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---------------------------

 Time/Warner Retail Sales
   & Marketing Logo

---------------------------
       A TimeWarner Company


Sports Illustrated Building, 135 West 50th Street, New York, New York 10020-1201

This agreement  dated as of January 1, 2006 between  Time/Warner  Retail Sales &
Marketing Inc.  (formerly known as Warner  Publisher  Services Inc.), a New York
corporation (herein called "Warner"), and Playboy Enterprises,  Inc., a Delaware
corporation (herein called "Publisher").

                                   WITNESSETH:

In  consideration  of the premises and of the mutual  covenants  and  agreements
herein set forth, the parties hereto hereby agree as follows:

1.    Definitions

      As used in this  agreement,  the following  terms shall have the following
      respective meanings:

      a.    "Publication(s)"  shall  mean the  English  language  United  States
            edition  of  PLAYBOY  Magazine,  all  PLAYBOY  denominated  magazine
            titles,  including  PLAYBOY  Specials,   PLAYBOY  Presents,  PLAYBOY
            Lingerie,  PLAYBOY Private Collection and one-shots (as that term is
            generally   understood  in  the  publishing  industry)  and  PLAYBOY
            newsstand version wall and desk calendars.

      b.    "Territory"  shall  mean the  United  States,  its  territories  and
            possessions and Canada.

      c.    "Printer's  Completion  Notice"  shall  mean a notice  delivered  to
            Warner and executed by the traffic manger or shipping manager of the
            printer of each issue of the Publication(s) specifying the number of
            copies of the  Publication(s)  shipped in  accordance  with Warner's
            instructions.

      d.    "Net  Sales"  shall  mean,   with  respect  to  each  issue  of  the
            Publication(s), the number of copies of the Publication(s) specified
            in each Printer's  Completion Notice (as the same may be modified or
            amended  by  additional  information  furnished  by the  printer  or
            Publisher)   less  the  number  of  copies  of  that  issue  of  the
            Publication(s)  returned  to Warner  pursuant to the  provisions  of
            paragraph 8.

<PAGE>

      e.    "Cover Price" shall mean the suggested  retail  selling price of the
            Publication(s)  (as specified by Publisher on the cover of each copy
            thereof),  as the same may be  increased  or  decreased by Publisher
            during the term of this agreement.

      f.    "Warner's  Commission" shall mean (1) for issues of PLAYBOY magazine
            with  On-Sale  Dates from  January  1, 2006  through  and  including
            December  31,  2006  ("Year 1"), a sum equal to ***** of Cover Price
            per Net Sale copy,  (2) for issues of PLAYBOY  magazine with On-Sale
            Dates from January 1, 2007 through and  including  December 31, 2007
            ("Year  2"), a sum equal to ***** of Cover  Price per Net Sale copy,
            (3) for issues of PLAYBOY  magazine  with On-Sale Dates from January
            1, 2008  through and  including  December 31, 2008 ("Year 3"), a sum
            equal to ***** of Cover  Price per Net Sales  copy,  and (4) for all
            issues  of  Publications  other  than  PLAYBOY  magazine  (including
            specials, one-shots and newly launched and acquired publications), a
            sum   equal  to  *****  of  Cover   Price   per  Net   Sales   copy.
            Notwithstanding  the foregoing or anything in this  agreement to the
            contrary,  in each of Year 1, Year 2 and Year 3, Warner's Commission
            for the five (5) issues of PLAYBOY  magazine  with the  greatest Net
            Sales  shall be equal to  ***** of Cover  price  per Net Sale  copy;
            provided  that  such  additional   Warner's   Commission   shall  be
            determined  as soon as final net Sales are  determined  during  such
            year.

      g.    Notwithstanding  anything in this  agreement to the contrary,  in no
            event shall Warner's Commission for Year 1, Year 2 or Year 3 be less
            than ***** for such year; provided,  however, that if the product of
            Net Sales  multiplied  by Cover Price for any such year is less than
            *****,  then Warner's  Commission  for such year shall be limited to
            ***** of Cover Price per Net Sale copy.

      h.    "Wholesaler  Discount"  shall mean the  discount off the Cover Price
            set by Publisher at which Warner bills wholesalers for copies of the
            Publication(s).

      i.    "Gross  Billings"  shall mean the Cover Price,  less the  Wholesaler
            Discount,  multiplied by the number of copies of the  Publication(s)
            specified  on  a  Printer's  Completion  Notice  and  less  Warner's
            Commission with respect to such number of copies.

      j.    "Final  Billings"  shall mean the Cover Price,  less the  Wholesaler
            Discount, multiplied by the Net Sales and less Warner's Commission.

      k.    "On-Sale  Date" shall mean the date  (designated  by  Publisher)  on
            which each issue of the  Publication(s)  is to be placed for initial
            sale at retail outlets.

      l.    "Off-Sale  Date" shall mean the date  (designated  by Publisher) for
            recall of issues of the Publication(s) from sale at retail outlets.

      m.    (i) "Term" shall mean the period commencing with the On-Sale Date of
            the  February  2006 issue of  PLAYBOY  Magazine  and shall  continue
            thereafter  for a period  of three  (3)  years,  terminating  on the
            Off-Sale Date of the January 2009 issue of PLAYBOY Magazine,  unless
            earlier terminated as hereinafter provided.


                                       2
<PAGE>

            (ii)  Notwithstanding  any  termination of the Term,  this agreement
                  shall continue in full force and effect after the  termination
                  date  for  the  purposes,   and  only  for  the  purposes,  of
                  distributing  the  last  issue  of the  Publication(s)  and of
                  handling  and  crediting  returns of unsold  copies and making
                  payments,  adjustments  and  credits,  with  respect  to  such
                  termination  date,  until  the  same are  completed,  made and
                  settled.

            (iii) Publisher  shall send Warner  written notice of termination at
                  least  forty-five  (45) days prior to the end of the Term (the
                  "Notice Date").  Warner shall have the right,  upon the Notice
                  Date, to suspend any further payments to Publisher relating to
                  the Publication(s) in an amount not to exceed the total of (A)
                  the "Overdraft"  (as  hereinafter  defined) as reported on the
                  last  payment  statement  issued  to  Publisher   pursuant  to
                  subparagraph  7.h  prior  to  the  Notice  Date  and  (B)  the
                  Overdraft  as  calculated  by  Warner  based  upon  the  sales
                  performance  statement  last issued to  Publisher  pursuant to
                  subparagraph 7.g prior to the Notice Date. The total amount of
                  the  Overdrafts as  calculated in accordance  with (A) and (B)
                  above,  shall be  recalculated  for  each  payment  and  sales
                  performance statement thereafter issued to Publisher until the
                  parties  are  able to  effect  a final  settlement  hereunder,
                  provided,  however,  the parties  shall,  in the event of such
                  termination,  effect final settlement hereunder not later than
                  one hundred  fifty (150) days after the  Off-Sale  Date of the
                  last issue of PLAYBOY Magazine, flat or special, and not later
                  than one hundred  eighty (180) days after the Off-Sale Date of
                  the last calendar distributed by Warner hereunder.

            (iv)  Notwithstanding  anything in this  agreement to the  contrary,
                  Publisher may terminate  this agreement on the On-Sale Date of
                  the  February  2007 issue of PLAYBOY  Magazine,  if Warner has
                  materially breached any provision of Part I of Annex B ("Major
                  Contract Commitments").

            (v)   The termination provisions set forth in this subparagraph 1.m,
                  including the settling of accounts and suspension of payments,
                  shall be  applicable  to any  termination  of this  agreement,
                  including any termination pursuant to subparagraphs 14.b, 14.c
                  and 24 hereof.

2.    Rights Granted

      a.    Publisher  hereby agrees to grant,  and does hereby grant, to Warner
            for the Term of this agreement and  throughout  the  Territory,  the
            exclusive right to distribute the Publication(s).

      b.    The provisions of subparagraph 2.a shall not apply to:

            (i)   copies  of  the  Publication(s)   furnished  by  Publisher  to
                  subscribers  or to Publisher's  internal  operations and other
                  miscellaneous cash sales.


                                       3
<PAGE>

            (ii)  Publications,  whether in magazine or pamphlet form,  prepared
                  by  Publisher  for third  parties and not  distributed  in the
                  normal channels of the magazine distribution industry.

      c.    Anything  in  this   agreement  to  the  contrary   notwithstanding,
            Publisher   shall   have  the  right  to  service   retailers   with
            Publication(s),   either  directly  or  through  national   jobbers,
            wholesalers  and jobbers,  should Warner refuse to do so, subject to
            the following conditions:

            (i)   For any new retailer  account  (retail  stores not serviced by
                  Warner's wholesale distributors),  Publisher, to the extent it
                  is not  prohibited  from doing so, shall supply  Warner with a
                  list of such  accounts  and  shall  allow  Warner  to submit a
                  proposal to compete for such business on a competitive service
                  and cost basis.

            (ii)  If Publisher shall be unable to reach an agreement with Warner
                  with  respect  to the  servicing  of  any  such  new  retailer
                  accounts,  Publisher  shall not grant the right to service any
                  such  accounts  to any third  party on terms  equal to or less
                  favorable than those offered by Warner,  and shall give Warner
                  the  opportunity  to  acquire  said  rights on the best  terms
                  offered to Publisher by any third party (such  matching  right
                  to apply whether or not Warner submits a proposal as set forth
                  in paragraph 2.c(i) above). Warner shall have two (2) business
                  days after  notice  from  Publisher  to make a proposal  which
                  meets  or  exceeds  such  third-party  terms.  If  Warner  and
                  Publisher  agree that Warner shall  acquire said rights,  then
                  any such account  shall be serviced by Warner  pursuant to the
                  terms hereof,  except as such terms may be expressly  modified
                  or replaced in a fully executed written  amendment  hereto. In
                  the event that Warner  cannot,  does not or will not meet such
                  third-party  terms,  Publisher  may grant  such  rights to the
                  third party,  but in no event may Publisher  grant such rights
                  to *****, or a current  subsidiary or current affiliate of any
                  such  companies,  unless no other  means of  distribution  are
                  available.

            (iii) For retail  accounts that  wholesaler(s)  refuse to serve,  or
                  retail  accounts  that  refuse  service  from   wholesaler(s),
                  Publisher,  if  it  chooses  to  award  the  service  of  such
                  business,  shall  award such  service on the same basis as set
                  forth in  subparagraphs  2.c(i) and 2.c(ii)  above,  except as
                  provided otherwise in paragraph 23.

            (iv)  Publisher  shall not be obligated to maintain the  publication
                  of any of the  Publication(s).  Publisher  shall have the sole
                  discretion   to  determine   the   frequency  of  any  of  the
                  Publication(s).

            (v)   In  the  event   Publisher   decides  to  distribute   PLAYBOY
                  denominated non-magazine products through I.D. wholesalers, it
                  will first  negotiate  with Warner for such rights.  If within
                  thirty (30) days after notice from  Publisher  that  Publisher
                  desires  such  distribution,  Publisher  and  Warner  have not


                                       4
<PAGE>

                  concluded an agreement,  it will be conclusively presumed that
                  the parties  cannot reach an agreement and  Publisher  will be
                  free to  pursue  such  distribution  free from  obligation  or
                  liability to Warner on the condition that if Publisher  grants
                  such distribution rights it will be on terms more favorable to
                  Publisher than the terms offered by Warner.

3.    The Publisher Agrees

      a.    That upon receipt from Warner of the lists of wholesale distributors
            to whom  copies  of the  Publication(s)  are to be  shipped  and the
            number  of  copies,   Publisher  shall  cause  to  be  shipped  such
            designated  number of copies in accordance with said lists and shall
            cause to be shipped as far enough in advance of the On-Sale  Date of
            the  respective   issues  of  the   Publication(s)  as  will  enable
            distribution to and by wholesale  distributors by the On-Sale Dates.
            Publisher  shall  pay all  transportation  charges  relating  to the
            shipment  of  the   Publication(s)  to  wholesale   distributors  as
            aforesaid, provided that if Publisher shall so request, Warner shall
            advance such transportation  charges,  which transportation  charges
            shall be  recovered  by Warner as provided in  subparagraph  9.b(iv)
            hereof.

      b.    That Warner may deduct from the payments due Publisher,  as provided
            in subparagraph 9.b(ii) hereof,  amounts attributable to any and all
            copies  of  the  Publication(s)  lost  or  damaged  in  shipment  to
            wholesale  distributors.  Subject to the  provisions of paragraph 16
            hereof,  all such loss or damage  adjustments made by Warner for the
            benefit of said  wholesale  distributors  shall be conclusive on the
            question of loss and/or  damage,  approved by Publisher  and binding
            upon Publisher.

      c.    That Warner  shall allow  wholesale  distributors  the  privilege of
            returning  all unsold  copies of the  Publication(s)  and  receiving
            credit at the rate charged  therefor,  in accordance with the terms,
            conditions and limitations of paragraph 8 hereof.

      d.    That Warner shall be permitted to conduct  periodic  field audits of
            Publisher's  customers  on behalf of  Publisher  during the Term and
            that  Warner  shall be  entitled  to an audit fee for such  services
            equal to  ***** of all  funds  recovered  by  Warner  on  behalf  of
            Publisher  as a result of such audit (the  "Audit  Fee").  Publisher
            further  agrees  that  Warner  may  deduct  the  Audit  Fee from the
            payments due Publisher, as provided in subdivision 9(b)(vi) hereof.

      e.    To  follow  Warner's  "Terms  for  Access  to  Information  Systems"
            attached as Annex A hereto.

      f.    That if Warner incurs any expenses  hereunder on behalf of Publisher
            or the  Publications  for retail  display  payments,  rack  charges,
            shortages,  freight,  reship allowances,  or other handling charges,
            then Warner may recover,  pursuant to subdivision  9(b)(vii) hereof,
            any or all such  expenses from any advances  and/or  payments due or
            becoming due to Publisher,  or, at its option, may require Publisher
            to  reimburse  Warner  by check  within 30 days  following  Warner's
            request therefor.


                                       5
<PAGE>

      g.    To provide Warner,  on a timely basis,  with notice of all financial
            arrangements, whether written or oral, that Publisher agrees to with
            a wholesaler.

      h.    To grant Warner a non-exclusive  license to use any logo,  trademark
            or trade name owned by Publisher  for sales and  marketing  purposes
            pursuant to this agreement subject to Publisher's prior approval.

4.    Billings and Collections

      Publisher  hereby  grants  and  assigns  to Warner a  continuing  security
      interest  in and to all sums which may be paid or are payable to Warner by
      wholesalers  or  other  parties  as  Gross  Billings,  Final  Billings  or
      otherwise in connection with the exercise by Warner of its rights pursuant
      to this  agreement.  Warner shall not be obligated to segregate any of the
      aforesaid sums from any of its other funds, or to pay any interest thereon
      to  Publisher  (other than as may be awarded to  Publisher in the event of
      non-payment  or late payment of such amounts by Warner),  and Warner shall
      not be considered a trustee,  pledgeholder or fiduciary of Publisher as to
      such collected funds.

5.    Retail Display Allowance

      a.    Warner shall perform the work of receiving and collating information
            from  retail  magazine  dealers  and  issuing  payments on behalf of
            Publisher  to them for amounts due to them under  retail or checkout
            display  allowance  ("RDA")  programs  conducted by the Publisher in
            reference  to  the   Publication(s)  as  previously   authorized  by
            Publisher  in writing for each retail  outlet.  Such payment to such
            dealers for retail or checkout  display  allowances shall be charged
            to the  Publisher's  account and recovered and received by Warner as
            provided in subparagraph  9.b(iii) hereof.  Warner will perform such
            services pursuant to the terms and conditions of the Publisher's RDA
            contracts  on a timely  basis and will make  such  payments  to such
            dealers on not less than a calendar quarterly basis.

      b.    (i)   For the services to be performed  under  subparagraph  5.b and
                  Annex B  attached  hereto  and made a part  hereof,  Publisher
                  agrees  to  pay  Warner  an  annual  fee  of  *****  for up to
                  thirty-seven  (37)  issues  with an average  retailer  base of
                  ***** retailers per issue. In addition,  Warner is entitled to
                  receive a pro rata  portion  of the  annual fee amount for any
                  issue  and/or  retailer  in  excess of the  thirty-seven  (37)
                  issues and the retailer  base of *****  retailers  average per
                  issue.  Such  annual  fee shall be  adjusted  annually  for an
                  amount equal to ***** of the  increase in the  Consumer  Price
                  Index for Urban New York and shall be paid to Warner in twelve
                  (12) equal monthly payments.

            (ii)  As a result of Warner's  performing  auditing  services of RDA
                  claims,  Warner  is  entitled  to  receive  ***** of the total
                  savings  recovered by Warner on behalf of the  Publisher  from
                  such audits.

      c.    Publisher, on not less than four (4) months' prior written notice to
            Warner to the claim  form mail date for the final RDA  quarter to be
            administered  by Warner,  shall


                                       6
<PAGE>

            have the right to perform the work related to and to administer  its
            RDA program or use the  services  of a third  party to perform  such
            work.  In which  case the  payments  to be made  under  subparagraph
            5.b(i) will  continue for four (4) months after mailing of the claim
            forms for the final Warner administered RDA quarter,  but will in no
            event exceed eight (8) monthly payments after such notice.

6.    Credit to Wholesale Distributors

      a.    Warner  will bill  Publisher's  customers  at the Cover Price of the
            Publications less the Wholesaler Discount.

      b.    In the event Publisher's  customers make deductions from payments to
            Warner  for  adjustments  to  Customer  Discount  or  other  special
            allowances  not  agreed  to by the  Publisher,  Warner  will  notify
            Publisher of such adjustments and, if Publisher does not resolve the
            dispute with  Publisher's  customer  within thirty (30) days of such
            notice,  then Warner  shall  deduct from any  payments to  Publisher
            pursuant  to  subdivision   9(b)(v)  hereof,   the  amount  of  such
            deductions.  Warner shall use reasonable efforts to assist Publisher
            in Publisher's  attempt to resolve such dispute(s) with  Publisher's
            customer(s).  Publisher  may direct Warner to hold up or stop future
            shipments to the customer.

      c.    Publisher agrees that Warner shall be entitled to make all decisions
            as to which  customer to  distribute  the  Publications  to, and all
            credit  and   collection   decisions   with   respect  to  wholesale
            distributors,  including  whether  to stop or  hold up  shipment  to
            delinquent or uncreditworthy accounts and, if practicable, to secure
            substitute  accounts,  except,  in each case,  if Publisher  directs
            Warner  otherwise  as provided  below.  Warner shall bear any losses
            from   uncollectible    accounts   and   all   collection   expenses
            (collectively,  the "Credit  Risk"),  except as provided  below.  If
            Warner  determines,  in  its  sole  discretion,   that  a  wholesale
            distributor(s)  poses an unacceptable credit risk to Warner,  Warner
            may provide  notice to Publisher that Warner is no longer willing to
            accept  the  Credit  Risk  relating  to  Publications  sent  to such
            wholesaler distributor(s). If Publisher desires to continue shipping
            Publications  to such  wholesale  distributor(s)  and is  willing to
            accept the Credit Risk  associated  therewith,  then Publisher shall
            provide notice ordering Warner to continue shipping  Publications to
            such wholesale  distributor(s)  and  indicating  that that Publisher
            shall accept the Credit Risk relating to  Publications  sent to such
            wholesaler  distributor(s),  and any such losses sustained by Warner
            shall be charged to  Publisher's  account and recovered by Warner as
            provided in subdivision  9(b)(v) hereof.  Nothing herein  contained,
            however,  shall  require  Warner to  institute  any legal  action or
            collection  proceedings.  Publisher  agrees  and  acknowledges  that
            Warner may, if there is a new or suitable substitute,  recommend new
            or substitute  accounts in place of or in addition to customers that
            Warner  thinks are  inadequate,  an  unacceptable  credit  risk,  or
            irregular   in   payments.   Publisher   will   adhere  to  Warner's
            recommendation to change customers.

      d.    Publisher  acknowledges that it has significant  knowledge about the
            wholesale  magazine  distribution  industry and its participants and
            that it is aware  that many


                                       7
<PAGE>

            wholesale  distributors  are currently under  significant  financial
            pressure and may currently be, or in the near future become,  credit
            risks.  Publisher  further  acknowledges  that,  in the event Warner
            requests  Publisher  to  stop  or  hold  shipments  as  provided  in
            subparagraph  8(c) hereof,  there is a substantial  probability that
            wholesale   distributors   affected  may  constitute  a  substantial
            percentage   of  wholesale   distributors   and  there  may  not  be
            appropriate substitute distributors.

7.    Warner Agrees

      a.    To furnish shipping instructions and addressed labels to Publisher a
            reasonable  time prior to the shipping date for  distribution of the
            Publication(s).

      b.    To bill and collect  from  wholesale  distributors  for Warner's own
            account and to designate wholesale distributors and other customers.

      c.    To pay to Publisher the sums specified in paragraph 9.

      d.    To  in  good  faith  consult  fully  with   Publisher's   designated
            representative(s)   with   respect  to  the   following,   it  being
            understood,  however,  that Publisher  shall have the final decision
            with respect to such matters:

            (i)   the number of copies of each issue of the Publication(s) to be
                  printed;

            (ii)  the number of copies of each issue of the Publication(s) to be
                  allotted to each wholesale distributor;

            (iii) the advertising and promotion campaign for the Publication(s).

      e.    To  designate  an  employee  as the  "limited"  exclusive  Marketing
            Director or Marketing Manager for Publisher's  Publication(s) and to
            designate such employee of Warner to work primarily on  coordinating
            all distribution  relating to Publisher's  Publication(s);  it being
            understood that such designated employee shall perform such services
            under Warner's  direction and control,  that the designation of such
            employee  shall be in Warner's  sole and absolute  discretion,  that
            Warner  shall  have  the  sole  right  to  change  the  employee  so
            designated  and that such employee  shall be subject to  Publisher's
            reasonable right of approval.

            Additional  activities for other  Publishers or other projects shall
            be assigned under Warner's  direction,  control and discretion,  but
            not to exceed  more than  twenty  percent  (20%) of such  employee's
            total activities.

      f.    To have Warner's field  personnel  monitor the sales  performance of
            the Publication(s) by wholesale distributors.

      g.    To render to Publisher a sales performance  statement for each issue
            of the  Publication(s)  setting  forth,  in summary form,  the issue
            date, On-Sale Date and Off-Sale Date, number of copies  distributed,
            returns received, Net Sales (in both


                                       8
<PAGE>

            numerical  and  percentage   terms)  and  the  sales  trend  of  the
            Publication(s) by comparing, in numerical form, the Net Sales of the
            issue  of the  Publication(s)  for  which  such  statement  is being
            rendered  versus  that of the one  prior  issue and the issue of one
            year previous.

      h.    To render to  Publisher  a payment  statement  for each issue of the
            Publication(s)  setting  forth,  in summary  form,  the  appropriate
            calculations pursuant to this agreement.

      i.    Unless  modified  by  Warner's   marketing  plan  as  agreed  to  by
            Publisher,  to make  annual  marketing  calls on not less than *****
            retailer  chains.  Results of these marketing calls will be reported
            to Publisher  within  fourteen  days (14) days of the time the calls
            are made.

      j.    That neither Warner nor any person, firm or corporation controlling,
            controlled by or under common control with Warner, shall, during the
            Term hereof, distribute the publication entitled *****

      k.    That Warner shall  endeavor to require its  wholesalers  to promptly
            notify Warner of any censorship claims regarding the  Publication(s)
            and Warner agrees to promptly so notify Publisher of such censorship
            claims.

      l.    To use all reasonable  efforts to perform the specific  distribution
            services  set  forth  in  subparagraphs  7.i and 7.k  above  and the
            Circulation  Commitments  attached as Annex B hereto and made a part
            hereof,  some of which services have already been implemented.  Upon
            Warner's  receipt  of a written  notice  by  Publisher  of  Warner's
            failure  to  adhere  to  a  particular   obligation   set  forth  in
            subparagraphs  7.i and 7.k  above or Annex B  hereto,  Warner  shall
            promptly  commence the cure of any such  failure and shall  complete
            such cure in  accordance  with a  mutually  agreed  upon  timetable.
            Neither any failure by Warner that is cured in  accordance  with the
            preceding  sentence,  nor any such failure by Warner with respect to
            which  Publisher  does not send  Warner a written  notice,  shall be
            considered  a  material  breach of this  agreement.  Nothing in this
            paragraph  7.1 shall be deemed to affect  Publisher's  rights  under
            paragraph 1.m(iv) of this agreement.

8.    Returns

      a.    In  determining  the sums  payable  to  Publisher,  Warner  shall be
            entitled  to  deduct  returns  of each  issue of the  Publication(s)
            shipped to Warner from  wholesalers  located in the United States of
            America  and the  Dominion  of Canada at any time within one hundred
            twenty (120) days of the Off-Sale Date of each  Publication(s),  but
            as to the last issue of the Publication(s)  distributed  pursuant to
            this  agreement,  or any  one-shots  or  special  issues  which  may
            hereafter  be  published by  Publisher  and  distributed  by Warner,
            Warner may accept  returns  shipped at any time  within one  hundred
            fifty  (150)  days  of the  Off-Sale  Date  of  such  issues  of the
            Publication(s).  The  aforesaid  one  hundred  twenty  (120) and one
            hundred fifty (150) day periods  shall be subject to  extension,  if
            agreed to by Publisher  in advance,  by


                                       9
<PAGE>

            reason  of delay or delays  in mail  delivery,  "acts of God" or any
            other cause beyond the  reasonable  control of Warner and shall also
            be subject to  extension if  Publisher  shall  consent in writing to
            such extension.

      b.    Accordingly,  in the event Warner shall receive returns of any issue
            of the  Publication(s)  after  final  payment of such issue has been
            determined  and paid  pursuant to  subparagraph  9.b hereof,  Warner
            shall be entitled to deduct such return at the rate charged therefor
            from any  remittance  due Publisher for any later issues (if any) of
            the Publication(s)  or, if after termination of this agreement,  the
            Publisher  shall  make  prompt  payment  to Warner  upon  receipt of
            Warner's  statement  regarding  such  returns.  It is the intent and
            agreement  of the  parties  that  returns  of a prior  issue  can be
            deducted from payments made by Warner to Publisher, but only if such
            returns are received by Warner  within one hundred  fifty (150) days
            of  the  Off-Sale  Dates  of  the   Publication(s)  for  which  such
            deductions are made.

      c.    Warner may accept returns of unsold copies of the  Publication(s) by
            means  of  front   covers,   headings,   affidavits   or  electronic
            notification  in form  satisfactory  to Warner.  If Publisher  shall
            request,  in  writing,  full  copy  returns,  Warner  shall  use its
            reasonable  efforts  to obtain  same and,  in such  case,  Publisher
            agrees to pay for return transportation and such handling charges as
            are required, provided that if Warner shall be unable to obtain such
            full copy returns from any wholesaler or other  customer,  Publisher
            shall have the right to require  Warner to stop or hold up shipments
            of the Publication(s) and subject to paragraph 16 hereof, same shall
            be accepted by Publisher as conclusive  evidence  thereof and Warner
            is hereby authorized at its sole cost and expense to destroy any and
            all front covers or headings representing such returns.

9.    Payment to Publisher

In consideration  of the rights granted to Warner by Publisher  hereunder and in
consideration of Publisher's  warranties and representations,  Warner shall make
payment to Publisher of the following:

      a.    (i)   As an  advance  against  any and all  sums  which  may  become
                  payable to Publisher pursuant to subparagraph 9.b with respect
                  to each  issue of each  Publication,  except,  as set forth in
                  subparagraph  9.a(ii)  below,  an amount equal to ***** of the
                  estimated  Net  Sales of the  average  of the last  three  (3)
                  issues of such  Publication for which Final Billings have been
                  determined,  payable not later than thirty (30) days after the
                  On-Sale  Date of the issue and upon  receipt  by Warner of the
                  Printer's  Completion  Notice.  For the final issue of PLAYBOY
                  Magazine on sale in each year,  the  advance  shall be payable
                  not  later  than  the  last  business  day of the  year of the
                  On-Sale Date of the issue.  Warner may also withhold an amount
                  equal to the  actual  charges of the last three (3) net issues
                  for which Final Billings have been  determined,  for the items
                  in subsections 9.b(ii) through 9.b(viii) below.


                                       10
<PAGE>

            (ii)  As an  advance  against  any and all  sums  which  may  become
                  payable to Publisher pursuant to subparagraph 9.b with respect
                  to any particular issue of the  Publication(s) for which there
                  is a  substantial  increase  in  both  the  print  run and the
                  projected Net Sales,  an amount to be mutually  agreed upon by
                  Warner and Publisher, payable at a mutually agreed-upon time.

      b.    An amount  equal to ***** of  Warner's  estimate  of Final  Billings
            (which  estimate  of Final  Billings  shall  not  project  estimated
            returns or other  charges  for the period  sixty (60) to one hundred
            twenty (120) days after the Off-Sale Date of the Publication(s)) not
            later than sixty (60) days from and after the Off-Sale  Date of that
            issue of the  Publication(s)  after Warner  shall have  deducted and
            retained  from such Final  Billings (to the extent that such amounts
            have not previously  been deducted and retained by Warner) an amount
            equal to:

            (i)   All sums advanced to Publisher  pursuant to  subparagraph  9.a
                  above;

            (ii)  All loss and damage  adjustments  made by Warner  pursuant  to
                  subparagraph 3.c. above;

            (iii) All amounts  allowed as retail display  allowances and related
                  administrative  fees  pursuant  to  paragraph  5.b  above,  if
                  applicable;

            (iv)  All  transportation  charges  advanced  by Warner  pursuant to
                  subparagraph 3.a above;

            (v)   All uncollectible  amounts and other items properly chargeable
                  to Publisher referred to in paragraph 6 above;

            (vi)  The Audit Fee pursuant to paragraph 3.d. above;

            (vii) The  following  special  allowances  which may be  granted  by
                  Warner:

                  (1)   With respect to Reshipping  Wholesaler Agencies (defined
                        as   those    wholesalers   who   deliver    Publisher's
                        Publication(s) to retailers via mail or common carrier):

                        (A)   there  will be a  charge o *****  per cwt.  on all
                              second-class  and non-second class entry magazines
                              delivered via common carrier to retailers for U.S.
                              and Canada Reshipping Wholesaler Agencies;

                        (B)   there  will be a charge of *****  per cwt.  on all
                              second-class entry magazines delivered by mail for
                              U.S. and Canada Reshipping Wholesaler Agencies.

                        The charges  referred to in  subdivision 1) and 2) above
                        are  subject  to  change  only  with  Publisher's  prior
                        written approval.


                                       11
<PAGE>

                        Publisher shall have the right to approve any Wholesaler
                        Agency  defined as a  Reshipping  Wholesaler  Agency for
                        Publisher's  Publication(s)  prior to any charges  being
                        incurred  by   Publisher.   Warner  will   document  all
                        reshipping  charges by publication  issue and Reshipping
                        Wholesaler Agency. Warner agrees to monitor the accuracy
                        of Reshipping  Wholesaler Agency claims by auditing each
                        claiming Reshipping Wholesaler Agency's records not less
                        than  every  six  (6)  months.  All  reshipping  charges
                        determined  by  such  audit  to be  inaccurate  will  be
                        adjusted  within  thirty  (30) days of the  audit.  Such
                        adjustments  may be waived only with  Publisher's  prior
                        written approval.

                  (2)   A charge  of ***** USD will be made if any  analysis  of
                        circulation  by  population  for the  Publication(s)  is
                        requested   and   required   for  the  Audit  Bureau  of
                        Circulation report. No charge will be made for the State
                        Circulation analyses, which are customarily made twice a
                        year for the Publication(s).

            (viii) All other proper  charges,  payments or other  reimbursements
                   due Warner pursuant to the terms of this agreement, including
                   all  returns  and other  charges  of the  Publication(s)  not
                   charged to  Publisher's  account  at the time of the  payment
                   specified  in this  paragraph  9.b is made,  shall be charged
                   against any  subsequent  payment  pursuant to this  paragraph
                   9.b;  provided,   however,  that  without  Publisher's  prior
                   approval no such  charges  may be  deducted  from any payment
                   made  more  than one  hundred  twenty  (120)  days  after the
                   Off-Sale Date of the issue to which the charges relate.

10.   New Titles

      In the  event  that  during  the Term  hereof  Publisher  enters  into any
      third-party  agreements  for  non-PLAYBOY   denominated  English  language
      publications,  or Publisher itself publishes such a publication, then such
      publication(s)  shall be included  under the terms and  conditions of this
      agreement,  provided  that  Publisher  has the  right  to so  include  the
      publication(s) in question.  Warner's Commission on such publications will
      be a sum equal to ***** of the U.S. cover price of all Net Sales.

11.   Cross-Collateralization/Overdrafts

      The  estimated  Final  Billings  of  each  issue  of  all   Publication(s)
      distributed  by Warner  pursuant to this  agreement  shall be treated as a
      unit,  it being the  intention  hereof  that if the  total of the  advance
      payments made by Warner pursuant to  subparagraph  9.a with respect to any
      Publication(s) and the deductible distribution expenses incurred by Warner
      pursuant to  subdivisions  (ii) through  (viii) of  subparagraph  9.b with
      respect to any issue of such  Publication(s)  shall  exceed the  Estimated
      Final   Billings   for  the  same  issue  of  that   Publication(s)   (the
      "Overdraft"),  the  Overdraft  may be  deducted by Warner from any advance
      and/or  payment of Final  Billings which Warner may be required to make on
      any succeeding  issue or issues of the same  Publication(s),  or any other
      Publication(s),  the


                                       12
<PAGE>

      distribution  rights to which  have been  granted  to Warner by  Publisher
      under this agreement between Warner and Publisher, or shall be refunded or
      paid by Publisher immediately upon demand.

12.   Publisher's Warranties; Indemnity

      a.    Publisher  represents and warrants that the rights herein granted to
            Warner  have  not  been  granted  to  any  other  person,   firm  or
            corporation;  that it has the right and authority to enter into this
            agreement and to perform the  obligations  hereunder to be performed
            by Publisher;  and that to the best of Publisher's knowledge,  there
            are no  suits  or  proceedings  pending  or  threatened  against  or
            affecting Publisher which, if adversely determined, would impair the
            rights granted to Warner.

      b.    Publisher will indemnify and hold harmless  Warner and its officers,
            agents or representatives and its wholesalers and retailers from and
            against  any  damages,  costs,  expenses,  judgments,   settlements,
            penalties,  liabilities  or losses of any kind or nature  (excluding
            consequential  damages,  but including  reasonable  attorneys' fees)
            resulting   from  any  claim,   cause  of  action,   suit  or  other
            proceedings,  arising out of (i) claims of  copyright  or  trademark
            infringement,  libel,  obscenity,  violations  of rights of privacy,
            publicity or other proprietary rights in the title,  contents or any
            printed matter of the Publication(s), including, but not limited to,
            advertisements, pictures, photographs, cartoons, caricatures, either
            on the cover or in the text  thereof,  (ii) the  breach  or  alleged
            breach of any of the  foregoing  representations  or  warranties  or
            (iii) any act or omission or  commission  of  Publisher  pursuant to
            this  agreement.  If any such suit,  proceeding,  claim or demand is
            brought  or made  against  Warner,  Publisher  shall  undertake  the
            defense  thereof at its expense,  provided  that if Publisher  shall
            fail  so to do,  Warner  shall  undertake  the  defense  thereof  at
            Publisher's expense.

      c.    Warner  represents  and warrants that it has the right and authority
            to  enter  into  this  agreement  and  to  perform  the  obligations
            hereunder  to be  performed  by  Warner;  and  that  to the  best of
            Warner's  knowledge,  there are no suits or  proceedings  pending or
            threatened   against  or  affecting   Warner  which,   if  adversely
            determined,  would  impair the  services  herein to be  provided  to
            Publisher.

      d.    Warner will indemnify and hold harmless  Publisher and its officers,
            directors,  agents or employees from and against any damages, costs,
            expenses, judgments,  settlements,  penalties, liabilities or losses
            of  any  kind  or  nature  (excluding   consequential  damages,  but
            including  reasonable  attorneys'  fees)  resulting  from any claim,
            cause of action,  suit or other proceedings,  arising out of (i) the
            breach or alleged breach of any of the foregoing  representations or
            warranties  or (ii) any act or  omission  or  commission  of  Warner
            pursuant to this agreement.  If any such suit, proceeding,  claim or
            demand is brought or made against Publisher,  Warner shall undertake
            the defense  thereof at its expense,  provided  that if Warner shall
            fail so to do,  Publisher  shall  undertake  the defense  thereof at
            Warner's expense.


                                       13
<PAGE>

      e.    Anything  in  this  paragraph  12 to the  contrary  notwithstanding,
            neither  party  shall be  liable  to the  other  party  for any such
            indemnification   unless  the  party  seeking   indemnification  has
            notified the other party of said claim, action, proceeding or demand
            as soon  as  practicable  upon  receipt  of  knowledge  of same  and
            afforded the other party the opportunity to defend or participate in
            the  defense  of said  claim,  action,  proceeding  or  demand,  and
            further,  that  no  settlement  or  payment  of any  claim,  action,
            proceeding  or demand  shall be  binding on the  indemnifying  party
            unless prior approval and consent is obtained from the  indemnifying
            party, which said consent will not be unreasonably withheld. Each of
            the parties agrees to cooperate with the other in the defense of any
            said claim, action, proceeding or demand.

13.   Wholesaler/Customer Bankruptcy--Computation of Net Sales

      In the event that a designated wholesale  distributor or other customer to
      which Warner  distributes the  Publication(s) on Publisher's  behalf shall
      take  advantage  of any  federal  or state  insolvency  laws for relief of
      debtors,  including reorganization,  or shall cease its business operation
      with the effect that such  wholesale  distributor  or other customer shall
      not return its unsold copies of the  Publication(s),  Warner shall use the
      records  of Net  Sales  obtained  from the  wholesaler  or  customer  when
      available  or Warner  shall use the  average  percent  of Net Sales of the
      Publication(s)  as reported by such wholesale  distributor or customer for
      the twelve  (12)  months (or such lesser  period if  applicable)  prior to
      those months for which such  wholesale  distributor  or customer shall not
      return  unsold  copies of the  Publication(s)  shipped  to such  wholesale
      distributor or customer for said months.

14.   Assignment

      a.    This  agreement  shall bind and inure to the  benefit of the parties
            hereto and their respective successors and assigns, provided that no
            assignment  of this  agreement,  voluntary  or by  operation of law,
            shall be binding upon either of the parties hereto without the prior
            written   consent  of  the  other,   which   consent  shall  not  be
            unreasonably  withheld,  unless  it is an  assignment  to a  parent,
            subsidiary,  affiliate, or as part of the sale or transfer of all or
            substantially  all of such  party's  assets.  Notwithstanding  this,
            Publisher  may sell,  assign,  transfer or otherwise  dispose of its
            interest in any Publication or any trademark(s) associated therewith
            to any third party  (whether by means of a sale of assets or equity)
            if such third party  agrees in writing to assume and be bound by all
            the  terms and  conditions  of this  agreement  to be  performed  by
            Publisher  and prior to such  sale,  assignment,  transfer  or other
            disposition  Publisher  reimburses  Warner  the full  amount  of any
            indebtedness owed by Publisher to Warner.

      b.    Notwithstanding the above,  Publisher shall have the right, upon one
            hundred  twenty (120) days' written  notice to Warner,  to terminate
            this agreement  subject to the provisions of subparagraph 1.m above,
            in the event of a sale or transfer (by merger or otherwise) of:


                                       14
<PAGE>

            (i)   any portion of the stock of Warner to the business entity that
                  publishes or  distributes  ***** or anyone holding a direct or
                  indirect equity interest in such business entity; or

            (ii)  all or substantially  all of the assets of Warner or more than
                  fifty  percent  (50%) of the stock of Warner to a third  party
                  whose relationship to Warner immediately prior to such sale or
                  transfer   is  other  than  that  of  a  parent,   subsidiary,
                  affiliated or related company.  If Publisher does not elect to
                  terminate  this  agreement,  the new  owners of  Warner  shall
                  assume  this  agreement  and  carry  out all of its  terms and
                  provisions.

      c.    Notwithstanding subparagraphs 14.a and b above, Publisher shall have
            the right to terminate this agreement if:

            (i)   Warner's  business  operations and  organization  is acquired,
                  merged   or   otherwise   combined   with   another   national
                  distributor; or

            (ii)  Warner  combines  its "back room"  functions  (e.g.,  billing,
                  collections,  RDA processing,  data  processing)  with another
                  national distributor.

            Warner shall notify  Publisher  not less than thirty (30) days prior
            to the effective date of (i) or (ii) above.  Publisher may terminate
            this agreement at any time within the six (6) month period after the
            ninety (90) days immediately  following the effective date of (i) or
            (ii)  above.  The  effective  date of such  termination  will be the
            Off-Sale  Date of that issue of PLAYBOY  Magazine  closest to ninety
            (90) days following the date of such notification by Publisher.

15.   Notices

      All notices which either party hereto is required or may desire to give to
      the other shall be in writing and sent to the address  hereinafter in this
      paragraph  set forth,  or at such other  address as may be  designated  in
      writing  by any such  party in a notice to the other  given in the  manner
      prescribed in this paragraph.

      Any notice sent by facsimile  shall be deemed received on the date that is
      set forth on the  confirmation of receipt  obtained by the sender,  unless
      within two (2) business days  thereafter the recipient  shall have sent to
      the sender  notice that the facsimile  was  illegible,  in which event the
      facsimile shall not be deemed received until the facsimile has been resent
      and a new  confirmation  of receipt has been  received by the sender.  Any
      notice sent by registered mail,  return receipt  requested,  DHL, or other
      similar  express mail courier,  shall be deemed  conclusively to have been
      given  when  actually   received  or  refused  or  upon   notification  of
      non-deliverability by the postal authorities, as the case may be.


                                       15
<PAGE>

To Warner:                                     To Publisher:

Time/Warner Retail Sales & Marketing Inc.      Playboy Enterprises, Inc.
Attention: President                           Attention: Senior Vice President
Sports Illustrated Building                    and General Manager
135 West 50th Street, 7th Floor                Publishing Division
New York, NY 10020                             680 North Lake Shore Drive
                                               Chicago, IL 60611

With a copy to:                                With a copy to:

Time Inc.                                      Playboy Enterprises, Inc.
Attention: General Counsel                     Attention: General Counsel
Sports Illustrated Building                    680 North Lake Shore Drive
135 West 50th Street, 7th Floor                Chicago, IL 60611
New York, NY 10020

16.   Audit Rights

      Publisher  may, at its own expense,  audit the books and records of Warner
      relative  to the  distribution  of the  Publication(s)  pursuant  to  this
      agreement  at the place where Warner  maintains  such books and records in
      order to verify statements rendered to Publisher hereunder. Any such audit
      shall  be  conducted  by a  reputable  public  accountant  or  Publisher's
      accountant  during  reasonable  business  hours in such  manner  as not to
      interfere with Warner's  normal  business  activities.  A true copy of all
      reports made by Publisher's accountant shall be delivered to Warner at the
      same time as such  respective  reports are  delivered to Publisher by said
      accountant.  In no event shall audits be made  hereunder  more  frequently
      than twice annually.

17.   LIMITATION OF LIABILITY

      NOTWITHSTANDING  ANYTHING  IN THIS  AGREEMENT  TO THE  CONTRARY,  UNDER NO
      CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY LOST
      PROFITS OR SPECIAL, CONSEQUENTIAL, INDIRECT, CIRCUMSTANTIAL, OR INCIDENTAL
      DAMAGES OF ANY KIND. IN NO EVENT SHALL THE  LIABILITY OF WARNER  HEREUNDER
      TO PUBLISHER FOR ANY REASON EXCEED  WARNER'S  COMMISSION FOR THE PRECEDING
      TWELVE (12) MONTH  PERIOD (OR SUCH LESSER  PERIOD IF LESS THAN TWELVE (12)
      MONTHS OF THE  ORIGINAL  TERM OF THIS  AGREEMENT  HAS  LAPSED);  PROVIDED,
      HOWEVER,  THAT THIS  LIMITATION  OF  LIABILITY  SHALL NOT IN ANY WAY LIMIT
      WARNER'S  LIABILITY TO THE EXTENT THAT THE LIABILITY IS CAUSED BY WARNER'S
      WILLFUL MISCONDUCT. PUBLISHER'S LIABILITY TO WARNER IS LIMITED IN THE SAME
      MANNER AS DESCRIBED HEREIN.


                                       16
<PAGE>

18.   Integration; Waiver; Modification

      This   agreement,   including   Annexes  A  and  B  sets  forth  the  full
      understanding of the parties and supersedes all earlier understandings and
      agreements  with  respect  to  the  subject  matter  hereof.   No  waiver,
      modification  or  cancellation  of any term or condition of this agreement
      shall be  effective  unless  executed  in  writing  by the  party  charged
      therewith. No written waiver shall excuse the performance of any act other
      than those specifically referred to therein.

19.   No Partnership, Etc.

      This  agreement  does  not  constitute  and  shall  not  be  construed  as
      constituting a partnership or joint venture  between Warner and Publisher.
      Neither  party shall have any right to obligate or bind the other party in
      any manner  whatsoever,  nor nothing  herein  contained  shall give, or is
      intended to give, any rights of any kind to any third persons.

20.   Force Majeure

      Neither  party  shall be liable to the other for the  failure  to  fulfill
      their   obligations   hereunder  due  to  reasons  beyond  their  control,
      including,  by way of example,  governmental  restrictions,  strikes, war,
      invasions,  civil riot,  breakdown of market  distribution  facilities  or
      shortages  of labor or  material.  If any such force  majeure  event shall
      prohibit either party from publishing or distributing (as the case may be)
      six (6) consecutive issues of the Publication(s),  either party shall have
      the right to terminate this agreement upon ten (10) business days' written
      notice, which notice shall be in accordance with paragraph 15.

21.   Headings

      The headings in this  agreement are for  convenience of reference only and
      shall not limit or otherwise affect the meaning hereof.

22.   Governing Law

      This agreement  shall be interpreted  and construed in accordance with the
      laws of the State of New York  applicable to  agreements  entered into and
      entirely performed therein.

23.   Arbitration

      Any controversy or claim arising out of or relating to this agreement,  or
      any breach of it, shall be settled by arbitration pursuant to the American
      Arbitration  Association's  ("AAA")  Commercial  Arbitration Rules then in
      effect, as modified hereby.  All proceedings  relating to such arbitration
      shall be held in New  York,  New  York.  The  parties  hereby  irrevocably
      consent to the exclusive  jurisdiction and venue of the courts situated in
      the state and county of New York  (federal  and state)  and  consent  that
      judgment upon the award rendered by the Arbitrator(s)  shall be entered in
      such court.


                                       17
<PAGE>

24.   Wholesaler Relationships

      a.    If Warner decides to change a wholesaler with which it currently has
            a distribution  relationship and at least ***** of the retail stores
            that sell the  Publication(s)  in the affected  area (the  "Affected
            Stores")  refuse  to be  serviced  by the new  wholesaler  and  such
            refusal  continues  for longer  than sixty (60) days  following  the
            change in wholesaler, then within ten (10) days following the end of
            such  sixty (60) day  period  Warner  shall  submit to  Publisher  a
            proposal to compete for the  business  of the  Affected  Stores on a
            competitive service and cost basis.

      b.    If Publisher  shall be unable to reach an agreement with Warner with
            respect to the  servicing of the  Affected  Stores,  then  Publisher
            shall  not grant the right to  service  the  Affected  Stores to any
            third party on terms equal to or less  favorable  than those offered
            by Warner,  and shall give Warner the  opportunity  to acquire  said
            rights on the best terms  offered to  Publisher  by any third  party
            (such  matching  right to apply  whether  or not  Warner  submits  a
            proposal  as set forth in  paragraph  23.a  above).  If  Warner  and
            Publisher  agree that Warner shall  acquire  said  rights,  then the
            Affected  Stores  shall be serviced by Warner  pursuant to the terms
            hereof,  except  as such  terms  may be  appropriately  modified  or
            replaced in a fully executed written  amendment  hereto. In no event
            may Publisher grant such rights to *****, or to a current subsidiary
            or current affiliate of any of such companies..

25.   Defaults and Right to Cure

      If either party shall violate any of its  obligations or warranties  under
      the terms of this  agreement,  the other  party  shall  have the right and
      option,  but not the duty, to terminate  this agreement upon not less than
      ninety (90) days' prior written notice; but no neglect or failure to serve
      such notice  shall be deemed to be a waiver of any breach of any  covenant
      or stipulation  under this agreement.  Such  termination of this agreement
      shall  become  effective  unless  the  violation  complained  of  shall be
      completely  remedied to the  satisfaction  of such other party within such
      ninety (90) day period.  Nothing in the preceding sentence shall be deemed
      to affect Publisher's rights under paragraph 1.m(iv) of this agreement. If
      the  violation  complained  of  shall be of a kind  that a remedy  or cure
      cannot effectively restore the prior  circumstances,  then this agreement,
      at the option of such other party, shall terminate  forthwith upon service
      of such notice without any period of grace as aforesaid.  The  termination
      of this agreement shall be without prejudice to any rights that such other
      party may otherwise have against the defaulting party under this agreement
      or under law.

26.   Bankruptcy

      If either party shall be adjudicated a bankrupt, shall make any assignment
      for the benefit of creditors,  shall  institute  proceedings for voluntary
      bankruptcy,  shall apply for or consent to the  appointment of a receiver,
      or if  an  order  shall  be  entered  approving  a  petition  seeking  its
      reorganization  or appointing a receiver of it or its property,  then upon
      the  happening of any one or more of such events,  the other party to this
      agreement  shall  have the right to  terminate  this  agreement  by giving
      written  notice  of  its  intention  to do so.  Any  termination


                                       18
<PAGE>

      of this  agreement  pursuant to this paragraph 25 shall not release either
      party from any obligation hereunder due and owing to the other party up to
      the date of such termination.

27.   Confidentiality

      a.    Publisher  and Warner agree to treat this  agreement as  proprietary
            information and each agrees not to reveal any of the terms hereof to
            any third party, for any purpose, without the prior written approval
            of the other  party,  except  that  each  party  may  disclose  this
            agreement to outside  accountants  performing  auditing services for
            such party or except to the extent  required by law.  Publisher  and
            Warner  each  agree  that,  after  the date  hereof,  they will take
            whatever  steps they deem  necessary to carry out the intent of this
            paragraph.

      b.    Any confidential or proprietary information obtained by either party
            from  the  other  in  connection  with the  furnishing  of  services
            pursuant to this agreement shall be kept  confidential and shall not
            be disclosed to any third party without the prior  written  approval
            of the other party, except to the extent required by law.

TIME/WARNER RETAIL SALES & MARKETING INC.

By        /s/ Robert J. Bedor
          -------------------
Its EVP   Robert J. Bedor


PLAYBOY ENTERPRISES, INC.

By       /s/ Larry Djerf.
         -------------------
Its V.P. Larry Djerf


                                       19
<PAGE>

                                     Annex A

                          Attached to and made apart of
                      Agreement dated as of January 1, 2006
                                     between
              Time/Warner Retail Sales & Marketing Inc. ("Warner")
                                       and
                     Playboy Enterprises, Inc. ("Publisher")

               Warner's "Terms For Access to Information Systems"

Publisher's  access to and use of  Time/Warner  Retail Sales & Marketing  Inc.'s
("Warner")  information  systems and data is subject to the following  terms and
conditions:

1.    Confidentiality.

      (a)   The information  obtained from Warner's  information  systems (other
            than information  concerning Publisher's own publications) and data,
            and the  software,  access  codes and other  devices  and  materials
            provided  by Warner to  Publisher  to access  such  systems and data
            (collectively,  the "Confidential Information") contain confidential
            business  terms,  are  otherwise  confidential  to  Warner,  and the
            disclosure thereof would be damaging to Warner.

      (b)   Any Confidential  Information disclosed or provided to Publisher, or
            any of its employees,  directors,  officers,  affiliates,  agents or
            other  representatives  (collectively,  the  "Representatives")  (i)
            shall be kept  confidential  by Publisher  and its  Representatives,
            (ii) shall not,  without Warner's prior written consent (unless such
            disclosure  is  required by  applicable  law or  regulation  and the
            procedures  set  forth  in  clause  1(f)  below  are  followed),  be
            disclosed,  in whole or in part, by Publisher or its Representatives
            to any person or entity  except as set forth in clause  1(c)  below,
            and (iii) shall be used by Publisher and its Representatives  solely
            to monitor and analyze key  performance  metrics and review  general
            information pertinent to the magazine category.

      (c)   Publisher shall allow access to the information systems and disclose
            the Confidential Information only to such of its Representatives who
            need to know the  Confidential  Information  for the sole purpose of
            monitoring  and  analyzing  key  performance  metrics  and  who  are
            informed by Publisher of the confidential nature of the Confidential
            Information.  In any event,  Publisher  shall be responsible for any
            breach of these Confidential  Information provisions by Publisher or
            its Representatives.

      (d)   Except as permitted pursuant to clause l(f) below,  without Warner's
            prior written consent,  Publisher and its  Representatives  will not
            disclose to any other person the fact that it or they have access to
            Warner's  information  systems or that the Confidential  Information
            has been made available.


                                    Annex A-1
<PAGE>

      (e)   Neither   Warner   nor   any  of  its   Representatives   make   any
            representation or warranty,  express or implied,  as to the accuracy
            or completeness of the  Confidential  Information.  Publisher agrees
            that neither  Warner nor any of its  Representatives  shall have any
            liability to Publisher or to any of its Representatives or any other
            person  relating to or  resulting  from the use of the  Confidential
            Information or any errors therein or omissions therefrom.

      (f)   If  Publisher  or  any  of  its   Representatives   becomes  legally
            compelled, in the written opinion of its counsel, to disclose any of
            the Confidential  Information,  Publisher shall immediately  provide
            Warner  with  written  notice  thereof  so that  Warner  may  seek a
            protective order or other appropriate remedy and/or waive compliance
            with the applicable provisions of this agreement. If such protective
            order or other remedy is not obtained,  or Warner waives  compliance
            with  the  applicable   provisions   hereunder,   Publisher  or  its
            Representative(s),  as the case may be,  shall  disclose  only  that
            portion  of the  Confidential  Information  which it is  advised  in
            writing  by counsel is legally  required  to be  disclosed  and will
            cooperate with Warner to obtain an appropriate  protective  order or
            other  reliable  assurance  that  confidential   treatment  will  be
            accorded  the  Confidential  Information  by such  tribunal or other
            entity.

2.    Systems and Data to Be Accessed.

      Publisher is  authorized to access only the  Web-based  Data Portal,  with
      access to Publisher's  draw/sale data,  display quality index (DQI),  rack
      data, RDA data, field force  automation data,  Warner MIS system data, POS
      data,  competitive share of market data, MSA data (for mutually contracted
      wholesalers),  and any  additional  information  mutually  agreed  upon in
      writing,  between the publisher and Warner.  Neither  Publisher nor any of
      its  Representatives  shall attempt to access any other  systems,  data or
      functions in Warner's information systems.

3.    Person Authorized to Access Systems and Data.

      (a)   Only  those   individuals  of  Publisher  and  its   Representatives
            specifically  authorized  in writing by Warner to access the systems
            and data may do so.

      (b)   If Publisher or any of its  Representatives who is granted access to
            Warner's   information   systems   or  data  (i)   ceases  to  be  a
            Representative of Publisher,  or (ii) misplaces,  loses or otherwise
            fails to maintain  possession  of its  computer,  software or access
            data or device,  or any of the Confidential  Information,  Publisher
            will immediately  notify the Warner Publisher  Services Help Desk at
            (212) 522-1681.

4.    Security.

      (a)   Publisher  will  access  the  systems  and data in  accordance  with
            Warner's instructions and requirements  concerning data security, as
            amended from time to time by Warner.

      (b)   In order to ensure  protection  of the systems  and data,  Publisher
            shall implement and maintain appropriate security measures including
            technical,  physical,  and  organizational  controls  to ensure  the
            confidentiality and integrity of the systems and data.


                                    Annex A-2
<PAGE>

      (c)   Publisher  will  immediately   report  any  suspected  or  confirmed
            security incident involving the systems or data to Warner's Director
            of Information  Security by calling the Time Inc. Network Operations
            Center at (212) 522-7777 or another number specified by Warner.

      (d)   On an ongoing basis from time to time and upon reasonable  notice to
            Publisher,   Warner  shall  be  entitled  to  perform,  or  to  have
            performed,  an information  security review and audit on Publisher's
            access and use of Warner's  information  systems,  as coordinated by
            Warner's Director of Information Security. Publisher shall implement
            any required  controls as  identified by such  information  security
            review and shall  institute  appropriate  escalation  procedures  in
            order to enable an  appropriate  response in the event of a security
            incident.

      (e)   Publisher  has  standard  security  procedures  in place and it will
            provide a copy of such  procedures  to all  Representatives  who are
            granted access to Warner's information systems.

      (f)   Neither  Publisher  nor any of its  Representatives  who are granted
            access to the information systems shall use software that is (i) not
            owned or  validly  licensed  by such  party,  (ii) in  violation  of
            third-party  rights,  including  but not limited to  copyrights,  or
            (iii) illegal.

      (g)   Neither  Publisher  nor any of its  Representatives  who are granted
            access to the  information  systems  shall  attempt to scan Warner's
            network  or run any other  diagnostic  tools  against  any system on
            Warner's  network  without  the prior  written  approval of Warner's
            Senior Director of Information Services.

      (h)   Publisher  acknowledges  that  its  access  to and  use of  Warner's
            information  systems are  subject to monitor by Warner and  Warner's
            policies of use (as same may be modified from time to time).

      (i)   Both Publisher and all of its Representatives who are granted access
            to the information  systems shall have current  anti-virus  software
            installed on their computers.

      (j)   Warner will maintain current anti-virus software on its system.

5.    Default.

      Warner may immediately terminate  Publisher's  authorization to access and
      use Warner's systems and data if Publisher fails to comply with any of the
      terms hereof.


                                    Annex A-3
<PAGE>

                                     Annex B

                          Attached to and Made Part of
                  Agreement Dated as of January 1, 2006 between
              Time/Warner Retail Sales & Marketing Inc. ("Warner")
                                       and
                        Playboy Enterprises, Inc. ("PET")

                             Circulation Action Plan

o *****


                                    Annex B-4

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