10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x   Quarterly report under Section 13 or 15(d) of the Securities and Exchange Act of 1934.

For the quarterly period ended September 30, 2008

o   Transition Report under Section 13 or 15(d) of the Exchange Act.

For the transition period from                          to

0-23697

(Commission file number)

NEW FRONTIER MEDIA, INC.

(Exact name of registrant as specified in its charter)

Colorado	84-1084061
(State or other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification Number)

7007 Winchester Circle, Suite 200, Boulder, CO 80301

(Address of principal executive offices)

(303) 444-0900

(Issuer’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by checkmark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x   No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer x	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o   No x

As of November 1, 2008, 22,649,077 shares of Common Stock, par value $.0001, were outstanding.

Form 10-Q

NEW FRONTIER MEDIA, INC.

FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 2008

Table of Contents

		Page Number
Part I.	Financial Information
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Income	4
	Condensed Consolidated Statements of Cash Flows	5
	Condensed Consolidated Statements of Comprehensive Income	6
	Condensed Consolidated Statements of Changes in Shareholders’ Equity	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	29
Part II.	Other Information
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 4.	Submission of Matters to a Vote of Security Holders	30
Item 6.	Exhibits	31
SIGNATURES		32

2

PART I.   FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par values)

	(Unaudited)
	September 30,			March 31,
	2008			2008
Assets
Current assets:
Cash and cash equivalents	$	13,544		$	18,325
Restricted cash	109			38
Marketable securities	1,474			930
Accounts receivable, net of allowance for doubtful accounts of $257 and $169, at September 30, 2008 and March 31, 2008, respectively	11,193			13,873
Deferred tax assets	601			620
Prepaid and other assets	1,384			1,899
Total current assets	28,305			35,685
Equipment and furniture, net	6,096			4,861
Prepaid distribution rights, net	11,101			10,381
Recoupable costs and producer advances, net	3,883			2,448
Film costs, net	7,383			7,626
Goodwill	18,608			18,608
Other identifiable intangible assets, net	2,983			3,033
Other assets	1,040			1,019
Total assets	$	79,399		$	83,661
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	2,358		$	2,937
Dividend payable	—			2,982
Taxes payable	1,944			760
Producers payable	957			1,012
Deferred revenue	1,257			984
Accrued compensation	1,448			1,817
Deferred producer liabilities	2,009			2,862
Accrued and other liabilities	3,068			2,257
Total current liabilities	13,041			15,611
Deferred tax liabilities	677			795
Taxes payable	216			216
Other long-term liabilities	771			1,002
Total liabilities	14,705			17,624
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $.10 par value, 4,999 shares authorized, no shares issued and outstanding	—			—
Common stock, $.0001 par value, 50,000 shares authorized, 22,649 and 23,775 shares issued and outstanding at September 30, 2008 and March 31, 2008, respectively	2			2
Additional paid-in capital	58,088			61,854
Retained earnings	6,665			4,191
Accumulated other comprehensive loss	(61		)	(10		)
Total shareholders’ equity	64,694			66,037
Total liabilities and shareholders’ equity	$	79,399		$	83,661

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

3

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

	(Unaudited) Quarter Ended September 30,						(Unaudited) Six Months Ended September 30,
	2008			2007			2008			2007
Net sales	$	13,375		$	12,430		$	26,436		$	25,370
Cost of sales	4,429			3,459			8,358			7,256
Gross margin	8,946			8,971			18,078			18,114
Operating expenses:
Sales and marketing	2,133			1,640			4,558			3,708
General and administrative	4,602			3,989			9,323			8,652
Charge for asset dispositions and impairments	65			90			65			363
Total operating expenses	6,800			5,719			13,946			12,723
Operating income	2,146			3,252			4,132			5,391
Other income (expense):
Interest income	68			215			146			469
Interest expense	(59		)	(53		)	(115		)	(96		)
Other income (loss), net	—			(13		)	—			12
Total other income	9			149			31			385
Income before provision for income taxes	2,155			3,401			4,163			5,776
Provision for income taxes	(860		)	(1,256		)	(1,689		)	(2,134		)
Net income	$	1,295		$	2,145		$	2,474		$	3,642
Basic income per share	$	0.06		$	0.09		$	0.11		$	0.15
Diluted income per share	$	0.06		$	0.09		$	0.11		$	0.15
Dividends declared per common share	$	—		$	0.13		$	—		$	0.25

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

4

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	(Unaudited) Six Months Ended September 30,
	2008			2007
Cash flows from operating activities:
Net income	$	2,474		$	3,642
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	4,575			3,611
Tax benefit from option/warrant exercises	—			167
Share-based compensation	537			563
Deferred tax asset and liability, net	(99		)	(508		)
Charge for asset dispositions and impairments	65			363
Changes in operating assets and liabilities
Accounts receivable	2,680			987
Accounts payable	(263		)	195
Prepaid distribution rights	(2,504		)	(2,388		)
Capitalized film costs	(1,167		)	(2,152		)
Deferred costs	—			(2,106		)
Deferred revenue	273			242
Producers payable	(55		)	(411		)
Taxes receivable and payable	1,184			275
Accrued compensation	(369		)	(1,547		)
Other assets and liabilities	(1,347		)	(45		)
Net cash provided by operating activities	5,984			888
Cash flows from investing activities:
Purchase of investments available-for-sale	(1,730		)	(2,671		)
Redemption of investments available-for-sale	1,184			7,532
Purchase of equipment and furniture	(2,222		)	(1,160		)
Purchase of intangible assets	(688		)	—
Payment of related party note arising from business acquisition	(21		)	(555		)
Net cash provided by (used in) investing activities	(3,477		)	3,146
Cash flows from financing activities:
Proceeds from exercise of stock options/warrants	—			512
Purchase of common stock	(4,303		)	(3,618		)
Payment of dividend	(2,982		)	(6,042		)
Excess tax benefit from option/warrant exercise	—			(26		)
Net cash used in financing activities	(7,285		)	(9,174		)
Net decrease in cash and cash equivalents	(4,778		)	(5,140		)
Effect of exchange rate changes on cash and cash equivalents	(3		)	—
Cash and cash equivalents, beginning of period	18,325			17,345
Cash and cash equivalents, end of period	$	13,544		$	12,205

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

5

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	(Unaudited) Quarter Ended September 30,					(Unaudited) Six Months Ended September 30,
	2008			2007		2008			2007
Net income	$	1,295		$	2,145	$	2,474		$	3,642
Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale marketable securities, net of tax	(2		)	14		(2		)	14
Currency translation adjustment	(49		)	—		(49		)	—
Total comprehensive income	$	1,244		$	2,159	$	2,423		$	3,656

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

SHAREHOLDERS’ EQUITY

(in thousands)

	(Unaudited) Six Months Ended September 30,
	2008			2007
Common stock
Balance at beginning of period	$	2		$	2
Balance at end of period	2			2
Additional paid-in capital
Balance at beginning of period	61,854			64,191
Exercise of stock options/warrants	—			512
Tax benefit for stock option/warrant exercise	—			141
Purchase of common stock	(4,303		)	(3,618		)
Share-based compensation	537			563
Balance at end of period	58,088			61,789
Retained earnings
Balance at beginning of period	4,191			7,536
Net income	2,474			3,642
Declared dividend	—			(6,042		)
Balance at end of period	6,665			5,136
Accumulated other comprehensive loss
Balance at beginning of period	(10		)	(30		)
Unrealized gain (loss) on available-for-sale securities	(2		)	14
Unrealized loss on currency translation adjustment	(49		)	—
Balance at end of period	(61		)	(16		)
Total shareholders’ equity	$	64,694		$	66,911

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

7

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 — BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

New Frontier Media, Inc. is a publicly traded holding company for its operating subsidiaries which are reflected in the Transactional TV segment, the Film Production segment and the Direct-to-Consumer segment.

Transactional TV Segment

The Transactional TV segment is a leading provider of adult programming to multiple system cable operators and direct broadcast satellite providers. The Transactional TV segment is able to provide a variety of editing styles and programming mixes to a broad range of adult consumers. Ten Sales, Inc., which is also reflected within the operating results of the Transactional TV segment, was formed in April 2003 and is responsible for selling the segment’s services.

Film Production Segment

The Film Production segment derives its revenue from two principal businesses: a) the production and distribution of original motion pictures known as “erotic thrillers,” horror movies, and erotic, event styled content (collectively, “owned content”) which is provided through the MRG Entertainment label and b) the licensing of third party films in international and domestic markets where it acts as a sales agent for the product (“repped content”) which is provided through the Lightning Entertainment Group label. This segment also periodically provides contract film production services to certain major Hollywood studios (“producer-for-hire” arrangements).

Direct-to-Consumer Segment

The Direct-to-Consumer segment aggregates and resells content through the internet. Revenue in this segment is primarily generated through the acquisition of monthly subscribers on adult-oriented consumer websites. The Direct-to-Consumer segment also recently acquired intellectual property rights for a set-top box that provides content to consumers through internet protocol television (“IPTV”) technology. The Company is currently testing this business model concept.

Basis of Presentation

The accompanying financial statements of New Frontier Media, Inc. and its wholly owned subsidiaries (collectively hereinafter referred to as “New Frontier Media,” the “Company,” “we,” and other similar pronouns) have been prepared without audit pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. The Company believes these statements include all adjustments, which are of a normal and recurring nature, considered necessary for a fair presentation of New Frontier Media’s financial position and results of operations. The financial statements included herein should be read in conjunction with the financial statements and notes thereto included in New Frontier Media’s latest annual report on Form 10-K filed with the SEC on June 13, 2008.

The results of operations for the three and six month periods ended September 30, 2008 are not necessarily indicative of the results to be expected for the full year.

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NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) —

(continued)

Significant Accounting Policies

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of New Frontier Media.  All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires the Company to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates have been made by the Company in several areas, including, but not limited to, estimated revenue for certain Transactional TV segment pay-per-view and video-on-demand (“VOD”) services; the recognition and measurement of deferred income tax assets and liabilities (including the measurement of uncertain tax positions); the valuation of recoupable costs including producer advances, direct costs and chargebacks; the achievement of certain earn-out targets associated with the Company’s acquisition of MRG Entertainment, Inc., and its subsidiaries and a related company, Lifestyles Entertainment, Inc. (collectively “MRG”) and the use of this information to estimate earn-out expense; the forecast of anticipated revenue (“ultimate” revenue), which is used to amortize film costs; the reporting of prepaid distribution rights for the Transactional TV segment; the assessment of goodwill, intangibles and other long-lived assets; and the valuation and recognition of share-based compensation.

The Company bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from these estimates.

Reclassifications

The Company has reclassified its prior year reporting to conform to the current period presentation.

Fair Values of Financial Instruments

The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurement, effective April 1, 2008.  There was no material impact on the Company’s condensed consolidated financial statements from the adoption of the SFAS No. 157. SFAS No. 157 currently applies to all financial assets and liabilities and for nonfinancial assets and liabilities recognized or disclosed at fair value on a recurring basis. For all other nonfinancial assets and liabilities, SFAS No. 157 is effective for the first quarter of fiscal year 2010. In February 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position SFAS No. 157-2, Effective Date of FASB Statement No. 157, which defers the application date of the provisions of SFAS No. 157 for all nonfinancial assets and liabilities except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Due to the deferral, the Company has delayed the implementation of the provisions of SFAS No. 157 related to the fair value of goodwill, intangible assets with indefinite lives and nonfinancial long-lived assets. SFAS No. 157 requires a new disclosure that establishes a framework for measuring fair value in accordance with generally accepted accounting principles in the U.S. and the disclosure requirement related to fair value measurements. SFAS No. 157 is intended to enable the readers of financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. SFAS No. 157 requires that assets and liabilities carried at fair value be classified and disclosed in one of the following categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.

At September 30, 2008, the Company had $1.5 million of available-for-sale financial assets. The fair value for these assets was determined through a Level 1 category and was based on quoted market prices in

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NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) —

(continued)

active markets.  The Company had no other financial assets and liabilities carried at fair value at September 30, 2008.

Foreign Currency Translations

The functional currency for all of the Company’s U.S. based subsidiaries is the U.S. dollar. The functional currency for the Company’s foreign subsidiaries is the local currency. Assets and liabilities denominated in foreign currencies are translated using the exchange rates on the balance sheet dates. Revenues and expenses are translated using the average exchange rates prevailing during the periods presented. Any translation adjustments resulting from this process are shown separately as a component of accumulated other comprehensive income (loss) within shareholders’ equity in the condensed consolidated balance sheets. Foreign currency transaction gains and losses are reported in the operating expense section of the condensed consolidated statements of income.

Recently Issued Accounting Pronouncements

In October 2008, the FASB issued Staff Position No. FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active (“FSP FAS 157-3”). FSP FAS 157-3 clarified the application of FAS No. 157. FSP FAS 157-3 demonstrated how the fair value of a financial asset is determined when the market for that financial asset is inactive. FSP FAS 157-3 was effective upon issuance, including prior periods for which financial statements had not been issued. The implementation of this standard did not have an impact on the Company’s results of operations and financial position.

In April 2008, the FASB issued Staff Position No. FAS 142-3, Determination of the Useful Life of Intangible Assets (“FSP FAS 142-3”). FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets. The intent of FSP FAS 142-3 is to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141(R) and other applicable accounting literature. FSP FAS 142-3 is effective for fiscal years beginning after December 15, 2008. The Company is currently evaluating the potential impact of FSP FAS 142-3 on its results of operations and financial position.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations. SFAS No. 141(R) establishes principles and requirements for how the acquirer in a business combination (a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any controlling interest; (b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) applies to business combinations for which the acquisition date is on or after December 15, 2008. The adoption of SFAS No. 141(R) will likely impact the Company’s results of operations and financial position to the extent that the Company makes acquisitions subsequent to December 15, 2008.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment to ARB No. 51. SFAS No. 160 establishes accounting and reporting standards that require (a) the ownership interest in subsidiaries held by parties other than the parent to be clearly identified and presented in the Consolidated Balance Sheets within equity, but separate from the parent’s equity; (b) the amount of consolidated net income attributable to the parent and the noncontrolling interest to be clearly identified and presented on the face of the Consolidated Statement of Earnings; and (c) changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary to be accounted for consistently. This statement is effective for fiscal years beginning on or after December 15, 2008. The Company does not expect the adoption of SFAS No. 160 will have a material impact on its results of operations and financial position because the Company does not currently have noncontrolling interests in any entity.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159 permits companies to choose to measure certain financial instruments and certain other items at fair value. The standard requires that unrealized gains and losses on items for

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NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) —

(continued)

which the fair value option has been elected be reported in earnings. SFAS No. 159 was effective for the fiscal year beginning April 1, 2008 for the Company, although earlier adoption was permitted. The adoption of SFAS No. 159 did not have a material impact on the Company’s results of operations and financial position because the Company did not adopt the fair value option.

NOTE 2 — INCOME PER SHARE

The components of basic and diluted income per share are as follows (in thousands, except per share amounts):

	(Unaudited) Quarter Ended September 30,				(Unaudited) Six Months Ended September 30,
	2008		2007		2008		2007
Net income	$	1,295	$	2,145	$	2,474	$	3,642
Average outstanding shares of common stock	23,202		24,120		23,445		24,232
Dilutive effect of warrants/stock options	14		105		29		192
Common stock and common stock equivalents	23,216		24,225		23,474		24,424
Basic income per share	$	0.06	$	0.09	$	0.11	$	0.15
Diluted income per share	$	0.06	$	0.09	$	0.11	$	0.15

Options and warrants which were excluded from the calculation of diluted earnings per share because the exercise price of the options and warrants was greater than the average market price of the common shares were approximately 2.3 million and 1.2 million for the quarters ended September 30, 2008 and 2007, respectively, and 2.2 million and 0.6 million for the six month periods ended September 30, 2008 and 2007, respectively.  Inclusion of these options and warrants would be antidilutive.

NOTE 3 — EMPLOYEE EQUITY INCENTIVE PLANS

The Company adopted the New Frontier Media, Inc. 2007 Stock Incentive Plan (the “2007 Plan”) during fiscal year 2008.  The 2007 Plan was approved by the Company’s shareholders and the purpose of the 2007 plan was to replace prior plans with one incentive plan. No awards or grants are available to be made under prior plans. Under the 2007 Plan, employees and directors of the Company may be granted incentive stock options, restricted stock, bonus stock and other awards, or any combination thereof. There were 1,250,000 shares of the Company’s common stock originally authorized for issuance under the 2007 Plan and the maximum number of shares of common stock that may be subject to one or more awards granted to a participant during any calendar year is 350,000 shares. As of September 30, 2008, approximately 0.3 million awards were available for issuance under the 2007 Plan.

Share-Based Compensation

In accordance with the provisions of SFAS No. 123(R), the Company accounts for employee and non-employee director stock options under the fair value method which requires the use of an option pricing model for estimating fair value. Accordingly, share-based compensation is measured at grant date based on

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NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) —

(continued)

the fair value of the award. The Company uses the straight-line attribution method to recognize share-based compensation costs over the requisite service period of the award.

Share-based compensation is determined using the Black-Scholes option pricing model for estimating the fair value of options granted under the Company’s equity incentive plan. The Company uses certain assumptions in order to calculate the fair value of an option using the Black-Scholes option pricing model. The volatility assumptions are derived using historical volatility data. The expected term assumptions are stratified between officers and non-officers and are determined using the estimated weighted average exercise behavior for these two groups of employees. The dividend yield assumption is based dividends declared by the Company’s Board of Directors and estimates of dividends to be declared in the future. The weighted average estimated fair values of stock option grants and the weighted average assumptions that were used in calculating such values for the quarters and six month periods ended September 30, 2008 and 2007 are presented below.

	Quarter Ended September 30,				Six Months Ended September 30,
	2008	2007			2008			2007
Weighted average estimated fair values per award	(1)	$	2.02		$	2.33		$	2.02
Expected term (in years)	(1)	6			5			6
Risk free interest rate	(1)	4.1		%	2.7		%	4.1		%
Volatility	(1)	60		%	52		%	60		%
Dividend yield	(1)	7.6		%	-		%	7.6		%

(1) No options were granted during the quarter end September 30, 2008.

Share-based compensation expense recognized in the condensed consolidated statements of income during the quarters and six month periods ended September 30, 2008 and 2007 is based on awards ultimately expected to vest, which considers estimated forfeitures. SFAS No. 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience and are different for officers and non-officers. The estimated forfeitures used for fiscal year 2009 were approximately 1% for officers and 16% for non-officers.  The estimated forfeitures used for fiscal year 2008 were 0% for officers and approximately 16% for non-officers.

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NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) —

(continued)

The following table summarizes the effects of share-based compensation resulting from the application of SFAS No. 123(R) to options granted under the Company’s equity incentive plans. This expense is included in cost of sales and selling, general and administrative expenses (in thousands, except per share amounts):

	Quarter Ended September 30,						Six Months Ended September 30,
	2008			2007			2008			2007
Share-based compensation expense before income taxes	$	280		$	288		$	537		$	563
Income tax benefit	(112		)	(107		)	(218		)	(208		)
Total share-based compensation expense after income taxes	$	168		$	181		$	319		$	355
Share-based compensation effects on basic earnings per common share	$	0.01		$	0.01		$	0.01		$	0.01
Share-based compensation effects on diluted earnings per common share	$	0.01		$	0.01		$	0.01		$	0.01

Stock option transactions during the six month period ended September 30, 2008 are summarized as follows:

	Shares		Weighted Avg. Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value(1) (in thousands)
Outstanding at March 31, 2008	1,727,802		$	6.39
Granted	623,500		$	4.76
Forfeited/Cancelled	(15,000	)	$	5.47
Outstanding at September 30, 2008	2,336,302		$	5.96	7.3	$	8
Options Exercisable at September 30, 2008	1,157,652		$	6.64	5.5	$	8
Options Vested and Expected to Vest—Non-Officers	827,745		$	6.47	7.2	$	8
Options Vested and Expected to Vest—Officers	1,403,922		$	5.72	7.3	$	—

(1) The aggregate intrinsic value represents the difference between the exercise price and the value of New Frontier Media, Inc. stock at the time of exercise or at the end of the period if unexercised.

13

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) —

(continued)

Net cash proceeds from the exercise of stock options were $0 and $0.3 million for the quarters ended September 30, 2008 and 2007, respectively, and $0 and $0.5 million for the six month periods ended September 30, 2008 and 2007, respectively. The Company issues new shares of common stock upon the exercise of stock options. As of September 30, 2008, there was $0.4 million and $1.7 million of total unrecognized compensation costs for non-officers and officers, respectively, related to stock options granted under the Company’s equity incentive plan. The unrecognized compensation cost for non-officers and officers is expected to be recognized over a weighted average period of 3 years.

NOTE 4 — SEGMENT INFORMATION

The Company has adopted SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, which establishes reporting and disclosure standards for an enterprise’s operating segments. Operating segments are defined as components of an enterprise for which separate financial information is available and regularly reviewed by the Company’s chief operating decision maker.

The Company has the following three reportable operating segments:

· Transactional TV—distributes branded adult entertainment programming networks and VOD content through electronic distribution platforms including cable television and direct broadcast satellite operators.

· Film Production—produces and distributes mainstream films and erotic features and events. These titles are distributed on U.S. and international premium channels, pay-per-view channels and VOD systems across a range of cable and satellite distribution platforms. The Film Production segment also distributes a full range of independently produced motion pictures to markets around the world. Additionally, this segment periodically provides producer-for-hire services to certain major Hollywood studios.

· Direct-to-Consumer—aggregates and resells adult content via the Internet. The Direct-to-Consumer segment sells content to monthly subscribers primarily through its consumer websites. This segment also includes the results of a set-top box IPTV business that began incurring costs in the fourth quarter of fiscal year 2008 in connection with the testing of the business model concept.

Expenses reported as Corporate Administration include all costs associated with the operation of the public holding company, New Frontier Media, Inc., that are not directly allocable to the Transactional TV, Film Production, or Direct-to-Consumer segments. These costs include, but are not limited to, legal and accounting expenses, insurance, registration and filing fees with NASDAQ, executive employee costs, and the SEC, investor relations and printing costs associated with the Company’s public filings and shareholder communications.

14

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) —

(continued)

The accounting policies of the reportable segments are the same as those described in the summary of accounting policies. Segment profit is based on income before income taxes. The reportable segments are distinct business units, separately managed with different distribution channels. The selected balance sheet information and operating results of the Company’s segments at the dates and during the periods presented below were as follows (in thousands):

	(Unaudited) Quarter Ended September 30,						(Unaudited) Six Months Ended September 30,
	2008			2007			2008			2007
Net sales
Transactional TV	$	10,773		$	9,995		$	21,329		$	20,362
Film Production	2,202			2,000			4,249			4,090
Direct-to-Consumer	400			435			858			918
Total	$	13,375		$	12,430		$	26,436		$	25,370
Segment profit (loss)
Transactional TV	$	5,453		$	5,129		$	10,955		$	10,243
Film Production	34			442			(34		)	305
Direct-to-Consumer	(654		)	97			(1,194		)	76
Corporate Aministration	(2,678		)	(2,267		)	(5,564		)	(4,848		)
Total	$	2,155		$	3,401		$	4,163		$	5,776
Interest income
Transactional TV	$	—		$	1		$	—		$	1
Film Production	1			1			3			1
Corporate Administration	67			213			143			467
Total	$	68		$	215		$	146		$	469
Interest expense
Direct-to-Consumer	$	3		$	—		$	7		$	—
Corporate Administration	56			53			108			96
Total	$	59		$	53		$	115		$	96

15

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) —

(continued)

	(Unaudited) Quarter Ended September 30,				(Unaudited) Six Months Ended September 30,
	2008		2007		2008		2007
Depreciation and amortization
Transactional TV	$	1,274	$	1,081	$	2,460	$	2,137
Film Production	971		577		1,825		1,363
Direct-to-Consumer	147		54		283		105
Corporate Administration	4		3		7		6
Total	$	2,396	$	1,715	$	4,575	$	3,611

	(Unaudited) September 30, 2008			March 31, 2008
Identifiable assets
Transactional TV	$	138,228		$	125,500
Film Production	34,416			34,269
Direct-to-Consumer	18,669			17,904
Corporate Administration	46,890			47,838
Eliminations	(158,804		)	(141,850		)
Total	$	79,399		$	83,661

NOTE 5 — MAJOR CUSTOMERS

The Company’s major customers (revenues in excess of 10% of total sales) are Comcast Corporation (“Comcast”), DirecTV, Inc. (“DirecTV”), DISH Network Corporation (“DISH”) and Time Warner, Inc. (“Time Warner”). These customers are included in the Transactional TV and Film Production segments. Revenue from these customers as a percentage of total revenue for each period presented is as follows:

	(Unaudited) Quarter Ended September 30,				(Unaudited) Six Months Ended September 30,
	2008		2007		2008		2007
Comcast	23	%	21	%	22	%	19	%
DirecTV	15	%	13	%	15	%	13	%
DISH	14	%	16	%	14	%	17	%
Time Warner	13	%	15	%	14	%	15	%

16

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) —

(continued)

The Company’s outstanding accounts receivable balance due from its major customers as of September 30, 2008 and March 31, 2008 are as follows (in thousands):

	(Unaudited) September 30, 2008		March 31, 2008
Comcast	$	2,021	$	1,882
DirecTV	1,270		2,011
DISH	1,114		1,817
Time Warner	782		1,015

The loss of any of the Company’s major customers would have a material adverse effect on the Company’s results of operations and financial position.

NOTE 6 — MARKETABLE SECURITIES

Marketable securities are required to be categorized as trading, available-for-sale or held-to-maturity. As of September 30, 2008, the Company had no trading or held-to-maturity securities. The marketable securities held by the Company at September 30, 2008 are categorized as available-for-sale and are reported at fair value. Marketable securities held by the Company at September 30, 2008 were as follows (in thousands):

	Gross
	Amortized		Gross Unrealized				Estimated
	Cost		Gains		Losses		Fair Value
Available-for-sale securities
Certificates of deposit	$	898	$	—	$	—	$	898
Tax exempt municipal securities	574		2		—		576
Total available-for-sale securities	$	1,472	$	2	$	—	$	1,474

The contractual maturities of these marketable securities as of September 30, 2008, were as follows (in thousands):

	Available-for-Sale
	Securities
Year Ended	Gross
March 31,	Amortized Cost		Fair Value
2009	$	1,472	$	1,474

NOTE 7 — ACQUISITION EARN-OUT

As part of the MRG acquisition, the Company entered into an earn-out arrangement which provides for three additional earn-out payments totaling $2.0 million payable to the selling shareholders of MRG over a three year term if certain performance targets as defined by the purchase agreement are achieved each year. The 2006 calendar year earn-out target was exceeded and the amount due to the former principals of MRG of approximately $0.7 million was paid in May 2007.

During the first nine months of calendar year 2007, the Company estimated that the second annual earn-out target for the twelve months ended December 31, 2007 would be met. However, actual results for MRG were not sufficient to achieve the second annual performance target. As a result, the previously accrued earn-out liability of approximately $0.5 million was reversed. The second annual earn-out payment could still be obtained by the selling shareholders of MRG if the performance results in year three of the earn-out period exceed the related year three target by an amount greater than the year two target shortfall. If actual performance or estimates for the twelve month period ending December 31, 2008 indicate that an overachievement equal to the shortfall in 2007 is likely to occur, the Company may be required to record the earn-out expenses that were reversed in subsequent future periods. The Company does not believe that the year three earn-out or recoupment of the year two earn-out is probable based on current estimates and

17

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) —

(continued)

historical performance data. As a result, the Company has not accrued any earn-out amounts at September 30, 2008.

NOTE 8 — LITIGATION

In the normal course of business, the Company is subject to various lawsuits and claims. The Company believes that the final outcome of these matters, either individually or in the aggregate, will not have a material effect on its financial statements.

NOTE 9 — CASH DIVIDENDS AND STOCK REPURCHASE

In December 2005, the Company’s Board of Directors approved a 2.0 million share repurchase plan to be executed over 30 months, and the Company purchased approximately 0.9 million shares through the original plan. In June 2008, the Company’s Board of Directors extended the plan through June 2010.  During the six month period ended September 30, 2008, the Company repurchased approximately 1.1 million shares for a total purchase price of approximately $4.3 million. The Company repurchased approximately $3.6 million of common stock during the six month period ended September 30, 2007.

The Company’s Board of Directors declared a cash dividend of $0.125 per share of common stock during the fourth quarter of fiscal year 2008, and the Company paid approximately $3.0 million for this cash dividend in April 2008.  The Board of Directors has not declared a dividend during fiscal year 2009, and the payment of future dividends is at the discretion of the Board of Directors.

NOTE 10 — INCOME TAXES

Effective at the beginning of the first fiscal quarter of 2008, the Company adopted the provisions of Financial Accounting Standards Interpretation (“FIN”) No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109. FIN No. 48 contains a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with SFAS No. 109, Accounting for Income Taxes. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon effective settlement.

In accordance with the provisions of FIN No. 48, the Company has total unrecognized tax benefits of approximately $1.8 million of which approximately $0.2 million are not expected to be settled within one year and have been classified as other long-term liabilities at September 30, 2008. If the Company were to prevail or the uncertainty were settled in favor of the Company on all uncertain tax positions, the net effect is estimated to be a benefit to the Company’s effective tax rate of approximately $0.4 million. As of September 30, 2008, the Company had accrued approximately $0.5 million and $0 of interest expense and penalties, respectively, of which approximately $46 thousand was recognized through interest expense during the quarter ended September 30, 2008. If the Company were to prevail or the uncertainty were settled in favor of the Company on all uncertain tax positions, the reversal of this accrual would result in a benefit to the Company. The Company estimates that it is reasonably possible that the unrecognized tax benefits will be settled during the fiscal year ended March 31, 2009 if one or more of the following occur: a) the more-likely-than-not recognition threshold will be met during the period, b) the tax is settled through negotiation or litigation, or c) the statute of limitations for the relevant taxing authority to examine and challenge the tax position will expire.

The Company files U.S. federal and state income tax returns. The Company concluded an audit by the Internal Revenue Service (“IRS”) for its fiscal year 2007 tax year, and the IRS proposed no changes to the Company’s fiscal year 2007 tax return in connection with the audit. With few exceptions, the Company is no longer subject to examination of its federal and state income tax returns for years prior to fiscal year 1999.

18

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) —

(continued)

NOTE 11 — BORROWING ARRANGEMENTS

In July 2008, the Company obtained a $9.0 million line of credit from an outside financial institution. Amounts borrowed under the line of credit can be used to support the Company’s short-term working capital needs. The line of credit is secured by the Company’s trade accounts receivable and will mature in July 2009. The interest rate applied to borrowings under the line of credit is based on the greater of the current prime rate less 0.13% or 5.75%. The terms of the line of credit include certain defined negative and affirmative covenants customary for facilities of this type, and the Company was in compliance with the covenants at September 30, 2008. The Company has made no borrowings under the line of credit.

NOTE 12 – COMMITMENTS AND CONTINGENCIES

In August and September 2008, certain executive officers and other key employees executed new or amended employment contracts with the Company. The terms and conditions of the amended contracts are materially equivalent to the original agreements. The impact of the new and amended contracts on the Company’s contractual future obligations is to increase the amounts by $0.1 million, $0.5 million and $0.5 million in each of the fiscal years ended March 31, 2009, 2010 and 2011, respectively.

NOTE 13 — SUBSEQUENT EVENTS

In October 2008, certain executive officers and other key employees executed new or amended employment contracts with the Company. The terms and conditions of the amended contracts are materially equivalent to the original agreements. The impact of the new and amended contracts on the Company’s contractual future obligations is to increase the amounts by $0.1 million, $0.4 million and $0.4 million in each of the fiscal years ended March 31, 2009, 2010 and 2011, respectively.

19

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Statements

This quarterly report on Form 10-Q includes forward-looking statements. These are subject to certain risks and uncertainties, including those identified below, which could cause actual results to differ materially from such statements. The words “believe”, “expect”, “anticipate”, “optimistic”, “intend”, “will”, “could”, and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to, our ability to: 1) retain our four major customers that accounted for approximately 65% of our total revenue for the six month period ended September 30, 2008; 2) maintain the license fee structures currently in place with our customers; 3) compete effectively with our current competitors and potential future competitors that distribute adult content to U.S. and international cable multiple system operators (“MSOs”) and direct broadcast satellite (“DBS”) providers; 4) retain our key executives; 5) produce film content that is well received by our Film Production segment’s customers; 6) successfully manage our credit card chargeback and credit percentages in order to maintain our ability to accept credit cards as a form of payment for our products and services; 7) effectively manage the test set-top box business model and attract customers for the related product and 8) attract market support for our stock. The foregoing list of factors is not exhaustive. For a more complete list of factors that may cause results to differ materially from projections, please refer to the Risk Factors section of our most recently filed Form 10-K and Item 1A located in Part II herein, as updated by periodic and current reports that we may file from time to time with the Securities and Exchange Commission that amend or update such factors.

20

Executive Summary

We are a leader in transactional television and the international distribution of independent general motion picture entertainment. Our key customers are large cable and satellite operators in the United States. Our products are sold to these operators who then distribute them to retail customers via pay-per-view and video-on-demand technology. We earn revenue through contractual percentage splits of the retail price. Our three principal businesses are reflected in the Transactional TV, Film Production and Direct-to-Consumer  operating segments. Our most profitable business lines are the Transactional TV and Film Production segments. Our Direct-to-Consumer segment is currently operating at a loss as a result of costs we are incurring to develop an internet protocol television (“IPTV”) test business model. Our Corporate Administration segment includes all costs associated with the operation of the public holding company, New Frontier Media, Inc., including costs such as legal and accounting expenses, human resources and training, insurance, registration and filing fees with NASDAQ, executive employee costs and the SEC, investor relations, and printing costs associated with our public filings and shareholder communications.

The business models of each of our revenue-generating segments are summarized below.

Transactional TV Segment

Our Transactional TV segment is focused on the distribution of its pay-per-view and video-on-demand service to MSOs and DBS providers in both domestic and international markets. We earn a percentage of revenue, or “split”, from our content for each pay-per-view, subscription, or video-on-demand transaction that is purchased on our customers’ platform. Revenue growth occurs as we launch our services to new cable MSOs or DBS providers, experience growth in the number of digital subscribers for systems where our services are currently distributed, when we launch additional services with existing cable and DBS providers, when our proportional buy rates improve relative to our competitors, and when there is a general increase in category buys on our customers’ platform. Revenue growth can also occur when operators increase retail prices. Alternatively, our revenue could decline if we experience lower buy rates, if the revenue splits we receive from our customers decline, if our customers remove our channels or VOD content from their platform, if our customers reduce the retail price of our content or if additional competitive channels are added to our customers’ platforms.

Film Production Segment

The Film Production segment has historically derived the majority of its revenue from two principal businesses: (1) the production and distribution of original motion pictures such as “erotic thrillers,” horror movies, and erotic, event styled content (“owned content”); and (2) the licensing of third party films in international and domestic markets where we act as a sales agent for the product (“repped content”). This segment also periodically provides contract film production services to certain major Hollywood studios (“producer-for-hire” arrangements).

Direct-to-Consumer Segment

Our Direct-to-Consumer segment generates revenue primarily by selling monthly memberships to our consumer websites. During fiscal year 2008, we focused our efforts on improving all aspects of our internet product in terms of site design, navigation, features, content and performance in an effort to increase traffic to the website and the conversion of that traffic into paying members. We plan to launch a new version of our primary consumer website during fiscal year 2009 that will provide potential customers with new functionality and the opportunity to participate in a virtual website community. This segment has also recently launched a test initiative related to the development of a set-top box IPTV business model. During January 2008, we acquired certain intellectual property rights to an internet protocol set-top box. Through the set-top box, consumers can access content through the internet and view the content on their television. The service would be provided through a monthly subscription.  We have been incurring costs associated with this initiative which is currently being tested.

21

Critical Accounting Policies

The significant accounting policies set forth in Note 1 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2008, as updated by Note 1 of the Notes to the Condensed Consolidated Financial Statements included herein, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, appropriately represent, in all material respects, the current status of our critical accounting policies, and are incorporated herein by reference.

Transactional TV Segment

The following table sets forth certain financial information for the Transactional TV segment (amounts may not sum due to rounding):

	(In Millions) Quarter Ended September 30,						Quarterly Percent Change		(In Millions) Year-to-Date September 30,						Year-to-Date Percent Change
	2008			2007(1)			‘08 vs’07		2008			2007(1)			‘08 vs’07
Net revenue
VOD	$	5.6		$	4.7		19	%	$	10.8		$	9.3		16	%
PPV - Cable/DBS	5.0			4.9			2	%	10.0			10.2			(2	)%
C-Band and other	0.2			0.4			(50	)%	0.4			0.9			(56	)%
Total	10.8			10.0			8	%	21.3			20.4			4	%
Cost of sales	2.9			2.7			7	%	5.5			5.5			0	%
Gross profit	7.9			7.3			8	%	15.8			14.8			7	%
Gross profit percentage	73		%	73		%			74		%	73		%
Operating expenses	2.4			2.1			14	%	4.8			4.6			4	%
Operating income	$	5.5		$	5.1		8	%	$	11.0		$	10.2		8	%

(1) Net revenue from advertising has been reclassified from PPV - Cable/DBS to C-Band and other revenue to conform with the current period presentation.  Additionally, the Company has reclassified certain prepaid distribution rights amortization from the Transactional TV segment to the Direct-to-Consumer segment to conform with the current period presentation.

Net Revenue

VOD

The 19% and 16% increase in VOD revenue during the current quarter and six month period ended September 30, 2008, respectively, was primarily the result of an improvement in performance on several of the top ten largest cable MSOs in the U.S. The improved performance was primarily the result of the addition of new content packages and improved menu positioning on the related platforms which resulted in overall category growth as well as an increase in our category market share. The current quarter results also included approximately $0.1 million of incremental international VOD revenue.

PPV — Cable/DBS

PPV — Cable/DBS revenue increased during the current quarter ended September 30, 2008 due primarily to the addition of a new channel on the largest U.S. DBS platform during the third quarter of fiscal year 2008. This increase was partially offset by a decline in revenue from the second largest DBS provider in the U.S. from an increase in competition.

22

PPV – Cable/DBS revenue declined during the six month period ended September 30, 2008 due to the above mentioned decline in revenue from the second largest DBS provider in the U.S.  Partially offsetting this decline was an increase in revenue from the above mentioned new channel on the largest DBS platform in the U.S.

C-Band and Other Revenue

The decline in C-Band and other revenue is from the C-Band services that we ceased offering during the third quarter of fiscal year 2008.

Cost of Sales

Our cost of sales consists of expenses associated with our digital broadcast center, satellite uplinking, satellite transponder leases, programming acquisitions, video-on-demand transport, and amortization of content licenses.  These costs also included in-house call center operations related to the C-Band services that we ceased offering during the third quarter of fiscal year 2008.  The increase in cost of sales during the quarter ended September 30, 2008 as compared to the same prior year quarter was due to 1) an increase in transport costs to support the increase in U.S. VOD distribution, 2) an increase in uplink costs to upgrade and improve the related services and service capacity, and 3) an increase in transponder costs to support an additional high definition offering.  These increases in costs were partially offset by a decline in costs from the termination of the C-Band services.  Cost of sales during the six month period ended September 30, 2008 was flat because the increase in costs discussed above were fully offset by the decline in costs from the termination of the C-Band services.

Operating Expenses and Operating Income

The increase in operating expenses during the quarter and six month period ended September 30, 2008 was due to an increase in advertising and promotion costs.  Operating income for the current quarter and six month period ended September 30, 2008 was $5.5 million and $11.0 million, respectively, and increased as compared to $5.1 million and $10.2 million during the same respective periods in the prior year.

Film Production Segment

The following table sets forth certain financial information for the Film Production segment (amounts may not sum due to rounding):

	(In Millions) Quarter Ended September 30,						Quarterly Percent Change		(In Millions) Year-to-Date September 30,						Year-to- Date Percent Change
	2008			2007(1)			‘08 vs’07		2008			2007(1)			‘08 vs’07
Net revenue
Owned content	$	1.7		$	1.4		21	%	$	3.4		$	2.8		21	%
Repped content	0.3			0.5			(40	)%	0.7			1.0			(30	)%
Other revenue	0.1			0.1			0	%	0.2			0.3			(33	)%
Total	2.2			2.0			10	%	4.2			4.1			2	%
Cost of sales	1.0			0.5			#		1.9			1.3			46	%
Gross profit	1.2			1.5			(20	)%	2.4			2.8			(14	)%
Gross profit percentage	55		%	75		%			57		%	68		%
Operating expenses	1.1			1.0			10	%	2.4			2.5			(4	)%
Operating income	$	0.0		$	0.4		#		$	0.0		$	0.3		#

23

(1) Other revenue was previously classified within owned content revenue and has been reclassified to conform with the current period presentation.

# Change is in excess of 100%.

Net Revenue

Owned Content

Revenue increased during the quarter and six month period ended September 30, 2008 primarily from the delivery of a thirteen episode series to a premium cable channel customer.  We delivered six titles during the first quarter of fiscal year 2009 and seven titles during the current quarter.  Revenue was also higher due to our delivery of VOD content to the second largest DBS provider and other top ten cable MSOs in the U.S.  These increases in revenue were partially offset by 1) a decline in revenue from a large pay-per-view aggregator, 2) a decline in horror film revenue related to a home video and VOD arrangement with a mainstream distributor, and 3) lower revenue from the largest DBS provider in the U.S. due to a change in the location of our content within that provider’s electronic programming guide.

Repped Content

Repped content revenue includes revenue from the licensing of film titles that we represent (but do not own) under sales agency relationships with various independent film producers. The decline in revenue is primarily related to the impact of unfavorable economic conditions on the independent film market.

Other Revenue

Other revenue relates to amounts earned through producer-for-hire arrangements, music royalty fees and the delivery of other miscellaneous film materials to distributors.  Other revenue during the quarter and six month period ended September 30, 2008 continues to represent an immaterial amount of revenue.

Cost of sales

Our cost of sales is comprised of the amortization of our owned content film costs as well as delivery and distribution costs related to that content. These expenses also include the costs we incur to provide producer-for-hire services.  There is no significant cost of sales related to the repped content business.

The increase in cost of sales during the quarter and six month period ended September 30, 2008 as compared to the same prior year periods is primarily due to higher film cost amortization related to the delivery of titles from a thirteen episode series.  Additionally, the prior year results included a larger proportion of revenue from older titles whose film costs had been fully amortized.  This resulted in an unusually low film cost amortization during the quarter and six month period ended September 30, 2007.  Film cost amortization as a percentage of the related owned content revenue during the quarter and six month period ended September 30, 2008 was 44% and 42%, respectively, as compared to 27% and 34% during the quarter and six month period ended September 30, 2007, respectively.

Operating Expenses and Operating Income

Operating expenses increased during the quarter ended September 30, 2008 as compared to the same prior year quarter from our efforts to expand into DVD retail markets with our repped content and from an impairment charge incurred for unrecoupable costs.  The increase in costs was primarily offset by a reduction in the earn-out fee which the Company is not accruing because it does not expect that the earn-out targets will be achieved.  The Film Production’s operating income was break-even during the quarter ended September 30, 2008 as compared to operating income of $0.4 million in the same prior year quarter.

The decrease in operating expenses during the six month period ended September 30, 2008 is primarily due to a decline in the previously mentioned earn-out accrual.  This decline was partially offset by costs incurred for the repped content DVD efforts.  The Film Production segment’s operating income was break-even

24

during the six month period ended September 30, 2008 as compared to operating income of $0.3 million during the same period in the prior year.

Direct-to-Consumer Segment

The following table sets forth certain financial information for the Direct-to-Consumer segment (amounts may not sum due to rounding):

	(In Millions) Quarter Ended September 30,						Quarterly Percent Change		(In Millions) Year-to-Date September 30,						Year-to- Date Percent Change
	2008			2007(1)			‘08 vs’07		2008			2007(1)			‘08 vs’07
Net revenue
Net membership	$	0.3		$	0.3		0	%	$	0.7		$	0.7		0	%
Other	0.1			0.1			0	%	0.1			0.2			(50	)%
Total	0.4			0.4			0	%	0.9			0.9			0	%
Cost of sales	0.5			0.2			#		0.9			0.4			#
Gross profit	(0.1		)	0.2			#		(0.1		)	0.5			#
Gross profit percentage	^			50		%			^			56		%
Operating expenses	0.5			0.2			#		1.1			0.4			#
Operating (loss) income	$	(0.7	)	$	0.1		#		$	(1.2	)	$	0.1		#

(1) We have reclassified certain prepaid distribution rights amortization from the Transactional TV segment to the Direct-to-Consumer segment to conform with the current period presentation.

# Change is in excess of 100%.

^ Information is not meaningful.

Net Revenue

Revenue from our Direct-to-Consumer segment primarily consists of amounts earned through the provision of internet subscriptions to customers.  Net membership revenue during the quarter and six month period ended September 30, 2008 was consistent with the same prior year periods.

Other revenue has been consistent and comparable with prior periods.  This revenue primarily relates to the sale of content to other webmasters, the distribution of our website to the LodgeNet Entertainment Corporation customer base, and revenue from the distribution of our content through wireless platforms.

Cost of Sales

Cost of sales consists of expenses associated with credit card processing, bandwidth, traffic acquisition, content and depreciation of assets.  These costs also include expenses incurred in connection with our efforts to launch a test IPTV business model and primarily include the initial employee, depreciation, amortization and travel costs incurred for the future distribution of content through that product line.

The Direct-to-Consumer segment’s cost of sales increased during the quarter and six month period ended September 30, 2008 as a result of additional costs incurred for the test IPTV business model.

25

Operating Expenses and Operating Income (Loss)

Operating expenses increased during the quarter and six month period ended September 30, 2008 as compared to the same prior year periods due to additional costs incurred in connection with the test IPTV business model.  We incurred an operating loss of $0.7 million and $1.2 million for the quarter and six month period ended September 30, 2008 as compared to an operating income of $0.1 million in each of the quarter and six month period ended September 30, 2007.

Corporate Administration Segment

The following table sets forth certain financial information for the Corporate Administration segment:

	(In Millions) Quarter Ended September 30,				Quarterly Percent Change		(In Millions) Year-to-Date September 30,				Year-to-Date Percent Change
	2008		2007		’08 vs’07		2008		2007		‘08 vs’07
Operating expenses	$	2.7	$	2.4	13	%	$	5.6	$	5.2	8	%

Expenses related to the Corporate Administration segment include all costs associated with the operation of the public holding company, New Frontier Media, Inc., which are not directly allocable to the Transactional TV, Film Production, and Direct-to-Consumer segments. These costs include, but are not limited to, legal and accounting expenses, human resources and training, insurance, registration and filing fees with NASDAQ, executive employee costs and the SEC, investor relations, and printing costs associated with our public filings and shareholder communications.

Corporate administration expenses incurred during the quarter and six month period ended September 30, 2008 increased as compared to the same prior year periods from 1) an increase in travel and administrative costs in connection with our international expansion efforts, and 2) an increase in third party advisor fees.

Liquidity and Capital Resources

Our current priorities for the use of our cash are:

· investments in processes intended to improve the quality and marketability of our products;

· funding the operations of the set-top box IPTV business within our Direct-to-Consumer segment; and

· funding our operating and capital requirements.

We believe that existing cash and anticipated cash generated from operations will be sufficient to satisfy our operating requirements for the foreseeable future, and we believe that any foreseeable capital expenditures, content licensing, film production costs and set-top box purchases that may be incurred can be financed through our current existing cash and investments, our expected cash flows from operations and available borrowing facilities.

Sources and Uses of Cash

Cash Flows from Operating and Investing Activities

Our cash flows from operating and investing activities are summarized as follows (amounts in table may not sum due to rounding):

	(In Millions) Six Months Ended September 30,
	2008			2007
Net cash provided by operating activities	$	6.0		$	0.9
Cash flows from investing activities:
Purchase of investments available-for-sale	(1.7		)	(2.7		)
Redemption of investments available-for-sale	1.2			7.5
Purchases of equipment and furniture	(2.2		)	(1.2		)
Purchases of intangible assets	(0.7		)	—
Payment of related party note arising from business acquisition	(0.0		)	(0.6		)
Net cash provided by (used in) investing activities	$	(3.5	)	$	3.1

26

The increase in cash provided by operating activities during the six month period ended September 30, 2008 as compared to the same prior year period is primarily from the following:

·   an increase in cash flows from improved efficiencies related to the collection of accounts receivable in our Transactional TV and Film Production segments;

·   an increase in cash flows arising from lower fiscal year 2008 bonus amounts that were paid during the first quarter of fiscal 2009; and

·   an increase in cash flows from the decline in owned and producer-for-hire content creation within the Film Production segment.

Cash used in investing activities was $3.5 million during the six month period ended September 30, 2008 as compared to cash provided by investing activities of $3.1 million in the same prior year period.  We used approximately $0.5 million of cash for net purchases of investments.  Approximately $2.2 million of cash was used for capital expenditures to acquire additional electronic storage equipment for our Transactional TV segment and to upgrade certain administrative hardware and software.  We also used approximately $0.7 million to purchase intangible assets within our Direct-to-Consumer segment.  We made no material related party payments during the first half of fiscal year 2009.

Cash Flows from Financing Activities

Our cash flows from financing activities are as follows (amounts in table may not sum due to rounding):

	(In Millions) Quarter Ended September 30,
	2008			2007
Cash flows from financing activities:
Proceeds from exercise of stock options/warrants	$	—		$	0.5
Purchase of common stock	(4.3		)	(3.6		)
Payment of dividends	(3.0		)	(6.0		)
Excess tax benefit from option/warrant exercise	—			0.0
Net cash used in financing activities	$	(7.3	)	$	(9.2	)

Net cash used in financing activities during the current quarter includes $3.0 million in payments for cash dividends and $4.3 million for the purchase of approximately 1.1 million shares of our common stock through our stock repurchase program.

Stock Repurchase Plan and Dividends

In December 2005, our Board of Directors approved a 2.0 million share repurchase plan to be executed over 30 months, and we purchased approximately 0.9 million shares through the original plan. In June 2008, our Board of Directors extended the plan through June 2010.  During the six month period ended September 30, 2008, we repurchased approximately 1.1 million shares for a total purchase price of approximately $4.3 million. We repurchased approximately $3.6 million of common stock during the six month period ended September 30, 2007.

Our Board of Directors declared a cash dividend of $0.125 per share of common stock during the fourth quarter of fiscal year 2008, and we paid approximately $3.0 million for this cash dividend in April 2008.  The Board of Directors has not declared a dividend during fiscal year 2009, and the payment of future dividends is at the discretion of the Board of Directors.

27

Borrowing Arrangements

In July 2008, we obtained a $9.0 million line of credit from an outside financial institution. Amounts borrowed under the line of credit can be used to support our short-term working capital needs. The line of credit is secured by our trade accounts receivable and will mature in July 2009. The interest rate applied to borrowings under the line of credit is based on the greater of the current prime rate less 0.13% or 5.75%. The terms of the line of credit include certain defined negative and affirmative covenants customary for facilities of this type, and we were in compliance with the covenants at September 30, 2008. We have made no borrowings under the line of credit.

Commitments and Contingencies

As part of the MRG Entertainment, Inc. (“MRG”) acquisition that occurred in fiscal year 2006, we entered into an earn-out arrangement which provides for three additional earn-out payments totaling $2.0 million payable to the selling shareholders of MRG over a three year term if certain performance targets as defined by the purchase agreement are achieved each year. The 2006 calendar year earn-out target was exceeded and the amount due to the former principals of MRG of approximately $0.7 million was paid in May 2007.

During the first nine months of calendar year 2007, we estimated that the second annual earn-out target for the twelve months ended December 31, 2007 would be met. However, actual results for MRG were not sufficient to achieve the second annual performance target. As a result, the previously accrued earn-out liability of approximately $0.5 million was reversed. The second annual earn-out payment could still be obtained by the selling shareholders of MRG if the performance results in year three of the earn-out period exceed the related year three target by an amount greater than the year two target shortfall. If actual performance or estimates for the twelve month period ending December 31, 2008 indicate that an overachievement equal to the shortfall in 2007 is likely to occur, we may be required to record the earn-out expenses that were reversed in subsequent future periods. We do not believe that the year three earn-out or recoupment of the year two earn-out is probable based on current estimates and historical performance data. As a result, we have not accrued any earn-out amounts at September 30, 2008.

In connection with our adoption of FIN 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, we have a $1.8 million liability recorded for unrecognized tax benefits at September 30, 2008. Approximately $1.6 million of the liability is expected to be settled within one year and has been classified as a current liability within taxes payable. Please refer to Note 10 — Income Taxes within the Condensed Consolidated Financial Statements for additional detail on the $1.8 million liability.

In August, September and October of 2008, certain executive officers and other key employees executed new or amended employment contracts with the Company. The terms and conditions of the amended contracts are materially equivalent to the original agreements. The impact of the new and amended contracts on the Company’s contractual future obligations is to increase the amounts by $0.2 million, $0.9 million and $0.9 million in each of the fiscal years ended March 31, 2009, 2010 and 2011, respectively.

Recent Accounting Pronouncements

For a discussion of the recent accounting pronouncements related to our operations, please refer to the related information provided under Note 1 — Business and Summary of Significant Accounting Policies to the accompanying Condensed Consolidated Financial Statements, which information is incorporated herein by reference.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Market Risk. The Company’s exposure to market risk is principally confined to cash in the bank, money market accounts and certificates of deposit, which have short maturities and, therefore, minimal and immaterial market risk.

Interest Rate Sensitivity. As of November 1, 2008, the Company had cash in checking and money market accounts, certificates of deposits, and fixed income debt securities. Because of the short maturities of these instruments, a sudden change in market interest rates would not have a material impact on the fair value of these assets.

As of November 1, 2008, the Company had no borrowings under its line of credit and so a sudden change in the prime rate would not have a material impact on the Company’s results of operations.

Foreign Currency Exchange Risk. The Company does not have any material foreign currency transactions.

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ITEM 4. CONTROLS AND PROCEDURES.

(a) Disclosure Controls and Procedures. Our Company’s management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our Company’s “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and the Chief Financial Officer concluded that, as of September 30, 2008, the Company’s disclosure controls and procedures were effective.

(b) Internal Controls. There were no changes in our internal control over financial reporting that occurred during our second fiscal quarter of 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1A. RISK FACTORS.

In addition to the other information set forth below and elsewhere in this report, you should carefully consider the factors discussed in Part I, Item 1A Risk Factors in our Annual Report on Form 10-K for the year ended March 31, 2008, as such risk factors have been updated by the filing with the SEC of subsequent periodic and current reports from time to time, which factors could materially affect our business, financial condition, or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or reporting results.

Current market volatility and difficult conditions in the financial services markets may materially and adversely impact our business and results of operations.

The global capital and credit markets have deteriorated significantly in recent months, resulting in the failure of major financial institutions, the reluctance of other major financial institutions to lend money, an increase in commercial and consumer delinquencies, a lack of consumer confidence, and a widespread reduction generally of business activity. If these conditions continue, which may be likely for the foreseeable future, or worsen, our ability to borrow funds or obtain other financing on terms acceptable to us could be materially adversely affected.  These conditions could also, among other things, negatively impact our customers’ ability to pay us, the number of subscribers and purchasers of our products and services, and require us to increase our reserves for bad debt, the occurrence of any or all of which could materially and negatively impact our business, our financial condition and our results of operations.

The loss of any of our current major customers, or our inability to maintain favorable terms with these customers, could have a material adverse affect on our financial position and results of operations.

We currently have agreements with nine of the ten largest U.S. cable MSOs, DISH Network, and DirecTV. Our agreements with these operators may be terminated on relatively short notice without penalty. If one or more of these cable MSO or DBS operators terminates or does not renew our agreements, or does not renew the agreements on terms as favorable as those of our current agreements, our financial position and results of operations could be materially adversely affected. For our fiscal year ended March 31, 2008, the aggregate revenue we received from our major customers (customers that account for 10% or more of our consolidated revenue including Comcast, DISH, DirecTV and Time Warner) was approximately 59% of our total company-wide revenue. For the six month period ended September 30, 2008, the aggregrate revenue we received from our major customers was approximately 65% of total company-wide revenue.

Our failure to meet our performance targets with DirecTV could adversely affect our financial position and results of operations.

Our agreement with DirecTV provided for an automatic one year carriage extension to mid-October 2009 on existing terms for each of our three DirecTV channels that achieved predetermined revenue targets by October 2008. The revenue targets for each channel were not met, however, and DirecTV may therefore seek to negotiate a new agreement with us or it may seek to remove one or more of our channels from its services.  If any such negotiations result in DirecTV removing one or more of our channels from its

29

services, or if it is successful in negotiating terms more favorable to it than under the current agreement, or if it replaced any of our channels with channels of our competitors, our financial position and results of operations could be materially adversely affected.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On December 13, 2005, the Board of Directors of the Company approved the repurchase of 2.0 million shares of common stock to be implemented over 30 months. The Company purchased approximately 0.9 million shares of common stock through this initial plan. In June 2008, the Board of Directors of the Company extended the duration of the plan through June 2010.  During the quarter ended September 30, 2008, the Company purchased shares in connection with the extended program (in thousands, except per share amounts):

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1-31, 2008	—	$	—	—	746
August 1-31, 2008	249	3.98		249	497
September 1-30, 2008	494	3.67		494	3
Total	743	$	3.77	743

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company’s annual meeting of its shareholders was held on August 25, 2008 in Santa Monica, California. The matters submitted for a vote at the meeting and the related election results were as follows:

1. Election of six directors to the Board of Directors to serve for the following year and until their successor is elected:

	For	Withheld	Broker Non-Vote
Michael Weiner	18,586,246	3,214,545	0
Alan L. Isaacman	14,586,756	7,214,035	0
Hiram J. Woo	18,586,455	3,214,336	0
David Nicholas	18,594,697	3,206,094	0
Melissa Hubbard	18,592,847	3,207,944	0
Walter Timoshenko	18,594,679	3,206,112	0

2. Ratification of the appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending March 31, 2009:

For	Against	Abstain	Broker Non-Vote
18,667,717	421,243	2,711,831	0

As a result, all of the matters submitted for a vote at the meeting were approved by the shareholders.

30

ITEM 6. EXHIBITS

Exhibit No.	Exhibit Description
3.01	Amended and Restated Bylaws of New Frontier Media, Inc.
4.01	Rights Agreement, which includes as Appendix A the form of Certificate of Designation, Preferences and Rights of Series A Preferred Stock, as Appendix B the related form of Rights Certificate, and as Appendix C the related Summary of Rights to Purchase Series A Preferred Stock (incorporated by reference to Exhibit 4.01 to Registrant’s Form 8-K (File No. 000-23697) filed August 1, 2008)
10.01	New Frontier Media, Inc. Summary of Director Compensation Arrangements
10.02	Amended and Restated Employment Agreement between New Frontier Media, Inc. and Michael Weiner
10.03	Amended and Restated Employment Agreement between New Frontier Media, Inc. and Grant Williams
10.04	Amended and Restated Employment Agreement between New Frontier Media, Inc. and Ira Bahr
10.05	Amended and Restated Employment Agreement between New Frontier Media, Inc. and Ken Boenish
10.06	Amended and Restated Employment Agreement between New Frontier Media, Inc. and Marc Callipari
10.07	Amended and Restated Employment Agreement between New Frontier Media, Inc. and Scott Piper
31.01	Certification by CEO Michael Weiner pursuant to Rule 13a-14(a)/15d-14(d)
31.02	Certification by CFO Grant Williams pursuant to Rule 13a-14(a)/15d-14(d)
32.01	Certification by CEO Michael Weiner pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.02	Certification by CFO Grant Williams pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

31

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed in its behalf by the undersigned thereunto duly authorized.

	NEW FRONTIER MEDIA, INC.
Dated: November 7, 2008	By:	/s/ Michael Weiner
	Name: Michael Weiner
	Title: Chief Executive Officer

32

EXHIBIT INDEX

Exhibit No.	Exhibit Description
3.01	Amended and Restated Bylaws of New Frontier Media, Inc.
4.01	Rights Agreement, which includes as Appendix A the form of Certificate of Designation, Preferences and Rights of Series A Preferred Stock, as Appendix B the related form of Rights Certificate, and as Appendix C the related Summary of Rights to Purchase Series A Preferred Stock (incorporated by reference to Exhibit 4.01 to Registrant’s Form 8-K (File No. 000-23697) filed August 1, 2008)
10.01	New Frontier Media, Inc. Summary of Director Compensation Arrangements
10.02	Amended and Restated Employment Agreement between New Frontier Media, Inc. and Michael Weiner
10.03	Amended and Restated Employment Agreement between New Frontier Media, Inc. and Grant Williams
10.04	Amended and Restated Employment Agreement between New Frontier Media, Inc. and Ira Bahr
10.05	Amended and Restated Employment Agreement between New Frontier Media, Inc. and Ken Boenish
10.06	Amended and Restated Employment Agreement between New Frontier Media, Inc. and Marc Callipari
10.07	Amended and Restated Employment Agreement between New Frontier Media, Inc. and Scott Piper
31.01	Certification by CEO Michael Weiner pursuant to Rule 13a-14(a)/15d-14(d)
31.02	Certification by CFO Grant Williams pursuant to Rule 13a-14(a)/15d-14(d)
32.01	Certification by CEO Michael Weiner pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.02	Certification by CFO Grant Williams pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

33

EX-3.01

Exhibit 3.01

AMENDED AND RESTATED BYLAWS

OF

NEW FRONTIER MEDIA, INC.

A Colorado Corporation

INDEX TO

AMENDED AND RESTATED BYLAWS OF

NEW FRONTIER MEDIA, INC.

	PAGE
ARTICLE 1 OFFICES	1
SECTION 1.1 PRINCIPAL OFFICE	1
SECTION 1.2 REGISTERED OFFICE	1
ARTICLE 2 SHAREHOLDERS	1
SECTION 2.1 ANNUAL MEETING	1
SECTION 2.2 SPECIAL MEETINGS	1
SECTION 2.3 PLACE OF MEETINGS	2
SECTION 2.4 NOTICE OF MEETING	2
SECTION 2.5 MEETING OF ALL SHAREHOLDERS	3
SECTION 2.6 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE	3
SECTION 2.7 VOTING REQUIRED	3
SECTION 2.8 QUORUM	4
SECTION 2.9 MANNER OF ACTING	4
SECTION 2.10 PROXIES	4
SECTION 2.11 VOTING OF SHARES	4
SECTION 2.12 VOTING OF SHARES BY CERTAIN SHAREHOLDERS	4
SECTION 2.13 INFORMAL ACTION BY SHAREHOLDERS	5
SECTION 2.14 VOTING BY BALLOT	5
SECTION 2.15 CUMULATIVE VOTING	5
ARTICLE 3 BOARD OF DIRECTORS	5
SECTION 3.1 GENERAL POWERS	5
SECTION 3.2 PERFORMANCE OF DUTIES	6
SECTION 3.3 NUMBER, TENURE AND QUALIFICATIONS	6
SECTION 3.4 REGULAR MEETINGS	6
SECTION 3.5 SPECIAL MEETINGS	7
SECTION 3.6 NOTICE	7
SECTION 3.7 QUORUM	7
SECTION 3.8 MANNER OF ACTING	7
SECTION 3.9 INFORMAL ACTION BY DIRECTORS	8
SECTION 3.10 PARTICIPATION BY ELECTRONIC MEANS	8
SECTION 3.11 VACANCIES	8
SECTION 3.12 RESIGNATION	8
SECTION 3.13 REMOVAL	8
SECTION 3.14 COMMITTEES	8
SECTION 3.15 COMPENSATION	9
SECTION 3.16 PRESUMPTION OF ASSENT	9

SECTION 3.17 LIMITATIONS ON LIABILITY	9
ARTICLE 4 OFFICERS	9
SECTION 4.1 NUMBER	9
SECTION 4.2 ELECTION AND TERM OF OFFICE	10
SECTION 4.3 REMOVAL	10
SECTION 4.4 VACANCIES	10
SECTION 4.5 CHIEF EXECUTIVE OFFICER	10
SECTION 4.6 PRESIDENT	10
SECTION 4.7 VICE PRESIDENT	11
SECTION 4.8 SECRETARY	11
SECTION 4.9 TREASURER	11
SECTION 4.10 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS	11
SECTION 4.11 BONDS	12
SECTION 4.12 SALARIES	12
ARTICLE 5 CONTRACTS, LOANS, CHECKS AND DEPOSITS	12
SECTION 5.1 CONTRACTS	12
SECTION 5.2 LOANS	12
SECTION 5.3 CHECKS, DRAFTS, ETC	12
SECTION 5.4 DEPOSITS	12
ARTICLE 6 SHARES, CERTIFICATES FOR SHARES AND TRANSFER OF SHARES	13
SECTION 6.1 REGULATION	13
SECTION 6.2 CERTIFICATES FOR STOCK	13
SECTION 6.3 CANCELLATION OF CERTIFICATES	13
SECTION 6.4 LOST, STOLEN OR DESTROYED CERTIFICATES	14
SECTION 6.5 TRANSFER OF SHARES	14
ARTICLE 7 INDEMNIFICATION	15
SECTION 7.1 INDEMNIFICATION	15
SECTION 7.2 RIGHT TO INDEMNIFICATION	16
SECTION 7.3 EFFECT OF TERMINATION OF ACTION	16
SECTION 7.4 GROUPS AUTHORIZED TO MAKE INDEMNIFICATION DETERMINATION	16
SECTION 7.5 COURT–ORDERED INDEMNIFICATION	17
SECTION 7.6 ADVANCE OF EXPENSES	17
SECTION 7.7 ADDITIONAL INDEMNIFICATION TO CERTAIN PERSONS OTHER THAN DIRECTORS	17
SECTION 7.8 WITNESS EXPENSES	17
SECTION 7.9 REPORT TO SHAREHOLDERS	18
SECTION 7.10 PROVISION OF INSURANCE	18

ii

ARTICLE 8 FISCAL YEAR	18
ARTICLE 9 DIVIDENDS	18
ARTICLE 10 CORPORATE SEAL	18
ARTICLE 11 WAIVER OF NOTICE	19
ARTICLE 12 AMENDMENTS	19
ARTICLE 13 EXECUTIVE COMMITTEE	19
SECTION 13.1 APPOINTMENT	19
SECTION 13.2 AUTHORITY	19
SECTION 13.3 TENURE AND QUALIFICATIONS	19
SECTION 13.4 MEETINGS	20
SECTION 13.5 QUORUM	20
SECTION 13.6 INFORMAL ACTION BY EXECUTIVE COMMITTEE	20
SECTION 13.7 VACANCIES	20
SECTION 13.8 RESIGNATIONS AND REMOVAL	20
SECTION 13.9 PROCEDURE	20
ARTICLE 14 EMERGENCY BYLAWS	21

iii

AMENDED AND RESTATED BYLAWS

OF

NEW FRONTIER MEDIA, INC.

A Colorado Corporation

ARTICLE 1

OFFICES

SECTION 1.1 PRINCIPAL OFFICE.

The principal office of the corporation in the state of Colorado shall be located in the city of Boulder, county of Boulder. The corporation may have such other offices, either within or outside of the State of Colorado as the board of directors may designate, or as the business of the corporation may require from time to time.

SECTION 1.2 REGISTERED OFFICE.

The registered office of the corporation, required by the Colorado Business Corporation Act, as amended, to be maintained in the State of Colorado, may be, but need not be, identical with the principal office in the State of Colorado, and the address of the registered office may be changed from time to time by the board of directors.

ARTICLE 2

SHAREHOLDERS

SECTION 2.1 ANNUAL MEETING.

The annual meeting of the shareholders shall be held each year at such time on such day as shall be fixed by the board of directors for the purpose of electing directors and for the transaction of such other business as may properly come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the State of Colorado, such meeting shall be held on the next succeeding business day. If the election of directors shall not be held on the day designated herein for any annual meeting of the shareholders, or at any adjournment thereof, the board of directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as may be convenient.

SECTION 2.2 SPECIAL MEETINGS.

The corporation shall hold a special meeting of shareholders (i) on call of its chief executive officer, president, or board of directors, or (ii) if, subject to the procedures set forth below in this Section 2.2, the corporation receives one or more written demands for the meeting, stating the purpose or purposes for which it is to be held, signed and dated by the holders of

shares representing at least ten percent of all the votes entitled to be cast on any issue proposed to be considered at the meeting.

The corporation’s board of directors shall establish a record date for determining the shareholders entitled to demand in writing a special meeting of shareholders not later than 30 days after the date the corporation confirms that it has received written notice, sent by registered mail to the chair of the board of directors at the corporation’s principal address, from a then existing shareholder that such shareholder intends to make a written demand for a special shareholder meeting and that states the purposes for which it is to be held.  Upon receipt within 70 days of the record date so chosen of one or more written demands for the meeting, stating the purpose or purposes for which it is to be held, signed and dated by the holders of shares representing as of such record date at least ten percent of all the votes entitled to be cast on any issue proposed to be considered at the meeting, the board of directors shall establish pursuant to Section 2.6 hereof a future record date for determining the shareholders entitled to be given notice of and to vote at the special meeting for such purpose or purposes, which record date shall be not more than seventy days and not less than ten days prior to the date on which the action requiring such determination of shareholders is to be taken.  Notwithstanding the foregoing, the corporation’s board of directors shall not be required to establish a record date for determining the shareholders entitled to demand a special meeting of shareholders that is a date within 90 days of the most recently completed annual meeting of shareholders if any of the proposed purposes of the special meeting is to consider or vote upon a matter or issue that was considered at the most recently completed annual meeting of shareholders, or within 75 days of the next regularly scheduled annual meeting of shareholders if any of the proposed purposes of the special meeting will be considered at the next regularly scheduled annual meeting of shareholders.

SECTION 2.3 PLACE OF MEETINGS.

The board of directors may designate any place, either within or outside of the State of Colorado, as the place of meeting for any annual meeting or for any special meeting called by the board of directors. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal office of the corporation in the State of Colorado.

SECTION 2.4 NOTICE OF MEETING.

Written notice stating the place, day and hour of the meeting of shareholders and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall, unless otherwise prescribed by statute, be delivered not less than ten nor more than sixty days before the date of the meeting, either personally or by mail, by or at the direction of the chief executive officer, the president, or the secretary, or the officer or other persons calling the meeting, to each shareholder of record entitled to vote at such meeting; provided, however, that if the authorized shares of the corporation are to be increased, at least thirty days’ notice shall be given, and if sale of all or substantially all assets are to be voted upon, at least twenty days’ notice shall be given. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his or her address as it appears on the stock transfer books of the corporation, with postage thereon prepaid.

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SECTION 2.5 MEETING OF ALL SHAREHOLDERS.

If all of the shareholders shall meet at any time and place, either within or outside of the State of Colorado, and consent to the holding of a meeting at such time and place, such meeting shall be valid without call or notice, and at such meeting any corporate action may be taken.

SECTION 2.6 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.

For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other purpose, the board of directors of the corporation may provide that the share transfer books shall be closed for a stated period but not to exceed, in any case, fifty days. If the share transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days immediately preceding such meeting. In lieu of closing the share transfer books, the board of directors may fix in advance a date as the record date for any such determination of shareholders (other than one involving a purchase, redemption, or other acquisition of the of the corporation’s shares), such date in any case to be not more than seventy days and, in case of a meeting of shareholders, not less than ten days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If the share transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the board of directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section, such determination shall apply to any adjournment thereof.

SECTION 2.7 VOTING REQUIRED.

The officer or agent having charge of the stock transfer books for shares of the corporation shall make, beginning the earlier of ten days before such meeting of shareholders or two business days after notice of the meeting is given and continuing through the meeting, a complete record of the shareholders entitled to vote at each meeting of shareholders or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each. The record, for such required period, shall be kept on file at the principal office of the corporation, whether within or outside of the State of Colorado, and shall be subject to inspection by any shareholder for any purpose germane to the meeting at any time during usual business hours during such period. Such record shall be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting for the purposes thereof.

The original stock transfer books shall be the prima facie evidence as to who are the shareholders entitled to examine the record or transfer books or to vote at any meeting of shareholders.

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SECTION 2.8 QUORUM.

One-third of the issued and outstanding shares of the corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders, except as otherwise provided by the Colorado Business Corporation Act, as amended, and the Articles of Incorporation. In the absence of a quorum at any such meeting, a majority of the shares so represented may adjourn the meeting from time to time for a period not to exceed sixty days without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal during such meeting of that number of shareholders whose absence would cause there to be less than a quorum.

SECTION 2.9 MANNER OF ACTING.

If a quorum is present, action on any matter at a meeting other than the election of directors is approved if a majority of the shares represented at the meeting and entitled to vote on the subject matter approve the action, unless the vote of a greater proportion or number or voting by classes is otherwise required by statute or by the Articles of Incorporation or these bylaws.  If a quorum is present and the matter presented at the meeting is an election of directors, that number of candidates equaling the number of directors to be elected, having the highest number of votes cast in favor of their election, are elected to the board of directors.

SECTION 2.10 PROXIES.

At all meetings of shareholders a shareholder may vote in person or by proxy executed in writing by the shareholder or by a duly authorized attorney-in-fact. Such proxy shall be filed with the secretary of the corporation before or at the time of the meeting. No proxy shall be valid after eleven months from the date of the execution, unless otherwise provided in the proxy.

SECTION 2.11 VOTING OF SHARES.

Unless otherwise provided by these bylaws or the Articles of Incorporation, each outstanding share entitled to vote shall be entitled to one vote upon each matter submitted to vote at a meeting of shareholders, and each fractional share shall be entitled to a corresponding fractional vote on each such matter.

SECTION 2.12 VOTING OF SHARES BY CERTAIN SHAREHOLDERS.

Shares standing in the name of another corporation may be voted by such officer, agent or proxy as the bylaws of such corporation may prescribe, or, in the absence of such provision, as the board of directors of such other corporation may determine.

Shares standing in the name of a deceased person, a minor ward or an incompetent person, may be voted by an administrator, executor, court appointed guardian or conservator, either in person or by proxy without a transfer of such shares into the name of such administrator, executor, court appointed guardian or conservator. Shares standing in the name of

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a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him or her without a transfer of such shares into his or her name.

Shares standing in the name of a receiver may be voted by such receiver and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into the trustee name if authority so to do be contained in an appropriate order of the court by which such receiver was appointed.

A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred.

Neither shares of its own stock belonging to this corporation, nor shares of its own stock held by it in a fiduciary capacity, nor shares of its own stock held by another corporation if the majority of shares entitled to vote for the election of directors of such corporation is held by this corporation may be voted, directly or indirectly, at any meeting and shall not be counted in determining the total number of outstanding shares at any given time.

Redeemable shares which have been called for redemption shall not be entitled to vote on any matter and shall not be deemed outstanding shares on and after the date on which written notice of redemption has been mailed to shareholders and a sum sufficient to redeem such shares has been deposited with a bank or trust company with irrevocable instruction and authority to pay the redemption price to the holders of the shares upon surrender of certificates therefor, if certificates have been issued in respect thereof, or confirmation of a notation of cancellation of such shares on the books and records of the corporation, if uncertificated.

SECTION 2.13 INFORMAL ACTION BY SHAREHOLDERS.

Any action required or permitted to be taken at a meeting of the shareholders may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof.

SECTION 2.14 VOTING BY BALLOT.

Voting on any question or in any election may be by voice vote unless the presiding officer shall order or any shareholder shall demand that voting be by ballot.

SECTION 2.15 CUMULATIVE VOTING.

Cumulative voting shall not be allowed.

ARTICLE 3

BOARD OF DIRECTORS

SECTION 3.1 GENERAL POWERS.

The business and affairs of the corporation shall be managed by its board of directors.

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SECTION 3.2 PERFORMANCE OF DUTIES.

A director of the corporation shall perform his or her duties as a director, including his or her duties as a member of any committee of the board upon which he or she may serve, in good faith, in a manner he or she reasonably believes to be in the best interests of the corporation, and with such care as an ordinarily prudent person in a like position would use under similar circumstances. In performing his or her duties, a director shall be entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, in each case prepared or presented by persons and groups listed in paragraphs (A), (B), and (C) of this Section 3.2; but he or she shall not be considered to be acting in good faith if he or she has knowledge concerning the matter in question that would cause such reliance to be unwarranted. A person who so performs his or her duties shall not have any liability by reason of being or having been a director of the corporation. Those persons and groups on whose information, opinions, reports, and statements a director is entitled to rely upon are:

A.            One or more officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the matter presented;

B.            Counsel, public accountants, or other persons as to matters which the director reasonably believes to be within such persons’ professional or expert competence; or

C.            A committee of the board upon which he or she does not serve, duly designated in accordance with the provision of the articles of incorporation or the bylaws, as to matters within its designated authority, which committee the director reasonably believes to merit confidence.

SECTION 3.3 NUMBER, TENURE AND QUALIFICATIONS.

The number of directors of the corporation shall not be less than three (3) nor more than seven (7). The number of directors of the corporation shall be fixed from time to time by resolution of the board of directors, but in no instance shall there be less than three (3) directors unless there are fewer than three (3) shareholders, in which event the number of directors may be the same as the number of shareholders. Each director shall hold office until the next annual meeting of shareholders or until his or her successor shall have been elected and qualified. Directors need not be residents of the state of Colorado or shareholders of the corporation.

There shall be a chairman of the board, who shall be elected from among the directors. He or she shall preside at all meetings of the shareholders and of the board of directors unless unavailable. He or she shall have such other powers and duties as may be prescribed by the board of directors.

SECTION 3.4 REGULAR MEETINGS.

 A regular meeting of the board of directors shall be held without other notice than this bylaw immediately after, and at the same place as, the annual meeting of shareholders. The board of directors may provide, by resolution, the time and place, either within or without the state of Colorado, for the holding of additional regular meetings without other notice than such resolution.

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SECTION 3.5 SPECIAL MEETINGS.

Special meetings of the board of directors may be called by or at the request of the chief executive officer, the president or any two directors. The person or persons authorized to call special meetings of the board of directors may fix any place, either within or without the state of Colorado, as the place for holding any special meeting of the board of directors called by them.

SECTION 3.6 NOTICE.

Written notice of any special meeting of directors shall be given as follows:

By mail to each director at his or her business address at least three days prior to the meeting;

By personal delivery or telegram at least twenty-four hours prior to the meeting to the business address of each director, or in the event such notice is given on a Saturday, Sunday or holiday, to the residence address of each director; or

By any other method in writing permitted under Section 17-101-402 of the Colorado Business Corporation Act, as amended.

If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. If another permitted method is used, such notice shall be effective as provided in Section 7-101-402 of the Colorado Business Corporation Act, as amended.

Any director may waive notice of any meeting. The attendance of a director at any meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors need be specified in the notice or waiver of notice of such meeting.

SECTION 3.7 QUORUM.

A majority of the number of directors fixed by or pursuant to Section 3.2 of this Article 3 shall constitute a quorum for the transaction of business at any meeting of the board of directors, but if less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice.

SECTION 3.8 MANNER OF ACTING.

Except as otherwise required by law or by the Articles of Incorporation, the act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors.

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SECTION 3.9 INFORMAL ACTION BY DIRECTORS.

Any action required or permitted to be taken by the board of directors or by a committee thereof at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors or all of the committee members entitled to vote with respect to the subject matter thereof.

SECTION 3.10 PARTICIPATION BY ELECTRONIC MEANS.

Any members of the board of directors or any committee designated by such board may participate in a meeting of the board of directors or committee by means of telephone conference or similar communications equipment by which all persons participating in the meeting can hear each other at the same time. Such participation shall constitute presence in person at the meeting.

SECTION 3.11 VACANCIES.

Any vacancy occurring in the board of directors may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the board of directors. A director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office. Any directorship to be filled by reason of an increase in the number of directors may be filled by election by the board of directors for a term of office continuing only until the next election of directors by the shareholders.

SECTION 3.12 RESIGNATION.

Any director of the corporation may resign at any time by giving written notice to the president or the secretary of the corporation. The resignation of any director shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. When one or more directors shall resign from the board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective.

SECTION 3.13 REMOVAL.

Any director or directors of the corporation may be removed at any time, with or without cause, in the manner provided in the Colorado Business Corporation Act, as amended.

SECTION 3.14 COMMITTEES.

By resolution adopted by a majority of the board of directors, the directors may designate two or more directors to constitute a committee, any of which shall have such authority in the management of the corporation as the board of directors shall designate and as shall be prescribed by the Colorado Business Corporation Act, as amended.

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SECTION 3.15 COMPENSATION.

By resolution of the board of directors and irrespective of any personal interest of any of the members, each director may be paid his or her expenses, if any, of attendance at each meeting of the board of directors, and may be paid a stated salary as director or a fixed sum for attendance at each meeting of the board of directors or both. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor.

SECTION 3.16 PRESUMPTION OF ASSENT.

A director of the corporation who is present at a meeting of the board of directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his or her dissent shall be entered in the minutes of the meeting or unless he or she shall file his or her written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.

SECTION 3.17 LIMITATIONS ON LIABILITY.

To the fullest extent permitted by the Colorado Business Corporation Act, as amended, a director of the corporation shall not be liable to the corporation or its shareholders for monetary damages for any action taken or any failure to take any action as a director. Notwithstanding the foregoing, a director will have liability for monetary damages for a breach or failure which involves: (i) a violation of criminal law; (ii) a transaction from which the director derived an improper personal benefit, either directly or indirectly; (iii) distributions in violation of the Colorado Business Corporation Act, as amended, or the Articles of Incorporation of the corporation (but only to the extent provided by law); (iv) willful misconduct or disregard for the best interests of the corporation concerning any acts or omissions concerning any proceeding other than in the right of the corporation or a shareholder; or (v) reckless, malicious or wanton acts or omissions concerning any proceeding other than in the right of the corporation or of a shareholder. No repeal, amendment or modification of this Article, whether direct or indirect, shall eliminate or reduce its effect with respect to any act or omission of a director of the corporation occurring prior to such repeal, amendment or modification.

ARTICLE 4

OFFICERS

SECTION 4.1 NUMBER.

The officers of the corporation shall be a president, a secretary, and a treasurer, each of whom shall be elected by the board of directors. Such other officers as may be deemed necessary may be elected or appointed by the board of directors. Any two or more offices may be held by the same person.

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SECTION 4.2 ELECTION AND TERM OF OFFICE.

The officers of the corporation to be elected by the board of directors shall be elected annually by the board of directors at the first meeting of the board of directors held after the annual meeting of the shareholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as practicable. Each officer shall hold office until his or her successor shall have been duly elected and shall have qualified or until his or her death or until he or she shall resign or shall have been removed in the manner hereinafter provided.

SECTION 4.3 REMOVAL.

Any officer or agent may be removed by the board of directors whenever in its judgment the best interests of the corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights.

SECTION 4.4 VACANCIES.

A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the board of directors for the unexpired portion of the term.

SECTION 4.5 CHIEF EXECUTIVE OFFICER

The chief executive officer (the “CEO”) shall be the chief executive officer of the corporation, shall have overall responsibility and authority for management of the operations of the corporation (subject to the authority of the board of directors), shall preside at all meetings of the shareholders if the chairman of the board of directors is unavailable, unless unavailable.  He or she may sign, with the secretary or any other proper officer of the corporation thereunto authorized by the board of directors, certificates for shares of the corporation and deeds, mortgages, bonds, contracts, or other instruments which the board of directors has authorized to be executed, excepted in cases where the signing and execution thereof shall be expressly delegated by the board of directors or by these bylaws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed.

SECTION 4.6 PRESIDENT.

The president shall, subject to the control of the board of directors and the CEO, in general supervise the business and affairs of the corporation. He or she shall, when present, and in the absence of a chairman of the board and CEO, preside at all meetings of the shareholders and of the board of directors.  Her or she shall, in the absence of the CEO or in the event of the CEO’s death, inability or refusal to act, perform all duties of the CEO, and when so acting, shall have all the powers of and be subject to all of the restrictions on the CEO.  He or she may sign, with the secretary or any other proper officer of the corporation thereunto authorized by the board of directors, certificates for shares of the corporation and deeds, mortgages, bonds, contracts, or other instruments which the board of directors has authorized to be executed, excepted in cases where the signing and execution thereof shall be expressly delegated by the board of directors or by these bylaws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties

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incident to the office of president and such other duties as may be prescribed by the board of directors from time to time.

SECTION 4.7 VICE PRESIDENT.

If elected or appointed by the board of directors or any senior officer, the vice president (or in the event there be more than one vice president, the vice presidents in the order designated at the time of their election or appointment, or in the absence of any designation, then in the order of their election or appointment) shall, in the absence of the president or in the event of his or her death, inability or refusal to act, perform all duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. Any vice president may sign, with the treasurer or an assistant treasurer or the secretary or an assistant secretary, certificates for shares of the corporation; and shall perform such other duties as from time to time may be assigned to him or her by the CEO, the president or by the board of directors.

SECTION 4.8 SECRETARY.

The secretary shall: (a) keep the minutes of the proceedings of the shareholders and of the board of directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation and see that the seal of the corporation is affixed to all documents the execution of which on behalf of the corporation under its seal is duly authorized; (d) keep a register of the post office address of each shareholder which shall be furnished to the secretary by such shareholder; (e) sign with the chairman or vice chairman of the board of directors, or the CEO, the president, or a vice president, certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the board of directors; (f) have general charge of the stock transfer books of the corporation; and (g) in general perform all duties incident to the office of secretary and such other duties as from time to time may be assigned to him or her by the CEO, the president or by the board of directors.

SECTION 4.9 TREASURER.

The treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; (b) receive and give receipts for moneys due and payable to the corporation from any source whatsoever, and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of Article 5 of these bylaws; and (c) in general perform all of the duties incident to the office of treasurer and such other duties as from time to time may be assigned to him or her by the CEO, the president or by the board of directors.

SECTION 4.10 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS.

The assistant secretaries, when authorized by the board of directors, may sign with the chairman or vice chairman of the board of directors or the CEO, the president or a vice president certificates for shares of the corporation the issuance of which shall have been authorized by a resolution of the board of directors. The assistant secretaries and assistant treasurers, in general,

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shall perform such duties as shall be assigned to them by the secretary or the treasurer, respectively, or by the CEO, the president or the board of directors.

SECTION 4.11 BONDS.

If the board of directors by resolution shall so require, any officer or agent of the corporation shall give bond to the corporation in such amount and with such surety as the board of directors may deem sufficient, conditioned upon the faithful performance of their respective duties and offices.

SECTION 4.12 SALARIES.

The salaries of the officers shall be fixed from time to time by the board of directors or its designee and no officer shall be prevented from receiving such salary by reason of the fact that he or she is also a director of the corporation.

ARTICLE 5

CONTRACTS, LOANS, CHECKS AND DEPOSITS

SECTION 5.1 CONTRACTS.

The board of directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances.

SECTION 5.2 LOANS.

No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the board of directors. Such authority may be general or confined to specific instances.

SECTION 5.3 CHECKS, DRAFTS, ETC.

All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by resolution of the board of directors.

SECTION 5.4 DEPOSITS.

All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositories as the board of directors may select.

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ARTICLE 6

SHARES, CERTIFICATES FOR SHARES AND TRANSFER OF SHARES

SECTION 6.1 REGULATION.

The board of directors may make such rules and regulations as it may deem appropriate concerning the issuance, transfer and registration of certificates for shares of the corporation, including the appointment of transfer agents and registrars.

SECTION 6.2 CERTIFICATES FOR STOCK.

The shares of the corporation’s stock may be certificated or uncertificated, as provided under Colorado law, and shall be entered in the books of the corporation and registered as they are issued.  Any certificates issued to any shareholder of the corporation shall be respectively numbered serially for each class of shares, or series thereof, as they are issued, shall be impressed with the corporate seal or a facsimile thereof, if applicable, and shall be signed by the chairman or vice-chairman of the board of directors or by the president or a vice president and by the treasurer or an assistant treasurer or by the secretary or an assistant secretary; provided that such signatures may be facsimile if the certificate is counter-signed by a transfer agent, or registered by a registrar other than the corporation itself or its employee.  Each certificate shall state the name of the corporation, the fact that the corporation is organized or incorporated under the laws of the State of Colorado, the name of the person to whom issued, the date of issue, the class (or series of any class), the number of shares represented thereby and the par value of the shares represented thereby or a statement that such shares are without par value.  A statement of the designations, preferences, qualifications, limitations, restrictions and special or relative rights of the shares of each class shall be set forth in full or summarized on the face or back of the certificates which the corporation shall issue, or in lieu thereof, the certificate may set forth that such a statement or summary will be furnished to any shareholder upon request without charge.  Each certificate shall be otherwise in such form as may be prescribed by the board of directors and as shall conform to the rules of any stock exchange on which the shares may be listed.

Within a reasonable time after the issuance or transfer of uncertificated shares, the corporation shall send to the registered owner thereof a written statement that shall set forth all of the information required by the Colorado Business Corporation Act, as amended, and these bylaws to be provided to holders of uncertificated shares, and any restrictions on the transfer or registration of such shares imposed by the corporation’s then-effective articles of incorporation, bylaws and any agreement among shareholders or any agreement between shareholders and the corporation.

The corporation shall not issue certificates representing fractional shares and shall not be obligated to make any transfers creating a fractional interest in a share.  The corporation may, but shall not be obligated to, issue scrip in lieu of any fractional shares, such scrip to have terms and conditions specified by the board of directors.

SECTION 6.3 CANCELLATION OF CERTIFICATES.

All certificates surrendered to the corporation for transfer shall be canceled and no new certificates shall be issued in lieu thereof until the former certificate for a like number of shares

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shall have been surrendered and canceled, except as herein provided with respect to lost, stolen or destroyed certificates.

SECTION 6.4 LOST, STOLEN OR DESTROYED CERTIFICATES.

Any shareholder claiming that his or her certificate for shares is lost, stolen or destroyed may make an affidavit or affirmation of that fact and lodge the same with the secretary of the corporation, accompanied by a signed application for a new certificate.  Thereupon, and upon the giving of a satisfactory bond of indemnity to the corporation not exceeding an amount double the value of the shares as represented by such certificate (the necessity for such bond and the amount required to be determined by the president and treasurer of the corporation), the corporation may issue (i) a new certificate of the same tenor and representing the same number, class and series of shares as were represented by the certificate alleged to be lost, stolen or destroyed; or (ii) uncertificated shares in place of the certificate previously issued by the corporation alleged to have been lost, stolen or destroyed.

SECTION 6.5 TRANSFER OF SHARES.

Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, and evidence of compliance with applicable securities laws and other restrictions, it shall be the duty of the corporation to issue a new certificate or evidence of the issuance of uncertificated shares to the shareholder entitled thereto, cancel the old certificate and record the transaction upon the corporation’s books. Upon the surrender of any certificate for transfer, such certificate shall at once be conspicuously marked on its face “Cancelled” and filed with the permanent stock records of the corporation.

Upon the receipt of proper transfer instructions from the registered owner of uncertificated shares, such uncertificated shares shall be cancelled, issuance of new equivalent uncertificated shares or certificated shares shall be made to the shareholder entitled thereto and the transaction shall be recorded upon the books of the corporation.  If the corporation has a transfer agent or registrar acting on its behalf, the signature of any officer or representative thereof may be in facsimile.

The board of directors may appoint a transfer agent and one or more co-transfer agents and a registrar and one or more co-registrars and may make or authorize such agent to make all such rules and regulations deemed expedient concerning the issue, transfer and registration of shares of stock.

As against the corporation, a transfer of shares can be made only on the books of the corporation and in the manner hereinabove provided, and the corporation shall be entitled to treat the holder of record of any share as the owner thereof and shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the statutes of the State of Colorado.

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ARTICLE 7

INDEMNIFICATION

SECTION 7.1 INDEMNIFICATION.

For purposes of this Article 7, a “Proper Person” means any person (including the estate or personal representative of a director) who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, and whether formal or informal, by reason of the fact that such individual is or was a director, officer, employee, fiduciary or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, fiduciary or agent of any foreign or domestic profit or nonprofit corporation or of any partnership, joint venture, trust, profit or nonprofit unincorporated association, limited liability company, or other enterprise or employee benefit plan.  The corporation shall indemnify any Proper Person against reasonably incurred expenses (including attorneys’ fees), judgments, penalties, fines (including any excise tax assessed with respect to an employee benefit plan) and amounts paid in settlement reasonably incurred by such Proper Person in connection with such action, suit or proceeding if it is determined by the groups set forth in Section 7.4 of this Article 7 that such Proper Person conducted himself in good faith and reasonably believed (i) in the case of conduct in the official capacity of such Proper Person with the corporation, that the conduct of such Proper Person was in the corporation’s best interests; or (ii) in all other cases (except criminal cases), that the conduct of such Proper Person was at least not opposed to the corporation’s best interests; or (iii) in the case of any criminal proceeding, that the Proper Person had no reasonable cause to believe such conduct was unlawful.  Official capacity means, when used with respect to a director, the office of director and, when used with respect to any other Proper Person, the office in a corporation held by the officer or the employment, fiduciary or agency relationship undertaken by the employee, fiduciary, or agent on behalf of the corporation.  Official capacity does not include service for any other domestic or foreign corporation or other person or employee benefit plan.

A director’s conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in the interests of the participants in or beneficiaries of the plan is conduct that satisfies the requirement in (ii) of this Section 7.1.  A director’s conduct with respect to an employee benefit plan for a purpose that the director did not reasonably believe to be in the interests of the participants in or beneficiaries of the plan shall be deemed not to satisfy the requirement of this Section 7.1 that a director acted in good faith.

No indemnification shall be made under this Article 7 to a Proper Person with respect to any claim, issue or matter in connection with a proceeding by or in the right of a corporation in which the Proper Person was adjudged liable to the corporation or in connection with any proceeding charging that the Proper Person derived an improper personal benefit, whether or not involving action in an official capacity, in which such Proper Person was adjudged liable on the basis that such Proper Person derived an improper personal benefit.  Further, indemnification under this Section 7.1 in connection with a proceeding brought by or in the right of the corporation shall be limited to reasonable expenses, including attorneys’ fees, incurred in connection with the proceeding.

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SECTION 7.2 RIGHT TO INDEMNIFICATION.

The corporation shall indemnify any Proper Person who was wholly successful, on the merits or otherwise, in defense of any action, suit, or proceeding as to which such Proper Person was entitled to indemnification under Section 7.l of this Article 7 against expenses (including attorneys’ fees) reasonably incurred by such Proper Person in connection with the proceeding without the necessity of any action by the corporation other than the determination in good faith that the defense has been wholly successful.

SECTION 7.3 EFFECT OF TERMINATION OF ACTION.

The termination of any action, suit or proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent shall not of itself create a presumption that the person seeking indemnification did not meet the standards of conduct described in Section 7.1 of this Article 7.  Entry of a judgment by consent as part of a settlement shall not be deemed an adjudication of liability, as described in Section 7.2 of this Article 7.

SECTION 7.4 GROUPS AUTHORIZED TO MAKE INDEMNIFICATION DETERMINATION.

Except where there is a right to indemnification as set forth in Sections 7.1 or 7.2 of this Article 7 or where indemnification is ordered by a court in Section 7.5 of this Article 7, any indemnification shall be made by the corporation only as determined in the specific case by a proper group that indemnification of the Proper Person is permissible under the circumstances because the Proper Person has met the applicable standards of conduct set forth in Section 7.1 of this Article 7.  This determination shall be made by the board of directors by a majority vote of those present at a meeting at which a Quorum, as defined hereunder, is present.  For purposes of this Article 7, a “Quorum” shall consist of all directors not party to the proceeding.  If a Quorum cannot be obtained, the determination shall be made by a majority vote of a committee of the board of directors designated by the board of directors, which committee shall consist of two or more directors not parties to the proceeding, except that directors who are parties to the proceeding may participate in the designation of directors for the committee.  If a Quorum of the board of directors cannot be obtained and the committee cannot be established, or even if a Quorum is obtained or the committee is designated and a majority of the directors constituting such Quorum or committee so directs, the determination shall be made by (i) independent legal counsel selected by a vote of the board of directors or the committee in the manner specified in this Section 7.4 or, if a Quorum of the full board of directors cannot be obtained and a committee cannot be established, by independent legal counsel selected by a majority vote of the full board of directors (including directors who are parties to the action) or (ii) a vote of the shareholders.

Authorization of indemnification and advance of expenses shall be made in the same manner as the determination that indemnification or advance of expenses is permissible except that, if the determination that indemnification or advance of expenses is permissible is made by independent legal counsel, authorization of indemnification and advance of expenses shall be made by the body that selected such counsel.

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SECTION 7.5 COURT–ORDERED INDEMNIFICATION.

Any Proper Person may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction for mandatory indemnification under Section 7.2 of this Article 7, including indemnification for reasonable expenses incurred to obtain court-ordered indemnification.  If a court determines that the Proper Person is entitled to indemnification under Section 7.2 of this Article 7, the court shall order indemnification, including the Proper Person’s reasonable expenses incurred to obtain court-ordered indemnification.  If the court determines that such Proper Person is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not such Proper Person met the standards of conduct set forth in Section 7.1 of this Article 7 or was adjudged liable in the proceeding, the court may order such indemnification as the court deems proper except that if the Proper Person has been adjudged liable, indemnification shall be limited to reasonable expenses incurred in connection with the proceeding and reasonable expenses incurred to obtain court-ordered indemnification.

SECTION 7.6 ADVANCE OF EXPENSES.

Reasonable expenses (including attorneys’ fees) incurred in defending an action, suit or proceeding as described in Section 7.1 of this Article 7 may be paid by the corporation to any Proper Person in advance of the final disposition of such action, suit or proceeding upon receipt of (i) a written affirmation of such Proper Person’s good faith belief that such Proper Person has met the standards of conduct prescribed by Section 7.1 of this Article 7; (ii) a written undertaking, executed personally or on the Proper Person’s behalf, to repay such advances if it is ultimately determined that such Proper Person did not meet the prescribed standards of conduct (the undertaking shall be an unlimited general obligation of the Proper Person but need not be secured and may be accepted without reference to financial ability to make repayment); and (iii) a determination is made by the proper group (as described in Section 7.4 of this Article 7) that the facts as then known to the group would not preclude indemnification.  Determination and authorization of payments shall be made in the same manner specified in Section 7.4 of this Article 7.

SECTION 7.7 ADDITIONAL INDEMNIFICATION TO CERTAIN PERSONS OTHER THAN DIRECTORS.

In addition to the indemnification provided to officers, employees, fiduciaries or agents because of their status as Proper Persons under this Article 7, the corporation may also indemnify and advance expenses to them if they are not directors of the corporation to a greater extent than is provided in these bylaws, if not inconsistent with public policy, and if provided for by general or specific action of its board of directors or shareholders or by contract.

SECTION 7.8 WITNESS EXPENSES.

The sections of this Article 7 do not limit the corporation’s authority to pay or reimburse expenses incurred by a director in connection with an appearance as a witness in a proceeding at a time when such individual has not been made a named as a defendant or respondent in the proceeding.

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SECTION 7.9 REPORT TO SHAREHOLDERS.

Any indemnification of or advance of expenses to a director in accordance with this Article 7, if arising out of a proceeding by or on behalf of the corporation, shall be reported in writing to the shareholders with or before the notice of the next shareholders’ meeting.  If the next shareholder action is taken without a meeting at the instigation of the board of directors, such notice shall be given to the shareholders at or before the time the first shareholder signs a writing consenting to such action.

SECTION 7.10 PROVISION OF INSURANCE.

By action of the board of directors, notwithstanding any interest of the directors in the action, the corporation may purchase and maintain insurance, in such scope and amounts as the board of directors deems appropriate, on behalf of any person who is or was a director, officer, employee, fiduciary or agent of the corporation, or who, while a director, officer, employee, fiduciary or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, fiduciary or agent of any other foreign or domestic profit or nonprofit corporation or of any partnership, joint venture, trust, profit or nonprofit unincorporated association, limited liability company, other enterprise or employee benefit plan, against any liability asserted against, or incurred by, such individual in that capacity or arising out of such individual’s status as such, whether or not the corporation would have the power to indemnify such individual against such liability under the provisions of Article 7 of these bylaws or applicable law.  Any such insurance may be procured from any insurance company designated by the board of directors of the corporation, whether such insurance company is formed under the laws of Colorado or any other jurisdiction of the United States or elsewhere, including any insurance company in which the corporation has an equity interest or any other interest, through stock ownership or otherwise.

ARTICLE 8

FISCAL YEAR

The fiscal year of the corporation shall end on the last day of March each year.

ARTICLE 9

DIVIDENDS

The board of directors may from time to time declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and its Articles of Incorporation.

ARTICLE 10

CORPORATE SEAL

The board of directors may provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the corporation and the state of incorporation and the words “CORPORATE SEAL.”

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ARTICLE 11

WAIVER OF NOTICE

Whenever any notice is required to be given under the provisions of these bylaws or under the provisions of the Articles of Incorporation or under the provisions of the Colorado Business Corporation Act, as amended, or otherwise, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the event or other circumstance requiring such notice, shall be deemed equivalent to the giving of such notice.

ARTICLE 12

AMENDMENTS

These bylaws may be altered, amended or repealed and new bylaws may be adopted by a majority of the directors present at any meeting of the board of directors of the corporation at which a quorum is present, or by unanimous written consent of the board of directors as provided in Section 3.9 hereof.

ARTICLE 13

EXECUTIVE COMMITTEE

SECTION 13.1 APPOINTMENT.

The board of directors by resolution adopted by a majority of the full board, may designate two or more of its members to constitute an executive committee. The designation of such committee and the delegation thereto of authority shall not operate to relieve the board of directors, or any member thereof, of any responsibility imposed by law.

SECTION 13.2 AUTHORITY.

The executive committee, when the board of directors is not in session, shall have and may exercise all of the authority of the board of directors except to the extent, if any, that such authority shall be limited by the resolution appointing the executive committee and except also that the executive committee shall not have the authority of the board of directors in reference to amending the Articles of Incorporation, adopting a plan of merger or consolidation, recommending to the shareholders the sale, lease or other disposition of all or substantially all of the property and assets of the corporation otherwise than in the usual and regular course of its business, recommending to the shareholders a voluntary dissolution of the corporation or a revocation thereof, or amending the bylaws of the corporation.

SECTION 13.3 TENURE AND QUALIFICATIONS.

Each member of the executive committee shall hold office until the next regular annual meeting of the board of directors following his or her designation and until his or her successor is designated as a member of the executive committee and is elected and qualified.

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SECTION 13.4 MEETINGS.

Regular meetings of the executive committee may be held without notice at such time and places as the executive committee may fix from time to time by resolution. Special meetings of the executive committee may be called by any member thereof upon not less than one day’s notice stating the place, date and hour of the meeting, which notice may be written or oral, and if mailed, shall be deemed to be delivered when deposited in the United States mail addressed to the member of the executive committee at his or her business address. Any member of the executive committee may waive notice of any meeting and no notice of any meeting need be given to any member thereof who attends in person. The notice of a meeting of the executive committee need not state the business proposed to be transacted at the meeting.

SECTION 13.5 QUORUM.

A majority of the members of the executive committee shall constitute a quorum for the transaction of business at any meeting thereof, and action of the executive committee must be authorized by the affirmative vote of a majority of the members present at a meeting at which a quorum is present.

SECTION 13.6 INFORMAL ACTION BY EXECUTIVE COMMITTEE.

Any action required or permitted to be taken by the executive committee at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors entitled to vote with respect to the subject matter thereof.

SECTION 13.7 VACANCIES.

Any vacancy in the executive committee may be filled by a resolution adopted by a majority of the full board of directors.

SECTION 13.8 RESIGNATIONS AND REMOVAL.

Any member of the executive committee may be removed at any time with or without cause by resolution adopted by a majority of the full board of directors. Any member of the executive committee may resign from the executive committee at any time by giving written notice to the president or secretary of the corporation, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

SECTION 13.9 PROCEDURE.

The executive committee shall elect a presiding officer from its members and may fix its own rules of procedure which shall not be inconsistent with these bylaws. It shall keep regular minutes of its proceedings and report the same to the board of directors for its information at the meeting thereof held next after the proceedings shall have been taken.

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ARTICLE 14

EMERGENCY BYLAWS

The emergency bylaws provided in this Article 14 shall be operative during any emergency (as defined in Section 7-102-107(4) of the Colorado Business Corporation Act, as amended) in the conduct of the business of the corporation, notwithstanding any different provision in the preceding bylaws. To the extent not inconsistent with the provisions of this Article 14, the bylaws provided in the preceding articles shall remain in effect during such emergency and upon its termination the emergency bylaws shall cease to be operative.

During any such emergency:

A.A meeting of the board of directors may be called by any officer or director of the corporation. Notice of the time and place of the meeting shall be given by the person calling the meeting to such of the directors as it may be feasible to reach by any available means of communication. Such notice shall be given at such time in advance of the meeting as circumstances permit in the judgment of the person calling the meeting.

B.At any such meeting of the board of directors, a quorum shall consist of the number of directors in attendance at such meeting.

C.The board of directors, either before or during any such emergency, may, effective in the emergency, change the principal office or designate several alternative principal offices or regional offices, or authorize the officers so to do.

D.The board of directors, either before or during any such emergency, may provide, and from time to time modify, lines of succession in the event that during an emergency any or all officers or agents of the corporation shall for any reason be rendered incapable of discharging their duties.

E.No officer, director or employee acting in accordance with these emergency bylaws shall be liable except for willful misconduct.

F.These emergency bylaws shall be subject to repeal or change by further action of the board of directors or by action of the shareholders, but no such repeal or change shall modify any action taken prior to the time of such repeal or change. Any amendment of these emergency bylaws may make any further or different provision that may be practical and necessary for the circumstances of the emergency.

*     *     *     *     *

These Amended and Restated Bylaws are effective as of July 28, 2008, and amend, restate and replace in their entirety the previously effective Third Amended and Restated Bylaws of New Frontier Media, Inc.

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EX-10.01

Exhibit 10.01

NEW FRONTIER MEDIA, INC.
SUMMARY OF
DIRECTOR COMPENSATION ARRANGEMENTS

Each director who is not a New Frontier Media, Inc. employee receives for general board services, including attendance at regular and special board meetings, an annual fee of $80,000, payable in equal quarterly installments. Each such director receives an additional annual fee of $7,500 for each board committee on which the director serves, and the chairman of each committee receives an additional annual fee of $2,500 for such service. Each director is also reimbursed for reasonable expenses incurred in connection with the services provided as a member of the board and its committees.

Subject to our corporate trading policies and general securities laws, each non-employee director is obligated to purchase, in the open market or otherwise during each one-year period beginning immediately after an annual meeting of shareholders, shares of our common stock equaling in value at least 20% of the amount of the annual board service fee. Directors are not permitted to sell or otherwise transfer shares of our common stock while serving as a director if the result would be to reduce the beneficial ownership to below 20,000 shares, and directors are not permitted to sell any shares unless they were acquired two years prior to any such sale.

EX-10.02

Exhibit 10.02

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), dated as of this 29 day of September, 2008 (the “Effective Date”) by and between MICHAEL WEINER, an individual (the “Executive”), and NEW FRONTIER MEDIA, INC., a Colorado corporation with offices at 7007 Winchester Circle, Suite 200, Boulder, CO 80301, as well as its affiliates and subsidiaries whether now in existence or formed in the future. (“NFM”), recites and provides as follows:

WHEREAS, Executive is and has been previously employed by NFM pursuant to one or more employment agreements that are superseded and replaced by this Agreement in their entirety;

WHEREAS, NFM desires to retain the services of Executive, and Executive desires to be employed by NFM, all on the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, NFM and Executive agree as follows:

1.             TERM.  The Term of this Agreement shall begin as of the Effective Date and shall continue until midnight on March 31, 2011, or such date as the Agreement is terminated by either party as hereinafter provided (the “Term”).

2.             TERMS OF EMPLOYMENT.

A.            POSITION AND DUTIES.

(i)            During the Term, Executive shall have the title of Chief Executive Officer and shall perform such executive duties as are commensurate with such title.

(ii)           Executive’s services shall be performed at NFM’s headquarters in Boulder, Colorado.  However, Executive may also be required by his job responsibilities to travel on NFM business, and Executive agrees to do so.

(iii)          During the Term, Executive agrees to devote his full-time and attention to the business and affairs of NFM.  Executive’s employment under this Agreement shall be Executive’s exclusive employment during the Term of this Agreement.  Service on any other company’s board of directors by Executive requires the written consent of the Compensation Committee of the Board of Directors of NFM (“Compensation Committee”).

B.            COMPENSATION.

(i)            Base Salary.  During the Term, Executive shall receive a base salary (“Base Salary”), which shall be paid in equal installments on a bi-weekly basis, at the rate of Six Hundred Thousand Dollars ($600,000.00) per annum, which Base Salary may be reviewed and adjusted, but in no event decreased, annually.  The term “Base Salary” as used throughout this Agreement shall mean the base salary paid to

Executive as so increased during the Term.  Any increase in Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement.  The Executive’s Base Salary shall be subject to all applicable federal, state and local withholding taxes and required withholdings under any NFM benefits plans Executive participates in.

(ii)           Bonus Based On Objective Criteria: In addition to Executive’s Base Salary, Executive shall be entitled to annual bonuses for each fiscal year during the Term in amounts to be determined based on performance criteria set by the Compensation Committee at its sole discretion.  The performance criteria for each fiscal year of this Agreement shall be set by the Compensation Committee within sixty (60) days of the commencement of such fiscal year of this Agreement and shall be set in accordance with the following process: After the Compensation Committee receives a budget for such fiscal year, the Compensation Committee shall provide to Executive proposed performance criteria for Executive’s comments.  Following receipt of the proposed performance criteria, Executive shall have two (2) weeks to provide to the Compensation Committee Executive’s comments concerning the proposed performance criteria.  The Compensation Committee shall consider Executive’s comments and shall thereafter provide to Executive the final performance criteria as set by the Compensation Committee for such fiscal year.  The bonus based on objective criteria shall be in an amount up to, but no greater than, an amount equal to one-third of Executive’s Base Salary for the fiscal year then ending.

(iii)          Discretionary Bonus: In addition to Executive’s Base Salary and any bonus based on objective criteria, the Compensation Committee may, in its sole discretion, award to Executive additional annual bonus(es).  Any

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discretionary bonus shall be set by the Compensation Committee in an amount up to, but no greater than, an amount equal to two-thirds of the Executive’s then current Base Salary for the fiscal year then ending.

 (iv)         All bonuses payable to Executive pursuant to subsections (ii) and (iii), above, shall be paid within two and one-half (2 1/2) months of the end of the fiscal year for which it is awarded.  No discretionary bonus shall be payable to Executive in connection with a fiscal year if Executive’s employment is terminated for “Cause” (as defined below) prior to the end of the applicable fiscal year.  Discretionary bonuses following termination prior to the end of the applicable fiscal year for reasons other than Cause may be paid depending upon the exercise of Compensation Committee discretion pursuant to Section 2(B) above.  No bonus based on objective criteria shall be payable to Executive if Executive’s employment is terminated for Cause prior to the achievement of the performance criteria set by the Compensation Committee.  In the event of a termination for reasons other than Cause in the last quarter of a fiscal year, bonuses based on objective criteria shall be prorated based upon the number of months worked in the fiscal year if Executive has achieved, or is on track to achieve, the applicable criteria.  The foregoing shall not apply to bonuses payable as a result of a “Change in Control Termination” (as defined below), which shall be paid pursuant to Section 3(F).

(v)           Stock Options.  Executive shall be eligible to receive stock options under the terms and conditions of any applicable Stock Option Plan approved by shareholders of NFM, on the terms and conditions set forth in such a plan.  Stock Options shall be granted at the discretion of the Board of Directors based upon the recommendations of the Compensation Committee.

(vi)          Expenses.  During the Term, Executive shall be entitled to receive reimbursement for all employment-related expenses incurred by Executive in accordance with the policies, practices and procedures of NFM as in effect generally from time to time after the Effective Date with respect to other employees at Executive’s level within NFM.

(vii)         Vacation.  Executive acknowledges that NFM has no policy concerning vacation time or sick leave applicable to its executive level employees and, by executing this Agreement, Executive acknowledges and agrees that he shall not accrue any such vacation or sick leave benefits during the Term.  Executive is authorized to take paid time off provided he meets his professional and productivity obligations to NFM as determined by the Board of Directors of NFM.  Executive is to coordinate time off with the Board of Directors or their designee.

(viii)        Car Allowance.  During the Term, the Executive shall be entitled to an $850 a month car allowance in accordance with NFM’s car allowance policy, in lieu of expenses associated with the operation of his automobile.

(ix)           Other Benefits.  During the Term, Executive shall be entitled to such health insurance and other benefits, in accordance with the policies, programs and practices of NFM which are in effect from time to time after the Effective Date with respect to other employees at Executive’s level within NFM.

(x)            Relationship Subsequent to this Agreement.  On or before the end of the Term, NFM and Executive shall address the subject of a new or extended employment agreement to take effect upon the expiration of this Agreement.  If the parties do not execute a new written agreement upon the expiration of this Agreement, but the parties are negotiating a new agreement in good-faith, Executive shall continue to be paid the Base Salary then in effect in regular bi-weekly installments until a new agreement is executed.

3.             TERMINATION OF EMPLOYMENT.

A.            DEATH.  If the Executive dies while employed by NFM, the Executive’s employment shall terminate on the date of death and NFM shall pay to the Executive’s executor, legal representative, administrator or designated beneficiary, as applicable, any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  Otherwise, NFM shall have no further liability or obligation under this Agreement to the Executive’s executors, legal representatives, administrators, heirs or assigns or any other person claiming under or through the Executive.

B.            DISABILITY.  If the Executive incurs a Disability (as defined below) during the Term, the Executive’s employment shall terminate on the date of Disability.  If the Executive’s employment terminates on account of his Disability, the Executive shall be entitled to receive any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  For purposes of this Agreement, the term “Disability” shall have the same meaning as under NFM long-term disability plan, or if there is no such plan, if the Executive by virtue of ill health or other disability is unable to perform substantially and continuously the duties assigned to him (as determined by the Board at its sole discretion) for more than 90 consecutive or non-consecutive days out of any 6 consecutive month period.

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C.            CAUSE.  NFM may terminate the Executive’s employment at any time for Cause (as defined below) upon written notice to the Executive (subject to the Executive’s opportunity to cure described below), in which event all payments under this Agreement shall cease, except for any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  For purposes of this Agreement, “Cause” shall mean any of the grounds for termination of the Executive’s employment listed below:

(i)            The Executive’s conviction of, or plea of guilty or nolo contendere to, (a) a felony, (b) a crime involving moral turpitude, or (c) a criminal act which adversely affects the business or reputation of NFM or its subsidiaries;

(ii)           The Executive’s engagement in willful misconduct or willful or gross neglect in the performance of his duties hereunder, or commission of an act of fraud, embezzlement, theft, dishonesty, breach of trust or misappropriation of funds against NFM or its subsidiaries;

(iii)          Material breach of this Agreement by the Executive;

(iv)          Material violation by Executive of the “Prohibition of Harassment and Discrimination ” set forth in the Employee Handbook (Rev 6/25/2008); or

(v)           The Executive’s persistent and continuing failure to perform the Executive’s reasonable duties hereunder.

If there is an event or condition under Section 3(C)(iii), (iv) or (v) above, the Executive shall have ten (10) days from the date NFM provides notice to the Executive of the event or condition constituting Cause to cure such event or condition (to the extent the event or condition is curable), and if the Executive does so fully cure such event or condition, such event or condition shall not constitute Cause hereunder.

D.            WITHOUT CAUSE. In the event that NFM at any time prior to the occurrence of a Change in Control: terminates Executive’s employment without Cause; or materially breaches this Agreement; or materially diminishes Executive’s title, position or responsibilities; or reduces Executive’s Base Salary, this Section 3(D) shall apply:

(i)            Executive shall be under no obligation to render any additional services to NFM and shall be allowed to seek other employment, subject to the Restrictive Covenants set forth herein.

(ii)           Unless the Executive complies with the provisions of Section 3(D)(iii) below, upon termination pursuant to this

Section 3(D), Executive shall be entitled to receive only any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  No other payments or benefits shall be due under this Agreement to the Executive.

(iii)          Notwithstanding the provisions of Section 3(D)(ii), upon termination pursuant to Section 3(D), if the Executive executes and does not revoke a written release, in a form reasonably acceptable to both parties, of any and all claims against NFM and all related parties with respect to all matters arising out of the Employee Retirement Income Security Act of 1974, the Family and Medical Leave Act of 1993, the WARN Act, or claims of discrimination under the Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended and the Americans with Disabilities Act of 1990 (other than claims for any entitlements under the terms of this Agreement or under any plans or programs of the Company under which the Executive has accrued and is due a benefit and to all indemnification and similar rights under the Company’s Articles of Incorporation, Bylaws or otherwise) (the “Release”), the Executive shall be entitled to receive the following:

(a)           The immediate and full payment of all amounts earned, accrued and owing but not yet paid under Section 2, above, and any benefits accrued and due under any applicable benefit plans and programs of NFM, and

(b)           An amount equal to Executive’s then current Base Salary for the remaining duration of the Term or to an amount equivalent to the then current annual Base Salary multiplied by two, whichever is greater, which shall be payable in accordance with NFM’s normal payroll practices in regular bi-weekly installments, and

(c)           Any applicable bonus payments pursuant to Section 2(B);

(d)           The immediate vesting of all outstanding options awarded to Executive prior to the Date of Termination; and

(e)           Payment of premiums on behalf of Executive and his dependents to allow Executive and his dependents to receive COBRA coverage for health, dental and vision benefits then being provided for Executive and his dependents at the time Executive’s employment is terminated, for eighteen (18) months, which benefit shall be provided subject to the applicable terms and conditions governing such COBRA coverage; provided, however that if Executive commences employment with another

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employer and is eligible to receive medical or other welfare benefits under another employer-provider plan, the medical and other welfare benefits to be provided by NFM as described herein shall terminate.

E.             CHANGE IN CONTROL.  For purposes of this Agreement, a “Change in Control” of NFM shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have occurred:

(i)            Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Act”)), becomes the “beneficial owner” (as defined in Rule 13-d under the Act) directly or indirectly, of securities representing more than fifty percent (50%) of the (a) total outstanding shares of common stock of NFM, or (b) the total combined voting power represented by NFM’s then outstanding voting securities other than by virtue of a merger, consolidation, or similar transaction.  However, if any one person, or more than one person acting as a group, owns 50% or more of the total fair market value or total voting power represented by NFM’s then outstanding voting securities, the increase in beneficial ownership by such person or group or persons will not be considered a Change in Control.

(ii)           A change in the composition of the Board of Directors of NFM (“Board”), as a result of which less than a majority of the directors are Incumbent Directors.  “Incumbent Directors” shall mean directors who either (a) are directors of New Frontier as of the date hereof, or (b) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors of NFM).

(iii)          NFM is a party to a merger, consolidation or consummates a similar transaction with any other business entity after which at least 50% of the total voting power of the resulting entity is not held by the shareholders of NFM prior to the merger, or NFM adopts, and the stockholders approve, if necessary, a plan of complete liquidation or dissolution of NFM, a complete dissolution or liquidation of NFM occurs or NFM sells or disposes of substantially all of its assets to an unrelated party (as contemplated by Section 1.409A-3(i)(5)(vii)(3) of the Treasury Regulations promulgated under the Code (as defined below)).

F.             CHANGE OF CONDITIONS OF EMPLOYMENT.  At any time following the occurrence of a Change in Control, if NFM terminates Executive’s employment without Cause or Executive terminates his employment due to NFM: materially breaching this Agreement; or materially diminishing Executive’s title, position or responsibilities; or reducing Executive’s Base Salary; or relocating NFM’s executive offices outside of the

Boulder, Colorado area, Executive shall receive the following within thirty (30) days of the Date of Termination (the aforementioned shall collectively be referred to as a “Change in Control Termination”):

(i)            Payment of all amounts earned, accrued and owing but not yet paid under Section 2, above, and any benefits accrued and due under any applicable benefit plans and programs of NFM, and

(ii)           A one time, lump sum payment of Executive’s then current Base Salary for the remaining duration of the Term or to an amount equivalent to the then current Base Salary multiplied by two, whichever is greater, and

(iii)          A one time, lump sum payment of an amount equivalent to one year’s bonus as measured by the average bonuses awarded to Executive during the immediately preceding two (2) full bonus years; and;

(iv)          The immediate vesting of all outstanding options awarded to Executive prior to the Date of Termination; and

(v)           Payment of premiums on behalf of Executive and his dependents to allow Executive and his dependents to receive COBRA coverage for health, dental and vision benefits then being provided for Executive and his dependents at the time Executive’s employment is terminated, for eighteen (18) months, which benefit shall be provided subject to the applicable terms and conditions governing such COBRA coverage.

G.            RESIGNATION (NOT A CHANGE IN CONTROL TERMINATION).  At any time during the Term, Executive may voluntarily terminate his employment for any reason.  In such event, after the effective date of such termination, no payments shall be due under this Agreement, except that Executive shall be entitled to any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of the Company, which amounts shall be paid within the time frames specified by Colorado state wage law.

H.            NOTICE OF TERMINATION. Any termination under this Agreement shall be communicated by a written notice to the other party, and may be sent via first class mail, facsimile transmission, email or personal delivery (the “Notice of Termination”).

I.              DATE OF TERMINATION. “Date of Termination” shall mean: (i) the date of transmission of the Notice of Termination by facsimile, email or personal delivery, or (ii) three calendar days after the date of mailing by first class mail, or (iii) date of death or disability (if applicable).

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J.             EXCESS PARACHUTE PAYMENTS.  In the event of a Change in Control Termination, unless otherwise agreed by both parties acting reasonably, a nationally recognized accounting firm (“Accounting Firm”) suitable to both parties shall be timely engaged to render an opinion on whether the Executive is expected to pay an excise tax on “excess parachute payments” (as defined in Section 280G(b) of the Internal Revenue Code of 1986, as amended), as a result of payments due under section 5(B) of this Agreement.  Within 10 days following Company’s receipt of a written opinion of the Accounting Firm, the Company shall, based solely upon the Accounting Firm’s determination of which option shall result in a higher net total net consideration to the Executive, either: (i) reduce the amounts and or benefits payable to the Executive under Section 3(D)(iii)(a)(b)(c)(d) and (e) to an amount that is $1 less than the amount that would constitute an excess parachute payment and pay such reduced amount to Executive, or (ii) pay the full amount due under Section 3(D)(iii)(a)(b)(c)(d) and (e) to the Executive.  Payments by the Company to the Executive pursuant to this paragraph shall be made without setoff, counterclaim or other withholding.  The parties agree that the written opinion of the Accounting Firm shall be final in all respects.  The fees and expenses of the Accounting Firm shall be paid by the Company.

K.            APPLICATION OF SECTION 409A OF THE INTERNAL REVENUE CODE.  Notwithstanding anything contained herein (including in Sections 3(D) or 3(F)) to the contrary, if Executive is a “specified employee” within the meaning of Section 1.409A-l(i) of the Treasury Regulations promulgated under the Internal Revenue Code of 1986, as amended (the “Code”), as of the Date of Termination, then payments to Executive hereunder shall not be made before the date that is six months after the Date of Termination (or if earlier, the date of death of Executive); provided, however, that during such six-month period, NFM shall make any and all payments contemplated hereunder to the extent such payments do not exceed two times the lesser of (i) Executive’s annualized compensation, based upon the annual rate of compensation for the calendar year preceding the year in which the Date of Termination occurs, or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(l7) of the Code for the year in which the Date of Termination occurs; and provided further that any amounts deferred hereunder shall be paid in a lump-sum amount at the expiration of such six-month period.

4.             RESTRICTIVE COVENANTS

For good and valuable consideration, including but not limited to the increase in Base Salary effectuated by this Agreement, and the continued employment of Executive by NFM, Executive agrees to be bound to the following restrictive covenants:

A.            COVENANT AGAINST COMPETITION. Executive agrees that he holds an executive level position with NFM, and Executive further agrees that by virtue of his position he has had access and will continue to have access to NFM’s Confidential Information and Trade Secrets (as those terms are defined below), and Executive further agrees that NFM has a legitimate business interest in preventing Executive from putting to a competitive use the information and relationships which pertain to NFM that Executive acquired in the course of his employment, and in protecting its customer base.  Accordingly, Executive agrees to the following:

(i)            The Executive acknowledges and agrees that the principal business of NFM is the sale, promotion and electronic distribution of adult themed programming and events, whether such adult themed programming and events are sold, promoted, or electronically distributed by means now known or hereafter discovered including but not limited to the Internet, satellite systems, cable systems, hotels, IPTV, mobile and/or stand alone systems (the “Business”).

(ii)           In addition, the Executive acknowledges and agrees that: NFM is one of the limited number of companies who have developed the Business; the Executive’s work for NFM has given and will continue to give him access to the Confidential Information and Trade Secrets of the Company; the value of all goodwill resulting from the operation of the Business of NFM and its subsidiaries and other affiliates should properly belong to NFM; the covenants and agreements of the Executive in this Section are necessary to preserve the value of such goodwill for the benefit of NFM; the proprietary technologies developed by NFM and its predecessors offer NFM a distinct competitive advantage, and NFM would not have entered into this Agreement but for the covenants and agreements set forth in this Section.  Accordingly, the Executive covenants and agrees that:

(a)           By and in consideration of the salary and benefits to be provided by NFM hereunder, including the severance arrangements set forth herein, and in consideration of the Executive’s executive position and exposure to the Confidential Information and Trade Secrets of NFM, the Executive covenants and agrees that, during the period commencing on the date hereof and ending one (1) year following the date upon which the Executive shall cease to be paid any compensation by NFM (the “Restricted Period”), he shall not anywhere in the Restricted Territory, directly or indirectly: engage in any element of the Business or otherwise compete with NFM; render any services to any person, corporation, partnership or other entity (other than NFM or its affiliates) primarily engaged in any element of the Business; or become interested in any such person, corporation, partnership or other entity (other than NFM or its affiliates) as a partner, shareholder,

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principal, agent, employee, consultant or in any other relationship or capacity; provided, however, that, notwithstanding the foregoing, the Executive may invest in securities of any entity, solely for investment purposes and without participating in the business thereof, if (A) such securities are traded on any national securities exchange or the National Association of Securities Dealers, Inc. Automated Quotation System, (B) the Executive is not a controlling person of, or a member of a group which controls, such entity and (C) the Executive does not, directly or indirectly, own five percent (5%) or more of any class of securities of such entity.

For purposes of this Agreement, “Restricted Territory” means any state, county, or locality in the United States in which NFM conducts Business and any other country, jurisdiction or territory in which NFM has generated material revenue during the last six (6) months of Executive’s employment.

For purposes of this Agreement, “Trade Secret” means all non-public information whether tangible or intangible related to the products, services or business of NFM that (A) derives economic value, actual or potential, from not being generally known to or readily ascertainable by other persons who can obtain economic value from its disclosure or use; or (B) is the subject of efforts by NFM that are reasonable under the circumstances to maintain its secrecy, which might include: (i) marking any information reduced to tangible form clearly and conspicuously with a legend identifying its confidential or trade secret nature; (ii) identifying any oral communication as confidential or secret immediately before, during, or after such oral communication; or (iii) otherwise treating such information as confidential or secret.  Assuming the criteria in clauses (A) or (B) of this paragraph are met, Trade Secrets includes information, without regard to form, including, but not limited to, technical and nontechnical data, formulas, patterns, designs, compilations, computer programs and software, devices, inventions, methods, techniques, drawings, processes, financial data, financial plans, product plans, lists of actual or potential customers and suppliers which are not commonly known by or available to the public, research, development, and existing and future products.

(b)           Notwithstanding anything to the contrary in Section 4(A)(ii)(a) above, in the event of a Change in Control Termination, such Restricted Period shall terminate and Executive shall therefore be free to seek employment elsewhere without regard to whether any prospective employer is a competitor of NFM.

B.            NON-SOLICITATION.  During the Restricted Period, Executive shall not, directly or indirectly, (i) solicit or encourage to leave the employment or other service of NFM any employee or independent contractor thereof; or (ii) hire (on behalf of Executive or any other person or entity) any

employee or independent contractor who has left the employment or other service of NFM within the one-year period which follows the termination of such employer’s or independent contractor’s employment or other service with NFM.  For purposes of the preceding sentence, the term “independent contractor” shall refer to independent contractors of NFM whose services relate directly to the conduct of the Business.  During the Restricted Period, the Executive will not, whether for his own account or for the account of any other person, firm, corporation or other business organization, intentionally interfere with NFM’ relationship with, or endeavor to entice away from NFM any person who during the Term is or was a customer, client, supplier, licensee or other business relation of NFM.

C.            CONFIDENTIALITY OBLIGATIONS

(i)            CONFIDENTIAL INFORMATION.  As used in this Agreement, “Confidential Information” includes, without limitation, design information, manufacturing information, business, financial, and technical information, sales and processing information, product information, customer lists, vendor information, vendor lists, pricing information, corporation and personal business opportunities, software, computer disks or files, or any other electronic information of any kind, Rolodex cards or other lists of names, addresses or telephone numbers, financial information, current projects, projects in development and future projects, forecasts, plans, contracts, releases, and other documents, materials, writings or information, including those which are prepared, developed or created by Executive, or which come into the possession of Executive by any means or manner, and which relate directly or indirectly to NFM (all of the above collectively referred to as “Confidential Information”).  Confidential Information includes information developed by Executive in the course of Executive’s services for NFM, as well as other Confidential Information to which Executive may have access in connection with Executive’s services.  Confidential Information also includes the confidential information of other individuals or entities with which NFM has a business relationship.  Confidential Information shall not include any information (a) which is in the public domain or which enters the public domain through no act of omission of Executive or (b) which was in the possession of Executive prior to the commencement of his employment with NFM.

(ii)           DUTY OF CONFIDENTIALITY.  At all times during his employment and thereafter, Executive will maintain in strictest confidence and will not, directly or indirectly, disclose or use (or allow others working with or related to Executive to disclose or use) any Confidential Information belonging to NFM, whether in oral, written, electronic or permanent form, except solely to the extent necessary to perform services on behalf of NFM.  Upon

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termination of this Agreement, or at the request of NFM prior to its termination, Executive shall deliver forthwith to NFM all Confidential Information (and all copies thereof) in Executive’s possession or control belonging to NFM and all tangible items embodying or containing Confidential Information.

(iii)         DOCUMENTS, RECORDS, ETC.  All documents, records, data, equipment and other physical property, whether or not pertaining to Confidential Information, which are furnished to Executive by NFM or are produced by Executive in connection with Executive’s services will be and remain the sole property of NFM.  Executive will return to NFM forthwith all such materials and property upon the termination of this Agreement or sooner if requested by NFM.

D.            ASSIGNMENT OF RIGHTS.  Executive shall make full and prompt disclosure to NFM of any and all designs, intellectual property, software, inventions, discoveries, or improvements (individually and collectively, “Inventions”) made by Executive as a result or product of his employment relationship with NFM.  Executive hereby assigns to NFM without additional compensation the entire worldwide right, title and interest in and to such Inventions, and related intellectual property rights and without limitation all copyrights, copyright renewals or reversions, trademarks, trade names, trade dress rights, industrial design, industrial model, inventions, priority rights, patent rights, patent applications, patents, design patents and any other rights or protections in connection therewith or related thereto, for exploitation in any form or medium, of any kind or nature whatsoever, whether now known or hereafter devised.  To the extent that any work created by Executive can be a work for hire pursuant to U.S. Copyright Law, the parties deem such work a work for hire and Executive should be considered the author thereof.  Executive shall, at the request of NFM, without additional compensation from time to time execute, acknowledge and deliver to NFM such instruments and documents as NFM may require to perfect, transfer and vest in NFM the entire right, title and interest in and to such inventions.  In the event that Executive does not timely perform such obligations, Executive hereby makes NFM and its officers his attorney in fact and gives them the power of attorney to perform such obligations and to execute such documents on Executive’s behalf.  Executive shall cooperate with NFM upon NFM’s request and at NFM’s cost but without additional compensation in the preparation and prosecution of patent, trademark, industrial design and model, and copyright applications worldwide for protection of rights to any Inventions.

E.             LEGAL AND EQUITABLE REMEDIES.  Because the Executive’s services are personal and unique and the Executive has had and will continue to have access to and has become and will continue to become acquainted with the Confidential Information and Trade Secrets of NFM, and because any breach by the Executive of any of the confidentiality covenants and restrictive covenants contained in Section 4 would result in irreparable injury and damage for which money damages would not provide an adequate remedy, NFM shall have the right to enforce the restrictions set forth in Section 4 by injunction, specific performance or other equitable relief, without bond and without prejudice to any other rights and remedies that NFM may have for a breach, or threatened breach, of the obligations described in Section 4.  The Executive agrees that in any action in which NFM seeks injunction, specific performance or other equitable relief, the Executive will not assert or contend that any of the provisions of Section 4 are unreasonable or otherwise unenforceable.

F.             SCOPE/BLUE PENCIL PROVISIONS.  Executive agrees that the duration, scope and geographic area of the restrictions stated in this Section are reasonable and necessary given the nature of NFM’s Business.  However, in the event that a court or arbitrator of competent jurisdiction shall hold that the duration, scope, geographic area or other restrictions stated herein are unreasonable and unenforceable under circumstances then existing, the parties agree that the maximum duration, scope, area or other restrictions reasonable under such circumstances shall be substituted for the stated duration, scope, area or other restrictions.

G.            INDEPENDENT AGREEMENT.  The covenants made in this Section 4 shall be construed as an agreement independent of any other provisions of this Agreement, and shall survive the termination of this Agreement.  Moreover, the existence of any claim or cause of action of Executive against NFM, whether or not predicated upon the terms of this Agreement, shall not constitute a defense to the enforcement of these covenants.  Notwithstanding anything to the contrary in this paragraph, Executive shall be released from his obligations under Section 4(A) of this Agreement if NFM is in material breach of its obligations set forth in Section 2(B) of this Agreement, provided such material breach remains uncured for more than thirty (30) days after written notice of said breach from Executive to NFM.

5.             ARBITRATION.  To the maximum extent permitted by law, all disputes, controversies, claims, or demands of any kind or nature arising between the parties in connection with this Agreement, whether at law or in equity or based upon common law or any federal or state

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statute, rule, or regulation, that cannot be resolved between the parties through NFM’s internal complaint resolution procedures, shall be submitted to binding arbitration by the American Arbitration Association; provided, however, that this arbitration requirement shall not apply to any action by either party to obtain injunctive relief to prevent any violation by the other party of the terms of this Agreement, which injunctive action may be brought in any court of competent jurisdiction. The filing of a claim for injunctive relief shall not allow either party to raise any other claim outside arbitration.

Any arbitration commenced hereunder shall be initiated in Boulder, Colorado and shall be governed by the AAA National Rules for the Resolution of Employment Disputes.  The arbitration shall occur before a single arbitrator that shall be mutually agreed upon by the parties hereto.  If the parties cannot agree on a single arbitrator, then an arbitrator shall be selected in accordance with the rules of AAA.  The arbitration must be filed within six months of the act or omission which gives rise to the claim.  Each party shall be entitled to take any discovery as is permitted by the applicable rules and the arbitrator. In determining the extent of discovery, the arbitrator shall exercise discretion, but shall consider the expense of the desired discovery and the importance of the discovery to a just adjudication.

The findings, conclusions, and award rendered in any arbitration shall be binding upon the parties and shall finally determine all questions of fact relating to the dispute. Judgment upon the arbitration award may be entered in the appropriate court, state or federal, having jurisdiction, and each party expressly waives any right to appeal any such judgment rendered by the court.   Any party may apply to a court of competent jurisdiction for entry of judgment on the arbitration award.

The costs of the arbitration shall be advanced equally by the parties, however the prevailing party in any arbitration or other legal action brought to enforce or defend the terms of this Agreement shall be entitled, in addition to any other remedies available to such party, to an award of reasonable attorney’s fees and costs.  Any party may apply to a court of competent jurisdiction for entry of judgment on the arbitration award.

The parties agree that failure to comply with the provisions of this paragraph shall constitute grounds for the dismissal of any suit, action, or proceeding instituted in any federal, state, or local court or before any administrative tribunal with respect to any dispute which arises during the period of this

Agreement and which is subject to this arbitration agreement. The arbitration provisions of this Agreement are specifically enforceable by each party to the Agreement and shall survive the termination or expiration of the Agreement.

THE EXECUTIVE UNDERSTANDS THAT THIS AGREEMENT TO ARBITRATE ALL ARBITRABLE DISPUTES MEANS THE EXECUTIVE IS AGREEING TO WAIVE TO THE MAXIMUM EXTENT PERMITTED BY LAW ANY RIGHT THE EXECUTIVE MAY HAVE TO ASK FOR A JURY OR COURT TRIAL IN ANY DISPUTE WITH THE COMPANY.

6.             NO CONFLICTING OBLIGATIONS OF EXECUTIVE.  Executive represents and warrants that he is not subject to any duties or restrictions under any prior agreement with any previous employer or other person or entity, and that he has no rights or obligations which may conflict with the interests of NFM or with the performance of Executive’s duties and obligations under this Agreement.  Executive agrees to notify NFM immediately if any such conflicts occur in the future.

7.             SUCCESSORS.

A.            This Agreement is personal to Executive and shall not be assignable by Executive.

B.            This Agreement shall inure to the benefit of NFM and its successors and assigns.  Upon written notice to Executive, NFM may assign this Agreement to any successor or affiliated entity, subsidiary, sibling, or parent company.

8.             LAW CHANGES.  To the extent that any payment under this Agreement is deemed to be deferred compensation subject to the requirements of section 409A of the Code, this Agreement shall be administered so that such payments will be made in accordance with the requirements of section 409A of the Code.

9.             INDEMNIFICATION.  NFM agrees to defend and indemnify Executive against all criminal and civil claims for acts within the scope of his duties to the maximum extent allowed by law, but excluding acts of gross negligence and willful misconduct.  Additionally, NFM shall pay all attorneys’ fees and costs related to any actual or threatened legal action against Executive as such fees and costs arise.  NFM agrees to maintain D&O insurance that covers Executive for all acts within the scope of his duties, but excluding acts of gross negligence and willful misconduct.

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10.          MISCELLANEOUS

A.            Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado, without reference to the principles of conflict of laws.

B.            Captions/Headings.  The captions and headings of this Agreement are not part of the provisions hereof and shall have no force or effect.

C.            Entire Agreement.  This Agreement contains the full and complete understanding between the parties hereto and supersedes all prior understandings, whether written or oral pertaining to the subject matter hereof.

D.            Modifications of Agreement.  This Agreement may not be amended or modified otherwise than by written agreement executed by Executive and by the designated representative of the Board.  Notwithstanding anything to the contrary, NFM hereby reserves the right to unilaterally amend this Agreement as necessary to avoid the imposition of liability under or as a consequence of the application of the provisions of Section 409A of the Code.

E.             Notices.  All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, or by facsimile, or by email, or by hand delivery to such address as either party shall have furnished to the other in writing in accordance herewith:

New Frontier Media, Inc.

7007 Winchester Circle, Suite 200

Boulder, CO 80301

Attn:  General Counsel

Executive:

Michael Weiner

F.             Severability.  If any provision of this Agreement or application thereof to anyone or under any circumstances is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and shall not invalidate or render unenforceable such provision or application in any other jurisdiction.  If any provision is held void, invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstances.

G.            Withholdings.  NFM shall withhold from any amounts payable under this Agreement such amounts as are required to be withheld pursuant to any applicable law or regulation, including without limitation amounts required to be withheld for Federal, State and local taxes, as well as garnishments and other required withholdings.

H.            Remedies Cumulative; No Waiver.  No remedy conferred upon a party by this Agreement is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to any other remedy given under this Agreement or now or hereafter existing at law or in equity.  The failure of either party to insist upon strict compliance with any provision of this Agreement, or the failure to assert any right either party may have hereunder, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

I.              Counterparts.  This Agreement may be executed in any number of counterparts (including facsimile counterparts), each of which shall be an original, but all of which together shall constitute one instrument.

IN WITNESS WHEREOF, Executive has hereunto set Executive’s hand, and NFM has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

NEW FRONTIER MEDIA, INC.			EXECUTIVE
By:	/s/ Marc Callipari		By:	/s/ Michael Weiner
Name:		Marc Callipari	Name: Michael Weiner
Title:		General Counsel

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EX-10.03

Exhibit 10.03

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), dated as of this 29 day of September, 2008 (the “Effective Date”) by and between GRANT WILLIAMS, an individual (the “Executive”), and NEW FRONTIER MEDIA, INC., a Colorado corporation with offices at 7007 Winchester Circle, Suite 200, Boulder, CO 80301, as well as its affiliates and subsidiaries whether now in existence or formed in the future. (“NFM”), recites and provides as follows:

WHEREAS, Executive is and has been previously employed by NFM pursuant to one or more employment agreements that are superseded and replaced by this Agreement in their entirety;

WHEREAS, NFM desires to retain the services of Executive, and Executive desires to be employed by NFM, all on the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, NFM and Executive agree as follows:

1.             TERM.  The Term of this Agreement shall begin as of the Effective Date and shall continue until midnight on April 30, 2010, or such date as the Agreement is terminated by either party as hereinafter provided (the “Term”).

2.             TERMS OF EMPLOYMENT.

A.            POSITION AND DUTIES.

(i)            During the Term, Executive shall have the title of Chief Financial Officer and shall perform such executive duties as are commensurate with such title.

(ii)           Executive’s services shall be performed at NFM’s headquarters in Boulder, Colorado.  However, Executive may also be required by his job responsibilities to travel on NFM business, and Executive agrees to do so.

(iii)          During the Term, Executive agrees to devote his full-time and attention to the business and affairs of NFM.  Executive’s employment under this Agreement shall be Executive’s exclusive employment during the Term of this Agreement.  Service on any other company’s board of directors by Executive requires the written consent of the Compensation Committee of the Board of Directors of NFM (“Compensation Committee”).

B.            COMPENSATION.

(i)            Base Salary.  During the Term, Executive shall receive a base salary (“Base Salary”), which shall be paid in equal installments on a bi-weekly basis, at the rate of Two Hundred Thousand Dollars ($200,000.00) per annum, which Base Salary may be reviewed and adjusted, but in no event decreased, annually.  The term “Base Salary” as used throughout this Agreement shall mean the base salary paid to

Executive as so increased during the Term.  Any increase in Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement.  The Executive’s Base Salary shall be subject to all applicable federal, state and local withholding taxes and required withholdings under any NFM benefits plans Executive participates in.

(ii)           Discretionary Bonus.  In addition to Executive’s Base Salary, the Compensation Committee may, at its sole discretion award to Executive annual bonus(es) which shall be awarded based upon factors and individual and/or company performance criteria established at the sole discretion of NFM.

 (iii)         All bonuses payable to Executive pursuant to subsections (ii), above, shall be paid within two and one-half (2 1/2) months of the end of the fiscal year for which it is awarded.  No discretionary bonus shall be payable to Executive in connection with a fiscal year if Executive’s employment is terminated for “Cause” (as defined in Section 3(C), below) prior to the end of the applicable fiscal year.  Discretionary bonuses following termination prior to the end of the applicable fiscal year for reasons other than Cause may be paid depending upon the exercise of Compensation Committee discretion.  The foregoing shall not apply to bonuses payable as a result of a “Change in Control Termination” (as defined below), which shall be paid pursuant to Section 3(F).

(iv)          Stock Options.  Executive shall be eligible to receive stock options under the terms and conditions of any applicable Stock Option Plan approved by shareholders of NFM, on the terms and conditions set forth in such a plan.  Stock Options shall be granted at the discretion of the Board of Directors based upon the recommendations of the Compensation Committee.

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(v)           Expenses.  During the Term, Executive shall be entitled to receive reimbursement for all employment-related expenses incurred by Executive in accordance with the policies, practices and procedures of NFM as in effect generally from time to time after the Effective Date with respect to other employees at Executive’s level within NFM.

(vi)          Vacation.  Executive acknowledges that NFM has no policy concerning vacation time or sick leave applicable to its executive level employees and, by executing this Agreement, Executive acknowledges and agrees that he shall not accrue any such vacation or sick leave benefits during the Term.  Executive is authorized to take paid time off provided he meets his professional and productivity obligations to NFM as determined by the Chief Executive Officer of NFM.  Executive is to coordinate time off with the Chief Executive Officer or his designee.

(vii)         Car Allowance.  During the Term, the Executive shall be entitled to an $850 a month car allowance in accordance with NFM’s car allowance policy, in lieu of expenses associated with the operation of his automobile.

(viii)        Other Benefits.  During the Term, Executive shall be entitled to such health insurance and other benefits, in accordance with the policies, programs and practices of NFM which are in effect from time to time after the Effective Date with respect to other employees at Executive’s level within NFM.

(ix)           Relationship Subsequent to this Agreement.  On or before the end of the Term, NFM and Executive shall address the subject of a new or extended employment agreement to take effect upon the expiration of this Agreement.  If the parties do not execute a new written agreement upon the expiration of this Agreement, but the parties are negotiating a new agreement in good-faith, Executive shall continue to be paid the Base Salary then in effect in regular bi-weekly installments until a new agreement is executed.

3.             TERMINATION OF EMPLOYMENT.

A.            DEATH.  If the Executive dies while employed by NFM, the Executive’s employment shall terminate on the date of death and NFM shall pay to the Executive’s executor, legal representative, administrator or designated beneficiary, as applicable, any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  Otherwise, NFM shall have no further liability or obligation under this Agreement to the Executive’s executors, legal representatives, administrators,

heirs or assigns or any other person claiming under or through the Executive.

B.            DISABILITY.  If the Executive incurs a Disability (as defined below) during the Term, the Executive’s employment shall terminate on the date of Disability.  If the Executive’s employment terminates on account of his Disability, the Executive shall be entitled to receive any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  For purposes of this Agreement, the term “Disability” shall have the same meaning as under NFM long-term disability plan, or if there is no such plan, if the Executive by virtue of ill health or other disability is unable to perform substantially and continuously the duties assigned to him (as determined by the Board at its sole discretion) for more than 90 consecutive or non-consecutive days out of any 6 consecutive month period.

C.            CAUSE.  NFM may terminate the Executive’s employment at any time for Cause (as defined below) upon written notice to the Executive (subject to the Executive’s opportunity to cure described below), in which event all payments under this Agreement shall cease, except for any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  For purposes of this Agreement, “Cause” shall mean any of the grounds for termination of the Executive’s employment listed below:

(i)            The Executive’s conviction of, or plea of guilty or nolo contendere to, (a) a felony, (b) a crime involving moral turpitude, or (c) a criminal act which adversely affects the business or reputation of NFM or its subsidiaries;

(ii)           The Executive’s engagement in willful misconduct or willful or gross neglect in the performance of his duties hereunder, or commission of an act of fraud, embezzlement, theft, dishonesty, breach of trust or misappropriation of funds against NFM or its subsidiaries;

(iii)          Material breach of this Agreement by the Executive;

(iv)          Material violation by Executive of the “Prohibition of Harassment and Discrimination” set forth in the Employee Handbook (Rev 6/25/2008); or

(v)           The Executive’s persistent and continuing failure to perform the Executive’s reasonable duties hereunder.

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If there is an event or condition under Section 3(C)(iii), (iv) or (v) above, the Executive shall have ten (10) days from the date NFM provides notice to the Executive of the event or condition constituting Cause to cure such event or condition (to the extent the event or condition is curable), and if the Executive does so fully cure such event or condition, such event or condition shall not constitute Cause hereunder.

D.            WITHOUT CAUSE. In the event that NFM at any time prior to the occurrence of a Change in Control: terminates Executive’s employment without Cause; or materially breaches this Agreement; or materially diminishes Executive’s title, position or responsibilities; or reduces Executive’s Base Salary, this Section 3(D) shall apply:

(i)            Executive shall be under no obligation to render any additional services to NFM and shall be allowed to seek other employment, subject to the Restrictive Covenants set forth herein.

(ii)           Unless the Executive complies with the provisions of Section 3(D)(iii) below, upon termination pursuant to this Section 3(D), Executive shall be entitled to receive only any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  No other payments or benefits shall be due under this Agreement to the Executive.

(iii)          Notwithstanding the provisions of Section 3(D)(ii), upon termination pursuant to Section 3(D), if the Executive executes and does not revoke a written release, in a form reasonably acceptable to both parties, of any and all claims against NFM and all related parties with respect to all matters arising out of the Employee Retirement Income Security Act of 1974, the Family and Medical Leave Act of 1993, the WARN Act, or claims of discrimination under the Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended and the Americans with Disabilities Act of 1990 (other than claims for any entitlements under the terms of this Agreement or under any plans or programs of the Company under which the Executive has accrued and is due a benefit and to all indemnification and similar rights under the Company’s Articles of Incorporation, Bylaws or otherwise) (the “Release”), the Executive shall be entitled to receive the following:

(a)           The immediate and full payment of all amounts earned, accrued and owing but not yet paid under Section 2, above, and any benefits accrued and due under any applicable benefit plans and programs of NFM, and

(b)           An amount equal to Executive’s then current Base Salary for the remaining duration of the Term or to an amount

equivalent to the then current annual Base Salary multiplied by 1½, whichever is greater, which shall be payable in accordance with NFM’s normal payroll practices in regular bi-weekly installments, and

(c)           Any applicable bonus payments pursuant to Section 2(B);

(d)           The immediate vesting of all outstanding options awarded to Executive prior to the Date of Termination; and

(e)           Payment of premiums on behalf of Executive and his dependents to allow Executive and his dependents to receive COBRA coverage for health, dental and vision benefits then being provided for Executive and his dependents at the time Executive’s employment is terminated, for eighteen (18) months, which benefit shall be provided subject to the applicable terms and conditions governing such COBRA coverage; provided, however that if Executive commences employment with another employer and is eligible to receive medical or other welfare benefits under another employer-provider plan, the medical and other welfare benefits to be provided by NFM as described herein shall terminate.

E.             CHANGE IN CONTROL.  For purposes of this Agreement, a “Change in Control” of NFM shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have occurred:

(i)            Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Act”)), becomes the “beneficial owner” (as defined in Rule 13-d under the Act) directly or indirectly, of securities representing more than fifty percent (50%) of the (a) total outstanding shares of common stock of NFM, or (b) the total combined voting power represented by NFM’s then outstanding voting securities other than by virtue of a merger, consolidation, or similar transaction.  However, if any one person, or more than one person acting as a group, owns 50% or more of the total fair market value or total voting power represented by NFM’s then outstanding voting securities, the increase in beneficial ownership by such person or group or persons will not be considered a Change in Control.

(ii)           A change in the composition of the Board of Directors of NFM (“Board”), as a result of which less than a majority of the directors are Incumbent Directors.  “Incumbent Directors” shall mean directors who either (a) are directors of New Frontier as of the date hereof, or (b) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or

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threatened proxy contest relating to the election of directors of NFM).

(iii)          NFM is a party to a merger, consolidation or consummates a similar transaction with any other business entity after which at least 50% of the total voting power of the resulting entity is not held by the shareholders of NFM prior to the merger, or NFM adopts, and the stockholders approve, if necessary, a plan of complete liquidation or dissolution of NFM, a complete dissolution or liquidation of NFM occurs or NFM sells or disposes of substantially all of its assets to an unrelated party (as contemplated by Section 1.409A-3(i)(5)(vii)(3) of the Treasury Regulations promulgated under the Code (as defined below)).

F.             CHANGE OF CONDITIONS OF EMPLOYMENT.  At any time following the occurrence of a Change in Control, if NFM terminates Executive’s employment without Cause or Executive terminates his employment due to NFM: materially breaching this Agreement; or materially diminishing Executive’s title, position or responsibilities; or reducing Executive’s Base Salary; or relocating NFM’s executive offices outside of the Boulder, Colorado area, Executive shall receive the following within thirty (30) days of the Date of Termination (the aforementioned shall collectively be referred to as a “Change in Control Termination”):

(i)            Payment of all amounts earned, accrued and owing but not yet paid under Section 2, above, and any benefits accrued and due under any applicable benefit plans and programs of NFM, and

(ii)           A one time, lump sum payment of Executive’s then current Base Salary for the remaining duration of the Term or to an amount equivalent to the then current Base Salary multiplied by 1½, whichever is greater, and

(iii)          A one time, lump sum payment of an amount equivalent to one year’s bonus as measured by the average bonuses awarded to Executive during the immediately preceding two (2) full bonus years; and;

(iv)          The immediate vesting of all outstanding options awarded to Executive prior to the Date of Termination; and

(v)           Payment of premiums on behalf of Executive and his dependents to allow Executive and his dependents to receive COBRA coverage for health, dental and vision benefits then being provided for Executive and his dependents at the time Executive’s employment is terminated, for eighteen (18) months, which benefit shall be provided subject to the applicable terms and conditions governing such COBRA coverage.

G.            RESIGNATION (NOT A CHANGE IN CONTROL TERMINATION).  At any time during the Term, Executive may voluntarily terminate his employment

for any reason.  In such event, after the effective date of such termination, no payments shall be due under this Agreement, except that Executive shall be entitled to any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of the Company, which amounts shall be paid within the time frames specified by Colorado state wage law.

H.            NOTICE OF TERMINATION. Any termination under this Agreement shall be communicated by a written notice to the other party, and may be sent via first class mail, facsimile transmission, email or personal delivery (the “Notice of Termination”).

I.              DATE OF TERMINATION. “Date of Termination” shall mean: (i) the date of transmission of the Notice of Termination by facsimile, email or personal delivery, or (ii) three calendar days after the date of mailing by first class mail, or (iii) date of death or disability (if applicable).

J.             EXCESS PARACHUTE PAYMENTS.  In the event of a Change in Control Termination, unless otherwise agreed by both parties acting reasonably, a nationally recognized accounting firm (“Accounting Firm”) suitable to both parties shall be timely engaged to render an opinion on whether the Executive is expected to pay an excise tax on “excess parachute payments” (as defined in Section 280G(b) of the Internal Revenue Code of 1986, as amended), as a result of payments due under section 5(B) of this Agreement.  Within 10 days following Company’s receipt of a written opinion of the Accounting Firm, the Company shall, based solely upon the Accounting Firm’s determination of which option shall result in a higher net total net consideration to the Executive, either: (i) reduce the amounts and or benefits payable to the Executive under Section 3(D)(iii)(a)(b)(c)(d) and (e) to an amount that is $1 less than the amount that would constitute an excess parachute payment and pay such reduced amount to Executive, or (ii) pay the full amount due under Section 3(D)(iii)(a)(b)(c)(d) and (e) to the Executive.  Payments by the Company to the Executive pursuant to this paragraph shall be made without setoff, counterclaim or other withholding.  The parties agree that the written opinion of the Accounting Firm shall be final in all respects.  The fees and expenses of the Accounting Firm shall be paid by the Company.

K.            APPLICATION OF SECTION 409A OF THE INTERNAL REVENUE CODE.  Notwithstanding anything contained herein (including in Sections 3(D) or 3(F)) to the contrary, if Executive is a “specified employee” within the meaning of Section 1.409A-l(i) of the Treasury Regulations promulgated under the Internal Revenue Code of 1986, as amended (the “Code”), as of the Date of Termination, then payments to Executive hereunder shall not be made before the date that is six

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months after the Date of Termination (or if earlier, the date of death of Executive); provided, however, that during such six-month period, NFM shall make any and all payments contemplated hereunder to the extent such payments do not exceed two times the lesser of (i) Executive’s annualized compensation, based upon the annual rate of compensation for the calendar year preceding the year in which the Date of Termination occurs, or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(l 7) of the Code for the year in which the Date of Termination occurs; and provided further that any amounts deferred hereunder shall be paid in a lump-sum amount at the expiration of such six-month period.

4.             RESTRICTIVE COVENANTS

For good and valuable consideration, including but not limited to the increase in Base Salary effectuated by this Agreement, and the continued employment of Executive by NFM, Executive agrees to be bound to the following restrictive covenants:

A.            COVENANT AGAINST COMPETITION. Executive agrees that he holds an executive level position with NFM, and Executive further agrees that by virtue of his position he has had access and will continue to have access to NFM’s Confidential Information and Trade Secrets (as those terms are defined below), and Executive further agrees that NFM has a legitimate business interest in preventing Executive from putting to a competitive use the information and relationships which pertain to NFM that Executive acquired in the course of his employment, and in protecting its customer base.  Accordingly, Executive agrees to the following:

(i)            The Executive acknowledges and agrees that the principal business of NFM is the sale, promotion and electronic distribution of adult themed programming and events, whether such adult themed programming and events are sold, promoted, or electronically distributed by means now known or hereafter discovered including but not limited to the Internet, satellite systems, cable systems, hotels, IPTV, mobile and/or stand alone systems (the “Business”).

(ii)           In addition, the Executive acknowledges and agrees that: NFM is one of the limited number of companies who have developed the Business; the Executive’s work for NFM has given and will continue to give him access to the Confidential Information and Trade Secrets of the Company; the value of all goodwill resulting from the operation of the Business of NFM and its subsidiaries and other affiliates should properly belong to NFM; the covenants and agreements of the Executive in this Section are necessary to preserve the value of such goodwill for the benefit of NFM; the proprietary technologies developed by NFM and its

predecessors offer NFM a distinct competitive advantage, and NFM would not have entered into this Agreement but for the covenants and agreements set forth in this Section.  Accordingly, the Executive covenants and agrees that:

(a)           By and in consideration of the salary and benefits to be provided by NFM hereunder, including the severance arrangements set forth herein, and in consideration of the Executive’s executive position and exposure to the Confidential Information and Trade Secrets of NFM, the Executive covenants and agrees that, during the period commencing on the date hereof and ending one (1) year following the date upon which the Executive shall cease to be paid any compensation by NFM (the “Restricted Period”), he shall not anywhere in the Restricted Territory, directly or indirectly: engage in any element of the Business or otherwise compete with NFM; render any services to any person, corporation, partnership or other entity (other than NFM or its affiliates) primarily engaged in any element of the Business; or become interested in any such person, corporation, partnership or other entity (other than NFM or its affiliates) as a partner, shareholder, principal, agent, employee, consultant or in any other relationship or capacity; provided, however, that, notwithstanding the foregoing, the Executive may invest in securities of any entity, solely for investment purposes and without participating in the business thereof, if (A) such securities are traded on any national securities exchange or the National Association of Securities Dealers, Inc. Automated Quotation System, (B) the Executive is not a controlling person of, or a member of a group which controls, such entity and (C) the Executive does not, directly or indirectly, own five percent (5%) or more of any class of securities of such entity.

For purposes of this Agreement, “Restricted Territory” means any state, county, or locality in the United States in which NFM conducts Business and any other country, jurisdiction or territory in which NFM has generated material revenue during the last six (6) months of Executive’s employment.

For purposes of this Agreement, “Trade Secret” means all non-public information whether tangible or intangible related to the products, services or business of NFM that (A) derives economic value, actual or potential, from not being generally known to or readily ascertainable by other persons who can obtain economic value from its disclosure or use; or (B) is the subject of efforts by NFM that are reasonable under the circumstances to maintain its secrecy, which might include: (i) marking any information reduced to tangible form clearly and conspicuously with a legend identifying its confidential or trade secret nature; (ii) identifying any oral communication as confidential or secret immediately before, during, or after such oral communication; or (iii) otherwise treating such information as confidential or secret.  Assuming the criteria in clauses (A) or (B) of this paragraph are met,

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Trade Secrets includes information, without regard to form, including, but not limited to, technical and nontechnical data, formulas, patterns, designs, compilations, computer programs and software, devices, inventions, methods, techniques, drawings, processes, financial data, financial plans, product plans, lists of actual or potential customers and suppliers which are not commonly known by or available to the public, research, development, and existing and future products.

(b)           Notwithstanding anything to the contrary in Section 4(A)(ii)(a) above, in the event of a Change in Control Termination, such Restricted Period shall terminate and Executive shall therefore be free to seek employment elsewhere without regard to whether any prospective employer is a competitor of NFM.

B.            NON-SOLICITATION.  During the Restricted Period, Executive shall not, directly or indirectly, (i) solicit or encourage to leave the employment or other service of NFM any employee or independent contractor thereof; or (ii) hire (on behalf of Executive or any other person or entity) any employee or independent contractor who has left the employment or other service of NFM within the one-year period which follows the termination of such employer’s or independent contractor’s employment or other service with NFM.  For purposes of the preceding sentence, the term “independent contractor” shall refer to independent contractors of NFM whose services relate directly to the conduct of the Business.  During the Restricted Period, the Executive will not, whether for his own account or for the account of any other person, firm, corporation or other business organization, intentionally interfere with NFM’ relationship with, or endeavor to entice away from NFM any person who during the Term is or was a customer, client, supplier, licensee or other business relation of NFM.

C.            CONFIDENTIALITY OBLIGATIONS

(i)            CONFIDENTIAL INFORMATION.  As used in this Agreement, “Confidential Information” includes, without limitation, design information, manufacturing information, business, financial, and technical information, sales and processing information, product information, customer lists, vendor information, vendor lists, pricing information, corporation and personal business opportunities, software, computer disks or files, or any other electronic information of any kind, Rolodex cards or other lists of names, addresses or telephone numbers, financial information, current projects, projects in development and future projects, forecasts, plans, contracts, releases, and other documents, materials, writings or information, including those which are prepared, developed or created by Executive, or which come into the possession of Executive by any means or manner, and which relate directly or indirectly to NFM (all of the above collectively referred to

as “Confidential Information”).  Confidential Information includes information developed by Executive in the course of Executive’s services for NFM, as well as other Confidential Information to which Executive may have access in connection with Executive’s services.  Confidential Information also includes the confidential information of other individuals or entities with which NFM has a business relationship.  Confidential Information shall not include any information (a) which is in the public domain or which enters the public domain through no act of omission of Executive or (b) which was in the possession of Executive prior to the commencement of his employment with NFM.

(ii)           DUTY OF CONFIDENTIALITY.  At all times during his employment and thereafter, Executive will maintain in strictest confidence and will not, directly or indirectly, disclose or use (or allow others working with or related to Executive to disclose or use) any Confidential Information belonging to NFM, whether in oral, written, electronic or permanent form, except solely to the extent necessary to perform services on behalf of NFM.  Upon termination of this Agreement, or at the request of NFM prior to its termination, Executive shall deliver forthwith to NFM all Confidential Information (and all copies thereof) in Executive’s possession or control belonging to NFM and all tangible items embodying or containing Confidential Information.

(iii)         DOCUMENTS, RECORDS, ETC.  All documents, records, data, equipment and other physical property, whether or not pertaining to Confidential Information, which are furnished to Executive by NFM or are produced by Executive in connection with Executive’s services will be and remain the sole property of NFM.  Executive will return to NFM forthwith all such materials and property upon the termination of this Agreement or sooner if requested by NFM.

D.            ASSIGNMENT OF RIGHTS.  Executive shall make full and prompt disclosure to NFM of any and all designs, intellectual property, software, inventions, discoveries, or improvements (individually and collectively, “Inventions”) made by Executive as a result or product of his employment relationship with NFM.  Executive hereby assigns to NFM without additional compensation the entire worldwide right, title and interest in and to such Inventions, and related intellectual property rights and without limitation all copyrights, copyright renewals or reversions, trademarks, trade names, trade dress rights, industrial design, industrial model, inventions, priority rights, patent rights, patent applications, patents, design patents and any other rights or protections in connection therewith or related thereto, for exploitation in any form or medium, of any kind or nature whatsoever, whether now known or hereafter devised.  To the extent that any work created by Executive can be a work for hire pursuant to U.S. Copyright Law, the parties deem such

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work a work for hire and Executive should be considered the author thereof.  Executive shall, at the request of NFM, without additional compensation from time to time execute, acknowledge and deliver to NFM such instruments and documents as NFM may require to perfect, transfer and vest in NFM the entire right, title and interest in and to such inventions.  In the event that Executive does not timely perform such obligations, Executive hereby makes NFM and its officers his attorney in fact and gives them the power of attorney to perform such obligations and to execute such documents on Executive’s behalf.  Executive shall cooperate with NFM upon NFM’s request and at NFM’s cost but without additional compensation in the preparation and prosecution of patent, trademark, industrial design and model, and copyright applications worldwide for protection of rights to any Inventions.

E.             LEGAL AND EQUITABLE REMEDIES.  Because the Executive’s services are personal and unique and the Executive has had and will continue to have access to and has become and will continue to become acquainted with the Confidential Information and Trade Secrets of NFM, and because any breach by the Executive of any of the confidentiality covenants and restrictive covenants contained in Section 4 would result in irreparable injury and damage for which money damages would not provide an adequate remedy, NFM shall have the right to enforce the restrictions set forth in Section 4 by injunction, specific performance or other equitable relief, without bond and without prejudice to any other rights and remedies that NFM may have for a breach, or threatened breach, of the obligations described in Section 4.  The Executive agrees that in any action in which NFM seeks injunction, specific performance or other equitable relief, the Executive will not assert or contend that any of the provisions of Section 4 are unreasonable or otherwise unenforceable.

F.             SCOPE/BLUE PENCIL PROVISIONS.  Executive agrees that the duration, scope and geographic area of the restrictions stated in this Section are reasonable and necessary given the nature of NFM’s Business.  However, in the event that a court or arbitrator of competent jurisdiction shall hold that the duration, scope, geographic area or other restrictions stated herein are unreasonable and unenforceable under circumstances then existing, the parties agree that the maximum duration, scope, area or other restrictions reasonable under such circumstances shall be substituted for the stated duration, scope, area or other restrictions.

G.            INDEPENDENT AGREEMENT.  The covenants made in this Section 4 shall be construed as an agreement

independent of any other provisions of this Agreement, and shall survive the termination of this Agreement.  Moreover, the existence of any claim or cause of action of Executive against NFM, whether or not predicated upon the terms of this Agreement, shall not constitute a defense to the enforcement of these covenants.  Notwithstanding anything to the contrary in this paragraph, Executive shall be released from his obligations under Section 4(A) of this Agreement if NFM is in material breach of its obligations set forth in Section 2(B) of this Agreement, provided such material breach remains uncured for more than thirty (30) days after written notice of said breach from Executive to NFM.

5.             ARBITRATION.  To the maximum extent permitted by law, all disputes, controversies, claims, or demands of any kind or nature arising between the parties in connection with this Agreement, whether at law or in equity or based upon common law or any federal or state statute, rule, or regulation, that cannot be resolved between the parties through NFM’s internal complaint resolution procedures, shall be submitted to binding arbitration by the American Arbitration Association; provided, however, that this arbitration requirement shall not apply to any action by either party to obtain injunctive relief to prevent any violation by the other party of the terms of this Agreement, which injunctive action may be brought in any court of competent jurisdiction. The filing of a claim for injunctive relief shall not allow either party to raise any other claim outside arbitration.

Any arbitration commenced hereunder shall be initiated in Boulder, Colorado and shall be governed by the AAA National Rules for the Resolution of Employment Disputes.  The arbitration shall occur before a single arbitrator that shall be mutually agreed upon by the parties hereto.  If the parties cannot agree on a single arbitrator, then an arbitrator shall be selected in accordance with the rules of AAA.  The arbitration must be filed within six months of the act or omission which gives rise to the claim.  Each party shall be entitled to take any discovery as is permitted by the applicable rules and the arbitrator. In determining the extent of discovery, the arbitrator shall exercise discretion, but shall consider the expense of the desired discovery and the importance of the discovery to a just adjudication.

The findings, conclusions, and award rendered in any arbitration shall be binding upon the parties and shall finally determine all questions of fact relating to the dispute. Judgment upon the arbitration award may be entered in the appropriate court, state or federal, having jurisdiction, and each party expressly waives any right to appeal any such judgment rendered by the court.   Any

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party may apply to a court of competent jurisdiction for entry of judgment on the arbitration award.

The costs of the arbitration shall be advanced equally by the parties, however the prevailing party in any arbitration or other legal action brought to enforce or defend the terms of this Agreement shall be entitled, in addition to any other remedies available to such party, to an award of reasonable attorney’s fees and costs.  Any party may apply to a court of competent jurisdiction for entry of judgment on the arbitration award.

The parties agree that failure to comply with the provisions of this paragraph shall constitute grounds for the dismissal of any suit, action, or proceeding instituted in any federal, state, or local court or before any administrative tribunal with respect to any dispute which arises during the period of this Agreement and which is subject to this arbitration agreement. The arbitration provisions of this Agreement are specifically enforceable by each party to the Agreement and shall survive the termination or expiration of the Agreement.

THE EXECUTIVE UNDERSTANDS THAT THIS AGREEMENT TO ARBITRATE ALL ARBITRABLE DISPUTES MEANS THE EXECUTIVE IS AGREEING TO WAIVE TO THE MAXIMUM EXTENT PERMITTED BY LAW ANY RIGHT THE EXECUTIVE MAY HAVE TO ASK FOR A JURY OR COURT TRIAL IN ANY DISPUTE WITH THE COMPANY.

6.             NO CONFLICTING OBLIGATIONS OF EXECUTIVE.  Executive represents and warrants that he is not subject to any duties or restrictions under any prior agreement with any previous employer or other person or entity, and that he has no rights or obligations which may conflict with the interests of NFM or with the performance of Executive’s duties and obligations under this Agreement.  Executive agrees to notify NFM immediately if any such conflicts occur in the future.

7.             SUCCESSORS.

A.            This Agreement is personal to Executive and shall not be assignable by Executive.

B.            This Agreement shall inure to the benefit of NFM and its successors and assigns.  Upon written notice to Executive, NFM may assign this Agreement to any successor or affiliated entity, subsidiary, sibling, or parent company.

8.             LAW CHANGES.  To the extent that any payment under this Agreement is deemed to be deferred compensation subject to the requirements of section 409A of the Code, this

Agreement shall be administered so that such payments will be made in accordance with the requirements of section 409A of the Code.

9.             INDEMNIFICATION.  NFM agrees to defend and indemnify Executive against all criminal and civil claims for acts within the scope of his duties to the maximum extent allowed by law, but excluding acts of gross negligence and willful misconduct.  Additionally, NFM shall pay all attorneys’ fees and costs related to any actual or threatened legal action against Executive as such fees and costs arise.  NFM agrees to maintain D&O insurance that covers Executive for all acts within the scope of his duties, but excluding acts of gross negligence and willful misconduct.

10.          MISCELLANEOUS

A.            Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado, without reference to the principles of conflict of laws.

B.            Captions/Headings.  The captions and headings of this Agreement are not part of the provisions hereof and shall have no force or effect.

C.            Entire Agreement.  This Agreement contains the full and complete understanding between the parties hereto and supersedes all prior understandings, whether written or oral pertaining to the subject matter hereof.

D.            Modifications of Agreement.  This Agreement may not be amended or modified otherwise than by written agreement executed by Executive and by the designated representative of the Board.  Notwithstanding anything to the contrary, NFM hereby reserves the right to unilaterally amend this Agreement as necessary to avoid the imposition of liability under or as a consequence of the application of the provisions of Section 409A of the Code.

E.             Notices.  All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, or by facsimile, or by email, or by hand delivery to such address as either party shall have furnished to the other in writing in accordance herewith:

New Frontier Media, Inc.

7007 Winchester Circle, Suite 200

Boulder, CO 80301

Attn:  General Counsel

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Executive:

Grant Williams

F.             Severability.  If any provision of this Agreement or application thereof to anyone or under any circumstances is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and shall not invalidate or render unenforceable such provision or application in any other jurisdiction.  If any provision is held void, invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstances.

G.            Withholdings.  NFM shall withhold from any amounts payable under this Agreement such amounts as are required to be withheld pursuant to any applicable law or regulation, including without limitation amounts required to

be withheld for Federal, State and local taxes, as well as garnishments and other required withholdings.

H.            Remedies Cumulative; No Waiver.  No remedy conferred upon a party by this Agreement is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to any other remedy given under this Agreement or now or hereafter existing at law or in equity.  The failure of either party to insist upon strict compliance with any provision of this Agreement, or the failure to assert any right either party may have hereunder, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

I.              Counterparts.  This Agreement may be executed in any number of counterparts (including facsimile counterparts), each of which shall be an original, but all of which together shall constitute one instrument.

IN WITNESS WHEREOF, Executive has hereunto set Executive’s hand, and NFM has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

NEW FRONTIER MEDIA, INC.		EXECUTIVE
By:	/s/ Michael Weiner	By:	/s/ Grant Williams
Name: Michael Weiner		Name: Grant Williams
Title: Chief Executive Officer

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EX-10.04

Exhibit 10.04

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), dated as of this 29 day of September, 2008 (the “Effective Date”) by and between IRA BAHR, an individual (the “Executive”), and NEW FRONTIER MEDIA, INC., a Colorado corporation with offices at 7007 Winchester Circle, Suite 200, Boulder, CO 80301, as well as its affiliates and subsidiaries whether now in existence or formed in the future. (“NFM”), recites and provides as follows:

WHEREAS, Executive is and has been previously employed by NFM pursuant to one or more employment agreements that are superseded and replaced by this Agreement in their entirety;

WHEREAS, NFM desires to retain the services of Executive, and Executive desires to be employed by NFM, all on the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, NFM and Executive agree as follows:

1.             TERM.  The Term of this Agreement shall begin as of the Effective Date and shall continue until midnight on March 31, 2011, or such date as the Agreement is terminated by either party as hereinafter provided (the “Term”).

2.             TERMS OF EMPLOYMENT.

A.            POSITION AND DUTIES.

(i)            During the Term, Executive shall have the title of Chief Operating Officer and shall perform such executive duties as are commensurate with such title.

(ii)           Executive’s services shall be performed at NFM’s headquarters in Boulder, Colorado.  However, Executive may also be required by his job responsibilities to travel on NFM business, and Executive agrees to do so.

(iii)          During the Term, Executive agrees to devote his full-time and attention to the business and affairs of NFM.  Executive’s employment under this Agreement shall be Executive’s exclusive employment during the Term of this Agreement.  Service on any other company’s board of directors by Executive requires the written consent of the Compensation Committee of the Board of Directors of NFM (“Compensation Committee”).

B.            COMPENSATION.

(i)            Base Salary.  During the Term, Executive shall receive a base salary (“Base Salary”), which shall be paid in equal installments on a bi-weekly basis, at the rate of Four Hundred Fifty Thousand Dollars ($450,000.00) per annum, which Base Salary may be reviewed and adjusted, but in no event decreased, annually.  The term “Base Salary” as used throughout this Agreement shall mean the base salary paid to

Executive as so increased during the Term.  Any increase in Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement.  The Executive’s Base Salary shall be subject to all applicable federal, state and local withholding taxes and required withholdings under any NFM benefits plans Executive participates in.

(ii)           Bonus Based On Objective Criteria: In addition to Executive’s Base Salary, Executive shall be entitled to annual bonuses for each fiscal year during the Term in amounts to be determined based on performance criteria set by the Compensation Committee at its sole discretion.  The performance criteria for each fiscal year of this Agreement shall be set by the Compensation Committee within sixty (60) days of the commencement of such fiscal year of this Agreement and shall be set in accordance with the following process: After the Compensation Committee receives a budget for such fiscal year, the Compensation Committee shall provide to Executive proposed performance criteria for Executive’s comments.  Following receipt of the proposed performance criteria, Executive shall have two (2) weeks to provide to the Compensation Committee Executive’s comments concerning the proposed performance criteria.  The Compensation Committee shall consider Executive’s comments and shall thereafter provide to Executive the final performance criteria as set by the Compensation Committee for such fiscal year.  The bonus based on objective criteria shall be in an amount up to, but no greater than, an amount equal to one-quarter of Executive’s Base Salary for the fiscal year then ending.

(iii)          Discretionary Bonus: In addition to Executive’s Base Salary and any bonus based on objective criteria, the Compensation Committee may, in its sole discretion, award to Executive additional annual bonus(es).  Any

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discretionary bonus shall be set by the Compensation Committee in an amount up to, but no greater than, an amount equal to three-quarters of the Executive’s then current Base Salary for the fiscal year then ending.

 (iv)         All bonuses payable to Executive pursuant to subsections (ii) and (iii), above, shall be paid within two and one-half (2 1/2) months of the end of the fiscal year for which it is awarded.  No discretionary bonus shall be payable to Executive in connection with a fiscal year if Executive’s employment is terminated for “Cause” (as defined below) prior to the end of the applicable fiscal year.  Discretionary bonuses following termination prior to the end of the applicable fiscal year for reasons other than Cause may be paid depending upon the exercise of Compensation Committee discretion pursuant to Section 2(B) above.  No bonus based on objective criteria shall be payable to Executive if Executive’s employment is terminated for Cause prior to the achievement of the performance criteria set by the Compensation Committee.  In the event of a termination for reasons other than Cause in the last quarter of a fiscal year, bonuses based on objective criteria shall be prorated based upon the number of months worked in the fiscal year if Executive has achieved, or is on track to achieve, the applicable criteria.  The foregoing shall not apply to bonuses payable as a result of a “Change in Control Termination” (as defined below), which shall be paid pursuant to Section 3(F).

(v)           Stock Options.  Executive shall be eligible to receive stock options under the terms and conditions of any applicable Stock Option Plan approved by shareholders of NFM, on the terms and conditions set forth in such a plan.  Stock Options shall be granted at the discretion of the Board of Directors based upon the recommendations of the Compensation Committee.

(vi)          Expenses.  During the Term, Executive shall be entitled to receive reimbursement for all employment-related expenses incurred by Executive in accordance with the policies, practices and procedures of NFM as in effect generally from time to time after the Effective Date with respect to other employees at Executive’s level within NFM.

(vii)         Vacation.  Executive acknowledges that NFM has no policy concerning vacation time or sick leave applicable to its executive level employees and, by executing this Agreement, Executive acknowledges and agrees that he shall not accrue any such vacation or sick leave benefits during the Term.  Executive is authorized to take paid time off provided he meets his professional and productivity obligations to NFM as determined by the Chief Executive Officer of NFM Executive is to coordinate time off with the Chief Executive Officer or his designee.

(viii)        Car Allowance.  During the Term, the Executive shall be entitled to an $850 a month car allowance in accordance with NFM’s car allowance policy, in lieu of expenses associated with the operation of his automobile.

(ix)           Other Benefits.  During the Term, Executive shall be entitled to such health insurance and other benefits, in accordance with the policies, programs and practices of NFM which are in effect from time to time after the Effective Date with respect to other employees at Executive’s level within NFM.

(x)            Relationship Subsequent to this Agreement.  On or before the end of the Term, NFM and Executive shall address the subject of a new or extended employment agreement to take effect upon the expiration of this Agreement.  If the parties do not execute a new written agreement upon the expiration of this Agreement, but the parties are negotiating a new agreement in good-faith, Executive shall continue to be paid the Base Salary then in effect in regular bi-weekly installments until a new agreement is executed.

3.             TERMINATION OF EMPLOYMENT.

A.            DEATH.  If the Executive dies while employed by NFM, the Executive’s employment shall terminate on the date of death and NFM shall pay to the Executive’s executor, legal representative, administrator or designated beneficiary, as applicable, any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  Otherwise, NFM shall have no further liability or obligation under this Agreement to the Executive’s executors, legal representatives, administrators, heirs or assigns or any other person claiming under or through the Executive.

B.            DISABILITY.  If the Executive incurs a Disability (as defined below) during the Term, the Executive’s employment shall terminate on the date of Disability.  If the Executive’s employment terminates on account of his Disability, the Executive shall be entitled to receive any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  For purposes of this Agreement, the term “Disability” shall have the same meaning as under NFM long-term disability plan, or if there is no such plan, if the Executive by virtue of ill health or other disability is unable to perform substantially and continuously the duties assigned to him (as determined by the Board at its sole discretion) for more than 90 consecutive or non-consecutive days out of any 6 consecutive month period.

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C.            CAUSE.  NFM may terminate the Executive’s employment at any time for Cause (as defined below) upon written notice to the Executive (subject to the Executive’s opportunity to cure described below), in which event all payments under this Agreement shall cease, except for any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  For purposes of this Agreement, “Cause” shall mean any of the grounds for termination of the Executive’s employment listed below:

(i)            The Executive’s conviction of, or plea of guilty or nolo contendere to, (a) a felony, (b) a crime involving moral turpitude, or (c) a criminal act which adversely affects the business or reputation of NFM or its subsidiaries;

(ii)           The Executive’s engagement in willful misconduct or willful or gross neglect in the performance of his duties hereunder, or commission of an act of fraud, embezzlement, theft, dishonesty, breach of trust or misappropriation of funds against NFM or its subsidiaries;

(iii)          Material breach of this Agreement by the Executive;

(iv)          Material violation by Executive of the “Prohibition of Harassment and Discrimination” set forth in the Employee Handbook (Rev 6/25/2008); or

(v)           The Executive’s persistent and continuing failure to perform the Executive’s reasonable duties hereunder.

If there is an event or condition under Section 3(C)(iii), (iv) or (v) above, the Executive shall have ten (10) days from the date NFM provides notice to the Executive of the event or condition constituting Cause to cure such event or condition (to the extent the event or condition is curable), and if the Executive does so fully cure such event or condition, such event or condition shall not constitute Cause hereunder.

D.            WITHOUT CAUSE. In the event that NFM at any time prior to the occurrence of a Change in Control: terminates Executive’s employment without Cause; or materially breaches this Agreement; or materially diminishes Executive’s title, position or responsibilities; or reduces Executive’s Base Salary, this Section 3(D) shall apply:

(i)            Executive shall be under no obligation to render any additional services to NFM and shall be allowed to seek other employment, subject to the Restrictive Covenants set forth herein.

(ii)           Unless the Executive complies with the provisions of Section 3(D)(iii) below, upon termination pursuant to this

Section 3(D), Executive shall be entitled to receive only any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  No other payments or benefits shall be due under this Agreement to the Executive.

(iii)          Notwithstanding the provisions of Section 3(D)(ii), upon termination pursuant to Section 3(D), if the Executive executes and does not revoke a written release, in a form reasonably acceptable to both parties, of any and all claims against NFM and all related parties with respect to all matters arising out of the Employee Retirement Income Security Act of 1974, the Family and Medical Leave Act of 1993, the WARN Act, or claims of discrimination under the Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended and the Americans with Disabilities Act of 1990 (other than claims for any entitlements under the terms of this Agreement or under any plans or programs of the Company under which the Executive has accrued and is due a benefit and to all indemnification and similar rights under the Company’s Articles of Incorporation, Bylaws or otherwise) (the “Release”), the Executive shall be entitled to receive the following:

(a)           The immediate and full payment of all amounts earned, accrued and owing but not yet paid under Section 2, above, and any benefits accrued and due under any applicable benefit plans and programs of NFM, and

(b)           An amount equal to Executive’s then current Base Salary for the remaining duration of the Term or to an amount equivalent to the then current annual Base Salary multiplied by 1½, whichever is greater, which shall be payable in accordance with NFM’s normal payroll practices in regular bi-weekly installments, and

(c)           Any applicable bonus payments pursuant to Section 2(B);

(d)           The immediate vesting of all outstanding options awarded to Executive prior to the Date of Termination; and

(e)           Payment of premiums on behalf of Executive and his dependents to allow Executive and his dependents to receive COBRA coverage for health, dental and vision benefits then being provided for Executive and his dependents at the time Executive’s employment is terminated, for eighteen (18) months, which benefit shall be provided subject to the applicable terms and conditions governing such COBRA coverage; provided, however that if Executive commences employment with another

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employer and is eligible to receive medical or other welfare benefits under another employer-provider plan, the medical and other welfare benefits to be provided by NFM as described herein shall terminate.

E.             CHANGE IN CONTROL.  For purposes of this Agreement, a “Change in Control” of NFM shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have occurred:

(i)            Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Act”)), becomes the “beneficial owner” (as defined in Rule 13-d under the Act) directly or indirectly, of securities representing more than fifty percent (50%) of the (a) total outstanding shares of common stock of NFM, or (b) the total combined voting power represented by NFM’s then outstanding voting securities other than by virtue of a merger, consolidation, or similar transaction.  However, if any one person, or more than one person acting as a group, owns 50% or more of the total fair market value or total voting power represented by NFM’s then outstanding voting securities, the increase in beneficial ownership by such person or group or persons will not be considered a Change in Control.

(ii)           A change in the composition of the Board of Directors of NFM (“Board”), as a result of which less than a majority of the directors are Incumbent Directors.  “Incumbent Directors” shall mean directors who either (a) are directors of New Frontier as of the date hereof, or (b) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors of NFM).

(iii)          NFM is a party to a merger, consolidation or consummates a similar transaction with any other business entity after which at least 50% of the total voting power of the resulting entity is not held by the shareholders of NFM prior to the merger, or NFM adopts, and the stockholders approve, if necessary, a plan of complete liquidation or dissolution of NFM, a complete dissolution or liquidation of NFM occurs or NFM sells or disposes of substantially all of its assets to an unrelated party (as contemplated by Section 1.409A-3(i)(5)(vii)(3) of the Treasury Regulations promulgated under the Code (as defined below)).

F.             CHANGE OF CONDITIONS OF EMPLOYMENT.  At any time following the occurrence of a Change in Control, if NFM terminates Executive’s employment without Cause or Executive terminates his employment due to NFM: materially breaching this Agreement; or materially diminishing Executive’s title, position or responsibilities; or reducing Executive’s Base Salary; or relocating NFM’s executive offices outside of the

Boulder, Colorado area, Executive shall receive the following within thirty (30) days of the Date of Termination (the aforementioned shall collectively be referred to as a “Change in Control Termination”):

(i)            Payment of all amounts earned, accrued and owing but not yet paid under Section 2, above, and any benefits accrued and due under any applicable benefit plans and programs of NFM, and

(ii)           A one time, lump sum payment of Executive’s then current Base Salary for the remaining duration of the Term or to an amount equivalent to the then current Base Salary multiplied by 1½, whichever is greater, and

(iii)          A one time, lump sum payment of an amount equivalent to one year’s bonus as measured by the average bonuses awarded to Executive during the immediately preceding two (2) full bonus years; and;

(iv)          The immediate vesting of all outstanding options awarded to Executive prior to the Date of Termination; and

(v)           Payment of premiums on behalf of Executive and his dependents to allow Executive and his dependents to receive COBRA coverage for health, dental and vision benefits then being provided for Executive and his dependents at the time Executive’s employment is terminated, for eighteen (18) months, which benefit shall be provided subject to the applicable terms and conditions governing such COBRA coverage.

G.            RESIGNATION (NOT A CHANGE IN CONTROL TERMINATION).  At any time during the Term, Executive may voluntarily terminate his employment for any reason.  In such event, after the effective date of such termination, no payments shall be due under this Agreement, except that Executive shall be entitled to any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of the Company, which amounts shall be paid within the time frames specified by Colorado state wage law.

H.            NOTICE OF TERMINATION. Any termination under this Agreement shall be communicated by a written notice to the other party, and may be sent via first class mail, facsimile transmission, email or personal delivery (the “Notice of Termination”).

I.              DATE OF TERMINATION. “Date of Termination” shall mean: (i) the date of transmission of the Notice of Termination by facsimile, email or personal delivery, or (ii) three calendar days after the date of mailing by first class mail, or (iii) date of death or disability (if applicable).

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J.             EXCESS PARACHUTE PAYMENTS.  In the event of a Change in Control Termination, unless otherwise agreed by both parties acting reasonably, a nationally recognized accounting firm (“Accounting Firm”) suitable to both parties shall be timely engaged to render an opinion on whether the Executive is expected to pay an excise tax on “excess parachute payments” (as defined in Section 280G(b) of the Internal Revenue Code of 1986, as amended), as a result of payments due under section 5(B) of this Agreement.  Within 10 days following Company’s receipt of a written opinion of the Accounting Firm, the Company shall, based solely upon the Accounting Firm’s determination of which option shall result in a higher net total net consideration to the Executive, either: (i) reduce the amounts and or benefits payable to the Executive under Section 3(D)(iii)(a)(b)(c)(d) and (e) to an amount that is $1 less than the amount that would constitute an excess parachute payment and pay such reduced amount to Executive, or (ii) pay the full amount due under Section 3(D)(iii)(a)(b)(c)(d) and (e) to the Executive.  Payments by the Company to the Executive pursuant to this paragraph shall be made without setoff, counterclaim or other withholding.  The parties agree that the written opinion of the Accounting Firm shall be final in all respects.  The fees and expenses of the Accounting Firm shall be paid by the Company.

K.            APPLICATION OF SECTION 409A OF THE INTERNAL REVENUE CODE.  Notwithstanding anything contained herein (including in Sections 3(D) or 3(F)) to the contrary, if Executive is a “specified employee” within the meaning of Section 1.409A-l(i) of the Treasury Regulations promulgated under the Internal Revenue Code of 1986, as amended (the “Code”), as of the Date of Termination, then payments to Executive hereunder shall not be made before the date that is six months after the Date of Termination (or if earlier, the date of death of Executive); provided, however, that during such six-month period, NFM shall make any and all payments contemplated hereunder to the extent such payments do not exceed two times the lesser of (i) Executive’s annualized compensation, based upon the annual rate of compensation for the calendar year preceding the year in which the Date of Termination occurs, or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(l7) of the Code for the year in which the Date of Termination occurs; and provided further that any amounts deferred hereunder shall be paid in a lump-sum amount at the expiration of such six-month period.

4.             RESTRICTIVE COVENANTS

For good and valuable consideration, including but not limited to the increase in Base Salary effectuated by this Agreement, and the continued employment of Executive by NFM, Executive agrees to be bound to the following restrictive covenants:

A.            COVENANT AGAINST COMPETITION. Executive agrees that he holds an executive level position with NFM, and Executive further agrees that by virtue of his position he has had access and will continue to have access to NFM’s Confidential Information and Trade Secrets (as those terms are defined below), and Executive further agrees that NFM has a legitimate business interest in preventing Executive from putting to a competitive use the information and relationships which pertain to NFM that Executive acquired in the course of his employment, and in protecting its customer base.  Accordingly, Executive agrees to the following:

(i)            The Executive acknowledges and agrees that the principal business of NFM is the sale, promotion and electronic distribution of adult themed programming and events, whether such adult themed programming and events are sold, promoted, or electronically distributed by means now known or hereafter discovered including but not limited to the Internet, satellite systems, cable systems, hotels, IPTV, mobile and/or stand alone systems (the “Business”).

(ii)           In addition, the Executive acknowledges and agrees that: NFM is one of the limited number of companies who have developed the Business; the Executive’s work for NFM has given and will continue to give him access to the Confidential Information and Trade Secrets of the Company; the value of all goodwill resulting from the operation of the Business of NFM and its subsidiaries and other affiliates should properly belong to NFM; the covenants and agreements of the Executive in this Section are necessary to preserve the value of such goodwill for the benefit of NFM; the proprietary technologies developed by NFM and its predecessors offer NFM a distinct competitive advantage, and NFM would not have entered into this Agreement but for the covenants and agreements set forth in this Section.  Accordingly, the Executive covenants and agrees that:

(a)           By and in consideration of the salary and benefits to be provided by NFM hereunder, including the severance arrangements set forth herein, and in consideration of the Executive’s executive position and exposure to the Confidential Information and Trade Secrets of NFM, the Executive covenants and agrees that commencing on the date hereof and ending on the date upon which the Executive’s employment terminates (the “Restricted Period”), he shall not anywhere in the Restricted Territory, directly or indirectly: engage in any element of the Business or otherwise compete with NFM; render any services to any person, corporation, partnership or other entity (other than NFM or its affiliates) primarily engaged in any element of the Business; or become interested in any such person, corporation, partnership or other entity (other than NFM or its affiliates) as a partner, shareholder, principal, agent, employee, consultant or in any other

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relationship or capacity; provided, however, that, notwithstanding the foregoing, the Executive may invest in securities of any entity, solely for investment purposes and without participating in the business thereof, if (A) such securities are traded on any national securities exchange or the National Association of Securities Dealers, Inc. Automated Quotation System, (B) the Executive is not a controlling person of, or a member of a group which controls, such entity and (C) the Executive does not, directly or indirectly, own five percent (5%) or more of any class of securities of such entity.

For purposes of this Agreement, “Restricted Territory” means any state, county, or locality in the United States in which NFM conducts Business and any other country, jurisdiction or territory in which NFM has generated material revenue during the last six (6) months of Executive’s employment.

For purposes of this Agreement, “Trade Secret” means all non-public information whether tangible or intangible related to the products, services or business of NFM that (A) derives economic value, actual or potential, from not being generally known to or readily ascertainable by other persons who can obtain economic value from its disclosure or use; or (B) is the subject of efforts by NFM that are reasonable under the circumstances to maintain its secrecy, which might include: (i) marking any information reduced to tangible form clearly and conspicuously with a legend identifying its confidential or trade secret nature; (ii) identifying any oral communication as confidential or secret immediately before, during, or after such oral communication; or (iii) otherwise treating such information as confidential or secret.  Assuming the criteria in clauses (A) or (B) of this paragraph are met, Trade Secrets includes information, without regard to form, including, but not limited to, technical and nontechnical data, formulas, patterns, designs, compilations, computer programs and software, devices, inventions, methods, techniques, drawings, processes, financial data, financial plans, product plans, lists of actual or potential customers and suppliers which are not commonly known by or available to the public, research, development, and existing and future products.

(b)           Notwithstanding anything to the contrary in Section 4(A)(ii)(a) above, in the event of a Change in Control Termination, such Restricted Period shall terminate and Executive shall therefore be free to seek employment elsewhere without regard to whether any prospective employer is a competitor of NFM.

B.            NON-SOLICITATION.  During the Restricted Period, Executive shall not, directly or indirectly, (i) solicit or encourage to leave the employment or other service of NFM any employee or independent contractor thereof; or (ii) hire (on behalf of Executive or any other person or entity) any employee or independent contractor who has left the

employment or other service of NFM within the one-year period which follows the termination of such employer’s or independent contractor’s employment or other service with NFM.  For purposes of the preceding sentence, the term “independent contractor” shall refer to independent contractors of NFM whose services relate directly to the conduct of the Business.  During the Restricted Period, the Executive will not, whether for his own account or for the account of any other person, firm, corporation or other business organization, intentionally interfere with NFM’ relationship with, or endeavor to entice away from NFM any person who during the Term is or was a customer, client, supplier, licensee or other business relation of NFM.

C.            CONFIDENTIALITY OBLIGATIONS

(i)            CONFIDENTIAL INFORMATION.  As used in this Agreement, “Confidential Information” includes, without limitation, design information, manufacturing information, business, financial, and technical information, sales and processing information, product information, customer lists, vendor information, vendor lists, pricing information, corporation and personal business opportunities, software, computer disks or files, or any other electronic information of any kind, Rolodex cards or other lists of names, addresses or telephone numbers, financial information, current projects, projects in development and future projects, forecasts, plans, contracts, releases, and other documents, materials, writings or information, including those which are prepared, developed or created by Executive, or which come into the possession of Executive by any means or manner, and which relate directly or indirectly to NFM (all of the above collectively referred to as “Confidential Information”).  Confidential Information includes information developed by Executive in the course of Executive’s services for NFM, as well as other Confidential Information to which Executive may have access in connection with Executive’s services.  Confidential Information also includes the confidential information of other individuals or entities with which NFM has a business relationship.  Confidential Information shall not include any information (a) which is in the public domain or which enters the public domain through no act of omission of Executive or (b) which was in the possession of Executive prior to the commencement of his employment with NFM.

(ii)           DUTY OF CONFIDENTIALITY.  At all times during his employment and thereafter, Executive will maintain in strictest confidence and will not, directly or indirectly, disclose or use (or allow others working with or related to Executive to disclose or use) any Confidential Information belonging to NFM, whether in oral, written, electronic or permanent form, except solely to the extent necessary to perform services on behalf of NFM.  Upon termination of this Agreement, or at the request of NFM

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prior to its termination, Executive shall deliver forthwith to NFM all Confidential Information (and all copies thereof) in Executive’s possession or control belonging to NFM and all tangible items embodying or containing Confidential Information.

(iii)         DOCUMENTS, RECORDS, ETC.  All documents, records, data, equipment and other physical property, whether or not pertaining to Confidential Information, which are furnished to Executive by NFM or are produced by Executive in connection with Executive’s services will be and remain the sole property of NFM.  Executive will return to NFM forthwith all such materials and property upon the termination of this Agreement or sooner if requested by NFM.

D.            ASSIGNMENT OF RIGHTS.  Executive shall make full and prompt disclosure to NFM of any and all designs, intellectual property, software, inventions, discoveries, or improvements (individually and collectively, “Inventions”) made by Executive as a result or product of his employment relationship with NFM.  Executive hereby assigns to NFM without additional compensation the entire worldwide right, title and interest in and to such Inventions, and related intellectual property rights and without limitation all copyrights, copyright renewals or reversions, trademarks, trade names, trade dress rights, industrial design, industrial model, inventions, priority rights, patent rights, patent applications, patents, design patents and any other rights or protections in connection therewith or related thereto, for exploitation in any form or medium, of any kind or nature whatsoever, whether now known or hereafter devised.  To the extent that any work created by Executive can be a work for hire pursuant to U.S. Copyright Law, the parties deem such work a work for hire and Executive should be considered the author thereof.  Executive shall, at the request of NFM, without additional compensation from time to time execute, acknowledge and deliver to NFM such instruments and documents as NFM may require to perfect, transfer and vest in NFM the entire right, title and interest in and to such inventions.  In the event that Executive does not timely perform such obligations, Executive hereby makes NFM and its officers his attorney in fact and gives them the power of attorney to perform such obligations and to execute such documents on Executive’s behalf.  Executive shall cooperate with NFM upon NFM’s request and at NFM’s cost but without additional compensation in the preparation and prosecution of patent, trademark, industrial design and model, and copyright applications worldwide for protection of rights to any Inventions.

E.             LEGAL AND EQUITABLE REMEDIES.  Because the Executive’s services are personal and unique and

the Executive has had and will continue to have access to and has become and will continue to become acquainted with the Confidential Information and Trade Secrets of NFM, and because any breach by the Executive of any of the confidentiality covenants and restrictive covenants contained in Section 4 would result in irreparable injury and damage for which money damages would not provide an adequate remedy, NFM shall have the right to enforce the restrictions set forth in Section 4 by injunction, specific performance or other equitable relief, without bond and without prejudice to any other rights and remedies that NFM may have for a breach, or threatened breach, of the obligations described in Section 4.  The Executive agrees that in any action in which NFM seeks injunction, specific performance or other equitable relief, the Executive will not assert or contend that any of the provisions of Section 4 are unreasonable or otherwise unenforceable.

F.             SCOPE/BLUE PENCIL PROVISIONS.  Executive agrees that the duration, scope and geographic area of the restrictions stated in this Section are reasonable and necessary given the nature of NFM’s Business.  However, in the event that a court or arbitrator of competent jurisdiction shall hold that the duration, scope, geographic area or other restrictions stated herein are unreasonable and unenforceable under circumstances then existing, the parties agree that the maximum duration, scope, area or other restrictions reasonable under such circumstances shall be substituted for the stated duration, scope, area or other restrictions.

G.            INDEPENDENT AGREEMENT.  The covenants made in this Section 4 shall be construed as an agreement independent of any other provisions of this Agreement, and shall survive the termination of this Agreement.  Moreover, the existence of any claim or cause of action of Executive against NFM, whether or not predicated upon the terms of this Agreement, shall not constitute a defense to the enforcement of these covenants.  Notwithstanding anything to the contrary in this paragraph, Executive shall be released from his obligations under Section 4(A) of this Agreement if NFM is in material breach of its obligations set forth in Section 2(B) of this Agreement, provided such material breach remains uncured for more than thirty (30) days after written notice of said breach from Executive to NFM.

5.             ARBITRATION.  To the maximum extent permitted by law, all disputes, controversies, claims, or demands of any kind or nature arising between the parties in connection with this Agreement, whether at law or in equity or based upon common law or any federal or state

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statute, rule, or regulation, that cannot be resolved between the parties through NFM’s internal complaint resolution procedures, shall be submitted to binding arbitration by the American Arbitration Association; provided, however, that this arbitration requirement shall not apply to any action by either party to obtain injunctive relief to prevent any violation by the other party of the terms of this Agreement, which injunctive action may be brought in any court of competent jurisdiction. The filing of a claim for injunctive relief shall not allow either party to raise any other claim outside arbitration.

Any arbitration commenced hereunder shall be initiated in Boulder, Colorado and shall be governed by the AAA National Rules for the Resolution of Employment Disputes.  The arbitration shall occur before a single arbitrator that shall be mutually agreed upon by the parties hereto.  If the parties cannot agree on a single arbitrator, then an arbitrator shall be selected in accordance with the rules of AAA.  The arbitration must be filed within six months of the act or omission which gives rise to the claim.  Each party shall be entitled to take any discovery as is permitted by the applicable rules and the arbitrator. In determining the extent of discovery, the arbitrator shall exercise discretion, but shall consider the expense of the desired discovery and the importance of the discovery to a just adjudication.

The findings, conclusions, and award rendered in any arbitration shall be binding upon the parties and shall finally determine all questions of fact relating to the dispute. Judgment upon the arbitration award may be entered in the appropriate court, state or federal, having jurisdiction, and each party expressly waives any right to appeal any such judgment rendered by the court.   Any party may apply to a court of competent jurisdiction for entry of judgment on the arbitration award.

The costs of the arbitration shall be advanced equally by the parties, however the prevailing party in any arbitration or other legal action brought to enforce or defend the terms of this Agreement shall be entitled, in addition to any other remedies available to such party, to an award of reasonable attorney’s fees and costs.  Any party may apply to a court of competent jurisdiction for entry of judgment on the arbitration award.

The parties agree that failure to comply with the provisions of this paragraph shall constitute grounds for the dismissal of any suit, action, or proceeding instituted in any federal, state, or local court or before any administrative tribunal with respect to any dispute which arises during the period of this

Agreement and which is subject to this arbitration agreement. The arbitration provisions of this Agreement are specifically enforceable by each party to the Agreement and shall survive the termination or expiration of the Agreement.

THE EXECUTIVE UNDERSTANDS THAT THIS AGREEMENT TO ARBITRATE ALL ARBITRABLE DISPUTES MEANS THE EXECUTIVE IS AGREEING TO WAIVE TO THE MAXIMUM EXTENT PERMITTED BY LAW ANY RIGHT THE EXECUTIVE MAY HAVE TO ASK FOR A JURY OR COURT TRIAL IN ANY DISPUTE WITH THE COMPANY.

6.             NO CONFLICTING OBLIGATIONS OF EXECUTIVE.  Executive represents and warrants that he is not subject to any duties or restrictions under any prior agreement with any previous employer or other person or entity, and that he has no rights or obligations which may conflict with the interests of NFM or with the performance of Executive’s duties and obligations under this Agreement.  Executive agrees to notify NFM immediately if any such conflicts occur in the future.

7.             SUCCESSORS.

A.            This Agreement is personal to Executive and shall not be assignable by Executive.

B.            This Agreement shall inure to the benefit of NFM and its successors and assigns.  Upon written notice to Executive, NFM may assign this Agreement to any successor or affiliated entity, subsidiary, sibling, or parent company.

8.             LAW CHANGES.  To the extent that any payment under this Agreement is deemed to be deferred compensation subject to the requirements of section 409A of the Code, this Agreement shall be administered so that such payments will be made in accordance with the requirements of section 409A of the Code.

9.             INDEMNIFICATION.  NFM agrees to defend and indemnify Executive against all criminal and civil claims for acts within the scope of his duties to the maximum extent allowed by law, but excluding acts of gross negligence and willful misconduct.  Additionally, NFM shall pay all attorneys’ fees and costs related to any actual or threatened legal action against Executive as such fees and costs arise.  NFM agrees to maintain D&O insurance that covers Executive for all acts within the scope of his duties, but excluding acts of gross negligence and willful misconduct.

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10.          MISCELLANEOUS

A.            Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado, without reference to the principles of conflict of laws.

B.            Captions/Headings.  The captions and headings of this Agreement are not part of the provisions hereof and shall have no force or effect.

C.            Entire Agreement.  This Agreement contains the full and complete understanding between the parties hereto and supersedes all prior understandings, whether written or oral pertaining to the subject matter hereof.

D.            Modifications of Agreement.  This Agreement may not be amended or modified otherwise than by written agreement executed by Executive and by the designated representative of the Board.  Notwithstanding anything to the contrary, NFM hereby reserves the right to unilaterally amend this Agreement as necessary to avoid the imposition of liability under or as a consequence of the application of the provisions of Section 409A of the Code.

E.             Notices.  All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, or by facsimile, or by email, or by hand delivery to such address as either party shall have furnished to the other in writing in accordance herewith:

New Frontier Media, Inc.

7007 Winchester Circle, Suite 200

Boulder, CO 80301

Attn:  General Counsel

Executive:

Ira Bahr

F.             Severability.  If any provision of this Agreement or application thereof to anyone or under any circumstances is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and shall not invalidate or render unenforceable such provision or application in any other jurisdiction.  If any provision is held void, invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstances.

G.            Withholdings.  NFM shall withhold from any amounts payable under this Agreement such amounts as are required to be withheld pursuant to any applicable law or regulation, including without limitation amounts required to be withheld for Federal, State and local taxes, as well as garnishments and other required withholdings.

H.            Remedies Cumulative; No Waiver.  No remedy conferred upon a party by this Agreement is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to any other remedy given under this Agreement or now or hereafter existing at law or in equity.  The failure of either party to insist upon strict compliance with any provision of this Agreement, or the failure to assert any right either party may have hereunder, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

I.              Counterparts.  This Agreement may be executed in any number of counterparts (including facsimile counterparts), each of which shall be an original, but all of which together shall constitute one instrument.

IN WITNESS WHEREOF, Executive has hereunto set Executive’s hand, and NFM has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

NEW FRONTIER MEDIA, INC.		EXECUTIVE
By:	/s/ Michael Weiner	By:	/s/ Ira Bahr
Name: Michael Weiner		Name: Ira Bahr
Title: Chief Executive Officer

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EX-10.05

Exhibit 10.05

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), dated as of this 29 day of September, 2008 (the “Effective Date”) by and between KEN BOENISH, an individual (the “Executive”), and NEW FRONTIER MEDIA, INC., a Colorado corporation with offices at 7007 Winchester Circle, Suite 200, Boulder, CO 80301, as well as its affiliates and subsidiaries whether now in existence or formed in the future. (“NFM”), recites and provides as follows:

WHEREAS, Executive is and has been previously employed by NFM pursuant to one or more employment agreements that are superseded and replaced by this Agreement in their entirety;

WHEREAS, NFM desires to retain the services of Executive, and Executive desires to be employed by NFM, all on the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, NFM and Executive agree as follows:

1.             TERM.  The Term of this Agreement shall begin as of the Effective Date and shall continue until midnight on March 31, 2011, or such date as the Agreement is terminated by either party as hereinafter provided (the “Term”).

2.             TERMS OF EMPLOYMENT.

A.            POSITION AND DUTIES.

(i)            During the Term, Executive shall have the title of President and shall perform such executive duties as are commensurate with such title.

(ii)           Executive’s services shall be performed at NFM’s headquarters in Boulder, Colorado.  However, Executive may also be required by his job responsibilities to travel on NFM business, and Executive agrees to do so.

(iii)          During the Term, Executive agrees to devote his full-time and attention to the business and affairs of NFM.  Executive’s employment under this Agreement shall be Executive’s exclusive employment during the Term of this Agreement.  Service on any other company’s board of directors by Executive requires the written consent of the Compensation Committee of the Board of Directors of NFM (“Compensation Committee”).

B.            COMPENSATION.

(i)            Base Salary.  During the Term, Executive shall receive a base salary (“Base Salary”), which shall be paid in equal installments on a bi-weekly basis, at the rate of Five Hundred Thousand Dollars ($500,000.00) per annum, which Base Salary may be reviewed and adjusted, but in no event decreased, annually.  The term “Base Salary” as used throughout this Agreement shall mean the base salary paid to

Executive as so increased during the Term.  Any increase in Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement.  The Executive’s Base Salary shall be subject to all applicable federal, state and local withholding taxes and required withholdings under any NFM benefits plans Executive participates in.

 (ii)          Bonus Based On Objective Criteria: In addition to Executive’s Base Salary, Executive shall be entitled to annual bonuses for each fiscal year during the Term in amounts to be determined based on performance criteria set by the Compensation Committee at its sole discretion.  The performance criteria for each fiscal year of this Agreement shall be set by the Compensation Committee within sixty (60) days of the commencement of such fiscal year of this Agreement and shall be set in accordance with the following process: After the Compensation Committee receives a budget for such fiscal year, the Compensation Committee shall provide to Executive proposed performance criteria for Executive’s comments.  Following receipt of the proposed performance criteria, Executive shall have two (2) weeks to provide to the Compensation Committee Executive’s comments concerning the proposed performance criteria.  The Compensation Committee shall consider Executive’s comments and shall thereafter provide to Executive the final performance criteria as set by the Compensation Committee for such fiscal year.  The bonus based on objective criteria shall be in an amount up to, but no greater than One Hundred Twenty Five Thousand Dollars ($125,000) for the fiscal year ending March 31, 2009.  The bonus based on objective criteria for the fiscal years ending March 31, 2010 and 2011 shall be in an amount up to, but no greater than, an amount equal to one-quarter of Executive’s Base Salary for the fiscal year then ending.

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(iii)          Discretionary Bonus: In addition to Executive’s Base Salary and any bonus based on objective criteria, the Compensation Committee may, in its sole discretion, award to Executive additional annual bonus(es).  Any discretionary bonus shall be set by the Compensation Committee in an amount up to, but no greater than One Hundred Twenty Five Thousand Dollars ($125,000) for the fiscal year ending March 31, 2009.  Any discretionary bonus granted for the fiscal years ending March 31, 2010 and 2011 shall be in an amount up to, but no greater than, an amount equal to three-quarters of the Executive’s then current Base Salary for the fiscal year then ending.

(iv)          All bonuses payable to Executive pursuant to subsections (ii) and (iii), above, shall be paid within two and one-half (2 1/2) months of the end of the fiscal year for which it is awarded.  No discretionary bonus shall be payable to Executive in connection with a fiscal year if Executive’s employment is terminated for “Cause” (as defined below) prior to the end of the applicable fiscal year.  Discretionary bonuses following termination prior to the end of the applicable fiscal year for reasons other than Cause may be paid depending upon the exercise of Compensation Committee discretion pursuant to Section 2(B) above.  No bonus based on objective criteria shall be payable to Executive if Executive’s employment is terminated for Cause prior to the achievement of the performance criteria set by the Compensation Committee.  In the event of a termination for reasons other than Cause in the last quarter of a fiscal year, bonuses based on objective criteria shall be prorated based upon the number of months worked in the fiscal year if Executive has achieved, or is on track to achieve, the applicable criteria.  The foregoing shall not apply to bonuses payable as a result of a “Change in Control Termination” (as defined below), which shall be paid pursuant to Section 3(F).

(v)           Stock Options.  Executive shall be eligible to receive stock options under the terms and conditions of any applicable Stock Option Plan approved by shareholders of NFM, on the terms and conditions set forth in such a plan.  Stock Options shall be granted at the discretion of the Board of Directors based upon the recommendations of the Compensation Committee.

(vi)          Expenses.  During the Term, Executive shall be entitled to receive reimbursement for all employment-related expenses incurred by Executive in accordance with the policies, practices and procedures of NFM as in effect generally from time to time after the Effective Date with respect to other employees at Executive’s level within NFM.

(vii)         Vacation.  Executive acknowledges that NFM has no policy concerning vacation time or sick leave applicable to its executive level employees and, by executing this Agreement, Executive acknowledges and agrees that he shall not accrue

any such vacation or sick leave benefits during the Term.  Executive is authorized to take paid time off provided he meets his professional and productivity obligations to NFM as determined by the Chief Executive Officer of NFM.  Executive is to coordinate time off with the Chief Executive Officer or his designee.

(viii)        Car Allowance.  During the Term, the Executive shall be entitled to an $850 a month car allowance in accordance with NFM’s car allowance policy, in lieu of expenses associated with the operation of his automobile.

(ix)           Other Benefits.  During the Term, Executive shall be entitled to such health insurance and other benefits, in accordance with the policies, programs and practices of NFM which are in effect from time to time after the Effective Date with respect to other employees at Executive’s level within NFM.

(x)            Relationship Subsequent to this Agreement.  On or before the end of the Term, NFM and Executive shall address the subject of a new or extended employment agreement to take effect upon the expiration of this Agreement.  If the parties do not execute a new written agreement upon the expiration of this Agreement, but the parties are negotiating a new agreement in good-faith, Executive shall continue to be paid the Base Salary then in effect in regular bi-weekly installments until a new agreement is executed.

3.             TERMINATION OF EMPLOYMENT.

A.            DEATH.  If the Executive dies while employed by NFM, the Executive’s employment shall terminate on the date of death and NFM shall pay to the Executive’s executor, legal representative, administrator or designated beneficiary, as applicable, any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  Otherwise, NFM shall have no further liability or obligation under this Agreement to the Executive’s executors, legal representatives, administrators, heirs or assigns or any other person claiming under or through the Executive.

B.            DISABILITY.  If the Executive incurs a Disability (as defined below) during the Term, the Executive’s employment shall terminate on the date of Disability.  If the Executive’s employment terminates on account of his Disability, the Executive shall be entitled to receive any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  For purposes of this

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Agreement, the term “Disability” shall have the same meaning as under NFM long-term disability plan, or if there is no such plan, if the Executive by virtue of ill health or other disability is unable to perform substantially and continuously the duties assigned to him (as determined by the Board at its sole discretion) for more than 90 consecutive or non-consecutive days out of any 6 consecutive month period.

C.            CAUSE.  NFM may terminate the Executive’s employment at any time for Cause (as defined below) upon written notice to the Executive (subject to the Executive’s opportunity to cure described below), in which event all payments under this Agreement shall cease, except for any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  For purposes of this Agreement, “Cause” shall mean any of the grounds for termination of the Executive’s employment listed below:

(i)            The Executive’s conviction of, or plea of guilty or nolo contendere to, (a) a felony, (b) a crime involving moral turpitude, or (c) a criminal act which adversely affects the business or reputation of NFM or its subsidiaries;

(ii)           The Executive’s engagement in willful misconduct or willful or gross neglect in the performance of his duties hereunder, or commission of an act of fraud, embezzlement, theft, dishonesty, breach of trust or misappropriation of funds against NFM or its subsidiaries;

(iii)          Material breach of this Agreement by the Executive;

(iv)          Material violation by Executive of the “Prohibition of Harassment and Discrimination” set forth in the Employee Handbook (Rev 6/25/2008); or

(v)           The Executive’s persistent and continuing failure to perform the Executive’s reasonable duties hereunder.

If there is an event or condition under Section 3(C)(iii), (iv) or (v) above, the Executive shall have ten (10) days from the date NFM provides notice to the Executive of the event or condition constituting Cause to cure such event or condition (to the extent the event or condition is curable), and if the Executive does so fully cure such event or condition, such event or condition shall not constitute Cause hereunder.

D.            WITHOUT CAUSE. In the event that NFM at any time prior to the occurrence of a Change in Control: terminates Executive’s employment without Cause; or materially breaches this Agreement; or materially diminishes

Executive’s title, position or responsibilities; or reduces Executive’s Base Salary, this Section 3(D) shall apply:

(i)            Executive shall be under no obligation to render any additional services to NFM and shall be allowed to seek other employment, subject to the Restrictive Covenants set forth herein.

(ii)           Unless the Executive complies with the provisions of Section 3(D)(iii) below, upon termination pursuant to this Section 3(D), Executive shall be entitled to receive only any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  No other payments or benefits shall be due under this Agreement to the Executive.

(iii)          Notwithstanding the provisions of Section 3(D)(ii), upon termination pursuant to Section 3(D), if the Executive executes and does not revoke a written release, in a form reasonably acceptable to both parties, of any and all claims against NFM and all related parties with respect to all matters arising out of the Employee Retirement Income Security Act of 1974, the Family and Medical Leave Act of 1993, the WARN Act, or claims of discrimination under the Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended and the Americans with Disabilities Act of 1990 (other than claims for any entitlements under the terms of this Agreement or under any plans or programs of the Company under which the Executive has accrued and is due a benefit and to all indemnification and similar rights under the Company’s Articles of Incorporation, Bylaws or otherwise) (the “Release”), the Executive shall be entitled to receive the following:

(a)           The immediate and full payment of all amounts earned, accrued and owing but not yet paid under Section 2, above, and any benefits accrued and due under any applicable benefit plans and programs of NFM, and

(b)           An amount equal to Executive’s then current Base Salary for the remaining duration of the Term or to an amount equivalent to the then current annual Base Salary multiplied by 1.5, whichever is greater, which shall be payable in accordance with NFM’s normal payroll practices in regular bi-weekly installments, and

(c)           Any applicable bonus payments pursuant to Section 2(B);

(d)           The immediate vesting of all outstanding options awarded to Executive prior to the Date of Termination; and

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(e)           Payment of premiums on behalf of Executive and his dependents to allow Executive and his dependents to receive COBRA coverage for health, dental and vision benefits then being provided for Executive and his dependents at the time Executive’s employment is terminated, for eighteen (18) months, which benefit shall be provided subject to the applicable terms and conditions governing such COBRA coverage; provided, however that if Executive commences employment with another employer and is eligible to receive medical or other welfare benefits under another employer-provider plan, the medical and other welfare benefits to be provided by NFM as described herein shall terminate.

E.             CHANGE IN CONTROL.  For purposes of this Agreement, a “Change in Control” of NFM shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have occurred:

(i)            Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Act”)), becomes the “beneficial owner” (as defined in Rule 13-d under the Act) directly or indirectly, of securities representing more than fifty percent (50%) of the (a) total outstanding shares of common stock of NFM, or (b) the total combined voting power represented by NFM’s then outstanding voting securities other than by virtue of a merger, consolidation, or similar transaction.  However, if any one person, or more than one person acting as a group, owns 50% or more of the total fair market value or total voting power represented by NFM’s then outstanding voting securities, the increase in beneficial ownership by such person or group or persons will not be considered a Change in Control.

(ii)           A change in the composition of the Board of Directors of NFM (“Board”), as a result of which less than a majority of the directors are Incumbent Directors.  “Incumbent Directors” shall mean directors who either (a) are directors of New Frontier as of the date hereof, or (b) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors of NFM).

(iii)          NFM is a party to a merger, consolidation or consummates a similar transaction with any other business entity after which at least 50% of the total voting power of the resulting entity is not held by the shareholders of NFM prior to the merger, or NFM adopts, and the stockholders approve, if necessary, a plan of complete liquidation or dissolution of NFM, a complete dissolution or liquidation of NFM occurs or NFM sells or disposes of substantially all of its assets to an unrelated party (as contemplated by Section 1.409A-3(i)(5)(vii)(3) of the Treasury Regulations promulgated under the Code (as defined below)).

F.             CHANGE OF CONDITIONS OF EMPLOYMENT.  At any time following the occurrence of a Change in Control, if NFM terminates Executive’s employment without Cause or Executive terminates his employment due to NFM: materially breaching this Agreement; or materially diminishing Executive’s title, position or responsibilities; or reducing Executive’s Base Salary; or relocating NFM’s executive offices outside of the Boulder, Colorado area, Executive shall receive the following within thirty (30) days of the Date of Termination (the aforementioned shall collectively be referred to as a “Change in Control Termination”):

(i)            Payment of all amounts earned, accrued and owing but not yet paid under Section 2, above, and any benefits accrued and due under any applicable benefit plans and programs of NFM, and

(ii)           A one time, lump sum payment of Executive’s then current Base Salary for the remaining duration of the Term or to an amount equivalent to the then current Base Salary multiplied by 1.5, whichever is greater, and

(iii)          A one time, lump sum payment of an amount equivalent to one year’s bonus as measured by the average bonuses awarded to Executive during the immediately preceding two (2) full bonus years; and;

(iv)          The immediate vesting of all outstanding options awarded to Executive prior to the Date of Termination; and

(v)           Payment of premiums on behalf of Executive and his dependents to allow Executive and his dependents to receive COBRA coverage for health, dental and vision benefits then being provided for Executive and his dependents at the time Executive’s employment is terminated, for eighteen (18) months, which benefit shall be provided subject to the applicable terms and conditions governing such COBRA coverage.

G.            RESIGNATION (NOT A CHANGE IN CONTROL TERMINATION).  At any time during the Term, Executive may voluntarily terminate his employment for any reason.  In such event, after the effective date of such termination, no payments shall be due under this Agreement, except that Executive shall be entitled to any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of the Company, which amounts shall be paid within the time frames specified by Colorado state wage law.

H.            NOTICE OF TERMINATION. Any termination under this Agreement shall be communicated by a written notice to the other party, and may be sent via

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first class mail, facsimile transmission, email or personal delivery (the “Notice of Termination”).

I.              DATE OF TERMINATION. “Date of Termination” shall mean: (i) the date of transmission of the Notice of Termination by facsimile, email or personal delivery, or (ii) three calendar days after the date of mailing by first class mail, or (iii) date of death or disability (if applicable).

J.             EXCESS PARACHUTE PAYMENTS.  In the event of a Change in Control Termination, unless otherwise agreed by both parties acting reasonably, a nationally recognized accounting firm (“Accounting Firm”) suitable to both parties shall be timely engaged to render an opinion on whether the Executive is expected to pay an excise tax on “excess parachute payments” (as defined in Section 280G(b) of the Internal Revenue Code of 1986, as amended), as a result of payments due under section 5(B) of this Agreement.  Within 10 days following Company’s receipt of a written opinion of the Accounting Firm, the Company shall, based solely upon the Accounting Firm’s determination of which option shall result in a higher net total net consideration to the Executive, either: (i) reduce the amounts and or benefits payable to the Executive under Section 3(D)(iii)(a)(b)(c)(d) and (e) to an amount that is $1 less than the amount that would constitute an excess parachute payment and pay such reduced amount to Executive, or (ii) pay the full amount due under Section 3(D)(iii)(a)(b)(c)(d) and (e) to the Executive.  Payments by the Company to the Executive pursuant to this paragraph shall be made without setoff, counterclaim or other withholding.  The parties agree that the written opinion of the Accounting Firm shall be final in all respects.  The fees and expenses of the Accounting Firm shall be paid by the Company.

K.            APPLICATION OF SECTION 409A OF THE INTERNAL REVENUE CODE.  Notwithstanding anything contained herein (including in Sections 3(D) or 3(F)) to the contrary, if Executive is a “specified employee” within the meaning of Section 1.409A-l(i) of the Treasury Regulations promulgated under the Internal Revenue Code of 1986, as amended (the “Code”), as of the Date of Termination, then payments to Executive hereunder shall not be made before the date that is six months after the Date of Termination (or if earlier, the date of death of Executive); provided, however, that during such six-month period, NFM shall make any and all payments contemplated hereunder to the extent such payments do not exceed two times the lesser of (i) Executive’s annualized compensation, based upon the annual rate of compensation for the calendar year preceding the year in which the Date of Termination occurs, or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(l7) of the Code for the year in which the Date of Termination occurs; and provided further

that any amounts deferred hereunder shall be paid in a lump-sum amount at the expiration of such six-month period.

4.             RESTRICTIVE COVENANTS

For good and valuable consideration, including but not limited to the increase in Base Salary effectuated by this Agreement, and the continued employment of Executive by NFM, Executive agrees to be bound to the following restrictive covenants:

A.            COVENANT AGAINST COMPETITION. Executive agrees that he holds an executive level position with NFM, and Executive further agrees that by virtue of his position he has had access and will continue to have access to NFM’s Confidential Information and Trade Secrets (as those terms are defined below), and Executive further agrees that NFM has a legitimate business interest in preventing Executive from putting to a competitive use the information and relationships which pertain to NFM that Executive acquired in the course of his employment, and in protecting its customer base.  Accordingly, Executive agrees to the following:

(i)            The Executive acknowledges and agrees that the principal business of NFM is the sale, promotion and electronic distribution of adult themed programming and events, whether such adult themed programming and events are sold, promoted, or electronically distributed by means now known or hereafter discovered including but not limited to the Internet, satellite systems, cable systems, hotels, IPTV, mobile and/or stand alone systems (the “Business”).

(ii)           In addition, the Executive acknowledges and agrees that: NFM is one of the limited number of companies who have developed the Business; the Executive’s work for NFM has given and will continue to give him access to the Confidential Information and Trade Secrets of the Company; the value of all goodwill resulting from the operation of the Business of NFM and its subsidiaries and other affiliates should properly belong to NFM; the covenants and agreements of the Executive in this Section are necessary to preserve the value of such goodwill for the benefit of NFM; the proprietary technologies developed by NFM and its predecessors offer NFM a distinct competitive advantage, and NFM would not have entered into this Agreement but for the covenants and agreements set forth in this Section.  Accordingly, the Executive covenants and agrees that:

(a)           By and in consideration of the salary and benefits to be provided by NFM hereunder, including the severance arrangements set forth herein, and in consideration of the Executive’s executive position and exposure to the Confidential Information and Trade Secrets of NFM, the Executive covenants and agrees that, during the period commencing on the date hereof and ending on the date

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upon which the Executive’s employment terminates (the “Restricted Period”), he shall not anywhere in the Restricted Territory, directly or indirectly: engage in any element of the Business or otherwise compete with NFM; render any services to any person, corporation, partnership or other entity (other than NFM or its affiliates) primarily engaged in any element of the Business; or become interested in any such person, corporation, partnership or other entity (other than NFM or its affiliates) as a partner, shareholder, principal, agent, employee, consultant or in any other relationship or capacity; provided, however, that, notwithstanding the foregoing, the Executive may invest in securities of any entity, solely for investment purposes and without participating in the business thereof, if (A) such securities are traded on any national securities exchange or the National Association of Securities Dealers, Inc. Automated Quotation System, (B) the Executive is not a controlling person of, or a member of a group which controls, such entity and (C) the Executive does not, directly or indirectly, own five percent (5%) or more of any class of securities of such entity.

For purposes of this Agreement, “Restricted Territory” means any state, county, or locality in the United States in which NFM conducts Business and any other country, jurisdiction or territory in which NFM has generated material revenue during the last six (6) months of Executive’s employment.

Notwithstanding the foregoing, the restrictions set forth in this Section 4(A) shall not prohibit Executive from rendering services in any country in which NFM has not generated material revenue during the last six (6) months of Executive’s employment.  It is intended that this Section 4(A), where applicable, shall prohibit Executive from rendering services to an enterprise that is engaged in direct competition with NFM but shall not prohibit Executive from rendering services to other networks in the cable industry, such as HBO, Showtime, ESPN, USA, or the like.

For purposes of this Agreement, “Trade Secret” means all non-public information whether tangible or intangible related to the products, services or business of NFM that (A) derives economic value, actual or potential, from not being generally known to or readily ascertainable by other persons who can obtain economic value from its disclosure or use; or (B) is the subject of efforts by NFM that are reasonable under the circumstances to maintain its secrecy, which might include: (i) marking any information reduced to tangible form clearly and conspicuously with a legend identifying its confidential or trade secret nature; (ii) identifying any oral communication as confidential or secret immediately before, during, or after such oral communication; or (iii) otherwise treating such information as confidential or secret.  Assuming the criteria in clauses (A) or (B) of this paragraph are met, Trade Secrets includes information, without regard to form, including, but not limited to, technical and nontechnical data, formulas,

patterns, designs, compilations, computer programs and software, devices, inventions, methods, techniques, drawings, processes, financial data, financial plans, product plans, lists of actual or potential customers and suppliers which are not commonly known by or available to the public, research, development, and existing and future products.

(b)           Notwithstanding anything to the contrary in Section 4(A)(ii)(a) above, in the event of a Change in Control Termination, such Restricted Period shall terminate and Executive shall therefore be free to seek employment elsewhere without regard to whether any prospective employer is a competitor of NFM.

B.            NON-SOLICITATION.  During the Restricted Period, Executive shall not, directly or indirectly, (i) solicit or encourage to leave the employment or other service of NFM any employee or independent contractor thereof; or (ii) hire (on behalf of Executive or any other person or entity) any employee or independent contractor who has left the employment or other service of NFM within the one-year period which follows the termination of such employer’s or independent contractor’s employment or other service with NFM.  For purposes of the preceding sentence, the term “independent contractor” shall refer to independent contractors of NFM whose services relate directly to the conduct of the Business.  During the Restricted Period, the Executive will not, whether for his own account or for the account of any other person, firm, corporation or other business organization, intentionally interfere with NFM’ relationship with, or endeavor to entice away from NFM any person who during the Term is or was a customer, client, supplier, licensee or other business relation of NFM.

C.            CONFIDENTIALITY OBLIGATIONS

(i)            CONFIDENTIAL INFORMATION.  As used in this Agreement, “Confidential Information” includes, without limitation, design information, manufacturing information, business, financial, and technical information, sales and processing information, product information, customer lists, vendor information, vendor lists, pricing information, corporation and personal business opportunities, software, computer disks or files, or any other electronic information of any kind, Rolodex cards or other lists of names, addresses or telephone numbers, financial information, current projects, projects in development and future projects, forecasts, plans, contracts, releases, and other documents, materials, writings or information, including those which are prepared, developed or created by Executive, or which come into the possession of Executive by any means or manner, and which relate directly or indirectly to NFM (all of the above collectively referred to as “Confidential Information”).  Confidential Information includes

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information developed by Executive in the course of Executive’s services for NFM, as well as other Confidential Information to which Executive may have access in connection with Executive’s services.  Confidential Information also includes the confidential information of other individuals or entities with which NFM has a business relationship.  Confidential Information shall not include any information (a) which is in the public domain or which enters the public domain through no act of omission of Executive or (b) which was in the possession of Executive prior to the commencement of his employment with NFM.

(ii)           DUTY OF CONFIDENTIALITY.  At all times during his employment and thereafter, Executive will maintain in strictest confidence and will not, directly or indirectly, disclose or use (or allow others working with or related to Executive to disclose or use) any Confidential Information belonging to NFM, whether in oral, written, electronic or permanent form, except solely to the extent necessary to perform services on behalf of NFM.  Upon termination of this Agreement, or at the request of NFM prior to its termination, Executive shall deliver forthwith to NFM all Confidential Information (and all copies thereof) in Executive’s possession or control belonging to NFM and all tangible items embodying or containing Confidential Information.

(iii)         DOCUMENTS, RECORDS, ETC.  All documents, records, data, equipment and other physical property, whether or not pertaining to Confidential Information, which are furnished to Executive by NFM or are produced by Executive in connection with Executive’s services will be and remain the sole property of NFM.  Executive will return to NFM forthwith all such materials and property upon the termination of this Agreement or sooner if requested by NFM.

D.            ASSIGNMENT OF RIGHTS.  Executive shall make full and prompt disclosure to NFM of any and all designs, intellectual property, software, inventions, discoveries, or improvements (individually and collectively, “Inventions”) made by Executive as a result or product of his employment relationship with NFM.  Executive hereby assigns to NFM without additional compensation the entire worldwide right, title and interest in and to such Inventions, and related intellectual property rights and without limitation all copyrights, copyright renewals or reversions, trademarks, trade names, trade dress rights, industrial design, industrial model, inventions, priority rights, patent rights, patent applications, patents, design patents and any other rights or protections in connection therewith or related thereto, for exploitation in any form or medium, of any kind or nature whatsoever, whether now known or hereafter devised.  To the extent that any work created by Executive can be a work for hire pursuant to U.S. Copyright Law, the parties deem such work a work for hire and Executive should be considered the author thereof.  Executive shall, at the request of NFM,

without additional compensation from time to time execute, acknowledge and deliver to NFM such instruments and documents as NFM may require to perfect, transfer and vest in NFM the entire right, title and interest in and to such inventions.  In the event that Executive does not timely perform such obligations, Executive hereby makes NFM and its officers his attorney in fact and gives them the power of attorney to perform such obligations and to execute such documents on Executive’s behalf.  Executive shall cooperate with NFM upon NFM’s request and at NFM’s cost but without additional compensation in the preparation and prosecution of patent, trademark, industrial design and model, and copyright applications worldwide for protection of rights to any Inventions.

E.             LEGAL AND EQUITABLE REMEDIES.  Because the Executive’s services are personal and unique and the Executive has had and will continue to have access to and has become and will continue to become acquainted with the Confidential Information and Trade Secrets of NFM, and because any breach by the Executive of any of the confidentiality covenants and restrictive covenants contained in Section 4 would result in irreparable injury and damage for which money damages would not provide an adequate remedy, NFM shall have the right to enforce the restrictions set forth in Section 4 by injunction, specific performance or other equitable relief, without bond and without prejudice to any other rights and remedies that NFM may have for a breach, or threatened breach, of the obligations described in Section 4.  The Executive agrees that in any action in which NFM seeks injunction, specific performance or other equitable relief, the Executive will not assert or contend that any of the provisions of Section 4 are unreasonable or otherwise unenforceable.

F.             SCOPE/BLUE PENCIL PROVISIONS.  Executive agrees that the duration, scope and geographic area of the restrictions stated in this Section are reasonable and necessary given the nature of NFM’s Business.  However, in the event that a court or arbitrator of competent jurisdiction shall hold that the duration, scope, geographic area or other restrictions stated herein are unreasonable and unenforceable under circumstances then existing, the parties agree that the maximum duration, scope, area or other restrictions reasonable under such circumstances shall be substituted for the stated duration, scope, area or other restrictions.

G.            INDEPENDENT AGREEMENT.  The covenants made in this Section 4 shall be construed as an agreement independent of any other provisions of this Agreement, and shall survive the termination of this Agreement.  Moreover, the existence of any claim or cause of action of Executive against NFM, whether or not predicated upon the terms of this Agreement, shall not constitute a defense to the enforcement of these covenants. 

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Notwithstanding anything to the contrary in this paragraph, Executive shall be released from his obligations under Section 4(A) of this Agreement if NFM is in material breach of its obligations set forth in Section 2(B) of this Agreement, provided such material breach remains uncured for more than thirty (30) days after written notice of said breach from Executive to NFM.

5.             ARBITRATION.  To the maximum extent permitted by law, all disputes, controversies, claims, or demands of any kind or nature arising between the parties in connection with this Agreement, whether at law or in equity or based upon common law or any federal or state statute, rule, or regulation, that cannot be resolved between the parties through NFM’s internal complaint resolution procedures, shall be submitted to binding arbitration by the American Arbitration Association; provided, however, that this arbitration requirement shall not apply to any action by either party to obtain injunctive relief to prevent any violation by the other party of the terms of this Agreement, which injunctive action may be brought in any court of competent jurisdiction. The filing of a claim for injunctive relief shall not allow either party to raise any other claim outside arbitration.

Any arbitration commenced hereunder shall be initiated in Boulder, Colorado and shall be governed by the AAA National Rules for the Resolution of Employment Disputes.  The arbitration shall occur before a single arbitrator that shall be mutually agreed upon by the parties hereto.  If the parties cannot agree on a single arbitrator, then an arbitrator shall be selected in accordance with the rules of AAA.  The arbitration must be filed within six months of the act or omission which gives rise to the claim.  Each party shall be entitled to take any discovery as is permitted by the applicable rules and the arbitrator. In determining the extent of discovery, the arbitrator shall exercise discretion, but shall consider the expense of the desired discovery and the importance of the discovery to a just adjudication.

The findings, conclusions, and award rendered in any arbitration shall be binding upon the parties and shall finally determine all questions of fact relating to the dispute. Judgment upon the arbitration award may be entered in the appropriate court, state or federal, having jurisdiction, and each party expressly waives any right to appeal any such judgment rendered by the court.   Any party may apply to a court of competent jurisdiction for entry of judgment on the arbitration award.

The costs of the arbitration shall be advanced equally by the parties, however the prevailing party in any arbitration or

other legal action brought to enforce or defend the terms of this Agreement shall be entitled, in addition to any other remedies available to such party, to an award of reasonable attorney’s fees and costs.  Any party may apply to a court of competent jurisdiction for entry of judgment on the arbitration award.

The parties agree that failure to comply with the provisions of this paragraph shall constitute grounds for the dismissal of any suit, action, or proceeding instituted in any federal, state, or local court or before any administrative tribunal with respect to any dispute which arises during the period of this Agreement and which is subject to this arbitration agreement. The arbitration provisions of this Agreement are specifically enforceable by each party to the Agreement and shall survive the termination or expiration of the Agreement.

THE EXECUTIVE UNDERSTANDS THAT THIS AGREEMENT TO ARBITRATE ALL ARBITRABLE DISPUTES MEANS THE EXECUTIVE IS AGREEING TO WAIVE TO THE MAXIMUM EXTENT PERMITTED BY LAW ANY RIGHT THE EXECUTIVE MAY HAVE TO ASK FOR A JURY OR COURT TRIAL IN ANY DISPUTE WITH THE COMPANY.

6.             NO CONFLICTING OBLIGATIONS OF EXECUTIVE.  Executive represents and warrants that he is not subject to any duties or restrictions under any prior agreement with any previous employer or other person or entity, and that he has no rights or obligations which may conflict with the interests of NFM or with the performance of Executive’s duties and obligations under this Agreement.  Executive agrees to notify NFM immediately if any such conflicts occur in the future.

7.             SUCCESSORS.

A.            This Agreement is personal to Executive and shall not be assignable by Executive.

B.            This Agreement shall inure to the benefit of NFM and its successors and assigns.  Upon written notice to Executive, NFM may assign this Agreement to any successor or affiliated entity, subsidiary, sibling, or parent company.

8.             LAW CHANGES.  To the extent that any payment under this Agreement is deemed to be deferred compensation subject to the requirements of section 409A of the Code, this Agreement shall be administered so that such payments will be made in accordance with the requirements of section 409A of the Code.

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9.             INDEMNIFICATION.  NFM agrees to defend and indemnify Executive against all criminal and civil claims for acts within the scope of his duties to the maximum extent allowed by law, but excluding acts of gross negligence and willful misconduct.  Additionally, NFM shall pay all attorneys’ fees and costs related to any actual or threatened legal action against Executive as such fees and costs arise.  NFM agrees to maintain D&O insurance that covers Executive for all acts within the scope of his duties, but excluding acts of gross negligence and willful misconduct.

10.          MISCELLANEOUS

A.            Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado, without reference to the principles of conflict of laws.

B.            Captions/Headings.  The captions and headings of this Agreement are not part of the provisions hereof and shall have no force or effect.

C.            Entire Agreement.  This Agreement contains the full and complete understanding between the parties hereto and supersedes all prior understandings, whether written or oral pertaining to the subject matter hereof.

D.            Modifications of Agreement.  This Agreement may not be amended or modified otherwise than by written agreement executed by Executive and by the designated representative of the Board.  Notwithstanding anything to the contrary, NFM hereby reserves the right to unilaterally amend this Agreement as necessary to avoid the imposition of liability under or as a consequence of the application of the provisions of Section 409A of the Code.

E.             Notices.  All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, or by facsimile, or by email, or by hand delivery to such address as either party shall have furnished to the other in writing in accordance herewith:

New Frontier Media, Inc.

7007 Winchester Circle, Suite 200

Boulder, CO 80301

Attn:  General Counsel

Executive:

Ken Boenish

F.             Severability.  If any provision of this Agreement or application thereof to anyone or under any circumstances is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and shall not invalidate or render unenforceable such provision or application in any other jurisdiction.  If any provision is held void, invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstances.

G.            Withholdings.  NFM shall withhold from any amounts payable under this Agreement such amounts as are required to be withheld pursuant to any applicable law or regulation, including without limitation amounts required to be withheld for Federal, State and local taxes, as well as garnishments and other required withholdings.

H.            Remedies Cumulative; No Waiver.  No remedy conferred upon a party by this Agreement is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to any other remedy given under this Agreement or now or hereafter existing at law or in equity.  The failure of either party to insist upon strict compliance with any provision of this Agreement, or the failure to assert any right either party may have hereunder, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

I.              Counterparts.  This Agreement may be executed in any number of counterparts (including facsimile counterparts), each of which shall be an original, but all of which together shall constitute one instrument.

IN WITNESS WHEREOF, Executive has hereunto set Executive’s hand, and NFM has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

NEW FRONTIER MEDIA, INC.		EXECUTIVE
By:	/s/ Michael Weiner	By:	/s/ Ken Boenish
Name: Michael Weiner		Name: Ken Boenish
Title: Chief Executive Officer

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EX-10.06

Exhibit 10.06

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), dated as of this 29 day of September, 2008 (the “Effective Date”) by and between MARC CALLIPARI, an individual (the “Executive”), and NEW FRONTIER MEDIA, INC., a Colorado corporation with offices at 7007 Winchester Circle, Suite 200, Boulder, CO 80301, as well as its affiliates and subsidiaries whether now in existence or formed in the future. (“NFM”), recites and provides as follows:

WHEREAS, Executive is and has been previously employed by NFM pursuant to one or more employment agreements that are superseded and replaced by this Agreement in their entirety;

WHEREAS, NFM desires to retain the services of Executive, and Executive desires to be employed by NFM, all on the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, NFM and Executive agree as follows:

1.             TERM.  The Term of this Agreement shall begin as of the Effective Date and shall continue until midnight on April 30, 2010, or such date as the Agreement is terminated by either party as hereinafter provided (the “Term”).

2.             TERMS OF EMPLOYMENT.

A.            POSITION AND DUTIES.

(i)            During the Term, Executive shall have the title of General Counsel and shall perform such executive duties as are commensurate with such title.

(ii)           Executive’s services shall be performed at NFM’s headquarters in Boulder, Colorado.  However, Executive may also be required by his job responsibilities to travel on NFM business, and Executive agrees to do so.

(iii)          During the Term, Executive agrees to devote his full-time and attention to the business and affairs of NFM.  Executive’s employment under this Agreement shall be Executive’s exclusive employment during the Term of this Agreement.  Service on any other company’s board of directors by Executive requires the written consent of the Compensation Committee of the Board of Directors of NFM (“Compensation Committee”).

B.            COMPENSATION.

(i)            Base Salary.  During the Term, Executive shall receive a base salary (“Base Salary”), which shall be paid in equal installments on a bi-weekly basis, at the rate of Two Hundred Thousand Dollars ($200,000.00) per annum, which Base Salary may be reviewed and adjusted, but in no event decreased, annually.  The term “Base Salary” as used throughout this Agreement shall mean the base salary paid to

Executive as so increased during the Term.  Any increase in Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement.  The Executive’s Base Salary shall be subject to all applicable federal, state and local withholding taxes and required withholdings under any NFM benefits plans Executive participates in.

(ii)           Discretionary Bonus.  In addition to Executive’s Base Salary, the Compensation Committee may, at its sole discretion award to Executive annual bonus(es) which shall be awarded based upon factors and individual and/or company performance criteria established at the sole discretion of NFM.

 (iii)         All bonuses payable to Executive pursuant to subsections (ii), above, shall be paid within two and one-half (2 1/2) months of the end of the fiscal year for which it is awarded.  No discretionary bonus shall be payable to Executive in connection with a fiscal year if Executive’s employment is terminated for “Cause” (as defined in Section 3(C), below) prior to the end of the applicable fiscal year.  Discretionary bonuses following termination prior to the end of the applicable fiscal year for reasons other than Cause may be paid depending upon the exercise of Compensation Committee discretion.  The foregoing shall not apply to bonuses payable as a result of a “Change in Control Termination” (as defined below), which shall be paid pursuant to Section 3(F).

(iv)          Stock Options.  Executive shall be eligible to receive stock options under the terms and conditions of any applicable Stock Option Plan approved by shareholders of NFM, on the terms and conditions set forth in such a plan.  Stock Options shall be granted at the discretion of the Board of Directors based upon the recommendations of the Compensation Committee.

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(v)           Expenses.  During the Term, Executive shall be entitled to receive reimbursement for all employment-related expenses incurred by Executive in accordance with the policies, practices and procedures of NFM as in effect generally from time to time after the Effective Date with respect to other employees at Executive’s level within NFM.

(vi)          Vacation.  Executive acknowledges that NFM has no policy concerning vacation time or sick leave applicable to its executive level employees and, by executing this Agreement, Executive acknowledges and agrees that he shall not accrue any such vacation or sick leave benefits during the Term.  Executive is authorized to take paid time off provided he meets his professional and productivity obligations to NFM as determined by the Chief Executive Officer of NFM.  Executive is to coordinate time off with the Chief Executive Officer or his designee.

(vii)         Car Allowance.  During the Term, the Executive shall be entitled to an $850 a month car allowance in accordance with NFM’s car allowance policy, in lieu of expenses associated with the operation of his automobile.

(viii)        Other Benefits.  During the Term, Executive shall be entitled to such health insurance and other benefits, in accordance with the policies, programs and practices of NFM which are in effect from time to time after the Effective Date with respect to other employees at Executive’s level within NFM.

(ix)           Relationship Subsequent to this Agreement.  On or before the end of the Term, NFM and Executive shall address the subject of a new or extended employment agreement to take effect upon the expiration of this Agreement.  If the parties do not execute a new written agreement upon the expiration of this Agreement, but the parties are negotiating a new agreement in good-faith, Executive shall continue to be paid the Base Salary then in effect in regular bi-weekly installments until a new agreement is executed.

3.             TERMINATION OF EMPLOYMENT.

A.            DEATH.  If the Executive dies while employed by NFM, the Executive’s employment shall terminate on the date of death and NFM shall pay to the Executive’s executor, legal representative, administrator or designated beneficiary, as applicable, any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  Otherwise, NFM shall have no further liability or obligation under this Agreement to the Executive’s executors, legal representatives, administrators,

heirs or assigns or any other person claiming under or through the Executive.

B.            DISABILITY.  If the Executive incurs a Disability (as defined below) during the Term, the Executive’s employment shall terminate on the date of Disability.  If the Executive’s employment terminates on account of his Disability, the Executive shall be entitled to receive any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  For purposes of this Agreement, the term “Disability” shall have the same meaning as under NFM long-term disability plan, or if there is no such plan, if the Executive by virtue of ill health or other disability is unable to perform substantially and continuously the duties assigned to him (as determined by the Board at its sole discretion) for more than 90 consecutive or non-consecutive days out of any 6 consecutive month period.

C.            CAUSE.  NFM may terminate the Executive’s employment at any time for Cause (as defined below) upon written notice to the Executive (subject to the Executive’s opportunity to cure described below), in which event all payments under this Agreement shall cease, except for any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  For purposes of this Agreement, “Cause” shall mean any of the grounds for termination of the Executive’s employment listed below:

(i)            The Executive’s conviction of, or plea of guilty or nolo contendere to, (a) a felony, (b) a crime involving moral turpitude, or (c) a criminal act which adversely affects the business or reputation of NFM or its subsidiaries;

(ii)           The Executive’s engagement in willful misconduct or willful or gross neglect in the performance of his duties hereunder, or commission of an act of fraud, embezzlement, theft, dishonesty, breach of trust or misappropriation of funds against NFM or its subsidiaries;

(iii)          Material breach of this Agreement by the Executive;

(iv)          Material violation by Executive of the “Prohibition of Harassment and Discrimination” set forth in the Employee Handbook (Rev 6/25/2008); or

(v)           The Executive’s persistent and continuing failure to perform the Executive’s reasonable duties hereunder.

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If there is an event or condition under Section 3(C)(iii), (iv) or (v) above, the Executive shall have ten (10) days from the date NFM provides notice to the Executive of the event or condition constituting Cause to cure such event or condition (to the extent the event or condition is curable), and if the Executive does so fully cure such event or condition, such event or condition shall not constitute Cause hereunder.

D.            WITHOUT CAUSE. In the event that NFM at any time prior to the occurrence of a Change in Control: terminates Executive’s employment without Cause; or materially breaches this Agreement; or materially diminishes Executive’s title, position or responsibilities; or reduces Executive’s Base Salary, this Section 3(D) shall apply:

(i)            Executive shall be under no obligation to render any additional services to NFM and shall be allowed to seek other employment, subject to the Restrictive Covenants set forth herein.

(ii)           Unless the Executive complies with the provisions of Section 3(D)(iii) below, upon termination pursuant to this Section 3(D), Executive shall be entitled to receive only any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  No other payments or benefits shall be due under this Agreement to the Executive.

(iii)          Notwithstanding the provisions of Section 3(D)(ii), upon termination pursuant to Section 3(D), if the Executive executes and does not revoke a written release, in a form reasonably acceptable to both parties, of any and all claims against NFM and all related parties with respect to all matters arising out of the Employee Retirement Income Security Act of 1974, the Family and Medical Leave Act of 1993, the WARN Act, or claims of discrimination under the Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended and the Americans with Disabilities Act of 1990 (other than claims for any entitlements under the terms of this Agreement or under any plans or programs of the Company under which the Executive has accrued and is due a benefit and to all indemnification and similar rights under the Company’s Articles of Incorporation, Bylaws or otherwise) (the “Release”), the Executive shall be entitled to receive the following:

(a)           The immediate and full payment of all amounts earned, accrued and owing but not yet paid under Section 2, above, and any benefits accrued and due under any applicable benefit plans and programs of NFM, and

(b)           An amount equal to Executive’s then current Base Salary for the remaining duration of the Term or to an amount

equivalent to the then current annual Base Salary multiplied by 1½, whichever is greater, which shall be payable in accordance with NFM’s normal payroll practices in regular bi-weekly installments, and

(c)           Any applicable bonus payments pursuant to Section 2(B);

(d)           The immediate vesting of all outstanding options awarded to Executive prior to the Date of Termination; and

(e)           Payment of premiums on behalf of Executive and his dependents to allow Executive and his dependents to receive COBRA coverage for health, dental and vision benefits then being provided for Executive and his dependents at the time Executive’s employment is terminated, for eighteen (18) months, which benefit shall be provided subject to the applicable terms and conditions governing such COBRA coverage; provided, however that if Executive commences employment with another employer and is eligible to receive medical or other welfare benefits under another employer-provider plan, the medical and other welfare benefits to be provided by NFM as described herein shall terminate.

E.             CHANGE IN CONTROL.  For purposes of this Agreement, a “Change in Control” of NFM shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have occurred:

(i)            Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Act”)), becomes the “beneficial owner” (as defined in Rule 13-d under the Act) directly or indirectly, of securities representing more than fifty percent (50%) of the (a) total outstanding shares of common stock of NFM, or (b) the total combined voting power represented by NFM’s then outstanding voting securities other than by virtue of a merger, consolidation, or similar transaction.  However, if any one person, or more than one person acting as a group, owns 50% or more of the total fair market value or total voting power represented by NFM’s then outstanding voting securities, the increase in beneficial ownership by such person or group or persons will not be considered a Change in Control.

(ii)           A change in the composition of the Board of Directors of NFM (“Board”), as a result of which less than a majority of the directors are Incumbent Directors.  “Incumbent Directors” shall mean directors who either (a) are directors of New Frontier as of the date hereof, or (b) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or

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threatened proxy contest relating to the election of directors of NFM).

(iii)          NFM is a party to a merger, consolidation or consummates a similar transaction with any other business entity after which at least 50% of the total voting power of the resulting entity is not held by the shareholders of NFM prior to the merger, or NFM adopts, and the stockholders approve, if necessary, a plan of complete liquidation or dissolution of NFM, a complete dissolution or liquidation of NFM occurs or NFM sells or disposes of substantially all of its assets to an unrelated party (as contemplated by Section 1.409A-3(i)(5)(vii)(3) of the Treasury Regulations promulgated under the Code (as defined below)).

F.             CHANGE OF CONDITIONS OF EMPLOYMENT.  At any time following the occurrence of a Change in Control, if NFM terminates Executive’s employment without Cause or Executive terminates his employment due to NFM: materially breaching this Agreement; or materially diminishing Executive’s title, position or responsibilities; or reducing Executive’s Base Salary; or relocating NFM’s executive offices outside of the Boulder, Colorado area, Executive shall receive the following within thirty (30) days of the Date of Termination (the aforementioned shall collectively be referred to as a “Change in Control Termination”):

(i)            Payment of all amounts earned, accrued and owing but not yet paid under Section 2, above, and any benefits accrued and due under any applicable benefit plans and programs of NFM, and

(ii)           A one time, lump sum payment of Executive’s then current Base Salary for the remaining duration of the Term or to an amount equivalent to the then current Base Salary multiplied by 1½, whichever is greater, and

(iii)          A one time, lump sum payment of an amount equivalent to one year’s bonus as measured by the average bonuses awarded to Executive during the immediately preceding two (2) full bonus years; and;

(iv)          The immediate vesting of all outstanding options awarded to Executive prior to the Date of Termination; and

(v)           Payment of premiums on behalf of Executive and his dependents to allow Executive and his dependents to receive COBRA coverage for health, dental and vision benefits then being provided for Executive and his dependents at the time Executive’s employment is terminated, for eighteen (18) months, which benefit shall be provided subject to the applicable terms and conditions governing such COBRA coverage.

G.            RESIGNATION (NOT A CHANGE IN CONTROL TERMINATION).  At any time during the Term, Executive may voluntarily terminate his employment

for any reason.  In such event, after the effective date of such termination, no payments shall be due under this Agreement, except that Executive shall be entitled to any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of the Company, which amounts shall be paid within the time frames specified by Colorado state wage law.

H.            NOTICE OF TERMINATION. Any termination under this Agreement shall be communicated by a written notice to the other party, and may be sent via first class mail, facsimile transmission, email or personal delivery (the “Notice of Termination”).

I.              DATE OF TERMINATION. “Date of Termination” shall mean: (i) the date of transmission of the Notice of Termination by facsimile, email or personal delivery, or (ii) three calendar days after the date of mailing by first class mail, or (iii) date of death or disability (if applicable).

J.             EXCESS PARACHUTE PAYMENTS.  In the event of a Change in Control Termination, unless otherwise agreed by both parties acting reasonably, a nationally recognized accounting firm (“Accounting Firm”) suitable to both parties shall be timely engaged to render an opinion on whether the Executive is expected to pay an excise tax on “excess parachute payments” (as defined in Section 280G(b) of the Internal Revenue Code of 1986, as amended), as a result of payments due under section 5(B) of this Agreement.  Within 10 days following Company’s receipt of a written opinion of the Accounting Firm, the Company shall, based solely upon the Accounting Firm’s determination of which option shall result in a higher net total net consideration to the Executive, either: (i) reduce the amounts and or benefits payable to the Executive under Section 3(D)(iii)(a)(b)(c)(d) and (e) to an amount that is $1 less than the amount that would constitute an excess parachute payment and pay such reduced amount to Executive, or (ii) pay the full amount due under Section 3(D)(iii)(a)(b)(c)(d) and (e) to the Executive.  Payments by the Company to the Executive pursuant to this paragraph shall be made without setoff, counterclaim or other withholding.  The parties agree that the written opinion of the Accounting Firm shall be final in all respects.  The fees and expenses of the Accounting Firm shall be paid by the Company.

K.            APPLICATION OF SECTION 409A OF THE INTERNAL REVENUE CODE.  Notwithstanding anything contained herein (including in Sections 3(D) or 3(F)) to the contrary, if Executive is a “specified employee” within the meaning of Section 1.409A-l(i) of the Treasury Regulations promulgated under the Internal Revenue Code of 1986, as amended (the “Code”), as of the Date of Termination, then payments to Executive hereunder shall not be made before the date that is six

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months after the Date of Termination (or if earlier, the date of death of Executive); provided, however, that during such six-month period, NFM shall make any and all payments contemplated hereunder to the extent such payments do not exceed two times the lesser of (i) Executive’s annualized compensation, based upon the annual rate of compensation for the calendar year preceding the year in which the Date of Termination occurs, or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(l7) of the Code for the year in which the Date of Termination occurs; and provided further that any amounts deferred hereunder shall be paid in a lump-sum amount at the expiration of such six-month period.

4.             RESTRICTIVE COVENANTS

For good and valuable consideration, including but not limited to the increase in Base Salary effectuated by this Agreement, and the continued employment of Executive by NFM, Executive agrees to be bound to the following restrictive covenants:

A.            COVENANT AGAINST COMPETITION. Executive agrees that he holds an executive level position with NFM, and Executive further agrees that by virtue of his position he has had access and will continue to have access to NFM’s Confidential Information and Trade Secrets (as those terms are defined below), and Executive further agrees that NFM has a legitimate business interest in preventing Executive from putting to a competitive use the information and relationships which pertain to NFM that Executive acquired in the course of his employment, and in protecting its customer base.  Accordingly, Executive agrees to the following:

(i)            The Executive acknowledges and agrees that the principal business of NFM is the sale, promotion and electronic distribution of adult themed programming and events, whether such adult themed programming and events are sold, promoted, or electronically distributed by means now known or hereafter discovered including but not limited to the Internet, satellite systems, cable systems, hotels, IPTV, mobile and/or stand alone systems (the “Business”).

(ii)           In addition, the Executive acknowledges and agrees that: NFM is one of the limited number of companies who have developed the Business; the Executive’s work for NFM has given and will continue to give him access to the Confidential Information and Trade Secrets of the Company; the value of all goodwill resulting from the operation of the Business of NFM and its subsidiaries and other affiliates should properly belong to NFM; the covenants and agreements of the Executive in this Section are necessary to preserve the value of such goodwill for the benefit of NFM; the proprietary technologies developed by NFM and its

predecessors offer NFM a distinct competitive advantage, and NFM would not have entered into this Agreement but for the covenants and agreements set forth in this Section.  Accordingly, the Executive covenants and agrees that:

(a)           By and in consideration of the salary and benefits to be provided by NFM hereunder, including the severance arrangements set forth herein, and in consideration of the Executive’s executive position and exposure to the Confidential Information and Trade Secrets of NFM, the Executive covenants and agrees that, during the period commencing on the date hereof and ending on the date upon which the Executive’s employment terminates (the “Restricted Period”), he shall not anywhere in the Restricted Territory, directly or indirectly: engage in any element of the Business or otherwise compete with NFM; render any services to any person, corporation, partnership or other entity (other than NFM or its affiliates) primarily engaged in any element of the Business; or become interested in any such person, corporation, partnership or other entity (other than NFM or its affiliates) as a partner, shareholder, principal, agent, employee, consultant or in any other relationship or capacity; provided, however, that, notwithstanding the foregoing, the Executive may invest in securities of any entity, solely for investment purposes and without participating in the business thereof, if (A) such securities are traded on any national securities exchange or the National Association of Securities Dealers, Inc. Automated Quotation System, (B) the Executive is not a controlling person of, or a member of a group which controls, such entity and (C) the Executive does not, directly or indirectly, own five percent (5%) or more of any class of securities of such entity.

For purposes of this Agreement, “Restricted Territory” means any state, county, or locality in the United States in which NFM conducts Business and any other country, jurisdiction or territory in which NFM has generated material revenue during the last six (6) months of Executive’s employment.

For purposes of this Agreement, “Trade Secret” means all non-public information whether tangible or intangible related to the products, services or business of NFM that (A) derives economic value, actual or potential, from not being generally known to or readily ascertainable by other persons who can obtain economic value from its disclosure or use; or (B) is the subject of efforts by NFM that are reasonable under the circumstances to maintain its secrecy, which might include: (i) marking any information reduced to tangible form clearly and conspicuously with a legend identifying its confidential or trade secret nature; (ii) identifying any oral communication as confidential or secret immediately before, during, or after such oral communication; or (iii) otherwise treating such information as confidential or secret.  Assuming the criteria in clauses (A) or (B) of this paragraph are met, Trade Secrets includes information, without regard to

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form, including, but not limited to, technical and nontechnical data, formulas, patterns, designs, compilations, computer programs and software, devices, inventions, methods, techniques, drawings, processes, financial data, financial plans, product plans, lists of actual or potential customers and suppliers which are not commonly known by or available to the public, research, development, and existing and future products.

(b)           Notwithstanding anything to the contrary in Section 4(A)(ii)(a) above, in the event of a Change in Control Termination, such Restricted Period shall terminate and Executive shall therefore be free to seek employment elsewhere without regard to whether any prospective employer is a competitor of NFM.

B.            NON-SOLICITATION.  During the Restricted Period, Executive shall not, directly or indirectly, (i) solicit or encourage to leave the employment or other service of NFM any employee or independent contractor thereof; or (ii) hire (on behalf of Executive or any other person or entity) any employee or independent contractor who has left the employment or other service of NFM within the one-year period which follows the termination of such employer’s or independent contractor’s employment or other service with NFM.  For purposes of the preceding sentence, the term “independent contractor” shall refer to independent contractors of NFM whose services relate directly to the conduct of the Business.  During the Restricted Period, the Executive will not, whether for his own account or for the account of any other person, firm, corporation or other business organization, intentionally interfere with NFM’ relationship with, or endeavor to entice away from NFM any person who during the Term is or was a customer, client, supplier, licensee or other business relation of NFM.

C.            CONFIDENTIALITY OBLIGATIONS

(i)            CONFIDENTIAL INFORMATION.  As used in this Agreement, “Confidential Information” includes, without limitation, design information, manufacturing information, business, financial, and technical information, sales and processing information, product information, customer lists, vendor information, vendor lists, pricing information, corporation and personal business opportunities, software, computer disks or files, or any other electronic information of any kind, Rolodex cards or other lists of names, addresses or telephone numbers, financial information, current projects, projects in development and future projects, forecasts, plans, contracts, releases, and other documents, materials, writings or information, including those which are prepared, developed or created by Executive, or which come into the possession of Executive by any means or manner, and which relate directly or indirectly to NFM (all of the above collectively referred to as “Confidential Information”).  Confidential Information

includes information developed by Executive in the course of Executive’s services for NFM, as well as other Confidential Information to which Executive may have access in connection with Executive’s services.  Confidential Information also includes the confidential information of other individuals or entities with which NFM has a business relationship.  Confidential Information shall not include any information (a) which is in the public domain or which enters the public domain through no act of omission of Executive or (b) which was in the possession of Executive prior to the commencement of his employment with NFM.

(ii)           DUTY OF CONFIDENTIALITY.  At all times during his employment and thereafter, Executive will maintain in strictest confidence and will not, directly or indirectly, disclose or use (or allow others working with or related to Executive to disclose or use) any Confidential Information belonging to NFM, whether in oral, written, electronic or permanent form, except solely to the extent necessary to perform services on behalf of NFM.  Upon termination of this Agreement, or at the request of NFM prior to its termination, Executive shall deliver forthwith to NFM all Confidential Information (and all copies thereof) in Executive’s possession or control belonging to NFM and all tangible items embodying or containing Confidential Information.

(iii)         DOCUMENTS, RECORDS, ETC.  All documents, records, data, equipment and other physical property, whether or not pertaining to Confidential Information, which are furnished to Executive by NFM or are produced by Executive in connection with Executive’s services will be and remain the sole property of NFM.  Executive will return to NFM forthwith all such materials and property upon the termination of this Agreement or sooner if requested by NFM.

D.            ASSIGNMENT OF RIGHTS.  Executive shall make full and prompt disclosure to NFM of any and all designs, intellectual property, software, inventions, discoveries, or improvements (individually and collectively, “Inventions”) made by Executive as a result or product of his employment relationship with NFM.  Executive hereby assigns to NFM without additional compensation the entire worldwide right, title and interest in and to such Inventions, and related intellectual property rights and without limitation all copyrights, copyright renewals or reversions, trademarks, trade names, trade dress rights, industrial design, industrial model, inventions, priority rights, patent rights, patent applications, patents, design patents and any other rights or protections in connection therewith or related thereto, for exploitation in any form or medium, of any kind or nature whatsoever, whether now known or hereafter devised.  To the extent that any work created by Executive can be a work for hire pursuant to U.S. Copyright Law, the parties deem such work a work for hire and Executive should be considered

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the author thereof.  Executive shall, at the request of NFM, without additional compensation from time to time execute, acknowledge and deliver to NFM such instruments and documents as NFM may require to perfect, transfer and vest in NFM the entire right, title and interest in and to such inventions.  In the event that Executive does not timely perform such obligations, Executive hereby makes NFM and its officers his attorney in fact and gives them the power of attorney to perform such obligations and to execute such documents on Executive’s behalf.  Executive shall cooperate with NFM upon NFM’s request and at NFM’s cost but without additional compensation in the preparation and prosecution of patent, trademark, industrial design and model, and copyright applications worldwide for protection of rights to any Inventions.

E.             LEGAL AND EQUITABLE REMEDIES.  Because the Executive’s services are personal and unique and the Executive has had and will continue to have access to and has become and will continue to become acquainted with the Confidential Information and Trade Secrets of NFM, and because any breach by the Executive of any of the confidentiality covenants and restrictive covenants contained in Section 4 would result in irreparable injury and damage for which money damages would not provide an adequate remedy, NFM shall have the right to enforce the restrictions set forth in Section 4 by injunction, specific performance or other equitable relief, without bond and without prejudice to any other rights and remedies that NFM may have for a breach, or threatened breach, of the obligations described in Section 4.  The Executive agrees that in any action in which NFM seeks injunction, specific performance or other equitable relief, the Executive will not assert or contend that any of the provisions of Section 4 are unreasonable or otherwise unenforceable.

F.             SCOPE/BLUE PENCIL PROVISIONS.  Executive agrees that the duration, scope and geographic area of the restrictions stated in this Section are reasonable and necessary given the nature of NFM’s Business.  However, in the event that a court or arbitrator of competent jurisdiction shall hold that the duration, scope, geographic area or other restrictions stated herein are unreasonable and unenforceable under circumstances then existing, the parties agree that the maximum duration, scope, area or other restrictions reasonable under such circumstances shall be substituted for the stated duration, scope, area or other restrictions.

G.            INDEPENDENT AGREEMENT.  The covenants made in this Section 4 shall be construed as an agreement independent of any other provisions of this Agreement, and shall survive the termination of this Agreement.  Moreover,

the existence of any claim or cause of action of Executive against NFM, whether or not predicated upon the terms of this Agreement, shall not constitute a defense to the enforcement of these covenants.  Notwithstanding anything to the contrary in this paragraph, Executive shall be released from his obligations under Section 4(A) of this Agreement if NFM is in material breach of its obligations set forth in Section 2(B) of this Agreement, provided such material breach remains uncured for more than thirty (30) days after written notice of said breach from Executive to NFM.

5.             ARBITRATION.  To the maximum extent permitted by law, all disputes, controversies, claims, or demands of any kind or nature arising between the parties in connection with this Agreement, whether at law or in equity or based upon common law or any federal or state statute, rule, or regulation, that cannot be resolved between the parties through NFM’s internal complaint resolution procedures, shall be submitted to binding arbitration by the American Arbitration Association; provided, however, that this arbitration requirement shall not apply to any action by either party to obtain injunctive relief to prevent any violation by the other party of the terms of this Agreement, which injunctive action may be brought in any court of competent jurisdiction. The filing of a claim for injunctive relief shall not allow either party to raise any other claim outside arbitration.

Any arbitration commenced hereunder shall be initiated in Boulder, Colorado and shall be governed by the AAA National Rules for the Resolution of Employment Disputes.  The arbitration shall occur before a single arbitrator that shall be mutually agreed upon by the parties hereto.  If the parties cannot agree on a single arbitrator, then an arbitrator shall be selected in accordance with the rules of AAA.  The arbitration must be filed within six months of the act or omission which gives rise to the claim.  Each party shall be entitled to take any discovery as is permitted by the applicable rules and the arbitrator. In determining the extent of discovery, the arbitrator shall exercise discretion, but shall consider the expense of the desired discovery and the importance of the discovery to a just adjudication.

The findings, conclusions, and award rendered in any arbitration shall be binding upon the parties and shall finally determine all questions of fact relating to the dispute. Judgment upon the arbitration award may be entered in the appropriate court, state or federal, having jurisdiction, and each party expressly waives any right to appeal any such judgment rendered by the court.   Any party may apply to a court of competent jurisdiction for entry of judgment on the arbitration award.

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The costs of the arbitration shall be advanced equally by the parties, however the prevailing party in any arbitration or other legal action brought to enforce or defend the terms of this Agreement shall be entitled, in addition to any other remedies available to such party, to an award of reasonable attorney’s fees and costs.  Any party may apply to a court of competent jurisdiction for entry of judgment on the arbitration award.

The parties agree that failure to comply with the provisions of this paragraph shall constitute grounds for the dismissal of any suit, action, or proceeding instituted in any federal, state, or local court or before any administrative tribunal with respect to any dispute which arises during the period of this Agreement and which is subject to this arbitration agreement. The arbitration provisions of this Agreement are specifically enforceable by each party to the Agreement and shall survive the termination or expiration of the Agreement.

THE EXECUTIVE UNDERSTANDS THAT THIS AGREEMENT TO ARBITRATE ALL ARBITRABLE DISPUTES MEANS THE EXECUTIVE IS AGREEING TO WAIVE TO THE MAXIMUM EXTENT PERMITTED BY LAW ANY RIGHT THE EXECUTIVE MAY HAVE TO ASK FOR A JURY OR COURT TRIAL IN ANY DISPUTE WITH THE COMPANY.

6.             NO CONFLICTING OBLIGATIONS OF EXECUTIVE.  Executive represents and warrants that he is not subject to any duties or restrictions under any prior agreement with any previous employer or other person or entity, and that he has no rights or obligations which may conflict with the interests of NFM or with the performance of Executive’s duties and obligations under this Agreement.  Executive agrees to notify NFM immediately if any such conflicts occur in the future.

7.             SUCCESSORS.

A.            This Agreement is personal to Executive and shall not be assignable by Executive.

B.            This Agreement shall inure to the benefit of NFM and its successors and assigns.  Upon written notice to Executive, NFM may assign this Agreement to any successor or affiliated entity, subsidiary, sibling, or parent company.

8.             LAW CHANGES.  To the extent that any payment under this Agreement is deemed to be deferred compensation subject to the requirements of section 409A of the Code, this Agreement shall be administered so that such payments will

be made in accordance with the requirements of section 409A of the Code.

9.             INDEMNIFICATION.  NFM agrees to defend and indemnify Executive against all criminal and civil claims for acts within the scope of his duties to the maximum extent allowed by law, but excluding acts of gross negligence and willful misconduct.  Additionally, NFM shall pay all attorneys’ fees and costs related to any actual or threatened legal action against Executive as such fees and costs arise.  NFM agrees to maintain D&O insurance that covers Executive for all acts within the scope of his duties, but excluding acts of gross negligence and willful misconduct.

10.          MISCELLANEOUS

A.            Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado, without reference to the principles of conflict of laws.

B.            Captions/Headings.  The captions and headings of this Agreement are not part of the provisions hereof and shall have no force or effect.

C.            Entire Agreement.  This Agreement contains the full and complete understanding between the parties hereto and supersedes all prior understandings, whether written or oral pertaining to the subject matter hereof.

D.            Modifications of Agreement.  This Agreement may not be amended or modified otherwise than by written agreement executed by Executive and by the designated representative of the Board.  Notwithstanding anything to the contrary, NFM hereby reserves the right to unilaterally amend this Agreement as necessary to avoid the imposition of liability under or as a consequence of the application of the provisions of Section 409A of the Code.

E.             Notices.  All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, or by facsimile, or by email, or by hand delivery to such address as either party shall have furnished to the other in writing in accordance herewith:

New Frontier Media, Inc.

7007 Winchester Circle, Suite 200

Boulder, CO 80301

Attn:  General Counsel

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Executive:

Marc Callipari

F.             Severability.  If any provision of this Agreement or application thereof to anyone or under any circumstances is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and shall not invalidate or render unenforceable such provision or application in any other jurisdiction.  If any provision is held void, invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstances.

G.            Withholdings.  NFM shall withhold from any amounts payable under this Agreement such amounts as are required to be withheld pursuant to any applicable law or regulation, including without limitation amounts required to

be withheld for Federal, State and local taxes, as well as garnishments and other required withholdings.

H.            Remedies Cumulative; No Waiver.  No remedy conferred upon a party by this Agreement is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to any other remedy given under this Agreement or now or hereafter existing at law or in equity.  The failure of either party to insist upon strict compliance with any provision of this Agreement, or the failure to assert any right either party may have hereunder, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

I.              Counterparts.  This Agreement may be executed in any number of counterparts (including facsimile counterparts), each of which shall be an original, but all of which together shall constitute one instrument.

IN WITNESS WHEREOF, Executive has hereunto set Executive’s hand, and NFM has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

NEW FRONTIER MEDIA, INC.		EXECUTIVE
By:	/s/ Michael Weiner	By:	/s/ Marc Callipari
Name: Michael Weiner		Name: Marc Callipari
Title: Chief Executive Officer

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EX-10.07

Exhibit 10.07

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), dated as of this 29 day of September, 2008 (the “Effective Date”) by and between SCOTT PIPER, an individual (the “Executive”), and NEW FRONTIER MEDIA, INC., a Colorado corporation with offices at 7007 Winchester Circle, Suite 200, Boulder, CO 80301, as well as its affiliates and subsidiaries whether now in existence or formed in the future. (“NFM”), recites and provides as follows:

WHEREAS, Executive is and has been previously employed by NFM pursuant to one or more employment agreements that are superseded and replaced by this Agreement in their entirety;

WHEREAS, NFM desires to retain the services of Executive, and Executive desires to be employed by NFM, all on the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, NFM and Executive agree as follows:

1.             TERM.  The Term of this Agreement shall begin as of the Effective Date and shall continue until midnight on April 30, 2010, or such date as the Agreement is terminated by either party as hereinafter provided (the “Term”).

2.             TERMS OF EMPLOYMENT.

A.            POSITION AND DUTIES.

(i)            During the Term, Executive shall have the title of Chief Information Officer and shall perform such executive duties as are commensurate with such title.

(ii)           Executive’s services shall be performed at NFM’s headquarters in Boulder, Colorado.  However, Executive may also be required by his job responsibilities to travel on NFM business, and Executive agrees to do so.

(iii)          During the Term, Executive agrees to devote his full-time and attention to the business and affairs of NFM.  Executive’s employment under this Agreement shall be Executive’s exclusive employment during the Term of this Agreement.  Service on any other company’s board of directors by Executive requires the written consent of the Compensation Committee of the Board of Directors of NFM (“Compensation Committee”).

B.            COMPENSATION.

(i)            Base Salary.  During the Term, Executive shall receive a base salary (“Base Salary”), which shall be paid in equal installments on a bi-weekly basis, at the rate of Two Hundred Twenty-Five Thousand Dollars ($225,000.00) per annum, which Base Salary may be reviewed and adjusted, but in no event decreased, annually.  The term “Base Salary” as used throughout this Agreement shall mean the base salary

paid to Executive as so increased during the Term.  Any increase in Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement.  The Executive’s Base Salary shall be subject to all applicable federal, state and local withholding taxes and required withholdings under any NFM benefits plans Executive participates in.

(ii)           Discretionary Bonus.  In addition to Executive’s Base Salary, the Compensation Committee may, at its sole discretion award to Executive annual bonus(es) which shall be awarded based upon factors and individual and/or company performance criteria established at the sole discretion of NFM.

 (iii)         All bonuses payable to Executive pursuant to subsections (ii), above, shall be paid within two and one-half (2 1/2) months of the end of the fiscal year for which it is awarded.  No discretionary bonus shall be payable to Executive in connection with a fiscal year if Executive’s employment is terminated for “Cause” (as defined in Section 3(C), below) prior to the end of the applicable fiscal year.  Discretionary bonuses following termination prior to the end of the applicable fiscal year for reasons other than Cause may be paid depending upon the exercise of Compensation Committee discretion.  The foregoing shall not apply to bonuses payable as a result of a “Change in Control Termination” (as defined below), which shall be paid pursuant to Section 3(F).

(iv)          Stock Options.  Executive shall be eligible to receive stock options under the terms and conditions of any applicable Stock Option Plan approved by shareholders of NFM, on the terms and conditions set forth in such a plan.  Stock Options shall be granted at the discretion of the Board of Directors based upon the recommendations of the Compensation Committee.

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(v)           Expenses.  During the Term, Executive shall be entitled to receive reimbursement for all employment-related expenses incurred by Executive in accordance with the policies, practices and procedures of NFM as in effect generally from time to time after the Effective Date with respect to other employees at Executive’s level within NFM.

(vi)          Vacation.  Executive acknowledges that NFM has no policy concerning vacation time or sick leave applicable to its executive level employees and, by executing this Agreement, Executive acknowledges and agrees that he shall not accrue any such vacation or sick leave benefits during the Term.  Executive is authorized to take paid time off provided he meets his professional and productivity obligations to NFM as determined by the Chief Operating Officer of NFM.  Executive is to coordinate time off with the Chief Operating Officer or his designee.

(vii)         Car Allowance.  During the Term, the Executive shall be entitled to an $850 a month car allowance in accordance with NFM’s car allowance policy, in lieu of expenses associated with the operation of his automobile.

(viii)        Other Benefits.  During the Term, Executive shall be entitled to such health insurance and other benefits, in accordance with the policies, programs and practices of NFM which are in effect from time to time after the Effective Date with respect to other employees at Executive’s level within NFM.

(ix)           Relationship Subsequent to this Agreement.  On or before the end of the Term, NFM and Executive shall address the subject of a new or extended employment agreement to take effect upon the expiration of this Agreement.  If the parties do not execute a new written agreement upon the expiration of this Agreement, but the parties are negotiating a new agreement in good-faith, Executive shall continue to be paid the Base Salary then in effect in regular bi-weekly installments until a new agreement is executed.

3.             TERMINATION OF EMPLOYMENT.

A.            DEATH.  If the Executive dies while employed by NFM, the Executive’s employment shall terminate on the date of death and NFM shall pay to the Executive’s executor, legal representative, administrator or designated beneficiary, as applicable, any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  Otherwise, NFM shall have no further liability or obligation under this Agreement to the Executive’s executors, legal representatives, administrators,

heirs or assigns or any other person claiming under or through the Executive.

B.            DISABILITY.  If the Executive incurs a Disability (as defined below) during the Term, the Executive’s employment shall terminate on the date of Disability.  If the Executive’s employment terminates on account of his Disability, the Executive shall be entitled to receive any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  For purposes of this Agreement, the term “Disability” shall have the same meaning as under NFM long-term disability plan, or if there is no such plan, if the Executive by virtue of ill health or other disability is unable to perform substantially and continuously the duties assigned to him (as determined by the Board at its sole discretion) for more than 90 consecutive or non-consecutive days out of any 6 consecutive month period.

C.            CAUSE.  NFM may terminate the Executive’s employment at any time for Cause (as defined below) upon written notice to the Executive (subject to the Executive’s opportunity to cure described below), in which event all payments under this Agreement shall cease, except for any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  For purposes of this Agreement, “Cause” shall mean any of the grounds for termination of the Executive’s employment listed below:

(i)            The Executive’s conviction of, or plea of guilty or nolo contendere to, (a) a felony, (b) a crime involving moral turpitude, or (c) a criminal act which adversely affects the business or reputation of NFM or its subsidiaries;

(ii)           The Executive’s engagement in willful misconduct or willful or gross neglect in the performance of his duties hereunder, or commission of an act of fraud, embezzlement, theft, dishonesty, breach of trust or misappropriation of funds against NFM or its subsidiaries;

(iii)          Material breach of this Agreement by the Executive;

(iv)          Material violation by Executive of the “Prohibition of Harassment and Discrimination” set forth in the Employee Handbook (Rev 6/25/2008); or

(v)           The Executive’s persistent and continuing failure to perform the Executive’s reasonable duties hereunder.

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If there is an event or condition under Section 3(C)(iii), (iv) or (v) above, the Executive shall have ten (10) days from the date NFM provides notice to the Executive of the event or condition constituting Cause to cure such event or condition (to the extent the event or condition is curable), and if the Executive does so fully cure such event or condition, such event or condition shall not constitute Cause hereunder.

D.            WITHOUT CAUSE. In the event that NFM at any time prior to the occurrence of a Change in Control: terminates Executive’s employment without Cause; or materially breaches this Agreement; or materially diminishes Executive’s title, position or responsibilities; or reduces Executive’s Base Salary, this Section 3(D) shall apply:

(i)            Executive shall be under no obligation to render any additional services to NFM and shall be allowed to seek other employment, subject to the Restrictive Covenants set forth herein.

(ii)           Unless the Executive complies with the provisions of Section 3(D)(iii) below, upon termination pursuant to this Section 3(D), Executive shall be entitled to receive only any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of NFM, which amounts shall be paid within the time frames specified by Colorado state wage law.  No other payments or benefits shall be due under this Agreement to the Executive.

(iii)          Notwithstanding the provisions of Section 3(D)(ii), upon termination pursuant to Section 3(D), if the Executive executes and does not revoke a written release, in a form reasonably acceptable to both parties, of any and all claims against NFM and all related parties with respect to all matters arising out of the Employee Retirement Income Security Act of 1974, the Family and Medical Leave Act of 1993, the WARN Act, or claims of discrimination under the Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended and the Americans with Disabilities Act of 1990 (other than claims for any entitlements under the terms of this Agreement or under any plans or programs of the Company under which the Executive has accrued and is due a benefit and to all indemnification and similar rights under the Company’s Articles of Incorporation, Bylaws or otherwise) (the “Release”), the Executive shall be entitled to receive the following:

(a)           The immediate and full payment of all amounts earned, accrued and owing but not yet paid under Section 2, above, and any benefits accrued and due under any applicable benefit plans and programs of NFM, and

(b)           An amount equal to Executive’s then current Base

Salary for the remaining duration of the Term or to an amount equivalent to the then current annual Base Salary multiplied by 1½, whichever is greater, which shall be payable in accordance with NFM’s normal payroll practices in regular bi-weekly installments, and

(c)           Any applicable bonus payments pursuant to Section 2(B);

(d)           The immediate vesting of all outstanding options awarded to Executive prior to the Date of Termination; and

(e)           Payment of premiums on behalf of Executive and his dependents to allow Executive and his dependents to receive COBRA coverage for health, dental and vision benefits then being provided for Executive and his dependents at the time Executive’s employment is terminated, for eighteen (18) months, which benefit shall be provided subject to the applicable terms and conditions governing such COBRA coverage; provided, however that if Executive commences employment with another employer and is eligible to receive medical or other welfare benefits under another employer-provider plan, the medical and other welfare benefits to be provided by NFM as described herein shall terminate.

E.             CHANGE IN CONTROL.  For purposes of this Agreement, a “Change in Control” of NFM shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have occurred:

(i)            Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Act”)), becomes the “beneficial owner” (as defined in Rule 13-d under the Act) directly or indirectly, of securities representing more than fifty percent (50%) of the (a) total outstanding shares of common stock of NFM, or (b) the total combined voting power represented by NFM’s then outstanding voting securities other than by virtue of a merger, consolidation, or similar transaction.  However, if any one person, or more than one person acting as a group, owns 50% or more of the total fair market value or total voting power represented by NFM’s then outstanding voting securities, the increase in beneficial ownership by such person or group or persons will not be considered a Change in Control.

(ii)           A change in the composition of the Board of Directors of NFM (“Board”), as a result of which less than a majority of the directors are Incumbent Directors.  “Incumbent Directors” shall mean directors who either (a) are directors of New Frontier as of the date hereof, or (b) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or

3

threatened proxy contest relating to the election of directors of NFM).

(iii)          NFM is a party to a merger, consolidation or consummates a similar transaction with any other business entity after which at least 50% of the total voting power of the resulting entity is not held by the shareholders of NFM prior to the merger, or NFM adopts, and the stockholders approve, if necessary, a plan of complete liquidation or dissolution of NFM, a complete dissolution or liquidation of NFM occurs or NFM sells or disposes of substantially all of its assets to an unrelated party (as contemplated by Section 1.409A-3(i)(5)(vii)(3) of the Treasury Regulations promulgated under the Code (as defined below)).

F.             CHANGE OF CONDITIONS OF EMPLOYMENT.  At any time following the occurrence of a Change in Control, if NFM terminates Executive’s employment without Cause or Executive terminates his employment due to NFM: materially breaching this Agreement; or materially diminishing Executive’s title, position or responsibilities; or reducing Executive’s Base Salary; or relocating NFM’s executive offices outside of the Boulder, Colorado area, Executive shall receive the following within thirty (30) days of the Date of Termination (the aforementioned shall collectively be referred to as a “Change in Control Termination”):

(i)            Payment of all amounts earned, accrued and owing but not yet paid under Section 2, above, and any benefits accrued and due under any applicable benefit plans and programs of NFM, and

(ii)           A one time, lump sum payment of Executive’s then current Base Salary for the remaining duration of the Term or to an amount equivalent to the then current Base Salary multiplied by 1½, whichever is greater, and

(iii)          A one time, lump sum payment of an amount equivalent to one year’s bonus as measured by the average bonuses awarded to Executive during the immediately preceding two (2) full bonus years; and;

(iv)          The immediate vesting of all outstanding options awarded to Executive prior to the Date of Termination; and

(v)           Payment of premiums on behalf of Executive and his dependents to allow Executive and his dependents to receive COBRA coverage for health, dental and vision benefits then being provided for Executive and his dependents at the time Executive’s employment is terminated, for eighteen (18) months, which benefit shall be provided subject to the applicable terms and conditions governing such COBRA coverage.

G.            RESIGNATION (NOT A CHANGE IN CONTROL TERMINATION).  At any time during the

Term, Executive may voluntarily terminate his employment for any reason.  In such event, after the effective date of such termination, no payments shall be due under this Agreement, except that Executive shall be entitled to any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of the Company, which amounts shall be paid within the time frames specified by Colorado state wage law.

H.            NOTICE OF TERMINATION. Any termination under this Agreement shall be communicated by a written notice to the other party, and may be sent via first class mail, facsimile transmission, email or personal delivery (the “Notice of Termination”).

I.              DATE OF TERMINATION. “Date of Termination” shall mean: (i) the date of transmission of the Notice of Termination by facsimile, email or personal delivery, or (ii) three calendar days after the date of mailing by first class mail, or (iii) date of death or disability (if applicable).

J.             EXCESS PARACHUTE PAYMENTS.  In the event of a Change in Control Termination, unless otherwise agreed by both parties acting reasonably, a nationally recognized accounting firm (“Accounting Firm”) suitable to both parties shall be timely engaged to render an opinion on whether the Executive is expected to pay an excise tax on “excess parachute payments” (as defined in Section 280G(b) of the Internal Revenue Code of 1986, as amended), as a result of payments due under section 5(B) of this Agreement.  Within 10 days following Company’s receipt of a written opinion of the Accounting Firm, the Company shall, based solely upon the Accounting Firm’s determination of which option shall result in a higher net total net consideration to the Executive, either: (i) reduce the amounts and or benefits payable to the Executive under Section 3(D)(iii)(a)(b)(c)(d) and (e) to an amount that is $1 less than the amount that would constitute an excess parachute payment and pay such reduced amount to Executive, or (ii) pay the full amount due under Section 3(D)(iii)(a)(b)(c)(d) and (e) to the Executive.  Payments by the Company to the Executive pursuant to this paragraph shall be made without setoff, counterclaim or other withholding.  The parties agree that the written opinion of the Accounting Firm shall be final in all respects.  The fees and expenses of the Accounting Firm shall be paid by the Company.

K.            APPLICATION OF SECTION 409A OF THE INTERNAL REVENUE CODE.  Notwithstanding anything contained herein (including in Sections 3(D) or 3(F)) to the contrary, if Executive is a “specified employee” within the meaning of Section 1.409A-l(i) of the Treasury Regulations promulgated under the Internal Revenue Code of 1986, as amended (the “Code”), as of the Date of Termination, then payments to Executive hereunder shall not be made before the date that is six

4

months after the Date of Termination (or if earlier, the date of death of Executive); provided, however, that during such six-month period, NFM shall make any and all payments contemplated hereunder to the extent such payments do not exceed two times the lesser of (i) Executive’s annualized compensation, based upon the annual rate of compensation for the calendar year preceding the year in which the Date of Termination occurs, or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(l7) of the Code for the year in which the Date of Termination occurs; and provided further that any amounts deferred hereunder shall be paid in a lump-sum amount at the expiration of such six-month period.

4.             RESTRICTIVE COVENANTS

For good and valuable consideration, including but not limited to the increase in Base Salary effectuated by this Agreement, and the continued employment of Executive by NFM, Executive agrees to be bound to the following restrictive covenants:

A.            COVENANT AGAINST COMPETITION. Executive agrees that he holds an executive level position with NFM, and Executive further agrees that by virtue of his position he has had access and will continue to have access to NFM’s Confidential Information and Trade Secrets (as those terms are defined below), and Executive further agrees that NFM has a legitimate business interest in preventing Executive from putting to a competitive use the information and relationships which pertain to NFM that Executive acquired in the course of his employment, and in protecting its customer base.  Accordingly, Executive agrees to the following:

(i)            The Executive acknowledges and agrees that the principal business of NFM is the sale, promotion and electronic distribution of adult themed programming and events, whether such adult themed programming and events are sold, promoted, or electronically distributed by means now known or hereafter discovered including but not limited to the Internet, satellite systems, cable systems, hotels, IPTV, mobile and/or stand alone systems (the “Business”).

(ii)           In addition, the Executive acknowledges and agrees that: NFM is one of the limited number of companies who have developed the Business; the Executive’s work for NFM has given and will continue to give him access to the Confidential Information and Trade Secrets of the Company; the value of all goodwill resulting from the operation of the Business of NFM and its subsidiaries and other affiliates should properly belong to NFM; the covenants and agreements of the Executive in this Section are necessary to preserve the value of such goodwill for the benefit of NFM; the proprietary technologies developed by NFM and its

predecessors offer NFM a distinct competitive advantage, and NFM would not have entered into this Agreement but for the covenants and agreements set forth in this Section.  Accordingly, the Executive covenants and agrees that:

(a)           By and in consideration of the salary and benefits to be provided by NFM hereunder, including the severance arrangements set forth herein, and in consideration of the Executive’s executive position and exposure to the Confidential Information and Trade Secrets of NFM, the Executive covenants and agrees that, during the period commencing on the date hereof and ending one (1) year following the date upon which the Executive shall cease to be paid any compensation by NFM (the “Restricted Period”), he shall not anywhere in the Restricted Territory, directly or indirectly: engage in any element of the Business or otherwise compete with NFM; render any services to any person, corporation, partnership or other entity (other than NFM or its affiliates) primarily engaged in any element of the Business; or become interested in any such person, corporation, partnership or other entity (other than NFM or its affiliates) as a partner, shareholder, principal, agent, employee, consultant or in any other relationship or capacity; provided, however, that, notwithstanding the foregoing, the Executive may invest in securities of any entity, solely for investment purposes and without participating in the business thereof, if (A) such securities are traded on any national securities exchange or the National Association of Securities Dealers, Inc. Automated Quotation System, (B) the Executive is not a controlling person of, or a member of a group which controls, such entity and (C) the Executive does not, directly or indirectly, own five percent (5%) or more of any class of securities of such entity.

For purposes of this Agreement, “Restricted Territory” means any state, county, or locality in the United States in which NFM conducts Business and any other country, jurisdiction or territory in which NFM has generated material revenue during the last six (6) months of Executive’s employment.

For purposes of this Agreement, “Trade Secret” means all non-public information whether tangible or intangible related to the products, services or business of NFM that (A) derives economic value, actual or potential, from not being generally known to or readily ascertainable by other persons who can obtain economic value from its disclosure or use; or (B) is the subject of efforts by NFM that are reasonable under the circumstances to maintain its secrecy, which might include: (i) marking any information reduced to tangible form clearly and conspicuously with a legend identifying its confidential or trade secret nature; (ii) identifying any oral communication as confidential or secret immediately before, during, or after such oral communication; or (iii) otherwise treating such information as confidential or secret.  Assuming the criteria in clauses (A) or (B) of this paragraph are met,

5

Trade Secrets includes information, without regard to form, including, but not limited to, technical and nontechnical data, formulas, patterns, designs, compilations, computer programs and software, devices, inventions, methods, techniques, drawings, processes, financial data, financial plans, product plans, lists of actual or potential customers and suppliers which are not commonly known by or available to the public, research, development, and existing and future products.

(b)           Notwithstanding anything to the contrary in Section 4(A)(ii)(a) above, in the event of a Change in Control Termination, such Restricted Period shall terminate and Executive shall therefore be free to seek employment elsewhere without regard to whether any prospective employer is a competitor of NFM.

B.            NON-SOLICITATION.  During the Restricted Period, Executive shall not, directly or indirectly, (i) solicit or encourage to leave the employment or other service of NFM any employee or independent contractor thereof; or (ii) hire (on behalf of Executive or any other person or entity) any employee or independent contractor who has left the employment or other service of NFM within the one-year period which follows the termination of such employer’s or independent contractor’s employment or other service with NFM.  For purposes of the preceding sentence, the term “independent contractor” shall refer to independent contractors of NFM whose services relate directly to the conduct of the Business.  During the Restricted Period, the Executive will not, whether for his own account or for the account of any other person, firm, corporation or other business organization, intentionally interfere with NFM’ relationship with, or endeavor to entice away from NFM any person who during the Term is or was a customer, client, supplier, licensee or other business relation of NFM.

C.            CONFIDENTIALITY OBLIGATIONS

(i)            CONFIDENTIAL INFORMATION.  As used in this Agreement, “Confidential Information” includes, without limitation, design information, manufacturing information, business, financial, and technical information, sales and processing information, product information, customer lists, vendor information, vendor lists, pricing information, corporation and personal business opportunities, software, computer disks or files, or any other electronic information of any kind, Rolodex cards or other lists of names, addresses or telephone numbers, financial information, current projects, projects in development and future projects, forecasts, plans, contracts, releases, and other documents, materials, writings or information, including those which are prepared, developed or created by Executive, or which come into the possession of Executive by any means or manner, and which relate directly or indirectly to NFM (all of the above collectively referred to

as “Confidential Information”).  Confidential Information includes information developed by Executive in the course of Executive’s services for NFM, as well as other Confidential Information to which Executive may have access in connection with Executive’s services.  Confidential Information also includes the confidential information of other individuals or entities with which NFM has a business relationship.  Confidential Information shall not include any information (a) which is in the public domain or which enters the public domain through no act of omission of Executive or (b) which was in the possession of Executive prior to the commencement of his employment with NFM.

(ii)           DUTY OF CONFIDENTIALITY.  At all times during his employment and thereafter, Executive will maintain in strictest confidence and will not, directly or indirectly, disclose or use (or allow others working with or related to Executive to disclose or use) any Confidential Information belonging to NFM, whether in oral, written, electronic or permanent form, except solely to the extent necessary to perform services on behalf of NFM.  Upon termination of this Agreement, or at the request of NFM prior to its termination, Executive shall deliver forthwith to NFM all Confidential Information (and all copies thereof) in Executive’s possession or control belonging to NFM and all tangible items embodying or containing Confidential Information.

(iii)         DOCUMENTS, RECORDS, ETC.  All documents, records, data, equipment and other physical property, whether or not pertaining to Confidential Information, which are furnished to Executive by NFM or are produced by Executive in connection with Executive’s services will be and remain the sole property of NFM.  Executive will return to NFM forthwith all such materials and property upon the termination of this Agreement or sooner if requested by NFM.

D.            ASSIGNMENT OF RIGHTS.  Executive shall make full and prompt disclosure to NFM of any and all designs, intellectual property, software, inventions, discoveries, or improvements (individually and collectively, “Inventions”) made by Executive as a result or product of his employment relationship with NFM.  Executive hereby assigns to NFM without additional compensation the entire worldwide right, title and interest in and to such Inventions, and related intellectual property rights and without limitation all copyrights, copyright renewals or reversions, trademarks, trade names, trade dress rights, industrial design, industrial model, inventions, priority rights, patent rights, patent applications, patents, design patents and any other rights or protections in connection therewith or related thereto, for exploitation in any form or medium, of any kind or nature whatsoever, whether now known or hereafter devised.  To the extent that any work created by Executive can be a work for hire pursuant to U.S. Copyright Law, the parties deem such

6

work a work for hire and Executive should be considered the author thereof.  Executive shall, at the request of NFM, without additional compensation from time to time execute, acknowledge and deliver to NFM such instruments and documents as NFM may require to perfect, transfer and vest in NFM the entire right, title and interest in and to such inventions.  In the event that Executive does not timely perform such obligations, Executive hereby makes NFM and its officers his attorney in fact and gives them the power of attorney to perform such obligations and to execute such documents on Executive’s behalf.  Executive shall cooperate with NFM upon NFM’s request and at NFM’s cost but without additional compensation in the preparation and prosecution of patent, trademark, industrial design and model, and copyright applications worldwide for protection of rights to any Inventions.

E.             LEGAL AND EQUITABLE REMEDIES.  Because the Executive’s services are personal and unique and the Executive has had and will continue to have access to and has become and will continue to become acquainted with the Confidential Information and Trade Secrets of NFM, and because any breach by the Executive of any of the confidentiality covenants and restrictive covenants contained in Section 4 would result in irreparable injury and damage for which money damages would not provide an adequate remedy, NFM shall have the right to enforce the restrictions set forth in Section 4 by injunction, specific performance or other equitable relief, without bond and without prejudice to any other rights and remedies that NFM may have for a breach, or threatened breach, of the obligations described in Section 4.  The Executive agrees that in any action in which NFM seeks injunction, specific performance or other equitable relief, the Executive will not assert or contend that any of the provisions of Section 4 are unreasonable or otherwise unenforceable.

F.             SCOPE/BLUE PENCIL PROVISIONS.  Executive agrees that the duration, scope and geographic area of the restrictions stated in this Section are reasonable and necessary given the nature of NFM’s Business.  However, in the event that a court or arbitrator of competent jurisdiction shall hold that the duration, scope, geographic area or other restrictions stated herein are unreasonable and unenforceable under circumstances then existing, the parties agree that the maximum duration, scope, area or other restrictions reasonable under such circumstances shall be substituted for the stated duration, scope, area or other restrictions.

G.            INDEPENDENT AGREEMENT.  The covenants made in this Section 4 shall be construed as an agreement

independent of any other provisions of this Agreement, and shall survive the termination of this Agreement.  Moreover, the existence of any claim or cause of action of Executive against NFM, whether or not predicated upon the terms of this Agreement, shall not constitute a defense to the enforcement of these covenants.  Notwithstanding anything to the contrary in this paragraph, Executive shall be released from his obligations under Section 4(A) of this Agreement if NFM is in material breach of its obligations set forth in Section 2(B) of this Agreement, provided such material breach remains uncured for more than thirty (30) days after written notice of said breach from Executive to NFM.

5.             ARBITRATION.  To the maximum extent permitted by law, all disputes, controversies, claims, or demands of any kind or nature arising between the parties in connection with this Agreement, whether at law or in equity or based upon common law or any federal or state statute, rule, or regulation, that cannot be resolved between the parties through NFM’s internal complaint resolution procedures, shall be submitted to binding arbitration by the American Arbitration Association; provided, however, that this arbitration requirement shall not apply to any action by either party to obtain injunctive relief to prevent any violation by the other party of the terms of this Agreement, which injunctive action may be brought in any court of competent jurisdiction. The filing of a claim for injunctive relief shall not allow either party to raise any other claim outside arbitration.

Any arbitration commenced hereunder shall be initiated in Boulder, Colorado and shall be governed by the AAA National Rules for the Resolution of Employment Disputes.  The arbitration shall occur before a single arbitrator that shall be mutually agreed upon by the parties hereto.  If the parties cannot agree on a single arbitrator, then an arbitrator shall be selected in accordance with the rules of AAA.  The arbitration must be filed within six months of the act or omission which gives rise to the claim.  Each party shall be entitled to take any discovery as is permitted by the applicable rules and the arbitrator. In determining the extent of discovery, the arbitrator shall exercise discretion, but shall consider the expense of the desired discovery and the importance of the discovery to a just adjudication.

The findings, conclusions, and award rendered in any arbitration shall be binding upon the parties and shall finally determine all questions of fact relating to the dispute. Judgment upon the arbitration award may be entered in the appropriate court, state or federal, having jurisdiction, and each party expressly waives any right to appeal any such judgment rendered by the court.   Any

7

party may apply to a court of competent jurisdiction for entry of judgment on the arbitration award.

The costs of the arbitration shall be advanced equally by the parties, however the prevailing party in any arbitration or other legal action brought to enforce or defend the terms of this Agreement shall be entitled, in addition to any other remedies available to such party, to an award of reasonable attorney’s fees and costs.  Any party may apply to a court of competent jurisdiction for entry of judgment on the arbitration award.

The parties agree that failure to comply with the provisions of this paragraph shall constitute grounds for the dismissal of any suit, action, or proceeding instituted in any federal, state, or local court or before any administrative tribunal with respect to any dispute which arises during the period of this Agreement and which is subject to this arbitration agreement. The arbitration provisions of this Agreement are specifically enforceable by each party to the Agreement and shall survive the termination or expiration of the Agreement.

THE EXECUTIVE UNDERSTANDS THAT THIS AGREEMENT TO ARBITRATE ALL ARBITRABLE DISPUTES MEANS THE EXECUTIVE IS AGREEING TO WAIVE TO THE MAXIMUM EXTENT PERMITTED BY LAW ANY RIGHT THE EXECUTIVE MAY HAVE TO ASK FOR A JURY OR COURT TRIAL IN ANY DISPUTE WITH THE COMPANY.

6.             NO CONFLICTING OBLIGATIONS OF EXECUTIVE.  Executive represents and warrants that he is not subject to any duties or restrictions under any prior agreement with any previous employer or other person or entity, and that he has no rights or obligations which may conflict with the interests of NFM or with the performance of Executive’s duties and obligations under this Agreement.  Executive agrees to notify NFM immediately if any such conflicts occur in the future.

7.             SUCCESSORS.

A.            This Agreement is personal to Executive and shall not be assignable by Executive.

B.            This Agreement shall inure to the benefit of NFM and its successors and assigns.  Upon written notice to Executive, NFM may assign this Agreement to any successor or affiliated entity, subsidiary, sibling, or parent company.

8.             LAW CHANGES.  To the extent that any payment under this Agreement is deemed to be deferred compensation subject to the requirements of section 409A of the Code, this

Agreement shall be administered so that such payments will be made in accordance with the requirements of section 409A of the Code.

9.             INDEMNIFICATION.  NFM agrees to defend and indemnify Executive against all criminal and civil claims for acts within the scope of his duties to the maximum extent allowed by law, but excluding acts of gross negligence and willful misconduct.  Additionally, NFM shall pay all attorneys’ fees and costs related to any actual or threatened legal action against Executive as such fees and costs arise.  NFM agrees to maintain D&O insurance that covers Executive for all acts within the scope of his duties, but excluding acts of gross negligence and willful misconduct.

10.          MISCELLANEOUS

A.            Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado, without reference to the principles of conflict of laws.

B.            Captions/Headings.  The captions and headings of this Agreement are not part of the provisions hereof and shall have no force or effect.

C.            Entire Agreement.  This Agreement contains the full and complete understanding between the parties hereto and supersedes all prior understandings, whether written or oral pertaining to the subject matter hereof.

D.            Modifications of Agreement.  This Agreement may not be amended or modified otherwise than by written agreement executed by Executive and by the designated representative of the Board.  Notwithstanding anything to the contrary, NFM hereby reserves the right to unilaterally amend this Agreement as necessary to avoid the imposition of liability under or as a consequence of the application of the provisions of Section 409A of the Code.

E.             Notices.  All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, or by facsimile, or by email, or by hand delivery to such address as either party shall have furnished to the other in writing in accordance herewith:

New Frontier Media, Inc.

7007 Winchester Circle, Suite 200

Boulder, CO 80301

Attn:  General Counsel

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Executive:

Scott Piper

F.             Severability.  If any provision of this Agreement or application thereof to anyone or under any circumstances is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and shall not invalidate or render unenforceable such provision or application in any other jurisdiction.  If any provision is held void, invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstances.

G.            Withholdings.  NFM shall withhold from any amounts payable under this Agreement such amounts as are required to be withheld pursuant to any applicable law or regulation, including without limitation amounts required to

be withheld for Federal, State and local taxes, as well as garnishments and other required withholdings.

H.            Remedies Cumulative; No Waiver.  No remedy conferred upon a party by this Agreement is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to any other remedy given under this Agreement or now or hereafter existing at law or in equity.  The failure of either party to insist upon strict compliance with any provision of this Agreement, or the failure to assert any right either party may have hereunder, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

I.              Counterparts.  This Agreement may be executed in any number of counterparts (including facsimile counterparts), each of which shall be an original, but all of which together shall constitute one instrument.

IN WITNESS WHEREOF, Executive has hereunto set Executive’s hand, and NFM has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

NEW FRONTIER MEDIA, INC.		EXECUTIVE
By:	/s/ Michael Weiner	By:	/s/ Scott Piper
Name: Michael Weiner		Name: Scott Piper
Title: Chief Executive Officer

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EX-31.01

Exhibit 31.01

CERTIFICATION

I, Michael Weiner, Chief Executive Officer of New Frontier Media, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of New Frontier Media, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 7, 2008

/s/ Michael Weiner

Michael Weiner

Chief Executive Officer

(Principal Executive

Officer)

EX-31.02

Exhibit 31.02

CERTIFICATION

I, Grant Williams, Chief Financial Officer of New Frontier Media, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of New Frontier Media, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 7, 2008

/s/ Grant Williams

Grant Williams

Chief Financial Officer

(Principal Financial

Officer)

EX-32.01

Exhibit 32.01

WRITTEN STATEMENT OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. Section 1350)

The undersigned, the Chief Executive Officer of New Frontier Media, Inc., a Colorado company (the “Company”), hereby certifies that, to his knowledge on the date hereof:

(a) the Form 10-Q of the Company for the fiscal quarter ended September 30, 2008, filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael Weiner

Michael Weiner

Chief Executive Officer

November 7, 2008

EX-32.02

Exhibit 32.02

WRITTEN STATEMENT OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. Section 1350)

The undersigned, the Chief Financial Officer of New Frontier Media, Inc., a Colorado company (the “Company”), hereby certifies that, to his knowledge on the date hereof:

(a) the Form 10-Q of the Company for the fiscal quarter ended September 30, 2008, filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Grant Williams

Grant Williams

Chief Financial Officer

November 7, 2008