that this Agreement  becomes  operative and
          it  is  determined  (as  hereafter   provided)  that  any  payment  or
          distribution  by the  Company or any of its  affiliates  to or for the
          benefit  of  Executive,  whether  paid or payable  or  distributed  or
          distributable  pursuant to the terms of this  Agreement  or  otherwise
          pursuant to or by reason of any other agreement, policy, plan, program
          or arrangement,  including without limitation any stock option,  stock
          appreciation  right or similar  right,  or the lapse or termination of
          any  restriction  on or the  vesting or  exercisability  of any of the
          foregoing (a "Payment"), would be subject to the excise tax imposed by
          Section 4999 of the Internal  Revenue Code of 1986, as amended (or any
          successor provision  thereto),  or to any similar tax imposed by state
          or local law, or any interest or penalties with respect to such excise
          tax (such tax or taxes, together with any such interest and penalties,
          are  hereafter  collectively  referred to as the "Excise  Tax"),  then
          Executive  will be  entitled  to  receive  an  additional  payment  or
          payments (a "Gross-Up  Payment") in an amount such that, after payment
          by Executive of all taxes (including any interest or penalties imposed
          with respect to such taxes),  including  any Excise Tax,  imposed upon
          the  Gross-Up  Payment,  Executive  retains an amount of the  Gross-Up
          Payment   equal  to  the  Excise  Tax  imposed   upon  the   Payments.
          Notwithstanding   anything  to  the  contrary,  any  Gross-Up  Payment
          pursuant to this Section 6(a) shall be paid no later than  December 31
          of the  year  following  the  year in  which  the  Executive  pays the
          applicable   Excise  Tax,  and,  if  the  Executive  is  a  `specified
          employee',  as  defined  and  applied in Code  Section  409A as of the
          termination  date,  no earlier than the first day of the seventh month
          following such date.

                    (b) Subject to the  provisions  of Section  6(f) below,  all
          determinations  required  to be made under this  Section 6,  including
          whether an Excise Tax is payable by  Executive  and the amount of such
          Excise Tax and whether a Gross-Up  Payment is required  and the amount
          of such Gross-Up Payment, will be made by a nationally recognized firm
          of certified public  accountants  (the "Accounting  Firm") selected by
          Executive in Executive's  sole  discretion.  Executive will direct the
          Accounting Firm to submit its  determination  and detailed  supporting
          calculations to both the Company and Executive within 15 calendar days
          after the date of the  Change in  Control  or the date of  Executive's
          termination of employment,  if applicable,  and any other such time or
          times as may be requested by the Company or Executive. For purposes of
          determining the amount of the Gross-Up Payment, the Executive

                                       10
<PAGE>

          shall be deemed to pay federal income tax at the highest marginal rate
          of federal income  taxation in the calendar year in which the Gross-Up
          Payment is to be made and state and local  income taxes at the highest
          marginal rate of taxation in the state and locality of the Executive's
          residence on the Termination Date (or if there is no Termination Date,
          then the date on which the Gross-Up Payment is calculated for purposes
          of this Section 6(b)), net of the maximum  reduction in federal income
          taxes which could be obtained  from  deduction of such state and local
          taxes.  If the  Accounting  Firm  determines  that any  Excise  Tax is
          payable by  Executive,  the  Company  will pay the  required  Gross-Up
          Payment to Executive  within five  business days after receipt of such
          determination and calculations. If the Accounting Firm determines that
          no Excise Tax is payable by Executive, it will, at the same time as it
          makes such  determination,  furnish  Executive  with an  opinion  that
          Executive  has  substantial  authority not to report any Excise Tax on
          Executive's  federal,  state,  local  income or other tax return.  Any
          determination  by the Accounting Firm as to the amount of the Gross-Up
          Payment will be binding upon the Company and Executive. As a result of
          the uncertainty in the application of Section 4999 of the Code (or any
          successor   provision   thereto)  and  the   possibility   of  similar
          uncertainty regarding applicable state or local tax law at the time of
          any  determination  by the Accounting Firm  hereunder,  it is possible
          that  Gross-Up  Payments  which will not have been made by the Company
          should  have  been  made  (an  "Underpayment"),  consistent  with  the
          calculations  required  to be made  hereunder.  In the event  that the
          Company  exhausts or fails to pursue its remedies  pursuant to Section
          6(f) below and  Executive  thereafter is required to make a payment of
          any Excise Tax, Executive will direct the Accounting Firm to determine
          the amount of the  Underpayment  that has  occurred  and to submit its
          determination and detailed supporting calculations to both the Company
          and Executive as promptly as possible.  Any such  Underpayment will be
          promptly  paid by the Company  to, or for the  benefit  of,  Executive
          within five  business  days after  receipt of such  determination  and
          calculations.

                    (c)  The  Company  and  Executive   will  each  provide  the
          Accounting  Firm  access  to and  copies  of any  books,  records  and
          documents in the  possession of the Company or Executive,  as the case
          may be,  reasonably  requested by the  Accounting  Firm, and otherwise
          cooperate with the Accounting  Firm in connection with the preparation
          and issuance of the determination contemplated by Section 6(b) above.

                    (d) The federal, state and local income or other tax returns
          filed by Executive  will be prepared  and filed on a consistent  basis
          with the  determination  of the  Accounting  Firm with  respect to the
          Excise Tax payable by Executive. Executive will make proper payment of
          the amount of any Excise  Tax.  If prior to the filing of  Executive's
          federal income tax return, or corresponding state or local tax return,
          if relevant,  the Accounting  Firm  determines  that the amount of the
          Gross-Up  Payment  should  be  reduced,  Executive  will  within  five
          business days pay to the Company the amount of such reduction.

                    (e) The fees and  expenses  of the  Accounting  Firm for its
          services  in  connection  with  the  determinations  and  calculations
          contemplated  by  Section  6(b)  and (d)  above  will be  borne by the
          Company.   If  such  fees  and  expenses  are  initially  advanced  by
          Executive,  the Company will  reimburse  Executive  the full amount of
          such fees and expenses  within five  business  days after receipt from
          Executive  of  a  statement   therefor  and  reasonable   evidence  of
          Executive's payment thereof.

                                       11
<PAGE>

                    (f)  Executive  will  notify  the  Company in writing of any
          claim by the Internal  Revenue  Service  that,  if  successful,  would
          require  the  payment  by the  Company  of a  Gross-Up  Payment.  Such
          notification  will be given as promptly as  practicable,  but no later
          than 10 business days after Executive actually receives notice of such
          claim, and Executive will further apprise the Company of the nature of
          such claim and the date on which such  claim is  requested  to be paid
          (in each case, to the extent known by  Executive).  Executive will not
          pay such claim prior to the earlier of:

                              (i) the expiration of the  30-calendar-day  period
                    following the date on which  Executive  gives such notice to
                    the Company; and

                              (ii) the date  that any  payment  of  amount  with
                    respect to such claim is due.

          If the Company  notifies  Executive in writing prior to the expiration
          of such period that it desires to contest such claim, Executive will:

                                        (A) provide the Company with any written
                              records or  documents  in  Executive's  possession
                              relating to such claim reasonably requested by the
                              Company;

                                        (B) take such action in connection  with
                              contesting   such  claim  as  the   Company   will
                              reasonably  request in writing  from time to time,
                              including  without   limitation   accepting  legal
                              representation  with  respect  to such claim by an
                              attorney  competent  in  respect  of  the  subject
                              matter and reasonably selected by the Company;

                                        (C)  cooperate  with the Company in good
                              faith in order  effectively to contest such claim;
                              and

                                        (D) permit the Company to participate in
                              any proceedings relating to such claim;

          provided,  however,  that the Company  will bear and pay  directly all
          costs and  expenses  (including  interest and  penalties)  incurred in
          connection  with such  contest and will  indemnify  and hold  harmless
          Executive,  on an after-tax  basis,  for and against any Excise Tax or
          income tax,  including  interest and penalties  with respect  thereto,
          imposed as a result of such  representation  and  payment of costs and
          expenses.  Without  limiting the foregoing  provisions of this Section
          6(f),  the Company will control all  proceedings  taken in  connection
          with the contest of any claim  contemplated  by this Section 6(f) and,
          at its sole  option,  may pursue or forego any and all  administrative
          appeals,  proceedings,   hearings  and  conferences  with  the  taxing
          authority  in respect  of such  claim  (provided  that  Executive  may
          participate  therein at Executive's  own cost and expense) and may, at
          its option, either direct Executive to pay the tax claimed and sue for
          a refund or contest the claim in any permissible manner, and Executive
          agrees  to  prosecute  such  contest  to a  determination  before  any
          administrative tribunal, in a court of initial jurisdiction and in one
          or more appellate  courts,  as the Company will  determine;  provided,
          however,  that if the Company directs Executive to pay the tax claimed
          and sue for a refund,  the  Company  will  advance  the amount of such
          payment to Executive on an

                                       12
<PAGE>

          interest-free basis and will indemnify and hold Executive harmless, on
          an  after-tax  basis,  from any  excise Tax or income  tax,  including
          interest or penalties  with respect  thereto,  imposed with respect to
          such advance; and provided further, however, that any extension of the
          statute of  limitations  relating  to payment of taxes for the taxable
          year of  Executive  with  respect  to which  the  contested  amount is
          claimed  to be  due  is  limited  solely  to  such  contested  amount.
          Furthermore, the Company's control of any such contested claim will be
          limited to issues with  respect to which a Gross-Up  Payment  would be
          payable hereunder and Executive will be entitled to settle or contest,
          as the case may be, any other  issue  raised by the  Internal  Revenue
          Service or any other taxing authority.

                    (g) If, after the receipt by Executive of an amount advanced
          by the Company pursuant to Section 6(f) above,  Executive receives any
          refund with  respect to such  claim,  Executive  will  (subject to the
          Company's  complying  with the  requirements  of Section  6(f)  above)
          promptly pay to the Company the amount of such refund  (together  with
          any  interest  paid or  credited  thereon  after any taxes  applicable
          thereto).  If, after the receipt by Executive of an amount advanced by
          the Company  pursuant to Section 6(f) above, a  determination  is made
          that Executive will not be entitled to any refund with respect to such
          claim and the  Company  does not  notify  Executive  in writing of its
          intent to contest  such denial or refund  prior to the  expiration  of
          30-calendar-days  after such determination,  then such advance will be
          forgiven  and will not be required to be repaid and the amount of such
          advance will  offset,  to the extent  thereof,  the amount of Gross-Up
          Payment required to be paid pursuant to this Section 6.

          7. Legal Fees and Expenses:  If it should appear to the Executive that
the  Company  has  failed  to  comply  with any of its  obligations  under  this
Agreement  or in the  event  that  the  Company  or any  other  person  takes or
threatens  to take any  action  to  declare  this  Agreement  void,  invalid  or
unenforceable,  or  institutes  any  litigation  or other  action or  proceeding
designed to deny,  or to recover from,  the  Executive the benefits  provided or
intended to be  provided to the  Executive  hereunder,  the Company  irrevocably
authorizes  the  Executive  from time to time to retain  counsel of  Executive's
choice,  at the  expense of the  Company as  hereafter  provided,  to advise and
represent the Executive in connection with any such interpretation,  enforcement
or  defense,  including  without  limitation  the  initiation  or defense of any
litigation  or other  legal  action,  whether by or against  the  Company or any
Director,  officer,  stockholder or other person affiliated with the Company, in
any jurisdiction.

Notwithstanding any existing or prior  attorney-client  relationship between the
Company and such counsel,  the Company  irrevocably  consents to the Executive's
entering into an  attorney-client  relationship  with such counsel,  and in that
connection the Company and the Executive agree that a confidential  relationship
shall exist between the Executive and such counsel.  The Company will pay and be
solely financially responsible for Executive's out-of-pocket expenses, including
reasonable attorneys' fees and expenses, incurred by the Executive in connection
with any of the foregoing; provided, however, in the case of any such litigation
or other action or proceeding in which the Company or any of its  affiliates and
Executive are adverse  parties,  the Company shall not pay or be responsible for
any such expenses if the Company or any of its affiliates  prevails  against the
Executive.

          8. Employment Rights;  Termination Prior to Change in Control: Nothing
expressed or implied in this Agreement will create any right or duty on the part
of the Company or the Executive to have the Executive  remain in the  employment
of the Company or any Subsidiary prior to or following any Change in Control.

                                       13
<PAGE>

          9.  Withholding  of Taxes:  The Company may withhold  from any amounts
payable  under this  Agreement  all federal,  state,  city or other taxes as the
Company is required to withhold pursuant to any law or government  regulation or
ruling.

          10. Successors and Binding Agreement:

                    (a) The Company will require any successor  (whether  direct
          or indirect,  by purchase,  merger,  consolidation,  reorganization or
          otherwise)  to all or  substantially  all of the business or assets of
          the Company,  by agreement in form and substance  satisfactory  to the
          Executive,  expressly to assume and agree to perform this Agreement in
          the same manner and to the same  extent the Company  would be required
          to perform if no such succession had taken place.  This Agreement will
          be  binding  upon and  inure to the  benefit  of the  Company  and any
          successor to the Company,  including  without  limitation  any persons
          acquiring  directly  or  indirectly  all or  substantially  all of the
          business  or  assets  of the  Company  whether  by  purchase,  merger,
          consolidation,  reorganization  or otherwise (and such successor shall
          thereafter   be  deemed  the   "Company"  for  the  purposes  of  this
          Agreement),  but will not  otherwise be  assignable,  transferable  or
          delegable by the Company.

                    (b)  This  Agreement  will  inure to the  benefit  of and be
          enforceable  by the  Executive's  personal  or legal  representatives,
          executors,   administrators,   successors,   heirs,  distributees  and
          legatees.

                    (c) This  Agreement is personal in nature and neither of the
          parties  hereto  shall,  without  the  consent of the  other,  assign,
          transfer  or  delegate  this  Agreement  or any rights or  obligations
          hereunder  except as  expressly  provided in Sections  10(a) and 10(b)
          hereof.  Without  limiting the  generality or effect of the foregoing,
          the  Executive's  right  to  receive  payments  hereunder  will not be
          assignable, transferable or delegable, whether by pledge, garnishment,
          creation of a security  interest,  claims for alimony,  or  otherwise,
          other than by a transfer by Executive's will or by the laws of descent
          and  distribution  and, in the event of any  attempted  assignment  or
          transfer  contrary to this Section  10(c),  the Company  shall have no
          liability to pay any amount so  attempted to be assigned,  transferred
          or delegated.

          11. Notices:  For all purposes of this Agreement,  all communications,
including without limitation notices, consents, requests or approvals,  required
or permitted to be given hereunder will be in writing and will be deemed to have
been duly  given when hand  delivered  or  dispatched  by  electronic  facsimile
transmission  (with receipt  thereof  orally  confirmed),  or five business days
after  having been  mailed by United  States  registered  mail,  return  receipt
requested,  postage prepaid,  or three business days after having been sent by a
nationally recognized overnight courier service such as Federal Express, UPS, or
Purolator,  addressed to the Company (to the  attention of the  Secretary of the
Company) at its principal  executive  office and to the Executive at Executive's
principal residence, or to such other address as any party may have furnished to
the other in writing and in accordance herewith,  except that notices of changes
of address shall be effective only upon receipt.

          12. Dispute  Resolutions:  Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration in
Chicago,  Illinois  in  accordance  with the rules of the  American  Arbitration
Association then in effect;  provided,  however,

                                       14
<PAGE>

that the evidentiary standards set forth in this Agreement shall apply. Judgment
may be entered on the arbitrator's award in any court having jurisdiction.

          13.  Governing  Law: The validity,  interpretation,  construction  and
performance  of this  Agreement  will be governed by and construed in accordance
with the substantive laws of the State of Delaware, without giving effect to the
principles of conflict of laws of such State.

          14.  Validity:  If a ny provision of this Agreement or the application
of any  provision  hereof  to any  person  or  circumstances  is  held  invalid,
unenforceable  or otherwise  illegal,  the  remainder of this  Agreement and the
application of such provision to any other person or  circumstances  will not be
affected,  and the provision so held to be invalid,  unenforceable  or otherwise
illegal  will be reformed to the extent  (and only to the extent)  necessary  to
make it enforceable, valid or legal.

          15.  Miscellaneous:  No provision of this  Agreement  may be modified,
waived or discharged unless such waiver,  modification or discharge is agreed to
in writing  signed by the Executive  and the Company.  No waiver by either party
hereto at any time of any breach by the other party  hereto or  compliance  with
any condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or representations,  oral
or  otherwise,  expressed or implied with respect to the subject  matter  hereof
have  been  made by  either  party  which  is not set  forth  expressly  in this
Agreement.  References  to  Sections  are to  references  to  Sections  of  this
Agreement.  Effective  as of the date  hereof,  this  Agreement  supersedes  and
replaces the prior  Severance  Agreement  entered into between the Executive and
the Company.

          16.  Counterparts:  This  Agreement  may be  executed  in one or  more
counterparts,  each of which shall be deemed to be an original  but all of which
together will constitute one and the same agreement.

          IN WITNESS WHEREOF,  the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.

                                    PLAYBOY ENTERPRISES, INC.,

                                    By:
                                       -----------------------------------------

                                    Title:
                                          --------------------------------------

ACCEPTED and AGREED to:

------------------------------
Alex Vaickus

                                       15Exhibit 10.27(b)

                    AMENDED AND RESTATED SEVERANCE AGREEMENT

          THIS  AMENDED AND RESTATED  SEVERANCE  AGREEMENT  (this  "Agreement"),
dated as of September 1, 2008, is by and between  Playboy  Enterprises,  Inc., a
Delaware  corporation (the "Company"),  and ____________,  (the "Executive") and
is, effective as of January 1, 2008, hereby amending,  restating and superseding
that prior Severance  Agreement between the parties dated November 29, 2001, for
compliance  with Section 409A of the Internal  Revenue Code of 1986,  as amended
(the "Code").

                                   WITNESSETH:

          WHEREAS,  the  Executive is a senior  executive or key employee of the
Company and has made and is expected to continue to make major  contributions to
the short- and long-term  profitability,  growth and  financial  strength of the
Company;

          WHEREAS,  the  Company  recognizes  that,  as is  the  case  for  most
publicly-held companies, the possibility of a Change in Control exists;

          WHEREAS,  the  Company  desires to assure  itself of both  present and
future  continuity  of  management  and  desires to  establish  certain  minimum
severance  benefits for certain of its senior  executive  officers and other key
employees,  including  the  Executive,  applicable  in the  event of a Change in
Control;

          WHEREAS,  the Company wishes to ensure that its senior  executives and
other key employees are not practically  disabled from discharging  their duties
in respect of a proposed  or actual  transaction  involving a Change in Control;
and

          WHEREAS, the Company desires to provide additional  inducement for the
Executive to continue to remain in the ongoing employ of the Company;

          NOW, THEREFORE, the Company and the Executive agree as follows:

          1.  Certain  Defined  Terms:  In addition to terms  defined  elsewhere
herein,  the  following  terms  have the  following  meanings  when used in this
Agreement with initial capital letters:

            (a) "Base Pay" means the  Executive's  annual  base salary at a rate
      not less than the  Executive's  annual  fixed or base  compensation  as in
      effect for Executive  immediately  prior to the  occurrence of a Change in
      Control or such higher rate as may be determined  from time to time by the
      Board of Directors of the Company (the "Board") or a Committee thereof.

            (b)  "Change  in  Control"  means any of the  following  occurrences
      during the Term:

                  (i)  Hugh  M.  Hefner  directly  or as  beneficial  owner  and
            Christie Hefner cease  collectively to hold over 50% of the combined
            voting  power of the  then-outstanding  securities  entitled to vote
            generally  in the  election of  directors  of the  Company  ("Voting
            Stock"); or

<PAGE>

                  (ii) except pursuant to a transaction described in the proviso
            to Section 1(b)(iv) or (v), a sale, exchange or other disposition of
            PLAYBOY Magazine; or

                  (iii)  except  pursuant  to a  transaction  described  in  the
            proviso to Section  1(b)(iv) or (v), the  liquidation or dissolution
            of the Company; or

                  (iv) the Company is merged,  consolidated or reorganized  into
            or  with  another  corporation  or  other  legal  person;  provided,
            however,  that no such merger,  consolidation or reorganization will
            constitute  a Change in  Control  if the  merger,  consolidation  or
            reorganization  is  initiated by the Company and as a result of such
            merger,  consolidation or reorganization not less than a majority of
            the combined voting power of the then-outstanding  securities of the
            surviving, resulting or ultimate parent corporation, as the case may
            be,  immediately  after such transaction is held in the aggregate by
            persons  who held not less than a majority  of the  combined  voting
            power of the  outstanding  Voting  Stock of the Company  immediately
            prior to such transaction; or

                  (v)  the  Company   sells  or  otherwise   transfers   all  or
            substantially  all of its  assets to  another  corporation  or other
            legal person; provided,  however, that no such sale or transfer will
            constitute  a Change in Control if the sale or transfer is initiated
            by the  Company  and as a result of such sale or  transfer  not less
            than a majority of the combined voting power of the then-outstanding
            securities of such  corporation  or other legal person,  as the case
            may be,  immediately  after  such  sale or  transfer  is held in the
            aggregate  by  persons  who  held not less  than a  majority  of the
            combined voting power of the outstanding Voting Stock of the Company
            immediately prior to such sale or transfer; or

                  (vi) an equity or other investment in the Company,  the result
            of which is that  Christie  Hefner  ceases to serve as the Company's
            Chief Executive  Officer or relinquishes upon request or is divested
            of any of the following responsibilities:

                        (A) functioning as the person primarily  responsible for
                  establishing policy and direction for the Company; or

                        (B) being the  person to whom the senior  executives  of
                  the Company report; or

                  (vii) the  adoption  by the Board of a  resolution  that,  for
            purposes of this Agreement, a Change in Control has occurred.

      For purposes of Section 1(b)(i),  any Voting Stock  beneficially owned (as
      such term is defined under Rule 13d-3 or any successor  rule or regulation
      under the  Securities  Exchange  Act of 1934,  as amended  (the  "Exchange
      Act"))  by the Hugh M.  Hefner  Foundation  shall be  deemed to be held by
      Christie  Hefner if and so long as she has sole voting  power with respect
      to such Voting Stock.

                                       2
<PAGE>

            (c) "Cause" means that, prior to any termination pursuant to Section
      3(b) hereof, the Executive shall have:

                  (i)  been   convicted  of  a  criminal   violation   involving
            dishonesty, fraud or breach of trust; or

                  (ii)  willfully  engaged in misconduct in the  performance  of
            Executive's duties that materially injures the Company or any entity
            in which the Company directly or indirectly beneficially owns 50% or
            more of the voting securities (a "Subsidiary").

            (d) "Disability" means a condition whereby the Executive:

                  (i) is unable to engage in any substantial gainful activity by
            reason of any medically  determinable  physical or mental impairment
            which can be  expected to result in death or can be expected to last
            for a continuous period of not less than 12 months; or

                  (ii) is, by reason of any medically  determinable  physical or
            mental impairment which can be expected to result in death or can be
            expected to last for a continuous period of not less than 12 months,
            receiving income replacement  benefits for a period of not less than
            3 months under an accident and health plan covering employees of the
            Executive's employer.

            (e) "Employee Benefits" means the perquisites,  benefits and service
      credit for  benefits as  provided  under any and all  employee  retirement
      income and welfare benefit  policies,  plans,  programs or arrangements in
      which Executive is entitled to participate,  including without  limitation
      any stock option, stock purchase,  stock appreciation,  savings,  pension,
      supplemental  executive retirement,  or other retirement income or welfare
      benefit,  deferred compensation,  incentive  compensation,  group or other
      life,  health,  medical/hospital  or other  insurance  (whether  funded by
      actual  insurance or  self-insured  by the  Company),  disability,  salary
      continuation,   executive  protection,  expense  reimbursement  and  other
      employee benefit  policies,  plans,  programs or arrangements that may now
      exist  or  any  equivalent   successor   policies,   plans,   programs  or
      arrangements  that may be  adopted  hereafter  by the  Company,  providing
      perquisites, benefits and service credit for benefits at least as great in
      the aggregate as are provided thereunder  immediately prior to a Change in
      Control.

            (f) "Incentive Pay" means bonus, incentive or other payments of cash
      compensation,  in  addition  to Base Pay,  made or to be made in regard to
      services  rendered  pursuant  to  any  bonus,  incentive,  profit-sharing,
      performance, discretionary pay or similar agreement, policy, plan, program
      or  arrangement  (whether or not funded) of the Company,  or any successor
      thereto  providing  benefits  at least as great as the  benefits  provided
      thereunder immediately prior to a Change In Control.

            (g)  "Potential  Change in Control" shall be deemed to have occurred
      if the event set forth in any one of the following  subsections shall have
      occurred:

                                       3
<PAGE>

                  (i) the Company enters into an agreement,  the consummation of
            which would result in the occurrence of a Change in Control;

                  (ii) the Company or any Person publicly announces an intention
            to take or to consider taking actions which,  if consummated,  would
            constitute a Change in Control; or

                  (iii) the Board  adopts a resolution  to the effect that,  for
            purposes  of this  Agreement,  a  Potential  Change in  Control  has
            occurred.

                  (h) "Potential  Change in Control  Period" shall commence upon
            the occurrence of a Potential Change in Control and shall lapse upon
            the occurrence of a Change in Control or, if earlier:

                  (i) with  respect to a Potential  Change in Control  occurring
            pursuant to Section  l(f)(i),  immediately  upon the  abandonment or
            termination of the applicable agreement;

                  (ii) with respect to a Potential  Change in Control  occurring
            pursuant to Section l(f)(ii), immediately upon a public announcement
            by the applicable  party that such party has abandoned its intention
            to take or consider taking actions which if consummated would result
            in a Change in Control; or

                  (iii) with respect to a Potential Change in Control  occurring
            pursuant to Section l(f)(iii),  upon the one year anniversary of the
            occurrence of a Potential Change in Control (or such earlier date as
            may be determined by the Board).

            (i)  "Severance  Period" means the period of time  commencing on the
      date of each  occurrence of a Change in Control and  continuing  until the
      earliest of:

                  (i) eighteen months  following the occurrence of the Change in
            Control; or

                  (ii) the Executive's death;

      provided,  however,  that commencing on each  anniversary of the Change in
      Control,  the  Severance  Period will  automatically  be  extended  for an
      additional  eighteen months unless, not later than 120 calendar days prior
      to such date, either the Company or the Executive shall have given written
      notice to the other that the Severance Period is not to be so extended.

            (j) "Term"  means the period  commencing  as of the date  hereof and
      expiring as of the later of:

                  (i) the close of business on December 31, 2008; or

                  (ii) the expiration of the Severance Period;

      provided,  however,  that the term of this Agreement will automatically be
      extended each year for an additional year unless, not later than September
      30 of the  immediately  preceding year,

                                       4
<PAGE>

      the  Company  or the  Executive  shall have  given  notice  that it or the
      Executive,  as the case may be,  does not wish to have the Term  extended.
      Notwithstanding  the  foregoing,  if,  prior to a Change in  Control,  the
      Executive  ceases for any reason to be an  employee  of the Company or any
      Subsidiary,  thereupon without further action, the Term shall be deemed to
      have expired and this  Agreement will  immediately  terminate and be of no
      further effect. For purposes of this Section 1(i), the Executive shall not
      be  deemed  to  have  ceased  to be an  employee  of  the  Company  or any
      Subsidiary by reason of the transfer of Executive's employment between the
      Company and any Subsidiary, or among any Subsidiaries.

            (k) "Targeted  Bonus" shall mean the targeted bonus for  Executive's
      position as set forth in the Company's  Executive  Incentive  Compensation
      Plan ("EICP") established for the then applicable fiscal year, which shall
      be equal to fifty percent (50%) times the maximum  amount which  Executive
      could earn under the EICP with  respect to  established  quantifiable  and
      objective financial goals.

          2.  Operation of  Agreement:  This  Agreement  will be  effective  and
binding immediately upon its execution,  but, anything in this Agreement, to the
contrary  notwithstanding,  will not be  operative  unless and until a Change in
Control  occurs,  whereupon  without  further action this Agreement shall become
immediately operative.

          3. Termination Following a Change in Control:

            (a) In the  event of the  occurrence  of a Change  in  Control,  the
      Executive's  employment  may be  terminated  by  the  Company  during  the
      Severance  Period and the Executive  shall not be entitled to the benefits
      provided  by  Section  4 only  upon the  occurrence  of one or more of the
      following events:

                  (i) The Executive's death;

                  (ii) The Executive's Disability; or

                  (iii) Cause.

      If, during the Severance Period, the Executive's  employment is terminated
      by the  Company  other than  pursuant  to  Section  3(a)(i),  3(a)(ii)  or
      3(a)(iii),  the  Executive  will be entitled to the  benefits  provided by
      Section 4 hereof.

            (b) In the  event of the  occurrence  of a Change  in  Control,  the
      Executive may  terminate  employment  with the Company and any  Subsidiary
      during the Severance  Period with the right to severance  compensation  as
      provided in Section 4 upon the  occurrence of one or more of the following
      "Good Reason" events  (regardless of whether any other reason,  other than
      Cause  as  hereinabove  provided,  for  such  termination  exists  or  has
      occurred,  including  without  limitation  other  employment)  which occur
      without the Executive's consent:

                  (i) the Executive is not elected to, or is removed  from,  any
            elected office of the Company and/or Subsidiary, as the case may be,
            which the Executive held immediately prior to the Change of Control;
            or

                                       5
<PAGE>

                  (ii)  the  Executive  is not  re-nominated  by the  Board as a
            Director of the Company (or any successor  thereto) if the Executive
            shall have been a Director of the Company  immediately  prior to the
            Change in Control; or

                  (iii)  the   assignment   to  the   Executive  of  any  duties
            inconsistent   in  any  respect  with  the   Executive's   position,
            authority,  duties  or  responsibilities  which the  Executive  held
            immediately  prior to the Change of Control,  or any other action by
            the  Company  which  results  in  a  diminution  in  such  position,
            authority, duties or responsibilities, excluding for this purpose an
            isolated,  insubstantial  and  inadvertent  action  not taken in bad
            faith and which is remedied by the Company promptly after receipt of
            notice thereof given by the Executive; or

                  (iv) any  failure  by the  Company  to comply  with any of the
            provisions of this Agreement, other than an isolated,  insubstantial
            and  inadvertent  failure  not  occurring  in bad faith and which is
            remedied by the Company  promptly  after  receipt of notice  thereof
            given by the Executive; or

                  (v) a material  reduction in the aggregate of the  Executive's
            Base Pay and  Incentive  Pay payable to the Executive by the Company
            and any Subsidiary; or

                  (vi) the  failure  of a  successor/tranferee  organization  to
            assume  all  duties  and  obligations  of  the  Company  under  this
            Agreement  pursuant  to Section  10(a)  following  the  liquidation,
            dissolution,  merger, consolidation or reorganization of the Company
            or  transfer  of all or  substantially  all of its  business  and/or
            assets,   and  where   the   Executive   has  no   employee/employer
            relationship with such  successor/transferee  organization following
            the Change of Control; or

                  (vii) The  Company  or any of its  Subsidiaries  requires  the
            Executive  regularly  to perform  Executive's  duties of  employment
            beyond a materially different geographic radius from the location of
            Executive's employment immediately prior to the Change in Control or
            requires the Executive to travel away from Executive's office in the
            course  of  discharging   Executive's   responsibilities  or  duties
            hereunder  at  least  50% more (in  terms of  aggregate  days in any
            calendar  year  or in  any  calendar  quarter  when  annualized  for
            purposes  of  comparison  to any prior  year) than was  required  of
            Executive  in any of the three full years  immediately  prior to the
            Change of Control.

            (c) A termination by the Company pursuant to Section 3(a) or 3(d) or
      by the  Executive  pursuant  to  Section  3(b) or 3(d) will not affect any
      rights or benefits which the Executive may have pursuant to any agreement,
      policy,  plan,  program or arrangement of the Company  providing  Employee
      Benefits (an "Other  Arrangement"),  which  rights and  benefits  shall be
      governed by the terms thereof,  including,  without limitation,  rights to
      payments  under the Company's  bonus and incentive  plans for prior fiscal
      years   which   have  been   earned   but  not  yet  paid  to   Executive.
      Notwithstanding  the  foregoing,  if  the  Executive  has  any  rights  to
      severance compensation upon termination of employment under any employment
      agreement  Executive  may have with the Company or any Other  Arrangement,
      such rights shall,  during the Severance Period, be completely  superseded
      by this Agreement;  for the

                                       6
<PAGE>

      avoidance  of doubt,  Executive  can only receive  severance  compensation
      under this Agreement or under the Other Arrangement, not both.

            (d) For purposes of this  Agreement,  a termination  of  Executive's
      employment during a Potential Change in Control Period: (

                  (i) by the Company other than pursuant to the events described
            in Section 3(a)(i), 3(a)(ii) or 3(a)(iii); or

                  (ii)  by  Executive  following  the  occurrence  of one of the
            events described in Section 3(b)(i) through (vii),

      shall be deemed to be a termination of Executive's  employment  during the
      Severance Period entitling Executive to benefits provided by Section 4.

          4. Severance Compensation:

            (a) If, following the occurrence of a Change in Control, the Company
      terminates the Executive's  employment  during the Severance  Period other
      than pursuant to Section 3(a), or if the Executive terminates  Executive's
      employment pursuant to Section 3(b), the Company will pay to the Executive
      the following:

                  (i) an amount (the  "Severance  Payment") equal to three times
            the sum of:

                        (A) Base Pay, plus

                        (B) the greater of:

                              (I)  the  average   actual  bonus  earned  by  the
                        Executive pursuant to any annual bonus or incentive plan
                        maintained by the Company in respect of the three fiscal
                        years  ending  immediately  prior to the fiscal  year in
                        which  occurs  such Change in Control  (or,  such lesser
                        number of years during which the  Executive was employed
                        by the  Company and  annualized  in the case of any such
                        bonus paid in  respect  of a portion of a fiscal  year);
                        and

                              (II) the Targeted Bonus  (determined in accordance
                        with Section 1(j) of this Agreement

            (the greater of Subclause (I) and Subclause  (II) being  hereinafter
            referred to as the "Highest Bonus");

      such  Severance  Payment,  as  permitted  pursuant to Treasury  Regulation
      Section  1.409A-1(b)(9)(iii),  shall  be  payable  in  three  payments  as
      follows:

                        (1) an amount equal to the lesser of:

                              (a) one (1) times the Executive's  annual Base Pay
                        as of his date of termination; or

                                       7
<PAGE>

                              (b) two (2) times the  compensation  limit of Code
                        Section 401(a)(17) (i.e., $460,000 for 2008)

      shall be paid to  Executive  in a lump sum  payment no later than ten (10)
      days following the Executive's date of termination; and

            (2) the remainder, which is an amount equal to the Severance Payment
      reduced by the amount paid to Executive under Item (1) immediately  above,
      shall be paid to Executive  in a lump sum no later than the seventh  month
      anniversary of her date of termination; and

                  (ii)  for  36  months  following  the  Termination  Date  (the
            "Continuation  Period"),  the  Company  will  arrange to provide the
            Executive with Employee  Benefits that are welfare benefits (but not
            stock  option,   stock  purchase,   stock  appreciation  or  similar
            compensatory  benefits)  no less  favorable  than  those  which  the
            Executive was receiving or entitled to receive  immediately prior to
            the  Termination  Date,   including   benefits  provided  under  the
            Company's  Executive  Protection Plan. If and to the extent that any
            benefit  described in this Section 4(a)(ii) is not or cannot be paid
            or provided  under any policy,  plan,  program or arrangement of the
            Company or any Subsidiary, as the case may be, then the Company will
            itself  pay  or  provide  for  the  payment  to  the  Executive,  or
            Executive's dependents and beneficiaries, of such Employee Benefits.
            Without  otherwise  limiting  the  purpose  or effect of  Section 5,
            Employee Benefits otherwise  receivable by the Executive pursuant to
            this  Section  4(a)(ii)  will be reduced  to the  extent  comparable
            welfare benefits are actually received by the Executive from another
            employer during the Continuation Period. Such welfare benefits shall
            be provided and paid for the Executive per regular payroll period of
            the Company  commencing with the first payroll period  following the
            Executive's  termination  of employment  and continuing for 36 month
            thereafter.  Medical  expenses (as defined in Code  Section  213(d))
            paid  pursuant to this  subparagraph  (ii) are intended to be exempt
            from  Code  Section  409A to the  extent  permitted  under  Treasury
            Regulation ss.ss.1.409A-1(b)(9)(v)(B) and -3(i)(1)(iv)(B).  However,
            to the  extent  any  welfare  benefits  provided  pursuant  to  this
            subparagraph  (ii) do not qualify for  exemption  under Code Section
            409A, the Company shall provide Executive with a lump sum payment in
            an amount  equal to the number of months of  coverage to which he is
            entitled times the then applicable  premium for the relevant benefit
            plan in which Executive  participated.  Such lump sum amount will be
            paid  during  the  second  month  following  the month in which such
            coverage expires.

                  (iii) Notwithstanding any provision of any annual or long-term
            incentive  plan  to  the  contrary,  the  Company  shall  pay to the
            Executive a lump sum amount, in cash, equal to the sum of:

                        (A) any  unpaid  incentive  compensation  which has been
                  allocated or awarded to the Executive  for a completed  fiscal
                  year or other measuring  period preceding the Termination Date
                  under any such plan and which, as of the Termination  Date, is
                  contingent only upon the continued employment of the Executive
                  to a subsequent date; and

                                       8
<PAGE>

                        (B) the product of the Highest Bonus and a fraction, the
                  numerator of which is the number of days in the fiscal year in
                  which the  Termination  Date occurs  prior to the  Termination
                  Date and the denominator of which is 365.

            Such amount shall be paid to the  Executive in  accordance  with the
            terms of the relevant underlying incentive  compensation plan at the
            time all  other  executives  are paid  pursuant  to such  plan  with
            respect  to any such  incentive  compensation  for such  year  which
            includes Executive's date of termination under this Section 4(a).

                  (iv)  Notwithstanding  the terms or  conditions  of any awards
            relating to a grant of  restricted  shares,  all  restricted  shares
            which are not vested as of the  Termination  Date shall become fully
            vested.

                  (v) The Company shall provide the Executive with  outplacement
            services suitable to the Executive's  position.  The Executive shall
            commence  the  outplacement  services  no later than sixty (60) days
            following his  termination  date under this Section 4(a),  but in no
            event  shall such  services be  provided  beyond  December 31 of the
            second year  following the year of termination  or, if earlier,  the
            first acceptance by the Executive of an offer of employment..

            (b) There will be no right of set-off or  counterclaim in respect of
      any claim,  debt or  obligation  against any payment to or benefit for the
      Executive provided for in this Agreement,  except as expressly provided in
      Section 4(a)(ii).

            (c)  Without  limiting  the  rights  of the  Executive  at law or in
      equity,  if the  Company  fails to make any payment or provide any benefit
      required to be made or provided  hereunder on a timely basis,  the Company
      will pay  interest  on the  amount or value  thereof  at the prime rate in
      effect  at the First  National  Bank of  Chicago.  Such  interest  will be
      payable as it  accrues  on  demand.  Any change in such prime rate will be
      effective on and as of the date of such change.

            (d)   Notwithstanding  any  other  provision  hereof,  the  parties'
      respective  rights and obligations under this Section 4 and under Sections
      6 and 7 will  survive any  termination  or  expiration  of this  Agreement
      following  a Change  in  Control  or the  termination  of the  Executive's
      employment following a Change in Control for any reason whatsoever.

          5. No Mitigation  Obligation:  The Company hereby acknowledges that it
will be difficult and may be impossible:

            (a)  for the  Executive  to find  reasonably  comparable  employment
      following the Termination Date; and

            (b) to measure the amount of damages which Executive may suffer as a
      result of termination of employment hereunder.

Accordingly,  the payment of the  severance  compensation  by the Company to the
Executive in accordance with the terms of this Agreement is hereby  acknowledged
by the  Company  to be  reasonable  and  will  be  liquidated  damages,  and the
Executive  will not be required to mitigate  the

                                       9
<PAGE>

amount of any payment provided for in this Agreement by seeking other employment
or otherwise,  nor will any profits, income, earnings or other benefits from any
source  whatsoever  create  any  mitigation,  offset,  reduction  or  any  other
obligation  on the part of the  Executive  hereunder  or  otherwise  reduce  any
payments or benefits to be provided to Executive hereunder,  except as expressly
provided in Section 4(a)(ii).

          6. Certain Additional Payments by the Company:

            (a) In the event that this  Agreement  becomes  operative  and it is
      determined (as hereafter provided) that any payment or distribution by the
      Company  or any of its  affiliates  to or for the  benefit  of  Executive,
      whether paid or payable or  distributed or  distributable  pursuant to the
      terms of this Agreement or otherwise pursuant to or by reason of any other
      agreement,  policy,  plan,  program  or  arrangement,   including  without
      limitation any stock option, stock appreciation right or similar right, or
      the  lapse  or  termination  of  any  restriction  on or  the  vesting  or
      exercisability of any of the foregoing (a "Payment"),  would be subject to
      the excise tax imposed by Section  4999 of the  Internal  Revenue  Code of
      1986, as amended (or any successor provision  thereto),  or to any similar
      tax  imposed by state or local law,  or any  interest  or  penalties  with
      respect  to such  excise  tax (such tax or taxes,  together  with any such
      interest and  penalties,  are  hereafter  collectively  referred to as the
      "Excise  Tax"),  then  Executive will be entitled to receive an additional
      payment or payments (a "Gross-Up  Payment") in an amount such that,  after
      payment by  Executive  of all taxes  (including  any interest or penalties
      imposed  with respect to such taxes),  including  any Excise Tax,  imposed
      upon the  Gross-Up  Payment,  Executive  retains an amount of the Gross-Up
      Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding
      anything to the contrary,  any Gross-Up  Payment  pursuant to this Section
      6(a) shall be paid no later than  December  31 of the year  following  the
      year in which the Executive  pays the  applicable  Excise Tax, and, if the
      Executive  is a  `specified  employee',  as  defined  and  applied in Code
      Section 409A as of the termination  date, no earlier than the first day of
      the seventh month following such date.

            (b)  Subject  to  the   provisions   of  Section  6(f)  below,   all
      determinations required to be made under this Section 6, including whether
      an Excise Tax is payable by  Executive  and the amount of such  Excise Tax
      and whether a Gross-Up Payment is required and the amount of such Gross-Up
      Payment,  will be made by a nationally recognized firm of certified public
      accountants (the  "Accounting  Firm") selected by Executive in Executive's
      sole  discretion.  Executive will direct the Accounting Firm to submit its
      determination and detailed supporting calculations to both the Company and
      Executive  within 15 calendar days after the date of the Change in Control
      or the date of Executive's termination of employment,  if applicable,  and
      any  other  such  time or  times as may be  requested  by the  Company  or
      Executive. For purposes of determining the amount of the Gross-Up Payment,
      the  Executive  shall be deemed to pay  federal  income tax at the highest
      marginal rate of federal income taxation in the calendar year in which the
      Gross-Up  Payment  is to be made and state and local  income  taxes at the
      highest  marginal  rate of  taxation  in the  state  and  locality  of the
      Executive's  residence  on  the  Termination  Date  (or  if  there  is  no
      Termination  Date,  then  the  date  on  which  the  Gross-Up  Payment  is
      calculated  for  purposes  of  this  Section  6(b)),  net of  the  maximum
      reduction in federal  income taxes which could be obtained from  deduction
      of such state and local taxes.  If the Accounting Firm determines that any
      Excise Tax is payable by  Executive,  the  Company  will pay the  required
      Gross-Up  Payment to Executive  within five business days after receipt of
      such  determination  and  calculations.  If the Accounting Firm

                                       10
<PAGE>

      determines  that no Excise Tax is payable by  Executive,  it will,  at the
      same  time as it  makes  such  determination,  furnish  Executive  with an
      opinion that Executive has substantial  authority not to report any Excise
      Tax on Executive's  federal,  state, local income or other tax return. Any
      determination  by the  Accounting  Firm as to the  amount of the  Gross-Up
      Payment will be binding upon the Company and Executive. As a result of the
      uncertainty  in the  application  of  Section  4999  of the  Code  (or any
      successor  provision  thereto) and the possibility of similar  uncertainty
      regarding   applicable  state  or  local  tax  law  at  the  time  of  any
      determination  by the  Accounting  Firm  hereunder,  it is  possible  that
      Gross-Up Payments which will not have been made by the Company should have
      been made (an "Underpayment"),  consistent with the calculations  required
      to be made hereunder.  In the event that the Company  exhausts or fails to
      pursue  its  remedies   pursuant  to  Section  6(f)  below  and  Executive
      thereafter is required to make a payment of any Excise Tax, Executive will
      direct the  Accounting  Firm to determine  the amount of the  Underpayment
      that has occurred and to submit its determination and detailed  supporting
      calculations  to both the Company and  Executive  as promptly as possible.
      Any such  Underpayment will be promptly paid by the Company to, or for the
      benefit of,  Executive  within five  business  days after  receipt of such
      determination and calculations.

            (c) The Company and Executive will each provide the Accounting  Firm
      access to and copies of any books, records and documents in the possession
      of the Company or Executive,  as the case may be, reasonably  requested by
      the Accounting  Firm, and otherwise  cooperate with the Accounting Firm in
      connection  with  the  preparation  and  issuance  of  the   determination
      contemplated by Section 6(b) above.

            (d) The federal,  state and local income or other tax returns  filed
      by Executive  will be prepared  and filed on a  consistent  basis with the
      determination  of the  Accounting  Firm with  respect  to the  Excise  Tax
      payable by Executive.  Executive will make proper payment of the amount of
      any Excise Tax. If prior to the filing of  Executive's  federal income tax
      return,  or  corresponding  state or local tax return,  if  relevant,  the
      Accounting Firm determines that the amount of the Gross-Up  Payment should
      be reduced,  Executive  will within five  business days pay to the Company
      the amount of such reduction.

            (e) The fees and expenses of the Accounting Firm for its services in
      connection  with  the  determinations  and  calculations  contemplated  by
      Section 6(b) and (d) above will be borne by the Company.  If such fees and
      expenses are initially  advanced by Executive,  the Company will reimburse
      Executive  the full amount of such fees and expenses  within five business
      days after receipt from  Executive of a statement  therefor and reasonable
      evidence of Executive's payment thereof.

            (f) Executive will notify the Company in writing of any claim by the
      Internal Revenue Service that, if successful, would require the payment by
      the  Company of a Gross-Up  Payment.  Such  notification  will be given as
      promptly  as  practicable,  but no  later  than  10  business  days  after
      Executive  actually  receives  notice of such claim,  and  Executive  will
      further  apprise  the  Company of the nature of such claim and the date on
      which such  claim is  requested  to be paid (in each  case,  to the extent
      known  by  Executive).  Executive  will not pay  such  claim  prior to the
      earlier of:

                  (i) the expiration of the 30-calendar-day period following the
            date on which Executive gives such notice to the Company; and

                                       11
<PAGE>

                  (ii) the date that any payment of amount with  respect to such
            claim is due.

      If the Company  notifies  Executive in writing prior to the  expiration of
      such period that it desires to contest such claim, Executive will:

                        (A)  provide the  Company  with any  written  records or
                  documents  in  Executive's  possession  relating to such claim
                  reasonably requested by the Company;

                        (B) take such action in connection  with contesting such
                  claim as the Company will  reasonably  request in writing from
                  time to time,  including  without  limitation  accepting legal
                  representation  with  respect  to such  claim  by an  attorney
                  competent  in respect  of the  subject  matter and  reasonably
                  selected by the Company;

                        (C)  cooperate  with the  Company in good faith in order
                  effectively to contest such claim; and

                        (D) permit the Company to participate in any proceedings
                  relating to such claim;

      provided,  however,  that the Company will bear and pay directly all costs
      and expenses  (including  interest and  penalties)  incurred in connection
      with such contest and will  indemnify and hold harmless  Executive,  on an
      after-tax basis,  for and against any Excise Tax or income tax,  including
      interest and penalties with respect  thereto,  imposed as a result of such
      representation  and payment of costs and  expenses.  Without  limiting the
      foregoing  provisions of this Section  6(f),  the Company will control all
      proceedings taken in connection with the contest of any claim contemplated
      by this Section 6(f) and, at its sole option, may pursue or forego any and
      all administrative appeals, proceedings, hearings and conferences with the
      taxing  authority in respect of such claim  (provided  that  Executive may
      participate  therein at Executive's  own cost and expense) and may, at its
      option,  either  direct  Executive  to pay the tax  claimed  and sue for a
      refund or  contest  the claim in any  permissible  manner,  and  Executive
      agrees  to  prosecute   such  contest  to  a   determination   before  any
      administrative  tribunal, in a court of initial jurisdiction and in one or
      more appellate courts, as the Company will determine;  provided,  however,
      that if the Company directs Executive to pay the tax claimed and sue for a
      refund,  the Company  will advance the amount of such payment to Executive
      on an interest-free  basis and will indemnify and hold Executive harmless,
      on an  after-tax  basis,  from any  excise  Tax or income  tax,  including
      interest or penalties with respect  thereto,  imposed with respect to such
      advance; and provided further,  however, that any extension of the statute
      of  limitations  relating  to  payment  of taxes for the  taxable  year of
      Executive with respect to which the contested  amount is claimed to be due
      is limited solely to such  contested  amount.  Furthermore,  the Company's
      control of any such contested claim will be limited to issues with respect
      to which a Gross-Up Payment would be payable  hereunder and Executive will
      be  entitled  to settle or  contest,  as the case may be, any other  issue
      raised by the Internal Revenue Service or any other taxing authority.

            (g) If, after the receipt by Executive of an amount  advanced by the
      Company pursuant to Section 6(f) above, Executive receives any refund with
      respect to such

                                       12
<PAGE>

      claim,  Executive  will  (subject  to the  Company's  complying  with  the
      requirements of Section 6(f) above) promptly pay to the Company the amount
      of such refund  (together with any interest paid or credited thereon after
      any taxes  applicable  thereto).  If, after the receipt by Executive of an
      amount  advanced  by  the  Company  pursuant  to  Section  6(f)  above,  a
      determination  is made that  Executive  will not be entitled to any refund
      with  respect to such claim and the Company  does not notify  Executive in
      writing  of its  intent to  contest  such  denial  or refund  prior to the
      expiration of 30-calendar-days after such determination, then such advance
      will be  forgiven  and will not be required to be repaid and the amount of
      such advance will offset,  to the extent  thereof,  the amount of Gross-Up
      Payment required to be paid pursuant to this Section 6.

      7. Legal Fees and Expenses:  If it should appear to the Executive that the
Company has failed to comply with any of its obligations under this Agreement or
in the event that the Company or any other person takes or threatens to take any
action to declare this Agreement void,  invalid or unenforceable,  or institutes
any  litigation  or other action or  proceeding  designed to deny, or to recover
from,  the  Executive  the  benefits  provided or intended to be provided to the
Executive hereunder,  the Company irrevocably authorizes the Executive from time
to time to retain counsel of Executive's  choice,  at the expense of the Company
as hereafter provided,  to advise and represent the Executive in connection with
any such  interpretation,  enforcement or defense,  including without limitation
the initiation or defense of any litigation or other legal action, whether by or
against  the  Company or any  Director,  officer,  stockholder  or other  person
affiliated with the Company, in any jurisdiction.

Notwithstanding any existing or prior  attorney-client  relationship between the
Company and such counsel,  the Company  irrevocably  consents to the Executive's
entering into an  attorney-client  relationship  with such counsel,  and in that
connection the Company and the Executive agree that a confidential  relationship
shall exist between the Executive and such counsel.  The Company will pay and be
solely financially responsible for Executive's out-of-pocket expenses, including
reasonable attorneys' fees and expenses, incurred by the Executive in connection
with any of the foregoing; provided, however, in the case of any such litigation
or other action or proceeding in which the Company or any of its  affiliates and
Executive are adverse  parties,  the Company shall not pay or be responsible for
any such expenses if the Company or any of its affiliates  prevails  against the
Executive.

      8.  Employment  Rights;  Termination  Prior to Change in Control:  Nothing
expressed or implied in this Agreement will create any right or duty on the part
of the Company or the Executive to have the Executive  remain in the  employment
of the Company or any Subsidiary prior to or following any Change in Control.

      9. Withholding of Taxes: The Company may withhold from any amounts payable
under this Agreement all federal,  state,  city or other taxes as the Company is
required to withhold pursuant to any law or government regulation or ruling.

      10. Successors and Binding Agreement:

            (a) The  Company  will  require  any  successor  (whether  direct or
      indirect, by purchase, merger, consolidation, reorganization or otherwise)
      to all or substantially  all of the business or assets of the Company,  by
      agreement in form and substance  satisfactory to the Executive,  expressly
      to assume and agree to perform  this  Agreement  in the same manner and

                                       13
<PAGE>

      to the same  extent the  Company  would be  required to perform if no such
      succession had taken place.  This Agreement will be binding upon and inure
      to the benefit of the Company and any successor to the Company,  including
      without  limitation  any persons  acquiring  directly or indirectly all or
      substantially  all of the  business  or assets of the  Company  whether by
      purchase,  merger,  consolidation,  reorganization  or otherwise (and such
      successor  shall  thereafter  be deemed the  "Company" for the purposes of
      this  Agreement),  but will not otherwise be assignable,  transferable  or
      delegable by the Company.

            (b) This  Agreement  will inure to the benefit of and be enforceable
      by  the  Executive's   personal  or  legal   representatives,   executors,
      administrators, successors, heirs, distributees and legatees.

            (c) This  Agreement is personal in nature and neither of the parties
      hereto  shall,  without  the  consent of the other,  assign,  transfer  or
      delegate this Agreement or any rights or obligations  hereunder  except as
      expressly  provided in Sections 10(a) and 10(b) hereof.  Without  limiting
      the  generality  or  effect of the  foregoing,  the  Executive's  right to
      receive  payments  hereunder  will  not  be  assignable,  transferable  or
      delegable,  whether  by  pledge,  garnishment,   creation  of  a  security
      interest,  claims for alimony,  or otherwise,  other than by a transfer by
      Executive's  will or by the laws of descent and  distribution  and, in the
      event of any  attempted  assignment  or transfer  contrary to this Section
      10(c),  the Company shall have no liability to pay any amount so attempted
      to be assigned, transferred or delegated.

      11.  Notices:  For all  purposes of this  Agreement,  all  communications,
including without limitation notices, consents, requests or approvals,  required
or permitted to be given hereunder will be in writing and will be deemed to have
been duly  given when hand  delivered  or  dispatched  by  electronic  facsimile
transmission  (with receipt  thereof  orally  confirmed),  or five business days
after  having been  mailed by United  States  registered  mail,  return  receipt
requested,  postage prepaid,  or three business days after having been sent by a
nationally recognized overnight courier service such as Federal Express, UPS, or
Purolator,  addressed to the Company (to the  attention of the  Secretary of the
Company) at its principal  executive  office and to the Executive at Executive's
principal residence, or to such other address as any party may have furnished to
the other in writing and in accordance herewith,  except that notices of changes
of address shall be effective only upon receipt.

      12. Dispute  Resolutions:  Any dispute or controversy  arising under or in
connection  with this Agreement  shall be settled  exclusively by arbitration in
Chicago,  Illinois  in  accordance  with the rules of the  American  Arbitration
Association then in effect;  provided,  however,  that the evidentiary standards
set  forth  in this  Agreement  shall  apply.  Judgment  may be  entered  on the
arbitrator's award in any court having jurisdiction.

      13.  Governing  Law:  The  validity,   interpretation,   construction  and
performance  of this  Agreement  will be governed by and construed in accordance
with the substantive laws of the State of Delaware, without giving effect to the
principles of conflict of laws of such State.

      14. Validity: If any provision of this Agreement or the application of any
provision hereof to any person or  circumstances is held invalid,  unenforceable
or otherwise  illegal,  the remainder of this  Agreement and the  application of
such provision to any other person or  circumstances  will not be affected,  and
the provision so held to be invalid, unenforceable or otherwise

                                       14
<PAGE>

illegal  will be reformed to the extent  (and only to the extent)  necessary  to
make it enforceable, valid or legal.

      15. Miscellaneous:  No provision of this Agreement may be modified, waived
or  discharged  unless such  waiver,  modification  or discharge is agreed to in
writing  signed by the  Executive  and the  Company.  No waiver by either  party
hereto at any time of any breach by the other party  hereto or  compliance  with
any condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or representations,  oral
or  otherwise,  expressed or implied with respect to the subject  matter  hereof
have  been  made by  either  party  which  is not set  forth  expressly  in this
Agreement.  References  to  Sections  are to  references  to  Sections  of  this
Agreement.  Effective  as of the date  hereof,  this  Agreement  supersedes  and
replaces the prior  Severance  Agreement  entered into between the Executive and
the Company.

      16.  Counterparts:   This  Agreement  may  be  executed  in  one  or  more
counterparts,  each of which shall be deemed to be an original  but all of which
together will constitute one and the same agreement.

      IN WITNESS  WHEREOF,  the parties  have caused this  Agreement  to be duly
executed and delivered as of the date first above written.

                              PLAYBOY ENTERPRISES, INC.,

                              By:
                                 -----------------------------------------------

                              Title:
                                    --------------------------------------------

ACCEPTED and AGREED to:

-----------------------------
Richard Rosenzweig

                                       15

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