Exhibit 10.7c


                           THIRD AMENDED AND RESTATED
                               OPERATING AGREEMENT
                                       FOR
                         PLAYBOY TV - LATIN AMERICA, LLC
                     A CALIFORNIA LIMITED LIABILITY COMPANY

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                                TABLE OF CONTENTS

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<S>     <C>                                                                                  <C>
ARTICLE I DEFINITIONS ....................................................................    2

ARTICLE II ORGANIZATIONAL MATTERS ........................................................   10

        2.1   Formation ..................................................................   10
        2.2   Name .......................................................................   10
        2.3   [Intentionally Omitted] ....................................................   11
        2.4   Office and Agent ...........................................................   11
        2.5   Addresses of the Members, the Managers and the General Manager. ............   11
        2.6   Purpose of Company .........................................................   11
        2.7   Feasibility Study ..........................................................   11
        2.8   Option to Develop the Playboy Lifestyle Channel USA in the US Lifestyle
              Territory ..................................................................   12
        2.9   On-line Internet Rights Good Faith Negotiation .............................   13
        2.10  Playboy Lifestyle Rights of Good Faith Negotiation .........................   13

ARTICLE III CAPITAL CONTRIBUTIONS ........................................................   13

        3.1   Capital Contribution .......................................................   13
        3.2   Additional Capital Contributions ...........................................   13
        3.3   Optional Capital Contributions .............................................   13
        3.4   Capital Accounts ...........................................................   14
        3.5   No Interest ................................................................   15
        3.6   Iberia Agreements ..........................................................   15

ARTICLE IV ALLOCATIONS OF NET INCOME AND NET LOSSES AND DISTRIBUTIONS ....................   15

        4.1   Allocations of Net Income and Net Loss .....................................   15
        4.2   Distribution of Distributable Cash by the Company ..........................   15
        4.3   Form of Distribution .......................................................   15
        4.4   Restriction on Distributions ...............................................   15
              4.4.1 Restriction ..........................................................   15
              4.4.2 Method of Determination ..............................................   15
              4.4.3 Personal Liability ...................................................   16
        4.5   Return of Distributions ....................................................   16
        4.6   Withholding ................................................................   16

ARTICLE V MANAGEMENT AND CONTROL OF THE COMPANY ..........................................   16

        5.1   The Management Committee ...................................................   16
              5.1.1 General Scope of Authority ...........................................   16
              5.1.2 Veto Rights ..........................................................   16
        5.2   Members of the Management Committee; Appointment and Removal; Voting. ......   18
        5.3   Meetings of the Management Committee .......................................   18
        5.4   Delegation of Authority; General Manager and Other Officers ................   19
              5.4.1 General Power to Delegate Authority ..................................   19
              5.4.2 The General Manager ..................................................   19
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<S>     <C>                                                                                  <C>
              5.4.3 Duties of the General Manager ........................................   20
              5.4.4 Additional Officers ..................................................   20
              5.4.5 Officers Serve at the Pleasure of the Management Committee ...........   20
        5.5   Interested Party Transactions ..............................................   21
              5.5.1 Approval .............................................................   21
              5.5.2 Termination and Remedies .............................................   21
              5.5.3 Priority of Payments .................................................   21
        5.6   Performance of Duties; Liability of Managers ...............................   21
              5.6.1 Standards ............................................................   21
        5.7   Management Company .........................................................   21
        5.8   Insurance ..................................................................   22

ARTICLE VI BUSINESS PLANS AND ANNUAL BUDGETS .............................................   22

        6.1   The Business Plan ..........................................................   22
              6.1.1 The Business Plan ....................................................   22
              6.1.2 Additions to Business Plan ...........................................   22
        6.2   Annual Budgets .............................................................   22
              6.2.1 Adjustment to Annual Budget ..........................................   22
              6.2.2 Required Local Programming Expenditures Allocations ..................   22
              6.2.3 Adjustment to Company Produced Programming Budget and Marketing
                    Budget ...............................................................   23

ARTICLE VII [INTENTIONALLY OMITTED] ......................................................   23

ARTICLE VIII MEMBERS .....................................................................   23

        8.1   Limited Liability ..........................................................   23
        8.2   Admission of Additional Members ............................................   23
        8.3   Withdrawals or Resignations ................................................   23
        8.4   Termination of Membership Interest .........................................   23
        8.5   Remuneration To Members.....................................................   24
        8.6   Members Are Not Agents; No Management Authority.............................   24
        8.7   Meetings of Members ........................................................   24
              8.7.1 Date, Time and Place of Meetings of Members; Secretary ...............   24
              8.7.2 Power to Call Meetings ...............................................   24
              8.7.3 Notice of Meeting ....................................................   24
              8.7.4 Manner of Giving Notice; Affidavit of Notice .........................   24
              8.7.5 Validity of Action ...................................................   24
              8.7.6 Quorum ...............................................................   24
              8.7.7 Adjourned Meeting; Notice ............................................   25
              8.7.8 Waiver of Notice or Consent ..........................................   25
              8.7.9 Action by Written Consent Without a Meeting ..........................   25
              8.7.10 Telephonic Participation by Member at Meetings ......................   25
              8.7.11 Record Date .........................................................   25
              8.7.12 Proxies .............................................................   26
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<S>     <C>                                                                                  <C>
ARTICLE IX TRANSFER AND ASSIGNMENT OF INTERESTS ..........................................   26

        9.1   Transfer and Assignment of Interests .......................................   26
        9.2   Further Restrictions on Transfer of Interests ..............................   27
        9.3   Right of First Offer .......................................................   27
        9.4   Right of First Refusal .....................................................   28
        9.5   Substitution of Members ....................................................   29
        9.6   Effective Date of Permitted Transfers ......................................   29
        9.7   Rights of Legal Representatives ............................................   29
        9.8   PEGI Buy-Up Option .........................................................   30
        9.9   Claxson Control Over Membership Interest ...................................   31
        9.10  Playboy Television B.V. and PTVLA U.S., LLC ................................   31
        9.11  Venus Operations ...........................................................   33
        9.12  Playboy Lifestyle Holding and Newco ........................................   34

ARTICLE X CONSEQUENCES OF DEATH, DISSOLUTION RETIREMENT OR BANKRUPTCY OF MEMBER ..........   35

        10.1  Withdrawal Dissolution Event................................................   35
        10.2  Purchase Price .............................................................   35
        10.3  Notice of Intent to Purchase ...............................................   35
        10.4  Election to Purchase Less Than All of the Former Member's Interest .........   35
        10.5  Payment of Purchase Price ..................................................   35
        10.6  Closing of Purchase of Former Member's Interest ............................   36
        10.7  Purchase Terms Varied by Agreement .........................................   36

ARTICLE XI ACCOUNTING, RECORDS, REPORTING BY MEMBERS .....................................   36

        11.1  Books and Records ..........................................................   36
        11.2  Delivery to Members and Inspection .........................................   37
              11.2.1 Delivery Upon Request ...............................................   37
              11.2.2 Inspection ..........................................................   37
              11.2.3 Authorized Persons ..................................................   37
              11.2.4 PEI Additional Right of Inspection ..................................   37
        11.3  Statements .................................................................   37
              11.3.1 Annual Report .......................................................   37
              11.3.2 Monthly Report ......................................................   37
              11.3.3 Tax Information .....................................................   38
        11.4  Financial and Other Information ............................................   38
        11.5  Filings ....................................................................   38
        11.6  Bank Accounts ..............................................................   38
        11.7  Accounting Decisions and Reliance on Others ................................   38
        11.8  Tax Matters for the Company Handled by Managers and Tax Matters Member .....   38

ARTICLE XII DISSOLUTION AND WINDING UP ...................................................   39

        12.1  Term .......................................................................   39
        12.2  Dissolution Events .........................................................   39
        12.3  Effect of Dissolution ......................................................   41
        12.4  Dissolution ................................................................   41
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<S>     <C>                                                                                  <C>
        12.5  Certificate of Dissolution .................................................   41
        12.6  Winding Up .................................................................   41
        12.7  Distributions in Kind ......................................................   42
        12.8  Order of Payment of Liabilities Upon Dissolution ...........................   42
              12.8.1 Distributions to Members ............................................   42
              12.8.2 Payment of Debts ....................................................   42
        12.9  Certificate of Cancellation ................................................   42
              12.10 No Action for Dissolution ............................................   42

ARTICLE XIII INDEMNIFICATION AND INSURANCE ...............................................   43

        13.1  Indemnification of Agents ..................................................   43
        13.2  Insurance ..................................................................   43

ARTICLE XIV NON-COMPETITION ..............................................................   43

        14.1  Adult Oriented Television Business Non-Competition .........................   43
        14.2  Playboy Lifestyle Business Non-Competition in the Territory ................   44
        14.3  US Playboy Lifestyle Business Non-Competition in the US Lifestyle
              Territory ..................................................................   44
        14.4  Separate Covenants .........................................................   45
        14.5  Intent; Severability .......................................................   45
        14.6  Injunctive Relief ..........................................................   46

ARTICLE XV MEMBER REPRESENTATIONS AND WARRANTIES .........................................   46

        15.1  Representations and Warranties by Each Member ..............................   46
              15.1.1 Experience ..........................................................   46
              15.1.2 No Advertising ......................................................   46
              15.1.3 Investment Intent ...................................................   46
              15.1.4 Purpose of Entity ...................................................   46
              15.1.5 Economic Risk .......................................................   46
              15.1.6 No Registration of Membership Interest ..............................   47
              15.1.7 Membership Interest in Restricted Security ..........................   47
              15.1.8 No Obligation to Register ...........................................   47
              15.1.9 No Disposition in Violation of Law ..................................   47
              15.1.10 Investment Risk ....................................................   47
              15.1.11 Restrictions on Transferability ....................................   48
              15.1.12 Information Reviewed ...............................................   48
              15.1.13 No Representations By Company ......................................   48
              15.1.14 Consultation with Attorney .........................................   48
              15.1.15 Tax Consequences ...................................................   48
              15.1.16 No Assurance of Tax Benefits .......................................   48
        15.2  Indemnity ..................................................................   48
        15.3  Procedure ..................................................................   48

ARTICLE XVI DISPUTE RESOLUTION ...........................................................   49

        16.1  Alternate Dispute Resolution ...............................................   49
        16.2  Notification and Negotiation ...............................................   49
        16.3  Arbitration Rules ..........................................................   49
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<S>     <C>                                                                                  <C>
        16.4  Selection of Arbitrators ...................................................   49
        16.5  Arbitration Procedures .....................................................   50
        16.6  Effect of Arbitration ......................................................   50
        16.7  Statute of Limitations .....................................................   50
        16.8  Service of Process .........................................................   50
        16.9  Additional Arbitration Provisions ..........................................   51
        16.10 Availability of Equitable Relief ...........................................   51

ARTICLE XVII MISCELLANEOUS ...............................................................   51

        17.1  Additional Documents and Acts ..............................................   51
        17.2  Time is of the Essence .....................................................   51
        17.3  Remedies Cumulative ........................................................   51
        17.4  Currency; Payments .........................................................   51
        17.5  Governing Law ..............................................................   52
        17.6  Authority ..................................................................   52
        17.7  Assignment; No Third Party Beneficiary .....................................   52
        17.8  Agreement Negotiated .......................................................   52
        17.9  Waivers; Remedies Cumulative, Amendments, etc ..............................   52
        17.10 Notices ....................................................................   53
        17.11 Public Announcements .......................................................   54
        17.12 Survival ...................................................................   54
        17.13 Confidentiality ............................................................   54
              17.13.1 General Confidentiality Requirements ...............................   54
              17.13.2 Exceptions to the General Confidentiality Requirements .............   54
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                                    EXHIBITS

EXHIBIT A  CAPITAL CONTRIBUTION AND ADDRESSES OF MEMBERS .................   A-1

EXHIBIT B  TAX ALLOCATIONS ...............................................   B-1

EXHIBIT C  CALCULATION OF FAIR MARKET VALUE ..............................   C-1

EXHIBIT D  [Intentionally Omitted] .......................................   D-1

EXHIBIT E  RESTRICTED TRANSFEREES ........................................   E-1

EXHIBIT F  [Intentionally Omitted] .......................................   F-1

EXHIBIT G  REGISTRATION RIGHTS ...........................................   G-1

EXHIBIT H  RELATED DOCUMENTS .............................................   H-1


                                       i
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                           THIRD AMENDED AND RESTATED
                               OPERATING AGREEMENT
                                       FOR
                         PLAYBOY TV - LATIN AMERICA, LLC
                     A CALIFORNIA LIMITED LIABILITY COMPANY

            This  Third   Amended  and  Restated   Operating   Agreement   (this
"Agreement")  of Playboy TV - Latin America,  LLC, a limited  liability  company
organized under the laws of the State of California (the "Company"), is made and
entered into on November 10, 2006, by and between Playboy  Entertainment  Group,
Inc., a Delaware corporation (together with its permitted successors and assigns
"PEGI") and Lifford  International  Co. Ltd., an International  Business Company
incorporated  under the laws of the British  Virgin  Islands  (together with its
permitted  successors  and assigns  "Lifford"),  with reference to the following
facts:

            A. On June 14, 1996,  Articles of Organization  for the Company were
filed  with  the  California   Secretary  of  State,  and  PEGI  and  Bloomfield
Mercantile,  Inc.  executed  an  operating  agreement  (the  "Initial  Operating
Agreement").

            B. On November 4, 1998, Bloomfield Mercantile,  Inc. assigned all of
its rights and obligations under the Initial Operating  Agreement to Lifford and
Lifford was admitted as a Member to the Company.

            C. On November 10, 1998,  PEGI and Lifford  amended and restated the
Initial Operating  Agreement in its entirety  effective as of June 14, 1996 (the
"First Amended and Restated Operating Agreement").

            D. On December 23, 2002 and effective as of April 1, 2002,  PEGI and
Lifford amended and restated the First Amended and Restated Operating  Agreement
in its entirety  effective as of April 1, 2002 (the "Second Amended and Restated
Operating Agreement").

            E. On June 17, 2004, PEGI and Lifford amended the Second Amended and
Restated Operating Agreement (the "Amendment").

            F. The parties  desire to amend and  restate the Second  Amended and
Restated  Operating  Agreement in order to, among other things,  (i) include the
terms of the  Amendment;  (ii)  modify the terms of the PEGI  Buy-Up  Option and
Additional  Buy-Up Option and (iii) provide  certain  agreements with respect to
the  development,  launch and operation by the Company,  through a newly formed,
wholly owned  subsidiary  Playboy  Lifestyle  Holding,  LLC, a Delaware  limited
liability  company  ("Playboy  Lifestyle  Holding"),  and its soon to be formed,
wholly owned  subsidiary,  an Argentine  limited  liability company ("Newco" and
collectively with Playboy Lifestyle Holding, the "Playboy Lifestyle Companies"),
of the  Playboy  Lifestyle  Business,  each  as more  fully  set  forth  in this
Agreement.

            NOW, THEREFORE,  for good and valuable  consideration,  the receipt,
adequacy and legal  sufficiency  of which are hereby  acknowledged,  the parties
hereby amend and restate the Second Amended and Restated Operating  Agreement in
its  entirety  under  the laws of the  State of  California  upon the  terms and
subject to the conditions of this Agreement as follows:

<PAGE>

                                    ARTICLE I
                                   DEFINITIONS

            When used in this  Agreement,  the  following  terms  shall have the
meanings set forth below:

            "AAA" has the meaning set forth in Section 16.3.

            "Act"  means  the  Beverly-Killea  Limited  Liability  Company  Act,
codified in the California Corporations Code, Section 17000 et seq., as the same
may be amended from time to time.

            "Additional Buy-Up Option" has the meaning set forth in Section 9.8.

            "Adult-Oriented"  means, with respect to a Channel or program,  that
such Channel or program  features content that is comparable to or more explicit
than the content that is  exhibited  on the Channels in the  Territory as of the
date of this Agreement;  it being understood that content that would be rated no
more restrictively than "R" by the Motion Picture Association of America as such
rating standards are currently in effect is not "Adult-Oriented" content.

            "Adult-Oriented Television Business" means the business of owning or
operating an  Adult-Oriented  television  service or distributing,  supplying or
producing Adult-Oriented programming in the Media.

            "Affiliate" means any Person,  directly or indirectly through one or
more  intermediaries,  controlling,  controlled by, or under common control with
the specified Person.  The term "control" (and  "controlled" and  "controlling,"
respectively),  as  used  in  the  immediately  preceding  sentence,  means  the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of the specified  Person  (whether by the holding of
shares or other equity interests, the possession of voting rights or otherwise).

            "Agent" has the meaning set forth in Section 13.1.

            "Agreement"   means  this  Third  Amended  and  Restated   Operating
Agreement, as originally executed and as amended from time to time in accordance
with the terms hereof.

            "Amended  Affiliation  Agreement"  means that  certain  Amended  and
Restated  Affiliation  Agreement,  dated the date  hereof,  by and  between  the
Company and PTV BV.

            "Annual Budget" has the meaning set forth in Section 6.2.

            "Articles"  means  the  Articles  of  Organization  for the  Company
originally filed with the California Secretary of State and as amended from time
to time.

            "Bankruptcy"  with respect to a Member  means:  (a) the filing of an
application by a Member for, or such Member's  consent to, the  appointment of a
trustee,  receiver, or custodian of such Member's other assets; (b) the entry of
an order for relief with respect to a Member in proceedings under the Bankruptcy
Code, as amended or superseded  from time to time; (c) the making by a Member of
a general  assignment  for the benefit of creditors;  (d) the entry of an order,
judgment, or decree by any court of competent jurisdiction appointing a trustee,
receiver,  or custodian of the assets of a Member unless the proceedings and the
person  appointed are dismissed within ninety (90) days; or (e) the failure by a
Member  generally to pay such Member's  debts as the debts become due within the
meaning of Section  303(h)(l)  of the  Bankruptcy  Code,  as  determined  by the
Bankruptcy Court, or the admission in writing of such Member's  inability to pay
its debts as they become due.

            "Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C.
101 et seq.


                                       2
<PAGE>

            "Basic  Cable"  has the  meaning  currently  or  hereafter  commonly
understood in the television industry, but will also include for all purposes of
this  Agreement  any  broadcast or other  transmission  (whether by satellite or
otherwise)  to television  sets or other  television  devices,  now or hereafter
known,  of a  program  service  (other  than  any  free  television  terrestrial
broadcast station) (a) that is included as part of a package of program services
for which members of the public pay a periodic fee for the right to receive such
package of program services, and (b) for which program service a separate fee is
not  generally  charged  for the right to  receive  the  particular  service  in
question.

            "Branded"  means a  television  service  or a  Program  or  block of
Programs where PEGI's or any PEGI Affiliate's name or trademarks are used either
in connection or close  affiliation  with the service or the Program or block of
Programs, or any related advertising.

            "Branded  Format  Programming"  has the  meaning  set  forth  in the
Program Supply Agreement.

            "Business Plan" has the meaning set forth in Section 6.1.

            "Capital  Account"  means with  respect  to any  Member the  capital
account that the Company  establishes  and maintains for such Member pursuant to
Section 3.4 and Article 1 of Exhibit B.

            "Capital Call" has the meaning set forth in Section 3.3.

            "Capital Call Due Date" has the meaning set forth in Section 3.3.

            "Capital Contribution" means the total value of cash and fair market
value of property (including  promissory notes or other obligation to contribute
cash or property)  contributed and/or services rendered or to be rendered to the
Company by Members, other than the Venus Contribution.

            "Caribbean Basin" means the following territories: Anguilla, Antigua
and Barbuda,  Aruba,  Barbados,  Bermuda, The British Virgin Islands, The Cayman
Islands,   Cuba,  Dominica,   Dominican  Republic,   Grenada,   Haiti,  Jamaica,
Montserrat,  St.  Kitts & Nevis,  St.  Lucia,  St.  Vincent and the  Grenadines,
Trinidad and Tobago, and the Turks and Caicos Islands.

            "Channels" means Playboy TV - Latin America,  the television program
service based on PEGI's Playboy  television network as programmed by PEGI in the
United States from  time-to-time,  the Spice Networks,  Venus, the G-Channel and
the Playboy Lifestyle  Channel,  and any other television  program service added
from time-to-time,  in each case, as provided for reception within the Territory
by the Company or any of its  Subsidiaries in accordance with this Agreement and
the Program Supply Agreement (each, a "Channel").

            "Cisneros Group" means (i) Gustavo A. Cisneros, Ricardo J. Cisneros,
their respective wives and direct  descendants or any entity,  including trusts,
in which Gustavo A.  Cisneros  and/or  Ricardo J.  Cisneros or their  respective
wives and direct descendants hold, directly or indirectly, at least 50.1% of the
economic  benefit or the total shares,  participations  or interests in (however
designated) corporate stock,  partnership  interests,  limited liability company
interests,  or any equivalents  thereof of such entity, and which is controlled,
directly or indirectly,  by any of such persons;  or (ii) any entity,  including
trusts,  which is  controlled,  directly  or  indirectly,  by any of  Gustavo A.
Cisneros  and/or  Ricardo  J.  Cisneros  or their  respective  wives and  direct
descendants.

            "Claim" has the meaning set forth in Section 15.2.

            "Claxson"  means Claxson  Interactive  Group Inc., an  International
Business Company incorporated under the laws of the British Virgin Islands.

            "Claxson Guarantee  Obligation" has the meaning set forth in Section
12.2.3.


                                       3
<PAGE>

            "Claxson Offer" has the meaning set forth in Section 2.8.

            "Code" means the Internal Revenue Code of 1986, as amended from time
to time, the  provisions of succeeding  law, and to the extent  applicable,  the
Treasury Regulations.

            "Company" has the meaning set forth in the preamble.

            "Company  Format  Programming"  has the  meaning  set  forth  in the
Program Supply Agreement.

            "Company Produced  Programming"  shall mean Programs produced by the
Company for exhibition on the Channels.

            "Company Produced  Programming  Budget" has the meaning set forth in
Section 6.2.1.

            "Corporations  Code"  means the  California  Corporations  Code,  as
amended from time to time, and the provisions of succeeding law.

            "CPI"  means the  Consumer  Price Index for all Urban  Consumers  as
released by the Bureau of Labor  Statistics,  U.S.  Department of Labor.  If the
Bureau of Labor Statistics,  U.S. Department of Labor (i) substantially  revises
the  methodology (in contrast to benchmark  adjustments or other  corrections of
previously  published data),  (ii)  discontinues  publication of any of the data
referred to above or (iii)  temporarily  discontinues  publication of any of the
data referred to above, the parties shall select a substitute for the revised or
discontinued  data,  in order  to  provide  substitute  data to lead to the same
adjustment  result,  insofar  as  possible,  as  would  have  been  achieved  by
continuing  the use of the original  data as it may have  fluctuated  had it not
been revised or discontinued.

            "Dissolution Event" has the meaning set forth in Section 12.2.

            "Distributable  Cash"  means the amount of cash that the  Management
Committee deems available for  distribution to the Members,  taking into account
all debts,  liabilities and obligations of the Company then due and amounts that
the Management  Committee  deems  necessary to place into reserves for customary
and usual claims with respect to the Company's business.

            "Distribution  Agreement"  means that  certain  Second  Amended  and
Restated Distribution Agreement,  dated the date hereof, between the Company and
PEGI.

            "DTM" has the meaning set forth in Section 3.6.

            "DTM Arrangement" has the meaning set forth in Section 3.6.

            "EBITDA"  means,  for any period,  the  consolidated  earnings  from
continuing operations of the Company and its Subsidiaries for such period before
interest  expense,  income taxes, the cumulative effect of changes in accounting
principle,  depreciation  of property and equipment,  amortization of intangible
assets,   amortization   of  investments  in   entertainment   programming   and
amortization of deferred financing fees.

            "Economic  Interest"  means a  Member's  share of one or more of the
Company's Net Income,  Net Losses,  and  distributions  of the Company's  assets
pursuant to this  Agreement  and the Act, but shall not include any other rights
of a Member,  including, but not limited to, the right to vote or participate in
the management, or except as provided in Section 17106 of the Corporations Code,
any right to information concerning the business and affairs, of the Company.

            "Fair Market Value" with respect to the Company or any asset thereof
means the value determined pursuant to Exhibit C.

            "Feasibility Study" has the meaning set forth in Section 2.7.


                                       4
<PAGE>

            "First Amended and Restated Operating Agreement" has the meaning set
forth in the recitals.

            "Fiscal  Year" means the Company's  fiscal year,  which shall be the
calendar year.

            "Former Member" has the meaning set forth in Section 10.1.

            "Former  Member's  Interest"  has the  meaning  set forth in Section
10.1.

            "Fully-Participating  Member"  has the  meaning set forth in Section
3.3.1.

            "GAAP" has the meaning set forth in Section 11.1.

            "G-Channel" means that certain pay-per-view,  adult content channel,
launched in 2004,  and owned and  distributed  by the  Company or any  successor
channels.

            "General Manager" has the meaning set forth in Section 5.4.2.

            "Iberia" means Spain, Portugal and Andorra.

            "Iberia Arrangements" has the meaning set forth in Section 3.6.

            "Imagen" means Imagen Satelital S.A., an Argentine corporation

            "Initial  Operating  Agreement"  has the  meaning  set  forth in the
recitals.

            "Initial  Option  Percentage"  has the  meaning set forth in Section
9.8.

            "Lifestyle Linear Television  Business" means the business of owning
or operating a Lifestyle Oriented,  advertising supported, 24 hours a day 7 days
a week linear television programming service (which may also be distributed on a
pay per view or video  on  demand  basis  offered  as a  premium  on  demand  or
subscription  on demand  solely to  subscribers  of the 24 hours a day, 7 days a
week linear television programming service).

            "Lifestyle Media Business" means the business of owning or operating
a Lifestyle Oriented programming service or distributing, supplying or producing
Lifestyle Oriented programming in the Playboy Lifestyle Media.

            "Lifestyle  Oriented"  means,  with respect to content,  programs or
advertising supported Channels, such content,  program, or advertising supported
Channel,  that is primarily  focused on themes associated with the attitudes and
values  of a group  of  persons  or  social  classification,  including  without
limitation, habits of consumption, dress, recreation and way of living; it being
understood  that Lifestyle  Oriented  content does not include  "Adult-Oriented"
content.

            "Lifford" has the meaning set forth in the preamble.

            "Lifford Managers" has the meaning set forth in Section 5.2.1.

            "Lifford US" has the meaning set forth in Section 9.10(b).

            "Major  Currency" as used herein  shall mean US Dollars,  UK Pounds,
Euros or Japanese Yen.

            "Majority  Interest"  means  one or  more  Percentage  Interests  of
Members that taken  together  exceed fifty percent (50%) of the aggregate of all
Percentage Interests.

            "Management  Co." means Claxson USA II, Inc., a Florida  corporation
(formerly known as Claxson USA, Inc.)


                                       5
<PAGE>

            "Management Committee" has the meaning set forth in Section 5.1.1.

            "Management  Services  Agreement"  means the  Amended  and  Restated
Management  Services  Agreement  dated the date  hereof  between the Company and
Management Co. relating to the provision of services by Management Co.

            "Manager" has the meaning set forth in Section 5.2.1.

            "Marketable  Security"  shall  mean  common  stock  or  an  American
Depositary  Receipt  that is listed for trading on the New York Stock  Exchange,
the NASDAQ National Market System, or the London Stock Exchange.

            "Marketing Budget" has the meaning set forth in Section 6.2.1.

            "Media"  means  all  forms  of  linear  and   nonlinear   television
exhibition,  transmission and distribution  whether now existing or developed in
the future and whether on a subscription, pay-per-view,  video-on-demand or free
basis,  including but not limited to the following:  (i) conventional VHF or UHF
television  broadcast,  (ii) Basic Cable and pay cable, (iii) "over the air pay"
subscription  television (STV), (iv) direct broadcasting by satellite (DBS), (v)
master antenna television systems (MATV), (vi) multipoint  distribution services
(MDS),  (vii)  multichannel  multipoint  distribution  services  (MMDS),  (viii)
satellite master antenna television systems (SMATV), (ix) microwave transmission
and (x) IP  television  encrypted  to a set top box.  Solely with respect to the
Playboy  Lifestyle  Business (other than the Playboy Lifestyle  Channel),  Media
shall include the Playboy Lifestyle Media as defined below.  Notwithstanding the
foregoing,  except as provided  herein,  in the Program Supply  Agreement or any
Related Documents, Media shall exclude Streaming.

            "Mediation Period" has the meaning set forth in Section 2.8.1.

            "Member"  means each Person who (a) is an initial  signatory to this
Agreement  or has been  admitted to the Company as a Member in  accordance  with
this Agreement and (b) has not resigned, withdrawn, been expelled or dissolved.

            "Member Offerees" has the meaning set forth in Section 9.3.

            "Membership  Interest"  means  a  Member's  entire  interest  in the
Company  including  the  Member's  Economic  Interest,  the  right to vote on or
participate in the management,  and the right to receive information  concerning
the business and affairs, of the Company.

            "Negotiated  Purchase  Price" has the  meaning  set forth in Section
9.3.

            "Net Income" and "Net Losses" have the meanings set forth in Article
2 of Exhibit B hereto.

            "Newco" has the meaning set forth in the recitals.

            "Non-Contributing  Member"  has the  meaning  set  forth in  Section
3.3.1.

            "Notice" has the meaning set forth in Section 16.2.

            "Offer Notification" has the meaning set forth in Section 9.3.

            "Offered  Membership  Interest" has the meaning set forth in Section
9.3.

            "Optional Capital Contribution" has the meaning set forth in Section
3.3.

            "PEGI" has the meaning set forth in the preamble.


                                       6
<PAGE>

            "PEGI Buy-Up Option" has the meaning set forth in Section 9.8.

            "PEGI Managers" has the meaning set forth in Section 5.2.1.

            "PEI" means Playboy Enterprises, Inc., a Delaware corporation.

            "PEI Rejection" has the meaning set forth in Section 2.8.1.

            "PEI Reply" has the meaning set forth in Section 2.8.1.

            "PEI Representatives" has the meaning set forth in Section 11.2.4.

            "PEI Second Rejection" has the meaning set forth in Section 2.8.1.

            "PEI Stock" has the meaning set forth in Section 9.8(b).

            "Percentage  Interest"  means the  percentage  of a Member set forth
opposite the name of such Member under the column "Member's Percentage Interest"
in  Exhibit A  hereto,  as such  percentage  may be  adjusted  from time to time
pursuant to the terms of this Agreement.

            "Person"  means  an   individual,   general   partnership,   limited
partnership,  limited liability company, corporation, trust, estate, real estate
investment trust, association or any other entity.

            "Playboy  Lifestyle  Business"  means,  the  business  of  owning or
operating the Playboy Lifestyle Programming Services or distributing, licensing,
sublicensing,  supplying or producing Playboy Lifestyle  Programming Services in
the Playboy Lifestyle Media.

            "Playboy  Lifestyle Capital  Contribution" has the meaning set forth
in Section 3.3.2.

            "Playboy Lifestyle Channel" has the meaning set forth in the Program
Supply Agreement.

            "Playboy  Lifestyle  Channel  USA" has the  meaning set forth in the
Program Supply Agreement.

            "Playboy Lifestyle Channel USA  Non-Competition" has the meaning set
forth in Section 2.8.1.

            "Playboy  Lifestyle  Companies"  has the  meaning  set  forth in the
recitals.

            "Playboy  Lifestyle  Holding"  has  the  meaning  set  forth  in the
recitals.

            "Playboy  Lifestyle  Media"  means  the  Media and any and all other
forms of  audiovisual  distribution,  exhibition and  transmission  now known or
hereafter devised, linear and non linear,  including but not limited to wireless
transmission  technologies,  wireless messaging  technologies and other wireless
network technologies  primarily intended to transmit voice, video, still images,
or data to mobile devices (including  cellular phones,  handhelds,  and personal
digital  assistants),  video on demand,  near video on demand, or portable media
players.  Notwithstanding  the  foregoing,  except as  provided  herein,  in the
Program Supply Agreement or any Related Documents, Playboy Lifestyle Media shall
exclude  Streaming,  including IP television  that is not encrypted to a set top
box.

            "Playboy  Lifestyle  Note" means that certain  Senior Secured Credit
Promissory  Note  dated as of the date  hereof  executed  by  Playboy  Lifestyle
Holding and payable to the order of  Lifford,  which,  except as provided in the
related Pledge and Security Agreement  executed as of the date hereof,  shall be
nonrecourse to the Company.

            "Playboy  Lifestyle   Programming  Service"  means  any  Branded  or
Unbranded  programming  service  or  content  and the  marketing  thereof in the
Playboy  Lifestyle  Media,  including


                                       7
<PAGE>

through  promotional  websites,  that is  Lifestyle  Oriented  and is not  Adult
Oriented, including, without limitation, the Playboy Lifestyle Channel.

            "Program"  or  "Programming"  means any program  which is, or may be
scheduled to be, broadcast or transmitted on the Channels.

            "Program Supply  Agreement"  means the Amended and Restated  Program
Supply Agreement,  executed concurrently herewith dated the date hereof, between
PEGI and the Company with respect to the supply of programming  for the Channels
and the license of certain trademarks.

            "Proposed Purchaser" has the meaning set forth in Section 9.4(a).

            "PTV BV" has the meaning set forth in Section 9.10(a).

            "PTV Holdings" has the meaning set forth in Section 9.10(a).

            "PTV UK" has the meaning set forth in Section 3.6.

            "PTV US" has the meaning set forth in Section 9.10(a).

            "PTV US  Affiliation  Agreement"  means  that  certain  Amended  and
Restated  Affiliation  Agreement,  dated the date  hereof,  by and  between  the
Company and PTV US.

            "Purchase Notification" has the meaning set forth in Section 9.3.

            "Reference  Rate" means the reference rate as set forth from time to
time by The Bank of America Corporation.

            "Related  Documents"  means those  agreements set forth on Exhibit H
attached hereto.

            "Remaining Members" has the meaning set forth in Section 10.1.

            "Remediable Breach" has the meaning set forth in Section 12.2.2(b).

            "Renewal" has the meaning set forth in Section 5.4.5.

            "Required  Expenditure  Adjustment"  has the  meaning  set  forth in
Section 6.2.3.

            "Response" has the meaning set forth in Section 16.2.

            "Rules" has the meaning set forth in Section 16.3.

            "Sales  Services  Agreement"  Amended and  Restated  Sales  Services
Agreement, dated as of the date hereof, by and between Imagen and the Company.

            "SEC" means the U.S. Securities and Exchange Commission.

            "Second  Amended and Restated  Operating  Agreement" has the meaning
set forth in the recitals.

            "Second Option Percentage" has the meaning set forth in Section 9.8.

            "Securities Act" has the meaning set forth in Section 15.1.6.

            "Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.

            "Selling Member" has the meaning set forth in Section 9.3.


                                       8
<PAGE>

            "Shortfall" has the meaning set forth in Section 6.2.3.

            "Spice Networks" means  collectively,  Spice Digital Networks,  Club
Jenna, Spice:Xcess, fresh! and shorteez, and successor networks, if any, as PEGI
may include from time-to-time, as programmed by PEGI.

            "Streaming"  means the delivery of audio and/or  visual  programming
whether in real time or by program  download  (including,  but not  limited  to,
RealVideo,  any format that  operates on the Windows  Media  Player or any other
streaming or direct  download  audio and/or  visual  software)  through the data
delivery protocol known as TCP/Internet Protocol or any successor or replacement
protocol to any recipient for purposes of viewing.

            "Subsequent  Transfer  Offer  Period"  has the  meaning set forth in
Section 9.3.

            "Subsequent  Third-Party  Transfer Offer Period" has the meaning set
forth in Section 9.4(b).

            "Subsidiary"  means,  with  respect to any  Person at any time,  any
corporation,  partnership, limited liability company or other entity, a majority
of  the  equity  interests  of  which  shall,  at  the  time  as  of  which  any
determination  is made,  be  owned,  controlled  or held by such  Person  either
directly or through Subsidiaries of such Person.

            "Tax Matters Member" shall be Lifford or such Member's  successor as
designated pursuant to Section 11.8.

            "Term" has the meaning set forth in Section 12.1.

            "Terms" has the meaning set forth in Section 9.3.

            "Territory" means (a) Mexico and each country comprising Central and
South America;  (b) Spain,  Portugal and Andorra (c) the Caribbean Basin and (d)
the territories and possessions of each of the foregoing.

            "Third Party" has the meaning set forth in Section 17.14.2(a).

            "Third Party Buyer" has the meaning set forth in Section 9.3.

            "Third Party  Transfer  Notice" has the meaning set forth in Section
9.4(a).

            "Third-Party  Transfer  Offer  Period"  has the meaning set forth in
Section 9.4(b).

            "Transfer" has the meaning set forth in Section 9.1.

            "Transfer Offer Period" has the meaning set forth in Section 9.3.

            "Treasury Regulations" has the meaning set forth in Exhibit B.

            "Unbranded"  means a  television  service  or a Program  or block of
Programs  where PEGI's or any PEGI  Affiliate's  name or trademarks are not used
either in  connection  or close  affiliation  with the service or the Program or
block of Programs or any related advertising other than in customary production,
logo credits or end  sequences  of such  Program or block of  Programs,  for use
solely in the credit block in advertising for such Program, where applicable.

            "US Lifestyle  Territory" means the United States and Canada,  their
territories and possessions.

            "US Option Confirmation" has the meaning set forth in Section 2.8.1.


                                       9
<PAGE>

            "US Option Period" has the meaning set forth in Section 2.8.1.

            "Venus" means that certain  premium and  pay-per-view  adult content
channel, launched in 1994, and owned and distributed throughout Latin America by
Claxson and its Subsidiaries and Affiliates.

            "Venus Argentina" has the meaning set forth in Section 9.11.

            "Venus  Assets" has the meaning set forth in the Venus  Contribution
Agreement.

            "Venus  Contribution"  means Claxson's  contribution of Venus to the
Company pursuant to the Venus Contribution Agreement.

            "Venus Contribution Agreement" means that certain Venus Contribution
Agreement  dated as of December 23, 2002,  by and among  Claxson,  Lifford,  the
Company and PEGI.

            "Venus Entities" has the meaning set forth in Section 9.11.

            "Venus International" has the meaning set forth in Section 9.11.

            "Web Site Revenue  Share  Agreement"  means the Amended and Restated
Web  Site  Revenue  Share  Agreement,  dated  the  date  hereof,  by  and  among
Playboy.com, Inc., a Delaware corporation, Claxson and the Company.

            "Wireless  Distribution  Agreement" means the Wireless  Distribution
Agreement,  dated  September 1, 2005, by and between  Playboy.com,  Inc. and the
Company  which the  parties  agree will be amended or  restated  to reflect  the
Playboy Lifestyle Business within thirty (30) days of the date hereof.

            "Withdrawal  Dissolution  Event" means,  with respect to any Member,
one  or  more  of the  following:  the  expulsion,  Bankruptcy,  dissolution  or
occurrence of any other event that  terminates  the continued  membership of any
Member  unless the other  Member(s)  consent to  continue  the  business  of the
Company pursuant to Section 10.1.

            "Zagasse" has the meaning set forth in Section 9.10(b).

                                   ARTICLE II
                             ORGANIZATIONAL MATTERS

      2.1 Formation. Pursuant to the Act, the Members formed a limited liability
company  under the laws of the State of  California  by filing the Articles with
the  California  Secretary  of State and  entering  into the  Initial  Operating
Agreement.  The  rights  and  liabilities  of the  Members  shall be  determined
pursuant  to the Act and  this  Agreement.  To the  extent  that the  rights  or
obligations  of any  Member are  different  by reason of any  provision  of this
Agreement  than they would be in the absence of such  provision,  this Agreement
shall, to the extent  permitted by the Act,  control.

      2.2 Name.  The name of the Company  shall be "Playboy TV - Latin  America,
LLC." The  Management  Committee  shall be  permitted  to change the name of the
Company to any name  approved by the PEGI  Managers,  such  approvals  not to be
unreasonably  withheld.  The business of the Company may be conducted under such
name in compliance  with  applicable  laws.  The General  Manager shall file any
fictitious name  certificates and similar filings,  and any amendments  thereto,
that   the   Management   Committee   considers    appropriate   or   advisable.
Notwithstanding  the  foregoing,  if there is no PEGI Manager on the  Management
Committee or PEGI is no longer a Member, at PEGI's request the Articles shall be
amended  to change the name of the  Company  to a name that does not  contain or
utilize any Playboy trademarks or any confusingly similar designation or mark.


                                       10
<PAGE>

      2.3 [Intentionally Omitted].

      2.4 Office and Agent.  The Company shall  continuously  maintain an office
and  registered  agent in the State of  California  as required by the Act.  The
principal  office  of the  Company  shall  be as the  Management  Committee  may
determine.  The Company also may have such offices,  anywhere within and without
the  State of  California,  as the  Management  Committee  from time to time may
determine,  or the business of the Company may  require.  The  registered  agent
shall be as stated in the Articles or as otherwise  determined by the Management
Committee.

      2.5 Addresses of the Members,  the Managers and the General  Manager.  The
respective  addresses  of the Members are set forth on Exhibit A, which  exhibit
will be modified from time to time to reflect  changes  therein.  The respective
addresses of the Managers and the General  Manager  shall be  maintained  in the
books of the Company and made available to any Member on request.

      2.6  Purpose of  Company.  The  purpose of the Company is to engage in any
lawful activity for which a limited liability company may be organized under the
Act.  Notwithstanding  the  foregoing,  without  the  majority  approval  of the
Management  Committee and subject to the veto right under Section 5.1.2(a),  the
Company  shall not  engage in any  business  other  than (i) the  Adult-Oriented
Television  Business  in the  Territory;  (ii)  licensing  programming  to third
parties in the Territory, except for Company Produced Programming,  which can be
distributed  worldwide to PEGI or one of its Affiliates pursuant to the terms of
the Distribution  Agreement;  (iii)  development and marketing of Adult-Oriented
commercial  websites,  subject  to any  restrictions  set  forth in the Web Site
Revenue Share Agreement,  targeted to Spanish and Portuguese  language audiences
in the Territory,  including the Company websites,  Venus commercial website and
Spice  websites;  (iv) the  Playboy  Lifestyle  Business in the  Territory;  (v)
licensing Company Produced  Programming and Company Format Programming  produced
for the Playboy  Lifestyle  Business (other than Branded Format  Programming) or
otherwise to third parties worldwide in any and all media now known or hereafter
devised;  (vi)  content  distribution  via  wireless  media  in  the  Territory,
including pursuant to the Wireless Distribution Agreement;  and (vii) such other
activities  ancillary  and related  thereto as may be  necessary,  advisable  or
appropriate,  in the reasonable  opinion of the Management  Committee to further
the  businesses  set forth in  clauses  (i) - (vi)  above.  Notwithstanding  any
territorial  or other  restrictions  contained  in this  Agreement,  the parties
hereto  acknowledge  that the distribution of the Channels in Puerto Rico in the
Spanish language via DirecTV Latin America, LLC, so long as such distribution is
conducted  solely  in Puerto  Rico in  Spanish  via DTH,  shall not be deemed to
violate any such territorial  restrictions.  Notwithstanding  any territorial or
other  restrictions  contained  in  this  Agreement,  Branded  Company  Produced
Programming  and Branded  Company  Format  Programming  produced for the Playboy
Lifestyle Business may only be exploited in the US Lifestyle  Territory with the
written consent of PEGI, such consent not to be unreasonably withheld.

      2.7 Feasibility  Study. The Playboy Lifestyle  Companies shall conduct and
complete a feasibility  study (the  "Feasibility  Study") within twenty one (21)
months of this Agreement,  to determine the feasibility and economic  benefit of
creating  a  Playboy  Lifestyle  Channel  USA in both the  English  and  Spanish
languages  in the US  Lifestyle  Territory.  The cost  incurred  by the  Playboy
Lifestyle  Companies to complete or cause the Feasibility  Study to be completed
shall be financed by the  proceeds of the Playboy  Lifestyle  Note and shall not
exceed Five Hundred Thousand Dollars  (U.S.$500,000).  If the costs incurred for
the completion of the Feasibility  Study are less than  U.S.$200,000,  PEI shall
have the right to reject the Feasibility Study to serve as the basis for Claxson
to make the Claxson Offer (as defined below).  The Playboy  Lifestyle  Companies
shall  actively  seek  input  from and  provide  updates  for each  stage of the
Feasibility Study to representatives of each of Claxson and PEI. Upon completion
of the Feasibility  Study, the Playboy Lifestyle  Companies shall furnish a copy
of the Feasibility Study to Claxson and PEI.


                                       11
<PAGE>

      2.8  Option  to  Develop  the  Playboy  Lifestyle  Channel  USA  in the US
Lifestyle Territory.

            2.8.1 On or prior to the date  that is ninety  (90)  days  after the
completion of the Feasibility Study,  Claxson may, in its sole and discretionary
option, offer to PEI a written proposal for the creation,  including a suggested
time  frame for the  launch,  of the  Playboy  Lifestyle  Channel  USA in the US
Lifestyle  Territory  which  shall  not  exceed  12  months  from the US  Option
Confirmation (the "Claxson Offer"). If Claxson fails or refuses to make a timely
Claxson  Offer,  all of the terms and  conditions  related  to the US  Lifestyle
Territory  shall be null and void and of no further effect and PEI shall have no
further  obligations with respect to the Playboy Lifestyle Channel USA in the US
Lifestyle Territory including PEI's and its Subsidiaries non compete obligations
set forth in Section 14.3.1,  provided,  however, that Claxson shall be bound by
the non compete  obligations  regarding the Lifestyle Linear Television Business
in the US  Lifestyle  Territory  set forth in  Sections  14.3.2 and  14.3.4.  If
Claxson makes a timely Claxson Offer to PEI, PEI shall have ninety (90) days to,
in writing,  accept,  reject or provide comments and modifications in good faith
to the Claxson Offer (the "PEI Reply"). If PEI accepts the Claxson Offer it will
be deemed as a "US Option  Confirmation".  If PEI rejects  the Claxson  Offer or
fails or  refuses  to make a timely  PEI Reply it will be deemed as a  rejection
("PEI Rejection") and PEI and its Subsidiaries shall be bound by the non compete
obligations  regarding  the  Lifestyle  Linear  Television  Business  in  the US
Lifestyle  Territory  set forth in Sections  14.3.3 and 14.3.4.  If PEI provides
Claxson with a timely PEI Reply other than a US Option Confirmation, the parties
shall have an additional thirty (30) days to meet, confer and agree to the terms
and  conditions of the Claxson Offer as modified by the PEI Reply and as further
negotiated by the parties in such 30-day period.  If Claxson fails or refuses to
meet and  confer  with PEI  during  such  30-day  period,  all of the  terms and
conditions  related to the US Lifestyle  Territory shall be null and void and of
no further effect and PEI shall have no further  obligations with respect to the
Playboy Lifestyle Channel USA in the US Lifestyle  Territory including PEI's and
its Subsidiaries non compete obligations set forth in Section 14.3.1,  provided,
however,  that Claxson shall be bound by the non compete  obligations  regarding
the Lifestyle Linear Television Business in the US Lifestyle Territory set forth
in  Sections  14.3.2 and  14.3.4.  If the parties can not agree on the terms and
conditions during such thirty (30) day period,  the parties shall continue their
discussions in good faith for a period of 180 days (the "Mediation Period") with
the  participation of a non-binding  mediator  appointed by the parties who will
work in mediating and resolving the  differences  for the launch and development
of the Playboy Lifestyle Channel USA in the US Lifestyle  Territory.  Unless the
parties otherwise agree, Fred Vierra shall act as the mediator. If Claxson fails
or refuses to  participate  during the  Mediation  Period,  all of the terms and
conditions  related to the US Lifestyle  Territory shall be null and void and of
no further effect and PEI shall have no further  obligations with respect to the
Playboy Lifestyle Channel USA in the US Lifestyle  Territory including PEI's and
its Subsidiaries non compete obligations set forth in Section 14.3.1,  provided,
however,  that Claxson shall be bound by the non compete  obligations  regarding
the Lifestyle Linear Television Business in the US Lifestyle Territory set forth
in Sections 14.3.2 and 14.3.4.  If during the Mediation Period the parties agree
to the terms and conditions  for the creation,  including a suggested time frame
for  the  launch,  of the  Playboy  Lifestyle  Channel  USA in the US  Lifestyle
Territory, it will be deemed a "US Option Confirmation." If after the expiration
of the  Mediation  Period,  the parties  have not reached an  agreement  for the
launch and development of the Playboy  Lifestyle Channel USA in the US Lifestyle
Territory it will be deemed a rejection  by PEI to launch the Playboy  Lifestyle
Channel USA in the US Lifestyle Territory ("PEI Second Rejection"),  and PEI and
its Subsidiaries shall be bound by the non-competition provisions related to the
Lifestyle Linear Television  Business in the US Lifestyle Territory set forth in
Sections 14.3.3 and 14.3.4 ("Playboy Lifestyle Channel USA Non-Competition"). If
the parties  reach an agreement on the terms and  conditions  for the launch and
development of the Playboy Lifestyle Channel USA in the US Lifestyle  Territory,
including an estimated time schedule for the launch of the channel,  the parties
shall be bound by the non-competition provisions related to the Lifestyle Linear
Television Business in the US Lifestyle Territory set forth in Section 14.3. The
period from the date of this  Agreement  until the  expiration  of the Mediation
Period shall be hereinafter referred to as the "US Option Period".


                                       12
<PAGE>

            2.8.2  Notwithstanding the above, during the period of discussion of
the Feasibility  Study and the negotiation of the Claxson Offer, PEI and Claxson
agree to consult on the  potential  development  and  expansion  of the  Playboy
Lifestyle  Channel  USA  into  other  forms of  media,  other  than the  Playboy
Lifestyle Channel USA, including other forms of non-linear  television,  on-line
and wireless media distribution.

      2.9 On-line Internet Rights Good Faith Negotiation. Except with respect to
the US Lifestyle  Territory,  PEI and Claxson  agree to negotiate in good faith,
for a period of 180 days  following  the date of this  Agreement,  to  determine
reasonable  terms and conditions,  for the extension of the  distribution of the
Adult Oriented Television Business and the Playboy Lifestyle Business (which for
purposes  of the  Playboy  Lifestyle  Business  shall  include a 6% license  fee
calculated  based on the gross annual revenues earned and actually  collected by
the  Playboy  Lifestyle  Companies  for the  applicable  business),  for on-line
Internet rights, including Streaming, in the Territory other than Brazil.

      2.10 Playboy Lifestyle Rights of Good Faith Negotiation.  If PEI or any of
its  Affiliates  determines  to  extend  the  Playboy  Lifestyle  Business  or a
competing  business into any territory  outside of the Territory  other than the
United States and its territories  and possessions  which are subject to Section
2.8, PEI agrees to negotiate in good faith with Claxson to determine  reasonable
terms and conditions,  for the participation of Claxson or its Affiliates in the
extension  of the  distribution  of the  Playboy  Lifestyle  Business  into such
territory.

                                   ARTICLE III
                              CAPITAL CONTRIBUTIONS

      3.1  Capital  Contribution.  Each Member has  contributed  the amounts set
forth on  Exhibit  A.  Exhibit A shall be  revised  to  reflect  any  additional
contributions  contributed  in  accordance  with  Section  3.3.  Notwithstanding
anything to the contrary  contained  herein,  the parties agree and  acknowledge
that the Venus  Contribution  shall have no impact on the  Capital  Accounts  of
Lifford and PEGI.

      3.2 Additional Capital Contributions.  No Member shall be required to make
any additional Capital Contributions.

      3.3  Optional  Capital   Contributions.   The  Management   Committee  may
reasonably  determine in good faith from time to time, that  additional  Capital
Contributions  from the Members (each, an "Optional Capital  Contribution")  are
necessary or appropriate  for the conduct of the Company's  business,  including
without limitation,  expansion or diversification  thereof.  Upon the Management
Committee making such a determination,  the Company shall provide written notice
of such request for additional Capital  Contributions (a "Capital Call") to each
Member not less than  thirty (30) days prior to the date such  Optional  Capital
Contributions are due (the "Capital Call Due Date"). Such notice shall set forth
the aggregate  amount of the Capital  Call,  the purposes for which such Capital
Contributions will be used and the date on which Optional Capital  Contributions
are due. No Member shall be  obligated  to make any such Capital  Contributions.
However,  each Member shall have the  opportunity,  but not the  obligation,  to
participate  in a  Capital  Call on a pro  rata  basis  in  accordance  with its
Percentage Interest by making an Optional Capital  Contribution.  In addition, a
Member  may  elect to make its  Optional  Capital  Contribution  conditional  (a
"Conditional  Capital   Contribution")  upon  the  other  Members  making  their
respective  Optional  Capital  Contributions,  in which  event such  Conditional
Capital  Contribution  shall be deemed made, if at all, only at such time as the
other Members make their respective Optional Capital Contributions.  If a Member
elects to make a Conditional Capital  Contribution and the other Members decline
or fail to make  their  respective  Optional  Capital  Contributions,  then  the
Company shall  immediately  return the Conditional  Capital  Contribution to the
Member making such Conditional Capital


                                       13
<PAGE>

Contribution and such Conditional Capital  Contribution shall be deemed never to
have been made.  Immediately  following any Optional  Capital  Contribution by a
Member,  the Percentage  Interests shall be adjusted to reflect the new relative
proportions  of the Capital  Accounts of the  Members.  Each of Lifford and PEGI
will have the right,  by written  notice to the  General  Manager  and the other
Members at least five (5) business  days prior to the Capital Call Due Date,  to
fund its Optional Capital  Contributions through retention by the Company of the
fees payable under the Related Documents then accrued,  to the extent sufficient
to cover such  requirements,  subject to the timely  review and  approval of the
other Members of the offset amount.

            3.3.1 If a Member  (a  "Non-Contributing  Member")  does not make an
Optional Capital Contribution equal to its pro rata share of the Capital Call by
the Capital  Call Due Date,  the Company  shall  notify each Member that made an
Optional Capital  Contribution  equal to its pro rata share of such Capital Call
(each, a "Fully-Participating Member") that such Fully-Participating Member may,
within the fourteen  (14) day period from the date of such notice,  increase its
Optional  Capital  Contribution  to  the  Company  to  cover  amounts  that  the
Non-Contributing  Member  declined to contribute  on a pro rata basis,  in which
case the  Percentage  Interests of the Members  shall be adjusted to reflect the
new relative proportions of the Capital Accounts of the Members.

            3.3.2 Until the full payment or  acceleration of all Obligations (as
defined in the Playboy  Lifestyle  Note) under the Playboy  Lifestyle  Note, the
Members  of the  Company  (other  than  Lifford or its  Affiliates  who are then
Members of the  Company)  shall have the  option to make an  additional  Capital
Contribution  in an amount  equal to the  number  obtained  by  multiplying  the
aggregate amount of such Members'  Percentage  Interest by the quotient obtained
by dividing the sum of the  outstanding  amount of principal  and interest  then
outstanding under the Playboy Lifestyle Note by Lifford's (or its Affiliates who
are then Members of the Company)  Percentage  Interest (the  "Playboy  Lifestyle
Capital Contribution").  This option may only be exercised if all of the Members
of the Company (other than Lifford or its Affiliates who are then Members of the
Company)  agree to make the  Playboy  Lifestyle  Capital  Contribution.  If this
option is exercised (i) the Company shall  immediately  contribute the amount of
the Playboy  Lifestyle Capital  Contribution to the Playboy Lifestyle  Companies
and (ii) Lifford (or its  Affiliates  who are then Members of the Company) shall
be deemed to have made a Playboy Lifestyle Capital Contribution in the amount of
principal and interest outstanding under the Playboy Lifestyle Note and the loan
evidenced by the Playboy  Lifestyle Note shall be capitalized and converted into
Membership  Interests which for the avoidance of doubt shall result in no change
in the respective  Member's  Percentage  Interest.  For purposes of illustration
only,  if $81.00 in  principal  and simple  interest  is owed under the  Playboy
Lifestyle Note and Lifford's  Percentage  Interest is 81% and PEGI's  Percentage
Interest is 19% and the  Members  agree to make the  Playboy  Lifestyle  Capital
Contribution,  then PEGI will be  required  to make a  Capital  Contribution  of
$19.00 to the  Company  and in exchange  for the  capitalization  of the Playboy
Lifestyle  Note,  Lifford will be deemed to have made a Capital  Contribution of
$81.00  through the surrender and  capitalization  of the loan under the Playboy
Lifestyle Note for the same amount and as a result,  no change in the respective
Member's  Percentage  interest will occur.  ( i.e.,  .19 x ($81/.81) = $19). For
clarification  purposes,  pursuant to Section 8 of the Playboy  Lifestyle  Note,
upon  the  exercise  of  the  option  to  make  the  Playboy  Lifestyle  Capital
Contribution,  the total amount of interest accrued under the Playboy  Lifestyle
Note, whether paid or unpaid, shall be recalculated as simple interest,  without
compounding.

      3.4 Capital  Accounts.  The Company has established an individual  Capital
Account for each Member in accordance  with Article 1 of Exhibit B hereto.  If a
Member  transfers all or a part of its  Membership  Interest in accordance  with
this Agreement,  such Member's  Capital Account  attributable to the transferred
Membership  Interest  shall  carry  over to the  new  owner  of such  Membership
Interest pursuant to Treasury  Regulations  Section  l.704-l(b)(2)(iv)(l).  Each
Member's Capital Account as of the date hereof is set forth in Exhibit A hereto.


                                       14
<PAGE>

      3.5 No  Interest.  No Member  shall be entitled to receive any interest on
its Capital Contributions.

      3.6 Iberia Agreements. The parties acknowledge that Playboy TV UK Limited,
a wholly owned subsidiary of PEGI ("PTV UK") has entered into certain agreements
through  Desarrollos   Tecnicos   Multimedia  s.l.  ("DTM"),   relating  to  the
distribution  of  Private  Spice  and The  Adult  Channel  in  Iberia  (the "DTM
Arrangement").  The parties agree and acknowledge that, notwithstanding anything
to the contrary contained in the Agreement,  PEGI shall have the right to modify
the DTM  Arrangement  and enter  into  other  arrangements,  in its own right or
through its  Affiliates  or agents,  to distribute  Private Spice in Iberia,  as
determined  by PEGI in its  sole  and  absolute  discretion  from  time to time,
including but not limited to via DTH  (together  with the DTM  Arrangement,  the
"Iberia Arrangements"). The parties hereby agree that PEGI shall pay over to the
Company fifty percent (50%) of the net revenues that it receives from the Iberia
Arrangements,  net of all payments due and payable to its agents relating to the
Iberia Arrangement and any withholding required by applicable law, following the
end of the  applicable  quarter.  It is  understood  and agreed that the initial
sales  agent for  distribution  of  Private  Spice in Iberia  other than the DTM
Arrangement will be Imagen pursuant to the Sales Services Agreement.

                                   ARTICLE IV
           ALLOCATIONS OF NET INCOME AND NET LOSSES AND DISTRIBUTIONS

      4.1  Allocations of Net Income and Net Loss. Net Income and Net Loss shall
be allocated to the Members in accordance with Article 1 of Exhibit B.

      4.2  Distribution  of  Distributable  Cash  by  the  Company.  Subject  to
applicable law and any limitations  contained  elsewhere in this Agreement,  the
Management Committee shall cause the Company to distribute Distributable Cash on
a  quarterly  basis to the  Members,  which  distributions  shall be made to the
Members  in  proportion  to  their  Percentage  Interests  as of the  end of the
relevant quarter.

      4.3 Form of  Distribution.  Except as provided in Section  12.7, a Member,
regardless of the nature of the Member's Capital  Contribution,  has no right to
demand and  receive  any  distribution  from the  Company in any form other than
money.  No Member may be compelled to accept from the Company a distribution  of
any asset in kind in lieu of a proportionate distribution of money being made to
other Members.  Except upon a dissolution and the winding up of the Company,  no
Member may be compelled to accept a distribution of any asset in kind.

      4.4 Restriction on Distributions.

            4.4.1  Restriction.  No distribution  shall be made if, after giving
effect to the distribution:

            (a) The  Company  would not be able to pay its debts as they  become
due in the usual course of business.

            (b) The  Company's  total  assets  would be less than the sum of its
total liabilities.

            4.4.2 Method of Determination.  The Management  Committee may base a
determination that a distribution is not prohibited on any of the following: (i)
financial   statements  prepared  on  the  basis  of  accounting  practices  and
principles  that  are  generally  consistent  with  those  used to  prepare  the
Company's  audited  financial  statements;  (ii) a fair valuation;  or (iii) any
other method that is reasonable in the circumstances.


                                       15
<PAGE>

            Except as provided in Section 17254(e) of the Corporations Code, the
effect  of a  distribution  is  measured  as of the  date  the  distribution  is
authorized if the payment  occurs within one hundred twenty (120) days after the
date of  authorization,  or the date  payment is made if it occurs more than one
hundred twenty (120) days of the date of authorization.

            4.4.3  Personal  Liability.  A Member  or  Manager  who  votes for a
distribution  in violation of this Agreement or the Act is personally  liable to
the Company for the amount of the distribution that exceeds what could have been
distributed  without  violating  this  Agreement or the Act if it is established
that the  Member or  Manager  did not act in  compliance  with the terms of this
Agreement.  Any Member or Manager  who is so liable  shall be entitled to compel
contribution from (a) each other Member or Manager who also is so liable and (b)
each  Member  for the  amount  the  Member  received  with  knowledge  of  facts
indicating that the  distribution was made in violation of this Agreement or the
Act.

      4.5 Return of Distributions. Except for distributions made in violation of
the  Act or  this  Agreement,  no  Member  shall  be  obligated  to  return  any
distribution  to the  Company  or pay the  amount  of any  distribution  for the
account of the  Company or to any  creditor  of the  Company.  The amount of any
distribution  returned  to the  Company  by a Member or paid by a Member for the
account of the  Company or to a creditor  of the  Company  shall be added to the
account or accounts from which it was subtracted  when it was distributed to the
Member.

      4.6  Withholding.  Notwithstanding  any other provision of this Agreement,
the Management  Committee is authorized to take any action that it determines to
be  necessary  or  appropriate  to cause the Company to comply with any federal,
state,  local or foreign  withholding  requirement  with respect to any payment,
allocation or  distribution  by the Company to any Member or other  person.  Any
amount  withheld  pursuant  to the  preceding  sentence  shall be  treated  as a
distribution  to the Member to which  such  amount  would have been  distributed
under  this  Agreement  but  for  the  withholding.   If  any  such  withholding
requirement with respect to any Member exceeds the amount  distributable to such
Member under this  Agreement,  or if any such  withholding  requirement  was not
satisfied with respect to any item previously paid,  allocated or distributed to
such  Member,  such Member or any  successor  or assignee  with  respect to such
Member's  interest  hereby  indemnifies  and agrees to hold  harmless  the other
Members and the Company for such excess amount or such  unsatisfied  withholding
requirement, as the case may be, and any penalties assessed on such amounts.

                                    ARTICLE V
                      MANAGEMENT AND CONTROL OF THE COMPANY

      5.1 The Management Committee.

            5.1.1 General  Scope of  Authority.  The business and affairs of the
Company  shall  be  managed  by a  management  committee  of  the  Company  (the
"Management  Committee")  appointed and  constituted  in the manner  provided in
Section  5.2 hereof.  The  Management  Committee  shall be  responsible  for all
aspects  of the  operations  and  development  of the  Company  and,  except  as
otherwise  expressly  provided for in this Agreement,  the Management  Committee
shall  have  exclusive  authority  and  full  discretion  with  respect  to  the
management  of the business of the Company and shall have the  exclusive  right,
power and  authority  to cause the Company to do, or cause to be done,  all acts
and actions  which in its sole  judgment are  necessary,  proper,  convenient or
desirable  in order to operate and  conduct  the  business of the Company and to
carry out and fulfill the purposes of the Company.

            5.1.2  Veto  Rights.   Notwithstanding   anything  to  the  contrary
contained in this Agreement: (i) the Lifford Managers may (so long as Lifford or
any of its  Affiliates  is a Manager) and the PEGI Managers may (so long as PEGI
or any of its  Affiliates  is a Manager)  veto any  decision  of the


                                       16
<PAGE>

Management  Committee  to perform,  or cause the Company to perform,  any of the
acts or transactions  described in subsections  (d) and (h) below;  and (ii) the
Lifford  Managers may (so long as Lifford and its Affiliates hold, in aggregate,
Percentage  Interests  equal to at least 10%) and the PEGI Managers may (so long
as PEGI and its Affiliates hold, in aggregate,  Percentage Interests equal to at
least 10%) veto any decision of the  Management  Committee to perform,  or cause
the Company to perform, any of the following acts or transactions:

            (a) any  material  change in the basic  business  of the  Company as
defined in Section 2.6;

            (b) any material  acquisition or sale by the Company of any business
(whether  by  asset  purchase,   stock   purchase,   merger  or  other  business
combination);

            (c) any borrowing by the Company or making or guaranteeing  loans by
the  Company or  incurrence  or  guaranteeing  of  obligations  of others by the
Company  in the  aggregate  at any time  exceeding  the  lesser of (i) one times
EBITDA of the  Company for the most  recent  Fiscal  Year or (ii) $5.0  million;
provided,  however,  that  the  Company  may not  pledge,  transfer,  assign  or
otherwise encumber its rights under any agreements with PEI (or its Affiliates),
including without limitation,  any of the Related Documents,  in connection with
the foregoing;

            (d)  the  sale  of all or  substantially  all of the  assets  of the
Company or the merger,  consolidation or  reorganization  of the Company with or
into another Person;

            (e) the  acceptance  of any  additional  capital other than Optional
Capital Contributions or Playboy Lifestyle Capital Contributions from any Member
pursuant to Section 3.3;

            (f) the issuance of Membership  Interests  except in connection with
an Optional Capital Contribution or a Playboy Lifestyle Capital Contribution for
a Member pursuant to Section 3.3;

            (g) other than pursuant to the Related Documents,  transactions with
any Member or any Affiliate of any Member;

            (h)  commencement  by the  Company  of a  voluntary  case  under the
Bankruptcy  Code or any applicable  bankruptcy,  insolvency or other similar law
now or hereafter  in effect;  or consent by the Company to the entry of an order
for relief in an involuntary  case, or to the conversion of an involuntary  case
to a  voluntary  case  under any such law;  or  consent  by the  Company  to the
appointment of or taking of possession by a receiver, trustee or other custodian
for all or  substantially  all of its  property;  or making by the  Company of a
general assignment for the benefit of creditors;

            (i) any  amendment,  modification  or waiver  relating  to a Related
Document;

            (j) any  distribution  by the  Company on the  Membership  Interests
other than distributions of Distributable Cash;

            (k)  loans by the  Company  to any  Member or any  Affiliate  of any
Member;

            (l) the selection or replacement of the Company's accountants if the
selected  or  replacement  accountants  are  not  one  of the  following  firms:
PricewaterhouseCoopers,  LLP, KPMG, LLP, Ernst & Young, LLP or Deloitte & Touche
LLP or


                                       17
<PAGE>

            (m) (i)  filing any tax return or (ii)  making any tax  election  or
taking any position  with respect to any  examination  audit or  proceeding by a
taxing authority that could have an adverse impact on any Member or the Company.

      The PEGI  Managers  and the  Lifford  Managers  shall cause the Company to
enforce  the veto  rights set forth in this  Section  to apply to the  Company's
Subsidiaries.

      5.2 Members of the Management Committee; Appointment and Removal; Voting.

            5.2.1 For so long as Lifford  (or its  Affiliates)  and PEGI (or its
Affiliates) are the only Members, the Management Committee shall consist of five
members, three representatives  selected by Lifford (the "Lifford Managers") and
two  representatives  selected  by PEGI (the  "PEGI  Managers").  The  number of
Managers  shall not be amended  without the approval of both the Lifford and the
PEGI Managers.  No other Member shall have the right to appoint  Managers.  Each
member  of  the  Management  Committee  is  referred  to  as a  "Manager",  and,
collectively,  as the "Managers".  A Manager need not be a resident of the State
of California or a citizen of the United States. To the fullest extent permitted
by law, no Manager  shall be deemed an agent or sub-agent  of the Company.  Each
Member, by execution of this Agreement, agrees to, consents to, and acknowledges
the  delegation  of powers and  authority to such  Managers  and the  Management
Committee,  and to the actions and decisions of such Managers and the Management
Committee  within  the  scope  of  such  Manager's  and  Management  Committee's
authority  as  provided  herein.  No  Manager  shall have the  authority  in his
capacity as a Manager to enter into any transaction on behalf of the Company.

            5.2.2  Each  of  Lifford  and  PEGI  shall  have  the  absolute  and
unconditional  right from time to time to designate the Managers appointed by it
by delivery of written  notice to the Members.  A Manager may be removed with or
without cause at the sole  discretion of the Member that  appointed that Manager
by delivery of written notice to the other Members.  A vacancy on the Management
Committee may only be filled by the Member that originally appointed the Manager
whose death,  disability,  removal or resignation created such vacancy.  Each of
Lifford and PEGI shall also have the right to appoint alternates to each Manager
by  designating  the name of such  alternates  in a written  notice to the other
Members.  In case of the absence of a Manager,  any individual  designated as an
alternate for that Manager shall have the right and power to exercise all rights
and powers of the absent Manager.

            5.2.3 The current  Lifford  Managers and PEGI Managers will serve on
the Management Committee until their death, disability, removal or resignation.

            5.2.4   Except  as  provided  in  Section   5.1.2  or  as  otherwise
specifically  provided  in this  Agreement,  the  affirmative  vote of  Managers
holding the Majority Interests shall be required for any decision or approval of
the  Management  Committee  or to cause  the  Company  to  engage  in any act or
transaction.  The Managers shall have voting power in proportion to the ratio of
Percentage  Interests held by the Member appointing them. All Managers appointed
by a Member  will  collectively  exercise  such  voting  power  and each  Member
entitled to designate  Managers will  designate one Manager to vote on behalf of
all Managers  appointed by such Member in the event of a disagreement  among the
Managers appointed by such Member.

      5.3 Meetings of the Management Committee.

            5.3.1 Regular quarterly  meetings of the Management  Committee shall
be held  without call or notice at such time as shall from time to time be fixed
by standing  resolution of the  Management  Committee.  Special  meetings of the
Management  Committee  may be held at any time  whenever  called by any Manager.
Written Notice of a special  meeting of the Management  Committee shall be given
to the


                                       18
<PAGE>

other  Managers by the Manager  calling  the meeting at least  seventy-two  (72)
hours before such special meeting.

            5.3.2 All meetings of the Management Committee shall be held at such
location as the Management  Committee  shall agree by majority  vote;  provided,
however, at least one (1) meeting per year shall be held in Miami or Los Angeles
as the  Management  Committee  shall agree by majority  vote. The presence of at
least one  Lifford  Manager  and at least  one PEGI  Manager  at a duly  noticed
meeting  of  the  Management   Committee  shall  constitute  a  quorum  for  the
transaction of business;  provided,  however, that with respect to the taking of
any action for which the vote of any  Managers may be excluded or any matter for
which a unanimous  vote is required  to take action  (e.g.,  pursuant to Section
5.1.2),  the  presence of at least one Manager  appointed  by each Member  whose
Managers  are  entitled to vote on such  action  shall  constitute  a quorum for
purpose of taking such action. Managers may participate in a meeting through the
use of  conference  telephone  or  similar  communications  equipment,  and such
Managers  shall  be  considered  present  in  person  as  long  as all  Managers
participating in such meeting can hear one another.

            5.3.3 Every act of the Management  Committee taken at any meeting of
the Management Committee,  however called and noticed or wherever held, shall be
as valid as though made or performed  at a meeting duly held after  regular call
and notice,  if a quorum is present and if,  either before or after the meeting,
each of the  Managers  not  present  or who,  though  present,  has prior to the
meeting  or at its  commencement,  protested  the lack of proper  notice to such
Manager,  signs a written waiver of notice or a written  consent to holding such
meeting or approval of the minutes thereof.

            5.3.4 Any action required or permitted to be taken at any meeting of
the Management  Committee may be taken without a meeting if one Lifford  Manager
and one PEGI Manager consent  thereto in writing,  and the writing is filed with
the minutes of proceedings of the Management Committee.

      5.4 Delegation of Authority; General Manager and Other Officers.

            5.4.1 General Power to Delegate Authority.  The Management Committee
may delegate the right,  power and authority to manage the day-to-day  business,
affairs,  operations and activities of the Company to any officer of the Company
or Management Co. pursuant to the Management Services Agreement, or to any other
Person with the prior  approval of the PEGI  Managers,  subject to the  ultimate
direction,  control  and  supervision  of the  Management  Committee;  provided,
however,  that  no  officer  or  other  Person,   including  without  limitation
Management Co., shall be authorized to take any action or engage in any activity
where  unanimous  approval of the Management  Committee is required or where the
approval of a specified Person is required, without first obtaining the required
approvals.

            5.4.2 The General  Manager.  The Members  intend that the Management
Committee  delegate  the  management  of  the  day-to-day   business,   affairs,
operations  and  activities  of the Company to a general  manager (the  "General
Manager").  Subject to the supervisory powers of the Management  Committee,  the
General Manager shall have general and active  management of the business of the
Company  and  shall  see that  all  orders  and  resolutions  of the  Management
Committee are carried into effect.  The General  Manager shall have the power to
execute any  agreements and  instruments on behalf of the Company,  except where
the execution thereof shall be expressly reserved by the Management Committee or
delegated  by the  Management  Committee  to some other  officer or agent of the
Company.  The General  Manager shall have such other powers and duties as may be
prescribed by the Management Committee or this Agreement.


                                       19
<PAGE>

            5.4.3  Duties of the  General  Manager.  Unless and until any of the
following  duties are delegated to another officer by the Management  Committee,
the General Manager shall:

            (a) attend all meetings of the Management Committee and all meetings
of the Members,  unless directed not to do so by the Management  Committee,  and
record  all the  proceedings  of the  meetings  in a book to be  kept  for  that
purpose;

            (b) give,  or cause to be given,  notice of all special  meetings of
the Management Committee and all meetings of the Members;

            (c) keep, or cause to be kept, at the principal  executive office, a
register,  or a duplicate  register,  showing the names of all Members and their
addresses,  their  Percentage  Interests,  and all  documents  described in this
Agreement or required under the Act to be maintained at the principal  executive
office of the Company;

            (d) keep and maintain, or cause to be kept and maintained,  adequate
and  correct  books and  records of  accounts  of the  properties  and  business
transactions  of the  Company,  including  accounts of its assets,  liabilities,
receipts,  disbursements,  gains,  losses,  capital,  Membership  Interests  and
Economic Interests, which books of account shall at all reasonable times be open
to inspection by any Manager or his/her representatives;

            (e) have or supervise the custody of the funds and securities of the
Company,  keep or cause to be kept full and  accurate  accounts of receipts  and
disbursements  in books  belonging  to the  Company,  and deposit or cause to be
deposited all monies and other valuable effects in the name and to the credit of
the  Company  in  such  depositories  as may  be  designated  by the  Management
Committee;

            (f)  disburse or cause to be  disbursed  the funds of the Company as
may be ordered by the  Management  Committee,  taking  proper  vouchers for such
disbursements,  and  render  to  the  Management  Committee,  at  their  regular
meetings, or when Members so require, at a meeting of the Members, an account of
the financial condition of the Company; and

            (g) prepare or cause to be prepared the various financial statements
and reports required to be delivered to the Members in this Agreement.

            5.4.4 Additional Officers.  The Company may have such other officers
with such powers and duties as the  Management  Committee  shall  determine from
time to time.

            5.4.5 Officers  Serve at the Pleasure of the  Management  Committee.
Subject to whatever  rights an officer  may have under a contract of  employment
with the Company, all officers of the Company shall serve at the pleasure of the
Management  Committee.  Other than the renewal on substantially similar terms of
the  employment  agreement  of an  officer,  including,  but not  limited to the
General Manager, of the Company (a "Renewal"),  the Company shall not enter into
any new employment  agreement or amend any existing employment agreement with an
officer of the  Company,  including,  but not limited  to, the General  Manager,
without the prior approval of the PEGI Managers during any of the following time
periods:  (i) the  period  of time  commencing  upon  the  receipt  of an  Offer
Notification  from  Lifford  pursuant to Section 9.3 hereof and  expiring on the
later of (a) the date that PEGI may no longer  exercise its right of first offer
or (b) the date of  closing  on PEGI's  purchase  of the  additional  Membership
Interests  pursuant  to such  right of first  offer;  (ii)  the  period  of time
commencing upon the receipt of a Third-Party Transfer Notice pursuant to Section
9.4  hereof  and  expiring  on the later of (a) the date that PEGI may no longer
exercise  its  right  of first  refusal  of (b) the date of  closing  on  PEGI's
purchase of the additional  Membership Interests pursuant to such right of first
refusal;  and (iii) the period of time


                                       20
<PAGE>

commencing  upon PEGI's notice that it is exercising its buy-up option  pursuant
to Section  9.8 hereof  and  expiring  upon the  closing of PEGI's  purchase  of
additional  Membership  Interests  pursuant  to such  buy-up  option;  provided,
however,  that any Renewal  during any such time periods shall not be for a term
extending  beyond  the end of such time  periods  and  shall  not  result in the
Company being subject to any liabilities  with respect to such officer after the
end of such time periods.

      5.5 Interested Party Transactions.

            5.5.1  Approval.  Except for  transactions  provided  in the Related
Documents,  the Company shall only engage in a transaction  with a Member or any
Affiliate of a Member if the  transaction  is on terms and  conditions  fair and
reasonable  to the  Company  and at least as  favorable  to the Company as those
generally  available in a similar transaction between parties operating at arm's
length  and is  approved  by  the  Management  Committee.  A  transaction  shall
conclusively  be  deemed  to have met the  above  requirements  if,  after  full
disclosure, the transaction is unanimously approved by the Management Committee.
In addition,  any transaction between the Company and any member of the Cisneros
Group,  for so long as any such member directly or indirectly  holds an interest
in Claxson,  shall be subject to the approval of the PEGI Managers.  Each Member
agrees to  disclose  to the  Management  Committee  the nature and extent of the
interest of such Member and its Affiliates in any  transaction to be acted on by
the  Management  Committee  pursuant to this Section 5.5.1 prior to such action.
Subject to  applicable  law, if a Member or an  Affiliate  thereof  engages in a
transaction  with the Company,  such Member and/or such Affiliate shall have the
same  rights  and  obligations  with  respect  thereto  as a Person who is not a
Member.

            5.5.2 Termination and Remedies. With respect to any contract between
the Company and a Member or any Affiliate of a Member, including but not limited
to every Related Document,  the Managers appointed by the Members independent of
such contract  shall have the right,  acting by majority vote, to determine what
actions,   if  any,   should  be  taken  upon  the  other  party's   default  or
non-performance and to cause the Company to exercise any and all remedies it may
have under such contract or applicable law,  including without  limitation,  the
termination of such contract.

            5.5.3 Priority of Payments.  Except for payments to be made pursuant
to the Playboy  Lifestyle Note, to the extent such note has not been capitalized
pursuant to Section  3.3.2,  the General  Manager and the  Management  Committee
shall  cause any  payments  made to Lifford and its  Affiliates  to be made pari
passu with payments to be made to PEGI and its Affiliates.

      5.6 Performance of Duties; Liability of Managers.

            5.6.1 Standards.  A Manager shall not be liable to the Company or to
any Member for any loss or damage sustained by the Company or any Member, unless
the  loss or  damage  shall  have  been  the  result  of  fraud,  deceit,  gross
negligence, reckless or intentional misconduct, or a knowing violation of law by
the Manager.  The Managers shall perform their managerial  duties in good faith,
in a manner they  reasonably  believe to be in the best interests of the Company
and its  Members,  and with  such  care,  including  reasonable  inquiry,  as an
ordinarily   prudent   person  in  a  like  position  would  use  under  similar
circumstances.  A Manager who so performs  the duties of Manager  shall not have
any liability by reason of being or having been a Manager of the Company.

      5.7  Management  Company.  The Members  intend  that the  General  Manager
delegate certain of the day-to-day operational and financial responsibilities of
the  Company  to  Management  Co.,  subject to the terms and  conditions  of the
Management  Services  Agreement.  Such  services  shall be  rendered  under  the
supervision of the General Manager and, as set forth in the Management  Services
Agreement, shall include, without limitation, the following services:  financial
management,  payroll services and


                                       21
<PAGE>

accounting;   collections  and  accounts  payable;  facilities  acquisition  and
management; and management of day to day business and legal affairs.

      5.8  Insurance.  The Members  shall cause the Company to secure errors and
omissions  and other  customary  liability  insurance  for the Company  covering
exhibitions of programming by the Company,  which insurance  policies shall meet
Claxson's  customary  standards,  and liability and other insurance covering the
activities of the Company consistent with good business customs and practices in
the Territory and the other  locations in which the Company  conducts  business.
All insurance policies shall name each Member and their respective Affiliates as
named insureds.

                                   ARTICLE VI
                        BUSINESS PLANS AND ANNUAL BUDGETS

      6.1 The Business Plan.

            6.1.1 The Business Plan.  The  Management  Committee and the General
Manager shall  conduct the business of the Company in accordance  with the three
year Business Plans and the Annual Budgets (each as defined below),  as adjusted
from  time to time by the  Management  Committee.  The  financial  model for the
operation  of the Company and the  Channels,  as  annually  updated  pursuant to
Section 6.1.2, is the "Business Plan."

            6.1.2 Additions to Business Plan. The Business Plan shall be updated
annually by the Management Committee not later than sixty (60) days prior to the
conclusion  of the then current  Fiscal Year and each  Business  Plan so adopted
shall cover the next three (3) consecutive Fiscal Years.

      6.2 Annual Budgets. The annual update to the Business Plan shall include a
budget for the coming  Fiscal Year (the "Annual  Budget").  The General  Manager
will prepare the Annual  Budget and present it to the  Management  Committee for
approval at least sixty (60) days prior to commencement of the applicable Fiscal
Year. The approved Annual Budget for a given Fiscal Year will supersede the data
contained in the Business Plan for that Fiscal Year.

            6.2.1  Adjustment to Annual  Budget.  Beginning  January 1, 2003 and
ending   December  31,  2003,  the  Company  shall  spend  one  million  dollars
($1,000,000)  to produce Company  Produced  Programming  (the "Company  Produced
Programming  Budget") and shall spend one million two hundred  thousand  dollars
($1,200,000) for marketing purposes (the "Marketing Budget") for the Channels in
each case not including any amounts spent on the Playboy  Lifestyle  Programming
Service.  For each subsequent  Fiscal Year during the term of the Program Supply
Agreement,  the Company shall spend the Company Produced  Programming Budget and
the  Marketing  Budget,  each of which shall be adjusted each Fiscal Year by any
change in the CPI. Notwithstanding the foregoing, pursuant to Section 9.2 of the
Program  Supply  Agreement,  in the event PEGI  elects not to renew the  Program
Supply  Agreement,  Sections  6.2.1,  6.2.2 and 6.2.3 herein shall  terminate on
January 1, 2020. Subject to Section 6.2.3, the Company shall not spend less than
the annual  Marketing Budget and Company  Produced  Programming  Budget for that
Fiscal Year without the prior written approval of the PEGI Managers.

            6.2.2 Required Local Programming Expenditures  Allocations.  In each
of Fiscal  Years 2004 through  2007,  the Company  shall spend at least  seventy
percent  (70%) of the Company  Produced  Programming  Budget to produce  Branded
Company  Produced  Programming  and no more  than  thirty  percent  (30%) of the
Company  Produced  Programming  Budget to  produce  Unbranded  Company  Produced
Programming.  In each of Fiscal Years 2008 through 2022, the Company shall spend
at least sixty  percent  (60%) of the  Company  Produced  Programming  Budget to
produce  Branded  Company


                                       22
<PAGE>

Produced  Programming  and no more  than  forty  percent  (40%)  of the  Company
Produced Programming Budget to produce Unbranded Company Produced Programming.

            6.2.3  Adjustment  to  Company  Produced   Programming   Budget  and
Marketing  Budget.  In the event  that the  Company  would be unable to meet its
obligations  as  they  become  due if it met  its  payment  obligations  to PEGI
pursuant  to the  Program  Supply  Agreement  (a  "Shortfall"),  the  Management
Committee,  in its sole discretion,  may reduce the amount of the annual Company
Produced  Programming  Budget and annual  Marketing Budget by an amount equal to
the  Shortfall  in order to allow the  Company to make such  payments to PEGI (a
"Required  Expenditure  Adjustment");  provided,  however,  except for  payments
required to be made  pursuant  to the Playboy  Lifestyle  Note,  the  Management
Committee shall cause any payments made to PEGI or Lifford and their  respective
Affiliates or members of the Cisneros Group, thereafter to be reduced pari passu
with such Required Expenditure Adjustment;  provided,  further, that if the cash
flow  provided from  operations  of the Company  after any Required  Expenditure
Adjustment  is  sufficient  to enable the Company to make all or any part of the
annual Company Produced  Programming Budget or annual Marketing Budget in effect
prior to such Required Expenditure  Adjustment,  then the Company shall fund the
maximum possible local Company Produced  Programming Budget and Marketing Budget
until such initial annual required Company Produced Programming Budget or annual
Marketing Budget has been met. The Management  Committee shall make no more than
two (2) such Required Expenditure Adjustments during the Term.

                                   ARTICLE VII
                             [INTENTIONALLY OMITTED]

                                  ARTICLE VIII
                                     MEMBERS

      8.1 Limited  Liability.  Except as required  under the Act or as expressly
set forth in this Agreement,  no Member shall be personally liable for any debt,
obligation,  or liability of the Company,  whether that  liability or obligation
arises  in  contract,  tort,  or  otherwise.  In the event  any  Member  becomes
personally  liable for any debt,  obligation or liability of the Company arising
from any action or approval of the Members or Management Committee taken without
the approval of such Member or the Managers  appointed by such Member where such
approval  is required  under the terms  hereof,  then,  in addition to any other
rights set forth herein, the Members taking or who appointed the Managers taking
such action shall  indemnify  and hold harmless such Member from and against any
liability,  loss,  claim or damage,  including  but not limited  to,  reasonable
attorneys fees and cost, arising from or relating to such action.

      8.2 Admission of Additional  Members.  Subject to Sections  5.1.2 and 9.2,
the  Management  Committee  may admit to the  Company  additional  Members.  Any
additional Members shall obtain Membership Interests and will participate in the
management,  Net Income,  Net Losses,  and  distributions of the Company on such
terms as are determined by the Management Committee.

      8.3 Withdrawals or Resignations. No Member may withdraw or resign from the
Company.

      8.4  Termination of Membership  Interest.  Upon the transfer of a Member's
Membership  Interest in  violation  of this  Agreement  or the  occurrence  of a
Withdrawal  Dissolution  Event as to such  Member  that  does not  result in the
dissolution  of the  Company,  the  Membership  Interest  of a  Member  shall be
terminated by the Managers  designated  by the other Members or such  Membership
Interest  shall be  purchased  by the Company or  remaining  Members as provided
herein. Each Member acknowledges and agrees that such termination or purchase of
a Membership  Interest upon the occurrence of any of the foregoing events is not
unreasonable under the circumstances existing as of the date hereof.


                                       23
<PAGE>

      8.5  Remuneration  To  Members.  Except  as  otherwise  authorized  in, or
pursuant to, this Agreement, no Member is entitled to remuneration for acting in
the Company business,  subject to the entitlement of Managers or Members winding
up the affairs of the Company to reasonable compensation.

      8.6 Members  Are Not Agents;  No  Management  Authority.  Pursuant to this
Agreement  and the  Articles,  the  management  of the  Company is vested in the
Management  Committee.  No Member, acting solely in the capacity of a Member, is
an agent of the Company nor can any Member in such capacity bind nor execute any
instrument  on  behalf  of the  Company.  The  Members  shall  have no  power to
participate in the  management of the Company except as expressly  authorized by
this Agreement and except as expressly required by the Act.

      8.7 Meetings of Members.

            8.7.1  Date,  Time and  Place of  Meetings  of  Members;  Secretary.
Meetings of Members may be held at such date,  time and place  within or without
the State of California as the  Management  Committee may fix from time to time.
No annual or regular meetings of Members is required.  At any Members'  meeting,
the General  Manager  shall preside at the meeting and shall act as secretary of
the meeting.

            8.7.2 Power to Call  Meetings.  Unless  otherwise  prescribed by the
Act, meetings of the Members may be called by the Management Committee acting by
majority  vote or by any Member or group of Members  holding  more than  fifteen
percent (15%) of the  Percentage  Interests  for the purpose of  addressing  any
matters on which the Members may vote.

            8.7.3  Notice of  Meeting.  Written  notice of a meeting  of Members
shall be sent or otherwise  given to each Member not less than ten (10) nor more
than sixty (60) days before the date of the meeting.  The notice  shall  specify
the place,  date and hour of the meeting and the general  nature of the business
to be transacted.  No other  business may be transacted at such meeting  without
the consent of all Members.  Upon written  request to the General Manager by any
Person  entitled  to call a  meeting  of  Members,  the  General  Manager  shall
immediately  cause  notice to be given to the  Members  entitled  to vote that a
meeting will be held at a time requested by the Person calling the meeting,  not
less than ten (10) days nor more than sixty  (60) days after the  receipt of the
request. If the notice is not given within twenty (20) days after the receipt of
the request, the Person entitled to call the meeting may give the notice.

            8.7.4 Manner of Giving  Notice;  Affidavit of Notice.  Notice of any
meeting of Members shall be given either  personally or by  first-class  mail or
telegraphic or other written  communication,  charges prepaid,  addressed to the
Member at the  address of that Member  appearing  on the books of the Company or
given by the Member to the Company for the purpose of notice.

            8.7.5  Validity of Action.  Any action  approved at a meeting  other
than by unanimous approval of those entitled to vote, shall be valid only if the
general  nature of the  proposal so approved was stated in the notice of meeting
or in any written waiver of notice.

            8.7.6 Quorum. The presence in person or by proxy of the holders of a
Majority Interest shall constitute a quorum at a meeting of Members. The Members
present  at a duly  called  or held  meeting  at which a quorum is  present  may
continue to do business until adjournment, notwithstanding the loss of a quorum,
if any action taken after loss of a quorum (other than  adjournment) is approved
by at least Members holding a Majority Interest.


                                       24
<PAGE>

            8.7.7 Adjourned Meeting;  Notice.  Any Members' meeting,  whether or
not a quorum is present,  may be adjourned  from time to time by the vote of the
majority of the  Membership  Interests  represented  at that meeting,  either in
person or by proxy,  but in the absence of a quorum,  no other  business  may be
transacted  at that  meeting,  except as  provided  in Section  8.7.6.  When any
meeting of Members is  adjourned  to another  time or place,  notice need not be
given of the adjourned  meeting if the time and place are announced at a meeting
at which the  adjournment  is taken,  unless a new record date for the adjourned
meeting  is  subsequently  fixed,  or unless  the  adjournment  is for more than
forty-five (45) days from the date set for the original  meeting,  in which case
the Managers  shall set a new record date. At any adjourned  meeting the Company
may  transact  any  business  that might have been  transacted  at the  original
meeting.

            8.7.8 Waiver of Notice or Consent.  The actions taken at any meeting
of Members however called and noticed, and wherever held, have the same validity
as if taken at a meeting duly held after regular call and notice, if a quorum is
present  either  in  person  or by  proxy,  and if,  either  before or after the
meeting,  each of the Members entitled to vote, who was not present in person or
by proxy,  signs a written  waiver of notice or  consents  to the holding of the
meeting or approves the minutes of the meeting.  All such  waivers,  consents or
approvals  shall be filed with the Company records or made a part of the minutes
of the meeting.

            Attendance  of a Member or its  representative  at a  meeting  shall
constitute  a waiver of notice of that  meeting,  except when the Member or such
representative  objects,  at the beginning of the meeting, to the transaction of
any business because the meeting is not lawfully called or convened,  and except
that  attendance  at a  meeting  is not a waiver  of any  right to object to the
consideration  of matters  not  included  in the  notice of the  meeting if that
objection  is  expressly  made  at  the  meeting.  Neither  the  business  to be
transacted  nor the purpose of any meeting of Members  need be  specified in any
written waiver of notice.

            8.7.9 Action by Written Consent  Without a Meeting.  Any action that
may be taken at a  meeting  of  Members  may be taken  without a  meeting,  if a
consent in writing setting forth the action so taken, is signed and delivered to
the Company within sixty (60) days of the record date for that action by Members
having not less than the  minimum  number of votes that  would be  necessary  to
authorize or take that action at a meeting at which all Members entitled to vote
on that action at a meeting were present and voted.  All such consents  shall be
filed with the General  Manager and shall be maintained in the Company  records.
Any Member giving a written consent,  or the Member's proxy holders,  may revoke
the consent by a writing received by the General Manager before written consents
of the number of votes  required  to  authorize  the  proposed  action have been
filed.

            Unless  the  consents  of all  Members  entitled  to vote  have been
solicited in writing,  notice of any Member  approval  without a meeting by less
than unanimous written consent, shall be given at least ten (10) days before the
consummation of the action authorized by such approval to those Members entitled
to vote who have not consented in writing.

            8.7.10 Telephonic  Participation by Member at Meetings.  Members may
participate in any Members'  meeting  through the use of any means of conference
telephones  or  similar   communications   equipment  as  long  as  all  Members
participating  can hear one another.  A Member so  participating is deemed to be
present in person at the meeting.

            8.7.11 Record Date.

            (a) Fixed By Managers or Members. To enable the Company to determine
the Members of record entitled to notices of any meeting or to vote, or entitled
to  receive  any  distribution  or


                                       25
<PAGE>

to exercise any rights in respect of any  distribution or to exercise any rights
in respect of any other  lawful  action,  the  Management  Committee  or Members
representing  more than fifteen percent (15%) of the Percentage  Interests,  may
fix, in advance,  a record date,  that is not more than sixty (60) days nor less
than ten (10) days prior to the date of the meeting and not more than sixty (60)
days prior to any other action.

            (b) If Not Fixed.  If no record  date is fixed,  the record date for
determining  Members  entitled  to notice of or to vote at a meeting  of Members
shall be at the close of business on the business day preceding the day on which
notice  is given  or, if notice  is  waived,  at the  close of  business  on the
business day preceding the day on which the meeting is held. The record date for
determining  Members  entitled  to give  consent  to  Company  action in writing
without a meeting shall be the day on which the first written  consent is given.
The record date for  determining  Members for any other  purpose shall be at the
close of  business  on the day on which  the  Management  Committee  adopts  the
resolution relating thereto, or the sixtieth (60th) day prior to the date of the
other action, whichever is later.

            8.7.12  Proxies.  Every Member  entitled to vote on any matter shall
have the right to do so either in person or by one or more agents  authorized by
a written proxy signed by the person and filed with the General Manager. A proxy
shall be deemed signed if the Member's  name is placed on the proxy  (whether by
manual signature, typewriting, telegraphic transmission, electronic transmission
or  otherwise)  by the Member or the  Member's  attorney in fact. A proxy may be
transmitted  by  an  oral  telephonic  transmission  if  it  is  submitted  with
information from which it may be determined that the proxy was authorized by the
Member or the Member's  attorney in fact. A validly executed proxy that does not
state that it is  irrevocable  shall  continue  in full force and effect  unless
revoked by the Person executing it, before the vote pursuant to that proxy, by a
writing  delivered to the General Manager stating that the proxy is revoked,  or
by a subsequent  proxy  executed by, or  attendance at the meeting and voting in
person by, the Person  executing  the proxy;  provided,  however,  that no proxy
shall be valid after the  expiration  of eleven (11) months from the date of the
proxy,  unless otherwise provided in the proxy. The revocability of a proxy that
states on its face that it is irrevocable shall be governed by the provisions of
Corporations Code Sections 705(e) and 705(f) or any successor provisions.

                                   ARTICLE IX
                      TRANSFER AND ASSIGNMENT OF INTERESTS

      9.1 Transfer and  Assignment of Interests.  No Member shall be entitled to
transfer,  assign,  sell, encumber or in any way alienate or dispose of (each, a
"Transfer"),  including to an  Affiliate,  all or any portion of its  Membership
Interest  if  such  Transfer:  (i)  is  to a  party  which  is  materially  less
creditworthy  than the transferring  Member (taking into account the obligations
of such  transferring  Member's  Affiliates under this Agreement and the Related
Documents);  or, (ii) would cause the termination or dissolution of the Company.
Notwithstanding the foregoing,  a Member shall be entitled to pledge all of such
Member's Membership Interest as collateral as part of a blanket pledge of all of
such Member's assets to a financial institution.  Transfers in violation of this
Article 9 shall be null and void and the transferee  shall have no right to vote
or participate  in the  management of the business,  property and affairs of the
Company,  to  exercise  any rights of a Member or to receive the share of one or
more of the Company's Net Income,  Net Losses and distributions of the Company's
assets  to  which  the  transferor  would  otherwise  be  entitled.   After  the
consummation  of  any  transfer  of  any  part  of a  Membership  Interest,  the
Membership Interest so transferred shall continue to be subject to the terms and
provisions  of this  Agreement  and any further  transfers  shall be required to
comply with all the terms and provisions of this Agreement. If the secured party
receiving  a pledge  of an  Economic  Interest  of a Member  forecloses  on such
Economic Interest,  such Person shall not be admitted as a Member,  shall not be
entitled to further  transfer or  otherwise  dispose of such  Economic  Interest
without the  approval of the Members and shall have no rights of a Member  other
than the right to receive the share of one or more of the  Company's Net


                                       26
<PAGE>

Income,  Net  Losses  and  distributions  of the  Company's  assets to which the
pledging Member would otherwise be entitled.

      9.2 Further  Restrictions  on Transfer of Interests.  In addition to other
restrictions  found in this Agreement,  no Member shall Transfer all or any part
of its Membership Interest:  (a) without compliance with Section 15.1.9, and (b)
if the Membership Interest to be transferred,  assigned, sold or exchanged, when
added to the total of all other  Membership  Interests  sold or exchanged in the
preceding  twelve  (12)  consecutive  months  prior  thereto,  would  cause  the
termination  of the  Company  under the Code,  as  determined  by the  Managers.
Notwithstanding  anything to the contrary  contained in this Agreement,  Lifford
(nor any of its  respective  Affiliates  which  may hold  Membership  Interests,
collectively)  shall not Transfer any Membership  Interest to any of the Persons
set  forth  on  Exhibit  E or any of such  Persons'  Affiliates,  successors  or
assigns.

      9.3 Right of First Offer. In addition to other  restrictions found in this
Agreement,  in the event any Member (such Member being herein referred to as the
"Selling  Member"),  desires to Transfer any of its  Membership  Interest to any
Person which is not an Affiliate  of such  Selling  Member,  and, in the case of
Lifford, any member of the Cisneros Group (a "Third Party Buyer"),  such Selling
Member  must first make a bona fide offer in good faith  (including  as to price
and terms) to Transfer such Membership Interest to the other Members (such other
Members being referred to as the "Member Offerees") on a pro rata basis and must
Transfer such Membership  Interest to any Member Offeree that accepts such offer
as set forth  below.  In the event any such Selling  Member  desires to Transfer
such offered  Membership  Interest,  such Selling  Member will notify in writing
(the "Offer  Notification")  the Company and the Member  Offerees of such desire
setting forth the amount of the Membership  Interest  proposed to be Transferred
and the proposed purchase price thereof (the "Offered Membership  Interest") and
other terms of the proposed sale (the "Terms"); provided, that the consideration
must be in United  States  Dollars and must  constitute a bona fide,  good faith
offer.  For a period of thirty  (30) days  following  the  receipt  of the Offer
Notification, the Selling Member and the Member Offerees shall negotiate in good
faith to agree upon a final purchase price and terms for the Offered  Membership
Interest (a "Negotiated  Purchase Price").  If the Selling Member and the Member
Offerees agree on a Negotiated  Purchase  Price,  then the Member Offerees shall
purchase the Offered  Membership  Interest at the Negotiated  Purchase Price. If
the Selling Member and the Member  Offerees are unable in good faith to agree on
a purchase  price and  terms,  the  Member  Offerees  shall have the right for a
period of fifteen (15) days following the end of the thirty (30) day negotiation
period,  to elect to  purchase  all or any portion of its pro rata share of such
Offered  Membership  Interest  on the  Terms  originally  set forth in the Offer
Notification (the "Transfer Offer Period").  If the Member Offeree elects not to
purchase  the  Offered  Membership  Interest  prior  to the  termination  of the
forty-five  (45) day period,  such Member Offeree shall be deemed to have waived
its right to purchase  the Offered  Membership  Interest  under this Section 9.3
(but not under any other  section  of this  Agreement).  If any  Member  Offeree
desires to purchase such Offered Membership Interest,  it will notify in writing
(the "Purchase  Notification")  the Selling Member of such desire.  In the event
that any Member  Offeree  does not elect to purchase  its full pro rata share of
any such  Offered  Membership  Interest,  such  unpurchased  Offered  Membership
Interest will be offered by the Selling Member to the other Member  Offerees (if
any) subscribing to purchase the Offered Membership Interest on a pro rata basis
for a period of fifteen (15) days  commencing on the  expiration of the Transfer
Offer Period (the "Subsequent Transfer Offer Period");  provided,  however, that
if there is only one other Member,  there shall be no Subsequent  Transfer Offer
Period.  In the event that,  after  compliance with the foregoing  provisions of
this Section 9.3, the Member Offerees,  taken together,  fail to purchase all of
the Offered  Membership  Interest,  then (i) the Member  Offerees  shall have no
right to purchase any of the Offered Membership Interest (other than pursuant to
Section 9.4 or 9.8 below),  and (ii) such  Selling  Member may offer to Transfer
all of the Offered Membership Interest to any Person;  provided,  however,  that
any such Transfer must be made in accordance  with the  provisions  set forth in
Section 9.4 below.  The closing of any purchase by the Member Offerees of any of
the Offered Membership  Interest as


                                       27
<PAGE>

provided  in this  Section  9.3 will take place at the offices of the Company on
such date as designated by the Member  Offerees  occurring  within  fifteen (15)
days after the expiration of the Subsequent  Transfer Offer Period,  or if there
be none, the Transfer Offer Period. At such closing, the Member Offerees will be
entitled to receive  customary  representations  and warranties from the Selling
Member regarding  ownership and title of the Offered Membership Interest and the
Company will evidence such Transfer on the books of the Company.

      9.4 Right of First Refusal.

            (a) Subject to, and after  compliance  with,  the  requirements  set
forth in Section 9.3 above,  in the event any Selling Member desires to Transfer
any of its  Membership  Interest  to any Third Party Buyer who shall have made a
written bona fide offer to purchase  such  Membership  Interest,  which,  in the
Selling Member's reasonable  judgment,  has a substantial  likelihood of closing
and is not  subject to a  financing  or other  material  contingency  other than
applicable  antitrust or similar  clearances,  provided,  that such offer may be
subject to a financing  contingency  if such offer is  accompanied  by financing
commitments from institutions of national standing in the United States or other
international  institutions of comparable standing on usual and customary terms,
the Selling Member will promptly  furnish to the Company and all Member Offerees
written  notification  (the  "Third  Party  Transfer  Notice") of such desire to
Transfer  such  Membership  Interest and of the bona fide offered price for such
Membership Interest,  the method of payment of such offered price (which must be
in either cash in a Major Currency or Marketable Securities,  provided that such
Marketable  Securities  must be freely  tradable upon the receipt thereof by the
Selling  Member),  the identity of the prospective  purchaser or purchasers (the
"Proposed  Purchaser") and all other pertinent terms and conditions of such bona
fide offer to purchase such Membership Interest.

            (b) For a period of thirty (30) days commencing on the date that the
Member Offerees receive the Third-Party Transfer Notice (provided,  that, in the
event that the price for the  Membership  Interest  set forth in the Third Party
Transfer  Notice  is  less  than  80% of  the  price  set  forth  in  the  Offer
Notification  delivered by the Selling  Member to the other Members  pursuant to
Section  9.3, or the  consideration  is  different  than,  or the terms are more
favorable to the third party than the terms set forth in the Offer Notification,
such period shall be extended for an  additional  five (5)  business  days,  the
Member Offerees will have the right to elect to purchase on a pro rata basis all
(but not less  than  all) of the  Membership  Interest  on the  same  terms  and
conditions as described in the Third-Party  Transfer Notice and at the bona fide
offer price using cash in a Major  Currency if the  Proposed  Purchaser is using
cash in a Major Currency, or using its own Marketable Securities or cash, if the
Proposed Purchaser intends to use its own Marketable Securities as consideration
(the "Third Party Transfer Offer  Period");  provided,  that if PEGI is a Member
Offeree and desires to use PEI Stock as its own Marketable  Securities,  (i) the
PEI Stock so used  shall  have the  registration  rights  set forth on Exhibit G
hereto;  (ii) the closing of PEGI's  purchase  and the transfer of the PEI Stock
shall occur on the effective  date of the  registration  statement  filed by PEI
with  respect  to such PEI  Stock;  and (iii) the  number of shares of PEI Stock
issued  with  respect  to  such  payment  will be  determined  at the  time  the
registration  statement  filed by PEI with  respect  to such PEI  Stock  becomes
effective by dividing (x) the aggregate consideration by (y) the average closing
trading  price for PEI Stock for the  twenty  (20)  trading  days  ending on the
trading day three trading days prior to the effective date of such  registration
statement.  Any Member Offeree desiring to purchase any Membership Interest must
notify  the  Selling  Member in writing  of such  desire.  In the event that any
Member  Offeree  does not  elect  to  purchase  its  full pro rata  share of any
Membership  Interest  proposed to be Transferred,  such  unpurchased  Membership
Interest will be offered by the Selling Member to the other Member  Offerees (if
any)  subscribing  to purchase  Membership  Interests  on a pro rata basis for a
period of 15 days commencing on the expiration of the Third-Party Transfer Offer
Period (the "Subsequent Third Party Transfer Offer Period");  provided, however,
that if there is only one other Member, there shall be no Subsequent Third Party
Transfer  Offer Period.  No such  Membership


                                       28
<PAGE>

Interest may be made available for purchase by any Proposed  Purchaser  pursuant
to the  remaining  provisions  of this  Section  9.4 unless and until all Member
Offerees have had an  opportunity  to purchase all such  Membership  Interest in
accordance with the provisions of this clause (b).

            (c) Except as otherwise  provided in Section 9.4(b),  the closing of
any purchase by the Member  Offerees of any  Membership  Interest as provided in
this  Section  9.4 will take place at the offices of the Company on such date as
designated by the Member Offerees  occurring within 15 days after the expiration
of the Subsequent  Third-Party  Transfer Offer Period,  or if there be none, the
Third-Party  Transfer Offer Period. At such closing, the Member Offerees will be
entitled to receive  customary  representations  and warranties from the Selling
Member regarding  ownership and title of the subject Membership Interest and the
Company will evidence such Transfer on the books of the Company.

            (d)  In  the  event  that,   after  compliance  with  the  foregoing
provisions of this Section 9.4, the Member  Offerees fail to purchase all of the
Membership Interest proposed to be Transferred by the Selling Member, then for a
period of  one-hundred-twenty  (120) days  commencing on the date that no Member
Offeree  remains  entitled to  exercise  its right to  purchase  any  Membership
Interest in accordance  with the  foregoing  provisions of this Section 9.4, the
Selling  Member may Transfer to the  Proposed  Purchaser  any of the  Membership
Interest described in the Third-Party  Transfer Notice which the Member Offerees
are not  purchasing;  provided,  however,  that  (1) any  such  Transfer  to the
Proposed  Purchaser  must be made for the  consideration  and upon the terms and
conditions set forth in the Third-Party  Transfer Notice,  (2) any such transfer
to the Proposed  Purchaser  remains  subject to those  restrictions on transfers
contained in this Agreement,  including the restrictions on transfer included in
this  Article  9, and (3) at the  closing  of any such  Transfer,  the  Proposed
Purchaser executes and delivers to the Company a counterpart of, or an agreement
adopting,  this Agreement.  Such Member Offerees who fail to purchase all of the
Membership  Interest  proposed to be  transferred by the Selling Member shall be
deemed to have  consented  to the  Transfer  of the  Membership  Interest to the
Third-Party Transferee.  If the Selling Member shall not consummate the Transfer
of such  remaining  Membership  Interest to the Proposed  Purchaser  within such
one-hundred-twenty  (120) day period,  such  Membership  Interest  shall  remain
subject to the  provisions  of this  Agreement  and the Seller  Member shall not
thereafter  Transfer any such  Membership  Interest to any Person  without again
first complying with all of the provisions of this Agreement.

      9.5 Substitution of Members.  A transferee of a Membership  Interest shall
have the right to become a  substitute  Member only if (a) the  requirements  of
Sections 9.1 and 9.2 relating to securities and tax requirements hereof are met,
(b) the  requirements  of Sections 9.3 and 9.4 relating to rights of first offer
and rights of first  refusal  are met,  (c) such Person  executes an  instrument
reasonably  satisfactory to the Management  Committee accepting and adopting the
terms and provisions of this Agreement,  and (c) such Person pays any reasonable
expenses in connection  with its  admission as a new Member.  The admission of a
Member shall not result in the release of the Member who assigned the Membership
Interest from any liability that such Member may have to the Company.

      9.6 Effective Date of Permitted  Transfers.  Any permitted transfer of all
or any  portion of a  Membership  Interest  shall be  effective  as of the first
business day  following  the date upon which the  requirements  of Sections 9.1,
9.2, 9.3, 9.4 and 9.5 have been met. The General Manager shall promptly  provide
the Members with written notice of such transfer. Any transferee of a Membership
Interest  shall take  subject to the  restrictions  on transfer  imposed by this
Agreement.

      9.7 Rights of Legal Representatives. If a Member who is an individual dies
or is adjudged by a court of competent  jurisdiction to be incompetent to manage
the Member's person or property, the Member's executor, administrator, guardian,
conservator,  or other legal  representative  may  exercise  all of the Member's
rights for the purpose of settling  the  Member's  estate or  administering  the
Member's


                                       29
<PAGE>

property,  including  any power the Member has under this  Agreement  to give an
assignee  the right to become a Member.  If a Member is a  corporation  or other
entity  and is  dissolved  or  terminated,  the  powers  of that  Member  may be
exercised by its legal representative or successor.

      9.8 PEGI Buy-Up Option.

            (a) On or before  December 23, 2022, PEGI (or its Affiliates who are
then  Members  of the  Company)  has the  option to  acquire  up to  thirty  and
nine-tenths  percent (30.9%) of additional  Membership  Interests in the Company
(the  applicable  percentage  from  time  to  time  being  the  "Initial  Option
Percentage")  by purchasing such  additional  Membership  Interests from Lifford
(and any of its Affiliates which hold Membership  Interests,  collectively) (the
"PEGI Buy-Up Option") provided,  however;  (i) that if PEGI (and its Affiliates,
collectively)  Transfers  Membership  Interests to any Person(s) which is not an
Affiliate of PEGI, the Initial Option Percentage will be adjusted downward,  pro
rata, in  accordance  with the decline in PEGI's and its  Affiliates'  aggregate
Membership  Interests  in the Company;  (ii) in the event that Lifford  receives
additional  Membership  Interests in the Company,  the Initial Option Percentage
shall be increased in accordance with the then outstanding  Membership Interests
of the Company such that following the exercise by PEGI of its option to acquire
the Initial Option  Percentage  pursuant to this Section 9.8, PEGI and any third
Person not affiliated with Lifford shall hold forty-nine and nine-tenths percent
(49.9%) of the  Membership  Interests of the  Company.  Starting on December 23,
2012 and continuing  through  December 23, 2022, PEGI (or its Affiliates who are
then Members of the Company) has the option (the "Additional  Buy-Up Option") to
acquire up to the remaining  fifty and one-tenth  percent  (50.1%) of additional
Membership Interest in the Company (the applicable  percentage from time to time
being the  "Second  Option  Percentage")  by  purchasing  all of the  additional
Membership  Interests  owned by Lifford  (and any of its  Affiliates  which hold
Membership Interests, collectively); provided, that PEGI (or its Affiliates) has
previously or  concurrently  exercised its option to acquire the entire  Initial
Option  Percentage,  it being the intent of the Members  that PEGI would own one
hundred percent (100%) of the Membership  Interests following PEGI's purchase of
the Second Option Percentage, and payment therefor.

            (b) PEGI's buy-in price for the Initial  Option  Percentage  and the
Second Option  Percentage will be a pro rata portion of the Fair Market Value of
the Company at the time of purchase (as  determined in  accordance  with Exhibit
C). PEGI may pay the purchase  price for the Initial  Option  Percentage  or the
Second  Option  Percentage  in cash,  shares of PEI's Class B common stock ("PEI
Stock") (if upon the closing of any such  transaction such stock is a Marketable
Security) or a  combination  of cash and PEI Stock,  which  election will be set
forth in PEGI's notice that it is exercising its buy-up  option.  If PEGI elects
to pay for some or all of its  purchase  with  cash,  it will make such  payment
prior to the later of (i) sixty (60) days after the  delivery  of such notice or
(ii) twenty (20) days after the final  determination  of Fair Market  Value with
respect to such purchase.  If PEGI elects to pay for some or all of its purchase
with PEI Stock, such transfer of stock will be made on or prior to the date that
is the later of (i) ninety  (90) days after the  delivery of such  notice,  (ii)
twenty (20) days after the final determination of Fair Market Value with respect
to such purchase or (iii) the effective date of the registration statement filed
by PEI with  respect to the PEI Stock.  The number of shares of PEI Stock issued
with  respect to such payment will be  determined  at the time the  registration
statement filed by PEI with respect to such shares becomes effective by dividing
(x) the aggregate  consideration  elected by PEGI to be paid in PEI Stock by (y)
the average closing trading price for PEI Stock for the twenty (20) trading days
ending on the trading day three trading days prior to the effective date of such
registration statement.  The closing of any purchase by PEGI as provided in this
Section  9.8 shall take place at the  offices of the Company (i) on such date as
mutually agreed to by PEGI and Lifford, if PEGI elects to pay the purchase price
solely in cash, or (ii) if PEI elects to pay any or all of the purchase price in
shares of PEI Stock,  on the date on which the  registration  statement filed by
PEI with  respect to such  shares is declared  effective.  In the event that the
registration  statement to be filed with respect to the PEI Stock has not become
effective


                                       30
<PAGE>

within  one-hundred-eighty  (180) days from the date of the  delivery  of PEGI's
notice of its election to exercise the PEGI Buy-Up Option or  Additional  Buy-Up
Option,  Lifford shall have the option to either: (i) allow an extension of such
one-hundred-eighty  (180) day period, or (ii) refuse to allow such extension and
cause the  applicable  option to  expire,  unless  PEGI pays for the  applicable
option  in  cash  within   fifteen  (15)  days  from  the   expiration  of  such
one-hundred-eighty  (180) day period. At such closing,  PEGI will be entitled to
receive  customary  representations  and warranties from Lifford (and any of its
Affiliates which hold Membership  Interests,  collectively)  regarding ownership
and title of the  purchased  Membership  Interest and the Company will  evidence
such  Transfer  on the  books of the  Company.  After the date on which the cash
portion of the purchase  price is due, PEGI may determine  that it wishes to pay
all or any part of the portion of the purchase  price  previously  elected to be
paid in PEI Stock in cash, in which event such  additional  cash payment will be
due  immediately.  In the  event  PEGI  fails to timely  pay for any  additional
Percentage Interests for which it exercised its buy-up option, Lifford may elect
either:  (i) to terminate  permanently  PEGI's right to purchase such Percentage
Interests;  or (ii) to cause the Company to withhold any payments  otherwise due
to PEGI  under this  Agreement  or the  Program  Supply  Agreement  or any other
agreement  that requires the Company to make payments to PEGI or its  Affiliates
and to pay such  amounts to  Lifford  until  Lifford is paid in full  (including
interest  at the  Reference  Rate from the date such  payment  was due) for such
additional interests, and Lifford will then transfer such interests to PEGI.

            (c) If PEGI pays for some or all of the Initial Option Percentage or
the Second  Option  Percentage  in PEI Stock,  Lifford  shall have  registration
rights and obligations with respect to the PEI Stock as set forth in Exhibit G.

            (d) In the event Lifford  sells  Membership  Interests  representing
fifty and  one-tenths  percent  (50.1%) or more of the  Company to a third party
after giving PEGI the opportunity to exercise its right of first offer and right
of first  refusal  pursuant to  Sections  9.3 and 9.4 of this  Agreement  (which
Lifford may do at any time), the Additional PEGI Buy-Up Option will terminate.

      9.9 Claxson Control Over Membership Interest.  Subject to a Member's right
to transfer and assign its  Membership  Interest  pursuant to the right of first
offer in Section 9.3,  right of first  refusal in Section 9.4 and PEGI's  Buy-Up
Option in Section 9.8, at all times during the term of this  Agreement,  Claxson
will,  directly or indirectly,  (i) own 100% of the Membership Interest owned by
Lifford  on the date of this  Agreement,  (ii)  retain all  voting  rights  with
respect to such Membership  Interest,  (iii) retain all rights to participate in
the management of the business, property and affairs of the Company with respect
to such Membership Interest, and (iv) retain all rights to the Economic Interest
with respect to such Membership  Interest,  subject to Claxson's right to pledge
all of its  indirect  Membership  Interest  as  collateral  as part of a blanket
pledge of all such Member's assets to a financial institution.

      9.10 Playboy Television B.V. and PTVLA U.S., LLC

            (a) The Members hereby agree and acknowledge that Playboy Television
B.V., a Netherlands limited liability company ("PTV BV") has been created by the
Members and their  Affiliates  to  distribute  the Channels in Spain and Mexico,
that  Playboy TV  Holdings,  LLC, a Delaware  limited  liability  company  ("PTV
Holdings"),  has been created by the Members and their  Affiliates to serve as a
holding  company  for PTV BV, and that  PTVLA  U.S.,  LLC,  a  Delaware  limited
liability  company  ("PTV  US")  has  been  created  by the  Members  and  their
Affiliates to distribute  the Channels in the United  States,  Canada and Puerto
Rico.  At all  times  during  the  Term,  Claxson  and  PEI  will,  directly  or
indirectly,  (i) own the same percentage  ownership  interest in PTV Holdings or
PTV US as they may hold in the Company  from time to time;  (ii) in the event of
transfer of any Membership Interest, transfer a corresponding percentage of such
Equity  Interest to the same  purchaser so long as such transfer does not have a
material  adverse  tax effect on any  member of PTV  Holdings  or PTV US;  (iii)
retain all voting


                                       31
<PAGE>

rights  with  respect  to such  Equity  Interests,  (iv)  retain  all  rights to
participate  in the  management  of the  business,  property  and affairs of PTV
Holdings  and PTV US with  respect to such Equity  Interests.  Without the prior
written  consent of the PEGI Managers,  Claxson and Lifford shall not, and shall
cause their respective Subsidiaries and Affiliates (including without limitation
PTV Holdings, PTV BV and PTV US) not to:

                  (i)   take any action with respect to PTV Holdings,  PTV BV or
                        PTV US  that  would  require  the  consent  of the  PEGI
                        Managers as set forth in Section 5.1.2, determined as if
                        the definition of "Company"  contained therein included,
                        for the purposes of this Section  9.10(a)(i)  only,  PTV
                        Holdings, PTV BV and PTV US;

                  (ii)  authorize the issuance of or issue any additional Equity
                        Interests in PTV Holdings,  PTV BV or PTV US, other than
                        to  the   Company   in   connection   with   a   capital
                        contribution;

                  (iii) allow or permit PTV  Holdings  to conduct  any  business
                        other than  owning  all of the  issued  and  outstanding
                        Equity Interests of PTV BV;

                  (iv)  allow or permit PTV BV to  conduct  any  business  other
                        than  the   licensing   of  rights  from  PEGI  and  the
                        sublicensing  of such rights in the  territory  of Spain
                        and  Mexico  in  the  English,  Spanish  and  Portuguese
                        languages as  contemplated  and permitted by the Amended
                        Affiliation Agreement;

                  (v)   allow or permit PTV US to  conduct  any  business  other
                        than the  licensing  of rights  from the Company and the
                        sublicensing  of such rights to PEGI in the territory of
                        the United States, Canada and Puerto Rico in the Spanish
                        language as  contemplated  and  permitted  by the PTV US
                        Affiliation Agreement and the Distribution Agreement;

                  (vi)  amend or modify the  certificate  of formation,  deed of
                        incorporation, operating agreement, by-laws or any other
                        constitutive or organizational document of PTV Holdings,
                        PTV BV or PTV US;

                  (vii) sell any of the  assets of PTV  Holdings,  PTV BV or PTV
                        US, except in the ordinary course of business, or merge,
                        consolidate or reorganize PTV Holdings, PTV BV or PTV US
                        with or into another  Person,  other than another wholly
                        owned Subsidiary of the Company; or

                  (viii) take any action with respect to PTV Holdings, PTV BV or
                        PTV US that would have a disproportionate adverse impact
                        (financial or otherwise) on PEGI or its  Subsidiaries or
                        Affiliates.

            (b)  In  the  event  that  PEGI  at  any  time  acquires  additional
Membership Interests in the Company, whether pursuant to Section 9.3, 9.4 or 9.8
hereof  or  otherwise,  at the  closing  of the  acquisition  by  PEGI  of  such
Membership Interests,  PEGI shall have the right,  exercisable by written notice
to Lifford not later than two days prior to the date of such closing:

                  (i)   with  respect to PTV  Holdings and PTV BV, to elect that
                        either:  (i) Lifford or its Affiliates  shall contribute
                        to  PEGI  a  corresponding  membership  interest  in PTV
                        Holdings,  and in the event that PEGI so


                                       32
<PAGE>

                        elects,  Claxson  shall cause  Zagasse  Corp.,  N.V.,  a
                        Netherlands    Antilles   limited    liability   company
                        ("Zagasse"), or any other Affiliate of Claxson that then
                        holds an interest in PTV Holdings, to contribute to PEGI
                        for no  additional  consideration  and at no  additional
                        cost to PEGI a corresponding  membership interest in PTV
                        Holdings  simultaneously  with  the  closing  of  PEGI's
                        acquisition  of additional  Membership  Interests in the
                        Company,  such  that  following  such  closing,   PEGI's
                        membership  interest in PTV  Holdings  shall be equal to
                        PEGI's    Membership    Interest    in   the    Company.
                        Notwithstanding  the  foregoing,  in the event that PEGI
                        acquires  100%  of  the  Membership   Interests  in  the
                        Company,  PEGI  may,  in  lieu of  acquiring  all of the
                        membership interests in PTV Holdings,  elect to dissolve
                        PTV Holdings and PTV BV. In such event,  Claxson  shall,
                        and shall  cause its  Subsidiaries  to, take all actions
                        necessary  or  desirable  to  effect  such   dissolution
                        simultaneously with, and effective as of, the closing of
                        PEGI's acquisition of additional Membership Interests in
                        the Company; and

                  (ii)  with  respect  to PTV US,  to  elect  that  either:  (i)
                        Lifford or its  Affiliates  shall  contribute  to PEGI a
                        corresponding  membership interest in PTV US, and in the
                        event that PEGI so elects,  Claxson  shall cause Lifford
                        US, Inc., a Delaware corporation  ("Lifford US"), or any
                        other  Affiliate  of Claxson that then holds an interest
                        in PTV  US,  to  contribute  to PEGI  for no  additional
                        consideration  and  at no  additional  cost  to  PEGI  a
                        corresponding    membership    interest    in   PTV   US
                        simultaneously with the closing of PEGI's acquisition of
                        additional  Membership  Interests in the  Company,  such
                        that following such closing,  PEGI's membership interest
                        in PTV US shall be equal to PEGI's  Membership  Interest
                        in the Company.  Notwithstanding  the foregoing,  in the
                        event  that  PEGI  acquires   100%  of  the   Membership
                        Interests in the Company, PEGI may, in lieu of acquiring
                        all of the  membership  interests  in PTV US,  elect  to
                        dissolve PTV US. In such event, Claxson shall, and shall
                        cause its Subsidiaries to, take all actions necessary or
                        desirable  to  effect  such  dissolution  simultaneously
                        with,  and  effective  as  of,  the  closing  of  PEGI's
                        acquisition  of additional  Membership  Interests in the
                        Company.

      9.11 Venus  Operations.  The Members  hereby  agree and  acknowledge  that
Contribution S.R.L., an Argentine limited liability company ("Venus Argentina"),
and Venus TV International,  Inc., a British Virgin Islands  corporation ("Venus
International", and together with Venus Argentina, the "Venus Entities") will be
acquired by the Company to own and operate the Venus  Channels in the Territory.
Without the prior written  consent of the PEGI Managers,  the Company shall not,
and shall cause Venus Argentina and Venus International not to:

            (a) Transfer  the Venus Assets from the Venus  Entities to any other
Person,  including without  limitation the Company or any of its Subsidiaries or
Affiliates;

            (b)  allow or  permit  the  Transfer  of any  assets  from any other
Person,  including the Company and any of its  Subsidiaries  or  Affiliates,  to
either or both of the Venus Entities;

            (c) allow or permit the Venus  Entities to own any assets other than
the Venus Assets;


                                       33
<PAGE>

            (d) operate the Venus Entities  other than as stand-alone  entities,
provided,  however,  that the  Company  may  manage  either or both of the Venus
entities;

            (e) allow or permit the Venus  Channels to be operated other than as
businesses  separate and distinct from the other  Channels and businesses of the
Company,  provided,  however,  that the Company may manage either or both of the
Venus entities;

            (f)  commingle  any of the assets of a Venus  Entity  with any other
assets of the Company and its Subsidiaries and Affiliates; or

            (g) merge the Venus  Entities,  merge any other  Person into a Venus
Entity or otherwise  combine the operations of the Venus Entities with any other
Person.

      9.12 Playboy Lifestyle  Holding and Newco. The Members hereby  acknowledge
and agree that  Playboy  Lifestyle  Holding  and Newco have been formed and will
soon to be formed respectively by the Company to develop, launch and operate the
Playboy Lifestyle  Business in the Territory,  and to fund the Feasibility Study
to develop  the Playboy  Lifestyle  Channel  USA in the US  Lifestyle  Territory
whereby Playboy Lifestyle  Holding will borrow up to U.S.$5,000,000  pursuant to
the  Playboy  Lifestyle  Note to fund the  operation  of the  Playboy  Lifestyle
Business in the Territory through Newco. Except as may be required in connection
with the  Playboy  Lifestyle  Note or any related  documents,  without the prior
written  consent of the PEGI  Managers,  the Company  shall not, and shall cause
Playboy Lifestyle Holding and Newco not to:

            (a) take any action with  respect to Playboy  Lifestyle  Holding and
Newco that  would  require  the  consent  of the PEGI  Managers  as set forth in
Section 5.1.2,  determined as if the definition of "Company"  contained  therein
included,  for the purposes of this Section  9.12(a)(i) only,  Playboy Lifestyle
Holding and Newco;

            (b)  authorize  the  issuance  of or  issue  any  additional  Equity
Interests in Playboy  Lifestyle  Holding or Newco,  other than to the Company in
connection with a capital contribution;

            (c)  allow or  permit  Playboy  Lifestyle  Holding  to  conduct  any
business  other  than  (x)  owning  all of the  issued  and  outstanding  Equity
Interests of Newco, (y) issuing the Playboy Lifestyle Note and (iii) the Playboy
Lifestyle Business as contemplated and permitted by this Agreement;

            (d) allow or permit  Newco to conduct  any  business  other than the
Playboy Lifestyle Business as contemplated and permitted by this Agreement;

            (e)  amend  or  modify  the   certificate  of  formation,   deed  of
incorporation,  operating  agreement,  by-laws  or  any  other  constitutive  or
organizational document of Playboy Lifestyle Holding or Newco;

            (f) sell any of the  assets of Playboy  Lifestyle  Holding or Newco,
except in the ordinary course of business,  or merge,  consolidate or reorganize
Playboy  Lifestyle  Holding or Newco  with or into  another  Person,  other than
another wholly owned Subsidiary of the Company;

            (g) take any action  with  respect to Playboy  Lifestyle  Holding or
Newco that would have a disproportionate adverse impact (financial or otherwise)
on PEGI or its Subsidiaries or Affiliates;

            (h)  operate  Playboy  Lifestyle  Holding  and Newco  other  than as
stand-alone entities,  provided,  however, that the Company may manage either or
both of these entities;


                                       34
<PAGE>

            (i) allow or permit  the  Playboy  Lifestyle  Holding or Newco to be
operated other than as businesses  separate and distinct from the other Channels
and businesses of the Company,  provided,  however,  that the Company may manage
either or both of these entities or

            (j)  commingle  any of the  assets of Playboy  Lifestyle  Holding or
Newco with any other assets of the Company and its Subsidiaries and Affiliates.

                                    ARTICLE X
                       CONSEQUENCES OF DEATH, DISSOLUTION
                       RETIREMENT OR BANKRUPTCY OF MEMBER

      10.1  Withdrawal  Dissolution  Event.  Upon the occurrence of a Withdrawal
Dissolution  Event, the Company shall dissolve unless the remaining Members (the
"Remaining  Members") holding all of the remaining  Membership Interests consent
within ninety (90) days of the Withdrawal  Dissolution Event to the continuation
of the  business  of  the  Company.  If the  Remaining  Members  consent  to the
continuation of the business of the Company,  the Remaining  Members and/or,  if
applicable pursuant to Section 10.4, the Company shall purchase,  and the Member
whose actions or conduct resulted in the Withdrawal  Dissolution  Event ("Former
Member") or such Former  Member's  legal  representative  shall sell, the Former
Member's  Membership  Interest ("Former Member's  Interest") as provided in this
Article 10 to avoid dissolution of the Company.

      10.2 Purchase Price.  The purchase price for the Former Member's  Interest
shall be the lesser of (i) the positive  Capital  Account  balance of the Former
Member  or  (ii)  the  Fair  Market  Value  of  the  Former  Member's  Interest.
Notwithstanding the foregoing,  if the Withdrawal Dissolution Event results from
a breach of this Agreement by the Former Member,  the purchase price paid by the
Remaining  Members and/or the Company shall be reduced by an amount equal to the
damages suffered by such purchasing parties as a result of such breach.

      10.3  Notice of Intent to  Purchase.  Within  thirty  (30) days  after the
General  Manager has notified the Remaining  Members as to the purchase price of
the Former  Member's  Interest  determined in accordance with Section 10.2, each
Remaining  Member shall  notify the General  Manager in writing of its desire to
purchase a portion of the Former Member's Interest. The failure of any Remaining
Member to submit a notice  within the  applicable  period  shall  constitute  an
election  on the part of the Member not to purchase  any of the Former  Member's
Interest.  Each  Remaining  Member so electing to purchase  shall be entitled to
purchase a portion of the Former  Member's  Interest in the same proportion that
the  Percentage  Interest of the Remaining  Member bears to the aggregate of the
Percentage  Interests of all of the Remaining  Members  electing to purchase the
Former Member's Interest.

      10.4 Election to Purchase Less Than All of the Former  Member's  Interest.
If any Remaining Member elects to purchase none or less than all of its pro rata
share of the Former Member's  Interest,  then the Remaining Members can elect to
purchase  more than  their pro rata  share.  If the  Remaining  Members  fail to
purchase the entire  interest of the Former  Member,  the Company shall purchase
any remaining share of the Former Member's Interest.

      10.5 Payment of Purchase  Price.  The purchase  price shall be paid by the
Remaining  Members  and/or  the  Company,  as the  case may be,  at the  closing
one-fifth  (1/5) in cash and the  balance  of the  purchase  price in four equal
annual principal  installments,  plus accrued interest, and be payable each year
on the anniversary date of the closing. Any such payment by the Company shall be
made solely out of Distributable  Cash allocable to the Remaining  Members.  The
unpaid principal balance shall accrue interest at the current applicable federal
rate as provided in the Code for the month in which the initial payment is made,
but the Company and the Remaining Members shall have the right to prepay in full
or


                                       35
<PAGE>

in part at any time without penalty. The obligation to pay the balance due shall
be  evidenced  by a promissory  note,  and if  purchased by a Remaining  Member,
secured by a pledge of the Membership Interest being purchased.

      10.6 Closing of Purchase of Former Member's Interest.  The closing for the
sale of a Former Member's  Interest pursuant to this Article 10 shall be held on
a business day at the  principal  office of the Company no later than sixty (60)
days after the  determination of the purchase price. At the closing,  the Former
Member or such Former Member's legal representative shall deliver to the Company
or the Remaining  Members an instrument  of transfer  (containing  warranties of
title and no encumbrances)  conveying the Former Member's  Interest.  The Former
Member  or such  Former  Member's  legal  representative,  the  Company  and the
Remaining  Members shall do all things and execute and deliver all papers as may
be necessary  fully to consummate  such sale and purchase in accordance with the
terms and provisions of this Agreement.

      10.7  Purchase  Terms Varied by  Agreement.  Nothing  contained  herein is
intended to prohibit  Members from agreeing upon other terms and  conditions for
the  purchase  by the  Company or any Member of the  Membership  Interest of any
Member in the  Company  desiring to retire,  withdraw or resign,  in whole or in
part, as a Member.

                                   ARTICLE XI
                    ACCOUNTING, RECORDS, REPORTING BY MEMBERS

      11.1 Books and  Records.  The books and  records of the  Company  shall be
kept, and the financial position and the results of its operations recorded,  in
accordance with United States  generally  accepted  accounting  principles as in
effect from time to time ("GAAP") and the accounting methods followed for United
States federal  income tax purposes.  The books and records of the Company shall
reflect all the Company  transactions  and shall be appropriate and adequate for
the Company's  business.  The Company shall maintain at its principal office all
of the following:

            (a) A  current  list of the full  name and last  known  business  or
residence  address of each  Member,  together  with the  Capital  Contributions,
Capital Account and Percentage Interest of each Member;

            (b) A  current  list of the full  name  and  business  or  residence
address of each Manager;

            (c) A copy  of the  Articles  and any  and  all  amendments  thereto
together  with  executed  copies of any  powers of  attorney  pursuant  to which
amendments thereto have been executed;

            (d) Copies of the Company's federal,  state, and local income tax or
information  returns and reports,  if any,  for the six (6) most recent  taxable
years;

            (e) A copy of this  Agreement  and  any and all  amendments  thereto
together with executed  copies of any powers of attorney  pursuant to which this
Agreement or any amendments thereto have been executed;

            (f) Copies of the financial  statements of the Company,  if any, for
the six (6) most recent Fiscal Years; and

            (g) The  Company's  books and records as they relate to the internal
affairs of the Company for at least the current and past four (4) Fiscal Years.


                                       36
<PAGE>

      11.2 Delivery to Members and Inspection.

            11.2.1  Delivery  Upon  Request.  Upon the request of any Member for
purposes  reasonably  related to the  interest of that  Person as a Member,  the
General Manager shall promptly deliver to the requesting  Member, at the expense
of the Company, a copy of the information  required to be maintained by Sections
11.1(a),  (b) and (d),  and a copy of this  Agreement,  as amended.  The General
Manager  shall  promptly  furnish  to a  Member a copy of any  amendment  to the
Articles or this Agreement executed by a Manager pursuant to a power of attorney
from the Member.

            11.2.2  Inspection.  Each  Member  has the  right,  upon  reasonable
request for purposes  reasonably related to the interest of the Person as Member
to:

            (a) inspect and copy during normal business hours any of the Company
records described in Sections 11.1(a) through (g); and

            (b) obtain from the General  Manager,  promptly after their becoming
available,  a copy of the  Company's  federal,  state,  and local  income tax or
information returns for each Fiscal Year.

            11.2.3 Authorized Persons.  Any request,  inspection or copying by a
Member under this Section 11.2 may be made by that Person or that Person's agent
or attorney.

            11.2.4 PEI Additional Right of Inspection.  Upon reasonable  notice,
the Company shall, and shall cause the Company's  independent public accountants
and  outside   counsel  and  each  of  the  Company's   employees,   agents  and
representatives  to: (i) afford the officers,  employees and authorized  agents,
independent  public   accountants,   outside  counsel,   financing  sources  and
representatives  of  PEI  (the  "PEI  Representatives")  access,  during  normal
business hours, to the offices,  properties, other facilities, books and records
of the Company and to the Company's  independent  public accountants and outside
counsel and those employees,  agents and representatives of the Company who have
any knowledge relating to the business,  assets and properties of the Company or
the  Channels  and  (ii)  furnish  promptly  to  the  PEI  Representatives  such
additional  financial and  operating  data and other  information  regarding the
business,  assets and  properties of the Company or the Channels as PEI may from
time to time  reasonably  request;  provided,  however,  that PEI  shall  not be
entitled to exercise such rights of  inspection  more than once in a twelve (12)
month  period,  unless  Lifford or any of its  Affiliates  are in breach of this
Agreement,  in  which  case  there  shall  be no  limit  on the  number  of such
inspections.

      11.3 Statements.

            11.3.1  Annual  Report.  The General  Manager shall cause an audited
annual  report to be sent to each of the Members not later than thirty (30) days
after the close of each fiscal year or sooner if the  reporting  obligations  of
PEI or  Claxson  are  accelerated  due to a change  in  applicable  SEC or other
regulatory requirements.  The report shall contain a balance sheet as of the end
of the Fiscal Year and an income statement and statement of changes in financial
position for the Fiscal Year.  The report shall be prepared in  accordance  with
GAAP  consistently  applied and fairly  present the  results of  operations  and
financial  condition of the Company and its Subsidiaries for the periods covered
thereby.  Such financial  statements shall be accompanied by the report thereon,
if any, of the independent accountants engaged by the Company.

            11.3.2  Monthly  Report.  The General  Manager shall cause a monthly
report to be sent to each of the  Members  not later than twenty (20) days after
the end of each  month  during a Fiscal  Year,  subject  to  customary  year-end
adjustments. The report shall contain a balance sheet as of the last day of such
month and an income statement and statement of changes in financial position for
the period then


                                       37
<PAGE>

ended. The report shall be prepared in accordance with GAAP consistently applied
and fairly  present the results of  operations  and  financial  condition of the
Company  and its  Subsidiaries  for  the  periods  covered  thereby  subject  to
customary year-end adjustments.  Such financial statements will be unaudited but
will  prepared on a consistent  basis with the Company's  audited  annual report
described above.

            11.3.3  Tax  Information.  The  General  Manager  shall  cause to be
prepared at least annually,  at Company expense,  information  necessary for the
preparation  of the Members'  federal and state income tax returns.  The General
Manager  shall send or cause to be sent to each Member  within  ninety (90) days
after the end of each taxable year such  information as is necessary to complete
federal,  state, and local income tax or information  returns, and a copy of the
Company's federal,  state, and local income tax or information  returns for that
year.

      11.4 Financial and Other  Information.  The General  Manager shall provide
such financial and other  information  relating to the Company,  as a Member may
reasonably request.

      11.5 Filings.  The General Manager,  at Company  expense,  shall cause the
income tax  returns for the  Company to be  prepared  and timely  filed with the
appropriate  authorities.  Within  seventy five (75) days after the close of the
taxable year, the General  Manager shall deliver to the Managers  copies of such
returns for their approval  pursuant to Section 5.1.2(m) prior to the filing due
date. The General Manager,  at Company expense,  shall also cause to be prepared
and  timely  filed,   with   appropriate   federal  and  state   regulatory  and
administrative  bodies,  amendments to, or restatements of, the Articles and all
reports required to be filed by the Company with those entities under the Act or
other  then  current  applicable  laws,  rules,  and  regulations.  If a Manager
required by the Act to execute or file any document fails,  after demand,  to do
so within a reasonable  period of time or refuses to do so, any other Manager or
Member may prepare, execute and file that document with the California Secretary
of State.

      11.6 Bank  Accounts.  The General  Manager shall maintain the funds of the
Company  in one or more  separate  bank  accounts  in the  United  States or the
European  Union in the name of the Company and in any other  jurisdiction  where
the applicable laws of such jurisdiction require the Company to maintain such an
account  and shall not permit the funds of the Company to be  commingled  in any
fashion with the funds of any other Person.

      11.7  Accounting  Decisions  and Reliance on Others.  All  decisions as to
accounting matters,  except as otherwise specifically set forth herein, shall be
made by the  Management  Committee.  A Manager  may rely upon the  advice of the
Company's  accountants  as to whether  such  decisions  are in  accordance  with
accounting methods followed for federal income tax purposes.

      11.8 Tax  Matters  for the  Company  Handled by  Managers  and Tax Matters
Member.  The Management  Committee  shall from time to time cause the Company to
make such tax elections as it deems to be in the best  interests of the Company;
provided,  however,  that the  Management  Committee  shall not (i) file any tax
return or (ii) make any tax  election or take any  position  with respect to any
examination audit or proceeding by a taxing authority that could have an adverse
impact on PEGI or the Company without PEGI's prior written consent.  Any failure
by the  Management  Committee  to approve  unanimously  any matter  described in
Section 5.1.2(l) will be resolved in accordance with the procedures specified in
Article 16;  provided,  however,  that the sole arbitrator  described in Section
16.4 shall  appoint  one or more  impartial  experts to testify on the  disputed
matters and shall base his or her decision on such expert testimony, taking into
account the interests of both parties. The Tax Matters Member (the equivalent to
the Tax Matters  Partner as defined in Code Section  6231) shall  represent  the
Company (at the Company's  expense) in connection  with all  examinations of the
Company's  affairs  by  tax  authorities,   including   resulting  judicial  and
administrative   proceedings,   and  shall  expend  the   Company's   funds  for
professional  services and costs  associated  therewith.  The Tax Matters Member
shall  oversee the


                                       38
<PAGE>

Company's tax affairs in the overall best  interests of the Company.  If for any
reason the Tax Matters  Member can no longer serve in that capacity or ceases to
be a Member or Manager,  as the case may be, Members holding a Majority Interest
may designate another to be Tax Matters Member.

                                   ARTICLE XII
                           DISSOLUTION AND WINDING UP

      12.1 Term. The term (the "Term") of the Company shall commence on the date
the Articles are filed with the Secretary of State of  California  and terminate
on the  earlier to occur of the  termination  of the  Company as provided in the
Articles or the earlier dissolution of the Company pursuant to the terms of this
Article 12.

      12.2  Dissolution  Events.  The  Company  may be  dissolved  prior  to the
termination  date set forth in the  Articles  upon the  happening  of any of the
following events (each, a "Dissolution Event"):

            12.2.1  Either  Lifford or PEGI may elect to dissolve the Company if
controlling  ownership  of the other Member  changes  (other than a change to an
Affiliate of such Member); provided,  however, that the parties acknowledge that
Claxson and PEI are  publicly  held and that no change in their  ownership  will
constitute  a change of control of Lifford or PEGI,  as the case may be, as long
as Lifford or PEGI remain a controlled subsidiary of Claxson or PEI, as the case
may be. Any such  dissolution  will be effective as of the later of (i) the last
day of the Fiscal Year in which such  dissolution  event occurs or (ii) the date
six (6) months after such dissolution event occurs.

            12.2.2 Any Member may without prejudice to any other remedies it may
have elect to dissolve the Company by notice in writing to the other  Members on
or after the occurrence of any of the following:

            (a)  the  commission  of one  or  more  material  breaches  of  this
Agreement by the Company or another Member which are not capable of remedy;

            (b) the  commission  of a material  breach of this  Agreement by the
Company or another  Member  which is capable of remedy (a  "Remediable  Breach")
which shall not have been remedied within a period of thirty (30) days after the
party in breach has been  given  notice in writing  specifying  that  Remediable
Breach and requiring it to be remedied; provided, however, that such thirty (30)
day  period  shall  be  extended  for  such  additional  period,  not to  exceed
one-hundred-twenty  (120)  days,  as  shall  be  reasonably  necessary  if  that
Remediable  Breach is incapable of remedy within that thirty (30) day period and
during that additional  period the party in breach shall diligently  endeavor to
remedy that Remediable  Breach,  but only if such extension would not reasonably
be expected to have a material adverse effect on the party giving notice of such
breach.  However,  in respect of the breach of any  obligation  to make  payment
hereunder,  the cure period  shall not be extended as provided in the  foregoing
proviso.

            (c) the bankruptcy,  insolvency,  general assignment for the benefit
of  creditors  or similar  event or the  appointment  of a trustee,  receiver or
similar person for any Member holding a Majority Interest or of the Company;

            (d) the uncured material breach of one or more of the Program Supply
Agreement or the Distribution Agreement by another Member or their Affiliates or
the Company,  unless in the event of a breach by the Company,  the party seeking
dissolution hereunder caused such breach; or


                                       39
<PAGE>

            (e) the  institution  by such Member of a legal  proceeding  against
another  Member to enforce  against the other Member either (i) a final arbitral
award or (ii) a final judgment,  in each case arising out of or relating to this
Agreement, the Program Supply Agreement or the Distribution Agreement.

            12.2.3 Any failure by the Company to make payments due to PEGI under
the Program  Supply  Agreement  shall be deemed to constitute a material  breach
hereunder  by  Claxson  and  Lifford.   Each  of  Claxson  and  Lifford   hereby
unconditionally and irrevocably guarantees, as primary obligor and not merely as
a surety,  and as a guaranty of payment when due and not of  collectibility,  to
PEGI and its successors and assigns the prompt payment and  satisfaction in full
of any  amounts  due and owing by the  Company  to PEGI and its  successors  and
assigns  pursuant  to the Program  Supply  Agreement  in an amount  equal to the
outstanding obligation multiplied by the Percentage Interest in the Company then
owned by Lifford and its Affiliates (the "Claxson  Guarantee  Obligation"),  and
each of Claxson and Lifford  hereby (a) further agrees that if the Company shall
fail to pay, or otherwise satisfy,  in full any of such amounts when they become
due, whether at stated maturity, by acceleration,  demand or otherwise, it shall
promptly pay the same up to amount of the Claxson Guarantee Obligation,  and (b)
waives, for the benefit of PEGI and its successors and assigns, (i) any right to
require  PEGI to proceed  against  the Company or any  guarantor,  or to proceed
against,  exhaust or have  resort to any  security  held from the Company or any
other guarantor, or any balance of any deposit account or credit on the books of
PEGI, (ii) any right to set-offs, recoupments and counterclaims;  (iii) notices,
demands, presentments,  protests, notices of protest and notices of dishonor and
notices of any action or inaction or default under this Agreement or the Program
Supply   Agreement;   (iv)  any   right   of   subrogation,   reimbursement   or
indemnification  that  it  may  have  against  the  Company  and  any  right  of
contribution  it may have  against  any other  guarantor  and (v) to the fullest
extent  permitted by law,  any defenses or benefits  that may be derived from or
afforded by law which limit the  liability of or  exonerate  it or sureties,  or
which may conflict with the terms of this Section  12.2.3.  The  obligations  of
each of Claxson and Lifford  pursuant to this Section  12.2.3 shall continue and
remain in full  force and  effect or be  reinstated,  as the case may be, in the
event that all or any part of any payment  made by the Company to PEGI under the
Program Supply  Agreement is rescinded or recovered  directly or indirectly from
PEGI as a preference,  fraudulent  transfer or  conveyance  or otherwise.  PEGI,
Claxson  and  Lifford  acknowledge  that any  payment  obligation  of Claxson or
Lifford hereunder shall be limited to Lifford's (or its Affiliate's)  Membership
Percentage  Interest at the time of such failure to make payment  multiplied  by
the amount of the payment due and further, that the payment of such payments due
shall  constitute a cure of such breach.  In the event that PEGI  exercises  the
PEGI Buy-Up Option,  the  provisions of this Section  12.2.3 shall  terminate in
their entirety.

            12.2.4 PEI hereby  unconditionally  and irrevocably  guarantees,  as
primary  obligor and not merely as a surety,  and as a guaranty of payment  when
due and not of collectibility, to the Company and its successors and assigns the
prompt payment and  satisfaction in full of any amounts due and owing by PEGI to
the  Company,  its  successors  and  assigns  pursuant  to  the  Program  Supply
Agreement,  and the  Distribution  Agreement,  and PEI hereby (a) further agrees
that if PEGI  shall  fail to pay,  or  otherwise  satisfy,  in full  any of such
amounts  when they  become due,  whether at stated  maturity,  by  acceleration,
demand or otherwise,  it shall promptly pay, or otherwise satisfy,  the same and
(b) waives,  for the benefit of the Company and its successors and assigns,  (i)
any right to require the Company to proceed against PEGI or any other guarantor,
or to proceed against,  exhaust or have resort to any security held from PEGI or
any  guarantor  or any balance of any deposit  account or credit on the books of
the Company;  (ii) any right to set-offs,  recoupments and counterclaims;  (iii)
notices,  demands,  presentments,  protests,  notices of protest  and notices of
dishonor  and notice of any action or  inaction  or  default  under the  Program
Supply Agreement or the Distribution  Agreement;  (iv) any right of subrogation,
reimbursement or indemnification  that it may have against PEGI and any right of
contribution  it may have  against  any other  guarantor  and (v) to the fullest
extent  permitted by law,  any defenses or benefits  that may be derived from


                                       40
<PAGE>

or afforded by law which limit the liability of or exonerate it or sureties,  or
which may conflict with the terms of this Section 12.2.4. The obligations of PEI
pursuant to this  Section  12.2.4  shall  continue  and remain in full force and
effect or be  reinstated,  as the case may be, in the event that all or any part
of any payment made by PEGI to the Company under the  Distribution  Agreement is
rescinded or recovered  directly or indirectly from the Company as a preference,
fraudulent  transfer  or  conveyance  or  otherwise,  PEGI,  Claxson and Lifford
acknowledge  that any payment  obligation of PEI  hereunder  shall be limited to
PEGI's (or its Affiliate's)  Membership  Percentage Interest at the time of such
failure to make payment multiplied by the amount of the payment due and further,
that the payment of such payments due shall constitute a cure of such breach. In
the event that PEGI  exercises the PEGI Buy-Up  Option,  the  provisions of this
Section 12.2.4 shall terminate in their entirety.

      12.3 Effect of Dissolution.  Upon dissolution of the Company,  the Related
Documents  will  automatically  terminate and all rights and  obligations of the
respective  parties  thereunder will  terminate,  except for any provisions that
expressly  survive such  termination  or claims,  etc. that have arisen prior to
such  termination.  Upon dissolution of the Company,  each Member shall have the
right to compel the Company to be promptly wound-up and liquidated.

      12.4  Dissolution.  The Company  shall be  dissolved,  its assets shall be
disposed of, and its affairs wound up on the first to occur of the following:

            (a) Upon the  election of the  applicable  Member(s)  following  the
happening of any Dissolution Event;

            (b) Upon the entry of a decree of judicial  dissolution  pursuant to
Section 17351 of the Corporations Code;

            (c) The occurrence of a Withdrawal Dissolution Event and the failure
of the  Remaining  Members to consent to  continue  the  business of the Company
within ninety (90) days after the occurrence of such event or the failure of the
Company or the  Remaining  Members to purchase the Former  Member's  Interest as
provided in Article 10; or

            (d)  The  sale  of all or  substantially  all of the  assets  of the
Company.

      12.5  Certificate  of  Dissolution.  As soon  as  possible  following  the
occurrence  of any  of the  events  specified  in  Section  12.4,  the  Managers
appointed  by Members  whose  breach or  Withdrawal  Dissolution  Event have not
caused the dissolution of the Company or, if none, the Members,  shall execute a
Certificate of Dissolution in such form as shall be prescribed by the California
Secretary of State and file the Certificate as required by the Act.

      12.6 Winding Up. Upon  dissolution,  the Company shall continue solely for
the  purpose of winding up its  affairs in an orderly  manner,  liquidating  its
assets,  and satisfying the claims of its creditors.  The Managers  appointed by
Members  whose  breach or  Withdrawal  Dissolution  Event  have not  caused  the
dissolution  of the Company or, if none, the Members,  shall be responsible  for
overseeing the winding up and liquidation of Company, shall take full account of
the  liabilities  of Company and assets,  shall  (subject to PEGI's  right under
Section 12.7) either cause its assets to be sold or distributed,  and if sold as
promptly as is consistent  with obtaining the Fair Market Value  thereof,  shall
cause the proceeds therefrom,  to the extent sufficient therefor,  to be applied
and  distributed as provided in Section 12.8. The Persons winding up the affairs
of the Company shall give written  notice of the  commencement  of winding up by
mail to all known creditors and claimants whose addresses  appear on the records
of the Company.  The  Managers or Members  winding up the affairs of the Company
shall be entitled to reasonable compensation for such services.


                                       41
<PAGE>

      12.7  Distributions in Kind. Any non-cash asset distributed to one or more
Members  shall first be valued at its Fair  Market  Value to  determine  the Net
Income or Net Loss that  would  have  resulted  if such asset were sold for such
value,  such Net Income or Net Loss shall then be allocated  pursuant to Article
4,  and the  Members'  Capital  Accounts  shall  be  adjusted  to  reflect  such
allocations.  The amount  distributed and charged to the Capital Account of each
Member receiving an interest in such distributed  asset shall be the Fair Market
Value of such  interest  (net of any  liability  secured by such asset that such
Member  assumes or takes  subject to). The Fair Market Value of such asset shall
be determined  by the Managers or by the Members or if any Member  objects by an
independent  appraiser in  accordance  with  Exhibit C, with a single  appraiser
selected by the Manager or  liquidating  trustee  and  approved by the  Members;
provided,  however, that the Fair Market Value of the physical embodiment of any
intellectual  property  shall be determined  based on its value to a third party
(i.e.,  to a  Person  other  than  the  owner  of such  intellectual  property).
Notwithstanding  the foregoing,  PEGI may elect in lieu of or in addition to any
other form of  distribution  to have  distributed to it in kind or destroyed any
assets  of the  Company  that are  Playboy-branded,  contain  Playboy-identified
content or are otherwise identified as a Playboy-related product.

      12.8 Order of Payment of Liabilities Upon Dissolution.

            12.8.1  Distributions to Members.  After  determining that all known
debts and  liabilities of the Company in the process of  winding-up,  including,
but not limited to, debts and  liabilities  to Members that are creditors of the
Company,  have been paid or adequately  provided for, the remaining assets shall
be distributed to the Members in accordance with their positive  Capital Account
balances,  after  taking  into  account  income  and  loss  allocations  for the
Company's  taxable  year  during  which  liquidation  occurs.  Such  liquidating
distributions  shall be made by the end of the  Company's  taxable year in which
the Company is liquidated,  or, if later, within ninety (90) days after the date
of such liquidation.

            12.8.2 Payment of Debts. The payment of a debt or liability, whether
the  whereabouts  of the  creditor  is known  or  unknown,  has been  adequately
provided  for if the payment has been  provided  for by either of the  following
means:

            (a) Payment  thereof has been assumed or guaranteed in good faith by
one or more financially  responsible  persons or by the United States government
or any agency thereof, and the provision, including the financial responsibility
of the Person,  was  determined  in good faith and with  reasonable  care by the
Members or Managers to be adequate at the time of any distribution of the assets
pursuant to this Section.

            (b) The  amount  of the  debt or  liability  has been  deposited  as
provided in Section 2008 of the Corporations Code.

            This  Section  12.8.2 shall not  prescribe  the  exclusive  means of
making adequate provision for debts and liabilities.

      12.9  Certificate of  Cancellation.  The Managers or Members who filed the
Certificate  of  Dissolution  shall cause to be filed in the office of, and on a
form  prescribed  by,  the  California  Secretary  of State,  a  certificate  of
cancellation  of the  Articles  upon the  completion  of the  winding  up of the
affairs of the Company.

      12.10 No Action for  Dissolution.  Except as  expressly  permitted in this
Agreement,  a Member shall not take any voluntary  action that directly causes a
Dissolution Event. The Members acknowledge that irreparable damage would be done
to the  goodwill  and  reputation  of the Company if any Member  should bring an
action in court to dissolve the Company under circumstances where dissolution is
not


                                       42
<PAGE>

required by Section 12.4.  This  Agreement  has been drawn  carefully to provide
fair  treatment of all  parties.  Accordingly,  except  where the Managers  have
failed to  liquidate  the Company as  required  by this  Article 12, each Member
hereby  waives and  renounces  its right to  initiate  legal  action to seek the
appointment  of a  receiver  or trustee to  liquidate  the  Company or to seek a
decree of judicial  dissolution  of the Company on the ground that (a) it is not
reasonably  practicable  to carry on the  business of the Company in  conformity
with  this  Agreement,  or (b)  dissolution  is  reasonably  necessary  for  the
protection  of the rights or interests of the  complaining  Member.  Damages for
breach of this  Section  12.10 shall be monetary  damages only (and not specific
performance), and the damages may be offset against distributions by the Company
to which such Member would otherwise be entitled.

                                  ARTICLE XIII
                          INDEMNIFICATION AND INSURANCE

      13.1  Indemnification  of Agents.  The Company  shall and hereby agrees to
indemnify  any Person who was or is a party or is  threatened to be made a party
to any threatened,  pending or completed action, suit or proceeding by reason of
the fact that such  Person is or was a Member,  Manager,  officer,  employee  or
other agent of the Company or that, being or having been such a Member, Manager,
officer,  employee or agent, such Person is or was serving at the request of the
Company as a manager,  director,  officer,  employee  or other  agent of another
limited liability company,  corporation,  partnership,  joint venture,  trust or
other enterprise (all such persons being referred to hereinafter as an "Agent"),
to the fullest  extent  permitted by applicable law in effect on the date hereof
and to such greater  extent as applicable  law may  hereafter  from time to time
permit.  The Managers  shall be authorized,  on behalf of the Company,  to enter
into  indemnity  agreements  from time to time with any  Person  entitled  to be
indemnified  by the Company  hereunder,  upon such terms and  conditions  as the
Managers deem appropriate in their business judgment.

      13.2 Insurance.  The Company shall have the power to purchase and maintain
insurance on behalf of any Person who is or was an Agent of the Company  against
any  liability  asserted  against such Person and incurred by such Person in any
such capacity,  or arising out of such Person's  status as an Agent,  whether or
not the  Company  would have the power to  indemnity  such Person  against  such
liability under the provisions of Section 13.1 or under applicable law.

                                   ARTICLE XIV
                                 NON-COMPETITION

      14.1 Adult Oriented Television Business Non-Competition.

            14.1.1 PEI and its  Subsidiaries  may not  directly  or  indirectly,
alone or as a partner, joint venturer,  member,  consultant,  agent, independent
contractor  or  stockholder  of or lender to, any company or  business,  engage,
compete  or  participate  in  the  Adult-Oriented  Television  Business  in  the
Territory (except as provided in Section 3.6), for a period coterminous with the
Term and until two (2) years after the termination of this Agreement.

            14.1.2 Claxson and its  Subsidiaries may not directly or indirectly,
alone or as a partner, joint venturer,  member,  consultant,  agent, independent
contractor  or  stockholder  of, or lender to, any company or business,  engage,
compete or participate in the  Adult-Oriented  Television  Business in all other
territories  except for the Territory for a period coterminous with the Term and
until two (2) years after the termination of this Agreement.

            14.1.3 Claxson and PEI and their respective Subsidiaries may not own
any interest in a Person engaged in the  Adult-Oriented  Television  Business in
the Territory, except and unless those


                                       43
<PAGE>

interests are contributed to the Company,  and only with the written  permission
of the other Member, and such party shall not receive any consideration for such
contribution.

            14.1.4  If this  Agreement,  the  Program  Supply  Agreement  or any
Related  Document is terminated due to a breach by PEI,  Claxson or any of their
respective Subsidiaries, all non-competition restrictions on the breaching party
will remain in force for an additional two (2) years, while the  non-competition
restrictions on the non-breaching party and its Subsidiaries will be terminated.

      14.2 Playboy Lifestyle Business Non-Competition in the Territory.

            14.2.1   Neither  PEI  or  Claxson  nor  any  of  their   respective
Subsidiaries may directly or indirectly,  alone or as a partner, joint venturer,
member,  consultant,  agent,  independent contractor or stockholder of or lender
to, any company or business,  engage,  compete or  participate  in the Lifestyle
Media Business in the Territory for a period coterminous with the Term and until
two (2) years after the termination of this Agreement.

            14.2.2 Claxson and PEI and their respective Subsidiaries may not own
any  interest  in a  Person  engaged  in the  Lifestyle  Media  Business  in the
Territory,  except and unless those  interests are contributed to the Company or
the Playboy  Lifestyle  Companies,  and only with the written  permission of the
other  Member,  and such party  shall not  receive  any  consideration  for such
contribution.

            14.2.3 If this  Agreement  or the Program  Supply  Agreement  or any
Related  Document is terminated due to a breach by PEI,  Claxson or any of their
respective Subsidiaries, all non-competition restrictions on the breaching party
will remain in force for an additional two (2) years, while the  non-competition
restrictions on the non-breaching party and its Subsidiaries will be terminated.

      14.3 US Playboy  Lifestyle  Business  Non-Competition  in the US Lifestyle
Territory.

            14.3.1   Neither  PEI  or  Claxson  nor  any  of  their   respective
Subsidiaries  may for a  period  coterminous  with  the US  Option  Period:  (i)
directly  or  indirectly,  alone  or  as  a  partner,  joint  venturer,  member,
consultant,  agent,  independent  contractor or stockholder of or lender to, any
company or business,  engage,  compete or  participate  in the Lifestyle  Linear
Television Business in the US Lifestyle Territory, or (ii) own any interest in a
Person engaged in the Lifestyle Linear  Television  Business in the US Lifestyle
Territory,  except and unless those  interests are contributed to the Company or
the Playboy  Lifestyle  Companies,  and only with the written  permission of the
other  Member,  and such party  shall not  receive  any  consideration  for such
contribution.  If  there  is a US  Option  Confirmation,  this  non  competition
obligation  will survive during the Term of this  Agreement;  provided  however,
that if (i)  there  is a PEI  Second  Rejection  or (ii) the  Playboy  Lifestyle
Channel USA is not launched in the US Lifestyle  Territory within the time frame
as  mutually   determined  by  the  parties  pursuant  to  Section  2.8.1,  this
noncompetition obligation will terminate.

            14.3.2 If Claxson fails or refuses to make a timely  Claxson  Offer,
Section 14.3.1 shall no longer be applicable,  and Claxson and its  Subsidiaries
may not for the one (1) year period immediately  following the expiration of the
90-day period to complete a Claxson Offer: (i) directly or indirectly,  alone or
as a partner, joint venturer, member, consultant,  agent, independent contractor
or  stockholder  of, or lender to, any company or business,  engage,  compete or
participate  in the  Lifestyle  Linear  Television  Business in the US Lifestyle
Territory or (ii) own any interest in a Person  engaged in the Lifestyle  Linear
Television  Business  in the US  Lifestyle  Territory,  except and unless  those
interests are contributed to the Company or the Playboy Lifestyle Companies, and
only with the written  permission of the other Member,  and such party shall not
receive any consideration for such contribution.  If Claxson fails or refuses to
meet and confer with PEI during the 30-day period after a PEI Reply other than a
US Option


                                       44
<PAGE>

Confirmation,  Section 14.3.1 shall no longer be applicable, and Claxson and its
Subsidiaries  may not for the one (1)  year  period  immediately  following  the
expiration  of such 30-day  period:  (i) directly or  indirectly,  alone or as a
partner, joint venturer,  member,  consultant,  agent, independent contractor or
stockholder  of, or lender  to,  any  company or  business,  engage,  compete or
participate  in the  Lifestyle  Linear  Television  Business in the US Lifestyle
Territory or (ii) own any interest in a Person  engaged in the Lifestyle  Linear
Television  Business  in the US  Lifestyle  Territory,  except and unless  those
interests are contributed to the Company or the Playboy Lifestyle Companies, and
only with the written  permission of the other Member,  and such party shall not
receive any consideration for such contribution.  If Claxson fails or refuses to
participate  during the  Mediation  Period,  Section  14.3.1  shall no longer be
applicable, and Claxson and its Subsidiaries may not for the one (1) year period
immediately  following  the  expiration  of the 180-day  Mediation  Period:  (i)
directly  or  indirectly,  alone  or  as  a  partner,  joint  venturer,  member,
consultant,  agent,  independent contractor or stockholder of, or lender to, any
company or business,  engage,  compete or  participate  in the Lifestyle  Linear
Television  Business in the US Lifestyle Territory or (ii) own any interest in a
Person engaged in the Lifestyle Linear  Television  Business in the US Lifestyle
Territory,  except and unless those  interests are contributed to the Company or
the Playboy  Lifestyle  Companies,  and only with the written  permission of the
other  Member,  and such party  shall not  receive  any  consideration  for such
contribution.

            14.3.3 If there is a PEI Rejection or PEI Second Rejection,  Section
14.3.1  shall  no  longer  be  applicable,  and  for the  two  (2)  year  period
immediately  following a PEI  Rejection  or the one (1) year period  immediately
following a PEI Second Rejection, PEI and its Subsidiaries may not: (i) directly
or indirectly, alone or as a partner, joint venturer, member, consultant, agent,
independent contractor or stockholder of, or lender to, any company or business,
engage,  compete or participate in the Lifestyle Linear  Television  Business in
the US Lifestyle  Territory or (ii) own any interest in a Person  engaged in the
Lifestyle Linear Television Business in the US Lifestyle  Territory,  except and
unless those interests are  contributed to the Company or the Playboy  Lifestyle
Companies,  and only with the written  permission of the other Member,  and such
party shall not receive any consideration for such contribution.

            14.3.4 If this  Agreement  or the Program  Supply  Agreement  or any
Related  Document is terminated due to a breach by PEI,  Claxson or any of their
respective Subsidiaries, all non-competition restrictions on the breaching party
in this Section 14.3 will remain in force for an additional two (2) years, while
the non-competition restrictions on the non-breaching party and its Subsidiaries
will be terminated

      Notwithstanding  anything to the contrary in the foregoing,  PEI expressly
acknowledges  and agrees that  neither the  ownership or operation by Claxson or
any of its Subsidiaries of any of Claxson's or any of its Subsidiaries' existing
television  channels  shall be  deemed  to be a  breach  of this  Section  14.3.
Notwithstanding  anything to the contrary in the  foregoing,  Claxson  expressly
acknowledges and agrees that neither the ownership or operation by PEI or any of
its Subsidiaries of any of PEI's or any of its Subsidiaries' existing television
channels shall be deemed to be a breach of this Section 14.3.

      14.4 Separate Covenants.  The agreements  contained in Sections 14.1, 14.2
and 14.3 shall be construed as a series of separate and distinct covenants,  one
for  each  (a)  activity  of PEI  and  its  Subsidiaries  and  Claxson  and  its
Subsidiaries,  as the case may be,  (b)  capacity  in which  each of PEI and its
Subsidiaries  and  Claxson  and  its  Subsidiaries,  as the  case  may  be,  are
prohibited  from  competing and (c) territory in which PEI and its  Subsidiaries
and  Claxson  and its  Subsidiaries,  as the case  may be,  are  carrying  on or
prohibited from carrying on such activity.

      14.5  Intent;  Severability.  Each of PEI,  PEGI and Claxson  intends that
Sections  14.1,  14.2 and 14.3  satisfy  the terms  of,  and be  enforceable  in
accordance with California Business and Professions Code Section 16602.5,  which
authorizes any member who sells its interest in a limited  liability  company to
enter into an agreement with the buyer of such interest to refrain from carrying
on a similar business


                                       45
<PAGE>

within the counties or cities in which a limited  liability company carries on a
like  business  therein.  Each of PEI, on behalf of itself and its  Subsidiaries
(including,  without limitation, PEGI), and Claxson, on behalf of itself and its
Subsidiaries,  recognizes that the territorial and time  restrictions  set forth
herein are reasonable,  not burdensome and are properly  required by law for the
adequate protection of the Company, PEI and its Subsidiaries and Claxson and its
Subsidiaries.  If such  territorial or time  restrictions or any other provision
contained herein shall be deemed to be illegal, unenforceable or unreasonable by
a court of competent jurisdiction,  each of PEI and its Subsidiaries and Claxson
and its Subsidiaries  agrees and submits to the reduction of such territorial or
time  restriction  or other  provision  to such an area or period as such  court
shall deem reasonable.

      14.6 Injunctive  Relief.  Each of PEI, PEGI and Claxson  acknowledges that
(a) the covenants and the restrictions contained in Sections 14.1, 14.2 and 14.3
are a  material  factor to such  party's  execution  of this  Agreement  and are
necessary  and  required  for  the  protection  of  the  Company,  PEI  and  its
Subsidiaries  and Claxson and its  Subsidiaries,  (b) such  covenants  relate to
matters that are of a special,  unique and  extraordinary  character  that gives
each of such  covenants a special,  unique and  extraordinary  value,  and (c) a
breach of any of such covenants  will result in irreparable  harm and damages to
the Company,  PEI and its Subsidiaries or Claxson and its  Subsidiaries,  as the
case may be, in an amount  difficult to ascertain  and that cannot be adequately
compensated by a monetary award.  Accordingly,  in addition to any of the relief
to which the Company,  PEI and its Subsidiaries or Claxson and its Subsidiaries,
as the case may be, may be entitled at law or in equity,  the  Company,  PEI and
its Subsidiaries and Claxson and its Subsidiaries,  as the case may be, shall be
entitled to  temporary  and/or  permanent  injunctive  relief from any breach or
threatened  breach of the  provisions  of Sections  14.1,  14.2 and 14.3 without
proof of actual  damages that have been or may be caused to such Persons by such
breach or threatened breach.

                                   ARTICLE XV
                      MEMBER REPRESENTATIONS AND WARRANTIES

      15.1  Representations  and  Warranties by Each Member.  Each Member hereby
represents and warrants to, and agrees with, the other Members, and the Company,
as follows:

            15.1.1 Experience.  By reason of such Member's business or financial
experience,  such  Member is  capable of  evaluating  the risks and merits of an
investment  in the  Membership  Interest  and of  protecting  such  Member's own
interests in connection with this investment.

            15.1.2 No  Advertising.  Such  Member has not seen,  received,  been
presented with, or been solicited by any leaflet,  public  promotional  meeting,
newspaper   or  magazine   article  or   advertisement,   radio  or   television
advertisement,  or any other form of  advertising or general  solicitation  with
respect to the sale of the Membership Interest.

            15.1.3  Investment  Intent.  Such Member is acquiring the Membership
Interest for investment purposes for such Member's own account only and not with
a view to or for sale in connection with any  distribution of all or any part of
the  Membership  Interest.  No other  Person  will have any  direct or  indirect
beneficial interest in or right to the Membership Interest.

            15.1.4  Purpose of Entity.  Such  Member was not  organized  for the
specific purpose of acquiring the Membership Interest.

            15.1.5  Economic Risk.  Such Member is financially  able to bear the
economic risk of an investment in the Membership  Interest,  including the total
loss thereof.


                                       46
<PAGE>

            15.1.6  No   Registration  of  Membership   Interest.   Such  Member
acknowledges  that the  Membership  Interest has not been  registered  under the
Securities Act of 1933 (as amended,  the  "Securities  Act"), or qualified under
the  California  Corporate  Securities  Law of 1968,  as  amended,  or any other
applicable blue sky laws in reliance, in part, on such Member's representations,
warranties, and agreements herein.

            15.1.7  Membership  Interest  in  Restricted  Security.  Such Member
understands  that the Membership  Interest is a "restricted  security" under the
Securities Act in that the Membership Interest will be acquired from the Company
in a  transaction  not  involving  a public  offering,  and that the  Membership
Interest may be resold  without  registration  under the  Securities Act only in
certain limited circumstances and that otherwise the Membership Interest must be
held  indefinitely.  In this  connection,  such  Member  understands  the resale
limitations  imposed by the Securities Act and is familiar with SEC Rule 144, as
presently in effect,  and the conditions which must be met in order for such SEC
Rule 144 to be available for resale of "restricted securities".

            15.1.8 No Obligation to Register. Such Member represents,  warrants,
and agrees  that the Company is under no  obligation  to register or qualify the
Membership  Interest under the Securities Act or under any state securities law,
or to assist such Member in complying with any exemption from  registration  and
qualification.

            15.1.9 No  Disposition  in  Violation of Law.  Without  limiting the
representations  set forth above,  and without  limiting the other provisions of
this  Agreement  relating to the transfer of Membership  Interests,  such Member
will not  make any  disposition  of all or any part of the  Membership  Interest
which  will  result in the  violation  by such  Member or by the  Company of the
Securities  Act, the California  Corporate  Securities Law of 1968, or any other
applicable  securities laws. Without limiting the foregoing,  such Member agrees
not to make any disposition of all or any part of the Membership Interest unless
and until:

            (a)  There is then in  effect a  registration  statement  under  the
Securities Act covering such proposed  disposition and such  disposition is made
in accordance with such registration  statement and any applicable  requirements
of state securities laws; or

            (b) (i)  Such  Member  has  notified  the  Company  of the  proposed
disposition  and has  furnished  the Company  with a detailed  statement  of the
circumstances  surrounding  the proposed  disposition,  and (ii) such Member has
furnished the Company with a written opinion of counsel, reasonably satisfactory
to the  Company,  that such  disposition  will not require  registration  of any
securities  under  the  Securities  Act  or  the  consent  of or a  permit  from
appropriate authorities under any applicable state securities law; and

            (c) In  the  case  of any  disposition  of  all or any  part  of the
Membership  Interest  pursuant to SEC Rule 144, in addition to the  requirements
set forth above, such Member shall promptly forward to the Company a copy of any
Form 144 filed with the SEC with respect to such  disposition  and a letter from
the executing broker satisfactory to the Company evidencing  compliance with SEC
Rule 144. If SEC Rule 144 is amended or if the SEC's interpretations  thereof in
effect  at the time of any  such  disposition  have  changed  from  its  present
interpretations  thereof,  such  Member  shall  provide  the  Company  with such
additional documents as the General Manager may reasonably require.

            15.1.10   Investment  Risk.  Such  Member   acknowledges   that  the
Membership  Interest is a speculative  investment  which  involves a substantial
degree of risk of loss by such Member of its entire  investment  in the Company,
that such  Member  understands  and takes full  cognizance  of the risk  factors
related to the purchase of the Membership Interest.


                                       47
<PAGE>

            15.1.11  Restrictions on  Transferability.  Such Member acknowledges
that there are substantial restrictions on the transferability of the Membership
Interest  pursuant  to this  Agreement,  that there is no public  market for the
Membership Interest and none is expected to develop, and that,  accordingly,  it
may not be possible for such Member to liquidate such Member's investment in the
Company.

            15.1.12 Information Reviewed.  Such Member has received and reviewed
all  information  such Member  considers  necessary or appropriate  for deciding
whether to purchase the Membership Interest.

            15.1.13 No  Representations  By  Company.  No Person has at any time
represented,  guaranteed or warranted to such Member that such Member may freely
transfer the Membership  Interest,  that a percentage of profit and/or amount or
type of  consideration  will be  realized  as a result of an  investment  in the
Membership  Interest,  that past  performance  or  experience on the part of the
Managers or any other Person in any way indicates the predictable results of the
ownership of the Membership  Interest or of the overall Company  business,  that
any cash  distributions from Company operations or otherwise will be made to the
Members by any  specific  date or will be made at all, or that any  specific tax
benefits will accrue as a result of an investment in the Company.

            15.1.14 Consultation with Attorney.  Such Member has been advised to
consult with such Member's own attorney  regarding all legal matters  concerning
an investment in the Company and the tax  consequences of  participating  in the
Company, and has done so, to the extent such Member considers necessary.

            15.1.15  Tax  Consequences.  Such Member  acknowledges  that the tax
consequences  to such Member of  investing  in the  Company  will depend on such
Member's particular circumstances, and such Member will look solely to, and rely
upon,  such Member's own advisers with respect to the tax  consequences  of this
investment.

            15.1.16 No Assurance of Tax Benefits.  Such Member acknowledges that
there can be no assurance that the Code or the Treasury  Regulations will not be
amended  or  interpreted  in the  future in such a manner so as to  deprive  the
Company  and the  Members  of some or all of the tax  benefits  they  might  now
receive,  nor  that  some  of  the  deductions  claimed  by the  Company  or the
allocations  of items of income,  gain,  loss,  deduction,  or credit  among the
Members may not be challenged by the Internal Revenue Service.

      15.2 Indemnity. Each Member shall indemnify and hold harmless the Company,
each  and  every  Manager,  each  and  every  other  Member,  and any  officers,
directors,   shareholders,   managers,  members,  employees,  partners,  agents,
attorneys, accountants,  registered representatives,  and control persons of any
such  entity  who was or is a party or is  threatened  to be made a party to any
threatened,  pending, or completed action,  suit, or proceeding,  whether civil,
criminal,  administrative, or investigative (a "Claim"), by reason of or arising
from any  misrepresentation or misstatement of facts or omission to represent or
state facts made by such Member  including,  but not limited to, the information
and representations in this Agreement, against losses, liabilities, and expenses
of the Company,  each and every  Manager,  each and every other Member,  and any
officers,  directors,  shareholders,  managers,  members,  employees,  partners,
attorneys, accountants, agents, registered representatives,  and control persons
of any such Person  (including  attorneys' fees,  judgments,  fines, and amounts
paid in settlement,  payable as incurred)  incurred by such Person in connection
with such action, suit, proceeding, or the like.

      15.3 Procedure. If a claim by a third party is made against an indemnified
party, the indemnified party will promptly notify the indemnifying party of such
claim.  Failure  to so  notify  the


                                       48
<PAGE>

indemnifying  party will not relieve  the  indemnifying  party of any  liability
which the indemnifying  party might have, except to the extent that such failure
materially  prejudices the indemnifying  party's legal rights.  The indemnifying
party  will have the  obligation  after  receipt  of such  notice to  undertake,
conduct and control  such claim  through  counsel of its own choosing and at its
expense.  If, within thirty (30) days of such notice, the indemnifying party has
not  undertaken,  conducted  nor  controlled  such claim  through  counsel,  the
indemnified  party shall have the right to  undertake,  conduct and control such
claim through  counsel of its own choosing and the  indemnifying  party shall be
responsible for paying all such reasonable,  documented  expenses at the expense
of the indemnifying party.

                                   ARTICLE XVI
                               DISPUTE RESOLUTION

      16.1 Alternate Dispute  Resolution.  Except as set forth in Section 16.10,
any dispute  arising out of or relating to this  Agreement  shall be resolved in
accordance with the procedures  specified in this Article 16, which shall be the
sole and exclusive procedures for the resolution of any such disputes; provided,
however,  that  this  Article  shall  not apply to any  dispute  concerning  the
validity,  ownership or control of the trademarks licensed by PEI to the Company
pursuant to the Program Supply  Agreement or the  copyrights to any  programming
supplied by PEGI pursuant to the Program Supply Agreement,  and instead any such
dispute shall be litigated in a court of law. The Company and the Members intend
that these provisions shall be valid,  binding,  enforceable and irrevocable and
shall  survive any  termination  of this  Agreement or any of the other  Related
Documents.

      16.2 Notification and Negotiation.  If the Company or any Member wishes to
assert a dispute with the Company or any other Member arising out of or relating
to this  Agreement,  such Person shall  promptly  notify the Company and/or such
other  Member in  writing  of such  dispute  and shall  attempt in good faith to
resolve any dispute  arising  out of or relating to this  Agreement  promptly by
negotiation  between  executives who have  authority to settle the  controversy.
Within  five (5)  business  days of the  receipt  by a party of a notice  of the
existence of a Dispute  ("Notice"),  the receiving  party shall submit a written
response to the other party ("Response"). Both the Notice and the Response shall
include (i) a statement of each party's  position with regard to the Dispute and
a summary of arguments supporting that position;  and (ii) the name and title of
the senior  executive who will represent that party in attempting to resolve the
Dispute  pursuant to this  Section.  Within five (5) business days of receipt of
the Response,  the designated  executives  shall meet and attempt to resolve the
Dispute.  All reasonable requests for information made by one party to the other
will be honored. All negotiations  pursuant to this clause shall be confidential
and shall be treated as compromise and settlement  negotiations,  and no oral or
documentary  representations  made by the parties during such negotiations shall
be admissible for any purpose in any subsequent  proceedings.  If any Dispute is
not  resolved  for any reason  within  twenty (20) days of receipt of Notice (or
within such longer period as to which the parties have agreed in writing), then,
on the request of any party the Dispute  shall be  submitted to  arbitration  in
accordance with Sections 16.3 to 16.9 herein.

      16.3 Arbitration Rules. Any Dispute not timely resolved in accordance with
Section  16.2  shall be  finally  and  exclusively  settled  by  arbitration  in
accordance with the International  Arbitration Rules of the American Arbitration
Association ("AAA") then in effect (the "Rules"), except as modified herein. The
arbitration  shall  be  held  in  Los  Angeles,   California.   The  arbitration
proceedings shall be conducted,  and the award shall be rendered, in the English
language.

      16.4  Selection  of  Arbitrators.  If the  Dispute  (including  claims and
counterclaims) is for less than $5 million,  there shall be one arbitrator.  The
parties  shall have fifteen (15) days from the receipt by the  respondent of the
demand for arbitration to agree on an arbitrator.  If the parties fail to timely
agree, on the request of any party such arbitrator shall be appointed by the AAA
in accordance with the Rules


                                       49
<PAGE>

and the  procedures  set forth  herein.  If the  Dispute  (including  claims and
counterclaims)  is for more than $5 million,  there  shall be three  neutral and
impartial arbitrators of whom the claimant and the respondent shall each appoint
one,  within  fifteen  (15) days of the receipt by  respondent  of a copy of the
demand for  arbitration.  The two  arbitrators so appointed shall select a third
arbitrator to serve as presiding  arbitrator,  such  selection to be made within
twenty (20) days of the selection of the second arbitrator. If any arbitrator is
not appointed within the time limits set forth herein,  such arbitrator(s) shall
be  appointed by the AAA in  accordance  with the Rules and the  procedures  set
forth  herein.  There  shall  be  no  restriction  on  the  nationality  of  any
arbitrator.  Any arbitrator appointed by the AAA shall be either a retired judge
with experience in international  commercial cases or a practicing attorney with
at least 15 years  experience with large  commercial  cases and experience as an
international  arbitrator.  The AAA shall send  simultaneously  to each party an
identical list of at least nine arbitrator  candidates,  and each party shall be
permitted to strike two names from the list,  rank the remaining  arbitrators in
order of  preference  and return the list to the AAA within ten (10) days of the
transmittal date. If a party does not return the list within the time specified,
all persons named therein shall be considered acceptable. From among the persons
who remain on both lists and in accordance  with the designated  order of mutual
preference, the AAA shall invite the acceptance of an arbitrator to serve.

      16.5  Arbitration  Procedures.  The hearing on the merits shall be held as
expeditiously  as possible,  if  practicable no later than four (4) months after
the appointment of a single  arbitrator or five (5) months after the appointment
of the third arbitrator, as applicable. The hearing shall, if practicable,  last
no longer  than ten (10) days,  which shall be  consecutive,  if  possible.  The
award,  which shall be in writing  and shall  briefly  and  concisely  state the
findings of fact and conclusions of law on which it is based, shall be rendered,
if  practicable,  within  twenty  (20)  days of the  close  of the  hearing.  In
rendering an award, the arbitrator(s) shall be required to follow the law of the
State of  California.  The  arbitrator(s)  are not empowered to award damages in
excess of  compensatory  damages and each party  hereby  irrevocably  waives any
right  to  recover  such  damages  with  respect  to  any  dispute  resolved  by
arbitration.  The  arbitrator(s)  shall have the authority to award the costs of
the  arbitration  (including  attorneys'  fees and  expenses) to the  prevailing
party.  The award shall be final and  binding  upon the parties and shall be the
sole  and   exclusive   remedy   between  the  parties   regarding  any  claims,
counterclaims, issues or accounting presented to the arbitral tribunal. Judgment
upon any award may be  entered in any court  having  jurisdiction  thereof.  Any
costs or fees (including attorneys' fees and expenses) incident to enforcing the
award shall be charged against the party resisting such enforcement.

      16.6 Effect of Arbitration. By agreeing to arbitration, the parties do not
intend  to  deprive  any  court  of its  jurisdiction  to  issue a  pre-arbitral
injunction,  pre-arbitral  attachment  or  other  order  in aid  of  arbitration
proceedings  and  the  enforcement  of any  award.  Without  prejudice  to  such
provisional  remedies as may be available  under the  jurisdiction of a national
court,  the arbitral  tribunal  shall have full  authority to grant  provisional
remedies or modify or vacate any  temporary or  preliminary  relief  issued by a
court, and to award damages for the failure of any party to respect the arbitral
tribunal's orders to that effect.

      16.7 Statute of  Limitations.  The statute of  limitations of the State of
California  applicable  to the  commencement  of a  lawsuit  shall  apply to the
commencement  of an  arbitration  hereunder,  except that no  defenses  shall be
available  based upon the passage of time during any  negotiation  or  mediation
called for by the preceding paragraphs of this Article 16.

      16.8 Service of Process.  The Company and each Member  agrees that service
by registered or certified  mail,  return receipt  requested,  delivered to such
party at the address provided in Section 17.10 (Notices) will be deemed in every
respect  effective service of process upon such Person for all purposes of these
provisions  relating to mediation and  arbitration.  The Company and each Member
irrevocably submits to the jurisdiction of the courts of the State of California
and to any federal court located within


                                       50
<PAGE>

such  state for the  purpose  of any  action or  judgment  with  respect to this
Agreement,  regardless of where any alleged  breach or other  action,  omission,
fact or  occurrence  giving rise thereto  occurred.  The Company and each Member
hereby  irrevocably  waives any claim that any action or  proceeding  brought in
California has been brought in any inconvenient forum.

      16.9 Additional Arbitration Provisions.  The Company and each Member shall
take all actions  necessary for awards and other  judgments  resulting  from the
provisions  set forth above to be recognized  and  enforceable in the respective
jurisdictions of organization of the Company,  the Members and the other parties
to the Related Documents and, to the extent necessary, in other jurisdictions in
the Territory.

      16.10  Availability  of Equitable  Relief.  Notwithstanding  the foregoing
provisions  of this Article 16, the Company and the Members  acknowledge  that a
material  breach  of  this  Agreement,  the  Program  Supply  Agreement  or  the
Distribution  Agreement by a party thereto may result in irreparable harm to the
Company or a Member for which there is no adequate  remedy at law.  Accordingly,
if the  Company or any Member  reasonably  believes  that the Company or another
Member,  as the case may be, (i) has  materially  breached this  Agreement,  the
Program Supply Agreement or the Distribution Agreement and (ii) said breach will
create irreparable harm to such Person for which there is not adequate remedy at
law, the allegedly  harmed party shall be entitled to preliminary,  temporary or
permanent   equitable  relief  in  any  Federal  or  State  Court  of  competent
jurisdiction located in the State of California.

                                  ARTICLE XVII
                                  MISCELLANEOUS

      17.1  Additional  Documents  and Acts.  Each Member  agrees to execute and
deliver such additional documents and instruments and to perform such additional
acts as may be necessary or appropriate to effectuate, carry out and perform all
of the terms, provisions,  and conditions of this Agreement and the transactions
contemplated hereby.

      17.2 Time is of the Essence.  All dates and times in this Agreement are of
the essence.

      17.3 Remedies Cumulative. The remedies under this Agreement are cumulative
and shall not  exclude  any other  remedies  to which any Person may be lawfully
entitled.

      17.4 Currency; Payments.

            17.4.1 All amounts due from one Member to another  Member,  from the
Company  to one or more  Members  or from  one or more  Members  to the  Company
pursuant to this Agreement and the other Related Documents shall be paid in U.S.
Dollars.  If any portion of such payment is  calculated on the basis of revenues
received  in other  currencies,  such  revenues  shall be  calculated  using the
exchange rate  published in the Wall Street  Journal or as quoted by the Central
Bank  of any  country  in the  Territory,  as of the  business  day  immediately
preceding  the date on which the payment  initially is due.  Such  exchange rate
shall also apply to any portion of a payment  which is permitted to be deferred,
regardless of whether such deferred  payment is represented by a promissory note
or other instrument.

            17.4.2 All payments  owing  pursuant to this Agreement and the other
Related Documents will be made by wire transfer of immediately  available funds,
net of any  withholding  required by applicable law. Each Member and the Company
will from time to time  designate  one or more accounts into which such payments
will be made and may designate one or more Affiliates to receive such payments.


                                       51
<PAGE>

            17.4.3 Unless otherwise  indicated,  any payment  hereunder or under
the other  Related  Documents not made when due will bear interest from the date
due to and  including  the  date  of  payment  in full  at a rate  equal  to the
Reference Rate as in effect on the date payment was due.

            17.4.4 Each Member  agrees for the benefit of the other Members that
if any payment  owing by it under this  Agreement  is  precluded or limited by a
restriction  imposed by the  jurisdiction  of  organization or operation of such
Member or the  jurisdiction  where such Member's  funds are  deposited,  then an
Affiliate of such Member not subject to such restriction shall make the required
payment.

      17.5 Governing Law. This Agreement has been negotiated and entered into in
the State of California and all questions with respect to this Agreement and the
relationships of the parties  hereunder will be governed by the internal laws of
the  State  of  California,  regardless  of  the  choice  of law  principles  of
California or any other jurisdiction.

      17.6  Authority.  Each  Member  represents  that (i) it has full power and
authority to enter into and perform this  Agreement,  (ii) this Agreement is the
valid  and  binding  obligation  of  such  Member,  enforceable  against  it  in
accordance  with its  terms,  and (iii) the  performance  by such  Member of its
obligations  under this  Agreement  does not violate any law, rule or regulation
binding on such Member or such Member's charter documents.

      17.7 Assignment;  No Third Party Beneficiary.  Neither the Company nor any
Member  shall assign its rights or delegate its  obligations  hereunder  without
written  consent of all of the Members  except to an Affiliate of the Company or
such Member;  provided that no such assignment shall relieve the assignor of its
obligations.  The  provisions of this  Agreement are for the benefit only of the
Company and the Members,  and no third party may seek to enforce or benefit from
these provisions except that the Persons  indemnified by the Company pursuant to
Section 13.1 shall be third party  beneficiaries  of this Agreement with respect
to such Section only and shall have  independent  standing to enforce or benefit
from such Section.  References to a party by name herein shall also be deemed to
be references to such party's permitted successors and assigns.

      17.8 Agreement  Negotiated.  The Members are  sophisticated  and have been
represented  by  lawyers  throughout  the  negotiation  and  execution  of  this
Agreement who have carefully negotiated the provisions hereof. As a consequence,
the parties do not believe the presumption of California Civil Code Section 1654
and similar laws or rules relating to the  interpretation  of contracts  against
the  drafter  of any  particular  clause  should  be  applied  in this  case and
therefore waive its effects.

      17.9 Waivers; Remedies Cumulative, Amendments, etc.

            17.9.1  No  failure  or  delay  by  the  Company  or any  Member  in
exercising any right, power or privilege under this Agreement shall operate as a
waiver  thereof  nor shall any single or partial  exercise by any of them of any
right,  power or privilege preclude any further exercise thereof or the exercise
of any other right, power or privilege.

            17.9.2 The rights and remedies  herein  provided are  cumulative and
not exclusive of any rights and remedies provided by law.

            17.9.3 No  provision  of this  Agreement  may be amended,  modified,
waived, discharged or terminated, other than by the express written agreement of
all of the  Members nor may any breach of any  provision  of this  Agreement  be
waived or discharged  except with the express  written consent of the party(ies)
not in breach.


                                       52
<PAGE>

      17.10 Notices.  All notices,  requests,  demands and other  communications
required  to be given  under  this  Agreement  shall  be in  writing  and  shall
conclusively  be deemed to have been  duly  given to each  Member  (a) when hand
delivered, (b) the next business day if sent by a generally recognized overnight
courier  service  that  provides  written  acknowledgement  by the  addressee of
receipt,  or (c) when received,  if sent by facsimile (with  appropriate  answer
back) or other generally accepted means of electronic  transmission addressed as
follows:

            If to PEGI to:

            Playboy Entertainment Group, Inc.
            Attention:  President
            2706 Media Center Drive
            Los Angeles, CA 90065
            United States of America
            Fax Number:  (323) 276-4500

            with a copy to:

            Playboy Enterprises, Inc.
            Attention:  General Counsel
            680 North Lake Shore Drive
            Chicago, IL 60611
            United States of America
            Fax Number:  (312) 266-2042

            with a copy to:

            Playboy Entertainment Group, Inc.
            Attention: Business and Legal Affairs
            2706 Media Center Drive
            Los Angeles, CA 90065
            United States of America
            Fax Number: (323) 276-4502

            if to Lifford to:

            Lifford International Co. Ltd.
            c/o Claxson Interactive Group, Inc.
            Attention: General Counsel
            1550 Biscayne Boulevard
            Ground Floor
            Miami, FL  33132
            Fax Number:  (305) 894-4803

            with a copy to:

            Paul Berkowitz, Esq.
            Greenberg Traurig, P.A.
            1221 Brickell Avenue
            Miami, Florida 33131
            Fax Number: (305) 961-5685


                                       53
<PAGE>

            if to the Company to:

            Playboy TV - Latin America, LLC
            c/o Claxson Interactive Group Inc.
            Attention:  General Counsel
            1550 Biscayne Boulevard
            Ground Floor
            Miami, FL  33132
            Fax Number:  (305) 894-4803

            with copies to PEGI and Claxson

or to such other  address,  or  facsimile  transmission  number as the  relevant
addressee may hereafter by notice hereunder substitute.

      17.11 Public  Announcements.  Unless otherwise  unanimously  agreed by the
Management Committee or as required by law or by the stock exchange on which any
Member's stock,  or the stock of any direct or indirect  parent of a Member,  is
traded, no public  announcement will be made by any of the Company,  any Member,
any Manager,  the General  Manager or any other officer of the Company or any of
their  respective  Affiliates  with  respect  to  the  subject  matter  of  this
Agreement.

      17.12 Survival.  Notwithstanding  the  termination of this Agreement,  the
dissolution  of the  Company,  or a Member's  ceasing to be a Member  under this
Agreement, the following sections of this Agreement, as set forth as of the date
hereof or as hereafter  amended by agreement in writing  signed by both PEGI and
Lifford,  shall  survive  indefinitely  and be  enforceable  by PEGI or Lifford:
Section 12.7, Section 13.1, Article 14, Article 16 and this Section 17.12.

      17.13   Confidentiality.   Unless  otherwise  unanimously  agreed  by  the
Management Committee or as required by law or by the stock exchange on which any
Member's stock,  or the stock of any direct or indirect  parent of a Member,  is
traded, no public  announcement will be made by any of the Company,  any Member,
any Manager,  the General  Manager or any other officer of the Company or any of
their  respective  Affiliates  with  respect  to  the  subject  matter  of  this
Agreement.

            17.13.1 General Confidentiality Requirements.  Each Member shall and
shall cause its Affiliates to, maintain the  confidentiality  of all information
of a confidential or proprietary nature,  which it may have or acquire regarding
customers,  business,  finances,  assets or affairs of the  Company or the other
Members or its Affiliates,  except for any  information,  which is (a) generally
available to the public or becomes generally  available to the public other than
through disclosure in violation of this Agreement,  (b) required to be disclosed
by applicable law or to enforce the provisions of this Agreement and the Related
Documents,  or (c) disclosed to its representatives  (which term shall be deemed
to include their banks,  private  investors,  independent  accountants and legal
counsel);  provided,  such Member causes such representatives to comply with the
confidentiality requirements of this Agreement.

            17.13.2 Exceptions to the General Confidentiality Requirements.

            (a)  Notwithstanding  anything  stated to the  contrary  in  Section
17.12.1 above,  to the extent any Member invites a third party to participate as
an equity or non-equity  investor or other provider of finance (a "Third Party")
in or to such Member or its respective  Affiliates,  the Members agree that such
Member may provide to such Third Party and its representatives (which term shall
be deemed to include their banks, private investors, independent accountants and
legal  counsel),  subject to the  execution  of an  appropriate  confidentiality
agreement,  copies of (i) this Agreement, (ii) the Related


                                       54
<PAGE>

Documents,  (iii) any other  agreement  by and between  any of the parties  that
relate to the Company and  transactions  contemplated  by this Agreement and the
Related Documents,  and (iv) any other financial or other information that would
be  reasonable  in  the  circumstances  for a  potential  investor  to  require.
Notwithstanding  the  foregoing,  no such  information  will be provided until a
confidentiality agreement to the benefit of the Members, in a form and substance
reasonably acceptable to the Members, has been signed by the Third Party.

            (b)  Notwithstanding  anything  stated to the  contrary  in  Section
17.13.1  above,  Claxson,  PEI and the Members may provide to any  institutional
investors and analysts and their representatives  (which term shall be deemed to
include  their  independent  accountants  and  legal  counsel),  subject  to the
execution  of  an  appropriate   confidentiality   agreement,  such  information
concerning  the  Company as is  conventional  to assist  (i) such  institutional
investors in deciding  whether to invest or (ii) such  analysts to prepare their
reports;  provided,  however, that no information may be disclosed to any entity
pursuant to this Section  17.13.2(b)  without the prior  written  consent of the
Management  Committee,  with such consent only being  withheld  upon  reasonable
determination   by  the  Management   Committee  that  the  disclosure  of  such
information  would reasonably be expected to cause harm,  including with respect
to its competitive position, to the Company.

                            [SIGNATURE PAGE FOLLOWS]


                                       55
<PAGE>

            IN WITNESS  WHEREOF,  the parties have caused their duly  authorized
officers to execute this Agreement.

                                    PLAYBOY ENTERTAINMENT GROUP, INC.



                                    By: Reid Nathan
                                       -----------------------------------------
                                       Name:Reid Nathan
                                       Title:V.P. Business and Legal Affairs


                                    LIFFORD INTERNATIONAL CO. LTD.



                                    By: Amaya Arizstoy
                                       -----------------------------------------
                                       Name:Amaya Arizstoy
                                       Title:

Solely in connection  with Article 14,  Sections 2.8, 2.9,  2.10, 9.8 and 12.2.4
and Exhibit G of this Agreement, agreed to and accepted by:

                                    PLAYBOY ENTERPRISES, INC.



                                    By: Alejandro Inglesias
                                       -----------------------------------------
                                       Name:Alejandro Inglesias
                                       Title:


Solely in connection  with Article 14,  Sections 2.8, 2.9,  2.10,  9.9, 9.10 and
12.2.3 and Exhibit G, agreed to and accepted by:


                                    CLAXSON INTERACTIVE GROUP INC.



                                    By: Roberto Vivo
                                       -----------------------------------------
                                       Name:Roberto Vivo
                                       Title:


                                       56
<PAGE>

                                    EXHIBIT A

                     CAPITAL CONTRIBUTION / CAPITAL ACCOUNT
                            AND ADDRESSES OF MEMBERS

                               AS OF APRIL 1, 2002

Playboy TV - Latin America, LLC

<TABLE>
<CAPTION>
                                          Member's            Member's              Member's          Percentage
           Member's Name                  Address         Capital Account     Capital Contribution     Interest
<S>                                  <C>                    <C>                    <C>                   <C>
Playboy Entertainment Group, Inc.    See Section 17.10      ($  381,000)           $ 5,692,000           19%

Lifford International Co. Ltd.       See Section 17.10      ($1,637,000)           $24,260,000           81%
</TABLE>

Playboy TV Holdings, LLC

<TABLE>
<CAPTION>
                                          Member's            Member's              Member's          Percentage
           Member's Name                  Address         Capital Account     Capital Contribution     Interest
<S>                                  <C>                    <C>                    <C>                   <C>
Playboy Entertainment Group, Inc.    See Section 17.10        $ 74,470                 $ --              19%

Zagasse Corp, N.V.                   See Section 17.10        $334,530                 $ --              81%
</TABLE>


                                      A-1
<PAGE>

                                    EXHIBIT B

                                 TAX ALLOCATIONS

                                    ARTICLE 1
                      ALLOCATION OF NET INCOME, NET LOSSES
                        AND OTHER ITEMS AMONG THE MEMBERS

      1.1 Capital Accounts.

            (a) A separate  capital  account shall be maintained for each Member
(a "Capital Account").  Such Member's Capital Account shall from time to time be
(i)  increased  by (A) the  amount  of money and the  Gross  Asset  Value of any
property contributed by the Member to the Company (net of liabilities secured by
the property or to which the  property is  subject),  and (B) the Net Income and
any other  items of income and gain  specially  allocated  to the  Member  under
Paragraph 1.3, and (ii) decreased by (A) the amount of money and the Gross Asset
Value  of  any  property  distributed  to the  Member  by the  Company  (net  of
liabilities  secured by the property or to which the  property is subject),  and
(B) the Net Losses and any other items of deduction and loss specially allocated
to the Member under Paragraph 1.3.

            (b) For purposes of this  Paragraph 1.1, an assumption of a Member's
unsecured  liability by the Company shall be treated as a distribution  of money
to that Member. An assumption of the Company's  unsecured  liability by a Member
shall be treated as a cash contribution to the Company by that Member.

            (c) In the event  that  assets of the  Company  other than money are
distributed  to a Member in  liquidation  of the  Company,  or in the event that
assets of the Company other than money are  distributed  to a Member in kind, in
order to reflect unrealized gain or loss, Capital Accounts for the Members shall
be  adjusted  for the  hypothetical  "book"  gain or loss that  would  have been
realized by the Company if the distributed  assets had been sold for their Gross
Asset  Values in a cash  sale.  In the event of the  liquidation  of a  Member's
interest in the Company,  in order to reflect  unrealized gain or loss,  Capital
Accounts for the Members shall be adjusted for the  hypothetical  "book" gain or
loss that would have been realized by the Company if all Company assets had been
sold for their Gross Asset Values in a cash sale.

      1.2  Allocation  of Net Income and Net Losses.  After giving effect to the
special  allocations set forth in Paragraph 1.3 below, Net Income and Net Losses
of the  Company  for each  Fiscal  Year  shall be  allocated  to the  Members in
accordance with their respective Percentage Interests.

      1.3 Special  Allocations.  The following special allocations shall be made
in the following order:

            (a) Minimum Gain Chargeback.  Subject to the exceptions set forth in
Treasury  Regulation Section  1.704-2(f),  if there is a net decrease in Company
Minimum  Gain  during a Company  Fiscal  Year,  each Member  shall be  specially
allocated  items of income and gain for Capital  Account  purposes for such year
(and, if necessary,  for  subsequent  years) in an amount equal to such Member's
share of the net decrease in Company  Minimum Gain during such year (which share
of such net decrease  shall be  determined  under  Treasury  Regulation  Section
1.704-2(g)(2)).  It is intended that this  Paragraph  1.3(a) shall  constitute a
"minimum gain chargeback" as provided by Treasury Regulation Section 1.704-2(f).

            (b) Member Nonrecourse Debt Minimum Gain Chargeback.  Subject to the
exceptions contained in Treasury Regulation Section 1.704-2(i)(4), if there is a
net decrease in Member  Nonrecourse


                                      B-1
<PAGE>

Debt Minimum Gain during a Company  Fiscal Year, any Member with a share of such
Member  Nonrecourse  Debt Minimum Gain  (determined in accordance  with Treasury
Regulation  Section  1.704-2(i)(5))  as of the  beginning  of such year shall be
specially  allocated items of income and gain for Capital  Account  purposes for
such year (and, if necessary,  for subsequent  years) in an amount equal to such
Member's  share of the net  decrease in Member  Nonrecourse  Debt  Minimum  Gain
(which share of such net decrease shall be determined under Treasury  Regulation
Sections  1.704-2(i)(4) and  1.704-2(g)(2)).  It is intended that this Paragraph
1.3(b) shall constitute a "partner  nonrecourse debt minimum gain chargeback" as
provided by Treasury Regulation Section 1.704-2(i)(4).

            (c)  Nonrecourse  Deductions.  Any Nonrecourse  Deductions  shall be
allocated to the Members in accordance with their Percentage Interests.

            (d) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions
shall be allocated  to the Member that takes the  Economic  Risk of Loss for the
Member  Nonrecourse Debt to which such deductions relate as provided in Treasury
Regulation Section 1.704-2(i)(1).

            (e) Qualified  Income Offset.  In the event any Member  unexpectedly
receives any adjustments,  allocations,  or distributions  described in Treasury
Regulation   Sections   1.704-1(b)(2)(ii)(d)(4),   1.704-l(b)(2)(ii)(d)(5),   or
1.704-1(b)(2)(ii)(d)(6),  items of Company  income and gain for Capital  Account
purposes for such Fiscal Year shall be  specially  allocated to the Member in an
amount  and manner  sufficient  to  eliminate,  to the  extent  required  by the
Treasury  Regulations,  the Adjusted  Capital  Account  Deficit of the Member as
quickly as possible,  provided  that an  allocation  pursuant to this  Paragraph
1.3(e)  shall be made if and only to the extent  that the  Member  would have an
Adjusted  Capital  Account Deficit after all other  allocations  provided for in
this Article 1 have been  tentatively  made as if this Paragraph 1.3(e) were not
in the Agreement.

            (f)  Section 754  Adjustment.  To the extent any  adjustment  to the
adjusted tax basis of any Company asset  pursuant to Code Section 734(b) or Code
Section   743(b)  is   required,   pursuant  to  Treasury   Regulation   Section
l.704-1(b)(2)(iv)(m),  to be taken into account in determining Capital Accounts,
the amount of such  adjustment  to the Capital  Accounts  shall be treated as an
item of gain (if the  adjustment  increases  the basis of the asset) or loss (if
the  adjustment  decreases  such basis) and such gain or loss shall be specially
allocated to the Members in a manner  consistent  with the manner in which their
Capital  Accounts  are  required to be adjusted  pursuant to such section of the
Treasury Regulations.

            (g) No Excess  Deficit.  To the extent  that any Member has or would
have,  as a result of an allocation  of loss (or an item  thereof),  an Adjusted
Capital  Account  Deficit,  such  amount of loss (or an item  thereof)  shall be
allocated to the other Members in accordance  with this  Paragraph 1.3, but in a
manner which will not produce an Adjusted Capital Account Deficit as to any such
Member.

            (h)  Curative  Allocations.   The  allocations  set  forth  in  this
Paragraph  1.3 shall be taken into account for  purposes of equitably  adjusting
subsequent  allocations of Net Income and Net Losses, and items of income, gain,
loss and deduction  among the Members so that, to the extent  possible,  the net
amount of such  allocations of Net Income and Net Losses and other items to each
Member  shall be equal to the net amount that would have been  allocated to each
such Member if such allocations had not occurred.

            (i) It is the intent of the allocation  provisions of this Exhibit B
that the  distributions  to the Members  pursuant to Article 12 will be equal to
the positive Capital Account balances of the Members (as determined after taking
into  account  all  Capital  Account  adjustments  for  the  year  prior  to any
liquidating distributions). If such Capital Account Balances would otherwise not
satisfy the intent described in the preceding  sentence,  then the Manager shall
reallocate  items of gross income or deduction


                                      B-2
<PAGE>

for the year of such  liquidating  distributions  (and, if necessary,  for prior
taxable years of the Company for which amended tax returns can be and are filed)
such that, to the extent possible,  the positive Capital Account balances of the
Members (as determined after taking into account all Capital Account adjustments
for the year of liquidation)  will be equal to the  distributions to be received
by the Members pursuant to Article 12.

      1.4   Allocation of Certain Tax Items.

            (a) Except as otherwise provided in this Paragraph 1.4, all items of
income, gain, loss or deduction for federal, state and local income tax purposes
shall be  allocated  in the same manner as the  corresponding  "book"  items are
allocated under  Paragraph 1.2 (as a component of Net Income or Net Losses),  or
1.3.

            (b)  In  accordance  with  Code  Section  704(c)  and  the  Treasury
Regulations  thereunder,  income,  gain,  loss and deduction with respect to any
property  contributed  to the  capital  of the  Company  shall,  solely  for tax
purposes,  be allocated among the Members so as to take account of any variation
between the adjusted  basis of such  property to the Company for federal  income
tax purposes and the initial Gross Asset Value  thereof  (computed in accordance
with subparagraph (i) of the definition of the term Gross Asset Value herein).

            (c) In the event  the  Gross  Asset  Value of any  Company  asset is
adjusted  pursuant to  subparagraph  (ii) or (iv) of the  definition of the term
Gross Asset Value,  subsequent  allocations of income,  gain, loss and deduction
with  respect to such asset  shall take  account of any  variation  between  the
adjusted basis of such asset for federal income tax purposes and its Gross Asset
Value  in the  same  manner  as  under  Code  Section  704(c)  and the  Treasury
Regulations thereunder.

            (d) In the event the Company has in effect an election under Section
754 of the Code,  allocations  of income,  gain,  loss or  deduction to affected
Members for federal,  state and local tax  purposes  shall take into account the
effect of such election pursuant to applicable provisions of the Code.

            (e) Any elections or other  decisions  relating to such  allocations
shall be made by the Manager in any manner that reasonably  reflects the purpose
and intention of this Agreement.  Allocations pursuant to this Paragraph 1.4 are
solely  for  federal,  state and  local tax  purposes  and  shall  comprise  the
information  furnished to such Members in their Schedule K-1s each year.  Except
to the  extent  allocations  under  this  Paragraph  1.4  are  reflected  in the
allocations  of the  corresponding  "book" items pursuant to Paragraph 1.2 (as a
component of Net Income or Net Losses), or 1.3, allocations under this Paragraph
1.4 shall not  affect,  or in any way be taken into  account in  computing,  any
Member's  Capital  Account or share of Net Income,  Net  Losses,  other items or
distributions pursuant to any provision of this Agreement.

            (f) To the extent  possible,  any tax credits  shall be allocated in
accordance with each Member's Percentage Interest.

      1.5 Allocation  Between Assignor and Assignee.  The portion of the income,
gain, losses,  credits, and deductions of the Company for any Fiscal Year of the
Company  during  which a  Membership  Interest is assigned by a Member (or by an
assignee or successor in interest to a Member),  that is allocable  with respect
to such  Membership  Interest shall be apportioned  between the assignor and the
assignee of the Membership Interest on whatever reasonable, consistently applied
basis  selected  by  the  Manager  and  permitted  by  the  applicable  Treasury
Regulations under Section 706 of the Code.


                                      B-3
<PAGE>

                                    ARTICLE 2
                                   DEFINITIONS

            As used in this  Exhibit  B,  the  following  terms  shall  have the
following meaning:

            "Adjusted  Capital  Account  Deficit"  means,  with  respect  to any
Member, the deficit balance,  if any, in such Member's Capital Account as of the
end  of  the  relevant  Fiscal  Year,  after  giving  effect  to  the  following
adjustments: (i) credit to such Capital Account any amounts which such Member is
treated for purposes of the Treasury  Regulations as being  obligated to restore
to the Company pursuant to Treasury Regulations Section  1.704-1(b)(2)(ii)(c) or
is deemed to be obligated to restore  pursuant to the  penultimate  sentences of
Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5);  and (ii) debit to
such  Capital  Account  the items  described  in  Treasury  Regulation  Sections
1.704-1(b)(2)(ii)(d)(4),  1.704-1(b)(2)(ii)(d)(5),  and 1.704-1(b)(2)(ii)(d)(6).
The foregoing  definition  of Adjusted  Capital  Account  Deficit is intended to
comply with the provisions of Treasury  Regulation Section  1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith.

            "Company   Minimum   Gain"  with  respect  to  any  year  means  the
"partnership minimum gain" computed in accordance with the principles of Section
l.704-2(d)(1) of the Treasury Regulations.

            "Depreciation"  means,  for each  Fiscal  Year or other  period,  an
amount equal to the depreciation, amortization, or other cost recovery deduction
allowable for federal income tax purposes with respect to an asset for such year
or other period,  except that if the Gross Asset Value of any asset differs from
its adjusted basis for federal income tax purposes at the beginning of such year
or other period,  Depreciation  shall be an amount which bears the same ratio to
such  beginning  Gross  Asset  Value as the  federal  income  tax  depreciation,
amortization,  or other cost  recovery  deduction  for such year or other period
bears to such  beginning  adjusted  tax basis,  provided,  however,  that if the
federal income tax depreciation,  amortization, or other cost recovery deduction
for such year is zero,  Depreciation  shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the Manager.

            "Economic Risk of Loss" shall have the meaning  provided by Sections
1.704-2(b)(4) and 1.752-2 of the Treasury Regulations.

            "Gross Asset Value"  means,  with respect to any asset,  the asset's
adjusted basis for federal income tax purposes, except as follows:

the  initial  Gross  Asset  Value of any  asset  contributed  by a Member to the
Company shall be the gross fair market value of such asset, as determined by the
contributing Member and the Company; and

the Gross  Asset Value of all  Company  assets  shall be adjusted to equal their
respective  gross fair market  values,  as determined by the Manager,  as of the
following times: (a) the acquisition of an additional interest in the Company by
any new or  existing  Member  in  exchange  for more than a de  minimis  capital
contribution;  (b) the distribution by the Company to a Member of more than a de
minimis  amount of Company  property  as  consideration  for an  interest in the
Company,  (provided,  that in the  case of  either  (a) or (b),  if the  Members
reasonably determine that such adjustment is necessary or appropriate to reflect
the relative Economic Interests of the Members in the Company within the meaning
of  Section  1.704-(b)(2)(iv)(g)  of the  Treasury  Regulations);  and  (c)  the
liquidation  of a Member's  interest in the  Company or the  Company  within the
meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations;

the Gross Asset Value of any Company  asset  distributed  to any Member shall be
the gross fair market value of such asset on the date of distribution;


                                      B-4
<PAGE>

the Gross Asset Values of Company  assets shall be increased  (or  decreased) to
reflect any adjustments to the adjusted basis of such assets pursuant to Section
734(b)  or  Section  743(b)  of the  Code,  but  only to the  extent  that  such
adjustments are taken into account in determining  Capital Accounts  pursuant to
Treasury  Regulation Section  1.704-1(b)(2)(iv)(m)  and Paragraph 1.3(f) hereof,
provided,  however,  that Gross Asset Values  shall not be adjusted  pursuant to
this  subparagraph  (iv)  to the  extent  that  the  Members  determine  that an
adjustment  pursuant to  subparagraph  (ii) of this  definition  is necessary or
appropriate in connection with a transaction  that would otherwise  result in an
adjustment pursuant to this subparagraph (iv); and

if the Gross Asset Value of any asset has been  determined or adjusted  pursuant
to  subparagraphs  (i),  (ii) or (iv)  hereof,  such  Gross  Asset  Value  shall
thereafter  be adjusted by the  Depreciation  taken into account with respect to
such asset for purposes of  computing  gains or losses from the  disposition  of
such asset.

            "Member  Nonrecourse  Debt" means liabilities of the Company treated
as  "partner  nonrecourse  debt" under  Section  1.704-2(b)(4)  of the  Treasury
Regulations.

            "Member  Nonrecourse  Debt  Minimum  Gain"  means an  amount of gain
characterized  as  "partner   nonrecourse  debt  minimum  gain"  under  Treasury
Regulation Section 1.704-2(i)(2) and 1.704-2(i)(3).

            "Member  Nonrecourse  Deductions"  in any  year  means  the  Company
deductions that are  characterized  as "partner  nonrecourse  deductions"  under
Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the Treasury Regulations

            "Net  Income" and "Net Losses"  mean,  for each Fiscal Year or other
period,  an amount equal to the Company's  taxable income or loss, as applicable
for such year or period,  determined  in accordance  with Section  703(a) of the
Code (for this purpose,  all items of income,  gain, loss and deduction required
to be stated  separately  pursuant  to  Section  703(a)(1)  of the Code shall be
included in taxable  income or loss),  with the following  adjustments:  (i) any
income of the Company that is exempt from federal  income tax and not  otherwise
taken into  account in  computing  Net  Income or Net  Losses  pursuant  to this
paragraph shall be added to such taxable income or loss;  (ii) any  expenditures
of the Company described in Code Section 705(a)(2)(B) or treated as Code Section
705(a)(2)(B)    expenditures    pursuant   to   Treasury    Regulation   Section
1.704-1(b)(2)(iv)(i),  and not  otherwise  taken into account in  computing  Net
Income or Net Losses  pursuant to this paragraph  shall be subtracted  from such
taxable income or loss;  (iii) in the event the Gross Asset Value of any Company
asset  is  adjusted  pursuant  to  subparagraph  (ii),  (iii)  and  (iv)  of the
definition thereof, the amount of such adjustment shall be taken into account as
gain or loss from the  disposition  of such asset for purposes of computing  Net
Income or Net Losses;  (iv) gain or loss resulting  from the  disposition of any
Company  asset  with  respect to which gain or loss is  recognized  for  federal
income tax  purposes  shall be computed by reference to the Gross Asset Value of
the asset disposed of, notwithstanding that the adjusted tax basis of such asset
differs  from  its  Gross  Asset  Value;  (v)  in  lieu  of  the   depreciation,
amortization, and other cost recovery deductions taken into account in computing
such taxable income or loss, there shall be taken into account  Depreciation for
such Fiscal Year or other  period,  computed in accordance  with the  definition
thereof,  and (vi)  notwithstanding  any other provision of this paragraph,  any
items which are specially  allocated  pursuant to Paragraph 1.4 hereof shall not
be taken into account in computing Net Income and Net Losses.

            "Nonrecourse  Deductions"  in any year means the Company  deductions
that are characterized as "nonrecourse  deductions" under Sections 1.704-2(b)(1)
and 1.704-2(c) of the Treasury Regulations.


                                      B-5
<PAGE>

            "Nonrecourse  Liabilities"  means liabilities of the Company treated
as "nonrecourse  liabilities"  under Section  l.704-2(b)(3) and 1.752-1(a)(2) of
the Treasury Regulations.

            "Treasury  Regulations" means the income tax regulations  (including
temporary and proposed) promulgated under the Code.

            Other Definitions.  All other capitalized terms used in this Exhibit
B shall have the same meaning as in the text of the Agreement.


                                      B-6
<PAGE>

                                    EXHIBIT C

                                 CALCULATION OF
                                FAIR MARKET VALUE

            As used in the  Agreement,  the term "Fair Market  Value" shall mean
the price at which a willing seller would sell and a willing buyer would buy the
asset for which the  determination of value is being made, having full knowledge
of the facts,  in an arm's  length  transaction  without time  constraints,  and
without being under any compulsion to buy or sell. The determination of the Fair
Market Value of an asset shall, without duplication of deduction,  be reduced by
the amount of any liens,  claims,  encumbrances or liabilities  relating to such
asset. The Fair Market Value of a fractional interest in an asset shall be equal
to the  appropriate  pro rata  portion of the Fair  Market  Value for the entire
asset, without any further reduction on account of the fractional ownership.

            As soon as  practicable  after  the  receipt  of any  notice  or the
occurrence of any event requiring the  determination of the Fair Market Value of
the Company or other asset,  the Members  shall confer and use their  reasonable
best efforts to determine the same. If the Members agree upon the  determination
of the Fair Market Value of the Company or other asset, such determination shall
be final and binding upon the parties for all purposes. If any Member shall give
notice to the other Member(s)  requesting  determination of such amount or value
by appraisal, or the parties have been unable to agree on the Fair Market Value,
then  the   Members   shall   consult   for  the   purpose   of   appointing   a
mutually-acceptable  qualified  independent expert. If the Members are unable to
agree on an expert within a three-day  period,  each Member shall select its own
expert within a 10 day period,  which shall provide its own determination within
thirty  (30) days  after its  appointment.  In the event  that the two  experts'
determination are not identical or differ by ten percent (10%) or less then, the
Fair Market Value shall be the average of those two  determinations and the Fair
Market  Value as so  determined  shall be final and binding upon the Members for
all purposes.  In the event that the two experts'  determination  differ by more
than ten  percent  (10%) and the  Members  cannot  then agree on the Fair Market
Value,  then the experts  shall choose a third expert within a three day period,
which shall also  provide  with its own  determination.  Such third  independent
expert  shall  report  its  determination   with  thirty  (30)  days  after  its
appointment.   The  Fair   Market   Value  shall  be  the  average  of  the  two
determinations,  which are closest in their  determinations of Fair Market Value
(i.e.,  the outlier will be  disregarded).  In the event that the third expert's
determination   falls   exactly   halfway   between   the  other  two   experts'
determination,  the third expert's determination shall be the Fair Market Value.
The Fair  Market  Value as so  determined  shall be final and  binding  upon the
Members for all purposes.  Any expert selected  pursuant to this provision shall
not be affiliated with any Member (and in the case of Lifford,  to any member of
the Cisneros  Group or any of its  Affiliates)  nor shall it have provided other
investment  banking services to such Member (and in the case of Lifford,  to any
member of the Cisneros Group or any of its  Affiliates)  during the preceding 12
months and shall be an  investment  banking  firm of  national  standing  in the
United  States  or  other  qualified  firm of  comparable  standing  with  prior
experience in  appraising  assets  comparable  to the asset(s) at issue.  If any
Member fails to appoint an independent  expert as required under this provision,
the Member shall forfeit its rights to appoint an  independent  expert,  and the
determination  of Fair Market  Value by (or on behalf of) the other Member shall
be final and  binding for all  purposes  hereunder.  If the Members  agree on an
expert,  then  the  Company  shall  pay the fees  and  costs  of the  appraisal;
otherwise, each Member shall pay the fees and costs of the expert it selects and
the fees and costs of the third expert shall be borne by the Member whose expert
provided  the  disregarded   determination,   or  if  there  is  no  disregarded
determination,  then the costs of the third expert shall be borne by the Members
equally.


                                      C-1
<PAGE>

                                    EXHIBIT D

                             [Intentionally Omitted]


                                      D-1
<PAGE>

                                    EXHIBIT E

                             RESTRICTED TRANSFEREES

Gold Group International Ltd.
Northern and Shell Plc
Paul Raymond Organisation Ltd. (Club; Mayfair)
Private Media Group Inc.
Pout TV
Sapphire
Sport Newspapers Ltd.
Zone Vision Enterprises Limited

Dennis Publishing, Inc. (Maxim)
General Media International, Inc. (Penthouse)
LFP, Inc. (Hustler)
New Frontier Media, Inc.
Vivid Entertainment Group
Vivid Video, Inc.
Vivid Video International, Inc.
VCA Pictures
Wicked Pictures


                                      E-1
<PAGE>

                                    EXHIBIT F

                             [Intentionally Omitted]


                                      F-1
<PAGE>

                                    EXHIBIT G

                               REGISTRATION RIGHTS

      All terms  used  herein  not  otherwise  defined  shall  have the  meaning
ascribed to them in the Operating Agreement.

      In the event that PEGI elects to pay all or part of the PEGI Buy-up Option
and  Additional  Buy-Up  Option  with  shares of PEI Class B common  stock  (the
"Issued Stock"),  PEI agrees to grant Lifford the following  registration rights
in connection with the Issued Stock:

1.    Resale  Registration.  Promptly  following the exercise of the PEGI Buy-Up
      Option and  Additional  Buy-Up  Option,  if Issued  Stock is to be used as
      consideration,  PEI will prepare and file, a shelf registration  statement
      on Form S-3, or any successor or other appropriate form (the "Registration
      Statement")  under the Securities Act of 1933, as amended (the "Securities
      Act"),  covering  the Issued  Stock and will use  commercially  reasonable
      efforts to cause the  Registration  Statement to be declared  effective as
      soon as reasonably practicable. Once the Registration Statement has become
      effective,  PEI will use commercially  reasonable  efforts to maintain the
      effectiveness  of  such  Registration  Statement  for  a  period  of  time
      terminating  on the first to occur of (a) the date that is nine (9) months
      after the date the  Registration  Statement is declared  effective and (b)
      the date on which  Lifford  has sold or  otherwise  disposed of all of the
      Issued  Stock,  in each case as such  period may be  extended  pursuant to
      Sections 2 and 3.

2.    Blackout  Periods.  Notwithstanding  anything  to the  contrary  contained
      herein,  PEI will be entitled to postpone  and/or  suspend for a period of
      time, not to exceed one hundred  twenty (120) days (a "Blackout  Period"),
      the  use of any  Registration  Statement  pursuant  to  Section  1, if PEI
      reasonably  determines  that the  offering of any Issued  Stock by Lifford
      would  impede,  delay or interfere  with any  financing,  offer or sale of
      securities,   acquisition,  corporate  reorganization  or  other  material
      transaction involving PEI or any of its affiliates,  or require disclosure
      of material  information as to which  disclosure at that time would not be
      in the best interest of PEI and its stockholders;  provided, however, that
      the Blackout Period will earlier  terminate upon public  disclosure by PEI
      of such material  information  or completion of such a  transaction.  Upon
      notice by PEI to Lifford of such determination, Lifford agrees to (i) keep
      the fact of any such notice strictly confidential,  (ii) promptly halt any
      offer,  sale,  trading or transfer by Lifford of any Issued  Stock for the
      duration of the Blackout Period set forth in such notice (or until earlier
      terminated  by  PEI)  and  (iii)  promptly  halt  any  use,   publication,
      dissemination  or  distribution  of  any  registration   statement,   each
      prospectus  included therein,  and any amendment or supplement thereto for
      the  duration  of the  Blackout  Period set forth in such notice (or until
      earlier  terminated by PEI). In the event PEI gives such notice, PEI shall
      extend the effectiveness of the Registration Statement pursuant to Section
      1 for a period of time equal to the length of the Blackout Period. PEI may
      not impose a Blackout Period during the sixty (60) day period  immediately
      following the date the Registration Statement is declared effective.

3.    Suspension of Dispositions. Lifford agrees that upon receipt of any notice
      (a "Suspension Notice") from PEI of the happening of any event of the kind
      which, in the opinion of PEI,  requires the amendment or supplement of any
      prospectus, Lifford will forthwith discontinue disposition of Issued Stock
      until  Lifford's  receipt  of the  copies of the  supplemented  or amended
      prospectus  or until it is  advised  in writing by PEI that the use of the
      prospectus  may be resumed,  and has received  copies of any additional or
      supplemental filings which are incorporated by reference in the prospectus
      (the  period  from the  receipt  of any  Suspension  Notice to the date of
      receipt by Lifford of copies of any additional or supplemental filings and
      written  notice  from PEI


                                      G-1
<PAGE>

      that the use of the  prospectus  may be  resumed  being  referred  to as a
      "Suspension Period"),  and, if so directed by PEI, Lifford will deliver to
      PEI all copies of the  prospectus  covering such Issued Stock,  current at
      the time of receipt of the Suspension  Notice.  PEI will use  commercially
      reasonable  efforts  to  prepare  and cause to become  effective  any such
      amendment  or  supplement  as  promptly as  practicable.  In the event PEI
      delivers  a   Suspension   Notice  to  Lifford,   PEI  shall   extend  the
      effectiveness  of the Registration  Statement  pursuant to Section 1 for a
      period of time equal to the Suspension Period.

4.    Information  by Lifford.  Lifford  shall  furnish to PEI such  information
      regarding  Lifford  and the  distribution  proposed  by Lifford as PEI may
      reasonably  request  in writing  and as shall be  reasonably  required  in
      connection with any registration, qualification, or compliance referred to
      in Section 1.

5.    Conduct of Sales by Lifford. Claxson and Lifford hereby covenant and agree
      that,  during the period  commencing upon the receipt by Lifford of notice
      from PEGI of its intent to exercise the PEGI Buy-Up  Option or  Additional
      Buy-Up  Option and to pay some or all of the  purchase  price in PEI Stock
      and terminating  upon the  effectiveness  of the  Registration  Statement,
      Claxson, Lifford and their Subsidiaries and Affiliates (collectively,  the
      "Lifford Parties") shall not, directly or indirectly,  whether or not then
      prohibited by law or regulation,  sell,  offer to sell,  solicit offers to
      buy,  or  dispose of  (collectively,  a  "Disposition")  any shares of PEI
      Stock, nor will any Lifford Party engage in any hedging  transaction which
      would  result  in a  Disposition  of PEI  Stock  by  such  Lifford  Party;
      including,  without  limitation,  effecting any short sale (whether or not
      such short sale is against the box) of PEI Stock or maintaining  any short
      position in shares of PEI Stock.  The Lifford Parties hereby further agree
      (i) that all sales of Issued  Stock will be  conducted  in a  commercially
      reasonable manner, and (ii) to use all commercially  reasonable efforts in
      their selling  activities,  whether prior to or after the effectiveness of
      the Registration  Statement,  not to adversely affect the trading value of
      PEI Stock.

6.    Legends; Securities Laws Compliance.  Lifford acknowledges that any Issued
      Stock will bear any and all appropriate  state and federal  securities law
      legends.  Lifford  agrees  that it will  comply with all state and federal
      securities  laws  relating to the sale and  distribution  of Issued Stock,
      including  delivering the prospectus  provided by PEI for resales pursuant
      to the Registration Statement. In addition, Lifford agrees not to take any
      action that would prevent the distribution of Issued Stock included in the
      Registration  Statement  to  be  made  in  accordance  with  the  plan  of
      distribution  set forth in the Registration  Statement.  Lifford agrees to
      notify  PEI  promptly  in  writing  upon the sale by Lifford of any Issued
      Stock covered by the Registration Statement.


                                      G-2
<PAGE>

                                    EXHIBIT H

                                RELATED DOCUMENTS

"Related Documents" means the following  agreements as amended from time to time
in accordance with their terms:

1.    Third  Amended and  Restated  Operating  Agreement  for Playboy TV - Latin
      America,  LLC, a California  limited  liability company  ("PTVLA"),  dated
      November  10, 2006 by and between  Playboy  Entertainment  Group,  Inc., a
      Delaware corporation ("PEGI"), and Lifford International Co. Ltd. (BVI), a
      British Virgin Islands corporation ("Lifford").

2.    Amended  and  Restated  Playboy  TV - Latin  America  Program  Supply  and
      Trademark License Agreement,  dated November 10, 2006, by and between PEGI
      and PTVLA.

3.    Second Amended and Restated Distribution Agreement, dated the date hereof,
      by and between PEGI, PTVLA U.S., LLC, a Delaware limited liability company
      ("PTV US") and PTVLA.

4.    Transfer  Agreement,  dated as of December 23, 2002,  by and among Playboy
      Enterprises,   Inc.,  a  Delaware  corporation   ("PEI"),   PEGI,  Playboy
      Enterprises International,  Inc., a Delaware corporation ("PEII"), Claxson
      Interactive Group Inc., a British Virgin Islands corporation  ("Claxson"),
      Carlyle  Investments LLC, a Delaware limited liability company ("Carlyle")
      (in its own right and as a  successor  in  interest  to  Victoria  Springs
      Investments Ltd., a British Virgin Islands corporation  ("VSI")),  Carlton
      Investments LLC, a Delaware limited liability company  ("Carlton") (in its
      own right and as a successor in interest to VSI), Lifford,  and Playboy TV
      International, LLC, a Delaware limited liability company ("PTVI").

5.    Master Termination and Successor Agreement, dated as of December 23, 2002,
      by  and  among  PEI,  PEGI,  Playboy.com,  Inc.,  a  Delaware  corporation
      ("Playboy.com"),  PTVI, Lifford, Carlyle, Carlton, and Claxson, in its own
      right and as  successor  in interest to  Morehaven  Investments,  Inc.,  a
      British Virgin Islands corporation.

6.    Notice, dated as of December 23, 2002, given by Lifford to Playboy.com.

7.    Letter Agreement, dated December 23, 2002, by and among PEI, PEGI, Claxson
      and PTVLA.

8.    Venus Contribution Agreement,  dated as of December 23, 2002, by and among
      Claxson, Lifford, PTVLA and PEGI.

9.    Amended and Restated Management Services Agreement, dated the date hereof,
      by and between  Claxson  USA II , Inc.,  a Florida  corporation  ("Claxson
      USA"), and PTVLA.

10.   Amended and Restated Sales Services Agreement, dated as of the date hereof
      and effective as of December 1, 2004, by and between Imagen and PTVLA.

11.   Program  Origination  Services  Agreement,  dated the date hereof,  by and
      between Imagen and PTVLA.


                                      H-1
<PAGE>

12.   Termination  and  Release  Agreement,  dated  as of the  date  hereof  and
      effective  as of June 1, 2005,  by and between  Claxson  Playout,  Inc., a
      Florida Corporation, formerly know as The Kitchen, Inc. and PTVLA.

13.   First  Amended and Restated Web Site Revenue  Share  Agreement,  dated the
      date hereof, by and among Playboy.com, Claxson and PTVLA.

14.   Contribution Agreement,  dated as of December 22, 2002 and effective as of
      March 31, 2002,  by and among PEGI,  AdulTVision  Communications,  Inc., a
      Delaware corporation, Carlyle and Carlton.

15.   Amended and Restated Affiliation Agreement,  dated the date hereof, by and
      between PTVLA and Playboy Television B.V., a Netherlands limited liability
      company ("PTV BV").

16.   Amended and Restated Affiliation Agreement,  dated the date hereof, by and
      between PTVLA and PTV US.

17.   Affiliate Agreement Termination Agreement,  dated as of December 23, 2002,
      by and between PTVI and Claxson.

18.   Master  Termination and Release  Agreement,  dated the date hereof, by and
      among  Imagen,   Contribution  S.A.,  an  Argentine   corporation  ("Venus
      Argentina")  and Venus TV,  Inc.,  a British  Virgin  Islands  corporation
      ("Venus International").

19.   Termination and Release  Agreement,  dated the date hereof, by and between
      Claxson USA and Venus International.

20.   Master Termination,  Consent and Release Agreement,  dated the date hereof
      and effective as of December 1, 2004, by and between Troy,  Imagen,  PTVLA
      and Venus International.

21.   Amended and Restated Sales Services Agreement, dated as of the date hereof
      and  effective  as of  December 1, 2004,  by and between  Imagen and Venus
      Argentina.

22.   Sales Services Agreement,  dated as of the date hereof and effective as of
      December 1, 2004, by and between Imagen and Venus International.

23.   Senior Secured Credit  Promissory Note,  dated the date hereof,  issued by
      Playboy Lifestyle Holding.

24.   Pledge and Security Agreement, dated the date hereof, by and among Playboy
      Lifestyle Holding, PTVLA and Lifford.

25.   Sub-Licensing  Agreement,  dated the date hereof,  by and between  Playboy
      Lifestyle Holding and PTVLA.

26.   Operating Agreement of Playboy Lifestyle Holding, LLC, dated as of October
      10, 2006, by and between PTVLA and Playboy Lifestyle Holding.

27.   Wireless Distribution  Agreement,  dated September 1, 2005, by and between
      Playboy.com and PTVLA.


                                      H-2
<PAGE>

28.   Satellite  Transponder  Segment  Agreement,  dated the date hereof, by and
      between Claxson USA and PTVLA.

29.   License  Agreement dated July 30, 2003 between El Sitio  Management,  S.A.
      and Playboy.com.

30.   Amended and Restated Amendment and Assignment  Agreement,  dated as of the
      date hereof and  effective as of September  22, 2004, by and among Imagen,
      El  Sitio,  Inc.,  a  British  Virgin  Islands  corporation,  Claxson  and
      Playboy.com.


                                      H-3