EXHIBIT 10.1

 

SUPPLEMENTARY AGREEMENT

 

This supplementary agreement is made on the 11th day of August, 2004 by and
between

 

1. Beate Uhse AG, Gutenbergstrasse 11, D-24941, Flensburg, duly represented by
its CFO Otto Christian Lindemann and its procurator Mrs Gesa Münzmaier,
hereinafter referred to as “Beate Uhse” and or “Lender”

 

and

 

2a. Private Media Group Inc., established at USA, 3230 Flamingo Road, Suite 156,
Las Vegas, Nevada 89121, duly represented by Johan Gillborg, and its subsidiary
companies:

 

2b. Private Benelux BV, established at the Netherlands, 5084 PS Best, De Dintel
18-20, duly represented by its director Johan Gillborg

 

2c. Peach Entertainment Distribution AB, established at Sweden, Starrbacksgatan
3, 17223 Sundbyberg, duly represented by Bo Rodebrant

 

hereinafter referred to as “Private” and or “Borrower”

 

Whereas:

 

Private and Beate Uhse concluded an agreement on 11 December 2002 pursuant to
which Beate Uhse, as the Lender, has granted Private, as the Borrower, a loan
amounting to US $ 3 million, which was repayable at the latest by 13 December
2003 (“the Original Agreement” or “the Agreement”).

 

The parties hereby confirm and agree that the Agreement is amended in accordance
with the terms stipulated in this agreement.

 

Have agreed as follows:

 

Article 1

 

1.1 The Lender hereby agrees to continue the loan of 3 million $ to the
Borrower. The loan is repayable ultimately on 31-12-2005. As of 30-06-2004, the
Loan Amount has been reduced to US $ 2.246.046,35, including accrued interest,
after giving effect to the setoff of receivables due from Beate Uhse or certain
of its subsidiaries to Private or certain of its subsidiaries, as described in
Schedule One to this Agreement.

 

1.2 The Borrower shall be entitled to prepay the Loan in whole at any time, or
in part from time to time, without premium or penalty provided the Borrower
announces these payments a month in advance and the amount of the repayments
shall be in amounts of 100.000 US $ (hundred thousand US Dollar) at a minimum.

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Article 2     Interest rate

 

The Borrower shall owe interest on the amount of the Loan outstanding at the
rate of 5% per annum during the term of this agreement. Interests shall be due
and payable each quarter.

 

Article 3     Repayment

 

The repayment obligation is regulated as follows:

 

1. The loan debt under this Agreement will be repaid by setting off receivables
due from certain subsidiaries of Beate Uhse that will arise on or after
30-06-2004 from deliveries and services by certain subsidiaries of Private,
namely

 

a) receivables due from Scala Agenturen BV in Amsterdam, the Netherlands.

 

payable to

 

Private Benelux BV in Best, Netherlands (Private Benelux)

 

and

 

b) receivables due from Beate Uhse MAX´S AB in Stockholm, Sweden (Max A.B)

 

payable to

 

Peach Entertainment Distribution AB in Sundbyberg, Sweden (Peach Entertainment)

 

2. Thus the repayment normally will be finalized somewhere in 2005. Any
outstanding amount under this agreement, which has not been repaid by setting
off receivables per 01-12-2005, has to be repaid by Private ultimately
31-12-2005.

 

Beate Uhse will provide an overview of the outstanding amount per 01-12-2005 to
Private.

 

Article 4

 

4.1 The following subsidiaries of Private assign to Beate Uhse their receivables
from subsidiaries of the Beate Uhse Group up to the total amount of the
outstanding loan amount from time to time plus accrued and unpaid interest at
the stipulated rate of 5% per annum.

 

• Private Benelux BV, established in Best, the Netherlands;

 

• Peach Entertainment AB, established in Sundbyberg, Sweden;

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Article 5

 

Beate Uhse and or its subsidiaries have no obligation by reason of this
Agreement to purchase goods / products from Private and its subsidiaries.

 

Peach and Private Benelux each intend to continue their respective business
relationship with Scala and Max AB, and visa versa. However, none of such
entities shall have any obligation whatsoever by reason of this Agreement to
continue their business relationship with the others.

 

Article 6     Events of Default

 

1. Beate Uhse confirms that upon execution of this Supplementary Agreement by
all parties Private is not in default in connection with its obligations under
the Agreement. Private agrees that thereafter, if one or more of the following
events occurs and continues for not less than 10 days after written notice from
Beate Uhse to Private (“Events of Default”):

 

a. Prior to the repayment of the outstanding loan amount Private Benelux does
not deliver services or goods available in stock to Scala, or Peach does not
deliver services or goods available in stock to Max AB, in either case on a
timely basis during the term of the Agreement;

 

b. Private fails to make any payment under this Agreement when due;

 

c. Private, directly or indirectly, sells or transfers all or substantially all
of its assets;

 

d. Private, Peach or Private Benelux is adjudicated as bankrupt under applicable
law; or

 

e. a receiver, trustee or similar official is appointed to administer all or a
substantial portion of Private´s assets (including assets owned indirectly
through a subsidiary) and such action is not stayed or dismissed within 30 days;

 

then, in such event the full loan amount shall immediately become due and
payable, including interest and allowable costs, and Beate Uhse shall be free to
take any and all lawful action required to enforce its rights under the
Agreement.

 

2. If Beate Uhse decides not to buy any Private products anymore, then Beate
Uhse will give written notification thereof to Private. The outstanding amount
including interest then have to be repaid by Private in monthly equal terms,
thus that the outstanding amount will be fully repaid per 31-12-2005.

 

Article 7   Default interest

 

Any amounts which are payable to Beate Uhse under this Agreement and which are
not paid when due, shall carry interest in accordance with Section 288 BGB
(German Civil Code)

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Article 8     Miscellaneous

 

If any provision of this Agreement is or becomes invalid the validity of the
remaining provisions of this Agreement shall not be affected. The contracting
parties are obliged to replace any invalid provisions by valid provisions which
fulfil the desired purpose.

 

This Agreement is governed by the law of the Federal Republic of Germany.

 

The courts of Hamburg shall have non-exclusive jurisdiction for any controversy
out of or in connection with this Agreement.

 

Flensburg, September 2, 2004    Barcelona, August 11, 2004 Beate Uhse AG   
Private Media Group Inc.

/s/ O.C. Lindemann

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/s/ Johan Gillborg

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O.C. Lindemann    Johan Gillborg      Barcelona, August 11, 2004      Private
Benelux BV     

/s/ Johan Gillborg

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     Johan Gillborg      Sundbyberg, August 25, 2004      Peach Entertainment AB
    

/s/ Bo Rodebrant

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     Bo Rodebrant