Document:

exv10w2

 

Exhibit 10.2

WAUWATOSA SAVINGS BANK

SUPPLEMENTAL RETIREMENT BENEFIT PLAN

     THIS PLAN is established this 13th day of July, 1999, by agreement between
Wauwatosa Savings Bank, a Wisconsin-chartered savings bank (the “Bank”) and Donald J. Stephens (the
“Executive”).

     WHEREAS, Executive is a valued employee who in his years of service with the Bank and in his
capacity as President and Chief Executive Officer has contributed materially to the Bank’s
profitability and success; and

     WHEREAS, the Bank wishes to establish this Supplemental Retirement Plan (hereinafter the
“Plan”) to assure Executive’s continued availability to provide services to the Bank and to make
available to Executive certain benefits upon retirement, death or disability in consideration of
services to be performed from and after the date of this Plan.

     NOW, THEREFORE, in consideration of the premises, the parties hereto agree as follows:

     1. Definitions

          A. Administrative Committee — “Administrative Committee” shall mean the
committee charged with administration and interpretation of the Plan pursuant to Section 4.

          B. Age — “Age” shall mean Executive’s age as of his last birthday.

          C. Change in Control — “Change in Control” shall mean any change in
control with respect to the Bank that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (“Exchange Act”) or any successor thereto; provided that, without
limitation, a change in control shall be deemed to have occurred if (i) any “person” (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act and other than a holding
company formed to acquire the stock of the Bank as a part of a conversion to the stock form
of ownership) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities representing 25% or more of the
combined voting power of the Bank’s then outstanding securities; or (ii) during any period of
two consecutive years, individuals who at the beginning of such period constituted the Board
of Directors of the Bank cease for any reason to constitute at least a majority thereof unless
the election, or the nomination for election by stockholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period; or (iii) the Bank merges or consolidates with or
reorganizes into any other corporation or corporations other than its affiliates or engages in
any other similar business combination or reorganization, or (iv) the Bank sells, assigns or
transfers all or substantially all of its business and assets, in one or a series of related
transactions, except any such sales to affiliates.

          D. Disability — “Disability” shall mean, if Executive is covered under a
disability insurance policy paid by the Bank, the definition of total disability contained in

 

 

such policy. If Executive is not insured under such a policy, Disability shall mean a mental
or physical condition which renders Executive unable to perform the regular duties of his job, as
determined by the Administrative Committee; provided that in the event of any disagreement between
the Executive and the Administrative Committee, they shall select a mutually agreeable, qualified,
independent physician to make such determination. Absent agreement, the determination shall be
made by a physician recommended by the then president of the medical society for the county in
which Executive resides. The costs of any necessary medical examination shall be borne by the
Bank.

          E. Discharge for Cause — “Discharge for Cause” shall mean the
termination of Executive’s employment with the Bank because of (i) Executive’s willful and
continued failure to timely perform duties (other that any such failure resulting from
incapacity due to physical or mental illness) and complete tasks assigned by the Board of
Directors of the Bank after a demand for performance delivered by the Bank and specifically
identifying the manner in which it is believed he has not performed; (ii) any willful act of
misconduct by Executive which is materially injurious to the Bank, monetarily or otherwise;
(iii) a criminal conviction of the Executive for any act involving the business and affairs of
the Bank; (iv) a criminal conviction of Executive for commission of a felony; or (v) removal
of Executive by a regulatory agency. For purposes of this definition, no act or failure to act
on the Executive’s part will be considered “willful” unless done or omitted not in good faith
and without reasonable belief that the act or omission was in the best interest of the Bank.

          F. Early Retirement Date — “Early Retirement Date” shall mean the first
day of the month following the month in which Executive reaches age 62.

          G. Termination of Employment — “Termination of Employment” shall
mean Executive’s ceasing to be employed by the Bank for any reason whatsoever, including
by reason of death or Disability.

          H. Trustee — “Trustee” means the Trustee appointed under the Trust for Wauwatosa
Savings Bank Supplemental Retirement Plan, created pursuant to Section 7 hereof.

     2. Eligibility

          Executive is eligible for the benefits provided herein, subject to and in accordance with
the terms and conditions of this Plan, upon the execution hereof. Executive shall cease to
participate in this Plan at Termination of Employment; provided that Executive’s employment shall
not be deemed to have been terminated by reason of an approved leave of absence granted in
accordance with uniform rules applied in a non-discriminatory manner and further provided that
Executive shall not subsequently forfeit any benefit for which he was or would have become eligible
as a result of service prior to such Termination of Employment.

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     3. Payment of Benefits

          3.1 Benefits After Attainment of Early Retirement Date

          Upon Executive’s Termination of Employment after attainment of Early Retirement Date and for
any reason other than for Cause, the Bank shall pay to Executive, as compensation for services
rendered prior to such date, the sum of $170,000 per year, payable in monthly installments of
$14,166.67 each, commencing on the first day of the month coincident with or next following the
date of Termination of Employment and continuing on the first day of each month thereafter for a
period of 10 years, until 120 total monthly payments have been made to Executive or to Executive’s
beneficiary as designated in accordance with Section 3.6.

          3.2 Termination of Employment Prior to Early Retirement Date

          (a) Voluntary Termination. In the event of a voluntary Termination of
Employment by Executive prior to attainment of Early Retirement Date, the Bank
shall pay to Executive, as compensation for services rendered prior to such date, the
sum of $170,000 per year, reduced by 7.375% for each 12 month period (i.e.
resulting in a benefit of $157,462.50 in the event of voluntary termination at age 61;
$145,849.64 at age 60, etc., and; using a prorated reduction for any portion of a 12
month period) by which such Termination of Employment precedes Executive’s
attainment of his Early Retirement Date. The monthly payment amount shall be
determined by dividing the resulting annual payment by 12, with such payments to be
made commencing on the first day of the month next following Executive’s attainment
of his Early Retirement Date and continuing on the first day of each month thereafter
for a period of 10 years, until 120 total monthly payments have been made to
Executive or to Executive’s beneficiary as designated in accordance with Section 3.6.
In the event of Executive’s death prior to attainment of his Early Retirement Date,
Section 3.5(b) shall apply.

          (b) Involuntary Termination. In the event of a Termination of
Employment of the Executive by the Bank prior to Executive’s attainment of his Early
Retirement Date, the Bank shall pay Executive, as compensation for services rendered prior
to such date, the sum of $170,000 per year, payable in monthly installments of $14,166.67
each, commencing on the first day of the month coincident with or next following the date of
such Termination of Employment and continuing on the first day of each month thereafter for
a period of 10 years, until 120 total monthly payments have been made to Executive or to
Executive’s beneficiary as designated in accordance with Section 3.6. For purposes of this
Section 3.2(b), any Termination of Employment occurring within 90 days of a change in
Executive’s job title or responsibilities or a greater than 10% reduction in base
compensation shall be deemed involuntary.

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          3.3 Termination of Employment For Cause

          Notwithstanding any other provision of this Agreement, in the event of Executive’s Discharge
for Cause at any time, the Bank shall not be obligated to pay any benefit to the Executive or
Executive’s beneficiaries hereunder and Executive shall have no further right to the receipt of any
benefit hereunder.

          3.4 Benefits Upon Change in Control

          In the event of a Change in Control as defined in Section 1.C., Executive shall become vested
in the full amount of the benefits as provided under Section 3.1. Executive and/or his
beneficiary, if applicable, shall become eligible for receipt of benefits following a Change in
Control as of the later of (i) the date on which Executive attains, or would have attained, Early
Retirement Date, or (ii) the date of Executive’s Termination of Employment.

          3.5 Termination of Employment Upon Disability or Death

          (a) Disability. In the event of Executive’s Termination of
Employment by reason of Disability, Executive shall become eligible, upon attainment of his
Early Retirement Date, for the benefit set forth in Section 3.1. If Executive dies prior
to attainment of his Early Retirement Date following a Termination Employment for
Disability, Section 3.5(b) shall apply.

          (b) Death. In the event of Executive’s Termination of Employment
by reason of death, or in the event of Executive’s death prior to the commencement
of benefits and following any Termination of Employment that would have entitled
him to receipt of a benefit under this Agreement at a later date or upon attainment of
his Early Retirement Date, benefits hereunder shall commence as of the first day of
the month following Executive’s death. The amount of such benefit shall be either (i)
$170,000 per year, payable in monthly installments of $14,166.67 each, or (ii) in the
event Executive is terminated under Section 3.2(a) such lesser amount as calculated
thereunder. In either case, payments shall be made on the first day of each month for
a period of 10 years, until 120 total monthly payments have been made to Executive’s
beneficiary as designated in accordance with Section 3.6.

          3.6
Recipients of Payments: Designation of Beneficiary

          All payments under the Plan shall be made to the Executive, if living. In the event of
Executive’s death prior to receipt of all benefit payments, subsequent payments under this Plan
shall be to the beneficiary or beneficiaries of the Executive. Executive shall designate a
beneficiary by filing a written notice of such designation with the Bank in the form attached.
Executive may revoke or modify said designation at any time by a further written designation.
Executive’s beneficiary designation shall be deemed automatically revoked in the event of the death
of the beneficiary or, if the beneficiary is Executive’s spouse, in the event of dissolution of the
marriage. If no designation shall be in effect at the

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time benefits become payable under this Plan, the beneficiary shall be the spouse of the
Executive or if no spouse is then living, the legal representatives of Executive’s estate.

     4. Administration and Interpretation of this Plan

     An Administrative Committee of the then current Board of Directors of the Bank (exclusive of
Executive) shall administer and interpret the Plan. The Administrative Committee may adopt such
rules and regulations relating to this Plan as it deems necessary or advisable for the
administration thereof.

     5. Claims Procedure

     The Executive or the Executive’s beneficiary (hereinafter “Claimant”) shall submit any claim
for benefits to the Trustee. If the claim is denied all or a portion of an expected benefit under
this Plan for any reason, he or she may file a claim with the Administrative Committee. The
Administrative Committee shall notify the Claimant within 60 days of allowance or denial of the
claim, unless the Claimant receives written notice from the Administrative Committee prior to the
end of the 60 day period stating that special circumstances require an extension of the time for
decision. Notice of the Administrative Committee’s decision shall be in writing, sent by mail to
Claimant’s last known address and, if a denial of the claim, must contain the following
information:

          a) the specific reasons for the denial;

          b) specific reference to provisions of the Plan on which the denial is
based; and

          c) if applicable, a description of any additional information or material
necessary to perfect the claim, an explanation of why such information or material is
necessary, and an explanation of the claims review procedure.

     6. Review Procedure

          a) A Claimant is entitled to request a review of any denial of a claim by
the Administrative Committee. The request for review must be submitted in writing within
60 days of mailing of notice of the denial. Absent a request for review within the 60-day
period, the claim will be deemed to be conclusively denied. The Claimant or his
representative shall be entitled to review all pertinent documents and to submit issues and
comments orally and in writing.

          b) If the request for review by a Claimant concerns the interpretation and
application of the provisions of the Plan and the Bank’s obligations, the review shall be
conducted by a separate committee consisting of 3 persons designated or appointed by the
Administrative Committee. The separate committee shall afford the Claimant a hearing and
the opportunity to review all pertinent documents and submit issues and comments orally and

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in writing and shall render a review decision in writing, all within sixty (60) days after
receipt of a request for a review, provided that, in special circumstances (such as the necessity
of holding a hearing) the committee may extend the time for decision by not more than sixty (60)
days upon written notice to the Claimant. The Claimant shall receive written notice of the
separate committee’s review decision, together with specific reasons for the decision and reference
to the pertinent provisions of the Plan.

     7. Life Insurance and Funding

     The Bank in its discretion may leave its obligations under the Plan unfunded or may seek to
fund such obligations in any manner it deems reasonable, including applying for a policy or
policies of insurance on the life of the Executive in such amounts and in such forms as the Bank
may select. The Executive shall have no interest whatsoever in any such policy or policies, but at
the request of the Bank shall submit to medical examinations and supply such information and
execute such documents as may be required by any insurance company or companies to whom the Bank
has made application.

     The rights of the Executive, or his beneficiary or estate, to benefits under the Plan shall be
solely those of an unsecured creditor of the Bank. Any insurance policy or other assets acquired
by or held by the Bank in connection with the liabilities assumed pursuant to this Plan may be held
in trust for the benefit of the Executive, his beneficiary or estate, or as security for the
performance of the obligations of the Bank; provided, however, that no such trust or other
arrangement shall prevent any asset designated for funding as being anything other than a general,
unpledged, and unrestricted asset of the Bank subject to the claims of its creditors.

     If this Plan is funded through insurance on the life of Executive, then in the event of
Executive’s death during the first two (2) years after the effective date of such insurance, and if
Executive’s death was a result of suicide or if Executive made any material misstatement or failed
to make a material disclosure of information in any documentation which the Executive was requested
to complete in connection with this Plan or the procurement of such insurance, no benefits under
the terms of this Plan will be payable, unless and to the extent that the Board of Directors of
Bank, in their absolute discretion, may otherwise determine.

     8. Noncompete

     Executive acknowledges that the development of personal contacts and relationships is an
essential element of the Bank’s business, that the Bank has invested considerable time and money in
his development of such contacts and relationships, that the Bank could suffer irreparable harm if
he were to leave employment and solicit the business of Bank’s customers, and that it is reasonable
to protect the Bank against competitive activities by Executive. Executive covenants and agrees,
in recognition of the foregoing and in consideration of the mutual promises contained herein, that
in the event of a voluntary termination of employment by Executive pursuant to Section 3.2(a),
Executive shall not accept employment in Dodge, Jefferson, Milwaukee, Walworth, Washington, or
Waukesha

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counties with any Significant Competitor of the Bank for a period of eighteen (18) months
following such termination. For purposes of this Agreement, the term Significant Competitor means
any financial institution including, but not limited to, any commercial bank, savings bank, savings
and loan association, credit union, or mortgage banking corporation which, at the time of
termination of Executive’s employment or during the period of this covenant not to compete, (i)
maintains a home, branch or other office in any of said counties, or (ii) has originated within any
of said counties $10,000,000 or more in residential mortgage loans during any consecutive twelve
(12) month period within the twenty-four (24) months prior to Executive’s termination and inclusive
of the period covered by this covenant.

          Executive agrees that the non-competition provisions set forth herein are necessary for the
protection of the Bank and are reasonably limited as to the scope of activities affected, their
duration and geographic scope, and their effect on Executive and the public. In the event
Executive violates the non-competition provisions set forth herein, Bank shall be entitled, in
addition to its other legal remedies, (i) to enjoin the employment of Executive with any
Significant Competitor for the period set forth herein, and (ii) to treat as forfeited any payment
or payments that would have been made to Executive under this Agreement during any portion of the
noncompetition period set forth herein during which Executive is employed by such Significant
Competitor. If Executive violates this covenant and the Bank brings legal action for injunctive
or other relief, the Bank shall not, as a result of the time involved in obtaining such relief, be
deprived of the benefit of the full period of the restrictive covenant. Accordingly, the covenant
shall be deemed to have the duration specified herein, computed from the date such relief is
granted, but reduced by any period between commencement of the period and the date of the first
violation. In addition to such other relief as may be awarded, if the Bank is the prevailing party
it shall be entitled to reimbursement for all reasonable costs, including attorneys’ fees, incurred
in enforcing its rights hereunder.

     9. Assignment of Benefits

     Neither Executive nor any other beneficiary under the Plan shall have any right to assign
benefits hereunder, and in the event of any attempted assignment or transfer, the Bank shall have
no further liability hereunder.

     10. Employment Not Guaranteed

     Neither this Plan nor any action taken hereunder shall be construed as giving
Executive the right to be retained as an employee of the Bank for any period.

     11. Taxes

     The Bank may deduct from all payments made hereunder all federal or state taxes which it
believes are required by law to be withheld.

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     12. Bank Not an Advisor

     The Bank makes this Plan available to Executive without assuming any responsibility as an
advisor or consultant relative to tax, Social Security, or other aspects of the Plan or of the tax
effect of any payments provided hereunder.

     13. Amendment and Termination

     The Board of Directors may, at any time, amend or terminate this Plan, but may not reduce or
modify any benefit in pay status to Executive or a beneficiary hereunder or any benefit that would
become payable hereunder if Executive were to have died on the day prior to such action by the
Board, except with the prior written consent of Executive.

     The Bank has established this Plan upon the assumption that certain existing tax laws will
continue in effect in substantially their current form. In the event of any changes in Federal
law relating to and allowing the tax-free accumulation of earnings within a life insurance policy,
the income tax-free payment of proceeds from life insurance policies, or any other law which would
result in a material adverse impact upon the Bank’s ability to perform its obligations under this
Plan, the Bank shall have an option to modify the Plan subject to the protection afforded Executive
in the preceding paragraph.

     14. Construction

     This Plan shall be construed according to the laws of the State of Wisconsin.

     15. Form of Communication

     Any election, application, claim, notice or other communication required or permitted to be
made by Executive to the Bank shall be made in writing and in such form as the Bank shall
prescribe. Such communication shall be effective upon mailing, if sent by first class mail,
postage pre-paid, and addressed to the Bank’s Secretary at 7500 West State Street, Wauwatosa,
Wisconsin, 53213.

     16. Captions

     The captions at the head of a section or a paragraph of this Plan are designed for convenience
of reference only and are not to be resorted to for the purpose of interpreting any provision of
this Plan.

     17. Severability

     The invalidity of any portion of this Plan shall not invalidate the remainder thereof, and
said remainder shall continue in full force and effect.

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     18. Binding Effect

     This Plan shall be binding upon and shall inure to the benefit of the Bank and the Executive
and each of their successors, heirs, personal representatives and permitted assigns. No sale of
substantially all of the Bank’s assets shall be made without the buyer expressly assuming the
obligation of this Plan. The Bank further agrees that it will not be a party to any merger,
consolidation or reorganization unless and until its obligations hereunder are expressly assumed by
the successor or successors.

     19. Liability

     Any and all liability created under this Plan to provide Executive with payments of deferred
compensation shall be exclusively and solely that of the Bank and of any Trust created hereunder.
No officer and/or director, past, present or future, of the Bank shall have any liability to
Executive, or to any other person or entity, to provide or pay such supplemental compensation, such
liability hereby being expressly and unconditionally denied.

     IN WITNESS WHEREOF, this Plan has been executed and agreed to by the parties as of the date
first set forth above.

	 	 	 	 	 
	 	 	Wauwatosa Savings Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Raymond J. Perry
	

	 	 	 	 
	 
	 	 	 	 
	 	 	Title: CHAIRMAN
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	Attest:
	 
	 	 	 	 
	

	 	By:
	 	/s/ Robert Temple
	

	 	 	 	 
	 
	 	 	 	 
	 	 	Title: Board Member
	 
	 	 	 	 
	 	 	Executive
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	/s/ Donald J. Stephens
	 	 	 
	 	 	Donald J. Stephens, Executive

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                                                                     Exhibit 4.1

                 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

                                       OF

                                NEW PLAYBOY, INC.

            The undersigned, being the Executive Vice President, Law and
Administration, and General Counsel and the Secretary of NEW PLAYBOY, INC. (the
"Corporation"), a corporation organized and existing under the laws of the State
of Delaware, do hereby certify as follows:

            1. The name of the Corporation is NEW PLAYBOY, INC. The date of
filing its original Certificate of Incorporation with the Secretary of State was
April 30, 1998.

            2. This Amended and Restated Certificate of Incorporation has been
duly adopted in accordance with the provisions of Section 245 of the General
Corporation Law of the State of Delaware. This Amended and Restated Certificate
of Incorporation restates and integrates and further amends the provisions of
the Corporation's Certificate of Incorporation as heretofore amended or
supplemented.

            3. The text of the Amended and Restated Certificate of
Incorporation, as amended or supplemented heretofore, is hereby restated to read
as herein set forth in full:

            FIRST: The name of the corporation is NEW PLAYBOY, INC.

            SECOND: Its principal office in the State of Delaware is located at
1013 Centre Road, Wilmington. The name and address of its resident agent is
Corporation Service Company, 1013 Centre Road, Wilmington, Delaware 19805. In
the County of New Castle.

            THIRD: The nature of the business, or objects or purposes to be
transacted, promoted or carried on are:

            To engage in the business of: publishing of all kinds; all phases of
entertainment and communications, including motion pictures, plays, radio,
television; the operation of hotels and resorts; and the operation of
establishments featuring food, beverage and entertainment.

            To engage in any lawful act or activity, or engage in any business,
for which corporations may be organized under the General Corporation Law of the
State of Delaware.

<PAGE>

            In general, to carry on any other business in connection with the
foregoing, and to have and exercise all the powers conferred by the laws of
Delaware upon corporations formed under the General Corporation Law of the State
of Delaware, and to do any or all of the things hereinbefore set forth to the
same extent as natural persons might or could do.

            FOURTH: The total number of shares of all classes of capital stock
which the corporation shall have authority to issue is Thirty Seven Million Five
Hundred Thousand (37,500,000) shares of Common Stock, consisting of Seven
Million Five Hundred Thousand (7,500,000) shares of Class A Common Stock of the
par value of One Cent ($.0l) per share and Thirty Million (30,000,000) shares of
Class B Common Stock of the par value of One Cent ($.0l) per share.

      A. Terms of Common Stock

            Except as otherwise required by law or as otherwise provided in this
certificate, each share of Class A Common Stock and each share of Class B Common
Stock shall have identical powers, preferences, qualifications, limitations and
other rights.

            Subject to all of the rights of any class of stock authorized after
the effective date of this provision of Article FOURTH ranking senior to the
Common Stock as to dividends, dividends may be paid upon the Common Stock as and
when declared by the Board of Directors out of funds and other assets legally
available for the payment of dividends. The Board of Directors may declare a
dividend or distribution upon both classes of the Common Stock in shares of any
authorized class or series of capital stock of the corporation only if such
dividend or distribution is declared and paid proportionately to all holders of
both classes of Common Stock as follows: (i) in Class A Common Stock to the
holders of Class A Common Stock and in Class B Common Stock to the holders of
Class B Common Stock, (ii) in Class B Common Stock to the holders of Class A
Common Stock and Class B Common Stock, or (iii) in any other authorized class or
series of capital stock to the holders of both classes of Common Stock.

            In the event of any liquidation, dissolution or winding up of the
corporation, whether voluntary or involuntary, and after the holders of any
class of stock authorized after the effective date of this provision of Article
FOURTH ranking senior to the Common Stock as to assets shall have been paid in
full the amounts to which such holders shall be entitled, or an amount
sufficient to pay the aggregate amount to which such holders shall be entitled
shall have been set aside for the benefit of the holders of such stock, the
remaining net assets of the corporation shall be distributed pro rata to the
holders of both classes of the Common Stock.

            In the event of a merger or consolidation of the corporation with or
into another entity (whether or not the corporation is the surviving entity),
the holders of Class B Common Stock shall be entitle to receive the same per
share consideration as the per share consideration, if any, received by any
holder of the Class A Common Stock in such merger or consolidation.

<PAGE>

            Except as otherwise expressly provided with respect to any other
class of stock and except as otherwise may be required by law or this
certificate, the Class A Common Stock shall have the exclusive right to vote for
the election of directors and for all other purposes and each holder of Class A
Common Stock shall be entitled to one vote for each share of Class A Common
Stock held.

            Except as expressly provided in this certificate and except as
otherwise required by law, the Class B Common Stock shall have no voting rights.

            The corporation may not split, divide or combine the shares of
either class of Common Stock unless, at the same time, the corporation splits,
divides or combines, as the case may be, the shares of the other class of Common
Stock in the same proportion and manner.

      B. Issuance of Class A Common Stock in Mergers and Acquisitions

            Class A Common Stock may be issued as consideration in a merger or
other transaction involving the acquisition of or exchange for securities,
assets, properties or other interests of any person or entity by the
corporation, only if such issuance is approved by the holders, as of a date not
more than thirty days prior to the effective date of such merger or other
transaction, of a majority of the outstanding shares of Class A Common Stock,
unless (i) Class B Common Stock is also issued as consideration in such merger
or other transaction, and (ii) the quotient determined by dividing the number of
shares of Class B Common Stock to be so issued by the number of shares of Class
A Common Stock to be so issued is greater than or equal to the quotient
determined, immediately prior to the effective time of such merger or other
transaction, by dividing the total number of outstanding shares of Class B
Common Stock by the total number of outstanding shares of Class A Common Stock.

      C. Minority Protection Transactions

            (i) If any person or group acquires beneficial ownership of
additional Class A Common Stock, or if any group of persons is formed, after the
effective date of this provision of Article FOURTH, and such acquisition (other
than upon original issuance by the corporation, by operation of law, by will or
the laws of descent and distribution, by gift or by foreclosure of a bona fide
loan) or formation results in such person or group owning 10% or more of the
issued and outstanding Class A Common Stock, and such person or group (a
"Related Person") does not then own an equal or greater percentage of the Class
B Common Stock, such person or group must, within a 90-day period beginning the
day after becoming a Related Person, make a public tender offer in compliance
with all applicable laws and regulations to acquire additional Class B Common
Stock as provided in this subsection C of Article FOURTH (a "Minority Protection
Transaction").

            (ii) In each Minority Protection Transaction, the Related Person
must make a public tender offer to acquire that number of shares of Class B
Common Stock determined by (a) multiplying the percentage of outstanding Class A
Common Stock

<PAGE>

beneficially owned by such Related Person by the total number of shares of Class
B Common Stock outstanding on the date such person or group became a Related
Person, and (b) subtracting therefrom the total number of shares of Class B
Common Stock beneficially owned by such Related Person on such date (including
shares acquired on such date at or prior to the time such person or group became
a Related Person). The Related Person must acquire all of such shares validly
tendered; provided, however, that if the number of shares of Class B Common
Stock tendered to the Related Person exceeds the number of shares required to be
acquired pursuant to the formula set forth in this clause (ii), the number of
shares of Class B Common Stock acquired from each tendering holder shall be pro
rata in proportion to the total number of shares or Class B Common Stock
tendered by all tendering holders.

            (iii) The offer price for any shares of Class B Common Stock
required to be purchased by the Related Person pursuant to this provision shall
be the greater of (a) the highest price per share paid by the Related Person for
any share of Class A Common Stock in the six month period ending on the date
such person or group became a Related Person or (b) the highest bid price of a
share of Class A Common Stock or Class B Common Stock on the New York Stock
Exchange (or such other exchange or quotation system as is then the principal
trading market for such shares) on the date such person or group became a
Related Person. For purposes of clause (iv) below, the applicable date for the
calculations required by the preceding sentence shall be the date on which the
Related Person or Interested Stockholder (as defined therein), became required
to engage in a Minority Protection Transaction. In the event that the Related
Person has acquired Class A Common Stock in the six month period ending on the
date such person or group becomes a Related Person for consideration other than
cash, the value of such consideration per share of Class A Common Stock shall be
as determined in good faith by the Board of Directors.

            (iv) A Minority Protection Transaction shall also be required to be
effected by any Related Person, and any other person or group that beneficially
owns 10% or more of the outstanding shares of Class A Common Stock on the
effective date of this provision of Article FOURTH (an "Interested
Stockholder"), that acquires beneficial ownership of additional shares of Class
A Common Stock (other than upon issuance or sale by the corporation, by
operation of law, by will or the laws of descent and distribution, by gift, or
by foreclosure of a bona fide loan) or joins with other persons to form a group,
whenever such additional acquisition or formation results in such Related Person
or Interested Stockholder owning the next higher integral multiple or 5% (e.g.
15%, 20%, 25%, etc.) of the outstanding shares of Class A Common Stock and such
Related Person or Interested Stockholder does not own an equal or greater
percentage of the shares of Class B Common Stock. Such Related Person or
Interested Stockholder shall be required to make a public tender offer to
acquire that number or shares of Class B Common Stock prescribed by the formula
set forth in clause (ii) above, and must acquire all shares validly tendered or
a pro rata portion thereof, as specified in said clause (ii), at the price
determined pursuant to clause (iii) above.

<PAGE>

            (v) If any Related Person or Interested Stockholder fails to make an
offer required by this subsection C of Article FOURTH, or to purchase shares
validly tendered and not withdrawn (after proration, if any), such Related
Person or Interested Stockholder shall not be entitled to vote any shares of
Class A Common Stock beneficially owned by such Related Person or Interested
Stockholder unless and until such requirements are complied with or unless and
until all shares of Class A Common Stock causing such offer requirement to be
effective are no longer beneficially owned by such Related Person or Interested
Stockholder.

            (vi) The Minority Protection Transaction requirement shall not apply
to any increase in percentage ownership of Class A Common Stock resulting solely
from a change in the total amount of Class A Common Stock outstanding, provided
that any acquisition by any person or group owning 10% or more of the Class A
Common Stock occurring after such change shall be subject to any Minority
Protection Transaction requirement that would be imposed with respect to a
Related Person or Interested Stockholder pursuant to clause (iv) of this
Subsection C of Article FOURTH.

            (vii) If the person acquiring Class A Common Stock is the
corporation, treasury shares will be considered issued and outstanding for
purposes of determining the corporation's obligations hereunder.

            (viii) All calculations with respect to percentage ownership of
issued and outstanding shares of either class of Common Stock will be based upon
the numbers of issued and outstanding shares reported by the corporation on the
last filed of (a) the corporation's most recent annual report on Form 10-K, (b)
its most recent Quarterly Report on Form 10-Q, or (c) if any, its most recent
Current Report on Form 8-K.

            (ix) For purposes of this subsection C of this Article FOURTH, the
term "person" means a natural person, company, government, or political
subdivision, agency or instrumentality of a government, or other entity.
"Beneficial ownership" shall be determined pursuant to Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), or any
successor regulation. The formation or existence of a "group" shall be
determined pursuant to Rule 13d-5(b) under the 1934 Act or any successor
regulation.

            (x) The corporation shall not take any corporate action, including,
without limitation, any amendment to this certificate (including any amendment
effected by merger or consolidation), which will adversely affect the rights of
the holders of the Class B Stock under this subsection C of Article FOURTH,
unless such action shall have been approved by the holders of a majority of the
outstanding shares of Class B Stock who are not Related Persons or Interested
Stockholders.

<PAGE>

      D. No Pre-emptive Rights

            No stockholder of this corporation shall by reason of his holding
shares of any class have any pre-emptive or preferential right to purchase or
subscribe to any shares of any class of this corporation, now or hereafter to be
authorized, or any notes, debentures, bonds, or other securities convertible
into or carrying options or warrants to purchase shares of any class, now or
hereafter to be authorized whether or not the issuance of any such shares, or
such notes, debentures, bonds or other securities, would adversely affect the
dividend or voting rights of such stockholder, other than such rights, if any,
as the Board of Directors, in its discretion from time to time may grant and at
such price as the Board of Directors in its discretion may fix; and the Board of
Directors may issue shares of any class of this corporation, or any notes,
debentures, bonds, or other securities convertible into or carrying options or
warrants to purchase shares of any class, without offering any such shares of
any class, either in whole or in part, to the existing stockholders of any
class.

            FIFTH: The minimum amount of capital with which the corporation will
commence business is One Thousand Dollars ($1,000.00).

            SIXTH: The corporation is to have perpetual existence.

            SEVENTH: The private property of the stockholders shall not be
subject to the payment of corporate debts to any extent whatever.

            EIGHTH: In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized:

            To make, alter or repeal the by-laws of the corporation.

            To authorize and cause to be executed mortgages and liens upon the
real and personal property of the corporation.

            To set apart out of any of the funds of the corporation available
for dividends a reserve or reserves for any proper purpose and to abolish any
such reserve in the manner in which it was created.

            By resolution passed by a majority of the whole board, to designate
one or more committees, each committee to consist of two or more of the
directors of the corporation, which, to the extent provided in the resolution or
in the by-laws of the corporation, shall have and may exercise the powers of the
Board of Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it. Such committee or committees shall have such name
or names as may be stated in the by-laws of the corporation or as may be
determined from time to time by resolution adopted by the Board of Directors.

<PAGE>

            When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting-power, given at a
stockholders' meeting duly called for that purpose, or when authorized by the
written consent of the holders of a majority of the voting stock issued and
outstanding, to sell, lease or exchange all of the property and assts of the
corporation, including its good will and its corporate franchises, upon such
terms and conditions and for such consideration, which may be in whole or in
part shares of stock in, and/or other securities of, any other corporation or
corporations, as its Board of Directors shall deem expedient and for the best
interests of the corporation.

            NINTH: In the absence of fraud, no contract or other transaction
between this corporation and any other corporation or any partnership or
association shall be affected or invalidated by the fact that any director or
officer of this corporation is pecuniarily or otherwise interested in or is a
director, member or officer of such other corporation or of such firm,
association or partnership or is a party to or is pecuniarily or otherwise
interested in such contract or other transaction or in any way connected with
any person or persons, firm, association, partnership or corporation pecuniarily
or otherwise interested therein; any director may be counted in determining the
existence of a quorum at any meeting of the Board of Directors of this
corporation for the purpose of authorizing any such contract or transaction with
like force and effect as if he were not so interested, or were not a director,
member or officer of such other corporation, firm, association or partnership.

            TENTH: Meetings of stockholders may be held outside the State of
Delaware, if the by-laws so provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the by-laws of the corporation. Elections of directors
need not be by ballot unless the by-laws of the corporation shall so provide.

            ELEVENTH: The corporation reserves the right to amend, alter, change
or repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.

            TWELFTH: Directors shall not be personally liable to the corporation
or its stockholders for monetary damages for breaches of fiduciary duty as a
director, except for liability (i) for breach of the director's duty of loyalty
to the corporation or its stockholders; (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law;
(iii) under Section 174 of the Delaware General Corporation Law; or (iv) for any
transaction from which the director derived an improper personal benefit.

<PAGE>

            IN WITNESS WHEREOF, the undersigned have signed and attested this
certificate this 5th day of August, 1998.

                                                     /s/  Howard Shapiro
                                             -----------------------------------
                                             Howard Shapiro
                                             Executive Vice President,
                                             Law and Administration,
                                             General Counsel and Secretary
ATTEST:

     /s/ Robert D. Campbell
----------------------------------
Robert D. Campbell
Assistant Secretary

<PAGE>

                            CERTIFICATE OF AMENDMENT
                                     OF THE
                AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                                NEW PLAYBOY, INC.

            NEW PLAYBOY. INC., a corporation duly organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify that:

            1. The Amended and Restated Certificate of Incorporation of the
Corporation is amended by adding the following sentence to the end of the fifth
paragraph of Article FOURTH thereof:

      The prior sentence shall not, however, apply to the merger to be effected
      under Section 251(g) of the General Corporation Law of the State of
      Delaware as contemplated by the Agreement and Plan of Merger, dated as of
      May 29, 1998, as the same has been and may be amended, to which the
      Corporation is a party.

            2. The foregoing amendment to the Amended and Restated Certificate
of Incorporation of the Corporation was duly adopted in accordance with the
provisions of Section 242 and has been consented to in writing in accordance
with Section 228 of the General Corporation Law of the State of Delaware.

            IN WITNESS WHEREOF, New Playboy, Inc. has caused this Certificate of
Amendment to be executed by its duly authorized officer this 15th of March,
1999.

                                         NEW PLAYBOY, INC.

                                         By:    /s/ Howard Shapiro
                                            ------------------------------------
                                         Name:  Howard Shapiro
                                         Title: Executive Vice President,
                                                Law and Administration,
                                                General Counsel and Secretary

<PAGE>

                            CERTIFICATE OF AMENDMENT
                                     OF THE
                AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                                NEW PLAYBOY, INC.

            NEW PLAYBOY, INC., a corporation duly organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify that:

            1. Article FIRST of the Amended and Restated Certificate of
Incorporation of the Corporation is amended to read in its entirety as follows:

"FIRST: The name of the corporation is PLAYBOY ENTERPRISES, INC."

            2. The foregoing amendment to the Amended and Restated Certificate
of Incorporation of the Corporation was duly adopted in accordance with the
provisions of Section 242 and has been consented to in writing by the sole
stockholder in accordance with Section 228 of the General Corporation Law of the
State of Delaware.

            IN WITNESS WHEREOF, New Playboy, Inc. has caused this Certificate of
Amendment to be executed by its duly authorized officer this 15th of March,
1999.

                                           NEW PLAYBOY, INC.

                                           By:    /s/ Howard Shapiro
                                              ---------------------------------
                                           Name:  Howard Shapiro
                                           Title: Executive Vice President,
                                                  Law and Administration,
                                                  General Counsel and Secretary

<PAGE>

                    CERTIFICATE OF CHANGE OF REGISTERED AGENT

                                       AND

                                REGISTERED OFFICE

                                      *****

            PLAYBOY ENTERPRISES, INC., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:

            The present registered agent of the corporation is Corporation
Service Company and the present registered office of the corporation is in the
county of Wilmington.

            The Board of Directors of PLAYBOY ENTERPRISES, INC. adopted the
following resolution on the 20th day of September, 2000.

      RESOLVED, that the registered office of PLAYBOY ENTERPRISES, INC. in the
      state of Delaware be and it hereby is changed to Corporation Trust Center,
      1209 Orange Street, in the City of Wilmington, County of New Castle, and
      the authorization of the present registered agent of this corporation be
      and the same is hereby withdrawn, and THE CORPORATION TRUST COMPANY, shall
      be and is hereby constituted and appointed the registered agent of this
      corporation at the address of its registered office.

            IN WITNESS WHEREOF, PLAYBOY ENTERPRISES, INC. has caused this
statement to be signed by Howard Shapiro, its Executive Vice President and
Secretary, as of the 21st day of September, 2000.

                                             /s/ Howard Shapiro
                                   -----------------------------------------
                                   Howard Shapiro
                                   Executive Vice President, General Counsel
                                   and Secretary

<PAGE>

                            CERTIFICATE OF AMENDMENT
                                     OF THE
                AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                            PLAYBOY ENTERPRISES, INC.

                    ----------------------------------------

                     Pursuant to Section 242 of the General
                    Corporation Law of the State of Delaware

                    ----------------------------------------

            PLAYBOY ENTERPRISES, INC., a corporation duly organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
does hereby certify that:

            FIRST: The first paragraph of Article FOURTH of the Amended and
Restated Certificate of Incorporation of the Corporation is hereby amended to
read in its entirety as follows:

            "The total number of shares of all classes of capital stock which
            the corporation shall have authority to issue is Forty Seven Million
            Five Hundred Thousand (47,500,000) consisting of: (i) Seven Million
            Five Hundred Thousand (7,500,000) shares of Class A Common Stock of
            the par value of One Cent ($.01) per share, (ii) Thirty Million
            (30,000,000) shares of Class B Common Stock of the par value of One
            Cent ($.01) per share and (iii) Ten Million (10,000,000) shares of
            Preferred Stock of the par value of One Cent ($.01) per share."

            SECOND: The following paragraph is to be inserted as a new
subsection E entitled "Terms of Preferred Stock" of Article FOURTH of the
Amended and Restated Certificate of Incorporation of the Corporation:

            "The Board of Directors is expressly authorized to provide for the
            issuance of all or any shares of the Preferred Stock in one or more
            classes or series, and to fix for each such class or series such
            voting powers, full or limited, or no voting powers, and such
            distinctive designations, preferences and relative, participating,
            optional or other special rights and such qualifications,
            limitations or restrictions thereof, as shall be stated and
            expressed in the resolution or resolutions adopted by the Board of
            Directors providing for the issuance of such class or series and as
            may be permitted by the General Corporation Law of the State of
            Delaware, including, without limitation, the authority to provide
            that any such class or series may be (i) subject to redemption at
            such time or times and at such price or prices; (ii) entitled to
            receive dividends (which may be cumulative or non-cumulative) at
            such rates, on such conditions, and at such times, and payable in
            preference to, or in such relation to, the dividends payable on any
            other class or classes or any other series; (iii) entitled to such
            rights upon the dissolution of, or upon any distribution of the
            assets of, the

<PAGE>

            Corporation; or (iv) convertible into, or exchangeable for, shares
            of any other class or classes of stock, or of any other series of
            the same or any other class or classes of stock, of the Corporation
            at such price or prices or at such rates of exchange and with such
            adjustments; all as may be stated in such resolution or resolutions.
            Notwithstanding the foregoing, any such Preferred Stock shall not
            have any voting powers, except as required by law or in the event of
            failure to pay dividends, and shall in no event be convertible into
            shares of Class A Common Stock."

            THIRD: The foregoing amendments to the Amended and Restated
Certificate of Incorporation of the Corporation were duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law of the State
of Delaware.

            IN WITNESS WHEREOF, Playboy Enterprises, Inc. has caused this
Certificate of Amendment to be executed by its duly authorized officer this 1st
day of May, 2003.

                                        PLAYBOY ENTERPRISES, INC.

                                        By: /s/ Howard Shapiro
                                          ------------------------------------
                                          Name: Howard Shapiro
                                          Title: Executive Vice President, Law
                                          and Administration, General
                                          Counsel and Secretary

<PAGE>

                        CERTIFICATE OF THE DESIGNATIONS,
                         POWERS, PREFERENCES AND RIGHTS
                                       OF
                      SERIES A CONVERTIBLE PREFERRED STOCK
                                       OF
                            PLAYBOY ENTERPRISES, INC.

                         (Pursuant to Section 151 of the
                        Delaware General Corporation Law)

            Playboy Enterprises, Inc., a Delaware corporation (the "Company"),
hereby certifies that the following resolution was adopted by the Board of
Directors of the Company:

            "RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Company (the "Board of Directors") by
the provisions of the Amended and Restated Certificate of Incorporation of the
Company (the "Certificate of Incorporation"), there is hereby created, out of
the 10,000,000 shares of preferred stock, par value $0.01 per share, of the
Company authorized in Article Fourth of the Certificate of Incorporation (the
"Preferred Stock"), a series of the Preferred Stock consisting of 1,674 shares,
which series shall have the following powers, designations, preferences and
relative, participating, optional or other rights, and the following
qualifications, limitations and restrictions (in addition to any powers,
designations, preferences and relative, participating, optional or other rights,
and any qualifications, limitations and restrictions, set forth in the
Certificate of Incorporation which are applicable to the Preferred Stock):

      Section 1. Designation of Amount.

            The shares of Preferred Stock created hereby shall be designated the
"Series A Convertible Preferred Stock" (the "Series A Preferred Stock") and the
authorized number of shares constituting such series shall be 1,674. The stated
value per share shall be $10,000 (the "Stated Value").

      Section 2. Dividends.

            (a) The holders of the then outstanding shares of Series A Preferred
Stock will be entitled to receive, when, as and if declared by the Board of
Directors out of funds of the Company legally available therefor, cumulative
cash dividends, accruing from the Original Issuance Date (as hereinafter
defined) through and including the date on which such dividends are paid at the
annual rate of 8% (the "Applicable Rate") of the Liquidation Preference (as
hereinafter defined) per share of the Series A Preferred Stock, payable in cash
in arrears on the last day of each June and December (each such date being
referred to herein as a "Dividend Payment Date"), commencing on the first
Dividend Payment Date after the Original Issuance Date; provided that if payment
in cash would not be permitted at the time (the "Cash Dividend Block") under the
Indenture (as hereinafter defined), no cash dividends shall be paid or

<PAGE>

payable, until such time as the payment of dividends in cash is no longer
prohibited by the terms of the Indenture. In the event of a Cash Dividend Block,
the Company may at its option, pay any such dividend in Class B Common Stock,
par value $0.01 per share (the "Class B Common Stock"), of the Company. If a
dividend payment date is not a Business Day then such dividend shall be payable
on the next Business Day. Accumulated and unpaid dividends for any prior period
may be paid at any time. Such dividends shall be deemed to accrue on the Series
A Preferred Stock from the Original Issuance Date and shall be cumulative
whether or not earned or declared and whether or not there are profits, surplus
or other funds of the Company legally available for the payment of dividends.
The term "Original Issuance Date" means the date on which the Series A Preferred
Stock was issued to the holder pursuant to the terms of the Series B Preferred
Stock (as hereinafter defined). The term "Indenture" means that certain
Indenture dated as of the Closing Date (as hereinafter defined), among the
Company, certain subsidiaries of the Company and Bank One, N.A., as Trustee. The
dividends provided for in this Section 2(a) are hereinafter referred to as "Base
Dividends." Any dividend paid in the manner specified in this Section 2, if so
paid, shall be deemed to be paid in full.

            (b) In the event of a Cash Dividend Block, any dividend payments to
be made by delivering shares of Class B Common Stock shall be made by delivering
the number of shares of Class B Common Stock (rounded up in the case of
fractions to the next whole share) determined by dividing the amount of accrued
but unpaid Base Dividends payable as of the dividend payment date by the
weighted average closing price of Class B Common Stock over the 90-day period
immediately preceding the dividend payment date.

            (c) If full cumulative Base Dividends are not paid in full, or
declared in full and sums set apart in trust with a bank or trust company for
the payment thereof, upon the shares of Series A Preferred Stock and the shares
of any other series of capital stock of the Company ranking on a parity as to
dividends with the Series A Preferred Stock ("Parity Dividend Stock"), all
dividends declared upon shares of Series A Preferred Stock and upon all Parity
Dividend Stock shall be paid or declared pro rata so that in all cases the
amount of dividends paid or declared per share on the Series A Preferred Stock
and such Parity Dividend Stock shall bear to each other the same ratio that
unpaid accumulated dividends per share, including dividends accrued or in
arrears, if any, on the shares of Series A Preferred Stock and such other shares
of Parity Dividend Stock, bear to each other. Unless and until full cumulative
Base Dividends on the shares of Series A Preferred Stock in respect of all past
semi-annual dividend periods have been paid, and the full amount of Base
Dividends on the shares of Series A Preferred Stock in respect of the then
current semi-annual dividend period shall have been or are contemporaneously
declared in full and sums set aside in trust with a bank or trust company for
the payment thereof, no dividends shall be paid or declared or set aside for
payment or other distribution upon the Class A Common Stock, par value $0.01 per
share (the "Class A Common Stock") and the Class B Common Stock, and
collectively with the Class A Common Stock the "Common Stock"), of the Company
or any other capital stock of the Company ranking junior to the Series A
Preferred Stock as to dividends (other than in shares of, or warrants or rights
to acquire, solely capital stock of the

<PAGE>

Company ranking junior to the Series A Preferred Stock both as to dividends and
as to distributions upon liquidation, dissolution or winding up of the Company).

            The terms "accrued dividends," "dividends accrued" and "dividends in
arrears," whenever used herein with reference to shares of Series A Preferred
Stock shall be deemed to mean an amount which shall be equal to Base Dividends
thereon at the Applicable Rate per share from the date or dates on which such
dividends commence to accrue to the end of the then current semi-annual dividend
period (or, in the case of redemption or conversion, to the effective date of
redemption or conversion as provided herein), whether or not earned or declared
and whether or not assets of the Company are legally available therefor, and if
full dividends are not declared or paid, then such dividends shall cumulate,
with additional dividends thereon, compounded semi-annually, at the Applicable
Rate, for each semi-annual period during which such dividends remain unpaid.

            The amount of any Base Dividends per share of Series A Preferred
Stock for any full semi-annual period shall be computed by multiplying the
Applicable Rate for such semi-annual dividend period by the Liquidation
Preference per share and dividing the result by two. Base Dividends payable on
the shares of Series A Preferred Stock for any period less than a full
semi-annual dividend period shall be computed on the basis of a 360-day year of
twelve 30-day months and the actual number of days elapsed for any period less
than one month.

      Section 3. Liquidation Preference.

            (a) In the event of a liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary (a "Liquidation"), the holders of the
Series A Preferred Stock then outstanding shall be entitled to receive out of
the assets of the Company available for distribution to the Company's
stockholders, whether such assets are stated capital or surplus of any nature,
after payment of the liquidation preference of any Senior Liquidation Stock (as
hereinafter defined), an amount on such date equal to the Stated Value per share
of Series A Preferred Stock (the "Liquidation Preference") plus an amount equal
to any accrued and unpaid Base Dividends as of such date, calculated pursuant to
Section 2 and no more. Such payment shall be made before any payment shall be
made or any assets distributed to the holders of any class or series of the
Common Stock or any other Junior Liquidation Stock (as hereinafter defined). If
upon any Liquidation, the amounts payable with respect to the Series A Preferred
Stock and any Parity Liquidation Stock (as hereinafter defined) are not paid in
full, holders of the Series A Preferred Stock and any Parity Liquidation Stock
will share ratably in any distribution of the assets of the Company in
proportion to the respective amounts that would be payable per share, if the
assets of the Company were sufficient for all such amounts to be paid in full.
Neither the consolidation or merger of the Company into or with any other
entity, nor the sale or transfer by the Company of all or any part of its
assets, nor the reduction of the capital stock of the Company, shall be deemed
to be a Liquidation.

<PAGE>

            (b) Any assets to be delivered to the holders of the Series A
Preferred Stock pursuant to this Section 3 as a consequence of a Liquidation
shall be valued at their fair market value as determined in good faith by the
Board of Directors of the Company, whose determination shall be conclusive and
binding absent manifest error.

      Section 4. Mandatory Redemption.

            On September 15, 2010 (the "Final Redemption Date"), the Company
shall, subject to any limitations or restrictions imposed by law, redeem all
shares of Series A Preferred Stock that are then outstanding at a redemption
price per share equal to the Liquidation Preference thereof plus an amount equal
to any accrued and unpaid Base Dividends as of the Final Redemption Date (the
"Final Redemption Price"). The Final Redemption Price shall be paid, at the
Company's option, in either (i) cash, (ii) shares of Class B Common Stock or
(iii) any combination thereof. The number of shares of Class B Common Stock to
which a holder of Series A Preferred Stock shall be entitled upon redemption
pursuant to clause (ii) shall be determined by dividing (x) the Liquidation
Preference of such Series A Preferred Stock plus the amount of any accrued but
unpaid Base Dividends as of the Final Redemption Date by (y) the weighted
average closing price of the Class B Common Stock over the 90-day period
immediately preceding the Final Redemption Date. Not less than ten (10) days
prior to the Final Redemption Date, notice by first class mail, postage prepaid,
shall be given to each holder of record of the Series A Preferred Stock, at such
holder's address as it shall appear upon the stock register of the Company on
such date. Each notice shall specify the Final Redemption Price, the form of
payment of the Final Redemption Price, the place or places of payment and that
payment will be made upon presentation and surrender of the certificate(s)
evidencing the shares of Series A Preferred Stock to be redeemed. On or after
the Final Redemption Date, each holder of shares of Series A Preferred Stock
shall surrender the certificate evidencing such shares to the Company at the
place designated in such notice and shall thereupon be entitled to receive
payment of the Final Redemption Price in the manner set forth in the notice.

      Section 5. Status of Redeemed Shares.

            Any shares of Series A Preferred Stock which shall at any time have
been redeemed pursuant to Section 4 hereof shall, after such redemption, have
the status of authorized but unissued shares of Preferred Stock, without
designation as to series, and shall not be reissued as Series A Preferred Stock.
On the Final Redemption Date, notwithstanding that the certificates evidencing
any shares so called for redemption shall not have been surrendered, the shares
shall no longer be deemed outstanding, the dividends shall cease to accumulate,
the holders thereof shall cease to be stockholders, and all rights whatsoever
with respect to the Series A Preferred Stock (except the right of the holders to
receive the Final Redemption Price upon surrender of their certificates
therefor) shall terminate, except to the extent the Company shall default in
payment of the Final Redemption Price on the Final Redemption Date.

<PAGE>

      Section 6. Voting Rights.

            Except as required by applicable law, the holders of outstanding
shares of the Series A Preferred Stock shall have no voting rights or powers;
provided that with respect to any matters required to be submitted to a vote of
the holders of Class B Common Stock under applicable law, the holders of
outstanding shares of Series A Preferred Stock shall (i) vote together with the
holders of Class B Common Stock as a single class and (ii) be entitled to the
number of votes per share of Series A Preferred Stock equal to the number of
shares of Class B Common Stock into which such share is convertible at the time.

      Section 7. Conversion Rights.

            (a) Optional. Subject to and upon compliance with the provisions of
this Section 7, the holders of the shares of Series A Preferred Stock shall be
entitled, at their option, at any time to convert all or any such shares of
Series A Preferred Stock into a number of fully paid and non-assessable shares
(calculated as to each conversion to the nearest 1/100,000th of a share) of
Class B Common Stock. The number of shares of Class B Common Stock to which a
holder of Series A Preferred Stock shall be entitled upon conversion shall be
determined by dividing (x) the Liquidation Preference of such Series A Preferred
Stock plus the amount of any accrued but unpaid Base Dividends thereon as of the
Conversion Date (as hereinafter defined) by (y) the Conversion Price (determined
as provided in this Section 7).

            (b) Conversion Price. The conversion price (the "Conversion Price")
shall be equal to 1.25 multiplied by the weighted average closing price of the
Class B Common Stock over the 90-day period immediately prior to the Original
Issuance Date, subject to adjustment from time to time in accordance with
Section 7(e).

            (c) Mandatory. (i) After the date that is three (3) years after the
Original Issue Date, if at any time the weighted average closing price of the
Class B Common Stock for each of fifteen (15) consecutive Trading Days (each a
"Mandatory Conversion Period") equals or exceeds 150% of the Conversion Price
(subject to proportionate adjustment as provided in Section 7(e)) the Company
shall have the option by delivery of written notice ("Mandatory Conversion
Notice") to holders of shares of Series A Preferred Stock provided within five
(5) Business Days after the end of any Mandatory Conversion Period to convert
any or all shares of Series A Preferred Stock into such number of fully paid and
non-assessable shares of Class B Common Stock determined by dividing (i) the
Liquidation Preference of such Preferred Stock plus the amount of any accrued
but unpaid Base Dividends as of the Mandatory Conversion Date (as hereinafter
defined) by (ii) the Conversion Price. The Company shall send the written notice
provided for above, by mail to each holder of record of Series A Preferred Stock
at its address then shown on the records of the Company, which notice shall
state that the Company has elected to convert some or all of the Series A
Preferred Stock and the effective date (the "Mandatory Conversion Date") of such
conversion, which date shall be the last day of the applicable Mandatory
Conversion Period, and that certificates

<PAGE>

evidencing shares of Series A Preferred Stock must be surrendered at the office
of the Company (or of its transfer agent for the Class B Common Stock, if
applicable).

            (ii) On or after the Mandatory Conversion Date, shares of Series A
Preferred Stock shall no longer be deemed outstanding, the dividends shall cease
to accumulate, the holders shall cease to be stockholders, all rights whatsoever
with respect to the Series A Preferred Stock so converted will terminate, and
the holders entitled to receive Class B Common Stock issuable upon conversion
shall be treated for all purposes as the record holder of such Class B Common
Stock as and after the Mandatory Conversion Date. The conversion shall occur on
Mandatory Redemption Date without any further action by such holders of such
shares and whether or not the certificates representing such shares are
surrendered to the Company or its transfer agent; provided, however, that the
Company shall not be obligated to issue certificates evidencing the shares of
Class B Common Stock issuable upon such conversion unless certificates
evidencing such shares of Series A Preferred Stock so converted are surrendered
to the Company. Upon the occurrence of such conversion of the Series A Preferred
Stock, the holders of Series A Preferred Stock shall promptly surrender the
certificates representing such shares at the office of the Company or any
transfer agent for the Series A Preferred Stock. Thereupon, there shall be
issued and delivered to such holder promptly at such office and in its name as
shown on such surrendered certificate(s), a certificate or certificates for the
number of shares of Class B Common Stock into which the shares of Series A
Preferred Stock surrendered were convertible on the Mandatory Conversion Date.

            (d) Fractions of Shares. The Company shall not issue any fractional
shares of Class B Common Stock upon conversion of the Series A Preferred Stock.
Instead the Company shall round the results of a conversion up to the nearest
full share of Class B Common Stock.

            (e) Adjustments to Conversion Price. The Conversion Price shall be
subject to adjustment from time to time as follows:

                  (1) Upon Stock Dividends, Subdivisions or Splits. If, at any
      time after the Original Issuance Date, the number of shares of Class B
      Common Stock outstanding is increased by a stock dividend payable in
      shares of Class B Common Stock or by a subdivision or split-up of shares
      of Class B Common Stock, then, following the record date for the
      determination of holders of Class B Common Stock entitled to receive such
      stock dividend, or to be affected by such subdivision or split-up, the
      Conversion Price shall be appropriately decreased so that the number of
      shares of Class B Common Stock issuable on conversion of Series A
      Preferred Stock shall be increased in proportion to such increase in
      outstanding shares.

                  (2) Upon Combinations. If, at any time after the Original
      Issuance Date, the number of shares of Class B Common Stock outstanding is
      decreased by a combination of the outstanding shares of Class B Common
      Stock into a smaller number of shares of Class B Common Stock, then,

<PAGE>

      following the record date to determine shares affected by such
      combination, the Conversion Price shall be appropriately increased so that
      the number of shares of Class B Common Stock issuable on conversion of
      each share of Series A Preferred Stock shall be decreased in proportion to
      such decrease in outstanding shares.

                  (3) Upon Reclassifications, Reorganizations, Consolidations or
      Mergers. In the event of any capital reorganization of the Company, any
      reclassification of the stock of the Company (other than a change in par
      value or from par value to no par value or from no par value to par value
      or as a result of a stock dividend or subdivision, split-up or combination
      of shares), or any consolidation or merger of the Company with or into
      another Person (where the Company is not the surviving Person or where
      there is a change in or distribution with respect to the Class B Common
      Stock), each share of Series A Preferred Stock shall after such
      reorganization, reclassification, consolidation, or merger be convertible
      into the kind and number of shares of stock or other securities or
      property of the Company or of the successor Person resulting from such
      consolidation or surviving such merger, if any, to which the holder of the
      number of shares of Class B Common Stock deliverable (immediately prior to
      the time of such reorganization, reclassification, consolidation or
      merger) upon conversion of such Series A Preferred Stock would have been
      entitled upon such reorganization, reclassification, consolidation or
      merger. The provisions of this clause shall similarly apply to successive
      reorganizations, reclassifications, consolidations or mergers.

                  (4) Distributions. If the Company declares, pays or makes a
      Class B Common Distribution (as hereinafter defined), then the Conversion
      Price shall be reduced so that the same shall equal the price determined
      by multiplying the Conversion Price in effect immediately prior to the
      close of business on the date fixed for the determination of stockholders
      entitled to receive such Class B Common Distribution by a fraction of
      which the numerator shall be the fair market value (as determined in good
      faith by the Board of Directors of the Company whose determination shall
      be final and binding absent manifest error) per share of Common Stock on
      the date fixed for such determination less the fair market value (as
      determined above) on such date of the portion of the assets, property
      and/or securities so to be distributed applicable to one share of Class B
      Common Stock and of which the denominator shall be such fair market value
      per share of Class B Common Stock on the date fixed for such
      determination, such adjustment to become effective immediately prior to
      the opening of business on the day following the date fixed for the
      determination of stockholders entitled to receive such Class B Common
      Distribution. For purposes of this Section 7(e)(4), "Class B Common
      Distribution" means any dividend or other distribution declared, paid or
      made on or in respect of the Class B Common Stock (other than a
      distribution or dividend payable solely in Class B Common Stock for which
      an adjustment provided by Section 7(e)(1) above is made including any pro
      rata distribution of cash, property, securities or other assets to

<PAGE>

      the holders of Class B Common Stock, whether or not paid out of capital,
      surplus or earnings).

            (f) Exercise of Conversion Privilege.

                  (i) To convert shares of Series A Preferred Stock pursuant to
      Section 7(a), a holder must (A) surrender the certificate or certificates
      evidencing such holder's shares of Series A Preferred Stock to be
      converted, duly endorsed in a form satisfactory to the Company, at the
      office of the Company and (B) notify the Company at such office that such
      holder elects to convert Series A Preferred Stock and the number of shares
      such holder wishes to convert. Such notice referred to in clause (B) above
      shall be delivered substantially in the following form:

                      "NOTICE TO EXERCISE CONVERSION RIGHT"

            The undersigned, being a holder of the Series A Convertible
      Preferred Stock of Playboy Enterprises, Inc. (the "Convertible Preferred
      Stock") irrevocably exercises the right to convert ____________
      outstanding shares of Convertible Preferred Stock on ___________, ____,
      into shares of Class B Common Stock of Playboy Enterprises, Inc. in
      accordance with the terms of the shares of Convertible Preferred Stock,
      and directs that the shares issuable and deliverable upon the conversion
      be issued and delivered in the denominations indicated below to the
      registered holder hereof unless a different name has been indicated below.

Dated: [At least one Business Day prior to the date fixed for conversion]

Fill in for registration of
shares of Class B Common Stock if
to be issued otherwise than to
the registered holder:

--------------------------------
Name

--------------------------------
Address

--------------------------------                --------------------------------
Please print name and                                (Signature)
address, including postal
code number

Denominations:__________________

<PAGE>

                        (ii) Series A Preferred Stock shall be deemed to have
            been converted immediately prior to the close of business on the day
            (the "Conversion Date") of surrender of such shares of Series A
            Preferred Stock for conversion in accordance with the foregoing
            provisions and at such time the shares of Series A Preferred Stock
            (or portions thereof) submitted for conversion shall no longer be
            deemed outstanding, the dividend shall cease to accumulate on such
            shares, the holders shall cease to be stockholders with respect to
            such shares, and all rights whatsoever with respect to the Series A
            Preferred Stock so converted will terminate and the holders entitled
            to receive the Class B Common Stock issuable upon conversion shall
            be treated for all purposes as the record holder or holders of such
            Class B Common Stock as and after such time. As promptly as
            practicable on or after the Conversion Date, the Company shall issue
            and shall deliver at any office of the Company or the transfer agent
            for the Series A Preferred Stock, a certificate or certificates for
            the number of full shares of Class B Common Stock issuable upon
            conversion.

                        (iii) In the case of any certificate evidencing shares
            of Series A Preferred Stock which is converted in part only, upon
            such conversion the Company shall execute and deliver a new
            certificate representing an aggregate number of shares of Series A
            Preferred Stock equal to the unconverted portion of such
            certificate.

            (g) Notice of Adjustment of Conversion Price. Whenever the
Conversion Price is adjusted as herein provided the Company shall compute the
adjusted Conversion Price in accordance with Section 7(e) and a notice stating
that the Conversion Price has been adjusted and setting forth the adjusted
Conversion Price shall forthwith be prepared by the Company, and as soon as
practicable after it is prepared, such notice shall be mailed by the Company at
its expense to all holders at their last addresses as they shall appear in the
stock register.

            (h) Company to Reserve Class B Common Stock. The Company shall at
all times reserve and keep available, free from preemptive rights, out of the
authorized but unissued Class B Common Stock or out of the Class B Common Stock
held in treasury, for the purpose of effecting the conversion of Series A
Preferred Stock, the full number of shares of Class B Common Stock then issuable
upon the conversion of all outstanding shares of Series A Preferred Stock.

            (i) Taxes on Conversions. The Company will pay any and all original
issuance, transfer, stamp and other similar taxes that may be payable in respect
of the issue or delivery of shares of Class B Common Stock on conversion of
Series A Preferred Stock pursuant hereto. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of shares of Class B Common Stock in a name other than
that of the holder to be converted or as payment of dividends, and no such issue
or delivery shall be made unless and until

<PAGE>

the Person requesting such issue has paid to the Company the amount of any such
tax, or has established to the reasonable satisfaction of the Company that such
tax has been or will be paid.

            (j) Status of Converted Series A Preferred Stock. Any shares of
Series A Preferred Stock which shall have been exchanged pursuant to Section 7
hereof, shall, after such conversion, have the status of authorized but unissued
shares of Preferred Stock without designation as to series, and shall not be
reissued as Series A Preferred Stock.

            (k) Minimum Adjustment. No adjustment in the Conversion Price need
be made until all cumulative adjustments amount to 1.0% or more of the
Conversion Price as last adjusted. Any adjustments that are not made shall be
carried forward and taken into account in any subsequent adjustment.

      Section 8. Certain Definitions. The following terms shall have the
following respective meanings herein:

            "Business Day" means a day other than a Saturday, Sunday or day on
      which banking institutions in New York are authorized or required to
      remain closed.

            "Closing Date" means the Closing Date as defined in that certain
      Purchase Agreement, dated March 6, 2003, among the Company, PEI Holdings,
      Inc., the subsidiary guarantors listed on Schedule B thereto, Banc of
      America Securities LLC and Lazard Freres & Co. LLC.

            "Junior Liquidation Stock" means any class or series of capital
      stock of the Company that, with respect to distributions upon liquidation,
      dissolution or winding up of the Company, ranks junior to the Series A
      Preferred Stock.

            "Parity Liquidation Stock" means any class or series of capital
      stock of the Company that, with respect to distributions upon liquidation,
      dissolution or winding up the Company, ranks on parity to the Series A
      Preferred Stock.

            "Senior Liquidation Stock" means any class or series of capital
      stock of the Company that, with respect to distributions upon liquidation,
      dissolution or winding up of the Company, ranks senior to the Series A
      Preferred Stock.

            "Series B Preferred Stock" means the shares of the Preferred Stock
      created by the Certificate of the Designations, Powers, Preferences and
      Rights of Series B Exchangeable Preferred Stock of PEI Holdings, Inc., as
      the same may be amended from time to time.

<PAGE>

            "Trading Day" means a day on which the New York Stock Exchange,
      Inc., or if the New York Stock Exchange, Inc. is not the principle
      securities exchange or trading market for the Class B Common Stock, the
      principle securities exchange or trading market for the Class B Common
      Stock, is open for general trading of securities, other than a day on
      which general trading of securities on such exchange or market is
      suspended based on fluctuations in stock market averages or stock market
      indices or (other than where the context so requires) on a day on which
      general trading of the Class B Common Stock is suspended."

                            [Execution Page Follows]

<PAGE>

            IN WITNESS WHEREOF, the Company has caused this Certificate of
Designations to be signed by its duly authorized officer this 1st day of May,
2003.

                                       PLAYBOY ENTERPRISES, INC.

                                       By: /s/ Howard Shapiro
                                          ------------------------------------
                                          Name: Howard Shapiro
                                          Title: Executive Vice President, Law
                                                 and Administration, General
                                                 Counsel and Secretary

<PAGE>

                            CERTIFICATE OF AMENDMENT
                                     OF THE
               AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                           PLAYBOY ENTERPRISES, INC.

                ------------------------------------------------

                     Pursuant to Section 242 of the General
                    Corporation Law of the State of Delaware

                ------------------------------------------------

         PLAYBOY ENTERPRISES, INC., a corporation duly organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
does hereby certify that:

         FIRST: The first paragraph of Article FOURTH of the Amended and
Restated Certificate of Incorporation of the Corporation is hereby amended to
read in its entirety as follows:

         "The total number of shares of all classes of capital stock which the
         corporation shall have authority to issue is Forty Seven Million Five
         Hundred Thousand (47,500,000) consisting of: (i) Seven Million Five
         Hundred Thousand (7,500,000) shares of Class A Common Stock of the par
         value of One Cent ($.01) per share, (ii) Thirty Million (30,000,000)
         shares of Class B Common Stock of the par value of One Cent ($.01) per
         share and (iii) Ten Million (10,000,000) shares of Preferred Stock of
         the par value of One Cent ($.01) per share."

         SECOND: The following paragraph is to be inserted as a new subsection
E entitled "Terms of Preferred Stock" of Article FOURTH of the Amended and
Restated Certificate of Incorporation of the Corporation:

         "The Board of Directors is expressly authorized to provide for the
         issuance of all or any shares of the Preferred Stock in one or more
         classes or series, and to fix for each such class or series such voting
         powers, full or limited, or no voting powers, and such distinctive
         designations, preferences and relative, participating, optional or
         other special rights and such qualifications, limitations or
         restrictions thereof, as shall be stated and expressed in the
         resolution or resolutions adopted by the Board of Directors providing
         for the issuance of such class or series and as may be permitted by the
         General Corporation Law of the State of Delaware, including, without
         limitation, the authority to provide that any such class or series may
         be (i) subject to redemption at such time or times and at such price or
         prices; (ii) entitled to receive dividends (which may be cumulative or
         non-cumulative) at such rates, on such conditions, and at such times,
         and payable in preference to, or in such relation to, the dividends
         payable on any other class or classes or any other series; (iii)
         entitled to such rights upon the dissolution of, or upon any
         distribution of the assets of, the
<PAGE>
          Corporation; or (iv) convertible into, or exchangeable for, shares of
          any other class or classes of stock, or of any other series of the
          same or any other class or classes of stock, of the Corporation at
          such price or prices or at such rates of exchange and with such
          adjustments; all as may be stated in such resolution or resolutions.
          Notwithstanding the foregoing, any such Preferred Stock shall not have
          any voting powers, except as required by law or in the event of
          failure to pay dividends, and shall in no event be convertible into
          shares of Class A Common Stock."

     THIRD: The foregoing amendments to the Amended and Restated Certificate of
Incorporation of the Corporation were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.

     IN WITNESS WHEREOF, Playboy Enterprises, Inc. has caused this Certificate
of Amendment to be executed by its duly authorized officer this 1st day of May,
2003.

                                    PLAYBOY ENTERPRISES, INC.

                                    By:  /s/ Howard Shapiro
                                       ------------------------------------
                                       Name:  Howard Shapiro
                                       Title: Executive Vice President, Law
                                              and Administration, General
                                              Counsel and Secretary

                                       2
<PAGE>

                        CERTIFICATE OF AMENDMENT OF THE
                AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
                          OF PLAYBOY ENTERPRISES, INC.

                            ------------------------

                     Pursuant to Section 242 of the General
                    Corporation Law of the State of Delaware

                            ------------------------

      PLAYBOY ENTERPRISES, INC., a corporation duly organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify that:

      FIRST: The first paragraph of Article FOURTH of the Amended and Restated
Certificate of Incorporation of the Corporation is hereby amended to read in its
entirety as follows:

      "The total number of shares of all classes of capital stock which the
      corporation shall have authority to issue is Ninety-Two Million Five
      Hundred Thousand (92,500,000) consisting of: (i) Seven Million Five
      Hundred Thousand (7,500,000) shares of Class A Common Stock of the par
      value of One Cent ($.01) per share, (ii) Seventy-Five Million (75,000,000)
      shares of Class B Common Stock of the par value of One Cent ($.01) per
      share and (iii) Ten Million (10,000,000) shares of Preferred Stock of the
      par value of One Cent ($.01) per share."

      SECOND: The foregoing amendment to the Amended and Restated Certificate of
Incorporation of the Corporation was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.

      IN WITNESS WHEREOF, Playboy Enterprises, Inc. has caused this Certificate
of Amendment to be executed by its duly authorized officer this 13th day of May,
2004.

                                  PLAYBOY ENTERPRISES, INC.

                                  By: /s/ Howard Shapiro
                                      ------------------------------------------
                                      Name: Howard Shapiro
                                      Title: Executive Vice President, Law and
                                             Administration, General Counsel and
                                             Secretary

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