PLAYBOY ENTERPRISES INC
AMENDMENT TO SEVERANCE AGREEMENT
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<TYPE>EX-10.1
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<FILENAME>0002.txt
<DESCRIPTION>AMENDMENT TO SEVERANCE AGREEMENT
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                             AMENDMENT TO SEVERANCE AGREEMENT

This agreement between Playboy Enterprises, Inc., a Delaware corporation (the
"Company"), and ____________________ (the "Executive") constitutes an amendment,
dated and effective as of August _____, 2000, to the Severance Agreement, dated
as of ____________________, between the Company and the Executive (the
"Severance Agreement"). This amendment was approved in substance by the
Compensation Committee of the Company's Board of Directors at a meeting held on
____________________, 2000. For good and valuable consideration, the receipt of
which is hereby acknowledged by the parties, the Severance Agreement is hereby
amended as follows:

1.    The number "12" in the first sentence of Section 4(a)(ii) of the Severance
      Agreement is replaced with the number "36".

2.    In Section 4(d) of the Severance Agreement, the words "Section 7" are
      replaced with the words "Sections 6 and 7".

3.    Section 6 of the Severance Agreement is deleted in its entirety and
      replaced with the following:

      6.    Certain Additional Payments by the Company

            (a)   In the event that this Agreement becomes operative and it is
                  determined (as hereafter provided) that any payment or
                  distribution by the Company or any of its affiliates to or for
                  the benefit of Executive, whether paid or payable or
                  distributed or distributable pursuant to the terms of this
                  Agreement or otherwise pursuant to or by reason of any other
                  agreement, policy, plan, program or arrangement, including
                  without limitation any stock option, stock appreciation right
                  or similar right, or the lapse or termination of any
                  restriction on or the vesting or exercisability of any of the
                  foregoing (a "Payment"), would be subject to the excise tax
                  imposed by Section 4999 of the Internal Revenue Code of 1986,
                  as amended (or any successor


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                  provision thereto), or to any similar tax imposed by state or
                  local law, or any interest or penalties with respect to such
                  excise tax (such tax or taxes, together with any such interest
                  and penalties, are hereafter collectively referred to as the
                  "Excise Tax"), then Executive will be entitled to receive an
                  additional payment or payments (a "Gross-Up Payment") in an
                  amount such that, after payment by Executive of all taxes
                  (including any interest or penalties imposed with respect to
                  such taxes), including any Excise Tax, imposed upon the
                  Gross-Up Payment, Executive retains an amount of the Gross-Up
                  Payment equal to the Excise Tax imposed upon the Payments.

            (b)   Subject to the provisions of Section 6(f) below, all
                  determinations required to be made under this Section 6,
                  including whether an Excise Tax is payable by Executive and
                  the amount of such Excise Tax and whether a Gross-Up Payment
                  is required and the amount of such Gross-Up Payment, will be
                  made by a nationally recognized firm of certified public
                  accountants (the "Accounting Firm") selected by Executive in
                  Executive's sole discretion. Executive will direct the
                  Accounting Firm to submit its determination and detailed
                  supporting calculations to both the Company and Executive
                  within 15 calendar days after the date of the Change in
                  Control or the date of Executive's termination of employment,
                  if applicable, and any other such time or times as may be
                  requested by the Company or Executive. If the Accounting Firm
                  determines that any Excise Tax is payable by Executive, the
                  Company will pay the required Gross-Up Payment to Executive
                  within five business days after receipt of such determination
                  and calculations. If the Accounting Firm determines that no
                  Excise Tax is payable by Executive, it will, at the same time
                  as it makes such determination, furnish Executive with an
                  opinion that Executive has substantial authority not to report
                  any Excise Tax on Executive's


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                  federal, state, local income or other tax return. Any
                  determination by the Accounting Firm as to the amount of the
                  Gross-Up Payment will be binding upon the Company and
                  Executive. As a result of the uncertainty in the application
                  of Section 4999 of the Code (or any successor provision
                  thereto) and the possibility of similar uncertainty regarding
                  applicable state or local tax law at the time of any
                  determination by the Accounting Firm hereunder, it is possible
                  that Gross-Up Payments which will not have been made by the
                  Company should have been made (an "Underpayment"), consistent
                  with the calculations required to be made hereunder. In the
                  event that the Company exhausts or fails to pursue its
                  remedies pursuant to Section 6(f) below and Executive
                  thereafter is required to make a payment of any Excise Tax,
                  Executive will direct the Accounting Firm to determine the
                  amount of the Underpayment that has occurred and to submit its
                  determination and detailed supporting calculations to both the
                  Company and Executive as promptly as possible. Any such
                  Underpayment will be promptly paid by the Company to, or for
                  the benefit of, Executive within five business days after
                  receipt of such determination and calculations.

            (c)   The Company and Executive will each provide the Accounting
                  Firm access to and copies of any books, records and documents
                  in the possession of the Company or Executive, as the case may
                  be, reasonably requested by the Accounting Firm, and otherwise
                  cooperate with the Accounting Firm in connection with the
                  preparation and issuance of the determination contemplated by
                  Section 6(b) above.

            (d)   The federal, state and local income or other tax returns filed
                  by Executive will be prepared and filed on a consistent basis
                  with the determination of the Accounting Firm with respect to
                  the Excise Tax payable by Executive. Executive will make
                  proper payment of the amount of any Ex-


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                  cise Tax, and at the request of the Company, provide to the
                  Company true and correct copies (with any amendments) of
                  Executive's federal income tax return as filed with the
                  Internal Revenue Service and corresponding state and local tax
                  returns, if relevant, as filed with the applicable taxing
                  authority, and such other documents reasonably requested by
                  the Company, evidencing such payment. If prior to the filing
                  of Executive's federal income tax return, or corresponding
                  state or local tax return, if relevant, the Accounting Firm
                  determines that the amount of the Gross-Up Payment should be
                  reduced, Executive will within five business days pay to the
                  Company the amount of such reduction.

            (e)   The fees and expenses of the Accounting Firm for its services
                  in connection with the determinations and calculations
                  contemplated by Section 6(b) and (d) above will be borne by
                  the Company. If such fees and expenses are initially advanced
                  by Executive, the Company will reimburse Executive the full
                  amount of such fees and expenses within five business days
                  after receipt from Executive of a statement therefor and
                  reasonable evidence of Executive's payment thereof.

            (f)   Executive will notify the Company in writing of any claim by
                  the Internal Revenue Service that, if successful, would
                  require the payment by the Company of a Gross-Up Payment. Such
                  notification will be given as promptly as practicable, but no
                  later than 10 business days after Executive actually receives
                  notice of such claim, and Executive will further apprise the
                  Company of the nature of such claim and the date on which such
                  claim is requested to be paid (in each case, to the extent
                  known by Executive). Executive will not pay such claim prior
                  to the earlier of (i) the expiration of the 30-calendar-day
                  period following the date on which Executive gives such notice
                  to the Company and (ii) the


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                  date that any payment of amount with respect to such claim is
                  due. If the Company notifies Executive in writing prior to the
                  expiration of such period that it desires to contest such
                  claim, Executive will:

                  (i)   provide the Company with any written records or
                        documents in Executive's possession relating to such
                        claim reasonably requested by the Company;

                  (ii)  take such action in connection with contesting such
                        claim as the Company will reasonably request in writing
                        from time to time, including without limitation
                        accepting legal representation with respect to such
                        claim by an attorney competent in respect of the subject
                        matter and reasonably selected by the Company;

                  (iii) cooperate with the Company in good faith in order
                        effectively to contest such claim; and

                  (iv)  permit the Company to participate in any proceedings
                        relating to such claim;

                  provided, however, that the Company will bear and pay directly
                  all costs and expenses (including interest and penalties)
                  incurred in connection with such contest and will indemnify
                  and hold harmless Executive, on an after-tax basis, for and
                  against any Excise Tax or income tax, including interest and
                  penalties with respect thereto, imposed as a result of such
                  representation and payment of costs and expenses. Without
                  limiting the foregoing provisions of this Section 6(f), the
                  Company will control all proceedings taken in connection with
                  the contest of any claim contemplated by this Section 6(f)
                  and, at its sole option, may pursue or forego any and all
                  administrative appeals, proceedings, hearings and conferences
                  with the taxing authority in respect of such


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                  claim (provided that Executive may participate therein at
                  Executive's own cost and expense) and may, at its option,
                  either direct Executive to pay the tax claimed and sue for a
                  refund or contest the claim in any permissible manner, and
                  Executive agrees to prosecute such contest to a determination
                  before any administrative tribunal, in a court of initial
                  jurisdiction and in one or more appellate courts, as the
                  Company will determine; provided, however, that if the Company
                  directs Executive to pay the tax claimed and sue for a refund,
                  the Company will advance the amount of such payment to
                  Executive on an interest-free basis and will indemnify and
                  hold Executive harmless, on an after-tax basis, from any
                  excise Tax or income tax, including interest or penalties with
                  respect thereto, imposed with respect to such advance; and
                  provided further, however, that any extension of the statute
                  of limitations relating to payment of taxes for the taxable
                  year of Executive with respect to which the contested amount
                  is claimed to be due is limited solely to such contested
                  amount. Furthermore, the Company's control of any such
                  contested claim will be limited to issues with respect to
                  which a Gross-Up Payment would be payable hereunder and
                  Executive will be entitled to settle or contest, as the case
                  may be, any other issue raised by the Internal Revenue Service
                  or any other taxing authority.

            (g)   If, after the receipt by Executive of an amount advanced by
                  the Company pursuant to Section 6(f) above, Executive receives
                  any refund with respect to such claim, Executive will (subject
                  to the Company's complying with the requirements of Section
                  6(f) above) promptly pay to the Company the amount of such
                  refund (together with any interest paid or credited thereon
                  after any taxes applicable thereto). If, after the receipt by
                  Executive of an amount advanced by the Company pursuant to
                  Section 6(f) above, a determination is made that Ex-


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                  ecutive will not be entitled to any refund with respect to
                  such claim and the Company does not notify Executive in
                  writing of its intent to contest such denial or refund prior
                  to the expiration of 30-calendar-days after such
                  determination, then such advance will be forgiven and will not
                  be required to be repaid and the amount of such advance will
                  offset, to the extent thereof, the amount of Gross-Up Payment
                  required to be paid pursuant to this Section 6.

The Severance Agreement, except as herein amended, is hereby ratified, confirmed
and approved in all respects.

                                PLAYBOY ENTERPRISES, INC.


                                By_________________________________


                                ___________________________________
                                        NAME OF EXECUTIVE


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