EXHIBIT 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made as of this 29th day of October,
2009, by and between ENTRUPHEMA INC., a corporation organized pursuant to the
laws of the Province of Ontario (the “Company”), and Eric Johnson (“Employee”).

Recitals

A. Concurrently with the execution and delivery of this Agreement, pursuant to
an Acquisition Agreement dated as of October 9, 2009 (the “Acquisition
Agreement”), by and among Private Media Group, Inc. (“Private”), 2220445 Ontario
Inc. (“Sub”), the Company and the holders of all of the Company’s capital stock,
including Employee (the “Sellers”), Private will become the indirect owner of
the Company.

B. Pursuant to the Acquisition Agreement, Sub will purchase all of the
outstanding shares of the Company from Sellers and, immediately following such
purchase, Sub and the Company will amalgamate (with the amalgamated company
being referred to herein as “Amalco”). References to the Company herein include
any successor thereto, including Amalco.

C. The parties desire to continue Employee’s employment with Amalco following
the Amalgamation upon the terms and conditions set forth in this Agreement.

D. The execution and delivery of this Agreement is a condition to the
consummation of the transactions contemplated by the Acquisition Agreement.

E. All capitalized terms which are not defined herein shall have the respective
meanings ascribed to such terms in the Acquisition Agreement.

NOW, THEREFORE, in consideration of the foregoing, and the mutual covenants
contained herein, the parties hereto, intending to be legally bound, agree as
follows:

Part 1 Employment and Duties.

1.1 Employment; Duties. During the “Term” (as such quoted term is defined in
Part 3 of this Agreement), the Company shall continue Employee’s employment, and
Employee hereby accepts such continued employment, as the Chief Executive
Officer and President of the Company, and shall report to the Chief Executive
Officer of the consolidated Internet and Internet-related business conducted by
Private and its subsidiaries (the “Private Group”) (the Internet and
Internet-related business conducted by the Private Group from time to time,
including the business of the Company, is referred to as the “Online Media
Business”). Employee shall have such titles, responsibilities and duties,
consistent with his position and expertise, as may from time to time be
prescribed by the Company.

1.2 Full Time. Employee shall devote all of his business time, energy, and skill
to the business and affairs of the Private Group’s Online Media Business.
Employee acknowledges and agrees that he shall observe and comply with all of
the reasonable policies as prescribed from

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time to time by the Company and the Private Group. Nothing in this Part 1,
however, shall prohibit Employee from (i) serving as a director, trustee,
officer of, or partner or investor in, any other firm, trust, corporation or
partnership; provided that such activities are not inconsistent with Employee’s
duties under this Agreement; or (ii) engaging in additional activities in
connection with personal investments and community affairs that are not
inconsistent with Employee’s duties under this Agreement.

1.3 Other Conditions. As a condition to Employee’s employment with the Company
following Closing, Employee will be required to sign and comply with the form of
Assignment of Intellectual Property Agreement attached hereto as Exhibit A.
Further, this Agreement is contingent upon Employee being legally employable in
Canada.

Part 2 Compensation.

2.1 Base Salary. In consideration of the services rendered to the Company
(and/or its Affiliates) by Employee, during the Term Employee shall receive an
annual salary of CAD $235,000 (“Base Salary”), payable semi-monthly in
accordance with the Company’s standard payroll practices.

2.2 Benefits. During the Term, Employee shall be entitled to participate in
employee benefit plans (such as health, dental, vision, pension, retirement and
similar plans) and receive fringe benefits that are substantially similar to
those provided to similarly situated employees of Private, as are generally now
or hereafter available to such employees in accordance with their then existing
terms and conditions. Additionally, Employee shall have the option of allocating
up to CAD $10,000 of Employee’s Base Salary per annum to the Company’s medical
reimbursement plan.

2.3 Vacation. Employee shall be entitled to a total of twenty (20) vacation days
or paid time off per year, exclusive of holidays observed by the Company, in
accordance with the vacation policies of the Company in effect from time to
time, which shall be scheduled in a reasonable manner by Employee. Vacation days
which are not used during any calendar year may be accrued or paid in accordance
with Company policy in effect from time to time.

2.4 Expenses. During the Term, Employee will be entitled to reimbursement of all
reasonable expenses incurred in the ordinary course of business on behalf of the
Company, including its Affiliates, subject to the presentation of appropriate
documentation and approved in accordance with the then existing terms and
conditions of the Company’s policies in effect from time to time.

2.5 Withholding. The Company may withhold from compensation payable to Employee
all applicable federal and provincial withholding taxes.

Part 3 Term and Renewal.

3.1 Term. The term of employment under this Agreement shall be a period
commencing on the Closing (as defined in the Acquisition Agreement) and ending
on the third anniversary of the Closing (the “Expiration Date”), unless
terminated earlier in accordance with Part 4 hereof (the “Term”). This Agreement
shall terminate automatically on the Expiration Date without any pay in lieu of
notice, severance pay, termination pay or any severance obligation whatsoever,
other than as may be owed to Employee for notice and severance pay (if
applicable) under the Employment Standards Act, 2000 (Ontario).

 

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3.2 Renewal. Upon the conclusion of the Term, the Company and Employee may
negotiate a renewal term or the continuation of the Employee’s employment with
the Company on such terms and conditions as the parties may then agree.

Part 4 Termination.

4.1 Definitions. As used herein, the following terms shall have the following
meanings:

4.1.1 “Notice of Termination” means a written notice specifying the termination
provision in this Agreement relied upon and the effective date of such
termination.

4.1.2 “Date of Termination” means (i) where termination is due to the death of
the Employee, the date of death, or (ii) the date specified in the Notice of
Termination.

4.1.3 “Cause” means that Employee has (i) breached any fiduciary duty or
material legal or contractual obligation to the Company (including any
Affiliate) which breach is not cured within thirty (30) days after notice to
Employee thereof or, if cured, such conduct recurs (it being agreed that such
cure right for any particular conduct shall only be available once during the
Term), (ii) failed to perform satisfactorily Employee’s material job duties or
to follow any reasonable directive of the Chief Executive Officer of Private or
the Board of Directors of Private, which failure is not cured within thirty
(30) days after notice to Employee thereof or, if cured, such conduct recurs (it
being agreed that such cure right for any particular conduct shall only be
available once during the Term), (iii) engaged in gross negligence, gross
insubordination, willful misconduct, fraud, embezzlement, acts of material
dishonesty or a conflict of interest, in any such case relating to the affairs
of the Company or any of its Affiliates, or (iv) been convicted of or pleaded no
contest to any criminal offence either (A) relating to the affairs of the
Company or any of its Affiliates or (B) which could cause harm or damage to the
Company’s or its Affiliates’ public image, reputation or relations with the
authorities, unless in either case (1) the offence involved actions or omissions
of Employee in the ordinary course of the Private Group’s business, and
(2) Employee was acting in good faith and what he reasonably believed to be the
best interests of the Private Group.

4.1.4 “Good Reason” means Employee’s voluntary termination within thirty
(30) days following the occurrence of one or more of the following: (i) a
material diminution Employee’s authority, duties, reporting structure or
responsibilities that is not remedied by the Company within thirty (30) days
after receipt of notice thereof given by Employee, or (ii) a material breach of
this Agreement by the Company, which breach is not cured within thirty (30) days
after notice thereof given by Employee, or (iii) a change by the Company in the
geographical location at which Employee must provide the services described in
this Agreement by more than twenty-five (25) miles from his current location in
Toronto, Ontario, Canada, excluding reasonable travel.

4.1.5 “Disability” means illness (mental or physical) or accident, which results
in Employee being unable to perform Employee’s duties as an employee of the
Company on a full time basis, for a period of ninety (90) consecutive days, or
one hundred twenty (120) days, whether or not consecutive, in any twelve month
period. In the event of a dispute as to whether Employee is Disabled, the
Company may refer the same to a mutually acceptable licensed practicing
physician, whose written report shall be final and binding upon the parties, and
Employee agrees to submit to such tests and examination as such physician shall
deem appropriate. If Employee fails or refuses for any reason to promptly submit
to any examination requested by such physician, then Employee shall be
considered to be Disabled.

 

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4.2 General. Employee’s employment with the Company may be terminated at any
time by the Company for Cause, effective immediately upon receipt by Employee of
written Notice of Termination. Employee’s employment shall automatically
terminate upon his death. Employee’s employment with the Company may be
terminated at any time by the Company for Disability or for any reason other
than for Cause, effective immediately upon receipt by Employee of written Notice
of Termination or upon such other date specified in such Notice of Termination.
Employee may resign for Good Reason after at least thirty (30) days prior
written Notice of Termination thereof from Employee to the Company which Notice
of Termination may be contemporaneous with the notice required by Section 4.1.4
hereof (subject to the Company’s remediation right in Section 4.1.4).

4.3 Effects of Termination.

4.3.1 Termination For Disability, Other Than For Cause or For Good Reason. If
the Company terminates the Employee’s employment during the Term for Disability
or for any reason other than for Cause, or if Employee terminates his employment
with the Company during the Term, for Good Reason, the Company shall: (i) pay to
Employee any and all Base Salary, accrued vacation and expense reimbursement
that had accrued but had not been paid prior to the Date of Termination, which
amounts shall be paid promptly after the Date of Termination, (ii) pay to
Employee an amount equal to Employee’s monthly Base Salary multiplied by the
remaining number of whole months left in the Term (or such greater amount (if
any) as may be otherwise owed to Employee for notice and severance pay (if
applicable) under the Employment Standards Act, 2000 (Ontario)), which amount
shall be paid in equal monthly installments consistent with how the Company
historically pays Employee’s Base Salary, and (iii) continue Employee’s benefits
for at least the period of notice required by the Employment Standards Act, 2000
(Ontario), and, to the extent permitted by the Company’s benefit provider, for
the duration of the Term. Except as set forth in this Section 4.3.1, the Company
shall have no further obligation to make any payments or provide any benefits to
Employee hereunder after the Date of Termination. All pay in lieu of notice of
termination and severance payments described herein are inclusive of all amounts
which would be owed to Employee for notice and severance pay (if applicable)
under the Employment Standards Act, 2000 (Ontario). The compensation and
benefits described above are in full and final payment of all the legal and
contractual obligations of the Company towards the Employee with respect to his
employment or the termination thereof. Subject to the Company complying with its
obligations, as described above in this Section 4.3.1, Employee, on behalf of
himself and of his descendants, dependants, executors, administrators and
successors, hereby forever releases and fully discharges the Company, its
parent, predecessors, successors, subsidiaries, affiliates, groups or divisions
and related entities, as well as each of their fiduciaries, principals,
administrators, officers, partners, directors, insurers, employees, current or
former agents, and other representatives from any and all claims, actions,
causes of action, charges, complaints, obligations, rights, demands, debts,
damages, costs and legal fees, losses, liabilities or accounting of whatever
nature, or any other liability without limitation, known or unknown, for the
past, present and future, arising out of, concerning or relating directly or
indirectly to the Employee’s employment relationship with the Company or the
termination thereof other than the covenants, rights, entitlements, agreements
and obligations arising under the Acquisition Agreement and all exhibits and
schedules thereto including, without limitation, Employee’s right to the
Amalgamation Consideration Shares. Without limiting the generality of the
foregoing, Employee recognizes that other than the amounts and benefits
described above in this Section 4.3.1, there are no other amounts or benefits of
any nature whatsoever that are or will

 

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be owed to him, including, without limitation, for damages, salary, wages,
commissions, bonus payments, leave, overtime pay, pension plan contributions,
insurance, stock options, shares, allowance, notice, payment in lieu of notice
of termination and any vacation pay related thereto or any other amounts,
benefits, compensation, payments, equity participation or interests in the
Company related to his employment or the termination thereof to which he may
claim to be entitled pursuant to any agreement whatsoever or to the laws of the
Province of Ontario and Canada, including without limitation, the Employment
Standards Act, 2000 (Ontario), the Workplace Safety and Insurance Act, 1997, the
Human Rights Code and at common law. Notwithstanding the foregoing, nothing in
this Section 4.3.1 releases any claims, rights or entitlements Employee had, has
or may in the future have as a shareholder of Private or any of its Affiliates.

4.3.2 Termination for Cause. If Employee’s employment is terminated by the
Company for Cause or by the Employee without Good Reason, the Company shall have
no further obligation to make any payments or provide any benefits to Employee
hereunder after the Date of Termination except for payments of Base Salary and
expense reimbursement that had accrued but had not been paid prior to the Date
of Termination, provided that any amounts owed by Employee to the Company shall
be offset against any such expense reimbursement.

4.3.3 Termination of Severance Payments. If, following the cessation of
Employee’s employment, the Employee breaches his obligations under either
Section 5.1 hereof or Section 9.3 of the Acquisition Agreement (as determined by
the Ontario Superior Court of Justice whether in a hearing for injunctive relief
or otherwise), in addition to any other rights and remedies available to the
Company, the Company shall have the right to immediately cease paying to
Employee all amounts otherwise payable to Employee under Section 4.3.1(ii) above
and no further amounts shall be payable to Employee under such Section, other
than amounts which may be owed to Employee for notice and severance pay (if
applicable) under the Employment Standards Act, 2000 (Ontario). Employee and
Company agree that any amounts not paid as a result of a determination by the
Ontario Superior Court of Justice that Employee has breached his obligations
under Sections 5.1 of this Agreement or Section 9.3 of the Acquisition Agreement
will be setoff against any damages owing or otherwise recoverable as a result of
said breach.

4.4 Procedure upon Termination. On termination of employment regardless of the
reason, Employee (or his heirs, representatives or estate as the case may be)
shall promptly return to the Company all documents (including copies) and other
property containing or disclosing Confidential Information, including customer
lists, manuals, letters, materials, reports and records in Employee’s possession
or control no matter from whom or in what manner acquired.

4.5 Effect of Termination on Board Membership and as an Officer. Except as
otherwise agreed in writing by the Company and Employee, upon termination of
Employee’s employment with the Company for any reason, Employee will
automatically and without further action immediately be deemed to have resigned
from the board of directors and as an officer of the Company and any member of
the Private Group, as applicable, effective as of the Date of Termination.
Employee shall also take all actions and sign any necessary documents to effect
such resignations and remove his name as an authorized signatory on behalf of
the Company and any member of the Private Group.

 

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Part 5 Confidential Information.

5.1 During the Term of this Agreement and thereafter, Employee will not,
directly or indirectly, use, or disclose to any Person, any Confidential
Information (as defined herein) of the Private Group, except (A) in the
performance of his duties on behalf of the Private Group, or (B) to the extent
necessary to comply with law or the valid order of a court of competent
jurisdiction, in which event Employee shall notify the Company as promptly as
practicable (and, if possible, prior to the making of such disclosure).
“Confidential Information” means any information, data, trade secrets and
confidential or proprietary information relating to the business, operations,
assets and liabilities of the Private Group, including without limitation all
customers and/or suppliers’ identities, characteristics and agreements,
financial information and projections, employee files, business and marketing
plans, sales activities, pricing methodologies, credit and financial data and
financial methods; provided, however, that the foregoing shall not apply to
information which is generally known to the industry or the public other than as
a result of Employee’s breach of this covenant. Employee agrees that upon
termination of his employment with the Company for any reason, he will return to
the Company immediately all memoranda, books, papers, plans, information,
letters and other data, and all copies thereof or therefrom, in any way relating
to the business of the Private Group. Employee further agrees that he will not
retain or use for his account at any time any trade names, trademark or other
proprietary business designation used or owned in connection with the business
of any member of the Private Group.

5.2 For the avoidance of doubt, Employee acknowledges that if he engages
(directly or indirectly) in any conduct which violates this Part 5, such conduct
shall constitute a breach of this Agreement regardless of whether such conduct
constitutes a violation of the Acquisition Agreement.

Part 6 Appointment as Director.

6.1 The Company agrees that it is a condition of Employee’s employment that
Private will appoint Employee to Private’s Board of Directors on or before
December 31, 2009 and nominate Employee to continue to serve as a director on
Private’s Board of Directors at each annual meeting of shareholders of Private
in 2010 and 2011, until not earlier than the end of the Earnout Periods;
provided that Employee remains employed with Private or its Affiliates at the
time of appointment and each such annual meeting of shareholders. By its
signature below Private agrees to appoint Employee to its Board of Directors on
or before December 31, 2009 and to nominate Employee to continue to serve as a
director of Private in 2010 and 2011 until not earlier than the end of the
Earnout Periods; provided that Employee remains employed with Private or its
Affiliates at the time of appointment and each such annual meeting of
shareholders. For the avoidance of doubt, the Company’s or Private’s breach of
this Section 6.1 shall constitute a material breach of this Agreement by the
Company for purposes of Section 4.1.4(ii) hereof.

Part 7 Miscellaneous.

7.1 Notices. All written notices, demands and requests of any kind which either
Party may be required or may desire to serve upon the other Party hereto in
connection with this Agreement shall be delivered only by courier or other means
of personal service which provides written verification of receipt or by
registered or certified mail return receipt requested, or by facsimile; provided
that the facsimile is promptly followed by delivery of a hard copy of such
notice which provides written verification or receipt (each, a “Notice”). Any
such Notice delivered by registered or certified mail shall be deposited in the
United States or Canada mail

 

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with postage thereon fully prepaid, or if by courier then deposited prepaid with
the courier. All Notices shall be addressed to the Parties to be served as
follows:

If to the Company:

c/o Private Media Group, Inc.

Calle de la Marina 14-16

Floor 18, Suite D

08005 Barcelona, Spain

Attention: Chief Financial Officer

If to Employee:

Eric Johnson

c/o Entruphema Inc.

229 Yonge Street, Suite 408

Toronto Ontario Canada M5B 1N9

7.2 Entire Agreement. This Agreement (including the documents referred to
herein) and the Acquisition Agreement constitute the entire agreement between
the parties and at the Effective Time will supersede any prior understandings,
agreements, or representations by or between the Parties, written or oral, to
the extent they related in any way to the subject matter hereof (including,
without limitation, any severance, notice, and/or equity award agreements
between Employee and the Company), excluding any acknowledgments or covenants
that Employee entered into relating to the assignment of inventions to the
Company or the use or disclosure of the Company’s confidential or trade secret
information.

7.3 Assignment, Successors. This Agreement is personal in its nature and neither
of the parties hereto shall, without the consent of the other, assign or
transfer this Agreement or any rights or obligations hereunder; provided that
the Company may assign its rights under this Agreement either to an Affiliate or
in connection with a merger, amalgamation, consolidation, transfer, or sale of
all or substantially all of the assets of the Company with or to any other
individual or entity, in which event this Agreement shall, subject to the
provisions hereof, be binding upon and inure to the benefit of such successor
and such successor shall discharge and perform all the promises, covenants,
duties, and obligations of the Company hereunder.

7.4 Governing Law and Venue. This Agreement will be governed solely by laws and
regulations of the province of Ontario and the federal laws and regulations of
Canada applicable therein.

7.5 Waiver; Modification. Failure to insist upon strict compliance with any of
the terms, covenants, or conditions hereof shall not be deemed a waiver of such
term, covenant, or condition, nor shall any waiver or relinquishment of, or
failure to insist upon strict compliance with, any right or power hereunder at
any one or more times be deemed a waiver or relinquishment of such right or
power at any other time or times. This Agreement shall not be modified in any
respect except by a writing executed by each party hereto.

7.6 Headings. Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.

 

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7.7 Specific Performance. Employee acknowledges and agrees that the Company’s
remedies at law for a breach or threatened breach of any of the provisions of
Part 5 hereof would be inadequate and, in recognition of this fact, Employee
agrees that, in the event of such a breach or threatened breach, in addition to
any remedies at law, the Company shall be entitled to obtain equitable relief in
the form of specific performance, temporary restraining order, temporary or
permanent injunction or any other equitable remedy which may then be available
without the need to post any security or bond.

7.8 Contingent Offer. Notwithstanding any provision of this Agreement to the
contrary, the terms of this Agreement, including Employee’s acceptance, are
contingent upon the occurrence of the Closing and become effective at the
Effective Time. In the event that the Acquisition Agreement is terminated or if
for any other reason the Closing does not occur, this Agreement shall be null
and void and shall have no further effect and all prior agreements between
Employee and the Company relating to Employee’s employment shall remain in full
force and effect.

7.9 Counterparts; Facsimile Signatures. This Agreement may be executed in two or
more counterparts, each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument. A facsimile
copy shall have the same legal effect as the original.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as of the date above written.

 

COMPANY:

 

ENTRUPHEMA INC.

By:   /s/ Name:   Title:  

 

EMPLOYEE: /s/ Eric Johnson Eric Johnson

 

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Joinder of Private Media Group, Inc.

Private Media Group, Inc., by its signature below, agrees to be bound by the
terms and conditions of Part 6 of the within Employment Agreement dated
October 29, 2009, by and between the Company and Eric Johnson.

 

PRIVATE MEDIA GROUP, INC. By:   /s/ Johan Gillborg Name:   Johan Gillborg Title:
  Chief Financial Officer

 

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Exhibit A

Form of Assignment of Intellectual Property Agreement

 

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