Exhibit 10.3

                       FIRST AMENDMENT TO CREDIT AGREEMENT

                                  July 30, 2004

PEI Holdings
680 North Lakeshore Drive
Chicago, Illinois 60611

Ladies and Gentlemen:

            Reference is hereby made to that certain Credit Agreement, dated as
of March 11, 2003 (the "Credit Agreement"), among PEI Holdings, Inc., a Delaware
corporation ("Borrower"), the financial institutions from time to time a party
thereto ("Lenders"), and Bank of America, N.A., as Agent for the Lenders
("Agent"). Unless otherwise defined herein, capitalized terms used herein shall
have the meanings provided to such terms in the Credit Agreement.

            Borrower has requested that Required Lenders agree to amend the
Credit Agreement in certain respects and Required Lenders have agreed to such
amendments, on the terms, and subject to the conditions, contained herein.

            Therefore, Borrower and Required Lenders hereby agree as follows:

            1. Amendment. The Credit Agreement is hereby amended by amending and
restating the definition of "Adjusted EBITDA" contained in Section 1.01 of the
Credit Agreement as follows:

            "Adjusted EBITDA" means net income, less income or plus loss from
      discontinued operations and extraordinary items, plus income taxes, plus
      interest expense, plus depreciation, depletion, and amortization
      (including programming amortization), plus restructuring charges, plus
      non-cash expenses or losses or any other non-cash charges, and minus cash
      investments in programming (plus for purposes of calculating Adjusted
      EBITDA for any period ending between, and including, June 30, 2004 and
      March 31, 2005, the following items: (a) the amount paid to Logix
      Development Corporation pursuant to that certain Settlement Agreement
      dated February 18, 2004 not to exceed $8,500,000 and (b) the redemption
      premium incurred in connection with the repayment of certain bonds, not to
      exceed $3,850,000, each solely to the extent deducted in the determination
      of net income and not otherwise added back in the calculation of Adjusted
      EBITDA), all determined for Playboy and its Restricted Subsidiaries on a
      consolidated basis and in accordance with GAAP.

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            2. Scope. Except as amended hereby, the Credit Agreement remains
unchanged and in full force and effect.

            3. Effectiveness. This First Amendment to Credit Agreement shall be
effective on July 30, 2004 when executed by Required Lenders and Agent and
agreed to by Borrower.

            4. Counterparts. This First Amendment to Credit Agreement may be
executed in one or more counterparts, each of which shall constitute an
original, but all of which taken together shall be one and the same instrument.

            5. Governing Law. THIS FIRST AMENDMENT TO CREDIT AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE;
PROVIDED THAT BORROWER, AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.

                                              Very truly yours,

                                              BANK OF AMERICA, N.A., as Agent

                                              By /s/ Paul Folino
                                                --------------------------------
                                              Its Assistant Vice President
                                                  ------------------------------


                                              BANK OF AMERICA, N.A., as a Lender

                                              By /s/ Craig W. McGuire
                                                --------------------------------
                                              Its Vice President
                                                  ------------------------------


                                              LASALLE BANK NATIONAL ASSOCIATION,
                                              as a Lender

                                              By /s/ Kyle Freimuth
                                                --------------------------------
                                              Its Vice President
                                                  ------------------------------

ACKNOWLEDGED AND AGREED TO
THIS 29th DAY OF July, 2004:

PEI HOLDINGS, INC., as Borrower

By  Robert D. Campbell
  ------------------------------------
Its Treasurer
    ----------------------------------


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