SERVICES AND FACILITIES AGREEMENT

Services and Facilities : BFI will provide Customer the following services and facilities from and in BFI’s facilities at Andrita on the terms and conditions set forth herein:

The Transmission Services,   in accordance with the details and technical specifications set forth in Exhibits A & B, using the Galaxy 23 (“ G 23 ”) Transponder 5, 15 and/or 23 or such other satellite transponder(s) and/or satellite(s) that may replace G 23 Transponder 5, 15 or 23, or their replacements due to the failure of G 23 Transponders 5, 15 or 23 to meet technical specifications materially equivalent to those set forth in Exhibit A (the “ BFI SD Transponders ”).  The Transmission Services will be provided for the entire Term.  The Transmission Services will initially be provided for 13 SD Channels (including Playboy TV en Espanol).  *****.  The parties acknowledge that the Channel known as Club Jenna XX.5 will terminate at midnight EST on March 27, 2008.  If during the Term Customer commences the origination of any additional SD Channel(s), Customer must utilize BFI for the Transmission Services required to originate said additional Channel(s) (the “ Additional SD Channel(s) ”) and BFI will provide Customer with the Transmission Services for the Additional SD Channel(s) pursuant to this Agreement, provided BFI has the capacity and facilities available for the Additional SD Channel(s).  Upon Customer’s reasonable request at any time, BFI shall, within five (5) days, notify Customer of the number of Additional SD Channel(s) for which BFI has the capacity and facilities to provide Transmission Services at such time.  BFI shall be responsible for responding to any failure of a BFI SD Transponder and/or G23, including providing all appropriate notices to Customer.  Customer and BFI shall reasonably cooperate with each other in connection with the response to any such failure, including technical communications to third parties.  Customer shall be solely responsible for providing notice of any such failure to third parties, including but not limited to Customer’s affiliates.  For all purposes of this agreement, an “affiliate” shall mean with respect to any “person” (which shall mean an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other business entity or a governmental entity (or any department, agency, or political subdivision thereof)), any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person; and for purposes of this definition, “control,” as used with respect to any person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such person, whether through the ownership of voting securities, by agreement or otherwise.  For purposes of this definition, the terms “controlling,” controlled by” and “under common control with” shall have correlative meanings.

The Network Playback Services, in accordance with the details set forth in Exhibit B, all specifically for creation, playback and transmission of the SD Channels and data appurtenant thereto.  The Network Playback Services will be provided for the entire Term.  The Network Playback Services will initially be provided for 12 SD Channels (not including Playboy TV en Espanol).  *****.  The parties acknowledge that the Channel known as Club Jenna XX.5 will terminate at midnight EST on March 27, 2008.  If during the Term Customer commences the origination of any Additional SD Channel(s) pursuant to this Agreement, Customer must utilize BFI for the Network Playback Services required to originate said Additional SD Channels and BFI will provide the Network Playback Services for the Additional SD Channel(s), provided BFI has the capacity and facilities available for the Additional SD Channel(s).  Upon Customer’s reasonable request at any time, BFI shall, within five (5) days, notify Customer of the number of Additional SD Channel(s) for which BFI has the capacity and facilities to provide Network Playback Services at such time.

The Andrita Radio Studio (as it is currently configured or with improvements thereto made at BFI’s sole discretion, unless Customer requests in writing that BFI provide additional equipment, software and/or functionality for the Andrita Radio Studio (and upon such a request, the parties shall negotiate in good faith regarding additional fees and charges), in accordance with the details set forth in Exhibit B.  The Andrita Radio Studio will be provided for the first thirty-six (36) months of the Term (the “ Andrita Radio Studio Term ”).  At Customer’s option, one hundred and twenty (120) days prior to the end of the Andrita Radio Studio Term, BFI and Customer will commence good faith negotiations on the terms and conditions for an extension of the Andrita Radio Studio Term.  In the event BFI and Customer fail to reach agreement on the terms and conditions for an extension of the Andrita Radio Studio Term prior to the end of the Andrita Radio Studio Term, BFI shall be free from any obligation to provide Customer with the Andrita Radio Studio facilities after the Andrita Radio Studio Term.

The Dedicated Post Production Services, in accordance with the details set forth in Exhibit B.  The Dedicated Post Production Services will be provided for the first thirty-six (36) months of the Term (the “ Dedicated Post Production Services Term ”).  Customer shall have the option to extend the Dedicated Post Production Services Term on the then-existing terms and conditions for the remainder of the Term, provided Customer provides BFI with written notice thereof no later than ninety (90) days prior to the end of the Dedicated Post Production Services Term.

The VOD Services including VOD encoding, VOD concatenation and VOD propagation to cable headends, Telco systems and DTH operators *****, all in accordance with the details set forth in Exhibit B.  The VOD Services will be provided for the Term.

The Dedicated Office Facilities, in accordance with the details set forth in Exhibit B.  The Dedicated Office Facilities will be provided for the first thirty-six (36) months of the Term (the “ Dedicated Office Facilities Term ”).  Customer shall have the option to extend the Dedicated Office Facilities Term on the then-existing terms and conditions for the remainder of the Term, provided Customer provides BFI with written notice thereof no later than ninety (90) days prior to the end of the Dedicated Office Facilities Term.

The Tape Vault Services, in accordance with the details set forth in Exhibit B.  The Tape Vault Services shall be provided for the Term.

The Duplication/Conversion Services in accordance with the details set forth in Exhibit B and at the rates set forth on the Playboy Rate Card shall be provided for the Term; provided, that, if Customer is considering performing itself (or by its affiliates) these services, it shall notify BFI at least ***** days in advance.  If Customer is considering using a non-affiliated third party for these services, it may do so only if BFI is not meeting generally accepted industry pricing, quality and delivery standards for such services.  If Customer believes that BFI is not meeting generally accepted industry pricing, quality and delivery standards for such services, it shall notify BFI in writing, specifying where BFI does not meet generally accepted industry pricing, quality and delivery standards for such services.  Following its receipt of any such notice, BFI shall have ***** to address the issues raised by Customer (or, if new equipment is required to address the issue, such longer period as may be reasonably required to purchase and deploy such equipment).  If, at the end of such period, Customer and BFI agree that BFI has addressed the pricing, quality or delivery issues, then Customer may not use a non-affiliated third party for these services.  Otherwise, Customer may use a non-affiliated third party for these services.

The Optional Services, at Customer’s option and in accordance with and subject to the details set forth in Exhibit C and the Playboy Rate Card.  Customer may elect to receive any of the Optional Services at any time during the Term, subject to BFI having sufficient capacity  (as solely determined by BFI) available at the time of Customer’s request to provide the requested services.  Exhibit D may be modified at any time during the Term, upon mutual agreement of BFI and Customer.

The HD Transmission Services, and in accordance with the details and technical specifications set forth in Exhibits A and Exhibit B, using the Galaxy 13 (“ G 13 ”) Transponder 11 or 13, or such other satellite transponder(s) and/or satellite(s) that may replace G 13 Transponder 11 or 13 or their replacements due to the failure of G 13 Transponder 11 or 13 to meet technical specifications materially equivalent to those set forth in Exhibit A (the “ BFI HD Transponder ” and together with the BFI SD Transponders, the “ BFI Transponders ”); provided that BFI has the capacity and facilities available to provide the HD Transmission Services as determined on a HD Channel by HD Channel basis.  The HD Transmission Services will be provided from the date they commence for the remainder of the Term.  Customer must utilize the HD Transmission Services for all HD Channels it launches during the Term, *****.  Upon Customer’s request at any time, BFI shall, within five (5) days, notify Customer of the number of HD Channels for which BFI has the capacity and facilities to provide HD Transmission Services at such time.  BFI shall be responsible for responding to any failure of a BFI HD Transponder and/or G13, including providing all appropriate notices to Customer.  Customer and BFI shall reasonably cooperate with each other in connection with the response to any such failure, including technical communications to third parties. Customer shall be solely responsible for providing notice of any such failure to Customer’s third parties, including but not limited to Customer’s affiliates.

The HD Network Playback Services, in accordance with the details in Exhibit B, all specifically for the creation, playback and transmission of HD Channel(s) and data appurtenant thereto; provided that BFI has the capacity and facilities available to provide the HD Network Playback Services as determined on a HD Channel by HD Channel basis.  The HD Network Playback Services will be provided from the date they commence for the remainder of the Term.  Customer must utilize the HD Network Playback Services for all HD Channels it launches during the Term, *****.  Upon Customer’s reasonable request at any time, BFI shall, within five (5) days, notify Customer of the number of HD Channels for which BFI has the capacity and facilities to provide HD Network Playback Services at such time.

The Additional Office Facilities, in accordance with the details set forth in Exhibit B. The Additional Office Facilities will be provided for the first forty-five (45) days of the Term (the “ Additional Office Facilities Term ”).  Customer shall have the option to extend the Additional Office Facilities Term on the then-existing terms and conditions for the next forty-five (45) days of the Term by providing BFI with written notice thereof.

Notwithstanding anything to the contrary in this Agreement, this Agreement shall only apply to content transmitted via broadcast, cable television, DTH, SMATV or any Telco system (e.g. Verizon, AT&T, etc.), and shall not apply to any content that is transmitted over the Internet or any equivalent or successor technology (including transmission via any IP or TCP/IP protocol, or any equivalent or successor protocols), unless said Internet transmission is incorporated in the transmissions and/or protocol utilized by Customer’s broadcast, cable television, DTH, SMATV, or Telco systems.

Customer’s Channels .

Customer shall be solely responsible for the content of the Channels and the creation and delivery of said content to BFI, and Customer shall have the sole and exclusive right to license the reception of the Channels.  BFI shall have no rights whatsoever to the content of the Channels except those required to perform the Andrita Services reflected herein as directed to do so by the Customer.  BFI shall have no right to alter in any manner the content of the Channels except as required to perform the Andrita Services reflected herein, as directed by Customer.  Customer will be solely responsible for all billing and collection from all persons and entities that have been authorized to receive the Channels.  BFI shall not be entitled to any of such sums collected.

Upon Customer’s request with respect to specific Customer content, BFI shall, at no cost to Customer, promptly delete such content from all computer systems owned or controlled by BFI and, at Customer’s option and payment of BFI’s current Playboy Rate Card, BFI shall also provide Customer with a digital copy of such deleted content, in a format reasonably acceptable to BFI.  In the event BFI does not have a rate card rate for these services, Customer and BFI shall negotiate in good faith to establish the rates for these services.

BFI shall only authorize or de-authorize headends (or any similar delivery mechanism) as instructed in writing by Customer, and shall promptly do so upon its receipt of any such instruction.  BFI shall provide Customer with a list of all Customer IRDs currently authorized by BFI’s encryption system upon Customer’s request.

From time to time during the Term, at Customer’s request, BFI shall reasonably cooperate with Customer in connection with additional projects involving the Andrita Services, so long as such cooperation does not require BFI to incur any additional, non de minimis costs.  To the extent that such cooperation would require BFI to incur any new additional, non de minimis costs, BFI shall notify Customer and the parties shall meet to discuss whether to alter or continue the proposed project, and any addition fees or charges to be paid by Customer, in good faith.

Term .  BFI shall commence providing the Andrita Services on the date hereof (the “ Commencement Date ”), and this Agreement shall continue for a period of sixty (60) months from the Commencement Date (the “ Initial Term ”).  During the Term, BFI shall provide each Andrita Service to Customer for the period set forth in the applicable provision of Section 1.  Customer shall have the option to extend the Initial Term for an additional thirty-six (36) months on terms and conditions that are substantially the same as the then-existing terms and conditions (the “ Option Term ”).  Customer shall provide written notice to BFI of its intention to exercise the Option Term no later than one hundred and twenty (120) days prior to the expiration of the Initial Term.  The “ Term ” shall consist of the Initial Term together with the Option Term and the Transition Period, if applicable, but in any case shall end at the termination of this Agreement if terminated earlier pursuant to the terms hereof.

Fees .  As full consideration for the Dedicated BFI Services, HD Transmission Services and HD Network Playback Services, Customer shall pay to BFI per month (prorated for partial months) the following amounts, as set forth below (the “ Monthly Charges ”), as well as any fees set forth below for Duplication/Standards Conversion Services and/or Optional Services, as applicable (“ Additional Charges ”).

Subject to Section 4(b), Customer shall remit to BFI the following amounts:

The Transmission Services :

The Network Playback Services :

The Andrita Radio Studio :

The Dedicated Post Production Services :

The VOD Services :

The Dedicated Office Facilities :

Tape Vault Services:

Duplication/Conversion Services:

The Optional Services:

The HD Transmission Services:

The HD Network Playback Services:

The Additional Office Facilities :

The Monthly Charges (for the Dedicated BFI Services (other than the VOD Services), HD Transmission Services and HD Network Playback Services, as applicable) will be paid in advance and shall be due no later than the first day of the month in which the applicable Dedicated BFI Services are to be rendered (the “ Due Date ”).  As a courtesy, BFI shall send an invoice for the Monthly Charges thirty (30) days prior to the Due Date, provided that Customer’s failure to receive an invoice shall not relieve Customer of its obligation to pay the Monthly Charges by the Due Date.  To the extent that any Dedicated BFI Services (excluding the VOD Services, the Origination Services, the HD Network Playback Services and the HD Transmission Services) are not provided following such advance payment, Customer shall be entitled as its sole remedy (except only payment suspension if and as applicable under Section 12) to a credit equal to a pro rated (per applicable Channel and per applicable other channels) portion of the Monthly Charges for the period and with respect to such service(s) that are not provided (in each case, which is not also caused by any action or inaction of Customer).  In the event that Customer is entitled to suspend payments pursuant to Section 12, below; and, if Customer so suspends, then Customer shall not be entitled to any credit hereunder with respect to such suspended periods; provided that, to the extent that any resumed payment under Section 12 includes amounts paid for such suspended periods, then Customer shall be entitled to a credit hereunder with respect to the amounts paid for such suspended periods.

The Additional Charges for   the VOD Services, the Additional Office Facilities, the Duplication/Conversion Services and the Optional Services, as detailed in Exhibit C and Exhibit D, shall be invoiced after the applicable services are rendered to Customer and payment shall be due within thirty (30) days after Customer’s receipt of the invoice, unless otherwise specified.

All payments shall be made via electronic transfer to: BFI’s account as follows:

The Monthly Charges and Additional Charges (as applicable) shall apply to each month, or fraction thereof (paid on a pro-rata basis), that the applicable Andrita Services are provided to Customer and accrue through and include the date that any Andrita Services are discontinued in whole or in part, as provided for herein.  Each month will be consider