[LOGO OF RABBIT HEAD]
 PLAYBOY ENTERPRISES INC.                          INTEROFFICE CORRESPONDENCE
 DATE: August 15, 1996                 PRIVILEGED AND CONFIDENTIAL
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TO:          Tony Lynn
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FROM:        Christie Hefner      
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SUBJECT:     Employment Agreement
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                                                            .

          Tony, this will confirm our agreement to amend your employment
          agreement dated May 21, 1992 as follows:

          1.   The Employment Term will be extended through June 30, 2000.

          2.   Your Basic Compensation will be $525,000 for the period July 1,
               1996 through June 30, 1997 and $550,000 for each year of your
               Employment Term thereafter.

          3.   The Profits Base on which your Contingent Compensation will be
               computed will continue to be $2.35 million.

          4.   The Contingent Compensation payable to you will continue to be 5%
               of the amount by which the pre-tax profit of the Playboy
               Entertainment Group for each fiscal year during the Employment
               Term exceeds the Profits Base. However, once the sum of Basic
               Compensation plus Contingent Compensation equals $2 million
               in any fiscal year, any additional Contingent Compensation
               payable to you in such fiscal year will be reduced to 2.5% of the
               amount by which the pre-tax profit of the Playboy Entertainment
               Group in such fiscal year exceeds the Profits Base.

          5.   Paragraph 3.D. under your Employment Agreement will be deleted in
               its entirety and the following will be substituted in lieu
               thereof:

               D. Equity Bonus:
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               (i) In the event that Company directly or indirectly sells,
                   transfers or otherwise disposes of an equity interest in the
                   Playboy Entertainment Group (or all or substantially all of
                   the assets comprising the Playboy Enter-
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PRIVILEGED AND CONFIDENTIAL
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August 15, 1996
To: Tony Lynn
Re: Employment Agreement
Page Two



               tainment Group operations) to a third party (including a sale to
               the public) during the Employment Term or within three (3) months
               following the end of the Employment Term (an "Equity Disposition
               Transaction"), then Employee shall be entitled to a one-time
               Equity Bonus that will be computed by multiplying the Contingent
               Compensation payable to Employee in the fiscal year immediately
               preceding the fiscal year in which the Equity Disposition
               Transaction takes place by the number of fiscal years remaining
               in the Employment Term. The Equity Bonus will be paid to Employee
               in cash promptly following the closing date of the Equity
               Disposition Transaction.

     (ii)      It is the express intent of the parties hereto that the Equity
               Bonus shall only be payable in connection with an Equity
               Disposition Transaction which constitutes a bona fide transfer of
               an equity interest in the Playboy Entertainment Group and shall
               not be payable in connection with any other transaction (whether
               in the form of joint ventures, co-productions or otherwise) which
               represents a financing transaction. In no event shall Company
               structure a transaction which would otherwise constitute a sale
               or disposition of an equity interest in the Playboy Entertainment
               Group as a financing transaction for the purpose of frustrating
               the provisions of this Paragraph 3.D.

     (iii)     The payment of the Equity Bonus, if any, will be in addition to
               any Contingent Compensation payable to you.

6.   If your employment is terminated by the Company without cause, you will be
     entitled to:
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PRIVILEGED AND CONFIDENTIAL
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August 15, 1996
To: Tony Lynn
Re: Employment Agreement
Page Three



     (i)   a one-time severance payment equal to your Basic Compensation in the
           fiscal year in which such termination occurs; plus

     (ii)  100% of the Contingent Compensation to which you would have been
           entitled for, and only for, the fiscal year in which such termination
           occurs (based on the actual pre-tax profits of the Playboy
           Entertainment Group for such fiscal year).

     Any amounts paid to you under this Paragraph 6. will be reduced by any
     amounts paid to you pursuant to your Change in Control Severance Agreement
     dated as of June 1, 1992.

Except as modified above, all of the other terms and conditions of your
employment agreement will remain as is.

ACCEPTED AND AGREED TO:

/s/ Anthony L. Lynn
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Date  August 16, 1996
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Source: OneCLE Business Contracts.