Document:

EX-10.1 Third Amended and Restated Operating Agree

 

	 	 	 	 	 

Exhibit 10.1

CONFIDENTIAL

THIRD AMENDED AND RESTATED

OPERATING AGREEMENT

FOR

PLAYBOY TV — LATIN AMERICA, LLC

A CALIFORNIA LIMITED LIABILITY COMPANY

Portions of this exhibit have been omitted pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission. The omissions have been indicated by (“***”), and
each page containing confidential information is footnoted with the phrase “FOIA Confidential
Treatment.” The omitted text has been filed separately with the Securities and Exchange
Commission.

 

 

TABLE OF CONTENTS

	 	 	 
	 	 	Page
	Article I DEFINITIONS
	 	2
	 
	 	 
	Article II ORGANIZATIONAL MATTERS
	 	10
	2.1 Formation
	 	10
	2.2 Name
	 	10
	2.3 [Intentionally Omitted]
	 	10
	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
	 	12
	2.10 Playboy Lifestyle Rights of Good Faith Negotiation
	 	12
	 
	 	 
	Article III CAPITAL CONTRIBUTIONS
	 	12
	3.1 Capital Contribution
	 	12
	3.2 Additional Capital Contributions
	 	12
	3.3 Optional Capital Contributions
	 	12
	3.4 Capital Accounts
	 	14
	3.5 No Interest
	 	14
	3.6 Iberia Agreements
	 	14
	 
	 	 
	Article IV ALLOCATIONS OF NET INCOME AND NET LOSSES AND DISTRIBUTIONS
	 	14
	4.1 Allocations of Net Income and Net Loss
	 	14
	4.2 Distribution of Distributable Cash by the Company
	 	14
	4.3 Form of Distribution
	 	14
	4.4 Restriction on Distributions
	 	15
	4.4.1 Restriction
	 	15
	4.4.2 Method of Determination
	 	15
	4.4.3 Personal Liability
	 	15
	4.5 Return of Distributions
	 	15
	4.6 Withholding
	 	15
	 
	 	 
	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
	 	17
	5.3 Meetings of the Management Committee
	 	18
	5.4 Delegation of Authority; General Manager and Other Officers
	 	18
	5.4.1 General Power to Delegate Authority
	 	18
	5.4.2 The General Manager
	 	19
	5.4.3 Duties of the General Manager
	 	19
	5.4.4 Additional Officers
	 	20
	5.4.5 Officers Serve at the Pleasure of the Management Committee
	 	20
	5.5 Interested Party Transactions
	 	20

-i-

 

TABLE OF CONTENTS
(continued)

	 	 	 
	 	 	Page
	5.5.1 Approval
	 	20
	5.5.2 Termination and Remedies
	 	20
	5.5.3 Priority of Payments
	 	20
	5.6 Performance of Duties; Liability of Managers
	 	21
	5.6.1 Standards
	 	21
	5.7 Management Company
	 	21
	5.8 Insurance
	 	21
	 
	 	 
	Article VI BUSINESS PLANS AND ANNUAL BUDGETS
	 	21
	6.1 The Business Plan
	 	21
	6.1.1 The Business Plan
	 	21
	6.1.2 Additions to Business Plan
	 	21
	6.2 Annual Budgets
	 	21
	6.2.1 Adjustment to Annual Budget
	 	21
	6.2.2 Required Local Programming Expenditures Allocations
	 	22
	6.2.3 Adjustment to Company Produced Programming Budget and
Marketing Budget
	 	22
	 
	 	 
	Article VII [INTENTIONALLY OMITTED]
	 	22
	 
	 	 
	Article VIII MEMBERS
	 	22
	8.1 Limited Liability
	 	22
	8.2 Admission of Additional Members
	 	22
	8.3 Withdrawals or Resignations
	 	23
	8.4 Termination of Membership Interest
	 	23
	8.5 Remuneration To Members
	 	23
	8.6 Members Are Not Agents; No Management Authority
	 	23
	8.7 Meetings of Members
	 	23
	8.7.1 Date, Time and Place of Meetings of Members; Secretary
	 	23
	8.7.2 Power to Call Meetings
	 	23
	8.7.3 Notice of Meeting
	 	23
	8.7.4 Manner of Giving Notice; Affidavit of Notice
	 	23
	8.7.5 Validity of Action
	 	24
	8.7.6 Quorum
	 	24
	8.7.7 Adjourned Meeting; Notice
	 	24
	8.7.8 Waiver of Notice or Consent
	 	24
	8.7.9 Action by Written Consent Without a Meeting
	 	24
	8.7.10 Telephonic Participation by Member at Meetings
	 	25
	8.7.11 Record Date
	 	25
	8.7.12 Proxies
	 	25
	 
	 	 
	Article IX TRANSFER AND ASSIGNMENT OF INTERESTS
	 	25
	9.1 Transfer and Assignment of Interests
	 	25
	9.2 Further Restrictions on Transfer of Interests
	 	26
	9.3 Right of First Offer
	 	26
	9.4 Right of First Refusal
	 	27
	9.5 Substitution of Members
	 	28
	9.6 Effective Date of Permitted Transfers
	 	28

-ii-

 

TABLE OF CONTENTS
(continued)

	 	 	 
	 	 	Page
	9.7 Rights of Legal Representatives
	 	29
	9.8 PEGI Buy-Up Option
	 	29
	9.9 Claxson Control Over Membership Interest
	 	30
	9.10 Playboy Television B.V. and PTVLA U.S., LLC
	 	30
	9.11 Venus Operations
	 	32
	9.12 Playboy Lifestyle Holding and Newco
	 	32
	 
	 	 
	Article X CONSEQUENCES OF DEATH, DISSOLUTION RETIREMENT OR BANKRUPTCY OF MEMBER
	 	33
	10.1 Withdrawal Dissolution Event
	 	33
	10.2 Purchase Price
	 	34
	10.3 Notice of Intent to Purchase
	 	34
	10.4 Election to Purchase Less Than All of the Former Member’s Interest
	 	34
	10.5 Payment of Purchase Price
	 	34
	10.6 Closing of Purchase of Former Member’s Interest
	 	34
	10.7 Purchase Terms Varied by Agreement
	 	34
	 
	 	 
	Article XI ACCOUNTING, RECORDS, REPORTING BY MEMBERS
	 	35
	11.1 Books and Records
	 	35
	11.2 Delivery to Members and Inspection
	 	35
	11.2.1 Delivery Upon Request
	 	35
	11.2.2 Inspection
	 	35
	11.2.3 Authorized Persons
	 	36
	11.2.4 PEI Additional Right of Inspection
	 	36
	11.3 Statements
	 	36
	11.3.1 Annual Report
	 	36
	11.3.2 Monthly Report
	 	36
	11.3.3 Tax Information
	 	36
	11.4 Financial and Other Information
	 	36
	11.5 Filings
	 	36
	11.6 Bank Accounts
	 	37
	11.7 Accounting Decisions and Reliance on Others
	 	37
	11.8 Tax Matters for the Company Handled by Managers and Tax Matters Member
	 	37
	 
	 	 
	Article XII DISSOLUTION AND WINDING UP
	 	37
	12.1 Term
	 	37
	12.2 Dissolution Events
	 	37
	12.3 Effect of Dissolution
	 	39
	12.4 Dissolution
	 	39
	12.5 Certificate of Dissolution
	 	40
	12.6 Winding Up
	 	40
	12.7 Distributions in Kind
	 	40
	12.8 Order of Payment of Liabilities Upon Dissolution
	 	41
	12.8.1 Distributions to Members
	 	41
	12.8.2 Payment of Debts
	 	41
	12.9 Certificate of Cancellation
	 	41
	12.10 No Action for Dissolution
	 	41

-iii-

 

TABLE OF CONTENTS
(continued)

	 	 	 
	 	 	Page
	Article XIII INDEMNIFICATION AND INSURANCE
	 	41
	13.1 Indemnification of Agents
	 	41
	13.2 Insurance
	 	42
	 
	 	 
	Article XIV NON-COMPETITION
	 	42
	14.1 Adult Oriented Television Business Non-Competition
	 	42
	14.2 Playboy Lifestyle Business Non-Competition in the Territory
	 	42
	14.3 US Playboy Lifestyle Business Non-Competition in the US Lifestyle Territory
	 	42
	14.4 Separate Covenants
	 	43
	14.5 Intent; Severability
	 	43
	14.6 Injunctive Relief
	 	43
	 
	 	 
	Article XV MEMBER REPRESENTATIONS AND WARRANTIES
	 	44
	15.1 Representations and Warranties by Each Member
	 	44
	15.1.1 Experience
	 	44
	15.1.2 No Advertising
	 	44
	15.1.3 Investment Intent
	 	44
	15.1.4 Purpose of Entity
	 	44
	15.1.5 Economic Risk
	 	44
	15.1.6 No Registration of Membership Interest
	 	44
	15.1.7 Membership Interest in Restricted Security
	 	44
	15.1.8 No Obligation to Register
	 	44
	15.1.9 No Disposition in Violation of Law
	 	44
	15.1.10 Investment Risk
	 	45
	15.1.11 Restrictions on Transferability
	 	45
	15.1.12 Information Reviewed
	 	45
	15.1.13 No Representations By Company
	 	45
	15.1.14 Consultation with Attorney
	 	45
	15.1.15 Tax Consequences
	 	46
	15.1.16 No Assurance of Tax Benefits
	 	46
	15.2 Indemnity
	 	46
	15.3 Procedure
	 	46
	 
	 	 
	Article XVI DISPUTE RESOLUTION
	 	46
	16.1 Alternate Dispute Resolution
	 	46
	16.2 Notification and Negotiation
	 	46
	16.3 Arbitration Rules
	 	47
	16.4 Selection of Arbitrators
	 	47
	16.5 Arbitration Procedures
	 	47
	16.6 Effect of Arbitration
	 	48
	16.7 Statute of Limitations
	 	48
	16.8 Service of Process
	 	48
	16.9 Additional Arbitration Provisions
	 	48
	16.10 Availability of Equitable Relief
	 	48
	 
	 	 
	Article XVII MISCELLANEOUS
	 	49
	17.1 Additional Documents and Acts
	 	49
	17.2 Time is of the Essence
	 	49

-iv-

 

TABLE OF CONTENTS
(continued)

	 	 	 
	 	 	Page
	17.3 Remedies Cumulative
	 	49
	17.4 Currency; Payments
	 	49
	17.5 Governing Law
	 	49
	17.6 Authority
	 	49
	17.7 Assignment; No Third Party Beneficiary
	 	50
	17.8 Agreement Negotiated
	 	50
	17.9 Waivers; Remedies Cumulative, Amendments, etc.
	 	50
	17.10 Notices
	 	50
	17.11 Public Announcements
	 	52
	17.12 Survival
	 	52
	17.13 Confidentiality
	 	52
	17.13.1 General Confidentiality Requirements
	 	52
	17.13.2 Exceptions to the General Confidentiality Requirements
	 	52

-v-

 

 TABLE OF CONTENTS

EXHIBITS

	 	 	 	 	 
	 	 	 	 	Page
	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

vi

 

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:

 

 

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

 

          “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

 

          “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

 

          “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

 

          “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.

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          “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

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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.

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          “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 ***.

          “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.

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

9

 

          “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.

     2.3 [Intentionally Omitted].

10

 

     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 *** 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 ***. If the costs incurred for the completion of the
Feasibility Study are less than ***, 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.

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     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 *** after the completion of the ***, 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 ***. If
Claxson fails or refuses to make a timely Claxson Offer, ***. If PEI rejects the Claxon 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 ***. Unless the parties otherwise agree, *** shall act as the
mediator. ***. If Claxson fails or refuses to participate during the Mediation Period, ***. 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 ***. 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 ***. The period from the date of this Agreement
until the expiration of the *** shall be hereinafter referred to as the “US Option Period”.

          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 ***
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 *** 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

12

 

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 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

13

 

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.

     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 Técnicos
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.

14

 

     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.

          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.

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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 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;

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          (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

          (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.

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          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
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

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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.

          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.

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          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 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.

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     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 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 *** to produce Company Produced Programming (the “Company Produced
Programming Budget”) and shall spend *** for marketing purposes (the “Marketing Budget”) for the
Channels in each case not including any amounts spent on the Playboy Lifestyle Programming

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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 ***. 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 *** of the Company Produced Programming Budget
to produce Branded Company Produced Programming and no more than *** 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 *** of the Company Produced Programming Budget to
produce Branded Company Produced Programming and no more than *** 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.

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     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.

     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.

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          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.

          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.

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          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 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

25

 

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 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

26

 

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 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 *** 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

27

 

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 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

28

 

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 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 *** 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 *** 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 *** 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 *** 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 *** 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 ***, which
election will be set forth in PEGI’s notice that it is exercising its buy-up option. *** 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, ***, or (ii) ***. 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. *** 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

29

 

the Reference Rate from the
date such payment was due) for such additional interests, and Lifford will then transfer such
interests to PEGI.

          (c) ***

          (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 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;

30

 

	 	(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 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

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	 	 	 	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;

          (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 *** 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

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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;

          (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

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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 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.

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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.

     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.

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          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 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

36

 

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 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

37

 

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

          (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,

38

 

(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 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:

39

 

          (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.

     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.

40

 

     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 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,

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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, ***.

          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, ***.

          14.1.3 Claxson and PEI and their respective Subsidiaries may not ***.

          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, ***.

     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,***.

          14.2.2 Claxson and PEI and their respective Subsidiaries may not***.

          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, ***.

     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 ***.

          14.3.2 If Claxson fails or refuses to ***.

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          14.3.3 If there is a PEI Rejection or PEI Second Rejection, ***.

          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, ***.

          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 or 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 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.

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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.

          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

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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.

          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.

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          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 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

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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 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)

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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 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.

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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.

          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.

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     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.

     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

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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

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.

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     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 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

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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]

53

 

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

	 	 	 	 	 
	 	PLAYBOY ENTERTAINMENT GROUP, INC.

 	 
	 	By:  	/s/ F. Reid Nathan
 	 
	 	 	Name:  	F. Reid Nathan 	 
	 	 	Title:  	Vice President Business and Legal Affairs 	 
	 
	 	LIFFORD INTERNATIONAL CO. LTD.

 	 
	 	By:  	/s/ Amaya Ariztoy
 	 
	 	 	Name:  	Amaya Ariztoy 	 
	 	 	Title:  	Attorney-in-fact 	 
	 

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:  	/s/ Bob Meyers
 	 
	 	 	Name:  	Bob Meyers 	 
	 	 	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:  	/s/ Roberto Vivo-Chaneton
 	 
	 	 	Name:  	Roberto Vivo-Chaneton 	 
	 	 	Title:  	Chief Executive Officer 	 
	 

54EX-10.2 Amended and Restated Program Supply and Tr

 

Exhibit 10.2

CONFIDENTIAL

 

PLAYBOY TV — LATIN AMERICA

AMENDED AND RESTATED PROGRAM SUPPLY AND TRADEMARK LICENSE AGREEMENT

 

Between

PLAYBOY ENTERTAINMENT GROUP, INC.

as Licensor

and

PLAYBOY TV — LATIN AMERICA, LLC

as Company

November 10, 2006

Portions of this exhibit have been omitted pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission. The omissions have been indicated by (“***”), and
each page containing confidential information is footnoted with the phrase “FOIA Confidential
Treatment.” The omitted text has been filed separately with the Securities and Exchange
Commission.

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page	 
	1. DEFINITIONS
	 	 	4	 
	 
	 	 	 	 
	2. GRANT OF PROGRAM LICENSE
	 	 	11	 
	2.1. Grant
	 	 	11	 
	2.2. Approved Uses of Licensed Programming
	 	 	13	 
	2.3. Company Produced Programming
	 	 	14	 
	2.4. Licensor
	 	 	14	 
	2.5. Licensor Ownership
	 	 	15	 
	2.6. Use Rights
	 	 	15	 
	2.7. Services Provided by Licensor
	 	 	15	 
	 
	 	 	 	 
	3. TRADEMARK LICENSE AND QUALITY CONTROL
	 	 	16	 
	3.1. Grant of Exclusive License
	 	 	16	 
	3.2. All Other Rights Retained by Licensor
	 	 	17	 
	3.3. Restriction on Sub-Licensing
	 	 	17	 
	3.4. Duration of License
	 	 	17	 
	3.5. Company’s ***
	 	 	17	 
	3.6. Restriction on Scope of Services
	 	 	17	 
	3.7. Restrictions on Modifications of Trademarks
	 	 	18	 
	3.8. License of Additional Trademarks
	 	 	18	 
	3.9. Quality Control
	 	 	18	 
	3.10. Title and Protection of the Licensor Trademarks; Use of the Licensor Trademarks
	 	 	19	 
	3.11. Form
	 	 	20	 
	3.12. Maintenance of Distinctive Quality of Licensor Trademarks
	 	 	20	 
	3.13. Advertising and Publicity
	 	 	20	 
	3.14. Ownership of the Licensor Trademarks
	 	 	21	 
	3.15. Infringements
	 	 	21	 
	 
	 	 	 	 
	4. LICENSE TERM AND MEDIA HOLDBACKS
	 	 	22	 
	4.1. License Term
	 	 	22	 
	4.2. No Home Video Rights
	 	 	22	 
	4.3. Other Home Video Rights
	 	 	22	 
	 
	 	 	 	 
	5. CENSORSHIP; WITHDRAWAL OF PROGRAMS
	 	 	23	 
	5.1. Censorship
	 	 	23	 
	5.2. Withdrawal of Programs
	 	 	23	 
	5.3. Advertising
	 	 	23	 
	 
	 	 	 	 
	6. DELIVERY AND RETURN
	 	 	24	 
	6.1. Access and Delivery Items
	 	 	24	 
	6.2. Title to Delivery Materials
	 	 	24	 
	 
	 	 	 	 
	7. PROGRAM AND TRADEMARK LICENSE FEES; OTHER FEES
	 	 	24	 
	7.1. Due and Payable
	 	 	25	 
	7.2. Wire Transfers
	 	 	25	 
	7.3. Late Payment
	 	 	25	 
	7.4. Restricted Funds
	 	 	25	 
	7.5. Currency
	 	 	25	 

i

 

	 	 	 	 	 
	 	 	Page	 
	7.6. Maintenance of Records and Audit Rights
	 	 	25	 
	7.7. Distribution Fee
	 	 	26	 
	7.8. Licensor Distribution In Belize
	 	 	27	 
	 
	 	 	 	 
	8. INDEMNITIES
	 	 	27	 
	8.1. Representations and Warranties
	 	 	27	 
	8.2. Indemnification
	 	 	28	 
	8.3. Musical Compositions
	 	 	29	 
	8.4. Procedure
	 	 	29	 
	 
	 	 	 	 
	9. TERMINATION
	 	 	29	 
	9.1. Expiration of Term
	 	 	29	 
	9.2. Renewal
	 	 	29	 
	9.3. Early Termination on Breach
	 	 	29	 
	9.4. Inadvertent Breach
	 	 	30	 
	9.5. Cross Default
	 	 	30	 
	9.6. Dissolution of Company
	 	 	30	 
	 
	 	 	 	 
	10. EFFECTS OF TERMINATION
	 	 	30	 
	10.1. Survival of Obligations
	 	 	30	 
	10.2. Termination of Rights
	 	 	30	 
	10.3. Further Assurances
	 	 	30	 
	 
	 	 	 	 
	11. EQUITABLE RELIEF
	 	 	31	 
	 
	 	 	 	 
	12. DISPUTE RESOLUTION
	 	 	31	 
	12.1. IP-Validity Dispute
	 	 	31	 
	12.2. Dispute, Notice and Response
	 	 	31	 
	12.3. Arbitration
	 	 	31	 
	12.4. Number of Arbitrators
	 	 	31	 
	12.5. Hearing
	 	 	32	 
	12.6. Jurisdiction
	 	 	32	 
	12.7. Enforceability
	 	 	32	 
	 
	 	 	 	 
	13. MISCELLANEOUS
	 	 	33	 
	13.1. Force Majeure
	 	 	33	 
	13.2. Binding Effect; No Assignment
	 	 	33	 
	13.3. Invalidity
	 	 	33	 
	13.4. Waivers, Remedies Cumulative, Amendments, etc
	 	 	33	 
	13.5. Notices
	 	 	33	 
	13.6. Governing Law
	 	 	35	 
	13.7. Entire Agreement
	 	 	35	 
	13.8. Rules of Construction
	 	 	35	 
	13.9. Counterparts
	 	 	35	 
	13.10. Relationship Between the Parties
	 	 	35	 
	13.11. Time Is of the Essence
	 	 	35	 

ii

 

SCHEDULES

	 	 	 
	Schedule 2.1(a)

	 	Existing Library
	 
	 	 
	Schedule 2.1(b)

	 	2001 PTVLA New Programming Schedule
	 
	 	 
	Schedule 3.1

	 	Licensor Trademarks
	 
	 	 
	Schedule 6.1

	 	Delivery Materials

iii

 

     THIS AMENDED AND RESTATED PROGRAM SUPPLY AND TRADEMARK LICENSE AGREEMENT (this
“Agreement”) is entered into on November 10, 2006, between Playboy Entertainment Group,
Inc., a Delaware corporation (“PEGI”), and Playboy TV–Latin America, LLC, a California limited
liability company (including its subsidiaries, collectively the “Company”).

RECITALS

     WHEREAS, the Company is the owner and operator of the Company Service (as defined below);

     WHEREAS, Licensor (as defined below) is the owner of certain rights in and to certain
television programs, movies and other content as described herein;

     WHEREAS, the Company licenses from Licensor on the terms and conditions set forth in this
Agreement certain television programs, movies and other content for use on the Company Service and
the Licensor Trademarks (as defined below).

     WHEREAS, the parties entered into that certain Program Supply and Trademark License Agreement
as of December 31, 2002 and effective as of April 1, 2002 as amended by that First Amendment to
Program Supply and Trademark License Agreement for Playboy-TV-Latin America, LLC as of June 17,
2004 and effective as of January 1, 2004 (as so amended, the “Original Agreement”).

     WHEREAS, the parties desire to amend the Original Agreement in order to, among other things,
(i) extend the term of the Original Agreement for an additional ten (10) years and (ii) provide a
license to the Company including its subsidiaries, the Playboy Lifestyle Companies (as defined
below) for the use of Licensor Trademarks and Licensed Programming in connection with the Playboy
Lifestyle Business (as defined below), 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 Original
Agreement in its entirety as follows:

     1. DEFINITIONS.

     In this Agreement (including the Recitals hereto) the following terms will have the
following meanings unless otherwise stated:

     “AAA” has the meaning set forth in Section 12.3.

     “Acquired Movie” means a program acquired by Licensor (or any of its Affiliates) from
a third party that is at least 60 minutes in length and represents an edited or unedited version of
an adult film (i.e., a film which contains actual sex acts).

     “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.

4

 

     “Affiliate” means any Person, directly or indirectly through one or more
intermediaries, controlling, controlled by, or under common control with the specified Person. For
purposes of the foregoing, “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 or contract rights or
otherwise). Notwithstanding the foregoing, the Company will not be deemed an Affiliate of
Licensor.

     “After Tax Basis” means a basis such that any payment (the “Original Payment”)
received or deemed to have been received by a Person (the “Recipient”) will be supplemented
by a further payment to the Recipient so that the sum of the two payments will equal the Original
Payment, after taking into account (x) all taxes that would result from the receipt or accrual of
such payments, if legally required, and (y) any reduction in taxes that would result from the
deduction of the expense indemnified against, if legally permissible. In the event that the
expense indemnified against is used to reduce taxes by way of amortization or depreciation,
payments made on an After Tax Basis will be refunded in each taxable year of the recipient in which
such expense is deductible in an amount equal to the sum of (i) the tax savings attributable to
such deduction plus (ii) any reduction in taxes that would result from the deduction of any amounts
described in clause (i) as increased hereby. All payments hereunder will be calculated on the
assumptions that the recipient was subject to tax at the highest marginal rates of tax applicable
to such class of taxpayer and that it could benefit from the deduction of any expense at such rate
of tax. In the event that a taxing authority will treat any indemnification payment as not
includible in gross income or disallow any deduction taken into account hereunder, the
indemnification will be recomputed and further payments or refunds made.

     “Agreement” has the meaning set forth in the introductory paragraph.

     “Alta Loma Program” has the meaning set forth in Section 2.1(g).

     “Amended Distribution Agreement” means the Amended and Restated Distribution
Agreement, dated the date hereof, between PEGI and the Company.

     “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.

     “Blocked Funds” has the meaning set forth in Section 7.4.

     “Branded” means a television service or Program where Licensor’s or any Licensor
Affiliate’s name or trademarks currently existing or hereafter created by Licensor or its
Affiliates are used in connection, or closely associated, with such television service or Program,
or any related advertising.

     “Branded Channels” means the PTVLA Channels, the Playboy Lifestyle Channel and the
Spice Channels.

     “Branded Company Originated Marks” has the meaning set forth in Section 3.7.

     “Branded Format Programming” has the meaning set forth in Section 2.1(f).

5

 

     “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.

     “Channel” has the meaning set forth in the Company Operating Agreement.

     “Company” has the meaning set forth in the introductory paragraph.

     “Company Format Programming” has the meaning set forth in Section 2.3(c).

     “Company Guaranteed Minimum License Fee” has the meaning set forth in Section
7.

     “Company Indemnified Parties” has the meaning set forth in Section 8.2(a).

     “Company Operating Agreement” means the Third Amended and Restated Operating
Agreement, dated the date hereof, between PEGI and Lifford relating to the formation and governance
of the Company, as amended from time to time.

     “Company Produced Programming” has the meaning set forth in Section 2.3(a).

     “Company Produced Programming Budget” has the meaning set forth in Section 6.2.1 of
the Company Operating Agreement.

     “Company Service” means Playboy TV–Latin America, the television service which
includes the PTVLA Channels, the Spice Channels, the Venus Channel, the Playboy Lifestyle
Programming Services, the G-Channel and any other television program or channel operated by the
Company or any of its subsidiaries from time to time in accordance with this Agreement and the
Company Operating Agreement and any other permitted activity contemplated herein or therein.

     “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.

     “Customer Service and Shipping Department” means Licensor’s department, formerly known
as the traffic department, that processes all requests made to Licensor and its Affiliates for
duplication and shipment of Delivery Materials and marketing materials.

     “Delivery Materials” means the materials set forth on Schedule 6.1.

     “DirectTV Latin America, LLC” means the satellite DTH pay TV service, and its
successors and assignees.

     “Dispute” has the meaning set forth in Section 12.2.

6

 

     “Existing Library” means any program or movie to which Licensor (or its Affiliates)
owns or has obtained the rights to in the Media in the Territory as of March 31, 2002 each of which
is set forth on Schedule 2.1(a) hereto.

     “Fiscal Year” has the meaning set forth in the Company Operating Agreement.

     “Force Majeure” has the meaning set forth in Section 13.1.

     “Format Rights” has the meaning set forth in Section 2.1(f).

     “G-Channel” has the meaning set forth in the Company Operating Agreement.

     “Home Video Rights” has the meaning set forth in Section 4.2.

     “Hot Brands” means those trademarks listed under “Hot Trademark” on Schedule 3.1
attached hereto.

     “IP – Validity Dispute” has the meaning set forth in Section 12.1. 

     “License Fees” has the meaning set forth in Section 7.

     “Licensed Programming” means collectively, the Existing Library, the New Programs, the
Acquired Movies, Playboy Branded Format Programming, the Alta Loma Programs (subject to Section
2.1(g)), Wallpaper and any other Programs which may be made available to the Company hereunder.

     “Licensor” means PEGI and any of its Affiliates that hold any of the rights licensed
hereunder or which may provide services hereunder, or such successor or assignee as may be
permitted herein.

     “Licensor Additional Marks” has the meaning set forth in Section 3.8.

     “Licensor Indemnified Parties” has the meaning set forth in Section 8.2(b).

     “Licensor Trademarks” means the trademarks and the registrations or pending
registrations therefor, as listed under such heading in Schedule 3.1 hereto, owned by Licensor or
to which Licensor has all necessary rights to grant the license as set forth herein, and the
Licensor Additional Marks.

     “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” means Lifford International Co. Ltd., an International Business Company
incorporated under the laws of the British Virgin Islands, a party to the Company Operating
Agreement and a member of the Company.

     “Localized Licensed Programming” has the meaning set forth in Section 2.2(e).

     “Losses” has the meaning set forth in Section 8.2(a).

     “Management Committee” has the meaning set forth in the Company Operating Agreement.

7

 

     “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.

     “Member” has the meaning set forth in the Company Operating Agreement.

     “Net Revenue” shall have the meaning set forth in Section 7.

     “New Programs” means television programs or movies that are similar in content, style,
mix and budget to the Existing Library, that are not included in the Existing Library which are
acquired or produced by Licensor after March 31, 2002. Compilations of Programs previously
provided to the Company shall be considered New Programs if such compilations are prepared in a
manner consistent with Licensor’s activities in 2001 and the number of such compilations provided
hereunder shall be consistent with the number produced in 2001. In the event Licensor obtains the
rights in the Media in the Territory to a television program or movie for which Licensor previously
had other rights in such program or movie, such program or movie shall not be considered a New
Program hereunder without the prior consent of the Company.

     “Newco” means a soon to be formed Argentine limited liability company and wholly owned
subsidiary of Playboy Lifestyle Holding.

     “Notice” has the meaning set forth in Section 12.2.

     “Original Payment” has the meaning set forth in this Section 1.

     “Original Agreement” has the meaning set forth in the recitals.

     “PEGI” has the meaning set forth in the introductory paragraph.

     “Permitted Sublicensee” has the meaning set forth in Section 3.3.

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

     “Playboy Brands” means those trademarks listed under the heading “Playboy Marks” on
Schedule 3.1 attached hereto.

     “Playboy Competition” has the meaning set forth in Section 3.9(b).

     “Playboy Lifestyle Business” has the meaning set forth in the Company Operating
Agreement.

     “Playboy Lifestyle Channel” means the television program service containing Playboy
Lifestyle Programming Services to be launched by the Playboy Lifestyle Companies in the Territory
and which

8

 

may be named “Playboy Lifestyle Channel” or any other name including names using Licensor
Trademarks permitted hereunder and approved by the Management Committee.

     “Playboy Lifestyle Channel USA” means an advertising supported, 24 hours a day, 7 days
a week linear television programming service (which may also be distributed nonexclusively 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)
containing Playboy Lifestyle Programming Services in the US Lifestyle Territory, to be launched by
the Playboy Lifestyle Companies subject to Section 3.1(a) which may be named “Playboy Lifestyle
Channel” or any other name including names using Licensor Trademarks permitted hereunder and
approved by the Management Committee. For clarity, the Playboy Lifestyle Channel USA shall not
include delivery via wireless devices, internet or mobile television or any other means of non
linear television transmission now in existence or hereafter created.

     “Playboy Lifestyle Companies” means collectively Playboy Lifestyle Holding and Newco.

     “Playboy Lifestyle Holding” means Playboy Lifestyle Holding, LLC, a wholly owned
subsidiary of the Company that is a Delaware limited liability company.

     “Playboy Lifestyle Media” has the meaning set forth in the Company Operating
Agreement.

     “Playboy Lifestyle Net Revenue” has the meaning set forth in Section 7.

     “Playboy Lifestyle Net Revenue Fee” has the meaning set forth in Section 7.

     “Playboy Lifestyle Programming Service” has the meaning set forth in the Company
Operating Agreement.

     “Playboy TV en Español” means those Spanish language networks operated by PEGI and its
Affiliates based on the Playboy Brands, excluding the Playboy Lifestyle Programming Service.

     “Playboy TV” means those television networks operated by PEGI and its Affiliates based
on the Playboy Brands, excluding the Playboy Lifestyle Programming Service.

     “Portuguese Africa Distribution Territory” means, with respect to distribution in any
and all Media, (a) the Republic of Angola; (b) Republic of Mozambique; (c) the Democratic Republic
of Sao Tomé and Principe; (d) Cap Verde; (e) Guinea-Bissau; and (f) the territories, possessions
and commonwealths of each of the foregoing, if any.

     “Program” or “Programming” has the meaning set forth in the Company Operating
Agreement.

     “Proposed Activity” has the meaning set forth in Section 3.5.

     “PTVLA Channels” means those Branded Channels, other than the Playboy Lifestyle
Programming Service, included as part of the Company Service that are based on Playboy TV.

     “PTVLA Portugal Feed” means the PTVLA Channel as originally telecast by the Company in
Portugal.

     “Recipient” has the meaning set forth in this Section 1.

     “Remediable Breach” has the meaning set forth in Section 9.3(b).

9

 

     “Response” has the meaning set forth in Section 12.2.

     “Rules” has the meaning set forth in Section 12.3.

     “Spice Brands” means those trademarks listed under the heading “Spice Marks” on
Schedule 3.1 attached hereto.

     “Spice Channels” means those Branded Channels included as part of the Company Service
that are based on the Spice Network.

     “Spice-Hot Feed” has the meaning set forth in Section 2.1(i).

     “Spice Network” 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 ***.

     “Sublicense” has the meaning set forth in Section 2.2(d).

     “TCP” has the meaning set forth in Section 3.1(a).

     “Term” has the meaning set forth in Section 9.1.

     “Termination Date” has the meaning set forth in Section 10.2.

     “Territory” shall have the meaning set forth in the Company Operating Agreement.

     “Trade Materials” means trade presentations, business cards, invoices, stationery and
other similar printed matter reflecting names under which the Company conducts business.

     “Unbranded” means a television service, Program or a block of Programs where
Licensor’s or any Licensor Affiliate’s name or trademarks are not used in connection or closely
associated with such television service, Program or block of Programs or any related advertising
other than in customary production, logo credits or end sequences of such Program, for use solely
in the credit block in advertising for such Program, where applicable. Unbranded Programs include
Branded Programs which have been edited to remove all Licensor Trademarks pursuant to Section
2.4(c).

     “Unbranded Channels” means any channel which may be operated by the Company where
Licensor or any Licensor Affiliate’s name or trademarks are not used in close connection or closely
associated with such channel.

     “US Lifestyle Territory” has the meaning set forth in the Company Operating Agreement.

     “Venus Channel” means the television program service known as “Venus” and any other
television program service, channel or network operated by Venus TV, Inc. and Contribution S.A.

     “Wallpaper” has the meaning set forth in Section 2.1(d).

10

 

     2. GRANT OF PROGRAM LICENSE.

          2.1. Grant. Upon and subject to the terms and conditions set forth in this Agreement and to Licensor’s
retained rights pursuant to Section 2.5, Licensor hereby grants to the Company and the
Company hereby accepts an exclusive license during the Term (or until Licensor loses its rights in
or to any Licensed Programming) to distribute, exhibit and display the Licensed Programming on the
Company Service subject to the terms herein. Notwithstanding anything to the contrary in this
Agreement, without the express written permission of Licensor, the Company shall not be entitled to
use the Licensed Programming in connection with the Playboy Lifestyle Business except for Licensed
Programming that is suitable for the Playboy Lifestyle Channel containing Lifestyle Oriented
content subject to Licensor’s ability to grant such rights.

               (a) Existing Library. Licensor represents and warrants that the Existing Library
consists of all Programs for which Licensor (and/or its Affiliates) owns rights in the Media in the
Territory as of March 31, 2002, including (but not limited to) Playboy, Spice and Hot Branded
Programs and adult films licensed by Licensor and its Affiliates and any other programming or
content, including Wallpaper, and the Acquired Movies as set forth on Schedule 2.1(a) attached
hereto.

               (b) New Programs. Each Fiscal Year Licensor and/or its Affiliates will produce or
acquire the rights in the Media in the Territory to New Programs. The parties acknowledge that the
content, style, mix and budget of the *** program hours of New Programs provided to the Company
pursuant to Section 2.1(e) shall meet the category mix specifications detailed in
Schedule 2.1(b) (Programming Delivery Based on 2001 Categories).

               (c) Acquired Movies. Whenever Licensor and/or its Affiliates acquire the rights to an
Acquired Movie for exploitation in the United States, it will also acquire the rights for such
Acquired Movie in the Media in the Territory, unless such rights are unavailable or are not
available on commercially reasonable terms. If the rights to such Acquired Movie are not available
in the Media for the Territory, or are available in only a portion of the Territory, on
commercially reasonable terms, Licensor will so notify the Company, and the Company will determine
whether it wishes to acquire the rights in the Territory for such Acquired Movie. If the Company
wishes to acquire such rights, Licensor will acquire such rights for the Company on terms to be
agreed to by the Company. The Company shall reimburse Licensor for any material incremental costs
associated with such acquisition.

               (d) “Wall-to-Wall” Material. Licensor will provide the Company with copies of, or
access to, all bumpers, promos, interstitials and other raw materials produced by Licensor and/or
its Affiliates for use in its television business (collectively, the “Wallpaper”). The
Company may exhibit Wallpaper in the form provided or may modify, edit or utilize them to create
appropriate Wallpaper for the Company Service, subject to the terms and conditions of the trademark
license set forth in Section 3 and all applicable laws and regulations within the
Territory.

               (e) Program Hour Requirement. Licensor shall make available hereunder: (i) at least
*** program hours of Adult Oriented New Programs for the Company Service; and (ii) in addition to
any Acquired Movies included in New Programs set forth on Schedule 2.1(b), *** Adult
Orientation Acquired Movies for the Company Service; provided, however, that the
Company acknowledges that Licensor shall not be required to provide the Company with any more than
*** program hours of New Programs, and, in addition to any Acquired Movies included in New
Programs, *** Acquired Movies, for each Fiscal Year during the Term. The parties acknowledge that
if differently rated versions of the same Program or movie are provided to the Company hereunder,
such different versions shall be counted as one movie or Program. Notwithstanding the foregoing,
the Company acknowledges and agrees that, unless the Term is extended pursuant to Section
9.2 herein for the year

11

 

2022, Licensor shall provide the Company a pro rated amount of program
hours for three calendar months
of such year equal to *** program hours of New Programs and, in addition to any Acquired
Movies included in New Programs, *** Acquired Movies.

               (f) Format Rights. Licensor hereby grants the Company the exclusive right, to create,
produce, develop, commercialize, and distribute Programs, in the Spanish and/or Portuguese
languages, in the Territory for use in the Media, which Programs are based upon any titles, formats
(including, without limitation, the “Night Calls” format), concepts or other elements developed,
owned or controlled by Licensor or its Affiliates, whether now existing or hereinafter acquired or
created (collectively, the “Format Rights”) subject to Licensor’s prior written approval of any
such production, which shall not be unreasonably withheld or delayed. Each Program or other
production based on the Format Rights created by, or, on behalf of, the Company (“Branded
Format Programming”) shall be owned by Licensor in accordance with Section 2.5 and
subject to Section 2.2 herein, provided, however, Licensor shall pay the
Company for any use of any Branded Format Programming pursuant to the terms of the Amended
Distribution Agreement and Sections 2.4(b) and 2.6 herein.

               (g) Alta Loma Programs. The parties acknowledge that Licensor and/or its Affiliates
produce additional programs which: (i) are intended for adults and do not contain nudity; and (ii)
do not carry any of the Licensor Trademarks set forth on Schedule 3.1 other than: (x) in customary
production, presentation and logo credits in the title or end sequences of such program, or (y) for
use solely in the credit block in advertising for such program. These programs are intended for
“first run” on domestic television networks or channels other than Playboy TV or the Spice Network.
Licensor produces and sells such programming under the Alta Loma banner. This programming may
consist, from time to time, of movies, series, and/or specials. (Any such non-nude program, whether
produced by Licensor or one of its Affiliates, and whether carrying the “Alta Loma” or any other
brand, will be referred to as an “Alta Loma Program”).

               (h) Option to Acquire Rights. Licensor will offer the Company rights to any Alta Loma
Program for a fee equal to *** of the production budget for such program. If the Company chooses
to pay such fee, Licensor shall make such Alta Loma Program available to the Company on the same
terms as, and such program shall be considered, a Licensed Program hereunder, provided, however,
that such program will not be counted as a part of the program hour requirement as described in
Section 2.1(e). If the Company does not choose to obtain a license for a given Alta Loma Program:
(i) the Company will have the right to act as Licensor’s exclusive sales agent for that program
throughout the Territory and will receive a *** distribution fee on such sales, plus reimbursement
of reasonable costs; provided, however, that in the event an Alta Loma Program is produced pursuant
to an agreement which gives a third-party co-producer or commissioning network the right to
distribute such program in a region or regions of the Territory (or otherwise restricts Licensor’s
right to grant the Company the right to act as sales agent for such program), Licensor will pay to
the Company *** of the total revenue which Licensor (or its Affiliates) receives from the
exploitation of such program in the Media in such region(s) of the Territory; and (ii) Licensor
shall have the right to produce or co-produce not more than *** per year of Alta Loma Programs.
The Company acknowledges that the following criteria shall not count towards the *** per year of
Alta Loma Programs: (a) repeat showings of the same program; and (b) Alta Loma Programs for which
the Company has agreed to pay *** of the production budget. The Company shall use commercially
reasonable efforts to distribute Alta Loma Programs in the Territory in regards to any Alta Loma
Program for which it has sales and distribution rights.

               (i) Spice-Hot Feed. Licensor shall provide the Company with one feed to Club Jenna,
fresh!, Spice:xcess and shorteez (the “Spice-Hot Feed”). The costs associated with the Company’s
exploitation of the Spice-Hot Feed will be borne by the Company; provided, however, that Licensor
shall be responsible for the uplink and other Spice-Hot Feed signal availability-related costs.

12

 

          2.2. Approved Uses of Licensed Programming. The Company may exploit the Licensed
Programming as follows:

               (a) Licensed Programming Use. Branded Programming shall only be displayed or
transmitted on the PTVLA Channels, the Playboy Lifestyle Channel or on the Spice Channels in
accordance with the respective Branding as appropriate as set forth on Schedule 3.1 attached hereto
unless any such Branding is previously removed by the Company such that such Programming would be
characterized as Unbranded hereunder pursuant to Section 2.4(c). In no event shall the
Company display or transmit Branded Programming on the Venus Channel or any other Unbranded Channel
without Licensor’s prior written consent.

               (b) Spillover. Licensor and the Company acknowledge and agree that the accidental or
de minimis “spillover” into the Territory of transmissions to Licensor customers outside of the
Territory will not be a breach of the grant of rights hereunder and that the accidental or de
minimis “spillover” outside of the Territory of transmissions to Company customers inside the
Territory will not be a breach of the grant of rights hereunder.

               (c) Puerto Rico. Notwithstanding any territorial or other restrictions contained in
this Agreement, the parties hereto acknowledge that the distribution of the Company Service in
Puerto Rico in the Spanish language via DirectTV Latin America shall not be deemed to violate any
such territorial restrictions.

               (d) Sublicensing. The Company shall have the right to license the Licensed
Programming and Branded Format Programming to third parties for exhibition and use in the Media in
the Territory (each a “Sublicense”) subject to the following terms: (i) the Company may
grant a Sublicense for any Unbranded Licensed Programming at its sole discretion, and (ii) may
grant a Sublicense for any Branded Programming and/or Branded Format Programming subject to
Licensor’s prior written approval which shall not be unreasonably withheld or delayed,
provided, however, that, in any event, any such Licensed Programming must first be
exhibited on the Company Service (i.e., “downstream windows”).

               (e) Sales Agents. The Company may, in its sole discretion and solely in accordance
with this Section, utilize sales agents to handle permitted sub-licensing of Licensed Programming
to third parties on an arms-length basis based on prevailing market rates (whether or not such
third party is an Affiliate of the Company). Unless the Company receives Licensor’s prior written
consent to use a different procedure: (i) a sales agent may not enter into any outright sales or
sales of unlimited runs; (ii) all agreements negotiated on the Company’s behalf by any sales agent
will be subject to the Company’s prior approval, and all contracts will be entered into by the
Company directly with the purchaser, which must be an end-user (e.g., a broadcaster, direct-to-home
or Private Network operator); (iii) any sales agent will be compensated on a commissions-only
basis; and (iv) and any sales agency agreement must be terminable at will by the Company on not
more than six (6) months written notice.

               (f) Editing. Subject to and consistent with the terms of Section 3 (Trademark
License and Quality Control) and Section 5 (Censorship; Withdrawal of Programs), the
Company may, at its sole cost and expense, edit, dub or subtitle in Spanish and/or Portuguese, or
otherwise alter Licensed Programming as necessary to comply with local language or custom or local
broadcasting requirements (“Localized Licensed Programming”). Such altered Licensed
Programming, including, without limitation, the rights to any edited, dubbed or subtitled tracks
related thereto, shall be owned exclusively by Licensor subject to the terms of Section 2.5
herein, provided, however, Licensor
shall pay the Company for any use of any such altered Licensed Programming pursuant to the
terms of the Amended Distribution Agreement and Sections 2.4(b) and 2.6 herein.

13

 

               (g) Exclusive Supplier. Except for Company Produced Programming and Company Format
Programming, Licensor will be the exclusive supplier of Programs on the PTVLA Channels and Spice
Channels regardless of whether such Programs are produced and owned by Licensor, or whether
Licensor acquires such Programs for the Company.

               (h) Streaming. ***

          2.3. Company Produced Programming.

               (a) Development. Each year during the Term, the Company shall produce Programs for
exhibition on the Company Service and for sublicensing (“Company Produced Programming”).
All such Company Produced Programming shall be subject to domestic and international law. All
Company Produced Programming which is Branded shall be subject to the prior written approval of
Licensor, which shall not be unreasonably withheld or delayed, and shall be produced consistent
with Licensor’s standards (including, but not limited to, the content restrictions set forth
herein) and subject to domestic and international law including, without limitation, the Child
Protection Restoration and Penalties Enhancement Act of 1990. The inclusion of any Company
Produced Programming on the Company Service shall be in addition to and in no way diminish the ***
program hours of New Programs and *** Acquired Movies required to be provided by Licensor pursuant
to Section 2.1(e).

               (b) Minimum Company Produced Programming Budget. Subject to Section 9.2
herein, the Company shall annually spend the Company Produced Programming Budget in accordance with
the provisions of Article 6 of the Company Operating Agreement.

               (c) Company Format Programming. ***. Any Branded Company Format Programming, Branded
Localized Licensed Programming and Branded Company Format Programming shall be subject to the
content restrictions set forth herein and domestic and international law including, without
limitation, the Child Protection Restoration and Penalties Enhancement Act of 1990. ***
acknowledges that the use of Company Format Programming is subject to the non-compete provisions
set forth in Article 14 of the Company Operating Agreement.

               (d) Scheduling of the Company Service. In reasonable consultation with Licensor, the
Company shall determine, the timing, order, placement and other scheduling-related details of all
Programs to be transmitted on the PTVLA Channels throughout the Territory.

          2.4. Licensor ***.

               (a) Cost. At the expiration or earlier termination of this Agreement, for any reason,
Licensor ***.

               (b) Branded Format Programming and Localized Licensed Programs. In respect to any
Branded Format Programming or any Localized Licensed Programming, at the expiration or earlier
termination of the Agreement, for any reason, Licensor ***.

               (c) Branding Removal. If Licensor ***. The Company acknowledges and agrees that if
any such Branded Programming is ***.

14

 

          2.5. Licensor Ownership.

               (a) Goodwill. ***; provided, however, that, any and all goodwill
associated with the Licensor Trademarks included as part of any Branded Company Produced
Programming shall inure to the sole benefit of Licensor.

               (b) Work For Hire. Subject to Section 2.4, any Branded Format Programming or
any Localized Licensed Programming produced by the Company shall be a work made for hire specially
ordered or commissioned by Licensor within the meaning of the United States Copyright Act, made for
the sole benefit of Licensor and Licensor shall be the sole and exclusive owner thereof. In the
event that any right, title or interest, except for any right, title or interest granted to the
Company hereunder to any Branded Format Programming or Localized Branded Programming, or part
thereof, may not, by operation of law, vest in Licensor, then the Company hereby conveys, transfers
and assigns to Licensor all right, title and interest, except for any right, title or interest
granted to the Company hereunder throughout the world and without further consideration, in and to
such Branded Format Programming or Localized Branded Programming retroactive to the date of
creation. The assignment of the Branded Format Programming or Localized Branded Programming under
this Section includes all rights of paternity, integrity, attribution and withdrawal and any other
rights known as, or substantially similar to, “moral rights.” To the extent such moral rights may
not be assigned under applicable law and to the extent such assignment is not allowed by the laws
in the various countries moral rights exist, the Company hereby waives such moral rights and
consents to any action that would violate such moral rights in the absence of such consent.

               (c) All Other Rights Retained by Licensor; Covenant not to Challenge. All rights not
expressly granted to the Company hereunder are reserved by Licensor for its own use and benefit.
Without limiting the generality of the foregoing, the Company shall not challenge the validity of
Licensor’s ownership of the Licensed Programming or any intellectual property registration or
application for registration thereof or contest the fact that the Company’s rights under this
Agreement are solely those of the Company, which rights shall terminate in accordance with the
provisions of Section 9.

          2.6. Use Rights. Licensor shall have the exclusive rights to Branded Company Produced
Programming, Branded Format Programming and Branded Company Format Programming as set forth in the
Amended Distribution Agreement. In the event that Licensor desires to use Branded Company Produced
Programming, Branded Format Programming or Branded Company Format Programming other than on Playboy
TV en Español, the parties shall negotiate in good faith reasonable financial terms for such
distribution on a case-by-case basis. In the event that Licensor desires to use Branded Company
Produced Programming, Branded Format Programming and Branded Company Format Programming produced
for the Playboy Lifestyle Business in the US Lifestyle Territory and all applicable non-competition
provisions set forth in Section 14.3 of the Company Operating Agreement have expired, the parties
shall negotiate in good faith reasonable financial terms for such distribution on a case-by-case
basis.

          2.7. Services Provided by Licensor. In addition to any License Fees payable to
Licensor pursuant to Section 7, the Company will be entitled to purchase from Licensor
specific services, which request Licensor shall not unreasonably refuse, which Licensor routinely
performs for itself (such as creative services, the creation of on-air promos, Customer Service and
Shipping Department services as described in Section 6.1 hereof,
and residual accounting) at Licensor’s actual direct cost, without mark-up, but including all
related staffing costs.

15

 

     3. TRADEMARK LICENSE AND QUALITY CONTROL.

          3.1. Grant of Exclusive License.

               (a) Company Rights. Upon and subject to the terms and conditions set forth in this
Agreement, Licensor hereby grants to the Company, and the Company hereby accepts, an exclusive
license to use the Licensor Trademarks in the Territory in connection with: (i) the broadcast,
transmission and distribution of the Company Service and the applicable Programs as part of the
Company Service; (ii) the Company’s sublicensing rights provided herein; (iii) the promotion and
marketing of the Company Service in any and all media, now known or hereafter devised, and the
applicable Programs as part of the Company Service, including through the use of Trade Materials
***. Notwithstanding the foregoing, the Company shall not have any right to use any of the
Licensor Trademarks on or in connection with any Program that is not Licensed Programming except
for Programs acquired from third parties for the Playboy Lifestyle Programming Services (provided
that the use of such Licensor Trademarks in connection with such acquired Programs are subject to
the written consent of PEGI, not to be unreasonably withheld or delayed) or as the name of the
channel on which such Program is broadcast or as approved by Licensor in connection with any
Company Produced Programming. Further, the Company shall not have the right to use the Licensor
Trademarks on or in connection with any product, goods or services except the Company Service, the
Programs and the Playboy Lifestyle Business (provided that the use of such Licensor Trademarks in
connection with such product, goods or services are subject to the written consent of PEGI, not to
be unreasonably withheld or delayed). Upon and subject to the terms and conditions set forth in
this Agreement, Licensor hereby grants to the Company, and the Company hereby accepts, a limited,
non-exclusive license to use the Licensor Trademarks in the Portuguese Africa Distribution
Territory in connection with: (i) the broadcast, transmission and distribution of the PTVLA
Portugal Feed, (ii) the Company’s sublicensing rights provided herein; and (iii) the promotion and
marketing of the PTVLA Portugal Feed, including through the use of Trade Materials, provided,
however, that the Company shall not conduct any such promotion or marketing via TCP, TCP/Internet
Protocol, or similar or successor network or protocol, unless such promotion or marketing takes
place on an Internet site that is controlled by Licensor or its Affiliates or that has been
approved in writing (and not withdrawn) by Licensor.

In the event the Playboy Lifestyle Channel USA is launched in the US Lifestyle Territory in
accordance with the terms of the Company Operating Agreement, upon and subject to the terms and
conditions set forth in this Agreement and the Company Operating Agreement, Licensor hereby grants
to the Company, and the Company hereby accepts, a non exclusive license to use the Licensor
Trademarks in the US Lifestyle Territory in connection with: (i) the broadcast, transmission and
distribution of the Playboy Lifestyle Channel USA; (ii) the Company’s sublicensing rights in
connection with the Playboy Lifestyle Programming Services; and (iii) the promotion and marketing
of the Playboy Lifestyle Programming Services, including through the use of Trade Materials,
provided, however, that the Company shall not conduct any such promotion or marketing via TCP,
TCP/Internet Protocol, or similar or successor network or protocol, unless such promotion or
marketing takes place on an Internet site that is controlled by Licensor or its Affiliates or that
has been approved in writing (and not withdrawn) by Licensor.

               (b) Prohibited Licensor Activity Relating to Media in the Territory. During the Term,
Licensor shall not itself use or authorize any other person to use the Licensor Trademarks or any
confusingly similar designation within the Territory in connection with Media in the Territory
other than Internet promotion and marketing for the Company Service; provided,
however, that the following shall not constitute a breach of this sub-paragraph 3.1(b): (i)
use of the Licensor Trademarks or any
confusingly similar designation in customary production, presentation and logo credits in
advertising for and the title or end credits sequences of programs licensed to others in the
Territory as permitted hereunder, and (ii) use of the Licensor Trademarks or any confusingly
similar designation in connection

16

 

with any Media, or any programs or other items of any description
included in any Media, which is not intended for general reception in the Territory but is received
in the Territory due to unintentional spillover, so long as that Media was transmitted in a manner
not intended for general reception in the Territory.

               (c) Portuguese Africa Distribution Territory. Upon and subject to the terms and
conditions set forth in this Agreement, the Company shall have the right to transmit, exhibit,
broadcast, telecast, exploit, edit (solely in accordance with Section 2.2(e)), distribute,
advertise, promote, publicize, and make available to system operators the PTVLA Portugal Feed for
exploitation in the Portuguese Africa Distribution Territory during the Term. For clarification
purposes only, the rights granted under this paragraph (c) are granted on a non-exclusive basis.

          3.2. All Other Rights Retained by Licensor. All rights not expressly granted to the
Company hereunder or expressly restricted hereunder are reserved to Licensor for its own use and
benefit. Without limiting the generality of the foregoing, nothing in this Agreement shall prevent
Licensor from doing any or all of the following: (a) subject to the restrictions set forth herein,
using or granting one or more others the right or license to use the Licensor Trademarks outside of
the Media in any area of the world including the Territory; (b) using or granting one or more
others the right or license to use the Licensor Trademarks on or in connection with Media in any
area of the world other than the Territory; (c) using or granting one or more others the right or
license to use the Licensor Trademarks on or in connection with any service (other than a service
in the Media and the activities described in Section 2.2 and Section 2.1(g) (Alta
Loma) of this Agreement) or goods in any or all areas of the world including the Territory; and (d)
retaining and exercising the exclusive rights hereby reserved to Licensor to design, manufacture,
advertise, promote, sell and distribute and license the design, manufacture, advertising,
promotion, sale and distribution of any and all products and services in any or all areas of the
world including the Territory other than Media in the Territory.

          3.3. Restriction on Sub-Licensing. Licensor acknowledges that for the Company to
conduct its business the Company will need to procure licenses of the Licensor Trademarks for use
by systems operators and other distributors of the Programming for the purposes of distributing,
marketing or advertising such Branded Channels or Branded Programming in the Territory (each, a
“Permitted Sublicensee”). Licensor agrees that it will enter into trademark sublicense agreements
with the Company and Permitted Sublicensees pursuant to the permitted grant of any Sublicense of
Licensed Programming hereunder. The term of such sublicense agreements will be consistent with
Licensor’s customary practices for licenses of similar scope and will provide Licensor with rights
of approval and control reasonably satisfactory to Licensor; provided that the license fee or other
payment terms will be in the discretion of the Company. The Company will not otherwise sub-license
any of the Trademarks without the prior written consent of Licensor.

          3.4. Duration of License. The trademark license granted pursuant to this Section
3 shall continue in force until any termination of this Agreement in accordance with the
provisions of Section 9.

          3.5. Company’s ***. If Licensor (or any of its Affiliates) proposes to enter into a new license of the
Trademarks in any region of the Territory for any use in broadcast media other than the Media and
other than with respect to any edition of the “Playboy” Magazine or an option or renewal of license
granted prior to the commencement of the Agreement and which could reasonably be expected to
compete with the Company Service or the Playboy Lifestyle Business (a “Proposed Activity”),
***.

          3.6. Restriction on Scope of Services. During the Term, the Company shall not be
involved in providing any television program service or channel using the Licensor Trademarks which
is

17

 

intended for general reception, whether by use of decoder devices or otherwise, outside the
Territory; provided, however, that, a television program service or channel using the Licensor
Trademarks that is received outside the Territory due to unintentional spillover shall not
constitute a breach of this Agreement so long as it was not transmitted in a manner intended for
general reception outside the Territory.

          3.7. Restrictions on Modifications of Trademarks. The Company shall not use, cause or
authorize to be used any word, device, design, slogan or symbol confusingly similar to any or all
of the Licensor Trademarks other than a Licensor Trademark. Without limiting the generality of the
foregoing, during the Term, any or all of the following shall not be used by the Company on or in
connection with the Company Service or the Programs without, in each case, Licensor’s express prior
written consent: (i) permutations of any or all of the Licensor Trademarks; (ii) secondary or
combination marks including or derived from any of the Licensor Trademarks; (iii) new words,
devices, designs, slogans or symbols derived from any of the Licensor Trademarks.

Notwithstanding the foregoing, Licensor shall not withhold consent for any mark that would
otherwise violate this Section (collectively “Branded Company Originated Marks”) unless it
reasonably determines that such Branded Company Originated Mark or the Company’s intended use
thereof would be detrimental to the Licensor Trademarks or Licensor. Upon termination of this
Agreement, the Company shall immediately cease all use of any Branded Company Originated Marks and
Licensor and the Company shall negotiate in good faith terms for the sale of such Branded Company
Originated Marks to Licensor.

          3.8. License of Additional Trademarks. Licensor hereby agrees to include as Licensor
Trademarks licensed hereunder with respect to the applicable Company Service and the Playboy
Lifestyle Business (i) any trademarks or permutations, secondary, combination or derivative marks
owned by Licensor and its Affiliates and used in connection with the broadcast, transmission,
advertising or promotion of the Licensed Programming in the United States and worldwide outside the
Territory provided that the same are, in Licensor’s reasonable determination, at such time
applicable to the Company Service, as the case may be, and are available for use by the Company
pursuant hereto and are available for registration by Licensor in the Territory, and (ii) any other
mark to which Licensor consents to include pursuant hereto (all of such marks the “Licensor
Additional Marks”). The Company may not attempt to register or otherwise gain any other rights
than as set forth herein in and to Licensor Additional Marks. If, in Licensor’s reasonable
discretion, based on the Company’s use in the Territory of such Licensor Additional Marks, Licensor
elects to register any such Licensor Additional Marks in the Territory, the Company shall reimburse
Licensor for the costs of such registration and the maintenance thereof during the Term, if the
Company elects to continue such use. The Company will at Licensor’s written request, and at
Licensor’s cost,
register and maintain any Branded Company Originated Mark that Licensor approves pursuant
hereto, if the Company elects to continue such use.

          3.9. Quality Control. All Programs and other material transmitted by the Company
shall comply with the specifications set forth in this Section 3.9. Licensor acknowledges
that the Venus Channel and any Unbranded Channel or Program is not subject to this Section
3.9.

               (a) Program Restrictions. Although the Programs transmitted by the Company Service
will depict nudity and will allow strong or explicit language, the Company is prohibited from
transmitting and covenants that it will not knowingly permit, on the Branded Channels, the
transmission or exhibition of scenes, Wallpaper, or other material depicting any of the following:
(i) the glorification of violence or gratuitous violence; (ii) rape, nonconsensual intercourse or
other nonconsensual sexual activity; (iii) bondage, incest, sadism or masochism, bestiality,
extreme sexual explicitness or the graphic close-up of genitals; or (iv) child pornography,
including, without limitation,

18

 

instances where an actor is the legal age for consent but is
portrayed as under the legal age for consent. In that regard, no actor will appear nude or engage
in sexual conduct in any Program who is not at least the age of majority (e.g., eighteen (18) years
of age in the United States) consistent with the laws and regulations of each jurisdiction within
the Territory where such Program is transmitted. Notwithstanding the foregoing, (i) the standards
applied by Licensor from time to time for Playboy TV in the United States shall be the controlling
standards and any material transmitted on Playboy TV or the Spice Networks shall be deemed
acceptable by Licensor for transmission on the Branded Channels and (ii) any materials provided, or
approved by Licensor under this Agreement shall be deemed acceptable for transmission on the
Branded Channels.

               (b) Advertising and Home Shopping Restrictions. All advertising transmitted on the
Branded Channels, exhibited through Wallpaper, and all direct marketing activities conducted on the
Branded Channels shall comply with the specifications set forth in this Section 3.9(b) and
all applicable laws and regulations in the Territory. The Company shall not transmit advertising
or direct marketing programs or exhibit Wallpaper or other materials which advertise or promote any
of the following: (i) firearms (or advertisements from any gun lobby organization) and other
weapons, explosives or fireworks; (ii) massage parlors, sex clubs, sexually explicit audio-visual
products (e.g., X-rated or similar “hard core” videos), sex toys, materials depicting graphic
sexual conduct or depicting any matter subject to the restrictions set forth in Section
3.9(a) above; (iii) classified advertising, including, but not limited to, psychics or similar
persons or services; (iv) religious organizations and cults; or (v) magazines which compete with
any edition of the “Playboy” magazine or any other publication, product or service published,
produced, financed, branded, identified with or distributed by any Person who is engaged in the
publication or distribution of any magazine which, in Licensor’s discretion, competes with any
edition of the “Playboy” magazine (whether in the print, television or Internet industry, or any
other medium of delivery now known or hereinafter created) (“Playboy Competition”). Further, the
Company shall not advertise or promote the Branded Channels or otherwise use the Licensor
Trademarks in any media in connection with any of the foregoing. Notwithstanding the foregoing,
and Wallpaper, advertising or direct marketing programs provided by Licensor under this Agreement
or otherwise expressly approved in writing by Licensor shall be deemed acceptable by Licensor for
distribution and display on the Branded Channels.

               (c) Inspection Rights. Except for any items or Programs prepared or provided by
Licensor, the Company shall submit to Licensor for its inspection representative samples of all
items and materials with respect to which a Licensor Trademark is utilized pursuant hereto
(including, without limitation, any Programs, all advertising, and all promotional and marketing
materials) for
Licensor’s prior written approval at least ten (10) days prior to their intended distribution.
If Licensor does not reply to any such submission within ten (10) days, such submission will be
deemed rejected.

          3.10. Title and Protection of the Licensor Trademarks; Use of the Licensor Trademarks.
The Company hereby acknowledges that except for the license expressly granted in this Agreement,
the Company has not acquired and will not acquire any rights, title or interest in the Licensor
Trademarks by reason of this Agreement and further acknowledges each of the following: the great
value of the goodwill associated with the Licensor Trademarks; the worldwide recognition thereof;
that the proprietary rights therein (including, without limitation, all rights that Licensor may
have by virtue of international agreements that protect famous marks and common law rights) and the
goodwill associated therewith are solely owned by and belong to Licensor; that the Licensor
Trademarks and other related words, devices, designs and symbols are inherently distinctive or have
secondary meaning firmly associated in the mind of the general public with Licensor, the respective
subsidiaries and Affiliates and their activities; and that all additional goodwill associated with
the Licensor Trademarks created through the use of such Licensor Trademarks by the Company shall
inure to the sole benefit of Licensor. The Company agrees not to use the Licensor Trademarks in
any manner which, directly or indirectly, would

19

 

dilute, demean, ridicule or otherwise tarnish the
image of the Licensor Trademarks or Licensor, or any of its Affiliates. During and after the Term,
the Company shall not:

               (a) attack or question the validity of, or assist any individual or entity in attacking or
questioning, the title or any rights of or claims by any or all of Licensor, its subsidiaries and
Affiliates and their respective licensees and sublicensees in and to the Licensor Trademarks or any
other trademark, copyright or such other intellectual or intangible property associated or
connected with Licensor, its respective Affiliates, their publications, published material and
activities;

               (b) directly or indirectly seek for itself or assist any third party to use or acquire any
rights, proprietary or otherwise, in any patent, trademark, copyright or such other intellectual or
intangible property associated or connected with Licensor, its Affiliates, their publications,
published material or activities, without, in each case, the prior express written consent of
Licensor;

               (c) in any way seek to avoid the Company’s duties or obligations under this Agreement because
of the assertion or allegation by any individual or entity that any or all of the Licensor
Trademarks are invalid or by reason of any contest concerning the rights of or claimed by Licensor;
or

               (d) file or prosecute one or more trademark applications in connection with the Company’s use
or intended use of the Licensor Trademarks or any mark or designation of any kind that is
confusingly similar to or dilutive of the Licensor Trademarks, unless expressly requested to do so
in writing by Licensor.

          3.11. Form. The Company shall use the Licensor Trademarks in the form stipulated by
Licensor and shall include such trademark and copyright notices as Licensor may request in
connection with the protection of Licensor’s ownership of the Licensor Trademarks. The Company
shall also observe all directions given by Licensor as to colors and size of the representations of
the Licensor Trademarks and their manner and disposition in connection with the Programs.

          3.12. Maintenance of Distinctive Quality of Licensor Trademarks. The use of the Licensor Trademarks by the Company shall at all times be in keeping with and
seek to maintain their distinctiveness and reputation as determined by Licensor.

          3.13. Advertising and Publicity. The Company hereby acknowledges that, as between the
Company and Licensor, the Licensor Trademarks are the sole and exclusive property of Licensor. The
Company, and any sublicensee of the Licensed Programming and solely in connection with the
sublicensed Licensed Programming, shall have the right to develop and distribute in the Territory,
and with respect to the PTVLA Portugal Feed, in the Portuguese Africa Distribution Territory,
advertising, publicity and promotional materials relating to the Company Service and the Programs,
including advertising telecasts of the Programs or any person appearing therein (unless Licensor
has specifically notified the Company to the contrary); provided, however, that any such
advertising, publicity and promotional materials (other than material obtained directly from
Licensor) shall comply with applicable law and the following restrictions:

               (a) all such materials shall comply with the restrictions set forth in this Section 3
and be subject to Licensor’s approval rights pursuant thereto;

               (b) all such materials shall clearly identify the Licensor Trademarks with a legible credit
line with the wording “Playboy” (or the ‘Rabbit Head Design,’ etc.) is the mark of and used with
the permission of Playboy or its Affiliates, as the case may be, or such other words as Licensor
may designate from time to time;

20

 

               (c) in no event may any advertising, publicity or promotional material using the names of
Licensor, the name of a Branded Program or the name of any person appearing in a Branded Program be
used to constitute an endorsement, express or implied, of any party, sponsor, product or service;
and

               (d) in no event without Licensor’s prior approval, in each instance, may any advertising,
publicity or promotional material be in any language other than Spanish, Portuguese or English.

Other than as expressly set forth in this Agreement, the Company shall make no use of the Licensor
Trademarks or any confusingly similar designation without the prior express written consent of
Licensor in each instance. The Company shall also make no use whatsoever of any other trademark,
trade name or service mark that is the property of Licensor or any of its Affiliates without the
prior express written consent of Licensor in each instance. The Company similarly agrees that it
will not authorize or purport to authorize any third party to make any such use and, if Licensor’s
consent thereto is obtained in accordance with this Section 3, it will expressly provide in
any applicable third-party agreements that such third parties will only be entitled to use such
names and marks on material supplied to them by the Company in accordance with the Company’s rights
hereunder.

          3.14. Ownership of the Licensor Trademarks.

               (a) Prosecution and Maintenance of Licensor Trademarks. Licensor shall pay all
renewal fees and take such other actions as are commercially reasonable to prosecute the
applications for and maintain the registrations of the Licensor Trademarks in the Territory during
the Term.

               (b) Cooperation of Company. The Company will on request give to Licensor or its
authorized representative any information as to its use of the Licensor Trademarks which
Licensor may require and will render during the Term any assistance reasonably required by
Licensor in registering and maintaining the registrations of the Licensor Trademarks.

               (c) Covenant of Company. The Company will not make any representation or do any act
to the effect that it has any right, title or interest in or to the ownership or use of any of the
Licensor Trademarks except under the terms of this Agreement.

               (d) Cooperation of Parties to Register Licensor Trademarks. Each party shall at its
own expense, if required by the other, do all such acts and execute all such documents as may be
necessary to confirm the license granted hereunder in respect of any of the Licensor Trademarks and
to record the Company as a registered user of the registered Licensor Trademarks on the trademarks
register in the Territory. The Company hereby agrees that any such entry with respect to any
Company Service on any trademark register may be cancelled by Licensor on termination of this
Agreement with respect to such Company Service, for whatever reason, and that it will assist
Licensor insofar as may be necessary to achieve such cancellation including by executing any
necessary documents.

          3.15. Infringements.

               (a) Notice. Each party shall as soon as it becomes aware thereof give the other
written notice of (i) any use or proposed use by any other person, firm or company of a trade name,
trademark or trade dress or mode of promotion or advertising which amounts or might amount either
to infringement in the Territory of Licensor’s rights in connection with the Licensor Trademarks or
to passing off in the Territory, and (ii) any allegation or claim by any other person, firm or
company that any

21

 

of the
Licensor Trademarks are invalid within the Territory or that use of any of
the Licensor Trademarks infringes any rights of another party or that any of the Licensor
Trademarks are otherwise attacked or open to attack within the Territory.

               (b) Control of Proceedings. Licensor shall have the sole right to control and conduct
all proceedings relating to any claim or suit arising out of or relating to any of the matters
described in this Section 3 and to decide what action (if any) to take in respect thereof.
The Company expressly covenants no discussions by the Company whatsoever with any and all claimants
and litigants, no compromise or settlement by the Company of any claim or suit and no negotiations
by the Company with respect to any compromise or settlement shall be had, made or entered into
without the prior written approval of Licensor.

               (c) Procedures and Costs. Licensor shall bear the cost of all proceedings pursuant to
this Section 3 and shall be entitled to retain any damages recovered pursuant to such
proceeding. At Licensor’s cost, the Company shall provide any assistance reasonably requested by
Licensor, and the Company shall agree to being joined as a party in any such proceeding at the
request of Licensor. The parties may mutually agree to jointly conduct and control any such
proceeding, in which case the costs and proceeds thereof shall be borne equally by the parties.

               (d) Equitable Relief. The Company acknowledges that the Company’s failure to cease
using the Licensor Trademarks upon the expiration or termination of this Agreement, will result in
irreparable harm to Licensor for which there is no adequate remedy at law. Accordingly, in such
event, Licensor shall be entitled to preliminary or temporary equitable relief in any Federal or
State court of competent jurisdiction located in the State of California without regard to the
provisions of Section 12, without the necessity of posting bond unless otherwise required
by applicable law by way of any or all of the temporary and permanent injunctions and such other
relief as any court of competent jurisdiction may deem just and proper.

               (e) Use of the Term “Licensor”. As used in this Section 3, in each instance,
“Licensor” shall mean Licensor or its licensees, as the case may be.

     4. LICENSE TERM AND MEDIA HOLDBACKS.

          4.1. License Term. In each instance, the term of the Company’s rights in and to any
Licensed Programming shall begin upon the availability of such Licensed Programming to the Company,
and shall end on the sooner to occur of: (i) the term of Licensor’s rights in and to such Licensed
Programming; or (ii) the duration of the Term.

          4.2. No Home Video Rights. The Company shall not have the right to distribute any
Licensed Programming for non-public exhibition in a private residence by means of discs, cassettes
or electronic analog or digital storage devices now existing or invented in the future (“Home
Video Rights”). Home Video Rights shall not include any decoding, recording or storage devices
(whether now existing or hereinafter devised) which allow viewers to view, record or store programs
broadcast via the Media.

          4.3. Other Home Video Rights. The Company acknowledges that, in certain cases,
Licensor may be offered the rights in the Media in the Territory as part of Licensor’s acquisition
of Home Video Rights. Licensor shall obtain these Media rights, in its discretion, provided that,
in the event the fees for such Media rights are unreasonable, Licensor shall consult with the
Company and obtain the Media rights for the Company at the Company’s own cost. Nothing herein
shall effect Licensor’s rights to acquire separately the Home Video Rights.

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     5. CENSORSHIP; WITHDRAWAL OF PROGRAMS.

          5.1. Censorship. The Company is willing to accept and pay for the Existing Library
and New Programs regardless of censorship regulations or the potential for same throughout the
Territory or in any individual country or political subdivision within the Territory. The Company
will elect, consistent with applicable law, either to: (i) edit out the Programming as supplied by
Licensor, provided that the storyline of such edited Programming may not be altered, (ii) blackout
the region(s) where the censorship problem occurs, or (iii) not use such Programming, provided,
that any such effected New Programs nonetheless shall count towards the requirements set forth in
Section 2.1(e). All costs of editing and/or blackout will be borne by the Company;
provided, that the Company will make good faith efforts to obtain waivers of such restrictions or
will permit Licensor to make such efforts on behalf of the Company. Without limiting the Company’s
rights under Section 2.2(e), the Company will only make such cuts or deletions as are
necessary to conform to applicable censorship regulations.

          5.2. Withdrawal of Programs.

               (a) Notwithstanding any other term of this Agreement to the contrary, Licensor may, in its
sole but reasonable discretion, withdraw any Program if Licensor determines that the transmission
thereof would or might reasonably be expected to (i) infringe upon the rights of others; (ii)
violate the law, court order, government regulation or other ruling of any governmental agency; or
(iii) subject Licensor to any liability, other than due to a breach by Licensor of its
covenants and representations in this Agreement.

               (b) If Licensor elects to withdraw any Program as set forth in paragraph 5.2(a) above before
any telecast, the Company will have the right, in its sole discretion, to require Licensor to
deliver another program of comparable quality (which program will constitute a Program hereunder).
If Licensor elects to withdraw any Program, any transportation, dubbing and assembly costs incurred
and paid by the Company with respect to the withdrawn Program will be refunded by Licensor promptly
upon the Company’s presentation of reasonable evidence of such expenditures.

               (c) If a withdrawn Program has been delivered, the Company will, at Licensor’s request, either
promptly erase such Program or return it to Licensor at Licensor’s expense.

          5.3. Advertising.

               (a) In all advertising and publicity relating to any Branded Program or any transmission
thereof, the Company will comply with the advertising and billing credit requirements furnished by
Licensor. The Company will not make or permit to be made, in any advertising, publicity or
otherwise, any statements which (i) constitute or may be understood to be an endorsement of any
sponsor, product, article or service by Licensor or any of its Affiliates or by any person or
entity that appears in or otherwise renders any services or provides any materials for use in any
Branded Program or (ii) indicate or may be understood to indicate the Licensor, any of its
Affiliates, or any person that appears in or otherwise renders any services or provides any
materials for use in any Program is connected or associated with any sponsor, product, article or
service.

               (b) The Company will not advertise or promote, in any manner, any Program withdrawn by
Licensor.

               (c) The Company will not authorize or permit any excerpt or clip from any Branded Program to
be used for promotional purposes to be in excess of one (1) minute in length.

23

 

               (d) The Company will not advertise or promote any Branded Program earlier than sixty (60) days
prior to the first day of the month in which the Branded Program will first air.

     6. DELIVERY AND RETURN.

          6.1. Access and Delivery Items. The Company will have full and immediate access to
all Delivery Materials set forth on Schedule 6.1, and other tangible manifestations of the rights
licensed hereunder, solely as requested by the Company from Licensor’s Customer Service and
Shipping Department, or other designee as Licensor may from time-to-time designate. Licensor shall
provide the Company, at no extra cost to the Company, with one original copy of each of the
Delivery Materials and shall provide the same for all Programs, Acquired Movies, Wallpaper or any
other content required to be made available to the Company hereunder from time-to-time during the
Term.

          6.2. Title to Delivery Materials. It is expressly agreed that title in and to any
Delivery Material provided to the Company hereunder will remain in Licensor at all times and that
title, including copyrights therein, will
vest in Licensor upon the creation thereof, subject only to the possession and control thereof
by the Company from the date of delivery through the end of the related license period solely for
the purposes of exercising its rights hereunder. The Company will execute, acknowledge and deliver
to Licensor any instruments of transfer, conveyance or assignment in or to any such Delivery
Materials necessary or desirable to evidence or effectuate Licensor’s ownership thereof and in the
event that the Company fails or refuses to execute, acknowledge or deliver any such instrument or
documents then Licensor will be deemed to be, and the Company hereby nominates, constitutes and
appoints Licensor, its true and lawful attorney-in-fact irrevocably to execute and deliver all such
instruments in the Company’s name or otherwise, it being acknowledged that such power is a power
coupled with an interest. The Company will not have the right to use any Delivery Materials except
in the exercise of the rights granted to the Company hereunder and in accordance with all
limitations on said rights as are contained in this Agreement.

     7. PROGRAM AND TRADEMARK LICENSE FEES; OTHER FEES. The Company will pay to Licensor each
Fiscal Year license fees (the “License Fees”) equal to a sum computed as (A) the greater of: (i)
seventeen and one-half percent (17.5%) of the aggregate Net Revenue of the Company; or (ii) the
Company Guaranteed Minimum License Fee (as described below), plus (B) *** of the aggregate Playboy
Lifestyle Net Revenue (as described below)(the “Playboy Lifestyle Net Revenue Fee”). For
purposes hereof, “Company Guaranteed Minimum License Fee” means: (x) for the year 2002, three
million seven hundred thousand dollars ($3,700,000), of which the pro rated amount for nine
calendar months of such year equals two million seven hundred and seventy-five thousand dollars
($2,775,000); (y) for the year 2003, four million dollars ($4,000,000); and (z) for each subsequent
twelve (12) month period, the Company Guaranteed Minimum License Fee shall be adjusted each year by
any change in the CPI. As used herein, the term “Net Revenue” means gross revenues earned and
actually collected, less any applicable withholding taxes, excluding: (I) the PTVLA Channel
Distribution Fee (as defined in the Amended Distribution Agreement); (II) amounts paid to the
Company by Playboy.com pursuant to Section 5.1 of the First Amended and Restated Web Site Revenue
Share Agreement dated the date hereof among the Company, Playboy.com, Inc., and Claxson Interactive
Group Inc.; (III) any revenues from (A) advertising; (B) from the sublicense of any Unbranded
Company Format Programming and Unbranded Company Produced Programming; and (C) revenues from the
exploitation by the Company of any Alta Loma Program rights acquired by the Company as Licensed
Programming pursuant to Section 2.1(g)(1), to the extent that such revenues can be
separately identified; (IV) any revenues received by the Company pursuant to that certain Wireless
Distribution Agreement dated September 1, 2005 between the Company and Playboy.com, Inc., as
amended; (V) any Playboy Lifestyle Net Revenues; (VI) the PTVLA Portugal Feed Net Revenues; (VII)
amounts paid to the Company from Licensor pursuant to Section 7.8 and (VIII) amount paid to the
Company from Licensor pursuant to the Iberia Arrangements as set forth in Section

24

 

3.6 of the
Company Operating Agreement. As used herein, the term “Playboy Lifestyle Net Revenue” means the
gross annual revenues earned and actually collected for the Playboy Lifestyle Business, less any
applicable withholding taxes. Notwithstanding the foregoing, in the event this Agreement is
terminated or expires, any License Fees owed to Licensor hereunder shall be adjusted on a pro rata
basis based on the date of such termination or expiration during such Fiscal Year.

          7.1. Due and Payable. The License Fees shall be due and payable to Licensor as
follows: (i) the Company Guaranteed Minimum License Fee shall be paid ***; (ii) any overages based
on Net Revenue above the Company Guaranteed Minimum License Fee and the Playboy Lifestyle Net
Revenue Fee shall be ***. Any necessary adjustments thereto shall be made within thirty (30) days
after the Company receives audited financial statements.

          7.2. Wire Transfers. Payments of License Fees will be made by wire transfer of
immediately available funds, net of any withholding required by applicable law. Licensor 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.

          7.3. Late Payment. Any payment not made when due will bear interest from the date due
to and including the date payment in full is made at a rate equal to the reference rate of the Bank
of America for U.S. domestic customers as in effect on the date payment was due.

          7.4. Restricted Funds. Monies actually received by the Company outside the U.S. in
U.S. dollars or in a currency freely convertible to U.S. dollars and freely remittable to the U.S.
shall be deemed to have been received by the Company as of the end of the applicable accounting
period during which such monies were received, and, as applicable, converted into U.S. dollars at
the actual exchange rate applicable to the Company. Monies actually received by the Company
outside the U.S. in any currency and not freely remittable to the Company in the U.S. in U.S.
dollars shall be considered “Blocked Funds”, and shall not be included in Net Revenues. However,
upon the Company’s receipt of written notice from Licensor that the Licensor desires a settlement
of its share of a particular item of Blocked Funds, the Company shall deposit the Licensor’s share
of such Blocked Funds (i.e., the License Fees) in a bank account in the applicable country, in the
Licensor’s name, subject to all applicable laws and regulations. Such deposit shall fully satisfy
the Company’s obligations to Licensor with respect to such Blocked Funds and Licensor’s share
thereof, and any taxes, expenses or other charges incurred in connection with the making of such
deposit shall be deducted from Licensor’s share of such Blocked Funds, or otherwise charged to or
paid by Licensor in advance, if required to make such deposit.

          7.5. Currency. The License Fees shall be paid *** in U.S. Dollars. To the extent the
calculation of the License Fees are based on revenues received in other currencies, such revenues
shall be calculated using the exchange rate published in the Wall Street Journal or, with respect
to Mexico, Brazil, Argentina and Venezuela, as quoted by the Central Bank of such country, as of
the last day of the month during which the payment is due. Where License Fees’ payments are due by
the Company in a country where, pursuant to the reasonable advice of legal counsel, it is unlawful
to make License Fees’ payments in that country in accordance with this Agreement, notice thereof in
writing will be given by the Company to Licensor and said License Fees’ payments shall be deposited
in whatever currency is allowable, for the benefit or credit of Licensor, by wire transfer into an
accredited bank in that country as shall be acceptable to Licensor.

          7.6. Maintenance of Records and Audit Rights.

               (a) The Company shall keep accurate books of account and records covering all transactions
relating to or arising out of this Agreement. The Company shall permit Licensor and its nominees,
employees, accountants, agents and representatives to (i) have full access to and inspect such

25

 

books and records during normal business hours upon reasonable notice, and (ii) to conduct an
examination of and to copy all such books and records. The Company shall maintain in good order
and condition all such books and records for a period of either: (i) five years after the
expiration of the Term or the earlier termination of this Agreement, or in the event of a dispute
between the parties hereto, until
such dispute is resolved, whichever date is later; or (ii) such period of time required under
applicable laws and regulations, whichever period is longer. Receipt or acceptance by Licensor of
any sums paid by the Company hereunder shall not preclude Licensor from questioning the correctness
thereof at any time.

               (b) If an inspection or examination referred to in paragraph (a) above discloses, or Licensor
or the Company otherwise discover, an underpayment of License Fees, the amount of such underpayment
shall be paid by the Company to Licensor not later than thirty (30) days after determination
thereof plus interest from the date the payment should have been made to and including the date of
payment in full at a rate equal to the reference rate of the Bank of America for U.S. domestic
customers as in effect on the date payment should have been made. If such underpayment of License
Fees by the Company is in excess of ten percent (10%) of the aggregate License Fees earned during
any quarterly period under inspection, the Company shall, in addition to paying Licensor the amount
of such underpayment, reimburse Licensor for all reasonable costs and expenses of conducting such
inspection or examination.

               (c) If an inspection or examination referred to in paragraph (a) above discloses, or Licensor
or the Company otherwise discovers, an overpayment of License Fees, the amount of such overpayment
shall be credited against future payments of License Fees, unless the period for which the
overpayment was made is the final period covered by this Agreement, in which case the amount of the
overpayment shall be paid by Licensor to the Company within thirty (30) days after determination
thereof.

               (d) The Company shall provide Licensor with year-end audited financial statements within: (i)
forty-five (45) days of the end of calendar year 2006; and (ii) thirty (30) days of the end of each
calendar year during the Term thereafter.

          7.7. Distribution Fee.

               (a) The Company shall collect and receive all revenues derived from systems operators or any
other authorized person on account of the Company’s exploitation of the PTVLA Portugal Feed in the
Portuguese Africa Distribution Territory. In consideration for granting exploitation rights
hereunder outside the Company’s Territory, the Company will pay to PEGI a distribution fee equal to
fifty percent (50%) of the Net Revenues received by the Company from the exploitation of the PTVLA
Portugal Feed in the Portuguese Africa Distribution Territory, based on the simultaneous
retransmission feed or a broadcast directed to the Portuguese Africa Distribution Territory (the
“PTVLA Portugal Feed Distribution Fee”). For purposes of distribution fees under this Paragraph,
the term “PTVLA Portugal Feed Net Revenue” means gross revenues earned and actually collected from
systems operators or any other authorized person on account of the Company’s exploitation of the
PTVLA Portugal Feed in the Portuguese Africa Distribution Territory, less any applicable
withholding taxes herein. It is understood that the PTVLA Portugal Net Feed Revenue shall be
excluded from the Net Revenues as defined in Section 7 hereinabove.

               (b) The PTVLA Portugal Feed Distribution Fee will be computed by the Company as of the last
day of each calendar month, and will be paid to PEGI on a quarterly basis as of each March 31, June
30, September 30, and December 31, within 30 days after the end of each such respective quarter.
The Company shall furnish PEGI with a statement showing the calculation of such PTVLA Channel
Distribution Fee and setting forth all applicable Company-related taxes withheld, if any.

26

 

               (c) Payments of the PTVLA Channel Distribution Fee will be made by wire transfer of
immediately available funds, net of any withholding required by applicable law. PEGI 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.

               (d) Any payment not made when due will bear interest from the date due to and including the
date payment in fill is made at a rate equal to the reference rate of the Bank of the America for
domestic customers as in effect on the date payment was due.

               (e) Subject to Section 7.4 the PTVLA Portugal Feed Distribution Fees shall be paid in U.S.
dollars. To the extent the calculation is based on revenues received in other currencies, such
revenues shall be calculated using the exchange rate published in the Wall Street Journal as of the
business day immediately preceding the date on which the payment initially is due.

               (f) Distribution Cost. The cost associated with the exploitation of the PTVLA Portugal Feed
will be borne by the Company including all related costs set forth in the Company Operating
Agreement or in this Agreement (including, but not limited to, uplink an other delivery-related
costs).

          7.8. Licensor Distribution In Belize. Notwithstanding any territorial, exclusivity or other restrictions contained in this
Agreement, upon notice from Licensor and consent from the Company, such consent not to be
unreasonably withheld or delayed, Licensor may sub-license and distribute Programs in the English
language from the Licensed Programming to television system operators in the country of Belize. In
the event Licensor sub-licenses and distributes such Programs to third parties in the country of
Belize, Licensor shall pay the Company a distribution fee equal to fifty percent (50%) of the total
revenues which Licensor receives from the exploitation of such Programs in the Media in such region
of the Territory, less any applicable withholding taxes. It is understood that the distribution
fee received by the Company pursuant to this Section 7.8 shall be excluded from Net Revenues as
defined in Section 7.

     8. INDEMNITIES.

          8.1. Representations and Warranties.

               (a) By Licensor. Licensor represents and warrants that, except as set forth in the
Schedules hereto: (i) it is duly authorized to enter into the transactions contemplated by this
Agreement; (ii) this Agreement is a valid and binding obligation of Licensor, enforceable against
it in accordance with its terms; (iii) the performance of Licensor’s obligations hereunder does not
violate any agreement, law, rule, or regulation binding on Licensor or Licensor’s charter
documents; (iv) it has, and will continue to have during the Term, all rights in and to the
Existing Library, New Programs, Wallpaper and any other content provided hereunder necessary to
fulfill its obligations hereunder (except that with respect to the Existing Library, no such
representation is made as to any program not listed on Schedule 6.1); (v) the Existing Library, New
Programs, Wallpaper and any other content provided hereunder are not subject to licenses which
conflict with the rights granted herein, and the use thereof by the Company as contemplated herein
will not infringe upon the copyright, literary or dramatic right or right of privacy of any third
party or constitute a libel or slander of any third party; and (vi) Licensor has disclosed all
information having a material adverse effect on the rights granted hereunder, and that all such
information is true and correct to the best of Licensor’s knowledge and belief.

27

 

               (b) By the Company. The Company represents and warrants that: (i) it is duly
authorized to enter into the transactions contemplated by this Agreement; (ii) this Agreement is a
valid and binding obligation of the Company, enforceable against it in accordance with its terms;
(iii) the
performance of the Company obligations hereunder does not violate any agreement, law, rule, or
regulation binding on the Company or the Company charter documents; (iv) it will not use the
Licensed Programming expect as authorized by this Agreement; (v) it has, and will continue to have
during the Term, all rights in and to the Company Produced Programming and Company Format
Programming and any other content provided hereunder necessary to fulfill its obligations
hereunder; (vi) the Company Produced Programming and Company Format Programming and any other
content provided hereunder are not subject to licenses which conflict with the rights granted
herein, and the use thereof by Licensor as contemplated herein will not infringe upon the
copyright, literary or dramatic right or right of privacy of any third party or constitute a libel
or slander of any third party; and (vii) the Company has disclosed all information having a
material adverse effect on the rights granted hereunder, and that all such information is true and
correct to the best of the Company’s knowledge and belief.

          8.2. Indemnification.

               (a) By Licensor. Licensor will indemnify and hold harmless the Company and its
members, managers, directors, officers, shareholders, employees, agents, representatives and
Affiliates (collectively, the “Company Indemnified Parties”), on an After Tax Basis, from and
against all claims, losses, damages (including loss of profits and consequential damages awarded to
unrelated third parties, if any, but excluding loss of profits and consequential damages otherwise
suffered by the Company Indemnified Parties), expenses, judgments, costs and liabilities (including
reasonable attorneys’ fees and costs) (collectively, “Losses”) incurred by the Company
Indemnified Parties arising from Licensor’s breach of any obligation, representation or warranty
contained in this Agreement or by reason of any claim, resulting in liability to the claimant or a
settlement approved in writing by Licensor, which may be made alleging that any of the Licensed
Programming or other materials furnished by Licensor for public exhibition as authorized hereunder
infringe upon the copyright, literary or dramatic right or right of privacy of any claimant or
constitutes a libel or slander of such person, except with respect to any material added by the
Company (including as permitted hereunder) and except with respect to music which is specifically
covered by Section 8.3 below. Licensor shall not be required to provide indemnification
for any Losses solely and directly caused by the action or inaction of any Company Indemnified
Party.

               (b) By Company. The Company will indemnify and hold harmless Licensor and its
directors, officers, shareholders, employees, agents, representatives and Affiliates (collectively,
the “Licensor Indemnified Parties”), on an After Tax Basis, from and against all Losses incurred by
the Licensor Indemnified Parties arising from (i) the breach or alleged breach of any provision of
this Agreement by the Company; or (ii) any claim, resulting in liability to the claimant or a
settlement approved in writing by the Company, which may be made alleging that any of the Company
Produced Programming, Branded Format Programming, Company Format Programming or other materials
furnished by the Company as authorized hereunder infringe upon the copyright, literary or dramatic
right or right of privacy of any claimant or constitutes a libel or slander of such person, except
with respect to any material added by Licensor, but excluding any Losses for which the Company must
indemnify Licensor pursuant to Section 8.2(a) above and excluding claims arising out of
Licensor’s failure to secure clearances and/or make payments as provided in paragraph 2.4(a) above
except for those clearances that are the responsibility of the Company subject to Section 2.4(a)
above. Without limiting the foregoing, the Company shall specifically so indemnify Licensor and
such other parties from and against all Losses made or assessed against Licensor arising from the
transmission of any material that should have been edited for censorship or other than as contained
in the Delivery Materials as delivered by Licensor, or from the temporary or permanent loss of any
such material. The Company shall not be required to

28

 

provide indemnification for any Losses solely
and directly caused by the action or inaction of any Licensor Indemnified Party.

          8.3.
Musical Compositions. Licensor warrants and represents that to the best of its knowledge, information and belief,
the performing rights in all musical compositions contained in the Licensed Programming are: (i)
controlled by a performing rights society having jurisdiction, (ii) controlled by Licensor, or
(iii) in the public domain. Licensor does not represent or warrant that the Company may exercise
the performing rights to said musical compositions without the payment of a performing rights
royalty. The Company will be solely responsible for the payment of such royalty and will hold
Licensor free and harmless therefrom.

          8.4.
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 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 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 at the expense of the
indemnifying party, provided, that any such expenses shall be reasonable, actual, verifiable,
out-of-pocket expenses.

     9. TERMINATION.

          9.1. Expiration of Term. The term of this Agreement shall continue from the original effective date of April 1, 2002
and terminate on March 31, 2022, unless sooner terminated pursuant to the other provisions of this
Section (the “Term”).

          9.2. Renewal. No later than ***, PEGI shall notify the Company in writing if it intends to renew or
extend this Agreement. ***. If PEGI elects not to renew or extend this Agreement, the parties
hereto agree and acknowledge that ***.

          9.3. Early Termination on Breach. Either party may without prejudice to its other remedies terminate this Agreement
immediately by notice in writing to the other on or after the occurrence of any of the following:

               (a) the commission of one or more material breaches of this Agreement by the other party which
are not capable of remedy; provided, however, that in case of a breach by the
Company, such breach is not caused by Licensor as a Member of the Company; or

               (b) the commission of a material breach of this Agreement by the other party 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. Notwithstanding

29

 

the foregoing, Licensor may not terminate this Agreement in
case of a breach by the Company if such breach is caused by Licensor as a Member of the Company; or

               (c) the bankruptcy or insolvency of, a general assignment for the benefit of creditors or
similar event by, or the appointment of a trustee, receiver or similar person for the other party;

               (d) the other party being prevented by an event of Force Majeure from performing its
obligations or the party exercising such right of termination being prevented by an event of Force
Majeure from exercising its rights under this Agreement for a period of one-hundred-twenty (120)
consecutive calendar days; and provided, further, that in case of a breach by the
Company, such breach is not caused by Licensor as a Member of the Company.

          9.4. Inadvertent Breach. The parties agree that any inadvertent breach relating to Licensor’s obligations with
respect to any individual Program shall constitute a Remediable Breach and shall not constitute
grounds for termination hereof if Licensor provides comparable substitute Programming for the
applicable Program.

          9.5. Cross Default. The uncured material breach of the Company Operating Agreement by either party or their
Affiliates shall cause this Agreement to terminate, unless such breach was caused by the party
seeking termination hereunder.

          9.6. Dissolution of Company. The dissolution of the Company shall cause this Agreement to terminate.

     10. EFFECTS OF TERMINATION.

          10.1. Survival of Obligations. The termination of this Agreement for whatever reason shall not effect Articles 8, 10, 12
and 13, and Sections 2.3(c), 2.4(c), 2.5, 3.10, 6.2 and
7.6 of this Agreement.

          10.2. Termination of Rights. Upon the date on which any termination of this Agreement for whatever reason takes effect
(the “Termination Date”) all rights of the Company hereunder (other than any rights that
the Company may have arising from the conduct of, or performance hereof by, Licensor) will
immediately terminate and automatically revert to Licensor and the Company will cease to make any
use of the Licensed Programs and other materials provided by Licensor hereunder, and shall promptly
destroy or return the same to Licensor, in each case as directed by Licensor. Further, the Company
shall immediately amend its charter documents so that its name no longer includes any reference to
any trademark of Licensor or any confusingly similar designation or mark, if such a reference is
included its name.

          10.3. Further Assurances. Upon termination of this Agreement, the parties will perform all other acts which may be
necessary or useful to render effective the termination of the Company’s interests in the Licensed
Programs, Licensor Trademarks and other materials furnished by Licensor hereunder and the Company
will execute any assignment, conveyance, acknowledgment or other document that Licensor may
reasonably request relinquishing such interests. Without limiting the foregoing, the Company
hereby consents to any application which Licensor may make to limit or terminate the Company’s
status as a registered user of the Licensor Trademarks and irrevocably agrees not to contest,
oppose or dispute such application.

30

 

     11. EQUITABLE RELIEF.

     Each of Licensor and the Company acknowledges that any material breach of this Agreement by
such party, including, by way of example, the Company’s failure to cease using any Programming
supplied hereunder upon the expiration or termination of this Agreement, will result in irreparable
harm to the other party for which there is no adequate remedy at law. Accordingly, in such event,
Licensor or the Company, as the case may be, will be entitled to preliminary or temporary equitable
relief in any Federal or State court of competent jurisdiction located in Los Angeles County,
California and, except in the case of an IP-Validity Dispute, pending a final determination in
accordance with Section 12, without the necessity of posting bond unless otherwise required
by applicable law by way of any or all of the temporary and permanent injunctions and such other
relief as any court of competent jurisdiction may deem just and proper.

     12. DISPUTE RESOLUTION.

          12.1. IP-Validity Dispute. Notwithstanding the foregoing and the provisions of this Section 12, the parties
hereto agree in the event any third-party brings a dispute concerning: (i) the validity, ownership,
or control of the Licensor Trademarks or the Licensor Additional Marks, Branded Company Originated
Marks or the copyrights or other intellectual property rights to any Licensed Programming or any
Branded Programming (an “IP-Validity Dispute”); the parties, (a) shall seek to have such dispute
litigated in a court of law and brought in the state or federal courts in Los Angeles, California
and (b) shall irrevocably submit to the exclusive jurisdiction of such courts, (x) shall waive any
objection to choice of venue in any such action or proceeding in such courts, (y) shall waive any
objection that any such court is an inconvenient forum or does not have jurisdiction over any party
hereto, and (z) shall waive any right they may have to request a jury trial.

          12.2. Dispute, Notice and Response. If any dispute or difference of any kind whatsoever shall arise between the parties in
connection with, arising out of or relating to this Agreement (including any schedule or exhibit
hereto), or the breach, termination or validity thereof (a “Dispute”), the parties shall attempt to
settle such Dispute in the first instance by mutual discussions. Within ten (10) 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 12.2. Within five (5) business days of receipt of the
Response, the designated executives shall meet and attempt to resolve the Dispute. 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 the Response (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 12.2-12.5 herein.

          12.3. Arbitration. Any Dispute not timely resolved in accordance with Section 12.2 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.

          12.4. Number 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

31

 

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 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. There shall be no restrictions on the nationality of any arbitrator.

          12.5. Hearing. The hearing on the merits shall be held as expeditiously as possible, if practicable no
later than four months after the appointment of a single arbitrator or five months after the
appointment of the third arbitrator, as applicable. The hearing shall, if practicable, last no
longer than ten 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 New York.
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 attorney’s fees and expenses) incident to
enforcing the award shall be charged against the party resisting such enforcement.

          12.6. Jurisdiction. 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.

          12.7. Enforceability. The parties 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 parties and, to the extent necessary, in other jurisdictions in the Territory.

32

 

     13. MISCELLANEOUS.

          13.1. Force Majeure. Subject to the right to terminate set forth in Section 9.3, neither party will be
liable to the other for any failure or delay in delivery of Delivery Materials, or the inability to
telecast any of the Programs, due to accident involving breakdown of any satellite or of
transmission facilities or equipment, labor disputes, acts of God, failure of carriers, failure or
delay of laboratories, of or any other cause beyond the control of such party (each, an event of
“Force Majeure”) and such performances will be excused to the extent that it is prevented
by reason of any of the foregoing conditions. Notwithstanding the foregoing, an event of Force
Majeure will not include censorship restrictions or any restriction by any jurisdiction on a
party’s right to transfer funds.

          13.2. Binding Effect; No Assignment. The provisions of this Agreement shall be binding on and ensure to the benefit of the
successors of each party hereto; provided, however, that no party may not assign, transfer, pledge,
hypothecate, charge or otherwise dispose of or subcontract any of its rights or obligations
hereunder without the prior written consent of the other party. Notwithstanding the foregoing; (i)
either party may assign its rights and obligations hereunder to an Affiliate of such party, but the
original party will remain responsible and liable for such Affiliate’s compliance with all of such
original party’s obligations hereunder, and, in the case of an assignment by Licensor, such
Affiliate must be the owner of the Licensor Trademarks; and (ii) in the event Lifford (or an
Affiliate of Lifford which is then a member of the Company) elects to dissolve the Company due to a
breach by PEGI (or an Affiliate of PEGI which is then a member of the Company) of the Company
Operating Agreement, Lifford (or such Affiliate) may cause the Company’s rights hereunder to be
assigned to Lifford (or to an Affiliate of Lifford), provided that the Company’s rights under the
this Agreement are assigned to the same assignee. Nothing in this Agreement, expressed or implied,
is intended to confer on any Person other than the parties hereto or their
respective permitted successors and assigns, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.

          13.3. Invalidity. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction
will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof or affecting the validity or enforceability of
such provisions in any other jurisdictions.

          13.4. Waivers, Remedies Cumulative, Amendments, etc.

               (a) No failure or delay by either party hereto in exercising any right, power or privilege
under this Agreement will operate as a waiver thereof nor will any single or partial exercise by
either party hereto of any right, power or privilege preclude any further exercise thereof or the
exercise of any other right, power or privilege.

               (b) Except as otherwise provided in this Agreement, the rights and remedies herein provided
are cumulative and not exclusive of any rights and remedies provided by law.

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

          13.5. Notices.

               (a) All notices, requests, demands and other communications required to be given under this
Agreement will conclusively be deemed to have been duly given: (i) when hand

33

 

delivered, (ii) the
next business day if sent by a generally recognized overnight courier service that provides written
acknowledgment by the addressee of receipt, or (iii) when received (with appropriate answerback),
if sent by facsimile transmission or other generally accepted means of electronic transmission
addressed as follows:

	 	 	 
	If to Licensor 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:

	 	Business and Legal Affairs
	 

	 	2706 Media Center Drive
	 

	 	Los Angeles, CA 90065
	 

	 	United States of America
	 

	 	Fax Number: (323) 276-4502
	 
	 	 
	If to the Company:

	 	Playboy TV — Latin America, LLC
	 

	 	c/o Claxson Interactive Group Inc.
	 

	 	Attention: Chairman and Chief Executive Officer
	 

	 	1550 Biscayne Boulevard
	 

	 	Ground Floor
	 

	 	Miami, FL 33132
	 

	 	Fax Number: (305) 894-3606
	 
	 	 
	with a copy to:

	 	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

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

     
(b) All notices will be deemed given when received at the address(es) as provided in paragraph
(a) above.

34

 

          13.6. Governing Law. ALL QUESTIONS WITH RESPECT TO THIS AGREEMENT AND THE RIGHTS AND LIABILITIES OF THE PARTIES
WILL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, IRRESPECTIVE OF THE CHOICE OF LAWS
PROVISIONS OF NEW YORK OR OF ANY OTHER JURISDICTION. The parties each hereby consent to the
personal jurisdiction and venue in the state and federal courts sitting in the State of California.

          13.7. Entire Agreement. This Agreement, together with its attachments, constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all prior agreements and
understandings, oral and written, between the parties hereto with respect to the subject matter
hereof.

          13.8. Rules of Construction.

               (a) Headings. The section headings in this Agreement are inserted only as a matter of
convenience, and in no way define, limit, or extend or interpret the scope of this Agreement or of
any particular section.

               (b) Tense and Case. Throughout this Agreement, as the context may require, references
to any word used in one tense or case will include all other appropriate tenses or cases.

               (c) Agreement Negotiated. The parties hereto are sophisticated and have been
represented by lawyers throughout the negotiation and execution of this Agreement who have
carefully negotiated the provisions hereof.

          13.9. Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same instrument.

          13.10. Relationship Between the Parties. This Agreement will not be construed to place the parties in the relationship of partners
or joint venturers. The Company shall have no power to obligate or bind any or all of Licensor and
its subsidiaries or Affiliates in any manner whatsoever except as expressly set forth in the
Company Operating Agreement.

          13.11. Time Is of the Essence. Time will be of the essence with respect to each and every obligation of the Company and
Licensor hereunder.

[SIGNATURE PAGE FOLLOWS]

35

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the date first above written.

	 	 	 	 	 	 	 
	 	 	LICENSOR:	 	 
	 
	 	 	 	 	 	 
	 	 	PLAYBOY ENTERTAINMENT GROUP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ F. Reid Nathan
	 	 
	 

	 	 	 	 	 	 
	 	 	Name: F. Reid Nathan	 	 
	 	 	Title:   Vice President Business and Legal Affairs	 	 
	 
	 	 	 	 	 	 
	 	 	COMPANY:	 	 
	 
	 	 	 	 	 	 
	 	 	PLAYBOY TV-LATIN AMERICA, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Alejandro Iglesias
	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Alejandro Iglesias	 	 
	 	 	Title:   General Manager	 	 

36

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