Document:

Exhibit 4.1(v)

This instrument prepared by and
after recording return to:

Susan D. Kennedy, Esq.
DAVIS POLK & WARDWELL
450 Lexington Avenue
New York, New York
(212) 450-4470

             SECOND PRIORITY DEED OF TRUST WITH ASSIGNMENT OF RENTS,
                      SECURITY AGREEMENT AND FIXTURE FILING
                        (Los Angeles County, California)

            THIS SECOND PRIORITY DEED OF TRUST WITH ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING ("Deed of Trust"), dated as of March 11,
2003, is made and executed by PLAYBOY ENTERPRISES INTERNATIONAL, INC., a
Delaware corporation with its chief executive office and principal place of
business at 680 North Lake Shore Drive, Chicago, Illinois 60611 ("Trustor"), in
favor of FIDELITY NATIONAL TITLE INSURANCE COMPANY, having an address at 1900
West Loop South, Suite 760, Houston, Texas 77027 ("Trustee"), for the benefit of
BANK ONE, N.A., having an office at 1 Bank One Plaza, Mail Code IL1-0430,
Chicago, Illinois 60670-0430, as trustee pursuant to the Indenture (defined
below) ("Beneficiary").

                                    RECITALS

      I. Pursuant to the terms of a certain Indenture dated March 11, 2003 (said
Indenture, together with all amendments, supplements, modifications and
replacements thereof, being hereinafter referred to as the "Indenture") by and
between PEI HOLDINGS INC. ("Issuer"), the Guarantors party to the Indenture
("Guarantors") and Beneficiary, Issuer will issue its 11% Senior Secured Notes
due 2010 in the aggregate original principal amount of $115,000,000 (said notes,
together with all amendments, supplements, modifications, full or partial
replacements thereof and Additional Notes and Exchange Notes, each as defined in
the Indenture, being hereinafter referred to as the "Notes").

      II. Pursuant to Article 11 of the Indenture (the "Guaranty"), Trustor,
among others, has guaranteed the obligation of the Issuer to fully and
punctually repay the principal of, premium, if any, and interest on and all
other amounts payable under, each Note and to fully and punctually pay all other
amounts payable by the Issuer under the Indenture (such guaranty obligations of
Trustor being hereinafter referred to as the "Obligations"). This Deed of Trust
is being delivered to secure said Obligations. All persons who may have or
acquire an interest in

<PAGE>

the Property (defined herein) shall be deemed to have notice of the terms of the
Notes and the Indenture.

      III. This Deed of Trust is subordinate to a certain Deed of Trust with
Assignment of Rents, Security Agreement and Fixture Filing of even date herewith
granted by Trustor to Trustee for the benefit of Bank of America, N.A. (as
agent), as Beneficiary (said Deed of Trust, together with all other documents
and instruments delivered in connection with the indebtedness secured thereby,
being collectively called the "Senior Loan Documents").

      IV. Bank of America, N.A. and Beneficiary have executed a certain
Intercreditor Agreement of even date herewith (the "Intercreditor Agreement"),
so as to, among other things, set forth the relative priority of their
respective liens.

                                GRANTING CLAUSES

            For the purposes and upon the terms and conditions in this Deed of
Trust and to secure Trustor's Obligations and Trustor's payment of all interest,
fees and other amounts due under, and Trustor's performance and observance of
all covenants and conditions contained in, this Deed of Trust and any and all
renewals, extensions, amendments and replacements of this Deed of Trust and any
such other documents and instruments executed by Trustor in connection therewith
(the Notes, the Indenture, this Deed of Trust, such other documents and
instruments now or hereafter executed and delivered in connection with the
issuance of the Notes and any and all amendments, renewals, extensions and
replacements hereof and thereof, being sometimes referred to collectively as the
"Debt Instruments") (all indebtedness and liabilities secured hereby being
hereinafter sometimes referred to as "Guarantor's Liabilities"):

            (A) Trustor irrevocably grants, conveys and assigns to Trustee, in
trust for the benefit of Beneficiary, with power of sale and right of entry and
possession, a security interest in the following described property subject to
the terms and conditions herein:

            (1) The land located in Los Angeles County, California, legally
      described in attached Exhibit A ("Land");

            (2) All Trustor's right, title and interest in the buildings,
      structures, improvements and fixtures of every kind or nature now or
      hereafter situated on the Land (the "Improvements");

            (3) All Trustor's right, title and interest in any rights or
      appurtenances relating to any of the Land or Improvements, or which
      hereafter shall in any way belong, relate or be appurtenant thereto,
      whether now owned or hereafter acquired (the "Appurtenances");

                                      -2-
<PAGE>

            (4) All Trustor's right, title and interest in proceeds, products,
      replacements, additions, substitutions, renewals and accessions of and to
      the Land, Improvements and Appurtenances;

            (5) Any and all after-acquired right, title or interest of Trustor
      in and to any of the property described in the preceding subsections (1)
      through (4); and

            (6) The proceeds from the sale, transfer, pledge or other
      disposition of any or all of the property described in the preceding
      subsections (1) through (5);

            (B) Trustor hereby grants and assigns to Beneficiary a security
interest in all of Trustor's right, title and interest in the following
described personal property:

            (1) Except that which is owned by any tenant of the Land and/or
      Improvements, all machinery, appliances, equipment, furniture and all
      other personal property of every kind or nature located in or on, or
      attached to, or used or intended to be used in connection with, or with
      the operation of, the Land and the Improvements now or hereafter located
      or to be located on the Land, and all extensions, additions, improvements,
      substitutions and replacements to any of the foregoing;

            (2) (i) All judgments, insurance proceeds, awards of damages and
            settlements which may result from any damage to all or any portion
            of the Land, Improvements or Appurtenances or any part thereof or to
            any rights appurtenant thereto;

                  (ii) All compensation, awards, damages, claims, rights of
            action and proceeds of or on account of (a) any damage or taking,
            pursuant to the power of eminent domain, of the Land, Improvements
            or Appurtenances or any part thereof, (b) damage to all or any
            portion of the Land, Improvements or Appurtenances by reason of the
            taking, pursuant to the power of eminent domain, of all or any
            portion of the Land, Improvements or Appurtenances or of other
            property, or (c) the alteration of the grade of any street or
            highway on or about the Land, Improvements or Appurtenances or any
            part thereof; and, except as otherwise provided herein, Beneficiary
            is hereby authorized to collect and receive said awards and proceeds
            and to give proper receipts and acquittances therefor and, except as
            otherwise provided herein, to apply the same toward the payment of
            the indebtedness and other sums secured hereby; and

                  (iii) All proceeds, products, replacements, additions,
            substitutions, renewals and accessions of and to any of the
            foregoing;

                                      -3-
<PAGE>

            (3) Any and all after-acquired right, title or interest of Trustor
      in and to any of the property described in the preceding subsections (1)
      and (2); and

            (4) The proceeds from the sale, transfer, pledge or other
      disposition of any or all of the property described in the preceding
      subsections (1) through (3); and

            (C) Trustor hereby irrevocably assigns to Beneficiary all of
Trustor's right, title and interest (if any) in, to and under:

            (1) All rents, issues, profits, income and other benefits now or
      hereafter arising from or in respect of the Land, Improvements or
      Appurtenances (the "Rents"); it being intended that this Granting Clause
      shall, except to the extent otherwise required by the Senior Loan
      Documents, constitute an absolute and present assignment of the Rents,
      subject, however, to the license conferred by Beneficiary upon Trustor to
      collect and retain the Rents as provided in Section 1.11 hereof;

            (2) Any and all subleases, licenses and other occupancy agreements
      now or hereafter affecting the Land, Improvements or Appurtenances (the
      "Leases"); subject, however, to the license conferred by Beneficiary upon
      Trustor to collect and retain the Rents provided in Section 1.11 hereof;

            (3) Any and all after-acquired right, title or interest of Trustor
      in and to any of the property described in the preceding subsections (1)
      and (2); and

            (4) The proceeds from the sale, transfer, pledge or other
      disposition of any or all of the property described in the preceding
      subsections (1) through (3).

            All of the Property described in the Granting Clauses is hereinafter
collectively referred to as the "Property."

            Trustor hereby covenants, warrants and represents that as of the
date hereof and at all times thereafter during the term hereof, Trustor is and
shall be the owner of the Property.

                                      -4-
<PAGE>

                                   ARTICLE ONE
                              COVENANTS OF TRUSTOR

            Trustor covenants and agrees with Beneficiary as follows:

            1.1. Performance under Guaranty and Deed of Trust. Trustor shall
perform, observe and comply with or cause to be performed, observed and complied
with in a complete and timely manner all provisions hereof and of the Guaranty.

            1.2. General Covenants and Representations. Trustor covenants,
represents and warrants that as of the date hereof and at all times thereafter
during the term hereof: (a) Trustor is seized of an indefeasible estate in fee
simple in that portion of the Property which is real property, and has good and
absolute title to it and the balance of the Property free and clear of all
liens, security interests, charges and encumbrances whatsoever, except for (i)
the Agreement of Lease dated June 1, 1979 between Hugh M. Hefner and Playboy
Enterprises, Inc. (Trustor's predecessor by merger) (said Agreement of Lease, as
amended from time to time, being hereinafter referred to as the "Hefner Lease");
(ii) any deed of trust securing the loans made pursuant to the Senior Loan
Documents (such deed of trust being hereinafter referred to as the "Senior Deed
of Trust"); (iii) any option agreement that may be entered into between Trustor
and Hugh M. Hefner (or any entity controlled by Hugh M. Hefner) granting Hugh M.
Hefner (or any entity controlled by Hugh M. Hefner) an option to acquire the
Property or any portion thereof (the "Option"); (iv) any lien securing real
estate taxes that are not at the time delinquent or are thereafter payable
without penalty or that are being contested in good faith by appropriate
proceedings diligently conducted and for which adequate reserves have been
provided in accordance with GAAP (as such term is defined in the Indenture)
(such contest being a "Pemitted Contest"); and (v) those encumbrances set forth
on Schedule B of the loan policy of title insurance accepted by Beneficiary
insuring the lien of this Deed of Trust (such liens, security interests, charges
and encumbrances set forth in clauses (i), (ii), (iii), (iv) and (v) being
hereinafter collectively referred to as the "Permitted Encumbrances"); and (b)
until the Notes have been paid in full and all obligations of Beneficiary and
Issuer under the Indenture have been terminated, Trustor will maintain and
preserve the lien of this Deed of Trust as a second lien on the Property,
subject only to the Permitted Encumbrances, except that this Deed of Trust shall
be prior to the Hefner Lease and the Option.

            1.3. Compliance with Laws and Other Restrictions. Trustor covenants
and represents that the Land and the Improvements and the use thereof presently
comply with, and will continue to comply with, all applicable restrictive
covenants, zoning and subdivision ordinances and building codes, licenses,
health and environmental laws and regulations and all other applicable laws,
ordinances, rules and regulations, except for such non-compliance as could not
reasonably be expected to have a material adverse effect on the use, value or
operation of the Property or the lien of this Deed of Trust.

                                      -5-
<PAGE>

            1.4. Taxes and Other Charges.

            1.4.1. Taxes and Assessments. Trustor shall pay promptly when due
all taxes, assessments, rates, dues, charges, fees, levies, fines, impositions,
liabilities, obligations, liens and encumbrances of every kind and nature
whatsoever now or hereafter imposed, levied or assessed upon or against the
Property or any part thereof, or upon or against this Deed of Trust or
Guarantor's Liabilities; provided, however, that Trustor may in good faith
contest the validity, applicability or amount of any tax, assessment or other
charge pursuant to a Permitted Contest.

            1.4.2. Intentionally deleted.

            1.5. Mechanic's and Other Liens. Trustor shall not permit or suffer
any mechanic's, laborer's, materialman's, statutory or other lien or encumbrance
(other than as permitted in Section 1.4.1 hereof) to be created upon or against
the Property; provided, however, that Trustor may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted lien
pursuant to a Permitted Contest.

            1.6. Insurance and Condemnation.

            1.6.1. Insurance Policies. Trustor shall, at its sole expense,
obtain for, deliver to, assign to and maintain for the benefit of Beneficiary,
until the Notes are paid in full, such policies of insurance as are required by
the certain Security Agreement of even date herewith between Issuer and
Beneficiary (the "Security Agreement").

            1.6.2. Adjustment of Loss; Application of Proceeds. If an Event of
Default shall have occurred, subject to the requirements of the Senior Loan
Documents, Beneficiary shall be authorized to adjust or compromise any loss
under any insurance policies covering the Property, collect and receive the
proceeds from any such policy or policies and apply such proceeds to the
Obligations secured hereby. Trustor hereby irrevocably appoints Beneficiary as
its attorney-in-fact for the purposes set forth in the preceding sentence.
Notwithstanding the foregoing, subject to the requirements of the Senior Loan
Documents, if an Event of Default shall not have occurred, Trustor shall apply
the proceeds of insurance to the repair or restoration of the Property.

            1.6.3. Condemnation Awards. Provided no Default or Event of Default
shall have occurred, except as otherwise required by the Senior Loan Documents,
Trustor shall be entitled to all compensation, awards, damages, claims, rights
of action and proceeds of, or on account of, (i) any damage or taking, pursuant
to the power of eminent domain, of the Property or any part thereof, (ii) damage
to the Property by reason of the taking, pursuant to the power of eminent
domain, of other property, or (iii) the alteration of the grade of any street or
highway on or about the Property. Notwithstanding any other provision of this
Section, if a Default or an Even of Default shall be existing at the time of
such condemnation or if a Default or an Event of Default occurs thereafter,
Beneficiary shall have the right to apply all such awards or compensation to the
Obligations secured hereby. Subject to the

                                      -6-
<PAGE>

requirements of the Senior Loan Documents, Beneficiary is hereby authorized, at
its option, to commence, appear in and prosecute in its own or Trustor's name
any action or proceeding relating to any such compensation, awards, damages,
claims, rights of action and proceeds and to settle or compromise any claim in
connection therewith. Trustor hereby irrevocably appoints Beneficiary as its
attorney-in-fact for the purposes set forth in the preceding sentence.

            1.6.4. Obligation to Repair. If all or any part of the Property
shall be damaged or destroyed by fire or other casualty or shall be damaged or
taken through the exercise of the power of eminent domain or other cause
described in Section 1.6.3, Trustor shall promptly and with all due diligence
restore and repair the Property to the extent that the proceeds, award or other
compensation are made available to Trustor or proceeds of the Notes are made
available to Trustor for such purpose and are sufficient to pay the cost of such
restoration or repair.

            1.7. Beneficiary May Pay; Default Rate. Upon Trustor's failure to
pay any amount required to be paid by Trustor under any provision of this Deed
of Trust, Beneficiary may pay the same. Trustor shall pay to Beneficiary on
demand the amount so paid by Beneficiary together with interest at a rate equal
to the highest rate payable under the Indenture after the occurrence of an
"Event of Default" as such term is defined in the Indenture (the "Default Rate")
and the amount so paid by Beneficiary, together with interest, shall be added to
Guarantor's Liabilities.

            1.8. Care of the Property. Trustor shall preserve and maintain the
Property in good operating condition.

            1.9. Transfer or Encumbrance of the Property. Trustor shall not
permit or suffer to occur any disposition of the Property, except as permitted
by the Indenture.

            1.10. Further Assurances. At any time and from time to time, upon
Beneficiary's request, Trustor shall make, execute and deliver, or cause to be
made, executed and delivered, to Beneficiary, and where appropriate shall cause
to be recorded, registered or filed, and from time to time thereafter to be
re-recorded, re-registered and refiled at such time and in such offices and
places as shall be deemed desirable by Beneficiary, any and all such further
mortgages or deeds of trust, security agreements, financing statements,
instruments of further assurance, certificates and other documents as
Beneficiary may consider reasonably necessary in order to effectuate or perfect,
or to continue and preserve the obligations under, this Deed of Trust.

            1.11. Assignment of Rents. The assignment of rents, income and other
benefits contained in Section (C) of the Granting Clauses of this Deed of Trust
shall be fully operative without any further action on the part of either party,
and, specifically, Beneficiary shall be entitled, at its option, upon the
occurrence of an Event of Default hereunder, to all rents, income and other
benefits from the Property, whether or not Beneficiary takes possession of such
property. Notwithstanding the foregoing, so long as no Event of Default

                                      -7-
<PAGE>

has occurred, Trustor shall have the right and authority to continue to collect
the rents, income and other benefits from the Property as they become due and
payable but not more than thirty (30) days prior to the due date thereof.

            1.12. After-Acquired Property. To the extent permitted by, and
subject to, applicable law, the lien of this Deed of Trust shall automatically
attach, without further act, to all property hereafter acquired by Trustor
located in or on, or attached to, or used or intended to be used in connection
with, or with the operation of, the Property or any part thereof.

            1.13. Leases Affecting Property. Trustor shall comply with and
perform in a complete and timely manner all of its obligations as landlord under
all leases affecting the Property or any part thereof. The assignment contained
in Section (C) of the Granting Clauses shall not be deemed to impose upon
Beneficiary any of the obligations or duties of the landlord or Trustor provided
in any lease.

            1.14. Execution of Leases. Except as may be permitted by the
Indenture, Trustor shall not permit any leases to be made of the Property, or to
be modified, terminated, extended or renewed, without the prior written consent
of Beneficiary.

            1.15. Fixture Filing. Trustor and Beneficiary agree that this Deed
of Trust shall be effective from the date of its recording as a fixture filing
with respect to all goods and other personal property constituting part of the
Property which are or are to become fixtures related to the real estate
described herein. For this purpose, the following information is set forth:

            (a) Name and Address of Debtor:

                  Playboy Enterprises International, Inc.
                  680 North Lake Shore Drive
                  Chicago, Illinois  60611

            (b) Name and Address of Secured Party:

                  Fidelity National Title Insurance Company
                  1900 West Loop South, Suite 760
                  Houston, Texas  77027

            (c) This document covers goods and personal property which are or
are to become fixtures.

            (d) The name of the record owner is "Playboy Enterprises
International, Inc."

The real estate to which such fixtures are or are to be attached is that
described in Exhibit A attached hereto, the record owner of which is Trustor.

                                      -8-
<PAGE>

            1.16. Senior Loan Documents. (a) The Trustor represents and warrants
that (i) Trustor has furnished or caused to be furnished to Beneficiary true and
correct copies of the Senior Loan Documents; and (ii) none of the Senior Loan
Documents have been modified or, to the knowledge of Trustor, assigned by the
holder thereof.

            (b) The Trustor hereby covenants that (i) the Trustor shall promptly
pay when due and payable the principal, interest and other charges mentioned in
and made payable by the Senior Loan Documents; (ii) the Trustor shall promptly
perform and observe all of the terms, covenants and conditions required to be
performed and observed by the Trustor under the Senior Loan Documents within the
grace and cure periods provided therein; (iii) the Trustor shall notify the
Beneficiary (A) promptly prior to the expiration of any applicable grace and
cure period for which provision is made in the Senior Loan Documents of any
monetary default, and (B) promptly after the expiration of any applicable grace
and cure period for which provision is made in the Senior Loan Documents of any
non-monetary default by the Trustor in the performance or observance of any of
the terms, covenants or conditions on the part of the Trustor to be performed or
observed under the Senior Loan Documents; (iv) the Trustor shall shall (A)
promptly notify the Beneficiary of the receipt by the Trustor of any notice from
the holder of the Senior Loan Documents asserting or claiming a default by the
Trustor in the performance or observance of any of the terms, covenants or
conditions on the part of the Trustor to be performed or observed under the
Senior Loan Documents, and (B) promptly cause a copy of each such notice to be
delivered to the Beneficiary; and (v) the Trustor shall not, without the consent
of the Beneficiary, modify or permit any modification of the Senior Loan
Documents.

                                   ARTICLE TWO
                                    DEFAULTS

            2.1. Event of Default. The term "Event of Default," wherever used in
this Deed of Trust, shall mean any one or more of the following events:

            (a) The failure by Trustor to keep, perform, or observe any
covenant, condition or agreement on the part of Trustor in this Deed of Trust,
which failure is not cured within any applicable grace or cure period provided
in the Indenture.

            (b) The occurrence of an "Event of Default" under and as defined in
the Indenture or any of the other Debt Instruments.

                                      -9-
<PAGE>

                                  ARTICLE THREE
                                    REMEDIES

                  3.1. Acceleration of Maturity. If an Event of Default shall
have occurred, Beneficiary may, in accordance with the Indenture, declare the
Notes to be immediately due and payable, without further demand or notice.

                  3.2. Beneficiary's Power of Enforcement. If an Event of
Default shall have occurred and Beneficiary shall have declared all the Notes
immediately due and payable, Beneficiary may, either with or without entry or
taking possession as provided in this Deed of Trust or otherwise, and without
prejudice to the right of Beneficiary thereafter to bring an action of
foreclosure or any other action for any default existing at the time such
earlier action was commenced or arising thereafter, proceed by any appropriate
action or proceeding:

                  (a) To enforce the obligations of Trustor under the Indenture.

                  (b) To commence and maintain an action or actions in any court
of competent jurisdiction to foreclose this instrument as a mortgage or to
obtain specific enforcement of the covenants of Trustor hereunder, and Trustor
agrees that such covenants shall be specifically enforceable by injunction or
any other appropriate equitable remedy and that, for the purposes of any suit
brought under this subsection, Trustor waives the defense of laches and any
applicable statute of limitations.

                  (c) To apply to a court of competent jurisdiction for and
obtain appointment of a receiver of the Property as a matter of strict right and
without regard to the adequacy of the security for the repayment of Guarantor's
Liabilities, the existence of a declaration that the Notes are immediately due
and payable, or the filing of a notice of default, and Trustor hereby consents
to such appointment.

                  (d) To execute a written notice of such Event of Default and
of Beneficiary's election to cause the Property to be sold to satisfy
Guarantor's Liabilities. As a condition precedent to any such sale, Trustee
shall give and record such notice of default as the law then requires. When the
minimum period of time required by law after the recordation of such notice of
default has elapsed, and notice of sale having been given as then required by
law, shall sell the Property at the time and place of sale fixed by it in the
notice of sale, at one or several sales, either as a whole or in separate
parcels and in such manner and order, all as Beneficiary in its sole discretion
may determine, at public auction and to the highest bidder for cash, in lawful
money of the United States, payable at the time of sale. Neither Trustor nor any
other person or entity other than Beneficiary shall have the right to direct the
order in which the Property is sold. Subject to requirements and limits imposed
by law, Trustee may from time to time postpone the sale of all or any portion of
the Property by public announcement at such time and place of sale, Trustee
shall deliver to the purchaser at such sale a deed conveying the Property or
portion thereof so sold,

                                      -10-
<PAGE>

but without any covenant or warranty, express or implied. The recitals in the
deed of any matters or facts shall be conclusive proof of the truthfulness
thereof. Any person, including Trustee, Trustor or Beneficiary may purchase at
the sale.

            (e) To resort to and realize upon the security hereunder and any
other security now or later held by Beneficiary concurrently or successively and
in one or several consolidated or independent judicial actions or lawfully taken
non-judicial proceedings, or both, and to apply the proceeds received upon
Guarantor's Liabilities all in such order and manner as Trustee and Beneficiary,
or either of them, determine in their sole discretion.

At any sale of the Property held pursuant to subsection (b) or subsection (d)
above, Beneficiary may bid, as the equivalent of cash, the amount of all or any
portion of Guarantor's Liabilities, including, without limitation, reasonable
attorneys' fees. Beneficiary may take action either by such proceedings or by
the exercise of its powers with respect to entry or taking possession, or both,
as Beneficiary may determine.

            3.3. Trustee's Sale. Should Beneficiary elect to foreclose by
exercise of the power of sale contained herein, Beneficiary shall notify Trustee
and shall, if required, deposit with Trustee the Notes, the original or a
certified copy of this Deed of Trust, and such other documents, receipts and
evidences of expenditures made and secured hereby as Trustee may require.

            (a) Upon receipt of such notice from Beneficiary, Trustee shall
cause to be recorded and delivered to Trustor such notice of default as may then
be required by law and by this Deed of Trust. Trustee shall, without demand on
Trustor, after lapse of such time as may then be required by law and after
recordation of such notice of default and after notice of sale has been given as
required by law, sell the Property at the time and place of sale fixed by it in
said notice of sale, either as a whole or in separate lots or parcels or items
as Trustee shall deem expedient, and in such order as it may determine, at
public auction to the highest bidder for cash in lawful money of the United
State payable at the time of sale. Trustee shall deliver to the purchaser or
purchasers at such sale its good and sufficient deed or deeds conveying the
property so sold, but without any covenant or warranty, express or implied. The
recitals in such deed of any matters or facts shall be conclusive proof of the
truthfulness thereof. Any person, including, without limitation, Trustor,
Trustee or Beneficiary, may purchase at such sale, and Trustor hereby covenants
to warrant and defend the title of such purchaser or purchasers.

            (b) Trustee may postpone the sale of all or any portion of the
Property from time to time in accordance with the laws of the State in which the
Land is located.

                                      -11-
<PAGE>

            (c) To the fullest extent allowed by law, Trustor hereby expressly
waives any right which it may have to direct the order in which any of the
Property shall be sold in the event of any sale or sales pursuant to this Deed
of Trust.

            3.4. Application of Foreclosure Sale Proceeds. After deducting all
costs, fees and expenses of Trustee, and of this trust, including, without
limitation, cost of evidence of title and reasonable attorneys' fees in
connection with the sale, Trustee shall apply all proceeds of any foreclosure
sale: (i) to payment of all sums reasonably expended by Beneficiary; (ii) to
payment of all other Guarantor's Liabilities; and (iii) the remainder, if any,
to the person or persons legally entitled thereto.

            3.5. Application of Other Sums. All sums received by Beneficiary
under this Deed of Trust other than the sums referred to in Section 3.3, less
all costs and expenses reasonably incurred by Beneficiary or any receiver under
this Deed of Trust, including, without limitation, attorneys' fees, shall be
applied in payment of Guarantor's Liabilities, in such order as Beneficiary
shall elect and, in the absence of such election, first to all costs and
expenses incurred by Beneficiary, Trustee or any receiver under this Deed of
Trust, including the expenses of sale, then to expenses (including attorneys'
fees) of the foreclosure proceeding, then to other liabilities; provided,
however, Beneficiary shall have no liability for funds not actually received by
Beneficiary. If any sums received by Beneficiary under this Deed of Trust other
than the sums referred to in Section 3.3 shall be remaining after Guarantor's
Liabilities are paid in full, such sums remaining shall be paid to Trustor.

            3.6. No Cure or Waiver. Neither Beneficiary's, nor Trustee's, nor
any receiver's entry upon and taking possession of all or any part of the
Property, nor any collection of rents, issues, profits, insurance proceeds,
condemnation proceeds or damages, other security or proceeds of other security,
or other sums, nor the application of any collected sum to any of Guarantor's
Liabilities, nor the exercise or failure to exercise of any other right or
remedy by Beneficiary or Trustee or any receiver shall cure or waive any breach,
Event of Default or notice of default under this Deed of Trust, or nullify the
effect of any notice of default or sale (unless all of Guarantor's Liabilities
then due have been paid and performed and Trustor has cured all other defaults),
or impair the status of the security, or prejudice Beneficiary or Trustee in the
exercise of any right or remedy, or be construed as an affirmation by
Beneficiary of any tenancy, lease or option or a subordination of the lien of
this Deed of Trust.

            3.7. Payment of Costs, Expenses and Attorneys' Fees. Trustor agrees
to pay to Beneficiary immediately all reasonable costs and expenses incurred by
Trustee and Beneficiary in connection with the exercise of rights under this
Article III (including, without limitation, court costs and attorneys' fees,
whether incurred in litigation or not). In addition, Trustor shall pay to
Trustee all Trustee's fees hereunder and shall reimburse Trustee for all
expenses incurred in the administration of this trust, including, without
limitation, any attorneys' fees.

                                      -12-
<PAGE>

            3.8. Power to File Notice and Cure Defaults. Trustor hereby
irrevocably appoints Beneficiary and its successors and assigns, as its
attorney-in-fact, which agency is coupled with an interest (a) to execute and/or
record any notices of completion, cessation of labor, or any other notices that
Beneficiary deems appropriate to protect Beneficiary's interest, (b) upon the
issuance of a deed pursuant to the foreclosure of this Deed of Trust or the
delivery of a deed in lieu of foreclosure, to execute all instruments of
assignment or further assurance with respect to the Leases and Rents in favor of
the grantee of any such deed, as Beneficiary may deem reasonably necessary or
desirable for such purpose, (c) to prepare, execute and file or record financing
statements, continuation statements, applications for registration and like
papers necessary to create, perfect or preserve Beneficiary's security interests
and rights, and (d) upon the occurrence of an event, act or omission which, with
notice or passage of time or both, would constitute an Event of Default,
Beneficiary may perform any obligation of Trustor hereunder; provided, however,
that: (i) Beneficiary as such attorney-in-fact shall only be accountable for
such funds as are actually received by Beneficiary; and (ii) Beneficiary shall
not be liable to Trustee or any other person or entity for any failure to act
under this Section.

            3.9. Beneficiary's Right to Enter and Take Possession, Operate and
Apply Income.

            (a) If an Event of Default shall have occurred, Trustor, upon demand
of Beneficiary, shall forthwith surrender to Beneficiary the actual possession
of the Property, and to the extent permitted by law, Beneficiary itself, or by
such officers or Beneficiarys as it may appoint, is hereby expressly authorized,
without becoming a mortgagee in possession, to enter and take possession of all
or any portion of the Property, and to manage, operate, protect and exercise any
other rights of an occupant of the Property, and Beneficiary may exclude Trustor
and the Beneficiarys and employees of Trustor wholly therefrom.

            (b) If an Event of Default shall have occurred and if Trustor shall
for any reason fail to surrender or deliver the Property or any part thereof
after Beneficiary's demand, Beneficiary may obtain a judgment or decree
conferring on Beneficiary the right to immediate possession or requiring Trustor
to deliver immediate possession of all or part of the Property to Beneficiary,
to the entry of which judgment or decree Trustor hereby specifically consents.
Trustor shall pay to Beneficiary, upon demand, all costs and expenses of
obtaining such judgment or decree and reasonable compensation to Beneficiary,
its attorneys and Beneficiarys, and all such costs, expenses and compensation
shall, until paid, be secured by the lien of this Deed of Trust.

            3.10. Waiver of Marshalling Rights. Trustor, for itself and for all
parties claiming through or under Trustor, and for all parties who may acquire a
lien on or interest in the Property, hereby waives all rights to have the
Property and/or any other property which is now or later may be security for
Guarantor's Liabilities (the "Other Property") marshaled

                                      -13-
<PAGE>

upon any foreclosure of this Deed of Trust or on a foreclosure of any other
security for any of Guarantor's Liabilities. Beneficiary shall have the right to
sell, and any court in which foreclosure proceedings may be brought shall have
the right to order a sale of, the Property and any or all of the Other Property
as a whole or in separate parcels, in any order that Beneficiary may designate.

            3.11. Remedies Cumulative. No right, power or remedy conferred upon
or reserved to Beneficiary by the Indenture, the Notes, this Deed of Trust or
any other Debt Instrument or any instrument evidencing or securing Guarantor's
Liabilities is exclusive of any other right, power or remedy, but each and every
such right, power and remedy shall be cumulative and concurrent and shall be in
addition to any other right, power and remedy given hereunder or under the the
Notes, the Indenture or any other Debt Instrument or any instrument evidencing
or securing Guarantor's Liabilities, or now or hereafter existing at law, in
equity or by statute.

                                  ARTICLE FOUR
                            MISCELLANEOUS PROVISIONS

            4.1. Acceptance of Trust; Powers and Duties of Trustee. Trustee
accepts this trust when this Deed of Trust is recorded. From time to time upon
reasonable written request of Beneficiary and presentation of this Deed of Trust
or a certified copy thereof for endorsement, and without affecting the personal
liability of any person for payment of any indebtedness or performance of any
obligations secured hereby, Trustee may, without liability thereof and without
notice: (i) reconvey all or any part of the Property; (ii) consent to the making
of any map or plat thereof; and (iii) join in any grant of easement thereon, any
declaration of covenants and restrictions, or any extension agreement or any
agreement subordinating the lien or charge of this Deed of Trust. Except as may
be required by applicable law, Trustee or Beneficiary may from time to time
apply to any court of competent jurisdiction for aid and direction in the
execution of the trust hereunder and the enforcement of rights and remedies
available hereunder, and may obtain orders or decrees directing or confirming or
approving acts in the execution of said trust and the enforcement of said
remedies. Trustee has no obligation to notify any party of any pending sale or
any action or proceeding, including, without limitation, actions in which
Trustor, Beneficiary or Trustee shall be a party unless held or commenced and
maintained by Trustee under this Deed of Trust. Trustee shall not be obligated
to perform any act required of it hereunder unless the performance of the act is
requested in writing and Trustee is reasonably indemnified and held harmless
against loss, cost, liability or expense.

            4.2. Substitution of Trustees. From time to time, by a writing,
signed and acknowledged by Beneficiary and recorded in the Office of the
Recorder of the county in which the Property is situated, Beneficiary may
appoint another trustee to act in the place and stead of Trustee or any
successor. Such writing shall set forth any information required by law. The
recordation of such instrument of substitution shall discharge Trustee herein
named

                                      -14-
<PAGE>

and shall appoint the new trustee as the trustee hereunder with the same effect
as if originally named Trustee herein. A writing recorded pursuant to the
provisions of this Section 4.2 shall be conclusive proof of the proper
substitution of such new Trustee.

            4.3. Heirs, Successors and Assigns Included in Parties. Whenever
Trustor or Beneficiary are named or referred to herein, heirs and successors and
assigns of such person or entity shall be included, and all covenants and
agreements contained in this Deed of Trust shall bind the successors and assigns
of Trustor, including any subsequent owner of all or any part of the Property
and inure to the benefit of the successors and assigns of Beneficiary.

            4.4. Notices. All notices, requests, reports, demands or other
instruments required or contemplated to be given or furnished under this Deed of
Trust to Trustor or Beneficiary shall be directed, in the manner set forth in
the Indenture, to Trustor, at the address provided on the first page of this
Deed of Trust, or Beneficiary, at the address for notice provided in the
Indenture, as the case may be. Notices sent by or to Trustee shall be sent by
U.S. Mail, postage prepaid, certified, return receipt requested.

            4.5. Headings. The headings of the articles, sections, paragraphs
and subdivisions of this Deed of Trust are for convenience only, are not to be
considered a part hereof, and shall not limit, expand or otherwise affect any of
the terms hereof.

            4.6. Invalid Provisions. In the event that any of the covenants,
agreements, terms or provisions contained in this Deed of Trust shall be
invalid, illegal or unenforceable in any respect, the validity of the remaining
covenants, agreements, terms or provisions contained herein (or the application
of the covenant, agreement, term held to be invalid, illegal or unenforceable,
to persons or circumstances other than those in respect of which it is invalid,
illegal or unenforceable) shall be in no way affected, prejudiced or disturbed
thereby.

            4.7. Changes. Neither this Deed of Trust nor any term hereof may be
released, changed, waived, discharged or terminated orally, or by any action or
inaction, but only by an instrument in writing signed by the party against which
enforcement of the release, change, waiver, discharge or termination is sought.

            4.8. Governing Law. This Deed of Trust shall be construed,
interpreted, enforced and governed by and in accordance with the laws of the
State of Illinois; except that the creation, perfection, priority and
enforcement of the lien and security interests created hereby shall be governed,
construed and enforced in accordance with the internal laws of the State of
California, without regard to conflicts of law principles.

            4.9. Limitation of Interest. Any provisions of the Notes regarding
the payment of lawful interest are hereby incorporated herein by reference.

            4.10. Intentionally Deleted

                                      -15-
<PAGE>

            4.11. Last Dollar. Unless earlier released or reconveyed in
accordance with the provisions of the Indenture, the lien of this Deed of Trust
shall remain in effect until the last dollar of the Notes are paid in full and
all obligations of Beneficiary and Issuer under the Indenture have been
terminated.

            4.12. Reconveyance. This Deed of Trust shall be released upon the
terms and conditions set forth in the Indenture (including a disposition of the
Property permitted under the terms of the Indenture) and, upon the satisfaction
of such terms and conditions and surrender to Trustee for cancellation of this
Deed of Trust or a certified copy thereof, Trustee shall reconvey, without
warranty, the Property or that portion thereof then held hereunder. To the
extent permitted by law, the reconveyance may describe the grantee as "the
person or persons legally entitled thereto" and the recitals of any matters or
facts in any reconveyance executed hereunder shall be conclusive proof of the
truthfulness thereof. Neither Beneficiary nor Trustee shall have any duty to
determine the rights of persons claiming to be rightful grantees of any
reconveyance. When the Property has been fully reconveyed, the last of such
reconveyance shall operate as a reassignment of all future rents, issues and
profits of the Property to the person or persons legally entitled thereto.

            4.13. Time of the Essence. Time is of the essence with respect to
this Deed of Trust and all the provisions hereof.

            4.14. Indenture. The Notes are governed by terms and provisions set
forth in the Indenture and in the event of any conflict between the terms of
this Deed of Trust and the terms of the Indenture, the terms of the Indenture
shall control.

            4.15. Intentionally Deleted

            4.16. Conditions to Exercise of Rights. Trustor hereby waives any
right it may now or hereafter have to require Beneficiary, as a condition to the
exercise of any remedy or other right against Trustor hereunder or under any
other document executed by Trustor in connection with Guarantor's Liabilities:
(a) to proceed against Trustor or any other person, or against any other
collateral assigned to Beneficiary by Trustor or any other person; (b) to pursue
any other right or remedy in Beneficiary's power; (c) to give notice of the
time, place or terms of any public or private sale of real or personal property
collateral assigned to Beneficiary by Trustor or any other person (other than
Trustor), or otherwise to comply with Section 9-613(5) of the Uniform Commercial
Code, as adopted in the State of California (the "UCC"), with respect to any
such personal property collateral; or (d) to make or give (except as otherwise
expressly provided in the Debt Instruments) any presentment, demand, protest,
notice of dishonor, notice of protest or other demand or notice of any kind in
connection with any of Guarantor's Liabilities or any collateral (other than the
Property) for any of Guarantor's Liabilities.

            4.17. Request for Notice. Trustor requests that a copy of any Notice
of Default and Notice of Sale that may be required by law be mailed to Trustor
at its address set forth above.

                                      -16-
<PAGE>

                                  ARTICLE FIVE
                                LOCAL PROVISIONS

            5.1. Should the Beneficiary elect to sell any portion of the
Property which is real property or which is personal property or fixtures that
Beneficiary has elected under Section 9604(a)(1)(B) of the UCC to sell together
with real property in accordance with the laws governing a sale of real
property, the Beneficiary or the Trustee shall give such notice of default and
election to sell as may then be required by law. Thereafter, upon the expiration
of such time and the giving of such notice of sale as may then be required by
law, and without the necessity of any demand on the Trustor, the Trustee, at the
time and place specified in the notice of sale, shall sell said real property or
part thereof at public auction to the highest bidder for cash in lawful money of
the United States. The Trustee may, and upon request of the Beneficiary shall,
from time to time, postpone any sale hereunder by public announcement thereof at
the time and place noticed therefor.

            5.2. If the Property consists of several lots, parcels or items of
Property, the Beneficiary may: (i) designate the order in which such lots,
parcels or items shall be offered for sale or sold, or (ii) elect to sell such
lots, parcels or items through a single sale, or through two or more successive
sales, or in any other manner the Beneficiary deems in its best interest. Should
the Beneficiary desire that more than one sale or other disposition of the
Property be conducted, the Beneficiary may, at its option, cause the same to be
conducted simultaneously, or successively, on the same day, or at such different
days or times and in such order as the Beneficiary may deem to be in its best
interests, and no such sale shall terminate or otherwise affect the lien of this
Deed of Trust on any part of the Property not sold until all indebtedness
secured hereby has been fully paid. In the event the Beneficiary elects to
dispose of the Property through more than one sale, the Trustor agrees to pay
the costs and expenses of each such sale and of any judicial proceedings wherein
the same may be made, including reasonable compensation to the Trustee and the
Beneficiary, their agents and counsel, and to pay all expenses, liabilities and
advances made or incurred by the Trustee in connection with such sale or sales,
together with interest on all such advances made by the Trustee at the lower of
the Default Rate and the maximum rate permitted by law to be charged by the
Trustee.

            5.3. Waivers

            5.3.1. The Trustor, in addition to, and without limitation of any
other waivers contained in this Deed of Trust, (a) acknowledges that Section
2856 of the California Civil Code authorizes and validates waivers of a
guarantor's rights of subrogation and reimbursement and certain other rights and
defenses available to Beneficiary under California law; and (b) unconditionally
waives any defense to the enforcement of this Deed of Trust, including any right
of subrogation, reimbursement, exoneration, contribution or indemnity, or any
right to enforce any remedy which the Beneficiary now has or may hereafter have
against the Issuer or any benefit of, or any right to participate in, any
security now or hereafter held by the Beneficiary.

                                      -17-
<PAGE>

            5.3.2. Without limitation on the generality of the other waivers
contained in this Deed of Trust, the Trustor hereby waives all rights and
defenses arising out of an election of remedies by the creditor, even though
that election of remedies, such as a nonjudicial foreclosure with respect to
security for a guaranteed obligation, has destroyed the guarantor's rights of
subrogation and reimbursement against the principal by the operation of Section
580d of the Code of Civil Procedure or otherwise. In addition, the Trustor
waives all rights and defenses that the Trustor may have because the debtor's
debt is secured by real property. This means, among other things:

            (a) The creditor may collect from the guarantor without first
foreclosing on any real or personal property collateral pledged by the debtor.

            (b) If the creditor forecloses on any real property collateral
pledged by the debtor: (x) the amount of the debt may be reduced only by the
price for which the collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price; and (y) the creditor may collect
from the guarantor even if the creditor, by foreclosing on the real property
collateral, has destroyed any right the guarantor may have to collect from the
debtor. This is an unconditional and irrevocable waiver of any rights and
defenses the guarantor may have because the debtor's debt is secured by real
property. These rights and defenses include, but are not limited to, any rights
or defenses based upon Section 580a, 580b, 580d or 726 of the Code of Civil
Procedure.

            5.3.3. These waivers and acknowledgments constitute an unconditional
and irrevocable waiver of any rights and defenses Trustor may have because
Issuer's debt is secured by real property. These rights and defenses include,
but are not limited to, any rights or defenses based upon Sections 580a, 580b,
580d, or 726 of the California Code of Civil Procedure.

            5.4. The Trustor acknowledges that this Deed of Trust is one of a
number of deeds of trust and other security documents ("Other Security
Instruments") that secure the guarantee of Issuer's obligations under the Notes
and the Indenture. The Trustor agrees that the lien of this Deed of Trust shall
be absolute and unconditional and shall not in any manner be affected or
impaired by any acts or omissions whatsoever of the Beneficiary, and without
limiting the generality of the foregoing, the lien hereof shall not be impaired
by any acceptance by the Beneficiary of any security for or guarantees of
Issuer's obligations under the Notes and Indenture, or by any failure, neglect
or omission on the part of the Beneficiary to realize upon or protect any any
collateral security therefor including the Other Security Instruments. The lien
hereof shall not in any manner be impaired or affected by any release (except as
to the property released), sale, pledge, surrender, compromise, settlement,
renewal, extension, indulgence, alteration, changing, modification or
disposition of any of Issuer's obligations under the Notes and the Indenture or
of any of the collateral security therefor, including the Other Security
Instruments or of any guarantee thereof, and, to the fullest extent permitted by
applicable law, the Beneficiary may at its discretion foreclose, exercise any

                                      -18-
<PAGE>

power of sale, or exercise any other remedy available to it under any or all of
the Other Security Instruments without first exercising or enforcing any of its
rights and remedies hereunder. Such exercise of Beneficiary's rights and
remedies under any or all of the Other Security Instruments shall not in any
manner impair the indebtedness hereby secured or the lien of this Deed of Trust
and any exercise of the rights or remedies of the Beneficiary hereunder shall
not impair the lien of any of the Other Security Instruments or any of the
Trustee's or Beneficiary's rights and remedies thereunder. To the fullest extent
permitted by applicable law, the Trustor specifically consents and agrees the
Beneficiary may exercise its rights and remedies hereunder and under the Other
Security Instruments separately or concurrently and in any order that it may
deem appropriate and waives any rights of subrogation.

--------------------------------------------------------------------------------
              THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
--------------------------------------------------------------------------------

                                      -19-
<PAGE>

            IN WITNESS WHEREOF, Trustor has caused this instrument to be
executed by its duly authorized officer as of the day and year first above
written.

                                        PLAYBOY ENTERPRISES INTERNATIONAL,
                                        Inc.,
                                        a Delaware corporation

                                        By  /s/ Robert Campbell
                                            ------------------------------------
                                        Its Senior Vice President and Treasurer

<PAGE>

                                 ACKNOWLEDGMENT

STATE OF                )
                        )  SS
COUNTY OF               )

            On March 11, 2003, before me, Ivana Del Real, a Notary Public,
personally appeared Robert Campbell, the Senior Vice President and Treasurer of
PLAYBOY ENTERPRISES INTERNATIONAL, Inc., a Delaware corporation, who proved to
me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument,
the person, or the entity upon behalf of which the person acted, executed the
instrument.

            WITNESS my hand and official seal.

                                        /s/ Ivana Del Real
                                        ----------------------------------------
                                        Notary Public

                                        [SEAL]

<PAGE>

                                    EXHIBIT A

                                Legal Description

Parcel 1:

All that portion of Lot 33, of Tract No. 9061, in the City of Los Angeles,
County of Los Angeles, State of California, as per map recorded in Book 121
Page(s) 64 to 66 of maps, in the office of the County Recorder of said County,
lying Southeasterly of a line parallel with and distant 40 feet Northwesterly,
measured at right angles from the Southeasterly line of said Lot 33.

Parcel 2:

Lot 34, of Tract No. 9061, in the City of Los Angeles, County of Los Angeles,
State of California, as per map recorded in Book 121 Page(s) 64 to 66 of maps,
in the office of the County Recorder of said County.

Said Parcels 1 and 2 are described as a whole as follows:

Beginning at the Southeasterly corner of said Lot 34; thence South 69(degree)
25' 00' West 486.35 feet to a point on the Northeasterly right of way line of
Mapleton Drive; thence North 59(degree) 21' 40" West along the Northeasterly
right of way line line of Mapleton Drive, a distance of 13.00 feet to the
beginning of a tangent curve, concave Northeasterly having a radius of 448.78
feet; thence Northeasterly along said curve through a central angle of
24(degree) 17' 15" an arc length 190.24 feet to the most Westerly corner of of
said Lot 34; thence North 26(degree) 21' 56" East 483.11 feet to a point in the
Southwesterly right of way line of Charing Cross Road; thence South 77(degree)
40' 30" East along the Southwesterly right of way line of Charing Cross Road a
distance of 121.65 feet to the beginning of a tangent curve, concave
Northwesterly having a radius of 80.00 feet; thence easterly and Northeasterly
along said curve through a central angel of 64(degree)40' 43" an arc length of
90.31 feet; thence South 87(degree) 29' 00" East 41.18 feet to the Northeast
corner of said Lot 34; thence South 20(degree) 35' 00" East along the Easterly
line of of said Lot 34, a distance of 426.09 feet to the point of beginning.

Assessor's Parcel No: 4359-013-025Exhibit 4.1(w)

                             INTERCREDITOR AGREEMENT

            This Intercreditor Agreement is dated as of March 11, 2003 and is
between Bank of America, N.A., as agent, and Bank One, N.A., as trustee.

                                    RECITALS:

            A. PEI Holdings, Inc., a Delaware corporation ("Borrower") and
Trustee (defined below) are parties to a certain Indenture of even date herewith
among Trustee, Borrower and the Loan Parties (as amended from time to time in
accordance with Section 7.08 of the Credit Agreement, the "Indenture"),
pertaining to certain senior secured notes due 2010 issued pursuant to the
Indenture evidencing term indebtedness of Borrower in the aggregate principal
amount of $115,000,000.

            B. Borrower, BA (defined below) and the other Lenders (defined
below) are parties to a certain Credit Agreement of even date herewith (as
amended, restated or modified from time to time, the "Credit Agreement"),
pursuant to which Lenders have agreed to make loans and extend other financial
accommodations to Borrower.

            C. Playboy Enterprises, Inc., Borrower and certain of its
subsidiaries have granted BA and Trustee liens against and security interests in
the Collateral (defined below) as security for payment and performance of the BA
Claim and the Trustee Claim (each as defined below).

            D. To induce BA and the other Lenders to enter into the Credit
Agreement and Trustee to enter into the Indenture, BA and Trustee have each
required the other to enter into this Agreement so as to set forth the relative
priority of their respective liens against and security interests in the
Collateral and certain other rights, priorities and limitations on the exercise
of remedies as between BA and Trustee.

            THEREFORE, the parties agree as follows:

1.    Definitions.

      1.1. BA means Bank of America, N.A. in its capacity as administrative
agent under the Credit Agreement and each successor administrative agent under
the Credit Agreement.

      1.2. BA Claim means all "Obligations" as defined in the Credit Agreement,
including, without limitation, all sums loaned and advanced to or for the
benefit of Borrower at any time, any interest thereon, including Post-Petition
Interest, any future advances, obligations with respect to letters of credit
issued or guaranteed by any Lender for the account of Borrower, all fees,
indemnification amounts, breakage costs, all amounts owed to BA or any Lender
under or in connection with any Swap Contract (as defined in the Credit
Agreement), and any costs of collection or enforcement, including, without
limitation, reasonable attorneys' and paralegals' fees and costs.

<PAGE>

      1.3. BA Documents means the Credit Agreement, each note executed by
Borrower and payable to the order of a Lender, each Collateral Document (as
defined in the Credit Agreement), the Agent Fee Letter (as defined in the Credit
Agreement) and the Loan Guaranties (as defined in the Credit Agreement), each as
amended or supplemented from time to time.

      1.4. BA Senior Collateral means the Collateral described in Section 2.1(a)
in which BA has a senior lien or security interest.

      1.5. Bankruptcy Code means the United States Bankruptcy Code (11 U.S.C.
ss. 101 et seq.).

      1.6. Claim means, as applicable, the BA Claim or the Trustee Claim,
collectively, the "Claims."

      1.7. Collateral means all property and interests in property now owned or
hereafter acquired by any Loan Party in or upon which a security interest or
mortgage lien is granted to BA or Trustee under the Security Documents.

      1.8. Enforcement Action means with respect to a Claim, the demand for
payment or acceleration of such Claim, the repossession any material amount of
Collateral, the commencement or prosecution of enforcement of any of the rights
and remedies under, as applicable, the Trustee Documents, the BA Documents, or
applicable law with respect to such Claim, including judicial or UCC
foreclosure, provided that Enforcement Action shall not include the filing of a
claim in an Insolvency Proceeding.

      1.9. Enforcement Notice means a written notice delivered by the Enforcing
Party to the other Party stating that an "Event of Default" (as defined in the
Indenture or the Credit Agreement, respectively) has occurred and is continuing
and that an Enforcement Period has commenced.

      1.10. Enforcing Party means BA in the case of Enforcement Action with
respect to the BA Claim and Trustee in the case of the Enforcement Action with
respect to the Trustee Claim.

      1.11. Enforcement Period means the period of time following the receipt by
either Trustee or BA of an Enforcement Notice until the Trustee Claim is Paid In
Full (if the Trustee is the Enforcing Party) or the BA Claim is Paid In Full (if
BA is the Enforcing Party), provided that if (a) the Enforcing Party has not
commenced foreclosure or other direct action to collect its Claim within ninety
(90) days after delivery of the Enforcement Notice or (b) at any time after the
commencement of such foreclosure or other direct action to collect its claim,
the Enforcing Party ceases to prosecute such Enforcement Action with reasonable
diligence, then the Enforcement Period with respect to such Enforcement Notice
shall terminate, provided that if Hefner exercises the Hefner Option (as each of
those terms is defined under the Credit Agreement), the Enforcement Period with
respect to the BA Claim shall be deemed extended by the number of days BA is
required under Section 7.05 of the Credit Agreement (as that section was in
effect as of the date hereof) to forebear in exercising its right to foreclose
the Deed of Trust. A notice to Hefner by either BA or Trustee that Hefner has 30
days to exercise the Hefner Option shall not constitute an Enforcement Notice.

                                      -2-
<PAGE>

      1.12. Insolvency Proceeding means any voluntary or involuntary insolvency,
bankruptcy, receivership, custodianship, liquidation, dissolution,
reorganization, assignment for the benefit of creditors, appointment of a
custodian, receiver, trustee or other officer with similar powers or any other
proceeding for the liquidation, dissolution or other winding up of any Loan
Party.

      1.13. Lenders means the Lenders (including Bank of America, N.A. in its
individual capacity) from time to time under and as defined in the Credit
Agreement.

      1.14. Loan Party means Parent, Borrower and each subsidiary of Borrower
which is now or hereafter becomes a party to any Collateral Document as defined
in the Credit Agreement.

      1.15. Noteholder means any holder of a Note or Notes.

      1.16. Paid In Full means, in the case of the BA Claim, the aggregate
outstanding, unpaid amount of the BA Claim has been paid in full in cash and all
commitments to make loans or extend other financial accommodations have
terminated or, in the case of the Trustee Claim, the aggregate outstanding
unpaid amount of the Trustee Claim has been paid in full in cash or the
requirements of Section 8.02 or 8.03 of the Indenture have been complied with.

      1.17. Parent means Playboy Enterprises, Inc., a Delaware corporation and
its successors.

      1.18. Party means BA or Trustee.

      1.19. Post-Petition Interest means interest at the contract rate under the
BA Documents or the Trustee Documents, as applicable, accruing subsequent to the
filing of any Insolvency Proceeding as to Parent or any Loan Party whether or
not such interest is an allowable claim in any such Insolvency Proceeding.

      1.20. Real Estate means the real property commonly known as the Playboy
Mansion encumbered by the Deeds of Trust in favor of BA and Trustee and, subject
to the limitations set forth in the Security Documents, the right to use the
Trademark "Playboy Mansion" in connection with the marketing and use thereof.

      1.21. Security Documents means, collectively, the Collateral Documents as
defined in the Credit Agreement and the Security Documents as defined in the
Indenture.

      1.22. Trademarks shall have the meaning ascribed thereto in the Security
Documents, provided, however, as used herein, Trademarks shall also include
proceeds thereof.

      1.23. Trustee means Bank One, N.A., as trustee, and each successor trustee
under the Indenture.

      1.24. Trustee Claim means all "Obligations" (as defined in the Indenture)
of Loan Parties to Trustee as set forth in the Trustee Documents, including,
without limitation, the

                                      -3-
<PAGE>

principal of, interest (including Post-Petition Interest) on and any premium
with respect to the Notes and any other amounts due and owing under the Trust
Documents plus any costs of collection or enforcement, including, without
limitation, reasonable attorneys' and paralegals' costs, fees and any prepayment
premiums.

      1.25. Trustee Documents means the Indenture, each of the Notes (as defined
in the Indenture) and each Security Document (as defined in the Indenture), each
as amended or supplemented from time to time.

      1.26. Trustee Senior Collateral means the Collateral described in Section
2.1(b) in which Trustee has a senior lien or security interest.

2.    Intercreditor Agreement.

      2.1. Lien Priorities. Notwithstanding the date, manner or order of
perfection of the security interests and liens granted to BA and Trustee, and
notwithstanding any provisions of the Uniform Commercial Code, or any applicable
law or decision or the BA Documents or the Trustee Documents, or whether either
BA or Trustee holds possession of all or any part of the Collateral, the
following, as between BA and Trustee, shall be the relative priority of the
security interests and liens of BA and Trustee in the Collateral:

            (a) BA shall have a first and prior security interest or, as
      applicable, mortgage lien, in all Collateral other than the Trademarks.
      Trustee shall have a second and subordinate security interest in the
      foregoing property and interests in such property and a second priority
      and junior mortgage lien against the Real Estate; and

            (b) Trustee shall have a first and prior security interest in the
      Trademarks whether now owned or hereafter acquired by any Loan Party. BA
      shall have a second and subordinate security interest in the Trademarks
      whether now owned or hereafter acquired by any Loan Party.

Neither BA nor Trustee shall contest the validity, perfection, priority or
enforceability of any lien or security interest heretofore granted to the other
Party or granted in connection herewith and contemplated hereby. Notwithstanding
any failure of a Party to perfect its security interests in the Collateral or
any other defect in the security interests or obligations owing to such Party,
the priority and rights as between the parties hereto shall be as set forth
herein.

      2.2. Distribution of Proceeds of Collateral.

            (a) All proceeds of Collateral resulting from the sale or other
      disposition of Collateral not in connection with or resulting from any
      Enforcement Action or the closing of the sale of the Real Estate at a time
      when no Default or Event of Default (each as defined in the Credit
      Agreement) has occurred and is then continuing shall be distributed as
      follows: (i) if the Collateral is the Real Estate, the proceeds shall be
      distributed first to BA to the

                                      -4-
<PAGE>

      extent of the amount required, if any, to reduce the amount of the
      Obligations to $10,000,000 and the balance, if any, to the Trustee for
      application in accordance with the Indenture and (ii) if the Collateral is
      not the Real Estate, the proceeds shall be applied in accordance with the
      Indenture;

            (b) All proceeds of Collateral resulting from any Enforcement
      Action, the closing of the sale of the Real Estate or hazard or other
      insurance claims when, in any such case, a Default or Event of Default
      (each as defined in the Credit Agreement) has occurred and is then
      continuing shall be distributed in accordance with the following
      procedure, to the extent permitted by law:

                  (i) All proceeds of BA Senior Collateral shall be paid to BA
            for application to the BA Claim with any residual proceeds after the
            BA Claim is Paid In Full being paid to Trustee;

                  (ii) All proceeds of Trustee Senior Collateral shall be paid
            to Trustee for application to the Trustee Claim with any residual
            proceeds after the Trustee Claim is Paid In Full being paid to BA;
            and

                  (iii) After the BA Claim and the Trustee Claim have been Paid
            In Full, the balance of proceeds of Collateral, if any, shall be
            paid to Borrower or as otherwise required by applicable law.

            (c) Should any payment or distribution be received by either Party
      which Party is not permitted to receive and retain pursuant to the terms
      hereof, such Party shall receive and hold the same in trust, as trustee,
      for the Party entitled to receive and retain such payment, and shall
      forthwith deliver the same to such Party in precisely the form received
      (except for endorsement or assignment where necessary), for application to
      the Claim of such Party and, until so delivered, the recipient shall hold
      the same in trust as the property of such Party entitled to the same. If a
      Party obligated to make an endorsement or assignment pursuant to the
      provisions of this Section 2.2 fails to make any such endorsement or
      assignment, the permitted recipient of such payment or distribution, or
      any of its officers or employees, is hereby irrevocably authorized to make
      the same.

      2.3. Enforcement Actions. Each of BA and Trustee agrees not to commence or
take any Enforcement Action until an Enforcement Notice has been given by such
Enforcing Party to the other Party. Subject to the foregoing, BA and Trustee
agree that during an Enforcement Period:

            (a) BA may, at its option, take and continue any Enforcement Action
      with respect to BA Senior Collateral and realize thereon, without the
      prior written consent of Trustee, provided that during any Enforcement
      Period with respect to the Trustee Senior Collateral BA shall not commence
      or take any

                                      -5-
<PAGE>

      Enforcement Action or realize upon the Trustee Senior Collateral without
      Trustee's prior written consent.

            (b) Trustee may, at its option, take and continue any Enforcement
      Action with respect to the Trustee Senior Collateral and realize thereon
      without the prior written consent of BA, provided that during any
      Enforcement Period with respect to the BA Senior Collateral, Trustee shall
      not commence or take any Enforcement Action (including the notification of
      account debtors or making any attempt to collect payment therefrom) or
      realize upon any of the BA Senior Collateral without BA's prior written
      consent.

            (c) If both BA and Trustee elect to proceed with Enforcement Action,
      then each shall proceed with the Enforcement Action of any security
      interests in or liens on any Collateral in which it has a senior lien or
      security interest as described in and provided by Section 2.1 without
      prejudice to the other Party to join in any proceedings.

            (d) Each Enforcing Party shall so notify the other Party at such
      time as the Enforcing Party's Claim is Paid in Full.

      2.4. Acknowledgment Regarding Trademarks. Notwithstanding any Enforcement
Action by Trustee against the Trademarks or the existence of an Enforcement
Period with respect thereto, Trustee hereby acknowledges and agrees that use of
any of the Trademarks shall be considered genuine with respect to (a) any
distribution of the Inventory; (b) any distribution of work-in-process inventory
completed by BA, its assigns, or any purchaser of any BA Senior Collateral; and
(c) any reproduction, distribution, performance, display or creation of any
derivative work based upon any work protected by the Copyrights (as defined in
the Security Documents) where the work incorporates any Trademark.

      2.5. Maximum Amount of Senior Claims. At no time shall the aggregate
principal amount of the BA Claim (including, without limitation, hedging
obligations and swap obligations and the maximum amount available for drawing
under outstanding letters of credit) exceed $40,000,000 plus interest, fees,
costs and expenses, whether or not capitalized, accruing under the Credit
Agreement and advances to preserve, protect or enforce the interests of BA in
the Collateral. At no time shall the aggregate principal amount of the Trustee
Claim exceed $115,000,000 plus interest, fees, costs and expenses, whether or
not capitalized, and advances to preserve, protect or enforce the interests of
Trustee in the Collateral.

      2.6. Accountings. BA and Trustee agree to render accountings to the other
upon request, giving effect to the application of proceeds of Collateral as
hereinbefore provided.

      2.7. Notices of Defaults. BA and Trustee agree to endeavor to give to the
other copies of any notice of the occurrence of an Event of Default,
respectively, simultaneously with the sending of such notice to Borrower, but
the failure to do so shall not affect the validity of such notice or create a
cause of action against the Party failing to give such notice or create any

                                      -6-
<PAGE>

claim or right on behalf of any third party. The sending or receipt of such
notice shall not obligate the recipient to cure such Event of Default.

      2.8. Agency for Perfection. BA and Trustee each hereby appoint each other
as agent for purposes of perfecting their respective security interests and
liens in the Collateral. To the extent that either Party obtains possession of
Collateral in which the other Party has a senior priority under the terms
hereof, the Party having possession shall notify the other Party of such fact
and shall deliver such Collateral to the Party having the senior priority upon
request of such Party. Each Party shall be a bailee for the other Party with
respect to Collateral in such Party's possession. If directed by Borrower, the
bailee Party shall, after the Claim of such bailee Party has been Paid In Full,
deliver the Collateral in its possession to the other Party.

      2.9. UCC Notices. In the event that BA or Trustee shall be required by the
Uniform Commercial Code or any other applicable law to give notice to the other
of intended disposition of Collateral, such notice shall be given in accordance
with Section 3.1 hereof and five (5) days' notice shall be deemed to be
commercially reasonable.

      2.10. Post Bankruptcy Issues. If any Loan Party shall become the subject
of any Insolvency Proceeding under the Bankruptcy Code and if BA shall desire to
provide financing to such Loan Party under either Section 363 or Section 364 of
the Bankruptcy Code (without obtaining a priority lien under Section 364(d) on
the Trustee Senior Collateral) or BA consents to the use of cash collateral by
such Loan Party under Section 363 of the Bankruptcy Code, Trustee hereby agrees
as follows: (i) adequate notice to Trustee shall have been provided for such
financing if Trustee receives notice two (2) business days prior to the entry of
the order approving such financing and (ii) no objection will be raised by
Trustee to any such financing on the ground of a failure to provide "adequate
protection" for Trustee's junior lien position on the BA Senior Collateral so
long as the terms of such financing do not provide financing in excess of the
amounts or advance rates permitted pursuant to Section 2.5 hereof. For purposes
of this paragraph, notice of a proposed financing shall be deemed given upon the
giving of notice by telegram, facsimile (receipt confirmed) or hand delivery to
the Trustee, at the addresses and locations indicated in Section 3.1. This
Agreement shall be applicable both before and after the filing of any petition
by or against a Loan Party under the Bankruptcy Code and all references herein
to a Loan Party shall be deemed to apply to such Loan Party as
debtor-in-possession and all allocations of payments between BA and Trustee
shall, subject to any court order approving the financing of the Borrower as
debtor-in-possession, continue to be made after the filing thereof on the same
basis that the payments were to be applied prior to the date of the petition.
The Party with the junior priority position hereunder waives any right to (i)
seek relief from the automatic stay under Section 362 of the Bankruptcy Code
with respect to Collateral in which it has a junior lien, unless such relief has
been granted to the Party having the senior priority position hereunder and (ii)
object to any relief from the automatic stay under Section 362 of the Bankruptcy
Code sought by a Party with respect to Collateral in which the Party seeking
such relief has the senior priority position.

      2.11. Information Sharing. Upon the occurrence and continuance of an
Enforcement Period, in the event that either BA or Trustee shall, in connection
with any Enforcement Action, receive possession or control of any books and
records which contain information identifying or

                                      -7-
<PAGE>

pertaining to any of the property of any Loan Party in which the other Party has
been granted a lien, it shall notify the other Party that it has received such
books and records and shall, as promptly as practicable thereafter, make
available to the other Party duplicate copies of such books and records in the
same form as the original. All expenses incurred by either BA or Trustee in
performing its obligations under this paragraph shall be borne by Borrower and
shall constitute indebtedness under the respective Party's agreements with
Borrower. The failure of either Party to share information shall not create a
cause of action against the Party failing to share information or create any
claim on behalf of any Loan Party or any third party.

      2.12. Obligations of the Loan Parties Unconditional. Nothing contained
herein is intended to or shall impair the obligations, liabilities and
indebtedness of Parent or the Loan Parties, which are absolute and
unconditional, to pay to the Claims as and when the same shall become due and
payable in accordance with the terms of the BA Documents and the Trustee
Documents, as applicable, or to affect the relative rights of Parent and the
Loan Parties and creditors of the Loan Parties other than BA, the Lenders,
Trustee and the Noteholders.

      2.13. Reserved.

      2.14. Continuing Obligations. This Agreement shall be irrevocable and
shall continue in effect until each Claim has been Paid In Full. This is a
continuing agreement and the Lenders may continue, at any time and without
notice to Trustee, to extend credit to or for the benefit of the Loan Parties on
the faith hereof.

      2.15. Certain Waivers. Each of BA and Trustee hereby expressly waives all
notice of the acceptance by the other Party and, as applicable, the Lenders and
the Noteholders of the standstill, subordination and other provisions of this
Agreement and all the notices not specifically required pursuant to the terms of
this Agreement or under the UCC in connection with foreclosure on or sale of
assets whatsoever, and each of BA and Trustee expressly consents to reliance by
the other Party and the Lenders and Noteholders upon the subordination and other
agreements as herein provided. Trustee acknowledges that none of BA or any
Lender has made warranties or representations with respect to the due execution,
legality, validity, completeness or enforceability of the BA Documents or the
collectibility of the BA Claim. Trustee, BA and each Lender shall be entitled to
manage and supervise its financial arrangements with each Loan Party in
accordance with its usual practices, modified from time to time as it deems
appropriate under the circumstances, without affecting the validity or
enforceability of this Agreement; and none of BA or any Lender shall have any
liability to Trustee or any Noteholder for, and Trustee hereby waives any claim
which such Person may now or hereafter have against, BA or any Lender arising
out of any and all actions which BA or any Lender, in good faith, takes or omits
to take (including, without limitation, actions with respect to the creation,
perfection or continuation of liens or security interests in any existing or
future Collateral, actions with respect to the occurrence of a default or event
of default, actions with respect to the foreclosure upon, sale, release, or
depreciation of, or failure to realize upon, any of the Collateral and actions
with respect to the collection of any claim for all or any part of the Trustee
Claim from any account debtor, guarantor or any other person) with respect to
and in accordance with any BA Document or

                                      -8-
<PAGE>

any other agreement related thereto or to the collection of the BA Claim or the
valuation, use, protection or release of the Collateral, so long as any such
actions are taken in a manner consistent with the terms of this Agreement, or
any election of the application of Section 1111(b)(2) of the Bankruptcy Code. BA
acknowledges that none of Trustee or any Noteholder has made warranties or
representations with respect to the due execution, legality, validity,
completeness or enforceability of the Trustee Documents or the collectibility of
the Trustee Claim. BA agrees that Trustee shall have no liability to BA or any
Lender for, and BA hereby waives any claim which such Person may now or
hereafter have against, any Trustee or any Noteholder arising out of any and all
actions which Trustee, in good faith, takes or omits to take (including, without
limitation, actions with respect to the creation, perfection or continuation of
liens or security interests in any existing or future Collateral, actions with
respect to the occurrence of a default or event of default, actions with respect
to the foreclosure upon, sale, release, or depreciation of, or failure to
realize upon, any of the Collateral and actions with respect to the collection
of any claim for all or any part of the Trustee Claim from any account debtor,
guarantor or any other person) with respect to and in accordance with the
Trustee Documents, so long as any such actions are taken in a manner consistent
with the terms of this Agreement, or any election of the application of Section
111(b)(2) of the Bankruptcy Code. Trustee agrees that it will not take any
action to contest the relative rights and duties of any Lender with respect to
any Collateral established in any of the BA Documents. Without limiting any
other provision of this Agreement, (a) by acceptance of a Note, each Noteholder
shall be bound by and deemed to have made and given each of the acknowledgments
and waivers of Trustee set forth in this Section 2.16 and Section 3.4 and (b) by
acceptance of a note or other instrument evidencing any portion of the BA Claim,
each Lender shall be bound by and deemed to have made and given each of the
acknowledgments and waivers of BA set forth in this Section 2.16 and Section
3.4.

      2.16. Modifications and Waivers. Any modification or waiver of any
provision of this Agreement, or any consent to any departure by either Party
from the terms hereof, shall not be effective in any event unless the same is in
writing and signed by BA and Trustee, and then such modification, waiver or
consent shall be effective only in the specific instance and for the specific
purpose given. Any notice to or demand on any Party in any event not
specifically required hereunder shall not entitle the Party receiving such
notice or demand to any other or further notice or demand in the same, similar
or other circumstances unless specifically required hereunder. Parent and each
Loan Party hereby acknowledges and agrees that this Agreement may be amended or
otherwise modified without notice to or consent by Parent or any Loan Party.

3.    Miscellaneous.

      3.1. Representations, Warranties and Covenants. Each Party represents,
warrants and covenants to the other that:

            (a) Except as set forth herein and in Section 9.12(b)(ii) of the
      Credit Agreement (as in effect on the date hereof), it has not
      subordinated and agrees that it will not subordinate at any time while
      this Agreements remain in effect, any right, claim or interest of any kind
      in or to the Collateral as to which such

                                      -9-
<PAGE>

      Party has a senior lien or security interest, and any subordination in
      violation of this sub-paragraph shall be null and void;

            (b) It has not assigned or transferred any right, claim or interest
      of any kind in or to its Claim; and

            (c) The execution, delivery and performance by or on behalf of such
      Party has been duly authorized by all necessary action, corporate or
      otherwise, does not violate any provision of law, governmental regulation,
      or any agreement or instrument by which such Party is bound, and requires
      no governmental or other consent that has not been obtained.

      3.2. Notices. Any notice required or desired to be served, given or
delivered hereunder shall be in writing (including facsimile transmission), and
shall be deemed to have been validly served, given or delivered upon the earlier
of (a) personal delivery to the address set forth below; (b) in the case of
mailed notice, five (5) days after deposit in the United States mails, with
proper postage for certified mail, return receipt requested, prepaid, or in the
case of notice by Federal Express or other reputable overnight courier service,
one (1) Business Day after delivery to such courier service; and (c) in the case
of facsimile transmission, upon transmission with confirmation of receipt, in
any such case addressed to the party to be notified as follows:

      If to BA at:                      Bank of America, N.A.
                                        Agency Management
                                        231 South LaSalle Street
                                        Mail Code: IL 1-231-08-30
                                        Chicago, Illinois 60604
                                        (312) 828-8010
                                        Attention:  Linda Lov, Agency Officer
                                        Facsimile Number: (877) 206-1766

      With a copy to:                   Goldberg, Kohn, Bell, Black,
                                          Rosenbloom & Moritz, Ltd.
                                        55 East Monroe Street, Suite 3700
                                        Chicago, Illinois  60603
                                        (312) 201-4000
                                        Attention:  David L. Dranoff, Esq.
                                        Facsimile Number:  (312) 332-2196

      If to Trustee:                    Bank One, N.A.
                                        1 Bank One Plaza
                                        Chicago, Illinois 60670-0430
                                        (312) 336-9275
                                        Attention:  George Reaves
                                        Facsimile Number:  (312) 407-8929

                                      -10-
<PAGE>

or to such other address as each party designates to the other in the manner
herein prescribed.

      3.3. No Benefit to Third Parties. Except as specifically set forth in
Section 2.4, the terms and provisions of this Agreement shall be for the sole
benefit of BA, the Lenders, Trustee and the Noteholders and their respective
successors and assigns (as permitted by Section 3.7 hereof), and no other
person, firm, entity or corporation shall have any right, benefit, priority or
interest under or because of this Agreement.

      3.4. Independent Credit Investigations. Neither of the Parties nor any of
their respective directors, officers, agents or employees nor any Lender or
Noteholder shall be responsible to any other person, firm or corporation, for
the solvency, financial condition or ability of any Loan Party to repay the BA
Claim or the Trustee Claim, or for statements of any Loan Party, oral or
written, or for the validity, sufficiency or enforceability of the BA Claim or
the Trustee Claim, the BA Documents, the Trustee Documents, or any liens or
security interests granted by any Loan Party in connection therewith. Each of
BA, Trustee, Lender and Noteholder has entered into its respective financing
agreements with Loan Parties based upon its own independent investigation, and
makes no warranty or representation to the other Party nor does it rely upon any
representation of the other Lender with respect to matters identified or
referred to in this paragraph. If either Party or any Lender or Noteholder, in
its sole discretion, undertakes, at any time or from time to time, to provide
any such information to another Lender, Noteholder, Trustee or BA, as
applicable, such information shall be given with no representation or warranty
of any kind from such Person and such Person shall be under no obligation (a) to
provide any such information to any other Person at that time or to any Person
on any subsequent occasion or (b) to undertake any investigation not a part of
its regular business routine.

      3.5. Amendments to Financing Arrangements or to this Agreement. BA and
Trustee shall each endeavor to notify the other Party of any material amendment
or modification of BA Documents or the Trustee Documents, respectively, but the
failure to do so shall not create a cause of action against the Party failing to
give such notice or create any claim or right on behalf of the other Party. BA
and Trustee shall, upon request of the other Party, provide copies of all such
modifications or amendments and copies of all other documentation relevant to
the Collateral.

      3.6. Marshaling of Assets. Trustee hereby waives any and all rights to
have the BA Senior Collateral, or any part thereof, marshaled upon any
foreclosure of any of BA's liens thereon or with respect to any other
Enforcement Action by BA. BA hereby waives any and all rights to have the
Trustee Senior Collateral, or any part thereof, marshaled upon any foreclosure
of the Trustee's liens thereon or with respect to any other Enforcement Action
by Trustee. If any Claim is now or hereafter secured by collateral other than
the Collateral described hereunder, the Party holding such collateral shall have
no obligation to marshal such collateral before enforcing its rights in the
Collateral hereunder, and the other Party shall have no rights hereunder to
share or participate in any proceeds of such other collateral. Each Party shall
have the right, subject to Section 2.3, to take Enforcement Action against
Collateral in such order or in whole or in part and subject to such conditions
as such Enforcing Party determines in its sole discretion.

                                      -11-
<PAGE>

      3.7. Successors and Assigns; Replacement Financing, Subordination. This
Agreement shall be binding upon and inure to the benefit of the respective
successors and assigns of each of the Parties, but does not otherwise create,
and shall not be construed as creating, any rights enforceable by any Loan Party
or any other person not a party to this Agreement. Trustee agrees that it will,
at the request of BA or Borrower, enter into an agreement, in the form of this
Agreement, mutatis mutandis, with any party (the "New Lender") to a New Credit
Facility which refinances the BA Claim or refinances, in whole or in part, any
New Credit Facility and such refinancing would not result in a "Default" as
defined in the Indenture or the Credit Agreement, it being understood that (i)
such agreement shall contain provisions substantially similar to those set forth
herein with respect to the subordination of the Trustee's lien on the BA Senior
Collateral and (ii) such agreement shall contain a provision substantially
similar to Section 2.5 which restricts the amount of the BA Claim (as refinanced
by the New Credit Facility) to the amounts set forth in Section 2.5. For the
purpose of this section, "New Credit Facility" shall mean one or more debt
facilities (including, without limitation, the Credit Agreement) or commercial
paper facilities, in each case with banks or other institutional lenders
providing for revolving credit loans, terms loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
of credit and any hedging obligations owing to the lenders thereunder and their
affiliates.

      3.8. Agreement Absolute. This Agreement shall be and remain absolute and
unconditional under any and all circumstances, and no act or omission on the
part of any Party to this Agreement shall affect or impair the agreement of the
other Party hereunder. Each of the Parties hereby authorizes the other Party to
(a) change any terms relating to such obligations of and Loan Party to such
Party or the loan agreements relating thereto as such other Party in its
discretion may deem advisable; (b) grant renewals, increases or extensions of
the time for payment of the Claim of such Party; (c) receive notes or other
evidences of the obligations of the Loan Parties to such other Party or
renewals, increases or extensions thereof; and (d) take or omit to take any
action for the enforcement of, or waive any rights with respect to, any
obligation of the Loan Parties to such other Party without invalidating or
impairing any provision hereof.

      3.9. Section Titles; Gender. The section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the Parties. The singular
form of any word used in this Agreement shall include the plural form and the
neuter form of any word used in this Agreement shall include the masculine and
feminine forms, and vice versa.

      3.10. Right to Purchase BA Claim. Trustee shall have the right,
exercisable by written notice to BA (the "Election Notice") given not later than
thirty (30) days after the date of delivery of an Enforcement Notice by BA or
the Trustee to purchase the BA Claim and all of the right, title and interest of
BA and the Lenders in, to and under the BA Documents for a purchase price equal
to, after payment of BA's closing costs, the amount that would be required to
cause the BA Claim to be Paid In Full as of the Closing Date. Trustee shall
designate in the Election Notice a closing date for the purchase and sale of the
BA Claim (the "Closing Date") which Closing Date shall be a business day not
later than ten (10) days after the date of the Election Notice. If Trustee
elects to purchase the BA Claim as

                                      -12-
<PAGE>

provided in this Section 3.10, Trustee shall complete such purchase and pay in
cash in immediately available funds all amounts due BA pursuant to this Section
3.10 on the Closing Date. The sale of the BA Claim pursuant to this Section 3.10
shall be without recourse, representations or warranties, except that BA shall
certify to Trustee (a) the amount of the BA Claim as of the Closing Date and (b)
that title to the BA Claim is held by BA and the Lenders. The provisions of this
Section 3.10 shall not have the effect of staying or preventing the initiation
or prosecution of Enforcement Action by BA or the Trustee prior to the Closing
Date.

      3.11. Governing Law and Forum Selection. This Agreement shall be governed
as to validity, interpretations, enforcement and effect by the laws of the State
of Illinois without giving effect to conflicts of law principles thereunder. All
actions or proceedings in any way, manner or respect, arising out of or from or
related to this Agreement shall be litigated in courts having situs within the
City of Chicago, State of Illinois. Each of BA and Trustee hereby consents and
submits to the jurisdiction of any local, state or federal courts located within
said city and state and waives any right it may have to transfer or change the
venue of any litigation brought by either Party in accordance with this Section
3.11.

      3.12. Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be deemed to be an original hereof submissible
into evidence and all of which together shall be deemed to be a single
instrument.

                     [The Next Page is the Signature Page]

                                      -13-
<PAGE>

            IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.

                                        BANK OF AMERICA, N.A., as Agent

                                        By  /s/ David A. Johanson
                                            ------------------------------------
                                        Its David A. Johanson
                                            Vice President

                                        BANK ONE, N.A., as Trustee

                                        By  /s/ George N. Reaves
                                            ------------------------------------
                                        Its Vice President

                                      -14-
<PAGE>

                                 ACKNOWLEDGMENT

            Each of the undersigned hereby acknowledges and agrees to the
foregoing terms and provisions. By executing this Agreement, each of the
undersigned agrees to be bound by the provisions hereof as they relate to the
relative rights of Trustee and BA as between them. Each of the undersigned
further agrees that the terms of this Agreement shall not give the undersigned
any substantive rights vis-a-vis either Trustee or BA.

            If either BA or Trustee shall enforce its rights or remedies in
violation of the terms of this Agreement, each of the undersigned agrees that it
shall not use such violation as a defense to any Enforcement Action by either BA
or Trustee nor assert such violation as a counterclaim or basis for set-off or
recoupment against either BA or Trustee.

Dated: March 11, 2003

                                        PEI HOLDINGS, INC.,
                                        a Delaware corporation

                                        By  /s/ Robert Campbell
                                            ------------------------------------
                                        Its Treasurer

                         [next page is a signature page]

                                      -15-
<PAGE>

                         ADULTVISION COMMUNICATIONS, INC.
                         AFTER DARK VIDEO, INC.
                         AL ENTERTAINMENT, INC.
                         ALTA LOMA DISTRIBUTION, INC.
                         ALTA LOMA ENTERTAINMENT, INC.
                         CANDLELIGHT MANAGEMENT LLC
                            By: Playboy TV International, LLC, its Sole Member,
                                By: Playboy Entertainment Group, Inc., its Sole
                                    Member
                         CHELSEA COURT HOLDINGS LLC
                            By: Playboy TV International, LLC, its Sole Member,
                                By: Playboy Entertainment Group, Inc., its Sole
                                    Member
                         CLARIDGE ORGANIZATION LLC
                            By: Playboy TV International, LLC, its Sole Member,
                                By: Playboy Entertainment Group, Inc., its Sole
                                    Member
                         CPV PRODUCTIONS, INC.
                         CYBERSPICE, INC.
                         IMPULSE PRODUCTIONS, INC.
                         INDIGO ENTERTAINMENT, INC.
                         ITASCA HOLDINGS, INC.
                         LAKE SHORE PRESS, INC.
                         LIFESTYLE BRANDS, LTD.
                         MH PICTURES, INC.
                         MYSTIQUE FILMS, INC.
                         PLANET PLAYBOY, INC.
                         PLANET SPICE, INC.
                         PLAYBOY CLUB OF HOLLYWOOD, INC.
                         PLAYBOY CLUB OF NEW YORK, INC.
                         PLAYBOY CLUBS INTERNATIONAL, INC.
                         PLAYBOY CRUISE GAMING, INC.
                         PLAYBOY ENTERTAINMENT GROUP, INC.
                         PLAYBOY GAMING INTERNATIONAL, LTD.
                         PLAYBOY GAMING NEVADA, INC.
                         PLAYBOY GAMING UK, LTD.
                         PLAYBOY JAPAN, INC.
                         PLAYBOY MODELS, INC.

                         By     /s/ Robert Campbell
                                ------------------------------------------------
                         Name:  Robert Campbell
                         Title  Treasurer

                         [next page is a signature page]

                                      -16-
<PAGE>

                         PLAYBOY OF LYONS, INC.
                         PLAYBOY OF SUSSEX, INC.
                         PLAYBOY PREFERRED, INC.
                         PLAYBOY PROPERTIES, INC.
                         PLAYBOY SHOWS, INC.
                         PLAYBOY TV INTERNATIONAL, LLC
                            By: Playboy Entertainment Group, Inc., its Sole
                                Member
                         PRECIOUS FILMS, INC.
                         SPECIAL EDITIONS, LTD.
                         SPICE DIRECT, INC.
                         SPICE ENTERTAINMENT, INC.
                         SPICE INTERNATIONAL, INC.
                         SPICE NETWORKS, INC.
                         SPICE PRODUCTIONS, INC.
                         STEELTON, INC.
                         TELECOM INTERNATIONAL, INC.
                         WOMEN PRODUCTIONS, INC.

                         By /s/ Robert Campbell
                            ----------------------------------------------------
                         Name:  Robert Campbell
                         Title: Treasurer

                         PLAYBOY ENTERPRISES, INC.
                         PLAYBOY ENTERPRISES INTERNATIONAL, INC.

                         By /s/ Robert Campbell
                            ----------------------------------------------------
                         Name:  Robert Campbell
                         Title: Senior Vice President, Treasurer and
                                Strategic Planning

                         SPICE HOT ENTERTAINMENT, INC.
                         SPICE PLATINUM ENTERTAINMENT, INC.

                         By /s/ Alexandra Shepard
                            ----------------------------------------------------
                         Name:  Alexandra Shepard
                         Title: Senior Vice President and Secretary

                                      -17-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}]]