10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2010

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

For the transition period from               to              

000-23697

(Commission file number)

NEW FRONTIER MEDIA, INC.

(Exact name of registrant as specified in its charter)

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

7007 Winchester Circle, Suite 200, Boulder, CO 80301

(Address of principal executive offices)

(303) 444-0900

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant (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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o 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:

Large accelerated filer o	Accelerated filer o
Non-accelerated filer x	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 August 1, 2010, 19,432,317 shares of Common Stock, par value $.0001, were outstanding.

Form 10-Q

NEW FRONTIER MEDIA, INC.

FOR THE FISCAL QUARTER ENDED June 30, 2010

Table of Contents

		Page Number
Part I.	Financial Information
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Cash Flows	5
	Condensed Consolidated Statements of Comprehensive Income	6
	Condensed Consolidated Statements of Shareholders’ Equity	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
Part II.	Other Information
Item 1A.	Risk Factors	25
Item 6.	Exhibits	25
SIGNATURES		26

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)
	June 30,			March 31,
	2010			2010
Assets
Current assets:
Cash and cash equivalents	$	14,078		$	17,187
Restricted cash	115			112
Accounts receivable, net of allowance for doubtful accounts of $213 and $253, at June 30, 2010 and March 31, 2010, respectively	11,905			10,112
Deferred producer-for-hire costs	2,261			625
Taxes receivable	611			944
Prepaid and other assets	1,276			1,749
Total current assets	30,246			30,729
Equipment and furniture, net	4,412			4,557
Content and distribution rights, net	11,738			11,316
Recoupable costs and producer advances, net	3,820			3,421
Film costs, net	5,151			5,705
Goodwill	3,743			3,743
Other identifiable intangible assets, net	496			673
Deferred tax assets	544			349
Other assets	1,258			1,320
Total assets	$	61,408		$	61,813
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	840		$	1,103
Producers payable	835			951
Deferred revenue	905			685
Accrued compensation	1,298			1,802
Deferred producer liabilities	1,645			1,377
Short-term debt	1,000			1,000
Deferred tax liabilities	107			107
Accrued and other liabilities	1,118			1,823
Total current liabilities	7,748			8,848
Taxes payable	309			309
Other long-term liabilities	452			528
Total liabilities	8,509			9,685
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, 19,432 shares issued and outstanding at June 30, 2010 and March 31, 2010	2			2
Additional paid-in capital	55,159			54,929
Accumulated deficit	(2,185		)	(2,735		)
Accumulated other comprehensive loss	(77		)	(68		)
Total shareholders’ equity	52,899			52,128
Total liabilities and shareholders’ equity	$	61,408		$	61,813

Refer to Notes to Condensed Consolidated Financial Statements.

3

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

	(Unaudited) Three Months Ended June 30,
	2010			2009
Net revenue	$	12,454		$	12,487
Cost of sales	5,063			4,416
Gross margin	7,391			8,071
Operating expenses:
Sales and marketing	2,030			2,127
General and administrative	4,435			4,285
Charge for asset impairments	5			28
Total operating expenses	6,470			6,440
Operating income	921			1,631
Other income (expense):
Interest income	16			12
Interest expense	(23		)	(73		)
Other income (expense), net	3			(5		)
Total other expense	(4		)	(66		)
Income from continuing operations before provision for income taxes	917			1,565
Provision for income taxes	(360		)	(579		)
Income from continuing operations	557			986
Loss from discontinued operations, net of income tax benefit of $5 and $92, respectively	(7		)	(159		)
Net income	$	550		$	827
Basic income (loss) per share:
Continuing operations	$	0.03		$	0.05
Discontinued operations	(0.00		)	(0.01		)
Net basic income per share	$	0.03		$	0.04
Diluted income (loss) per share:
Continuing operations	$	0.03		$	0.05
Discontinued operations	(0.00		)	(0.01		)
Net diluted income per share	$	0.03		$	0.04

Refer to Notes to Condensed Consolidated Financial Statements.

4

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	(Unaudited) Three Months Ended June 30,
	2010			2009
Cash flows from operating activities:
Net income	$	550		$	827
Add: Loss from discontinued operations	7			159
Income from continuing operations	557			986
Adjustments to reconcile income from continuing operations to net cash provided by (used in) operating  activities of continuing operations:
Depreciation and amortization	2,553			2,438
Share-based compensation	228			210
Deferred taxes	(188		)	(13		)
Charge for asset impairments	5			28
Change in operating assets and liabilities:
Accounts receivable	(1,494		)	(247		)
Accounts payable	(255		)	254
Content and distribution rights	(1,516		)	(833		)
Film costs	(305		)	(252		)
Deferred producer-for-hire costs	(1,636		)	(1,024		)
Deferred revenue	240			68
Producers payable	(116		)	242
Taxes receivable and payable	338			477
Accrued compensation	(504		)	15
Recoupable costs and producer advances	(399		)	(309		)
Other assets and liabilities	(337		)	(150		)
Net cash provided by (used in) operating activities of continuing operations	(2,829		)	1,890
Net cash used in operating activities of discontinued operations	(39		)	(527		)
Net cash provided by (used in) operating activities	(2,868		)	1,363
Cash flows from investing activities:
Redemptions of investments	—			90
Purchases of equipment and furniture	(158		)	(156		)
Purchases of intangible assets	—			(6		)
Net cash used in investing activities of continuing operations	(158		)	(72		)
Net cash provided by (used in) investing activities of discontinued operations	—			—
Net cash used in investing activities	(158		)	(72		)
Cash flows from financing activities:
Payment of long-term seller financing	(75		)	(75		)
Net cash used in financing activities of continuing operations	(75		)	(75		)
Net cash provided by (used in) financing activities of discontinued operations	—			—
Net cash used in financing activities	(75		)	(75		)
Net increase (decrease) in cash and cash equivalents	(3,101		)	1,216
Effect of exchange rate changes on cash and cash equivalents	(8		)	4
Cash and cash equivalents, beginning of period	17,187			16,049
Cash and cash equivalents, end of period	$	14,078		$	17,269

Refer to Notes to Condensed Consolidated Financial Statements.

5

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	(Unaudited) Three Months Ended June 30,
	2010			2009
Net income	$	550		$	827
Other comprehensive income (loss):
Currency translation adjustment	(9		)	71
Total comprehensive income	$	541		$	898

Refer to Notes to Condensed Consolidated Financial Statements.

6

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

	(Unaudited) Three Months Ended June 30,
	2010			2009
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	54,929			54,702
Reversal of tax benefit for stock option forfeitures/cancellations	—			(25		)
Share-based compensation	230			213
Balance at end of period	55,159			54,890
Accumulated deficit
Balance at beginning of period	(2,735		)	(997		)
Net income	550			827
Balance at end of period	(2,185		)	(170		)
Accumulated other comprehensive loss
Balance at beginning of period	(68		)	(132		)
Currency translation adjustment	(9		)	71
Balance at end of period	(77		)	(61		)
Total shareholders’ equity	$	52,899		$	54,661

Refer to Notes to Condensed Consolidated Financial Statements.

7

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 Stated (“GAAP”) 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 annual report on Form 10-K filed with the SEC on June 11, 2010.  The results of operations for the three month period ended June 30, 2010 are not necessarily indicative of the results to be expected for the full year.

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 GAAP 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 (“PPV”) and video-on-demand (“VOD”) services; the recognition and measurement of income tax expenses, assets and liabilities (including the measurement of uncertain tax positions and the valuation allowances for deferred tax assets); the valuation of recoupable costs and producer advances; the assessment of film costs and the forecast of anticipated revenue (“ultimate” revenue), which is used to amortize film costs; the amortization methodology and valuation of content and distribution rights; the valuation of goodwill, intangible 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 considered reasonable under the circumstances, the results of which form the basis for making judgments that are not readily apparent from other sources. Actual results could differ materially from these estimates.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation of discontinued operations.

NOTE 2 — RECENT ACCOUNTING PRONOUNCEMENTS

From time to time, new accounting pronouncements are issued that are adopted by the Company as of the specified effective date. The Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s results of operations and financial position.

8

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 3 — INCOME PER SHARE

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

	Three Months Ended June 30,
	2010		2009
Net income from continuing operations	$	557	$	986
Average outstanding shares of common stock	19,432		19,494
Dilutive effect of warrants/stock options	—		4
Common stock and common stock equivalents	19,432		19,498
Basic income per share from continuing operations	$	0.03	$	0.05
Diluted income per share from continuing operations	$	0.03	$	0.05

The Company computed basic income per share from continuing operations using net income from continuing operations and the weighted average number of common shares outstanding during the period. The Company computed diluted income per share from continuing operations using net income from continuing operations and the weighted average number of common shares outstanding plus potentially dilutive common shares outstanding during the period. The Company excluded 2.2 million and 1.9 million options and warrants from the calculation of diluted earnings per share for the three month periods ended June 30, 2010 and 2009, respectively, because inclusion of these options and warrants would be antidilutive.

NOTE 4 — 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. 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. Awards granted under the 2007 Plan that are subsequently forfeited or cancelled may be reissued under the provisions of the 2007 Plan. Options have been granted to employees and non-employee directors of New Frontier Media with exercise prices equal to, or in excess of, the fair market value of the underlying common stock at the date of grant. As of June 30, 2010, there were no awards available for issuance under the 2007 Plan.  The Company issues new shares of common stock upon the exercise of stock options.

Share-Based Compensation

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 the estimated 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 on dividends declared by the Company’s Board of Directors and estimates of dividends to be declared in the future.   No options were granted during the three month period ended June 30, 2010 or 2009.

Share-based compensation expense recognized in the condensed consolidated statements of operations is based on awards ultimately expected to vest, which considers estimated forfeitures. Forfeitures are estimated at the time of

9

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.  The Company recognizes the effect of adjusting the estimated forfeiture rate for all expense amortization in the period that the Company changes the forfeiture estimate. The effect of forfeiture adjustments was not significant during the periods presented.

The following table summarizes the effects of share-based compensation resulting from options granted under the Company’s equity incentive plans. This expense from continuing operations is included in cost of sales, sales and marketing, and general and administrative expenses (in thousands, except per share amounts):

	Three Months Ended June 30,
	2010			2009
Share-based compensation expense before income taxes	$	228		$	210
Income tax benefit	(88		)	(78		)
Total share-based compensation expense after income taxes	$	140		$	132
Share-based compensation effect on basic earnings per common share	$	0.01		$	0.01
Share-based compensation effect on diluted earnings per common share	$	0.01		$	0.01

Stock option transactions during the three month period ended June 30, 2010 are summarized as follows:

	Shares	Weighted Avg. Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value(1) (in thousands)
Outstanding at April 1, 2010	2,228,902	$	5.11
Outstanding at June 30, 2010	2,228,902	$	5.11	6.9	$	—
Options exercisable at June 30, 2010	1,295,402	$	6.60	5.5	$	—
Options vested and expected to vest—Non-Officers	943,580	$	5.67	6.3	$	—
Options vested and expected to vest—Officers	1,167,957	$	4.90	7.2	$	—

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

As of June 30, 2010, there was $0.2 million and $0.7 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 approximately 2 years.

NOTE 5 — SEGMENT AND GEOGRAPHIC INFORMATION

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 reportable operating segments:

10

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

· Transactional TV—distributes branded adult entertainment PPV networks and VOD content through electronic distribution platforms including cable television and DBS operators.

· Film Production—produces and distributes mainstream films and erotic features and events. These titles are distributed on U.S. and international premium channels, PPV 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 major Hollywood studios.

· Direct-to-Consumer—aggregates and resells adult content via the internet. The Direct-to-Consumer segment sells content to subscribers primarily through its consumer websites.

· Corporate Administration—includes 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 expenses, accounting expenses, human resource department costs, insurance expenses, registration and filing fees with NASDAQ, executive employee costs, and costs associated with the public company filings and shareholder communications.

The accounting policies of the reportable segments are the same as those described in the summary of accounting policies. Segment profit (loss) is based on income before income taxes. The reportable segments are distinct business units, separately managed with different distribution channels. The selected operating results of the Company’s segments during each of the three month periods ended June 30 are as follows (in thousands):

	Three Months Ended June 30,
	2010			2009
Net revenue
Transactional TV	$	8,973		$	9,644
Film Production	3,290			2,533
Direct-to-Consumer	191			310
Total	$	12,454		$	12,487
Segment profit (loss)
Transactional TV	$	3,474		$	3,978
Film Production	396			357
Direct-to-Consumer	(218		)	(134		)
Corporate Administration	(2,735		)	(2,636		)
Total	$	917		$	1,565
Interest income
Film Production	$	6		$	—
Corporate Administration	10			12
Total	$	16		$	12
Interest expense
Direct-to-Consumer	$	2		$	—
Corporate Administration	21			73
Total	$	23		$	73
Depreciation and amortization
Transactional TV	$	1,346		$	1,283
Film Production	1,158			1,079
Direct-to-Consumer	37			64
Corporate Administration	12			12
Total	$	2,553		$	2,438

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NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Company’s total identifiable asset balance by operating segment as of the dates presented was as follows (in thousands):

	June 30, 2010		March 31, 2010
Identifiable Assets
Transactional TV	$	27,141	$	26,474
Film Production	18,667		15,490
Direct-to-Consumer	780		775
Corporate Administration	14,815		18,850
Total continuing operations assets	61,403		61,589
Total discontinued operations assets	5		224
Total assets	$	61,408	$	61,813

Approximately $0.1 million of the Company’s total assets are located in Europe as of June 30, 2010. All other assets are located in the U.S.

Net revenue, classified by geographic billing location of the customer, during each of the three month periods ended June 30 was as follows (in thousands):

	Three Months Ended June 30,
	2010		2009
Domestic net revenue	$	10,811	$	11,289
International net revenue:
Europe, Middle East and Africa	402		310
Latin America	549		379
Canada	583		367
Asia	39		93
Other	70		49
Total international net revenue	1,643		1,198
Total net revenue	$	12,454	$	12,487

NOTE 6 — MAJOR CUSTOMERS

The Company’s major customers (customers with revenue in excess of 10% of total net revenue during a presented period) are Comcast Corporation (“Comcast”), Time Warner, Inc. (“Time Warner”), DISH Network Corporation (“DISH”), and DirecTV, Inc. (“DirecTV”). Revenue from these customers is included in the Transactional TV and Film Production segments. Net revenue from these customers as a percentage of total net revenue for each of the three month periods ended June 30 are as follows:

	Three Months Ended June 30,
	2010		2009
Comcast	17	%	19	%
Time Warner	10	%	12	%
DISH	10	%	11	%
DirecTV	9	%	14	%

The Company also recognized revenue from one Film Production segment customer that represented approximately 11% of the total net revenue during the three month period ended June 30, 2010. The Company’s outstanding accounts receivable balance due from this customer as of June 30, 2010 was approximately $1.4 million.

12

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Company’s outstanding accounts receivable balances due from its other major customers as of the dates presented are as follows (in thousands):

	June 30, 2010		March 31, 2010
DISH	$	1,686	$	1,810
Comcast	1,309		1,221
DirecTV	692		699
Time Warner	382		448

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 condition.

NOTE 7 — INCOME TAXES

The Company accounts for uncertain tax positions using a two-step approach. 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.  As of June 30, 2010, the Company had total unrecognized tax benefits of approximately $0.3 million that are not expected to be settled within one year and have been classified within long-term taxes payable. If the Company was to prevail or the uncertainties 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 tax expense of approximately $0.3 million.

Based on historical research and development tax credit studies, the Company has estimated that it will utilize research and development tax credits during fiscal year 2010 of between $0.1 million and $0.2 million.  For fiscal year 2011, the estimated tax rate does not include any research and development tax credits because the tax credit expired as of December 31, 2009 and has not been extended as of June 30, 2010.

The Company files U.S. federal, state and foreign income tax returns. 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 2006.

NOTE 8 — BORROWING ARRANGEMENTS

On December 15, 2009, the Company’s former line of credit matured and the Company obtained a new line of credit from a financial institution.  The line of credit is secured by certain trade accounts and accounts receivable, is scheduled to mature on December 15, 2010, and bears interest at the greater of (a) the current prime rate less 0.125 percentage points per annum or (b) 5.75% per annum.  The remainder of the line of credit may be drawn from time to time to support the Company’s operations and short-term working capital needs, if any.  A loan origination fee of 0.5% of the available line was paid by the Company upon the execution of the line of credit.  The line of credit includes a maximum borrowing base equal to the lesser of 75% of the trade accounts and accounts receivable securing the line of credit or $5.0 million, and the maximum borrowing base at June 30, 2010 was $5.0 million.

The line of credit contains both conditions precedent that must be satisfied prior to any borrowing and affirmative and negative covenants customary for facilities of this type, including, without limitation, (a) a requirement to maintain a current asset to current liability ratio of at least 1.50 to 1.00, (b) a requirement to maintain a total liability to tangible net worth ratio not to exceed 1.0 to 1.0, (c) prohibitions on additional borrowing, lending, investing or fundamental corporate changes without prior consent, (d) a prohibition on declaring without consent any dividends, other than dividends payable in our stock, and (e) a requirement that there be no material adverse change in the Company’s current client base as it relates to our largest clients.  The line of credit provides that an event of default will exist in certain circumstances, including without limitation, the Company’s failure to make payment of principal or interest on borrowed amounts when required, failure to perform certain obligations under the line of credit and related documents, defaults in certain other indebtedness, the Company’s insolvency, a change in control of the Company, any material adverse change in the Company’s financial condition and certain other events customary for

13

NEW FRONTIER MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

facilities of this type.  As of June 30, 2010, the Company’s outstanding principal balance under the line of credit was $1.0 million, and the Company was in compliance with the related covenants.

NOTE 9 — COMMITMENTS AND CONTINGENCIES

Guarantees

From time to time, the Film Production segment enters into sales agency arrangements whereby the Company provides a guarantee to the producer that license fees will be equal to or greater than a stated amount.  These arrangements are typically executed once the Company has identified or pre-sold the related film for license fees equal to or greater than the guarantee amount.  If the Company were unable to execute and collect license fees equal to the guarantee amount, the Company would be required to pay the difference between the guarantee and collected license fees.  As of June 30, 2010, the estimated maximum payment due under a guarantee is approximately $0.6 million, and the term of the original agreement expires in 2024.  The Company estimates that the likelihood of having to make a payment under the guarantee is remote.

Legal Proceedings

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 10 —DISCONTINUED OPERATIONS

The Direct-to-Consumer segment acquired certain intangible assets in late fiscal year 2008 in an effort to expand the product lines that are delivered directly to consumers. The acquired intangible assets primarily related to intellectual property rights technology that allow the Company to manufacture a set-top box through which consumers can obtain content directly through the internet and view the content on television. During the fourth quarter of fiscal year 2010, the Company implemented a plan to discontinue the operations of the internet protocol television (“IPTV”) set-top box business based primarily on lower than expected performance of the IPTV set-top box business. Cash flows associated with the IPTV set-top box business have been materially eliminated from the ongoing operations of the Company, and the Company does not have any significant continuing involvement in the operations of the IPTV set-top box business.

The discontinued operations generated immaterial net revenue during each of the three month periods ended June 30, 2010 and 2009, and the pre-tax loss was immaterial during the three month period ended June 30, 2010 and $0.3 million during the three month period ended June 30, 2009.

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

Forward-Looking Statements

This Quarterly Report on Form 10-Q of New Frontier Media, Inc. and its consolidated subsidiaries, or the Company or the Registrant, and the information incorporated by reference includes forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements regarding trend analysis and the Company’s expected financial position and operating results, its business strategy, its financing plans and the outcome of contingencies are forward-looking statements. Forward-looking statements are also identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “could,” “will,” “would,” and similar expressions. The forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth or implied by any 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 update or revise publicly 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 Transactional TV segment customers that accounted for approximately 46% of our total revenue during the three month period ended June 30, 2010; 2) maintain the license fee structures and distribution market share currently in place with our customers; 3) maintain our pay-per-view (“PPV”) and video-on-demand (“VOD”) shelf space with existing customers; 4) 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; 5) retain our key executives; 6) produce film content that is well received by our Film Production segment’s customers; 7) comply with future regulatory developments; and 8) successfully compete against other forms of entertainment such as pay and free adult oriented internet sites as well as adult oriented premium channel content. 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, as updated by periodic and current reports that we may file from time to time with the United States Securities and Exchange Commission (“SEC”) that amend or update such factors.

Executive Summary

We are a leader in transactional television and the distribution of general motion picture entertainment. Our key customers include large cable and satellite operators, premium movie channel providers and major Hollywood studios. We distribute content world-wide. Our three principal businesses are reflected in the Transactional TV, Film Production and Direct-to-Consumer operating segments. Our Transactional TV segment distributes adult content to cable and satellite operators who then distribute the content to retail customers via PPV and VOD technology. We earn revenue through contractual percentage splits of the retail price. The Transactional TV segment has historically been our most profitable segment. The Film Production segment primarily generates revenue through the distribution of mainstream content to large cable and satellite operators, premium movie channel providers and other international content distributors. This segment also periodically provides contract film production services to major Hollywood studios (“producer-for-hire” arrangements). The Film Production segment incurred operating losses in fiscal years 2010 and 2009 primarily due to large non-cash impairment charges. Our Direct-to-Consumer segment primarily generates revenue from membership fees earned through the distribution of adult content to consumer websites. The Direct-to-Consumer segment has historically incurred operating losses and is expected to continue to incur operating losses for the foreseeable future; however, we have focused our efforts on improving the segment results through efforts described below. Our Corporate Administration segment includes all costs associated with the operation of the public holding company, New Frontier Media, Inc.

The business models of each of our segments are summarized below.

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Transactional TV Segment

Our Transactional TV segment is focused on the distribution of its PPV and VOD service to MSOs and DBS providers worldwide. We earn a percentage of revenue, or “split”, from our content for each VOD, PPV or subscription that is purchased on our customers’ platform. Revenue growth can occur when we launch our services to new cable MSOs or DBS providers, when we experience growth in the number of digital subscribers for systems where our services are currently distributed, when we launch additional services or replace our competitors’ services on existing customer cable and DBS platforms, and when our proportional buy rates improve relative to our competitors. Alternatively, our revenue could decline if we were to experience lower consumer buy rates as has been the case with the recent general economic downturn, if customers migrate to other forms of entertainment such as pay and free adult oriented internet sites, if the revenue splits we receive from our customers decline, if additional competitive channels are added to our customers’ platforms or if our existing customers remove or replace our services on their platform.

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 memberships to our adult consumer websites. During fiscal year 2010 and 2009, we experienced a decline in the Direct-to-Consumer segment revenue which we believe is due to a decline in consumer spending as a result of the unfavorable economic conditions as well as the availability of free and low-cost internet content. We expect this segment will continue to incur operating losses for the foreseeable future; however, we recently launched additional niche consumer websites during fiscal year 2010 as well as a dating website and are optimistic that these efforts will result in improved performance during fiscal year 2011.  The Direct-to-Consumer segment also operated an internet protocol television (“IPTV”) set-top box business beginning in late fiscal year 2008. Customers of the IPTV set-top box product could obtain content directly through the internet and view the content on television. In the fourth quarter of fiscal year 2010, we discontinued the operations of the IPTV business model as a result of underperformance in fiscal year 2010.

Corporate Administration Segment

The Corporate Administration segment reflects 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 operating segments. These costs include, but are not limited to, legal expenses, accounting expenses, human resource department costs, insurance expenses, registration and filing fees with NASDAQ, executive employee costs, and costs associated with our public company filings and shareholder communications. Our focus for this operating segment is balancing cost containment with the need for administrative support for the growth of the Company.

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, 2010, as updated by Note 1 to the Unaudited Condensed Consolidated Financial Statements included herein, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2010, appropriately represent, in all material respects, the current status of our critical accounting policies, the disclosure with respect to which is incorporated herein by reference.

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Transactional TV Segment

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

	Three Months Ended June 30,
(dollars in millions)	2010			2009			% change
Net revenue
VOD	$	5.4		$	5.1		6	%
PPV	3.5			4.4			(20	)%
Other	0.1			0.1			0	%
Total	9.0			9.6			(6	)%
Cost of sales	3.0			3.0			0	%
Gross profit	6.0			6.7			(10	)%
Gross profit percentage	67		%	70		%
Operating expenses	2.5			2.7			(7	)%
Operating income	$	3.5		$	4.0		(13	)%

Net Revenue

VOD

The increase in VOD revenue during the three month period ended June 30, 2010 as compared to the prior year quarter was primarily due to a $0.5 million increase in international revenue.  The increase in international revenue was primarily due to new customer launches, an increase in the quantity of content distributed to existing customers, and an improvement in our content performance with existing customers.  Partially offsetting the increase in revenue was a $0.2 million decline in revenue from domestic customers.  We believe that the depressed economic conditions are causing consumers that have historically purchased our content with discretionary income to reduce their spending on our content, eliminate their acquisition of our content, or view adult content through less expensive alternatives such as lower-cost and free internet websites.

PPV

PPV revenue from the largest DBS provider in the U.S. declined by approximately $0.6 million during the three month period ended June 30, 2010 primarily due to the removal of a channel on that platform in November 2009.  Revenue also declined as a result of lower revenue from the second largest DBS provider in the U.S. as well as other top 10 cable MSOs in the U.S. We believe these declines are also due to the depressed economic conditions as discussed above.  Partially offsetting the decline in revenue was a $0.1 million increase in international PPV revenue primarily from our distribution of content to Latin America.

Other

Other revenue primarily includes revenue from advertising on our PPV channels and from distribution fees.  Amounts are generally consistent and comparable with the same prior year period results.

Cost of Sales

Our cost of sales consists of expenses associated with our digital broadcast center, satellite uplinking, satellite transponder leases, programming acquisitions, VOD transport, amortization of content, depreciation of equipment,

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and related employee costs. Cost of sales during the three month period ended June 30, 2010 was consistent with the same prior year period results. The Transactional TV segment’s cost of sales are relatively fixed and may not change in a similar manner as revenue.

Operating Expenses and Operating Income

Operating expenses declined during the three month period ended June 30, 2010 primarily due to a $0.4 million reduction in advertising and promotion activities related to a large promotional event that we participated in during the prior year quarter.  We did not participate in a similar event during the fiscal year 2011 quarter.  Partially offsetting the decline was a $0.1 million increase in business development consulting fees related to our international expansion and a $0.1 million increase in employee costs associated with developing new content packages in an effort to improve revenue.  Operating income for the three month periods ended June 30, 2010 and 2009 was $3.5 million and $4.0 million, respectively.

Film Production Segment

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

	Three Months Ended June 30,
(dollars in millions)	2010			2009			% change
Net revenue
Owned content	$	2.0		$	2.0		0	%
Repped content	0.5			0.4			25	%
Producer-for-hire and other	0.8			0.1			#
Total	3.3			2.5			32	%
Cost of sales	1.8			1.1			64	%
Gross profit	1.5			1.4			7	%
Gross profit percentage	45		%	56		%
Operating expenses	1.1			1.1			0	%
Operating income	$	0.4		$	0.4		0	%

# Change is in excess of 100%.

Net Revenue

Owned Content

During the three month period ended June 30, 2010, we generated approximately $1.3 million in revenue from the completion of a partial delivery of films from the fourth installment of an episodic series to a premium cable channel customer, whereas in the same prior fiscal year period, we generated $1.0 million in revenue from the completion of a partial delivery of films from the third installment of this episodic series.  The impact of the partial delivery of these episodic series during the presented quarters was a net increase in revenue of $0.3 million during the three month period ended June 30, 2010.  We expect to deliver the remaining films from the fourth installment of the episodic series in the second quarter of fiscal year 2011, which should result in an additional approximately $0.4 million in owned content revenue.  The net increase in revenue from the delivery of episodic series films was offset by a decline in owned content revenue from international distribution.  We believe our international customers are utilizing their existing content libraries rather than acquiring new content in response to the depressed economic conditions.

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Repped Content

Repped content revenue includes amounts from the licensing of film titles that we represent (but do not own) under sales agency relationships with various independent film producers. Repped content revenue during the three month period ended June 30, 2010 was generally consistent with the same prior year period results.

Producer-for-Hire and Other

Producer-for-hire and other revenue relates to amounts earned through producer-for-hire arrangements, music royalty fees and the delivery of other miscellaneous film materials to distributors.  The increase in producer-for-hire and other revenue during the three month period ended June 30, 2010 was due to the completion of a producer-for-hire arrangement during the quarter.  We also executed a new producer-for-hire arrangement and began production during the first quarter of fiscal year 2011.  We expect to complete the arrangement in the second half of fiscal year 2011, and we expect to generate revenue of between $3.1 million and $3.3 million from the arrangement.

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.  We have deferred costs of $2.3 million as of June 30, 2010 associated with the new producer-for-hire arrangement discussed above.  The deferred costs will be subsequently recorded as a cost of sales when we recognize the related producer-for-hire revenue.  There is no significant cost of sales related to the repped content business.

Cost of sales during the three month period ended June 30, 2010 increased primarily as a result of production costs incurred in connection with the completion of the producer-for-hire arrangement.  Film cost amortization as a percentage of the related owned content revenue during the three month periods ended June 30, 2010 and 2009 was 49% and 44%, respectively.  Film cost amortization as a percentage of owned content revenue increased because a larger proportion of the revenue related to the delivery of episodic series titles, and the film cost amortization from these titles is higher as compared to non-episodic titles.

Operating Expenses and Operating Income

Operating expenses during the three month period ended June 30, 2010 were consistent with the same prior year period.  Operating income for each of the three month periods ended June 30, 2010 and 2009 was $0.4 million.

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Direct-to-Consumer Segment

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

	Three Months Ended June 30,
(dollars in millions)	2010			2009			% change
Net revenue
Net membership	$	0.2		$	0.3		(33	)%
Other	0.0			0.0			0	%
Total	0.2			0.3			(33	)%
Cost of sales	0.3			0.4			(25	)%
Gross loss	(0.1		)	(0.0		)	#
Operating expenses	0.1			0.1			0	%
Operating loss	$	(0.2	)	$	(0.1	)	#

# Change is in excess of 100%.

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 three month period ended June 30, 2010 was generally consistent with the same prior year period.

Other revenue primarily relates to the sale of content to other webmasters and wireless platforms.  Other revenue during the three month period ended June 30, 2010 was consistent with the same prior year period.

Cost of Sales

Cost of sales consists of expenses associated with credit card processing, bandwidth, traffic acquisition, content amortization, depreciation of equipment, and related employee costs.  Cost of sales during the three month period ended June 30, 2010 was generally consistent with the same prior year period.

Operating Expenses and Operating Loss

Operating expenses during the three month period ended June 30, 2010 were generally consistent with the same prior year period.  We incurred operating losses of $0.2 million and $0.1 million during the three month periods ended June 30, 2010 and 2009, respectively.

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Corporate Administration Segment

The following table sets forth certain financial information for the Corporate Administration segment for each of the periods presented:

	Three Months Ended June 30,
(dollars in millions)	2010		2009		% change
Operating expenses	$	2.7	$	2.6	4	%

Corporate administration expenses during the three month period ended June 30, 2010 were generally consistent with the same prior year period.  The slight increase in operating expenses during the three month period ended June 30, 2010 was primarily due to an increase in international business development travel.

Discontinued Operations

The Direct-to-Consumer segment acquired certain intangible assets in late fiscal year 2008 in an effort to expand the product lines that are delivered directly to consumers. The acquired intangible assets primarily related to intellectual property rights technology that allow us to manufacture a set-top box through which consumers can obtain content directly through the internet and view the content on television. During the fourth quarter of fiscal year 2010, we implemented a plan to discontinue the operations of the internet protocol television (“IPTV”) set-top box business based primarily on lower than expected performance of the IPTV set-top box business. Cash flows associated with the IPTV set-top box business have been materially eliminated from the ongoing operations, and we do not have any significant continuing involvement in the operations of the IPTV set-top box business.

The discontinued operations generated immaterial net revenue during each of the three month periods ended June 30, 2010 and 2009, and the pre-tax loss was immaterial during the three month period ended June 30, 2010 and $0.3 million during the three month period ended June 30, 2009.

Liquidity and Capital Resources

Our current priorities for the use of our cash and cash equivalents are:

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

· funding our operating and capital requirements; and

· funding, from time to time, opportunities to enhance shareholder value, whether in the form of repurchase of shares of our common stock, cash dividends or other strategic transactions.

We anticipate that our existing cash, cash equivalents and cash flows from operations will be sufficient during the next 12 months to satisfy our operating requirements. We also anticipate that we will be able to fund our estimated outlay for capital expenditures, repayment of outstanding debt, film production costs and other related purchases that may occur during the next 12 months through our available cash, cash equivalents, and our expected cash flows from operations during that period.

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Sources and Uses of Cash

Operating and Investing Cash Flow Activities of Continuing Operations

Our operating and investing cash flow activities of continuing operations are summarized as follows (amounts in table may not sum due to rounding):

	Three Months Ended June 30,
(in millions)	2010			2009
Net cash provided by (used in) operating activities of continuing operations	$	(2.8	)	$	1.9
Cash flows from investing activities:
Redemptions of marketable securities	—			0.1
Purchases of equipment and furniture	(0.2		)	(0.2		)
Purchases of intangible assets	—			(0.0		)
Net cash used in investing activities of continuing operations	$	(0.2	)	$	(0.1	)

Operating Cash Flow Activities of Continuing Operations

Cash provided by (used in) operating activities of continuing operations during the three month period ended June 30, 2010 as compared to the same prior year period was primarily impacted by the following:

·     a decline in operating income primarily associated with lower Transactional TV segment domestic revenue;

·     a $1.2 million decrease in cash flows from accounts receivable collections primarily because we completed and recognized revenue for the partial delivery of an episodic series and the remaining films from a producer-for-hire arrangement, and we did not collect the outstanding balances due from the productions in the first quarter of fiscal year 2011;

·     a $0.7 million comparable decrease in cash flows from purchases of content and distribution rights primarily due to a one-time bulk acquisition during the first quarter of fiscal 2011;

·     a $0.6 million comparable decrease in cash flows from production costs associated with a producer-for-hire arrangement we executed in the first quarter of fiscal year 2011;

·     a $0.5 million comparable decrease in cash flows primarily from bonuses paid to employees in the first quarter of fiscal year 2011 related to performance in fiscal year 2010;

·     a $0.5 million comparable decline in cash flows from accounts payable due to larger payments in fiscal year 2011 including the timing of payments for auditing and accounting related services; and

·     a $0.4 million comparable decline in cash flows from producers payable due to additional payments to producers associated with several strong performing films from our repped content business.

As of June 30, 2010, we have $1.7 million of outstanding receivables due for a producer-for-hire arrangement that was completed in the first quarter of fiscal year 2011 and $1.3 million due for the completion of a partial delivery of films from our fourth installment of an episodic series.  We expect to collect these outstanding amounts during the second or third quarter of fiscal year 2011.  As of June 30, 2010, we had disbursed approximately $2.3 million in cash outflows for a new producer-for-hire arrangement, and we expect to incur net cash outflows for this

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arrangement of between $2.8 million and $3.0 million.  We expect to collect between $3.1 million and $3.3 million from the completion and delivery of the new producer-for-hire arrangement during the third or fourth quarter of fiscal year 2011.

Investing Cash Flow Activities of Continuing Operations

Cash from investing activities during the three month period ended June 30, 2010 included $0.2 million of net cash used to purchase equipment and furniture.

Cash Flows from Financing Activities of Continuing Operations

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

	Three Months Ended June 30,
(in millions)	2010			2009
Cash flows from financing activities:
Payment of long-term seller financing	$	(0.1	)	$	(0.1	)
Net cash used in financing activities of continuing operations	$	(0.1	)	$	(0.1	)

Cash flows from financing activities during each of the three month periods ended June 30, 2010 and 2009 reflected $0.1 million in payments for long-term seller financing related to our purchase of a patent in fiscal year 2008.

Borrowing Arrangements

On December 15, 2009, our former line of credit matured and we obtained a new line of credit from a financial institution.  The line of credit is secured by certain trade accounts and accounts receivable, is scheduled to mature on December 15, 2010, and bears interest at the greater of (a) the current prime rate less 0.125 percentage points per annum or (b) 5.75% per annum.  The remainder of the line of credit may be drawn from time to time to support our operations and short-term working capital needs, if any.  A loan origination fee of 0.5% of the available line was paid upon the execution of the line of credit.  The line of credit includes a maximum borrowing base equal to the lesser of 75% of the trade accounts and accounts receivable securing the line of credit or $5.0 million, and the maximum borrowing base at June 30, 2010 was $5.0 million.

The line of credit contains both conditions precedent that must be satisfied prior to any borrowing and affirmative and negative covenants customary for facilities of this type, including, without limitation, (a) a requirement to maintain a current asset to current liability ratio of at least 1.50 to 1.00, (b) a requirement to maintain a total liability to tangible net worth ratio not to exceed 1.0 to 1.0, (c) prohibitions on additional borrowing, lending, investing or fundamental corporate changes without prior consent, (d) a prohibition on declaring without consent any dividends, other than dividends payable in our stock, and (e) a requirement that there be no material adverse change in our current client base as it relates to our largest clients.  The line of credit provides that an event of default will exist in certain circumstances, including without limitation, our failure to make payment of principal or interest on borrowed amounts when required, failure to perform certain obligations under the line of credit and related documents, defaults in certain other indebtedness, our insolvency, a change in control, any material adverse change in our financial condition and certain other events customary for facilities of this type.  As of June 30, 2010, our outstanding principal balance under the line of credit was $1.0 million, and we were in compliance with the related covenants.

Commitments and Contingencies

Guarantees

From time to time, the Film Production segment enters into sales agency arrangements whereby it provides a guarantee to the producer that license fees will be equal to or greater than a stated amount.  These arrangements are typically executed once we have identified or pre-sold the related film for license fees equal to or greater than the guarantee amount.  If we were unable to execute and collect license fees equal to the guarantee amount, we would be required to pay the difference between the guarantee and collected license fees.  As of June 30, 2010, the estimated maximum payment due under a guarantee is approximately $0.6 million, and the term of the original agreement expires in 2024.  We estimate that the likelihood of having to make a payment under the guarantee is remote.

Legal Proceedings

In the normal course of business, we are subject to various lawsuits and claims. We believe that the final outcome of these matters, either individually or in aggregate, will not have a material effect on our financial statements.

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Income Taxes

Deferred Taxes

Deferred income tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. We establish valuation allowances when, based on an evaluation of objective evidence, there is a likelihood that some portion or all of the deferred tax assets will not be realized. As of June 30, 2010, we determined that it was more likely than not that deferred tax assets associated with international operating losses would not be realized and recorded a valuation allowance for the full operating loss deferred tax asset of $0.2 million. We expect all other deferred tax assets will be realizable based on our history of earning pretax income (excluding non-deductible goodwill impairment charges) and based on our internal projections of future pretax income.

Uncertain Tax Positions

We account for uncertain tax positions using a two-step approach. 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.  As of June 30, 2010, we had total unrecognized tax benefits of approximately $0.3 million that are not expected to be settled within one year and have been classified within long-term taxes payable. If we were to prevail or the uncertainties were settled in our favor for all uncertain tax positions, the net effect is estimated to be a benefit to our tax expense of approximately $0.3 million.

Recent Accounting Pronouncements

For a discussion of the recent accounting pronouncements related to our operations, please refer to the related information provided under Note 2 — Recent Accounting Pronouncements 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 deposit accounts and money market accounts, which have short maturities and, therefore, minimal and immaterial market risk.

Interest Rate Sensitivity.    Changes in interest rates could impact our anticipated interest income on cash and cash equivalents. An adverse change in interest rates in effect as of June 30, 2010 would not have a material impact on the Company’s net income or cash flows.

Changes in interest rates could also impact the amount of interest we pay on borrowings under our line of credit. A 10% adverse change in the interest rates on borrowings under our line of credit would not have a material impact on the Company’s interest expense.

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

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, the Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2010, the Company’s disclosure controls and procedures were effective.

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(b) Internal Controls. There were no changes in our internal control over financial reporting that occurred during our first quarter of fiscal year 2011 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 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 fiscal year ended March 31, 2010, 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. Such risks, however, 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.  Based on our review of the risk factors presented in our Annual Report on Form 10-K for the fiscal year ended March 31, 2010, as updated by our filings of subsequent periodic and current reports from time to time, there have been no material changes to the description of the risk factors since those filings.

ITEM 6. EXHIBITS.

Exhibit No.	Exhibit Description
10.01	Employment Agreement between MRG Entertainment, Inc. and Richard Bruce Goldberg
10.02	Amendment to Employment Agreement between MRG Entertainment, Inc., New Frontier Media, Inc. and Richard Bruce Goldberg
10.03	Second Amendment to Employment Agreement between MRG Entertainment, Inc., New Frontier Media, Inc. and Richard Bruce Goldberg
10.04	Employment Agreement between MRG Entertainment, Inc. and Marc Laurence Greenberg
10.05	Amendment to Employment Agreement between MRG Entertainment, Inc., New Frontier Media, Inc. and Marc Laurence Greenberg
10.06	Second Amendment to Employment Agreement between MRG Entertainment, Inc., New Frontier Media, Inc. and Marc Laurence Greenberg
10.07#	TVN-CSB Adult VOD Services Agreement dated April 8, 2010 between Colorado Satellite Broadcasting, Inc. and TVN Entertainment Corporation
10.08#	Amended and Restated Affiliation Agreement for DTH Satellite Exhibition of Cable Network Programming by and between Colorado Satellite Broadcasting, Inc. and DirecTV, Inc.
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 18 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 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

# Confidential treatment has been requested as to portions of this exhibit.  Such portions have been redacted and filed separately with the SEC.

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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: August 6, 2010	By:	/s/ Michael Weiner
	Name:	Michael Weiner
	Title:	Chief Executive Officer
Dated: August 6, 2010		/s/ Grant Williams
	Name:	Grant Williams
	Title:	Chief Financial Officer and Chief Accounting Officer

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Exhibit No.	Exhibit Description
10.01	Employment Agreement between MRG Entertainment, Inc. and Richard Bruce Goldberg
10.02	Amendment to Employment Agreement between MRG Entertainment, Inc., New Frontier Media, Inc. and Richard Bruce Goldberg
10.03	Second Amendment to Employment Agreement between MRG Entertainment, Inc., New Frontier Media, Inc. and Richard Bruce Goldberg
10.04	Employment Agreement between MRG Entertainment, Inc. and Marc Laurence Greenberg
10.05	Amendment to Employment Agreement between MRG Entertainment, Inc., New Frontier Media, Inc. and Marc Laurence Greenberg
10.06	Second Amendment to Employment Agreement between MRG Entertainment, Inc., New Frontier Media, Inc. and Marc Laurence Greenberg
10.07#	TVN-CSB Adult VOD Services Agreement dated April 8, 2010 between Colorado Satellite Broadcasting, Inc. and TVN Entertainment Corporation
10.08#	Amended and Restated Affiliation Agreement for DTH Satellite Exhibition of Cable Network Programming by and between Colorado Satellite Broadcasting, Inc. and DirecTV, Inc.
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 18 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 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

# Confidential treatment has been requested as to portions of this exhibit.  Such portions have been redacted and filed separately with the SEC.

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EX-10.01

EXHIBIT 10.01

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated as of February 10, 2006 (the “Effective Date”), is entered into by and between Richard Bruce Goldberg, an individual residing at 512 11th Street, Santa Monica, California 90402 (“Executive”), and MRG Entertainment, Inc., a California corporation, located at 301 Arizona Avenue, Santa Monica, California 90401 (“Company”).

WHEREAS, Executive possesses valuable knowledge and skills which are relevant to the operation of Company’s business; and

WHEREAS, Company desires to provide for the employment of Executive, and Executive is willing to serve as an executive of Company, on the terms and conditions herein provided; and

WHEREAS, New Frontier Media, Inc., a Colorado corporation (“New Frontier”), Marc Lawrence Greenberg Trust dated May 11, 2001 (“Greenberg Trust”), Goldberg Family Trust dated June 15, 2001 (“Goldberg Trust”), Marc Lawrence Greenberg (“Greenberg”) and Executive are parties to that certain Stock Purchase Agreement dated February 6, 2006 (the “Purchase Agreement”); and

WHEREAS, the Greenberg Trust and the Goldberg Trust collectively own one hundred percent (100%) of the issued and outstanding common stock shares of Company and Lifestyles Entertainment, Inc., a California corporation (collectively, the “Businesses”); and

WHEREAS, New Frontier is acquiring all of the stock and the goodwill of the Businesses, which will continue to be engaged in (i) the entertainment, production, marketing and distribution businesses, and (ii) producing, licensing and selling motion pictures and television programs; and

WHEREAS, pursuant to the Purchase Agreement, the Businesses shall become wholly owned subsidiaries of New Frontier; and

WHEREAS, Executive is a beneficiary of the Goldberg Trust and the Co-President and Secretary of each of the Businesses and is benefiting financially from the acquisition contemplated by the Purchase Agreement; and

WHEREAS, Executive has had and will continue to have access to and possession of various trade secrets and other proprietary and confidential information of the Businesses which is material to the continued value of the Businesses; and

WHEREAS, the entering into this Agreement by Company and Executive is a condition to the consummation of the closing contemplated by the Purchase Agreement and a material inducement of New Frontier to enter into the Purchase Agreement; and

WHEREAS, Company desires to hire Executive, and Executive wishes to accept such employment, upon the terms and conditions set forth in this Agreement.

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

1.EMPLOYMENT PERIOD.  Executive shall be employed by Company, in accordance with the terms and provisions of this Agreement, commencing on the Effective Date and ending at midnight on February 9, 2009, unless sooner terminated in accordance with the provisions of Sections 3 or 4 herein (the “Employment Period”).

2.TERMS OF EMPLOYMENT.

A.Position and Duties.  During the Employment Period, Executive shall be employed by Company as President or a Co-President (to the extent that Greenberg remains employed by Company as Co-President), and Executive accepts and agrees to such employment.  During the Employment Period, Executive shall perform all services and acts necessary and advisable to fulfill the duties and responsibilities as are commensurate and consistent with Executive’s position and shall render such services on the terms set forth herein.  During the Employment Period, Executive shall report to the Chief Executive Officer (the “CEO”) of New Frontier (or the CEO’s designee, so long as such designee is of equal or greater rank than the CEO).  Executive shall have such powers and duties with respect to his position as Co-President as may reasonably be assigned to Executive by the CEO, to the extent consistent with Executive’s position and status.  Executive agrees to devote his full-time attention to the business and affairs of Company.  During the Employment Period, it shall not be a violation of this Agreement for Executive to: (a) serve on corporate, civic, charitable, and professional association boards or committees; (b) deliver lectures or fulfill speaking engagements; and (c) manage personal investments, so long as such activities do not result in more than de minimus interference with the performance of Executive’s responsibilities as Co-President of Company in accordance with this Agreement or do not create any perceived or actual conflict of interest with Company or New Frontier.  The CEO reserves the right for legitimate business reasons to require Executive to end or refrain from participating in any such activities upon reasonable prior written notice to Executive. Executive’s employment with Company under this Agreement shall be Executive’s exclusive employment during the Employment Period.

B.Compensation.

(i)Base Salary.  During the Employment Period, Executive shall receive a base salary (“Base Salary”), which shall be paid in equal installments on a bi-weekly basis, at the rate of Three Hundred Fifty Thousand Dollars ($350,000) per annum, less standard state and federal tax-related deductions and withholdings.

(ii)Discretionary Bonus.  In addition to Executive’s Base Salary, the Compensation Committee of the Board of Directors of New Frontier (the “New Frontier Board”) may, in its sole discretion, award cash bonuses annually to Executive, if at all, in an aggregate amount of up to one hundred percent (100%) of Executive’s Base Salary, less standard state and federal tax-related deductions and withholdings.  Notwithstanding the foregoing, Executive shall have the right, to be determined in his sole discretion, to decline and waive any discretionary bonus amount approved by the New Frontier Board and, in such event, such approved bonus amount shall not count against the calculation of EBITDA under the Earnout Agreement entered into as of even

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date herewith by and among New Frontier, Executive, Greenberg, the Greenberg Trust and the Goldberg Trust (the “Earnout Agreement”), provided that Executive notifies the CEO in writing of such waiver by the later of (i) September 30th of the year during which such bonus is accrued, or (ii) within ten (10) business days after Executive is advised in writing of the accrued bonus amount.  For purposes of this Agreement, the term “EBITDA” shall have the meaning ascribed to it in the Earnout Agreement.

(iii)Expenses.  During the Employment Period, Company shall reimburse Executive for all reasonable employment-related expenses incurred by Executive in accordance with the policies, practices and procedures of Company as in effect generally from time to time after the Effective Date.

(iv)Vacation and Sick Leave.  Executive acknowledges that Company 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 Employment Period.  Executive is authorized to take paid time off provided he meets his professional and productivity obligations to Company as determined by the CEO.  Executive is to coordinate time off with the CEO.

(v)Car Allowance.  During the Employment Period, Executive shall be entitled to a car allowance equal to Eight Hundred Fifty Dollars ($850) per month (the “Car Allowance”), to be paid in accordance with and subject to Company’s car allowance policy.  The Car Allowance shall be paid bi-weekly, and shall be taxable to Executive whether or not Executive has an actual car payment (including any car lease payment).

(vi)Savings and Retirement Plans.  During the Employment Period, Executive shall be entitled to participate in all savings and retirement plans maintained by New Frontier, including any 401(k) plan, on the same terms as executives of New Frontier or other subsidiaries of New Frontier of similar rank to Executive are entitled to participate.

(vii)Key Man Insurance.  During the Employment Period, Company may at its election obtain and maintain in full force and effect term life insurance in such amounts as Company may elect in its sole discretion on the life of Executive naming Company or New Frontier as beneficiary (the “Key Man Insurance”).  Executive shall cooperate with Company and New Frontier with respect to any reasonable underwriting activities as may be required by New Frontier’s insurer(s) in connection with obtaining the Key Man Insurance, including, without limitation, undertaking such medical examinations and providing such documents and information as New Frontier or its insurer(s) may reasonably request.

(viii)Welfare Benefit Plans.  During the Employment Period, Executive shall be eligible to participate in all welfare benefit plans made available by New Frontier to other executives of similar rank to Executive; provided, however, nothing in this Section 2(B)(viii) shall operate to reduce or impair New Frontier’s right to alter, amend, or cancel any such plans, programs or benefits at any time, upon reasonable advance notice to Executive.

(ix)Stock Options.  Executive shall be eligible to participate in such Stock Option Plans of New Frontier that may be made available from time to time to New Frontier

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executives of similar rank to Executive; provided, however, the level, terms and conditions of such participation shall be determined by and within the sole discretion of the New Frontier Board.

(x)Withholdings.  All payments made to Executive hereunder shall be subject to all applicable state and federal tax-related withholding obligations, as required by applicable law.

3.EARLY TERMINATION OF EMPLOYMENT.

Executive and Company each acknowledge that either party has the right to terminate Executive’s employment with Company at any time for any lawful reason whatsoever, with or without Cause (as defined herein) or advance notice, pursuant to the following:

A.For Cause. Company may terminate Executive’s employment during the Employment Period for Cause.  For purposes of this Agreement, “Cause” shall mean (i) the conviction of Executive for committing an act of fraud, embezzlement, theft or other act constituting a crime or the guilty or nolo contendere plea of Executive to any such crime; (ii) fraudulent conduct or an act of dishonesty or breach of trust on the part of Executive in connection with the business of Company or any of its affiliates or subsidiaries; (iii) violation of any Company policy of which Executive is aware and is given a period of ten (10) days’ prior written notice and opportunity to cure during such period; (iv) failure, neglect, or refusal by Executive to engage in diligent efforts to properly discharge, perform or observe any or all of Executive’s job dutiesfor any reason other than Company’s material breach of this Agreement or Executive’s Permanent Disability (as defined herein), which failure, neglect, or refusal continues after Company provides ten (10) days’ prior written notice to Executive; provided, however, Company shall not be required to deliver any such notice under this subpart (iv) on more than one (1) occasion for each year of the Employment Period; (v) breach of the Non-Competition, Non-Solicitation and Trade Secret Agreement attached as Exhibit J to the Purchase Agreement (the “Non-competition Agreement”); (vi) any uncured breach of the Employee Proprietary Information and Inventions Agreement which results in damage to the Company, attached as Exhibit A to this Agreement (the “Proprietary Information Agreement”); and (vii) any other breach or failure by Executive to comply with any of the provisions of this Agreement applicable to him and which is not remedied within ten (10) days after written notice thereof from Company.  The parties acknowledge that this definition of “Cause” is not intended and does not apply to any aspect of the relationship between Company and any of its employees, including Executive, beyond determining Executive’s eligibility for the Without Cause Severance Payments (as defined herein).

B.Without Cause. Company may terminate Executive’s employment without Cause by providing Executive ten (10) business days advance notice of such termination.

C.Upon Executive’s Death or Permanent Disability. Subject to applicable state or federal law, Executive’s employment shall terminate automatically upon Executive’s death or upon Executive’s permanent disability (“Permanently Disabled” or “Permanent Disability”), meaning that Executive is unable to perform the essential functions of his job, with or without reasonable accommodation, for a total of ninety (90) days out of any six (6) month period.

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4.TERMINATION BY EXECUTIVE FOR GOOD REASON. Executive may terminate his employment with Company for Good Reason. For purposes of this Agreement, “Good Reason” shall mean, in the absence of the advance written consent of Executive, a reasonable determination by Executive that any of the following has occurred:

A.The assignment to Executive of any duties inconsistent in any material respect with Executive’s position (including titles and reporting requirements, authority, duties or responsibilities as contemplated by Section 2(A) of this Agreement), or any other action by Company which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated and insubstantial action not taken in bad faith and which is remedied by Company within ten (10) days after receipt of written notice thereof given by Executive; or

B.Any failure by Company to comply with any of the provisions of this Agreement applicable to it, other than any isolated and insubstantial failure not occurring in bad faith and which is remedied within ten (10) days after receipt of written notice thereof given by Executive.

C.Company’s failure to obtain a written agreement from any successor of Company to assume and perform Company’s obligations under this Agreement.

Upon the occurrence of any of the events described in Sections 4(A), 4(B), or 4(C) above, Executive shall be deemed to have waived any right to receive post termination benefits if he does not notify Company of his intention to resign within ninety (90) days after the occurrence of such event.

5.OBLIGATIONS OF COMPANY UPON EARLY TERMINATION.

A.Termination for Cause.  In the event Executive is terminated by Company for Cause, Company’s obligation to make payments hereunder shall cease as of the Date of Termination, as defined in Section 6, except Company shall pay to Executive, on the Date of Termination, any accrued Base Salary and bonuses that have been earned through the Date of Termination (the sum of these amounts shall hereinafter be referred to as the “Accrued Obligations”).  Business expenses reimbursable under Company policy will be paid within thirty (30) days after the final submittal of outstanding business expenses, provided that Executive submit any outstanding business expenses within thirty (30) days after the Date of Termination.  Vesting of any stock option under any applicable Stock Option Plan shall cease vesting as of the Date of Termination.

B.Termination by Company Without Cause.  In the event Executive is terminated without Cause and upon the execution of a full general release by Executive (“Release”), releasing all claims known or unknown that Executive may have under this Agreement against Company or New Frontier as of the date Executive signs such Release, and upon the written acknowledgement of his continuing obligations under the Proprietary Information Agreement and the Non-competition Agreement, Company shall pay Executive associated termination paymentsequal to Base Salary continuation through February 9, 2009, or six (6) months of Base Salary, whichever is greater (the “Without Cause Severance Payments”), plus the Accrued Obligations; provided, however, the Without Cause Severance Payments shall be reduced in accordance with Section 5(G) (Mitigation of Damages).  The Without Cause Severance Payments will be paid in Company’s regular payroll cycle; provided, the Accrued Obligations shall be paid to Executive on the Date of Termination.

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Business expenses reimbursable under Company policy will be paid within ten (10) days after the final submittal of outstanding business expenses, provided that Executive submits any outstanding business expenses within ten (10) days after the Date of Termination.  Vesting of any stock options under any applicable Stock Option Plan shall cease vesting as of the Date of Termination without Cause.

C.Termination by Executive for Good Reason.  In the event Executive resigns his employment with Company for Good Reason and upon the execution of a Release against Company and New Frontier, releasing all claims known or unknown that Executive may have under this Agreement against Company or New Frontier as of the date Executive signs such Release, and upon the written acknowledgement of his continuing obligations under the Proprietary Information Agreement and the Non-competition Agreement, Company shall pay Executive associated termination paymentsequal to Base Salary continuation through February 9, 2009, or six (6) months of Base Salary, whichever is greater (“Good Reason Severance Payments”), plus the Accrued Obligations; provided, however, the Good Reason Severance Payments shall be reduced in accordance with Section 5(G) (Mitigation of Damages).  The Good Reason Severance Payments will be paid in Company’s regular payroll cycle; provided, the Accrued Obligations shall be paid to Executive on the Date of Termination.  Business expenses reimbursable under Company policy will be paid within ten (10) days after the final submittal of outstanding business expenses, provided that Executive submits any outstanding business expenses within ten (10) days after the Date of Termination.  Vesting of any stock options under any applicable Stock Option Plan shall cease vesting as of the Date of Termination for Good Reason.

D.Upon Death.  If Executive’s employment is terminated by reason of Executive’s death during the Employment Period, this Agreement shall terminate without further obligation to Executive’s legal representatives under this Agreement.  Upon notice of Executive’s death, Company shall pay to Executive’s estate all Accrued Obligations.  Business expenses reimbursable under Company policy will be paid with thirty (30) days after the final submittal of outstanding business expenses, provided that Executive’s estate submit any outstanding business expenses within thirty (30) days after Executive’s death.  Vesting of any stock options under any applicable Stock Option Plan shall be governed by the terms of the Stock Option Plan and applicable Stock Option grant.

E.Upon Permanent Disability.  If Executive’s employment is terminated by reason of Executive’s Permanent Disability (as determined pursuant to Section 3(C) of this Agreement) during the Employment Period, this Agreement shall terminate without further obligation to Company.  Company shall pay to Executive, on the Date of Termination, all Accrued Obligations.  Business expenses reimbursable under Company policy will be paid within thirty (30) days after the final submittal of outstanding business expenses, provided Executive submit any outstanding business expenses within thirty (30) days after the Date of Termination.  Vesting of any stock options under any applicable Stock Option Plan shall be governed by the terms of the Stock Option Plan and applicable Stock Option grant.

F.Application of Section 409A of Internal Revenue Code.  Notwithstanding anything contained in Section 5(B) or 5(C) to the contrary, to the extent that (i) the parties’ agreement regarding the Cause Severance Payments or Good Reason Severance Payments, as applicable, to be made by Company in accordance with this Agreement is treated as a “nonqualified deferred compensation plan” within the meaning of Section 409A(d)(1) of the Internal Revenue

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Code of 1986 (the “Code”), (ii) the Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, and (iii) Section 409A(a)(1)(A) of the Code would apply to any Cause Severance Payments or Good Reason Severance Payments, as applicable, but for the application of Section 409A(a)(2)(A)(i) of the Code required to avoid the tax consequences of Section 409A of the Code, the first such severance payment under either scenario shall cover all payments scheduled to be made to Executive during the first six (6) months after the Date of Termination and such first payment shall be delayed until the day after the six (6) month anniversary of the Date of Termination.

G.Parachute Tax Gross Up.  Executive acknowledges that neither the Company nor New Frontier presently has, nor shall it have any obligation to consider or institute, a policy or procedure (a “Gross Up Policy”) that requires the Company/New Frontier to pay any of its employees (including senior officers) a “gross-up amount” providing employees entitled to any acceleration payments with a “net” (or increased) payment amount that takes into account any associated golden parachute excise tax (“Parachute Tax”) under Section 4999(a) of the Code. Notwithstanding the foregoing, in the event New Frontier or the Company during the Employment Period institutes a Gross Up Policy applicable to one or more executives similarly situated to Executive in connection with any acceleration payments owing or which could be owing to such executive(s), Executive shall thereafter be entitled to participate in such Gross Up Policy.

H.Mitigation of Damages.  Executive shall not be obligated to seek other employment to mitigate the amount of Without Cause Severance Payments or the Good Reason Severance Payments payable to Executive hereunder; provided, however, the amount of any Without Cause Severance Payments or Good Reason Severance Payments shall be reduced, dollar for dollar, by an amount equal to the gross amount that Executive earns (whether as an employee, contractor, or director of any other business, trade, profession or occupation, and irrespective of whether such form of compensation constitutes salary, bonus or compensation) following (i) the termination of Executive without Cause, or (ii) Executive’s resignation for Good Reason, as applicable.  Executive shall for so long as any severance payments are due and owing to Executive, provide the Company with contact information of any new employer of Executive (or such other person or entity to whom Executive acts as a consultant or contractor) (each referred to as a “Third Party Employer”) following termination; Executive hereby further authorizes Company to provide a copy of this Agreement to such Third Party Employer and to obtain from such Third Party Employer, without Executive’s consent, all such information as may be reasonably requested by the Company to ascertain the amount of compensation received by Executive from such Third Party Employer, including without limitation, pay stubs, W-2’s and/or Form 1099’s issued to Executive but only to the extent Executive does not first provide such information to the Company within ten (10) days of written request.

6.NOTICE AND DATE OF TERMINATION.  Any termination (whether based on Permanent Disability, Good Reason, with Cause or without Cause) shall be communicated by a written “Notice of Termination” to the other party, and may be sent via registered or certified mail, return receipt requested, postage prepaid or by facsimile transmission, or by electronic mail or by hand delivery. “Date of Termination” shall mean: (i) the date of transmission of the Notice of Termination by facsimile, e-mail or personal delivery; (ii) three (3) calendar days after the date of mailing by first class mail; or (iii) if Executive’s employment is terminated by reason of Executive’s death, the Date of Termination shall be the date of Executive’s death.

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7.PROPRIETARY AND OTHER OBLIGATIONS.

A.Proprietary Information Agreement.  Executive acknowledges that signing and complying with the Proprietary Information Agreement is a condition of his employment by Company.  Executive therefore agrees to sign and comply with the Proprietary Information Agreement and acknowledges that by beginning employment with Company, he will be deemed to have signed and agreed to the provision of the Proprietary Information Agreement.

B.Exceptions.  Notwithstanding any contrary provisions in the Proprietary Information Agreement to the contrary the parties agree as follows:  (i) the term “Proprietary Information”, as defined in Section 1.2 of the Proprietary Information Agreement, shall not include Executive’s personal address book; (ii) to the extent of any conflict between Section 2(A) of this Agreement and the first sentence of paragraph 4 of the Proprietary Information Agreement, Section 2(A) of this Agreement shall govern and control; (iii) the last sentence of paragraph 7 of the Proprietary Information Agreement shall not apply to Executive; (iv) a copy of all notices to be provided to Executive under paragraph 9 of the Proprietary Information Agreement shall be delivered to Michael Wolf, Esq., Wolf, Rifkin, Shapiro & Schulman, LLP, 11400 W. Olympic Blvd., Ninth Floor, Los Angeles, California 90064; (v) promptly after providing a notification described in paragraph 10 of the Proprietary Information Agreement to any new employer of Executive, the Company will provide Executive with a copy of the notice given to such new employer; and (vi) to the extent of any conflict between any Section(s) of this Agreement and paragraph 11.5 of the Proprietary Information Agreement, the Section(s) of this Agreement shall govern and control.

8.NON-COMPETITION; NON-SOLICITATION.  This Agreement shall not alter or amend any of the non-competition or non-solicitation terms (nor any other terms) set forth in the Non-competition Agreement or the Proprietary Information Agreement.

9.ARBITRATION.  To the fullest extent permitted by law, any controversy or claim past, present, or future, arising out of or relating to the hiring of Executive, Executive’s employment, the termination of Executive’s employment, this Agreement and/or the breach or termination of this Agreement that Company may have against Executive or that Executive may have against Company or against its officers, directors, employees or agents in their capacity as such or the breach hereof, shall be settled by a single arbitrator in arbitration conducted in Los Angeles County, California, in accordance with the National Employment Arbitration Rules of the American Arbitration Association (“AAA”).  These rules are posted on the AAA’s website, www.adr.org. The arbitrators shall prepare a written award and judgment upon the award may be entered in any court having jurisdiction thereof.  The arbitrator’s decision shall be final and binding. The arbitrator shall have the authority to settle such controversy or claim by finding that a party should be enjoined from certain actions or be compelled to undertake certain actions, and in such event such court may enter an order enjoining and/or compelling such actions as found by that arbitrator.  Each party shall pay its own legal and other professional fees and costs in connection with the arbitration and Company shall pay the arbitrator’s fees; however, to the extent permitted by law, the arbitrator may require the other party to pay the costs of the arbitration and/or the legal and other professional fees and costs incurred by the prevailing party in connection with such arbitration proceeding and any necessary court action.

The claims covered by this arbitration provision include, but are not limited to, claims arising out of contract law, tort law, common law, defamation law, fraud law (including, without

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limitation, fraud in the inducement of contract), wrongful discharge law, privacy rights, statutory protections, constitutional protections, wage and hour law, California Labor Code protections, the California Fair Employment and Housing Act (which includes claims for discrimination or harassment on the basis of age, race, color, ancestry, national origin, disability, medical condition, marital status, religious creed, sexual orientation, pregnancy, and sex), any similar state discrimination law, the Federal Civil Rights Act of 1964 and 1991, as amended, the Age Discrimination in Employment Act, the Older Workers’ Benefit Protection Act, the Americans With Disabilities Act; claims for benefits (except claims under an employee benefit plan that either (1) specifies that its claims procedure shall culminate in an arbitration procedure different from this one, or (2) is underwritten by a commercial insurer which decides claims); and claims for violation of any federal, state, or other governmental law, statute, regulation, or ordinance, except claims excluded in the following section.

Notwithstanding the foregoing, the parties expressly agree that claims Executive may have for workers’ compensation, state unemployment compensation benefits, and state disability insurance are not covered by this Agreement.  The parties also agree that a court of competent jurisdiction may enter a temporary restraining order or an order enjoining a breach of this Agreement, including Exhibit A (Confidentiality Agreement) hereto, pending a final award or further order by the arbitrator.  Such remedy, however, shall be cumulative and nonexclusive, and shall be in addition to any other remedy to which the parties may be entitled.  The parties further expressly agree that this provision does not apply to any matter in which the amount in controversy falls within the jurisdiction of the Small Claims Division of the Municipal Courts of the State of California.  Should such matter fall within the jurisdiction of the Small Claims Division of the Municipal Court of the State of California, then such matter shall be, and may only be, submitted to a Small Claims Division of the Courts of the State of California for Los Angeles County for determination.

This Section 9 shall apply notwithstanding any provision to the contrary which is set forth in the Purchase Agreement; provided however, Company shall, in the event of any arbitration under this Section 9, continue to have (and the arbitrator shall take into account in rendering any award hereunder) all of its offset rights contained in applicable provisions of the Purchase Agreement.

10.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 other than Company, and that he has no rights or obligations which may conflict with the interests of Company or with the performance of Executive’s duties and obligations under this Agreement.  Executive agrees to notify Company immediately if any such conflicts occur in the future.

11.DIRECTOR AND OFFICER INSURANCE AND INDEMNITY.  To the extent that New Frontier maintains Director and Office Insurance on similarly situated executives of other subsidiaries, New Frontier shall obtain and pay the premiums upon director and officer insurance and shall name Executive as an insured under such policies.  Company shall further indemnify and hold harmless Executive as required under Company’s articles of incorporation or bylaws and, without limiting the generality of the foregoing, Company shall indemnify and hold harmless Executive to the maximum extent required by California law.

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12.SUCCESSORS.  This Agreement is personal to Executive and shall not be assignable by Executive.  This Agreement shall inure to the benefit of Company and its successors and assigns.  Upon written approval by Executive, Company may assign this Agreement to any successor or affiliated entity, subsidiary or parent company, but no such assignment shall relieve Company of its obligations under this Agreement.

13.MISCELLANEOUS.

A.Modification/Waiver.  This Agreement may not be amended, modified, superseded, canceled, renewed or expanded, or any terms or covenants hereof waived, except by a writing executed by each of the parties hereto or, in the case of a waiver, by the party waiving compliance.  Failure of any party at any time or times to require performance of any provision hereof shall in no manner affect his or its right at a later time to enforce the same.  No waiver by a party of a breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances shall be deemed to be or construed as a further or continuing waiver of agreement contained in the Agreement.

B.Taxes.  Executive agrees to be responsible for the payment of any taxes due on any and all compensation, stock option, or benefit provided by Company pursuant to this Agreement.  Executive agrees to indemnify Company and hold Company harmless from any and all claims or penalties asserted against Company for any failure by Executive to pay taxes due on any compensation, stock option, or benefit provided by Company pursuant to this Agreement. Executive expressly acknowledges that Company has not made, nor herein makes, any representation about the tax consequences of any consideration provided by Company to Executive pursuant to this Agreement.

C.Governing Law; Personal Jurisdiction.  This Agreement and all disputes relating to this Agreement shall be governed in all respects by the laws of the State of California as such laws are applied to agreements between California residents entered into and performed entirely in California. The parties acknowledge that this Agreement constitutes the minimum contacts to establish personal jurisdiction in California. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.

D.Notices.  All notices and other communications hereunder (including any notices pursuant to Section 6) 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.  Copies of all notices sent hereunder shall be forwarded to Michael Wolf, Esq., Wolf, Rifkin, Shapiro & Schulman, LLP, 11400 West Olympic Boulevard, Ninth Floor, Los Angeles, California 90064 and to E. Lee Reichert, Esq., Kamlet Shepherd & Reichert, LLP, 1515 Arapahoe Street, Ste. 1600, Denver, Colorado 80202.

E.Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

F.Withholdings.  Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

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G.Entire Agreement.  This Agreement, together with Exhibit A attached hereto, set forth the entire agreement and understanding of the parties hereto with regard to the employment of the Executive by Company and supersede any and all prior agreements, arrangements and understandings, written or oral, pertaining to the subject matter hereof.  No representation, promise or inducement relating to the subject matter hereof has been made to a party that is not embodied in these Agreements, and no party shall be bound by or liable for any alleged representation, promise or inducement not so set forth.  Notwithstanding this Section 13(G), nothing contained in this Agreement shall alter, amend or effect in any way the terms and conditions of the Purchase Agreement or the Non-competition Agreement.

H.Waiver.  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.

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

COMPANY:
		EXECUTIVE:
MRG Entertainment, Inc.,
a California corporation
By:	/s/ Marc Greenberg	/s/ Richard Goldberg
Name:		Richard Bruce Goldberg
Its:

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EX-10.02

EXHIBIT 10.02

AMENDMENT TO EMPLOYMENT AGREEMENT

The agreement set forth herein (“this Agreement”), is made as of this 25th day of August, 2008, by and between MRG Entertainment, Inc. (“the Company”), New Frontier Media, Inc. (“NFM”) and Richard Bruce Goldberg (“Executive”) and is effective as of February 10, 2009.

Recitals

Whereas, Executive has heretofore been employed by MRG, pursuant to an Employment Agreement dated February 10, 2006, a copy of which is attached hereto as Exhibit A and incorporated by reference (“the MRG Employment Agreement”); and

Whereas, Executive has previously entered into the Non-Competition, Non-Solicitation and Trade Secrecy Agreement between and among NFM, MRG, and Executive, dated February 10, 2006, a copy of which is attached hereto as Exhibit B and incorporated by reference (the Non-Competition Agreement”); and

Now Therefore, all parties desire to extend the period of employment of Executive under the terms and conditions set forth in this Agreement.

A.Unless otherwise defined in this Agreement, all defined terms used herein shall have the meaning as set forth in the MRG Employment Agreement.

B.Except as expressly modified hereby, the terms and conditions of the MRG Employment Agreement remain in full force and effect.

C.This Agreement shall not alter or amend any of the non-competition or non-solicitation terms (nor any other terms) set forth in the Non-Competition Agreement.

D.Company and Executive agree to amend the MRG Employment Agreement as set forth below. The following replaces Section 1 and Subsections (i), (ii) and (ix) of Section 2B of the MRG Employment Agreement in their entirety, and adds Section 14 to the MRG Employment Agreement:

Section 1. Employment Period

Executive shall be employed by Company, in accordance with the terms and conditions of this Agreement and the MRG Employment Agreement, commencing on the effective date of the MRG Employment Agreement, and ending at midnight on March 31, 2011, unless sooner terminated in accordance with the provisions of Sections 3 or 4, of the MRG Employment Agreement (“the Employment Period”).

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Section 2. Terms of Employment.

(B) Compensation

(i) Base Salary.  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 Thousand Dollars ($400,000) per annum, less standard deductions and withholdings, during the period commencing February 10, 2009 and ending February 9, 2010; and Four Hundred Fifty Thousand Dollars ($450,000) per annum, less standard deductions and withholdings, during the period commencing February 10, 2010 and ending March 31, 2011.

(ii) Discretionary Bonus.  In addition to Executive’s Base Salary, the Company may, in its sole discretion, award cash bonuses annually to Executive, less standard deductions and withholdings.

(ix) Stock Options.  Executive shall receive an option to purchase 150,000 shares of New Frontier Media common stock with a strike price of $5.00 per option.  (“Option”).  Unless the employment relationship has sooner terminated, the Option will vest equally over a four (4) year period (25% vested after year one, 25% vested after year two, 25% vested after year three and 25% vested after year four).

Section 14.  Assignment of MRG’s Rights and Obligations.

All of Company’s rights and obligations under this Agreement may be assigned to NFM, or to any subsidiary of NFM, in the sole discretion of NFM.  In such event, Executive shall report to the Chief Executive Officer of NFM or its successor.

Agreed and Accepted:

NEW FRONTIER MEDIA, INC.	Date:
A Colorado Corporation
/s/ Michael Weiner	8/21/2008
MRG ENTERTAINMENT, INC.	Date:
A California Corporation
/s/ Rich Goldberg	8-25-08
EXECUTIVE	Date:
/s/ Rich Goldberg	8/12/2008
Richard Bruce Goldberg

EX-10.03

EXHIBIT 10.03

SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

The agreement set forth herein (“Agreement”), is made and effective as of this 13th day of January, 2010, by and between MRG Entertainment, Inc. (“the Company”), New Frontier Media, Inc. (“NFM”) and Richard Bruce Goldberg (“Executive”).

Whereas, Executive is employed by MRG, pursuant to an Employment Agreement dated February 10, 2006, as subsequently amended on August 25th, 2008 (“the MRG Employment Agreement”); and

Whereas, Executive has entered into the Non-Competition, Non-Solicitation and Trade Secrecy Agreement between and among NFM, MRG, and Executive, dated February 10, 2006 (the Non-Competition Agreement”); and

Now Therefore, all parties desire to amend the terms of the MRG Employment Agreement as specifically set forth herein.

A.Unless otherwise defined in this Agreement, all defined terms used herein shall have the meaning as set forth in the MRG Employment Agreement.

B.Except as expressly modified hereby, the terms and conditions of the MRG Employment Agreement remain in full force and effect.

C.This Agreement shall not alter or amend any of the non-competition or non-solicitation terms (nor any other terms) set forth in the Non-Competition Agreement.

D.The following replaces Section 2B(ix) of the MRG Employment Agreement in its entirety:

Section 2. Terms of Employment, (B) Compensation, (ix) Stock Options.  Executive shall receive an option to purchase 75,000 shares of New Frontier Media common stock with a strike price of $2.15 per option (“Option”).  Unless the employment relationship has sooner terminated, the Option will vest equally over a two (2) year period (50% vested after year one, 50% vested after year two).

Agreed and Accepted:

NEW FRONTIER MEDIA, INC.	Date:
/s/ Michael Weiner	1/13/2010
MRG ENTERTAINMENT, INC.	Date:
/s/ Marc Greenberg	1/13/2010
EXECUTIVE	Date:
/s/ Rich Goldberg	1/13/2010
Richard Bruce Goldberg

EX-10.04

EXHIBIT 10.04

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated as of February 10, 2006 (the “Effective Date”), is entered into by and between Marc Laurence Greenberg, an individual residing at 4211 Roma Court, Marina del Rey, California 90292 (“Executive”), and MRG Entertainment, Inc., a California corporation, located at 301 Arizona Avenue, Santa Monica, California 90401 (“Company”).

WHEREAS, Executive possesses valuable knowledge and skills which are relevant to the operation of Company’s business; and

WHEREAS, Company desires to provide for the employment of Executive, and Executive is willing to serve as an executive of Company, on the terms and conditions herein provided; and

WHEREAS, New Frontier Media, Inc., a Colorado corporation (“New Frontier”), Marc Lawrence Greenberg Trust dated May 11, 2001 (“Greenberg Trust”), Goldberg Family Trust dated June 15, 2001 (“Goldberg Trust”), Richard Bruce Goldberg (“Goldberg”) and Executive are parties to that certain Stock Purchase Agreement dated February 6, 2006 (the “Purchase Agreement”); and

WHEREAS, the Greenberg Trust and the Goldberg Trust collectively own one hundred percent (100%) of the issued and outstanding common stock shares of Company and Lifestyles Entertainment, Inc., a California corporation (collectively, the “Businesses”); and

WHEREAS, New Frontier is acquiring all of the stock and the goodwill of the Businesses, which will continue to be engaged in (i) the entertainment, production, marketing and distribution businesses, and (ii) producing, licensing and selling motion pictures and television programs; and

WHEREAS, pursuant to the Purchase Agreement, the Businesses shall become wholly owned subsidiaries of New Frontier; and

WHEREAS, Executive is a beneficiary of the Greenberg Trust and the Co-President and Secretary of each of the Businesses and is benefiting financially from the acquisition contemplated by the Purchase Agreement; and

WHEREAS, Executive has had and will continue to have access to and possession of various trade secrets and other proprietary and confidential information of the Businesses which is material to the continued value of the Businesses; and

WHEREAS, the entering into this Agreement by Company and Executive is a condition to the consummation of the closing contemplated by the Purchase Agreement and a material inducement of New Frontier to enter into the Purchase Agreement; and

WHEREAS, Company desires to hire Executive, and Executive wishes to accept such employment, upon the terms and conditions set forth in this Agreement.

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

1.EMPLOYMENT PERIOD.  Executive shall be employed by Company, in accordance with the terms and provisions of this Agreement, commencing on the Effective Date and ending at midnight on February 9, 2009, unless sooner terminated in accordance with the provisions of Sections 3 or 4 herein (the “Employment Period”).

2.TERMS OF EMPLOYMENT.

A.Position and Duties.  During the Employment Period, Executive shall be employed by Company as President or a Co-President (to the extent that Goldberg remains employed by Company as Co-President), and Executive accepts and agrees to such employment.  During the Employment Period, Executive shall perform all services and acts necessary and advisable to fulfill the duties and responsibilities as are commensurate and consistent with Executive’s position and shall render such services on the terms set forth herein.  During the Employment Period, Executive shall report to the Chief Executive Officer (the “CEO”) of New Frontier (or the CEO’s designee, so long as such designee is of equal or greater rank than the CEO).  Executive shall have such powers and duties with respect to his position as Co-President as may reasonably be assigned to Executive by the CEO, to the extent consistent with Executive’s position and status.  Executive agrees to devote his full-time attention to the business and affairs of Company.  During the Employment Period, it shall not be a violation of this Agreement for Executive to: (a) serve on corporate, civic, charitable, and professional association boards or committees; (b) deliver lectures or fulfill speaking engagements; and (c) manage personal investments, so long as such activities do not result in more than de minimus interference with the performance of Executive’s responsibilities as Co-President of Company in accordance with this Agreement or do not create any perceived or actual conflict of interest with Company or New Frontier.  The CEO reserves the right for legitimate business reasons to require Executive to end or refrain from participating in any such activities upon reasonable prior written notice to Executive. Executive’s employment with Company under this Agreement shall be Executive’s exclusive employment during the Employment Period.

B.Compensation.

(i)Base Salary.  During the Employment Period, Executive shall receive a base salary (“Base Salary”), which shall be paid in equal installments on a bi-weekly basis, at the rate of Three Hundred Fifty Thousand Dollars ($350,000) per annum, less standard state and federal tax-related deductions and withholdings.

(ii)Discretionary Bonus.  In addition to Executive’s Base Salary, the Compensation Committee of the Board of Directors of New Frontier (the “New Frontier Board”) may, in its sole discretion, award cash bonuses annually to Executive, if at all, in an aggregate amount of up to one hundred percent (100%) of Executive’s Base Salary, less standard state and federal tax-related deductions and withholdings.  Notwithstanding the foregoing, Executive shall have the right, to be determined in his sole discretion, to decline and waive any discretionary bonus amount approved by the New Frontier Board and, in such event, such approved bonus amount shall not count against the calculation of EBITDA under the Earnout Agreement entered into as of even

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date herewith by and among New Frontier, Executive, Goldberg, the Greenberg Trust and the Goldberg Trust (the “Earnout Agreement”), provided that Executive notifies the CEO in writing of such waiver by the later of (i) September 30th of the year during which such bonus is accrued, or (ii) within ten (10) business days after Executive is advised in writing of the accrued bonus amount.  For purposes of this Agreement, the term “EBITDA” shall have the meaning ascribed to it in the Earnout Agreement.

(iii)Expenses.  During the Employment Period, Company shall reimburse Executive for all reasonable employment-related expenses incurred by Executive in accordance with the policies, practices and procedures of Company as in effect generally from time to time after the Effective Date.

(iv)Vacation and Sick Leave.  Executive acknowledges that Company 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 Employment Period.  Executive is authorized to take paid time off provided he meets his professional and productivity obligations to Company as determined by the CEO.  Executive is to coordinate time off with the CEO.

(v)Car Allowance.  During the Employment Period, Executive shall be entitled to a car allowance equal to Eight Hundred Fifty Dollars ($850) per month (the “Car Allowance”), to be paid in accordance with and subject to Company’s car allowance policy.  The Car Allowance shall be paid bi-weekly, and shall be taxable to Executive whether or not Executive has an actual car payment (including any car lease payment).

(vi)Savings and Retirement Plans.  During the Employment Period, Executive shall be entitled to participate in all savings and retirement plans maintained by New Frontier, including any 401(k) plan, on the same terms as executives of New Frontier or other subsidiaries of New Frontier of similar rank to Executive are entitled to participate.

(vii)Key Man Insurance.  During the Employment Period, Company may at its election obtain and maintain in full force and effect term life insurance in such amounts as Company may elect in its sole discretion on the life of Executive naming Company or New Frontier as beneficiary (the “Key Man Insurance”).  Executive shall cooperate with Company and New Frontier with respect to any reasonable underwriting activities as may be required by New Frontier’s insurer(s) in connection with obtaining the Key Man Insurance, including, without limitation, undertaking such medical examinations and providing such documents and information as New Frontier or its insurer(s) may reasonably request.

(viii)Welfare Benefit Plans.  During the Employment Period, Executive shall be eligible to participate in all welfare benefit plans made available by New Frontier to other executives of similar rank to Executive; provided, however, nothing in this Section 2(B)(viii) shall operate to reduce or impair New Frontier’s right to alter, amend, or cancel any such plans, programs or benefits at any time, upon reasonable advance notice to Executive.

(ix)Stock Options.  Executive shall be eligible to participate in such Stock Option Plans of New Frontier that may be made available from time to time to New Frontier

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executives of similar rank to Executive; provided, however, the level, terms and conditions of such participation shall be determined by and within the sole discretion of the New Frontier Board.

(x)Withholdings.  All payments made to Executive hereunder shall be subject to all applicable state and federal tax-related withholding obligations, as required by applicable law.

3.EARLY TERMINATION OF EMPLOYMENT.

Executive and Company each acknowledge that either party has the right to terminate Executive’s employment with Company at any time for any lawful reason whatsoever, with or without Cause (as defined herein) or advance notice, pursuant to the following:

A.For Cause. Company may terminate Executive’s employment during the Employment Period for Cause.  For purposes of this Agreement, “Cause” shall mean (i) the conviction of Executive for committing an act of fraud, embezzlement, theft or other act constituting a crime or the guilty or nolo contendere plea of Executive to any such crime; (ii) fraudulent conduct or an act of dishonesty or breach of trust on the part of Executive in connection with the business of Company or any of its affiliates or subsidiaries; (iii) violation of any Company policy of which Executive is aware and is given a period of ten (10) days’ prior written notice and opportunity to cure during such period; (iv) failure, neglect, or refusal by Executive to engage in diligent efforts to properly discharge, perform or observe any or all of Executive’s job dutiesfor any reason other than Company’s material breach of this Agreement or Executive’s Permanent Disability (as defined herein), which failure, neglect, or refusal continues after Company provides ten (10) days’ prior written notice to Executive; provided, however, Company shall not be required to deliver any such notice under this subpart (iv) on more than one (1) occasion for each year of the Employment Period; (v) breach of the Non-Competition, Non-Solicitation and Trade Secret Agreement attached as Exhibit J to the Purchase Agreement (the “Non-competition Agreement”); (vi) any uncured breach of the Employee Proprietary Information and Inventions Agreement which results in damage to the Company, attached as Exhibit A to this Agreement (the “Proprietary Information Agreement”); and (vii) any other breach or failure by Executive to comply with any of the provisions of this Agreement applicable to him and which is not remedied within ten (10) days after written notice thereof from Company.  The parties acknowledge that this definition of “Cause” is not intended and does not apply to any aspect of the relationship between Company and any of its employees, including Executive, beyond determining Executive’s eligibility for the Without Cause Severance Payments (as defined herein).

B.Without Cause. Company may terminate Executive’s employment without Cause by providing Executive ten (10) business days advance notice of such termination.

C.Upon Executive’s Death or Permanent Disability. Subject to applicable state or federal law, Executive’s employment shall terminate automatically upon Executive’s death or upon Executive’s permanent disability (“Permanently Disabled” or “Permanent Disability”), meaning that Executive is unable to perform the essential functions of his job, with or without reasonable accommodation, for a total of ninety (90) days out of any six (6) month period.

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4.TERMINATION BY EXECUTIVE FOR GOOD REASON. Executive may terminate his employment with Company for Good Reason. For purposes of this Agreement, “Good Reason” shall mean, in the absence of the advance written consent of Executive, a reasonable determination by Executive that any of the following has occurred:

A.The assignment to Executive of any duties inconsistent in any material respect with Executive’s position (including titles and reporting requirements, authority, duties or responsibilities as contemplated by Section 2(A) of this Agreement), or any other action by Company which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated and insubstantial action not taken in bad faith and which is remedied by Company within ten (10) days after receipt of written notice thereof given by Executive; or

B.Any failure by Company to comply with any of the provisions of this Agreement applicable to it, other than any isolated and insubstantial failure not occurring in bad faith and which is remedied within ten (10) days after receipt of written notice thereof given by Executive.

C.Company’s failure to obtain a written agreement from any successor of Company to assume and perform Company’s obligations under this Agreement.

Upon the occurrence of any of the events described in Sections 4(A), 4(B), or 4(C) above, Executive shall be deemed to have waived any right to receive post termination benefits if he does not notify Company of his intention to resign within ninety (90) days after the occurrence of such event.

5.OBLIGATIONS OF COMPANY UPON EARLY TERMINATION.

A.Termination for Cause.  In the event Executive is terminated by Company for Cause, Company’s obligation to make payments hereunder shall cease as of the Date of Termination, as defined in Section 6, except Company shall pay to Executive, on the Date of Termination, any accrued Base Salary and bonuses that have been earned through the Date of Termination (the sum of these amounts shall hereinafter be referred to as the “Accrued Obligations”).  Business expenses reimbursable under Company policy will be paid within thirty (30) days after the final submittal of outstanding business expenses, provided that Executive submit any outstanding business expenses within thirty (30) days after the Date of Termination.  Vesting of any stock option under any applicable Stock Option Plan shall cease vesting as of the Date of Termination.

B.Termination by Company Without Cause.  In the event Executive is terminated without Cause and upon the execution of a full general release by Executive (“Release”), releasing all claims known or unknown that Executive may have under this Agreement against Company or New Frontier as of the date Executive signs such Release, and upon the written acknowledgement of his continuing obligations under the Proprietary Information Agreement and the Non-competition Agreement, Company shall pay Executive associated termination paymentsequal to Base Salary continuation through February 9, 2009, or six (6) months of Base Salary, whichever is greater (the “Without Cause Severance Payments”), plus the Accrued Obligations; provided, however, the Without Cause Severance Payments shall be reduced in accordance with Section 5(G) (Mitigation of Damages).  The Without Cause Severance Payments will be paid in Company’s regular payroll cycle; provided, the Accrued Obligations shall be paid to Executive on the Date of Termination.

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Business expenses reimbursable under Company policy will be paid within ten (10) days after the final submittal of outstanding business expenses, provided that Executive submits any outstanding business expenses within ten (10) days after the Date of Termination.  Vesting of any stock options under any applicable Stock Option Plan shall cease vesting as of the Date of Termination without Cause.

C.Termination by Executive for Good Reason.  In the event Executive resigns his employment with Company for Good Reason and upon the execution of a Release against Company and New Frontier, releasing all claims known or unknown that Executive may have under this Agreement against Company or New Frontier as of the date Executive signs such Release, and upon the written acknowledgement of his continuing obligations under the Proprietary Information Agreement and the Non-competition Agreement, Company shall pay Executive associated termination paymentsequal to Base Salary continuation through February 9, 2009, or six (6) months of Base Salary, whichever is greater (“Good Reason Severance Payments”), plus the Accrued Obligations; provided, however, the Good Reason Severance Payments shall be reduced in accordance with Section 5(G) (Mitigation of Damages).  The Good Reason Severance Payments will be paid in Company’s regular payroll cycle; provided, the Accrued Obligations shall be paid to Executive on the Date of Termination.  Business expenses reimbursable under Company policy will be paid within ten (10) days after the final submittal of outstanding business expenses, provided that Executive submits any outstanding business expenses within ten (10) days after the Date of Termination.  Vesting of any stock options under any applicable Stock Option Plan shall cease vesting as of the Date of Termination for Good Reason.

D.Upon Death.  If Executive’s employment is terminated by reason of Executive’s death during the Employment Period, this Agreement shall terminate without further obligation to Executive’s legal representatives under this Agreement.  Upon notice of Executive’s death, Company shall pay to Executive’s estate all Accrued Obligations.  Business expenses reimbursable under Company policy will be paid with thirty (30) days after the final submittal of outstanding business expenses, provided that Executive’s estate submit any outstanding business expenses within thirty (30) days after Executive’s death.  Vesting of any stock options under any applicable Stock Option Plan shall be governed by the terms of the Stock Option Plan and applicable Stock Option grant.

E.Upon Permanent Disability.  If Executive’s employment is terminated by reason of Executive’s Permanent Disability (as determined pursuant to Section 3(C) of this Agreement) during the Employment Period, this Agreement shall terminate without further obligation to Company.  Company shall pay to Executive, on the Date of Termination, all Accrued Obligations.  Business expenses reimbursable under Company policy will be paid within thirty (30) days after the final submittal of outstanding business expenses, provided Executive submit any outstanding business expenses within thirty (30) days after the Date of Termination.  Vesting of any stock options under any applicable Stock Option Plan shall be governed by the terms of the Stock Option Plan and applicable Stock Option grant.

F.Application of Section 409A of Internal Revenue Code.  Notwithstanding anything contained in Section 5(B) or 5(C) to the contrary, to the extent that (i) the parties’ agreement regarding the Cause Severance Payments or Good Reason Severance Payments, as applicable, to be made by Company in accordance with this Agreement is treated as a “nonqualified deferred compensation plan” within the meaning of Section 409A(d)(1) of the Internal Revenue

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Code of 1986 (the “Code”), (ii) the Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, and (iii) Section 409A(a)(1)(A) of the Code would apply to any Cause Severance Payments or Good Reason Severance Payments, as applicable, but for the application of Section 409A(a)(2)(A)(i) of the Code required to avoid the tax consequences of Section 409A of the Code, the first such severance payment under either scenario shall cover all payments scheduled to be made to Executive during the first six (6) months after the Date of Termination and such first payment shall be delayed until the day after the six (6) month anniversary of the Date of Termination.

G.Parachute Tax Gross Up.  Executive acknowledges that neither the Company nor New Frontier presently has, nor shall it have any obligation to consider or institute, a policy or procedure (a “Gross Up Policy”) that requires the Company/New Frontier to pay any of its employees (including senior officers) a “gross-up amount” providing employees entitled to any acceleration payments with a “net” (or increased) payment amount that takes into account any associated golden parachute excise tax (“Parachute Tax”) under Section 4999(a) of the Code. Notwithstanding the foregoing, in the event New Frontier or the Company during the Employment Period institutes a Gross Up Policy applicable to one or more executives similarly situated to Executive in connection with any acceleration payments owing or which could be owing to such executive(s), Executive shall thereafter be entitled to participate in such Gross Up Policy.

H.Mitigation of Damages.  Executive shall not be obligated to seek other employment to mitigate the amount of Without Cause Severance Payments or the Good Reason Severance Payments payable to Executive hereunder; provided, however, the amount of any Without Cause Severance Payments or Good Reason Severance Payments shall be reduced, dollar for dollar, by an amount equal to the gross amount that Executive earns (whether as an employee, contractor, or director of any other business, trade, profession or occupation, and irrespective of whether such form of compensation constitutes salary, bonus or compensation) following (i) the termination of Executive without Cause, or (ii) Executive’s resignation for Good Reason, as applicable.  Executive shall for so long as any severance payments are due and owing to Executive, provide the Company with contact information of any new employer of Executive (or such other person or entity to whom Executive acts as a consultant or contractor) (each referred to as a “Third Party Employer”) following termination; Executive hereby further authorizes Company to provide a copy of this Agreement to such Third Party Employer and to obtain from such Third Party Employer, without Executive’s consent, all such information as may be reasonably requested by the Company to ascertain the amount of compensation received by Executive from such Third Party Employer, including without limitation, pay stubs, W-2’s and/or Form 1099’s issued to Executive but only to the extent Executive does not first provide such information to the Company within ten (10) days of written request.

6.NOTICE AND DATE OF TERMINATION.  Any termination (whether based on Permanent Disability, Good Reason, with Cause or without Cause) shall be communicated by a written “Notice of Termination” to the other party, and may be sent via registered or certified mail, return receipt requested, postage prepaid or by facsimile transmission, or by electronic mail or by hand delivery. “Date of Termination” shall mean: (i) the date of transmission of the Notice of Termination by facsimile, e-mail or personal delivery; (ii) three (3) calendar days after the date of mailing by first class mail; or (iii) if Executive’s employment is terminated by reason of Executive’s death, the Date of Termination shall be the date of Executive’s death.

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7.PROPRIETARY AND OTHER OBLIGATIONS.

A.Proprietary Information Agreement.  Executive acknowledges that signing and complying with the Proprietary Information Agreement is a condition of his employment by Company.  Executive therefore agrees to sign and comply with the Proprietary Information Agreement and acknowledges that by beginning employment with Company, he will be deemed to have signed and agreed to the provision of the Proprietary Information Agreement.

B.Exceptions.  Notwithstanding any contrary provisions in the Proprietary Information Agreement to the contrary the parties agree as follows:  (i) the term “Proprietary Information”, as defined in Section 1.2 of the Proprietary Information Agreement, shall not include Executive’s personal address book; (ii) to the extent of any conflict between Section 2(A) of this Agreement and the first sentence of paragraph 4 of the Proprietary Information Agreement, Section 2(A) of this Agreement shall govern and control; (iii) the last sentence of paragraph 7 of the Proprietary Information Agreement shall not apply to Executive; (iv) a copy of all notices to be provided to Executive under paragraph 9 of the Proprietary Information Agreement shall be delivered to Michael Wolf, Esq., Wolf, Rifkin, Shapiro & Schulman, LLP, 11400 W. Olympic Blvd., Ninth Floor, Los Angeles, California 90064; (v) promptly after providing a notification described in paragraph 10 of the Proprietary Information Agreement to any new employer of Executive, the Company will provide Executive with a copy of the notice given to such new employer; and (vi) to the extent of any conflict between any Section(s) of this Agreement and paragraph 11.5 of the Proprietary Information Agreement, the Section(s) of this Agreement shall govern and control.

8.NON-COMPETITION; NON-SOLICITATION.  This Agreement shall not alter or amend any of the non-competition or non-solicitation terms (nor any other terms) set forth in the Non-competition Agreement or the Proprietary Information Agreement.

9.ARBITRATION.  To the fullest extent permitted by law, any controversy or claim past, present, or future, arising out of or relating to the hiring of Executive, Executive’s employment, the termination of Executive’s employment, this Agreement and/or the breach or termination of this Agreement that Company may have against Executive or that Executive may have against Company or against its officers, directors, employees or agents in their capacity as such or the breach hereof, shall be settled by a single arbitrator in arbitration conducted in Los Angeles County, California, in accordance with the National Employment Arbitration Rules of the American Arbitration Association (“AAA”).  These rules are posted on the AAA’s website, www.adr.org. The arbitrators shall prepare a written award and judgment upon the award may be entered in any court having jurisdiction thereof.  The arbitrator’s decision shall be final and binding. The arbitrator shall have the authority to settle such controversy or claim by finding that a party should be enjoined from certain actions or be compelled to undertake certain actions, and in such event such court may enter an order enjoining and/or compelling such actions as found by that arbitrator.  Each party shall pay its own legal and other professional fees and costs in connection with the arbitration and Company shall pay the arbitrator’s fees; however, to the extent permitted by law, the arbitrator may require the other party to pay the costs of the arbitration and/or the legal and other professional fees and costs incurred by the prevailing party in connection with such arbitration proceeding and any necessary court action.

The claims covered by this arbitration provision include, but are not limited to, claims arising out of contract law, tort law, common law, defamation law, fraud law (including, without

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limitation, fraud in the inducement of contract), wrongful discharge law, privacy rights, statutory protections, constitutional protections, wage and hour law, California Labor Code protections, the California Fair Employment and Housing Act (which includes claims for discrimination or harassment on the basis of age, race, color, ancestry, national origin, disability, medical condition, marital status, religious creed, sexual orientation, pregnancy, and sex), any similar state discrimination law, the Federal Civil Rights Act of 1964 and 1991, as amended, the Age Discrimination in Employment Act, the Older Workers’ Benefit Protection Act, the Americans With Disabilities Act; claims for benefits (except claims under an employee benefit plan that either (1) specifies that its claims procedure shall culminate in an arbitration procedure different from this one, or (2) is underwritten by a commercial insurer which decides claims); and claims for violation of any federal, state, or other governmental law, statute, regulation, or ordinance, except claims excluded in the following section.

Notwithstanding the foregoing, the parties expressly agree that claims Executive may have for workers’ compensation, state unemployment compensation benefits, and state disability insurance are not covered by this Agreement.  The parties also agree that a court of competent jurisdiction may enter a temporary restraining order or an order enjoining a breach of this Agreement, including Exhibit A (Confidentiality Agreement) hereto, pending a final award or further order by the arbitrator.  Such remedy, however, shall be cumulative and nonexclusive, and shall be in addition to any other remedy to which the parties may be entitled.  The parties further expressly agree that this provision does not apply to any matter in which the amount in controversy falls within the jurisdiction of the Small Claims Division of the Municipal Courts of the State of California.  Should such matter fall within the jurisdiction of the Small Claims Division of the Municipal Court of the State of California, then such matter shall be, and may only be, submitted to a Small Claims Division of the Courts of the State of California for Los Angeles County for determination.

This Section 9 shall apply notwithstanding any provision to the contrary which is set forth in the Purchase Agreement; provided however, Company shall, in the event of any arbitration under this Section 9, continue to have (and the arbitrator shall take into account in rendering any award hereunder) all of its offset rights contained in applicable provisions of the Purchase Agreement.

10.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 other than Company, and that he has no rights or obligations which may conflict with the interests of Company or with the performance of Executive’s duties and obligations under this Agreement.  Executive agrees to notify Company immediately if any such conflicts occur in the future.

11.DIRECTOR AND OFFICER INSURANCE AND INDEMNITY.  To the extent that New Frontier maintains Director and Office Insurance on similarly situated executives of other subsidiaries, New Frontier shall obtain and pay the premiums upon director and officer insurance and shall name Executive as an insured under such policies.  Company shall further indemnify and hold harmless Executive as required under Company’s articles of incorporation or bylaws and, without limiting the generality of the foregoing, Company shall indemnify and hold harmless Executive to the maximum extent required by California law.

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12.SUCCESSORS.  This Agreement is personal to Executive and shall not be assignable by Executive.  This Agreement shall inure to the benefit of Company and its successors and assigns.  Upon written approval by Executive, Company may assign this Agreement to any successor or affiliated entity, subsidiary or parent company, but no such assignment shall relieve Company of its obligations under this Agreement.

13.MISCELLANEOUS.

A.Modification/Waiver.  This Agreement may not be amended, modified, superseded, canceled, renewed or expanded, or any terms or covenants hereof waived, except by a writing executed by each of the parties hereto or, in the case of a waiver, by the party waiving compliance.  Failure of any party at any time or times to require performance of any provision hereof shall in no manner affect his or its right at a later time to enforce the same.  No waiver by a party of a breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances shall be deemed to be or construed as a further or continuing waiver of agreement contained in the Agreement.

B.Taxes.  Executive agrees to be responsible for the payment of any taxes due on any and all compensation, stock option, or benefit provided by Company pursuant to this Agreement.  Executive agrees to indemnify Company and hold Company harmless from any and all claims or penalties asserted against Company for any failure by Executive to pay taxes due on any compensation, stock option, or benefit provided by Company pursuant to this Agreement. Executive expressly acknowledges that Company has not made, nor herein makes, any representation about the tax consequences of any consideration provided by Company to Executive pursuant to this Agreement.

C.Governing Law; Personal Jurisdiction.  This Agreement and all disputes relating to this Agreement shall be governed in all respects by the laws of the State of California as such laws are applied to agreements between California residents entered into and performed entirely in California. The parties acknowledge that this Agreement constitutes the minimum contacts to establish personal jurisdiction in California. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.

D.Notices.  All notices and other communications hereunder (including any notices pursuant to Section 6) 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.  Copies of all notices sent hereunder shall be forwarded to Michael Wolf, Esq., Wolf, Rifkin, Shapiro & Schulman, LLP, 11400 West Olympic Boulevard, Ninth Floor, Los Angeles, California 90064 and to E. Lee Reichert, Esq., Kamlet Shepherd & Reichert, LLP, 1515 Arapahoe Street, Ste. 1600, Denver, Colorado 80202.

E.Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

F.Withholdings.  Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

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G.Entire Agreement.  This Agreement, together with Exhibit A attached hereto, set forth the entire agreement and understanding of the parties hereto with regard to the employment of the Executive by Company and supersede any and all prior agreements, arrangements and understandings, written or oral, pertaining to the subject matter hereof.  No representation, promise or inducement relating to the subject matter hereof has been made to a party that is not embodied in these Agreements, and no party shall be bound by or liable for any alleged representation, promise or inducement not so set forth.  Notwithstanding this Section 13(G), nothing contained in this Agreement shall alter, amend or effect in any way the terms and conditions of the Purchase Agreement or the Non-competition Agreement.

H.Waiver.  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.

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

COMPANY:
		EXECUTIVE:
MRG Entertainment, Inc.,
a California corporation
By:	/s/ Rich Goldberg	/s/ Marc Greenberg
Name:		Marc Laurence Greenberg
Its:

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EX-10.05

EXHIBIT 10.05

 AMENDMENT TO EMPLOYMENT AGREEMENT

The agreement set forth herein (“this Agreement”), is made as of this 8th day of October, 2008, by and between MRG Entertainment, Inc. (“the Company”), New Frontier Media, Inc. (“NFM”) and Marc Laurence Greenberg (“Executive”) and is effective as of February 10, 2009.

Recitals

Whereas, Executive has heretofore been employed by MRG, pursuant to an Employment Agreement dated February 10, 2006, a copy of which is attached hereto as Exhibit A and incorporated by reference (“the MRG Employment Agreement”); and

Whereas, Executive has previously entered into the Non-Competition, Non-Solicitation and Trade Secrecy Agreement between and among NFM, MRG, and Executive, dated February 10, 2006, a copy of which is attached hereto as Exhibit B and incorporated by reference (the Non-Competition Agreement”); and

Now Therefore, all parties desire to extend the period of employment of Executive under the terms and conditions set forth in this Agreement.

A.Unless otherwise defined in this Agreement, all defined terms used herein shall have the meaning as set forth in the MRG Employment Agreement.

B.Except as expressly modified hereby, the terms and conditions of the MRG Employment Agreement remain in full force and effect.

C.This Agreement shall not alter or amend any of the non-competition or non-solicitation terms (nor any other terms) set forth in the Non-Competition Agreement.

D.Company and Executive agree to amend the MRG Employment Agreement as set forth below. The following replaces Section 1 and Subsections (i), (ii) and (ix) of Section 2B of the MRG Employment Agreement in their entirety, and adds Section 14 to the MRG Employment Agreement:

Section 1. Employment Period

Executive shall be employed by Company, in accordance with the terms and conditions of this Agreement and the MRG Employment Agreement, commencing on the effective date of the MRG Employment Agreement, and ending at midnight on March 31, 2011, unless sooner terminated in accordance with the provisions of Sections 3 or 4, of the MRG Employment Agreement (“the Employment Period”).

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Section 2. Terms of Employment.

(B) Compensation

(i) Base Salary.  Executive shall receive a base salary (“Base Salary”), which shall be paid in equal installments on a bi-weekly basis, at the rate of: Three Hundred, Seventy-Five Thousand Dollars ($375,000) per annum, less standard deductions and withholdings, during the period commencing February 10, 2009 and ending February 9, 2010; and Four Hundred, Twenty-Five Thousand Dollars ($425,000) per annum, less standard deductions and withholdings, during the period commencing February 10, 2010 and ending March 31, 2011.

(ii) Discretionary Bonus.  In addition to Executive’s Base Salary, the Company may, in its sole discretion, award cash bonuses annually to Executive, less standard deductions and withholdings.

(ix) Stock Options.  Subject to the approval of NFM’s Board of Directors, Executive shall be eligible to receive an option to purchase 44,000 shares of New Frontier Media common stock with a strike price of $5.00 per option.  (“Option”).  Unless the employment relationship has sooner terminated, the Option will vest equally over a four (4) year period (25% vested after year one, 25% vested after year two, 25% vested after year three and 25% vested after year four).

Section 14.  Assignment of MRG’s Rights and Obligations.

All of Company’s rights and obligations under this Agreement may be assigned to NFM, or to any subsidiary of NFM, in the sole discretion of NFM.  In such event, Executive shall report to the Chief Executive Officer of NFM or its successor.

Agreed and Accepted:

NEW FRONTIER MEDIA, INC.	Date:
A Colorado Corporation
/s/ Michael Weiner	10/8/2008
MRG ENTERTAINMENT, INC.	Date:
A California Corporation
/s/ Michael Weiner	10/8/2008
EXECUTIVE	Date:
/s/ Marc Greenberg	10/8/2008
Marc Laurence Greenberg

EX-10.06

EXHIBIT 10.06

SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

The agreement set forth herein (“Agreement”), is made and effective as of this 15th day of December, 2009, by and between MRG Entertainment, Inc. (“the Company”), New Frontier Media, Inc. (“NFM”) and Marc Laurence Greenberg (“Executive”).

Whereas, Executive is employed by MRG, pursuant to an Employment Agreement dated February 10, 2006, as subsequently amended on October 8, 2008 (“the MRG Employment Agreement”); and

Whereas, Executive has entered into the Non-Competition, Non-Solicitation and Trade Secrecy Agreement between and among NFM, MRG, and Executive, dated February 10, 2006 (the Non-Competition Agreement”); and

Now Therefore, all parties desire to amend the terms of the MRG Employment Agreement as specifically set forth herein.

A.Unless otherwise defined in this Agreement, all defined terms used herein shall have the meaning as set forth in the MRG Employment Agreement.

B.Except as expressly modified hereby, the terms and conditions of the MRG Employment Agreement remain in full force and effect.

C.This Agreement shall not alter or amend any of the non-competition or non-solicitation terms (nor any other terms) set forth in the Non-Competition Agreement.

D.The following replaces Section 2B(ix) of the MRG Employment Agreement in its entirety:

Section 2. Terms of Employment, (B) Compensation, (ix) Stock Options.  Executive shall receive an option to purchase 22,000 shares of New Frontier Media common stock with a strike price of $2.15 per option (“Option”).  Unless the employment relationship has sooner terminated, the Option will vest equally over a two (2) year period (50% vested after year one, 50% vested after year two).

Agreed and Accepted:

NEW FRONTIER MEDIA, INC.	Date:
/s/ Michael Weiner	12-17-09
MRG ENTERTAINMENT, INC.	Date:
/s/ Rich Goldberg	12-17-09
EXECUTIVE	Date:
/s/ Marc Greenberg	Dec 17, 2009
Marc Laurence Greenberg

EX-10.07

Exhibit 10.07

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

TVN — CSB ADULT VOD SERVICES AGREEMENT

This agreement (the “Agreement”), dated as of April 8, 2010 (the “Effective Date”), is entered into by and between COLORADO SATELLITE BROADCASTING, INC., a Colorado corporation (“CSB”), with offices located at 7007 Winchester Circle, Suite 200, Boulder, CO 80301, and TVN ENTERTAINMENT CORPORATION, a Delaware corporation doing business as Avail-TVN (“TVN”), with offices located at 15301 Ventura Boulevard, Building E, Suite 3000, Sherman Oaks, CA 91403 (each, a “Party” and collectively, the “Parties”).

WHEREAS, CSB is the producer, owner, license holder and/or distributor of entertainment programming, and wishes to distribute certain programming to owners/operators of cable, telco, and DBS systems and other systems which distribute video programming to subscribers/customers for use on a video-on-demand basis;

WHEREAS, TVN is engaged in the business of, among other things, acquisition, delivery and management (e.g., encoding, asset and platform management, and digital file transport) of video grade digital files for use in video distribution systems offering content on a VOD basis, as well as sales and licensing of VOD programming offerings to Operators;

WHEREAS, the Parties are parties to that certain LICENSING, ENCODING AND TRANSPORT AGREEMENT FOR VIDEO ON DEMAND (VOD) dated April 1, 2003, as amended by that certain AMENDMENT TO LICENSING, ENCODING AND TRANSPORT AGREEMENT FOR VIDEO ON DEMAND dated June 29, 2007 (together with any other existing agreements between TVN and CSB, and any  agreements between CSB and Avail Media, Inc., the “Prior Agreements”), and wish to enter into a new agreement for the continued provision of services by TVN to CSB for [***] Content (defined below) under the terms and conditions of this Agreement, which, together with the [***] Content Agreement (defined below) shall collectively supersede and replace the Prior Agreements as of the Effective Date; and

NOW, THEREFORE, in consideration of the premises and the mutual and several promises contained herein, TVN and CSB hereby agree to the following terms and conditions:

1.DEFINITIONS.  Capitalized terms used in this Agreement shall have the meanings set forth below, unless otherwise defined in this Agreement.

1.1“A La Carte” means the offering of a VOD program to customers/subscribers on a [***] basis.

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

1.2“[***] Content” and “[***] Programming” mean programming that consists of [***] content commonly referred to or recognized  as rated [***], including without limitation programming commonly referred to or recognized  as [***], but not including [***] Content.

1.3“Agreement” has the meaning set forth in the first paragraph above.

1.4“Authorized Systems” means those TVN Systems that are authorized by CSB (or TVN, subject to Section 2.2 below) to receive the VOD Titles that comprise a specified VOD Package.

1.5“[***]” or “[***]” is defined in Section 5.2.1 below.

1.6“Carriage Agreement” means the agreement (whether between TVN and an Operator, or CSB and an Operator) governing the terms for carriage of the CSB VOD Service.

1.7“Content Provider Requirements” or “CPR” means that set of specifications, processes and procedures published and updated by TVN from time to time, which content providers must follow.

1.8“CSB Direct Licensee” means an Operator who licenses the CSB VOD Service via a Carriage Agreement between that Operator and CSB.

1.9“CSB VOD Affiliate” means an Operator who carries the CSB VOD Service either as a TVN Sublicensee or as a CSB Direct Licensee.

1.10“CSB VOD Service” means the collection of all of CSB’s VOD [***] Programming services and encompasses all [***] Programming distributed by CSB for use on a VOD basis.

1.11“Delivery Carve-out Operators” is defined as [***].

1.12“Distribution System” means the plant, system, mechanism or other means that is used to distribute multichannel video programming to subscribers.

1.13“FOD” means the offering of a program to VOD Enabled Subscribers on a free on demand basis (i.e., with no associated charges).

1.14“Gross Revenues” is defined as [***].

1.15“Group 1 Operators” is defined as all Operators except for [***].

CSB Adult VOD Services Agreement TVN CONFIDENTIAL

2

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

1.16“Group 2 Operators” is defined as the following Operators: [***].

1.17“Law”, for purposes hereof, means all laws, statutes, ordinances, codes, regulations, rules, orders, judgments, rulings, writs, injunctions, court and administrative decrees and other requirements imposed by any court, administrative agency or commission, governmental franchising or licensing authority or other governmental authority or instrumentality, whether local, state or federal and other pronouncements having the effect of law of any such entity or any other laws or reported decisions of any court thereof, including principles of common law.

1.18“[***] Content” or “[***] Programming” means programming that depicts [***] which do not include [***].

1.19“Metadata” means descriptive data associated with a VOD Title, which may vary in depth from merely identifying the associated Package, title or information to populate an electronic program guide, to providing a complete index of different scenes in a movie or providing terms detailing how the VOD Title and/or associated VOD Package may be displayed, copied, or sold, and, for the purposes of this Agreement, it shall conform to [***] specifications (and updates thereto as specified by TVN).

1.20“Minimum Terms” is defined in Section 8.1 below.

1.21“[***]” is defined in Section 9.1.2 below.

1.22“Monthly Transmission Planner” or “MTP” means the list of VOD Titles that CSB plans to distribute for a particular month, the template for which is provided in the CPR.

1.23“Net Revenues” is defined as [***].

1.24“Operational Requirements” is defined in Section 3.4.5 below.

1.25“Operator” means the entity that, directly or indirectly, owns or controls one or more Distribution System(s).

1.26“Party” or “Parties” is defined in the first paragraph of this Agreement.

1.27“Pre-Existing TVN Sublicensees” means Operators who are TVN Sublicensees as of [***], as identified in Schedule D.

1.28“Pre-Existing CSB Direct Licensees” means Operators who are CSB Direct Licensees as of [***], as identified in Schedule D.

3

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

1.29“Provider Remote Interface” or “PRI” is defined in Section 5.6 below.

1.30“Reserve Capacity” means transport capacity that TVN has reserved for the CSB VOD Service, which TVN will make available for the VOD Titles.

1.31“[***]” means the [***] of [***] payable by an Operator to the entity (either TVN or CSB) licensing the CSB VOD Service to such Operator.

1.32“SVOD” means a package of programming offered to VOD Enabled Subscribers where, [***], the subscriber can watch [***] with “on demand” functionality over a set period of time as often as desired on a [***] basis.  “SVOD Subscriber” and “SVOD Subscription” means a VOD-Enabled Subscriber who [***] for access to such [***] offered on [***] basis, as the context may require.

1.33“Term”, “Initial Term” and “Renewal Term” are defined in Section 13.1 below.

1.34“Territory” means the United States, Bermuda, the various nations located in the Caribbean Sea, and the territories and possessions of each.

1.35“TVN Affiliate Agreement” means the agreement between TVN and an Operator pursuant to which TVN delivers VOD programming to the Operator, and the Operator makes such VOD programming available to its VOD Enabled Subscribers via its VOD Servers.

1.36“TVN Equipment” means the receiving and/or management equipment (i.e., hardware and/or software) that is owned or otherwise configured and managed remotely by TVN, including, without limitation revisions and upgrades thereto, which is used by TVN in connection with the delivery and/or management of VOD programming, and which is located in the facilities of Operators.

1.37“TVN Sublicensee” means an Operator who sublicenses the CSB VOD Service via a Carriage Agreement between such Operator and TVN.

1.38“TVN System” means a Distribution System which is (i) owned or operated by  a cable,  local exchange carrier (LEC) or long distance carrier of telephony and/or telecommunications services (including, without limitation, [***]), a company providing video programming via internet protocol, and/or a DBS Operator, (ii) located or operating in the Territory, and (iii) served by a VOD receive site(s) where the TVN Equipment is deployed.

1.39“[***] Systems” means the Distribution Systems owned and operated by [***].

4

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

1.40“Video On Demand” or “VOD” means the distribution of video programming on an “on demand” basis, such that a VOD Enabled Subscriber can select a program, and begin viewing the program [***], including on [***] basis, as applicable.

1.41“VOD Distribution Services” means the collection of services offered by TVN for the acquisition, delivery and management (e.g., encoding, asset and platform management, and digital file transport) of [***] files for use in Distribution Systems.

1.42“VOD Enabled Subscriber” means any person or entity who has the capability to receive VOD programming through or from a Distribution System.

1.43“VOD Package” refers to the mapping or routing structure through which VOD programming is delivered [***] to Operators, where each VOD Package is comprised of VOD Titles which have a common:  (i) Provider Content Tier, (ii) unique distribution site list reachable via a common multicast pitch, and (iii) unique package parameters (e.g., poster art format and codec); and where each new VOD Package requires a setup process in order to set and coordinate the package parameters with the local system configurations at the relevant Operators prior to TVN delivering VOD programming as part of that VOD Package.

1.44“VOD Program” means each separate piece of [***] Content for which CSB owns, controls, manages, or licenses the VOD rights, or is otherwise a part of the CSB VOD Service, including without limitation ancillary or related content (e.g., promotional or other supporting programming) which is otherwise a part of the CSB VOD Service.

1.45“VOD Server” means the hardware and software system(s) that ingests VOD programming directly or indirectly from the TVN Equipment and facilitates or enables playback of VOD programming, and which is/are located at the VOD receive site(s) of Operators.

1.46“VOD Services Provider” or “VSP” means a company that provides digital file transport of VOD programming to Operators, such as [***].

1.47“VOD Title” means each [***] version of a VOD Program.  A VOD Title has an associated [***].  Each [***] for the [***] VOD Program constitutes a [***] VOD Title.  For example, [***].  A VOD Title may also be referred to in this Agreement as a “file”.

2.GRANT OF RIGHTS

2.1Authorized Systems.  CSB hereby grants to TVN the non-transferable, non-assignable, limited license to deliver VOD Titles to the Authorized Systems for

5

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

the applicable VOD Package(s), as identified in Schedule A, which Schedule is incorporated herein by reference and which may be expanded by CSB (or by TVN under Section 2.2 below) from time to time to include additional Authorized Systems.  Notwithstanding the foregoing or any other provision set forth in this Agreement, under no circumstances shall TVN designate a Delivery Carve-Out Operator to be an Authorized System unless approved in advance by CSB.  With respect to adding Authorized Systems, in order for a Distribution System to be considered an Authorized System(s) for a particular VOD Package(s) (such Distribution Systems referred to herein as “Authorized Systems”): (i) CSB shall provide TVN with written notice that CSB has authorized such Distribution System to receive the applicable VOD Package(s) (or if TVN is authorizing the Distribution System, then TVN shall notify CSB of such in accordance with Section 2.2 below), and (ii) the Operator of such Distribution System(s) shall provide authorization to TVN for delivery of the VOD Titles comprising the applicable VOD Package(s) to such Distribution System(s), at which time Schedule A shall be deemed automatically amended to include such Distribution System as an additional Authorized System(s).  TVN will add such Authorized Systems to its multicast delivery for the applicable VOD Package(s) no later than ten (10) business days from receipt of such authorizations.  A list of existing Authorized Systems and VOD Packages as of the Effective Date can be found in the PRI toolset, which will be updated throughout the Term to reflect the latest list of Authorized Systems.

2.2TVN’s Rights to Sublicense the CSB VOD Service.  CSB hereby grants to TVN the rights to sub-license the CSB VOD Service to Operators, subject to the terms set forth in Section 8 below (Sublicensing and Standard Terms).  The applicable systems of the TVN Sublicensees shall be deemed Authorized Systems under Schedule A, which Schedule shall be automatically amended to include such systems upon the commencement of the applicable sublicense.  TVN will keep CSB apprised in writing (including e-mail) and reasonably in advance of all TVN Sublicensees that TVN adds to Schedule A under this section.

2.3Ownership of Program Copyrights.  TVN acknowledges that, as between TVN and CSB, the copyrighted material, trademarks, service marks, and other intellectual property included in the VOD Programs, including the names of the VOD Programs, are the property of CSB (or its suppliers) and that TVN has not and shall not acquire any proprietary rights therein by reason of this Agreement.

2.4Reservation of Rights.  CSB reserves all rights in and to the VOD Programs and other intellectual property of CSB for its own use, except for the specific rights that are expressly granted to TVN under this Agreement.

6

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

3.CSB OPERATIONAL REQUIREMENTS

3.1VOD Title Selection and VOD Packages.  CSB shall, in CSB’s sole discretion, determine the VOD Programs and VOD Titles that it makes available as part of the CSB VOD Service and each of the VOD Packages offered thereunder. CSB may launch additional VOD Packages during the Term by providing TVN with [***] written notice.

3.2Content Provider Requirements.  CSB acknowledges that TVN’s role as a VOD distributor requires programming distributed by TVN to be compliant with TVN’s Content Provider Requirements (the “CPR”) and applicable Operator specifications. CSB shall comply with the CPR and any modifications made thereto; provided that (i) CSB will not be required to comply with any new or revised terms to the CPR until [***] receipt of such modifications to the CPR, and (ii) any amended requirements in the CPR that are applicable to CSB will be [***] applied to all other Adult Content VOD networks using TVN for their VOD distribution.

3.3Monthly Transmission Planner.  [***] prior to the first day of each month during the Term, CSB shall provide to TVN a Monthly Transmission Planner (the “MTP”), as described in the CPR, setting forth CSB’s needs for the applicable month, including, for each VOD Title to be distributed by TVN in such month: [***].  In the event that CSB has not provided an MTP to TVN [***] prior to the beginning of the applicable month, unless waived in writing by TVN, CSB will pay TVN the MTP late fee described in Subsection 2.3 of Section D of Schedule C.

3.4Delivery of Titles to TVN.

3.4.1Delivery and Timing.  CSB shall deliver to TVN [***] (i) the VOD Programs and/or VOD Titles and (ii) all associated Metadata, each in accordance with the then-current CableLabs specification and TVN’s CPR, at least twenty-one (21) days in advance for pre-encoded VOD Titles, and thirty (30) days in advance for VOD Titles requiring TVN encoding or transcoding, of each applicable VOD Title’s exhibition start date as that date is set forth in the applicable Metadata.

3.4.2Qualification.  CSB may deliver to TVN VOD Titles that have been pre-encoded in-house by CSB or by a third party authorized by CSB (each such third party encoding provider, a “Third Party Encoder”), provided that CSB or such third party has successfully completed TVN’s pre-qualification process (used to verify compliance with TVN and industry standards, and is consistently applied) for each unique codec, bitrate, and collection of encoder settings used in the encoding of the VOD Titles prior to TVN providing the VOD Distribution Services with respect to such VOD Titles.  It is acknowledged that as of the Effective Date, CSB has

7

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

been qualified as an encoder for [***].  CSB acknowledges that in the event it intends to distribute VOD Titles encoded at other bitrates, in other codecs, or with alternative encoder settings, CSB would need to be re-qualified prior to providing such VOD Titles. For the qualification of any Third Party Encoder, CSB shall pay TVN a Third Party Encoder Qualification Fee as set forth in Section C Subsection 1.3 of Schedule C.

3.4.3Delivery of Pre-Encoded Content.  Any entity delivering pre-encoded VOD Titles to TVN shall (i) deliver the pre-encoded VOD Titles via a TVN-approved FTP site, and (ii) be responsible for generating a verifiable date and timestamp for the complete transfer of all pre-encoded VOD Titles to TVN.  CSB shall also ensure that the encoding rate used for any pre-encoded HD VOD Titles complies with the requirements of each applicable Authorized System.

3.4.4Closed Captioning and Other Authorized System Requirements.  CSB shall ensure that each VOD Program and VOD Title delivered to TVN hereunder is in compliance with the closed captioning requirements and any other requirements (and any exceptions thereto) of the applicable Authorized Systems.

3.4.5Delivery Errors.  In the event that VOD Programs or VOD Titles are received by TVN out of compliance with the operational requirements described in this Section 3.4 (the “Operational Requirements”) on a frequent or repeated basis, it shall be considered a “Delivery Error.”  In such case, TVN will promptly inform CSB, and give CSB an opportunity to respond and address the issue.  If the Delivery Error(s) continue, or in the event that TVN is compelled to perform quality control (“QC”) activities due to such prior repeated non-compliance, TVN may charge and CSB will pay the applicable Delivery Error fee; it being understood that QC activities will only be performed until TVN reasonably ascertains that the applicable Delivery Errors have been satisfactorily addressed.

4.ADDITIONAL ADULT CONTENT PROVIDER CONSIDERATIONS

4.1.Editing Standards.  CSB shall ensure that all VOD Titles delivered to TVN pursuant to this Agreement shall be limited to [***] editing standards, as commonly understood in the cable television industry, and appropriately classified, consistent with the following editing standards:

4.1.1.With respect to the editing standard currently known as “[***]”,  the VOD Titles may depict [***]; however, [***] VOD Titles shall not depict [***].

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Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

4.1.2.With respect to the editing standard currently known as “[***]”, the VOD Titles may depict [***]; however, “[***]” VOD Titles shall not depict [***].

4.1.3.With respect to the editing standard currently known as “[***]”, the VOD Titles may depict [***]; however, “[***]” VOD Titles shall not depict [***].

4.1.4.With respect to the editing standard currently known as “[***]”, the VOD Titles may depict [***].

4.2.Restricted Content.  CSB shall not deliver to TVN any VOD Title that depicts [***].  CSB assumes all responsibility for ensuring that the VOD Titles comply with this Section 4.2 and Section 4.1 above.

4.3.Additional CSB Responsibilities.  CSB shall be responsible for all of the following:

4.3.1.Obtaining clearances of all necessary rights and licenses with respect to the production, distribution, and exhibition of all VOD Titles to be distributed under this Agreement; and

4.3.2.Ensuring that all VOD Titles made available as part of the CSB VOD Service comply with the requirements of each CSB VOD Affiliate(s), including compliance with all ratings/classifications/editing standards and restrictions and all rules regarding title naming and use of restricted words; and ensuring that the VOD Titles are appropriately classified and comply with all Laws and government regulations (including labeling, recordkeeping and other compliance with 18 U.S.C. Sections 2257 and 2257A, to the extent required thereunder), and obtaining approvals from any applicable governing bodies and review boards.

4.4.Operator Guidelines and Right to Reject.  Operators may reject (and therefore not offer to their subscribers) any VOD Title(s), and nothing herein may be interpreted to require such offering of any VOD Title(s).  CSB may provide, in its sole discretion, alternative VOD Titles for any rejected ones.  In addition, CSB shall ensure that its standards and practices guidelines (the “Guidelines”), used in association with production and distribution of the VOD Titles comprising the CSB VOD Service, include, at a minimum, guidelines that ensure compliance with (i) all applicable Laws, rules and regulations and the editing standards described in Sections 4.1, 4.2 and 4.3 above, and (ii) the naming convention and any other rules enacted by each applicable Operator with respect to [***] Content.  CSB shall provide TVN with a copy of the Guidelines prior to the Effective Date and within [***] of any material updates or modifications thereto.  Should any

9

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

VOD Title materially fail to conform to the Guidelines, or this Agreement, in TVN’s reasonable judgment, TVN may refuse to deliver the non-conforming VOD Title.  Should a determination be made by either TVN and/or an Operator that a delivered VOD Title is materially non-conforming or an Operator does not want to distribute a VOD Title because of its concerns about community standards, either TVN and/or the affected Operator may delete the VOD Title(s) at issue from the applicable Equipment and/or VOD Server(s).  Any failure to delete or not distribute the non-conforming or other applicable VOD Title(s) shall not relieve CSB of its obligations under this Agreement.

5.TVN’S VOD DISTRIBUTION SERVICES

5.1VOD Distribution Services.  TVN shall provide the VOD Distribution Services set forth on the attached Schedule B.

5.2Encoding Services.  Should CSB require encoding services in the future, TVN provides encoding services as follows:

5.2.1For [***].

5.2.2For [***].

5.2.3For [***].  For any [***]; provided that TVN will support applicable Operator encoding rate requirements which may differ from this rate, provided that any such alternative rates are (i) agreed to in writing between CSB and the applicable Operator and (ii) communicated by CSB to TVN prior to TVN performing encoding; provided further that TVN shall not be required to encode [***] VOD Programs at more than [***] encoding rates across the CSB VOD Titles in any given [***] (for example, [***], TVN will not be required to accommodate CSB’s request to encode at any additional [***] encoding rates in that [***]).  CSB shall be responsible for ensuring that any alternative [***] encoding rate complies with the requirements of each applicable Authorized System.

5.2.4For other VOD encoding specifications, the Parties will negotiate in good faith the terms under which TVN may provide such other encoding services.

5.3TVN Delivery of Titles.

5.3.1For all VOD Programs and/or VOD Titles delivered to TVN in accordance with the Operational Requirements, TVN will deliver the applicable VOD Titles and the associated Metadata to the TVN Equipment at the applicable Authorized Systems, pursuant to the terms and conditions of

10

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

this Agreement and in accordance with TVN’s multicast delivery, in advance of each applicable VOD Title’s exhibition start date.

5.3.2TVN will ensure the VOD Titles are delivered to the TVN Equipment and made ready for hand-off to the VOD Server at the Authorized Systems; provided, however, that TVN shall not be responsible for delivery to any Authorized System which is unwilling or unable to accept the VOD Titles or has disabled the TVN Equipment, due to reasons outside the immediate control of TVN.

5.3.3TVN shall perform a Metadata quality control (“QC”) review against the XML files provided by CSB to verify that the Metadata is compliant with [***] and the CPR and will communicate any errors to CSB in a timely manner.  TVN shall make no editorial changes to any CSB Metadata.

5.3.4In the event that TVN does not, in all material respects,  meet all of the requirements of Sections 3.5.1 and 3.5.2 on a [***] basis and fails to cure the same [***] after notice of such failure to TVN, and such performance issues are not due to the acts or omissions of CSB or the Authorized Systems or due to an un-communicated or mutually agreed upon change in formats or standards or other reasons outside of the immediate control of TVN, it shall be considered a material breach of this Agreement.

5.4Operator Instructions.  If TVN is notified by an Operator to not deliver one or more VOD Titles to one or more of its systems, TVN shall notify CSB of such instructions promptly, and will comply with such instructions until such time that Operator notifies TVN otherwise.  Nothing herein shall require TVN to violate its obligations set forth in a TVN Affiliate Agreement.

5.5Requests Outside of Normal Operational Processes.  Should CSB request TVN to encode and/or deliver a VOD Title other than as outlined in the Operational Requirements, TVN will, in its sole discretion, determine if it can meet CSB’s request.

5.6Provider Remote Interface.  During the Term, TVN will provide CSB access to TVN’s web-based asset management toolset, the Provider Remote Interface (“PRI”), through which CSB will be able to view asset states and delivery confirmations.

5.7Centralized Storage.  As an optional service, TVN will provide near-line centralized storage of VOD Titles at TVN’s facility at the rate set forth in Section 1 of Section C of Schedule C.  CSB shall notify TVN in writing of its desire to utilize this option on a [***] basis.

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Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

6.RESERVE CAPACITY

6.1Reserve Capacity.  TVN will initially reserve [***] transport capacity each [***] for the CSB VOD Titles (the “Reserve Capacity”).  CSB may increase (or decrease) the Reserve Capacity by providing [***] written notice to TVN, in which case the [***] (as set forth in Section 9.1.2) shall [***].  TVN shall not refuse any Reserve Capacity requests made by CSB during the Term, provided that CSB has provided [***] written notice of any such increase to the Reserve Capacity.

7.CSB’S USE OF TVN’S VOD DISTRIBUTION SERVICES

7.1Encoding Services.  It is acknowledged that as of the Effective Date CSB encodes its VOD Titles itself “in-house”.  In the event that CSB decides to outsource some or all of its encoding/transcoding work in the future, it may, in its sole election, use TVN; or a Third Party Encoder in accordance with Section 3.4, provided that such Third Party Encoder is able to meet the Operational Requirements.

7.2Transport Services.  CSB shall use TVN’s transport services for all delivery of VOD Titles to TVN Systems in the Territory (including the [***] Systems at such time as all VOD systems comprising the [***] Systems become TVN Systems), subject to the following permitted exceptions:

7.2.1Carve-Out Operators:  [***].

7.2.2[***] Systems:  [***].

7.2.3Hospitality Network:  [***].

7.3Scope.  This Agreement contemplates that the VOD Titles will be offered on [***] basis only with [***].  In the event that the Parties agree to include [***] content in the VOD Titles or otherwise within the CSB VOD Service offered to Group 1 Operators only, the Parties will negotiate how the Parties will share the [***] attributable to such [***],  with it being understood that any such [***] between CSB and TVN will be based upon [***] received by CSB from such [***], [***].  In the event that CSB wishes to offer the VOD Titles to Group 1 Operators (i) under a different business model, such as on [***] basis, with [***], or (ii) as part of a broader relationship with one or more Operator(s) whereby CSB gains carriage of its VOD Titles in exchange for [***], the Parties hereto shall negotiate in good faith with respect to such additional or revised terms to this Agreement with respect to such VOD Titles as may be mutually agreed upon in writing (including by confirmed email) in order for TVN to provide distribution for such VOD Titles under such new business model.  Notwithstanding anything to the contrary contained in this Agreement, the Parties acknowledge that this

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Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

Agreement does not apply to content other than [***] Content or ancillary or supporting programming which is [***] and otherwise a part of the CSB VOD Service (e.g., trailers or other content promoting the VOD Titles).

8LICENSING, STANDARD TERMS, AND AFFILIATE SALES

8.1.TVN Sublicensing Rights.  TVN shall have the right to sublicense the CSB VOD Service (including each of the VOD Packages offered by CSB) to (i) Pre-existing TVN Sublicensees and (ii) any Operator who at the commencement of such sublicense is not licensing the CSB VOD Service directly from CSB; provided that, unless otherwise mutually agreed, TVN will not sublicense the CSB VOD Service to an Operator for a [***] of less than [***] (the “Minimum Terms”).

8.2.Pre-existing Licensing Relationships.  It is acknowledged by the Parties that, as of the Effective Date, TVN sublicenses the CSB VOD Service to certain Operators, and CSB licenses the CSB VOD Service directly to other Operators.  A list of Pre-existing TVN Sublicensees and Pre-existing CSB Direct Licensees is shown on Schedule D.  The Parties agree that neither Party will actively pursue direct licensing agreements for the CSB VOD Service with Operators who at such time license the CSB VOD Service from the other Party, unless otherwise mutually agreed.

8.3.Sales Coordination.  TVN and CSB will use [***] efforts to conduct [***] sales calls or meetings to provide status updates, share market feedback, and coordinate efforts.  In addition to the foregoing, TVN shall, subject to confidentiality obligations with Operators, content providers, and/or other business partners/customers, confer in person, by e-mail  or by telephone at such time as it is notified by  an Operator, other than a Group 2 Operator or a Delivery Carve-out Operator, that such Operator: (i) intends to drop CSB or intends to reduce the [***] Programming it receives from CSB; or (ii) is creating or changing category menu structures or pricing, in a manner which affects CSB.

8.4.Additions to the CSB VOD Service and Additional Packages.  In the event that CSB launches any new VOD Packages or otherwise expands the CSB VOD Service, CSB shall communicate such modifications/additions, and provide any marketing materials and related details, to TVN’s affiliate sales team [***] prior to launch, so TVN can support such new VOD Packages at TVN Sublicensees.

8.5.Additional Affiliate Sales Considerations.

8.5.1.Subject to Section 8.5.2 and also to the notification requirements of Section 8.3, TVN will use [***] efforts to promote CSB’s [***] Content to cable Operators to a similar extent that it promotes competitive [***] Content.

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Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

8.5.2.TVN will not encourage Operators to cease carrying or reduce the volume of CSB VOD Titles they carry on their Distribution Systems and shall use reasonable efforts to discourage Operators from doing so.  To the extent that TVN is notified by an Operator that such Operator is seeking to increase the amount of [***] Programming they make available, TVN will ensure that such Operator has been made aware of the various VOD offerings available through CSB, and CSB agrees to make available enough [***] Programming on an ongoing basis to fill any carriage opportunities that arise from such activities.  In addition, at Operators where TVN (as opposed to the Operator) controls what [***] content is carried, TVN will not remove or reduce the volume of CSB VOD Titles carried by such Operator(s).

8.6.Linear Channel Opportunities.  For Operator systems in which TVN secures carriage of a local playback linear PPV [***] channel (i.e., the Operators receives VOD Titles via the TVN platform, then plays back a linear channel comprised of those Titles, such channel a “Local Playback Channel”), the first such Local Playback Channel offered and licensed to an Operator by TVN will be comprised [***] of CSB VOD Titles, unless the  CSB Local Playback Channel or the terms which CSB is willing to accept are rejected by such Operator (a “CSB Channel”).  CSB will grant TVN all rights associated with this opportunity, and the Parties will share [***], received by TVN with respect to such CSB Channel.  The Parties agree to negotiate in good faith for additional such Local Playback Channel opportunities beyond the initial “channel”.

9ECONOMICS

Each month, TVN shall earn both (i) [***] and (ii) [***], as each is set forth below:

9.1[***].

9.1.1[***].  [***].

9.1.2[***].  [***].

9.1.3[***].  [***].

9.1.4Acknowledgement.  It is acknowledged that the [***] described in this Section 9.1 and in Schedule C are provided as consideration in part for CSB’s commitments and the overall terms of this Agreement.  [***].

9.2[***].  [***].

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Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

9.3[***].  [***].

9.4Taxes.  All charges are exclusive of applicable federal, state, and local sales, use, excise, gross receipts, and other taxes (“Taxes”) that may apply.  Taxes due by Law must be properly invoiced at the same time as the fees or charges on which such Taxes are based.  In no event will Taxes include any taxes or tax-like surcharges determined by TVN’s income, net worth, franchise or property. If CSB provides TVN with a duly authorized exemption certificate, TVN will exempt CSB in accordance with Law.

10PAYMENTS AND REPORTING

10.1Fees.  TVN shall invoice CSB [***] for the applicable [***] owed to TVN for services rendered by TVN and other fees incurred by CSB [***].  CSB shall remit to TVN the invoiced fees on or before [***] following the date of the invoice from TVN.  TVN may charge CSB and CSB shall pay interest at the lesser of (i) [***] or (ii) the maximum percentage allowable under applicable Law, on fees not paid, unless such invoice is subject to a valid payment dispute.

10.2[***].

10.2.1CSB Payments to TVN.  For all applicable Net Revenues payable to CSB, CSB shall pay [***], on a [***] basis, the appropriate [***], along with a complete report (the “[***] Report”) detailing the calculation of [***] for such [***], within [***] following CSB’s actual receipt of the applicable revenue and/or the applicable reporting information.  The [***] Report shall include, unless not provided to CSB by an Operator (it being understood that CSB shall require the Operator provide such information in all Carriage Agreements with Operators), [***], during the applicable period.  The [***] Report shall be provided in TVN’s standard reporting format (the “Affiliate Revenue Report” or “ARR,” as updated from time to time).  TVN may charge CSB and CSB shall pay interest at the lesser of (i) [***] or (ii) the maximum percentage allowable under applicable Law, on [***] not paid on time, unless such invoice is subject to a valid payment dispute.

10.2.2TVN Payments to CSB.  For all applicable revenues payable to TVN, TVN shall pay CSB, on a [***] basis, CSB’s applicable share of such revenues along with a [***] Report (consistent with the format of the ARR) within [***] following receipt of the applicable revenue and reporting information. CSB may charge TVN and TVN shall pay interest at the lesser of (i) [***] or (ii) the maximum percentage allowable under

15

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

applicable Law, on [***] not paid on time, unless such invoice is subject to a valid payment dispute.

10.3Audit Rights.  Each Party shall keep and maintain, and require its Operators to keep and maintain, complete and accurate books and records for determining the [***] owed to each respective Party, as applicable.  For a period of [***] following each [***] Report, as applicable, each Party’s books and records specific to the determination of amounts due to the other Party for that particular month shall be available for inspection and audit by an independent, nationally recognized, certified accounting firm at the auditing Party’s expense and at the audited Party’s offices.  Such audit shall be conducted in accordance with generally accepted accounting principles without any unusual cost or expense. Any inspection or audit will be conducted no more than [***] with at least [***] prior written notice to the audited Party, the scope of which audit shall be specifically limited to items materially relevant to the economic terms of this Agreement.  Should the audit reveal a discrepancy of more than [***] of a shortfall in payment by the audited Party to the auditing Party, then the audited Party shall pay, in addition to paying any amounts owed to the auditing Party as a result of the discrepancy, the reasonable expenses associated with such audit.  Notwithstanding the foregoing, if a Party hereto intends to conduct an examination of the books and records of an Operator of such Party as the same pertains to the amounts due to the Parties hereunder, the auditing Party shall give the other Party notice of the auditing Party’s intention to do so and the other Party shall have the right to participate in said examination, if permitted by the Operator, provided that the other Party shall share the costs of such examination with the auditing Party in proportion to the Parties’ respective recoveries resulting therefrom.  Once a period has been audited, the auditing Party shall not have the right to audit the same period again.

11PUBLIC ANNOUNCEMENTS

The Parties agree to issue a joint press release announcing this Agreement.  Thereafter, neither Party shall issue a news release concerning this Agreement without the prior written approval of the other, such approval not to be unreasonably withheld, conditioned or delayed.  The aforementioned prohibition shall not be construed as limiting CSB’s right to make public disclosure as may be required by the United States Securities and Exchange Commission or as otherwise may be required by applicable Law.

12REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

12.2Each Party represents and warrants to the other Party that (i) such Party has the right to enter into this Agreement and to perform fully all of its obligations under the Agreement; (ii) there are no claims, litigation or other proceedings pending or threatened that would adversely affect the other Party’s rights or interests

16

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

hereunder; and (iii) it is under no contractual or other legal obligation that in any way interferes with its ability to fully, promptly and completely perform hereunder.

12.3CSB represents and warrants that it is a corporation duly organized and validly existing under the Laws of the State of Colorado.  CSB further represents and warrants that: (i) CSB has the right to grant the rights hereunder free and clear of any and all claims by any third party, (ii) it will have obtained at the time of production appropriate releases from all persons appearing in or providing services in connection with each VOD Title; (iii) all performers in each VOD Title appearing nude and/or engaging in any form of sexual conduct will have been older than eighteen (18) years of age; (iv) each VOD Title will have been produced and records are kept in accordance with, and each VOD Title contains the appropriate notice required by, The Child Protection Restoration and Penalties Enhancement Act of 1990, and hereby certifies that each VOD Title will be in compliance with the labeling requirements of Sections 2257 and 2257A of Title 18, United States Code and any amendments thereto; and (v) none of the VOD Titles provided by CSB to TVN under this Agreement will: (a) be libelous, slanderous, obscene, or defamatory or illegally indecent; or (b) violate or infringe any civil or property rights, copyrights (including, without limitation, music synchronization, master recording, and music performance rights through to the viewer, and dramatic and non-dramatic music rights), trademark rights, patent rights, rights of privacy, or other rights of any person or entity; or (c) violate any Law or the closed captioning requirements of the Authorized Systems.

12.4CSB hereby agrees to indemnify, defend, and forever hold harmless TVN, its parents, subsidiaries and related entities, and the CSB VOD Affiliates, and each of their respective present and former members, partners, directors, officers, employees, shareholders, agents, successors and assigns (collectively, the “TVN Indemnitees”) from and against any and all losses, liabilities, claims, costs, damages and reasonable expenses, including fines, forfeitures, penalties, reasonable attorneys’ fees, disbursements and court or administrative costs (collectively, “Liabilities”), incurred as a result of a third party claim that arises out of (i) any breach by CSB of any term of this Agreement, including its Schedules, or any warranty, covenant or representation contained herein by CSB; (ii) the content of the CSB VOD Service, the CSB Packages, VOD Programs and/or VOD Titles (including music performance rights through to the viewer), including, without limitation, a third party claim that the programming content contained in any VOD Program or VOD Title constitutes an infringement of any copyright or trademark or a violation of a right of publicity, privacy, or other right of any third party; (iii) CSB’s failure to comply with all applicable Laws to which it is subject or any other failure on CSB’s part that causes TVN and any TVN Indemnitee to violate any Law; (iv) CSB’s failure to have acquired at the pertinent time when all or part of the VOD Title is made available to TVN or to any CSB VOD Affiliate or to any

17

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

subscriber/customer, good title to, and/or each and every property right or other right necessary for it to satisfy the obligations imposed on it pursuant to the Agreement; (v) any civil or criminal violations of Law occurring as a result of the acts or omissions of CSB, and/or (vi) the use of intellectual property pertaining to encoding or digital video standards, formats, processes or technology used with respect to the VOD Titles, including without limitation the exhibition thereof and the end-user transactions for same; and shall reimburse the TVN Indemnitees for any and all legal, accounting and other fees, costs and expenses (collectively, “Expenses”) reasonably incurred by any of them in connection with investigating, mitigating or defending any such Liabilities, and will pay all damages and costs finally awarded against TVN or any TVN Indemnitee in any such suit or proceeding or settlement thereof, provided that TVN (a) promptly notifies CSB in writing of any such suit or proceeding; provided, however, that any failure to promptly provide such notice shall not relieve CSB of its obligations hereunder, except to the extent that such delay has materially prejudiced CSB’s ability to defend such suit or proceeding; (b) provides CSB with control over the defense or settlement of any such claim or action (except that CSB shall not, without TVN’s prior written consent, settle any claim that imposes any (1) equitable remedy against any TVN Indemnitee, (2) financial obligation for which a TVN Indemnitee is not otherwise indemnified hereunder, or (3) any other liability or obligation upon any TVN Indemnitee (including any admission of wrongdoing by any TVN Indemnitee) which could be reasonably expected to have an adverse effect upon the TVN Indemnitee’s business, reputation or prospects; and (c) provides reasonable information and assistance, at CSB’s cost and expense, in the defense or settlement of any such claim or action.  TVN may participate in any such suit or proceeding through counsel of its choice at TVN’s own expense, provided that the costs associated with TVN’s counsel shall not be deemed damages or costs for purposes of CSB’s indemnity hereunder.  [***].

12.5TVN represents and warrants that it is not party to any agreements for transport services for Adult Content VOD titles with any third party Adult Content providers which contain a “most favored nations” clause.

12.6TVN hereby agrees to indemnify, defend, and forever hold harmless CSB, its parents, subsidiaries and related entities, and each of their respective present and former members, partners, directors, officers, employees, shareholders, agents, successors and assigns (collectively, the “CSB Indemnitees”) from and against any Liabilities incurred as a result of a third party claim that arises out of any breach by TVN of any term of this Agreement, including its Schedules, or any warranty, covenant or representation contained herein by TVN; and shall reimburse the CSB Indemnitees for any and all Expenses reasonably incurred by any of them in connection with investigating, mitigating or defending any such Liabilities, and will pay all damages and costs finally awarded against CSB  or any CSB Indemnitee in any such suit or proceeding or settlement thereof, provided that CSB (a) promptly notifies TVN in writing of any such suit or proceeding; provided, however, that any

18

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

failure to promptly provide such notice shall not relieve TVN of its obligations hereunder, except to the extent that such delay has materially prejudiced TVN’s ability to defend such suit or proceeding; (b) provides TVN with control over the defense or settlement of any such claim or action (except that TVN shall not, without CSB’s prior written consent, settle any claim that imposes any (1) equitable remedy against any CSB Indemnitee, (2) financial obligation for which a CSB Indemnitee is not otherwise indemnified hereunder, or (3) any other liability or obligation upon any CSB Indemnitee (including any admission of wrongdoing by any CSB  Indemnitee) which could be reasonably expected to have an adverse effect upon the CSB  Indemnitee’s business, reputation or prospects; and (c) provides reasonable information and assistance, at TVN’s cost and expense, in the defense or settlement of any such claim or action.  CSB may participate in any such suit or proceeding through counsel of its choice at CSB’s own expense, provided that the costs associated with CSB’s counsel shall not be deemed damages or costs for purposes of TVN’s indemnity hereunder.  [***].

12.7EXCEPT WITH RESPECT TO THE INDEMNIFICATION AND CONFIDENTIALITY PROVISIONS SET FORTH IN THIS AGREEMENT, NEITHER PARTY SHALL, FOR ANY REASON OR UNDER ANY LEGAL THEORY, BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES OR FOR LOSS OF PROFITS, REVENUES, DATA OR SERVICES, REGARDLESS OF WHETHER SUCH DAMAGES OR LOSS WAS FORESEEABLE AND REGARDLESS OF WHETHER SUCH PARTY WAS INFORMED OR HAD DIRECT OR IMPUTED KNOWLEDGE OF THE POSSIBILITY OF SUCH DAMAGES OR LOSS IN ADVANCE.

13INSURANCE REQUIREMENT

CSB shall procure and maintain [***], at CSB’s sole expense, the following insurance coverage from a nationally-recognized insurance carrier and in accordance with industry standards:  (i) Commercial General Liability insurance that, at a minimum, covers Premises and Operations, Products and Completed Operations, Blanket Contractual Liability for both Oral and Written Contracts and Broad Form Property Damage at liability limits of [***] each occurrence for Bodily Injury and Property Damage, [***] each occurrence and [***] in the aggregate for Products and Completed Operations, and [***] policy General Aggregate; and (ii) Media Perils Liability insurance (Broadcasters’ Liability/Errors and Omissions) that, at a minimum, covers CSB’s media activities, including production of programming, the VOD Programs and VOD Titles and all elements thereof and all programming licensed to TVN by CSB pursuant to this Agreement (including original programming, marketing activities, sales promotions and other activities), with coverage for, at a minimum, the offenses of defamation of character or reputation, invasion of privacy, infringement of trademark, title, slogan, trade name or service mark, infringement of copyright or misappropriation of ideas, and at a liability limit of [***] in any [***] policy

19

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

period and a maximum self-insured retention of [***].  Each insurance policy required by this Section 13 shall be endorsed to provide that (a) TVN and the CSB VOD Affiliates are named as additional insureds, that the proceeds thereof are payable to TVN and the CSB VOD Affiliates, as the case may be, and that the policy provides primary and non-contributory coverage to TVN and the CSB VOD Affiliates, irrespective of any other insurance carried by TVN or any CSB VOD Affiliate, whether it be primary, excess, contingent or on any other basis; (b) the insurer waives any rights of subrogation it may have against TVN and/or any CSB VOD Affiliate; and (c) the policy provides coverage on an “occurrence,” and not a “claims-made” basis for the Commercial General Liability insurance, and on a “claims-made” basis for the Media Perils Liability insurance.  CSB shall provide to TVN standard ACORD certificates of insurance as evidence of maintenance of all insurance policies required by this Section 13 upon the execution of the Agreement by CSB.  Such certificates shall indicate that the pertinent insurance policy shall not be canceled or modified except upon delivery of [***] prior written notice to TVN and CSB; provided, however, that CSB shall not make any revisions to any policy that could adversely affect TVN’s or any CSB VOD Affiliate’s rights pursuant to this Section 13 without TVN’s prior written consent.  In addition, such certificates shall indicate coverage for the [***], or CSB shall provide to TVN, [***] prior to the expiration of any policy, a subsequent certificate of insurance as evidence that the pertinent insurance continues in full force and effect.

14TERM; TERMINATION

14.2Initial Term.  The initial term of this Agreement shall be for four (4) years beginning with the Effective Date of this Agreement (the “Initial Term”).  Further, the Term shall automatically be extended for additional one (1) year periods (each one year period a “Renewal Term”), unless written notice of termination is given by either Party at least ninety (90) days prior to the end of the then current Initial Term or Renewal Term.  The Initial Term and each Renewal Term are collectively referred to herein as the “Term”.

14.3Termination and Additional Remedies for Breach.  Either Party shall have the right to terminate this Agreement by giving written notice to the other Party if the other Party has materially breached this Agreement and has failed to cure such breach within [***] of receipt of written notice thereof specifying the breach (it being understood that cure of a breach by TVN for failure to timely deliver a VOD Title to an Operator shall be to effect delivery of such VOD Title as soon as practicable following notice and to use reasonable efforts to cause the Operator to make available to its Subscribers such VOD Title for the time period originally contemplated), , including pursing its other available rights and remedies at law, in equity or otherwise.  In the event of termination, TVN shall retain and distribute to the Authorized Systems, and the Authorized Systems will have the right to continue to exhibit, any and all VOD Titles in TVN’s possession until the end of each such VOD Title’s license end date.  Each and all of each Party’s

20

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

respective legal rights and remedies provided for in this Agreement shall be construed as being cumulative, and no one of them shall be deemed to be exclusive of the others or of any right or remedy allowed by law.  The exercise by either Party of such rights or remedies hereunder shall not release or relieve the breaching Party from its performance obligations or liabilities hereunder.

14.4Termination for Financial Impairment.  If a Party (i) makes a general assignment for the benefit of creditors, (ii) has appointed, voluntarily or involuntarily, any trustee, receiver, to it or a substantial part of its property, (iii) files, or has filed against it, a voluntary or involuntary petition in bankruptcy, or (iv) makes any arrangement or otherwise becomes subject to any proceedings under the bankruptcy, insolvency, reorganization or similar Laws of the United States or any state, and the Party fails to have any involuntary proceeding dismissed within ninety (90) days of service on the Party of notice of such involuntary proceeding, then the other Party shall have the right at any time thereafter to terminate this Agreement by giving written notice to such Party.

14.5Surviving Clauses.  [***], and all provisions of this Agreement which may reasonably be interpreted or construed as surviving the expiration or termination of this Agreement, shall survive the expiration or earlier termination of this Agreement for any reason.

14.6Obligations Upon Termination.  Upon the termination of this Agreement, any amounts then due hereunder shall become immediately due and payable. Upon the expiration or earlier termination of this Agreement, TVN shall immediately discontinue the delivery of the VOD Titles.  Not later than [***] after the expiration or earlier termination of this Agreement, any copies of the VOD Titles in TVN’s possession shall be destroyed or erased.

15CHOICE OF LAW / DISPUTES

15.2Governing Law.  This Agreement shall be construed in accordance with applicable federal Laws of the United States of America, and the Laws of the State of California applicable to contracts entered into and to be performed therein without regard to principles of conflict of Laws, and excluding the 1980 United Nations Convention on Contracts for the International Sale of Goods and any amendments or updates thereto.

15.3Disputes.  The Parties hereto agree that any dispute relating to this Agreement will be submitted in writing to a panel of two persons, one representing TVN and one representing CSB, who shall promptly meet and confer in an effort to resolve such dispute.  Each representative shall be identified by notice to the other side and may be changed at any time thereafter also by notice to the other.  Any unanimous decisions of the representatives will be final and binding on TVN and

21

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

CSB.  In the event the representatives are unable to resolve any dispute within [***] after submission to them, then either TVN or CSB may then refer such dispute to arbitration in accordance with Section 15.4 below.

15.4Arbitration.  Except for an action pursuant to the provisions of Section 15.7 below, the Parties agree that all disputes that are not resolved pursuant to the procedure set forth in Section 15.2 above and which relate to or arise out of this Agreement shall be submitted to arbitration before a single arbitrator in Los Angeles County in the State of California.  The arbitration shall be conducted through ADR Services, Inc. (“ADR Services”) or JAMS in accordance with the applicable ADR Services or JAMS arbitration rules.  The arbitration shall be heard before a retired federal court judge or an experienced attorney with experience in or knowledge of the business in which the Parties are primarily engaged.  The Parties shall select an arbitrator by mutual agreement through ADR Services or JAMS within thirty (30) days of the date the demand for arbitration is filed.  If the Parties are unable to agree on the selection of an arbitrator within such time, the administrator of ADR Services or JAMS, as the case may be, shall select an independent arbitrator.  The Parties agree that (a) they shall be entitled to conduct such reasonable discovery as the arbitrator may allow; (b) except as provided to the contrary in this Agreement to which this arbitration provision is a part, the arbitrator shall be entitled to award the full range of relief as would be available to the prevailing Party in a court of law; (c) the arbitrator shall not have the power to commit errors of Law or legal reasoning, and the award may be vacated or corrected on appeal to a court of competent jurisdiction for any such error; (d) the prevailing Party in any proceeding brought under this paragraph or in any proceeding brought to enforce an arbitration award hereunder shall be entitled to its costs and to its reasonable attorneys fees incurred in connection with the preparation and conduct of any such arbitration and/or any other proceeding hereunder, and (e) the arbitration shall be final and binding on all Parties and their respective heirs, executors, administrators, successors and assigns. Any action to secure judicial confirmation of the arbitration award may be brought in any state or federal court of competent jurisdiction.

15.5Court Action.  If any Party to this Agreement brings an action in a state or federal court to enforce rights hereunder (other than pursuant to Section 15.7 below), such action shall be barred as a result of the exclusive remedy provided in Section 15.4 above, and the prevailing Party in any such action shall be entitled to recover its costs and expenses, including reasonable attorneys’ fees, incurred in connection with such lawsuit.

15.6WAIVER OF CERTAIN RIGHTS.  THE PARTIES EACH ACKNOWLEDGE AND AGREE THAT BY SELECTING ARBITRATION AS THE SOLE AND EXCLUSIVE REMEDY FOR RESOLVING ALL DISPUTES AMONG THEM, THEY ARE WAIVING THEIR RIGHT TO A JURY TRIAL TO WHICH THEY MAY OTHERWISE BE ENTITLED.

22

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

THE PARTIES HERETO ALSO WAIVE THE RIGHT TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS AGREEMENT.  SERVICE OF PROCESS, SUFFICIENT FOR PERSONAL JURISDICTION IN ANY ACTION, MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE ADDRESSES FOR THE PARTIES SET FORTH IN SECTION 19 BELOW.

15.7Prearbitral or Related Awards.  By this Agreement, the Parties do not intend to deprive any court of its jurisdiction to issue a prearbitral injunction, prearbitral attachment or other order in aid of arbitration proceedings and enforcement of the award, including without limitation, injunctive relief for the protection of intellectual property, enforcement of Section 16 (Confidentiality) below,  enjoining any other Party in any action brought by or against a third party with respect to the subject matter of the arbitration, or filing legal action to compel arbitration or selection of a neutral arbitrator under the arbitration provisions hereof.

16CONFIDENTIALITY

The terms and conditions of this Agreement, other than the existence of this Agreement, shall be kept confidential by the parties hereto and shall not be disclosed by either Party to any third party except:  (i) as may be required by any court of competent jurisdiction, governmental agency, Law or regulation (in such event, the disclosing Party shall notify the other Party and redact to the extent possible before disclosing the Agreement); (ii) as part of the normal reporting or review procedure to a Party’s accountants, auditors, agents, legal counsel, and employees of partners, parent and subsidiary companies or lenders, potential financing entities or purchasers so long as all such entities and persons are bound by confidentiality obligations that are no less restrictive than those contained in this Section 16; (iii) in connection with a sale, acquisition, merger, joint venture or takeover; provided such third parties involved in such events are bound by confidentiality obligations that are no less restrictive than those contained in this Section 16; and (iv) to enforce any of a Party’s rights pursuant to this Agreement.  The parties recognize and agree that the nature of the services that TVN provides to CSB hereunder require TVN to share information and to maintain full and strong communications with Operators, other [***] Content providers and other participants in the industry.   To the extent that CSB desires to provide confidential information to TVN which it does not want TVN to communicate to CSB competitors, CSB shall clearly indicate which information it wishes to keep confidential by confirmed email communication or other written means to TVN, in which case TVN shall not share such confidential information with CSB competitors (and TVN may refuse to accept such information if it believes that it should not have such information).   As used herein, “confidential information” shall not include information which (1) is or becomes generally available to the public other than  in violation of this confidentiality provision, or (2) is or becomes available to TVN on a

23

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

non-confidential basis from a source which, to the knowledge of TVN, is entitled to disclose it, or (3) was known to TVN prior to disclosure of such information by CSB, or (4) is developed by TVN without the benefit of the information provided by CSB.

17INDEPENDENT CONTRACTOR

The Parties hereto are independent contractors.  Nothing in this Agreement may be construed to make the Parties partners or joint venturers,  agents or fiduciaries of the other, or to make either Party liable for the obligations, acts or activities of the other.

18ASSIGNMENT

This Agreement, including both its obligations and benefits, shall inure to the benefit of and be binding upon the Parties and their respective successors, transferees and assigns, except that neither this Agreement nor either Party’s rights or obligations hereunder shall be assigned or transferred by either Party without the prior written consent of the other Party, such consent not to be unreasonably withheld, conditioned or delayed; provided, however, no consent shall be necessary in the event of an assignment to a successor or transferee entity resulting from a merger, acquisition, consolidation or sale of substantially all assets by CSB or assignment to an entity under common control with, controlled by or in control of CSB, unless such successor or transferee is a material, direct competitor of TVN, in which case TVN’s prior written consent shall be required.

19NOTICES

For all administrative and operational matters under this Agreement, notices shall be given to (i) Josh Rosenblatt on behalf of TVN, and (ii) Bill Mossa on behalf of CSB, (or such other designee as TVN or CSB may provide, as applicable).   For all matters intended to have a legal effect with respect to this Agreement, or to provide financial information, unless otherwise stated herein, written notices shall be delivered by hand, postage pre-paid mail or national overnight private mail delivery or by fax or email (with contemporaneous delivery by one of the foregoing means) to the persons and at the addresses as set forth below and shall be deemed given upon transmission in the case of fax or email or otherwise upon delivery.  Either Party may change its address for receipt of notice to the other Party by delivering written notice of such change pursuant to this Section.

24

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

	If to TVN:	If to CSB:
	James P. Riley	Ken Boenish
	Chief Revenue Officer	President
	TVN Entertainment Corp.	Colorado Satellite Broadcasting, Inc.
	15301 Ventura Blvd.	7007 Winchester Circle, Suite 200
	Building E, Suite 3000	Boulder, CO 80301
	Sherman Oaks, CA 91403	Fax: 303-444-0848
		ken@noof.com
	Fax: 818-526-5001
	jriley@tvn.com
	With a copy to:	With a copy to:
	General Counsel	General Counsel
	TVN Entertainment Corp.	Colorado Satellite Broadcasting, Inc.
	15301 Ventura Blvd.	7007 Winchester Circle, Suite 200
	Building E, Suite 3000	Boulder, CO 80301
	Sherman Oaks, CA 91403
	Fax: 818-526-5003	Fax: 303-381-2369
	legal@tvn.com	legal@noof.com
With respect to financial matters:
	If to TVN:	If to CSB:
	Controller	Chief Financial Officer
	TVN Entertainment Corp.	Colorado Satellite Broadcasting, Inc.
	15301 Ventura Blvd.	7007 Winchester Circle, Suite 200
	Building E, Suite 3000	Boulder, CO 80301
	Sherman Oaks, CA 91403
		Fax: 303-444-0734
	Fax: 818-526-5007	gwilliams@noof.com
	finance@tvn.com

20AMENDMENTS; WAIVER

This Agreement may be amended or modified and any term hereof may be waived only be a written instrument executed by all of the Parties hereto or, in the case of a waiver, by the Party waiving compliance.  Any waiver by any Party of any condition, or of the breach of any provision, term, covenant, representation or warranty contained herein, in any one or more instances, shall not be deemed to be nor be construed as a further or

25

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

continuing waiver of any such condition or of the breach of any other provision, term, covenant, representation or warranty.

21SEVERABILITY

The invalidity under applicable Law of any provision of this Agreement shall not affect the validity of any other provision of this Agreement, and in the event that any provision hereof would be determined to be invalid or otherwise illegal, this Agreement shall remain effective and shall be construed in accordance with its terms as if the invalid, illegal or unenforceable provision were not contained herein.

22FORCE MAJEURE

In the event that either Party is unable to perform any of its obligations under this Agreement (other than each Party’s payment and reporting obligations as set forth in Sections 9 and 10 above and/or elsewhere as part of this Agreement) or to enjoy any of its benefits because of the non-operation of facilities (including any satellite or transponder not owned or controlled by the affected Party) due to any force majeure event beyond the reasonable control of the affected Party, such as natural disaster, acts of God, inevitable accident, fire, lockout, strike or other labor dispute, riot or civil commotion, acts of terrorism, actions or decrees of governmental bodies, failure of communication or electrical lines, or any other event beyond such Party’s reasonable control (a “Force Majeure Event”), the Party who has been so affected shall promptly give written notice to the other Party and shall use its commercially reasonable best efforts to resume performance.  Upon receipt of such notice, all obligations under this Agreement shall be immediately suspended for the duration of such Force Majeure Event, excluding the obligation to make payment when due.

23CAPTIONS; HEADINGS; SCHEDULES

The captions and headings are inserted in this Agreement for convenience only, and shall in no event be deemed to define, limit or describe the scope or intent of this Agreement, or of any provision hereof, nor in any way affect the interpretation of this Agreement.  All references to Schedules contained in this Agreement refer to the Schedules attached to this Agreement, which Schedules are incorporated into this Agreement where referenced in this Agreement.

24NO INFERENCE AGAINST AUTHOR

TVN and CSB each acknowledge and agree that this Agreement was fully negotiated by the Parties and, therefore, no provision of this Agreement shall be interpreted against any Party because such Party or its legal representative drafted such provision.

26

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

25ENTIRE AGREEMENT

This Agreement contains the entire understanding of the Parties relating to the subject matter hereof and  supersedes all Prior Agreements, which Prior Agreements shall be deemed terminated as of the Effective Date of this Agreement. This Agreement is duly executed as of the date first written above when signed by the authorized representatives of CSB and TVN, respectively.
Agreed to and Accepted by:	Agreed to and Accepted by:
COLORADO SATELLITE BROADCASTING, INC.	TVN ENTERTAINMENT CORPORATION
/s/ Ken Boenish	/s/ James P. Riley
Name: Ken Boenish Title: President	James P. Riley Chief Revenue Officer

27

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

SCHEDULE A

Authorized Systems

[Full list available via PRI]

28

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

SCHEDULE B

Standard Services

TVN’s Standard VOD Distribution Services include the following:

[***].

29

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

SCHEDULE C

OTHER SERVICE FEES

[***].

30

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this Exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

SCHEDULE D

Pre-Existing Licensing Relationships

[***].

31

EX-10.08

Exhibit 10.08

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

AMENDED AND RESTATED AFFILIATION AGREEMENT

FOR DTH SATELLITE EXHIBITION

OF CABLE NETWORK PROGRAMMING

DIRECTV, INC.

and

COLORADO SATELLITE BROADCASTING, INC.

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

AMENDED AND RESTATED AFFILIATION AGREEMENT

FOR DTH SATELLITE EXHIBITION

OF CABLE NETWORK PROGRAMMING

AGREEMENT, made as of this 15th day of June, 2010, by and between COLORADO SATELLITE BROADCASTING, INC., a Colorado corporation (“Programmer”), and DIRECTV, INC., a California corporation (“DIRECTV”).

WHEREAS:

A.DIRECTV and Programmer entered into a written agreement entitled Amended and Restated Affiliation Agreement for DTH Satellite Exhibition of Cable Network Programming dated September 24, 2007 (the “2007 Agreement”) whereby Programmer granted DIRECTV the right to distribute certain adult programming television networks owned and operated by Programmer (individually the “Service,” or collectively the “Services”, as defined in Section 1.2.1 below) via the DTH Distribution System (as defined in Section 1.1.2 below) in the United States, its territories and possessions, including Puerto Rico (the “Territory”) as restricted herein; and

B.The parties desire to amend various terms of the 2007 Agreement and herein restate the 2007 Agreement in its entirety.

NOW, THEREFORE, IT IS MUTUALLY AGREED AS FOLLOWS:

1.Grant of Rights.

1.1Distribution; Certain Definitions.

1.1.1Programmer hereby grants to DIRECTV the non-exclusive right to distribute the Services in the Territory via the DTH Distribution System to DIRECTV Subscribers (as defined in Section 1.1.2 below) during the Term (as defined in Section 6.1 below) hereof.  DIRECTV shall have the right to use the names, titles or logos of the Services or any of its programs, or the names, voices, photographs, music, likenesses or biographies of any individual participant or performer in, or contributor to, any program or any variations thereof, subject to the warranties and restrictions set forth in this Agreement.

2

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

1.1.2The term “DTH Distribution System” shall mean the distribution system for video and other programming services whereby the programming satellite signal or feed is received from Programmer’s Delivery Source (as defined in Section 1.3.3 below) by a DIRECTV turnaround earth-station facility which compresses and processes the signal or feed and then uplinks it to a DTH communications satellite (a “DTH Satellite”) for transmission to DIRECTV Subscribers.  DTH Distribution System shall also include any other method of distribution that DIRECTV currently and/or subsequently uses to deliver the Services feed to DIRECTV Subscribers, including, without limitation, MMDS and terrestrial-based transmission infrastructures such as Internet protocol, fiber optic, twisted pairs and coaxial cable, provided that in connection with such delivery methods, DIRECTV complies with the following:  (i) the end users to whom DIRECTV distributes the Services are DIRECTV Subscribers;  (ii) the branding and packaging that is received by such DIRECTV Subscribers is substantially the same as the branding and packaging received by DIRECTV Subscribers that receive the Services via DIRECTV’s direct to home satellites.  “DIRECTV Subscribers” shall mean those customers (both residential and non-residential) authorized by DIRECTV to receive service via the DTH Distribution System, excluding any customer who to DIRECTV’s knowledge: (A) charges an admission fee, cover charge, minimum or the like; or (B) distributes all or any part of the Services to viewers who are not located in the same residence, dwelling unit, store, hospital room, hotel room or suite, motel room or suite, office or other singular facility occupied, owned, leased or otherwise controlled by the customer entitled to receive the Services.  In all events, the DTH Distribution System shall mean and include all technologies used to connect a DIRECTV Subscriber’s network of authorized reception devices (e.g., wireless technology used to connect one or more set-top-boxes).

1.1.3If Programmer grants or has granted to any other distributor that distributes a Service in the Territory the right to receive and distribute such Service(s) and/or any Segments (as defined in Section 1.2.1 below) of Service programming (as any such Segments appear on the Service(s)) or Programmer or an Affiliated Company (as defined in Section 8.1 below) distributes the Service(s) (or any portion thereof) itself via a “New Distribution Method” (as defined below) (including, without limitation, for use in connection with an Authentication Service, as described in Section 1.1.4 below), then Programmer will promptly notify DIRECTV thereof in writing and make available to DIRECTV the right to receive and distribute such programming to DIRECTV Subscribers via such New Distribution Method under the same terms and conditions such rights were made available such other distributor directly in exchange for such rights, provided that if DIRECTV cannot reasonably satisfy such terms and conditions, Programmer shall offer DIRECTV comparable terms and conditions.  “New Distribution Method” shall mean, with respect to any other distributor of a Service in the Territory, any distribution method, device, distribution technology or format (for example, distribution to hand-held devices, streamlining to a web site); provided that, in all events, the current distribution

3

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

methods of cable television, telco (e.g., via Internet protocol or traditional fiber lines), direct to home satellite, SMATV and multipoint distribution service (all as currently utilized in the multichannel video distribution business) shall not be considered a New Distribution Method.

1.1.4Without limiting the scope of Sections 1.1.2 or 1.1.3 above, Programmer hereby grants to DIRECTV the following New Distribution Method rights: DIRECTV shall have the right to distribute all such Service programming purchased by Service Subscribers pursuant to this Agreement via the Internet, wireless, mobile and similar technologies, without payment of any incremental license fees or other consideration to Programmer, to Authenticated Service Subscribers’ (as defined below) computers, set-top-boxes, mobile devices or other authorized devices (including, without limitation, via streaming or download) at no additional fee or charge incremental to such Authenticated Service Subscribers’ PPV programming charge (other than an equipment charge, access fee or other similar infrastructure charge) during the viewing window for each PPV purchase of Service programming (the “Authentication Service”).  In the event that DIRECTV wishes to charge an incremental fee to its Authenticated Service Subscribers in connection with any of the above New Distribution Methods, then the parties shall negotiate in good faith an appropriate license fee in connection with any related incremental revenues.   “Authenticated Service Subscribers” shall mean solely those Service Subscribers (as defined in Section 2.4.1 below) who, prior to receiving any Service programming via the Authentication Service,  have been authenticated as DIRECTV Subscribers that subscribe to Service programming; provided that, the manner in which such subscribers are authenticated shall be comparable in effectiveness to the authentication of subscribers receiving the Service as part of a package of services from the DTH Distribution System.  Prior to DIRECTV’s launch of the Authentication Service, the parties shall negotiate in good faith the terms and conditions thereof (e.g., which party is serving the content, delivery format, technical specifications, holdbacks, advertising, etc.); provided that, the terms and conditions granted to Affiliate with respect to the Authentication Service shall be no less favorable to Affiliate than the terms and conditions provided to any other distributor in connection with any similar service or offering, provided further that if any such terms and conditions are not relevant to Affiliate or reasonably feasible taking into consideration Affiliate’s technology and distribution platform, the parties shall agree upon appropriate comparable terms and conditions as negotiated in good faith.

1.2The Services.

1.2.1The “Services” shall mean and consist of the national feed (or, if Programmer uses multiple feeds for the Services, such other of such multiple feeds designated by DIRECTV) of the following [***] programming services: (i) the programming service commonly known as “Juicy”, which shall consist of thematically organized [***] scenes which

4

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

are sourced from various movies (each [***] segment shall contain up to [***] scenes and shall in no instance show less than [***] scenes (collectively a “Segment”)); and (ii) the programming service commonly known as “Real”, which shall consist of a minimum of [***] unique programs per [***] and [***] unique programs per [***], including [***] channel premiers per [***] and [***] channel premiers per [***]. A program may repeat during [***] after its premiere [***], thereafter it shall not air for a minimum of [***] on Real or for a minimum of [***] after any subsequent [***] run.  Furthermore, no program on Real shall repeat more than [***] during any given [***].  All programs on Real will employ a [***] in which scripted [***] scenes simulate [***] situations.  Juicy shall contain a minimum of [***] unique Segments per [***] ([***] unique Segments comprised of [***] unique [***] scenes per [***]).  While [***] of Segments will be created during the Term, all Segments shall be [***] in that no Segment is ever [***] with the [***] scenes in the [***]. A Segment may [***] after its initial [***] and a [***] scene may [***] during [***] after its [***]. Thereafter, a segment and/or a scene shall not [***] for at least [***] or for a minimum of [***] after any subsequent [***] run.  Furthermore, no Segment shall [***] more than [***] during any given [***].  Segments shall be no less than [***] in duration.  The daily start time for Real is [***] and the daily start time for Juicy is [***]; provided that Programmer shall make commercially reasonable efforts to accommodate any request by DIRECTV to modify such start times.  The Services shall be comprised of [***] adult programming depicting [***] and [***] situations and [***] among consenting adults.  [***] programming (including individual programs) shall not be exhibited on more than one Service during any [***] during the Term.  Subject to the foregoing, the Services shall at all times be [***] the degree of explicitness of programming currently featured on competing adult services such as the services currently known as [***] (subject to the description and limitations in Exhibit A, as illustrated by the programming schedules in Exhibit C).

Notwithstanding the foregoing, upon [***] written notice to Programmer, DIRECTV shall have the sole option at any time during the Term to (A) replace any one of the Services with any other programming service of the same edit standard (i.e., [***]) distributed by Programmer in the Territory and to distribute such other service under the terms hereof and/or (B) distribute as an additional Service hereunder (subject to the terms hereof) any or all of the “Additional Services” described on Exhibit D.  Programmer represents and warrants that the Services shall reflect adult content limited to the [***] version, as described in Exhibit A and Schedule I thereto, and shall not contain or depict any acts set forth in the [***] columns of Schedule I to Exhibit A, or otherwise prohibited by Exhibit A.  The Services shall not contain any [***]. Notwithstanding the foregoing, Programmer shall have the right to include Programmer’s brand or trademark identification on the Services and to include promotional tags or spots solely for purposes of promoting upcoming programs on the Services (no more than [***] in each [***] segment of programming content, inclusive of any Programmer’s Avails (as defined in Section 3 hereof)); provided that in no case shall such tags or spots promote any programming service other than the

5

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

Services unless otherwise agreed to by the parties (including, without limitation, any online programming offering).  The Services shall be delivered to DIRECTV in their entirety, meaning that the programming on the Services, as received by any Service Subscriber at a given point in time, shall be the same as the programming that is received by all other subscribers to the Services at such point in time.  If Programmer or an Affiliated Company (as defined in Section 8.1 hereof) distributes itself or provides (or offers) any other programming rights, including, without limitation, DVR push down, high definition, video-on-demand, interactive or gaming rights (including, without limitation, data and informational enhancements to the programming contained in or delivered along with the Services) to any other distributor of the Services in the Territory, then Programmer shall promptly offer to DIRECTV such rights upon terms and conditions that are no less favorable to DIRECTV than those provided to the Other Distributor; provided, however, that if such terms and conditions are not relevant to DIRECTV or DIRECTV is not reasonably capable of complying with such terms and conditions taking into consideration DIRECTV’s business, including, without limitation, DIRECTV’s technology and DIRECTV’s national platform, then the parties shall negotiate comparable obligations, terms and conditions in good faith.  The terms hereunder that cannot be reduced to an economic value shall be no less favorable to DIRECTV than such terms that are provided to Other Distributors.

1.2.2All rights and title in and to the entire contents of the Services, including, but not limited to, films and recordings thereof, title or titles, names, trademarks, concepts, stories, plots, incidents, ideas, formulas, formats, general content and any other literary, musical, artistic, or other creative material included therein shall, as between Programmer and DIRECTV, remain vested in Programmer.

1.2.3DIRECTV is authorized to distribute the Services using satellite master antenna television system (or similar system) (“SMATV”) operators (including telephone companies and similar service providers) that serve multiple dwelling locations, master planned communities, multiple dwelling unit (“MDU”) buildings or complexes or commercial or business establishments with multiple television viewing sites via such SMATV systems directly to end users within such buildings or establishments, subject to Section 1.1.2 above.

1.2.4Programmer shall not propose or impose upon DIRECTV, nor shall DIRECTV be obligated to pay, any [***] for receipt and distribution of the Services.

1.3Other Distribution Obligations.  In addition, the parties agree as follows:

1.3.1Subject to Programmer’s obligations hereunder and DIRECTV’s rights under Section 17, DIRECTV shall distribute the Services in its entirety, in the order and at the time transmitted by Programmer without any intentional and willful editing, delays,

6

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

alterations, interruptions, deletions or additions (collectively, the “Alterations”) excepting: (i) DIRECTV’s electronic guides (including without limitation, any mosaic or similar guides), (ii) news bulletins and other public announcements as may be required by emergencies or applicable law; and (iii) a DIRECTV Subscriber’s use of equipment, programming or other data supplied by DIRECTV or any third party to make Alterations to the Signal as viewed on a monitor/television screen. Programmer acknowledges that the DTH Distribution System requires and applies digital compression and encryption processes prior to transmission and decryption and decompression processes upon reception and agrees that such processing does not constitute an alteration and/or other modification of the Services.  Programmer shall fully encrypt the satellite signals of the Services utilizing encryption technology commonly used in the satellite distribution industry.

1.3.2Subject to the terms and conditions of this Agreement, the terms and conditions upon which DIRECTV distributes the Services to DIRECTV Subscribers (including, without limitation, Service packaging and retail prices charged, discounts, etc.) shall be determined by DIRECTV in its sole discretion; provided that DIRECTV may offer each Service to DIRECTV Subscribers on a [***] basis (each, a “PPV Offering”) and/or in a [***] (as defined in Section 4 of Exhibit B).   PPV Offerings shall be made available in blocks of [***] each (or such other period as the parties shall agree), but not [***] each unless Programmer consents in writing, which consent shall not be unreasonably withheld (any such block of time, a “PPV Program”).  If, at any time during the Term, Programmer allows any other distributor to offer a Service to viewers in a manner which is more favorable to such other distributor than to DIRECTV (e.g., imposing less restrictive requirements on such other distributor than those set forth immediately above) (“More Favorable Packaging Terms”), then DIRECTV shall immediately be entitled to such More Favorable Packaging Terms.

1.3.3Programmer shall, at its sole expense, deliver the feeds of the Services from a U.S. domestic communications satellite in the Territory commonly used for transmission of television programming (or, at Programmer’s option and expense, a fiber optic or other facility reasonably acceptable to DIRECTV) (the “Delivery Source”) to either or both (as designated by DIRECTV) of DIRECTV’s uplink and broadcast facilities currently located in Castle Rock, Colorado and Los Angeles, California (collectively, the “Broadcast Centers”).  In connection with the foregoing, Programmer shall, at its sole cost and expense, provide DIRECTV with [***] receivers and decoders for the Services for each of the Broadcast Centers.  Programmer shall have in place appropriate back-up procedures and process, or shall reserve back-up fiber links between Programmer’s broadcast center and its satellite uplink center (VYVX), such that in the event of a failure of the first satellite or fiber link, delivery of the Services to DIRECTV shall be only minimally interrupted.  The format of the backup feeds shall be the same format as the primary feeds of the Services.  As of the Effective Date (defined in Section 6.1), the feeds of the Services shall be delivered from [***].  The delivery of all feeds hereunder shall be pursuant to the technical

7

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

specifications set forth at Exhibit “E” hereto.

1.3.4Programmer and DIRECTV shall use their respective commercially reasonable efforts to maintain for the Services a high quality of signal transmission in accordance with their respective technical standards and procedures. Programmer agrees to include closed-captioning and/or video description of the audio portion of the Services as delivered by Programmer to DIRECTV in a manner sufficient to allow DIRECTV to comply with any applicable closed-captioning and/or video description obligations as may be imposed upon DIRECTV or Programmer the rules and regulations of the Federal Communications Commission (“FCC”) or other governmental body during the Term, as modified from time to time, and Programmer shall provide DIRECTV certificates of compliance in connection therewith with the above obligations on a [***] basis during the Term. Other than as required pursuant to the immediately preceding sentence, DIRECTV shall have no liability in connection with Programmer’s failure to prepare, insert or include closed-captioning and/or video description in the Services as required by this Section 1.3.4.  Accordingly Programmer shall indemnify, defend and hold harmless DIRECTV, as provided in Section 8 hereof, against and from any and all losses, liabilities, claims, costs (including without limitation, any costs of preparing and including closed-captioning and/or video description in the Services), damages and expenses, including without limitation, fines, forfeitures, attorneys’ fees, disbursements and court or administrative costs, arising out of third party claims (including, without limitation, the action of any Governmental Authority, as such term is defined in Section 5.2.10 below) as a result of Programmer’s breach of this Section 1.3.4.

1.4Program Guide.  During the Term, Programmer, at its sole cost and expense, shall provide the daily programming schedule for the Services to Tribune Media Service (or such other service designated by DIRECTV) in order that DIRECTV may access the program schedule for purposes on the on-screen program guide.

1.5VBI.  Programmer acknowledges that digitizing and compressing of the signals of the Services (the “Signal”) will result in changes to the Signal.  As a consequence, the DTH Distribution System does not currently retransmit any data or information contained in the VBI of the Signals except line 21, fields 1 and 2 (or its digital equivalent), and only carries a single mono secondary audio program provided that such secondary audio is programmed twenty-four (24) hours per day/seven (7) days per week (“SAP”), and, in each case, only when carried in accordance with CEA-608 or CEA-708 (or successor industry standards), as applicable.  Accordingly, in no event shall DIRECTV be obligated to transmit more than the primary video and a single stereo pair of primary audio programs to be associated with the Signal, a single mono SAP associated with the Signal, and line 21, fields 1 and 2 of the VBI.  Programmer reserves and retains all rights in and to all signal distribution capacity contained

8

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

within the bandwidth of the Signal, including without limitation, the VBI and audio subcarriers from its transmission point to the point of reception by DIRECTV.  DIRECTV retains and reserves any and all rights in and to, and may use in its sole discretion, all distribution capacity contained within the bandwidth of the Signals, including, without limitation, the VBI and audio subcarriers, from the point of reception by DIRECTV to the DIRECTV Subscribers in the Territory.  Programmer shall not have any rights to use any part of a DIRECTV Subscriber’s return path for any reason whatsoever.

1.6Change of Satellite.  In the event Programmer either (i) changes the satellite to which the Services are transmitted to a satellite or other transmission medium not susceptible to viewing or utilization by DIRECTV’s then-existing earth station equipment without affecting the receipt of the signals of any other programming or other services then received (or committed to be received) by such DIRECTV, (ii) changes the technology used by Programmer to encrypt the Services to a technology not compatible with DIRECTV’s then-existing descrambling equipment, or (iii) compresses, digitizes or otherwise modifies the signal of the Services in such a manner that it cannot be received or utilized by DIRECTV, then DIRECTV shall have the right to discontinue carriage of the Services, immediately; provided that this right of discontinuance and deletion shall not apply to DIRECTV if Programmer agrees to promptly reimburse DIRECTV for (I) the cost to acquire and install equipment necessary for DIRECTV to receive the signal of the Services from such new satellite or other transmission medium, and/or (II) the cost to acquire and install equipment necessary for DIRECTV to descramble and/or utilize the signal of the Services; Programmer agrees to [***] provide DIRECTV with [***] prior written notice of a satellite or technology change as set forth in subsections (i) through (iii) above.

1.7On-Screen Logos.  It is understood and agreed that DIRECTV may superimpose a logo or “bug” in a corner of the screen identifying DIRECTV over the programming of the Services; provided however that DIRECTV’s bug shall appear only intermittently during any portion of the Services, and provided further that DIRECTV shall not delete the Service’s own promotion bug or its on-screen graphics.

1.8Alternate Distribution of Service Programming.  For the sake of clarity, distribution of a Service in its entirety, regardless of distribution method, is subject to [***].  Therefore, other than Programmer’s compliance with [***] and the other terms and conditions of this Agreement, there are no limitations on Programmer’s ability to authorize unaffiliated third parties to distribute a Service in its entirety.  Programmer itself (and its Affiliated Companies) shall not, however, be permitted to [***] a Service (or any other [***] service substantially similar to a Service) in its entirety.  Distribution of portions of a Service are not subject to [***] or otherwise restricted hereunder; provided, however, that such distribution is subject to the

9

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

following limitations: [***].  Any Programs that no longer meet the definition of Current Programming may be distributed [***].  “Current Programming” means Programs that were first exhibited on a Service within [***].

2.Reports and Payments.

2.1Reports; Payments; Audit Rights.  Within [***] during the Term, DIRECTV shall furnish Programmer (i) a statement containing a report of (A) the total number of [***] as of [***]; (B) the number of [***] (defined as the number of [***] for the Services authorized by DIRECTV for reception by DIRECTV Subscribers, net of any [***] and/or [***] subject to a [***] (as defined in Paragraph 2 of Exhibit “B”)) for the relevant [***]; and (C) the total amount of [***] (as defined in Exhibit B, attached hereto, and made a part hereof) for the relevant [***] and (ii) payment of the License Fees for the relevant [***], calculated pursuant to Section 2.2 and Exhibit B.  Programmer shall accord confidential treatment to any information contained in the aforementioned statement in accordance with Section 15.  At Programmer’s request, DIRECTV shall permit Programmer’s independent representatives to review, during the Term (no more than [***]) and for [***] after the end of the Term and on [***] basis, such DIRECTV Subscriber records as required for the sole purpose of verifying such statements at reasonable times, upon reasonable advance written notice and during normal business hours at DIRECTV’s offices.  Any third party auditors retained by Programmer shall be a certified public accountant and/or firm specializing in media audits that has no conflict with DIRECTV (subject to DIRECTV’s reasonable approval).  Such review shall be at Programmer’s sole cost and expense, unless such review reveals an underpayment of more than [***], in which case, DIRECTV shall reimburse Programmer the reasonable cost of such audit and shall promptly make payment of any fees due and owing, provided (I) DIRECTV does not have a bona fide dispute with the audit findings; and (II) such audit costs shall not exceed such underpayment.  Such review shall be conducted during reasonable business hours and in such manner as not to interfere with DIRECTV’s normal business activities and shall not continue for more than [***] so long as Programmer is given timely and reasonable access to the applicable DIRECTV Subscriber records.  Programmer shall not have the right to examine or inquire into any matters or items which are embraced by or contained in any such statement after the expiration of [***] from and after the date of mailing of such statement, and such statement shall be final and conclusive upon Programmer upon the expiration of such [***] period notwithstanding that the matters or items embraced by or contained therein may later be contained or referred to in a cumulative statement pertaining to more than one accounting period.  Such cumulative statement shall not be subject to audit by Programmer to the extent the material contained therein was first reflected on a statement submitted more than [***] prior to the date of mailing of such cumulative statement.  Programmer shall be forever barred from maintaining or instituting any action or proceeding based upon, or in anyway

10

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

relating to, any matters that are embraced by or reflected on any statement rendered hereunder, or the accuracy of any item appearing therein, unless written objection thereto shall have been delivered by Programmer to DIRECTV within [***] after the date of mailing of the statement on which such transaction or items was first reflected and unless such action or proceeding is commenced within [***] after delivery of such written objection.  Programmer may not commence a new audit until all prior audits have been closed (i.e., after such closure is confirmed in writing by Programmer) and the results have been presented to DIRECTV.  If Programmer shall audit DIRECTV’s books and records, then Programmer shall, within [***] of the conclusion of such audit (i.e., after the auditors conclude the audit at DIRECTV’s offices), inform DIRECTV in writing of any claim resulting therefrom (including a true copy of any third party audit), and, except for the claims set forth in such notice, all statements rendered by DIRECTV with respect to the period covered by such audit shall be conclusive and binding on the parties and not subject to further audit.  The information derived from and the process of such review shall be subject to the confidentiality provisions of Section 15, and any third party auditor shall be required to acknowledge in writing its agreement to such confidentiality provisions.

2.2License Fees.  As full and complete compensation for DIRECTV’s right to distribute the Services, DIRECTV shall pay to Programmer, on a [***] basis, for each Service Subscriber receiving the Services from DIRECTV for such [***], a “License Fee” determined pursuant to Programmer’s rate card for the Services set forth in Exhibit B hereto.

2.3Late or Non-Payments.  Any amounts that are not subject to a bona fide dispute by DIRECTV and not paid by DIRECTV after (i) the date payment is due pursuant to the first sentence of Section 2.1 and (ii) [***] after DIRECTV’s receipt of written notice from Programmer of such failure by DIRECTV, shall accrue interest at the rate of [***] or the maximum allowed by law, whichever shall be the lesser, from the date such amounts were due until they are paid.

2.4[***].

2.4.1[***].

2.4.2At DIRECTV’s election, Programmer shall (i) permit DIRECTV’s independent representatives to review, during the Term (no more than [***]) and for [***], such Programmer records as required for the sole purpose of verifying Programmer’s compliance with the terms of Section 2.4, at reasonable times, upon reasonable advance written notice and during normal business hours at Programmer’s offices, or (ii) provide to DIRECTV an annual statement, certified by Programmer’s chief financial officer, certifying compliance with the provisions of Section 2.4.  Such review shall be at DIRECTV’s sole cost and expense, unless such review

11

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

reveals an overpayment by DIRECTV of more than [***], in which case, Programmer shall promptly reimburse DIRECTV for the reasonable cost of such audit and shall promptly make payment of any monies due and owing, provided (A) Programmer does not have a bona fide dispute with the audit findings; and (B) such audit costs shall not exceed such overpayment.  The information derived from and the process of such review shall be subject to the confidentiality provisions of Section 15, and any third party auditor shall be required to acknowledge in writing its agreement to such confidentiality provisions.

3.Advertising.

Subject to Section 1.2.1 above, Programmer hereby represents and warrants that the Services shall not contain any [***] during the Term; provided, however, that Programmer shall have the right to include [***] on the Services up to a total of [***] at the end of each [***] of programming (“Programmer’s Avails”).  Programmer’s Avails may be covered by DIRECTV via the insertion of [***] (“DIRECTV Avails”).  Subject to the foregoing, under no circumstances may [***] promote any [***].  The Avails provided by Programmer to DIRECTV shall be no less favorable (in terms of the [***] of the Avails and so forth) than those provided to any other distributor of the Services.  Programmer shall properly [***], all Avails to enable DIRECTV to [***].  Under no circumstances shall a Service be permitted to include, directly or indirectly, [***].  For the avoidance of doubt, Programmer’s Avails shall not contain any promotion of any [***].

4.Marketing and Promotion.

In addition to other rights granted herein, Programmer hereby grants to DIRECTV, during the Term and in the Territory only, the following rights, but not the obligation, to be exercised by DIRECTV in its sole discretion with respect to its marketing of the Services: (i) the right to use any and all marketing materials reasonably requested from Programmer by DIRECTV (which materials shall be provided at [***] to DIRECTV) for the purpose of marketing the Services; (ii) the right to manufacture and produce its own marketing materials, subject to the prior approval of Programmer, such approval not to be unreasonably withheld or delayed; and (iii) the right to use the names, voices, music, recordings, images, and likenesses of any and all performers in and other persons related to the Services, and the right to use Programmer’s name and logo to market the Services [***].  Programmer shall promote DIRECTV’s carriage of the Services [***] as it promotes the carriage of the Services by any other [***] (including, without limitation, the [***] and [***]); provided, however, that Programmer shall provide DIRECTV with prior written notification of any [***] of DIRECTV’s [***] of the Services by Programmer, and any such [***] shall be subject to DIRECTV’s prior approval.  Notwithstanding the foregoing, DIRECTV may cease marketing and promoting the Services if DIRECTV, in its absolute sole determination, reasonably believes that marketing or promoting the Services may be politically harmful to

12

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

DIRECTV or its Affiliated Companies or adversely affect the corporate image that DIRECTV or its Affiliated Companies desires to maintain at such time.  In the event that DIRECTV, in its sole discretion, elects to undertake a [***] on behalf of the Services, DIRECTV shall furnish a [***] to Programmer, and Programmer and DIRECTV shall work in good faith to jointly implement such plan.

5.Representations, Warranties and Covenants.

5.1By DIRECTV.  DIRECTV warrants, represents and covenants to Programmer that it:

5.1.1is in compliance with and will comply with all material Laws (as defined below) with respect to its rights and obligations under this Agreement, including without limitation, all relevant provisions of the Cable Television Consumer Protection and Competition Act of 1992 (as may be amended and any successor, replacement or similar Law or statute) and any and all regulations issued pursuant thereto (as used herein, “Law” shall mean any FCC and any other governmental (whether international, federal, state, municipal or otherwise) statute, law, rule, regulation, ordinance, code, directive or order, including without limitation, any court order);

5.1.2has the power and authority to enter into this Agreement and to fully perform its obligations hereunder;

5.1.3shall distribute the Services in the Territory in accordance with and subject to the terms and conditions set forth in this Agreement;

5.1.4shall, except as otherwise set forth herein, (A) arrange and pay for reception of the Services (excluding any authorization fees) from the U.S. domestic communications satellite from time-to-time designated by Programmer to DIRECTV with DIRECTV’s approval of such designation; and (B) acquire and maintain, at DIRECTV’s sole expense, any equipment, including, without limitation, backup or reserve descramblers, which may be necessary to decode and unscramble the signal(s) for the Services;

5.1.5shall not, without Programmer’s consent, knowingly authorize or cause or knowingly permit any portion of the Services to be recorded, duplicated, cablecast, exhibited or otherwise used (except on a videocassette recorder or other home or personal recording device for private, noncommercial use) for any purpose other than for distribution by DIRECTV at the time the same is made available;

13

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

5.1.6shall not, without Programmer’s prior written approval, use the names, titles or logos of the Services or any of its programs, or the names, voices, photographs, likenesses or biographies of any individual participant or performer in, or contributor to, any program or any variations thereof, for any purpose other than in material intended to advise DIRECTV Subscribers or potential DIRECTV Subscribers of the availability and scheduling of the Services or as a channel identifier.  The restrictions set forth in this Section 5.1.6 shall apply only to the extent they are applied by Programmer uniformly with respect to all of its distributors of the Services, and shall not apply if DIRECTV has received a valid authorization from a third party for any of the uses described in this Section 5.1.6;

5.1.7has obtained, and shall maintain in full force during the Term hereof, such federal, state and local authorizations as are material and necessary to operate the business it is conducting in connection with its rights and obligations under this Agreement; and

5.1.8the obligations created by this Agreement, in so far as they purport to be binding on DIRECTV, constitute legal, valid and binding obligations of DIRECTV enforceable in accordance with their terms.

5.2By Programmer.  Programmer warrants, represents and covenants to DIRECTV that:

5.2.1to its best knowledge after diligent review and receipt of advice of counsel with respect hereto, it is in compliance with and will throughout the Term continue to comply with all Laws applicable to, or with respect to, the Services and the provision of the Services to DIRECTV, and Programmer’s rights and obligations under this Agreement with respect to the Services and Programmer’s obligations hereunder, including without limitation, FCC rules and regulations governing the Services, if any, all relevant provisions of the Cable Television Consumer Protection and Competition Act of 1992, and the Communications Act of 1934, the effective portions of the Communications Decency Act of 1996 (as any or all may be amended and any successor, replacement or similar Laws) and any regulations promulgated under any applicable law or any of the foregoing;

5.2.2it has the power and authority to enter into this Agreement and to fully perform its obligations hereunder and once executed this Agreement shall constitute a valid and binding agreement of Programmer enforceable in accordance with its terms;

5.2.3the general quality and quantity of programming on the Services shall not materially change from that existing as of the date of this Agreement, and the genre of programming shall not materially change from that described in Section 1.2.1 and existing on the

14

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

date of this Agreement;

5.2.4it has obtained, and shall maintain in full force during the Term hereof, such federal, state and local authorizations as are material and necessary to operate the business it is conducting in connection with its rights and obligations under this Agreement;

5.2.5it has secured and shall maintain in full force during the Term hereof all rights necessary for DIRECTV to use and enjoy its rights in connection with its distribution of the Services and all programming provided as part thereof, as a whole or in parts, as PPV Offerings in the Territory, including, without limitation, obtaining or all necessary trademarks, copyrights, licenses and any and all other proprietary intellectual property and other use rights necessary in connection with, and for DIRECTV’s distribution of, the Services (including without limitation, the right to use the names, titles or logos of the Services or any of its programs, the promotional materials supplied or approved by Programmer,  the names, voices, photographs, music, likenesses or biographies of any individual participant or performer in, or contributor to, any program or any variations thereof) and to perform its obligations hereunder and grant the rights granted pursuant to Section 1;

5.2.6it shall not, without DIRECTVs prior written approval, use the name or logo for “DIRECTV” or any other works owned or controlled by DIRECTV (and its related companies);

5.2.7as of the date hereof, the programming on the Services consists of and during the Term hereof such programming shall consist of, that programming described in Section 1.2.1;

5.2.8there are no (and it covenants that it shall not enter into directly or indirectly, allow or otherwise permit any) affiliation, distribution or any other agreements, whether written or oral, granting to distributors and/or any other third party, person or entity any form or type of exclusive or other rights that would limit or restrict in any way DIRECTV’s rights to distribute the Services in the Territory;

5.2.9the obligations created by this Agreement, in so far as they purport to be binding on Programmer constitute legal, valid and binding obligations of Programmer enforceable in accordance with their terms;

5.2.10it has not (and none of its principals or Affiliated Companies have) been convicted for the criminal violation of, and/or has not been found by the FCC or other federal, state or local governmental authority with appropriate jurisdiction (collectively, the

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Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

“Governmental Authority”) to have violated, any federal, state or local law or regulation as applicable concerning illegal, indecent or obscene material or the transmission thereof (the “Obscenity Laws”), and Programmer is not currently aware of any pending investigation (including, without limitation, a grand jury investigation) involving the Services (or any content included in the Services) or any pending proceeding against Programmer (or any of its principals or Affiliated Companies) for the violation of any Obscenity Laws;

5.2.11it will notify DIRECTV as soon as possible, but in no event later than the close of business on the same Business Day upon which Programmer receives notice of, or becomes aware of, any pending investigation by any Governmental Authority, or any pending criminal proceeding against Programmer (or any of its principals or Affiliated Companies), which investigation or proceeding concerns distribution of the Services or programming in the Services, including without limitation, investigations and/or proceedings concerning potential violations of Obscenity Laws.  For purposes of this Section 5(2)(11), Programmer shall be deemed to be aware of any such investigation or proceeding if any of the directors, officers, outside attorneys or employees of managerial status of Programmer or an Affiliated Company has received any communication about or otherwise becomes aware of any such investigation or proceeding;

5.2.12the Services, and all programming provided as part thereof, Programmer provides DIRECTV hereunder (A) is not intended to be obscene and, to the best of Programmer’s knowledge after diligent review, would not be found to be obscene in any jurisdiction in the Territory, and (B) complies with and, at all times that this Agreement is in effect, shall comply with the description and associated restrictions set forth in the definition of “Service” and “Services” in Section 1.2.1, Exhibit A and Schedule I thereto, including, without limitation, Programmer represents and warrants that the Services shall reflect adult content limited to the [***] type, as described in Schedule I, and shall under no circumstances contain or depict any acts set forth in the [***] column thereof;

5.2.13to its best knowledge after diligent review and receipt of advice of legal counsel with experience in such matters, it is in compliance with and will throughout the Term continue to comply with 18 USC 2257 or 28 CFR 75 or any successor legislation or code.  Programmer has prepared, maintained and executed, and at all times during the Term and for a period of seven (7) years thereafter shall, prepare, maintain and execute any documents or records, and provide Affiliate with copies of any documents or records which are required by Title 18, U.S.C. § 2257, as amended, and/or the associated regulations found at 28 C.F.R. 75.1 et. seq., as amended, and/or any successor statute or regulation (“Section 2257”).  Programmer warrants and represents that it is in possession of such documents and records, and maintains them in accordance with Section 2257.  Programmer agrees to appoint a “record custodian” as

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Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

required under Section 2257, and will keep DIRECTV apprised of the physical address where all required records are compiled and maintained pursuant to Section 2257, along with the name of the records custodian.  Programmer will display a conspicuous disclosure statement on all depictions of ‘actual sexually explicit conduct’ contained in the Services as required by Section 2257, which statement identifies the records custodian for the content and describes the physical location where the records relating to the content may be inspected as required under applicable law.  If required by law, Programmer will be identified as a “primary producer” in any and all disclosure statements associated with the Services pursuant to Section 2257.  Programmer further agrees to cooperate with DIRECTV in connection with any inspections or government inquiries initiated pursuant to Section 2257.   DIRECTV shall have the right to inspect such documents and records at any time during regular business hours at Programmer’s location for maintaining the records with five (5) business days’ prior written notice from DIRECTV;

5.2.14it has and throughout the Term will have a “through-to-the-viewer” license (as such term is commonly understood in the entertainment industry) from the applicable music performing rights societies and organizations (i.e., ASCAP, BMI and SESAC), in respect of all music rights contained in the Services;

5.2.15it has, and shall have throughout the Term, the sole and exclusive right and authority to authorize the exhibition, distribution and marketing of the Services, and the ability to grant any or all of the rights actually granted and those contemplated hereunder shall remain exclusively with Programmer throughout the Term; and

5.2.16as of date hereof, it is in compliance with [***].

6.Term; Termination.

6.1Term; Extension.  The term of this Agreement shall be for the period commencing on June 15, 2010 (the “Effective Date”) and continuing through [***] (the “Term”). DIRECTV shall have the option, in its sole discretion, to extend the Term on the same terms and conditions for [***].

6.2Termination for Breach, Bankruptcy; Discontinuance of Business.  In addition to any other rights or remedies, in equity or at law, this Agreement may be terminated by either party (the “Affected Party”), in its discretion, at any time after any of the following occurrences, except as provided in this Agreement, with respect to the other party (the “Other Party”):

6.2.1any breach of any material representation, warranty or covenant

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Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

made herein or the failure by the Other Party, its successors or assigns to perform any material obligation hereunder which is not cured within [***] after receipt of written notice thereof from the Affected Party or as to which reasonable steps to cure have not been commenced within such period (or are not thereafter diligently pursued and completed within [***]);

6.2.2the filing of a petition in bankruptcy or for reorganization by or against the Other Party under any bankruptcy act; the assignment by the Other Party for the benefit of its creditors, or the appointment of a receiver, trustee, liquidator or custodian for all or a substantial part of the Other Party’s property, and the order of appointment is not vacated within thirty (30) days; or the assignment or encumbrance by the Other Party of this Agreement contrary to the terms hereof; or

6.2.3if DIRECTV discontinues operation of the DTH Distribution System, or Programmer discontinues operation and distribution of the Services.  Neither party shall have any further liability to the other, other than as set forth in Section 6.6 below, for the discontinuance of the DTH Distribution System or the Services, as the case may be; provided that such discontinuance is not in connection with, and does not arise from, DIRECTV’s or Programmer’s breach of this Agreement.

6.3Termination by DIRECTV.  In addition to any other rights or remedies, in equity or at law, and except as set forth in subsection 6.3.3, DIRECTV may terminate any Service, or this Agreement, upon thirty (30) days’ prior written notice to Programmer:

6.3.1if at any time the general quality and quantity of programming on the Services materially changes from that existing as of the date of this Agreement, or the genre of programming materially changes from that described in Section 1.2.1 and existing on the date of this Agreement, as determined by DIRECTV in its sole discretion; [***];

6.3.2in the event of a Programmer Transfer (as defined below) other than (A) with DIRECTV’s prior written consent to the assignment of this Agreement to a new entity, which consent shall not be unreasonably withheld, (B) as the result of a merger into or sale or transfer directly or indirectly to a wholly-owned subsidiary, (C) or a transfer of a percentage of the assets or stock ownership of Programmer or the Services where Programmer retains ownership of at least fifty percent (50%) of the assets or stock thereof.   “Programmer Transfer” shall mean a change in the ownership of Programmer (or the parent of Programmer) or any transfer, conveyance, exclusive license, transfer or disposition of all or substantially all of the assets or business of Programmer (or the parent of Programmer), whether by operation of law or otherwise, the result of which is that a new entity, person or group of persons, directly or indirectly, has the ability (A) to elect or control the votes of the majority of the board of directors

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or other governing body of Programmer (or the parent of Programmer), (B) to control more than 50% of the voting interests of Programmer (or the parent of Programmer), or (C) to direct or cause the direction of the general management and policies of Programmer (or the parent of Programmer); or

6.3.3for any reason, as determined by DIRECTV in its sole discretion, as follows: (A) with respect to the two Services described in the first paragraph of Section 1.2.1 (or any successor to either such Service), upon six (6) months prior written notice, and (B) with respect to any Services that are incremental to the two Services described in the first paragraph of Section 1.2.1, upon ninety (90) days prior written notice.

6.5Offsets.Without limiting any other remedies available to it under this Agreement, by law or at equity and, notwithstanding anything to the contrary herein, DIRECTV shall have the right [***] to withhold and reserve from any monies whatsoever payable to Programmer or its designee hereunder, sums reasonably sufficient to secure DIRECTV from and against Programmer’s material breach of any of its obligations under this Agreement [***].

6.6Force Majeure.  Notwithstanding any other provision in this Agreement, neither Programmer nor DIRECTV shall have any liability to the other or any other person or entity with respect to any failure of Programmer or DIRECTV, as the case may be, to transmit or distribute the Services or perform its obligations hereunder if such failure is due to any failure or degradation in performance of the Delivery Source or the DTH Satellite(s) or transponders on such satellites (as applicable) or of the DTH Distribution System (in which case, DIRECTV shall be excused from its distribution obligations under this Agreement), or of any scrambling/descrambling equipment or any other equipment owned or maintained by others (including, without limitation, DIRECTV’s automated billing and authorization system), any failure at the origination and uplinking center used by Programmer or DIRECTV, any labor dispute, fire, flood, riot, legal enactment, government regulation, Act of God, or any cause beyond the reasonable control of Programmer or DIRECTV, as the case may be (a “Force Majeure”), and such non-performance shall be excused for the period of time such failure(s) causes such non-performance; provided, however, that if DIRECTV determines in its sole discretion that it is commercially or technically unfeasible to cure a Force Majeure with respect to the DTH Distribution System or DTH Satellite and so notifies Programmer, then either party may terminate this Agreement effective upon written notice to the other party.  The parties acknowledge and agree that although the Services may at any given time be uplinked to only one of several DTH Satellites, failure or degradation in any of such DTH Satellites may require DIRECTV to reduce the number of programming services available for allocation among all of the DTH Satellites, with such reduction including, without limitation, curtailment or termination

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Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

of the distribution of the Services by DIRECTV, at DIRECTV’s sole discretion.  Accordingly, Programmer further acknowledges and agrees that the provisions set forth in the first sentence of this Section 6.6 shall apply and shall exculpate DIRECTV and excuse the performance of DIRECTV hereunder in the event of a failure or degradation of any of the DTH Satellites or the transponders on any such satellites, regardless of whether the satellite to which the Services are uplinked at the time of such failure or degradation is itself the subject of such failure or degradation.

6.7Survival.  Termination of this Agreement pursuant to this Section 6 shall not relieve either party of any of its liabilities or obligations under this Agreement, including without limitation those set forth below in Section 8, which shall have accrued on or prior to the date of such termination.

7.Separate Entities.  No officer, employee, agent, servant or independent contractor of either party hereto or their respective subsidiaries or DIRECTVs shall at any time be deemed to be an employee, servant or agent of the other party for any purpose whatsoever, and the parties shall use commercially reasonable efforts to prevent any such misrepresentation.  Nothing in this Agreement shall be deemed to create any joint venture, partnership or principal-agent relationship between Programmer and DIRECTV, and neither shall hold itself out in its advertising or in any other manner which would indicate any such relationship with the other.

8.Indemnification; Limitation of Liability; Insurance.

8.1By Programmer.  Programmer shall indemnify, defend and hold harmless each of DIRECTV, its Affiliated Companies (as defined below), DIRECTV’s contractors, subcontractors and authorized distributors and the directors, officers, employees and agents of DIRECTV, such Affiliated Companies and such contractors, subcontractors and distributors (collectively, the “DIRECTV Indemnitees”) from, against and with respect to any and all claims, damages, liabilities, costs and expenses (including reasonable attorneys’ and expert’s fees) incurred in connection with any third party claim (including, without limitation, a claim by any Governmental Authority) against any of the DIRECTV Indemnitees arising out of (i) Programmer’s breach or alleged breach of any provision of this Agreement, (ii) any content contained in the Services, (iii) the distribution or cablecast of any programming of the Services which violates or requires payment for use or performance of any copyright, right of privacy or literary, music performance or dramatic right or other intellectual property right, or that violates any Law or that infringes upon the rights of any third party, (iv) Programmer’s advertising and marketing of the Services, (v) any other materials, including advertising or promotional copy, supplied or permitted by Programmer, and/or (vi) the preparation and delivery of the Signal by Programmer up to the point of authorized reception by DIRECTV at its Broadcast Center.  In

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Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

addition, Programmer shall pay and hold the DIRECTV Indemnitees harmless from any federal, state, or local taxes or fees which are based upon revenues derived by, or the operations of, Programmer.  As used in this Agreement, “Affiliated Company(ies)” shall mean, with respect to any person or entity, any other person or entity directly or indirectly controlling, controlled by or under common control (i.e., the power to direct affairs by reason of ownership of voting stock, by contract or otherwise) with such person or entity and any member, director, officer or employee of such person or entity.

8.2By DIRECTV.  DIRECTV shall indemnify and hold harmless each of Programmer, its Affiliated Companies, Programmer’s contractors, subcontractors and authorized distributors, each supplier to Programmer of any portion of the Services hereunder and each participant therein and the directors, officers, employees and agents of Programmer, such Affiliated Companies, such contractors, subcontractors and distributors and such suppliers and participants therein (collectively, the “Programmer Indemnitees”) from, against and with respect to any and all claims, damages, liabilities, costs and expenses (including reasonable attorneys’ and experts’ fees) incurred in connection with any third party claim (including, without limitation, a claim by any Governmental Authority) against the Programmer Indemnitees arising out of (i) DIRECTV’s breach or alleged breach of any provision of this Agreement, (ii) the distribution by DIRECTV of the Services (except with respect to claims relating to the content of the Services for which Programmer is solely responsible pursuant to Section 8.1(ii) and Section 8.1(iii)), (iii) DIRECTV’s advertising and marketing of the Services (except with respect to such advertising and marketing materials or content supplied or approved by Programmer), and (iv) any other materials, including advertising or promotional copy, supplied by DIRECTV.  In addition, DIRECTV shall pay and hold Programmer harmless from any federal, state, or local taxes or fees, including any fees payable to local franchising authorities, which are based upon revenues derived by, or the operations of, DIRECTV.

8.3Survival.  Termination of this Agreement shall not affect the continuing obligations of each of the parties hereto as indemnitors hereunder.  The party wishing to assert its rights set forth in this Section 8 shall promptly notify the other in writing of any claim or legal proceeding with respect to which such party is asserting such right.  Upon the written request of an indemnitee, the indemnitor will (1) assume the sole control of the defense and settlement of any claim, demand or action against such indemnitee and/or (2) allow the indemnitee to participate in the defense thereof, such participation to be at the expense of the indemnitee.  Settlement by the indemnitee without the indemnitor’s prior written consent shall release the indemnitor from the indemnity as to the claim, demand or action so settled.

8.4NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT:

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Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

8.4.1IN NO EVENT SHALL ANY PARTY BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER FORESEEABLE OR NOT, OCCASIONED BY ANY FAILURE TO PERFORM OR THE BREACH OF ANY OBLIGATION UNDER THIS AGREEMENT FOR ANY CAUSE WHATSOEVER, WHETHER BASED ON NEGLIGENCE.

8.4.2IN NO EVENT SHALL ANY PROJECTIONS, FORECASTS, ESTIMATIONS OF SALES AND/OR MARKET SHARE OR EXPECTED PROFITS, OR OTHER ESTIMATIONS OR PROJECTIONS BY PROGRAMMER OR DIRECTV OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR AFFILIATES, REGARDING OR RELATED TO PROGRAMMER’S OR DIRECTV’S DTH BUSINESS BE BINDING AS COMMITMENTS OR, IN ANY WAY, PROMISES BY PROGRAMMER OR DIRECTV.

8.5.Insurance.Without limiting Programmer’s representations, warranties and indemnification obligations under this Agreement, Programmer shall secure, at its sole cost and expense, the insurance policy (the “Insurance” and/or the “Policy” set forth in this paragraph.  Programmer shall obtain a media/professional liability insurance policy covering Programmer’s distribution of the Services during the Term (including the distribution by DIRECTV authorized under this Agreement) [***] in the minimum amount of [***] dollars [***] per claim and [***] dollars [***] in the aggregate, with a deductible of not greater than [***] dollars[***].  The Policy shall be in form and substance reasonably acceptable to DIRECTV, and shall name DIRECTV (and those “Affiliates” (defined below) identified by DIRECTV) as insureds thereon.  The Insurance shall contain an endorsement that negates the “other insurance” claims in the Policy, and shall contain a statement that the insurance being provided therein is primary.  For purposes of this Agreement, “Affiliate” shall mean any corporation or other person or entity controlling, or controlled by, or under common control with a party or third person, as the case may be.  Programmer shall provide DIRECTV and those Affiliates identified by DIRECTV with a certificate evidencing the Insurance required by this paragraph on or before the Services Commencement Date.  Programmer shall ensure that DIRECTV is notified in writing thirty (30) days in advance of any actual or proposed change to such insurance, and no such change (and no such Insurance, nor DIRECTV’s failure to disapprove of or object to the lack thereof) shall diminish Programmer’s obligations under this Agreement.

9.Notices.  Except as set forth below, all notices hereunder shall be in writing and delivered by hand or sent by certified mail, postage prepaid and return receipt requested, fax, or by an overnight delivery service to the receiving party at its address set forth above or as otherwise designated by written notice.  Notice to Programmer shall be provided as follows:

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Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

Colorado Satellite Broadcasting, Inc.

7007 Winchester Circle, Suite 200

Boulder, CO 80301

Attention:  Ken Boenish, President

Fax:  (303) 527-2872

cc:  General Counsel

Fax: (303) 527-2872

Notice to DIRECTV shall be provided as follows:

DIRECTV, Inc.

2230 East Imperial Highway

El Segundo, California 90245

Attention:  Senior Vice President, Programming

Fax:  (310) 964-5416

cc:  Executive Vice President and General Counsel

Fax:  (310) 964-4991

Notice given by hand shall be considered to have been given on the date delivered or, if delivery is refused, as of the date presented.  Notice given by mail shall be considered to have been given five (5) days after the date of mailing, postage prepaid certified (return receipt requested).  Notice given by facsimile machine shall be considered to have been given on the date receipt thereof is electronically acknowledged.  Notice given by an overnight delivery service shall be considered to have been given on the next business day.

10.Waiver.  The failure of any party to insist upon strict performance of any provision of this Agreement shall not be construed as a waiver of any subsequent breach of the same or similar nature.  Subject to Section 8.4 above, all rights and remedies reserved to either party shall be cumulative and shall not be in limitation of any other right or remedy which such party may have at law or in equity.

11.Binding Agreement; Assignment.  Subject to DIRECTV’s rights under Section 6.3.2, this Agreement shall be binding upon the parties hereto and their respective successors and assigns, except that it may not be assigned by transfer, by operation of law or otherwise, without the prior written consent of the non-transferring party, which shall not be unreasonably withheld; provided, however, that DIRECTV may assign its rights and obligations under this Agreement, in whole or in part (including without limitation, DIRECTV’s right to distribute the Services) (i) to an Affiliated Company or to a successor entity to DIRECTV’s DTH business; (ii) to a third party

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Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

as part of preparing to go or going public or as part of a merger, consolidation or sale of all substantially all of the assets of DIRECTV or (iii) to a third party, provided DIRECTV remains primarily liable for the performance of such third party’s obligations hereunder.

12.Laws of California.  This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made and to be fully performed therein by residents of the State of California, except to the extent that the parties’ respective rights and obligations are subject to mandatory local, State and Federal laws or regulations. The parties hereby agree that the jurisdiction of, or the venue of, any action brought by either party shall be in a state or federal district court sitting in the Los Angeles, California and both parties hereby agree to waive any right to contest such jurisdiction and venue.

13.Entire Agreement and Section Headings.  This Agreement, of which the Exhibits attached hereto form an integral part, sets forth the entire agreement and understanding of the parties relating to the subject matter hereof, and supersedes all prior agreements, arrangements, or understandings relating to the subject matter hereof (including, without limitation, the 2007 Agreement).  This Agreement shall not be modified other than in a writing, signed by each of the parties hereto. The section headings hereof are for the convenience of the parties only and shall not be given any legal effect or otherwise affect the interpretation of this Agreement.

14.Severability.  The parties agree that each provision of this Agreement shall be construed as separable and divisible from every other provision and that the enforceability of any one provision shall not limit the enforceability, in whole or in part, of any other provision hereof.  In the event that a court of competent jurisdiction determines that a restriction contained in this Agreement shall be unenforceable because of the extent of time or geography, such restriction shall be deemed amended to conform to such extent of time and/or geography as such court shall deem reasonable.

15.Confidentiality.

15.1The parties agree that they and their employees have maintained and will maintain, in confidence, the terms and provisions of this Agreement, as well as all data, summaries, reports, proprietary information, trade secrets and information of all kinds, whether oral or written, acquired or devised or developed in any manner from the other party’s personnel or files (the “Confidential Information”).  In the event Confidential Information is requested by a third party pursuant to a discovery request, subpoena or other such request or device, the party to whom such request is directed shall notify the other party in writing in order to afford the party an opportunity to object.  Notwithstanding the above, Confidential Information may be disclosed in the following circumstances: (i) (A) by mutual agreement; (B) to the extent necessary to

24

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

comply with the law (including SEC reporting requirements) or the valid order of a court of competent jurisdiction, in which event the disclosing party shall so notify the other party as promptly as practicable (and, in any event, prior to making any disclosure) and shall seek confidential treatment of such information (including by redacting any such information to the greatest extent possible), or in connection with any arbitration proceeding; (C) as part of its normal reporting or review procedure to its parent company, its auditors and its attorneys, and such parent company, auditors and attorneys agree to be bound by the provisions of this Section 15; (D) in order to enforce any of its rights pursuant to this Agreement; or (E) in the case of DIRECTV, to the NRTC, potential investors, insurers, financing entities or any entity engaged in DIRECTV’s DBS business; provided, however, that such person described above agrees to be bound by the provisions of this Section 15; or (ii)(A) at the time of disclosure to the recipient the Confidential Information is in the public domain; or (B) after disclosure to the recipient the Confidential Information becomes part of the public domain by written publication through no fault of the recipient.  During the Term, neither party shall issue an independent press release with respect to this Agreement or the transactions contemplated hereby without the prior written consent of the other party.  Breach of this last sentence shall be deemed a material breach of this Agreement.

15.2Notwithstanding Section 15.1, Programmer specifically acknowledges and agrees that any lists of DIRECTV’s customers or users, and all information related to such customers and users, is confidential and proprietary information of DIRECTV and cannot be disclosed by Programmer or used by Programmer for any purpose or use whatsoever, other than for its review at DIRECTV’s offices as part of Programmer’s audit rights hereunder to determine if Programmer has been paid the License Fees due to it by DIRECTV.  Also notwithstanding Section 15.1, Programmer further acknowledges and agrees that under no circumstances will it in any way: disclose information (whether personally identifiable or not) to any third party regarding DIRECTV’s customers or users or engage in any direct mailing or telephone solicitation which DIRECTV’s customers or users do not previously and expressly approve (whether orally or in writing) or previously and expressly request (whether orally or in writing), or which DIRECTV does not previously and expressly approve in writing in DIRECTV’s sole discretion.

16.Inadequacy of Money Damages.  Programmer and DIRECTV hereby acknowledge and agree that DIRECTV’s distribution and marketing of the Services pursuant to the terms and conditions contained herein are of the essence of this Agreement.  DIRECTV further acknowledges and agrees that such carriage and marketing requirements, subject to Force Majeure and other conditions of this Agreement, are special and unique, and that Programmer may not be adequately compensated by the payment of money damages in the event that

25

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

DIRECTV failed to comply with any of such requirements.  Programmer acknowledges and agrees that the grant of rights to DIRECTV hereunder are special and unique, and that DIRECTV may not be adequately compensated by the payment of money damages in the event that Programmer failed to comply with any of its obligations under this Agreement, including without limitation, providing access to any Service programming to DIRECTV, as required hereunder.

17.Cessation of Program Distribution.If DIRECTV in good faith reasonably believes that DIRECTV’s provision of any of the programming on the Services either violates any Law or could be found by a court or administrative agency to violate any Law (a “Law Violation” or “Potential Law Violation”) or reasonably believes in good faith at any time that any of the programming on the Services is adversely affecting the corporate image that DIRECTV desires to maintain at such time (an “Image Problem”) then, notwithstanding anything to the contrary in this Agreement, (i) immediately following written notice to Programmer in the case of a Law Violation or Potential Law Violation, or (ii) no sooner than [***] following written notice to Programmer in the case of an Image Problem (if DIRECTV elects to terminate this Agreement as provided in this Section 17): DIRECTV may terminate this Agreement, or DIRECTV may cease distributing the offending programming or the Services (in any portion of the Territory, or the entire Territory, as DIRECTV shall determine in its sole discretion based on the genesis of the Law Violation; Potential Law Violation or Image Problem) until DIRECTV determines in DIRECTV’s sole discretion that there will be no Image Problem because the Service programming at that subsequent time is consistent with the corporate image that DIRECTV then desires to maintain or DIRECTV reasonably determines that a Law Violation or Potential Law Violation will not again occur.

18.Survival of Representations and Warranties.  All representations and warranties contained herein or made by the parties, and each of them, in connection herewith shall survive any independent investigation made by either party.

19.Program Carriage Acknowledgement.  Programmer acknowledges each of the following:  (i) DIRECTV has not required a financial interest as a condition for carriage of the Service; (ii) DIRECTV has not coerced Programmer to provide, or retaliated against Programmer for failing to provide, exclusive rights against any other multichannel video programming service as a condition for carriage of the Service; and (iii) DIRECTV has not engaged in conduct the effect of which is to unreasonably restrain the ability of Programmer to compete fairly.

20.Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed an original and all such counterparts together shall constitute but one and the same instrument.  The parties also agree that this Agreement shall be binding upon the faxing by each party of a signed signature page thereof to the other party.  If such a faxing occurs, the

26

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

parties agree that they will each also immediately post, by Federal Express, a fully executed original counterpart of the Agreement to the other party.

27

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.

DIRECTV, INC.
By:	/s/ Toby Berlin
	Name: Toby Berlin
	Title: Vice President, Programming Acquisitions
	Date: July 6, 2010
COLORADO SATELLITE BROADCASTING, INC.
By:	/s/ Ken Boenish
	Name: Ken Boenish
	Title: President
	Date: July 6, 2010

28

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

EXHIBIT A

DESCRIPTION OF THE SERVICE

The programming content of the Services shall comply strictly with the provisions of this Exhibit A and the attached Schedule 1.  In addition to the definition set forth in Section 1.2.1 of the Agreement, the Services shall adhere to the industry’s strictest set of standards and practices (the “Industry’s Standards and Practices”) for adult programming, which will not be circumvented, and shall comply with the following standards and practices (the “Standards and Practices”) (which shall control if they conflict with the Industry’s Standards and Practices) (any act or portrayal which is prohibited below or which the Industry’s Standards and Practices prohibit to be presented in audiovisual material shall be deemed a “Prohibited Act”).

The Services shall offer tasteful [***] adult programming (feature films and interstitials) substantially the same in content, quality and production values as appears on the Services on the date hereof.  It is understood and acknowledged by Programmer that the Services may contain acts of the type listed on Schedule I to this Exhibit A under the heading [***].  Subject to the restrictions set forth herein, the Services’ programming shall consist primarily of [***].

None of the programming or promotional materials of the Services shall condone or present [***] in any form, nor contain any activity which equates [***].  Additionally, under no circumstances shall any programming on the Services contain any scenes of [***].

[***] situations may be presented on the Services as a matter of course; however, there shall be no depiction of any [***] acts in the [***] of Schedule I hereof except such acts as are also included in the [***].

The Services may include [***]; however, the Services shall not include [***].

29

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

SCHEDULE I TO EXHIBIT A

PROGRAMMING STANDARDS

[Programming Standards Rating Schedule Omitted.]

[***]

30

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

EXHIBIT B

PROGRAMMER’S RATE CARD

[***]

31

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

EXHIBIT C

PROGRAMMING SCHEDULE

(see attached)

[Programming Schedule by Title and Time Omitted]

[***]

32

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

EXHIBIT D

ADDITIONAL SERVICES

[***]

33

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

EXHIBIT E

DELIVERY SPECIFICATIONS

[***]

34

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: August 6, 2010
	/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: August 6, 2010
	/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 June 30, 2010, 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
August 6, 2010

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 June 30, 2010, 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

August 6, 2010