Earlier this month, Vivid Entertainment announced its plans to releaseKendra Exposed -- which prompted Wilkinson to hire a Los Angeles law firm to fight the release of the tape because she did not provide consent.
While Wilkinson reportedly formed a company to shop the tape -- and several others -- in 2008, she didn't follow through with the plan, opening the door for Frye to reach his own agreement recently, according to RadarOnline.
Wilkinson reportedly made the sex tape while living in a San Diego apartment with Frye before she moved into the Playboy Mansion as one of Hugh Hefner's girlfriends in 2005.
"Justin had a tripod in his bedroom for the camera and a stripper pole in the apartment," a source told RadarOnline.
"Kendra definitely was not shy about being in these tapes. There are tapes of Kendra in really compromising positions -- doing a lot of embarrassing things."
In addition, the source claimed Wilkinson simply left the tapes after she and Frye split.
"It was a bad break-up... as soon as Hef took her, she was gone," the source told RadarOnline.
"But Justin knew what he had and obviously waited for the optimum moment to sell it. He waited until Kendra's fame hit a certain level... he was striking while the iron is hot, if you like. This was a well orchestrated plan."
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