Document:

EXHIBIT 10.1

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

                                                              EXECUTED AGREEMENT

                                    AGREEMENT

            This agreement ("Agreement") is made and entered into as of October
4, 2004 (the "Effective Date"), by and between PLAYBOY ENTERPRISES
INTERNATIONAL, INC., a Delaware corporation ("Playboy"), FIESTA PALMS LLC, a
Nevada limited liability company ("FPLLC") and N-M VENTURES II, LLC, a Nevada
limited liability company (the "Tenant"), Nine Group LLC, a Delaware limited
liability company ("Nine Group") who with FPLLC are members of Tenant (the
Tenant, together with members Nine Group and FPLLC, are referred to collectively
as "Palms").

            WHEREAS, FPLLC is the owner of the Palms Casino Resort located at
4321 West Flamingo Road in Las Vegas, Nevada (the "Palms Resort"), N-M Ventures
LLC, a Nevada limited liability company is the lessee of the four venues known
as "N9NE Steakhouse" "ghostbar" "Skin Pool Lounge" "Rain Nightclub" (the
"Existing Venues") at the Palms Resort;

            WHEREAS, FPLLC is the owner of a store within the Palms Resort
called the "Palms Store" and N-M Ventures LLC, a Nevada limited liability
company is the owner of a store at the Palms Resort called the "Stuff Store."

            WHEREAS, the Tenant will be leasing from FPLLC up to three
additional venues ("New Venues") at the "New Tower" (as defined below) to be
built at the Palms Resort;

            WHEREAS, Playboy is the owner of the "Playboy Marks" (as hereinafter
defined) and Palms recognizes and acknowledges that the Playboy Marks are
internationally well-known and recognized by the general public and are
associated in the public mind with Playboy and are designations in which Playboy
has acquired considerable and valuable goodwill; and

            WHEREAS, Palms desires to obtain a license to use the Playboy Marks
at the Palms Resort including without limitation, the development and operation
of a Playboy branded lounge with a casino and a night club to be created at the
top two floors of the New Tower, a "Hugh Hefner Sky Villa" (as defined below)
and a "Playboy Store" (as defined below) on the ground level of the New Tower
(the Playboy Store, the Hugh Hefner Sky Villa, and the lounge with the casino
and the night club are referred to together as the "Project") in accordance with
the terms and conditions set forth in this Agreement and Playboy wishes to grant
such license.

            NOW, THEREFORE, in consideration of the foregoing and the mutual
promises herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:

                                       1
<PAGE>

1.    DEFINITIONS.

            In this Agreement and any exhibits, addenda or riders hereto, the
following terms shall have the following meanings: "Additional Playboy Venue"
means any Playboy themed or branded club, casino, lounge, restaurant, night
club, tavern, or hotel that is not within the "Playboy Elements" as defined
below.

            "Business Day" means any day other than a Saturday, a Sunday or a
day on which banking institutions in Las Vegas, Nevada are authorized by law to
close.

            "Co-Branded Merchandise Sales" shall be defined as set forth in
Section 5(d).

            "Failure to Open Termination Right" shall mean a right of
termination when pursuant to Section 2(b) below, the Project Opening Date for
the "Nightclub" and "Lounge" (as defined below) does not timely occur.

            "Fiscal Quarter" shall mean a fiscal quarter which ends on March 31,
June 30, September 30 or December 31. The first Fiscal Quarter shall be the
period commencing on the date of Project Opening Date for the Nightclub and
Lounge and ending on the last day of the Fiscal Quarter in which the Project
Opening Date for the Nightclub and Lounge occurs. The last Fiscal Quarter shall
be the period commencing on the first day of the Fiscal Quarter in which the
expiration or earlier termination of the term hereof shall occur and ending on
the date of such expiration or termination.

            "Force Majeure Event" shall mean an act of God, fire, explosion,
transportation contingencies, unusually severe weather, quarantine, restriction,
epidemic, natural catastrophe, war, acts of terrorism, civil disturbance, acts
of the government of any country or of any governmental agency or official
thereof or court order, beyond its reasonable control, that prevents the
performance by either party of an obligation hereunder for so long as the
excused party makes commercially reasonable efforts to minimize, if and to the
extent possible, the impact of such event.

            *****

            "Interest Rate" shall mean ***** per annum above the prime lending
rate announced, from time to time, by JPMorgan Chase Bank, N.A. in New York City
or, in the event that JPMorgan Chase Bank, N.A. shall no longer announce its
prime or base lending rate as aforesaid, ***** per annum above the prime rate
from time to time published in the "Money Rates" section of The Wall Street
Journal as being the "Prime Rate" (or, if more than one rate is published as the
Prime Rate, then the average of such rates).

            "Nevada Marketing Event for Playboy" shall be as defined in Section
3 below.

            "Nevada Licensing Authorities" shall mean the Nevada Gaming
Commission, the Nevada State Gaming Control Board, the Clark County Liquor and
Gaming Licensing Board and any other applicable governmental or administrative
state or local agency involved in the regulation of gaming and gaming activities
in the State of Nevada with jurisdiction over the Palms Resort.

                                       2
<PAGE>

            "Playboy Chips" shall mean gaming chips or tokens using any of the
Playboy Marks produced by or for Palms pursuant to the terms hereof. There are
three types of Playboy Chips. "Rack Playboy Gaming Chips" are those used by
FPLLC as rack or inventory chips for gaming at the Palms Resort. "Commemorative
Playboy Gaming Chips" are those produced and distributed for events involving
the Playboy Indicia and which can be used for gaming at the Palms Resort.
"Playboy Nongaming Chips" are those produced and distributed for souvenirs at
events involving the Playboy Indicia and which cannot be for gaming at the Palms
Resort and cannot be transferred or exchanged for money.

            "Playboy Co-Branded Merchandise" shall mean merchandise marked with
both the Playboy Marks and either be logos or marks of the Nine Group, the
Tenant, FPLLC, Palms Resort, the Existing Venues or New Venues.

            "Playboy Non-Element Revenue Event" shall mean any event at the
Palms Resort outside of the Playboy Elements that incorporates the Playboy
Indicia at which revenue outside the Playboy Elements are generated.

            "Playboy Indicia" shall mean the Playboy Marks, Bunnies, Bunny
Costumes, and other symbols or indicia of source related to Playboy.

            "Playboy Marks" shall mean the list of service marks and logos set
forth on Exhibit A attached hereto, as the same may be amended from time to time
by mutual written agreement of the parties hereto.

            "Playboy Marketing Use" shall mean using the Playboy Indicia for
marketing or promoting the Project at all locations at the Palms Resort
including weekends and nights that are not part of a Playboy Non-Element Revenue
Event.

            "Playboy Membership Incremental Revenue" *****

            "Playboy-Only Merchandise" shall mean merchandise that carries only
the Playboy Marks and no other marks.

            "Playboy Store Operating Expenses" *****

            *****

            "Playboy Store Net Profits" shall mean, as to any period, the
Playboy Store Revenues minus Playboy Store Operating Expenses.

            "Project Opening Date for the Nightclub and Lounge" is the earlier
of the date either the Nightclub or the Lounge are opened to the public for
business.

            "Project Opening Date for the Playboy Store" is when the Playboy
Store opens to the public for business.

                                       3
<PAGE>

            "Project Standard" shall mean a standard of design, construction,
maintenance, operation and management, as applicable, consistent with the
first-class standards employed at the Palms Resort as of the date of this
Agreement.

            *****

2.    THE PROJECT.

      (a)   New Tower Description. The Project will be included within a new
            tower (the "New Tower") to be built by Palms at the Palms Resort.
            The New Tower will (i) be not less than 25 floors above grade, (ii)
            include not fewer than 250 guest rooms, (iii) be accessible via
            enclosed corridors to the existing Palms Resort buildings, and (v)
            be located at the Palms Resort property in the area designated on
            Exhibit B attached hereto. Palms will consult with Playboy in
            developing the Project, provided, however, that Palms shall retain
            sole discretion with regard to all elements and decisions related to
            the Project

      (b)   New Tower Construction. Construction of the New Tower will be
            pursued diligently by FPLLC except for interruptions caused by a
            Force Majeure Event. Unless interrupted by a Force Majeure Event, if
            the Project Opening Date for the Nightclub and Lounge does not occur
            by June 30, 2006, then either FPLLC or Playboy may terminate this
            Agreement by giving a notice of termination to the other ("Failure
            to Open Termination Right"). If the Project Opening Date for the
            Nightclub and Lounge does not occur by June 30, 2006 because of a
            Force Majeure Event, then the Failure to Open Termination Right
            shall be deferred for a reasonable period (not to exceed 90 days) to
            accommodate the delay caused by the Force Majeure Event. Termination
            of this Agreement by exercise of the Failure to Open Termination
            Right does not give rise to a claim for loss or damage. Subject to
            compliance with the Project Standard, FPLLC will be solely
            responsible (at FPLLC's sole expense) for all aspects of the design,
            development, construction and finish of the New Tower, including,
            without limitation, all permits, approvals and licenses.

      (c)   New Tower Signage. Playboy icon signage and Palms Resort signage
            shall be installed on the east face of the New Tower (collectively,
            the "New Tower Signage"). The design of the New Tower Signage shall
            be as shown on Exhibit C attached hereto and by reference
            incorporated herein.

      (d)   Playboy Elements. The Project will consist of the following Playboy
            branded components (collectively, the "Playboy Elements") at the
            Palms Resort. The floorplan of the Playboy Elements shall be as
            shown on Exhibit D attached hereto and by reference incorporated
            herein, and any material changes to the floorplan and structural
            elements that materially changes the look and feel of the Playboy
            Elements, or requires the closing of the Playboy Elements for three
            (3) consecutive days after the Effective Date shall require the
            consent of both parties and be reflected in a revised Exhibit D:

                                       4
<PAGE>

            (i)   An exclusive high-end dance venue at the top floor of the New
                  Tower (the "Nightclub") linked by escalators and elevators to
                  a casino on the floor below the name of which will be "Moon."

            (ii)  A separate lounge with a casino of approximately 12,000 square
                  feet, immediately below the Nightclub, which shall be known by
                  the name or a name similar to "The Playboy Lounge and Casino"
                  (the "Lounge").

            (iii) An approximately 750 square foot Playboy branded retail store
                  shall be located on the ground level of the New Tower (the
                  "Playboy Store").

            (iv)  A two-level approximately 10,000 square foot super villa (the
                  "Hugh Hefner Sky Villa") shall be located at the highest guest
                  floor in the New Tower which FPLLC will use its best efforts
                  (subject to health, safety and engineering constraints) to
                  feature indoor/outdoor pools.

      (e)   New Tower, Playboy Store and Project Management. Subject to the
            Nevada Licensing Authorities, FPLLC will operate the gaming in the
            casino immediately below the Nightclub, the Playboy Store, and the
            Hugh Hefner Sky Villa and either Nine Group Management, Inc. or Nine
            Group Management II, Inc. will operate the Nightclub and the Lounge
            on behalf of Tenant. All management will be at a quality of
            operation equal to or better than the Project Standard. FPLLC and
            Playboy may mutually agree to form a new special purpose entity to
            lease the Playboy Store area from FPLLC and to operate the Playboy
            Store. In such event, reference to Playboy Store Revenues and
            Playboy Store Operating Expenses will be references to the revenues
            and operating expenses, respectively of such new special purpose
            entity. References to Playboy Store Net Profits will be references
            to the net profits of such new special purpose entity.

      (f)   Operating Covenants. *****.

3.    GRANT OF LICENSE AND RELATED RIGHTS.

      (a)   Grant. Subject to the provisions of this Agreement, Playboy hereby
            grants (and will cause its licensing subsidiaries to grant) to
            Palms, and Palms hereby accepts, the right and license to use
            publicly display, copy, reproduce and alter (subject to the
            provisions of Paragraph 4(c) below) the Playboy Marks in connection
            with the operation of the Playboy Elements and the Palms Resort and
            in the marketing and promotion thereof, including without limitation
            the right to produce or commission the production of the items
            listed on Exhibit E and any Playboy Co-Branded Merchandise, provided
            that Palms shall submit the first prototype of any such item to
            Playboy for approval in accordance with Paragraph 4(c). *****. The
            License is granted exclusively to Palms and not to any individual or
            entity that holds an interest in Palms for use in connection with
            business at the Palms Resort. Anything in this Paragraph 3(a) to the
            contrary notwithstanding, Playboy will retain the right to use and
            license third parties the right to use Playboy's

                                       5
<PAGE>

            trademarks and other intellectual properties on slot machines and
            other gaming devices. *****.

      (b)   Warranty. Playboy warrants that: (i) it has the right to grant the
            License hereunder; (ii) it directly or through a subsidiary owns the
            Playboy Marks; and (iii) Palms may use the Playboy Marks as provided
            hereunder free from any claim by third parties.

      (c)   Competition.

            (i)   During the term hereof, without prior written approval from
                  Playboy's General Counsel at the contact listed in Section 8
                  below, Palms shall not: (x) display, sell or permit to be sold
                  at the Playboy Elements any marks or names, or any merchandise
                  bearing or identified with the marks or names, of any of the
                  following persons or entities: ***** (the foregoing persons or
                  entities are collectively referred to as "Competitors"), (y)
                  use any Playboy Indicia at any events to sell any merchandise,
                  sponsored by or associated with any Competitor or (z) rename
                  an Existing Venue with a mark associated with any Competitor
                  at the Palms Resort.

            (ii)  Commencing on the Project Opening Date for the Nightclub and
                  Lounge, Playboy shall, for itself and its affiliates and
                  subsidiaries, book all "Nevada Marketing Events for Playboy"
                  at the Project or Palms Resort. Palms shall offer Playboy its
                  best competitive rate in connection with such bookings. If the
                  Project or Palms, using its best efforts, cannot accommodate
                  any such Nevada Marketing Events for Playboy, such Nevada
                  Marketing Events for Playboy may be conducted at one or more
                  other locations in Clark County, Nevada (the "Alternate
                  Location"), provided that if Playboy desires to book such
                  Nevada Marketing Event for Playboy at an Alternate Location
                  that is another hotel or casino in Las Vegas, then in such
                  case Palms shall have the right of approval over such
                  Alternate Location. A Nevada Marketing Event for Playboy is a
                  marketing or promotional events held by Playboy in the State
                  of Nevada, but it does not include the mere exhibiting at a
                  trade show, (for example at the Las Vegas Convention Center),
                  provided however that a party celebrating the exhibition at a
                  hotel or casino or restaurant or nightclub in Nevada would be
                  considered a Nevada Marketing Event for Playboy. Palms must
                  respond to Playboy's request to book a Nevada Marketing Event
                  for Playboy within ten (10) business days or it shall be
                  deemed that Palms cannot accommodate such request. From the
                  Effective Date until the Project Opening Date for the
                  Nightclub and Lounge, Playboy agrees that it shall not book
                  any Nevada Marketing Events for Playboy at the *****

      (d)   Co-branding and Sales at the Playboy Store. Subject to following the
            approval procedures set forth in Paragraph 4(c), the license
            includes the right to sell Playboy Co-Branded Merchandise at the
            Stuff Store, the Palms Store, the Playboy

                                       6
<PAGE>

            Store and through any Palms online internet store (including,
            without limitation the online internet store operated on the date of
            this Agreement by the Nine Group), if any. The sale of Playboy-Only
            Merchandise, shall be sold only at the Playboy Store and shall not
            be sold at the Stuff Store, the Palms Store or any Palms online
            internet store or any other retail sales outlet controlled by or
            affiliated with Palms. For clarification, the Playboy Store shall
            not be limited to selling Playboy-Only Merchandise or Playboy
            Co-Branded Merchandise, and other merchandise may also be sold at
            the Playboy Store. All Playboy-Only Merchandise and Playboy
            Co-Branded Merchandise shall be sold by Palms at prices that are
            competitive to the prices charged by other sellers of comparable
            merchandise using a commercially reasonable standard. All sales of
            Playboy Co-Branded Merchandise, including through an on line
            internet store, are subject to the provisions herein, including
            specifically 3(d), 4(c), 5(c), and 5(d).

      (e)   Playboy Chips. FPLLC shall have the right to produce or cause to be
            produced Playboy Chips, the design of which shall be approved by
            Playboy in accordance with Paragraph 4(c).

      (f)   Decor. Playboy may, subject to availability, provide Palms with
            promotional and decor items to use in connection with the Project,
            which will be provided at no cost to Palms, except that Palms will
            pay the actual costs of shipping, insuring and securing such items.
            All such items will remain the property of Playboy. Playboy will
            also provide, without charge to Palms (except for actual
            out-of-pocket reproduction costs), style sheets and camera-ready
            artwork from which Palms may appropriately reproduce the Playboy
            Marks pursuant to at its own expense. Palms may reject promotional
            and decor items and return same to Playboy.

      (g)   Assignment / Change of Control. Without the approval of Playboy's
            General Counsel at the contact information listed in Section 8
            below, the License and all rights and duties hereunder with respect
            to the License may only be assigned, sold or sublicensed to a person
            who buys (or acquires through a foreclosure or trustees' sale) the
            whole or substantially all of the assets of FPLLC or Tenant and who
            obtains (or has a manager, receiver or supervisor obtain) all
            required liquor or gaming licenses from the Nevada Licensing
            Authorities to operate the business formerly operated by FPLLC or
            Tenant, and agrees to be subject to the ongoing rights and
            obligations of this Agreement (a "Change of Control"), ***** Without
            the prior written approval of Playboy's General Counsel at the
            contact information listed in Section 8 below, the License and all
            rights and duties hereunder with respect to the License may not be
            mortgaged or otherwise encumbered by FPLLC, Nine Group or Tenant.
            Any attempt by any of Nine Group, FPLLC or Tenant to separately
            assign, mortgage, sublicense or otherwise encumber this Agreement or
            any of the rights and duties hereunder not in connection with a
            Change of Control without the prior written consent from Playboy's
            General Counsel at the contact information in Section 8 below (which
            may be withheld in Playboy's sole and absolute discretion) shall
            constitute a material event of default. Playboy hereby approves the
            grant by Palms of a security interest in its rights under this
            Agreement to secure Palms' obligations

                                       7
<PAGE>

            under a credit agreement and amendments, restatements, or
            modifications thereto with Wells Fargo, N.A. (on its own behalf or
            administrative agent for other lenders), the outstanding borrowings
            of which shall be used for purposes which include, without
            limitation, the financing, construction and operation of the New
            Tower. Playboy will sign customary and reasonable estoppel
            certificates or consents in connection with the foregoing, which
            estoppel certificates or consents will not impair or alter any of
            Playboy's rights under this Agreement.

      (h)   Pre-Opening Matters.

            (i)   Prior to the Project Opening Date for the Nightclub and
                  Lounge, (x) Palms shall host, at Palms' sole cost and expense,
                  a mutually agreed upon number of promotional events at the
                  Palms Resort to promote the Project and Playboy will cooperate
                  with Palms in connection with the production of such
                  promotional events and (y) Playboy and Palms will jointly host
                  a mutually agreed upon promotional event at Playboy Mansion
                  West to promote the Project and, in connection therewith,
                  Palms shall pay all of the actual out-of-pocket costs and
                  expenses, but not a fee just for the use of Playboy Mansion
                  West. For each of the promotional events promoting the
                  Project, Palms may produce and distribute to patrons and
                  guests Commemorative Playboy Gaming Chips or Playboy Nongaming
                  Chips. Palms will pay to Playboy a "Percentage Fee" (as
                  defined below) of ***** of the face amount of any
                  Commemorative Playboy Gaming Chips, within thirty (3)) days
                  following the date of any such promotional events. Palms is
                  not required to pay Playboy a Percentage Fee for Playboy
                  Nongaming Chips. All uses of the Playboy Marks at each such
                  promotional event will be strictly in accordance with the
                  terms hereof.

            (ii)  Pre-Opening Ads. *****

            (iii) Announcement. Playboy and Palms will mutually agree on a
                  public announcement of the Project. Palms acknowledges that
                  the timing of such announcement may be affected by SEC rules
                  and disclosure requirements.

      (i)   Additional Playboy Covenants. During the term hereof, Playboy shall
            provide Palms with the following:

            (i)   *****

            (ii)  *****

            (iii) *****

            (iv)  subject to the provisions of Section 4(c), the right to use
                  the Playboy Indicia for a Playboy Marketing Use, provided such
                  uses will not, in any event, include references to
                  Competitors;

            (v)   *****

                                       8
<PAGE>

            (vi)  from time to time during the Term of this Agreement, but in
                  any event no more frequently than ***** times per year, each
                  party shall send promotional materials, direct promotion
                  pieces and invitations for events that help promote the
                  Playboy Elements to its customer lists, magazine subscribers,
                  on-line subscribers, and celebrity mail list members, as
                  applicable. Written material to be mailed will be provided by
                  the party desiring the mailing and after mailing the other
                  party shall send a verified invoice for any postage, material
                  and labor costs incurred by the mailing party and the other
                  party shall have thirty (30) days within which to pay such
                  invoice.

            (vii) Playboy and palms agree to work together during the Term of
                  this Agreement to maximize opportunities for the assets of
                  both parties, including Playboy's television networks,
                  magazine, and ancillary products, licensing and online
                  services. Playboy will cause any of its subsidiaries to
                  perform their respective obligations under this Agreement.

      (j)   Playboy to Offer Concierge Services. Playboy shall have the right to
            offer concierge services through a company such as ***** that will
            allow the purchasers of such services to receive preferential line
            treatment for the Nightclub and Lounge (the "Concierge Services).
            Playboy and Palms agree that the Concierge Services shall only
            require the accommodation of a reasonable number of persons and
            shall work like other similarly situated services.

4.    APPROVAL AND CONTROL.

      (a)   *****

      (b)   *****

      (c)   *****

      (d)   Use and Goodwill. Palms shall reasonably conduct its business in
            accordance with all applicable laws and not in a manner that
            reflects adversely upon the good name of Playboy or the Playboy
            Marks. Any goodwill arising out of Palms' use of the Playboy Marks
            will inure solely to the benefit of Playboy. Palms shall use the
            Playboy Marks to identify the Playboy Elements at the Palms Resort
            and those personnel within the Palms Resort to be designated as
            "Bunnies" and that any unauthorized use of the Playboy Marks will
            constitute an infringement of the rights of Playboy.

      (e)   Playboy Bunnies. The Playboy Bunny is one of the most important
            symbols of Playboy and maintenance of the quality and goodwill
            associated with the symbol is central to the License. Consequently,
            for the mutual benefit of both Palms and Playboy, all Bunnies
            employed by Palms must conform to the high standards of personal
            appearance and moral conduct which the Playboy Bunny symbol
            represents and which may be determined from time to time by Playboy.
            Upon notice to Palms, Playboy will have the right to interview and
            observe Palms'

                                       9
<PAGE>

            Bunnies and ensure that the Bunnies conform to the high standards of
            personal appearance established by Playboy. Palms obligates itself
            to employ persons which Palms reasonably believes are of good moral
            character and conduct as Bunnies who will not bring discredit to the
            Playboy Bunny symbol or Playboy. It is the purpose of this Paragraph
            4(e) to ensure that the value of the Bunny symbol will not be eroded
            and to maintain uniformity in the appearance of the symbol. Palms
            will employ a Bunny supervisor ("Bunny Mother") who is subject to
            the ongoing reasonable approval of Playboy, for purposes of Bunny
            training and maintaining conformity to reasonable standards set by
            Playboy. Palms may ask the Bunny Mother to perform other management
            and supervisory work appropriate to her level of training and
            experience. Playboy will provide, at no cost to Palms, initial
            orientation training of Palms' Bunnies and the Bunny Mother. Palms
            will have complete control over all personnel policies and labor
            relations at the Project and it is not the intent of this Paragraph
            4(e) to affect or influence that control. In accordance with
            Paragraph 4(c), Playboy will approve all Bunny uniforms.

      (f)   Separate Identity. Palms shall not use any of the Playboy Marks as
            part of its corporate or other legal name. Palms shall not conduct
            business with its suppliers, employees, government agencies or
            others in the name of Playboy, or in any manner which suggests that
            Palms is an affiliate of Playboy or that Palms is authorized to act
            for or bind Playboy.

      (g)   No Contest of Playboy's Rights. Palms agrees that it will not,
            during the term of this Agreement, or at any time thereafter,
            directly or indirectly, contest or aid others in contesting the
            validity of any of the Playboy Marks or the exclusive ownership and
            rights to the use thereof by Playboy.

      (h)   Infringements. Palms will promptly notify Playboy of any
            infringement of the Playboy Marks that directly interferes with the
            Project or violates the rights granted to Palms hereunder. In the
            event of such notice, Playboy shall take such legal action as is
            reasonable and commercially practical under the circumstances. In
            the event of any monetary recovery by Playboy in connection with the
            enforcement of its rights as required herein, Playboy shall be
            entitled to recoup its costs in obtaining such recovery or judgment
            and the remainder, if any, shall be split equally between Playboy
            and Palms. Palms will cooperate fully with Playboy in any such
            action Playboy may decide to take. In no event shall Playboy be
            responsible to Palms for any incidental or consequential damages,
            such as lost profits, that may result from any such infringement.

      (i)   Complaints. Palms shall immediately notify Playboy of any complaint
            or legal action asserted against it by reason of the use of any of
            the Playboy Marks and Playboy shall defend or settle any such legal
            action in any manner and on any terms it shall deem appropriate. Any
            costs, including, but not limited to, awards of damages, amounts
            paid in settlement, attorneys' fees, court costs and disbursements
            incurred in defending or settling any such legal action and that may
            be assessed against the Palms by reason of the use of the Playboy
            Marks in

                                       10
<PAGE>

            accordance with the terms and conditions of this Agreement shall be
            paid by Playboy. In no event shall Playboy be responsible to Palms
            for any incidental or consequential damages, such as lost profits,
            that may result from any such action.

      (j)   Intellectual Property Notices. Palms shall utilize such reasonable
            trademark and copyright credit notices and such other consumer
            notices or information as Playboy may request from time to time.

      (k)   Permutations. Playboy acknowledges and agrees that the marks
            associated with the Existing Venues and the New Venues, along with
            permutations of such marks, are the property of the Nine Group (the
            "Nine Marks"). Playboy acknowledges and agrees that the marks and
            permutations of marks associated with Palms Resort are owned or
            licensed by FPLLC and are the property of FPLLC (the "Palms Marks").
            Any goodwill arising out of the Palms' use of the Palms Marks or the
            Nine Marks will inure solely to the benefit of Palms and/or Nine
            Group respectively. Playboy acknowledges and agrees that the extant
            Nine Marks and Palms Marks are not permutations of the Playboy Marks
            and upon expiration or termination of this Agreement the owners of
            the Palms Marks and Nine Marks are permitted to continued use of the
            Palms Marks and Nine Marks so long as they do not incorporate any
            Playboy Marks or permutations of the Playboy Marks. Palms shall not
            during or after the term of this Agreement use or cause or authorize
            to be used any words, device, design or symbol confusingly similar
            to the Playboy Marks except as authorized by Playboy.

5.    LICENSE FEES AND REPORTING.

            In consideration of the rights to use the Playboy Marks at the Palms
Resort, Palms will pay Playboy the following by electronic transfer, which shall
be payable in arrears:

      (a)   Fixed Fee. Commencing on the Project Opening Date for the Nightclub
            and Lounge and thereafter until termination (subject to Paragraph
            6(e)) of this Agreement, *****

      (b)   Percentage Fees. Commencing on the Project Opening Date for the
            Nightclub and Lounge and thereafter until termination (subject to
            Paragraph 6(e)) of this Agreement, a percentage fee (the "Percentage
            Fee") *****

            (i)   *****

            (ii)  *****

            (iii) *****

            (iv)  *****

            (v)   *****

                                       11
<PAGE>

      (c)   Monthly Statement. Commencing on the earlier of the Project Opening
            Date for the Playboy Store or the date Palms commences selling
            Playboy-Only Merchandise and/or Playboy Co-Branded Merchandise,
            whether at the Palms Resort or online, and thereafter until
            termination (subject to Paragraph 6(e)) of this Agreement, Palms
            shall furnish or cause to be furnished to Playboy a monthly
            statement of each calendar month's Shared Revenues with a
            calculation of Percentage Fees within twenty-one (21) days after the
            end of each calendar month. Such statements shall be in a form
            mutually acceptable to Palms and Playboy and shall be certified by
            an officer or responsible employee of either FPLLC or Tenant as an
            accurate accounting of such amounts. Palms will accompany each such
            statement with payment by electronic transfer to Playboy in an
            amount equal to the Percentage Fee and Playboy Store Net Profits
            calculated in accordance with Paragraph 5(b) hereof.

      (d)   Late Payments. If Palms fails to pay within ten (10) calendar days
            when the same is due any fee payable hereunder, the unpaid amounts
            shall bear interest at the Interest Rate, from the date the unpaid
            amount was initially due, to and excluding the date of payment;
            provided, however, that the interest provided for in this Paragraph
            5(d) shall not in any way limit Playboy's right to declare Palms in
            default of this Agreement for failure to pay an amount within ten
            (10) calendar days when the same is due and pursue all rights and
            remedies in connection therewith, including, without limitation, the
            right to terminate this Agreement.

      (e)   Records. At the time of a sale or other transaction upon which a
            Percentage Fee, Playboy Store Net Profits, Playboy-Only Merchandise
            Net Profits or Co-Branded Merchandise Sales are payable hereunder,
            Palms shall record the sale or other transaction in auditable point
            of sale computer systems installed and operated by either FPLLC or
            Tenant which are used for the recording of transactions to be
            reported either to the Nevada Licensing Authorities or the
            department of taxation of the State of Nevada. FPLLC and Tenant
            shall maintain records on these existing point of sale computer
            systems for the same period of time and in the same form as are
            required by the Nevada Licensing Authorities and the department of
            taxation of the State of Nevada, but in any case no less than three
            (3) years after such records are created. Promptly, upon request,
            FPLLC and Tenant will make copies of these records available at the
            Palms Resort for two inspections in each calendar year by Playboy's
            representatives who are engaged in inspecting and/or auditing Palms'
            books and records as provided herein.

      (f)   Audits. Playboy, at any time within three (3) years after receipt of
            any monthly statement required under this Section and upon not less
            than fifteen (15) days' prior written notice to Palms, may cause two
            audits in each calendar year to be made of Shared Revenues and all
            of Palms' records and books necessary to audit such items. Palms
            shall make all such books and records available for the audit at the
            Palms Resort. A copy of the audit report shall be furnished by
            Playboy to Palms regardless as to whether any additional Shared
            Revenues are found to be due. If the audit discloses an underpayment
            of Shared Revenues, Palms shall promptly pay to Playboy the amount
            of the underpayment, with interest at the

                                       12
<PAGE>

            Interest Rate, from the date the payment should have been made
            through and including the date of payment. If the audit discloses an
            underreporting of Shared Revenues in excess of *****of the reported
            Shared Revenues, then Palms shall also immediately pay to Playboy
            all reasonable costs and expenses incurred in performing the audit
            and in collecting the underpayment. If the audit discloses an
            overpayment of Percentage Fee or Playboy Store Net Profits, Palms
            shall be entitled to a prompt refund from Playboy. Playboy shall be
            permitted to audit Shared Revenues for any single year only once,
            unless a subsequent audit discloses an irregularity in Palms'
            reporting, in which event the foregoing limit shall not apply.

      (g)   Confidentiality. Playboy agrees that it shall use its reasonably
            good faith efforts to not disclose to any third party the Shared
            Revenues or the amount of Percentage Fees paid or payable by Palms;
            provided, however, that (a) such information was not previously
            disclosed by Palms to such third party or to the public generally,
            and (b) nothing contained herein shall restrict Playboy from
            disclosing such information (i) as may be required by law (including
            any securities laws) or (ii) to its accountants, investment bankers,
            attorneys or bona-fide prospective or current lenders, capital
            providers or purchasers, provided that each of such recipients shall
            be bound to the same non-disclosure provisions as are imposed upon
            Playboy.

6.    TERM AND TERMINATION.

      (a)   *****

      (b)   *****

      (c)   *****

      (d)   *****

      (e)   Effect Of Termination.

            (i)   Upon the expiration or earlier termination of this Agreement,
                  however caused, all rights and privileges of Palms hereunder
                  shall terminate and revert to Playboy, and Palms shall not
                  thereafter make any intentional use whatever of any of the
                  Playboy Marks or sell any Playboy-Only Merchandise or Playboy
                  Co-Branded Merchandise. Termination of the Agreement ends the
                  obligation by Palms to pay Fixed Fee and Percentage Fees,
                  except with regard to any Fixed Fee or Percentage Fees accrued
                  but not yet paid to Playboy as of the termination, and the
                  obligation by Playboy to provide any advertisements, banner,
                  direct mailings or access to Playboy Mansion West. Palms
                  shall, at its own expense, as soon as may reasonably be
                  accomplished remove and efface or destroy all references to
                  Playboy or to any of the Playboy Marks from any services,
                  products, materials, supplies and equipment of Palms and from
                  all business paper, stationery, signs, labels, packaging
                  material, advertising,

                                       13
<PAGE>

                  or the like, used or maintained by Palms, including telephone
                  directory listings, as soon as may reasonably be accomplished,
                  and Palms shall not thereafter hold forth in any manner
                  whatsoever that Palms has or ever had any connection with
                  Playboy.

            (ii)  Palms acknowledges that its failure to promptly make
                  reasonable efforts to cease use of any of the Playboy Marks at
                  the termination of this Agreement will result in immediate and
                  irreparable damage to Playboy and to the rights of any
                  subsequent licensees. Palms acknowledges and admits that there
                  is no adequate remedy at law for such failure to cease such
                  use, and Palms agrees that in the event of such failure,
                  Playboy shall be entitled to equitable relief by way of
                  temporary and permanent injunctions and such other further
                  relief as any court with jurisdiction may deem just and
                  proper. Resort to any remedies referred to herein shall not be
                  construed as a waiver of any other rights and remedies to
                  which Playboy is entitled under this Agreement or otherwise.

7.    INDEMNIFICATION AND INSURANCE.

      (a)   Indemnity to Palms. Playboy shall indemnify, defend and hold
            harmless Palms, its subsidiaries and affiliates, their respective
            shareholders, partners and members and the agents, managers,
            officers, directors and employees of each from and against all
            costs, claims, suits, losses, damages and expenses (including,
            without limitation, reasonable attorneys' fees and litigation
            expenses) arising out of the authorized use of the Playboy Marks on
            or in connection with the Project. Playboy shall have the option to
            settle or to undertake and conduct the defense of any such claim or
            suit. Playboy shall not be entitled to settle any such claim or suit
            on behalf of Palms unless Playboy is responsible for any payment to
            be made by Palms and obtains a release of all claims against Palms
            under any such settlement. Palms may, through counsel of Palms' own
            choice and at its own expense, participate in any such claim or
            suit, but in such event Playboy shall have sole and exclusive
            control over such defense, and Playboy's decisions with respect
            thereto shall govern and control. Palms expressly covenants that no
            discussion by Palms whatsoever with any claimant or litigant, no
            compromise or settlement by Palms of any claim or suit and no
            negotiations by Palms with respect to any compromise or settlement
            shall be had, made or entered into with out, in each instance, the
            prior written approval of Playboy.

      (b)   Indemnity to Playboy. Except as provided in Section 7(a) above,
            palms shall indemnify, defend and hold harmless Playboy, any parent
            and subsidiaries and affiliates, shareholders, agents, officers,
            directors and employees of each of the foregoing (hereinafter
            collectively referred to as "Indemnitees") from and against all
            costs, claims, suits, losses, damages and expenses (including,
            without limitation, reasonable attorneys' fees and litigation
            expenses) arising out of or in connection with: (i) the design,
            construction, ownership, operation or management of the Palms Resort
            (including, without limitation, the Project); (ii) Palms'
            performance hereunder or any alleged action or failure to act
            whatsoever

                                       14
<PAGE>

            by Palms; (iii) non-conformity to or non-compliance with any law
            pertaining to the Palms Resort (including, without limitation, the
            Project); or (iv) any breach by Palms of any of its representations
            or warranties hereunder. Palms shall have the option to settle or to
            undertake and conduct the defense of any such claim or suit. Playboy
            may, through counsel of Playboy's own choice and at its own expense,
            participate in any such claim or suit, but in such event Palms shall
            have sole and exclusive control over such defense, and Palms'
            decisions with respect thereto shall govern and control. Playboy
            expressly covenants that no discussion by Playboy whatsoever with
            any claimant or litigant, no compromise or settlement by Playboy of
            any claim or suit and no negotiation by Playboy with respect to any
            compromise or settlement shall be had, made or entered into without,
            in each instance, the prior written approval of Palms.

      (c)   Limitation on Indemnity. In no event shall such indemnification in
            (a) or (b) above include incidental or consequential damages, even
            if the "Indemnifying Party" (as defined below) is aware of such
            damages, including, but not limited to compensation or reimbursement
            for loss of prospective profits, anticipated sales or other losses
            occasioned by termination of the Agreement or any other reason.

      (d)   Indemnification Procedure. All claims for indemnification based on
            or arising from a third party claim shall be asserted and resolved
            as set forth in this Section. In the event that any claim or demand
            by a third party for which one party (the "Indemnifying Party") may
            be required to indemnify the other (the "Indemnified Party")
            hereunder (a "Claim") is asserted against the Indemnified Party by a
            third party, the Indemnified Party shall as promptly as practicable
            following the Indemnified Party's receipt of notice of such Claim,
            notify the Indemnifying Party in writing of such Claim, and such
            notice shall specify (to the extent known) in reasonable detail the
            amount of such claim and any relevant facts and circumstances
            relating thereto (the "Demand"); provided, however, that any failure
            to give such prompt notice or to provide any such facts and
            circumstances shall not constitute a waiver of any rights of the
            Indemnified Party, except to the extent that the rights of the
            Indemnifying Party are actually prejudiced thereby.

      (e)   Contribution. In the event that a loss, liability, claim, damage or
            expense is caused by more than one Indemnifying Party, each
            Indemnifying Party whose actions or omissions shall have caused the
            loss, liability, claim, damage or expense shall contribute to the
            aggregate amount of any losses, liabilities, claims, damages and
            expenses owed in such proportion as is appropriate to reflect their
            relative fault in connection with the actions or omissions which
            resulted in such losses, liabilities, claims, damages or expenses,
            as well as any other relevant equitable considerations. The relative
            fault shall be determined by reference to, among other things, the
            parties' relative intent, knowledge, access to information and
            opportunity to correct or prevent such action or omission. The
            Indemnifying Parties agree that it would not be just and equitable
            if contribution pursuant to this Section were determined by pro rata
            allocation or by any other method of allocation which does not take
            account of the equitable considerations referred to above. The
            aggregate amount of losses, liabilities, claims, damages and
            expenses

                                       15
<PAGE>

            shall be deemed to include any legal or other expenses reasonably
            incurred in investigating, preparing or defending against any
            litigation, or any investigation or proceeding commenced or
            threatened.

      (f)   Insurance. FPLLC shall obtain and maintain at substantially similar
            levels throughout the Term, at its expense, all insurance required
            by the first lien mortgage lender for the Palms Resort (including,
            without limitation, the Project) and Tenant shall obtain and
            maintain at its expense at substantially similar levels throughout
            the Term all insurance required by the leases for the Existing
            Venues and the New Venues, which insurance shall name Playboy as an
            additional insured on the liability coverage and if Playboy has an
            insurable interest in property at the Palms Resort as an additional
            named assured on the property damage coverage. Palms shall provide
            Playboy with a certificate of all relevant insurance policies
            indicating coverage limits and deductibles on an aggregate and per
            occurrence basis.

8.    MISCELLANEOUS PROVISIONS.

      (a)   No Waiver. The waiver of any breach of any term, covenant or
            condition of this Agreement by any of the parties hereto shall not
            constitute a continuing waiver nor a waiver of any subsequent
            breach, either of the same or any other term, covenant or condition
            of this Agreement.

      (b)   Partial Invalidity. In the event that any portion of this Agreement
            shall be unenforceable in whole or in part, said provision shall be
            limited or curtailed to the extent necessary to bring it within the
            requirement of present or future law, and this Agreement shall be
            construed as if said provision had been incorporated herein as so
            limited, or as if said provision has not been included herein, as
            the case may be.

      (c)   Integration. This Agreement together with the exhibits annexed
            hereto constitutes the entire agreement and understanding among the
            parties upon the subject matter of this Agreement. Any prior
            understandings and agreements between the parties regarding such
            subject matter are merged herein and superseded hereby.

      (d)   License Relationship. The rights and powers herein granted to Palms
            are those of a licensee only and is not intended to create any other
            relationship. It is expressly understood and agreed that Playboy
            shall not under any circumstances be liable to Palms for all or any
            part of any losses Palms may sustain except for losses or damages
            caused by a breach of this Agreement by Playboy. No party shall have
            power to obligate or bind any of the others in any manner
            whatsoever.

      (e)   Licenses. Palms will comply with all federal, state and local laws,
            rules and regulations and Palms will be solely responsible for
            obtaining and maintaining, at its own expense, any and all licenses,
            permits and approvals (including governmental and all other
            licenses, permits and approvals) necessary for the

                                       16
<PAGE>

            operation of the Palms Resort, including, without limitation, the
            Project. Except as provided in Paragraph 7(i) below, in the event
            Palms is unable, for any reason, to obtain and maintain throughout
            the term hereof all of such licenses, permits or approvals, such
            inability will be an incurable default hereunder.

      (f)   *****

      (g)   Governing Law and Jurisdiction.

            (i)   This Agreement shall be governed and construed in accordance
                  with the laws of the State of Nevada applicable to contracts
                  to be made and performed entirely therein without giving
                  effect to the principles of conflicts of law thereof or of any
                  other jurisdiction.

            (ii)  Each of the parties hereto hereby expressly and irrevocably
                  submits to the nonexclusive personal jurisdiction of the
                  United States District Court for the District of Nevada and to
                  the jurisdiction of any other competent court of the State of
                  Nevada located in the County of Clark (collectively, the
                  "Nevada Courts"),  preserving, however, all  rights
                  of removal to such federal court under 28 U.S.C.
                  Section 1441, in connection with all disputes arising out of
                  or in connection with this Agreement or the transactions
                  contemplated hereby and agrees not to commence any litigation
                  relating thereto except in such courts. If the aforementioned
                  courts do not have subject matter jurisdiction, then the
                  proceeding shall be brought in any other state or federal
                  court located in the State of Nevada, preserving, however, all
                  rights or removal to such federal court under 28 U.S.C.
                  Section 1441. Each party hereby waives the right to any other
                  jurisdiction or venue for any litigation arising out of or in
                  connection with this Agreement or the transactions
                  contemplated hereby to which any of them may be entitled by
                  reason of its present or future domicile. Notwithstanding the
                  foregoing, each of the parties hereto agrees that each of the
                  other parties shall have the right to bring any action or
                  proceeding for enforcement of a judgment entered by the Nevada
                  Courts in any other court or jurisdiction.

      (h)   Notices. All notice, consents and other communications hereunder
            shall be in writing and shall be deemed to have been given (a) when
            delivered by hand or by Federal Express or similar overnight courier
            or (b) when successfully transmitted by telecopier (with a
            confirming copy of such communication to be sent as provided in
            clauses (a) or (b) above) to the party for whom intended, at the
            address or telecopier number for such party set forth below (or at
            such other address or telecopier number for a party as shall be
            specified by like notice):

                  If to Playboy, to:

                           Jim Griffiths
                           Senior Executive Vice President

                                       17
<PAGE>

                           Playboy Enterprises International, Inc.
                           2706 Media Center Drive
                           Los Angeles, California 90065
                           Fax No. 323 276 4505

                  With a copy to:

                           Howard Shapiro
                           General Counsel
                           Playboy Enterprises International, Inc.
                           680 North Lake Shore Drive
                           Chicago, Illinois 60611
                           Fax No. 312 266 2042

                  If to FPLLC:

                           Palms Casino Resort
                           4321 West Flamingo Road
                           Las Vegas, Nevada 89103
                           Attention:  George J. Maloof, Jr.
                           Fax No. (702) 942-7001

                  With a copy to:

                           Mr. Thomas K. Land
                           Palms Casino Resort
                           4321 West Flamingo Road
                           Las Vegas, Nevada 89103
                           Fax No. (702) 942-7014

                           Mark H. Goldstein, Esq.
                           Lionel Sawyer & Collins
                           300 S. 4th Street
                           Las Vegas, NV 89101
                           Fax No. (702) 383-8845

                  If to the Tenant or Nine Group:

                           Nine Group, LLC
                           In care of:  Palms Casino Resort
                           4321 West Flamingo Road
                           Las Vegas, Nevada 89103
                           Attention:  Scott DeGraff
                           Fax No. (702) 933-5625

                  With a copy to:

                           Harold S. Dembo, Esq.

                                       18
<PAGE>

                           Katz Randall Weinberg & Richmond
                           333 W Wacker Dr Ste 1800
                           Chicago, IL 60606
                           Fax No. 312-807-3903

      (i)   Suitability for the Nevada Licensing Authorities.

Playboy acknowledges and agrees that Palms and its affiliates are engaged in
businesses that are subject to or exist because of privileged licenses issued by
the Nevada Licensing Authorities. Playboy agrees to apply for and obtain any
licenses, approvals, findings of suitability or other clearance if so requested
or required by any Nevada Licensing Authority. If (i) Playboy fails to satisfy
any licensing requirement referred to above, or (ii) if any Nevada Licensing
Authority directs Palms to terminate its relationship with Playboy, or (iii) if
Palms reasonably determines that Palms' continued relationship with Playboy
could or does jeopardize Palms' privileged licenses, approvals or findings of
suitability, or (iv) if any such license, approval or finding of suitability is
threatened to be, or is, denied, curtailed, suspended or revoked by the Nevada
Licensing Authorities as a result of Palms' relationship with Playboy, Palms
may, notwithstanding the provisions of Section 6 hereof, terminate this
Agreement effective immediately upon written notice to Playboy stating the basis
for such termination.

      (j)   No Brokers. Playboy and Palms agree to indemnify and hold one
            another harmless from and against any claim for any brokerage or
            other commission or finders fee made by any other person or entity
            claiming to have acted on the behalf of the indemnifying party by
            reason of this Agreement.

      (k)   No Agency or Partnership. Palms does not, in any way or for any
            purpose, become a partner, employer, principal, master, agent or
            joint venturer of or with Playboy. Playboy does not, in any way or
            for any purpose, become a partner, employer, principal, master,
            agent or joint venturer of or with Palms.

                                       19
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date and year first above written.

                          PLAYBOY ENTERPRISES INTERNATIONAL, INC.

                          By:              /s/ James F. Griffiths
                               -------------------------------------------------
                                           James F. Griffiths
                          Title:     Senior Executive Vice President
                                ------------------------------------------------

                          FIESTA PALMS LLC

                          By:              /s/ George J. Maloof, Jr.
                               -------------------------------------------------
                                           George J. Maloof, Jr.
                          Title:           Manager
                                ------------------------------------------------

                          NINE GROUP LLC

                          By:              /s/ Scott DeGraff
                               -------------------------------------------------
                                           Scott DeGraff
                          Title:           Manager
                                ------------------------------------------------

                          N-M VENTURES II, LLC

                          By:              /s/ Scott DeGraff
                               -------------------------------------------------
                                 Scott DeGraff as Manager of Nine Group II, LLC
                          Title:           Member
                                ------------------------------------------------

                                       20
<PAGE>

                                    EXHIBIT A

                         ATTACHED TO AND MADE A PART OF
                     THE TRADEMARK LICENSE AGREEMENT BETWEEN
                     PLAYBOY ENTERPRISES INTERNATIONAL, INC.
                                       AND

                    FIESTA PALMS LLC and N-M VENTURES II, LLC

                           DATED AS OF October 4, 2004

PLAYBOY

RABBIT HEAD DESIGN

BUNNY

BUNNY COSTUME

PLAYBOY AFTER HOURS

                                       21
<PAGE>

                                    Exhibit B

                          Drawing of New Tower Location

                                       22
<PAGE>

Exhibit B - Palms Casino and Resort - Site Plan - Page 1

                                       23
<PAGE>

Exhibit B - Casino Expansion Rendering - Palms - Page 2

                                       24
<PAGE>

                                    Exhibit C

                         Design of the New Tower Signage

                                       25
<PAGE>

Exhibit C - Palms Casino and Resort - Elevation

                                       26
<PAGE>

                                    Exhibit D

                           Playboy Elements Floorplan

                                       27
<PAGE>

Exhibit D - Furniture Floor Plan - Page 1

                                       28
<PAGE>

Exhibit D - Palms Casino and Resort - Gaming and Lounge - Page 2

                                       29
<PAGE>

                                    EXHIBIT E

          ITEMS THAT PALMS MAY PRODUCE, SUBJECT TO PLAYBOY APPROVAL OF
                                    PROTOTYPE

Screen printed decorated glassware and etched glass shot glasses, double
old-fashion glasses, hi-ball glasses, martini glasses, beer mugs, beer steins,
pilsner glasses, champagne glasses, wine glasses, pint glasses, margarita
glasses, martini shakers, martini pitchers, margarita pitchers, champagne
buckets, ice buckets, coasters, stirrers, picks, napkins, matches and serving
trays. Bar accessories, specifically corkscrews, bottle openers, bottle
stoppers, bottle pourers, strainers, ice tongs, jiggers and wine glass charms.

                                       30
<PAGE>

                                    EXHIBIT F

      *****

                                       31Exhibit 10.2

                           THIRD AMENDED AND RESTATED
                            PLAYBOY ENTERPRISES, INC.
                            1995 STOCK INCENTIVE PLAN
                        (as amended through May 23, 2007)

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

            The purposes of this Plan are as follows:

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

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

                                    ARTICLE I

                                   DEFINITIONS

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

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

            Section  1.2 Change of Control.  "Change of Control"  shall mean the
occurrence of any of the following events: (i) except in a transaction described
in clause (iii) below, Hugh M. Hefner,  Christie Hefner, the Hugh M. Hefner 1991
Trust (for so long as Hugh M. Hefner and Christie  Hefner are joint  trustees or
one of them is sole trustee),  and the Hugh M. Hefner Foundation (for so long as
Hugh M.  Hefner and  Christie  Hefner are joint  trustees or one of them is sole
trustee) cease  collectively to own a majority of the total number of votes that
may be cast for the  election of  directors  of the  Company;  or (ii) a sale of
Playboy magazine by the Company;  or (iii) the liquidation or dissolution of the
Company,  or any merger,  consolidation  or other  reorganization  involving the
Company  unless  (x)  the  merger,  consolidation  or  other  reorganization  is
initiated  by the  Company,  and (y) is one in  which  the  stockholders  of the
Company   immediately   prior  to  such   reorganization   become  the  majority
stockholders  of a  successor  or  ultimate  parent  corporation  of the Company
resulting  from such  reorganization  and (z) in  connection  with  such  event,
provision  is made for an  assumption  of  outstanding  Options  and rights or a
substitution  thereof of a new  Option or right in such  successor  or  ultimate
parent of substantially equivalent value.

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

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

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

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

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

<PAGE>

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

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

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

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

            Section 1.12  Grantee.  "Grantee"  shall mean an Employee  granted a
Performance   Award,   Stock   Payment,   Section  162(m)   Performance   Award,
Section162(m)  Stock  Payment,  or an award of Deferred  Stock or Section 162(m)
Deferred Stock, under this Plan.

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

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

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

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

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

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

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

                              (i) market value;

                              (ii) book value;

                              (iii) earnings per share;

                              (iv) market share;

                              (v) operating profit;

                              (vi) net income;

                              (vii) cash flow;

                                       2
<PAGE>

                              (viii) return on capital;

                              (ix) return on assets;

                              (x) return on equity;

                              (xi) margins;

                              (xii) shareholder return;

                              (xiii) sales or product volume growth;

                              (xiv) productivity improvement; or

                              (xv) costs or expenses.

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

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

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

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

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

            Section 1.22 Secretary.  "Secretary" shall mean the Secretary of the
Company.

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

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

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

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

                                       3
<PAGE>

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

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

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

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

            Section 1.26 Termination of Employment.  "Termination of Employment"
shall  mean  the  time  when  the  employee-employer  relationship  between  the
Optionee,   Grantee,   Restricted  Stockholder,  or  Section  162(m)  Restricted
Stockholder  and the Company or any  Subsidiary is  terminated,  voluntarily  or
involuntarily,  for any  reason,  with or  without  Cause  (as  defined  below),
including,  but  not  by  way  of  limitation,  a  termination  by  resignation,
discharge,  death, disability or retirement, but excluding any termination where
there  is a  simultaneous  reemployment  by the  Company  or a  Subsidiary.  The
Committee,  subject to the definition of Cause below, shall determine the effect
of all other  matters and  questions  relating  to  Termination  of  Employment,
including,  but not by way of  limitation,  the  question of whether  particular
leaves of absence  constitute  Terminations  of Employment;  provided,  however,
that,  with  respect  to  Incentive  Stock  Options,  a leave of  absence  shall
constitute a Termination of Employment if, and to the extent that, such leave of
absence interrupts  employment for the purposes of Section 422(a)(2) of the Code
and the then applicable  regulations and revenue rulings under said Section. For
purposes of the Plan,  "Cause" shall mean an Employee's (a) gross  negligence in
the performance of the  responsibilities  of such Employee's office or position;
(b) any act of dishonesty or moral turpitude  materially adversely affecting the
Company or the  Company's  reputation;  (c)  commission  of any other willful or
intentional  act that could  reasonably  be  expected to injure  materially  the
reputation, business or business relationships of the Company or any Subsidiary;
or (d) conviction of a felony or of any crime involving moral  turpitude,  fraud
or misrepresentation.

                                   ARTICLE II

                             SHARES SUBJECT TO PLAN

            Section 2.1 Shares  Subject to Plan. (a) The shares of stock subject
to Options,  or awards of Restricted  Stock,  Section 162(m)  Restricted  Stock,
Performance Awards,  Section 162(m) Performance Awards,  Deferred Stock, Section
162(m) Deferred Stock, Stock Payments, or Section 162(m) Stock Payments shall be
Common Stock.  The aggregate  number of shares which may be issued upon exercise
of such  Options  or rights  or upon any such  awards  under the Plan  shall not
exceed 7,703,000 shares of Common Stock.

                  (b) The maximum  number of shares of Common Stock which may be
subject  to  Options,  rights  or other  awards  granted  under  the Plan to any
Employee  in any  calendar  year  shall not  exceed  650,000,  and the method of
counting   such  shares  shall  conform  to  any   requirements   applicable  to
performance-based  compensation  under Section 162(m) of the Code. The shares of
Common Stock  issuable  upon exercise of such Options or rights or upon any such
awards may be either  previously  authorized  but  unissued  shares or  treasury
shares.

                  (c) With regard to Section 162(m)  Performance Awards that are
cash bonuses or other  performance or incentive  awards expressed as cash awards
(without  regard to whether  such bonuses or awards are  ultimately  paid in the
form of cash,  stock, or a combination of both as described in Section 7.7A), an
Employee  may not be  granted  during  any  calendar  year such  Section  162(m)
Performance Awards in an amount in excess of $1,000,000.

            Section 2.2 Unexercised  Options and Awards. If any Option, or other
right to acquire  shares of Common  Stock under any other award under this Plan,
expires  or  is  cancelled  without  having  been  fully  exercised

                                       4
<PAGE>

(including  Restricted Stock, Section 162(m) Restricted Stock or any other award
that is forfeited  before  applicable  vesting  requirements are met or transfer
restrictions have lapsed),  the number of shares subject to such Option or other
right but as to which such Option or other right was not exercised (or vested or
delivered  without  restriction,  as the case may be) prior to its expiration or
cancellation may again be optioned, granted or awarded hereunder, subject to the
limitations of Section 2.1.

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

                                   ARTICLE III

                               GRANTING OF OPTIONS

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

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

            Section 3.3 Granting of Options.  (a) The Committee  shall from time
to time, in its absolute discretion:

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

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

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

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

                                       5
<PAGE>

                  (b) Upon the  selection  of a key  Employee  to be  granted an
Option,  the Committee shall instruct the Secretary or other authorized  officer
to execute and deliver a Stock Option Agreement,  and may impose such conditions
on the grant of such Option as it deems appropriate,  not inconsistent with this
Plan. Without limiting the generality of the preceding  sentence,  the Committee
may, in its discretion and on such terms as it deems  appropriate,  require as a
condition on the grant of an Option to an Employee  that the Employee  surrender
for cancellation  some or all of the unexercised  Options,  awards of Restricted
Stock,  Section  162(m)  Restricted  Stock,  Deferred  Stock or  Section  162(m)
Deferred Stock,  Performance Awards,  Section 162(m) Performance  Awards,  Stock
Payments  or Section  162(m)  Stock  Payments  or other  rights  which have been
previously  granted to him. An Option,  the grant of which is  conditioned  upon
such surrender, may have an Option price lower (or higher) than the Option price
of the surrendered Option, may cover the same (or a lesser or greater) number of
shares as the surrendered  Option, may contain such other terms as the Committee
deems appropriate and be exercised in accordance with its terms,  without regard
to the number of shares,  price, Option period or any other term or condition of
such surrendered Option or award.

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

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

                                   ARTICLE IV

                                TERMS OF OPTIONS

            Section  4.1 Option  Price.  (a) The price of the shares  subject to
each  Non-Qualified  Option shall not be less than 100% of the fair market value
of such shares at the end of the business day upon which such Option is granted.

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

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

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

                  (b)  No  portion  of  an  Option  which  is  unexercisable  at
Termination of Employment shall thereafter become exercisable,  except as may be
otherwise provided by the Committee either in the Stock Option

                                       6
<PAGE>

Agreement or in a resolution  adopted following the grant of the Option.  Except
as  limited  by  requirements  of Section  422 of the Code and  regulations  and
rulings  thereunder  applicable to Incentive  Stock  Options,  the Committee may
extend the term of any outstanding  Option in connection with any Termination of
Employment of the Optionee,  or amend any other term or condition of such Option
relating to such a termination.

                  (c) To the extent  that the  aggregate  Fair  Market  Value of
stock with respect to which  "incentive  stock  options"  (within the meaning of
Section 422 of the Code,  but without  regard to Section 422(d) of the Code) are
exercisable  for the first time by an Optionee  during any calendar  year (under
the Plan and all other  incentive  stock  option  plans of the  Company  and any
subsidiary)  exceeds  $100,000,  such Options shall be treated as  Non-Qualified
Options to the extent required by Section 422 of the Code. The rule set forth in
the preceding  sentence  shall be applied by taking  Options into account in the
order in which they were granted.  For purposes of this Section 4.2(c), the Fair
Market Value of stock shall be determined as of the time the Option with respect
to such stock is granted.

            Section  4.3  Expiration  of Options.  (a) Unless an Option  expires
earlier or later pursuant to the terms of a Stock Option Agreement,  each Option
may be exercised any time until the first of the following  events,  after which
such Option will become unexercisable:

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

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

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

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

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

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

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

            Section 4.4 No Right to Continued  Employment.  Nothing in this Plan
or in any Stock Option  Agreement  hereunder  shall confer upon any Optionee any
right to  continue  in the  employ  of the  Company  or any  Subsidiary  or as a
director  of the  Company,  or shall  interfere  with or restrict in any way the
rights of the Company and any of its  Subsidiaries,  which are hereby  expressly
reserved, to discharge any Optionee at any time for any reason whatsoever,  with
or without Cause.

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

                                       7
<PAGE>

                                    ARTICLE V

                               EXERCISE OF OPTIONS

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

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

            Section 5.2 Partial Exercise. An exercisable Option may be exercised
in whole or in part. However, an Option shall not be exercisable with respect to
fractional  shares and the Committee may require that, by terms of the Option, a
partial exercise be with respect to a number of shares.

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

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

                  (b) Payment in full for the exercised shares:

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

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

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

                                       8
<PAGE>

                        (iv) With the consent of the  Committee  and at the sole
      discretion of the Company,  by a "net  exercise" via the forfeiture to the
      Company  of a portion  of the  Option  pertaining  to shares  with a value
      (based on the Fair Market Value of such  underlying  Option  shares on the
      date of  forfeiture)  equal to the  exercise  price of the  portion of the
      Option being exercised plus the applicable tax withholding amount; or

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

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

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

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

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

            Section 5.4 [RESERVED]

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

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

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

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

            Section 5.6 Rights as Stockholders. The holders of Options shall not
be, nor have any of the rights or privileges of,  stockholders of the Company in
respect of any shares  purchasable  upon the  exercise  of any part of an Option
unless and until  certificates  representing such shares have been issued by the
Company to such holders or the Company's stock record books reflect the Optionee
as a stockholder pursuant to any book entry procedure approved by the Secretary.

            The  Committee,  in its absolute  discretion,  may impose such other
restrictions on the  transferability of the shares purchasable upon the exercise
of an Option as it deems  appropriate.  Any such other  restriction shall be set
forth in

                                       9
<PAGE>

the respective Stock Option Agreement and may be referred to on the certificates
evidencing  such  shares.  The  Committee  may require the  Employee to give the
Company prompt notice of any disposition of shares of Common Stock,  acquired by
exercise of an  Incentive  Stock  Option,  within (i) two years from the date of
granting  such Option or (ii) one year after the transfer of such shares to such
Employee.  The  Committee  may direct that the  certificates  evidencing  shares
acquired  by  exercise  of an Option  refer to such  requirement  to give prompt
notice of disposition.

                                   ARTICLE VI

                            AWARD OF RESTRICTED STOCK

            Section 6.1 Award of Restricted  Stock. (a) The Committee shall from
time to time, in its absolute discretion:

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

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

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

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

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

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

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

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

                                       10
<PAGE>

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

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

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

                                  ARTICLE VI-A

                    AWARD OF SECTION 162(m) RESTRICTED STOCK

            Section  6.1A  Award of Section  162(m)  Restricted  Stock.  (a) The
Committee shall from time to time, in its absolute discretion:

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

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

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

                  (c) Upon the selection of a key Employee to be awarded Section
162(m)  Restricted  Stock,  the  Committee  shall  instruct the Secretary of the
Company to issue  such  Section  162(m)  Restricted  Stock and may  impose  such
conditions on the issuance of such Section 162(m)  Restricted  Stock as it deems
appropriate.

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

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

            Section 6.4A Rights as Stockholders.  Upon delivery of any shares of
Section  162(m)  Restricted  Stock that are  certificated  to the escrow  holder
pursuant to Section 6.7A,  and upon issuance  thereof,  if  uncertificated,  the
Section 162(m) Restricted  Stockholder shall have, unless otherwise  provided by
the  Committee,  all the rights of a  stockholder  with

                                       11
<PAGE>

respect  to said  shares,  subject to the  restrictions  in the  Section  162(m)
Restricted  Stock  Agreement,  including  the right to receive all dividends and
other distributions paid or made with respect to the shares; provided,  however,
that in the discretion of the Committee,  any  extraordinary  distribution  with
respect to the Common  Stock shall be subject to the  restrictions  set forth in
Section 6.5A.

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

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

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

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

                                   ARTICLE VII

               PERFORMANCE AWARDS, DEFERRED STOCK, STOCK PAYMENTS

            Section 7.1  Performance  Award.  Any key  Employee  selected by the
Committee  may be  granted  one or more  Performance  Awards.  The value of such
Performance Awards may be linked to the market value, book value, net profits or
other  measure  of the  value of  Common  Stock or  other  specific  performance
criteria  determined  to be  appropriate  by the  Committee,  in each  case on a
specified  date or  dates  or over  any  period  or  periods  determined  by the
Committee,  or may be based  upon the  appreciation  in the market  value,  book
value, net profits or other measure of the value of a specified number of shares
of Common Stock over a fixed period or periods  determined by the Committee.  In
making such  determinations,  the  Committee  shall  consider  (among such other
factors  as it deems  relevant  in  light of the  specific  type of  award)  the
contributions,  responsibilities  and other  compensation  of the particular key
Employee.

            Section  7.2  Stock  Payments.  Any  key  Employee  selected  by the
Committee may receive Stock Payments in the manner  determined from time to time
by the  Committee.  In particular,  any person  designated by the Committee as a
participant  in the  Company's Key  Executive  Incentive  Bonus Plan (the "Bonus
Plan") or under the Company  Service Award Program (the "Service Award Program")
in  accordance  with  the  terms  thereof,  and  whose  bonus or  service  award
thereunder is comprised wholly or partially in shares of Common Stock,  shall be
deemed to have been

                                       12
<PAGE>

selected to  participate  in this Plan,  and shall  receive  such  Common  Stock
denominated bonus as a Stock Payment in accordance with and under the provisions
of this Section 7.2. The number of shares shall be  determined  by the Committee
and may be based upon the Fair Market  Value,  book value,  net profits or other
measure  of the value of Common  Stock or other  specific  performance  criteria
determined  appropriate  by the  Committee,  determined  on the date such  Stock
Payment is made or on any date thereafter.

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

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

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

            Section 7.6 Exercise Upon  Termination of Employment.  A Performance
Award,  Deferred Stock Award and/or Stock Payment is exercisable or payable only
while the Grantee is an Employee; provided that the Committee may determine that
the  Performance  Award,  Deferred  Stock  Award  and/or  Stock  Payment  may be
exercised or paid  subsequent to  Termination of Employment  without  cause,  or
following a Change in Control of the Company,  or because of the Grantee's death
or disability.

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

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

                                  ARTICLE VII-A

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

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

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

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

                                       13
<PAGE>

Company  stockholder  with respect to such Section  162(m)  Deferred Stock until
such time as the award has vested and the Common Stock  underlying the award has
been issued.

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

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

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

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

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

                                  ARTICLE VIII

                                 ADMINISTRATION

            Section 8.1 Duties and Powers of Committee.  It shall be the duty of
the  Committee to conduct the general  administration  of the Plan in accordance
with its  provisions.  The Committee  shall have the power to interpret the Plan
and the  agreements  pursuant  to which  Options,  awards of  Restricted  Stock,
Deferred  Stock,  Section 162(m)  Restricted  Stock or Section  162(m)  Deferred
Stock, Performance Awards, Stock Payments, Section 162(m) Performance Awards, or
Section  162(m)  Stock  Payments are granted and awarded and to adopt such rules
for  the  administration,  interpretation  and  application  of the  Plan as are
consistent herewith and to interpret,  amend or revoke any such rules.  Options,
awards of Section  162(m)  Restricted  Stock,  Section  162(m)  Deferred  Stock,
Section 162(m) Performance Awards and Section 162(m) Stock Payments are intended
to qualify as  performance-based  compensation under Section 162(m) of the Code,
and the Committee shall grant or award such Options, rights or other awards in a
manner consistent with the rules governing performance-based  compensation under
Section  162(m) of the  Code.  Any such  interpretations  and rules in regard to
Incentive  Stock Options shall be consistent  with the basic purpose of the Plan
to grant  "incentive  stock  options"  within the  meaning of Section 422 of the
Code.  In its  absolute  discretion,  the Board may at any time and from time to
time  exercise  any and all rights and duties of the  Committee  under this Plan
except with respect to matters  which under Rule 16b-3 or Section  162(m) of the
Code,  or any  regulations  or  rules  issued  thereunder,  are  required  to be
determined in the sole discretion of the Committee.

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

            Section  8.3  Compensation;   Professional  Assistance;  Good  Faith
Action.  Members of the  Committee  shall  receive such  compensation  for their
services  as  members  as may be  determined  by the  Board.  All  expenses  and
liabilities  incurred  by  members  of the  Committee  in  connection  with  the
administration  of the Plan shall be borne by the  Company.  The  Committee  may
employ  attorneys,  consultants,   accountants,  appraisers,  brokers  or  other
persons.  The  Committee,  the Company and its Officers and  Directors  shall be
entitled to rely upon the advice,  opinions or  valuations  of any such persons.
All  actions  taken  and  all  interpretations  and  determinations  made by the
Committee in good faith shall be

                                       14
<PAGE>

final and binding upon all Optionees, Grantees, Restricted Stockholders, Section
162(m) Restricted Stockholders, the Company and all other interested persons. No
member  of  the   Committee   shall  be   personally   liable  for  any  action,
determination,  or interpretation made in good faith with respect to the Plan or
the Options or other  awards,  and all members of the  Committee  shall be fully
protected  by the  Company  in  respect  to any such  action,  determination  or
interpretation.

                                   ARTICLE IX

                                OTHER PROVISIONS

            Section  9.1  Options  and Other  Rights  Are Not  Transferable.  No
Options,  Performance Awards, Stock Payments, Section 162(m) Performance Awards,
Section 162(m) Stock  Payments,  Restricted  Stock,  Section  162(m)  Restricted
Stock, Deferred Stock Awards or Section 162(m) Deferred Stock Awards or interest
under this Plan or part  thereof  shall be liable for the  debts,  contracts  or
engagements of any Optionee, Grantee, Restricted Stockholder or their respective
successors  in  interest  or  shall  be  subject  to  disposition  by  transfer,
alienation,  anticipation,  pledge,  encumbrance,  assignment or any other means
whether such  disposition  be voluntary or involuntary or by operation of law by
judgment,  levy,  attachment,  garnishment  or  any  other  legal  or  equitable
proceedings (including bankruptcy),  and any attempted disposition thereof shall
be null and void and of no  effect;  provided,  however,  that  nothing  in this
Section 9.1 shall prevent  transfers by will, by the applicable  laws of descent
and  distribution  or by the  approval of the  Committee as described in Section
5.1(a) of the Plan.

            Section  9.2  Amendment,  Suspension  or  Termination  of the  Plan;
Modification of Options.  The Board may at any time terminate the Plan. With the
express written consent of an individual participant, the Board or the Committee
may cancel or reduce or otherwise alter outstanding Options or other awards. The
Board or the Committee may, at any time, or from time to time,  amend or suspend
and, if suspended,  reinstate,  the Plan in whole or in part;  provided that any
such amendment shall be contingent on obtaining the approval of the shareholders
of the Company if the  Committee  determines  that such approval is necessary to
comply with any  requirement  of law or any rule of any stock  exchange on which
the Company's  equity  securities  are traded,  or in order for Options or other
awards to  qualify  for an  exception  from  Section  162(m) of the Code (to the
extent  they would so qualify  but for the  absence  of  shareholder  approval).
Neither the amendment, suspension nor termination of the Plan shall, without the
consent of the holder of an Option,  Restricted Stock, Section 162(m) Restricted
Stock or award, alter or impair any rights or obligations under any such Option,
Restricted  Stock,   Section  162(m)  Restricted  Stock  or  award.  No  Option,
Restricted Stock, Section 162(m) Restricted Stock or award may be granted during
any period of suspension nor after  termination of the Plan, and in no event may
any Option be granted under this Plan after the expiration of ten years from May
23,  2007,  the  date  the  Plan,  as  amended,  is  approved  by the  Company's
stockholders  under Section 9.3. An Option,  Restricted  Stock,  Section  162(m)
Restricted  Stock or award shall be subject in all events to the condition that,
if at any time the Board shall determine,  in its discretion,  that the listing,
registration  or  qualification  of any of the  Company's  securities  upon  any
securities  exchange or under any law,  regulation or other  requirement  of any
governmental  authority  is  necessary  or  desirable,  or that any  consent  or
approval from any  governmental  authority is necessary or  desirable,  then the
Board may modify  the terms of any  Option,  Restricted  Stock,  Section  162(m)
Restricted  Stock or other award granted under the Plan,  without the consent of
the Optionee,  Grantee,  Restricted  Stockholder  or Section  162(m)  Restricted
Stockholder in any manner which the Board deems  necessary or desirable in order
to  improve  the  Company's  ability  to  obtain  such  listing,   registration,
qualification, consent or approval.

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

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

                                       15
<PAGE>

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

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

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

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

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

            Section  9.10  Noncompetition   Provisions.   The  Committee,  as  a
condition  of issuing  any award under the Plan,  may  include in any  agreement
evidencing such award such noncompetition and/or  nonsolicitation  provisions as
it may deem appropriate,  in its sole discretion,  and any award containing such
provisions  shall  not  be  effective  until  and  unless  the  grantee  thereof
acknowledges by written consent his or her obligation to be bound thereby.

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

                                       16
<PAGE>

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

                                       17

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00127-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00127-of-00352.parquet"}]]