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Shareholders' Agreement - Playboy TV UK/Benelux Ltd., Continental Shelf 16 Ltd. and Playboy Entertainment Group Inc.

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                       MADE EFFECTIVE 12TH JANUARY 1995
                       --------------------------------




                       (1)    CONTINENTAL SHELF 16 LIMITED

                       (2)    PLAYBOY ENTERTAINMENT GROUP, INC.

                       (3)    PLAYBOY TV UK/BENELUX LIMITED



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

                            SHAREHOLDERS' AGREEMENT
                       Relating to the establishment of
                         PLAYBOY TV UK/BENELUX LIMITED

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




                             [LOGO OF DENTON HALL]

                               FIVE CHANCERY LANE
                                 CLIFFORD'S INN
                                LONDON EC4A IBU

                   TELEPHONE 0171 242 1212 FAX 0171 404 0087

                      MEMBER OF THE DENTON INTERNATIONAL
                              GROUP OF LAW FIRMS
<PAGE>

                                                                     DENTON HALL

                                     INDEX
                                     -----

CLAUSE                                                           PAGE
------                                                           ----

1.      Definitions                                                1

2.      Business of the Company and Launch of the Channel         12

3.      Closing Arrangements                                      14

4.      Provision of Finance                                      16

5.      The Board and Management                                  20

6.      Agreement to Perform                                      23

7.      Information                                               23

8.      Restrictions on the Company's Activities                  25

9.      Name                                                      33

10.     Dividend Policy                                           33

11.     Condition Precedent                                       33

12.     Confidentiality                                           33

13.     Transfers of Shares and Loan Stock                        35

14.     Deemed Transfers                                          43

15.     Option                                                    45

16.     Sell Down                                                 52

17.     Compulsory Purchase by Flextech                           55

18.     Representations and Warranties                            56

19.     Competition                                               58

20.     No Assignment                                             58

21.     Waivers, Remedies Cumulative, Amendments etc              59

22.     Invalidity etc                                            59

23.     No Partnership or Agency                                  60

24.     Announcements                                             60

25.     Costs                                                     60

26.     Entire Agreement                                          60

27.     Conflict with Articles etc                                61

28.     Notices                                                   61

29.     Governing Law                                             62
<PAGE>

                                                                     DENTON HALL


                     AGREED FORM DOCUMENTS
                     ---------------------

                     1.   Articles of Association
                         
                     2.   Resolutions

                     3.   Loan Stock Deed and Certificate

                     4.   Programme Supply Agreement

                     5.   Trademark Licence

                     6.   Legal Opinions

                     7.   Consent Agreement

                     8.   Initial Business Plan
<PAGE>

                                                                     DENTON HALL



      SCHEDULES
      ---------

      SCHEDULE I       Particulars of the Company

      SCHEDULE II      Details of Subscriptions by Shareholders at Closing

      SCHEDULE III     Deed of Adherence

      SCHEDULE IV      Funding

      SCHEDULE V       Directors
<PAGE>

                                                                     DENTON HALL
THIS AGREEMENT is made effective 12th January 1995

BETWEEN
(1)  CONTINENTAL SHELF 16 LIMITED registered in England under number 3,005,499
     whose registered office is at The Ouadrangle, Imperial Square, Cheltenham,
     Gloucester, GL50 lYX ("Flextech");

(2)  PLAYBOY ENTERTAINMENT GROUP, INC. a Delaware corporation of 9242 Beverly
     Boulevard, Beverly Hills, California 90210 ("Playboy")

(3)  PLAYBOY TV UK/BENELUX LIMITED registered in England under number 3,000,033
     whose registered office is at Five Chancery Lane, Clifford's Inn, London
     EC4A lBU (for itself and, under Clauses 12 and 19, for itself and as
     trustee for its Subsidiaries for the time being) ("the Company").

WHEREAS:

(A)  The Shareholders wish to incorporate the Company and to procure that the
     Company will establish a pay television service to be known as "Playboy TV"
     based on the pay television service which is currently operated by Playboy
     in the United States of America under the name "Playboy TV" ("the Channel")
     in the Territory.

(B)  The Shareholders are entering into this Agreement with the Company (whose
     corporate details are set out in Schedule I) in order to record the basis
     of their relationship as shareholders in the Company and to establish the
     manner in which the business and affairs of the Company will be financed
     and conducted.

NOW IT IS HEREBY AGREED as follows:

1.   Definitions
     -----------
    
1.1  In this Agreement and in the Recitals and Schedules hereto the following
     words and expressions shall save as otherwise specifically provided have
     the following meanings:
                                                               


                                      2.



<PAGE>

                                                                     DENTON HALL

"the Act": the Companies Acts 1985 to 1989 and the Companies Consolidation
(Consequential Provisions) Act 1985 and the Company Directors Disqualification
Act 1986 and all regulations made under any of the foregoing:

"Advertising Material": audio and/or visual and/or audio visual films and/or
sound recordings which in each such case are advertising, promoting or selling
goods, services or facilities or otherwise as permitted in accordance with the
relevant codes published from time to time by the ITC;

"the Articles": the articles of association of the Company in the agreed form or
as they may subsequently be altered from time to time in a manner consistent
with the terms of this Agreement;

"Associate": in relation to any company, another company which controls, is
controlled by or is in common control with that company; and for the purposes of
this definition a company shall be deemed to control any company which is a
subsidiary or a subsidiary undertaking of such company;

"the Board": the board of directors of the Company;

"the Business": the operation of a pay television service and ancillary
businesses (known as Playboy TV) in the Territory and in such other country in
Europe as the Board may approve from time to time and in respect of which the
Company or any Subsidiary has a license to operate such a service under the
"Playboy" name;

"the Business Plan": the initial business plan and budget of the Company in the
agreed form or where the context permits any revision or amendment thereto and
any other business plan and/or budget approved pursuant to Clause 8;

"Chairman": the Chairman from time to time of the Board;



                                       3.
<PAGE>

                                                                     DENTON HALL

"the Channel": a pay television service to be known as "Playboy TV" based on the
pay television service which is currently operated by Playboy in the United
States of America under the name "Playboy TV" as such service may be developed
from time to time initially to operate as a cable channel and thereafter to be
transmitted by such other means as may be approved from time to time in
accordance with Clause 8;

"Closing": the date of completion of the matters specified in Clause
3.1;

"Consent Agreement": an agreement in the agreed form between Playboy, Playboy
Enterprises, Inc., Flextech and the Company which (inter alia) permits the
pledge of certain assets which would otherwise have been prohibited under the
Transaction Documents;

"control": the meaning ascribed thereto in Section 416 of the Taxes Act;

"Deed of Adherence": a deed of adherence in the form set out in
Schedule III;

"Directors": the directors for the time being of the Company;

"Disqualified Participant": any person all or part of whose Interest or
shareholding or interest in any other company taken alone or together with the
Interest or shareholding or interest in any other company of any other person or
persons, after taking into account any issue of any shares or securities in the
Company or any transfer of any Interest, in either case in respect of which the
relevant person has indicated in writing an intention to acquire any such shares
or securities and, has caused or would cause or be likely to cause (as
determined in accordance with this Agreement), a Licence Event;

                                       4.
<PAGE>

                                                                     DENTON HALL

"Encumbrance": means any assignment by way of security, charge, hypothecation,
lien (other than a lien arising solely by operation of law in the normal course
of trading, the aggregate amount of which is not material), mortgage, pledge,
title retention (other than arising pursuant to a third party's standard
conditions of supply of goods) right of set off, security interest, trust
arrangement and any other preferential right or agreement to confer security,
including any analogous security interest under local law.

"Europe": all countries which are situated within the geopolitical entity known
as Europe, for the avoidance of doubt, including, but without limitation all the
countries which are members of the European Union or the European Free Trade
Area.

"Fair Value":
------------

(a)  in respect of each Share the same proportion of the fair market value of
     the Company as a whole on the date of service of the Transfer Notice (or
     deemed date thereof) or in the event that clauses 8.5 and 8.6 apply the
     date of the Winding Up Resolution or in the event that clause 15 applies
     on the date of the Option Exercise Notice as such Share bears to the whole
     of the issued ordinary share capital of the Company stated as a price per
     Share; and


(b)  in respect of each (Pounds)1 principal amount of Loan Stock the lesser
     of:--

      (i) the principal amount thereof plus interest thereon which has accrued
          in accordance with the terms of issue of the Loan Stock but which
          remains unpaid; and

     (ii) the same proportion of the fair market value thereof treating each
          (Pounds)1 of Loan Stock as if it were a fully paid Share calculated in
          accordance with (a) above
         


                                 5.

<PAGE>

                                                                     DENTON HALL

as certified (except in relation to (b)(i)) by the Referee on the basis of a
sale thereof as between a willing vendor and a willing purchaser on the
assumption that the Shares and/or Loan Stock the subject of the Transfer Notice
will be purchased in one lot by a purchaser contracting on arm's length terms,
who has no other interest in the Company and (if the Company is then continuing
as a going concern) on the assumption that all the Shares were ordinary shares
of the same class and that the Company will continue in business as a going
concern and having regard to any goodwill attaching to the Company though
taking into account of the fact (if that be the case) that the Programme Supply
Agreement and/or Trademark Licence has been terminated;

"Foreign Licence Event": an event having a legal effect analogous to that of
a Licence Event in any of the Territories (other than the United Kingdom);

"Gross Revenues": all income and other payments receivable in the normal course
of business as shown in the audited accounts of the Company from time to time
less any value added tax or other similar taxes;

"Group": in relation to a Shareholder, that Shareholder and any holding
company or subsidiary of that Shareholder and any subsidiary of such holding
company;

"Indebtedness for Borrowed Money": any loan, debt, bond, note, loan stock,
debenture or other obligation for borrowed moneys, any obligation under any
hire purchase, conditional sale or title retention agreement or lease (other
than for payment of rent and service charges not exceeding a commercial rate
under any lease of real property), any liability in respect of any acceptance
credit or note or bill discounting facility, any amount of consideration
left outstanding by way of loan or otherwise under any agreement for the sale
or purchase of assets and/or the supply of services (other than normal trade
credit) and any guarantee, indemnity or security in respect of any of the
foregoing, the amount thereof in each case

                                      6.
<PAGE>
                                                                     DENTON HALL

being taken for the purpose of this Agreement to be (a) the maximum amount
capable of being outstanding from companies in the Playboy/Flextech Group
whether or not then due or owing from or advanced to companies in the
Playboy/Flextech Group at the time of calculation but (b) to be calculated
excluding any amounts owing to other companies in the Playboy/Flextech Group;

"Interest": an interest of any person in Shares, Loan Stock or any other
securities of the Company;

"in the Agreed Proportions": where the term is used in relation to all the
Shareholders in such proportions as equal the percentage which the nominal value
of the Shares for the time being in issue and beneficially owned by each
Shareholder respectively bears to the aggregate nominal value of all the Shares
or, where the term is used in relation to some only of the Shareholders in such
proportions as equal the percentage which the nominal value of the Shares for
the time being in issue and beneficially owned by each relevant Shareholder
bears to the aggregate nominal value of all the Shares held by such relevant
Shareholders;

"in writing": includes any communication made by letter, facsimile transmission
or electronic mail;

"ITC Satellite Licence": the non-domestic satellite service licence in respect
of the Channel to be applied for by the Company from ITC in accordance with the
provisions of the Broadcasting Act 1990;

"the ITC": the Independent Television Commission;

"LIBOR": the three month London Interbank Offered Rate for Sterling Deposits,
as published in the Financial Times on the first day of each month or on the
next succeeding day on which the Financial Times is published;

                                      7.
<PAGE>

                                                                     DENTON HALL

"Licence Event": any of the following events:

(a)      the ITC revoking or (in a manner which has or is reasonably likely to
         have a material adverse effect on the Company) reducing the period of
         the ITC Satellite Licence (and, for the avoidance of doubt, any
         reduction which results in the involuntary cessation of business by the
         Company shall be deemed to have such an effect); or

(b)      the ITC varying the terms of the ITC Satellite Licence which variation
         has or is likely to have a material adverse effect on the Company; or

(c)      the ITC declining to grant to the Company a renewal licence to provide
         a non-domestic satellite service on terms and conditions reasonably
         acceptable to the Company upon the expiry of the ITC Satellite
         Licence; or
          
(d)      a relevant change (as defined in sub-section 5(7) of the Broadcasting
         Act 1990) taking place in relation to the Company; or

(e)      the Company becoming a Disqualified Person in relation to the holding
         of the ITC Satellite Licence by virtue of Schedule 2 to the
         Broadcasting Act l990;

"Loan Stock": unsecured floating rate loan stock of the Company l999 to be
constituted by a Loan Stock Deed, in the agreed form and/or such other loan
stock as the Company may issue to the Shareholders from time to time pursuant
to this Agreement;

"Loan Stock Certificate": a certificate in respect of Loan Stock in
the agreed form;

"the Option": the options granted to Playboy pursuant to Clause 15;

                                      8.                        
<PAGE>

                                                                     DENTON HALL

    "the Original Shares": the number of ordinary shares of (Pounds)1 each
    in the capital of the Company as have been subscribed for by the
    Shareholders in accordance with clauses 3.1(b) and 4.1(b);

    "person": any individual, firm, company or other incorporated or
    unincorporated body;

    "Playboy/Flextech Group": the Company and each of its subsidiaries from
    time to time;

    "plc": Flextech plc;

    "Prescribed Price":

    (a)    in relation to a voluntary Transfer of Shares or Loan Stock in
           respect of which a Transfer Notice shall have been served pursuant to
           Clauses 13.5 or 13.11, the price per Share or, as the case may be,
           for each (Pounds)1 principal amount of Loan Stock, offered by the
           Proposed Transferee (as defined in Clause 13.5.1(a)); or

    (b)    in relation to a Transfer of Shares or Loan Stock in respect of
           which a Transfer Notice shall be deemed to have been served pursuant
           to Clauses 14 or 16.2, such price as the Shareholders may agree per
           Share and, as the case may be, for each (Pounds)1 principal amount
           of Loan Stock, or in default of agreement within 30 days after the
           date on which the Transfer Notice is deemed to be served, following a
           reference by either of the Shareholders, such price per Share and, as
           the case may be, for each (Pounds)1 principal amount of Loan Stock,
           as the Referee shall determine to be on the date of receipt of the
           relevant Transfer Notice:

               (i) in the case of Clause 14.1(a) and (b) and Clause 16.2, Fair
                   Value; and

                                      9.
<PAGE>

                                                                     DENTON HALL

         (ii) in the case of Clause 14.1(c) the Fair Value (for the avoidance of
              doubt, taking into account the breach of agreement which has given
              rise to the requirement to transfer pursuant to Clause 14.1(c))
              less a discount of 10%.

"Programme Service": the supply of television programmes by Playboy pursuant to
the Programme Supply Agreement;

"the Programme Supply Agreement": an agreement in the agreed form between the
Company and Playboy relating to the Programme Service on the Channel;

"Referee": such independent merchant or investment bank with acknowledged
experience of the industry in which the Company operates as the Shareholders may
agree or, in default of agreement within seven business days, as may be
nominated, on the request of either Shareholder, by the President for the time
being of the British Institute of Bankers, who shall be instructed to produce
his certificate within thirty days of this appointment and who shall act as
expert and not as arbitrator and whose certificate shall be final and binding
on the parties hereto, save in the event of manifest error;

"the Satellite": the Intelsat Satellite which is to be used for the
transmission of the Channel or any other satellite which may from time to time
be used for the transmission of the Channel in accordance with this Agreement;

"the Shareholders": Flextech and Playboy and their permitted transferees
pursuant to Clauses 13, 14, 15 and 17;

"Shares": the issued ordinary shares of (Pounds)1 each in the capital of the
Company for the time being;

"subsidiary" and "holding company": have the respective meanings attributed to
them by Section 736 of the Act;

                                      10.

<PAGE>

                                                                     DENTON HALL

       "the Taxes Act": the Income and Corporation Taxes Act 1988;

       "the Territories": the UK, the Republic of Ireland, Belgium, Luxembourg,
       the Netherlands and such other countries and regions in which the Channel
       has been launched or in which the Board subject to Clause 19.1 has
       decided to launch the Channel and in respect of which any company in the
       Playboy/Flextech Group has a licence pursuant to the Trademark Licence to
       operate a pay television service under the "Playboy" name;

       "the Trademark Licence": a licence in the agreed form between the Company
       and Playboy Enterprises, Inc. granting to the Company the right to use
       the name, logo and trade mark "Playboy" in connection with the
       Business;

       "Transaction Documents": this Agreement, the Articles, the ITC Satellite
       Licence, the Trademark Licence, the Programme Supply Agreement, the
       Consent Agreement and any Deed of Adherence which has been executed
       pursuant to this Agreement, each as it may subsequently be amended or
       altered from time to time;

       "Transfer": any sale, assignment, transfer, grant of lease or other
       disposition of any legal, equitable or other interest or the creation of
       an Encumbrance;

       "Transponder": the Transponder, as defined in the Transponder Sub Lease;

       "the Transponder Sub Lease": a sub-lease of specified capacity on the
        Transponder to be entered into between the Company and United Artists
        European Holdings Limited;

       "UK": the United Kingdom of Great Britain and Northern Ireland which
        expression shall for the avoidance of doubt continue to include
        Northern Ireland notwithstanding that Northern Ireland may at any time
        hereafter cease to be part of the UK, the Channel Islands and the Isle
        of Man.

                                      11.
<PAGE>

                                                                     DENTON HALL

    1.2    All references to "the Company" in Clauses 5, 7, 8, 9 and 12 shall
           include a reference to each company in the Playboy/Flextech Group so
           that each provision of such clauses shall, where the context admits,
           also apply to each company in the Playboy/Flextech Group.

    1.3    In this Agreement, references to statutes, statutory instruments and
           regulations shall include any statute statutory instruments and
           regulations modifying, re-enacting, extending or made pursuant to
           the same or which is modified re-enacted or extended by the same or
           pursuant to which the same is made.

    1.4    A document is in "the agreed form" if it is in the form of a draft
           agreed between and initialled by or on behalf of the Shareholders on
           or before the date hereof.

    1.5    References in this Agreement to Clauses, Sub-Clauses, paragraphs and
           Schedules are references to those contained in this Agreement.

    1.6    The Schedules to this Agreement are an integral part of this
           Agreement and references to this Agreement include references to such
           Schedules.

    1.7    Clause headings are for ease of reference only and shall not be taken
           into account in construing this Agreement.

    1.8    "day" (except where it is used in the expression "business day")
           means any day and "business day" means any day other than a Saturday,
           Sunday or public holiday either in England or the United States of
           America.

    2.     Business of the Company and Launch of the Channel
           -------------------------------------------------

    2.1    The sole object of the Company shall be to carry on the Business and
           businesses ancillary or incidental thereto, and to that end the Board
           shall seek to secure such means to distribute the Channel as are, in
           the Board's opinion, viable in the context of the Business

                                      12.
<PAGE>

                                                                     DENTON HALL

       Plan and the Company's available resources. The Shareholders shall use
       their reasonable endeavours to procure that the Business shall be
       conducted in accordance with the Business Plan.

2.2    After Closing the Shareholders and the Company shall do all such things
       as are reasonably within their respective powers as Shareholders to
       ensure that the Channel is launched in the Territories (other than
       Republic of Ireland) for broadcast via cable operators on or before 1st
       June 1995 and in Republic of Ireland after, but not before, the first
       anniversary of the launch of the Channel in the Territory and to this
       end the Company shall as soon as practicable after Closing

       (a)    apply for any licences necessary to launch the Channel in
              the Territories, including the ITC Satellite Licence; and

       (b)    conclude negotiations with United Artists European Holdings
              Limited on the terms of, and then enter into, the Transponder Sub
              Lease.

2.3    In the event that the Company is refused the ITC Satellite Licence and/or
       is not awarded the ITC Satellite Licence and/or the Transponder Sub Lease
       is not entered into on or before six months after Closing ("the Licence
       Long Stop Date"), then

       (i)    the liability of the Shareholders pursuant to clause 4 shall
              forthwith cease;

       (ii)   the Shareholders shall (to the extent they are able) procure that
              the Company will promptly be wound up;

       (iii)  funding provided by the Shareholders pursuant to Clauses 3 and 4
              shall be used to pay the liabilities of the Company;

       (iv)   the Loan Stock will, to the extent possible after compliance with
              clause (iii), be repaid pro rata to the amounts held by the
              Shareholders respectively; and
                       
                                      13.
<PAGE>

                                                                     DENTON HALL

       (v)   the Consent Agreement, the Trade Mark Licence and the Programme
             Supply Agreement shall terminate.

2.4    The provisions of clause 2.3 shall be without prejudice to any
       obligations of the Shareholders to provide funding to the Company which
       have accrued due but not been discharged prior to the Licence Long Stop
       Date and which the Board determines are required to discharge the
       obligation of the Company accrued prior to that date.

2.5    If any product using the brand name Playboy other than the Playboy
       Magazine and other Playboy publications ("a Playboy Product") is
       advertised on the Channel:

       (a)   where all the rights to use the brand name in relation to such
             Playboy Product vest in any company in the Playboy Group the
             Company shall have the right to sell such Playboy Product on the
             Channel and shall be entitled to be paid a fee by Playboy (which
             shall be negotiated and agreed by Playboy and the Company in
             good faith) which will, unless otherwise agreed be calculated by
             reference to an agreed percentage of the gross selling price of
             sales of such Playboy Product;

       (b)   where the rights to use the brand name in relation to a Playboy
             Product have been licensed other than to a company in the Playboy
             Group, Playboy shall use its reasonable endeavours to procure
             advertising of such Playboy Product on the Channel on similar terms
             to those set out in relation to (a) above.

2.6    The Company shall not launch, or otherwise make available, the Channel
       outside the Territory without all parties unanimous approval.

3.     Closing Arrangements
       ---------------------

3.1    Closing shall take place on the third business day after the conditions
       in Clause 11 have been satisfied or waived when:

                                      14.
<PAGE>

                                                                     DENTON HALL

       (a)   the Shareholders shall cause to be passed at a duly convened
             Shareholders' meeting of the Company a resolution in the agreed
             form to adopt the Articles;

       (b)   each Shareholder shall subscribe in cash at par for the number of
             Shares and principal amount of Loan Stock set opposite its
             respective name in Schedule II, provided that Associates of
             Flextech and Playboy may make such Loan Stock subscriptions in
             substitution for Flextech and Playboy respectively;

       (c)   at a meeting of the Board, the Company shall allot and issue such
             Shares and Loan Stock to the Shareholders (or in respect of Loan
             Stock, where the provision in paragraph (b) has been utilised, the
             relevant Associates of the Shareholders) as so subscribed by them
             respectively and shall enter the names of the Shareholders (or, as
             appropriate their Associates in the case of Loan Stock) in the
             register of members and Loan Stock holders of the Company as
             registered holders of such Shares and Loan Stock, and shall issue
             and deliver to the Shareholders (or an Associate of their
             Associates in the case of Loan Stock) the requisite Share and Loan
             Stock Certificates in the agreed form duly executed under seal by
             the Company;

       (d)   the following officers of the Company shall be appointed:

             --   Fred Vierra, Roger Luard and Mark Luiz as Flextech appointed
                  Directors

             --   David I. Chemerow and Anthony J. Lynn as Playboy appointed
                  Directors;

             --   Fred Vierra as first Chairman;

             --   Mark Luiz as Company Secretary;

                                      15.
<PAGE>

                                                                     DENTON HALL

                  - KPMG Peat Marwick as the Company's auditors;
                 
           (e) the following Transaction Documents shall be duly executed:
                
                  - the Loan Stock Deed

                  - the Trademark Licence
                 
                  - the Programme Supply Agreement

                  - the Consent Agreement;

           (f) the Board shall adopt and approve the Business Plan;

           (g) Playboy will deliver to Flextech a legal opinion addressed
               to Flextech and the Company by Howard Shapiro (General
               Counsel, Playboy Enterprises, Inc.) in the agreed form; and

           (h) Flextech will deliver to Playboy a legal opinion addressed
               to Playboy and the Company by Denton Hall in the agreed
               form;

3.2 Any provision in Clause 3.1 to the effect that a Transaction Document shall
    be "entered into and completed in accordance with its terms" shall
    constitute several obligations on the parties to sign such agreement, and
    duly to perform its respective obligations under the clause therein headed
    "Completion" or "Closing". Where any party to such a Transaction Document
    is not also a party to this Agreement, the Shareholder (if any) of whom any
    such party is an Associate shall to the extent practicable, make reasonable
    efforts to procure that such party so signs and performs.

3.3 The payments by the Shareholders under paragraph 3.1(b) shall each be made
    for value on the date of Closing by way of bankers' drafts drawn on a London
    Town Clearing Bank payable to the Company or by international wire transfer.

                                      16.
<PAGE>

                                                                     DENTON HALL

3.4 No party shall be obliged to complete this Agreement unless all of the
    matters referred to in Clause 3.1 are completed or, as appropriate, dealt
    with in accordance with that clause.

4.  Provision of Finance
    --------------------

4.1 The parties agree that the approved budgeted, working capital, capital
    expenditure and other budgeted funding requirements of the companies in the
    Playboy/Flextech Group as set out in any Business Plan and any other
    funding requirements shall be met in the following order of priority:

    (a) initially, out of the proceeds of the subscription for Shares and Loan
        Stock pursuant to Clause 3.1;

    (b) thereafter by the Shareholders (or, in the case of Loan Stock,
        Shareholder's Associates) by subscription in the Agreed Proportions at
        par for Shares and Loan Stock in the ratio of one Share for every
        (Pounds)3 principal amount of Loan Stock (or such other ratio as the
        Inland Revenue agrees is suitable for allowing all interest on such Loan
        Stock to be tax deductible for UK corporation tax purposes) on such
        dates and in such amounts as are set out in Schedule IV or in the event
        that the Board considers funding in excess of or earlier than that
        specified in Schedule IV is required, on the dates and in such amounts
        as may be determined by the Board having given to the Shareholders 14
        days prior written notice thereof up to a maximum principal aggregate
        amount (including amounts previously advanced whether or not for the
        time being outstanding) of (Pounds)11,500,000; or

    (c) thereafter (subject to Clause 4.7) by borrowings (secured if necessary
        by charges over the assets of any company in the Playboy/Flextech Group)
        from a bank or another financial institution on terms approved pursuant
        to Clause 8 provided that the Board shall approve any such borrowings
        which are available on terms in all respects commercially reasonable
 
                                      17.
<PAGE>

                                                                     DENTON HALL

         and further provided that any Shareholder (or in the case of Loan Stock
         its Associate) may participate in such borrowings on such terms up to
         such amount (including all such borrowings) as such Shareholder may
         decide and if more than one in the Agreed Proportions;

     (d) thereafter (subject to Clause 4.7) by subscription for Shares and/or
         Loan Stock by one or more Shareholders (or, in the case of Loan Stock
         their Associates) in accordance with Clause 4.5 or any third parties
         nominated by a Shareholder.

4.2  If either Shareholder (or its nominated Associate in the case of Loan
     Stock) fails to provide funding pursuant to Clause 4.1(b), the other
     Shareholder (or its Associate) may forthwith (at its own election and
     without prejudice to its other rights under this Agreement or the general
     law) provide funding by the methods described in Clause 4.5 or subscribe
     for new Shares/Loan Stock at par ("the Subscription Price") to meet the
     resulting funding requirement deficit, in a ratio of one Share each for
     every (Pounds)2 principal amount of Loan Stock (the "Default Shares/Loan
     Stock") PROVIDED THAT if the Inland Revenue agrees a debt: equity ratio for
     the purposes of Clause 4.1(b) other than 3:1, this 2:1 ratio shall be
     adjusted pro rata.

4.3  Where any Loan Stock has been issued to a Shareholder or its Associate
     pursuant to Clause 4.2 ("Clause 4.2 Loans") as a result of
     the default by the other Shareholder ("the Defaulter") no outstanding Loan
     Stock of the Defaulter (or interest accrued due thereon) subscribed
     pursuant to Clauses 3.1 and 4.1 may be repaid or demanded for repayment
     without the other Shareholders' consent until all Clauses 4.2 or 4.5 Loans
     (and interest accrued thereon) have been fully discharged.

4.4  Save as specifically provided in Clause 3.1(b) and 4.1(b), neither
     Shareholder shall be required to make any funding available to the Company.
                    
                                      18.
<PAGE>
                                                                     DENTON HALL

4.5  Subject always to Clause 4.7 (save where funding is being provided pursuant
     to Clause 4.2), if the Board determines that any company in the
     Playboy/Flextech Group requires funds in excess of those currently
     available to it or them (whether from Shareholders or third parties) either
     Shareholder ("a Funding Shareholder") wishing to provide (and who commits
     in writing within 7 business days of such determination to provide or
     procure the provision of) such additional funds shall be entitled to do so.
     The method(s) for such additional funding (whether by way of borrowing, or
     the issue of loan capital or securities) shall be determined by the Funding
     Shareholder or, in the event that more than one Shareholder so commits
     (each a "Funding Shareholder") and proposes different methods of providing
     additional funds, the Shareholders shall acting in good faith use their
     reasonable endeavours to agree the method of funding and the amount of such
     funding; failing which it shall be determined by the Funding Shareholder
     who holds the largest number of Shares PROVIDED THAT (i) no such method may
     provide for any Shareholder being obliged to incur any expenditure or
     financial commitment without its prior agreement; (ii) in the event of
     competition, unless otherwise agreed by the Funding Shareholders, the
     additional funds shall be provided in the Agreed Proportions. In any event,
     any opportunity to participate in any funding proposed pursuant to this
     Clause 4.5 shall be offered first to the Shareholders in the Agreed
     Proportions.

4.6. Subject always to Clause 4.7, for the purpose of implementing any method
     of funding approved by the Board pursuant to Clause 4.5 each of the parties
     agrees that any provision in this Agreement, the Loan Stock or the
     Articles which requires any particular agreement of the parties or any of
     them (including for the avoidance of doubt agreement to convert the Loan
     Stock into Shares or to subordinate the Loan Stock to any such funding) or
     a voting level or quorum or the vote of any class of Shareholder to
     increase the Company's authorised capital, to issue any securities or to
     create any Indebtedness for Borrowed Money shall not apply and
     (notwithstanding any other provision of this Agreement or of the Articles)
     the Shares held by a non-Defaulter (in the case of Clause 4.3) or a
     Funding

                                      19.
<PAGE>
                                                                     DENTON HALL

     Shareholder (in the case of clauses 4.2 and/or 4.5) shall on any vote carry
     such number of votes and entitle the holder to fulfil such quorum
     requirements as will enable the necessary resolution(s) to be passed as
     required by the non-Defaulter or Funding Shareholder as appropriate.

4.7  Flextech undertakes to Playboy that it will exercise all voting rights and
     other powers of control available to it in relation to the Company so as to
     procure (in so far as it is able by the exercise of such rights) that the
     Board shall not approve any annual budget or business plan for the Company
     or implement any material amendment to or material departure from any of
     the same which would require funding to be provided or procured pursuant
     to clause 4.1(c) or (d) ("the Additional Funding") if the Directors
     appointed by Playboy pursuant to clause 5.1 do not approve such Additional
     Funding and

     (a) the proposal and/or the approval of such Additional Funding by the
         Directors appointed by Flextech pursuant to clause 5.1 is capricious;
         or
   
     (b) the Additional Funding is in excess of what is reasonably required
         for the normal commercial operations of the Business for the 12 month
         period covered by the then current Business Plan and annual budget

     provided that this Clause 4.7 shall not apply and the Board shall be
     entitled to approve funding without reference to the restrictions contained
     in this clause for the purchase in any Year after the second Year (as
     determined in accordance with the Programme Supply Agreement) of Acquired
     Premium Movies (as defined in the Programme Supply Agreement).

4.8  In the event of any dispute as to whether Flextech has complied with its
     undertaking in Clause 4.7, the matter may be referred by either party
     hereto within 28 days of any proposal or approval of Additional Funding to
     an independent accountant agreed between the

                                      20.
<PAGE>
                                                                     DENTON HALL

     parties. The independent accountant shall act as expert and not as
     arbitrator; and shall be instructed to determine the matter within thirty
     days of such referral.

4.9  If the parties are unable to agree as to the appointment of the independent
     accountant pursuant to 4.8 above within 15 days of one party serving notice
     on the other calling for such appointment then the independent accountant
     shall be appointed on the application of either party to the President for
     the time being of the Institute of Chartered Accountants of England and
     Wales.

4.10 The decision of the independent accountant appointed pursuant to Clauses
     4.8 or 4.9 shall be final and binding on the parties hereto, save in the
     event of manifest error. The costs of such independent accountant shall
     be borne by the party whose position on the proposal for the Additional
     Funding least prevails.

5.   The Board and Management
     ------------------------
                 
5.1  The Board shall comprise not more than eleven Directors. Each Shareholder
     shall be entitled to appoint up to such number of Directors as is stated
     opposite its name in Schedule V and to remove and replace any such
     appointees provided that Flextech shall always be entitled to appoint a
     majority of the Directors so long as it holds more than 50% of the Shares.
     The right to appoint remove and/or replace a director shall be exercisable
     by notice to the Company a copy of which notice shall be given to the
     Shareholder not exercising or giving such notice. The Board shall act by
     majority vote only.

5.2  The Chairman shall be one of the Directors appointed by Flextech and shall
     not have a second or casting vote at Board or Shareholders' Meetings.

5.3  The appointment of the Chief Executive Officer, the Chief Financial Officer
     and the Marketing Manager (if any) of the Company shall be made by the
     Board in accordance with clause 8.1.

                                      21.
<PAGE>
                                                                     DENTON HALL
                       
5.4  The Chief Financial Officer and the Marketing Manager (if any) shall report
     directly to the Chief Executive Officer. Any director of the Board shall
     have unrestricted direct access to such executives who shall be obliged, as
     a term of their respective service agreements, to respond to any enquiries
     from, and provide any information and documentation requested by, any such
     director.
             
5.5  Without prejudice to the rights of any such persons under their respective
     terms of employment to claim compensation for breach, any Shareholder
     beneficially owning (or Shareholders together beneficially owning) more
     than 15% of the Shares may terminate the employment of the Chief Executive
     Officer, the Marketing Manager (if any) or the Chief Financial Officer.

5.6  Save as otherwise provided or contemplated in this Agreement, the Company
     (so far as it is legally able) shall and the Shareholders shall exercise
     their powers in relation to the Company so as to ensure that the Company
     shall:

     (a) convene and hold a formal meeting of the Board at least once in every
         period of 4 months;

     (b) procure that (save for emergency meetings) not less than fourteen
         business days' prior written notice of any meeting of the Board shall
         be given to the Directors, that every such notice shall be accompanied
         by a written agenda specifying the business of such meeting. Directors
         shall be permitted to attend board meetings by telephone;

     (c) carry on and conduct its business and affairs on a commercial basis,
         and in accordance with the Business Plan in force from time to time;

     (d) comply with the terms and conditions of the ITC Satellite Licence and
         any directions made by the ITC in relation to it and comply with the
         provisions of the Broadcasting Act 1990 and any other licences;

                                      22.
<PAGE>
                                                                     DENTON HALL

     (e) observe and duly perform its obligations under each Transaction
         Document to which it is a party.
        
5.7  Subject to Clause 3.4 each Shareholder and each Director shall, in its
     capacity as Shareholder and/or Director of the Company, be entitled to vote
     in connection with the approval by the Company of any agreement,
     transaction or arrangement in or to which (as applicable) that Shareholder
     (or as appropriate Shareholder appointing such Director), or any of its
     Associates, is an interested party and in connection with any revisions or
     amendments to, or waiver of any rights under, such agreement, transaction
     or arrangement PROVIDED THAT its/his interest therein has been disclosed
     beforehand to the Board.

5.8  Upon a Shareholder ceasing to be entitled to appoint a director or
     directors of the Company (other than by Transfer of Shares to its Associate
     pursuant to Clause 13.2) it shall procure the resignation from the Board
     (and from any executive position held with the Company) of some or all the
     Directors (as the case may be) it has appointed to the Board without any
     claim for damages or compensation for loss of office of any kind
     whatsoever.

5.9  No non-executive Director shall be entitled to Directors' fees or to
     reimbursement by the Company of travelling or other expenses for attending
     meetings of the Board.

5.10 All references to "the Board" in Clause 5 shall include a reference to the
     board of directors of each company in the Playboy/Flextech Group, so that
     each provision therein shall (where the context admits) also apply to the
     board of directors of each company in the Playboy/Flextech Group.

6.   Agreement to Perform
     --------------------

6.1  Each Shareholder shall at all times exercise its respective powers and
     votes as shareholder of the Company to ensure that (to the extent that the
     same is within such powers and voting rights) the

                                      23.
<PAGE>
                                                                     DENTON HALL

     Company will comply with all of its obligations under each Transaction
     Document and the Transponder Sub-Lease.

6.2  Each Shareholder undertakes with the other generally to use its reasonable
     endeavours to promote the Business and the Channel.

7.   Information
     -----------
  
7.1  The Company shall:

     (a) at all times keep true, accurate and up to date books and records of
         all the affairs of the Company;

     (b) subject to Clause 12, and subject to having received not less than 2
         business days' prior notice, make available to the Shareholders and
         their duly authorised representatives during working hours on
         reasonable notice access to the books, records, accounts, documents and
         premises of the Company; and

     (c) subject to Clause 12, supply to each Shareholder such information
         relating to the Company as it may reasonably require and without
         prejudice to the foregoing shall keep the Shareholders fully and
         promptly informed as to all material developments regarding the
         Company's financial and business affairs and promptly notify the
         Shareholders of any significant event (including without limitation any
         litigation or arbitration) the outcome of which will or is likely to
         materially affect the Company or its business, finances, assets or
         affairs.

7.2  Without detracting from the provisions of Clause 7.1, the Company shall at
     its own cost prepare and send to the Shareholders and each Director:

     (a) within 10 business days from the end of each calendar month unaudited
         management accounts of the Company for that month and cumulative
         management accounts for the current

                                      24.
<PAGE>
                                                                     DENTON HALL

         accounting period up to and including that month;

     (b) within forty five business days from the end of each of its financial
         years audited consolidated accounts of the Company (to be prepared,
         save as required by law, in accordance with UK Accounting Standards and
         certified by the auditors of the Company) and will convene and hold a
         meeting of Shareholders within one month thereafter to approve the
         same; and

     (c) without detracting from the provisions of clause 8.2(a) it shall be the
         responsibility of the Chief Executive Officer and the Chief Financial
         Officer, in consultation with Mark Luiz or such other person as may be
         nominated by Flextech from time to time and such person as Playboy may
         nominate from time to time, to prepare a budget, business plan and
         marketing plan for each fiscal year beginning after 31st December
         l995 no later than the end of October in the year prior to the year to
         which the budget, business plan and marketing plan relates.

7.3  The Company may at any time serve written notice upon any Shareholder
     requiring it to provide the Company with any information, supported by a
     declaration or by such other evidence (if any) in support as the Company
     may reasonably require, for the purpose of:
                    
     (a) complying with any EC or UK merger or competition law or regulations
         in relation to the issue or transfer of Shares and/or Loan Stock in
         accordance with this Agreement; or

     (b) deciding whether a Licence Event has occurred or is likely to occur;
         or

     (c) deciding whether a Shareholder is, or is likely to become, a
         Disqualified Participant

      and such Shareholder shall promptly comply with any such notice.

                                      25.
<PAGE>
                                                                     DENTON HALL

7.4  The Company undertakes to each Shareholder to keep it informed of any
     matter of which the Company is aware which may lead to a Licence Event or
     to any Shareholder becoming a Disqualified Participant.

7.5  Each Shareholder shall use its reasonable endeavours to ensure that all
     data and information which is reasonably required by the ITC or any other
     regulatory body having jurisdiction or to ensure compliance with EC or UK
     merger or competition law or regulations or with the Broadcasting Act 1990
     shall be duly and promptly supplied to that body.

8.   Restrictions on the Company's Activities
     ----------------------------------------

8.1  Save as expressly provided for in any Transaction Document, the
     Transponder Sub-Lease or in the initial Business Plan and subject to
     clause 8.2, so long as a Shareholder (together with its Associates) is the
     beneficial owner of not less than 15% of the Shares (and, additionally in
     the case of Playboy and its Associates so long as Playboy is an Associate
     of Playboy Enterprises, Inc., and the Trademark Licence and the Programme
     Supply Agreement have not been terminated or are under notice of
     termination, other than by wrongful termination by the Company) the
     following matters shall require the prior written approval of such
     Shareholder and if the above condition does not apply the following
     matters shall require the prior approval of the Board and the Shareholders
     shall exercise all voting rights and other powers of control available to
     them in relation to the Company so as to ensure (in so far as they are able
     by the exercise of such rights) that the Company shall not without such
     approval:

     (a) increase or reduce the authorised or issued share capital of the
         Company (other than to permit an issue of shares conducted in
         accordance with clause 4 of this Agreement) or consolidate, sub-divide,
         purchase, redeem or cancel any of such share capital or alter any right
         pertaining to any share or class of shares in such capital or
         otherwise re-organise, restructure or reduce the share capital of the
         Company;

                                      26.
<PAGE>

                                                                     DENTON HALL

(b) issue or allot any share or security or grant or create any option or right
    to acquire any share or security in the capital of the Company other than by
    way of a rights issue offered in accordance with Clause 4 of this Agreement
    and the Articles;

(c) alter the Company's Memorandum of Association or the Articles;

(d) save where Clause 8.2(i) applies, take or permit the taking of any action to
    have the Company wound up PROVIDED THAT nothing in this clause shall
    prohibit such action, taken upon the recommendation or decision of the Board
    (on the advice of the Company's auditors or legal counsel of not less than
    six years standing with experience in such matters) that the Company should
    cease trading in circumstances where, if the Company continued to trade,
    the Directors may, under the Insolvency Act 1986, be or become personally
    liable for the debts of the Company or to make a contribution to the
    Company's assets;

(e) amend or assign or fail to implement or enforce any Transaction Document or
    the Transponder Sub-Lease;

(f) enter into a scheme or arrangement, admit in writing its inability to pay
    its debts as they fall due, commence negotiations with creditors or any
    class thereof with a view to the readjustment or rescheduling of its
    indebtedness, make a general assignment for the benefit of creditors, or
    save where Clause 8.l(d) applies take any action for the winding-up,
    administration, dissolution, liquidation or reorganisation (other than a
    solvent reorganisation) of the Company, or for the adjustment, protection
    or relief of the Company or its debts under any law relating to bankruptcy,
    insolvency or reorganisation;
                                
                                      27.
<PAGE>

                                                                     DENTON HALL

           (g) enter into, renew, vary, terminate or continue after expiry
               any contract which is not on bona fide arm's length terms in
               all material respects;

           (h) subject to Clauses 5.3 and 5.4, engage or alter the terms of
               employment (including salary and benefits) of any person
               fulfilling the function of Chief Executive Officer, Chief
               Financial Officer, or Marketing Manager (if any);

           (i) approve any secure encryption system for the Channel or make any
               material change in such system such approval by Playboy not to be
               unreasonably withheld or delayed;

           (j) make any material change in the character of the Channel from
               that set out in this Agreement;

           (k) subject to Clause 15, make any determination as to (i) whether a
               Licence Event has been caused or is likely to be caused, (ii)
               whether a person is or is likely to become a Disqualified
               Participant, or (iii) whether a Transfer Notice has been or is
               deemed to be given in accordance with Clause 16 provided that:

               (aa) the approval of such Shareholder shall not be required
                    pursuant to (i) and/or (ii) of this clause once 14 days have
                    elapsed after a direction or ruling in respect of the matter
                    has been made by the ITC (unless, during such 14 days,
                    such Shareholder has, at its own expense, applied to court
                    for a judicial review or reversal of such direction or
                    ruling and the application has been successful or is still
                    sub judice the first instance court); and

               (bb) in the event that such Shareholder fails to give approval,
                    either such Shareholder or the Board may by notice in
                    writing to the other refer the matter to such legal counsel
                    of not less than six years

                                      28.
<PAGE>

                                                                     DENTON HALL

                              standing with experience in such matters as shall
                              be agreed between such Shareholder and the Board
                              (or, in the event of failure to agree within 7
                              business days of such notice, to such legal
                              counsel as above appointed by the President of the
                              Bar Counsel) who shall be instructed to determine
                              the matter as soon as reasonably practical, who
                              shall act as expert and not as arbitrator and
                              whose decision shall be final and binding on such
                              Shareholder and the Board. The costs of such
                              legal counsel shall be borne by such Shareholder
                              if their position least prevails. Otherwise such
                              costs shall be borne by the Company;

           (l) Transfer (other than by an Encumbrance) the whole or any material
               part of the undertaking, property and/or assets of the Company
               (or any interest therein), or contract so to do otherwise than in
               the ordinary and proper course of the Business;

           (m) consolidate, merge or amalgamate with any other person;

           (n) subject to clause 4 create, acquire or dispose of any subsidiary
               or otherwise acquire or dispose of any shares, securities or
               other interest in any company or business or incorporate or
               promote any company or permit any subsidiary to issue or allot
               any share or security or grant or create any option or right to
               acquire any share or security except to the Company or another
               wholly owned subsidiary of the Company;

           (o) declare or pay any dividend or other distribution or refrain
               from declaring or paying any dividend or other distribution
               other than in accordance with Clause 10;

           (p) incur, enter into or commit to Indebtedness for Borrowed Money
               or vary any terms or conditions of any such Indebtedness other
               than in accordance with clause 4;

                                      29.
<PAGE>

                                                                     DENTON HALL

      (q) give any guarantee or indemnity or other similar undertaking or
          create any Encumbrance over any of the undertaking, property, assets
          or uncalled share capital of the Company except to the extent
          necessary to obtain Indebtedness to be incurred pursuant to clause 4
          of this agreement;

      (r) make any loan or advance other than loans to another company in the
          Playboy/Flextech Group and normal trade credit and season ticket
          loans to employees not exceeding (Pounds)2,500 for all employees;

      (s) approve the transmission of the Channel by means of a satellite
          other than the Satellite, including transmission to the UK Direct to
          Home Market such approval of Playboy not to be unreasonably withheld
          or delayed;

      (t) use (other than in emergencies) any transponder, other than the
          Transponder such approval of Playboy not to be unreasonably withheld
          or delayed.

8.2   Save as expressly provided for in any Transaction Document, the
      Transponder Sub-Lease or the Business Plan any decision relating to any
      of the following matters and any other matters of a non-routine nature
      shall require the prior approval of the Board alone and the Shareholders
      shall exercise all voting rights and other powers of control available to
      them in relation to the Company so as to procure (in so far as they are
      able by the exercise of such rights) that the Company shall not without
      such approval:

      (a) approve any annual budget or any business plan for the Company or
          implement any amendment to or material departure from any of the same;

      (b) set, amend or waive any of the charges levied by the Company to
          subscribers to and/or advertisers on the Channel other than in the
          normal course of business;

                                      30.
<PAGE>

                                                                     DENTON HALL

      (c) approve the Company's audited balance sheet or profit and loss
          accounts or change the Company's accounting reference date,
          accounting policies or auditors;

      (d) vary or terminate (other than by effluxion of time) any long term
          contract or contract of material importance to the Company;

      (e) except in the case of emergency for the protection of the Company's
          business or assets institute or defend any litigation, arbitration
          or tribunal proceedings (other than normal debt collection in the
          ordinary course of business);

      (f) take or agree to take any leasehold interest in or licence over any
          land;

      (g) approve any payment of capital or interest (including capitalised
          interest) in respect of the Loan Stock;

      (h) enter into any joint venture, partnership, consortium or joint
          purchase arrangement;

      (i) take or permit the taking of any action to have the Company wound up
          if in the first Year (as defined in accordance with the Programme
          Supply Agreement) and the immediately succeeding two Years (the
          "Relevant Years") the aggregate of the Gross Revenues of the Company
          are less than 70% (seventy per cent) of the aggregate of the projected
          Gross Revenues of the Company as shown in the initial Business Plan
          for the Relevant Years provided that in the event that the Board does
          take any such action the provisions of Clauses 8.5 - 8.6 shall apply.

8.3   Notwithstanding the provisions of Clause 8.2, if the Board shall not have
      approved the annual budget for any company in the Playboy/Flextech Group
      before the commencement of the financial year to which it relates, the
      Company shall continue to carry on the

                                      31.
<PAGE>

                                                                     DENTON HALL

       Business for a period of six months on the basis of the previous year's
       approved budget in order to give the Board time in which to agree the
       annual budget for the financial year in question.

8.4    The exercise of the Company's rights under the Programme Supply
       Agreement (including without limitation its rights in relation to
       Programme Scheduling under clause 8 and Termination under clause 10.3)
       and the Trademark Agreement shall be exercised by the Company through the
       directors of the Company appointed by Flextech pursuant to clause 5.1 and
       not otherwise.

8.5    In the event that the Board resolves to take or permit the taking of
       any action to have the Company wound up in the circumstances set
       out in Clauses 8.1(d) and 8.2(i) ("the Winding Up Resolution"):-

       (i)       the obligations of the Shareholders pursuant to Clause 4 shall
                 forthwith cease save for obligations which have accrued due
                 prior to the date of such Winding Up Resolution;

       (ii)      any Shareholder may serve a notice on the other Shareholder(s)
                 and the Company at any time within 30 days after the
                 Winding Up Resolution has been passed, reguiring the
                 determination of Fair Value of the Shares and the Loan Stock;

       (iii)     any Shareholder may, within 30 days after such determination
                 has been made serve a notice ("the Offer Notice") on the other
                 Shareholder(s) offering to acquire all the Shares and Loan
                 Stock of the other Shareholder(s) at the price (which shall be
                 not less than 90% of Fair Value determined pursuant to
                 paragraph (ii)) per Share and per (Pounds)1 in nominal value
                 of Loan Stock specified by the Shareholder in the Offer
                 Notice;

       (iv)      any Shareholder may within 2 business days of service of an
                 Offer Notice serve on the Shareholder(s) a notice ("the
                 Counter Offer Notice") offering to acquire all the Shares and
                 Loan Stock of the other Shareholder(s) at the price per

                                      32.
               
<PAGE>

                                                                     DENTON HALL

                 Share and per (Pounds)1 in nominal value of Loan Stock
                 specified in the Counter Offer Notice (being in each case a
                 price which is higher than the price specified in the Offer
                 Notice). If no Counter Offer Notice is served within such
                 timescale, the Shareholder serving the Offer Notice shall
                 prevail;

       (v)       if a Counter Offer Notice is served the procedure set out in
                 (iii) above shall continue and may be repeated until such time
                 as no further Counter Offer Notice is served within 2 business
                 days from the date of service of the immediately preceding
                 Counter Offer Notice when the Shareholder serving the last
                 Counter Offer Notice shall prevail.

8.6    The Shareholder who prevails and the other Shareholders shall be bound
       within 14 days of service of the successful Offer Notice or Counter
       Offer Notice (as the case may be) to complete the sale and purchase of
       all the Shares and Loan Stock in the Company (other than the Shares
       and the Loan Stock held by the prevailing Shareholder or any member of
       such Shareholder's Group) at the price per Share and per (Pounds)1 in
       nominal value of Loan Stock specified in the Offer Notice or Counter
       Offer Notice which prevails (as the case may be) and in the event that
       any of the other Shareholders fails to do so the Company may receive the
       purchase money and the Directors appointed by the successful Shareholder
       may authorise some person to execute a transfer as appropriate of the
       Shares and Loan Stock in favour of such Shareholder and the Company shall
       hold the purchase money in trust for the relevant Shareholder(s).
      
9.     Name
       ----

       The Company's right to use, or trade under, any name which includes
       the word "Playboy" shall be governed by the Trademark Licence.
              
10.    Dividend Policy
       ---------------

       Subject to Clause 8.1 and except as may otherwise be agreed in
       writing by the Shareholders, and subject to the provisions of the Act,
       the terms of issue of any Loan Stock or other Company

                                      33.

<PAGE>

                                                                     DENTON HALL

      indebtedness and the Company's working capital and other capital
      requirements all of the Company's profits from time to time available for
      distribution shall be distributed to the Shareholders by way of dividend
      as soon as practicable.

11.   Condition Precedent
      -------------------

      This Agreement (other than Clauses 12 and 23 to 25 (inclusive)) is
      conditional upon its approval by:

      (a) the board of directors of plc;
      (b) the board of directors of Playboy;

      on or before 27th January 1995. If such conditions are not satisfied or
      waived (in the case of (a) by Flextech and in the case of (b) by Playboy)
      on or before that date, this Agreement (other than Clauses 12 or 23 to 25
      (inclusive)) shall lapse and cease to be of further effect.

12.   Confidentiality
      ---------------

12.1  Each Shareholder shall at all times keep confidential (and shall procure
      that its Associates, officers and employees and agents shall keep
      confidential) any information which it may have or acquire in relation to
      the customers, business, finances, assets or affairs of the Company or the
      other Shareholder and its Associates or which, in consequence of the
      negotiation or operation of, or the exercise of rights under, any
      Transaction Document it may have or acquire in relation to the customers,
      business or affairs of the other Shareholder or its Associates, save for
      any information:

      (a) which is publicly available or becomes publicly available through no
          act of that Shareholder;

      (b) which is disclosed to that Shareholder by a third party which did not
          acquire the information under an obligation of confidentiality;

                                      34.
<PAGE>

                                                                     DENTON HALL


          (c)  which is independently acquired by that shareholder as the result
               of work carried out by an employee to whom no disclosure of such
               information had been made; or

          (d)  which is required to be disclosed by any law (including any order
               of a court of competent jurisdiction) or the rules of any stock
               exchange or governmental, revenue or other regulatory authority,
               whether or not having the force of law.

          Provided that nothing in this clause shall prevent any Shareholder or
          any Associate of such Shareholder from operating their respective
          businesses in the ordinary and normal course.

12.2      The Company shall, and the Company shall procure that each other
          member of the Playboy/Flextech Group shall observe a similar
          obligation of confidence in favour of the Shareholders.

12.3      In recognition of each Shareholder's understanding that the other
          Shareholder proposes or may in the future propose to invite third
          parties to participate as equity or non equity investors or
          other providers of finance in or to plc or Flextech or Playboy or
          Playboy Enterprises, Inc. the parties agree that such other
          Shareholder may provide to such invitees copies of:

          (a)  the Transaction Documents:

          (b)  the Transponder Sub-Lease;

          (c)  any Business Plan,

          (d)  accounting and other information provided to the Shareholders
               pursuant to this Agreement; and

          (e)  such other information as it would be reasonable in all the
               circumstances for a potential investor to require in relation to
               the Company and the Business
               
                                      35.
<PAGE>

                                                                     DENTON HALL

          PROVIDED THAT neither Shareholder may include in such copies any
          information which is commercially sensitive, disclosure of which could
          in its reasonable opinion cause harm to any company in the
          Playboy/Flextech Group, any Shareholder or any company in its Group
          AND PROVIDED FURTHER that before providing such copies the invitee has
          signed a confidentiality agreement on terms which follow, at least,
          those conventionally followed in the United Kingdom, which agreement
          shall be expressed to be for the benefit of all parties to this
          Agreement and all the companies in the Playboy/Flextech Group.
          Furthermore, in recognition of the fact that Flextech and Playboy are
          both subsidiaries of publicly-owned companies, the parties agree that
          (subject to the first of the preceding provisos) each Shareholder and
          its Associates may provide to institutional investors and analysts
          such information concerning the Company as is conventional to assist
          such investors in deciding whether to invest or such analysts to
          prepare their analyst reports.

12.4      The provisions of this Clause shall survive any termination of this
          Agreement.
         
13.       Transfers of Shares and Loan Stock
          ----------------------------------

13.1      No Shares may be Transferred:

          (a)  at any time if the Transfer is to a Disqualified Person; or

          (b)  unless and until the terms of clause 13.4 are complied with.

13.2      Subject to Clause 13.1 a Shareholder may Transfer all, but not part
          only, of its Shares to any of its Associates but on terms that
          immediately upon such transferee ceasing to be the transferor's
          Associate such Shares shall be transferred to the transferor or
          another of its Associates.

13.3      Subject to Clause 13.1 and save for a Transfer in accordance with
          Clauses 13.2, 14, 15, 16 and 17, each Shareholder undertakes that it
          will not at any time Transfer any Shares except in accordance with
          Clause 13.5.
                                      36.
<PAGE>

                                                                     DENTON HALL

13.4    If any Shareholder ("the transferor") proposes to Transfer any Shares to
        any person ("the transferee") then it shall be a condition precedent to
        such Transfer and the registration thereof that the parties to this
        Agreement and the transferee shall execute a Deed of Adherence and
        deliver a legal opinion in a form, and from legal counsel, reasonably
        acceptable to the other Shareholders concerning the issues warranted
        and represented by them in Clause 3 of the Deed of Adherence.

13.5.1  Subject to Clauses 13.1 and 13.2 any Shareholder who wishes to sell any
        of its Shares (a "Vendor") shall give notice in writing to the Company
        and the other Shareholder(s) of such wish (a "Transfer Notice")
        identifying:

        (a) the person to whom it proposes to sell any of its Shares (the
            "Proposed Transferee");

        (b) the name of the Proposed Transferee's ultimate parent company and
            controlling shareholders, if any;

        (c) the Prescribed Price and other terms of the proposed sale and the
            extent to which (if any) such price assumes that the Proposed
            Transferee shall be entitled to receive all or any dividends or
            other distributions accrued due but not paid in respect of the
            Shares.

        The Transfer Notice shall not be effective if it does not contain such
        information unless it is a deemed Transfer Notice pursuant to Clause 14.
        A Transfer Notice, once given, cannot be withdrawn without the consent
        of all the Shareholders (other than the Vendor). The Transfer Notice
        shall constitute the Company the Vendor's agent for the sale of all, but
        not some only, of the Shares the subject of the Transfer Notice ("the
        Sale Shares") to the other Shareholder(s) and/or (subject to Clause
        13.5.4) any person procured or nominated by the other Shareholder(s) as
        it/they may in its/their absolute discretion determine ("a Nominee") at
        the Prescribed

                                      37.
<PAGE>

                                                                     DENTON HALL

        Price. The Transfer Notice shall be accompanied by the Vendor's share
        certificates and duly executed transfers in blank in respect thereof and
        (save as hereinafter provided) may not be withdrawn.

13.5.2  In any case where there is a deemed Transfer Notice and the
        determination of the Prescribed Price has been referred to the Referee,
        the Company shall as soon as it receives the Referee's certificate serve
        a certified copy thereof on the Shareholders. The fees and expenses of
        the Referee shall be borne as to one half by the purchaser(s) (if any)
        and as to the balance (or the whole if there are no purchasers) by the
        Vendor of the Sale Shares.

13.5.3  Within 7 business days of receipt of the Transfer Notice by the Company
        or, where a Referee's certificate is required, within 7 business days of
        receipt by the Company of the Referee's certificate, the Company shall
        give notice in writing to the other Shareholder(s) specifying the
        number of Sale Shares and the Prescribed Price therefor and offering the
        Sale Shares for sale to the other Shareholder(s) and/or (subject to
        Clause 13.5.4) a Nominee at the Prescribed Price. Such notice shall be
        accompanied by a copy of the Transfer Notice and, if applicable, the
        Referee's certificate and shall require the other Shareholder(s) within
        14 days of the receipt of the notice:

        (a) give notice that it and/or a Nominee is willing to purchase the
            Sale Shares at the Prescribed Price; or

        (b) (except in the case of a deemed Transfer Notice pursuant to Clause
            14 or 16.2) give notice that it consents to the sale of all the Sale
            Shares within 28 days thereof to the Proposed Transferee at the
            Prescribed Price;

        (c) give notice that it objects to the Transfer to the Proposed
            Transferee on the grounds set out in Clause 13.5.9.

        In the event that no notice or notices are received within the said
        period of 14 days or notice or notices have been given pursuant to
        Clause 13.5.3(a) but not in respect of all the Sale Shares then such

                                      38.
<PAGE>

                                                                     DENTON HALL

        other Shareholder(s) shall be deemed to have served a notice or notices
        pursuant to Clause 13.5.3(b) at the end of such 14 day period.

13.5.4  In the event that a notice or notices are served pursuant to Clause
        13.5.3(a) in respect of all of the Sale Shares, the other Shareholder or
        Shareholder(s) or a Nominee of either or both shall within 28 days
        thereafter complete the purchase from the Vendor of the Sale Shares at
        the Prescribed Price provided that in the event of competition the
        Shareholders (and/or their Nominees) shall complete the purchase of the
        Sale Shares in the Agreed Proportions save that notwithstanding the
        above no purchase pursuant to this clause may be made by a Nominee of
        any Shareholder if there remains another Shareholder willing to
        purchase those Sale Shares which such Nominee would otherwise have
        purchased. The Vendor shall be bound to transfer the Sale Shares
        comprised in the notice to the other Shareholder(s) or its/their
        Nominees at the Prescribed Price, and if it makes default in so doing
        the Company may receive the purchase money and the Directors
        appointed to the Board by the other Shareholder(s) may authorise some
        person to execute a transfer as appropriate of the Sale Shares in
        favour of the other Shareholder(s) and/or their Nominee(s) ("the
        Shareholder Purchasers") and the Company shall hold the purchase money
        in trust for the Vendor. The receipt by the Company of the purchase
        money shall be a good discharge to the Shareholder Purchaser(s) and
        after its or their name has been entered in the Company's Register of
        Members in exercise of the aforesaid power, the validity of the
        proceedings shall not be questioned by any person. If such purchase is
        not completed (for any reason other than the Vendor's delay or default)
        within such period of 28 days, then the certificate and duly completed
        transfer of the Sale Shares shall be returned to the Vendor and consent
        shall be deemed to have been given pursuant to Clause 13.5.3(b) and the
        provisions of Clause 13.5.5 shall apply.

13.5.5  In the event that a notice is given or deemed to be given by the other
        Shareholder pursuant to Clause 13.5.3(b) the Vendor shall, subject to
        Clause 13.6, be at liberty to sell all of the Sale Shares

                                      39.
<PAGE>

                                                                     DENTON HALL

        at any time within 28 days after the date of such notice (or, if no
        actual notice is given pursuant to Clause 13.5.3, the expiry of the
        period of 14 days provided for under Clause 13.5.3) to the Proposed
        Transferee at the Prescribed Price and otherwise upon no more favourable
        terms than those offered to the other Shareholder(s) and as stated in
        the Transfer Notice PROVIDED THAT if prior to completion of the said
        sale an event has occurred which, if any Proposed Transferee had been a
        member of the Company at the date of the Transfer Notice would have
        meant that a deemed Transfer Notice arose under Clause 14 then the
        identity of the Proposed Transferee shall need to be re-approved and
        failing such re-approval, the Transfer Notice shall be deemed to have
        been withdrawn by the Vendor and such sale shall not take place. It
        shall be a condition precedent of completion of any such sale that the
        Proposed Transferee shall deliver to the Vendor an undertaking that
        no such event has occurred.

13.5.6  The Board shall refuse to register any Transfer of any Share other
        than a Transfer permitted by or under and made in accordance with
        the provisions of Clauses 13, 14, 15, 16 or 17, which Transfers the
        Board shall register.

13.5.7  All Shares Transferred pursuant to Clause 13.5 shall be transferred as
        beneficial owner and free from all Encumbrances together with all
        rights, benefits and advantages attached thereto as at the date of the
        Transfer Notice or deemed Transfer Notice except the right to any
        dividend declared or interest accrued but not paid prior to the date of
        the relevant Transfer Notice except where the benefit to the Proposed
        Transferee of such payments after the date of the Transfer Notice has
        been taken into account in determining the Prescribed Price.

13.5.8  Immediately upon completion of the Transfer of any Shares by any
        Shareholder pursuant to the provisions of this Agreement the Vendor
        shall procure the resignation of any Director in accordance with
        clause 5.8.

                                      40.
<PAGE>

                                                                     DENTON HALL

13.5.9  A notice under Clause 13.5.3(c) may only be given where the Proposed
        Transferee or its Associate engages in a business which has editorial
        control over either:

        (a) a men's sophisticate magazine which regularly features nudity;

        (b) a film, television or multi-media production company which regularly
            produces films or programming that features nudity; or

        (c) a television programme service consisting of programming that
            regularly features nudity

        PROVIDED THAT such notice may not be given where the Shareholder
        otherwise entitled to give it consents to the Transfer to the Proposed
        Transferee, such consent not to be unreasonably withheld. When deciding
        whether or not to give such consent, such Snareholder may take account
        of:

        (a) the value of its or its Associate's logo, trademark, brands,
            image and/or reputation (in the case of Playboy, including
            its reputation as a mainstream men's sophisticate publisher
            and its unique position as an advertising vehicle for many
            reputable businesses);

        (b) Playboy's and plc's (and plc's ultimate parent company,
            Tele-Communications, Inc's.) position as companies whose
            stock is publicly traded.

        The parties acknowledge that if the publisher of "Hustler", "Mayfair" or
        "Penthouse" magazines or the producer of "Spice", "Adam and Eve" or "The
        Adult Channel" television services becomes a Shareholder, the image
        and/or reputation of Playboy might be impaired and that it might be
        reasonable for Playboy to withhold consent to a Transfer to such an
        entity. In the event that a notice is duly given under this Clause the
        Vendor shall not be permitted to Transfer its Shares to the Proposed
        Transferee.

                                      41.
<PAGE>

                                                                     DENTON HALL

13.6   No Transfer shall be permitted pursuant to Clause 13.5.5, or Clause
       13.11 read with Clause 13.5.5, by any Shareholders ("the Selling
       Shareholders") who together with its Associates holds the beneficial
       interest in Shares representing more than 35% of the Shares immediately
       prior to such Transfer if after the proposed Transfer the Selling
       Shareholder and its Associates would cease to hold the beneficial
       interest in shares representing at least 15% of the Shares unless the
       Selling Shareholder shall procure that the Proposed Transferee shall
       irrevocably offer (in writing) to acquire that proportion of Shares and
       Loan Stock held by each of the other Shareholders (and/or their
       respective Associates) as the proportion of Shares and Loan Stock which
       the Selling Shareholder proposes to Transfer bears to the total number of
       Shares and Loan Stock held by the Selling Shareholder and/or its
       Associates. Such offer shall be capable of acceptance, and shall be
       irrevocable, for not less than 14 days after it is given; such offer
       shall be at the Prescribed Price and otherwise on substantially no less
       favourable terms than those offered to the Selling Shareholder by the
       Proposed Transferee. If such offer is accepted, completion of the
       purchase thereby arising shall take place simultaneously with the
       completion of purchase by the Proposed Transferee from the Selling
       Shareholder.

13.7   The Shareholders shall together procure that at all times during the
       continuation of this Agreement the Board acts in accordance with the
       provisions of Clause 13.

13.8   Each Share and Loan Stock Certificate in respect of Shares and Loan
       Stock shall have typed on the face thereof the following legend:
      
           "Transfer is subject to restriction as appears on the back".
      
       and on the back the following legend:
      
           "The Shares/Loan Stock represented by this certificate are held and
           may only be Transferred by the registered owner subject to the terms
           of a Shareholders' Agreement made effective 12th January 1995"

                                      42.
<PAGE>

                                                                     DENTON HALL

13.9   The Company undertakes with each Shareholder that it will from time to
       time and as necessary undertake, and each Shareholder severally
       undertakes with each other Shareholder that it will vote in favour of,
       any reorganisation of the Shares or Loan Stock in issue if the Company is
       reasonably requested to undertake any such reorganisation by any
       Shareholder and, in the Company's reasonable opinion, such a
       reorganisation is necessary in order to avoid the occurrence of a Licence
       Event or a Shareholder becoming a Disqualified Participant, including,
       without limitation, the separation of voting and capital and income
       rights, the issue of new shares to any Shareholder or to its Associates
       and the sub-division or consolidation of Shares or Loan Stock held by any
       Shareholder or its Associates (as the case may be) PROVIDED THAT the
       Company shall not be requested to undertake any such reorganisation:
    
       (a) if that reorganisation would or would be likely to, as determined in
           accordance with the provisions of clause 16.1, cause a Licence Event
           or to make any Shareholder a Disqualified Participant; or

       (b) if that reorganisation would or would reasonably be likely, in the
           reasonable opinion of the Board (the Board having first consulted the
           auditors of the Company and considered any reasonable representation
           of any Shareholder), to have a material adverse effect on the
           Company or any of the other Shareholders

       (c) the Shareholder making the said request bears all the Company's and
           the other Shareholders' reasonable legal and other costs and
           expenses in relation to the reorganisation.

13.10  Each of the Shareholders hereby irrevocably consents for the purposes of
       Article 24 of the Articles to a transfer permitted by or made pursuant to
       the provisions of Clauses 13, 14, 15, 16 and 17.

13.11  Clauses 13.1 to 13.5 (excluding Clause 13.5.8) shall apply to Transfers
       of Loan Stock, mutatis mutandis.

                                      43.
<PAGE>

                                                                     DENTON HALL

14.  Deemed Transfers of Shares
     --------------------------

14.1  (a)  If a Shareholder becomes unable to pay its debts within Section 123
           of the Insolvency Act 1986 or makes a composition or arrangement with
           its creditors or puts a proposal to its creditors for a voluntary
           arrangement for a composition of its debts or a scheme of arrangement
           or on the presentation of a petition that it be put into liquidation
           (which is not withdrawn or defeated within 28 days) or administration
           or passes a resolution putting it into voluntary liquidation (other
           than for the purposes of amalgamation or reconstruction reasonably
           approved by the other Shareholder) or it suffers the appointment of a
           provisional liquidator, a receiver, manager or a administrative
           receiver or on the occurrence of an event which does result in the
           crystallisation of any floating charge over its business,
           undertaking, property or assets or any part thereof or is dissolved
           or an event occurs which is analogous to any of the above in any
           jurisdiction other than the UK in which the relevant Shareholder is
           incorporated; or

      (b)  if Playboy ceases to own on a diluted basis at least 10% of the
           Shares, or plc ceases to own on a diluted basis at least 20% of the
           Shares; (ownership on a diluted basis shall mean the "see through"
           percentage of such shares so that for example where a company
           (Company A) owns 50% of the shares in another company (Company B) and
           Company B owns 50% of the shares in another company (Company C),
           Company A will be deemed to own on a diluted basis 25% of the shares
           in Company C provided that in the event that Playboy exercises any of
           the Options under Clause 15, whether in whole or in part, the
           provisions of this Clause shall on completion of such exercise, cease
           to apply either to Playboy or to Flextech); or

                                      44.
<PAGE>

                                                                     DENTON HALL

          (c)  if a Shareholder or any of its Associates shall commit a material
               breach of any material provision of this Agreement, or any other
               agreement with the Company to which it or any of its Associates
               is a party and shall have failed to remedy such breach, if
               capable of remedy, within 30 days after the date of a notice from
               the other Shareholder specifying the nature of the breach and
               requiring it to be remedied

               (such Shareholder (or, in the case of (b) if the event happens to
               Playboy Enterprises, Inc., Playboy or if the event happens to
               plc, Flextech) being hereinafter referred to as "the
               Defaulter")

          then in any such event (without prejudicing or in any way limiting its
          other rights) the other Shareholder ("the Non-Defaulter") shall be
          entitled (by notice in writing to the other and to the Company given
          within 60 days of the later of the date of the event or of the date
          on which the Non-Defaulter becomes aware of the event giving rise to
          such rights under this Clause) in its entire discretion to treat the
          occurrence of any such event as the deemed service by the Defaulter of
          a Transfer Notice pursuant to Clauses 13.5 and Clause 13.11 the
          provisions of which shall accordingly apply mutatis mutandis.

14.2      Where any notice is given by the Non-Defaulter pursuant to Clause 14.1
          the Non-Defaulter may specify (and the parties shall give effect
          thereto) that (notwithstanding any provision of the Articles) until
          completion of the Transfer in accordance with Clause 13:

          (a)  any transfer by a Defaulter of its Shares or Loan Stock ("the
               relevant Units") (other than to or at the direction of the Non-
               Defaulter) shall be void;

          (b)  no voting rights shall be exercisable by the Defaulter in respect
               of its Shares or Loan Stock;

          (c)  no further Shares or Loan Stock shall be issued or need be
               offered to the Defaulter;

                                      45.
<PAGE>
                                                                     DENTON HALL

          (d)  in the event that the notice is served pursuant to Clause 14.1(c)
               no interest, dividend or other payment shall be made of any sums
               due from the Company on the Defaulters' Shares or Loan Stock or
               any other loans due from the Company (whether in respect of
               capital or otherwise) to the Defaulter but such sums shall be
               taken into account in determining the Prescribed Price;
              
          (e)  all the Defaulter's rights (but not its obligations) under
               Clauses 4, 5, 7 and 8, 13 and 14, shall be suspended during that
               period and in the event that the Defaulter is Playboy or any of
               its Associates, its rights under Clause 15 of this Agreement
               shall lapse.

14.3      The Non-Defaulter may by notice remove or relax such restriction in
          whole or in any particular case at any time.

15.       The Option
          ----------

15.1      Flextech hereby grants to Playboy the option:
         
          (i)  at any time during the period ending nine months after the date
               of Closing to purchase up to such number of the Original Shares
               as shall, following the exercise of such option and together with
               all other Original Shares held by Playboy and/or its Associates
               at that time, result in Playboy and/or its Associates together
               holding not more than 49% of the Original Shares ("the First
               Option"). The consideration payable for the Original Shares in
               respect of which the First Option is exercised ("the First Option
               Shares") shall be the aggregate price paid by Flextech for the
               First Option Shares plus interest thereon at LIBOR + 3% from the
               date of payment by Flextech therefor up to and including the date
               of completion of the First Option pursuant to Clause 15.6.

                                      46.
<PAGE>

                                                                     DENTON HALL

         (ii)  at any time during the 180 day period commencing on the third
               anniversary of Closing to purchase up to such number of Original
               Shares as shall represent 15% of the total number of the Original
               Shares or such lesser number as shall, following the exercise of
               such option and together with all other Original Shares held by
               Playboy and/or its Associates at that time including for the
               avoidance of doubt any Original Shares acquired pursuant to the
               First Option), result in Playboy and/or its Associates together
               holding not more than 49% of the Original Shares ("the Second
               Option"). The consideration payable for the Original Shares in
               respect of which the Second Option is exercised ("the Second
               Option Shares") shall be:

               (a)  the Fair Value; or

               (b)  the aggregate price paid by Flextech for the Second Option
                    Shares plus interest thereon at LIBOR + 3% from the date of
                    payment by Flextech therefor up to and including the date of
                    Completion of the Second Option pursuant to clause 15.6;


               whichever is the greater.

        (iii)  subject to clause 15.2 below, at any time during the 180 day
               period commencing on the fifth anniversary of Closing to purchase
               such number of Original Shares as shall, following the exercise
               of such option and together with all other Original Shares held
               by Playboy and/or its Associates at that time, (including for the
               avoidance of doubt any Original Shares acquired pursuant to the
               First Option and/or the Second Option), result in Playboy and/or
               its Associates together holding not more than 49% of the Original
               Shares ("the Third Option"). The consideration payable for the
               Original Shares in respect of which the Third Option is exercised
               ("the Third Option Shares") shall be:

                                      47.
<PAGE>

                                                                     DENTON HALL

               (a) the Fair Value; or

               (b) the aggregate price paid by Flextech for the Third Option
                   Shares plus interest thereon at LIBOR + 3% from the date of
                   payment by Flextech therefor up to and including the date of
                   Completion of the Third Option pursuant to clause 15.6;

                whichever is the greater.

15.2  In the event that it appears to Playboy and Flextech reasonably likely
      that (based on available audited accounts of the Company, management
      accounts and any annual budgets and projections for future financial
      years) Playboy will be entitled to receive the Bonus Licence Fee (as
      defined in the Programme Supply Agreement), Flextech will on written
      request from Playboy to be received on or before the day on which the
      Third Option would have expired in accordance with clause 15.1(iii) above,
      extend the period during which the Third Option may be exercised so that
      the Third Option may be exercised at any time during the period commencing
      on the date on which the Third Option would have expired in accordance
      with clause 15.1(iii) and ending on 30 days after (i) the Return of
      Investment Date (as defined in the Programme Supply Agreement); or (ii)
      the sixth anniversary of the Launch Date as defined in the Programme
      Supply Agreement, whichever is the earlier. If the Third Option is so
      exercised, payment of so much of the consideration for the Third Option
      Shares as equals the Board's estimate (based as aforesaid) of the Bonus
      Licence Fee or any relevant part thereof may be deferred, until 3 business
      days after each payment of the Bonus Licence Fee is made to Playboy so
      that amounts received by way of Bonus Licence Fee may be used to satisfy
      the consideration payable in respect of the Third Option Shares, provided
      that:

      (i) the difference between the Bonus Licence Fee and the consideration
          payable for the Third Option Shares shall be payable within 3
          business days after the consideration for the Third Option Shares
          shall have been determined:

                                      48.
<PAGE>

                                                                     DENTON HALL

     (ii)   all payments of Bonus Licence Fee shall, to the extent necessary, be
            used to satisfy any consideration for the Third Option Shares
            which may be outstanding;

     (iii)  interest shall be payable on any consideration deferred pursuant to
            this clause at LIBOR plus 3% from the third business day after the
            date on which the consideration for the Third Option Shares is
            established up to and including the date of payment of any deferred
            amount pursuant to this clause;

     (iv)   for the purposes of Clause 15.7, Playboy shall be deemed on each
            payment made in respect of the Third Option Shares to have
            completed the Third Option in respect of that percentage of the
            Original Shares in respect of which the Third Option has been
            exercised as equals the percentage which the relevant payment
            being made bears to the total consideration payable for the Third
            Option Shares; and

     (v)    all the consideration payable in respect of the Third Option Shares
            deferred pursuant to this clause (if not paid or payable before such
            date) shall be paid on the second anniversary of the exercise of the
            Third Option.

15.3  In calculating interest for the purposes of the above First, Second or
      Third Options respectively (and for the purposes to clause 15.5(iii)),
      interest shall accrue from day to day on the basis of a 365 day year and
      shall be compounded at six monthly intervals.

15.4  Each of the First Option, the Second Option and the Third Option ("the
      Options") may be exercised once only during the relevant periods set out
      above (time being of the essence as provided in clause 15.2 save in
      respect of the Third Option) by Playboy giving to Flextech not more than
      21 days' nor less than 7 business days' notice ("the Option Exercise
      Notice") in writing to expire on or before the last day of the relevant
      option period.

                                       49.
<PAGE>

                                                                     DENTON HALL

15.5  The right to exercise each of the Options shall be conditional on:

      (i)   Playboy and/or its Associates being the beneficial owner and
            registered holder of not less than 15% of the Shares (or not less
            than 10% provided that Playboy has not disposed of Shares which have
            resulted in Playboy's becoming the registered holder of less than
            15% of the Shares and Playboy are not in default under any
            provisions of Clause 4 of this Agreement) and Playboy being an
            Associate of Playboy Enterprises, Inc. on the date on which the
            Option is exercised;

     (ii)   such exercise not resulting in or being reasonably likely to result
            in a Licence Event;

     (iii)  Playboy or its Associate contemporaneously with completion of the
            relevant Option subscribing in cash for such principal amount of new
            Loan Stock as is equal to that proportion of the Loan Stock then
            held by Flextech and its Associates as equals the proportion of
            Flextech's Shares to be purchased under the relevant Option; such
            new Loan Stock shall be subscribed for in cash for the sum of:

            (A) the par value thereof; plus

            (B) an amount equal to interest on the said proportion of Loan Stock
                which is accrued or due but unpaid, calculated from the date of
                Flextech's or its relevant Associates subscription for such Loan
                Stock to the date of completion of the relevant Option exercise;

     (iv)   the entire proceeds of the subscription pursuant to paragraph (iii)
            being applied on the date of completion of the relevant Option
            exercise to redeem the proportion of Flextech's Loan Stock referred
            to in paragraph (iii) and interest due or accrued due thereon, for
            which purposes (and

                                      50.
<PAGE>

                                                                     DENTON HALL

             for the purposes of the calculations to be made under paragraph
             (iii)(B)) the "first in, first out" principal shall be applied.

      (v)    no event having occurred which would mean that a Transfer Notice
             has or may (whether or not such Transfer Notice is served) be
             served in relation to Playboy or any of its Associates under clause
             14;

      (vi)   no notice having been served on Playboy to terminate the
             Programme Supply Agreement or the Trademark Licence

      and for the avoidance of doubt if either (i), (v) or (vi) above are not
      satisfied at any time when one or more Options remain available to be
      exercised, that Option and any other subsisting Option shall automatically
      terminate and be of no further force and effect.

15.6  Completion of the exercise of any of the Options shall take place within
      3 business days after the consideration for the relevant Option Shares
      has been determined.

15.7  On completion of each of the Options:

      (a) Playboy shall pay or procure the payments to:
         
          (i)  Flextech (or as Flextech may direct) of the consideration for
               the relevant Option; and
 
          (ii) the Company of the subscription price in respect of the new
               Loan Stock to be subscribed pursuant to Clause 15.5(iii)

      (b) the Company shall, out of the proceeds of the payment under paragraph
          (a)(ii), redeem the relevant proportion of Flextech's Loan Stock
          pursuant to Clause 15.5(iv);

                                      51.
<PAGE>

                                                                     DENTON HALL

      (c) Flextech shall deliver to Playboy transfers in respect of the
          relevant Option Shares duly signed and completed in favour of Playboy
          together with the certificate(s) therefor;

      (d) Flextech shall use its reasonable endeavours to procure that the said
          transfer shall be registered subject to (where applicable) being duly
          stamped and that the certificates be sealed and issued to Playboy in
          respect of the relevant Option Shares.

15.8  Any Option Shares shall be sold by Flextech as beneficial owner free from
      all encumbrances and together with all rights and benefits attached
      thereto on or after the date of the exercise, save that in relation to any
      dividend declared and paid in respect of any fiscal year in which the
      Option is exercised, Flextech and Playboy shall be entitled to that
      proportion of the dividend relating to the relevant Option Shares as
      equals the proportion of the fiscal year to which the dividend relates
      during which they were the holder of the relevant Option Shares and
      Flextech and Playboy hereby instruct the Company to make any such dividend
      payments in accordance with the above provision unless an entitlement to
      such proportion has been taken into account in calculating the
      consideration for the relevant Option Shares.

15.9  The Option shall be personal to Playboy and shall not be assignable,
      either separately or through a Deed of Adherence.

15.10 Nothing in this Clause 15 shall prevent Flextech from transferring any of
      the Shares the subject of any of the Options in accordance with the
      provisions of Clauses 13 or 14 provided that (save where the Transfer is
      to any of its Associates pursuant to Clause 13.2):

      (a) in the event that Flextech transfers all or any of its Original
          Shares, immediately prior to such Transfer, the Options shall
          automatically terminate and be of no further force and effect in
          relation to those Original Shares and the Original Shares shall be
          transferred by Flextech free from the Option; or

                                      52.
<PAGE>

                                                                     DENTON HALL

          (b)  in the event that after any such Transfer Flextech retains
               Original Shares in excess of the maximum number of shares the
               subject of the Options which are still exercisable, the Options
               shall continue, subject to the other provisions of this Clause
               15; or

          (c)  to the extent that after any such Transfer the number of Original
               Shares held by Flextech is less than the number of Original
               Shares the subject of any Options which are still exercisable,
               the relevant Option(s) shall be deemed forthwith on such Transfer
               to relate to the maximum number of Original Shares then held by
               Flextech.
              
15.11     For the purposes of Clause 15.10 Flextech shall be deemed to dispose
          first of its Original Shares and only after it has disposed of shares
          equal in number to the number of Original Shares for which it has
          subscribed shall it be deemed to dispose of shares which are not
          Original Shares.

15.12     Notwithstanding any of the preceding provisions of this Clause 15, the
          maximum number of Shares which Playboy has the right to purchase under
          the Option shall be such number (when added to the other Shares for
          the time being held by Playboy and its Associates) as equals 49% of
          all the Shares.

16.       Selldown
          --------

16.1      Where any provision in this Agreement requires a determination of
          whether a Licence Event has been caused or has occurred or is likely
          to be caused or to occur or whether a person is, or is likely to
          become, a Disqualified Participant, that matter shall be determined:

          (a)  if the ITC shall have made a direction or ruling in respect of
               the matter, by the Board in accordance with that direction or
               ruling; and

                                      53.
<PAGE>

                                                                     DENTON HALL
        
          (b)  otherwise, in the reasonable opinion of the Board, provided that:

                    (i)  if, in the reasonable opinion of the Board, it is
                         appropriate in all the circumstances for the Board to
                         consult the ITC on the matter, the Board shall first
                         consult the ITC; and

                   (ii)  the Company shall first have served a written notice of
                         such duration (if any) as the Board shall in its
                         reasonable discretion think fit on the Shareholder or
                         Shareholders directly concerned with or affected by the
                         matter specifying the grounds on which the Board
                         believes that:

                         (A)  a Licence Event may have been caused or occurred
                              or may be likely to be caused or occur; or

                        (B)  that a person may be a Disqualified Participant or
                             may be likely to become a Disqualified Participant
                            
                        and shall consider any reasonable representation of the
                        Shareholder(s) concerned.

16.2      Where the Board (following if the Board in its reasonable opinion
          considers it is appropriate so to do, consultation with the ITC) shall
          determine, in its reasonable opinion and having regard to all the
          relevant circumstances, that a Licence Event has been caused or has
          occurred or one or more Shareholder(s) has or have become a
          Disqualified Participant or Participants or there is a reasonable
          likelihood that a Licence Event will occur or be caused or that one or
          more Shareholders will become a Disqualified Participant or
          Participants then the Shareholders agree that the Company shall be
          entitled to serve notice ("a Licence Notice") upon the affected
          Shareholder(s) requiring it/them within 90 days (or such other


                                      54.
<PAGE>

                                                                     DENTON HALL

          period as may be specified by the ITC) of service of a Licence Notice
          to reduce its/their proportionate holding of the Shares to such
          maximum percentage shareholding (if any) as may be fixed pursuant to
          any decision of the ITC or, in the absence of any fixed percentage, to
          such percentage as the Board may reasonably consider necessary in the
          circumstances ("the Reduced Percentage") the difference between the
          number of Shares in the Reduced Percentage and the comparable amount
          of Loan Stock and the total number of Shares and the Loan Stock held
          by the Shareholder being the "Relevant Number". A Licence Notice shall
          be deemed to constitute a Transfer Notice served by the affected
          Shareholder(s) offering to sell within the said period the Relevant
          Number of its/their holding of Shares and Loan Stock pursuant to the
          provisions of Clause 13.5.1 and (as the case may be) 13.11 save that
          (a) the Relevant Number of Shares and Loan Stock Units shall
          constitute the Sale Shares and Sale Loan Stock and (b) the Prescribed
          Price shall be determined pursuant to paragraph (b)(i) of the
          definition of Prescribed Price in Clause 1.1.

16.3      In the event that the provisions of Clause 16.1 or 16.2 apply then,
          with effect from the date of the Licence Notice, pending transfer of
          the Shares and Loan Stock in question, the affected Shareholder(s)
          shall to the extent required by the ITC be disenfranchised and lose
          any right to vote or receive dividends or other distributions in
          respect of the Share and Loan Stock in question. Any such dividends or
          distributions shall belong to the transferee of any such Share and
          Loan Stock and shall be taken into account in establishing the
          Prescribed Price. To the extent operation of this Clause 16.3 would
          cause any other Shareholder to be in the position where Clauses 16.1
          or 16.2 applied to it then the relevant percentage of the Shares held
          by such other Shareholders shall also be so disenfranchised with
          effect from the same date, pending the said Transfer.

16.4      If at any time within six months after completion of a Transfer
          pursuant to Clause 16.2 the ITC or other relevant regulatory authority
          indicates it has changed its mind or its decision is found to be
          incorrect then in consideration of the payment by the

                                      55.
<PAGE>

      purchaser thereof of the Prescribed Price paid under clause 16.2 plus
      interest thereon at LIBOR + 3% from the date of Transfer to the date on
      which such Shares are transferred back pursuant to this clause the Share
      and Loan Stock in question shall be transferred back to the affected
      Shareholder who, together with the purchaser of such Shares shall to the
      extent possible be put in the same position as if such Transfer had not
      taken place.

16.5  A Shareholder who reasonably believes that any other Shareholder is or
      may, or would or might with the passage of time, be likely to cause a
      Licence Event or become a Disqualified Participant shall forthwith notify
      the Company and the other Shareholders to that effect, provided that it
      has simultaneously so notified the relevant Shareholder, and the relevant
      Shareholder shall provide such information to the Company and the other
      Shareholders as any of them shall reasonably require.

16.6  The provisions of this Clause 1 shall apply so far as may be applicable
      to a Foreign Licence Event as if references in this Clause 16 to the
      ITC were deleted and reference to the analogous licensing body in the
      relevant territory was substituted in its place.

16.7  The Shareholders shall themselves respectively and shall procure that the
      Company shall use its reasonable endeavours to mitigate the effects on a
      Disqualified Participant of the provisions of this Clause 16 provided
      that nothing in this clause shall require the Company or any of the
      Shareholders to take any action or omit to take any action which would in
      its reasonable opinion be prejudicial to the interest of any company in
      the Playboy/Flextech Group or to such Shareholders.

17.   Compulsory Purchase by Flextech
      -------------------------------

17.1  In the event that:
       
                                      56.
<PAGE>

                                                                     DENTON HALL

      (a) the Company terminates the Programme Supply Agreement pursuant to
          Clause 10.3(a) of that Agreement or terminates the Trade Mark Licence
          other than on grounds of breach by Playboy or any of its Associates;
          and

      (b) Playboy and/or its Associates within 60 days of such termination
          serves a notice on the Company pursuant to clause 13.5.1 in respect
          of all its Shares and Loan Stock; and

      (c) a purchase of all such Shares and Loan Stock is not completed in
          accordance with clauses 13.5.4 or 13.5.5

      Flextech on demand in writing by Playboy undertakes to purchase or
      procure the purchase of all the Shares and Loan Stock held by Playboy
      and/or its Associates at the lower of:

               (i) the Prescribed Price (as defined in paragraph (a) of the
                   definition of Prescribed Price) (if any); and

              (ii) the Fair Value

          ("the Compulsory Price")
            --------------------

17.2  The Compulsory Price shall be notified to the Company and each of the
      Shareholders as soon as practicable after it has been established.
      Completion of the purchase shall take place not later than 14 days after
      the Compulsory Price has been notified as set out above provided that any
      other Shareholder who notifies Flextech in writing at any time within 7
      business days after the Compulsory Price has been so notified shall,
      subject to payment of the relevant purchase monies on completion, be
      entitled to participate in such purchase in the Agreed Proportions.

17.3  The provisions of clause 13.5.8 shall apply to any Transfer pursuant to
      this clause 17.

                                      57.
<PAGE>

                                                                     DENTON HALL

18.  Representations and Warranties
     ------------------------------

     Each Shareholder hereunder represents and warrants to the other Shareholder
     that:

     (a) it, and each of its Associates which is a party to any Transaction
         Document, is a company duly incorporated and validly existing in all
         respects under the laws of the jurisdiction of its incorporation with
         full power and authority to own its assets and to carry on its business
         as it is now being conducted and no action has been taken or threatened
         (whether by it or any third party) for or with a view to its or their
         liquidation, receivership or analogous process;

     (b) the execution of any Transaction Document to which it or its relevant
         Associate is a party has been validly authorised and the obligations
         expressed as being assumed by it (or, as applicable, by its Associate)
         under such Transaction Documents constitute its (or, as applicable, its
         Associate's) valid, legal and binding obligations enforceable against
         it (or, as applicable, its Associate) in accordance with its terms:

     (c) neither the execution and delivery by it or its Associate of any
         Transaction Document to which it is a party nor the performance or
         observance of any of its or its Associate's obligations thereunder
         does or will:

         (i)  conflict with, or result in any breach or violation of, any
              judgement, order or decree, indenture, mortgage, trust deed,
              agreement or other instrument, arrangement. obligation or duty by
              which it or such Associate is bound; or

         (ii) cause any limitation on any of its or its Associate's powers
              whatsoever, howsoever imposed, or on the right

                                      58.
<PAGE>

                                                                     DENTON HALL

              or ability of the directors of it or such Associate to exercise
              such powers, to be exceeded.

19.   Competition
      -----------

19.1  If Playboy wishes to launch (alone or with others) a channel which will be
      the same as or substantially similar to the Channel in any country in
      Europe other than the Territories ("the New Channel") using any of the
      assets of the Company, Playboy will negotiate reasonably and in good faith
      with Flextech (on behalf of itself and the Company) with a view to
      Flextech and/or the Company participating in the New Channel. To enable
      Flextech and the Company to consider such launch, Playboy shall provide
      to Flextech and the Company copies of any reports, surveys and other
      information which they have obtained or prepared relating to the launch
      of such New Channel.

      Nothing in this Clause shall permit Playboy to launch or operate a New
      Channel (other than through a wholly owned subsidiary of the Company)
      using any assets of or facilities of the Company or any Company in the
      Playboy/Flextech Group without the consent of Flextech.

19.2  Subject to clauses 12 and 19.1, the Programme Supply Agreement and the
      Trademark Licence, no Shareholder or its Associates shall be prohibited or
      restricted from participating in other ventures that compete, or do not
      compete, with the Business or the businesses of any of the other
      parties.

20.   No Assignment
      -------------

      The provisions of this Agreement shall be binding on and enure to the
      benefit of the successors of each party hereto provided that save as
      otherwise provided in this Agreement no party may agree to assign,
      transfer, charge or otherwise dispose of or subcontract any of its
      rights or obligations hereunder without the prior written consent of the
      other party.

                                      59.
<PAGE>

                                                                     DENTON HALL

21.   Waivers, Remedies Cumulative, Amendments. etc.
      ----------------------------------------------

21.1  No failure or delay by any of the parties hereto in exercising any right,
      power or privilege under this Agreement shall operate as a waiver thereof
      nor shall any single or partial exercise by any of the parties hereto of
      any right, power or privilege preclude any further exercise thereof or the
      exercise of any other right, power or privilege.

21.2  The rights and remedies herein provided are cumulative and not exclusive
      of any rights and remedies provided by law.

21.3  No provision of this Agreement may be amended, modified, waived,
      discharged or terminated, otherwise than by the express written agreement
      of the parties hereto nor may any breach of any provision of this
      Agreement be waived or discharged except with the express written consent
      of the parties not in breach.

22.   Invalidity etc.
      ---------------

22.1  Should any provision of this Agreement be or become ineffective for
      reasons beyond the control of the parties, the parties shall use
      reasonable efforts to agree upon a new provision which shall as nearly as
      possible have the same commercial effect as the ineffective provision.

22.2  Any provision contained in this Agreement or in any arrangement of which
      this Agreement forms part by virtue of which this Agreement or such
      arrangement is subject to registration under the Restrictive Trade
      Practices Act 1976 shall not come into effect until the business day
      following the date on which particulars of this Agreement and of any such
      arrangement have been furnished to the Office of Fair Trading (or on such
      later date as may be provided for in relation to any such provision) and
      the parties hereto agree to furnish such particulars within three months
      of the date of this Agreement.

                                      60.
<PAGE>

                                                                     DENTON HALL
                    
23.  No Partnership or Agency
     ------------------------         

     Nothing in this Agreement shall be deemed to constitute a partnership
     between the parties hereto nor, save as expressly set out herein,
     constitute any party the agent of another party for any purpose. In
     addition, unless otherwise agreed in writing between the Shareholders,
     neither of them shall enter into contracts with third parties as agent for
     any member of the Playboy/Flextech Group or for the other Shareholder or
     any member of its Group nor shall either Shareholder describe itself as
     agent as aforesaid or in any way hold itself out as being an agent as
     aforesaid.

24.  Announcements
     -------------

     Unless specifically otherwise agreed in writing or required by law or by
     The Stock Exchange no public announcement shall be made in respect of the
     subject matter of any Transaction Document or the Transponder Sub-Lease
     until after Closing and in no event shall any announcement in connection
     herewith be made by either party without the prior written approval of the
     other as to its form and content.

25.  Costs
     -----

     Each of the parties hereto shall pay its own costs, charges and expenses
     connected with the preparation and implementation of this Agreement and
     the transactions contemplated by it.

26.  Entire Agreement
     ----------------

     This Agreement and the Transaction Documents and the Transponder Sub-Lease
     constitute the entire agreement and understanding of the parties hereto
     with respect to the subject matter hereof and none of the parties hereto
     has entered into this Agreement in reliance upon any representation or
     warranty other than any such as may be set out herein.

                                      61.
<PAGE>
                                                                     DENTON HALL

27.  Conflict with Articles, etc.
     ----------------------------

     In the event of any conflict between the provisions of this Agreement and
     the Articles the provisions of this Agreement shall prevail and the parties
     shall exercise all voting and other rights and powers available to them so
     as to give effect to the provisions of this Agreement and shall and so far
     as they are able further if necessary procure any required amendment to the
     Articles as may be necessary.

28.  Notices
     -------

28.1 Any notice or other communication given or made under this Agreement shall
     be in writing and, without prejudice to the validity of any other method of
     service, may be delivered personally or by courier or sent by facsimile
     transmission by prepaid recorded delivery letter (airmail if overseas),
     addressed as follows:
          (a) if to Flextech to:
         13 Albermarle Street
         London W1X 3HX
         Facsimile transmission number: (London 71) 499 7533

     (b) if to Playboy to:
         9242 Beverly Boulevard,
         Beverly Hills,
         California 90210
         Facsimile transmission number: (Beverly Hills 310) 246 4065
         (Attention President)

         with a copy to

         Playboy Enterprises, Inc,
         680 North Lake Shore Drive,
         Chicago,
         Illinois 60611
         Facsimile transmission number: (Chicago 312) 266 2042
         (Attention General Counsel)

                                      62.
<PAGE>
                                                                     DENTON HALL

     (c) if to the Company to:
         Twyman House
         16 Bonny Street,
         London
         NWl NPG
         Facsimile transmission number: (London 71) 911 0145

         with a copy to the other parties, other than the party giving the
         notice

     or to such other address, or facsimile transmission number as the relevant
     addressee may hereafter by notice hereunder substitute.

28.2 Any such notice or other communication shall be deemed to have been duly
     served, given or made (i) in the case of posting, 96 hours after the
     envelope containing such notice was posted and proof that any such
     envelope was properly addressed, prepaid, registered and posted shall be
     sufficient evidence that such notice or other communication has been duly
     served, given or made; or (ii) in the case of delivery, when left at the
     relevant address; or (iii) in the case of facsimile transmission one
     business day after transmission.

29.  Governing Law
     -------------

     This Agreement shall be governed by and construed in all respects in
     accordance with English law and the parties agree to submit to the
     exclusive jurisdiction of the English Courts as regards any claim or matter
     arising in relation to this Agreement.

IN WITNESS whereof this Agreement has been duly executed.

                                      63.
<PAGE>
                                                                     DENTON HALL

                                  SCHEDULE I
                                  ----------

                          PARTICULARS OF THE COMPANY
                          --------------------------


     Date of Incorporation:              9th December 1994
                                      
     Place of registration:              England and Wales
                                      
     Company Registration Number:        3,000,033
                                      
     Authorised Share Capital:           (Pounds)11,000,000
                                      
     Issued Share Capital:               (Pounds)2, both held by Flextech
                                      
     Accounting Reference Date:          31st December
                                      
     Director:                           Roger Luard
                                      
                                      
     Name and address of                 Mark Luiz
             Secretary:               
                                      
                                      
     Name of Auditors:                   KPMG Peat Marwick

                                      64.
<PAGE>
                                                                     DENTON HALL

                                  SCHEDULE II
                                  -----------

            DETAILS OF SUBSCRIPTIONS BY SHAREHOLDERS AT CLOSING
            ---------------------------------------------------


Shareholders   Ordinary Shares   Loan Stock        Total Subscription Price
------------   ---------------   ----------        ------------------------
Names                            (Pounds)          (Pounds)
-----                            --------          --------

Flextech         79               243               322


Playboy          19                57                76
               ----              ----              ----   
             
                 98              (Pounds)300       (Pounds)398

                                      65.
<PAGE>
                                                                     DENTON HALL

                                 SCHEDULE III
                                 ------------

                               DEED OF ADHERENCE
                               -----------------


THIS DEED is made this          day of                199 .

BETWEEN:

(1) [Name of transferee] ("the New Shareholder") registered in
    [                ] under number [                 ] whose registered
    office is at [                                    ]; and

(2) [INSERT DETAILS OF SHAREHOLDER [X]]; and

(3) [INSERT DETAILS OF SHAREHOLDER [Y]]; and

(4) [                     ] ("the Company") registered in England under
    number [        ] and having its registered office at
    [                                              ]; and

    [Any other person becoming bound by the Shareholders' Agreement];

WHEREAS:

By virtue of the Transfer referred to in the Schedule to this Deed the New
Shareholder became entitled subject, inter alia, to the execution of this
Deed, to the Shares in the capital of the Company set out in the Schedule
hereto.

NOW THIS DEED WITNESSES as follows:

1.  In this Deed and the Recitals hereto:

    (a) "the Shareholders' Agreement": means the agreement dated
        [               ] and made between

                                      66.
<PAGE>
                                                                     DENTON HALL

    (b) terms and expression defined in the Shareholders' Agreement shall have
        the same meaning when used herein or in the Recital hereto, unless the
        context requires or admits otherwise

2.  In consideration of the sum of (Pounds)1 now paid by the Company (on behalf
    of itself and each other party hereto) to the New Shareholder, receipt
    whereof is hereby acknowledged, the New Shareholder hereby covenants with
    and undertakes to each other party to this Deed and to the Company as
    trustee for all other parties who hereafter become bound by the
    Shareholders' Agreement pursuant to a deed in a similar form to this Deed,
    entered into pursuant to the Shareholders' Agreement, to adhere to and be
    bound by the provisions of the Shareholders' Agreement as if the New
    Shareholder had been an original party to the Shareholders' Agreement.

3.  [INSERT WARRANTIES BY ALL PARTIES SIMILAR TO CLAUSE [18] TO THE
    SHAREHOLDERS' AGREEMENT]

4.  Subject to the provisions of Clause 2 of this Deed, and the Shareholders'
    Agreement the Company and the Shareholders hereby release the transferor
    from its obligations under the Shareholders' Agreement.

5.  The provisions of this document (other than those contained in this
    clause) shall not have any effect until this document has been dated.

IN WITNESS whereof this Deed has been duly executed.

                                   SCHEDULE
                                   --------

            Transferor              Transferee                Price
            ----------              ----------                -----
                     
                                      67.
<PAGE>
                                                                     DENTON HALL
                                  SCHEDULE IV
                                  -----------  
                                 
                                    FUNDING
                                    -------

                                      68.
<PAGE>

                                                                     DENTON HALL


                                  SCHEDULE V
                                  ----------

                        BOARD OF DIRECTORS COMPOSITION
                        ------------------------------

Playboy's             Playboy may appoint    Flextech's            Flextech
---------             -------------------    ----------            --------
Percentage            up to the following    Percentage            May Appoint
----------            -------------------    ----------            -----------
Ownership of Shares   number of Directors    Ownership of Shares   up to the
-------------------   -------------------    -------------------   ---------
                                                                   Following
                                                                   ---------
                                                                   Number of
                                                                   ---------
                                                                   Directors
                                                                   ---------


     0-9.9                    0                   90.1-100            11
     10-27.9                  2                   71.1-90             9
     28-37.9                  3                   62.1-72             8
     38-48.9                  4                   51.1-62             7
       49                     5                      51               6







                                       69.
<PAGE>

                       SIGNED by ROGER LUARD          )
                       for and on behalf of           )
                       CONTINENTAL SHELF 16 LIMITED   )
                       in the presence of:            )



                       SIGNED by Myron DuBow          )
                       for and on behalf of PLAYBOY   )
                       ENTERTAINMENT GROUP, INC. in   )
                       the presence of: Sidra Sparks  )  /s/ Myron DuBow
                       /s/ Sidra Sparks



                       SIGNED by ROGER LUARD          )
                       for and on behalf of           )
                       PLAYBOY TV UK/BENELUX          )
                       LIMITED in the presence        )
                       of:                            )







                                      70.
<PAGE>
                                                                     DENTON HALL

                       SIGNED by ROGER LUARD          )
                       for and on behalf of           )
                       CONTINENTAL SHELF 16 LIMITED   )
                       in the presence of:            )  /s/ Roger Luard



                       /s/ Fairlie Anderson
                       Fairlie Anderson
                       Denton Hall
                       5 Chancery Lane
                       Clifford's Inn
                       London
                       EC4A IBU



                       SIGNED by ANTHONY J. LYNN      )
                       for and on behalf of PLAYBOY   )
                       ENTERTAINMENT GROUP, INC. in   )
                       the presence of:



                       SIGNED by ROGER LUARD          )
                       for and on behalf of           )
                       PLAYBOY TV UK/BENELUX          )
                       LIMITED in the presence        )
                       of:                            )  /s/ Roger Luard



                       /s/ Fairlie Anderson
                       Fairlie Anderson
                       Denton Hall
                       5 Chancery Lane
                       Clifford's Inn
                       London
                       EC4A IBU






                                      70.
<PAGE>

                DATED                                   1995
                --------------------------------------------


            
          (1)    PLAYBOY ENTERTAINMENT GROUP, INC


          (2)    PLAYBOY TV UK/BENELUX LIMITED




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

                          PROGRAMME SUPPLY AGREEMENT

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




                          [LETTERHEAD OF DENTON HALL]

<PAGE>

                                                                     DENTON HALL

THIS AGREEMENT is made the     day of              1995

BETWEEN:

(1)  PLAYBOY ENTERTAINMENT GROUP, INC
     of 9242 Beverly Boulevard
     Beverly Hills
     California 90210
     United States of America
     ("the Licensor")

and

(2)  PLAYBOY TV/UK/BENELUX LIMITED
     of Twyman House
     16 Bonny Street
     London NW1 9PG
     ("the Company")

WHEREAS:

The Company wishes to licence from the Licensor and the Licensor has agreed to
licence to the Company certain television programmes upon the terms set out in
this Agreement.

NOW IT IS HEREBY AGREED as follows:

1.   Definitions and Interpretation
     ------------------------------

1.1  In this Agreement the following words and expressions shall have the
     following meanings:

     "Accumulated Net Losses": means as at the end of any Year commencing after
     the Return of Investment Date, the amount by which the aggregate amount of
     the Losses of the Company in respect of that Year and all

<PAGE>

                                                                     DENTON HALL

preceding Years (ignoring, for the avoidance of doubt, the fact that any such
Losses may have been, or may be capable of being, surrendered by way of group
relief) exceeds the aggregate amount of the Net Profits of the Company in
respect of that Year and all preceding Years;

"Acquired Premium Movie": any full-length (i.e. with a running time of not less
than 84 minutes) motion picture (whether made for theatrical release and/or
television exhibition) which falls within the Programme Specification and which
may be acquired by the Licensor or the Company for transmission in the Service
following a notice given by the Company pursuant to Clause 8.9;

"Acquired Programme": means any television programme falling within the
Programme Specification which is not a Playboy Programme or a Third Party
Programme but (a) in or to which the Licensor or any Affiliate of the Licensor
has acquired or does at any time during the Term acquire from a third party
inter alia the Non-Standard Television Rights within the Territory and (b) which
the Licensor delivers to the Company for first transmission in the Service in
any Year and as part of the Minimum Number of Hours in respect of that Year;

"Affiliate": of any person means any other person which is from time to time
either directly or indirectly controlling, controlled by or under common control
with the first person and for this purpose "control" means in relation to a
person (the "Relevant Person") the power of another person ("the Controlling
Person") to secure, whether by the holding of shares or the possession of voting
rights in or in relation to the Relevant Person or any other person or the
provisions of any agreement or otherwise, that the affairs of the Relevant
Person are conducted in accordance with the wishes of the Controlling Person;

"the Availability Date": in respect of any Third Party Programme or Acquired
Programme means the first day of the Licence Period in respect of that Third
Party Programme or Acquired Programme and in respect of any Playboy Programme
means the later of the following:

                                      2.

<PAGE>

(a)  the first day of the Licence Period in respect of that Playboy Programme;
     and

(b)  the expiry of the earlier of:

     (i)  a period of twelve (12) months commencing upon the date on which the
          home video release of that Playboy Programme within the Territory
          takes place; and

     (ii) a period of twenty-four (24) months commencing upon the date of
          completion of production of that Playboy Programme;

"Available Cash Flow": means such amount of the monies received by the Company
from the conduct of its business as is available for the purpose of paying the
Bonus Licence Fee to the Licensor pursuant to this Agreement but after having
made such provision as may be necessary, having regard to the reasonably
projected income and cash flow of the Company, to pay the Company's projected
cash requirements and needs, to pay and discharge the current liabilities and
obligations of the Company and to pay and discharge the known contingent
liabilities and obligations of the Company, which amount shall be determined in
accordance with Clause 7.6;

"Available Net Profits": means as at the end of any Year commencing after the
Return of Investment Date, the amount (if any) by which the Net Profits of the
Company in respect of that Year exceeds the Accumulated Net Losses of the
Company as at the end of the immediately preceding Year;

"the Basic Licence Fee": means in respect of each Year an amount calculated in
accordance with the provisions of Schedule 3;

"Bonus Amount": means the amount (if any) by which in respect of any of the
second, third, fourth and fifth Years the total of the Basic Licence Fee and any
Programming Premium payable by the Company in respect of that Year is less than
US$2,000,000 and which shall, for


                                      3.
<PAGE>

                                                                     DENTON HALL


the avoidance of doubt, be calculated on an annual basis following the end of
each such Year;

"Bonus Licence Fee": means an amount calculated by aggregating each Bonus Amount
following the end of the fifth Year;

"the Business Plan": means any plan which is from time to time in force and in
accordance with which the business of the Company is to be managed and conducted
pursuant to the Shareholders' Agreement;

"Co-Production": means any television programme falling within the Programme
Specification which was not produced solely by or under commission from the
Licensor and is not an Acquired Programme but which is co-produced by the
Licensor and/or any Affiliate of the Licensor with a third party;

"the CPI": means the US City Average Consumer Prices Index for all urban
consumers or any successor or replacement index. For the purpose of determining
any percentage increase in the CPI over the twelve months immediately preceding
the first day of any Year, reference shall be made to the published figure for
the CPI available for the month immediately preceding the first day of that Year
("the final figure") provided that, if the final figure is not available, the
latest published figure available shall apply;

"Delivery Material": means in relation to any Selected Programme, so-called
"vignette" or promotional material the master of the Selected Programme,
so-called "vignette" or promotional material in the form specified in Schedule 2
together with the other materials therein described and any dubbed or sub-titled
version of the Selected Programme, so-called "vignette" or promotional material
which the Licensor is required to deliver pursuant to Clause 5;

"the Directive": means the Directive of the Council of European Communities of
3rd October 1989 No 89/552 EEC and/or any other Directive of the Council of
European Communities which may modify, replace or supersede any of the
provisions of that Directive (including but not limited to Articles 4, 5 and 6
of that Directive);


                                      4.
<PAGE>

                                                                     DENTON HALL


"European Work": means a programme which complies with the definition of a
European Work contained in the Directive;

"the First Year": means the period commencing upon the Launch Date and ending
upon 31st December in the calendar year in which the Launch Date falls;

"Flextech": Continental Shelf 16 Limited, a company registered in England and
Wales under no. 3005499;

"Force Majeure": means any event or cause not within the control of the party
affected by it (other than a breach of this Agreement by the other party)
including (but not by way of limitation) accident or breakdown of any satellite
or any other facilities equipment or apparatus (caused otherwise than by the
wrongful act neglect or default of that party), act of God, flood, war, riot,
rebellion, civil commotion, strike, lock-out or other industrial dispute or
action, Act of Parliament, any act, order, direction or regulation of any
government or any public, local or regulatory authority or imposition of
government sanction, embargo or similar action, or of any law, judgment, order,
decree, embargo or blockade;

"the Growth Factor": means, for the purpose only of calculating the Minimum
Production Cost in any Year, the aggregate percentage increase in the CPI over
the twelve months immediately preceding the first day of that Year or three (3)
per cent, whichever is the greater;

"the Launch Date": means the date on which the Company commences the provision
of the Service for reception within the Territory;

"LIBOR": the three month London Interbank Offered Rate for Sterling Deposits, as
published in the Financial Times on the first day of each month or on the next
succeeding day on which the Financial Times is published;


                                      5.
<PAGE>

                                                                     DENTON HALL


"Licence Period": means in relation to:

(a)  each Playboy Programme, the period commencing upon the date of signature of
     this Agreement or (in the case of a Playboy Programme production of which
     has not prior to such date been completed) the date on which production of
     that Playboy Programme or the first episode of that Playboy Programme is
     completed and ending upon the later of (i) the final day of the Term and
     (ii) the date after the end of the Term on which any Transmission Period
     relating to that Playboy Programme ends in accordance with sub-clauses
     10.6.2, 10.6.3 and 10.6.4; and

(b)  each Acquired Programme or Third Party Programme acquired on behalf of the
     Company by the Licensor, the duration of the Playboy Licence Period
     relating to that Acquired Programme or Third Party Programme;

"the Licensor's Territory": means the United States of America;

"Losses": means in respect of any Year, the losses shown by the audited profit
and loss account of the Company for that Year (which losses shall be determined
according to the Company's accounting policies but shall always take into
account the amount of any Programming Premium payable in respect of that Year
and shall in respect of the fifth Year take into account the full amount of the
Bonus Licence Fee payable by the Company) but before interest on any loans made
to the Company by its shareholders pursuant to sub-clauses 3.1(b) and 4.1(b) of
the Shareholders' Agreement of even date herewith;

"Minimum Number of Hours": means in respect of each Year the minimum number of
Programme Hours of Programmes which the Licensor is obliged to deliver to the
Company in that Year pursuant to this Agreement for first transmission in the
Service and which shall (A) in the First Year be calculated by multiplying 114
by the number of days during the First Year (including the Launch Date) and
dividing the product of that multiplication by 365 and (B) be one hundred and
fourteen (114) Programme Hours in each subsequent Year unless or until that
number is


                                      6.
<PAGE>

                                                                     DENTON HALL

reduced or increased

(a) in accordance with Clause 8.6, Clause 8.7, Clause 8.8 or Clause 8.11; or

(b) following any termination of this Agreement pursuant to Clause 10.3;

"Minimum Production Cost": means an amount which shall increase during the Term
as follows:

(a) in the first Year, the sum of US$1,000,000 (one million United States
    dollars); and

(b) in any subsequent Year, the sum which, by virtue of this definition,
    represented the Minimum Production Cost in the immediately preceding Year
    increased by the Growth Factor;

"Net Profits": means in respect of any Year, the audited, after tax profits of
the Company for that Year shown in the accounts of the Company for that Year
prepared by its auditors (which profits shall be determined according to the
Company's accounting policies but shall always take into account the amount of
any Programming Premium payable by the Company in respect of that Year and shall
in respect of the fifth Year take into account the full amount of the Bonus
Licence Fee payable by the Company) but before interest on any loans made to the
Company by its shareholders pursuant to sub-clauses 3.1(b) and 4.1(b) of the
Shareholders' Agreement of even date herewith;

"Net Revenue per Household": means an amount calculated in accordance with the
provisions of Schedule 4;

"Net Revenues": means in respect of any Year, the aggregate of all payments
which are actually received by the Company during that Year, which (after making
adequate provision for refunds, discounts, bad debts and credits) the Company is
entitled to retain and which represent charges made for the reception and/or
re-transmission of the

                                      7.
<PAGE>

                                                                     DENTON HALL

Service in its entirety, or of programmes (other than Premium Movies and
Acquired Premium Movies included in the Service on a Pay-Per-View Basis), by any
third party (including but not limited to any cable operator) after deduction
of:

(i)  all amounts of Value Added Tax or similar sales taxes which may form part
     of such payments; and

(ii) all sales and agency commissions which may be payable to third parties as a
     result of the receipt of any such payment(s) by the Company and which have
     not been deducted by such third party or parties prior to the receipt of
     the relevant payment(s) by the Company;

"Non-Standard Television": means all forms of television exhibition,
transmission and distribution whether now existing or developed in the future
(other than Standard Television) and however transmitted or delivered, including
but not limited to the following:

(a) basic cable and pay cable;

(b) "over the air pay" subscription television (STV), direct broadcasting by
    satellite (DES), master antenna television systems (MATV), multipoint
    distribution systems (MDS), satellite master antenna television systems
    (SMATV), microwave transmission and video-on-demand services;

(c) transmission via Non-Standard Television delivery systems to closed circuit
    television systems such as hotel, motel or hospital rooms, educational
    institutions and military locations;

whether all of the foregoing (a), (b) and/or (c) are on a subscription,
pay-per-view, licence, free or other basis;

"the Non-Standard Television Rights": means the right to exhibit, or cause the
exhibition of, a Programme or a Third Party Programme by means of Non-Standard
Television;

                                      8.
<PAGE>

                                                                     DENTON HALL

"Payment Date": means any of the six dates specified in Clause 7.3;

"Pay-Per-View Basis": means the inclusion of a programme in the Service on terms
whereby a payment becomes due from a subscriber in consideration solely for the
right to receive and view (a) that programme or (b) a number of programmes which
are transmitted in the Service on the same day including that programme;

"Playboy Acquired Programme": means any Acquired Programme acquired by the
Licensor or any Affiliate of the Licensor pursuant to a licence:

(a) under which the Licensor or that Affiliate was also granted the Television
    Rights in that Acquired Programme within the Licensor's Territory;

(b) under which all of the Television Rights in that Acquired Programme granted
    to the Licensor and/or any Affiliate of the Licensor were granted on a sole
    and exclusive basis;

(c) which was granted for a period of not less than five (5) years from the date
    of its commencement; and

(d) under which the Television Rights in that Acquired Programme were granted
    within one of the following territories (in addition to the Licensor's
    Territory and the Territory): namely, Australia, Germany, France, Italy,
    Mexico or Brazil;

"Playboy Licence Period": means in respect of any Acquired Programme, so-called
"vignette" or (if applicable) Third Party Programme the period for which the
Licensor or any Affiliate of the Licensor has acquired the Non-Standard
Television Rights therein within the Territory;

"Playboy Production Costs": means in respect of any Premium Movie the aggregate
of (a) all fees and other remuneration paid to the Licensor and/or any Affiliate
of the Licensor, and to any employee or officer

                                      9.
<PAGE>

                                                                     DENTON HALL

of the Licensor and/or any such Affiliate, in connection with the production of
that Premium Movie and (b) any part of the cost of production of that Premium
Movie which represents overhead expenditure of the Licensor and/or any Affiliate
of the Licensor that the Licensor and/or any such Affiliate would have incurred
even if that Premium Movie had never been produced, including but not limited to
expenditure incurred in paying salaries or other remuneration to employees and
in owning, operating, occupying, using and/or leasing premises, office
equipment, facilities and/or services and/or equipment customarily used in the 
production of television programmes and/or motion pictures;

"Playboy Programme": means (a) any television programme falling within the
Programme Specification which is or was produced by, or under commission from,
the Licensor or any Affiliate of the Licensor or (b) a Co-Production which in
either case is not a Premium Movie;

"Premium Movie": means a full-length film or motion picture

(a) which contains at least one actor or actress with a generally recognizable
    name value in the United States motion picture industry who, in the five
    years immediately preceding the date on which production of that film or
    motion picture was commenced, has appeared in a starring role in a motion
    picture theatrically released in the United States by one or more of the
    major Hollywood studios or had a starring role in a regular prime-time U.S.
    network television series or movie-of-the-week.

(b) which is photographed in colour, using 35 millimeter film

(c) which has a running time of not less than eighty-four (84) minutes

(d) which is based upon a recognisable dramatic plot and/or storyline

                                      10.
<PAGE>

                                                                     DENTON HALL

(e) which has a Total Production Cost in excess of the Minimum Production Cost
    and

(f) whose Total Production Cost does not include Playboy Production Costs which
    in the aggregate exceed an amount equal to ten (10) per cent of the Minimum
    Production Cost (and to the extent that Playboy Production Costs in excess
    of that amount were included in the Total Production Cost such excess
    Playboy Production Costs shall be disregarded for the purposes of
    determining whether the relevant film or motion picture is a "Premium Movie"
    hereunder);

"Programme": means:

(a) any Playboy Programme; or

(b) any Acquired Programme (including but not limited to any Playboy Acquired
    Programme) in or to which the Licensor or any Affiliate of the Licensor
    acquires owns or holds or is entitled to exercise, or authorise the exercise
    of, any or all of the Non-Standard Television Rights within the Territory;
    or

(c) any Premium Movie but only insofar as the same may be licensed to the
    Company in accordance with Clause 3.2;

and for the purposes of interpreting this definition, it is agreed and declared
that, where a television programme consists of more than one episode or group of
episodes, each series or serial of that television programme which consists of a
single or discrete group of episodes shall be treated as a separate Programme;

"Programme Duration": means in relation to any Programme or Third Party
Programme or (in the case of a Programme or Third Party Programme consisting of
more than one episode) any episode, the running time of the master of the
Programme or Third Party Programme or episode (excluding, for the avoidance of
doubt, commercial breaks, promotional material and advertisements interpolated
in any Programme

                                      11.
<PAGE>
                                                                     DENTON HALL

or Third Party Programme or episode and further excluding any so-called
"vignettes") delivered to the Company by the Licensor as part of the Delivery
Material or by the licensor of the Third Party Programme (as the case may be);

"Programme Hour": means in relation to the Programme Duration of any
Programme(s) or Third Party Programme(s), a period of forty-five (45) minutes;

"the Programme Specifications": means the description of the programming which
is to be broadcast by the Company as part of the Service and is attached as
Schedule 1;

"Programming Premium": means, in respect of any Year commencing after the Year
in which the Return of Investment Date falls, the amount (if any) payable to the
Licensor in respect of that Year pursuant to sub-clause 7.1(b);

"Quarter": shall mean any three month period ending on the last day of March,
June, September and December;

"Requisite Percentage": means for the purpose of calculating the amount (if any)
of the Programming Premium payable to the Licensor:

(a)  33% (thirty-three per cent) of Available Net Profits; and

(b)  20% (twenty per cent) of Net Revenues

subject always to reduction of such percentages in accordance with the
provisions of Clause 8.6, sub-clause 8.8(d), Clause 8.11 or sub-clause 10.4.2;

"Return of Investment Date": the day on which each of the Company's shareholders
shall actually have received (by way of the repayment of all loans made, by way
of the return (by sales or repayment of shares or otherwise) of all share
capital subscribed (including share premiums), and by way of the payment of
interest or dividends thereon)

                                     12.




<PAGE>

                                                                     DENTON HALL


an amount equal to the aggregate of:

(a) the principal amount of all loans made, and share capital subscribed for in
    the capital of the Company, by each such shareholder pursuant to sub-clauses
    3.1(b) and 4.1(b) of the Shareholders' Agreement of even date herewith (in
    each case the "Initial Cost"); PLUS

(b)  interest on the Initial Cost at LIBOR plus 3% (which interest shall accrue
     on a daily basis from the date of the relevant loan or subscription and
     shall be calculated and compounded on 30th June and 31st December of each
     Year) PLUS

(c)  the principal amount of all loans made, and share capital subscribed for in
     the capital of the Company, by each such shareholder in addition to the
     Initial Cost prior to the date on which the Initial Cost plus interest
     thereon calculated in accordance with (b) above has been received by each
     of the Company's shareholders in accordance with the foregoing provisions
     of this definition (in each case the "Additional Cost"); PLUS

(d)  interest on the Additional Cost at LIBOR plus 3% or (if higher) at the rate
     of interest contractually payable on the relevant loan to the relevant
     shareholder (which interest shall accrue on a daily basis from the date of
     the relevant loan or subscription and shall be calculated and compounded on
     30th June and 31st December of each Year)

PROVIDED THAT:

(i)  where any such shares or loans are transferred to any person, including
     but not limited to upon exercise of any of the Options (as defined in
     Clause 15 of the Shareholders' Agreement of even date herewith), such
     person shall on such transfer be deemed to have subscribed for the shares
     and made the loans the subject of the transfer and there shall not be taken
     into


                                      13.









<PAGE>

                                                                     DENTON HALL


      account for the purposes of determining the Return of Investment Date such
      amount of the consideration paid by such person as exceeds the Initial
      Cost to the selling shareholder of the shares and loans the subject of the
      relevant transfer plus interest thereon, calculated in accordance with (b)
      above; and

(ii)  if any part of the Initial Cost or the Additional Cost shall be repaid to
      any shareholder through the use of monies borrowed by the Company from any
      third party (i.e. a person other than a shareholder in the Company or an
      Affiliate of such a shareholder), the Return of Investment Date shall not
      occur until all of those third party borrowings shall have been repaid by
      the Company to that third party together with interest thereon at the rate
      of interest contractually payable by the Company to that third party
      provided, however that if the Company has the funds to repay such third
      party but is not contractually permitted to prepay such third party, the
      Company will establish a fund to pay such borrowings with interest and
      will be deemed to have repaid such borrowings (with interest) to the
      extent of the amount from time to time standing to the credit of such
      fund; and

(iii) if the Company is not contractually permitted to prepay any part of the
      Initial Cost or the Additional Cost which comprises (a) loan(s) made by a
      shareholder, the Company will establish a fund to repay such loan(s) with
      interest and will be deemed to have repaid such loan(s) (with interest) to
      the extent of the amount from time to time standing to the credit of such
      fund;

"the Scheduler": the individual appointed in accordance with Clause 8.1, Clause
8.4, Clause 8.5, Clause 8.11 or Clause 10.4 who is to provide the services set
out in Clause 8.2;

"Selected Programme": means any Programme, Third Party Programme or so-called
"vignette" which is selected by the Scheduler for inclusion in the Transmission
Schedule and licensed to the Company by the Licensor pursuant to or by virtue of
any provision of this Agreement;


                                      14.
<PAGE>

"the Service": means the television programme service consisting solely of:

(a)  Programmes, Third Party Programmes and so-called "vignettes"; and

(b)  infomercials, advertisements and promotional and publicity material

which is to be provided by the Company for reception within the Territory;

"Service Language": means any of the following languages; English, Flemish,
Dutch or any other language of any country within the Territory;

"the Shareholders' Agreement": means the agreement which is for the time being
in force between the holders of not less than ninety-five per cent (95%) in
nominal value of the issued share capital of the Company and which inter alia
regulates the management and conduct of the business of the Company;

"Standard Television": means exhibition by conventional free VHF or UHF
television broadcast stations, the video and audio portions of which are
intelligibly receivable without charge by means of a conventional home roof-top
or television set built-in antenna;

"the Standard Television Rights": means the right to exhibit, or cause the
exhibition of, a Programme or a Third Party Programme by means of Standard
Television;

"the Term": means the period commencing on the date of signature hereof and
ending on the date on which any termination of this Agreement takes effect
pursuant to Clause 10;


                                      15.
<PAGE>

                                                                     DENTON HALL


"the Television  Rights": means the Non-Standard Television Rights and the
Standard Television Rights;

"the Territory": means the countries of the United Kingdom, the Republic of
Ireland, Belgium, The Netherlands and Luxembourg together with any other
countries in which the Service may from time to time be provided by the Company
in accordance with the Business Plan and Shareholders' Agreement;

"Third Party Programme": means

(a)  any television programme which falls within the Programme Specification and
     which is not a Playboy Programme; or

(b)  any Acquired Premium Movie.

in respect of which the Licensor or any Affiliate of the Licensor acquires upon
instruction from the Scheduler and/or the Company in accordance with Clause 8.6,
Clause 8.9 or 8.11 the Non-Standard Television Rights therein within the
Territory or the Company acquires the same in accordance with Clause 8.8, Clause
8.10, Clause 8.11 or Clause 10.4;

"Total Production Cost": means, in respect of each Premium Movie, the actual
cost of production of that Premium Movie (including without limitation the
aggregate of direct, out-of-pocket costs, charges and expenses paid to third
parties in connection with the acquisition of all underlying literary rights
with respect to the production of the Premium Movie, and in connection with the
preparation, production and completion of the Premium Movie including the costs
of materials, equipment, physical properties, any completion bond fee (net of
any rebate), personnel and services utilized in connection with the production
of the Premium Movie, and cost of customary production insurances and Playboy
Production Costs);

"Trademark Agreement": means the agreement between the Company and Playboy
Enterprises, Inc. of even date herewith relating to the use of the Trade Marks;


                                      16.
<PAGE>

                                                                     DENTON HALL


     "the Trade Marks": shall have the meaning ascribed to it in the Trademark
     Agreement;

     "Transmission Period": means in respect of any Programme, or any Third
     Party Programme acquired on behalf of the Company by the Licensor, the
     period commencing upon the Availability Date in respect of that Programme
     or Third Party Programme or (as the case may be) upon the date of any
     notice given by the Company pursuant to Clause 2.2 in respect of that
     Programme or Third Party Programme and ending upon the date on which the
     twenty-fourth (24th) transmission of that Programme or Third Party
     Programme (or, in the case of a Programme or Third Party Programme (or, in
     the case of a Programme or Third Party Programme consisting of more than
     one episode, the final episode of that Programme or Third Party Programme)
     in the Service during that period takes place or (if earlier) the final day
     of the Playboy License Period in respect of an Acquired Programme or Third
     Party Programme;

     "the Transmission Schedule": means the schedule to be prepared by the
     Scheduler in accordance with Clause 8.2 setting out the day, date and time
     of transmission of each Selected Programme, each so-called "vignette" and
     all interstitial material to be transmitted as part of the Service;

     "the United Kingdom": means Great Britain, Northern Ireland (irrespective
     of whether Northern Ireland is or remains part of the United Kingdom), the
     Channel Islands and Isle of Man;

     "Year": means the First Year and thereafter any calendar year.

1.2  In this Agreement references to a "programme" or "Programme" shall include
     a reference to any associated sound recording comprising the soundtrack
     thereto.

1.3  In this Agreement references to Clauses, sub-clauses, paragraphs and
     Schedules shall be references to Clauses, sub-classes and paragraphs of and
     Schedules to this Agreement.


                                      17.
<PAGE>

                                                                     DENTON HALL


1.4  Whenever the Service is licensed or otherwise sold to a third party
     (including but not limited to a cable operator) as part of a package of
     satellite delivered television channels, then the Company shall negotiate
     with that third party and/or with the providers of the other television
     channels included in such package on an arm's length basis regarding the
     allocation between the television channels (including but not limited to
     the Service) included in such package of the revenues derived from the
     relevant licence or sale.

1.5  Whenever any of the Non-Standard Television Rights in a Programme (other
     than a Playboy Programme) or a Third Party Programme within the Territory
     are acquired by the Licensor or any Affiliate of the Licensor pursuant to
     Clause 8.6, 8.8, 8.9 or 8.11 and the relevant Television Rights are also
     acquired in respect of any country or countries outside the Territory, then
     for the purposes of sub-clauses 8.6(c), 8.8(c), 8.9(d) and 8.11.4(b) the
     Licensor shall on a fair and equitable arm's length basis allocate the
     license fee(s) paid by the Licensor or its Affiliates for those Television
     Rights to the licensor of that Programme or Third Party Programme between
     the Television Rights so acquired by the Licensor within the Territory and
     the Television Rights so acquired by the Licensor in respect of any country
     or countries outside the Territory.

1.6  Whenever a Programme (other than a Playboy Programme) or a Third Party
     Programme is acquired by the Licensor or any Affiliate of the Licensor
     pursuant to Clause 8.6, 8.8, 8.9 or 8.11 and that Programme or Third Party
     Programme is acquired as part of a package of television programmes, then
     for the purposes of sub-clauses 8.6(c), 8.8(c), 8.9(d) and 8.11.4(b) the
     Licensor shall on a fair and equitable arm's length basis allocate the
     licence fee(s) paid by the Licensor or its Affiliate to the licensor of
     that package of television programmes between that Programme or Third Party
     Programme and the other television programmes included in that package.

1.7  If so requested by the Company in writing, the Licensor shall within
     fourteen (14) days after the date of such request deliver to the


                                      18.
<PAGE>

                                                                     DENTON HALL


     Company a certificate signed as being true and accurate by the Senior
     Financial Officer of the Licensor and stating in respect of each Premium
     Movie specified in such request (a) the Total Production Cost of that
     Premium Movie and (b) the total amount of Playboy Production Costs included
     in that Total Production Cost. At any time after delivery of that
     certificate the Company may upon reasonable notice to the Licensor and
     during normal business hours inspect the books and records of the Licensor
     and or any Affiliate of the Licensor relating to the production of any
     Premium Movie specified in that certificate for the purpose of verifying
     the accuracy of that certificate. The provisions of this Clause shall not
     apply to any Premium Movie in which the Television Rights within the
     Territory have been granted to any third party pursuant to any legally
     binding agreement entered into by the Licensor prior to the date of this
     Agreement.

1.8  Whenever reference is made in this Agreement to a period of less than
     fourteen (14) days, a "day" shall for the purposes of calculating the
     length of that period be deemed to mean any day other than a Saturday,
     Sunday or public holiday in England or the United States of America.

2.   Licence
     -------

2.1  The Licensor hereby grants to the Company by way of a sole and exclusive
     license under copyright during the Licence Period in respect of each
     Programme or Third Party Programme (as the case may be) and within the
     Territory:

     (a)  the sole and exclusive right to exercise the Non-Standard Television
          Rights in and to each Programme on not more than twenty-four (24)
          occasions during any Transmission Period relating to that Programme;
          and

     (b)  all Television Rights and all other right title and interest acquired
          by the Licensor in and to each Third Party Programme

     PROVIDED ALWAYS THAT the Company shall not make any transmission of any
     Programme, or any Third Party Programme acquired on its behalf by


                                      19.
<PAGE>

                                                                     DENTON HALL


     the Licensor, otherwise than during a Transmission Period relating to that
     Programme or Third Party Programme.

2.2  At any time after the end of the first Transmission Period in respect of a
     Programme the Company may by notice in writing to the Licensor elect to
     transmit that Programme during a further Transmission Period, then (subject
     always to the proviso to this Cause and unless the Licensor notifies the
     Company within seven (7) days after the date of receipt of the Company's
     notice that that Programme is an Acquired Programme and that the Licensor
     would be unable to perform its obligations under Clause 4.6 in relation to
     that Programme during that further Transmission Period) the following
     provisions shall apply:

     (a)  that Programme shall automatically be deemed to be a Selected
          Programme during that further Transmission Period for all purposes of
          this Agreement SAVE THAT that Programme shall not count towards the
          Minimum Number of Hours in respect of any Year and the Company shall
          pay a license fee to the Licensor in respect of that Programme in
          accordance with the provisions of Clause 7.7; and

     (b)  (unless the then current Scheduler has been appointed by the Company
          under Clause 8.4, proviso (c) to Clause 8.5, Clause 8.11.4 or Clause
          10.4) the Licensor shall procure that the Scheduler shall include that
          Programme in the Transmission Schedule for transmission in the Service
          during the further Transmission Period in respect of that Programme

     PROVIDED ALWAYS THAT, if the parties are unable to agree upon the amount of
     the licence fee payable to the Licensor in respect of that Programme within
     the 30 day period described in sub-clause 7.7(a), the Company may by notice
     in writing to the Licensor decline to accept a further Transmission Period
     of that Programme at the licence fee specified in paragraph (ii) of sub-
     clause 7.7(a) and, if the Company does so decline, the provisions of sub-
     clauses (a) and (b) of this Clause shall not apply to that Programme.


                                      20.
<PAGE>

                                                                     DENTON HALL


2.3  The Licensor further grants to the Company by way of a sole and exclusive
     licence under copyright the sole and exclusive right during the Term and
     within the Territory to exercise the Non-Standard Television Rights in and
     to each so-called "vignette" delivered to the Company hereunder on not more
     than (subject to the provisions of Clause 4.8) twenty-four (24) occasions.

2.4  Notwithstanding the definition of the Territory, the licences granted to
     the Company under Clauses 2.1 and 2.3 shall not extend to the Republic of
     Ireland until the earlier of:

     (a)  the first anniversary of the Launch Date; and

     (b)  the date on which the Licensor notifies the Company that those
          licences have been extended to the Republic of Ireland.

3.   Supply of Programmes
     --------------------

3.1  In order to assist the Company in marketing the Service and the Scheduler
     in performing his duties under Clause 8, the Licensor shall:

     (a)  within fourteen (14) days after the date of this Agreement supply to
          the Company and to the Scheduler a complete list of all of its
          Programmes, which list shall include in respect of each Programme the
          title, duration and number of episodes of that Programme, a brief
          description of that Programme and the year in which that Programme was
          produced and is attached as Schedule 5;

     (b)  not later than the first day of each Year supply to the Company and to
          the Scheduler a list of all Programmes which have completed
          production, and of all television programmes which have for any reason
          become Programmes (for example, because the Licensor or any Affiliate
          of the Licensor has acquired the Non-Standard Television Rights
          therein), since the last such list (or the list supplied pursuant to
          sub-clause 3.1(a)) was supplied, and the Licensor shall include in
          that list in


                                      21.
<PAGE>

                                                                     DENTON HALL


          respect of each such Programme the information specified in sub-clause
          (a) of this Clause;

     (c)  upon the Company's or the Scheduler's request, supply to the Company
          and the Schedule details (if available) of audience viewing ratings
          achieved by any Programme on the last broadcast of that Programme by
          the Licensor or any Affiliate or licensee of the Licensor anywhere in
          the world; and

     (d)  within 21 days after any request by the Company or the Scheduler,
          provide on loan a VHS viewing cassette of any Programme which may be
          requested by the Company or the Scheduler.

3.2  The Licensor shall not at any time during the Term licence any of the
     Television Rights in any Premium Movie within the Territory to any third
     party without first complying with the procedure set out in this Clause but
     the provisions of this Clause (other than sub-clause (d)) shall not apply
     to any Premium Movie in which the Television Rights within the Territory
     have been granted to any third party pursuant to any legally binding
     agreement entered into by the Licensor prior to the date of this Agreement.

     Whenever the provisions of this Clause apply to a Premium Movie, the
     Licensor shall send to the Company a viewing cassette of such Premium Movie
     (if the Premium Movie is already produced at the time of sending the notice
     hereunder) and a written notice (which notice shall specify the cost,
     budget and storyline of the Premium Movie if the Premium Movie is not
     available for viewing at the date of the notice) setting out the principal
     terms on which the Licensor is proposing so to grant Television Rights
     within the Territory in respect of each such Premium Movie. The following
     provisions shall apply to each Premium Movie offered for licence within the
     Territory by the Licensor in accordance with this Clause:

     (a)  the Company shall have twenty-eight (28) days from receipt of such
          offer to accept such offer by notice in writing to the Licensor;


                                      22.
<PAGE>

                                                                     DENTON HALL


     (b)  if the Company shall fail to accept such offer within that 28 day
          period and if the Licensor wishes to authorise a third party exercise
          the Television Rights in that Premium Movie within the Territory, the
          Licensor shall be free to do so, and shall have no further obligation
          to offer that Premium Movie for licence to the Company, subject always
          to sub-clauses (c) and (d) of this Clause;

     (c)  if the Company shall fail to accept such offer within that 28 day
          period and if the Licensor wishes to authorise a third party to
          exercise any of the Television Rights in that Premium Movie within the
          Territory, the Licensor shall not so authorise any third party upon
          terms which are more favourable to that third party than the terms
          offered by the Licensor to the Company pursuant to this Clause without
          first offering by notice in writing to the Company to licence that
          Premium Movie to the Company upon such more favourable terms. The
          Company shall have fourteen (14) days from receipt of such offer in
          which to accept such offer by notice in writing to the Licensor and,
          if the Company fails to accept such offer within that 14 day period,
          the Licensor shall (subject to sub-clause (d) of this Clause) be free
          to authorise such third party to exercise the Television Rights in
          that Premium Movie within the Territory;

     (d)  notwithstanding any failure by the Company to accept any offer made
          by the Licensor pursuant to this Clause or the absence of any
          obligation on the Licensor to make any offer pursuant to this Clause,
          the Licensor shall not authorise or permit any third party to
          broadcast, transmit or exhibit within the Territory (whether pursuant
          to the Standard Television Rights or the Non-Standard Television
          Rights) any Premium Movie, any excerpt from any Premium Movie or any
          promotional or advertising material or announcement publicising its
          transmission of any Premium Movie in any form (other than in the form
          of an on-screen credit and/or the display of the


                                      23.
<PAGE>

                                                                     DENTON HALL


          Licensor's logo or immediately after the closing titles) which allows
          or causes any of the Trade Marks, the "Playboy" name or any logo, mark
          or symbol which is associated with the "Playboy" name or brand to be
          seen or heard by any member of the public at any time during any
          broadcast, transmission or exhibition of that Premium Movie, any such
          excerpt or any such promotional or advertising material or
          announcement;

     (e)  if the Company shall accept any offer made by the Licensor pursuant to
          this Clause, that Premium Movie shall automatically become a Selected
          Programme for the purposes of this Agreement and be licensed to the
          Company as a Programme but on the terms of the offer accepted by the
          Company.

3.3  The Licensor shall not supply any Programme or Third Party Programme
     hereunder which would reasonably be designated regarded or treated as what
     is popularly known as "XXX Rated" in the United States of America.
     Programmes and Third Party Programmes supplied hereunder may include
     material rated "NC-17" by the Motion Picture Association of America (CARA)
     if the sexual content of such material is substantially similar to
     programming produced by the Licensor or any Affiliate of the Licensor
     itself unless such Programmes and/or Third Party Programmes will or might
     in the opinion of the Company be deemed obscene for the purposes of the
     Obscene Publications Act 1959 (or any modification re-enactment or
     replacement thereof) or in breach of any regulatory rules guidelines or
     codes applicable to the Service. In the event that the Company deems any
     Programme or Third Party Programme obscene or in breach of any applicable
     rule, guideline or code as aforesaid, the Company shall notify the Licensor
     to that effect and give the Licensor, if so requested, an opportunity to
     present arguments to the contrary to the board of directors of the Company.

3.4  The Company undertakes that, unless it is permitted to do so by virtue of
     any provisions of this Agreement, it shall not any time during the Term
     transmit in the Service or otherwise for reception in the Territory any
     programme which is not a Programme or a Third Party Programme.


                                      24.
<PAGE>

                                                                     DENTON HALL


4.   Undertakings by the Licensor
     ----------------------------

     The Licensor hereby agrees and undertakes with the Company that:

4.1  Each and every Playboy Programme will throughout the Term, and each and
     every Acquired Programme will throughout the Playboy Licence Period in
     respect of that Acquired Programme, be available on a sole and exclusive
     basis for delivery to and transmission by the Company within the Territory
     pursuant to this Agreement. Accordingly, the Licensor shall not and shall
     procure that each of its Affiliates shall not exercise, and shall not and
     shall procure that each of its Affiliates shall not directly or indirectly
     authorise licence or permit any third party to exercise, the Non-Standard
     Television Rights or the Standard Television Rights (or any of them) in or
     to any Programme or Third Party Programme in any country within the
     Territory at any time during the Term.

4.2  If the Licensor or any Affiliate of the Licensor is at any time during the
     Term proposing or negotiating to acquire (whether by way of licence, by
     operation of law or otherwise) the Non-Standard Television Rights or the
     Standard Television Rights within the Licensor's Territory in any
     television programme which is a Co-Production or which would, if the Non-
     Standard Television Rights therein were so acquired, be an Acquired
     Programme, then the Licensor shall, or shall procure that such Affiliate
     shall, use its best endeavours to acquire in addition (whether by way of a
     licence, by operation of law or otherwise) the Non-Standard Television
     Rights in that television programme within each of the countries of the
     Territory.

4.3  In each Year:

     (a)  the total number of Programme Hours of Programmes delivered to the
          Company in that Year for first transmission in the Service shall not
          be less than the Minimum Number of Hours in respect of that Year; and


                                      25.
<PAGE>

                                                                     DENTON HALL

     (b) the total number of Programme Hours of Playboy Programmes and of
         Playboy Acquired Programmes delivered to the Company in that Year for
         first transmission in the Service shall not be less than eighty (80)
         per cent of the Minimum Number of Hours in that Year; and

     (c) the total number of Programme Hours of Playboy Acquired Programmes
         delivered to the Company for first transmission in the Service shall
         not exceed sixteen (16) per cent of the Minimum Number of Hours in that
         Year.

4.4  In each Year none of the Selected Programmes or so-called "vignettes"
     delivered to the Company for first transmission in the Service in that Year
     shall have been delivered to the Company pursuant to this Agreement in any
     previous Year and neither shall any of such Selected Programmes or so-
     called "vignettes" have been broadcast, transmitted or exhibited in any
     country within the Territory at any time prior to their delivery hereunder
     by means of any form of Standard Television or Non-Standard Television.

4.5  The standard, quality, freshness and commercial appeal of the Selected
     Programmes, so-called "vignettes", promotional material and other
     programming delivered to the Company pursuant to this Agreement for first
     transmission in the Service shall not be inferior to the overall standard,
     quality, freshness and commercial appeal of the programming included during
     the period of twelve (12) months immediately preceding the Launch Date in
     the television service which is known as "Playboy TV" and is provided
     within the Licensor's Territory by the Licensor and/or an Affiliate of the
     Licensor ("the Playboy Service") or (if higher) to the overall standard,
     quality, freshness and commercial appeal of the programming from time to
     time included in the Playboy Service during the Term.

4.6  No Acquired Programme, Third Party Programme or so-called "vignette" shall
     be delivered to the Company by or on behalf of the Licensor for
     transmission in the Service, or scheduled for transmission in the Service
     by any Scheduler (other than a Scheduler appointed under

                                      26.
<PAGE>

                                                                     DENTON HALL

     Clause 8.4, proviso (c) or (d) to Clause 8.5, Clause 8.11.4 or Clause
     10.4), unless (a) the unexpired portion of the Playboy Licence Period in
     respect of that Acquired Programme, Third Party Programme or so-called
     "vignette" is at least twenty-four (24) months commencing upon the first
     day of the calendar month in which the first transmission by the Company of
     that Acquired Programme, Third Party Programme or so-called "vignette" in
     the Service takes place and (b) the Licensor has acquired the right, and
     the Company is therefore entitled, to transmit that Acquired Programme,
     Third Party Programme or so-called "vignette" in the Service on not less
     than twenty-four (24) occasions.

4.7  Without prejudice to and in addition to its obligations under Clause 4.3,
     the Licensor shall:

     (a) deliver to the Company for transmission in the Service on a timely
         basis such quantity and duration of "vignettes", promotional material
         and other programming as may be necessary to fill each hour of
         transmission time on the Service during which a Programme, or a Third
         Party Programme acquired by the Licensor, is transmitted; and

     (b) ensure that the total running time of the "vignettes" delivered to the
         Company for first transmission in the Service in each Year shall not in
         any event be less than ten (10) per cent of the Minimum Number of Hours
         in respect of that Year.

4.8  In the event that the Company requests the Licensor in writing to increase
     the maximum number of transmissions of so-called "vignettes" which it is
     entitled to make pursuant to this Agreement above twenty-four (24), the
     Licensor shall be deemed to have agreed to such request unless the Licensor
     notifies the Company within seven (7) days after the date of such request
     that it is unable to do so without committing a breach of any agreement
     between the Licensor and any third party (other than an Affiliate of the
     Licensor).

                                      27.
<PAGE>

                                                                     DENTON HALL

5.   Delivery Material
     -----------------

5.1  Following completion of the Transmission Schedule by the Scheduler for any
     Quarter in any Year, the Licensor shall deliver to the Company, at such
     place as the Company may from time to time direct by notice in writing, the
     Delivery Material in respect of each Selected Programme included in that
     Transmission Schedule (or licensed to the Company by virtue of the
     acceptance of any offer made pursuant to Clause 3.2 (as the case may be))
     no later than two months before the commencement of that Quarter. In the
     event that the Licensor or any Affiliate of the Licensor has in its
     custody, control or possession a dubbed or sub-titled version of any
     Selected Programme in any of the Service Languages, the Licensor shall
     deliver that dubbed or sub-titled version to the Company as part of the
     Delivery Material in respect of that Selected Programme. The costs of
     delivering Delivery Material to the Company pursuant to this Clause 5.1
     shall be borne as follows:

     (a) the cost of the blank tapes included in the Delivery Material and the
         cost of transporting the Delivery Material shall be borne by the
         Company; and

     (b) all other such costs (including but not limited to duplication costs
         and labour costs) shall be borne by the Licensor.

5.2  It shall be the responsibility of the Company to examine any Delivery
     Material made available by the Licensor for technical suitability and to
     notify the Licensor in writing within 30 (thirty) days of receipt of the
     Delivery Material of any defect that prevents use. The Licensor shall use
     all reasonable endeavours at its expense to replace the relevant elements
     of the Delivery Material within 21 (twenty-one) days of receipt of such
     notice but, if no such replacement is possible within such twenty-one day
     period or the Company is able to demonstrate that such replacement is also
     defective to such a degree as to prevent use, the Licensor shall make
     available to the Company (a) substitute Programme(s) or Third Party
     Programmes(s) of comparable nature, quality and duration which shall have
     been approved by the Company and upon (so far as is reasonably practicable)
     all the same

                                      28.
<PAGE>

                                                                     DENTON HALL

     terms as applied to the Programme or Third Party Programme in respect of
     which the Delivery Material is defective. The Delivery Material (which term
     includes any such replacement material as is referred to above) shall be
     deemed to have been accepted by the Company on the expiry of the said
     period of thirty (30) days unless the Licensor is so notified.

5.3  If after the Company has accepted, or is deemed pursuant to Clause 5.2 to
     have accepted, any Delivery Material in relation to a Selected Programme
     the Company requests further Delivery Material to replace material which
     has been erased or for any other reason is not usable for the purposes of
     this Agreement, the Licensor shall at the Company's cost arrange for such
     further Delivery Material to be delivered to the Company.

5.4  The supply to the Company of Delivery Material shall not imply a change of
     ownership in the Delivery Material or the Selected Programmes contained
     therein. The Company shall take reasonable precautions consistent with
     those taken for the Company's own materials to safeguard the Delivery
     Material against loss or damage.

5.5  The technical quality of Delivery Material delivered to the Company
     hereunder shall not be inferior to the technical quality of the
     transmission tapes or other material used for the transmission of
     programming in the Playboy Service (as defined in Clause 4.5) PROVIDED THAT
     the Licensor shall use its reasonable efforts to ensure that the technical
     quality of such Delivery Material also meets the customary standards of
     technical quality from time to time prevailing in the United Kingdom
     television industry.

6.   Editing, Publicity, Sub-titling and Dubbing
     -------------------------------------------

6.1  Subject to the provisions of Clauses 6.2, 6.3 and 6.6, the Company shall
     not without the prior written consent of the Licensor edit, abridge or in
     any way alter or rearrange any Selected Programme and shall (save in the
     event of an unexpected lack of time) broadcast each Selected Programme in
     its entirety.

                                      29.
<PAGE>

                                                                     DENTON HALL

6.2  The Company may edit Selected Programmes for the purposes of:

     6.2.1 meeting programme timing requirements provided that:

           (a) in carrying out such editing the Company shall not impair the
               technical quality, meaning or integrity of any Selected
               Programme; and

           (b) the Company shall not delete or fail to transmit any credits,
               titles or copyright notices appearing in any Selected Programme
               unless such failure is caused by unexpected lack of time;

     OR

     6.2.2 complying with any legislation or any rules regulations guidelines or
           codes of any competent regulatory authority of any country within the
           Territory having jurisdiction over the Service.

6.3  Subject to the provisions of Clause 6.8, the Company may at its own expense
     interpolate advertisements in the Selected Programmes but shall only do so
     during breaks in the Selected Programmes created or designated by the
     Licensor provided that such breaks comply with all rules and regulations
     relating to advertising which are applicable within the Territory. If the
     Licensor fails to create or designate breaks in any Selected Programme
     which comply with such rules and regulations, the Company shall be free to
     interpolate advertisements in that Selected Programme during breaks created
     by it but shall use all reasonable endeavours not to interrupt any Selected
     Programme at a place or in a manner which causes its technical quality,
     meaning or integrity to be impaired. The Licensor shall not supply to the
     Company any Selected Programme (or any Delivery Material in relation
     thereto) in which any advertisement or promotional material (other than
     promotional material promoting the transmission of Programmes or Third
     Party Programmes in the Service) is incorporated and, without

                                      30.
<PAGE>

                                                                     DENTON HALL

     prejudice to any other right or remedy of the Company, the Company shall be
     entitled to delete from any Selected Programme any advertisement or
     promotional material which is incorporated in that Programme or Third Party
     Programme on delivery of the relevant Delivery Material.

6.4  The Company may:

     (a)  broadcast and authorise third parties to broadcast sequences or
          excerpts from any Selected Programme for advertising and publicity
          purposes provided that no sequence so broadcast shall exceed two (2)
          minutes in running time and no excerpts so broadcast shall exceed
          three (3) minutes in running time; and

     (b)  exhibit excerpts from any Selected Programme to potential investors in
          the Company, advertisers and similar bodies. The Licensor shall on a
          timely basis following any request by the Company make available
          excerpts selected by the Company and supply materials to the Company
          for this purpose.


6.5  The Company may, and may authorise third parties to, publicise its
     transmission of each Selected Programme in any medium or media (including
     but not limited to newspaper, magazine, billboard, direct mail, television
     and radio advertising and publicity) and may for that purpose use and
     authorise the use of the title of the Selected Programme, the name and
     likeness (in the form of photographs which shall be supplied for that
     purpose by the Licensor) of each contributor to the Selected Programme (but
     not so as to endorse the use of any goods or services) and all other
     publicity material comprised in the Delivery Material.

6.6  The Licensor shall incorporate at appropriate intervals (which shall be
     determined by the Licensor having due regard to the need to identify and
     promote the Service and to the views and requests of the Company) in the
     Delivery Material relating to Selected Programmes supplied by the
     Licensor under this Agreement the logo used by the Company in connection
     with the Service (which logo shall be in the


                                      31.

<PAGE>

                                                                     DENTON HALL

     form approved by the Licensor prior to the Launch Date, such approval not
     to be unreasonably withheld) but, if the Licensor shall fail to do so, the
     Company shall, without prejudice to any of its other rights and remedies,
     be entitled to add such logo to Selected Programmes.


6.7  Unless the Licensor shall have notified the Company prior to or
     concurrently with delivery of the Delivery Material in respect of any
     Selected Programme that the Licensor does not have the right to dub and/or
     sub-title that Selected Programme, the Company shall also be entitled at
     its own expense to, and to authorise any third party to, translate, dub
     and/or sub-title the soundtrack of any Selected Programme into any or all
     of the Service Languages and to produce a version of versions of any
     Selected Programme in any of the Service Languages provided that the
     Company shall consult in good faith with the Licensor with a view to
     ensuring that the meaning or integrity of any Selected Programme is not
     impaired by any such dubbing or sub-titling. Ownership of all dubbed and/or
     sub-titled versions and foreign language tracks created by or on behalf of
     the Company pursuant to this Clause shall remain vested in the Company
     during the Term and thereafter shall be transferred to the Licensor without
     payment. The Company shall also make available to the Licensor at a price
     equal to 50% of the cost of dubbing or sub-titling access to and use of
     such versions and tracks during the Term.


6.8  Whenever the Company includes advertisements in the Service, it shall:


     (a)  use all reasonable endeavours not to accept advertisements for
          products and services which in any material way detract from the image
          established by the overall editorial content, graphic appeal and
          production qualities of the Playboy Programmes included in the Service
          ("the Playboy Image");


     (b)  not accept advertisements for:


          (i)  any of the categories of products and services listed in Schedule
               7; or


                                      32.
<PAGE>

                                                                     DENTON HALL

         (ii)  magazines which compete with any edition of the "Playboy"
               magazine; or

         (iii) related publications which are published or distributed in
               printed form by any competitor of the Licensor or any Affiliate
               of the Licensor (i.e. any person who is engaged in the
               publication and distribution of any magazine which competes with
               any edition of the "Playboy" magazine); or

         (iv)  any audio-visual products which compete with those produced,
               sold or distributed by the Licensor or any Affiliate of the
               Licensor within the Territory;

     (c) if the Licensor notifies the Company that any advertisement
         transmitted by the Company in the Service and specified by the Licensor
         in such notice does detract in a material way from the Playboy Image,
         only refuse to cease transmitting that advertisement in the Service on
         reasonable grounds (having regard inter alia to its contractual
         obligations to third parties in relation to that advertisement provided
         that the Company shall, if it would otherwise be obliged to cease
         transmitting that advertisement, use reasonable endeavours to obtain a
         release from such contractual obligations).

6.9  The Company hereby grants to the Licensor without charge the right
     throughout the Term to use Playboy Airtime for the purpose of advertising
     "Playboy" publications, and to authorise any Permitted Advertiser to use
     Playboy Airtime for the purpose of advertising any of its products and
     services which such Permitted Advertiser is concurrently advertising or
     committed to advertise in any edition of the "Playboy" magazine PROVIDED
     THAT the Licensor shall not itself use or authorise any Affiliate of the
     Licensor to use Playboy Airtime for the purpose of advertising any product
     (including but not limited to any audio or audio-visual product) or any
     service other than editions of the "Playboy" magazine (whether published by
     or under licence from the Licensor or any Affiliate of the Licensor) and
     related

                                      33.
<PAGE>

                                                                     DENTON HALL

     publications which are published or distributed in printed form. For the
     purposes of this Clause:

     (a) a "Permitted Advertiser" shall mean any person who has during the
         twelve (12) months immediately preceding any use of Playboy Airtime by
         that person purchased or agreed to purchase advertising space in any
         edition of the "Playboy" magazine for the first time; and

     (c) "Playboy Airtime" shall mean in respect of each hour of transmission
          time on the Service a period of thirty (30) seconds during that hour
          which is reserved for the transmission of advertisements.

     All advertisements which are to be transmitted during Playboy Airtime
     pursuant to this Clause shall be produced and delivered to the Company at
     the sole cost and expense of the Licensor. All such advertisements shall be
     subject to the terms and conditions (other than the Company's ratecard and
     discount policy) upon which the Company is prepared to accept
     advertisements as stated from time to time by the Company within its
     printed standard terms and conditions.

7.   Payment
     -------

7.1  In consideration of the rights granted to the Company under this Agreement
     and under the Trademark Agreement, the Company shall pay to the Licensor:

     (a) in each Year the Basic Licence Fee;

     (b) in respect of each Year commencing after the Year in which the Return
         of Investment Date falls, an amount equal to the amount by which the
         lesser of:

         (i) the Requisite Percentage of Available Net Profits in that Year; and

                                      34.
<PAGE>

                                                                     DENTON HALL

         (ii) the Requisite Percentage of Net Revenues in that Year exceed the
              Basic Licence Fee payable in respect of that Year; and

     (c) the Bonus Licence Fee (if any) upon the terms and subject to the
         conditions detailed in Clause 7.2.

7.2  In the event that the Return of Investment Date falls before the sixth
     anniversary of the Launch Date, then the Bonus Licence Fee shall be
     payable to the Licensor PROVIDED THAT:

     (a) if at any time after the Return of Investment Date and prior to payment
         of the Bonus Licence Fee in full any of the Company's shareholders (by
         whatever means and for whatever reason) provide(s) additional funding
         to the Company, payment of the balance of the Bonus Licence Fee shall
         be deferred until after repayment of all such funding (plus interest
         thereon) has (in the manner described and calculated in the definition
         of "Return of Investment Date" in Clause 1) been received by the
         relevant shareholder(s) in the Company; and

     (b) the Bonus Licence Fee shall only be payable to the Licensor out of
         Available Cash Flow and, to the extent that the Company does not as at
         the end of any Quarter have Available Cash Flow out of which to pay the
         Bonus Licence Fee, the Company shall have no liability to pay the Bonus
         Licence Fee on the final day of that Quarter pursuant to Clause 7.4(b)
         but the Bonus Licence Fee (or any unpaid balance thereof) shall be
         payable pursuant to Clause 7.4(b) as and when there is Available Cash
         Flow at the end of any subsequent Quarter.

7.3  The Basic Licence Fee in respect of each Year shall be payable by the
     Company in six (6) equal instalments on or before 28th February, 30th
     April, 30th June, 31st August, 31st October and 31st December in that Year
     (the first such instalment being payable on the first Payment Date
     following the Launch Date) provided that the number of

                                      35.
<PAGE>

                                                                     DENTON HALL

     instalments payable in the First Year shall be equal to the number of the
     Payment Dates falling during the First Year.

     Not later than 30 days prior to the first day of each Licence Year the
     Company shall supply to the Licensor a signed purchase order committing in
     that Licence Year to pay to the Licensor the amount of the Basic Licence
     Fee applicable to that Licence Year in consideration for and subject to the
     Licensor delivering to the Company for that Licence Year the portion of the
     Minimum Number of Hours of Programmes which is applicable to that Licence
     Year for first transmission in the Service. That purchase order will also
     contain a list of the Programmes to be delivered for first transmission in
     that Licence Year if the Licensor has previously supplied that list to the
     Company. The obligations of the Company under this paragraph of Clause 7.3
     and the terms of any purchase order delivered by the Company hereunder
     shall be read and construed subject to all of the other provisions of this
     Agreement which shall, in the event of any conflict, prevail. For the
     purposes of this paragraph a "Licence Year" shall mean any consecutive
     period of 12 months during the Term commencing upon the Launch Date or any
     anniversary of the Launch Date.

7.4  (a) In the event that a Programming Premium is payable to the Licensor in
         respect of any Year commencing after the Year in which the Return of
         Investment Date falls, the Company shall pay such Programming Premium
         to the Licensor within thirty (30) days after the date on which the
         amount of the Available Net Profits and the Net Revenues in that Year
         have been determined by the auditors of the Company and included in
         accounting statements approved by the directors of the Company.

     (b) On the final day of each Quarter in each Year commencing after the
         Return of Investment Date but in no event before the end of the fifth
         Year, the Company shall, until it has made payment of the Bonus Licence
         Fee in full, apply 100% of its Available Cash Flow in payment of the
         Bonus Licence Fee to the Licensor.

                                      36.
<PAGE>


                                                                     DENTON HALL

     (c)  Only after 100% of the Bonus Licence Fee has been paid by the Company
          may the Company begin paying dividends to any shareholder in the
          Company.


7.5  The licence fees payable by the Company under this Clause 7 and under
     Clause 8 are exclusive of any and all amounts of Value Added Tax payable
     thereon, which amounts of Value Added Tax shall be paid by the Company
     provided that an appropriate invoice shall have been rendered to the
     Company by the Licensor. If the Company is compelled by law or required by
     any present or future law, regulation, treaty or official directive to make
     any deduction or withholding from any amount of such licence fees, the
     Company shall be entitled to do so and shall not be required to pay any
     additional amount or amounts to the Licensor as a result of, or in order to
     compensate the Licensor for, any such deduction or withholding.


7.6  The Available Cash Flow of the Company as at the end of any Quarter shall
     for the purposes of sub-clause 7.2(b) be determined by the directors of the
     Company on a timely basis and a copy of such determination shall be
     provided to the Licensor. If the Licensor disagrees with any such
     determination, the Licensor may within 30 days after receipt of a copy
     thereof notify the Company to that effect whereupon the Company shall
     promptly refer the matter to its auditors (acting as experts and not as
     arbitrators) for their determination which shall be final and binding upon
     both parties. The costs of any such referral to the auditors shall be borne
     by the Licensor unless the auditors find that the determination made by the
     directors of the Company was materially incorrect in which case such costs
     shall be borne by the Company.


7.7  If the Company elects to transmit a Programme during a further Transmission
     Period pursuant to Clause 2.2 and provided that the Company does not
     subsequently decline to accept a further Transmission Period of that
     Programme pursuant to the proviso to Clause 2.2:


     (a)  the licence fee payable by the Company in respect of that further
          Transmission Period shall be:


                                      37.
<PAGE>

                                                                     DENTON HALL


         (i)   such sum as may be agreed in writing between the parties within a
               period of thirty (30) days after the date of the notice given by
               the Company pursuant to Clause 2.2 in respect of that Programme;
               or

         (ii)  in the absence of such agreement within that 30 day period, a sum
               equal to forty (40) per cent of the Initial Licence Fee and for
               this purpose "the Initial Licence Fee" shall be the lower of
               US$13,158 per Programme Hour of that Programme and the amount
               paid to the third party licensor of that Programme (in the case
               of an Acquired Programme) in consideration for the right to
               transmit that Programme in the Service within the Territory. Any
               licence fee payable pursuant to this Clause shall be paid in six
               (6) equal instalments within thirty (30) days after the final day
               of every fourth month during the first two (2) years of the
               further Transmission Period;


    (b)  the Basic Licence Fee in respect of each Year shall be increased by the
         aggregate of the license fees which the Company is liable to pay and
         reimburse to the Licensor in that Year pursuant to this Clause, and the
         references to the Basic Licence Fee in sub-clause 7.1(b) and in the
         definition of "the Bonus Amount" in Clause 1 shall, for the purpose of
         calculating any Programming Premium payable to the Licensor in respect
         of any Year and the Bonus Licence Fee (if any), mean the Basic Licence
         Fee as increased pursuant to this sub-clause.



7.8  In relation to each payment which is due to the Licensor pursuant to this
     Agreement, the Licensor shall deliver to the Company an invoice showing the
     amount of such payment and the Company shall make each such payment which
     is so invoiced in accordance with the relevant provision(s) of this
     Agreement.


                                     38.



<PAGE>

                                                                     DENTON HALL

8.     The Scheduler and Scheduling
       ----------------------------

8.1.1  During the first four (4) Years ("the Initial Period") the Licensor
       shall, after consulting with the Company in good faith regarding its
       proposed choice and taking into account any comments made by the Company
       in relation thereto, appoint an individual from the Licensor's staff
       based in Los Angeles to be the scheduler of the Service. If the Scheduler
       appointed under this Clause 8.1 is an employee of the Licensor, the
       Licensor shall be free to terminate the employment of that Scheduler
       based upon the Licensor's normal business practices whereupon the
       Licensor shall forthwith notify the Company and the provisions of sub-
       clause 8.1.2 shall apply to the appointment of a replacement Scheduler.
       In addition the Company may by giving one month's notice in writing to
       the Licensor expiring at any time after the first anniversary of the
       Launch Date and before the final day of the Initial Period require the
       Licensor to replace any Scheduler appointed under this Clause 8.1
       whereupon the provisions of sub-clause 8.1.2 or Clause 8.4 (as the case
       may be) shall apply to the appointment of a replacement Scheduler. The
       Company may not however exercise its right under the immediately
       preceding sentence of this sub-clause on more than one occasion during
       any twelve (12) month period during the Initial Period.

8.1.2  If at any time during the Initial Period the Licensor terminates the
       employment of any Scheduler appointed by it under this Clause 8.1 or the
       Company exercises its right under sub-clause 8.1.1 to replace any such
       Scheduler, the Licensor shall, after consulting with the Company in good
       faith regarding its proposed choice and taking into account any comments
       made by the Company in relation thereto, on a timely basis appoint one of
       its employees to be the scheduler of the Service as a replacement for the
       individual whose employment has been terminated by it or who is to be
       replaced by virtue of the exercise by the Company of its right under sub-
       clause 8.1.1.

8.2    The duties of the Scheduler shall include:

       8.2.1 selecting the Programmes and Third Party Programmes for
             transmission in the Service and preparing a quarterly

                                      39.
<PAGE>

                                                                     DENTON HALL

             Transmission Schedule for the same in compliance with the
             Shareholders Agreement, the Business Plan and this Agreement
             (including but not limited to Clause 4 as well as the Minimum
             Number of Hours and Programme Specification). The Scheduler will
             supply to the Company and to the Licensor a copy of each quarterly
             Transmission Schedule not later than 75 days prior to the first day
             of the relevant Quarter. The Scheduler will only procure the
             acquisition of and schedule Third Party Programmes in accordance
             with the terms of this Agreement;

       8.2.2 ensuring that the Selected Programmes and all interstitial material
             referred to in sub-clause 8.2.5 below are assembled in accordance
             with the Transmission Schedule;

       8.2.3 ensuring that no Selected Programme is scheduled for transmission
             in the Service on more than fifteen (15) occasions during any Year
             (which number shall be reduced or increased pro rata if the Minimum
             Number of Hours is increased above or reduced below 114 pursuant to
             Clause 8.6, 8.7, 8.8, 8.11 or 10.4);

       8.2.4 supervising the design of the on-screen appearance of the Service;

       8.2.5 at the cost of the Licensor procuring (a) the supply of or
             commissioning where necessary all on-screen promotional and
             interstitial material which is required in order to promote both
             the Selected Programmes and the Service and in a form which is
             suitable for transmission within the Territory and (b) the
             insertion of the Company's logo in each Selected Programme.

8.3.1  Each Scheduler appointed by the Licensor under Clause 8.1 during the
       Initial Period will be based in Los Angeles but the Licensor shall
       procure that he or she will be available to the Company at the Company's
       offices in the United Kingdom as and when reasonably required by the
       Company for the proper discharge of the Scheduler's functions hereunder.
       The Licensor shall also procure that each such

                                      40.
<PAGE>

                                                                     DENTON HALL

       Scheduler shall when not in the United Kingdom be generally readily
       available for consultation with the Company and its staff.

8.3.2  All costs (including, without limitation, all remuneration, benefits and
       bonuses) in connection with the engagement and provision of the services
       of the Scheduler and all related support personnel and services and with
       the performance of the Licensor's obligations under Clauses 8.1, 8.2 and
       8.3 will be borne solely and exclusively by the Licensor (save only in
       the circumstances set out in Clause 8.4, in sub-clause 8.5.3 and in
       provisos (c) and (d) to Clause 8.5 and provided that all reasonable and
       vouchered travelling and accommodation costs incurred by the Scheduler
       in travelling to and whilst visiting the United Kingdom or elsewhere
       within the Territory at the request of the Company shall be borne by the
       Company).

8.3.3  The services of each Scheduler appointed under Clause 8.1, Clause 8.4 or
       Clause 8.5 shall (unless the Scheduler is engaged by the Company as an
       employee of the Company pursuant to Clause 8.4 or proviso (c) or (d) to
       Clause 8.5) be made available by the Licensor to perform inter alia the
       duties set out in Clause 8.2 on a first call basis in connection with the
       Service. The Licensor shall make available the services of each such
       Scheduler, together with all support personnel and office services and
       facilities reasonably required by that Scheduler, for such periods, at
       such times during the Licensor's normal working hours and in such a
       manner as may be necessary in order to enable that Scheduler to discharge
       his or her obligations effectively and efficiently hereunder. The
       Licensor shall (unless the Scheduler is engaged by the Company as an
       employee of the Company pursuant to Clause 8.4 or proviso (c) or (d) to
       Clause 8.5) procure that the Scheduler shall at all times perform his
       or her duties in accordance with the provisions of this Agreement and the
       Shareholders' Agreement.

8.4    If the Company wishes to replace any Scheduler appointed under Clause
       8.1 with effect from any date after the final day of the Initial Period,
       it may do so upon giving not less than one month's written notice to the
       Licensor expiring at any time after the final

                                      41.

<PAGE>

                                                                     DENTON HALL

     day of the Initial Period. If the Company gives such a notice, the Company
     shall nominate in writing two or more individuals to act as Scheduler and,
     in respect of each individual so nominated by it, the Company shall specify
     the parameters of the financial terms on which it is proposing to engage
     that individual. Within fourteen (14) days thereafter the Licensor must
     choose one of the persons nominated and the Company will then engage at its
     own expense in the capacity of Scheduler hereunder either the individual so
     chosen by the Licensor or, if within that 14 day period the Licensor fails
     to choose any of the individuals nominated, the individual chosen by the
     Company. The provisions of Clause 8.5 shall apply to the replacement of any
     Scheduler appointed under this Clause 8.4.

8.5  If at any time after the first anniversary of the date upon which the
     appointment of the Scheduler appointed under Clause 8.4 took effect either
     party wishes to replace the Scheduler appointed under Clause 8.4 or any
     successor thereof appointed under this Clause 8.5, it may (subject always
     to the provisions of sub-classes 8.11.4 and 10.4.4) do so upon giving three
     months' written notice (a "Scheduler Replacement Notice") to the other
     party in which event:

     8.5.1 each party shall use its best endeavours to reach agreement with the
           other party upon the appointment of a replacement Scheduler and, if
           within that 3 month notice period such agreement is reached, the
           agreed individual shall be appointed as the Scheduler;

     8.5.2 if within that 3 month notice period the parties shall have been
           unable to reach agreement, each party shall not later than the final
           day of that 3 month period nominate in writing two individuals to act
           as Scheduler, the name of each individual so nominated shall be
           placed in a hat and the Chief Executive Officer of the Company shall
           draw one name out of that hat. The individual whose name is drawn out
           of the hat shall be appointed as the Scheduler;

                                      42.

<PAGE>

                                                                     DENTON HALL

8.5.3  if any Scheduler appointed under sub-clause 8.5.2:

       (a) was nominated by the Company; and
      
       (b) is not an employee of the Licensor
      
       that Scheduler shall be engaged by the Company at its expense;

8.5.4  if at any time either party wishes to replace an individual appointed
       under sub-clause 8.5.1 or 8.5.2, it shall follow the procedure
       hereinbefore set out in this Clause 8.5

PROVIDED ALWAYS THAT:

(a)    neither party may exercise the right to replace a Scheduler appointed
       under this Clause 8.5 at any time prior to the first anniversary of the
       date upon which the appointment of that Scheduler took effect;

(b)    the Licensor may not exercise the right to replace a Scheduler appointed
       under Clause 8.4 or under this Clause 8.5 in the circumstances described
       in sub-clause 8.11.4 or 10.4.4 if:

       (i)  at any time prior to the date of any Scheduler Replacement Notice
            given under this Clause 8.5, the Company has given a notice to the
            Licensor under Clause 8.6 or Clause 8.11; or

       (ii) as at the date of any Scheduler Replacement Notice given under this
            Clause 8.5, the Licensor holds less than fifteen (15) per cent in
            nominal value of the total issued ordinary shares in the capital of
            the Company

       and, if either paragraph (i) or (ii) above shall apply, the relevant
       Scheduler Replacement Notice given by the Licensor under this Clause 8.5
       shall have no force or effect; and

                                      43.


<PAGE>

                                                                     DENTON HALL

     (c) if either paragraph (i) or (ii) of proviso (b) above shall apply as at
         the date of any Scheduler Replacement Notice given by the Company under
         this Clause 8.5 and if within the three month period specified in that
         notice the parties shall have been unable to reach agreement upon a
         replacement Scheduler, then the Company may nominate in writing two or
         more individuals to act as Scheduler and, in respect of each individual
         so nominated by it, the Company shall specify the parameters of the
         financial terms on which it is proposing to engage that individual
         whereupon the provisions of sub-clauses 8.5.1 to 8.5.3 shall not apply
         to the appointment of the replacement Scheduler. Within fourteen (14)
         days thereafter the Licensor must choose one of the persons nominated
         and the Company will then engage at its own expense in the capacity of
         Scheduler hereunder either the individual so chosen by the Licensor or,
         if within that 14 day period the Licensor fails to choose any of the
         individuals nominated, the individual chosen by the Company; and

     (d) if as at the date of any Scheduler Replacement Notice given under this
         Clause 8.5, the Licensor holds less than ten (10) per cent in nominal
         value of the total issued ordinary shares in the capital of the
         Company, the Company shall be freely entitled to replace the Scheduler
         and engage at its expense a replacement Scheduler of its choice and
         sub-clauses 8.5.1 to 8.5.3 and proviso (c) to this Clause 8.5 shall not
         apply to the appointment of any such replacement Scheduler by the
         Company.

8.6  If the Net Revenues per Household received by the Company during the fourth
     Year is less than One Pound and thirty-seven pence ((Pounds)1.37) then at
     any time prior to the first day of the sixth Year the Company may, or if
     the Company becomes entitled to (but does not) terminate this Agreement
     pursuant to sub-clause 10.2(b), then at any time thereafter the Company
     may, give notice to the Licensor (with a copy to the Scheduler) stating
     that the Minimum Number of Hours is with effect from a date specified in
     such notice which shall not fall less than

                                      44.

<PAGE>

                                                                     DENTON HALL

ninety (90) days after the date of such notice ("the Applicable Date") to be
reduced and specifying such reduced Minimum Number of Hours in respect of each
subsequent Year. If the Company gives such a notice, then the following
provisions shall apply:

(a)    the aggregate Programme Duration of Programmes delivered to the Company
       by the Licensor for first transmission in the Service during each Year
       commencing after the Applicable Date shall comprise not less than fifty-
       one (51) per cent of the aggregate Programme Duration of all Programmes
       and all Third Party Programmes transmitted in the Service for the first
       time during that Year;

(b)    all Third Party Programmes broadcast by the Company for reception within
       the Territory following the Applicable Date shall fall within the
       Programme Specification;

(c)    following the Applicable Date Third Party Programmes shall (subject to
       the provisions of sub-clause (i) of this Clause 8.6) be acquired by the
       Licensor acting upon instruction from the Scheduler or the Company and
       as the agent of the Company on terms which shall first have been approved
       by the Company in writing and the Company shall within 21 days of receipt
       of the Licensor's invoice with respect thereto reimburse to the Licensor
       all licence fees which shall actually have been paid by the Licensor to
       the relevant third party with the prior written approval of the Company
       in accordance with this sub-clause and in consideration for the right to
       transmit the relevant Third Party Programme(s) in the Service within the
       Territory;

(d)    the Basic Licence Fee payable by the Company in respect of each Year
       commencing after the Year in which the Applicable Date falls shall be
       reduced pro rata to an amount calculated by:

       (i)  multiplying the reduced Minimum Number of Hours specified in such
       notice by the Basic Licence Fee which 

                                      45.
<PAGE>

                                                                     DENTON HALL

         would have been payable by the Company in respect of the relevant Year
         if no notice had been given by the Company pursuant to this Clause; and

    (ii) dividing the product of that multiplication by the number which would
         have represented the Minimum Number of Hours in respect of the Year in
         which the Applicable Date falls if no notice had been given by the
         Company pursuant to this Clause;

(e) the Basic Licence Fee payable by the Company in respect of the Year in which
    the Applicable Date falls shall be the aggregate of the following amounts:

    (i)  an amount ("the First Amount") calculated by (A) dividing by 365 the
         amount of the Basic Licence Fee which would have been payable by the
         Company in respect of that Year if no notice had been given by the
         Company pursuant to this Clause and (B) multiplying the product of that
         division by the total number of days during that Year prior to (but
         excluding) the Applicable Date; and

    (ii) an amount calculated by (A) subtracting the First Amount from the
         amount of the Basic Licence Fee which would have been payable by the
         Company in respect of that Year if no notice had been given by the
         Company pursuant to this Clause, (B) dividing the figure resulting from
         that subtraction by the number which would have represented the Minimum
         Number of Hours in respect of that Year if no notice had been given by
         the Company pursuant to this Clause and (C) multiplying the product of
         that division by the reduced Minimum Number of Hours specified in such
         notice in respect of each subsequent Year;

                                      46.

<PAGE>

                                                                     DENTON HALL

(f)    each Requisite Percentage shall with effect from the Applicable Date be
       reduced pro rata to a percentage calculated in the manner detailed in
       paragraphs (i) and (ii) of sub-clause (d) of this Clause save that for
       the purposes of each such calculation the reference in paragraph (i) of
       sub-clause (d) to "the Basic Licence Fee which would have been payable by
       the Company" shall be read as a reference to the Requisite Percentage of
       Available Net Profits or Net Revenues (as the case may be) which applied
       for the purpose of calculating the Programming Premium (if any) payable
       to the Licensor in respect of the immediately preceding Year;

(g)    the Minimum Number of Hours in respect of the Year in which the
       Applicable Date falls shall be the aggregate of the following numbers:

       (i)  a number calculated by (A) dividing by 365 the number which would
            have represented the Minimum Number of Hours in respect of that
            Year if no notice had been given by the Company pursuant to this
            Clause and (B) multiplying the product of that division by the total
            number of days during that Year prior to (but excluding) the
            Applicable Date; and

       (ii) a number calculated by (A) subtracting the total number of days
            during that Year following (and including) the Applicable Date from
            365, (B) dividing the figure resulting from that subtraction by 365
            and (C) multiplying the product of that division by the reduced
            Minimum Number of Hours specified in such notice in respect of each
            subsequent Year;

(h)    the maximum percentage (i.e. 36%) of Programme Hours of Acquired
       Programmes and the maximum percentage of Playboy Acquired Programmes
       (i.e. 16%) which in any Year commencing after the Applicable Date the
       Licensor is entitled by virtue of sub-clauses 4.3(b) and 4.3(c) to
       deliver to the Company for

                                      47.

<PAGE>
                                                                     DENTON HALL

     first transmission in the Service shall each be reduced pro rata to a
     percentage calculated in the manner detailed in paragraphs (i) and (ii) of
     sub-clause (d) of this Clause save that for the purposes of this
     calculation the reference in paragraph (i) of sub-clause (d) to "the Basic
     Licence Fee which would have been payable by the Company" shall be read as
     a reference to the maximum percentage of Programme Hours of Acquired
     Programmes or (as the case may be) the maximum percentage of Playboy
     Acquired Programmes which the Licensor was entitled to deliver to the
     Company in the immediately preceding Year pursuant to sub-clause 4.3(b) or
     4.3(c) for first transmission in the Service;

(i)  in the event that the Company gives a notice pursuant to this Clause 8.6
     after the Company has become entitled (but has elected not) to terminate
     this Agreement pursuant to sub-clause 10.2(b), then following the
     Applicable Date:

     (i)  the provisions of sub-clause (c) of this Clause 8.6 shall cease to
          apply, the Company shall be freely entitled at the Company's expense
          to licence Third Party Programmes from third parties and to schedule
          and transmit such Third Party Programmes in the Service and the
          Company shall assume sole responsibility for such licensing and
          scheduling PROVIDED THAT all Third Party Programmes so transmitted in
          the Service shall fall within the Programme Specification and the
          Company shall comply with the provisions of sub-clause (a) of this
          Clause 8.6 (as amended by paragraph (iii) below);

     (ii) the Company shall be freely entitled to replace the Scheduler and to
          engage at its expense a replacement Scheduler of its choice and
          Clauses 8.1 and 8.5 shall not apply to the appointment of any such
          replacement Scheduler.




                                      48.




<PAGE>

                                                                     DENTON HALL

         (iii) the reference to "fifty-one (51) per cent" in sub-clause (a) of
               this Clause 8.6 shall be read as a reference to "fifty-one (51)
               per cent or such lesser percentage as the Licensor is able to
               deliver to the Company for first transmission in the Service in
               compliance with the provisions of Clause 4"; and

         (iv)  if in any Year commencing after the Applicable Date the
               aggregate Programme Duration of Programmes transmitted by the
               Company in the Service during that Year shall comprise less than
               twenty-five (25) per cent of the aggregate Programme Duration of
               all Programmes and all Third Party Programmes transmitted in the
               Service during that Year, then the Licensor may within ninety
               (90) days after the final day of that Year give notice to the
               Company requiring the Company to remove the word "Playboy" from
               both the name of the Service and the name of the Company and the
               Company shall promptly comply with any such notice.

8.7  The Company shall be entitled at any time and from time to time after the
     first anniversary of the Launch Date:

     (a) to notify the Licensor that in its reasonable opinion (whether based
         upon the results of then current market research, feedback from
         advertisers or potential advertisers, a failure to achieve the
         objectives of any Business Plan and/or any other valid reason specified
         in writing by the Company) the then current Minimum Number of Hours is
         not sufficient and needs to be increased; and

     (b) pursuant to that notice to require the Licensor to deliver to the
         Company with effect from a date specified in that notice which shall
         fall not less than ninety (90) days after the date of that notice and
         in each subsequent Year commencing after the effective date of that
         notice such higher Minimum Number of Hours as may be specified by the
         Company in that notice

                                      49.

<PAGE>

                                                                     DENTON HALL

            PROVIDED THAT the higher Minimum Number of Hours so specified by the
            Company shall not exceed two hundred and twenty-eight (228).

8.8    If the Company gives such a notice pursuant to Clause 8.7:

       (a)  the Licensor shall deliver such higher Minimum Number of Hours to
            the Company in accordance with that notice provided that, if the
            Licensor is unable to deliver such higher Minimum Number of Hours to
            the Company without committing a breach of one of its other
            obligations hereunder, it shall be entitled to refuse to do so by
            giving notice in writing to the Company within 30 days after receipt
            of such notice from the Company;

       (b)  if the Licensor does so refuse to deliver such higher Minimum Number
            of Hours to the Company, then the Company shall be free to include
            Third Party Programmes in the Service and, solely for the purpose of
            calculating (i) any Programming Premium payable to the Licensor in
            respect of the Year in which that notice took effect (the "Current
            Year") and in respect of any subsequent Year commencing after the
            Current Year, and (ii) the Bonus Licence Fee (if any), the Basic
            Licence Fee in respect of the Current Year and in respect of each
            such subsequent Year shall be deemed to have been increased by the
            aggregate of all licence fees paid by the Company during the Current
            Year or that subsequent Year (as the case may be) in consideration
            for the right to include Third Party Programmes in the Service;

       (c)  if the Licensor does deliver such higher Minimum Number of Hours to
            the Company, then with effect from the date specified in that notice
            in accordance with sub-clause 8.7(b):

            (i)  the Company shall pay to the Licensor an additional licence fee
                 at the Hourly Rate (as defined in paragraph (iv) below) for
                 each Programme Hour in respect of those additional Playboy
                 Programmes which are delivered to the Company for first
                 transmission in the Service in

                                      50.

<PAGE>

                                                                     DENTON HALL

       any Year (an "additional" Playboy Programme being any Playboy Programme
       over and above those Playboy Programmes which are so delivered to the
       Company in that Year and whose aggregate Programme Duration is ninety-one
       (91) Programme Hours) and that additional licence fee will be added to
       and paid as part of the Basic Licence Fee for that Year in accordance
       with Clause 7.3;
      
(ii)   the Company shall within 21 days after receipt of the Licensor's invoice
       with respect thereto reimburse to the Licensor such licence fees as may
       actually have been paid to third parties in consideration for the right
       to transmit any Acquired Programme(s) in the Service within the Territory
       and with the prior written approval of the Company provided that the
       provisions of this paragraph (ii) shall only apply to those Acquired
       Programmes which are delivered to the Company for first transmission in
       the Service and whose aggregate Programme Duration exceeds twenty-three
       (23) Programme Hours in any Year;

(iii)  the Basic Licence Fee in respect of each Year shall be increased by the
       aggregate of the licence fees which the Company is liable to pay and
       reimburse to the Licensor in that Year pursuant to paragraphs (i) and
       (ii) of this sub-clause, and in respect to the Current Year (as defined
       in sub-clause (b) above) and each subsequent Year commencing after the
       Current Year the references to the Basic Licence Fee in sub-clause 7.1(b)
       and in the definition off "the Bonus Amount" in Clause 1 shall, for the
       purpose of calculating any Programming Premium payable to the Licensor in
       respect of the Current Year and any subsequent Year commencing after the
       Current Year and the Bonus Licence Fee (if any), mean the Basic Licence
       Fee as increased pursuant to this paragraph;

                                      51.
<PAGE>

                                                                     DENTON HALL

         (iv) for the purpose of paragraph (i) of this sub-clause, "the Hourly
              Rate" shall mean thirteen thousand one hundred and fifty-eight
              United States Dollars (US$13,158);

     (d) if the Licensor does deliver such higher Minimum Number of Hours to the
         Company, the Company shall be entitled at any time thereafter to give
         notice to the Licensor (with a copy to the Scheduler) stating that the
         Minimum Number of Hours is with effect from a date specified in such
         notice which shall fall not less than ninety (90) days after the date
         of such notice ("the Applicable Date") to be reduced and specifying
         such reduced Minimum Number of Hours in respect of each subsequent Year
         PROVIDED THAT the reduced Minimum Number of Hours so specified
         pursuant to this sub-clause shall not be less than one hundred and
         fourteen (114). If the Company gives such a notice, the provisions of
         sub-clauses 8.6(a) to (h) shall apply as if such notice had been given
         under Clause 8.6 SAVE AND EXCEPT THAT sub-clauses 8.6(c) and (h) shall
         not apply.

8.9  The Company may at any time by notice in writing to the Licensor require
     the Licensor to acquire and schedule for transmission in the Service a
     motion picture as an Acquired Premium Movie. Any such notice shall specify
     the criteria which any motion picture so acquired by the Licensor would
     have to satisfy ("the Criteria") including but not limited to the maximum
     amount of the licence fee which the Company is prepared to pay in order to
     acquire such a motion picture. The following provisions shall apply to the
     acquisition of Acquired Premium Movies:

     (a) the maximum number of Acquired Premium Movies which the Licensor can
         be required to acquire in any Year and the maximum amount which the
         Company may expend on such acquisitions in any Year shall be as
         follows:

                                      52.

<PAGE>

                                                                     DENTON HALL

         (i)   in the First Year: one Acquired Premium Movie at a cost not
               exceeding one hundred thousand pounds ((pounds)100,000);

         (ii)  in the second Year: such number of Acquired Premium Movies as the
               directors of the Company may determine at an aggregate cost not
               exceeding four hundred thousand pounds ((pounds)400,000) less
               such amount as may have been expended by the Company in the First
               Year on the acquisition of an Acquired Premium Movie;

         (iii) in the third and each subsequent Year: such number of Acquired
               Premium Movies and at such cost and aggregate cost as the
               directors of the Company may determine;

     (b) if the Company gives such a notice, the Licensor shall within fourteen
         (14) days after the date of that notice nominate in writing the titles
         of not less than three (3) motion pictures which satisfy the Criteria
         and, if the Company selects one of those three (3) motion pictures (a
         "Selected Title"), the Licensor shall use all reasonable endeavours to
         acquire that Selected Title for transmission in the Service;

     (c) the Licensor shall only acquire a Selected Title for transmission in
         the Service upon terms which shall first have been approved in writing
         by the Company and, after having so acquired a Selected Title, shall
         promptly schedule or procure the scheduling of that Selected Title for
         transmission in the Service in accordance with the reasonable
         requirements of the Company;

     (d) if a Selected Title is so acquired by the Licensor and scheduled for
         transmission in the Service, the Company shall within 21 days of
         receipt of the Licensor's invoice with respect thereto reimburse to the
         Licensor all licence fees which shall actually have been paid by the
         Licensor with the

                                     53.

<PAGE>

                                                                     DENTON HALL

          prior written approval of the Company in accordance with this sub-
          clause and in consideration for the right to transmit the relevant
          Selected Title in the Service within the Territory;

      (e) if within ninety (90) days after the date of that notice the Licensor
          shall have been unable so to acquire a Selected Title for transmission
          in the Service or if the Licensor shall have failed to perform its
          obligations under this Clause, the provisions of Clause 8.10 shall
          apply.

8.10  If at any time when the Company is entitled to include Third Party
      Programmes in the Service hereunder and/or the Company requests or
      instructs the Licensor to obtain such Third Party Programmes on its behalf
      in accordance with the terms hereof and the Licensor refuses, fails or
      neglects to obtain the same or does not obtain them in a timely fashion
      and/or on terms reasonably acceptable to the Company, then the Company
      shall be entitled to license or procure the licensing of the same and to
      schedule and transmit such Third Party Programmes in the Service.

8.11  If at any time during the Term the Company is obliged under the laws of
      any country within the Territory to transmit in the Service a certain
      percentage ("the Quota Percentage") of programmes which are European
      Works, then the Company shall notify the Licensor in writing to that
      effect specifying the Quota Percentage and the following provisions shall
      apply:

      8.11.1 within thirty (30) days after the date of any such notice the
             Licensor may by notice in writing to the Company elect with effect
             from the date which falls sixty (60) days after the date of the
             notice given by the Company ("the Applicable Date") to produce, co-
             produce or acquire and supply to the Company for first transmission
             in the Service in accordance with the provisions of this Agreement
             (including but not limited to the provisions of Clause 4) such
             number of Programme Hours of Programmes or Third Party Programmes
             which are European Works as may be necessary to enable the Company
             to transmit in the

                                      54.

<PAGE>

                                                                     DENTON HALL

       Service the Quota Percentage of programmes which are European Works.
      
8.11.2 if the Licensor elects under sub-clause 8.11.1 to acquire Third Party
       Programmes, the Company may give notice to the Licensor stating that the
       Minimum Number of Hours is with effect from the Applicable Date to be
       reduced and specifying such reduced Minimum Number of Hours in respect of
       each subsequent Year whereupon the provisions of sub-clauses 8.6(a) to
       (h) shall apply as if such notice had been given under Clause 8.6 SAVE
       AND EXCEPT THAT:

       (a)  the reference in sub-clause 8.6(a) to "fifty-one (51) per cent"
            shall be read as a reference to the Quota Percentage for the
            purposes of this Clause; and

       (b)  the references in sub-clause 8.6(c) to "Third Party Programmes"
            shall be read as references to "Third Party Programmes which are
            European Works".

8.11.3 if the Licensor does not so elect under sub-clause 8.11.1, the provisions
       of sub-clause 8.11.2 shall apply SAVE AND EXCEPT THAT sub-clauses 8.6(c)
       and 8.11.2(b) shall not apply and the Company shall following the
       Applicable Date (subject only to its obligations under sub-clauses 8.6(a)
       and (b)) be entitled at the Company's expense to licence Third Party
       Programmes which are European Works from third parties and to schedule
       and transmit such Third Party Programmes in the Service and shall assume
       sole responsibility for such licensing and scheduling.

8.11.4 if the Licensor does not so elect under sub-clause 8.11.1, then the
       following provisions shall also apply:

       (a)  the Company shall be freely entitled to replace the Scheduler and to
            engage at its expense a replacement Scheduler of its choice and
            Clauses 8.1 and 8.5 shall not apply to the appointment of any such
            replacement Scheduler; and

                                      55.

<PAGE>

                                                                     DENTON HALL


     (b)  if the Licensor notifies the Company that it is able to license to the
          Company any Programme which is a European Work in addition to the
          Programmes which the Company is obliged to transmit pursuant to Clause
          8.6, then the Company shall not unreasonably refuse to licence that
          Programme from the Licensor at a licence fee not exceeding (i)
          US$13,158 per Programme Hour (in the case of a Playboy Programme) or
          (ii) the actual amount paid to the third party licensor of that
          Programme in consideration for the right to transmit that Programme in
          the Service within the Territory (in the case of an Acquired
          Programme).

9.   Warranties
     ----------

9.1  The Licensor warrants to the Company in relation to each Selected Programme
     that:

     (a)  the Licensor has obtained and paid for, all such rights in the
          Selected Programme and has obtained and paid for all such releases
          licences and consents in relation to the material incorporated in it
          as are necessary to enable the Company to exercise the rights in the
          Selected Programme granted to it under this Agreement;

     (b)  no material contained in the Selected Programme is or will be
          libellous or otherwise defamatory of any person or obscene or
          constitute an invasion of any rights of privacy;

     (c)  the exercise by the Company of the rights hereby granted in the
          Selected Programme will not infringe the copyright, moral rights or
          any other similar right of any person;

     (d)  the Licensor is not at the date of this Agreement aware of any legal
          proceedings or any threat of legal proceedings or any claim by any
          third alleging that the Selected Programme


                                      56.
<PAGE>

                                                                     DENTON HALL


          infringes the rights (whether of copyright or otherwise) of any third
          party or that the exercise of the rights hereby granted in the
          Selected Programme will infringe the rights (whether of copyright or
          otherwise) of any third party;

     (e)  there are not and will not at any time during the Term be any charges,
          liens, security interests or other encumbrances over or affecting the
          Selected Programme which would preclude the exercise by the Company of
          the rights hereby granted in the Selected Programme;

     (f)  the content of the Selected Programme will comply with all censorship
          regulations and all broadcasting standards, regulations, codes and
          guidelines as to programme content which may be applicable to
          television services such as the Service in each country within the
          Territory and may have drawn up and/or imposed on such television
          services by any competent regulatory authority or body in any such
          country; and

     (g)  all music synchronisation licence and recording and performance fees
          and royalties, and all residuals, use fees and other monies payable in
          connection with the Selected Programme or the rights upon which it is
          based or the performances incorporated in it have been or will prior
          to the delivery of the Delivery Material be paid and that no fees of
          any description whatsoever will be payable by the Company in respect
          of the exercise in the Territory of the rights hereby granted in the
          Selected Programme other than performing rights in respect of music
          contained in the Selected Programme.

9.2  Each party warrants to and undertakes with the other that:

     (a)  it has full right title and authority to enter into this Agreement
          and to perform the obligations undertaken by it hereunder and that it
          has not entered into any agreement with any third party which does or
          will conflict with the terms hereof; and

                                      57.

<PAGE>

                                                                     DENTON HALL



     (b)  it will indemnify the other against all actions proceedings claims
          costs and expenses (including without limitation legal fees) and any
          other damage suffered by the other as a direct or reasonably
          foreseeable result of a breach of any of the warranties, undertakings
          or agreements on its part contained or made in this Agreement.

10.  Term, Termination and Extension
     -------------------------------

10.1 This Agreement shall become effective upon the date hereof and shall remain
     in effect throughout the Term.

10.2 In addition to and not in substitution for any other right or remedy either
     party shall have the right to terminate this Agreement with immediate
     effect by written notice to the other party to that effect given at any
     time if:

     (a)  the other party shall commit a material breach of any term or
          provision of this Agreement, or (subject to the provisions of Clause
          10.7) any warranty made herein by the other party shall be found not
          to be true and accurate in all material respects (a "default"), and
          such breach or default if remediable shall not have been remedied by
          the other party within twenty-eight (28) days after receipt of written
          notice specifying such breach or default and requiring the same to be
          remedied; or

     (b)  the other party shall cease to carry on business or shall be unable to
          pay its debts as they fall due for payment or if under the laws of any
          jurisdiction a liquidator, administrator, receiver, or similar
          official is appointed of the other party or in respect of any of its
          assets or undertaking or if any liquidation, insolvency, winding-up,
          administration or similar proceedings are instituted against the other
          party under the laws of any jurisdiction PROVIDED ALWAYS THAT the
          Licensor shall not be entitled to terminate this Agreement under this
          sub-clause 10.2(b) if Flextech shall notify the Licensor of its


                                      58.
<PAGE>

                                                                     DENTON HALL


          offer to acquire the Licensor's entire shareholding in the Company
          pursuant to Clause 8.5 of the Shareholder's Agreement of even date
          herewith; or

     (c)  the other party is prevented by an event of Force Majeure from
          performing its obligations, or if the party giving such notice of
          termination is prevented by an event of Force Majeure from exercising
          its rights, under this Agreement for a period in excess of one hundred
          and eighty (180) consecutive days; or

     (d)  the Trademark Agreement shall be lawfully terminated by either party
          thereto.

10.3 The Company shall in addition to the foregoing have the right to terminate
     this Agreement by giving notice in writing to the Licensor if:

     (a)  the Company has given any notice pursuant to Clause 8.6 and if during
          the first complete Year following the date of any such notice ("the
          Relevant Year") the Net Revenue per Household received by the Company
          is less than One Pound and thirty-seven pence ((pounds) 1.37)
          PROVIDED THAT any such notice of termination must be given by the
          Company within twenty-four (24) months after the final day of the
          Relevant Year; or

     (b)  in any Year after the Licensor has given a notice of election pursuant
          to sub-clause 8.11.1 the Licensor has been unable to licence to the
          Company pursuant to this Agreement a sufficient Programme Duration of
          Programmes or Third Party Programmes which are European Works in order
          to enable the Company to comply with the Directive and with the laws
          of each country within the Territory PROVIDED THAT any such notice of
          termination must be given by the Company within twelve (12) months
          after the final day of that Year; or

     (c)  the Licensor fails to give a notice of election under sub-clause
          8.11.1 within the 30 day period referred to in that


                                      59.
<PAGE>

                                                                     DENTON HALL

             sub-clause PROVIDED THAT any such notice of termination must be
             given by the Company within twelve (12) months after the final day
             of that 30 day period.

      Any such termination shall take effect immediately upon the first
      anniversary of the date of receipt by the Licensor of any such notice of
      termination (such anniversary being hereinafter referred to as "the
      Effective Date").

10.4  In the event that the Company terminates this Agreement in accordance with
      the provisions of Clause 10.3 then:


      10.4.1  the Company shall be entitled to continue to exercise its rights
              under the Trademark Agreement until the Effective Date;

      10.4.2  for the remaining year of this Agreement ending upon the Effective
              Date, the Programme Duration of the Programmes in the Service will
              comprise not less than 51% (in the case of a termination pursuant
              to sub-clause 10.3(a)) or the Quota Percentage (in the case of a
              termination pursuant to sub-clause 10.3(b) or (c)) of the total
              Programme Duration of the Programmes and the Third Party
              Programmes included in the Service during such year, and the
              Programming Premium and the Basic Licence Fee payable by the
              Company during or in respect of such year shall each be reduced
              pro rata to the proportion which the Programme Duration of
              Programmes included in the Service during the said year bears to
              the aggregate Programme Duration of Programmes and Third Party
              Programmes included in the Service during the said year;

      10.4.3  the Company shall be freely entitled at the Company's expense to
              licence Third Party Programmes from third parties and to schedule
              and transmit such Third Party Programmes in the Service and shall
              assume sole responsibility for such licensing and scheduling
              PROVIDED THAT all Third Party Programmes so transmitted in the
              Service shall fall within the Programme Specification and the
              Company shall comply with the provisions of sub-clause 10.4.2;

                                      60.
<PAGE>

                                                                     DENTON HALL

      10.4.4  the Company shall be freely entitled to replace the Scheduler and
              to engage at its expense a replacement Scheduler of its choice and
              Clauses 8.1 and 8.5 shall not apply to the appointment of any such
              replacement Scheduler;

      10.4.5  for a period of eighteen (18) months commencing upon the Effective
              Date the Licensor:

              (a) shall not use or authorise or permit any third party to use
                  any of the Trade Marks within the Territory; and

              (b) shall not authorise or permit any third party to broadcast,
                  transmit or exhibit (whether pursuant to the Standard
                  Television Rights or the Non-Standard Television Rights)
                  within the Territory and Programme, any excerpt from any
                  Programme or any promotional or advertising material
                  publicising its transmission of any Programme (i) in any form
                  which allows or causes the word "Playboy", any of the Trade
                  Marks or any other logo, mark or symbol which is associated
                  with the "Playboy" name or brand to be seen at any time during
                  any broadcast, transmission or exhibition of that Programme by
                  any person viewing such broadcast, transmission or exhibition
                  or (ii) which in any way suggests or implies that the
                  Programme has been produced by, or licensed to that third
                  party by, the Licensor or any Affiliate of the Licensor.

10.5  In the event that this Agreement is terminated by the Company pursuant to
      sub-clause 10.3(a) and in the event that prior to the Effective Date the
      Licensor has received or has become entitled to receive licence fees
      (other than amounts paid by the Licensor to third party licensors for the
      right to transmit Third Party Programmes in the Service and reimbursed to
      the Licensor by the Company hereunder) pursuant to any provision of Clause
      7, Clause 8 or this Clause 10 (including but not limited to Clauses 7.1 to
      7.4 inclusive, Clause 7.7

                                      61.
<PAGE>

                                                                     DENTON HALL


and Clause 8.8) amounting in the aggregate to less than US$7.5 million ("the
Minimum Amount"), then, for so long as the programming included in the Service
after the Effective Date is of the same genre as the Programmes and Third Party
Programmes delivered to the Company hereunder prior to the Effective Date, the
Company shall following the Effective Date licence from the Licensor on a sole
and exclusive basis within the Territory and the Licensor shall deliver to the
Company for first transmission in the Service such number of Programme Hours of
Playboy Programmes selected by the Company as may be determined in accordance
with the provisions of Schedule 6, upon and subject to the following terms and
conditions:

10.5.1 the Licensor may by notice in writing given to the Company within thirty
       (30) days after the date of any notice of termination given by the
       Company pursuant to Clause 10.3 decline to licence further Playboy
       Programmes to the Company in the event that this Clause should apply
       following the Effective Date and, if so, the Company will have no
       obligation or liability to the Licensor pursuant to this Clause;

10.5.2 if the Licensor does not give a notice to the Company pursuant to Clause
       10.5.1:

       (a)  the licence fees payable by the Company following the Effective Date
            shall be at the rate of US$13,158 per Programme Hour or (in the case
            of a Playboy Programme which the Company elects to transmit during a
            further Transmission Period pursuant to Clause 2.2) determined in
            accordance with Clause 7.7;

       (b)  the maximum period during which the provisions of this Clause 10.5
            shall continue in force following the Effective Date shall be
            determined in accordance with the provisions of Schedule 6 but the
            provisions of this Clause shall in any event lapse once the Licensor
            has received pursuant to Clause 7, Clause 8 and this Clause licence
            fees amounting in the aggregate to the Minimum Amount;


                                      62.
<PAGE>

                                                                     DENTON HALL


              (c)  subject to the provisions of sub-clauses (a) and (b) of this
                   Clause and notwithstanding the termination of this Agreement,
                   all Playboy Programmes licensed to the Company pursuant to
                   this Clause shall be licensed upon and subject to the same
                   terms and conditions (mutatis mutandis) as those which
                   applied to the Programmes licensed under Clause 2 prior to
                   the Effective Date including under Clause 2 prior to the
                   Effective Date including but not limited to those terms and
                   conditions set out in Clause 3.3, 4.1, 4.4, 4.5 and 6.5; and

              (d)  the Company shall be entitled to transmit the Trade Marks
                   only in the form and the places in which they appear in
                   Playboy Programmes licensed to it pursuant to this Clause.

10.6   Following the date on which any termination of this Agreement takes
       effect ("the Termination Date"):

       10.6.1 subject only to Clause 10.5, the Company shall have no obligation
              to licence or accept delivery of further Programmes or Third Party
              Programmes from the Licensor, and the Licensor shall have no
              obligation to deliver to the Company further Programmes or Third
              Party Programmes, for first transmission in the Service;

       10.6.2 the licence granted to the Company pursuant to Clause 2 in
              relation to each Programme or Third Party Programme whose
              Transmission Period has not ended prior to the Termination Date
              shall (subject to sub-clauses 10.6.3 and 10.6.4) remain in force
              for a period of twenty-four (24) months after the Termination Date
              (in the case of a Playboy Programme) and for the full duration of
              the Playboy Licence Period (in the case of an Acquired Programme
              or Third Party Programme); and

       10.6.3 notwithstanding the provisions of sub-clause 10.6.2, if this
              Agreement was terminated by the Licensor pursuant to sub-clause


                                      63.
<PAGE>

                                                                     DENTON HALL


       10.2(a), the Licensor may by giving notice in writing to the Company
       within 30 days after the Termination Date terminate the licence granted
       to the Company pursuant to Clause 2 in relation to each Programme, and
       each Third Party Programme acquired on behalf of the Company by the
       Licensor, with immediate effect whereupon the Licensor shall within seven
       (7) days after the date of such notice pay to the Company an amount equal
       to the aggregate of all Excess Payments. For the purposes of this sub-
       clause, an "Excess Payment" shall mean in respect of each Programme, or
       each Third Party Programme acquired on behalf of the Company by the
       Licensor, whose Transmission Period has not ended prior to the
       Termination Date an amount equal to:

       (A x B) x C where:
                 -
                 D

       A = US$13,158 or (in the case of a Third Party Programme) the actual
           amount paid to the third party licensor of that Third Party Programme
           in consideration for the right to transmit the same in the Service
           within the Territory

       B = the number of Programme Hour(s) of that Programme or Third Party
           Programme

       C = 24 (twenty-four) less the number of transmissions made by the Company
           in the Service of that Programme or Third Party Programme prior to
           the Termination Date

       D = 24 (twenty-four).

10.6.4 notwithstanding the provisions of sub-clause 10.6.2, the Licensor may by
       giving notice in writing to the Company within six (6) months after the
       Termination Date terminate the licence granted to the Company pursuant to
       Clause 2 in relation to each Playboy Programme with effect from the
       expiry of the period of eighteen (18) months commencing upon the
       Termination Date ("the Licence Termination Date") whereupon the Licensor
       shall within


                                      64.
<PAGE>

                                                                     DENTON HALL


            seven (7) days after the date of such notice pay to the Company an
            amount equal to the aggregate of all Excess Payments. For the
            purposes of this sub-clause, an "Excess Payment" shall mean in
            respect of each Playboy Programme whose Transmission Period has not
            ended prior to the Licence Termination Date an amount equal to:

            (A x B) x C where:
                      -
                      D

            A = US$13,158

            B = the number of Programme Hour(s) of that Playboy Programme

            C = 24 (twenty-four) less the number of transmissions made by the
                Company in the Service of that Playboy Programme prior to the
                Licence Termination Date

            D = 24 (twenty-four).

10.7   In the event that:

       (a)  any warranty made herein by the Licensor in relation to any Selected
            Programme is found not to be true and accurate in all material
            aspects (a "default"); and

       (b)  within twenty-eight (28) days after receipt of written notice from
            the Company specifying such default the Licensor has delivered to
            the Company for first transmission in the Service a replacement
            Playboy Programme or (if the Selected Programme in question was not
            a Playboy Programme) an Acquired Programme or Third Party Programme
            of comparable quality, duration and commercial appeal,

       then without prejudice to any of its other rights and remedies in respect
       of such default the Company shall not be entitled to terminate this
       Agreement pursuant to sub-clause 10.2(a) as a result of such default.


                                      65.
<PAGE>

                                                                     DENTON HALL


11.   Assignment
      ----------

      Neither party may assign the whole or any part of this Agreement to any
      third party without the prior written consent of the other party PROVIDED
      THAT either party may assign the benefit of this Agreement to any
      Associate (as defined in the Shareholders' Agreement of even date
      herewith) without the consent of the other party but shall remain liable
      for the performance of its obligations under this Agreement.

12.   Notices
      -------

12.1  Any notice or other communication given or made under this Agreement shall
      be in writing and, without prejudice to the validity of any other method
      of service, may be delivered personally or by courier or sent by facsimile
      transmission and by prepaid airmail letter, addressed as follows:

      (a)  if to the Licensor to:
           The President of the Licensor
           9242 Beverly Boulevard
           Beverly Hills
           California 90210
           United States of America
           Facsimile transmission number: (0101 310) 246 4065
           with a copy to the Senior Vice President, Legal and Business
           Affairs at the same facsimile transmission number

      (b)  if to the Company, to:
           Twyman House
           16 Bonny Street
           London NW1 9PG
           Facsimile transmission number: (0171) 911 0145
           with a copy to:


                                      66.
<PAGE>

                                                                     DENTON HALL


            The Chief Executive
            Flextech plc
            13 Albemarle Street
            London W1X 3HA
            Facsimile transmission number: (0171) 499 7553

      or to such other address, or facsimile transmission number as the relevant
      addressee may hereafter by notice hereunder substitute.

12.2  Any such notice or other communication shall be deemed to have been duly
      served, given or made (i) in the case of posting, 96 hours after the
      envelope containing such notice was posted and proof that any such
      envelope was properly addressed, prepaid, registered and posted shall be
      sufficient evidence that such notice or other communication has been duly
      served, given or made; or (ii) in the case of delivery, when left at the
      relevant address; or (iii) in the case of facsimile transmission on the
      first business day in the country of the intended recipient after the date
      of transmission.

13.   Waiver and Set-Off
      ------------------

13.1  No express or implied waiver by either party of any provision of this
      Agreement or of any breach or default of either party shall constitute a
      continuing waiver or a waiver of any other provision or (subject to the
      other provisions of this Agreement) prevent either party from acting on
      the same or any subsequent breach or default.

13.2  In the event that the Company becomes entitled to terminate this Agreement
      pursuant to sub-clause 10.2(a) and (subject to Clause 10.7) within thirty
      (30) days after becoming aware of such entitlement the Company does so
      terminate, then, without prejudice to any other right or remedy of the
      Company and notwithstanding any other provision of this Agreement, the
      Company shall be entitled without prejudice to any right or remedy of the
      Licensor to withhold payment of any or all amounts which may be or may
      thereafter become due to the Licensor pursuant to Clause 7 or Clause 8
      and, if the Company decides to exercise such right, it shall promptly
      notify the Licensor of such decision.


                                      67.
<PAGE>

                                                                     DENTON HALL


14.   Further Assurance
      -----------------

      The Licensor shall at the request and cost of the Company execute and
      deliver all such further documents as the Company shall reasonably request
      to confirm and evidence the grant of such Television Rights as are granted
      to the Company pursuant to Clause 2.

15.   No Partnership
      --------------

      This Agreement is made between principals and does not constitute a
      partnership between the parties and neither of them shall hold itself out
      as the agent or partner of the other.

16.   Entire Agreement
      ----------------

      This Agreement together with the Trademark Agreement and the
      Shareholders' Agreement contains the entire understanding of the parties
      with regard to the licensing of Programmes to the Company and may be
      changed or modified only in writing signed on behalf of both parties.

17.   Force Majeure
      -------------

      Neither party shall be liable for any failure to perform its obligations
      under this Agreement to the extent that such failure is caused by an
      event of Force Majeure.

18.   Severability, Registration and Notification
      -------------------------------------------

18.1  Should any provision of this Agreement be held by any competent court or
      authority to be invalid or unenforceable such provision shall (without
      prejudice to the remaining provisions) have no effect but the parties
      shall use all reasonable endeavours to replace the invalid or
      unenforceable provision by a valid provision, the effect of which shall be
      the closest possible to the intended effect of the invalid or
      unenforceable provision.


                                      68.
<PAGE>

                                                                     DENTON HALL


18.2  Notwithstanding any other provision of this Agreement or any arrangement
      of which this Agreement forms part, any provision which may cause this
      Agreement and/or such arrangement to be registrable under the Restrictive
      Trade Practices Act 1976 shall be of no effect until the day after such
      day as particulars of this Agreement and/or such arrangement shall have
      been furnished to the Director General of Fair Trading.

18.3  If either of the parties is advised by its lawyers that this Agreement
      should be notified to the European Commission under Council Regulation
      17/62, the other party shall on request co-operate in procuring such
      notification as soon as practicable.

19.   Headings
      --------

      The headings to the Clauses and sub-clauses in this Agreement are intended
      to make reference easier but not to affect its construction.

20.   Governing Law
      -------------

20.1  This Agreement shall be governed by and construed in all respects in
      accordance with English law and the parties agree to submit to the
      exclusive jurisdiction of the English Courts as regards any claim or
      matter arising in relation to this Agreement.

20.2  The Licensor hereby appoints O'Melveny & Myers of 10 Finsbury Square,
      London EC2A 1LA England as its authorised agent for the purpose of
      accepting service of process for all purposes in connection with this
      Agreement.


AS WITNESS the hands of the duly authorised representatives of the parties the
day and year first above written


                                      69.
<PAGE>

                                                                     DENTON HALL

                                  SCHEDULE 1
                                  ----------

                          The Programme Specification
                          ---------------------------


The Service is a television program service for adults featuring programming
that is sexually oriented but of a non-pornographic nature.

Programming included in the Service will depict nudity and will allow strong or
explicit language. Playboy will not deliver and the Company will not transmit
programming containing scenes which depict violent behaviour, particularly the
glorification of violence or gratuitous violence. Generally speaking, Playboy
will not deliver and the Company will not transmit programming containing
depictions of rape, non-consensual intercourse or other non-consensual sexual
activity. Generally speaking, Playboy will not deliver and the Company will not
transmit programming containing scenes of bondage, incest, sadism or masochism,
bestiality, extreme sexual explicitness or the graphic close-up of genitals.
Child pornography is never to be shown on the Service, and, even if an actor is
over 18 years of age, if that actor is portrayed as under 18, such showing is
prohibited.

Within the above guidelines, the Programmes and Third Party Programmes delivered
to the Company by Playboy hereunder shall consist of motion pictures (including
those made initially for television exhibition, for home video or for theatrical
release), miscellaneous specials (both in the half-hour and hour length),
dramatic series, game shows, magazine shows (as that term is generally used in
American television), comedy shows, Playmate specials featuring specific
Playmates, music specials, sexual advice specials, Playboy Video Centrefold
specials and Playmate of the Year specials. The vignettes delivered by Playboy
hereunder shall also comply with the above guidelines.

No Programme or Third Party Programme delivered by the Licensor under this
Agreement will have a running time of less than 22 minutes.

                                      70.
<PAGE>

                                                                     DENTON HALL

                                  SCHEDULE 2
                                  ----------

                               Delivery Material
                               -----------------


1. (a) The Licensor will supply a Beta SP master videotape for each Selected
       Programme, each so-called "vignette" and all promotional and interstitial
       material, together with a schedule of the running order in which these
       elements are to be broadcast. The Company will at its cost assemble the
       nightly programming block from these materials.

   (b) Each master videotape supplied by the Licensor shall be of broadcast
       quality and in either the NTSC or PAL standard. Where such a videotape is
       delivered in the NTSC standard, the Company shall create the necessary
       PAL transfer but the Licensor shall reimburse to the Company within 30
       days after receipt of an invoice in respect thereof the actual out-of-
       pocket cost incurred by the Company in doing so.

   (c) If the Licensor supplies NTSC-standard materials and the Company converts
       them to PAL, the Licensor shall remain the owner of such PAL-standard
       materials, which shall be on loan to the Company for the Term or (if
       later) until the end of the Transmission Period in respect of the
       relevant Programme or Third Party Programme and shall thereafter be
       returned to the Licensor.

   (d) Each master videotape supplied by the Licensor shall comply with the
       following specification:-

       Vision
       ------
       Line up - One minute of Colour Bars 100% luminance, 75% Chroma.
       EBU(75/0/100/0)
       Ten seconds of Black before Start of each Selected Programme
       No pedestal on black
       Each Selected Programme should start at Time Code 10:00:00:00

                                      71.
<PAGE>

                                                                     DENTON HALL

       Audio
       -----
       Time Code should be continuous throughout the line up and programme and
       for at least 30 seconds after end of programme Line up with Colour Bars -
       Zero Level Tone on linear tracks ('4' PPM)
       Maximum peak programme level +8dB above line up.

2. A music cue sheet in customary form and all billings information and credit
   requirements.

3. All advertising and promotional material (whether audio, audio-visual or
   visual material) which is available for use by the Company including but not
   limited to a plot or episodic synopsis, black and white stills, colour
   transparencies, a colour trailer and interstitial, "filler" and "behind the
   scenes" material.

                                      72.
<PAGE>

                                                                     DENTON HALL

                                  SCHEDULE 3
                                  ----------

                              Basic Licence Fees
                              ------------------

1. In this Schedule the following expressions shall have the following meanings:

   (a) "the Apportionment" means an amount calculated by:

       (i)   subtracting from 365 the total number of days during the First Year
             (including the Launch Date); 

       (ii)  multiplying the figure resulting from that subtraction by
             US$1,000,000 (one million United States dollars);

   and (iii) dividing the product of that multiplication by 365.

   (b) "the Increment": means in respect of the second, third, fourth, fifth and
       sixth Years an amount calculated as follows:

        A  x US$100,000
       ---
       365

       where A is the total number of days during the First Year (including the
       Launch Date);

   (c) "the Initial Amount": means in respect of each Year the amount set out
       below opposite that Year:

       Year              Amount (US$)
       ----              ------------

       First Year        US$1,000,000   less the Apportionment
       Second Year       US$1,000,000)
       Third Year        US$1,100,000)  plus in each case
       Fourth Year       US$1,200,000)  the Increment
       Fifth Year        US$1,300,000)  for that Year
       Sixth Year        US$1,400,000)
       Seventh Year      US$1,500,000
       and each
       subsequent Year

                                      73.
<PAGE>

                                                                     DENTON HALL

2.     In respect of each Year the Basic Licence Fee shall be the Initial Amount
       in respect of that Year subject always to:

       (a)  reduction in accordance with Clause 8.6, sub-clause 8.8(d) or Clause
            8.11 or following any notice of termination of this Agreement given
            by the Company pursuant to Clause 10.3; and

       (b)  increase in accordance with sub-clause 7.7(b), sub-clause 8.8(b) or
            sub-clause 8.8(c).

                                      74.

<PAGE>

                                                                     DENTON HALL

                                  SCHEDULE 4
                                  ----------

                           Net Revenue per Household
                           -------------------------

1. In this Schedule a "Household" means in respect of any Year:

   (a) during which (or any part of which) the Service is being transmitted by
       means of a medium-powered satellite (such as, by way of example, an Astra
       satellite), any person in the United Kingdom who on 1 January or 31
       December (as the case may be) in that Year is equipped with a satellite
       dish and any other receiving or decoding equipment (other than viewing
       cards and other decryption equipment and devices which are only available
       to paying subscribers) and/or (if the Service is transmitted by means of
       a compressed signal) decompression equipment which is necessary in order
       to receive and view a television channel transmitted in an unencrypted
       form by means of the same satellite as that by which on 1 January or 31
       December (as the case may be) in that Year the Service is being
       transmitted or by means of any other satellite which is compatible with
       that satellite; and/or

   (b) any person in the United Kingdom whose home has by 1 January or 31
       December (as the case may be) in that Year been connected to a Relevant
       System and for this purpose a "Relevant System" means any cable
       television system in the United Kingdom by means of which the Service is
       as at 1 January or 31 December in that Year (as the case may be) being
       re-transmitted by any means for reception by subscribers to that cable
       television system.

2. The "Net Revenue per Household" in respect of any Year shall be calculated by
   dividing the Net Revenues of the Company in respect of that Year by the
   average number of Households in respect of that Year. The average number of
   Households shall be calculated by aggregating the total numbers of Households
   on 1 January and on 31 December in that Year and by dividing the resulting
   figure by two.

                                      75.
<PAGE>

                                                                     DENTON HALL

3. The number of Households which on 1 January and 31 December in each Year fall
   within paragraph 1(a) of this Schedule shall be determined by reference to
   the relevant figure published or provided by Broadcasters' Audience Research
   Board Limited (or any replacement or successor body) as at 1 January or 31
   December in that Year (as the case may be) or as at the date which is closest
   to 1 January or 31 December in that Year and for which such a figure is
   available by 31 March in the immediately following Year.

4. The number of Households which on 1 January and 31 December in each Year fall
   within paragraph 1(b) of this Schedule shall be determined by reference to
   the relevant figure(s) published or provided by the Cable Communications
   Association (or any replacement or successor body or by the operators of
   Relevant Systems) as at 1 January or 31 December in that Year (as the case
   may be) or as at the date which is closest to 1 January or 31 December in
   that Year and for which such figure(s) is or are available by 31 March in the
   immediately following Year.

                                      76.
<PAGE>

                                                                     DENTON HALL



                                  SCHEDULE 5
                                  ----------


                          List of existing Programmes
                          ---------------------------

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
Program                              Number of     Length per       Total      Program Completion
 Type           Title                Episodes    Episode (min.)*    Hours             Date
-------------------------------------------------------------------------------------------------
<S>      <C>                         <C>           <C>             <C>            <C>      
Series   350                                29                30     14.5          1990-1994
         America Uncovered                   4                30        2          1983-1987
         Archival Reel                      58                60       58            1970's
         The Club                            8                30        3             1991
         Comedy After Hours                  6                30        3             1987
         Consenting Adults                   3                30      1.5             1984
         Do it Now                           3                30      1.5             1983
         Dueling for Playmates              12                30        6          1983-1984
         Eden                               26                30       13          1992-1993
         Erotic Images                       5                60        5          1984-1985
         Everything Goes                    23             30-60       12          1982-1984
         Fantasies                          20                30       10          1986-1988
         For a Good Time, Call...            4                30        2             1992
         Friday Files                        6             30-60      3.5             1983
         Girls of the Comedy Store           3                80        3          1983-1985
         Great American Stripoff            18                80       18          1983-1985
         Hot List                            3                30      1.5          1987-1988
         Hot Rocks                          28             30-50       15          1990-1994
         Inside Out                         26                30       13          1990-1991
         Inside Playboy                      7                30      3.5            1984
         It Happened One Night               5             30-60        3            1994
         Late Night I                       28                60       26          1989-1990
         Late Night II                      28                30       13            1991
         Late Night III                     28                30       13            1992
         Late Night IV                      26                30       13            1995
         Loving                              5                30      2.5            1982
         Pillow Previews                    10                30        5          1984-1985
         Playboy After Dark                 52                60       52          1968-1970
         Playboy Video Magazine             48                60       48          1982-1988
         Playboy's Erotic Fantasies         28                30       13            1994
         Playboy's Love & Sex Test          28                30       13            1992
         Playmate Guide to Physical
           Fitness                           6                30        3          1982-1983
         Prime Cuts                          4                30        2            1985
         Private Moments                     8                30        3          1983-1984
         Private Party Jokes                 7                30      3.5          1987-1988
         Ribald Classics                     5             30-60      4.5          1983-1992
         Secret Confessions & Fantasies     28                30      1.3          1992-1993
         Sexcetera                          64                80       64          1983-1988
         Shake it, Sexy                      6                30        3            1983
         Who's on Top                       24                30       12            1993
         World of Playboy                   34                30       17          1991-1995
         Women on Sex                       46                30       24          1983-1988
-------------------------------------------------------------------------------------------------
Sub Total Series                                                    539.5
-------------------------------------------------------------------------
</TABLE>


* As is television industry practice, a "60-minute" program is typically 44-45
minutes long (to account for commercial breaks), and a "30-minute" program is
typically 22 minutes long. Similarly, throughout this document, a 60-minute
episode length will refer to 45 minutes of actual programming, and a 30-minute
episode length will refer to 22 minutes of actual programming. With respect to
movies, running times are actual.

                                      77.
<PAGE>
                                                                    DENTON HALL


                             PLAYBOY TV UK/BENELUX
                                PROGRAM LIBRARY


<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
 Program                                                               Number of     Length per        Total    Program Completion
  Type                               Title                             Episodes     Episode (min.)*    Hours           Date
-----------------------------------------------------------------------------------------------------------------------------------
 <C>         <C>                                                       <C>          <C>                <C>      <C>
 Specials    101 Ways to Excite Your Lover                                     1                 60        1           1991
             20th Century Beauty                                               1                 60        1           1991
             Anna Goes Australian                                              1                 30      0.5           1987
             Around the World with Donna Wanna                                 1                 30      0.5           1993
             Arousal, Foreplay, and Orgasm with Dr. Ruth Westheimer            1                 60        1           1994
             Art of Sensual Massage                                            1                 60        1           1986
             Bedtime Stories                                                   1                 60        1           1987
             Best of Playboy                                                   2                 60        2           1988
             Best of Sexy Lingerie                                             1                 60        1           1992
             Best of Video Calendar                                            1                 60        1           1992
             Best of Wet & Wild                                                1                 60        1           1992
             Best of the Playboy Channel                                       1                 90      1.5           1988
             Big Ed Show                                                       1                 60        1           1990
             Blonde, Brunette, and Redhead                                     1                 30      0.5           1989
             Blonde Bombshells                                                 1                 30      0.5           1989
             Body Flash                                                        1                 30      0.5           1985
             Bunny Memories                                                    1                 60        1           1986
             Bunny of the Year 1974                                            1                 60        1           1974
             Bunny of the Year 1976                                            1                 90      4.5           1976
             Cheech and Chong Interview                                        1                 60        1           1984
             College Girls                                                     1                 60        1           1993
             Comedy on Campus                                                  1                 90      1.5           1988
             Comedy Roast: Don Adams                                           1                 60        1           1985
             Comedy Roast: Tommy Chong                                         1                 60        1           1986
             Comedy Theatre: The Great Lounge Commedians                       1                 60        1           1985
             Comedy Theatre: Henny Youngman                                    1                 60        1           1985
             Comedy Theatre: Mort Sahl                                         1                 60        1           1985
             Comedy Theatre: Phyllis Diller                                    1                 60        1           1985
             Comedy Theatre: Shecky Green                                      1                 60        1           1985
             Celebrity Video Centerfold: Patti Davis                           1                 60        1           1995
             Celebrity Video Centerfold: Jessica Hahn                          1                 60        1           1993
             Celebrity Video Centerfold: LaToya Jackson                        1                 60        1           1994
             Celebrity Video Centerfold: Dian Parkinson                        1                 60        1           1994
             Dear Homes                                                        1                 30      0.5           1983
             Dorothy Strattan: The Untold Story                                1                 60        1           1985
             Eden 1                                                            1                120        2           1992
             Eden 2                                                            1                120        2           1992
             Eden 3                                                            1                120        2           1992
             Eden 4                                                            1                120        2           1993
             Eden 5                                                            1                120        2           1993
             Eden 6                                                            1                120        2           1993
             Erotic Escapades                                                  1                 30      0.5           1994
             Erotic Fantasies I                                                1                 60        1           1992
             Erotic Fantasies II                                               1                 60        1           1993
             Erotic Fantasies III                                              1                 60        1           1993
             Erotic Weekend Getaways                                           1                 60        1           1992
             Fabulous Forties                                                  1                 60        1           1994
             Fantasies I                                                       1                 90      1.5           1987
             Fantasies II                                                      1                 60        1           1990
             Farmer's Daughters                                                1                 60        1           1987
             Girls of the Cabaret Royale                                       1                 60        1           1991
             Girls of Europe I                                                 1                 30      0.5           1987
             Girls of Europe II                                                1                 30      0.5           1987
             Girls of Hawaiian Tropic                                          1                 60        1           1994
             Girls of Hooters                                                  1                 60        1           1994
             Girls of Jamaica                                                  1                 30      0.5           1992
-----------------------------------------------------------------------------------------------------------------------------------


             * see note
</TABLE>

                                      78

<PAGE>

                                                                     DENTON HALL

                             PLAYBOY TV UK/BENELUX

                                PROGRAM LIBRARY
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
Program                                                         Number of    Length per     Total  Program Completion
 Type                         Title                             Episodes   Episode (min.)*  Hours        Date
---------------------------------------------------------------------------------------------------------------------
<S>           <C>                                               <C>        <C>              <C>    <C>
Specials,     Girls of Rock 'n Roll                                     1                60     1         1985
  continued   Girls of Spring Break                                     1                60     1         1991
              Girls of the Big West                                     1                30   0.5         1990
              Girls of the Moulin Rouge                                 1                30   0.5         1985
              Great American Stripoff 1994                              1                60     1         1994
              History of Striptease                                     1                60     1         1994
              Hollywood Hookers                                         1                60     1         1983
              Hot, Sexy & Safer with Suzi Landelphi                     1                60     1         1993
              Hot Rock in Reno                                          1               120     2         1983
              How to Reawaken Your Sexual Powers                        1                60     1         1992
              Hugh M. Hefner: Birthday Footage                          1               330   5.5      1979-1986
              Hugh M. Hefner: Miscellaneous Footage                     1                90   1.5      1974-1995
              Hugh M. Hefner: Once Upon a Time                          1                90   1.5         1992
              Inside Out I                                              1                90   1.5         1992
              Inside Out II                                             1                90   1.5         1993
              Inside Out III                                            1                90   1.5         1993
              Inside Out IV                                             1                90   1.5         1994
              International Playmates                                   1                60     1         1993
              Intimate Workout for Lovers                               1                60     1         1991
              International Beauty Pageant Promo Reel                   1                30   0.5         1992
              Japanese Erotica                                          1                30   0.5         1989
              Jerry Lee Lewis in Concert                                1                60     1         1985
              Les Filles Fatales                                        1                30   0.5         1983
              Lisa Lyons Lifestyles                                     1                30   0.5         1990
              Love, Sex, and Religion                                   1                30   0.5         1984
              Love, Sex, & Intimacy for New Relationships               1                60     1         1993
              Madcap Marathon                                           1                60     1         1980
              Making of... Girls of Cabaret Royale                      1                60     1         1991
              Making of... Girls of Spring Break                        1                30   0.5         1991
              Making of... Playmate Challenge Cup                       1                30   0.5         1984
              Making of... Sexy Lingerie III                            1                60     1         1992
              Maui Playmate Challenge                                   1                60     1         1994
              Miss Playboy International Beauty Pageant 1987            1                60     1         1987
              Nancy Friday's Interviews                                 1                30   0.5         1982
              Nancy Friday's Private Lives                              1               120     2         1983
              New Year's Eve at the Mansion 1982                        1                30   0.5         1982
              New Year's Eve at the Mansion 1983                        1                30   0.5         1983
              New Year's Eve at the Mansion 1984                        1                30   0.5         1984
              New Year's Eve at the Mansion 1985                        1                30   0.5         1985
              New Year's Eve at the Mansion 1986                        1                30   0.5         1986
              Pat Mc Cormick Unleashed I                                1                60     1         1980
              Pat Mc Cormick Unleashed II                               1                60     1         1980
              Playboy Club's 24th Anniversary Show                      1                60     1         1984
              Playboy Follies I                                         1                60     1         1983
              Playboy Follies II                                        1                60     1         1985
              Playboy Jazz Festival 1982                                1               180     3         1982
              Playboy Video Centerfold: Sherry Arnett                   1                60     1         1985
              Playboy Video Centerfold: Teri Weigel                     1                60     1         1985
              Playboy Video Centerfold: Rebekka Armstrong               1                60     1         1986
              Playboy Video Centerfold: Luann Lee                       1                60     1         1986
              Playboy Video Centerfold: Lynne Austen                    1                60     1         1987
              Playboy Video Centerfold: Fawna MacLaren/35th Anniv.      1                60     1         1988
              Playboy Video Centerfold: Dutch Twins                     1                60     1         1989
              Playboy Video Centerfold: Peggy McIntaggart               1                60     1         1989
              Playboy Video Centerfold: Karen Foster/Deborah Driggs     1                60     1         1990
              Playboy Video Centerfold: Kerry Kendall                   1                60     1         1990
              Playboy Video Centerfold: Tawni Cable                     1                60     1         1990
              Playboy Video Centerfold: Julie Clark                     1                60     1         1990
              Playboy Video Centerfold: Morgan Fox                      1                60     1         1991
---------------------------------------------------------------------------------------------------------------------

              * see note
</TABLE>

                                      79.
<PAGE>
                                                                     DENTON HALL

                             PLAYBOY TV UK/BENELUX

                                PROGRAM LIBRARY

<TABLE>                                                 
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
Program                                                         Number of    Length per     Total  Program Completion
 Type                         Title                             Episodes   Episode (min.)*  Hours        Date
---------------------------------------------------------------------------------------------------------------------
<S>           <C>                                               <C>        <C>              <C>    <C>
Specials      Playboy Video Centerfold: Pamala Anderson                 1               60      1         1991 
  continued   Playboy Video Centerfold: Tiffany Sloan                   1               60      1         1992
              Playboy Video Centerfold: Anna Marie Golldard/        
                40th Anniv.                                             1               60      1         1994
              Playboy's 20th Anniversary Show                           1               60      1         1974
              Playboy's 25th Anniversary Show                           1               60      1         1979
              Playboy's 35th Anniversary Special                        1               30    0.5         1989
              Playboy's 35th Anniv.: World of Hugh M. Hefner            1               90    1.5         1988
              Playboy's 35th Anniv.: Hugh M. Hefner's Birthday          1               90    1.5         1988
              Playboy's 35th Anniv.: Midsummer Night's Dream                                                 
                Parties                                                 1               60      1      1985-1993
              Playboy's 40th Anniversary Playmate Search                1               60      1         1993
              Playboy's Guide to Amsterdam                              1               60      1         1983
              Playboy's Guide to the Land of G'Day                      1               60      1         1989
              Playboy's Hidden Camera                                   1               60      1         1994
              Playboy Photographers                                     1               30    0.5         1989
              Playmate Bloopers                                         1               30    0.5         1992
              Playmate Party                                            1               60      1         1977
              Playmate Playoffs                                         1               60      1         1986
              Playmate Challenge Cup                                    1               60      1         1984
              Playmate Guide to Physical Fitness                        1               60      1         1983
              Playmate Music Videos I                                   1               30    0.5         1989
              Playmate Music Videos II                                  1               30    0.5         1992
              Playmate of the Year 1984: Barbara Edwards                1               60      1         1984
              Playmate of the Year 1987: Donna Edmondson                1               60      1         1987
              Playmate of the Year 1988: India Allen                    1               60      1         1988
              Playmate of the Year 1989: Kimberley Conrad               1               60      1         1989
              Playmate of the Year 1990: Renee Tenison                  1               60      1         1990
              Playmate of the Year 1991: Lisa Matthews                  1               60      1         1991
              Playmate of the Year 1992: Corrina Hamey                  1               60      1         1992
              Playmate of the Year 1993: Anna Nicole Smith              1               60      1         1993
              Playmate of the Year 1994: Jenny McCarthy                 1               60      1         1994
              Playmate of the Year 1990 Special                         1               90    1.5         1990
              Playmate Profiles: You Ought to Be In Pictures            1               30    0.5         1988
              Playmate Rafting Adventure                                1               30    0.5         1984
              Playmate Review Hotline I                                 1               60      1         1992
              Playmate Review Hotline II                                1               60      1         1993
              Playmate Review Hotline III                               1               60      1         1994
              Playmate Review                                           1               60      1         1983
              Playmate Review II                                        1               60      1         1984
              Playmate Review III                                       1               60      1         1985
              Playmate Review 1992                                      1               60      1         1992
              Playmate Review 1993                                      1               60      1         1993
              Playmate Six Pack                                         1               60      1         1992
              Playmate Sneak Preview                                    1               30    0.5         1990
              Playmate Spectacular I                                    1               30    0.5         1989
              Playmate Spectacular II                                   1               30    0.5         1990
              Playmate Sports Spectacular                               1               60      1         1992
              Playmate Video Calendar 1988                              1               60      1         1987
              Playmate Video Calendar 1989                              1               60      1         1988
              Playmate Video Calendar 1990                              1               60      1         1989
              Playmate Video Calendar 1991                              1               60      1         1990
              Playmate Video Calendar 1992                              1               60      1         1991
              Playmate Video Calendar 1993                              1               60      1         1992
              Playmate Video Calendar 1994                              1               60      1         1993
              Playmate Video Calendar 1995                              1               60      1         1994
              Playmate Video Calendar Preview Show                      1               30      1         1988
              Playmate Video Calendar Preview Show                      1               30      1         1989
              Playmate Video Calendar Preview Show                      1               30      1         1990
              Playmate Video Calendar Preview Show                      1               30      1         1991
              Playmate Video Calendar Preview Show                      1               30      1         1992
              Playmate Video Calendar Preview Show                      1               30      1         1993
---------------------------------------------------------------------------------------------------------------------

              * see note
</TABLE>
                                      80.
<PAGE>
                                                                     DENTON HALL

                             PLAYBOY TV UK/BENELUX

                                PROGRAM LIBRARY

<TABLE>                                                 
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
Program                                                         Number of    Length per     Total  Program Completion
 Type                         Title                             Episodes   Episode (min.)*  Hours        Date
---------------------------------------------------------------------------------------------------------------------
<S>           <C>                                               <C>        <C>              <C>    <C>
Specials      Playmate Video Calendar Preview Show                      1               30      1         1994 
  continued   Playmates at Play                                         1               60      1         1989
              Playmates Home Video Party                                1               30    0.5         1990
              Playmates in the Movies                                   1               30    0.5         1989
              Playmates in Paradise                                     1               60      1         1992
              Playmates of the Year: the '80's                          1               60      1         1989
              Playmates: the Early Years                                1               60      1         1991
              Playmates: Where are they Now I                           1               30    0.5         1988
              Playmates: Where are they Now II                          1               30    0.5         1988
              Private Diaries                                           1               60      1         1994
              Private Pleasures                                         1               30    0.5         1993
              Roller Disco and Pajama Party                             1               60      1         1981
              Romantic Visions I                                        1               30    0.5         1985
              Romantic Visions I                                        1               30    0.5         1985
              Secret Confessions I                                      1               60      1         1993
              Secret Confessions II                                     1               60      1         1994
              Secret Confessions III                                    1               60      1         1994
              Secret Moment                                             1               30    0.5         1984
              Secrets of EuroMassage                                    1               60      1         1989
              Secrets of Making Love to the Same Person Forever I       1               60      1         1990
              Secrets of Making Love to the Same Person Forever II      1               60      1         1992
              Sensual Fantasy for Lovers                                1               60      1         1993
              Sensual Pleasures of Oriental Massage                     1               60      1         1991
              Sex Under Hot Lights                                      1               60      1         1994
              Sex & Sensuality Test                                     1               60      1         1982
              Sexy Lingerie I                                           1               60      1         1983
              Sexy Lingerie II                                          1               60      1         1990
              Sexy Lingerie III                                         1               60      1         1991
              Sexy Lingerie IV                                          1               60      1         1991
              Sexy Lingerie V                                           1               60      1         1992
              Sexy Lingerie VI: Night Dreams                            1               60      1         1993
              Sexy Lingerie VII: Dreams & Desires                       1               60      1         1994
              Spring Break Madness                                      1               30    0.5         1989
              Spring Fling                                              1               60      1         1983
              Sunday's Child I                                          1               30    0.5         1983
              Sunday's Child II                                         1               30    0.5         1983
              Sunday's Child III                                        1               30    0.5         1983
              Sunday's Child IV                                         1               30    0.5         1983
              Sunday's Child V                                          1               30    0.5         1983
              Sunday's Child VI                                         1               30    0.5         1983
              Sunshine Girls                                            1               30    0.5         1988
              Taking it Off                                             1               30    0.5         1989
              Taste of Playboy                                          1               90    1.5         1983
              Twenty-Nine Minutes                                       1               60      1         1990
              Ultimate Sensual Massage                                  1               60      1         1991
              Valentine Day's Footage 1990                              1               60      1         1990
              Valentine Day's Footage 1991                              1               90    1.5         1991
              The Wedding (Hugh M. Hefner/Kimberley Conrad)             1               60      1         1989
              Wet & Wild I                                              1               60      1         1989
              Wet & Wild II                                             1               60      1         1990
              Wet & Wild III                                            1               60      1         1991
              Wet & Wild IV                                             1               60      1         1992
              Wet & Wild V                                              1               60      1         1993
              Wet & Wild VI: The Locker Room                            1               60      1         1994
              Wet & Wild VII: On Vacation                               1               60      1         1995
              Windy City Comedy Blowout                                 1               60      1         1987
              Women of Color                                            1               60      1         1993
              Women of Radio                                            1               60      1         1995
---------------------------------------------------------------------------------------------------------------------
Sub Total Specials                                                                            233
--------------------------------------------------------------------------------------------------

              * see note
</TABLE>

                                      81.
<PAGE>
                                                                     DENTON HALL

                             PLAYBOY TV UK/BENELUX

                                PROGRAM LIBRARY

<TABLE>                                                 
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
Program                                                         Number of    Length per     Total  Program Completion
 Type                         Title                             Episodes   Episode (min.)*  Hours        Date
---------------------------------------------------------------------------------------------------------------------
<S>           <C>                                               <C>        <C>              <C>    <C>
Movies        Affairs of the Heart                                      1               90    1.5         1994 
              After Dark I (Title TBD)                                  1               90    1.5         1995
              After Dark II (Title TBD)                                 1               90    1.5         1995
              After Dark III (Title TBD)                                1               90    1.5         1995
              After Dark IV (Title TBD)                                 1               90    1.5         1995
              After Dark V (Title TBD)                                  1               90    1.5         1995
              After Dark VI (Title TBD)                                 1               90    1.5         1995
              After Dark VII (Title TBD)                                1               90    1.5         1995
              After Dark VIII (Title TBD)                               1               90    1.5         1995
              After Dark IX (Title TBD)                                 1               90    1.5         1995
              After Dark X (Title TBD)                                  1               90    1.5         1995
              American Blonde                                           1               90    1.5         1994
              Animal Instinct                                           1               60      1         1993
              Accused                                                   1               90    1.5         1995
              Birds in Paradise I                                       1               90    1.5         1986
              Birds in Paradise II                                      1               90    1.5         1985
              Blind Spot                                                1               60      1         1993
              Blonde Justice III                                        1               90    1.5         1993
              Bonnie III                                                1               60      1         1994
              Bonnie IV                                                 1               90    1.5         1994
              Candy the Stripper                                        1               90    1.5         1987
              Carnival in Rio                                           1               60      1         1987
              Cheating                                                  1               90    1.5         1995
              Companion                                                 1               90    1.5         1995
              Coven I                                                   1               90    1.5         1994
              Coven II                                                  1               90    1.5         1994
              Dominoes                                                  1               60      1         1993
              Dr. Yes: The Hyannis Affair                               1              120      2         1985
              Erotic Showcase I                                         1               90    1.5         1993
              Erotic Showcase II                                        1               90    1.5         1993
              Erotic Showcase III                                       1               90    1.5         1993
              Forever Young                                             1               90    1.5         1994
              Hardcore                                                  1               90    1.5         1995
              Icewoman I                                                1               90    1.5         1993
              Icewoman II                                               1               90    1.5         1994
              I Like to Play Games                                      1               90    1.5         1994
              Immortal Desire                                           1               60      1         1993
              Intimate Journey                                          1               60      1         1995
              Letting Go                                                1               90    1.5         1995
              Love & Desire                                             1               60      1         1991
              Lover's Leap                                              1               90    1.5         1994
              Lusty Liaisons I                                          1               90    1.5      1983-1992
              Lusty Liaisons II                                         1               90    1.5      1983-1992
              Man & Women                                               1               90    1.5         1994
              Mask                                                      1               60      1         1993
              Masseuse II                                               1               90    1.5         1994
              Matter of Cunning                                         1               90    1.5         1986
              Naked Reunion                                             1               60      1         1994
              New Lovers                                                1               60      1         1993
              Night Train                                               1               90    1.5         1994
              On the Edge                                               1               90    1.5         1994
              Oral Obsession                                            1               90    1.5         1994
              Parlor Games                                              1               60      1         1993
              Passionate Interludes I                                   1               90    1.5      1986-1988
              Passionate Interludes II                                  1               90    1.5      1986-1988
              Playtime                                                  1               90    1.5         1994
              Prostitutes of Paris                                      1               60      1         1983
              Romancing of Sarah                                        1               90    1.5         1995
              Sexual Healing                                            1               90    1.5         1994
              Scoring                                                   1               90    1.5         1995
---------------------------------------------------------------------------------------------------------------------

              * see note
</TABLE>

                                      82.

<PAGE>
                                                                     DENTON HALL

                             PLAYBOY TV UK/BENELUX

                                PROGRAM LIBRARY

<TABLE>                                                 
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
Program                                                         Number of    Length per     Total  Program Completion
 Type                         Title                             Episodes   Episode (min.)*  Hours        Date
---------------------------------------------------------------------------------------------------------------------
<S>           <C>                                               <C>        <C>              <C>    <C>
Movies,       Sex II                                                    1               90    1.5         1994 
  continued   Silent Strangers                                          1               90    1.5         1995
              Starlet                                                   1               60      1         1993
              Steamy Windows                                            1               60      1         1994
              Suite 18                                                  1               90    1.5         1994
              Supermodel I                                              1               90    1.5         1994
              Supermodel II                                             1               60      1         1994
              Swap II                                                   1              120      2         1994
              Tales of Erotica                                          1              120      2         1993
              Tempted                                                   1               90    1.5         1995
              Undress to Thrill                                         1               90    1.5         1994
              Vagablonde                                                1               90    1.5         1994
              Watch Me                                                  1               90    1.5         1995
              Young Lady Chatterly II                                   1               90    1.5         1985
---------------------------------------------------------------------------------------------------------------------
Sub Total Movies                                                                            104.5
--------------------------------------------------------------------------------------------------
TOTAL ALL PROGRAMMING                                                                       877.0
--------------------------------------------------------------------------------------------------
</TABLE>

                                      83.

<PAGE>

                                                                     DENTON HALL

                                  SCHEDULE 6
                                  ----------

                                  Clause 10.5
                                  -----------

1.     In this Schedule the following expressions shall have the following
       meanings:

       (a)     "the Annual Quota": the maximum number of Programme Hours of
               Playboy Programmes which the Company shall be obliged to licence
               from the Licensor in each year following the Effective Date and
               which shall be fifty (50) Programme Hours per year;

       (b)     "the Shortfall": the amount by which the aggregate amount of the
               licence fees (other than amounts paid by the Licensor to third
               party licensors for the right to transmit Third Party Programmes
               in the Service and reimbursed to the Licensor by the Company
               hereunder) received by the Licensor prior to the Effective Date
               pursuant to Clauses 7, 8 and 10 is less than the Minimum Amount.

2.     The total number of Programme Hours of Playboy Programmes which is to be
       licensed by the Company pursuant to Clause 10.5 ("the Total Number")
       shall be calculated by dividing the Shortfall by 13,158 (thirteen
       thousand one hundred and fifty-eight).

3.     The maximum period during which the provisions of Clause 10.5 shall
       continue in force following the Effective Date shall be determined by
       dividing the Total Number by the Annual Quota.

                                      84.

<PAGE>

                                                                     DENTON HALL

                                  SCHEDULE 7
                                  ----------

                                  Clause 6.8
                                  ----------

            Categories that are not acceptable for advertising are firearms (or
            ads from any gun lobby organisation) and other weapons, explosives
            or fireworks, massage parlours, telephone sex lines, sex clubs,
            sexually explicit (e.g. adult bookstore, X or NC-17 or similarly
            rated hardcore) audio-visual products, sex toys, materials depicting
            graphic sexual conduct, violence, sadism, sadomasochism, bondage,
            incest, bestiality or child pornography, classified advertising,
            psychics or similar, religious organisations and cults.

                                      85.
<PAGE>

        SIGNED by               )
                                )
        for and on behalf of    )
        THE LICENSOR            )





        SIGNED by Roger Luard   ) /s/ Roger Luard
                                )
        for and on behalf of    )
        THE COMPANY             )



                                      79.
<PAGE>

FROM:  PLAYBOY ENTERTAINMENT GROUP, INC.
       of 9242 Beverly Boulevard
       Beverly Hills
       California 90210
       United States of America
       ("the Licensor")

TO:    PLAYBOY TV UK/BENELUX LIMITED
       of Twyman House
       16 Bonny Street
       London NW1 9PG
       ("the Company")

                                                             Dated  January 1995

Dear Sirs,

We refer to the Programme Supply Agreement which you are proposing to enter into
with us today ("the Agreement"). Words and expressions used in this letter
agreement and defined in the Agreement shall have the respective meanings
ascribed to them in the Agreement.

In consideration of the Company agreeing to pay to us upon signature hereof the
sum of (Pounds)1 (receipt of which is hereby acknowledged) and of the Company
hereby agreeing to enter into the Agreement today, the Licensor hereby agrees
and undertakes with the Company that the Licensor shall notwithstanding the
provisions of the Agreement:

(a)  licence and deliver to the Company in the First Year and in the second Year
     such number (which shall be in excess of the Minimum Number of Hours in
     respect of the First Year and in respect of the second Year) of Programme
     Hours of Programmes as may from time to time be required by the Scheduler
     for first transmission in the Service ("the Additional Programme Hours");
     and

(b)  perform its obligations under paragraph (a) above at no additional cost,
     charge or expense to the Company over and above (i) the Basic Licence Fee
     payable under the Agreement in respect of the First Year and the second
     Year and (ii) any costs and expenses of the kind payable by the Company
     under Clauses 5 and 6 of the Agreement which shall during the First Year
     and the second Year also be payable in relation to the Additional Programme
     Hours, but otherwise it is hereby agreed by the parties that all of the
     terms and conditions of the Agreement (including without limitation the
     provisions of Clauses 2 and 4 of the Agreement) shall apply to the
     licensing, supply and delivery by the Licensor of the Additional Programme
     Hours under this letter agreement.

In the event of any conflict between the terms of this letter agreement and the
terms of the Agreement, the terms of this letter agreement shall prevail.

                                       1
<PAGE>

This letter agreement shall be governed by and construed in all respects in
accordance with English law and the parties agree to submit to the exclusive
jurisdiction of the English Courts as regards any claim or matter arising in
relation to this letter agreement. The Licensor hereby appoints O'Melveny &
Myers of 10 Finsbury Square, London EC2A 1LA as its authorised agent for the
purpose of accepting service of process for all purposes in connection with this
letter agreement.

Please signify your agreement to and acceptance of the foregoing by signing and
returning to us the enclosed duplicate of this letter.

Yours faithfully,


 .......................
for and on behalf of
PLAYBOY ENTERTAINMENT GROUP, INC

Agreed and Accepted:


 .......................
for and on behalf of
PLAYBOY TV UK/BENELUX LIMITED






                                       2
<PAGE>
                                                                     DENTON HALL


Certificate No: 1                                            Amount (pound) 243

                         PLAYBOY TV UK/BENELUX LIMITED
                         -----------------------------

                     Incorporated in England No.3,000,033

Registered Office:
5 Chancery Lane, London EC4A 1BU

                            LOAN STOCK CERTIFICATE
                            ----------------------

Issue of Variable Loan Stock due the 31st day of December 1999 representing a
Principal Sum of (pound) 20,000,000 under the authority of the Memorandum of
Association of the Company and pursuant to a resolution of the Board of
Directors of the Company made on 26th January 1995.

THIS IS TO CERTIFY that Flextech 1992 Plc is the registered holder of
(pound) 243 Loan Stock which is issued with the benefit of and subject to the
Conditions annexed hereto.

Interest at 3% above LIBOR, compounded semi-annually, is payable on the Loan
Stock annually on the 31st December in each year, all as more particularly
described in and subject to the said Conditions.

The Loan Stock and the Conditions annexed hereto shall be construed and take
effect in all respects in accordance with the laws of England.

IN WITNESS WHEREOF this Deed has been duly executed;

EXECUTED as a DEED               )
by Playboy TV UK/Benelux Limited )
in the presence of:              )


                                                                             
                                       Director /s/ Mark Lewis
/s/ Fairlie Anderson
Fairlie Anderson
Denton Hall
5 Chancery Lane
Clifford's Inn                         Director/Secretary /s/ Roger Luard
London EC4A 1BU


Note: (1) This certificate must be surrendered at the Company's principal place
          of business before any transfer of this Loan Stock will be registered
          or a new Certificate issued in exchange.

                                      1

<PAGE>
                                                                     DENTON HALL




      (2) Transfer of this Loan Stock is subject to restrictions.




                                      2

<PAGE>
                                                                     DENTON HALL



                                  CONDITIONS
                                  ----------

1.   Definitions

1.1  The following words and expressions shall have the following meanings:

     "Company": Playboy TV UK/Benelux Limited;

     "LIBOR": the three month London Interbank Offered Rate for Sterling
     deposits, as published in the Financial Times on the relevant Quarter Day
     on the first business day of each period in respect of which interest is to
     be calculated pursuant to Condition 3.1;

     "Principal Sum": the principal sum referred to on the face of the Loan
     Stock Certificate to which these Conditions are attached together with the
     amount of any interest which is not paid when due pursuant to condition
     3.2;
    
     "Shareholders Agreement": an agreement made effective 12th January 1995
     between Continental Shelf 16 Limited, Playboy Enterprises Group, Inc. and
     the Company relating to the Management and funding of the Company;

     "Stockholder": the registered holder for the time being of the Loan Stock;

     "Transfer": the meaning ascribed thereto in the Shareholders Agreement;

1.2  References to provisions of the Companies Act 1985 are to be construed as
     references to those provisions as from time to time amended and re-enacted.
     Headings are for ease of reference only and shall not affect the
     construction hereof.

2.   Covenant to Repay

2.1  The Company shall pay to the Stockholder the Principal Sum together with
     accrued unpaid interest to that date on the earlier of:-

     (i)    as soon as possible after issue of this Loan Stock as the cash flow
            position of the Company shall permit (as determined by the Board of
            the Company in accordance with clause 8.2 of the Shareholders
            Agreement); or

     (ii)   on the 31st December 1999 ("the Repayment Date") which date shall,
            if the Board of the Company resolves in accordance with clause 8.2
            of the Shareholders Agreement that the cashflow position of the
            Company does not permit payment of all or any of the Principal Sum
            on such date, shall in relation to any such unpaid sum, be
            automatically extended to 31st December 2000 (and if another such
            resolution is past, 31 December 2001) and thereafter be



                                       3





<PAGE>
                                                                     DENTON HALL

          repayable on receipt by the Company of 30 days written notice from the
          Stockholder; or

    (iii) on such earlier date as the Principal Sum hereby covenanted to be paid
          shall become payable in accordance with these Conditions.


2.2  The Company may at any time, repay any or all of the Principal Sum.

3.   Interest

3.1  Subject to clause 8.2 of the Shareholders Agreement and Clause 3.2 of these
     Conditions until payment in full of the Principal Sum the Company shall pay
     the Stockholder interest calculated and compounded semi-annually on each
     30th June and 31st December in respect of the immediately following six
     calendar month period on the principal amount of the Loan Stock outstanding
     from day to day at 3% (three percent) above LIBOR. Subject as hereinafter
     provided interest shall be paid annually in arrears on 31st December in
     each year the first such payment calculated from the date of issue of the
     Loan Stock to be made on 31st December 1996.

3.2  The Company may at its discretion decide to roll up interest otherwise
     payable pursuant to this clause in which case the provisions of condition
     3.3 shall apply. Such non-payment shall not constitute an Event of Default.

3.3  Any interest which is rolled up in accordance with Clause 3.2 shall with
     effect from the date on which such interest became due be added to and form
     part of the Principal Sum and interest shall accrue thereon accordingly.

3.4  The Company hereby covenants with the Stockholders that it will pay no
     dividends and make no distribution of any kind whatsoever unless and until
     the entire Principal Sum together with all accrued interest thereon
     (including, for the avoidance of doubt, any interest which has been
     capitalised pursuant to clause 3.3) shall have been repaid to the
     Stockholders.

3.5  Payment of interest and repayment of any amount of the Principal Sum shall
     be made after deduction of United Kingdom taxation (where appropriate).

4.   Events of Default

     The Principal Sum shall immediately become repayable in full together with
     all unpaid interest thereon to the date of payment on the happening of any
     of the following events or any event which the lapse of time or the giving
     of notice or the fulfilment of any condition might become or give rise to
     such event:

     (a)  the Principal Sum or any interest thereon not being paid by the
          Company as and when the same has become due and payable pursuant to
          clause 3 provided that




                                       4
<PAGE>

                                                                     DENTON HALL


          the Board of the Company shall have approved the payment of interest
          pursuant to clause 8.2 of the Shareholders' Agreement and such payment
          would not result in a breach of clause 3.4 of these Conditions; or

      (b) any meeting of creditors of the Company being held or any
          arrangement, compromise or composition with or for the benefit of its
          creditors (including any voluntary arrangement as defined in the
          Insolvency Act 1986) being proposed or entered into by or in relation
          to the Company; or

      (c) a supervisor, receiver, administrator, administrative receiver or
          other encumbrancer taking possession of or being appointed over or in
          relation to any distress, execution or other process being levied or
          enforced (and not being discharged within seven days) upon the whole
          or any substantial part of the assets of the Company;

      (d) the Company ceasing to carry on business; or

      (e) a meeting being convened for the purpose of considering a resolution,
          for the making of an administration order, the winding-up, bankruptcy,
          or dissolution of the Company;

5.    Register of Loan Stock

      The Company shall keep a register of Stockholders and enter therein the
      issue and all transfers and changes of ownership of this Loan Stock. The
      said register may be closed at such times and for such periods as the
      Company may from time to time determine provided that it shall not be
      closed for more than 7 days in any year.

6.    Transfers

6.1   No Stockholder may Transfer any of their Loan Stock unless the Transfer
      is permitted by or made in accordance with the provisions of the
      Shareholders Agreement.

6.2   A Transfer of this Loan Stock shall be in writing under the hand of the
      transferor. The transfer instrument shall be lodged with the Company
      together with such evidence of the title of the transferor (including
      production of this Loan Stock Certificate) as the Company may reasonably
      require and thereupon and transferee shall be registered as the holder
      hereof. The Company shall be entitled to retain the transfer instrument.

6.3   "The Loan Stock represented by this Certificate is held and may only be
      transferred by the registered owner subject to the terms of the
      Shareholders Agreement.


                                       5




     



<PAGE>

                                                                     DENTON HALL

7.   Sole Holder
     -----------

     The Company shall recognise and treat the Stockholder as the sole absolute
     owner hereof and as alone entitled to give and receive effectual discharges
     for the moneys hereby covenanted to be paid. The Company shall not be bound
     by or be compelled in any way to recognise (even when having notice hereof)
     any equitable, contingent, future or partial interest in this Loan Stock or
     any interest in any fractional part hereof or any other rights in respect
     of the entirety thereof other than in the registered Stockholder.

8.   Set off, etc.
     -------------

     Subject always to clause 6 the moneys hereby covenanted to be paid shall be
     paid and this Loan Stock shall be transferable without regard to any set-
     off cross-claim or equities between the Company and the original or any
     intermediate Stockholder and the receipt of the Stockholder shall be a good
     discharge to the Company.

9.   Payment
     -------

     The Principal Sum and interest due and payable on this Loan Stock will be
     paid at the principal place of business of the Company. Payment of such
     moneys may be made, at the election of the receiving Stockholders either by
     international wire transfer or by cheque to the Stockholder at its
     registered address or to such other person or address as the Stockholder
     may request in writing and if posted shall be sent by pre-paid letter at
     the risk of the Stockholder. Payment of any such cheque shall for all
     purposes be deemed to be payment and satisfaction of the Principal Sum or
     interest represented thereby.

10.  Replacement
     -----------

     If this Loan Stock Certificate is worn out, defected, lost or destroyed it
     may be replaced on such terms as to evidence, identity, indemnity and
     expense incurred by the Company in investigating or verifying title as the
     Directors of the Company shall think fit provided that in the case of
     defacement of this Loan Stock Certificate it must be surrendered before the
     new Certificate is issued. Any stamp duty payable on such renewal shall be
     borne by the Stockholder.

 11. Notices
     -------

11.1 Any notice or other communication given or made hereunder shall be in
     writing and, without prejudice to the validity of any other method or
     service, may be delivered personally or by courier or sent by facsimile
     transmission or by prepaid recorded delivery letter (airmail if overseas),
     address as follows:

     (a)  if to Company, at its registered office for the time being;


                                       6
<PAGE>
                                                                     DENTON HALL

     (b)  if to a Stockholder at its address as entered for the time being on
          the register of Loan Stock.

11.2 Any such notice or other communication shall be deemed to have been duly
     served, given or made (i) in the case of posting, 96 hours after the
     envelope containing such notice was posted and proof that any such envelope
     was properly addressed, prepared, registered and posted shall be sufficient
     evidence that such notice or other communication has been duly served,
     given or made; or (ii) in the case of delivery, when left at the relevant
     address; or (iii) in the case of facsimile transmission one business day
     after transmission.













                                       7
<PAGE>

                                                                     DENTON HALL

Certificate No. 2                                              Amount (Pounds)57


                         PLAYBOY TV UK/BENELUX LIMITED
                         -----------------------------

                     Incorporated in England No. 3,000,033


Registered Office:
5 Chancery Lane, London EC4A 1BU

                            LOAN STOCK CERTIFICATE
                            ----------------------


Issue of Variable Loan Stock due the 31st day of December 1999 representing a
Principal Sum of (pound)20,000,000 under the authority of the Memorandum of
Association of the Company and pursuant to a resolution of the Board of
Directors of the Company made on 26th January 1995.

THIS IS TO CERTIFY that Playboy Entertainment Group Inc is the registered holder
of (pound)57 Loan Stock which is issued with the benefit of and subject to the
Conditions annexed hereto.

Interest at 3% above LIBOR, compounded semi-annually, is payable on the Loan
Stock annually on the 31st December in each year, all as more particularly
described in and subject to the said Conditions.

The Loan Stock and the Conditions annexed hereto shall be construed and take
effect in all respects in accordance with the laws of England.

IN WITNESS WHEREOF this Deed has been duly executed;

EXECUTED as a DEED                 )
by Playboy TV UK/Benelux Limited   )
in the presence of:                )


/s/ Fairlie Anderson
Fairlie Anderson                        Director /s/ Mark Lewis
Denton Hall
5 Chancery Lane                         Director/Secretary /s/ Roger Luard
Clifford's Inn
London
EC4A 1BU


                                       1
<PAGE>

                                                                     DENTON HALL

Note:  (1)  This certificate must be surrendered at the Company's principal
            place of business before any transfer of this Loan Stock will be
            registered or a new Certificate issued in exchange.

       (2)  Transfer of this Loan Stock is subject to restrictions.

                                       2

<PAGE>

                                                                     DENTON HALL

                                  CONDITIONS
                                  ----------

1.   Definitions
     -----------

1.1  The following words and expressions shall have the following meanings:

     "Company": Playboy TV UK/Benelux Limited;

     "LIBOR": the three month London Interbank Offered Rate for Sterling
     deposits, as published in the Financial Times on the relevant Quarter Day
     on the first business day of each period in respect of which interest is to
     be calculated pursuant to Condition 3.1;

     "Principal Sum": the principal sum referred to on the face of the Loan
     Stock Certificate to which these Conditions are attached together with the
     amount of any interest which is not paid when due pursuant to condition
     3.2;

     "Shareholders Agreement": an agreement made effective 12th January 1995
     between Continental Shelf 16 Limited, Playboy Enterprises Group, Inc. and
     the Company relating to the management and funding of the Company;

     "Stockholder": the registered holder for the time being of the Loan Stock;

     "Transfer": the meaning ascribed thereto in the Shareholders Agreement;

1.2  References to provisions of the Companies Act 1985 are to be construed as
     references to those provisions as from time to time amended and re-enacted.
     Headings are for ease of reference only and shall not affect the
     construction hereof.

2.   Covenant to Repay
     -----------------

2.1  The Company shall pay to the Stockholder the Principal Sum together with
     accrued unpaid interest to that date on the earlier of:

          (i)    as soon as possible after issue of this Loan Stock as the cash
                 flow position of the Company shall permit (as determined by the
                 Board of the Company in accordance with clause 8.2 of the
                 Shareholders Agreement), or

          (ii)   on the 31st December 1999 ("the Repayment Date") which date
                 shall, if the Board of the Company resolves in accordance with
                 clause 8.2 of the Shareholders Agreement that the cashflow
                 position of the Company does not permit payment of all or any
                 of the Principal Sum on such date, shall in relation to any
                 such unpaid sum, be automatically extended to 31st December
                 2000 (and if another such resolution is passed, 31 December
                 2001) and thereafter be

                                       3

<PAGE>

                                                                     DENTON HALL


            repayable on receipt by the Company of 30 days written notice from
            the Stockholder; or

     (iii)  on such earlier date as the Principal Sum hereby covenanted to be
            paid shall become payable in accordance with these Conditions.

2.2  The Company may at any time, repay any or all of the Principal Sum.

3.   Interest

3.1  Subject to clause 8.2 of the Shareholders Agreement and Clause 3.2 of these
     Conditions until payment in full of the Principal Sum the Company shall pay
     the Stockholder interest calculated and compounded semi-annually on each
     30th June and 31st December in respect of the immediately following six
     calendar month period on the principal amount of the Loan Stock outstanding
     from day to day at 3% (three per cent) above LIBOR. Subject as hereinafter
     provided interest shall be paid annually in arrears on 31st December in
     each year the first such payment calculated from the date of issue of the
     Loan Stock to be made on 31st December 1996.

3.2  The Company may at its discretion decide to roll up interest otherwise
     payable pursuant to this clause in which case the provisions of condition
     3.3 shall apply. Such non-payment shall not constitute an Event of Default.

3.3  Any interest which is rolled up in accordance with Clause 3.2 shall with
     effect from the date on which such interest became due be added to and form
     part of the Principal Sum and interest shall accrue thereon accordingly.

3.4  The Company hereby covenants with the Stockholders that it will pay no
     dividends and make no distribution of any kind whatsoever unless and until
     the entire Principal Sum together with all accrued interest thereon
     (including, for the avoidance of doubt, any interest which has been
     capitalised pursuant to clause 3.3) shall have been repaid to the
     Stockholders.

3.5  Payment of interest and repayment of any amount of the Principal Sum shall
     be made after deduction of United Kingdom taxation (where appropriate).

4.   Events of Default

     The Principal Sum shall immediately become repayable in full together with
     all unpaid interest thereon to the date of payment on the happening of any
     of the following events or any event which will with the lapse of time or
     the giving of notice or the fulfilment of any condition might become or
     give rise to such an event.

     (a)  the Principal Sum or any interest thereon not being paid by the
          Company as and when the same has become due and payable pursuant to
          clause 2 or 3 provided



                                       4
<PAGE>

                                                                     DENTON HALL


         that the Board of the Company shall have approved the payment of
         interest pursuant to clause 8.2 of the Shareholders' Agreement and such
         payment would not result in a breach of clause 3.4 of these Conditions;
         or

    (b)  any meeting of creditors of the Company being held or any arrangement,
         compromise or composition with or for the benefit of its creditors
         (including any voluntary arrangement as defined in the Insolvency Act
         1986) being proposed or entered into by or in relation to the Company;
         or

    (c)  a supervisor, receiver, administrator, administrative receiver or other
         encumbrancer taking possession of or being appointed over or in
         relation to any distress, execution or other process being levied or
         enforced (and not being discharged within seven days) upon the whole or
         any substantial part of the assets of the Company;

    (d)  the Company ceasing to carry on business; or

    (e)  a meeting being convened for the purpose of considering a resolution,
         for the making of an administration order, the winding-up, bankruptcy,
         or dissolution of the Company;

5.  Register of Loan Stock

    The Company shall keep a register of Stockholders and enter therein the
    issue and all transfers and changes of ownership of this Loan Stock. The
    said register may be closed at such times and for such periods as the
    Company may from time to time determine provided that it shall not be closed
    for more than 7 days in any year.

6.  Transfers

6.1 No Stockholder may Transfer any of their Loan Stock unless the Transfer is
    permitted by or made in accordance with the provisions of the Shareholders
    Agreement.

6.2 A Transfer of this Loan Stock shall be in writing under the hand of the
    transferor. The transfer instrument shall be lodged with the Company
    together with such evidence of the title of the transferor (including
    production of this Loan Stock Certificate) as the Company may reasonably
    require and thereupon and transferee shall be registered as the holder
    hereof. The Company shall be entitled to retain the transfer instrument.

6.3 "The Loan Stock represented by this Certificate is held and may only be
    transferred by the registered owner subject to the terms of the
    Shareholders Agreement.

                                       5
<PAGE>

                                                                     DENTON HALL


7.    Sole Holder
      -----------

      The Company shall recognise and treat the Stockholder as the sole absolute
      owner hereof and as alone entitled to give and receive effectual
      discharges for the moneys hereby convenanted to be paid. The Company shall
      not be bound by or be compelled in any way to recognise (even when having
      notice hereof) any equitable, contingent, future or partial interest in
      this Loan Stock or any interest in any fractional part hereof or any other
      rights in respect of the entirety thereof other than in the registered
      Stockholder.

8.    Set off, etc.
      -------------

      Subject always to clause 6 the moneys hereby covenanted to be paid shall
      be paid and this Loan Stock shall be transferable without regard to any
      set-off cross-claim or equities between the Company and the original or
      any intermediate Stockholder and the receipt of the Stockholder shall be a
      good discharge to the Company.

9.    Payment
      -------
 
      The Principal Sum and interest due and payable on this Loan Stock will be
      paid at the principal place of business of the Company. Payment of such
      moneys may be made, at the election of the receiving Stockholders either
      by international wire transfer or by cheque to the Stockholder at its
      registered address or to such other person or address as the Stockholder
      may request in writing and if posted shall be sent by pre-paid letter at
      the risk of the Stockholder. Payment of any such cheque shall for all
      purposes be deemed to be payment and satisfaction of the Principal Sum or
      interest represented thereby.

10.   Replacement
      -----------

      If this Loan Stock Certificate is worn out, defected, lost or destroyed it
      may be replaced on such terms as to evidence, identity, indemnity and
      expense incurred by the Company in investigating or verifying title as the
      Directors of the Company shall think fit provided that in the case of
      defacement of this Loan Stock Certificate it must be surrendered before
      the new Certificate is issued. Any stamp duty payable on such renewal
      shall be borne by the Stockholder.

11.   Notices
      -------

11.1  Any notice or other communication given or made hereunder shall be in
      writing and, without prejudice to the validity of any other method or
      service, may be delivered personally or by courier or sent by facsimile
      transmission or by prepaid recorded delivery letter (airmail if overseas),
      address as follows:

      (a)  if to Company, at its registered office for the time being;

                                       6
<PAGE>

                                                                     DENTON HALL


      (b)  if to a Stockholder at its address as entered for the time being on
           the register of Loan Stock.

11.2  Any such notice or other communication shall be deemed to have been duly
      served, given or made (i) in the case of posting, 96 hours after the
      envelope containing such notice was posted and proof that any such
      envelope was properly addressed, prepared, registered and posted shall be
      sufficient evidence that such notice or other communication has been duly
      served, given or made; or (ii) in the case of delivery, when left at the
      relevant address; or (iii) in the case of facsimile transmission one
      business day after transmission.

                                       7
<PAGE>
                                                                     DENTON HALL

THIS DEED is made the 26th day of January 1995 by PLAYBOY TV UK/BENELUX LIMITED
("the Company") registered in England with number 3000033 whose registered
office is at 5 Chancery Lane, Clifford's Inn, London EC4A 1BU

WHEREAS:

By a Resolution of its Board of Directors (being duly empowered in that behalf
by the Company's Memorandum and Articles of Association) passed on 26th January
1995 the Company has created (pound)20,000,000 nominal of Variable Rate Loan
Stock 1999 to be constituted in manner hereinafter appearing.

NOW THIS DEED WITNESSES as follows:

1.   Interpretation
     --------------

1.1  In this Deed the following words and expressions shall have the following
     meanings:

    
     "Register": the register of Stock to be kept by the Company;

     "Stock": the (pound)20,000,000 nominal of Variable Rate Loan Stock 1999 of
     the Company hereby constituted or as the context may require the nominal
     amount thereof for the time being issued and outstanding or a specific
     portion thereof;

     "this Deed": this Deed and the Schedules hereto (as from time to time
     modified in accordance with the provisions herein contained) and shall
     include all Deeds and Instruments supplemental to this Deed;

1.2  Words denoting the singular number include the plural and vice versa.
     Words denoting natural persons include corporations.

1.3  Unless the context otherwise requires, any words and expressions defined in
     the Companies Act 1985 (as amended) shall bear the same meanings in this
     Deed.

1.4  Headings are for ease of reference only and shall not affect the
     construction of this Deed.

2.   The Stock
     ---------

     The principal amount of the Stock is limited to (pound)20,000,000 and shall
     be known as "Variable Rate Loan Stock 1999". All of the Stock shall rank
     pari passu equally and rateably without discrimination or preference as an
     insecured obligation of the Company.


                                       1
<PAGE>

                                                                     DENTON HALL

3.   Terms of Issue
     --------------

     The Stock may be issued solely in accordance with the provisions of the
     Agreement and of this Deed and the proceeds of issue thereof shall be
     receivable by the Company and shall be applied as the Company in its
     absolute discretion shall determine.

4.   Certificates for Stock
     ----------------------

4.1  Every Stockholder from time to time shall be entitled to a Certificate
     stating the number and amount of stock held by him but so that joint
     holders shall be entitled to only one Certificate in respect of the Stock
     held jointly by them which Certificate shall be delivered to the joint
     holder whose name stands first in the Register.

4.2  The Certificates shall be in or substantially in the form set out in
     Schedule 1 hereto and shall have attached thereto Conditions in or
     substantially in the form also set out in that Schedule. Every such
     Certificate shall be executed as a deed. The Company shall comply with the
     terms of the Certificates and shall perform and observe the said Conditions
     attached thereto and the Stock shall be held subject to and with the
     benefit of such Conditions which Conditions shall be deemed to be
     incorporated in this Instrument and shall be binding on the Company and the
     holders of the Stock and all persons claiming through or under them
     respectively.

5.   Governing Law
     -------------

     This Deed shall be governed by and construed in all respects in accordance
     with English law and the parties agree to submit to the non-exclusive
     jurisdiction of the English Courts as regards any claim or matter arising
     in relation to this Deed.

IN WITNESS whereof this Deed has been duly executed the day and year first above
written.


EXECUTED AS A DEED      ) /s/ Roger Luard
by PLAYBOY TV           )
UK/BENELUX LIMITED      )
in the presence of:     ) /s/ Mark Lewis

/s/ Fairlie Anderson
Fairlie Anderson
Denton Hall
5 Chancery Lane
Clifford's Inn
 London
EC4A IBU


                                       2
<PAGE>
                                                                     DENTON HALL

                                     INDEX
                                     -----
<TABLE>
<CAPTION>
                                                             Page No.
                                                             --------
        <C>  <S>                                               <C>
         1.  Interpretation                                     1

         2.  Licence                                            3

         3.  Quality Control                                    6

         4.  Use of the Trade Marks                             7

         5.  Ownership of the Trade Marks                       8

         6.  Infringements                                     10

         7.  Indemnity by Licensee                             11

         8.  Termination                                       12

         9.  Post Termination                                  13

        10.  No Assignment                                     13

        11.  Force Majeure                                     14

        12.  Invalidity etc                                    14

        13.  Waivers, Remedies Cumulative, Amendments. etc.    14

        14.  Costs                                             15

        15.  Notices etc                                       15

        16.  Governing Law                                     16
</TABLE>

        Schedule -     Part 1 - Registered Trade Marks
                       Part 2 - Unregistered Trade Marks
<PAGE>
                                                                     DENTON HALL

THIS DEED is made the              day of                    1995
(but with effect from 12th January 1995)

BETWEEN:

(1)  PLAYBOY ENTERPRISES, INC of 680 North Lake Shore Drive Chicago Illinois
     60611 United States of America ("the Licensor"); and
    
(2)  PLAYBOY TV UK/BENELUX LIMITED ("the Licensee") registered in England with
     number 3000033 whose address is Twyman House, 16 Bonny Street, London NW1
     9PG.

WHEREAS:

Pursuant to the Shareholders' Agreement and the Programme Supply Agreement, the
Licensor, who is the proprietor of the Playboy trade marks, wishes to permit the
Licensee to use the Playboy trade marks in relation to a satellite delivered
television service and programmes transmitted in such service on the terms of
this Deed

NOW IT IS HEREBY AGREED as follows:

1.   Interpretation
     --------------

1.1  In this Deed (including the Recital hereto) the following words and
     expressions shall have the following meanings:

     "Flextech": Continental Shelf 16 Limited, a company registered in England
     and Wales under no. 3005499;

     "Permitted Licensee": any person who may be appointed by the Licensee to
     market, promote, sell, distribute or manage subscribers to the Service in
     any country within the Territory;
<PAGE>
                                                                     DENTON HALL

"Programme": any television programme which is, or is scheduled to be, broadcast
or transmitted in the Service;

"the Programme Supply Agreement": the programme supply agreement of even date
herewith which is to be entered into between Playboy Entertainment Group, Inc.
and the Licensee;

"Promotional Material": any audio-visual, visual and/or audio material which is
intended to promote the Service or the transmission of particular Programmes in
the Service including but not limited to channel generic promotions, programme
strand generic promotions and programme specific promotions;

"the Service": the television programme service which is to be provided for
reception within the Territory by the Licensee in accordance with the
Shareholders' Agreement:

"the Shareholders' Agreement": an agreement of even date herewith between
Flextech, Playboy Entertainment Group, Inc. and the Licensee relating to the
Licensee;

"Television Service": any television service or channel (other than the
Service) which is broadcast, distributed or transmitted by any means (including
but not limited to all forms of terrestrial, satellite and cable television
transmission, broadcast and delivery) whether now known or hereafter invented
and is capable of being received in any country within the Territory (whether or
not that service or channel is primarily intended for reception outside the
Territory);

"the Territory": the United Kingdom of Great Britain and Northern Ireland
(irrespective of whether Northern Ireland remains part of the United Kingdom),
the Republic of Ireland, Belgium, Luxembourg, The Netherlands and any other
country or countries in Europe to which the scope of this Deed is extended in
accordance with Clause 2.2;

                                       2.  
<PAGE>
                                                                     DENTON HALL

     "the Trade Marks": the registered trade marks and any service marks listed
     in Part 1 of the Schedule, the unregistered trade marks and service marks
     listed in Part 2 of the Schedule together with any registered or
     unregistered trade marks of the Licensor substantially similar to those
     listed in the Schedule in any country to which the scope of the licence
     granted under Clause 2.1 is extended pursuant to Clause 2.2;

     "Transmission Period": shall have the meaning ascribed to it in the
     Programme Supply Agreement.

1.2  In this Deed all words defined in the Shareholders Agreement shall when
     used herein, save where otherwise expressly provided, bear the same
     meaning as in the Shareholders Agreement.

1.3  References in this Deed to statutes, bye-laws, regulations and delegated
     legislation shall include any statute, bye-law, regulation or delegated
     legislation in force at the date hereof whether before or after the date
     hereof modifying, re-enacting, extending or made pursuant to the same or
     which is modified, re-enacted or extended by the same or pursuant to
     which the same is made.

1.4  Clause headings in this Deed are for ease of reference only and shall not
     be taken into account in construing this Deed.

1.5  References in this Deed to Clauses, sub-clauses, paragraphs and Schedules
     are references to those contained in this Deed.

1.6  The Schedules to this Deed are an integral part of this Deed and reference
     to this Deed includes reference thereto.

2.   Licence
     -------
   
2.1  In consideration of the Licensee hereby agreeing to pay to the Licensor
     the sum of One Pound ((Pounds)1) upon signature hereof (receipt of which
     is hereby acknowledged) and to enter into the Programme Supply Agreement
     immediately following the signature of this Deed, the

                                       3.  
                                           
<PAGE>
                                                                     DENTON HALL

     Licensor grants to the Licensee, on the terms set out in this Deed, an
     exclusive licence to use the Trade Marks in the Territory in relation to
     the broadcast, transmission and distribution of Programmes and Promotional
     Material in or as part of the Service and in relation to the promotion and
     marketing of the Service and of the Programmes in any medium or media
     whatsoever.

2.2  If at any time during the term of this Deed and in accordance with Clause
     2.6 of the Shareholders Agreement the Licensee or any subsidiary (within
     the meaning of Section 736 of the Companies Act 1985) of the Licensee
     launches its television programme service in any country in Europe which
     prior to such launch is not within the Territory, then with the prior
     written consent of the Licensor:

     (a) the licence granted under sub-clause 2.1 shall automatically be
         extended to that country;

     (b) all references to the Territory in this Deed shall thereafter be
         deemed to include that country; and

     (c) the list of trade marks set out in the Schedule shall thereafter be
         deemed to include all registered or unregistered trade marks in that
         country substantially similar to those listed in the Schedule.

2.3  The Licensee shall be entitled to grant sub-licences to any Permitted
     Licensee of such of the rights granted under sub-clause 2.1 in respect of
     any country in the Territory as may be necessary for the marketing,
     promotion, sale or distribution of or management of subscribers to the
     Service in that country provided that:

     (a) any sub-licence contains obligations on the Permitted Licensee
         relating to the use and protection of the trade marks at least
         equivalent to the obligations of the Licensee under this Deed;

                                       4.              
                                                       
<PAGE>
                                                                     DENTON HALE
     
     (b) the Licensee informs the Licensor within one month of the
         execution of each sub-licence that it has been signed;

     (c) the Licensee remains responsible for all acts and omissions of each
         Permitted Licensee as though they were by the Licensee;

     (d) on termination of this Deed for whatever reason any sub-licence shall,
         at the option of the Licensor, either be assigned to the Licensor or
         terminated by the Licensee.

2.4  The licence granted under sub-clause 2.1 shall continue in force until any
     termination of this Deed in accordance with the provisions of Clause 8.

2.5  The Licensee undertakes that during the term of this Deed it will not be
     involved in providing a television programme service using the Trade Marks
     which is intended for general reception outside the Territory.

2.6  The Licensor undertakes that during the term of this Deed it will not
     itself use or permit any other person to use the Trade Marks or any
     confusingly similar designation within the Territory in relation to any
     Television Service or any programmes or other items of any description
     included in any Television Service provided that use of the Trade Marks or
     any confusingly similar designation in relation to any Television Service,
     or any programmes or other items of any description included in any
     Television Service, which is intended solely for reception in any country
     or countries outside the Territory but which is also received in a country
     or countries within the Territory shall not constitute a breach of this
     clause so long as that Television Service was transmitted in encrypted
     form and decoders designed to receive and decode such encrypted
     transmissions are not made available to the general public within the
     Territory by or with the authority of the Licensor or any other licensee
     of any of the Trade Marks.

                                       5. 
<PAGE>
                                                                     DENTON HALL

2.7  During the term of this Deed, any or all of the following shall not be used
     on or in connection with the Service without the Licensor's prior written
     consent:

     (a) permutations of any or all of the Trade Marks;
                                      
     (b) secondary marks derived from any of the Trade Marks; or

     (c) new words, devices, designs, slogans or symbols derived from any of the
         Trade Marks.

     Upon such authorisation by the Licensor and use by the Licensee, each
     such permutation, secondary mark, word, device, design, slogan and symbol
     derived from any of the Trade Marks shall be the property of the Licensor
     and shall be included as one of the Trade Marks subject to this Deed.

2.8  In the event that at any time during the term of this Deed the Licensee
     creates or develops any advertising, promotion, packaging or trade dress
     which is unique to the Service (collectively "Service Packaging"), it
     shall be and remain the property of the Licensee. Accordingly, the Licensee
     shall be free to use such Service Packaging throughout the world
     (excluding the United States of America) but the Licensee shall within
     thirty (30) days after the date of this Deed enter into a royalty-free
     licence with Flextech and with the Licensor entitling each of them to use
     such Service Packaging in perpetuity and throughout the world excluding
     the Territory and further excluding (in the case of the licence granted to
     Flextech) the United States of America.

3.   Quality Control
     ---------------

     All Programmes transmitted in the Service by the Licensee under or by
     reference to the Trade Marks shall comply with the Programme Specification
     (as defined in the Programme Supply Agreement).

                                        6.         
<PAGE>
                                                                     DENTON HALL
4.   Use of the Trade Marks
     ----------------------
    
4.1  The Licensee shall use the Trade Marks in the form stipulated by the
     Licensor and shall include such trademark and copyright notices as the
     Licensor may request and as are necessary for the protection of the
     Licensor's ownership of the Trade Marks. The Licensee shall also observe
     any reasonable directions given by the Licensor as to colours and size of
     the representations of the Trade Marks and their manner and disposition in
     connection with the Programmes, the Promotional Material and the Service.
     Any additional goodwill which may attach to the Trade Marks and which
     arises out of the Licensee's use of the Trade Marks under this Deed will
     inure solely to the benefit of the Licensor. Save as expressly set out in
     sub-clauses 2.1 and 2.2, the Licensee has not acquired and will not acquire
     any proprietary rights in the Trade Marks by reason of this Deed.

4.2  The use of the Trade Marks by the Licensee shall at all times be in keeping
     with and seek to maintain their distinctiveness and reputation as
     determined by the Licensor.

4.3  Licensee hereby acknowledges that the trade names "Playboy" and "Playmate"
     and the Trade Marks are the sole and exclusive property of the Licensor.
     Licensee shall have the right to develop and distribute advertising,
     publicity and promotional materials relating to the Programmes, provided,
     however, that any such materials (other than material obtained directly
     from Licensor) shall:

     (a) clearly identify the Trade Marks with a legible credit line with the
         wording "Playboy" (or the "Rabbit Head Design" or "The Playboy
         Channel" or "Playboy at Night" or "Playboy Television" or "Playmate",
         as the case may be) is the mark of and used with the permission of
         Playboy Enterprises Inc." or such other words as Licensor may designate
         not later than 60 days prior to the first transmission of the relevant
         Programme(s) in the Service; and

                                       7.
                                        
<PAGE>

                                                                     DENTON HALL

     (b) in no event may any advertising, publicity or promotional material
         using the names of Licensor or any person appearing in a Playboy
         Programme (as defined in the Programme Supply Agreement) be used to
         constitute an endorsement, express or implied of any party, sponsor,
         product or service (other than the Service).

     Other than as expressly set forth in this Deed, Licensee shall make no use
     of the Trade Marks or any confusingly similar designation without the
     prior express written consent of Licensor in each instance. Licensee shall
     also make no use whatsoever of any other trademark, trade name or service
     mark that is the property of Licensor without the prior express written
     consent of Licensor in each instance. Licensee similarly agrees that
     it will not authorise or purport to authorise any third party to make any
     such use except as set out in Clause 2.3, and it will expressly provide in
     any applicable third party agreements that such third parties will only be
     entitled to use such names and marks on material supplied to them by
     Licensee in accordance with Licensee's rights hereunder.

4.4  Licensee may publicise and advertise telecasts of the Programmes or
     (unless it is notified to the contrary prior to delivery of the relevant
     Programme(s)) any person appearing therein in the Territory.

5.   Ownership of the Trade Marks
     ----------------------------
    
5.1  The Licensor warrants that it is the proprietor of the Trade Marks and
     that it is not aware that any of the Trade Marks or the use of any of them
     on or in relation to Programmes or Promotional Material in the Territory
     infringes or will infringe the rights of any third party.

5.2  The Licensor shall pay all renewal fees necessary to maintain the
     registrations of the registered Trade Marks on the Register of Trade Marks
     ("the Register") during the term of this Deed.

                                      8.
                                                      
<PAGE>
                                                                     DENTON HALL

5.3  The Licensee will on request give to the Licensor or its authorised
     representative any information as to its use of the Trade Marks which the
     Licensor may require and will during the term of this Deed render any
     assistance reasonably required by the Licensor in maintaining the
     registrations of the registered Trade Marks.

5.4  The Licensee will not make any representation or do any act which may be
     taken to indicate that it has any right title or interest in or to the
     ownership or use of any of the Trade Marks except under the terms of this
     Deed, and acknowledges that nothing contained in this Deed shall give the
     Licensee any right, title or interest in or to the Trade Marks save as
     granted hereby.

5.5  Each party shall at its own expense, if required by the other, do all such
     acts and execute all such documents as may be necessary to confirm the
     licence granted hereunder in respect of any of the Trade Marks and to
     record the Licensee as a registered user of the registered Trade Marks on
     the trade marks register in any country within the Territory (including
     such of the applications as mature into registrations during the term of
     this Deed). The Licensee hereby agrees that any such entry on any trade
     mark register may be cancelled by the Licensor on termination of this
     Deed, for whatever reason, and that it will assist the Licensor so far as
     may be necessary to achieve such cancellation including by executing any
     necessary documents.

5.6  The Licensor shall indemnify the Licensee against all costs, damages,
     liabilities, fees and expenses which it may suffer or incur and all claims,
     actions and proceedings which may be made or brought against it, by any
     person claiming that use of the Trade Marks by the Licensee in accordance
     with this Deed infringes the rights of such person. The Licensee will
     notify the Licensor of any such claims promptly and allow the Licensor to
     control the defence thereof PROVIDED THAT, where the Licensee reasonably
     considers that it may be adversely or materially prejudiced thereby, the
     Licensee may elect to continue to be separately represented in the defence
     thereof and (if the Licensee shall so elect) no such claim, action

                                       9.          
                                                   
<PAGE>

                                                                     DENTON HALL

     or proceedings may be settled by the Licensor without the prior written
     consent of the Licensee. The Licensee will also provide any assistance
     reasonably requested by the Licensor at the Licensor's expense.

6.   Infringements
     -------------

6.1  Each party shall as soon as it becomes aware thereof give the other written
     particulars of any use or proposed use by any other person, firm or company
     of a trade name, trade mark or get-up or mode of promotion or advertising
     which amounts or might amount either to infringement in the Territory of
     the Licensor's registered rights in relation to the Trade Marks or to
     passing-off.

6.2  Each party shall, as soon as it becomes aware that any other person, firm
     or company alleges that the Trade Marks are invalid within the Territory or
     that use of the Trade Marks infringes any rights of another party or that
     the Trade Marks are otherwise attacked or open to attack within the
     Territory, give the other written particulars.

6.3  The Licensee will at the request of the Licensor give full co-operation to
     the Licensor in any action, claim or proceedings brought or threatened in
     respect of the Trade Marks within the Territory and the Licensor shall
     meet any reasonable expenses incurred by the Licensee in giving such
     assistance.

6.4  The Licensor shall in the first instance have the conduct of all
     proceedings relating to the Trade Marks and shall in its sole discretion
     decide what action (if any) to take in respect of any infringement or
     alleged infringement of the Trade Marks within the Territory or passing-off
     or any other claim or counter-claim brought or threatened in respect of
     the use or registration of the Trade Marks within the Territory.

6.5  If the Licensor does not take any action to protect the Trade Marks under
     the provisions of Clause 6.4 within two months of the circumstances giving
     rise to the need for such action coming to the

                                    10.   
                                              
<PAGE>

                                                                     DENTON HALL

      attention of the Licensor (or earlier if the Licensor indicates that it
      does not intend to take such action) and if the Licensee receives advice
      from experienced trade mark counsel that proceedings could stand a
      reasonable chance of success, the Licensee shall, provided it has
      consulted with the Licensor as to the bringing of proceedings, have the
      option to commence proceedings at its own cost relating to the Trade Marks
      to which the Licensor shall lend its name and reasonable assistance
      subject to the Licensee reimbursing the Licensor for all costs and
      expenses that the Licensor may reasonably incur and any award of costs
      against it. All sums recovered by any such action representing damages
      suffered by the Licensee or unreimbursed costs of the Licensee shall
      belong to the Licensee.

6.6  The provisions of sub-clauses 6.1-6.5 inclusive shall also apply in
     relation to any registered or unregistered trade mark of the Licensor
     within the Territory which are substantially similar to the Trade Marks.

7.   Indemnity by Licensee
     ----------------------

     The Licensee shall indemnify the Licensor against all costs, damages,
     liabilities, fees and expenses which it may suffer or incur and all claims,
     actions and proceedings which may be made or brought against it as a
     result of any breach by the Licensee of the provisions of this Deed. The
     Licensor will notify the Licensee of any such claims promptly and allow
     the Licensee to control the defence thereof PROVIDED THAT, where the
     Licensor reasonably considers that it may be adversely or materially
     prejudiced thereby, the Licensor may elect to continue to be separately
     represented in the defence thereof and (if the Licensor shall so elect) no
     such claim, action or proceedings may be settled by the Licensee without
     the prior written consent of the Licensor.

                                    11.   
                                             
<PAGE>
                                                                     DENTON HALL
8.   Termination
     -----------

8.l  Either party may without prejudice to its other remedies terminate this
     Deed forthwith by notice in writing to the other on or after the occurrence
     of any of the following:

     (a) the persistent commission of material breaches of this Deed by the
         other party which are not capable of remedy; or

     (b) the commission of a material breach of this Deed by the other party
         which is capable of remedy (a "remediable breach") which shall not have
         remedied within a period of one month after the party in breach has
         been given notice in writing specifying that remediable breach and
         requiring it to be remedied PROVIDED ALWAYS THAT the notice of
         termination may not be given if that remediable breach is incapable of
         remedy within that one month period and during that one month period
         the party in breach shall diligently endeavour to remedy that
         remediable breach; or

     (c) a supervisor, receiver, administrator, administrative receiver or other
         encumbrancer taking possession of or being appointed over or any
         distress, execution or other process being levied or enforced (and not
         being discharged within thirty days) upon the whole or any substantial
         part of the assets of the other party PROVIDED ALWAYS THAT the
         Licensor shall not be entitled to terminate this Deed under this sub-
         clause 8.l(c) if Flextech shall notify the Licensor of its offer to
         acquire the entire shareholding of Playboy Entertainment Group, Inc.,
         or any Associate of Playboy Entertainment Group, Inc. in the Licensee
         pursuant to Clause 8.5 of the Shareholders' Agreement; or

     (d) any event analogous to any of the foregoing occurring in any
         jurisdiction in relation to the other party.

                                      12.
                                     
<PAGE>

                                                                     DENTON HALL

8.2  Subject only to clause 9.2, this Deed shall automatically terminate
     on:

     (a) the date on which any termination of the Programme Supply Agreement by
         the Licensee pursuant to Clause 10.2 or 10.3 of the Programme Supply
         Agreement takes effect; or

     (b) the date on which any termination of the Programme Supply Agreement by
         the Licensor pursuant to Clause 10.2 of the Programme Supply Agreement
         takes effect.

 9.  Post Termination
     ----------------

9.1  The termination of this Deed for whatever reason shall not affect any
     provision of this Deed which is expressed to survive or operate in the
     event of its termination and shall not prejudice or affect the rights of
     either party against the other in respect of any breach of this Deed or in
     respect of any moneys payable by one party to the other in relation to any
     period prior to termination.

9.2  Upon the date on which any termination of this Deed for whatever reason
     takes effect ("the Termination Date") the Licensee shall cease to make
     any use of the Trade Marks save that in relation to Programmes whose
     Transmission Period has not ended prior to the Termination Date the
     Licensee shall continue to be entitled to make use of the Trade Marks for
     so long as the Licensee continues to be entitled to transmit those
     Programmes by virtue of Clause 10.6 of the Programme Supply Agreement.

10.  No Assignment
     -------------
     The provisions of this Deed shall be binding on and enure to the benefit
     of the successors of each party hereto provided that no party may agree to
     assign, transfer, charge or otherwise dispose of or subcontract any of its
     rights or obligations hereunder without the prior written consent of the
     other party.

                                       13. 
                                           
<PAGE>



                                                                     DENTON HALL

11.  Force Majeure
     -------------

     Either party shall be excused from performance of its obligations under
     this Deed if and to the extent that such performance is hindered or
     prevented (directly or indirectly) by reason of any strike, lockout,
     labour disturbance, government action, riot, armed conflict, accident,
     unavailability or breakdown of normal means of transport, act of God or
     any other matter whatsoever beyond the reasonable control of that party
     (other than a breach of the provisions of this Deed by the other party).

12.  Invalidity etc.
     ---------------

12.1 Should any provision of this Deed be or become ineffective for reasons
     beyond the control of the parties, the parties shall use reasonable
     efforts to agree upon a new provision which shall as nearly as possible
     have the same commercial effect as the ineffective provision.

12.2 Any provision contained in this Deed or in any arrangement of which this
     Deed forms part by virtue of which this Deed or such arrangement is subject
     to registration under the Restrictive Trade Practices Act 1976 shall not
     come into effect until the day following the date on which particulars of
     this Deed and of any such arrangement have been furnished to the Office of
     Fair Trading (or on such later date as may be provided for in relation to
     any such provision) and the parties hereto agree to furnish such
     particulars within three months of the date of this Deed.

13.  Waivers, Remedies Cumulative, Amendments, etc.
     ---------------------------------------------- 

13.1 No failure or delay by any of the parties hereto in exercising any right,
     power or privilege under this Deed shall operate as a waiver thereof nor
     shall any single or partial exercise by any of the parties hereto of any
     right, power or privilege preclude any further exercise thereof or the
     exercise of any other right, power or privilege.

                                 14.         
<PAGE>

                                                                     DENTON HALL

13.2 The rights and remedies herein provided are cumulative and not
     exclusive of any rights and remedies provided by law.

13.3 No provision of this Deed may be amended, modified, waived, discharged or
     terminated, otherwise than by the express written agreement of the parties
     hereto nor may any breach of any provision of this Deed be waived or
     discharged except with the express written consent of the party not in
     breach.

14.  Costs
     -----

     Each of the parties hereto shall pay its own costs, charges and expenses
     connected with the preparation and implementation of this Deed and the
     transactions contemplated by it.

15.  Notices
     -------

15.1 Any notice or other communication given or made under this Deed shall be
     in writing and, without prejudice to the validity of any other method of
     service, may be delivered personally or by courier or sent by facsimile
     transmission and by prepaid airmail letter, addressed as follows:

     (a) if to the Licensor to:

         The General Counsel of the Licensor
         680 North Lake Shore Drive
         Chicago IL 60611
         United States of America
         Facsimile transmission number: (O101 312) 266 2042

         with a copy to:

         The President of Playboy Entertainment, Inc.
         9242 Beverly Boulevard
         Beverly Hills
         California 90210
         United States of America
         Facsimile transmission number: (0101 310) 246 4065

                                   15.     
                                               
<PAGE>

                                                                     DENTON HALL

     (b) if to the Licensee to:

         Twyman House
         16 Bonny Street
         London NW1 9PG
         Facsimile transmission number: (0171) 911 0145

         with a copy to:

         The Chief Executive
         Flextech plc
         13 Albemarle Street
         London
         W1X 3HA
         Facsimile transmission number: (0171) 499 7553

     or to such other address, or facsimile transmission number as the
     relevant addressee may hereafter by notice hereunder substitute.

15.2 Any such notice or other communication shall be deemed to have been duly
     served, given or made (i) in the case of posting, 96 hours after the
     envelope containing such notice was posted and proof that any such
     envelope was properly addressed, prepaid, registered and posted shall be
     sufficient evidence that such notice or other communication has been duly
     served, given or made; or (ii) in the case of delivery, when left at the
     relevant address; or (iii) in the case of facsimile transmission on the
     first business day in the country of the intended recipient after the
     date of transmission.

16.  Governing Law
     -------------

16.1 This Deed shall be governed by and construed in all respects in accordance
     with English law and the parties agree to submit to the exclusive
     jurisdiction of the English Courts as regards any claim or matter arising
     in relation to this Deed.


                                     16. 
                                            
<PAGE>

                                                                     DENTON HALL

16.2 The Licensor hereby appoints O'Melveny & Myers of 10 Finsbury Square,
     London EC2A 1LA, as its authorised agent for the purpose of accepting
     service of process for all purposes in connection with this Deed.

IN WITNESS whereof this Deed has been duly executed.


                                       17.   
                                             
<PAGE>

                                                                     DENTON HALL

                                   SCHEDULE
                                   --------
                                    Part 1
                                    ------
                            Registered Trade Marks
                            ----------------------
<TABLE>
<CAPTION>

Mark           Country        Reg. No        Class        Reg. Date        Relevant
----           -------        -------        -----        ---------        --------
                                                                           Goods/Services
                                                                           --------------
<S>            <C>            <C>            <C>          <C>              <C>
PLAYBOY        United         1286798        41           10/14/93         radio,
               Kingdom                                                     television and
                                                                           stage
                                                                           entertainments;
                                                                           all included in
                                                                           this class

RABBIT         United         1324768        41           10/22/87         radio,
HEAD           Kingdom                                                     television and
DESIGN                                                                     stage
                                                                           entertainments

PLAYBOY        Benelux        424544         41           1/6/87           entertainment
                                                                           and amusements;
                                                                           and the
                                                                           production of
                                                                           radio and
                                                                           television
                                                                           programmes

RABBIT         Benelux        427684         41           1/6/87           entertainment
HEAD                                                                       and
DESIGN                                                                     amusements; and
                                                                           the production
                                                                           of radio and
                                                                           television
                                                                           programmes

</TABLE>

                                      18.

<PAGE>

                                                                     DENTON HALL

                                    Part 2
                                    ------

                            Unregistered Trademarks
                            -----------------------

Country            Mark or Representation or        Goods/Services
-------            -------------------------        --------------
                   Description of Get-up
                   ---------------------

Republic of        PLAYBOY                          Entertainment
Ireland                                             services, namely,
                                                    pay television
                                                    services and pay per
                                                    view television
                                                    services

Republic of        RABBIT HEAD DESIGN               Entertainment
Ireland                                             services, namely,
                                                    pay television
                                                    services and pay per
                                                    view television
                                                    services

                                      19.

<PAGE>

EXECUTED AS A DEED by David     )  /s/ David I. Chemerow
I. Chemerow and Howard          )
Shapiro acting under            )  Exec. Vice President
the express authority of        )
PLAYBOY ENTERPRISES, INC.       )  /s/ Howard Shapiro
in accordance with the laws     )
of the State of Delaware        )  Exec. Vice President  



EXECUTED AS A DEED by           ) 
PLAYBOY TV UK/BENELUX LIMITED   )
in the presence of:             ) 

                                       Director


                                       Director/Secretary






                                      20.
<PAGE>


EXECUTED AS A DEED by           ) 
           and                  )
        acting under            ) 
the express authority of        )
PLAYBOY ENTERPRISES, INC.       ) 
in accordance with the laws     )
of the State of Delaware        ) 



EXECUTED AS A DEED by           ) 
PLAYBOY TV UK/BENELUX LIMITED   )
in the presence of:             ) 
/s/ Fairlie Anderson
Fairlie Anderson                       Director   /s/ Roger Luard
Denton Hall
5 Chancery Lane
Clifford's Inn                         Director/Secretary /s/ Mark Lewis
London EC4A IBU





                                      20.

<PAGE>

                        THE COMPANIES ACTS 1985 TO 1989

                         _____________________________

                           COMPANY LIMITED BY SHARES

                         _____________________________


                            ARTICLES OF ASSOCIATION

                                      of

                          PLAYBOY UK/BENELUX LIMITED
                           ________________________


                 (Adopted by Special Resolution passed on the
                           26th day of January 1995)
                  ___________________________________________


                                  PRELIMINARY

1.1  In these Articles "the Act" means the Companies Acts 1985 to 1989 (as
     amended or re-enacted at the date hereof) and "Table A" means Table A as
     prescribed in the Companies (Tables A to F) Regulations 1985 (as amended at
     the date hereof).

1.2  The regulations contained in Table A shall not apply to the Company.

                                INTERPRETATION

2.   In these Articles the following words and expressions shall have the
     following meanings:

     "the Board": the Board of Directors of the Company present at a duly
     convened meeting of the Directors at which a quorum is present;

     "Associate": means in relation to any member which is a company, another
     company which controls, is controlled by or is under common control with
     that company and for this purpose a company shall be deemed to control any
     company which is a subsidiary or a subsidiary undertaking of such company;

     "the Auditors": the auditors for the time being of the Company.

                           SHARE CAPITAL AND SHARES

3.   The authorised share capital of the Company at the date of adoption of
     these Articles is (Pounds) 11,000,000 divided into 11,000,000 ordinary
     shares of (Pounds)1 each ("the Ordinary Shares").

<PAGE>

4.   Subject to the provisions of the Act, shares may be issued which are to be
     redeemed or are to be liable to be redeemed at the option of the company or
     the holder on such terms and in such manner as may be provided by the
     articles.

5.   The company may exercise the powers of paying commissions conferred by the
     Act. Subject to the provisions of the Act, any such commission may be
     satisfied by the payment of cash or by the allotment of fully or partly
     paid shares or partly in one way and partly in the other.

6.   Except as required by law, no person shall be recognised by the company as
     holding any share upon any trust and (except as otherwise provided by the
     articles or by law) the company shall not be bound by or recognise any
     interest in any share except an absolute right to the entirety thereof in
     the holder.

                              SHARE CERTIFICATES

7.   Every member, upon becoming the holder of any shares, shall be entitled
     without payment to one certificate for all the shares of each class held by
     him (and, upon transferring a part of his holding of shares of any class,
     to a certificate for the balance of such holding) or several certificates
     each for one or more of his shares. Every certificate shall be sealed with
     the seal and shall specify the number, class of the shares to which it
     relates and the amount or respective amounts paid up thereon. The company
     shall not be bound to issue more than one certificate for shares held
     jointly by several persons and delivery of a certificate to one joint
     holder shall be a sufficient delivery to all of them.

8.   If a share certificate is defaced, worn-out, lost or destroyed, it may be
     renewed on such terms (if any) as to evidence and indemnity and payment of
     the expenses reasonably incurred by the company in investigating evidence
     as the directors may determine but otherwise free of charge, and (in the
     case of defacement or wearing-out) on delivery up of the old certificate.

                                     LIEN

9.   The company shall have a first and paramount lien on every share (not being
     a fully paid share) for all moneys (whether presently payable or not)
     payable at a fixed time or called in respect of that share. The directors
     may at any time declare any share to be wholly or in part exempt from the
     provisions of this regulation. The company's lien on a share shall extend
     to any amount payable in respect of it.

10.  The company may sell in such manner as the directors determine any shares
     on which the company has a lien if a sum in respect of which the lien
     exists is presently payable and is not paid within fourteen clear days
     after notice has been given to the holder of the share or to the person
     entitled to it in consequence of the death or bankruptcy of the holder,
     demanding payment and stating that if the notice is not complied with the
     shares may be sold.

                                      2.

<PAGE>

11.  To give effect to a sale the directors may authorise some person to execute
     an instrument of transfer of the shares sold to, or in accordance with the
     directions of, the purchaser. The title of the transferee to the shares
     shall not be affected by any irregularity in or invalidity of the
     proceedings in reference to the sale.

12.  The net proceeds of the sale, after payment of the costs, shall be applied
     in payment of so much of the sum for which the lien exists as is presently
     payable, and any residue shall (upon surrender to the company for
     cancellation of the certificate for the shares sold and subject to a like
     lien for any moneys not presently payable as existed upon the shares before
     the sale) be paid to the person entitled to the shares at the date of the
     sale.

                         CALLS ON SHARES AND FORFEITURE

13.  Subject to the terms of allotment, the directors may make calls upon the
     members in respect of any moneys unpaid on their shares (whether in respect
     of nominal value or premium) and each member shall (subject to receiving at
     least fourteen clear days' notice specifying when and where payment is to
     be made) pay to the company as required by the notice the amount called on
     his shares. A call may be required to be paid by instalments. A call may,
     before receipt by the company of any sum due thereunder, be revoked in
     whole or part and payment of a call may be postponed in whole or part. A
     person upon whom a call is made shall remain liable for calls made upon him
     notwithstanding the subsequent transfer of the shares in respect whereof
     the call was made.

14.  A call shall be deemed to have been made at the time when the resolution of
     the directors authorizing the call was passed.

15.  The joint holders of a share shall be jointly and severally liable to pay
     all calls in respect thereof.

15.  If a call remains unpaid after it has become due and payable the person
     from whom it is due and payable shall pay interest on the amount unpaid
     from the day it became due and payable until it is paid at the rate fixed
     by the terms of allotment of the share or in the notice of the call or, if
     no rate is fixed, at the appropriate rate (as defined by the Act) but the
     directors may waive payment of the interest wholly or in part.

16.  An amount payable in respect of a share on allotment or at any fixed date,
     whether in respect of nominal value or premium or as an instalment of a
     call, shall be deemed to be a call and if it is not paid the provisions of
     the articles shall apply as if that amount had become due and payable by
     virtue of a call.

17.  Subject to the terms of allotment, the directors may make arrangements on
     the issue of shares for a difference between the holders in the amounts
     and times of payment of calls on their shares.

18.  If a call remains unpaid after it has become due and payable the directors
     may give to the person from whom it is due not less than fourteen clear
     days' notice requiring payment of the amount unpaid

                                   3.      
<PAGE>

     together with any interest which may have accrued. The notice shall name
     the place where payment is to be made and shall state that if the notice is
     not complied with the shares in respect of which the call was made will be
     liable to be forfeited.

19.  If the notice is not complied with any share in respect of which it was
     given may, before the payment required by the notice has been made, be
     forfeited by a resolution of the directors and the forfeiture shall include
     all dividends or other moneys payable in respect of the forfeited shares
     and not paid before the forfeiture.

20.  Subject to the provisions of the Act, a forfeited share may be sold, re-
     allotted or otherwise disposed of on such terms and in such manner as the
     directors determine either to the person who was before the forfeiture the
     holder or to any other person and at any time before sale, re-allotment
     or other disposition, the forfeiture may be cancelled on such terms as the
     directors think fit. Where for the purposes of its disposal a forfeited
     share is to be transferred to any person the directors may authorise some
     person to execute an instrument of transfer of the share to that person.

21.  A person any of whose shares have been forfeited shall cease to be a member
     in respect of them and shall surrender to the company for cancellation
     the certificate for the shares forfeited but shall remain liable to the
     company for all moneys which at the date of forfeiture were presently
     payable by him to the company in respect of those shares with interest at
     the rate at which interest was payable on those moneys before the
     forfeiture or, if no interest was so payable, at the appropriate rate (as
     defined in the Act) from the date of forfeiture until payment but the
     directors may waive payment wholly or in part or enforce payment without
     any allowance for the value of the shares at the time of forfeiture or for
     any consideration received on their disposal.

22.  A statutory declaration by a director or the secretary that a share has
     been forfeited on a specified date shall be conclusive evidence of the
     facts stated in it as against all persons claiming to be entitled to the
     share and the declaration shall (subject to the execution of an instrument
     of transfer if necessary) constitute a good title to the share and the
     person to whom the share is disposed of shall not be bound to see to the
     application of the consideration, if any, nor shall his title to the share
     be affected by any irregularity in or invalidity of the proceedings in
     reference to the forfeiture or disposal of the share.

                              TRANSFER OF SHARES

23.  The instrument of transfer of a share may be in any usual form or in any
     other form which the directors may approve and shall be executed by or on
     behalf of the transferor and, unless the share is fully paid, by or on
     behalf of the transferee.

24.  Save as set out in Article 25 below no share shall be transferred by any
     Member or other person entitled thereto without the prior consent of all
     the other members.

                                      4.

<PAGE>

25.1 If a member ("the Defaulter") becomes unable to pay its debts within
     Section 123 of the Insolvency Act 1986 or makes a composition or
     arrangement with its creditors or puts a proposal to its creditors for a
     voluntary arrangement for a composition of its debts or a scheme of
     arrangement or on the presentation of a petition that it be put into
     liquidation (which is not withdrawn or defeated within 28 days) or
     administration or passes a resolution putting it into voluntary liquidation
     (other than for the purposes of amalgamation or reconstruction reasonably
     approved by the other members) or suffers the appointment of a provisional
     liquidator, a receiver, manager or an administrative receiver or on the
     occurrence of an event which does result in the crystallisation of any
     floating charge over its business, undertaking, property or assets of any
     part therof or is dissolved or on the occurrence of an event which is
     analogous to any of the above in any jurisdiction other than the United
     Kingdom in which the relevant member is incorporated, then any other member
     may within 60 days of the later of the date of such event or of the date on
     which such member becomes aware of that event require the Defaulter, by
     notice in writing to the Defaulter and the Company to sell all its shares
     in the Company ("the Transfer Notice").

25.2 The Transfer Notice shall constitute the Company the Defaulter's agent for
     the sale of all, but not some only, of the shares the subject of the
     Transfer Notice ("the Sale Shares") to the other members and/or any person
     procured or nominated by the other members as it/they may in its/their
     absolute discretion determine ("a Nominee") at the Prescribed Price (as
     defined in Article 25.5). The Defaulter shall within 7 business days of
     receipt of the Transfer Notice deliver to the Company the Defaulter's share
     certificates and duly executed transfers in blank in respect thereof
     which may not be withdrawn.

25.3 Within 7 business days of agreement or determination of the Prescribed
     Price, the Company shall give notice in writing to the other members
     specifying the number of Sale Shares and the Prescribed Price therefor
     and offering the Sale Shares for sale to the other members and/or their
     Nominees at the Prescribed Price. Such notice shall be accompanied by a
     copy of the Transfer Notice and (if applicable) the Referee's certificate
     of the Prescribed Price and shall require the other members to state in
     waiting within 14 days of the receipt of the notice whether it and/or a
     Nominee is willing to purchase the Sale Shares at the Prescribed Price.

25.4 In the event that a notice or notices are served in respect of all of the
     Sale Shares, the other members or a Nominee thereof shall within 28 days
     thereafter complete the purchase of the Sale Shares from the Defaulter at
     the Prescribed Price provided that (i) in the event of competition the
     members (and/or their Nominees) shall complete the purchase of the Sale
     Shares pro rata to the number of shares held by the other members save that
     notwithstanding the above no purchase pursuant to this clause shall be
     made by a Nominee of any member if there remains a member or members
     willing to purchase the Sale Shares to which any member who has proposed a
     Nominee to purchase his/her pro rata entitlement would otherwise be
     entitled to purchase. The Defaulter shall be bound to transfer the Sale
     Shares


                                      5.
<PAGE>

     comprised in the notice to the other member(s) or its/their Nominees at the
     Prescribed Price, and if it makes default in so doing the Company may
     receive the purchase money and the Directors may authorise some person to
     execute a transfer as appropriate of the Sale Shares in favour of the other
     members and/or their Nominee(s) ("the Shareholder Purchasers") and the
     Company shall hold the purchase money in trust for the Defaulter. The
     receipt by the Company of the purchase money shall be a good discharge to
     the Shareholder Purchaser(s) and after its or their name has been entered
     in the Company's Register of Members in exercise of the aforesaid power,
     the validity of the proceedings shall not be questioned by any person. If
     such purchase is not completed (for any reason other than the Defaulter's
     delay or default) within such period of 28 days, then the certificates and
     duly completed transfer of the Sale Shares shall be returned to the
     Defaulter.

25.5 The Prescribed Price shall be such price as the members may agree per share
     or in default of agreement within 30 days after the date on which the
     Transfer Notice is served following a reference by any member to a
     Referee such price per share as the Referee shall determine to be on the
     date of receipt of the Transfer Notice the Fair Value as defined in
     Article 25.6.

25.6 Fair Value shall be in respect of each Sale Share the same proportion of
     the fair market value of the Company as a whole on the date of service of
     the Transfer Notice as such Sale Share bears to the whole of the issued
     share capital in the Company stated as a price per share as certified by
     the Referee on the basis of a sale thereof as between a willing vendor and
     a willing purchaser on the assumption that the Sale Shares will be
     purchased in one lot by a purchaser contracting on arm's length terms, who
     has no other interest in the Company and (if the Company is then continuing
     as a going concern) on the assumption that all the Shares were ordinary
     shares of the same class and that the Company will continue in business as
     a going concern and having regard to any goodwill attaching to the Company
     though taking into account (if that be the case) the fact that any material
     contract or licence of the Company has been terminated. For this purpose,
     the Referee shall be such independent merchant or investment bank with
     acknowledged experience of the industry in which the Company operates as
     the members may agree or, in default of agreement within seven days, as may
     be nominated, on the request of any member, by the President for the time
     being of the British Institute of Bankers, who shall be instructed to
     produce his certificate within thirty days of his appointment and who shall
     act as expert and not as arbitrator and whose certificate shall be final
     and binding on the members, save in the event of manifest error. The fees
     and expenses of the Referee shall be borne as to the other half by the
     purchaser(s) of the Defaulter's Shares (if any) and as to the balance (or
     the whole if there are no purchasers) by the Defaulter.

25.7 In the event that no notice or notices are received in accordance with
     clause 25.3 above the Defaulter shall, be at liberty to sell all of the
     Sale Shares at any time within 28 days after the expiry of the period of 14
     days provided for under Article 25.2 to a third party at the Prescribed
     Price and otherwise upon no more favourable terms than those offered to the
     members.

                                     6.
  
<PAGE>

25.8  Where any Transfer Notice is given by a member pursuant to this Article 25
      such member may specify that until completion of any transfer pursuant to
      this clause:

      (a) any transfer by a Defaulter of its Shares (other than to or in
          accordance with this Article 25) shall be void;

      (b) no voting rights shall be exercisable by the Defaulter in
          respect of its Shares; and

      (c) no further Shares shall be issued or need be offered to the
          Defaulter.

                             TRANSMISSION OF SHARES

26.   If a member dies the survivor or survivors where he was a joint holder,
      and his personal representatives where he was a sole holder or the only
      survivor of joint holders, shall be the only persons recognised by the
      company as having any title to his interest; but nothing herein contained
      shall release the estate of a deceased member from any liability in
      respect of any share which had been jointly held by him.

25.   A person becoming entitled to a share in consequence of the death or
      bankruptcy of a member may, upon such evidence being produced as the
      directors may properly require, elect either to become the holder of the
      share or to have some person nominated by him registered as the
      transferee. If he elects to become the holder he shall give notice to the
      company to that effect. If he elects to have another person registered he
      shall execute an instrument of transfer of the share to that person. All
      the articles relating to the transfer of shares shall apply to the notice
      or instrument of transfer as if it were an instrument of transfer executed
      by the member and the death or bankruptcy of the member had not occurred.

26.   A person becoming entitled to a share in consequence of the death or
      bankruptcy of a member shall have the rights to which he would be
      entitled if he were the holder of the share, except that he shall not,
      before being registered as the holder of the share, be entitled in respect
      of it to attend or vote at any meeting of the company or at any separate
      meeting of the holders of any class of shares in the company.


                          ALTERATION OF SHARE CAPITAL

27.   The company may by ordinary resolution -

      (a) increase its share capital by new shares of such amount as the
          resolution prescribes;
        
      (b) consolidate and divide all or any of its share capital into shares of
          larger amount than its existing shares;

      (c) subject to the provisions of the Act, sub-divide its shares, or any of
          them, into shares of smaller amount and the resolution may determine
          that, as between the shares resulting

                                      7.
<PAGE>

          from the sub-division, any of them may have any preference or
          advantage as compared with the others; and

     (d)  cancel shares which, at the date of the passing of the resolution,
          have not been taken or agreed to be taken by any person and diminish
          the amount of its share capital by the amount of the shares so
          cancelled

28.  Whenever as a result of a consolidation of shares any members would become
     entitled to fractions of a share, the directors may, on behalf of those
     members, sell the shares representing the fractions for the best price
     reasonably obtainable to any person (including, subject to the provisions
     of the Act, the company) and distribute the net proceeds of sale in due
     proportion among those members, and the directors may authorise some person
     to execute an instrument of transfer of the shares to, or in accordance
     with the directions of, the purchaser. The transferee shall not be bound
     to see to the application of the purchase money nor shall his title to the
     shares be affected by any irregularity in or invalidity of the proceedings
     in reference to the sale.

29.  Subject to the provisions of the Act, the company may by special resolution
     reduce its share capital, any capital redemption reserve and any share
     premium account in any way.

                            PURCHASE OF OWN SERIES

30.  Subject to the provisions of the Act, the company may purchase its own
     shares (including any redeemable shares) and, if it is a private company,
     make a payment in respect of the redemption or purchase of its own shares
     otherwise than out of distributable profits of the company or the proceeds
     of a fresh issue of shares.

                               GENERAL MEETINGS

31.  All general meetings other than annual general meetings shall be called
     extraordinary general meetings.

32.  The directors may call general meetings and, on the requisition of members
     pursuant to the provisions of the Act, shall forthwith proceed to convene
     an extraordinary general meeting for a date not later than eight weeks
     after receipt of the requisition. If there are not within the United
     Kingdom sufficient directors to call a general meeting, any director or
     any member of the company may call a general meeting.

                           NOTICE OF GENERAL MEETINGS

33.  An annual general meeting and an extraordinary general meeting called for
     the passing of a special resolution or a resolution appointing a person as
     a director shall be called by at least twenty-one clear days' notice. All
     other extraordinary general meetings shall be called by at least fourteen
     days' notice but a general meeting may be called by shorter notice if it is
     so agreed -

     (a)  in the case of an annual general meeting, by all the members entitled
          to attend and vote thereat; and

                                      8.
<PAGE>

     (b) in the case of any other meeting by a majority in number of the members
         having a right to attend and vote being a majority together holding not
         less than ninety-five per cent in nominal value of the shares giving
         that right.

     The notice shall specify the time and place of the meeting and the general
     nature of the business to be transacted and, in the case of an annual
     general meeting, shall specify the meeting as such.

     Subject to the provisions of the articles and to any restrictions imposed
     on any shares, the notice shall be given to all the members, to all persons
     entitled to a share in consequence of the death or bankruptcy of a member
     and to the directors and auditors.

34.  The accidental omission to give notice of a meeting to, or the non-receipt
     of notice of a meeting by, any person entitled to receive notice shall not
     invalidate the proceedings at that meeting.

                        PROCEEDINGS AT GENERAL MEETINGS

35.  No business shall be transacted at any meeting unless a quorum of members
     is present at the time when the meeting proceeds to business. The quorum
     for any general meeting shall be not less than two or more members
     (including each member entitled to appoint a director pursuant to Article
     67) entitled to vote upon the business to be transacted or by a duly
     authorised representative present in person.

36.  If such a quorum is not present within half an hour from the time appointed
     for the meeting, or if during a meeting such a quorum ceases to be
     present, the meeting shall stand adjourned to the same day in the next week
     at the same time and place or to such time and place as the directors may
     determine and such meeting will be quorate provided a member or members
     holding more than 50% of the shares for the one time being in issue and
     carry the rights to attend and vote at the meeting are present.

37.  The chairman of the board of directors or in his absence some other
     director nominated by the directors shall preside as chairman of the
     meeting, but if neither the chairman nor such other director (if any) be
     present within fifteen minutes after the time appointed for holding the
     meeting and willing to act, the directors present shall elect one of their
     number to be chairman and, if there is only one director present and
     willing to act, he shall be chairman.

38.  If no director is willing to act as chairman or if no director is present
     within fifteen minutes after the time appointed for holding the meeting,
     the members present and entitled to vote shall choose one of their number
     to be chairman.

39.  A director shall, notwithstanding that he is not a member, be entitled to
     attend and speak at any general meeting and at any separate meeting of the
     holders of any class of shares in the company.

                                      9.
<PAGE>

40.  The chairman may, with the consent of a meeting at which a quorum is
     present (and shall if so directed by the meeting), adjourn the meeting from
     time to time and from place to place, but no business shall be transacted
     at an adjourned meeting other than business which might properly have been
     transacted at the meeting had the adjournment not taken place. When a
     meeting is adjourned for fourteen days or more, at least seven clear days'
     notice shall be given specifying the time and place of the adjourned
     meeting and the general nature of the business to be transacted. Otherwise
     it shall not be necessary to give any such notice.

41.  A resolution put to the vote of a meeting shall be decided on a show of
     hands unless before, or on the declaration of the result of, the show of
     hands a poll is duly demanded. Subject to the provisions of the Act, a poll
     may be demanded -

     (a) by the chairman; or

     (b) by at least two members having the right to vote at the meeting; or

     (c) by a member or members representing not less than one-tenth of the
         total voting rights of all the members having the right to vote at
         the meeting; or

     (d) by a member or members holding shares conferring a right to vote at
         the meeting being shares on which an aggregate sum has been paid up
         equal to not less than one-tenth of the total sum paid up on all the
         shares conferring that right;

     and a demand by a person as proxy for a member shall be the same as a
     demand by the member.

42.  Unless a poll is duly demanded a declaration by the chairman that a
     resolution has been carried or carried unanimously, or by a particular
     majority, or lost, or not carried by a particular majority and an entry to
     that effect in the minutes of the meeting shall be conclusive evidence of
     the fact without proof of the number or proportion of the votes recorded in
     favour of or against the resolution.

43.  The demand for a poll may, before the poll is taken, be withdrawn but only
     with the consent of the chairman and a demand so withdrawn shall not be
     taken to have invalidated the result of a show of hands declared before the
     demand was made.

44.  A poll shall be taken as the chairman directs and he may appoint
     scrutineers (who need not be members) and fix a time and place for
     declaring the result of the poll. The result of the poll shall be deemed to
     be the resolution of the meeting at which the poll was demanded.

45.  A poll demanded on the election of a chairman or on a question of
     adjournment shall be taken forthwith. A poll demanded on any other question
     shall be taken either forthwith or at such time and place as the chairman
     directs not being more than thirty days after the

                                10.           
<PAGE>

     poll is demanded. The demand for a poll shall not prevent the continuance
     of a meeting for the transaction of any business other than the question on
     which the poll was demanded. If a poll is demanded before the declaration
     of the result of a show of hands and the demand is duly withdrawn,the
     meeting shall continue as if the demand had not been made.

46.  No notice need be given of a poll not taken forthwith if the time and
     place at which it is to be taken are announced at the meeting at which it
     is demanded. In any other case at least seven clear days' notice shall be
     given specifying the time and place at which the poll is to be taken.

47.  A resolution in writing executed by or on behalf of each member who would
     have been entitled to vote upon it if it had been proposed at a general
     meeting at which he was present shall be as effectual as if it had been
     passed at a general meeting duly convened and held and may consist of
     several instruments in the like form each executed by or on behalf of one
     or more members.

                               VOTES OF MEMBERS

48.  Subject to any rights or restrictions attached to any shares, on a show of
     hands every member who (being an individual) is present in person or
     (being a corporation) is present by a duly authorised representative, not
     being himself a member entitled to vote, shall have one vote and on a poll
     every member shall have one vote for every share of which he is the holder.

49.  In the case of joint holders the vote of the senior who tenders a vote,
     whether in person or by proxy, shall be accepted to the exclusion of the
     votes of the other joint holders; and seniority shall be determined by the
     order in which the names of the holders stand in the register of members.

50.  A member in respect of whom an order has been made by any court having
     jurisdiction (whether in the United Kingdom or elsewhere) in matters
     concerning mental disorder may vote, whether on a show of hands or on a
     poll, by his receiver, curator bonis or other person authorised in that
     behalf appointed by that court, and any such receiver, curator bonis or
     other person may, on a poll, vote by proxy. Evidence to the satisfaction of
     the directors of the authority of the person claiming to exercise the right
     to vote shall be deposited at the office, or at such other place as is
     specified in accordance with the articles for the deposit of instruments of
     proxy, not less than 48 hours before the time appointed for holding the
     meeting or adjourned meeting at which the right to vote is to be exercised
     and in default the right to vote shall not be exercisable.

51.  No member shall vote at any general meeting or at any separate meeting of
     the holders of any class of shares in the company, either in person or by
     proxy, in respect of any share held by him unless all moneys presently
     payable by him in respect of that share have been paid.

                                   11.    
<PAGE>

52.      No objection shall be raised to the qualification of any voter except
         at the meeting or adjourned meeting at which the vote objected to is
         tendered, and every vote not disallowed at the meeting shall be valid.
         Any Objection made in due time shall be referred to the chairman whose
         decision shall be final and conclusive.

53.      On a poll votes may be given either personally or by proxy. A member
         may appoint more than one proxy to attend on the same occasion.

54.      An instrument appointing a proxy shall be in writing, executed by or on
         behalf of the appointor and shall be in the following form (or in a
         form as near thereto as circumstances allow or in any other form which
         is usual or which the directors may approve) -                       
         "                              PLC/Limited
                 I/We,                                            , of
                                                                       , being
         a member/members of the above-named company, hereby appoint           
                                  of
                                                          , or failing
         him,       of                , as my/our proxy to vote in my/our
         names[s] and on my/our behalf at the annual/extraordinary general
         meeting of the company to be held on
                             19  , and at any adjournment thereof.
         Signed on           19 ."

55.      Where it is desired to afford members an opportunity of instructing
         the proxy how he shall act the instrument appointing a proxy shall be
         in the following form (or in a form as near thereto as circumstances
         allow or in any other form which is usual or which the directors may
         approve) -
         "                          PLC/Limited
         I/We,                                                 , of
                                                                    ,being a
         member/members of the above-named company, hereby appoint
                                                  of
         or failing him,             of                , as my/our proxy
         to vote in my/our name[s] and on my/our behalf at the
         annual/extraordinary general meeting of the company, to be held on
                     19  , and at any adjournment thereof.
        
         This form is to be used in respect of the resolutions mentioned
         below as follows:

         Resolution No. 1 *for *against
        
         Resolution No. 2 *for *against.
         *Strike out whichever is not desired.

                                      12.
<PAGE>

         Unless otherwise instructed, the proxy may vote as he thinks fit or
         abstain from voting.

         Signed this        day of          19  ."

56.      The instrument appointing a proxy and any authority under which it is
         executed or a copy of such authority certified notarially or in some
         other way approved by the directors may -

         (a)   be deposited at the office or at such other place within the
               United Kingdom as is specified in the notice convening the
               meeting or in any instrument of proxy sent out by the company in
               relation to the meeting not less than 48 hours before the time
               for holding the meeting or adjourned meeting at which the person
               named in the instrument proposes to vote;

         or

         (b)   in the case of a poll taken more than 48 hours after it is
               demanded, be deposited as aforesaid after the poll has been
               demanded and not less than 24 hours before the time appointed
               for the taking of the poll; or

         (c)   where the poll is not taken forthwith but is taken not more than
               48 hours after it was demanded, be delivered at the meeting at
               which the poll was demanded to the chairman or to the secretary
               or to any director;

and an instrument of proxy which is not deposited or delivered in a manner so
permitted shall be invalid.

57.      A vote given or poll demanded by proxy or by the duly authorised
         representative of a corporation shall be valid notwithstanding the
         previous determination of the authority of the person voting or
         demanding a poll unless notice of the determination was received by
         the company at the office or at such other place at which the
         instrument of proxy was duly deposited before the commencement of the
         meetings or adjourned meeting at which the vote is given or the poll
         demanded or (in the case of a poll taken otherwise than on the same
         day as the meeting or adjourned meeting) the time appointed for taking
         the poll.

                              NUMBER OF DIRECTORS

58.      Unless otherwise approved by special resolution, the number of
         directors (other than alternate directors) shall not be less than
         two nor more than eleven directors.

                              ALTERNATE DIRECTORS

59.      Any director (other than an alternate director) may appoint any person
         willing to act, to be an alternate director and may remove from office
         an alternate director so appointed by him.

60.      An alternate director shall be entitled to receive notice of all
         meetings of directors and of all meetings of committees of directors of
         which his appointor is a member, to attend and vote at any such

                                      13.
<PAGE>

     meeting at which the director appointing him is not personally present, and
     generally to perform all the functions of his appointor as a director in
     his absence but shall not be entitled to receive any remuneration from the
     company for his services as an alternate director. But it shall not be
     necessary to give notice of such a meeting to an alternate director who is
     absent from the United Kingdom.

61.  An alternate director shall cease to be an alternate director if his
     appointor ceases to be a director; but, if a director retires but is
     reappointed or deemed to have been reappointed at the meeting at which he
     retires, any appointment of an alternate director made by him which was in
     force immediately prior to his retirement shall continue after his
     reappointment.

62.  Any appointment or removal of an alternate director shall be by notice to
     the company signed by the director making or revoking the appointment or in
     any other manner approved by the directors.

63.  Save as otherwise provided in the articles, an alternate director shall be
     deemed for all purposes to be a director and shall alone be responsible for
     his own acts and defaults and he shall not be deemed to be the agent of the
     director appointing him.

                              POWERS OF DIRECTORS

64.  Subject to the provisions of the Act, the memorandum and the articles and
     to any directions given by ordinary resolution, the business of the company
     shall be managed by the directors who may exercise all the powers of the
     company. No alteration of the memorandum or articles and no such direction
     shall invalidate any prior act of the directors which would have been valid
     if that alteration had not been made or that direction had not been given.
     The powers given by this regulation shall not be limited by any special
     power given to the directors by the articles and a meeting of directors at
     which a quorum is present may exercise all powers exercisable by the
     directors.

65.  The directors may, by power of attorney or otherwise, appoint any person to
     be the agent of the company for such purposes and on such conditions as
     they determine, including authority for the agent to delegate all or any of
     his powers.

                        DELEGATION OF DIRECTORS' POWERS

66.  The directors may delegate any of their powers to any committee consisting
     of one or more directors including at least one director appointed by each
     member entitled to appoint a director pursuant to Article 67. They may also
     delegate to any managing director or any director holding any other
     executive office such of their powers as they consider desirable to be
     exercised by him. Any such delegation may be made subject to any conditions
     the directors may impose, and either collaterally with or to the exclusion
     of their own powers and may be revoked or altered. Subject to any such
     conditions, the proceedings of a committee with two or more members shall
     be governed by the articles regulating the proceedings of directors so far
     as they are capable of applying.

                                      14.
<PAGE>

                           APPOINTMENT OF DIRECTORS

67.  Each member shall be entitled to appoint up to such number of directors as
     is stated in the table below.  Any member who holds more than 50% of the
     issued Ordinary Shares from time to time shall be entitled to appoint a
     majority of the directors and remove and replace any such directors from
     time to time.  The right to appoint, remove or replace a director shall be
     exercisable by notice to the company a copy of which notice shall be given
     to any shareholder not exercising or giving such notice.

                     Members's                  Member may appoint
                Percentage Holding              up to the following
                of Ordinary Shares              number of Directors
                ------------------              -------------------
                0-9.9                           0
                10-27.9                         2
                28-37-9                         3    
                38-46.9                         4
                49-50                           5

                In excess of 50%                The remaining Members
                                                of the Board

     For the purpose of this table, a member shall be deemed to hold not only
     Ordinary Shares in its name but also those held in the name of its
     Associates.


                   DISQUALIFICATION AND REMOVAL OF DIRECTORS

68.  The office of a director shall be vacated if -

     (a)  he ceases to be a director by virtue of any provision of the Act or he
          becomes prohibited by law from being a director; or

     (b)  he becomes bankrupt or makes any arrangement or composition with his
          creditors generally; or

     (c)  he is, or may be, suffering from mental disorder and either -

                (i)  he is admitted to hospital in pursuance of an application
                     for admission for treatment under the Mental Health Act
                     1983 or, in Scotland, an application for admission under
                     the Mental Health (Scotland) Act 1960, or

               (ii)  an order is made by a court having jurisdiction (whether in
                     the United Kingdom or elsewhere) in matters concerning
                     mental disorder for his detention or for the appointment of
                     a receiver, curator bonis or other person to exercise
                     powers with respect to his property or affairs;

          or
         

                                      15.

<PAGE>

      (d)  he resigns his office by notice to the company; or

      (e)  he shall for more than six consecutive months have been absent
           without permission of the directors from meetings of directors held
           during that period and the directors resolve that his office be
           vacated.


                           REMUNERATION OF DIRECTORS

69.  The directors shall be entitled to such remuneration as the company may by
     ordinary resolution determine and, unless the resolution provides
     otherwise, the remuneration shall be deemed to accrue from day to day.


                              DIRECTORS' EXPENSES

70.  The directors shall not be entitled to any expenses incurred by them in
     connection with their attendance at meetings of directors or committees of
     directors or several meetings or separate meetings of the holders of any
     class of shares or of debentures of the company or otherwise in connection
     with the discharge of their duties.


                     DIRECTORS' APPOINTMENTS AND INTERESTS

71.  Subject to the provisions of the Act, the directors may appoint one or more
     of their number to the office of Managing Director to any other executive
     office in the company and may enter into an agreement or arrangement with
     any director for his employment by the company or for the provision by him
     of any services outside the scope of the ordinary duties of a director. 
     Any such appointment, agreement or arrangement may be made upon such terms
     as the directors determine and they may remunerate any such director for
     his services as they think fit.  Any appointment of a director to an
     executive office shall terminate if he ceases to be a director but without
     prejudice to any claim to damages for breach of the contract of service
     between the director and the company.

72.  Without prejudice to the obligation of any director to disclose his
     interest in accordance with Section 317 of the Act, a director
     notwithstanding his office -

     (a)  may be a party to, or otherwise interested in, any transaction or
          arrangement with the company or in which the company is otherwise
          interested:

     (b)  may be a director or other officer of, or employed by, or a party to
          any transaction or arrangement with, or otherwise interested in, any
          body corporate promoted by the company or in which the company is
          otherwise interested: and

     (c)  shall not, by reason of his office, be accountable to the company for
          any benefit which he derives from any such office or employment or
          from any such transaction or arrangement or from any interest in any
          such body corporate and no such transaction or arrangement shall be
          liable to be avoided on the ground of any such interest or benefit.



                                      16.

<PAGE>

                      DIRECTORS' GRATUITIES AND PENSIONS
                       
73.  The directors may provide benefits, whether by the payment of gratuities or
     pensions or by insurance or otherwise, for any director who has held but no
     longer holds any executive office or employment with the company or with
     any body corporate which is or has been a subsidiary of the company or a
     predecessor in business of the company or of any such subsidiary, and for
     any member of his family (including a spouse and a former spouse) or any
     person who is or was dependent on him, and may (as well before as after he
     ceases to hold such office or employment) contribute to any fund and pay
     premiums for the purchase or provision of any such benefit.


                           PROCEEDINGS OF DIRECTORS
                       
74.  Subject to the provisions of the articles, the directors may regulate their
     proceedings as they think fit.  A director may, and the secretary at the
     request of a director shall, call a meeting of the directors.  Questions
     arising at a meeting shall be decided by a majority of votes.  In the case
     of an equality of votes, the chairman shall not have a second or casting
     vote.  A director who is also an alternate director shall be entitled in
     the absence of his appointor to a separate vote on behalf of his appointor
     in addition to his own vote.
                       
75.  The quorum for the transaction of the business of the directors and unless
     so fixed at any other number shall be not less than two and must include
     one director appointed by each Major Shareholder.  A person who holds
     office only as an alternate director shall, if his appointor is not
     present, be counted in the quorum.  If such quorum is not present within
     half an hour from the time appointed for the meeting, the meeting shall
     stand adjourned to the same day in the next week at the same time and place
     and such meeting shall be quorate if any two directors are present.

76.  A meeting of the directors may be validly held notwithstanding that all of
     the directors are not present at the same place and at the same time
     provided that:
    
     (a)  a quorum of the directors at the time of the meeting are in direct
          communication with each other whether by way of telephone, audio-
          visual link or other form of telecommunication: and
                   
     (b)  a quorum of the directors entitled to attend a meeting of the
          directors agree to the holding of the meeting in the manner described
          herein.
                       
77.  The continuing directors or a sole continuing director may act
     notwithstanding any vacancies in their number, but, if the number of
     directors is less than the number fixed as the quorum, the continuing
     directors or director may act only for the purpose of filling vacancies or
     of calling a general meeting.



                                      17.

<PAGE>

78.  The directors may appoint one of their number to be the chairman of the
     board of directors and may at any time remove him from that office.  Unless
     he is unwilling to do so; the director so appointed shall preside at every
     meeting of directors at which he is present.  But if there is no director
     holding that office, or if the director holding it is unwilling to preside
     or is not present within fifteen minutes after the time appointed for the
     meeting, the directors present may appoint one of their number to be
     chairman of the meeting.

79.  All acts done by a meeting of directors, or of a committee of directors, or
     by a person acting as a director shall, notwithstanding that it be
     afterwards discovered that there was a defect in the appointment of any
     director or that any of them were disqualified from holding office, or had
     vacated office, or were not entitled to vote, be as valid as if every such
     person had been duly appointed and was qualified and had continued to be a
     director and had been entitled to vote.

80.  A resolution in writing signed by all the directors entitled to receive
     notice of a meeting of directors or of a committee of directors shall be as
     valid and effectual as if it had been passed at a meeting of directors or
     (as the case may be) a committee of directors duly convened and held and
     may consist of several documents in the like form each signed by one or
     more directors, but a resolution signed by an alternate director need not
     also be signed by his appointor and, if it is signed by a director who has
     appointed an alternate director, it need not be signed by the alternate
     director in that capacity.


                             DIRECTORS' INTERESTS

81.  Without prejudice to the obligation of any Director to disclose his
     interest in accordance with Section 317 of the Act, a Director may vote in
     regard to any contract or arrangement in which he is interested or upon any
     matter arising thereat and if he shall so vote his vote shall be counted
     and he shall be reckoned in ascertaining whether there is present a quorum
     at any meeting at which any such contract or arrangement is considered.  A
     Director may act by himself or his firm in any professional capacity for
     the Company and he or his firm may be entitled to remuneration for
     professional services as if he were not a Director; provided that nothing
     herein contained shall authorise a Director or his firm to act as auditor
     to the Company.
    

                                   SECRETARY

82.  Subject to the provisions of the Act, the secretary shall be appointed by
     the directors for such term, at such remuneration and upon such conditions
     as they may think fit, and any secretary so appointed may be removed by
     them.


                                    MINUTES

83.  The directors shall cause minutes to be made in books kept for the
     purpose -




                                      18.
              
<PAGE>

     (a) of all appointments of officers made by the directors; and

     (b) of all proceedings at meetings of the company, of the holders of any
         class of shares in the company, and of the directors, and of committees
         of directors, including the names of the directors present at each such
         meeting.

                                    THE SEAL

84.  The seal shall only be used by the authority of the directors or of a
     committee of directors authorised by the directors. The directors may
     determine who shall sign any instrument to which the seal is affixed and
     unless otherwise so determined it shall be signed by a director and by the
     secretary or by a second director.

                                   DIVIDENDS

85.  Subject to the provisions of the Act, the company may by ordinary
     resolution declare dividends in accordance with the respective rights of
     the members, but no dividend shall exceed the amount recommended by the
     directors.

86.  Subject to the provisions of the Act, the directors may pay interim
     dividends if it appears to them that they are justified by the profits of
     the company available for distribution. If the share capital is divided
     into different classes, the directors may pay interim dividends on shares
     which confer deferred or non-preferred rights with regard to dividend as
     well as on shares which confer preferential rights with regard to dividend,
     but no interim dividend shall be paid on shares carrying deferred or non-
     preferred rights if, at the time of payment, any preferential dividend is
     in arrear. The directors may also pay at intervals settled by them any
     dividend payable at a fixed rate if it appears to them that the profits
     available for distribution justify the payment. Provided the directors act
     in good faith they shall not incur any liability to the holders of shares
     conferring preferred rights for any loss they may suffer by the lawful
     payment of an interim dividend on any shares having deferred or non-
     preferred rights.

87.  Except as otherwise provided by the rights attached to shares, all
     dividends shall be declared and paid according to the amounts paid up on
     the shares on which the dividend is paid. All dividends shall be
     apportioned and paid proportionately to the amounts paid up on the shares
     during any portion or portions of the period in respect of which the
     dividend is paid; but, if any share is issued on terms providing that it
     shall rank for dividend as from a particular date, that share shall rank
     for dividend accordingly.

88.  A general meeting declaring a dividend may, upon the recommendation of the
     directors, direct that it shall be satisfied wholly or partly by the
     distribution of assets and, where any difficulty arises in regard to the
     distribution, the directors may settle the same and in particular may issue
     fractional certificates and fix the value for distribution of any assets
     and may determine that cash shall be paid to any member upon the footing of
     the value so fixed in order to adjust the rights of members and may vest
     any assets in trustees.

                                   19.     

                       
<PAGE>

89.  Any dividend or other moneys payable in respect of a share may be paid by
     cheque sent by post to the registered address of the person entitled or, if
     two or more persons are the holders of the share or are jointly entitled to
     it by reason of the death or bankruptcy of the holder, to the registered
     address of that one of those persons who is first named in the register of
     members or to such person and to such address as the person or persons
     entitled may in writing direct. Every cheque shall be made payable to the
     order of the person or persons entitled or to such other person as the
     person or persons entitled may in writing direct and payment of the cheque
     shall be a good discharge to the company. Any joint holder or other person
     jointly entitled to a share as aforesaid may give receipts for any dividend
     or other moneys payable in respect of the share.

90.  No dividend or other moneys payable in respect of a share shall bear
     interest against the company unless otherwise provided by the rights
     attached to the share.

91.  Any dividend which has remained unclaimed for twelve years from the date
     when it became due for payment shall, if the directors so resolve, be
     forfeited and cease to remain owing by the company.

                                   ACCOUNTS

92.  No member shall (as such) have any right of inspecting any accounting
     records or other book or document of the company except as conferred by
     statute or authorised by the directors or by ordinary resolution of the
     company.

                           CAPITALISATION OF PROFITS

93.  The directors may with the authority of an ordinary resolution of the
     company -

     (a) subject as hereinafter provided, resolve to capitalise any undivided
         profits of the company not required for paying any preferential
         dividend (whether or not they are available for distribution) or any
         sum standing to the credit of the company's share premium account or
         capital redemption reserve;

     (b) appropriate the sum resolved to be capitalised to the members who would
         have been entitled to it if it were distributed by way of dividend and
         in the same proportions and apply such sum on their behalf either in or
         towards paying up the amounts, if any, for the time being unpaid on any
         shares held by them respectively, or in paying up in full unissued
         shares or debentures of the company of a nominal amount equal to that
         sum, and allot the shares or debentures credited as fully paid to those
         members, or as they may direct, in those proportions, or partly in one
         way and partly in the other; but the share premium account, the capital
         redemption reserve, and any profits which are not available for
         distribution may, for the purposes of this regulation, only be applied
         in paying up unissued shares to be allotted to members credited as
         fully paid;

                                     20.

                                     
<PAGE>

     (c) make such provision by the issue of fractional certificates or by
         payment in cash or otherwise as they determine in the case of shares or
         debentures becoming distributable under this regulation in fractions;
         and

     (d) authorise any person to enter on behalf of all the members concerned
         into an agreement with the company providing for the allotment to them
         respectively, credited as fully paid, of any shares or debentures to
         which they are entitled upon such capitalisation, any agreement made
         under such authority being binding on all such members.

                                    NOTICES

94.  Any notice to be given to or by any person pursuant to the articles shall
     be in writing except that a notice calling a meeting of the directors need
     not be in writing.

95.  The company may give any notice to a member either personally or by
     sending it by post in a prepaid envelope (airmail if overseas)
     addressed to the member at his registered address or by leaving it at that
     address. In the case of joint holders of a share, all notices shall be
     given to the joint holding and notice so given shall be sufficient notice
     to all the joint holders. Notice of every general meeting of the Company
     shall be given to every member of the Company who has provided the Company
     with an address for such purposes, whether within or outside the United
     Kingdom.

96.  A member present, either in person or by proxy, at any meeting of the
     company or of the holders of any class of shares in the company shall be
     deemed to have received notice of the meeting and, where requisite, of
     the purposes for which it was called.

97.  Every person who becomes entitled to a share shall be bound by any notice
     in respect of that share which, before his name is entered in the register
     of members, has been duly given to a person from whom he derives his title.

98.  Proof that an envelope containing a notice was properly addressed, prepaid
     and posted shall be conclusive evidence that the notice was given. A notice
     shall be deemed to be given at the expiration of 96 hours after the
     envelope containing it was posted.

99.  A notice may be given by the company to the persons entitled to a share in
     consequence of the death or bankruptcy of a member by sending or delivering
     it, in any manner authorised by the articles for the giving of notice to a
     member, addressed to them by name, or by the title of representatives of
     the deceased, or trustee of the bankrupt or by any like description at the
     address, if any, whether within or outside the United Kingdom supplied for
     that purpose by the persons claiming to be so entitled. Until such an
     address has been supplied, a notice may be given in any manner in which it
     might have been given if the death or bankruptcy had not occurred.

                                      21.


<PAGE>

                                  WINDING UP

100. If the company is wound up, the liquidator may, with the sanction of an
     extraordinary resolution of the company and any other sanction required by
     the Act, divide among the members in specie the whole or any part of the
     assets of the company and may, for that purpose, value any assets and
     determine how the division shall be carried out as between the members or
     different classes of members. The liquidator may, with the like sanction,
     vest the whole or any part of the assets in trustees upon such trusts for
     the benefit of the members as he with the like sanction determines, but no
     member shall be compelled to accept any assets upon which there is a
     liability.

                                   INDEMNITY

101. Subject to the provisions of the Act but without prejudice to any
     indemnity to which a director may otherwise be entitled, every director or
     other officer or auditor of the company shall be indemnified out of the
     assets of the company against any liability incurred by him in defending
     any proceedings, whether civil or criminal, in which judgment is given in
     his favour or in which he is acquitted or in connection with any
     application in which relief is granted to him by the court from liability
     for negligence, default, breach of duty or breach of trust in relation to
     the affairs of the company.

                                   22.     

                                
<PAGE>
                                                                     DENTON HALL

This Agreement is entered into this         day of          1995,
by and between:

(1)  Harris Trust and Savings Bank of 111 West Monroe Street, Chicago, Illinois
     60603, United States of America ("Harris");

(2)  LaSalle National Bank of 120 La Salle Street, Chicago, Illinois 60603,
     United States of America ("LaSalle");

(3)  Continental Shelf 16 Limited a company registered in England under no.
     3005499 whose address is Twyman House, 16 Bonny Street, London NW1 9PG
     ("Flextech");

(4)  Playboy TV UK/Benelux Limited of Twyman House, 16 Bonny Street, London
     NW1 9PG ("the Joint Venture")

WHEREAS the parties are entering into this Agreement pursuant to an agreement
dated             1995 between Playboy Entertainment Group, Inc. ("Playboy"),
Playboy Enterprises, Inc. ("Playboy Enterprises"), Flextech and the Joint
Venture ("the Head Agreement").

NOW IT IS HEREBY AGREED as follows:

1.   For the purposes of this Agreement:

     (a) all capitalised words and expressions used but not defined in this
         Agreement shall be defined as in the Head Agreement;

     (b) the expression "the Lenders" shall mean each of Harris and LaSalle and
         their respective assigns and successors in title under the Loan
         Documents;

                                      1.
<PAGE>
                                                                     DENTON HALL

     (c) the expression a "Default" shall mean any default by Playboy
         Enterprises in or in respect of any of its obligations under the Loan
         Documents or any other occurrence which in either case results in
         action by or on behalf of either or both of the Lenders to foreclose
         upon, assert control over, take possession of, sell or otherwise
         enforce its or their security over the Collateral or any Part thereof;

     (d) the expression "Programming Collateral" shall mean the entire right
         title and interest of Playboy and each Affiliate of Playboy (including
         but not limited to Playboy Enterprises), and of their successors in
         title and assigns, in and to the Programmes, Third Party Programmes,
         any Future Programmes, the Trade Marks and any Delivery Material in
         respect of any of the Programmes, Third Party Programmes or Future
         Programmes;

     (e) the expression "Collateral" shall mean the Programming Collateral and
         the respective Interests (as defined in the Shareholders' Agreement) of
         Playboy and Playboy Enterprises in the Joint Venture;

     (f) the expression "Affiliate of Playboy" shall mean any person which is
         from time to time either directly or indirectly controlling, controlled
         by or under common control with Playboy and for this purpose "control"
         means in relation to a person the power of another person ("the
         Controlling Person") to secure, whether by the holding of shares or the
         possession of voting rights in or in relation to that person or any
         other person or the provisions of any agreement or otherwise, that the
         affairs of that person are conducted in accordance with the wishes of
         the Controlling Person;

     (g) the expression a "Future Programme" shall mean any Programme or Third
         Party Programme which (notwithstanding the absence of an obligation on
         the Lenders to fund the creation or distribution of new Programmes or
         Third Party Programmes) comes into existence at any time after any
         Default.

                                      2.
<PAGE>
                                                                     DENTON HALL
                     
2.   In consideration of Flextech and the Joint Venture each agreeing to observe
     and comply with the provisions of the Shareholders' Agreement, The
     Trademark Agreement, the Programme Agreement and/or the Head Agreement
     which it is bound to observe and comply with, and for other good and
     valuable consideration the receipt and sufficiency of which are hereby
     acknowledged, each of the Lenders hereby undertakes and covenants with
     Flextech and the Joint Venture that the Lenders shall:

     (a) promptly notify Flextech and the Joint Venture of the occurrence of any
         Default;

     (b) in the event of any Default forebear from exercising (other than in
         compliance with the provisions of Clause 3) any of their rights
         against, in or to the Programmes and Third Party Programmes then in
         existence, any Future Programmes or the Trade Marks, or any of them,
         or any Delivery Material in relation to any of the Programmes or Third
         Party Programmes, or any Future Programmes;

     (c) not, at any time whilst the Collateral is pledged to it, take any
         action (other than in compliance with the provisions of Clause 3) which
         would interfere with the performance by Playboy or Playboy Enterprises
         of their respective obligations under the Programme Agreement or under
         the Trademark Agreement or the exercise by the Joint Venture of any of
         its rights under the Programme Agreement or under the Trademark
         Agreement with respect to the Programmes and Third Party Programmes
         then in existence or any Future Programmes or with respect to the Trade
         Marks

     provided that neither Flextech nor the Joint Venture is in default of and
     shall comply with all of their respective payment obligations under the
     Shareholders' Agreement and the Programme Agreement in accordance with
     their terms, and subject always to the provisions of Clause 3.

                                    3.    
<PAGE>
                                                                     DENTON HALL
 
3.   Notwithstanding anything in this Agreement to the contrary:

     (a) action may be taken by or on behalf of any one or more of the Lenders
         to foreclose upon, assert control over, take possession of, sell or
         otherwise enforce its liens or security interests on the Collateral or
         any part thereof PROVIDED HOWEVER THAT (subject to the provisions of
         Clause 4):

         (i)  any such action shall be taken subject to the terms of the sole
              and exclusive license granted to the Joint Venture under the
              Programme Agreement in and to each Programme and Third Party
              Programme within the territory ("the Territory") of the United
              Kingdom, the Republic of Ireland, Belgium, the Netherlands and
              Luxembourg (and each other country to which the Lenders have
              agreed with Playboy in writing) and subject also to the terms of
              the exclusive license granted to the Joint Venture to use the
              Trade Marks within the Territory under the Trademark Agreement;

         (ii) following the taking of any such action the Lenders shall either

              (A) permit and make available to the Joint Venture (or such person
                  as the Joint Venture may direct the Lenders in writing) access
                  (in each case to the extent that it is within the rights of
                  the Lenders to do so) to the Delivery Material required to be
                  furnished by Playboy to the Joint Venture under the Programme
                  Agreement; or

              (B) (in the case of any sale or disposition of the Programming
                  Collateral (or any part thereof) to any person under or by
                  virtue of such action) require that person to permit and make
                  available to the Joint Venture (or such person as the Joint
                  Venture may direct the Lenders in writing) access to the
                  Delivery Material

                                      4.
<PAGE>
                                                                     DENTON HALL

                  required to be furnished by Playboy to the Joint Venture under
                  the Programme Agreement;

     (b) neither the Lenders, nor any person who acquires any rights in any
         Programming Collateral under or by virtue of any disposition or other
         enforcement of the Lenders' rights therein, assumes liability for any
         positive obligations of Playboy under the Programme Agreement including
         without limitation the obligations of Playboy to provide a Scheduler,
         to create or physically deliver Delivery Material to the Joint Venture,
         to create or fund the creation of Programmes or Delivery Material or to
         acquire or fund the acquisition of Third Party Programmes (it being
         understood and agreed that in the event of a Default the Lenders have
         no obligation to consent to, and shall be entitled to take steps to
         prevent, the creation by Playboy (or any other person acting on behalf
         of Playboy) of any Future Programmes or any Delivery Material in
         relation to any Future Programmes).

4.   Provisos (i) and (ii) to sub-clause 3(a) above shall continue to apply if
     and so long as:

     (a) all payments due and to become due (if any) to Playboy under the
         Programme Agreement after the Joint Venture has been notified of any
         Default by the Lenders shall (subject to laws which provide third party
         priorities or otherwise provide to the contrary, to the order of any
         court of competent jurisdiction, to the provisions of Clause 5 below
         and to Playboy Enterprises continuing to perform its obligations under
         the Trademark Agreement in accordance with its terms and to the extent
         to which Playboy is continuing to perform its obligations under the
         Programme Agreement in accordance with its terms) have been made
         directly to the Lenders or their designee (to the extent so requested
         by the Lenders in writing to the Joint Venture); and

     (b) in the event that any payments made by the Joint Venture to the Lenders
         or their designee pursuant to sub-clause 4(a) above are not in an
         amount sufficient to reimburse the Lenders for their reasonable out-of-
         pocket costs and expenses

                                      5.
<PAGE>
                                                                     DENTON HALL

          (if any) of permitting access to the Delivery Material in accordance
          with proviso (ii) to sub-clause 3(a) above, the Lenders shall have
          received within twenty-one (21) days after having notified the Joint
          Venture to that effect such additional amount as will so reimburse
          them.

5.   In the event that the Joint Venture pays any additional amount to the
     Lenders pursuant to sub-clause 4(b) above, the Lenders agree that the Joint
     Venture shall be entitled to deduct such additional amount from any
     payment(s) which subsequently become(s) due to Playboy under the Programme
     Agreement.

6.   Except where any governmental department, agency or regulatory body
     requires a Lender to assign to a governmental department, agency or
     regulatory body the promissory notes evidencing that Lender's credit to
     Playboy so as to maintain that Lender's liquidity, each of the Lenders
     undertakes that it shall not assign any of its rights under any of the Loan
     Documents to any person unless that person shall first have entered into an
     agreement with Flextech and the Joint Venture which is substantially
     similar in form and substance to this Agreement.

7.   This Agreement shall be construed and the rights and obligations of the
     parties hereunder determined in accordance with the law of the State of
     Illinois, United States of America. The parties hereby consent to the non-
     exclusive jurisdiction of the federal courts of the federal districts
     having jurisdiction over the State of Illinois located in Cook County.

IN WITNESS WHEREOF, the parties herein have caused this Agreement to be
entered into as of the date set forth above.

HARRIS TRUST AND SAVINGS BANK


By:  R.L. Dell'Artino
    --------------------------
Its:      VICE PRESIDENT

                                      6.

<PAGE>
                                                                     DENTON HALL


LASALLE NATIONAL BANK


By:   Robert Kastenholz
    -----------------------------
Its:    Senior Vice President
                    

CONTINENTAL SHELF 16 LIMITED


By: 
    -----------------------------
Its:


PLAYBOY TV UK/BENELUX LIMITED

By:
   ------------------------------
Its:

                                      7.
<PAGE>

                                                                     DENTON HALL

                                   AGREEMENT

This Agreement is entered into this   day of         1995, by and between
Playboy Entertainment Group, Inc. ("Playboy"), Playboy Enterprises, Inc.
("Playboy Enterprises"), Continental Shelf 16 Limited ("Flextech") and Playboy
TV UK/Benelux Limited (the "Joint Venture").

WHEREAS, Playboy, Playboy Enterprises, Flextech and the Joint Venture intend to
enter into today that certain Programme Supply Agreement (the "Programme
Agreement"), that certain Shareholders' Agreement (the "Shareholders'
Agreement") and that certain Trademark Agreement (the "Trademark Agreement");
and

WHEREAS, Playboy Enterprises intends to enter into, among other things, a loan
and security agreement and related agreements (the "Loan Documents") with the
Harris Trust and Savings Bank and the LaSalle National Bank (collectively, the
"Lenders" which expression shall include their successors in title and assigns)
pursuant to which the Lenders will cause to make a loan or a series of loans and
other financial accommodations to Playboy Enterprises; and

WHEREAS, to secure Playboy Enterprises' obligations under the Loan Documents,
Playboy Enterprises intends to pledge certain assets to the Lenders as
collateral for the aforementioned loans (the "Bank Collateral"); and

WHEREAS, included among the Bank Collateral to be pledged to the Lenders in
accordance with the Loan Documents are or may be those certain "Programmes" and
"Third Party Programmes" as those terms are defined in Section 1.1 of the
Programme Agreement and the "Trade Marks" as that term is defined in Section
1.1 of the Trademark Agreement; and

WHEREAS, Flextech has sought assurances from Playboy and Playboy Enterprises as
to its rights in and to the Programmes and the Third Party Programmes as set
forth in the Programme Agreement and in and to the Trade Marks as set forth in
the Trademark

                                      1.

<PAGE>

                                                                     DENTON HALL

Agreement in the event of any default by Playboy Enterprises under the Loan
Documents or any other occurrence which results in any action by or on behalf of
the Lenders to foreclose upon or assert control over the Bank Collateral; and

WHEREAS, the parties herein deem it necessary to enter into this Agreement
immediately prior to executing the Shareholders' Agreement, the Programme
Agreement and the Trademark Agreement;

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
set forth below and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

1.  Notwithstanding the provisions of the Shareholders' Agreement, the
    Programme Agreement and the Trademark Agreement but subject to the
    performance by Playboy and Playboy Enterprises of their obligations under
    paragraph 2 and sub-paragraph 3(a) hereof:

    (a) Flextech hereby consents to the pledging to the Lenders of any or all
        of the shares in the capital of, and the other Interests (as defined in
        the Shareholders' Agreement) in, the Joint Venture held by Playboy
        and/or Playboy Enterprises.

    (b) Flextech hereby waives any rights which it might have pursuant to the
        Shareholders' Agreement to treat the pledging of any such shares to the
        Lenders as the deemed service by Playboy of a Transfer Notice (as
        defined in the Shareholders' Agreement) provided that nothing contained
        in this Agreement shall preclude Flextech from exercising any rights
        which it may have, whether under the Shareholders' Agreement or
        otherwise, in the event that any of the Lenders propose(s) to Transfer
        (as defined in the Shareholders' Agreement) any shares in the capital
        of the Joint Venture to any person.

    (c) Flextech hereby undertakes that it shall not Transfer any of its shares
        in the capital of the Joint Venture to any person other than Playboy or
        Playboy Enterprises unless Flextech shall have obtained from any such
        person (a copy

                                      2.

<PAGE>

                                                                     DENTON HALL

        of which shall be delivered promptly to Playboy and Playboy Enterprises)
        a consent, waiver and undertaking substantially similar in form and
        substance to the consent, waiver and undertaking hereinabove given in
        sub-paragraphs 1(a), (b) and (c).

    (d) The Joint Venture hereby consents to the pledging to the Lenders as part
        of the Bank Collateral of the following:

        (i)  the Programmes, the Third Party Programmes and the Trade Marks; and

        (ii) the benefit of the Programme Agreement and the Trade Mark
             Agreement.

2.  In consideration of Flextech and the Joint Venture each agreeing today to
    enter into the Shareholders' Agreement, the Trademark Agreement and/or the
    Programme Agreement and of the consents and waiver given by Flextech and the
    Joint Venture under paragraph 1 hereof, Playboy shall not later than 28
    February 1995 obtain from each of the Lenders and deliver to Flextech and
    the Joint Venture a forbearance agreement duly executed by each of the
    Lenders in the form attached to this Agreement (the "Forbearance
    Agreement").

3.  The obligations of Playboy and Playboy Enterprises under this Agreement
    shall be continuing in nature such that:

    (a) in the event that Playboy Enterprises enters into any such other or
        further secured lending agreements with institutions other than the
        Lenders; or

    (b) in the event that any of the Lenders assigns any of its rights under any
        of the Loan Documents to any person (other than any governmental
        department, agency or regulatory body as described in the exception to
        paragraph 6 of the Forbearance Agreement)

                                      3.
<PAGE>

                                                                     DENTON HALL

    Playboy and Playboy Enterprises shall promptly obtain from any such
    lender(s) or assignee(s) and deliver to Flextech and the Joint Venture an
    agreement substantially similar in form and substance to the Forbearance
    Agreement.

4.  Playboy and Playboy Enterprises hereby jointly and severally warrant and
    represent to Flextech and the Joint Venture that the entry into the Loan
    Documents and the pledging of the Bank Collateral to the Lenders will not
    (unless any or the Lenders default in the performance of their obligations
    to Flextech and the joint Venture under the Forbearance Agreement) interfere
    in any material respect with the performance by Playboy or Playboy
    Enterprises of their respective obligations (if any) under the Programme
    Agreement or under the Trademark Agreement or the exercise by the Joint
    Venture of any of its rights under the Programme Agreement or under the
    Trademark Agreement with respect to the Programmes and Third Party
    Programmes or with respect to the Trade Marks.

5.  The obligations and liability of Playboy and Playboy Enterprises under this
    Agreement shall be joint and several.

6.  This Agreement shall be governed by and construed in all respects in
    accordance with English law and the parties agree to submit to the exclusive
    jurisdiction of the English Courts as regards any claim or matter arising in
    relation to this Agreement. Playboy hereby appoints O'Melveny & Myers of
    10 Finsbury Square London EC2A 1LA, England as its authorised agent for the
    purpose of accepting service of process for all purposes in connection with
    this Agreement.

7.  In the event of any inconsistency between the provisions of this Agreement
    on the one hand and the provisions of the Shareholders' Agreement, the
    Programme Agreement and the Trademark Agreement on the other hand, the
    provisions of this Agreement shall prevail.

IN WITNESS WHEREOF, the parties herein have caused this Agreement to be
entered into as of the date set forth above.

                                      4.
<PAGE>

PLAYBOY ENTERTAINMENT                  PLAYBOY ENTERPRISES, INC.
GROUP, INC.



By:  /s/ Myron DuBow                   By:                          
     -------------------------              -------------------------
Its:                                   Its:

PLAYBOY TV UK/BENELUX LIMITED          CONTINENTAL SHELF 16 LIMITED



By:                                    By:                          
     -------------------------              -------------------------
Its:                                   Its:

                                      5.

<PAGE>

PLAYBOY ENTERTAINMENT                  PLAYBOY ENTERPRISES, INC.
GROUP, INC.



By:                                    By:  /s/ David I. Chemerow
     -------------------------              -------------------------
Its:                                   Its: Exec. Vice President

PLAYBOY TV UK/BENELUX LIMITED          CONTINENTAL SHELF 16 LIMITED



By:                                    By:                          
     -------------------------              -------------------------
Its:                                   Its:



                                      6.


<PAGE>

PLAYBOY ENTERTAINMENT                  PLAYBOY ENTERPRISES, INC.
GROUP, INC.



By:                                    By:                          
     -------------------------              -------------------------
Its:                                   Its:

PLAYBOY TV UK/BENELUX LIMITED          CONTINENTAL SHELF 16 LIMITED



By:  /s/ Roger Luard                   By:  /s/ Roger Luard
     -------------------------              -------------------------
Its:                                   Its:

                                      5.