Document:

Exhibit 10.9(c)

                               SECURITY AGREEMENT

            This SECURITY AGREEMENT is dated as of March 11, 2003 among Playboy
Enterprises, Inc. and each of the domestic subsidiaries of PEI Holdings, Inc., a
Delaware corporation (the "Borrower") set forth on the signature pages hereto
(together with those additional entities that hereafter become parties by
executing signature pages hereto, collectively, "Debtors" and individually, a
"Debtor"), and Bank of America, N.A., in its capacity as administrative agent
under the Credit Agreement described below ("Agent").

                              W I T N E S S E T H:

            WHEREAS, pursuant to a certain Credit Agreement of even date
herewith among the Borrower, Agent and Lenders (as the same may be amended,
restated, modified or supplemented and in effect from time to time, the "Credit
Agreement"), Lenders have agreed, subject to the satisfaction of certain
conditions precedent, to make Loans and other financial accommodations available
to the Borrower; and

            WHEREAS, it is a condition precedent to the availability of such
Loans and other financial accommodations under the Credit Agreement that the
each Debtor shall have granted the security interests contemplated by this
Agreement in order to secure the payment and performance of the Obligations and
each Debtor's obligations under the Guaranty;

            NOW, THEREFORE, in consideration of the foregoing, and in order to
induce Lenders to make the Loans and other financial accommodations available to
the Borrower under the Credit Agreement, each Debtor hereby agrees with Agent,
for its benefit and the benefit of Lenders, as follows:

SECTION 1. Definitions.

            1.1 The following terms, as used herein, have the meanings set forth
below:

            "Agreement" means this Security Agreement, as the same may be
amended, restated, modified or supplemented and in effect from time to time in
accordance with the terms hereof.

            "Collateral" has the meaning assigned to that term in Section 2.

            "Copyright Security Agreement" means, if any, each Copyright
Security Agreement executed and delivered by any Debtor to Agent, as the same
may be amended and in effect from time to time.

            "Copyrights" means (a) any copyrights, copyright registrations and
copyright applications, and all renewals and extensions of any of the foregoing,
(b) all income damages and payments now and hereafter due or payable with
respect thereto, including, without limitation, damages and payments for past or
future infringements thereof, (c) licenses of any of the foregoing to or from
third parties and the royalties and other payments, if any,

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receivable thereunder, (d) the right to sue for past, present and future
infringements thereof, and (e) all rights corresponding thereto throughout the
world.

            "Federal Registration Collateral" means Collateral with respect to
which Liens may be registered, recorded or filed under, or notice thereof given
under, any federal statute or regulation.

            "Intellectual Property" means, collectively, all Copyrights,
Patents, Trademarks and Trade Secrets.

            "Intercreditor Agreement" means that certain Intercreditor Agreement
among Borrower, Agent and the trustee under the Senior Secured Note Indenture.

            "License" has the meaning set forth in Section 4.3(g) herein.

            "Patent Security Agreement" means, if any, each Patent Security
Agreement executed and delivered by any Debtor to Agent, as the same may be
amended and in effect from time to time.

            "Patents" means (a) any patents and patent applications, and all
renewals, extensions and continuations of any of the foregoing, (b) all income
damages and payments now and hereinafter due or payable with respect thereto,
including, without limitation, damages and payments for past or future
infringements thereof, (c) licenses of any of the foregoing to or from third
parties and the royalties and other payments, if any, receivable thereunder, (d)
the right to sue for past, present and future infringements thereof, and (e) all
rights corresponding thereto throughout the world.

            "Permitted Liens" means those Liens permitted by Section 7.01 of the
Credit Agreement.

            "Security Interests" means the security interests granted or
provided for pursuant to Section 2 hereof and pursuant to any Copyright Security
Agreements, Patent Security Agreements and Trademark Security Agreements, as
well as all other security interests created, assigned or provided as additional
security for the Obligations pursuant to the provisions of this Agreement or any
of the other Loan Documents.

            "Trade Secrets" means technology, trade secrets and other
confidential information, know-how, proprietary processes, formulae, algorithms,
models, and methodologies, all renewals and extensions of any of the foregoing
and all goodwill symbolized by any of the foregoing, (b) all income damages and
payments now and hereinafter due or payable with respect thereto, including,
without limitation, damages and payments for past or future infringements
thereof, (c) licenses of any of the foregoing to or from third parties and the
royalties and other payments, if any, receivable thereunder, (d) the right to
sue for past, present and future infringements thereof, and (e) all rights
corresponding thereto throughout the world.

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            "Trademark Security Agreement" means, if any, each Trademark
Security Agreement executed and delivered by any Debtor to Agent, as the same
may be amended and in effect from time to time.

            "Trademarks" means any (a) trademarks, trademark registrations, and
trademark applications, trade names and trade styles, service marks, service
registrations and service mark applications, all renewals and extensions of any
of the foregoing and all goodwill symbolized by any of the foregoing, (b) all
income damages and payments now and hereinafter due or payable with respect
thereto, including, without limitation, damages and payments for past or future
infringements, unfair competition, dilution, or for injury to the goodwill
associated with any of the foregoing, (c) licenses of any of the foregoing to or
from third parties and the royalties and other payments, if any, receivable
thereunder, (d) the right to sue for past, present and future infringements
thereof, and (e) all rights corresponding thereto throughout the world.

            "UCC" means the Uniform Commercial Code of the State of Illinois as
in effect from time to time.

            1.2 Other Definition Provisions. References to "Sections" shall be
to Sections of this Agreement unless otherwise specifically provided. For
purposes hereof, "including" is not limiting and "or" is not exclusive. Except
as provided by the immediately following sentence, capitalized terms used herein
and not otherwise defined herein shall have the respective meanings provided for
in the Credit Agreement. All capitalized terms defined in the UCC and not
otherwise defined herein shall have the respective meanings provided for by the
UCC. Any of the terms defined in Section 1.1 may, unless the context otherwise
requires, be used in the singular or the plural depending on the reference. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations.

SECTION 2. Grant of Security Interests.

            To secure the payment and performance of the Obligations and each
Debtor's obligations under this Agreement and the Guaranty, each Debtor hereby
grants to Agent, for its benefit and the benefit of Lenders, and for the benefit
of each Affiliate of Agent and each Lender, a lien on, security interest in and
right of set-off against any and all right, title and interest in and to any and
all property and interests in property of each Debtor, whether now owned or
existing or hereafter created, acquired or arising, including all of the
following properties and interests in properties, whether now owned or hereafter
created, acquired or arising (all being collectively referred to herein as the
"Collateral"):

            (a) Accounts;

            (b) Chattel Paper;

            (c) Commercial Tort Claims specifically identified on Schedule III
hereto;

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            (d) Deposit Accounts, all cash, and other property deposited therein
or otherwise credited thereto from time to time and other monies and property in
the possession or under the control of Agent or any Lender or any affiliate,
representative, agent or correspondent of Agent or any Lender;

            (e) Documents;

            (f) General Intangibles, including without limitation any and all
Intellectual Property;

            (g) Goods, including without limitation any and all Inventory, any
and all Equipment and any and all Fixtures;

            (h) Instruments;

            (i) Investment Property;

            (j) Letter-of-Credit Rights;

            (k) Supporting Obligations;

            (l) Any and all other personal property and interests in property
whether or not subject to the UCC;

            (m) Any and all books and records, in whatever form or medium, that
at any time evidence or contain information relating to any of the foregoing
properties or interests in properties or are otherwise necessary in the
collection thereof or realization thereon;

            (n) All Accessions and additions to, and substitutions and
replacements of, any and all of the foregoing; and

            (o) All Proceeds and products of the foregoing, including without
limitation all insurance pertaining to the foregoing and proceeds thereof.

Notwithstanding the foregoing, "Collateral" shall not include (i) any stock in a
Controlled Foreign Corporation (within the meaning of Section 957 of the Code)
in excess of 65% of such stock or in excess of 65% of the total combined voting
power of all classes of such entity entitled to vote, (ii) any General
Intangibles or other rights arising under any contracts, instruments, licenses
or other documents to the extent that the grant of a Lien or security interest
therein would (A) result in a breach of the terms of, or constitute a default
under, such contract, instrument, license, agreement or other document (other
than to the extent that any such term would be rendered ineffective pursuant to
Section 9-406, 9-407 or 9-408 of the Uniform Commercial Code or any successor
provision of the Uniform Commercial Code of any relevant jurisdiction or other
applicable law) or (B) give any other party to such contract, instrument,
license or other document the right to terminate its obligations thereunder
pursuant to a valid and enforceable provision (including without limitation in
connection

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with the operation of Section 9-406, 9-407 or 9-408 of the Uniform Commercial
Code or any other applicable law), (iii) any personal property (including motor
vehicles) in respect of which perfection of a Lien is not either (A) governed by
the Uniform Commercial Code or (B) accomplished by appropriate evidence of the
lien being recorded in the U.S. Copyright Office or the U.S. Patent and
Trademark Office, or (iv) any property subject to any Pledge Agreement.

SECTION 3. Representations and Warranties.

            Each Debtor represents and warrants to Agent and to each Lender as
follows:

            3.1 Binding Obligation; Perfection. This Agreement constitutes a
valid and binding obligation of such Debtor, enforceable against it in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law). Subject to taking the
actions specified in Section 3.5, Agent has a valid and perfected first priority
Security Interest in the Collateral (except with respect to Trademarks, in which
Agent has a valid and perfected second priority Security Interest) to the extent
that a security interest therein may be perfected by the filing of a financing
statement and the other actions referred to in Section 3.5, securing the payment
of the Obligations and each Debtor's obligations under the Guaranty, and each
Debtor acknowledges that such Security Interests are entitled to all of the
rights, priorities and benefits afforded by the UCC or other applicable law as
enacted in any relevant jurisdiction within the United States which relates to
perfected security interests subject to Permitted Liens.

            3.2 Organizational Information. Schedule I hereto sets forth, as of
the Closing Date, (i) the full, correct and current name of each Debtor, as its
appears in such Debtor's organizational documents, (ii) any names of such Debtor
other than such Debtor's current name, as set forth such Debtor's organizational
documents used during the five (5) year period preceding the Closing Date, (iii)
such Debtor's type of organization, (iv) such Debtor's jurisdiction of
organization and (v) such Debtor's organizational identification number (except
where such Debtor's jurisdiction of organization does not assign organizational
numbers).

            3.3 Collateral Locations. Schedule II hereto sets forth all
addresses at which, as of the Closing Date, any material portion of the
Collateral consisting of Equipment or Inventory is located, indicating for each
whether such location is owned or leased by a Debtor, or owned or operated by a
third-party such as a warehouseman, consignee or processor. Schedule II
indicates, as of the Closing Date, which of the foregoing addresses serves as
each Debtor's chief executive office. Schedule II sets forth, as of the Closing
Date, the address of all real properties maintained by each Debtor, leased or
owned, on which any material portion of the Fixtures are located, together with
the name and address of the record owner of each such property.

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            3.4 Existing Liens. As of the Closing Date, each Debtor owns the
Collateral free and clear of Liens, except for Permitted Liens.

            3.5 Governmental Authorizations; Consents; Federal Registration
Collateral. Except as set forth in this Section 3.5, no authorization, approval
or other action by, and no notice to or filing with, any domestic or foreign
governmental authority or regulatory body or consent of any other Person is
required for (i) the grant by any Debtor of the Security Interests granted
hereby or for the execution, delivery or performance of this Agreement by such
Debtor; or (ii) the exercise by Agent of its rights and remedies hereunder other
than such as has already been obtained or taken or the failure of which to
obtain would not be reasonably likely to have a Material Adverse Effect. Except
as set forth on the schedules to the Copyright Security Agreement and the
Trademark Security Agreement, none of the material Collateral is Federal
Registration Collateral. Except for (a) the filing of UCC financing statements
with the Secretary of State of each Debtor's jurisdiction of organization, (b)
the filing of UCC financing statements in appropriate local jurisdictions with
respect to Fixtures, (c) the filing of any necessary registrations or notices
and the issue of recordations thereof, as applicable, in respect of any and all
Federal Registration Collateral (other than Trademarks), and (d) with respect to
Trademarks, the filing of the Trademark Security Agreement with the U.S. Patent
and Trademark Office, together with an appropriately completed recordation form
and the issuance of recordation therefor, no authorization, approval or other
action by, and no notice to or filing with, any domestic or foreign governmental
authority or regulatory body or consent of any other Person is required for the
perfection of the Security Interests granted hereby and pursuant to any other
Loan Documents in the Collateral in which a lien may be perfected under United
States, state or federal law; provided, however, that additional registrations,
notices and issuances of recordation, as applicable, may be necessary with
respect to Federal Registration Collateral acquired by a Debtor after the date
hereof.

            3.6 Accounts. To each Debtor's knowledge, each material Account
constitutes the legally valid and binding obligation of the applicable Account
Debtor. No Account Debtor has any defense, set-off, claim or counterclaim
against any Debtor that can be asserted against Agent, whether in any proceeding
to enforce Agent's rights in the Collateral or otherwise, except defenses,
setoffs, claims or counterclaims that are not, in the aggregate, material to the
value of the Accounts taken as a whole.

            3.7 Inventory. To each Debtor's knowledge, all material Inventory
is, and will be, of good and merchantable quality, free from any material
defects. None of any Debtor's Inventory has been produced in violation of any
provision of the Fair Labor Standards Act of 1938, or in violation of any other
law in any material respect.

            3.8 Intellectual Property. The Trademarks listed on the schedule to
the Trademark Security Agreement constitute all the federally registered
Trademarks owned by each Debtor. The Copyrights listed on the schedule to the
Copyright Security Agreement constitute the material federally registered
Copyrights in the original programming of Debtors. No Debtor currently owns any
Patents. All of the registrations for such Intellectual Property are subsisting
and, to each Debtor's knowledge, enforceable and all filings

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necessary to maintain the effectiveness of such registrations have been made.
Except as set forth on Schedule V, no Debtor has received written notice of any
material suits or actions commenced or threatened with reference to any
Intellectual Property of any Debtor which are unresolved. The execution,
delivery and performance of this Agreement or the Copyright Security Agreement
or the Trademark Security Agreement by any Debtor will not violate or cause a
default under any agreement pertaining to Intellectual Property to which such
Debtor is a party that is included in the Collateral, other than any such
violation or default that would not reasonably be expected to have a Material
Adverse Effect.

            3.9 Certain Collateral Disclosures. Except in each case as set forth
on Schedule IV hereto, no Debtor has an ownership interest in any material
Chattel Paper, Letter-of-Credit Rights, Commercial Tort Claims, Documents, or
Equipment covered by any certificate of title.

            3.10 Control Arrangements. Except for Control arising by operation
of law in favor of banks and securities intermediaries having custody over
deposit accounts and securities accounts, to the knowledge of each Debtor, no
Person (other than Agent) has Control of any deposit accounts, Electronic
Chattel Paper, Investment Property or Letter-of-Credit Rights in which such
Debtor has any interest and which constitutes part of the Collateral.

            3.11 Accurate Information. All factual information (taken as a
whole) heretofore or contemporaneously furnished by or on behalf of any Debtor
in writing to Agent or any Lender (including, without limitation, all
information contained in the Loan Documents) for purposes of or in connection
with this Agreement or any transaction contemplated herein is, and all other
such factual information (taken as a whole) hereafter furnished by or on behalf
of any Debtor in writing to Agent or any Lender for purposes of or in connection
with this Agreement or any transaction contemplated herein, when taken as a
whole, does not contain as of the date furnished any untrue statement of
material fact or omit to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading; provided that to the extent any such
factual information was based upon or constituted a forecast or projection, such
Debtor represents only that it acted in good faith and utilized reasonable
assumptions and due care in the preparation of such factual information.

            3.12 Survival of Representations and Warranties. All representations
and warranties of each Debtor contained in this Agreement shall survive the
execution and delivery of this Agreement.

SECTION 4. Covenants and Further Assurances.

            Until the Obligations are paid in full and the Credit Agreement has
terminated:

            4.1 Name or Entity Changes. No Debtor shall change such Debtor's
name, type of organization or jurisdiction of organization without providing
thirty (30) days' prior

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written notice to Agent. If any Debtor is at any time assigned a new
organizational identification number, it shall promptly notify Agent thereof in
writing.

            4.2 Accounts. Except as otherwise provided in this Section 4.2, each
Debtor shall continue to collect, at its own expense, all amounts due or to
become due to such Debtor with respect to Accounts and apply such amounts as are
so collected to the outstanding balances thereof. In connection with such
collections, each Debtor may take (and, at Agent's direction during the
continuance of any Event of Default, shall take) such action as such Debtor (or,
during the continuance of an Event of Default, Agent) may deem necessary or
advisable to enforce collection of the Accounts. Agent shall have the right if
an Event of Default has occurred and is continuing to: (i) notify the Account
Debtor under any Accounts (or any other Person obligated thereon) of the Lien
granted upon such Accounts in favor of Agent and to direct such Account Debtors
and other Persons to make payment of all amounts due or to become due or
otherwise render performance directly to Agent; (ii) exercise the rights of any
Debtor with respect to the obligation of the Account Debtor to make payment or
otherwise render performance to such Debtor and with respect to any property
that secures the obligations of the Account Debtor or any other Person obligated
on the Collateral; and (iii) adjust, settle or compromise the amount or payment
of such Accounts. If an Event of Default has occurred and is continuing, all
amounts and Proceeds received by any Debtor with respect to the Accounts shall
be received in trust for the benefit of Agent (on behalf of Lenders), and, at
Agent's request, shall be segregated from other funds of such Debtor and
forthwith paid over to Agent in the same form as so received (with any necessary
endorsement) to be applied against the Obligations.

            4.3 Intellectual Property.

            (a) Each Debtor shall concurrently herewith deliver to Agent each
Copyright Security Agreement and Trademark Security Agreement and all other
documents, instruments and other items as may be necessary for Agent to file
such agreements with the U.S. Copyright Office and the U.S. Patent and Trademark
Office, as applicable, except any recordation cover sheets and the applicable
recording fee pertaining thereto.

            (b) In the event any Debtor acquires or becomes the owner of any new
or additional Federal Registration Collateral consisting of Patents, Trademarks,
or material registered Copyrights in original programming of any Debtor, such
Debtor shall give to Agent prompt written notice thereof, and shall within
thirty (30) days of such notice amend (and hereby authorizes Agent to amend) the
schedules to the respective security agreements or enter into new or additional
security agreements to include any such new or additional Federal Registration
Collateral thereon and provide all other documents, instruments and other items
as may be necessary for Agent to file such agreements with the U.S. Copyright
Office and the U.S. Patent and Trademark Office, as applicable, except any
recordation cover sheets and the applicable recording fee pertaining thereto.

            (c) Each Debtor shall: (i) diligently prosecute any application
filed by such Debtor to register material Intellectual Property at any time
pending; (ii) make application for registration or issuance of all
newly-acquired material Intellectual Property

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owned by such Debtor as reasonably deemed appropriate by such Debtor; and (iii)
preserve and maintain all rights in the material Intellectual Property owned by
such Debtor unless such Debtor has a purpose in the ordinary course of business
to do otherwise and to do otherwise could not reasonably be expected to have a
Material Adverse Effect.

            (d) No Debtor shall abandon any right to file an application to
register material Intellectual Property, nor shall any Debtor abandon any
pending application to register material Intellectual Property or material
registered Intellectual Property unless such Debtor has a purpose in the
ordinary course of business to do otherwise and to do otherwise could not
reasonably be expected to have a Material Adverse Effect. Each Debtor will
notify the Agent promptly if it knows that any application or registration
relating to any Patents, Trademarks, or material registered Copyrights in
original programming of such Debtor owned by it may become abandoned or
dedicated to the public, or of any adverse determination or development
(including the institution of, or any adverse determination or development in,
any proceeding in the U.S. Copyright Office, the U.S. Patent and Trademark
Office or any court) regarding such Debtor's ownership of such Federal
Registration Collateral, or its right to maintain, register or patent the same.
If any of any Debtor's rights to any Federal Registration Collateral consisting
of material Intellectual Property are infringed, misappropriated or diluted by a
third party, such Debtor will notify the Agent within thirty (30) days after it
learns thereof and will, unless such Debtor shall reasonably determine that such
undertaking would not be commercially reasonable, promptly sue for infringement,
misappropriation or dilution and to recover any and all damages for such
infringement, misappropriation or dilution, and/or take such other actions as
such Debtor shall reasonably deem appropriate under the circumstances to protect
such Federal Registration Collateral.

            (e) No Debtor shall sell or assign or otherwise transfer or dispose
of its interest in, or grant any license under, or otherwise encumber any
Intellectual Property or enter into any other agreement with respect to any
material Intellectual Property included in the Collateral, except in the
ordinary course and consistent with past practices and except as permitted
hereunder or under the Credit Agreement. Each Debtor further agrees that it
shall not take any action or permit any action to be taken by others subject to
its control, including licensees, or knowingly fail to take any action which
could materially and adversely affect the validity or enforcement of the rights
granted to Agent under this Agreement, except as permitted hereunder or under
the Credit Agreement.

            (f) Each Debtor agrees to maintain the quality of any and all
products in connection with which the Trademarks are used, unless such Debtor
has a purpose in the ordinary course of business to do otherwise and to do
otherwise could not reasonably be expected to have a Material Adverse Effect.
During the continuance of an Event of Default, each Debtor agrees that Agent, or
a conservator appointed by Agent, shall have the right to establish such
additional product quality controls as Agent, or said conservator, in its
reasonable judgment, may deem necessary to assure the maintenance of the quality
of products sold by such Debtor under the Trademarks.

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            (g) Notwithstanding any Enforcement Action (as defined in the
Intercreditor Agreement) by Trustee (as defined in the Intercreditor Agreement)
against the Trademarks or the existence of an Enforcement Period (as defined in
the Intercreditor Agreement) with respect thereto, each Debtor hereby grants to
Agent effective during the existence of an Event of Default, the following
licenses with respect to the Intellectual Property to the extent it can lawfully
grant such licenses and subject to any third party rights to such Intellectual
Property (each, a "License"): (i) for a period of one (1) year after Agent
completes foreclosure in Agent's security interest in the Collateral consisting
of Inventory (including work-in-process), a license to use the Intellectual
Property for the purpose of completing the production, printing and/or
manufacture of work-in-process Inventory, provided that such Inventory is
completed in a manner that maintains the level of quality of such Inventory as
comparable to that which prevailed prior to the Events of Default; and (ii) a
license to use the Intellectual Property for the purpose of selling completed
Inventory, including in such License, the right to make public displays or
performances of any Collateral consisting of completed Inventory until such
Inventory is sold off. Each License shall be worldwide, assignable,
non-exclusive, include the right to sublicense and shall be free of obligation
to pay royalties. If a sale, exclusive license or other transfer or conveyance
is made of any Intellectual Property in compliance with the terms of the Credit
Agreement, Agent's Security Interest in the subject Intellectual Property shall
not be released or deemed released until the transferee or licensee thereof has
executed a document in form reasonably acceptable to Agent, confirming and
acknowledging the survival of the License.

            (h) If an Event of Default shall have occurred and be continuing,
the Agent may (without assuming any obligation or liability thereunder), at any
time and from time to time, in its sole and reasonable discretion, enforce (and
shall have the exclusive right to enforce) against any licensee or sublicensee
all rights and remedies of each Debtor in, to and under any of its Intellectual
Property and take or refrain from taking any action under any thereof, and each
Debtor releases the Agent and each other Secured Party from liability for, and
agrees to hold the Agent and each other Secured Party free and harmless from and
against any claims and expenses arising out of, any lawful action so taken or
omitted to be taken with respect thereto, except for claims and expenses arising
from the Agent's or such Secured Party's gross negligence or willful misconduct.

            (i) If Agent elects to exercise its remedies as set forth in that
certain Deed of Trust With Assignment of Rents Security Agreement and Fixture
Filing of even date herewith by Playboy Enterprises International, Inc. for the
benefit of Agent, each Debtor acknowledges and agrees that Agent, its assigns
and any purchaser of the Playboy Mansion may use the term "Playboy Mansion" when
describing such Playboy Mansion to the extent that such use constitutes a "fair
use" under applicable trademark law.

            4.4 Bailees. No material Collateral consisting of Equipment or
Inventory shall at any time be in the possession or control of any warehouse,
consignee, bailee or any of any Debtor's agents or processors without prior
written notice to Agent and the receipt by Agent, if Agent has so requested, of
warehouse receipts or bailee lien waivers (as applicable) reasonably
satisfactory to Agent prior to the commencement of such possession or control.
If an Event of Default has occurred and is continuing, each Debtor shall, upon
the request of

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Agent, notify any such warehouse, consignee, bailee, agent or processor of the
Security Interests, shall instruct such Person to hold all such Collateral for
Agent's account subject to Agent's instructions and shall obtain an
acknowledgement from such Person that such Person holds the Collateral for
Agent's benefit.

            4.5 Chattel Paper and Instruments. Each Debtor shall deliver to
Agent all Tangible Chattel Paper and all Instruments (other than Tangible
Chattel Paper and Instruments whose value does not exceed $25,000) duly endorsed
and accompanied by duly executed instruments of transfer or assignment, all in
form and substance reasonably satisfactory to Agent. Each Debtor shall use
commercially reasonable efforts to provide Agent with Control of all Electronic
Chattel Paper by having Agent identified as the assignee of the Records
pertaining to the single authoritative copy thereof and otherwise complying with
the applicable elements of Control set forth in the UCC. If an Event of Default
has occurred and is continuing, each Debtor also shall deliver to Agent all
security agreements securing any Chattel Paper and securing any Instruments. If
an Event of Default has occurred and is continuing, each Debtor will mark
conspicuously all Chattel Paper and all Instruments with a legend, in form and
substance reasonably satisfactory to Agent, indicating that such Chattel Paper
and such Instruments are subject to the Security Interests.

            4.6 Letters of Credit. At the Agent's request, each Debtor shall use
commercially reasonable efforts to deliver to Agent all Letters of Credit with a
value in excess of $25,000, duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance reasonably
satisfactory to Agent. Each Debtor shall use commercially reasonable efforts to
take any and all actions as may be necessary from time to time to cause Agent to
obtain exclusive Control of any Letter-of-Credit Rights owned by such Debtor in
a manner reasonably acceptable to Agent.

            4.7 Equipment. Each Debtor shall cause all material Equipment and
other material properties to be maintained and preserved in good and working
order, ordinary wear and tear excepted, and promptly make or cause to be made
all necessary repairs, replacements and other improvements in connection
therewith (other than with respect to obsolete Equipment), except where the
failure to do so would not reasonably be expected to have a Material Adverse
Effect. With respect to any item of Equipment that is covered by a certificate
of title under a statute of any jurisdiction under the law of which indication
of a security interest on such certificate is required as a condition of
perfection thereof, upon request of Agent, each Debtor shall deliver to Agent
any and all certificates of title, applications for title or similar evidence of
ownership of all such Equipment which has a value in excess of $10,000 and shall
execute and file with the registrar of motor vehicles or other appropriate
authority in such jurisdiction an application or other document requesting the
notation or other indication of the security interest created hereunder on such
certificate of title.

            4.8 Investment Property. At Agent's request, each Debtor shall take
any and all actions as may be commercially reasonable to (i) cause Agent to
obtain exclusive Control of any Investment Property owned by such Debtor in a
manner reasonably acceptable to Agent and (ii) request from any issuers of
Investment Property and such other

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Persons, for the benefit of Agent, written confirmation of Agent's Control over
such Investment Property upon terms and conditions reasonably acceptable to
Agent, excluding in each case, however, the Investment Property described on
Schedule VI hereto.

            4.9 General Intangibles. Each Debtor shall use commercially
reasonable efforts to obtain any consents, waivers or agreements necessary to
enable Agent to exercise remedies hereunder with respect to any of such Debtor's
rights under any material General Intangibles, including such Debtor's rights as
a licensee of material software and other Intellectual Property.

            4.10 Commercial Tort Claims. Each Debtor shall advise Agent upon
such Debtor becoming aware that it has any interest in a material Commercial
Tort Claim. With respect to any material Commercial Tort Claim in which a Debtor
has any interest, such Debtor shall execute and deliver such documents as may be
necessary to create and perfect Agent's security interest in such Commercial
Tort Claim.

            4.11 Taxes and Claims. Each Debtor shall pay when due all material
property and other taxes, assessments and governmental charges imposed upon, and
all claims against, the Collateral (including claims for labor, materials and
supplies); provided that no such tax, assessment, charge or claim need be paid
to the extent (i) it is not delinquent or thereafter payable without penalty, or
(ii) it is being contested in good faith by appropriate proceedings diligently
conducted and for which adequate reserves have been provided in accordance with
GAAP or (iii) the failure to pay such would not reasonably be expected to have a
Material Adverse Effect.

            4.12 Collateral Generally.

            (a) Each Debtor hereby authorizes Agent to file one or more
financing or continuation statements, and amendments thereto (or similar
documents required by any laws of any applicable jurisdiction), relating to all
or any part of the Collateral without the signature of such Debtor (to the
extent such signature is required under the laws of any applicable
jurisdiction), which financing statements may describe the Collateral as "all
assets" or "all personal property" or words of like import.

            (b) Each Debtor will furnish to Agent, from time to time upon
reasonable request by Agent, statements and schedules further identifying,
updating, and describing the Collateral and such other information, reports and
evidence concerning the Collateral as Agent may reasonably request, all in
reasonable detail.

            (c) No Debtor shall use or permit any Collateral to be used
unlawfully in any material respect or in violation of any provision of
applicable law, or any policy of insurance covering any of the Collateral, in
each case, in any material respect.

            (d) Each Debtor shall give Agent not less than thirty (30) days
prior written notice of any change in such Debtor's chief executive office and
principal place of business or of any new location of business or any new
location for any of the Collateral that is

                                      -12-
<PAGE>

material to such Debtor and that consists of Equipment or Inventory. With
respect to any such new location, upon Agent's request, each Debtor shall
execute and deliver such instruments, documents and notices and take such
actions as may be necessary to create and perfect the Security Interests under
the laws of the United States.

            (e) Each Debtor shall keep full and accurate books and records
relating to the Collateral and, if an Event of Default has occurred and is
continuing, at the request of Agent shall stamp or otherwise mark such books and
records in such manner as Agent may reasonably request indicating that the
Collateral is subject to the Security Interests.

            (f) Except for the safe custody of any Collateral in its possession
and the accounting for monies actually received hereunder, each Debtor agrees
that Agent shall have no duties concerning the custody and preservation of any
Collateral in its possession (or in the possession of any agent or bailee) or
with respect to any income thereon or the preservation of rights against prior
parties or any other rights pertaining thereto. Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if it takes such action for that purpose as a Debtor reasonably
requests in writing, but failure of Agent to comply with any such request at any
time shall not of itself be deemed a failure to exercise reasonable care. Agent
shall not be liable or responsible for any loss or damage to any of the
Collateral, or for any diminution in the value thereof, by reason of the act or
omission of any warehouseman, carrier, forwarding agency, consignee or other
agent or bailee reasonably selected by Agent.

            (g) Each Debtor assumes all liability and responsibility in
connection with the Collateral acquired by it, and the liability of such Debtor
to pay the Obligations shall in no way be affected or diminished by reason of
the fact that such Collateral may be lost, stolen, damaged, or for any reason
whatsoever unavailable to such Debtor.

            (h) Agent agrees that upon payment in full of all Obligations and
the termination of the Committed Loans and all Support Agreements, the Security
Interests shall automatically terminate and all rights to the Collateral shall
revert to the Debtors. Agent further agrees that upon such termination of the
Security Interests or release or re-assignment of any Collateral, Agent shall,
at the expense of each Debtor, return all Collateral then in Agent's possession
and execute and deliver to such Debtor such documents as such Debtor shall
reasonably request to evidence the termination of the Security Interests or the
release and re-assignment of such Collateral, as the case may be.

            4.13 Liens. The Collateral will be subject to no Liens, other than
Permitted Liens.

            4.14 Maintenance of Insurance. Each Debtor shall maintain with
reputable insurance companies that are not Affiliates of any Debtor, insurance
with respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts (after giving effect to any self-insurance
compatible with the following standards) as are customarily carried under
similar circumstances by such other Persons and providing for not

                                      -13-
<PAGE>

less than thirty (30) days' prior notice to Agent of termination, lapse or
cancellation of such insurance.

            If any Debtor fails to maintain the insurance required by the
immediately preceding paragraph, Agent may purchase such insurance at such
Debtor's expense, to protect Agent's interests in the Collateral. This insurance
may, but need not, protect the interests of such Debtor. The coverage that Agent
purchases may not pay any claim that such Debtor may make or any claim that is
made against such Debtor in connection with the Collateral. Such Debtor may
later cancel any insurance purchased by Agent, but only after providing Agent
with evidence that such Debtor has obtained insurance as required by this
Agreement. If Agent purchases insurance for the Collateral, such Debtor will be
responsible for the costs of that insurance, including interest and any other
charges that may be imposed in connection with the placement of the insurance,
until the effective date of the cancellation or expiration of the insurance. The
costs of the insurance may be added to the Loans. The costs of the insurance may
be more than the cost of insurance that such Debtor may be able to obtain on its
own.

            4.15 Federal Compliance.

            (a) Each Debtor shall notify Agent in writing upon acquiring any
ownership interest in Federal Registration Collateral. Such Debtor shall take
such steps as may be necessary in order to perfect the Agent's Security
Interests in Federal Registration Collateral.

            (b) Each Debtor shall notify Agent in writing of any Collateral
which constitutes a claim against the United States government or any
instrumentality or agency thereof, the assignment of which claim is restricted
by federal law. Upon the reasonable request of Agent, such Debtor shall take
such steps as may be necessary to comply with any applicable federal assignment
of claims laws and other comparable laws.

            (c) No Debtor shall produce any Inventory in violation of any
provision of the Fair Labor Standards Act of 1938, or in violation of any other
law.

            4.16 Debtor Remains Liable. Anything herein to the contrary
notwithstanding: (i) each Debtor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein and shall
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed; (ii) the exercise by Agent of any of the
rights hereunder shall not release any Debtor from any of its duties or
obligations under the contracts and agreements included in the Collateral; (iii)
neither Agent nor any Lender shall have any obligation or liability under the
contracts and agreements included in the Collateral by reason of this Agreement,
nor shall Agent nor any Lender be obligated to perform any of the obligations or
duties of any Debtor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder; and (iv) neither Agent nor any Lender
shall have any liability in contract or tort for any Debtor's acts or omissions.

                                      -14-
<PAGE>

            4.17 Other Documents and Actions. Each Debtor shall, from time to
time, at its expense, promptly execute and deliver all further instruments,
documents and notices and take all further action that may be necessary in order
to create, perfect and protect any Security Interests, or to enable Agent to
exercise and enforce its rights and remedies hereunder or under any other Loan
Document with respect to any Collateral.

SECTION 5. Remedial Provisions.

            (a) Upon the occurrence and during the continuance of an Event of
Default, Agent or its attorneys shall have the right without notice or demand or
legal process (unless the same shall be required by applicable law), personally,
or by an agent, (i) to enter upon, occupy and use any premises owned or leased
by any Debtor or where the Collateral is located (or is believed to be located)
until the Obligations are paid in full without any obligation to pay rent to
such Debtor, to render the Collateral useable or saleable and to remove the
Collateral or any part thereof to the premises of Agent for such time as Agent
may desire in order to effectively collect or liquidate the Collateral and use
in connection with such removal any and all services, supplies and other
facilities of such Debtor; (ii) to take possession of any Debtor's original
books and records, to obtain access to any Debtor's data processing equipment,
computer hardware and Software relating to the Collateral and to use all of the
foregoing and the information contained therein in any manner Agent deems
appropriate; and (iii) to notify postal authorities to change the address for
delivery of any Debtor's mail to an address designated by Agent and to receive,
open and dispose of all mail addressed to such Debtor. If any Debtor's books and
records are prepared or maintained by an accounting service, contractor or other
third party agent, such Debtor hereby irrevocably authorizes such service,
contractor or other agent, upon notice by Agent to such Person that an Event of
Default has occurred and is continuing, to deliver to Agent or its designees
such books and records, and to follow Agent's instructions with respect to
further services to be rendered.

            (b) If any Event of Default shall have occurred and be continuing,
Agent may exercise in respect of the Collateral, in addition to all other rights
and remedies provided for herein or otherwise available to it, all the rights
and remedies of Agent on default under the UCC (whether or not the UCC applies
to the affected Collateral) and also may: (i) require any Debtor to, and each
Debtor hereby agrees that it will, at its expense and upon request of Agent
forthwith, assemble all or part of the Collateral as directed by Agent and make
it available to Agent at any place or places designated by Agent which is
reasonably convenient to Agent in which event such Debtor shall at its own
expense (A) forthwith cause the same to be moved to the place or places so
designated by Agent, (B) store and keep any Collateral so delivered to Agent at
such place or places pending further action by Agent, and (C) while Collateral
shall be so stored and kept, provide such guards and maintenance services as
shall be necessary to protect the same and to preserve and maintain the
Collateral in good condition; (ii) withdraw all cash in any deposit account and
apply such monies in payment of the Obligations; and (iii) without notice except
as specified below, sell, lease, license or otherwise dispose of the Collateral
or any part thereof by one or more contracts, in one or more parcels at public
or private sale, and without the necessity of gathering at the place of sale of
the property to be sold, at any of Agent's offices or elsewhere, at such time or

                                      -15-
<PAGE>

times, for cash, on credit or for future delivery, and at such price or prices
and upon such other terms as Agent may deem commercially reasonable.

            (c) Each Debtor agrees that, to the extent notice of sale shall be
required by law, a reasonable authenticated notification of disposition shall be
a notification given at least ten (10) days prior to any such sale and such
notice shall (i) describe Agent and such Debtor, (ii) describe the Collateral
that is the subject of the intended disposition, (iii) state the method of
intended disposition, (iv) state that such Debtor is entitled to an accounting
of the Obligations and state the charge, if any, for an accounting, and (v)
state the time and place of any public disposition or the time after which any
private sale is to be made. At any sale of the Collateral, if permitted by law,
Agent may bid (which bid may be, in whole or in part, in the form of
cancellation of indebtedness) for the purchase, lease, license or other
disposition of the Collateral or any portion thereof for the account of Agent
(on behalf of Lenders). Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Agent may disclaim
any warranties that might arise in connection with the sale, lease, license or
other disposition of the Collateral and have no obligation to provide any
warranties at such time. Agent may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. To the extent permitted by law, each Debtor hereby specifically
waives all rights of redemption, stay or appraisal, which it has or may have
under any law now existing or hereafter enacted.

            (d) If an Event of Default has occurred and is continuing, each
Debtor hereby irrevocably authorizes and empowers Agent, without limiting any
other authorizations or empowerments contained in any of the other Loan
Documents, to assert, either directly or on behalf of such Debtor, any claims
such Debtor may have, from time to time, against any other party to any of the
agreements to which such Debtor is a party or to otherwise exercise any right or
remedy of such Debtor under any such agreements (including, without limitation,
the right to enforce directly against any party to any such agreement all of
such Debtor's rights thereunder, to make all demands and give all notices and to
make all requests required or permitted to be made by such Debtor thereunder).

            (e) If an Event of Default has occurred and is continuing, the
proceeds of any collection, enforcement, sale or other disposition of, or other
realization upon, all or any part of the Collateral and any cash held in any
deposit account shall be applied in accordance with the applicable provisions of
the Credit Agreement.

            (f) Each Debtor acknowledges and agrees that a breach of any of the
covenants contained in Sections 4, 5 and 6 hereof will cause irreparable injury
to Agent and that Agent has no adequate remedy at law in respect of such
breaches and therefore agrees, without limiting the right of Agent to seek and
obtain specific performance of other obligations of such Debtor contained in
this Agreement, that the covenants of such Debtor contained in the Sections
referred to in this Section shall be specifically enforceable against such
Debtor.

                                      -16-
<PAGE>

            (g) No failure or delay on the part of Agent or any Lender in the
exercise of any power, right or privilege hereunder shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or any other right, power
or privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise available.

SECTION 6. Attorney-in-Fact.

            Each Debtor hereby irrevocably appoints Agent, its nominee, and any
other Person whom Agent may designate, as such Debtor's attorney-in-fact, with
full power during the existence of any Event of Default, (i) to sign such
Debtor's name on verifications of Accounts and other Collateral; (ii) to send
requests for verification of Collateral to such Debtor's customers, Account
Debtors and other obligors; (iii) to endorse such Debtor's name on any checks,
notes, acceptances, money orders, drafts, and any other forms of payment or
security that may come into Agent's possession or on any assignments, stock
powers, or other instruments of transfer relating to the Collateral or any part
thereof; (iv) to sign such Debtor's name on any invoice or bill of lading
relating to any Collateral, on claims to enforce collection of any Collateral,
on notices to and drafts against customers and Account Debtors and other
obligors, on schedules and assignments of Collateral, on notices of assignment
and on public records; (v) to notify the post office authorities to change the
address for delivery of each Debtor's mail to an address designated by Agent;
(vi) to receive, open and dispose of all mail addressed to such Debtor; and
(vii) to do all things necessary to carry out the terms and provisions of this
Agreement. To the fullest extent permitted by law, each Debtor hereby ratifies
and approves all acts of any such attorney and agrees that neither Agent nor any
such attorney will be liable for any acts or omissions nor for any error of
judgment or mistake of fact or law other than, and to the extent of, such
Person's gross negligence or willful misconduct. The foregoing powers of
attorney, being coupled with an interest, are irrevocable until the Obligations
have been fully paid and satisfied and the Security Interests shall have
terminated in accordance with the terms hereof.

SECTION 7. Expenses.

            Subject to the provisions of Section 10.04 of the Credit Agreement,
each Debtor hereby agrees to promptly pay all fees, costs and expenses
(including reasonable attorneys' fees and expenses) incurred in connection with
(i) protecting, storing, warehousing, appraising, insuring, handling,
maintaining and shipping the Collateral, (ii) creating, perfecting, maintaining
and enforcing Agent's Liens and (iii) collecting, enforcing, retaking, holding,
preparing for disposition, processing and disposing of the Collateral.

            If any Debtor fails to promptly pay any portion of the above costs,
fees and expenses when due or to perform any other obligation of such Debtor
under this Agreement, Agent may, at its option, but shall not be required to,
pay or perform the same and charge such Debtor's account for all reasonable
fees, all costs and all expenses incurred therefor, and each Debtor agrees to
reimburse Agent therefor promptly upon written demand. All sums so

                                      -17-
<PAGE>

paid or incurred by Agent or any other Lender for any of the foregoing, any and
all other sums for which any Debtor may become liable hereunder and all fees,
costs and expenses (including reasonable attorneys' fees, all legal expenses and
all court costs) incurred by Agent in enforcing or protecting the Security
Interests or any of their rights or remedies under this Agreement shall
constitute Obligations and, to the extent not paid when due, shall bear interest
until paid at the Default Rate and shall be secured by the Collateral.

SECTION 8. Notices.

            All notices, approvals, requests, demands and other communications
hereunder to be delivered to any Debtor shall be sent c/o PEI Holdings, Inc. in
accordance with the notice provisions of the Credit Agreement and all other
notices, approvals, requests, demands and other communications hereunder shall
be given in accordance with the notice provisions of the Credit Agreement.

SECTION 9. Successors and Assigns.

            This Agreement shall be binding upon and insure to the benefit of
the parties hereto and their respective successors and assigns except that no
Debtor may assign its rights or obligations hereunder without the written
consent of Agent. No sales of participations, other sales, assignments,
transfers or other dispositions of any agreement governing or instrument
evidencing the Obligations or any portion thereof or interest therein, made in
accordance with the provisions of Section 10.07 of the Credit Agreement shall in
any manner impair the Lien granted to Agent, for the benefit of Agent and
Lenders, hereunder.

SECTION 10. Changes in Writing.

            No amendment, modification, termination or waiver of any provision
of this Agreement shall be effective unless the same shall be in writing signed
by Agent.

SECTION 11. GOVERNING LAW; SUBMISSION TO JURISDICTION.

            THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT EACH DEBTOR AND AGENT SHALL
RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS
SITTING IN COOK COUNTY, ILLINOIS OR OF THE UNITED STATES FOR THE NORTHERN
DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, DEBTOR
AND AGENT CONSENT, FOR THEMSELVES AND IN RESPECT OF THEIR PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. DEBTOR AND AGENT IRREVOCABLY WAIVE
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH THEY MAY NOW OR

                                      -18-
<PAGE>

HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF THIS AGREEMENT. DEBTOR AND AGENT WAIVE PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY THE LAW OF SUCH STATE.

SECTION 12. WAIVER OF JURY TRIAL.

            EACH OF THE DEBTORS AND AGENT HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND AGREES
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.

SECTION 13. Counterparts; Integration.

            This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement constitutes the entire
agreement and understanding among the parties hereto and supersede any and all
prior agreements and understandings, oral or written, relating to the subject
matter hereof.

SECTION 14. Headings.

            Headings and captions used in this Agreement are included for
convenience of reference and shall not be given any substantive effect.

                                      -19-
<PAGE>

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

               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

                                      -20-
<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/ James L. English
                      -------------------------------
               Name:  James L. English
               Title: President

               BANK OF AMERICA, N.A.
                 as Agent

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

                                      -21-
<PAGE>

                                   Schedule I
                           Organizational Information

<TABLE>
<CAPTION>
                                                       Former Name(s)                                   Jurisdiction  Organizational
                                           (within a 5-year period preceding the       Type of              of        Identification
            Name of Debtor                             Closing Date)                 Organization       Organization      Number
---------------------------------------   ---------------------------------------   --------------      ------------  --------------
<S>                                       <C>                                       <C>                 <C>           <C>
Playboy Enterprises, Inc.                            New Playboy, Inc.              Corporation         Delaware        2890968
Playboy Enterprises International, Inc.          Playboy Enterprises, Inc.          Corporation         Delaware        0611512
                                                 Playboy Acquisition Corp.
Playboy Entertainment Group, Inc.                           N/A                     Corporation         Delaware        2214975
AL Entertainment, Inc.                         Alta Loma Entertainment, Inc.        Corporation         California      C2104617
Adultvision Communications, Inc.                            N/A                     Corporation         Delaware        2506092
After Dark Video, Inc.                                      N/A                     Corporation         Delaware        0634603
Alta Loma Distribution, Inc.                                N/A                     Corporation         Delaware        0719802
Alta Loma Entertainment, Inc.                               N/A                     Corporation         Delaware        3431267
CPV Productions, Inc.                                       N/A                     Corporation         Delaware        2389325
Itasca Holdings, Inc.                           Critics' Choice Video, Inc.         Corporation         Illinois        54752474
                                          Collectors' Choice Music Holdings, Inc.
Cyberspice, Inc.                                            N/A                     Corporation         Delaware        2395164
Impulse Productions, Inc.                                   N/A                     Corporation         Delaware        2025398
Indigo Entertainment, Inc.                           Cameo Films, Inc.              Corporation         Illinois        51022718
Lake Shore Press, Inc.                                      N/A                     Corporation         Delaware        0734611
Lifestyle Brands, Ltd.                                      N/A                     Corporation         Delaware        0761117
MH Pictures, Inc.                                           N/A                     Corporation         California      C1852032
Mystique Films, Inc.                                        N/A                     Corporation         California      C1941961
Planet Playboy, Inc.                            Playboy International, Inc.         Corporation         Delaware        3118804
Planet Spice, Inc.                                          N/A                     Corporation         Delaware        3334731
Playboy Club of Hollywood, Inc.                             N/A                     Corporation         Delaware        0574817
Playboy Club of New York, Inc.                              N/A                     Corporation         New York        N/A
Playboy Clubs International, Inc.                           N/A                     Corporation         Delaware        0547111
Playboy Cruise Gaming, Inc.                                 N/A                     Corporation         Delaware        2912569
Playboy Gaming International, Ltd.                          N/A                     Corporation         Delaware        0759924
Playboy Gaming Nevada, Inc.                                 N/A                     Corporation         Nevada          C19197-1998
Playboy Gaming UK, Ltd.                                     N/A                     Corporation         Delaware        3236969
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                       Former Name(s)                                   Jurisdiction  Organizational
                                           (within a 5-year period preceding the       Type of              of        Identification
            Name of Debtor                             Closing Date)                 Organization       Organization      Number
---------------------------------------   ---------------------------------------   --------------      ------------  --------------
<S>                                       <C>                                       <C>                 <C>           <C>
Playboy Japan, Inc.                                         N/A                     Corporation         Delaware        3012466
Playboy Models, Inc.                                        N/A                     Corporation         Illinois        36304049
Playboy of Lyons, Inc.                                      N/A                     Corporation         Wisconsin       1P06328
Playboy of Sussex, Inc.                                     N/A                     Corporation         Delaware        0682905
Playboy Preferred, Inc.                                     N/A                     Corporation         Illinois        46823931
Playboy Properties, Inc.                                    N/A                     Corporation         Delaware        0604701
Playboy Shows, Inc.                                         N/A                     Corporation         Delaware        0689004
Precious Films, Inc.                                        N/A                     Corporation         California      C1914719
Special Editions, Ltd.                                      N/A                     Corporation         Delaware        0871843
Spice Entertainment, Inc.                   Spice Entertainment Companies, Inc.     Corporation         Delaware        2297730
Spice Direct, Inc.                                          N/A                     Corporation         Delaware        2313801
Spice Hot Entertainment, Inc.                               N/A                     Corporation         Delaware        3410364
Spice International, Inc.                                   N/A                     Corporation         Delaware        2305469
Spice Networks, Inc.                                        N/A                     Corporation         New York        N/A
Spice Platinum Entertainment, Inc.                          N/A                     Corporation         Delaware        3410368
Spice Productions, Inc.                                     N/A                     Corporation         Nevada          C14691-1994
Steelton, Inc.                                              N/A                     Corporation         Delaware        0672002
Telecom International, Inc.                                 N/A                     Corporation         Florida         P94000027131
Women Productions, Inc.                                     N/A                     Corporation         California      C1952207
Playboy TV International, LLC                               N/A                     Limited Liability   Delaware        3008396
                                                                                    Company
Claridge Organization LLC                                   N/A                     Limited Liability   Delaware        3322958
                                                                                    Company
Chelsea Court Holdings LLC                                  N/A                     Limited Liability   Delaware        3322951
                                                                                    Company
Candlelight Management LLC                                  N/A                     Limited Liability   Delaware        3322954
                                                                                    Company
</TABLE>

<PAGE>

                                   Schedule II
                              Collateral Locations

I.       General Collateral Locations

<TABLE>
<CAPTION>
                                              Location of Chief
          Name of Debtor                       Executive Office                 Other Locations(1)
---------------------------------------   -----------------------   ------------------------------------------
<S>                                       <C>                       <C>
Playboy Enterprises, Inc.                 680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Playboy Enterprises International, Inc.   680 N. Lake Shore Drive   730 Fifth Ave., New York, NY
                                          Chicago, IL               10236 Charing Cross Road, Los Angeles, CA
                                                                    2112 Broadway, Santa Monica, CA
                                                                    2706 Media Center Drive
                                                                    Los Angeles, CA
                                                                    9320 Wilshire Boulevard, Beverly Hills, CA

Playboy Entertainment Group, Inc.         2706 Media Center Drive   3030 Andrita St., Los Angeles, CA
                                          Los Angeles, CA           680 N. Lake Shore Dr., Chicago, IL
                                                                    730 Fifth Ave., NY, NY
                                                                    3675 Crestwood Pkwy, Duluth, GA

<CAPTION>

          Name of Debtor                           Third-Party Locations
---------------------------------------   ---------------------------------------
<S>                                       <C>
Playboy Enterprises, Inc.                 N/A

Playboy Enterprises International, Inc.   900 N. Rohlwing Rd., Itasca, IL
                                          2222 S. Federal Ave., Los Angeles, CA
                                          333 S. Mapleton Dr., Los Angeles, CA
                                          952 Badger Rd, Lomira, WI
                                          111 N. Canal St., Chicago, IL
                                          721 2nd St., Great Falls, MT
                                          96 College Ave., Rochester NY
Playboy Entertainment Group, Inc.         2901 W. Alameda Ave., Burbank, CA
                                          2130 Hollywood Way, Burbank, CA
                                          4444 Vineland Ave., Toluca Lake, CA
                                          4720 Vineland Ave., Toluca Lake, CA
                                          712 N. Seward St., Los Angeles, CA
                                          6900 Beck Ave., N. Hollywood, CA
                                          1220 N. Highland Ave., N. Hollywood, CA
                                          1132 N. Vine St., Hollywood, CA
                                          6087 Sunset Blvd., Los Angeles, CA
                                          655 W. Broadway, Glendale, CA
                                          2044 Cotner Ave., Los Angeles, CA
                                          6616 Lexington Ave., Hollywood, CA
                                          6750 Boulder Hwy., Las Vegas, NV
                                          13451 Brooks St., Baldwin Park, CA
                                          11510 Jefferson Blvd., Culver City, CA
                                          8550A Chetle Ave., Whittier CA
                                          5845-A Wynn Road, Las Vegas, NV
                                          6650 Spencer St., Las Vegas, NV
                                          605 S. Douglas St., El Segundo, CA
                                          2120 S. Jefferson St., Chicago, IL
</TABLE>

----------
(1)   Note that all properties are leased except 10236 Charing Cross Road, Los
      Angeles, CA, which is owned by Playboy Enterprises International, Inc.

<PAGE>

<TABLE>
<CAPTION>
                                              Location of Chief
          Name of Debtor                       Executive Office                 Other Locations(1)
---------------------------------------   -----------------------   ------------------------------------------
<S>                                       <C>                       <C>
AL Entertainment, Inc.                    2706 Media Center Drive   3030 Andrita St., Los Angeles, CA
                                          Los Angeles, CA
Adultvision Communications, Inc.          2706 Media Center Drive   3030 Andrita St., Los Angeles, CA
                                          Los Angeles, CA
After Dark Video, Inc.                    2706 Media Center Drive   3030 Andrita St., Los Angeles, CA
                                          Los Angeles, CA
Alta Loma Distribution, Inc.              2706 Media Center Drive   3030 Andrita St., Los Angeles, CA
                                          Los Angeles, CA
Alta Loma Entertainment, Inc.             2706 Media Center Drive   3030 Andrita St., Los Angeles, CA
                                          Los Angeles, CA
CPV Productions, Inc.                     680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Itasca Holdings, Inc.                     680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Cyberspice, Inc.                          680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Impulse Productions, Inc.                 2706 Media Center Drive   3030 Andrita St., Los Angeles, CA
                                          Los Angeles, CA
Indigo Entertainment, Inc.                2706 Media Center Drive   3030 Andrita St., Los Angeles, CA
                                          Los Angeles, CA
Lake Shore Press, Inc.                    680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Lifestyle Brands, Ltd.                    680 N. Lake Shore Drive   730 Fifth Ave., New York, NY
                                          Chicago, IL
MH Pictures, Inc.                         680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Mystique Films, Inc.                      2706 Media Center Drive   3030 Andrita St., Los Angeles, CA
                                          Los Angeles, CA
Planet Playboy, Inc.                      680 N. Lake Shore Drive   N/A
                                          Chicago, IL

<CAPTION>

          Name of Debtor                           Third-Party Locations
---------------------------------------   ---------------------------------------
<S>                                       <C>
AL Entertainment, Inc.                    N/A

Adultvision Communications, Inc.          N/A

After Dark Video, Inc.                    N/A

Alta Loma Distribution, Inc.              N/A

Alta Loma Entertainment, Inc.             N/A

CPV Productions, Inc.                     N/A

Itasca Holdings, Inc.                     N/A

Cyberspice, Inc.                          N/A

Impulse Productions, Inc.                 N/A

Indigo Entertainment, Inc.                N/A

Lake Shore Press, Inc.                    N/A

Lifestyle Brands, Ltd.                    N/A

MH Pictures, Inc.                         N/A

Mystique Films, Inc.                      N/A

Planet Playboy, Inc.                      N/A

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                              Location of Chief
          Name of Debtor                       Executive Office                 Other Locations(1)
---------------------------------------   -----------------------   ------------------------------------------
<S>                                       <C>                       <C>
Planet Spice, Inc.                        680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Playboy Club of Hollywood, Inc.           680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Playboy Club of New York, Inc.            680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Playboy Clubs International, Inc.         680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Playboy Cruise Gaming, Inc.               680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Playboy Gaming International, Ltd.        680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Playboy Gaming Nevada, Inc.               680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Playboy Gaming UK, Ltd.                   680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Playboy Japan, Inc.                       680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Playboy Models, Inc.                      680 N. Lake Shore Drive   2706 Media Center Drive
                                          Chicago, IL               Los Angeles, CA
Playboy of Lyons, Inc.                    680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Playboy of Sussex, Inc.                   680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Playboy Preferred, Inc.                   680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Playboy Properties, Inc.                  680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Playboy Shows, Inc.                       680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Precious Films, Inc.                      2706 Media Center Drive   3030 Andrita St., Los Angeles, CA
                                          Los Angeles, CA
Special Editions, Ltd.                    680 N. Lake Shore Drive   N/A
                                          Chicago, IL

<CAPTION>

          Name of Debtor                           Third-Party Locations
---------------------------------------   ---------------------------------------
<S>                                       <C>
Planet Spice, Inc.                        N/A

Playboy Club of Hollywood, Inc.           N/A

Playboy Club of New York, Inc.            N/A

Playboy Clubs International, Inc.         N/A

Playboy Cruise Gaming, Inc.               N/A

Playboy Gaming International, Ltd.        N/A

Playboy Gaming Nevada, Inc.               N/A

Playboy Gaming UK, Ltd.                   N/A

Playboy Japan, Inc.                       N/A

Playboy Models, Inc.                      N/A

Playboy of Lyons, Inc.                    N/A

Playboy of Sussex, Inc.                   N/A

Playboy Preferred, Inc.                   N/A

Playboy Properties, Inc.                  N/A

Playboy Shows, Inc.                       N/A

Precious Films, Inc.                      N/A

Special Editions, Ltd.                    900 N. Rohlwing Rd., Itasca, IL

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                              Location of Chief
          Name of Debtor                       Executive Office                 Other Locations(1)
---------------------------------------   -----------------------   ------------------------------------------
<S>                                       <C>                       <C>
Spice Entertainment, Inc.                 2706 Media Center Drive   3030 Andrita St., Los Angeles, CA
                                          Los Angeles, CA
Spice Direct, Inc.                        680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Spice Hot Entertainment, Inc.             2706 Media Center Drive   3030 Andrita St., Los Angeles, CA
                                          Los Angeles, CA
Spice International, Inc.                 680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Spice Networks, Inc.                      680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Spice Platinum Entertainment, Inc.        2706 Media Center Drive   3030 Andrita St., Los Angeles, CA
                                          Los Angeles, CA
Spice Productions, Inc.                   680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Steelton, Inc.                            680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Telecom International, Inc.               680 N. Lake Shore Drive   N/A
                                          Chicago, IL
Women Productions, Inc.                   2706 Media Center Drive   3030 Andrita St., Los Angeles, CA
                                          Los Angeles, CA
Playboy TV International, LLC             2706 Media Center Drive   3030 Andrita St., Los Angeles, CA
                                          Los Angeles, CA
Claridge Organization LLC                 2706 Media Center Drive   N/A
                                          Los Angeles, CA
Chelsea Court Holdings LLC                2706 Media Center Drive   N/A
                                          Los Angeles, CA
Candlelight Management LLC                2706 Media Center Drive   N/A
                                          Los Angeles, CA

<CAPTION>

          Name of Debtor                           Third-Party Locations
---------------------------------------   ---------------------------------------
<S>                                       <C>
Spice Entertainment, Inc.                 N/A

Spice Direct, Inc.                        N/A

Spice Hot Entertainment, Inc.             N/A

Spice International, Inc.                 N/A

Spice Networks, Inc.                      N/A

Spice Platinum Entertainment, Inc.        N/A

Spice Productions, Inc.                   N/A

Steelton, Inc.                            N/A

Telecom International, Inc.               N/A

Women Productions, Inc.                   N/A

Playboy TV International, LLC             N/A

Claridge Organization LLC                 N/A

Chelsea Court Holdings LLC                N/A

Candlelight Management LLC                N/A

</TABLE>

II.   Fixture Locations

A.    10236 Charing Cross Road, Los Angeles, CA

      Record Owner: Playboy Enterprises International, Inc., 680 N. Lake Shore
      Drive, Chicago, IL 60611

<PAGE>

                                  Schedule III
                             Commercial Tort Claims

                                      None.

<PAGE>

                                   Schedule IV
                         Certain Collateral Disclosures

Equipment covered by certificate of title:

Record Owner:                                 Record Owner:
Playboy Enterprises International, Inc        Playboy Entertainment Group, Inc.
Make/VIN:                                     Make/VIN:

1.    1986 Ford Ranger Pickup                 1.    2001 Ford Econoline Van/E350
      IFTCR10A5GUC47129                             1FB8831L01HA92599

2.    1987 Chevy Celeb, Wagon                 2.    1981 Tking Utility Trailer
      1GIAW81W2H6130643                             TK811248

3.    1988 Mercedes 560 SEL                   3.    1996 Ford Aerostar Van
      WDBCA39DOJA414939                             1FTDA14UOTZB53673

4.    1990 Acura Legend
      JH4KA4665LC031769

5.    1998 Lincoln Town Car
      1L1FM81W1WY685505

6.    1995 Ford Ranger
      1FTCR10X8STA68375

7.    1994 Ford Ranger XLT
      1FTCR14X4RPC28118

8.    2001 Ford Econoline Van
      1FTSE34L71HB23099

9.    1999 Mitsubishi Diamante
      6MMAP47P5XT002657

10.   2001 Honda Accord
      1HGCG668X1A138991

<PAGE>

                                   Schedule V
                          Intellectual Property Claims

                                      None.

<PAGE>

                                   Schedule VI
                          Excluded Investment Property

1.    Investment account held in the name of Playboy Enterprises, Inc., at
      LaSalle Bank, N.A., with LaSalle Bank, N.A. as Trustee, account number
      44-7914-10-2.Exhibit 10.9(d)

                                PLEDGE AGREEMENT

            This PLEDGE AGREEMENT (this "Agreement") is dated as of March 11th,
2003 and is between PEI Holdings, Inc., a Delaware corporation ("Company"), and
Bank of America, N.A., as agent for "Lenders" (as defined below).

                               W I T N E S S E T H

            WHEREAS, pursuant to a Credit Agreement of even date herewith (as
the same may be amended, modified or supplemented from time to time, the "Credit
Agreement") among Company, the various financial institutions as are, or may
from time to time become, parties thereto ("Lenders"), and Bank of America,
N.A., as a Lender and as agent for the Lenders ("Agent"), Lenders have extended
commitments to make credit extensions to Company;

            WHEREAS, it is a condition precedent to the making of the initial
Credit Extension and extension of other financial accommodations under the
Credit Agreement that Company shall have granted the pledge and security
interests contemplated by this Agreement, and Company desires to grant such
pledge and security interests in order to induce Lenders to extend credit to
Company under the Credit Agreement;

            NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to make Loans and provide other financial accommodations under
the Credit Agreement, Company hereby agrees with Agent, for the benefit of Agent
and Lenders as follows:

            1. Reference to Credit Agreement. Terms defined in the Credit
Agreement and not otherwise defined herein shall have the respective meanings
provided for in the Credit Agreement. In addition, "Permitted Liens" means those
Liens permitted by Section 7.01 of the Credit Agreement.

            2. Pledge. To secure the payment and performance of the "Secured
Obligations" (as defined in Section 3 below), Company hereby pledges and
hypothecates to Agent, for the benefit of Agent and Lenders, and grants to
Agent, for the benefit of Agent and Lenders, a security interest in, the
following (the "Pledged Collateral"):

            (a) the shares of stock of the corporations (the "Issuers")
identified on Schedule I hereto held by Company (the "Pledged Shares") and the
certificates representing the Pledged Shares, and all stock dividends, cash
dividends, cash, instruments, chattel paper and other rights, property or
proceeds and products from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Shares;

            (b) all additional shares of stock of Issuers at any time acquired
by Company in any manner, and the certificates representing such additional
shares (and any such additional shares shall constitute part of the Pledged
Shares under this Agreement), and all stock dividends, cash dividends, cash,
instruments, chattel paper and other rights, property

<PAGE>

or proceeds and products from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares; and

            (c) all proceeds of any of the foregoing.

            3. Security for Obligations. This Agreement secures the payment and
performance of the Obligations (as defined in the Credit Agreement) and the
obligations of Company under this Agreement (all such debts, obligations and
liabilities of Company being collectively called the "Secured Obligations").

            4. Delivery of Pledged Collateral. All certificates representing or
evidencing the Pledged Collateral shall be delivered to and held by or on behalf
of Agent pursuant hereto and shall be in suitable form for transfer by delivery,
or shall be accompanied by duly executed undated instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to Agent.
Agent shall have the right, at any time in its discretion and without notice to
Company if an Event of Default has occurred and is continuing to transfer to or
to register in the name of Agent or any of its nominees any or all of the
Pledged Collateral. In addition, in connection with the exercise of its remedies
pursuant to Section 12 below following the occurrence and during the continuance
of an Event of Default, Agent shall have the right to exchange certificates or
instruments representing or evidencing Pledged Collateral for certificates or
instruments of smaller or larger denominations.

            5. Representations and Warranties. Company represents and warrants
as follows:

            (a) Schedule I hereto completely and accurately sets forth the
number of shares of the issued and outstanding stock of Issuers held by Company
as of the Closing Date. The Pledged Shares held by Company constitute the
percentage of the issued and outstanding shares of stock of Issuers set forth on
Schedule I hereto as of the Closing Date.

            (b) The delivery of the Pledged Shares to Agent pursuant to this
Agreement is effective to create a valid and perfected first priority security
interest in the Pledged Collateral, free of any adverse claim, securing the
payment of the Secured Obligations subject to Permitted Liens.

            (c) No consent of any other Person and no consent, authorization,
approval or other action by, and no notice to or filing with, any Governmental
Authority is required either (i) for the pledge by Company of the Pledged
Collateral pursuant to this Agreement or for the execution, delivery or
performance of this Agreement by Company or (ii) for the exercise by Agent of
the voting or other rights provided for in this Agreement or the remedies in
respect of the Pledged Collateral pursuant to this Agreement (except (i) as has
already been obtained or taken , (ii) as may be required in connection with any
disposition of the Pledged Collateral by laws affecting the offering and sale of
securities generally and (iii)

                                      -2-
<PAGE>

as to which the failure of which to obtain would not be reasonably likely to
have a Material Adverse Effect).

            (d) None of the Pledged Shares constitutes margin stock, as defined
in Regulation U of the Board of Governors of the Federal Reserve System.

            6. Further Assurances.

            (a) Company will, from time to time, at Company's expense, and upon
Agent's reasonable request, promptly execute and deliver all further instruments
and documents and take all further action that may be reasonably necessary, in
order to perfect and protect any security interest granted or purported to be
granted hereby, to enable Agent to exercise and enforce the rights and remedies
of Agent hereunder with respect to any Pledged Collateral or to carry out the
provisions and purposes hereof. Without limiting the generality of the
foregoing, Company will: (i) upon Agent's reasonable request, appear in and
defend any action or proceeding that may affect Company's title to or Agent's
security interest in the Pledged Collateral; and (ii) promptly after the
purchase or other acquisition thereof, deliver to Agent all Pledged Shares
hereunder.

            (b) Company will, promptly upon request, provide to Agent all
information and evidence it may reasonably request concerning the Pledged
Collateral to enable Agent to enforce the provisions of this Agreement.

            (c) Company will, promptly upon the purchase or acquisition of any
additional shares of stock of Issuers, deliver to Agent such Pledged Shares as
required by Section 4 above, together with the other documents required under
Section 4 above.

            7. Voting Rights; Dividends; Etc.

            (a) So long as no Event of Default shall have occurred and is
continuing and Agent shall not have delivered to Company notice of its election
to exercise the rights set forth in subsection (b) below:

            (i) Company shall be entitled to exercise any and all voting and
      other consensual rights pertaining to the Pledged Collateral or any part
      thereof; provided, however, that Company shall not exercise or shall
      refrain from exercising any such right if, in Agent's reasonable judgment,
      such action or inaction would have a material adverse effect on the value
      of the Pledged Collateral taken as a whole or any material part thereof.

            (ii) To the extent permitted under the Credit Agreement, Company
      shall be entitled to receive (A) any cash dividends and other cash
      distributions paid or payable with respect to any of the Pledged
      Collateral, and (B) any and all instruments, chattel paper and other
      rights, property or proceeds and products (other than cash or checks)
      received, receivable or otherwise distributed in respect of any Pledged
      Collateral.

                                      -3-
<PAGE>

            (b) If an Event of Default has occurred and is continuing:

            (i) All rights of Company to exercise the voting and other
      consensual rights which Company would otherwise be entitled to exercise
      pursuant to subsection 7(a)(i), shall cease to be effective upon notice by
      Agent to Company of Agent's intent to exercise its rights hereunder, and
      upon delivery of such notice become vested in Agent who shall thereupon
      have the sole right to exercise such voting and other consensual rights.
      In order to effect the foregoing, Company hereby grants Agent an
      irrevocable proxy to vote the Pledged Collateral and Company agrees to
      execute such other proxies as Agent shall reasonably require.

            (ii) All rights of Company to receive and retain any cash dividends
      and other distributions shall cease upon notice by Agent to Company and
      any such dividends or other distributions paid or payable with respect to
      any of the Pledged Collateral shall be paid to Agent and held by Agent to
      secure the Secured Obligations until the earlier of (a) such time as such
      Event of Default is cured or waived and (b) such time as the Required
      Lenders elect to apply such dividends and other distributions to the
      Secured Obligations (any such application to be in such order and manner
      set forth in Section 8.03 of the Credit Agreement). All dividends and
      distributions which are received by Company contrary to the provisions of
      this subsection 7(b) shall be received in trust for the benefit of Agent,
      shall be segregated from other funds of Company and shall be forthwith
      paid over to Agent as Pledged Collateral in the same form as so received
      (with any necessary endorsement).

            8. Transfers and Other Liens; Additional Shares.

            (a) Except as permitted under the Credit Agreement and the other
Loan Documents, Company agrees that Company will not (i) encumber, sell, assign
(by operation of law or otherwise) or otherwise dispose of, or grant any option
with respect to, any of the Pledged Collateral or (ii) enter into any other
Contractual Obligations (including without limitation any voting or shareholders
agreement) which could reasonably be expected to restrict or inhibit Agent's
rights or ability to vote or sell or otherwise dispose of the Pledged Collateral
or any part thereof after the occurrence of an Event of Default.

            (b) Company agrees that it will not cause Issuers to issue any stock
or other securities (including any warrants, options, subscriptions or other
Contractual Obligations for the purchase of stock or securities convertible into
stock) in addition to or in substitution for the Pledged Shares.

            9. Agent Appointed Attorney-in-Fact. Company hereby irrevocably
appoints Agent as Company's attorney-in-fact effective during the continuance of
an Event of Default, with full authority in the place and stead of Company and
in the name of Company, Agent or otherwise, from time to time in Agent's
discretion to take any action (including

                                      -4-
<PAGE>

completion and presentation of any proxy) and to execute any instrument that
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation (but subject to the other provisions
hereof), to (i) receive, endorse and collect all instruments made payable to
Company representing any dividend or other distribution in respect of the
Pledged Collateral or any part thereof; (ii) exercise the voting and other
consensual rights pertaining to the Pledged Collateral; and (iii) sell,
transfer, pledge, make any agreement with respect to or otherwise deal with any
of the Pledged Collateral as fully and completely as though Agent was the
absolute owner thereof for all purposes, and to do, at Agent's option and
Company's expense, at any time or from time to time, all acts and things that
Agent deems necessary to protect, preserve or realize upon the Pledged
Collateral. Company hereby ratifies and approves all acts of Agent made or taken
pursuant to this Section 9. Except as specifically set forth in Section 11
hereof, neither Agent nor any Person designated by Agent shall be liable for any
acts or omissions or for any error of judgment or mistake of fact or law. This
power of attorney, being coupled with an interest, shall be irrevocable until
all Secured Obligations shall have been paid in full and the Credit Agreement
shall have been terminated.

            10. Agent May Perform. If Company fails to perform any agreement
contained herein, Agent may itself perform, or cause performance of, such
agreement, and the expenses of Agent incurred in connection therewith shall be
payable by Company under Section 15 hereof, and be a part of the Secured
Obligations.

            11. Limitation on Duty of Agent with Respect to the Pledged
Collateral. The powers conferred on Agent hereunder are solely to protect its
interest in the Pledged Collateral and shall not impose any duty on it to
exercise any such powers. Except for the safe custody of any Pledged Collateral
in its possession and the accounting for monies actually received by it
hereunder, Agent shall have no duty with respect to any Pledged Collateral in
its possession (or in the possession of any agent or bailee). Agent shall be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if it takes such action for that purpose as Company
reasonably requests in writing, but failure of Agent to comply with any such
request at any time shall not of itself be deemed a failure to exercise
reasonable care. It is expressly agreed that Agent shall have no responsibility
for (i) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Pledged
Collateral, whether or not Agent has or is deemed to have knowledge of such
matters, or (ii) taking any necessary steps to preserve rights against any
parties with respect to any Pledged Collateral, but Agent may do so and, subject
to Section 15, all expenses incurred in connection therewith shall be payable by
and for the sole account of Company.

            12. Remedies upon Event of Default. If any Event of Default shall
have occurred and is continuing:

            (a) Agent may exercise in respect of the Pledged Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party under the Uniform
Commercial Code (the "UCC") in effect in the

                                      -5-
<PAGE>

State of Illinois at that time, whether or not the UCC applies to the affected
Pledged Collateral, and Agent may also, without notice except as specified
below, sell the Pledged Collateral or any part thereof in one or more parcels at
public or private sale, at any exchange, broker's board or at any of Agent's
offices or elsewhere, for cash, on credit, or for future delivery, at such price
or prices and upon such other terms as Agent deems commercially reasonable.
Company agrees that, to the extent notice of sale shall be required by law, at
least ten (10) days' prior written notice to Company of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. At any sale of the Pledged Collateral, if
permitted by law, Agent may bid (which bid may be, in whole or in part, in the
form of cancellation of indebtedness) for the purchase of the Pledged Collateral
or any portion thereof. Agent shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. Agent may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.

            (b) Company recognizes that Agent may be unable to effect a public
sale of all or part of the Pledged Collateral and may be compelled to resort to
one or more private sales to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire such Pledged Collateral for
their own account, for investment and not with a view to the distribution or
resale thereof. Company acknowledges that any such private sales may be at
prices and on terms less favorable to the seller than if sold at public sales
and agrees that such private sales shall be deemed to have been made in a
commercially reasonable manner, and that Agent shall be under no obligation to
delay a sale of any of the Pledged Collateral for the period of time necessary
to permit the issuing corporation of such securities to register such securities
for public sale under the Securities Act of 1933, as from time to time amended
(the "Securities Act"), or under any other requirement of law, even if the
issuing corporation would agree to do so. To the extent permitted by law,
Company hereby specifically waives all rights of redemption, stay or appraisal
which Company has or may have under any law now existing or hereafter enacted.

            13. Remedies Cumulative. No failure on the part of Agent to
exercise, and no delay in exercising and no course of dealing with respect to,
any power, privilege or right under the other Loan Documents or this Agreement
shall operate as a waiver thereof; nor shall any single or partial exercise by
Agent of any power, privilege or right under any of the other Loan Documents or
this Agreement preclude any other or further exercise thereof or the exercise of
any other such power, privilege or right. The powers, privileges and rights in
this Agreement and the Loan Documents are cumulative and are not exclusive of
any other remedies provided by law.

            14. Application of Proceeds. If an Event of Default has occurred and
is continuing, the proceeds of any sale of, or other realization upon, all or
any part of the Pledged Collateral shall be applied as provided in Section 8.03
of the Credit Agreement.

                                      -6-
<PAGE>

            15. Expenses. Subject to the provisions of Section 10.04 of the
Credit Agreement, Company shall promptly pay to Agent all reasonable costs and
expenses of Agent (including reasonable Attorney Costs) in connection with
protecting or perfecting Agent's security interest in the Pledged Collateral or
in connection with any matters contemplated by or arising out of this Agreement
(including without limitation the enforcement of this Agreement), the Credit
Agreement or any of the other Loan Documents.

            16. Termination of Security Interests; Release of Collateral. Upon
payment and performance in full of all Secured Obligations and termination of
the Credit Agreement, the security interests granted herein shall automatically
terminate and all rights to the Pledged Collateral shall revert to Company. Upon
such termination of the security interests or release of any Pledged Collateral,
Agent will, at the expense of Company, return to Company all Pledged Collateral
then in Agent's possession and execute and deliver to Company such documents as
Company shall reasonably request to evidence the termination of the security
interests or the release of such Pledged Collateral which has not yet
theretofore been sold or otherwise applied or released. Such release shall be
without recourse or warranty to Agent.

            17. Amendments, Waivers and Consents. No amendment, modification,
termination or waiver of any provision of this Agreement, or consent to any
departure by Company therefrom, shall in any event be effective without the
written concurrence of Agent and Company.

            18. Notices. All notices, requests and other communications
hereunder shall be given in accordance with Schedule 10.02 of the Credit
Agreement.

            19. Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that Company may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of Agent and each Lender.

            20. Waiver. In addition to any other waivers herein, Company waives
to the greatest extent it may lawfully do so, and agrees that it shall not at
any time insist upon, plead or in any manner whatever claim or take the benefit
or advantage of, any appraisal, valuation, stay, extension, marshalling of
assets, redemption or similar law, or exemption, whether now or at any time
hereafter in force, which may delay, prevent or otherwise affect the performance
by Company of its obligations under, or the enforcement by Agent of, this
Agreement. Company hereby waives diligence, presentment and demand (whether for
nonpayment or protest or of acceptance, maturity, extension of time, change in
nature or form of the Secured Obligations, acceptance of further security,
release of further security, composition or agreement arrived at as to the
amount of, or the terms of the Secured Obligations, notice of adverse change in
Company's or any other Person's financial condition or any other fact which
might materially increase the risk to Company) with respect to any of the
Secured Obligations or all other demands whatsoever. Company hereby waives, to
the extent it may lawfully do so, any requirement on the part of any holder of
any Note to mitigate the damages resulting from any default under any Note.

                                      -7-
<PAGE>

            21. Applicable Law.

            (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF ILLINOIS APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED, THAT COMPANY AND AGENT SHALL
RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

            (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS
SITTING IN COOK COUNTY, ILLINOIS OR OF THE UNITED STATES FOR THE NORTHERN
DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, COMPANY
AND Agent CONSENT, FOR THEMSELVES AND IN RESPECT OF THEIR PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. COMPANY AND Agent IRREVOCABLY WAIVE
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN
DOCUMENT OR OTHER DOCUMENT RELATED THERETO. COMPANY AND Agent WAIVE PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY
OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

            22. Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR
TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

            23. Failure or Indulgence Not Waiver; Remedies Cumulative;
Severability.

            (a) No failure or delay on the part of Agent or any Lender in the
exercise of, and no course of dealing with respect to, any power, right or
privilege under the Credit

                                      -8-
<PAGE>

Agreement or this Agreement or any other Loan Document shall impair such power,
right or privilege or be construed to be a waiver of any Default or Event of
Default or acquiescence therein, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or any
other right, power or privilege. All rights and remedies existing under the
Credit Agreement, this Agreement, the other Loan Documents or by law afforded
are cumulative to, and not exclusive of, any rights or remedies otherwise
available and shall be available to Agent until the Secured Obligations have
been indefeasibly paid in full and the termination of all Commitments.

            (b) The invalidity, illegality or unenforceability of any provision
in or obligation under this Agreement shall not affect or impair the validity,
legality or enforceability of the remaining provisions or obligations under this
Agreement.

            24. Survival of Representations. All representations and warranties
of Company contained in this Agreement shall survive the execution and delivery
of this Agreement.

            25. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.

                                      -9-
<PAGE>

            Witness the due execution hereof by the duly authorized officer of
the undersigned as of the day first above written.

                                            PEI HOLDINGS, INC.

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

                                      -10-
<PAGE>

                                   SCHEDULE I
                               TO PLEDGE AGREEMENT

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
                                                                                       Percentage of
                                                                                        Outstanding
                                                 Number of       Share Certificate       Shares of
     Name of Company         Class of Stock        Shares              Number          Capital Stock
----------------------------------------------------------------------------------------------------
<S>                             <C>              <C>                    <C>                 <C>
Playboy Enterprises             Common A         10 Class A             CA3                 100%
International, Inc.             Common B         90 Class B             CB3
Spice Entertainment, Inc.        Common             100                  3                  100%
----------------------------------------------------------------------------------------------------
</TABLE>

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