Document:

Exhibit 10.3

                      SECOND AMENDMENT TO CREDIT AGREEMENT

                                                September 15, 2004

PEI Holdings, Inc.
680 North Lakeshore Drive
Chicago, Illinois 60611

Ladies and Gentlemen:

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

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

            Therefore, Borrower and Lenders hereby agree as follows:

            1. Amendment. Subject to the satisfaction of the conditions set
forth in Section 3 hereof, the Credit Agreement is hereby amended as follows:

            (a) Schedule 2.01 of the Credit Agreement is amended and restated as
set forth on Exhibit A hereto.

            (b) The definitions of the terms "Applicable Rate", "Liquidity Test"
and "Maturity Date" contained in Section 1.01 of the Credit Agreement are
amended and restated as follows:

            "Applicable Rate" means, from time to time, the following
      percentages per annum, based upon Playboy's Adjusted EBITDA (the
      "Financial Covenant") as set forth in the most recent quarterly Compliance
      Certificate received by Agent pursuant to Section 6.02(b):

<PAGE>

                                 Applicable Rate

<TABLE>
<CAPTION>
                                                                          IBOR Committed       Base Rate
      Pricing                                           Commitment       Loans and Letter      Committed
       Level            Financial Covenant                 Fee            of Credit Fees         Loans
      --------------------------------------------------------------------------------------------------
<S>                <C>                                    <C>                 <C>                <C>
      1            Greater than $35,000,000               0.375%              1.50%               .00%

      2            Greater than $30,000,000, but          0.375%              2.00%               .50%
                   less than or equal to
                   $35,000,000

      3            Greater than $25,000,000, but          0.375%              2.25%               .75%
                   less than or equal to
                   $30,000,000

      4            Greater than $20,000,000, but          0.375%              2.50%              1.00%
                   less than or equal to
                   $25,000,000

      5            Less than or equal to                  0.375%              3.00%              1.50%
                   $20,000,000
</TABLE>

            The Applicable Margin will be in effect from the first day of the
      month following the delivery date of each quarterly Compliance Certificate
      (an "Adjustment Date") until the first day of the month following the
      delivery date of the next quarterly Compliance Certificate. The Applicable
      Rate in effect from September 1, 2004 through November 5, 2004 shall be
      determined based upon Pricing Level 3. If no Compliance Certificate is
      delivered when due in accordance with Section 6.02(b), the then-applicable
      Pricing Level will remain in effect until actual delivery of such
      Compliance Certificate, at which time the Pricing Level will be adjusted
      retroactive to the applicable Adjustment Date.

            "Liquidity Test" means that, after giving effect to the payment
      subject to the Liquidity Test, the sum of (i) cash and Cash Equivalents of
      Playboy and its Domestic Restricted Subsidiaries at such time and (ii) the
      amount of Available Revolver at such time, exceed $10,000,000.

            "Maturity Date" means September 1, 2007.

            (c) Section 6.09(c) of the Credit Agreement is amended by deleting
the amount "Seven Million Dollars ($7,000,000)" and replacing it with the amount
"Ten Million Dollars ($10,000,000)".

            (d) Section 7.08 of the Credit Agreement is amended by deleting
clause (d) thereof and replacing it with the following phrase "(d) optional
prepayments in respect of the Senior Secured Note Debt at any time after April
11, 2006, so long as (i) no Event of Default is in existence at the time of such
payment and (ii) after making such payment, Borrower has satisfied the Liquidity
Test."

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

                                      -2-
<PAGE>

            3. Effectiveness. This Second Amendment to Credit Agreement shall be
effective as of September 1, 2004 when executed by Lenders and Agent and agreed
to by Borrower and returned to Agent, together with (i) payment to Agent of an
amendment fee equal to $75,000 for the ratable benefit of Lenders and (ii) each
of the documents set forth on Exhibit B hereto, all fully executed.

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

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

                                        Very truly yours,

                                        BANK OF AMERICA, N.A., as Agent

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

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

                                        By      /s/ Craig W. McGuire
                                            ------------------------------------
                                        Its         CRAIG W. McGUIRE
                                            ------------------------------------
                                                     VICE PRESIDENT

                                        LASALLE BANK NATIONAL ASSOCIATION,
                                        as a Lender

                                        By      /s/ Kyle Freimuth
                                            ------------------------------------
                                        Its         KYLE FREIMUTH
                                            ------------------------------------
                                                    VICE PRESIDENT

ACKNOWLEDGED AND AGREED TO
THIS 15 DAY OF SEPTEMBER, 2004:

PEI HOLDINGS, INC., as Borrower

By  /s/ Robert D. Campbell
    -----------------------------
Its Robert D. Campbell, Treasurer
    -----------------------------

                                      -3-
<PAGE>

                                    EXHIBIT A

                                                                   SCHEDULE 2.01

                                   COMMITMENTS
                               AND PRO RATA SHARES

Lender                                         Commitment         Pro Rata Share
--------------------------------------------------------------------------------

Bank of America, N.A.                          $15,000,000         50%
LaSalle Bank National Association              $15,000,000         50%
                                               -----------        ---
Total                                          $30,000,000        100%

<PAGE>

                                    EXHIBIT B

                               Closing Deliveries

1.    Reaffirmation by each Guarantor of its Guaranty of the Obligations.

2.    Amended and Restated Note executed by Borrower in favor of each Lender.

3.    Amendment to Deed of Trust covering the Playboy Mansion executed by
      Playboy Enterprises International, Inc. ("PEII").

4.    Date down endorsement to title insurance policy.

5.    Certified articles of incorporation of each of Borrower and PEII.

6.    Good standing certificates for each of Borrower and PEII in its state of
      incorporation.

7.    Certificate of Compliance with Senior Secured Note Indenture executed by
      Borrower.

8.    Opinion of counsel to Borrower and PEII.Exhibit 10.4

This instrument prepared by and
after recording return to:

Carole K. Towne, Esq.
GOLDBERG, KOHN, BELL, BLACK,
  ROSENBLOOM & MORITZ, LTD.
55 East Monroe Street
Suite 3700
Chicago, Illinois 60603
(312) 201-4000

           FIRST AMENDMENT TO DEED OF TRUST WITH ASSIGNMENT OF RENTS,
                      SECURITY AGREEMENT AND FIXTURE FILING
                        (Los Angeles County, California)

            THIS FIRST AMENDMENT TO DEED OF TRUST WITH ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING ("Amendment"), is made as of September 15,
2004, by and between PLAYBOY ENTERPRISES INTERNATIONAL, INC., a Delaware
corporation ("Trustor"), and BANK OF AMERICA, N.A., as Agent ("Agent") for
various lenders ("Lenders").

                                    RECITALS

            A. Pursuant to the terms of a certain Credit Agreement dated as of
March 11, 2003 (said Credit Agreement, together with all amendments,
supplements, modifications and replacements thereof, being hereinafter referred
to as the "Credit Agreement"), Agent and Lenders agreed to make loans to PEI
HOLDINGS INC. ("Borrower") and extend other financial accommodations to Borrower
in an aggregate amount of $30,000,000, consisting of (i) revolving loans in an
aggregate principal amount not to exceed $20,000,000 (the "Loans") with a
maturity date of March 11, 2006, and (ii) obligations of Borrower under certain
Swap Contracts (as defined in the Credit Agreement) not to exceed $10,000,000
(the "Swap Obligations"). Trustor, among others, has executed and delivered to
Agent and Lenders a certain Master Corporate Guaranty dated as of March 11, 2003
(said Master Corporate Guaranty, together with all amendments, supplements,
modifications and full or partial replacements thereof, being hereinafter
referred to the "Guaranty"), guarantying the obligations of Borrower to repay
the Loans and the Swap Obligations. The Guaranty is secured by a certain Deed of
Trust with Assignment of Rents, Security Agreement and Fixture Filing dated as
of March 11, 2003 and recorded with the Recorder's Office in Los Angeles County,
California on March 13, 2003 in the Official Records as Instrument No. 03
0717740 (the "Deed of Trust").

<PAGE>

            B. Concurrently herewith, Borrower, Agent and Lenders are entering
into a certain Second Amendment to Credit Agreement of even date herewith,
pursuant to which, among other things, the Loans are being increased from
$20,000,000 to $30,000,000 (the "Amended Loans") and the maturity date is being
extended to September 1, 2007. The notes evidencing the Loans are being amended
and restated in their entirety by one or more notes in the aggregate principal
amount of $30,000,000 (said notes, together with all amendments, supplements,
modifications and replacements thereof, being hereinafter referred to as the
"Amended Notes"). Trustor has executed and delivered to Agent a certain
Reaffirmation of Guaranty of even date herewith.

            C. The parties hereto now desire to amend the Deed of Trust to
secure the increase in the obligations secured by the Guaranty.

                                   AGREEMENTS

            1. The Recitals hereto are hereby incorporated by this reference
into the Deed of Trust.

            2. The Deed of Trust is hereby amended to secure the increased
amount of the obligations secured by the Guaranty.

            3. All references in the Deed of Trust to the "Loans" shall mean the
Amended Loans.

            4. All references in the Deed of Trust to the "Notes" shall mean the
Amended Notes.

            5. The Deed of Trust is hereby amended to conform to the provisions
hereof. Except as modified hereby, the Deed of Trust shall remain in full force
and effect in accordance with its original terms.

            6. Trustor hereby acknowledges, agrees and reaffirms the Deed of
Trust, as hereby amended, as security for the Guaranty of indebtedness in the
maximum aggregate principal amount of $40,000,000, and Trustor further
acknowledges, agrees and reaffirms that the Deed of Trust retains a first lien
priority on the real estate encumbered by the Deed of Trust, subject only to the
Permitted Encumbrances (as defined in the Deed of Trust).

<PAGE>

            IN WITNESS WHEREOF, the undersigned have executed this Amendment on
the date first above written.

                                        PLAYBOY ENTERPRISES
                                        INTERNATIONAL, INC., a Delaware
                                        corporation

                                        By /s/ Robert D. Campbell
                                           -------------------------------------
                                        Print Name Robert D. Campbell
                                                   -----------------------------
                                        Its SVP and Treasurer
                                            ------------------------------------

                                        BANK OF AMERICA, N.A., as Agent

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

<PAGE>

                                 ACKNOWLEDGMENT

STATE OF ILLINOIS       )
                        ) SS
COUNTY OF COOK          )

            On September 15, 2004, before me, Susan A. Tario, a Notary Public,
personally appeared Robert D. Campbell, the SVP and Treasurer of PLAYBOY
ENTERPRISES INTERNATIONAL, INC., a Delaware corporation, who proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument, the person, or
the entity upon behalf of which the person acted, executed the instrument.

            WITNESS my hand and official seal.

                                        Susan A. Tario
                                        --------------------------------
                                        Notary Public

                                        (SEAL)            "OFFICIAL SEAL"
                                                          SUSAN A. TARIO
                                                Notary Public, State of Illinois
                                                My Commission Expires 11-24-2007

<PAGE>

                                 ACKNOWLEDGMENT

STATE OF ILLINOIS       )
                        ) SS
COUNTY OF COOK          )

            On September 14, 2004, before me, Maria Paggao, a Notary Public,
personally appeared David A. Johanson, the vice president of BANK OF AMERICA,
N.A., who proved to me on the basis of satisfactory evidence to be the person
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his authorized capacity, and that by his signature on the
instrument, the person, or the entity upon behalf of which the person acted,
executed the instrument.

            WITNESS my hand and official seal.

                                                /s/ Maria Paggao
                                        --------------------------------
                                        Notary Public

                                        (SEAL)            OFFICIAL SEAL
                                                          MARIA PAGGAO
                                                NOTARY PUBLIC, STATE OF ILLINOIS
                                               MY COMMISSION EXPIRES: 02-01-2005

<PAGE>

                                    Exhibit A

                                Legal Description

Parcel 1:

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

Parcel 2:

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

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

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

Assessor's Parcel No: 4359-013-025

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