Private Media Group (PRVT)

2.8 Post-Closing Adjustment to Merger Consideration.

(a) Not less than two (2) days prior to the Closing Date, Sellers Representative shall deliver to Buyer his good faith estimate of the consolidated Net Worth of the Subsidiaries as of the Closing Date (the “Estimated Net Worth Schedule”), based on the 2007 Audited Financial Statements, the 2008 Reviewed Interim Financial Statements and current books and records of the Subsidiaries and using the same accounting practices and methodologies as were used to prepare the 2007 Audited Financial Statements.

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(b) Buyer shall notify the Sellers’ Representative promptly if Buyer disagrees with the calculation of the Estimated Net Worth Schedule. Buyer and the Sellers’ Representative shall thereupon seek in good faith to resolve any differences they have with respect to any matter specified in such notice prior to the Closing Date. The Estimated Net Worth Schedule shall be revised to reflect such resolution and the Estimated Net Worth Schedule, as so revised, shall be deemed the “Estimated Net Worth Schedule” for all purposes of this Agreement, and the Net Worth reflected in such Schedule shall be referred to as the “Estimated Net Worth.”

(i) Buyer shall have a period of ninety (90) days from the Closing Date to determine whether there is a Net Worth Deficiency, based upon its determination of the actual consolidated Net Worth of the Subsidiaries at the Closing Date (as finally determined under this Section 2.8, “Actual Net Worth”). If Buyer fails to deliver a Disagreement Notice (as defined below) with such ninety (90) day period, the Estimated Worth shall be deemed to be the Actual Net Worth for purposes of this Section 2.8. If following the Closing Date Buyer believes there is a Net Worth Deficiency, then within ninety (90) days after the end of the Closing Date, Buyer shall deliver to Sellers Representative a schedule setting forth in reasonable detail its calculation of the Actual Net Worth (“Disagreement Notice”). The Sellers Representative shall have a thirty (30) day period to review the Buyer’s calculation of the Actual Net Worth. If Sellers Representative disputes Buyer’s calculation of the Actual Net Worth, Sellers Representative shall deliver a written notice (“Net Worth Dispute Notice”) to Buyer within such thirty (30) day period. Sellers Representative shall set forth in detail in the Net Worth Dispute Notice the basis for its disagreement with the Buyer’s calculation of the Actual Net Worth. If Sellers Representative fails to deliver the Net Worth Dispute Notice within the thirty (30) day period, Sellers Representative shall be deemed to have agreed to the given calculation delivered by Buyer, which calculation shall be final, conclusive and binding upon all of the parties hereto. If Sellers Representative disputes the calculation of the Actual Net Worth within the thirty (30) day period, the parties will in good faith attempt to jointly resolve any dispute during the thirty (30) day period following the delivery of the Net Worth Dispute Notice. If Buyer and Sellers Representative can resolve their dispute and agree upon the calculation of the Actual Net Worth, they shall memorialize their agreement in writing and such mutually agreed upon figure shall be final, conclusive and binding upon all of the parties. If Buyer and Sellers Representative cannot resolve the dispute to their mutual satisfaction, Buyer and Sellers Representative shall engage the Independent Accountant to determine the appropriate amount of Actual Net Worth consistent with this Agreement. Each of Buyer and Sellers shall provide the Independent Accountant such of their respective work papers as may be requested by the Independent Accountant. The Independent Accountant shall be requested to complete its engagement within forty-five (45) days of being retained by Buyer and Sellers. The determination of the Independent Accountant shall be final, binding and conclusive upon the parties and not subject to any further dispute resolution procedures of Article 11. All expenses relating to the engagement of the Independent Accountant shall be borne by (1) the Buyer if the Actual Net Worth contained in the final determination of the Independent Accountant is closer to the Actual Net Worth contained in the Net Worth Dispute Notice than the Actual Net Worth contained in the Disagreement Notice, (2) the Sellers if the Actual Net Worth contained in the final determination of the Independent Accountant is closer to the Actual Net Worth contained in the Disagreement Notice than the Actual Net Worth contained in the Net Worth Dispute Notice, and (c) equally by the Buyer, on one hand, and the Sellers, on the other hand, if the Actual Net Worth contained in the Net Worth Dispute Notice and the Actual Net Worth contained in the Disagreement Notice are equally close to the Actual Net Worth contained in the final determination of the Independent Accountant.

(ii) Buyer shall afford Sellers Representative and his advisers and representatives, upon request, reasonable access to its books and records and appropriate financial personnel for purposes relating to the determination of Actual Net Worth, provided that such access shall be limited to that portion of the books and records that relate to the calculation of Actual Net Worth and provided further that prior to granting such access, Sellers Representative shall have entered into a confidentiality agreement on terms and conditions reasonably satisfactory to Buyer.

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(iii) Upon the final, conclusive and binding determination of the Actual Net Worth in accordance with Section 2.8, if the Actual Net Worth is less than the Estimated Net Worth by more than 10% of the Estimated Net Worth, then (A) the number of Merger Consideration Shares issued or issuable to the Sellers shall be reduced, pro rata as to the Private Closing Shares, Private Initial Deferred Shares and Earnout Shares, and in proportion to the Sellers’ respective interests at the Effective Times, and without regard to any other adjustments under Section 10.7, by the aggregate number of Private Shares determined by dividing the “Net Worth Deficiency” (90% of the Estimated Net Worth, if Estimated Net Worth is a positive number, or 110% of Estimated Net Worth if Estimated Net Worth is a negative number, in either case minus Actual Net Worth) by the Private Share Issue Price, in accordance with the provisions of Section 10.7.

(iv) For purposes of determining Actual Net Worth on the Closing Date it shall be conclusively presumed that the consolidated Net Worth of the Subsidiaries at December 31, 2008, as audited by Odenberg Ullakko Muranishi & Co. LLP following the Closing Date, is accurate.

2.9 Delivery of Certificates. At and after the Effective Times, Private will make available, and Sellers shall be entitled to receive the allocable share of the Merger Consideration representing the Private Closing Shares.

2.10 Stock Transfer Books. From and after the Effective Times, the stock transfer books of the Members will be closed, and there will be no further registration or transfers of Shares thereafter on the records of the Company.

2.11 No Fractional Shares. No certificate or scrip representing fractional Private Shares shall be issued upon the surrender of Share certificates for exchange, and such fractional share interests will not entitle the owner thereof to vote or to any other rights of a shareholder of Private. Each holder of Shares exchanged pursuant to the Mergers who would otherwise be entitled to receive a fraction of a Private Share (after taking into account all certificates evidencing Shares delivered by such holder) shall receive from Private, in lieu thereof, cash (without interest) in an amount, less any applicable withholding taxes, equal to such fractional part of a Private Share, calculated based upon the Private Share Issue Price.

2.12 Lost, Stolen or Destroyed Certificates. In the event any Share certificates are lost, stolen or destroyed, Private will issue in exchange for such lost, stolen or destroyed Share certificates, upon the making of an affidavit of that fact by the holder thereof and the other deliveries required above, the applicable Merger Consideration; provided, however, that the applicable Surviving Corporation may, in its sole discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed Share certificate to deliver an indemnity or bond in such sum as it may reasonably direct as indemnity against any claim that may be made against it with respect to the Share certificates alleged to have been lost, stolen or destroyed.

2.13 Taking of Necessary Action; Further Action. Each of Private, Merger Subs and the Members will take all such reasonable lawful action as may be necessary or appropriate in order to effect the Merger in accordance with this Agreement as promptly as practicable. If, at any time after the Effective Times, any such further action is necessary or desirable to carry out the purposes of this Agreement and to vest a Surviving Corporation with full right, title and possession to all the property, rights, privileges, power and franchises of the applicable Member or Merger Sub, the officers and directors of such Member and Merger Sub immediately prior to the Effective Time are fully authorized in the name of their respective corporations or otherwise to take, and will take, all such lawful and necessary action.

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2.14 Reorganization Treatment. For federal income tax purposes, each of the Mergers is intended to constitute a reorganization within the meaning of Section 368(a) of the Code. For the avoidance of doubt, and not withstanding anything herein to the contrary, no Party represents, warrants or guarantees that the Merger and the transactions contemplated by this Agreement will be treated by any relevant regulatory authority as a reorganization within the meaning of Section 368(a) of the Code and the parties intend for this Agreement to constitute a “plan of reorganization” within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.