Document:

Exhibit 4.1(x)

                          REGISTRATION RIGHTS AGREEMENT

                                  by and among

                               PEI Holdings, Inc.

                            Playboy Enterprises, Inc.

                     the Subsidiary Guarantors party hereto

                                       and

                         Banc of America Securities LLC
                             Lazard Freres & Co. LLC

                           Dated as of March 11, 2003

<PAGE>

                          Registration Rights Agreement

      This Registration Rights Agreement (this "Agreement") is made and entered
into as of March 11, 2003, by and among PEI Holdings, Inc., a Delaware
corporation (the "Company"), Playboy Enterprises, Inc., a Delaware corporation
and the Company's corporate parent ("Playboy"), the subsidiary guarantors listed
on the signature pages hereof (the "Subsidiary Guarantors" and together with
Playboy, the "Guarantors"), and Banc of America Securities LLC and Lazard Freres
& Co. LLC (each an "Initial Purchaser" and, collectively, the "Initial
Purchasers"), each of whom has agreed to purchase the Company's 11% Senior
Secured Notes due 2010 (the "Initial Notes") pursuant to the Purchase Agreement
(as defined below).

      This Agreement is made pursuant to the Purchase Agreement, dated March 6,
2003 (the "Purchase Agreement"), by and among the Company, the Guarantors and
the Initial Purchasers (i) for the benefit of each Initial Purchaser and (ii)
for the benefit of the holders from time to time of the Notes (including each
Initial Purchaser). In order to induce the Initial Purchasers to purchase the
Initial Notes, the Company has agreed to provide the registration rights set
forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchasers set forth in Section 5(h)
of the Purchase Agreement.

      The parties hereby agree as follows:

      Section 1. Definitions. As used in this Agreement, the following
capitalized terms shall have the following meanings:

      Advice: As defined in Section 6(c) hereof.

      Agreement: As defined in the preamble.

      Broker-Dealer: Any broker or dealer registered under the Exchange Act.

      Business Day: As defined in the Indenture.

      Closing Date: The date of this Agreement.

      Commission: The Securities and Exchange Commission.

      Company: As defined in the preamble.

      Consummate: A Registered Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Securities Act of the Exchange Offer Registration
Statement relating to the Exchange Notes to be issued in the Exchange Offer,
(ii) the maintenance of such Registration Statement continuously effective and
the keeping of the Exchange Offer open for a period not less than the minimum
period required pursuant to Section 3(b) hereof, and (iii) the delivery by the
Company to the Registrar under the Indenture of Exchange Notes

                                       2
<PAGE>

in the same aggregate principal amount as the aggregate principal amount of
Initial Notes that were tendered by Holders thereof pursuant to the Exchange
Offer.

      Controlling person: As defined in Section 8(a) hereof.

      Effectiveness Target Date: As defined in Section 5 hereof.

      Exchange Act: The Securities Exchange Act of 1934, as amended.

      Exchange Date: As defined in Section 3(b) hereof.

      Exchange Notes: The Company's 11% Senior Secured Exchange Notes due 2010,
constituting the same series under the Indenture as the Initial Notes, to be
issued to Holders in exchange for Initial Notes pursuant to this Agreement, with
the Exchange Notes containing terms identical in all material respects to the
Initial Notes (except that the Exchange Notes will not bear legends restricting
their transfer).

      Exchange Offer: The registration by the Company under the Securities Act
of the Exchange Notes pursuant to a Registration Statement pursuant to which the
Company offers the Holders of all outstanding Transfer Restricted Securities the
opportunity to exchange all such outstanding Transfer Restricted Securities held
by such Holders for Exchange Notes in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities tendered in
such exchange offer by such Holders.

      Exchange Offer Registration Statement: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.

      Guarantors. As defined in the preamble hereto.

      Holders: As defined in Section 2(b) hereof.

      Indemnified Holder: As defined in Section 8(a) hereof.

      Indenture: The Indenture, dated as of March 11, 2003, among the Company,
the Guarantors and the Trustee, pursuant to which the Notes are to be issued, as
such Indenture is amended or supplemented from time to time in accordance with
the terms thereof.

      Initial Notes: As defined in the preamble hereto.

      Initial Purchaser: As defined in the preamble hereto.

      Interest Payment Date: As defined in the Indenture and the Notes.

      Liquidated Damages: As defined in Section 5 hereof.

      NASD: National Association of Securities Dealers, Inc.

                                       3
<PAGE>

      Notes: The Initial Notes and the Exchange Notes.

      Person: An individual, partnership, corporation, limited liability
company, trust or unincorporated organization, or a government or agency or
political subdivision thereof.

      Playboy: As defined in the preamble hereto.

      Prospectus: The prospectus included in a Registration Statement, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.

      Purchase Agreement: As defined in the preamble hereto.

      Record Holder: With respect to any Interest Payment Date at which time any
Liquidated Damages will be paid, each Person who is a Holder of Notes on the
record date with respect to such Interest Payment Date, as determined pursuant
to the Indenture and the Notes.

      Registration Default: As defined in Section 5 hereof.

      Registration Statement: Any registration statement of the Company relating
to (a) an offering of Exchange Notes pursuant to an Exchange Offer or (b) the
registration for resale of Transfer Restricted Securities, in each case which is
filed pursuant to the provisions of this Agreement, including the Prospectus
included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.

      Securities Act: The Securities Act of 1933, as amended.

      Shelf Registration Statement: As defined in Section 4 hereof.

      Shelf Trigger Date: As defined in Section 4 hereof.

      Subsidiary Guarantors: As defined in the preamble hereto.

      Transfer Restricted Securities: Each Initial Note, until the earliest to
occur of (a) the date on which such Note is exchanged in the Exchange Offer, (b)
the date on which such Note has been effectively registered under the Securities
Act and disposed of in accordance with a Shelf Registration Statement, (c) the
date on which such Note is distributed to the public pursuant to Rule 144 under
the Securities Act or is saleable pursuant to Rule 144(k) under the Securities
Act (or similar provisions then in effect), and (d) the date such Note ceases to
be outstanding, and each Exchange Note issued to a Broker-Dealer until the date
on which such Exchange Note is distributed to the public by such Broker-Dealer
pursuant to the "Plan of Distribution" contemplated by the Exchange Offer
Registration Statement (including delivery of the Prospectus contained therein);
provided, however, that the Transfer Restricted Securities with respect to which

                                       4
<PAGE>

the Company has caused to be filed and declared effective an Exchange Offer
Registration Statement and has consummated an Exchange Offer, in each case
pursuant to and in accordance with Section 3 hereof, and which have not been
tendered by the Exchange Date by the Holder thereof shall be deemed not to be
Transfer Restricted Securities, except to the extent the Holder provides the
notice contemplated by Section 4(a)(ii) hereof.

      Trust Indenture Act: The Trust Indenture Act of 1939 as amended.

      Trustee: Bank One, N.A., as the trustee under the Indenture, together with
its successors and assigns.

      Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.

      Section 2. Securities Subject To This Agreement.

      (a) Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.

      (b) Holders of Transfer Restricted Securities. A Person is deemed to be a
holder of Transfer Restricted Securities (each, a "Holder") whenever such Person
owns Transfer Restricted Securities.

      Section 3. Registered Exchange Offer.

      (a) Unless the Exchange Offer shall not be permissible under applicable
law or Commission policy (after the procedures set forth in Section 6(a) below
have been complied with), the Company and the Guarantors shall (i) cause to be
filed with the Commission on or prior to 120 days after the Closing Date, a
Registration Statement under the Securities Act relating to the Exchange Notes
and the Exchange Offer, (ii) use their reasonable best efforts to cause such
Registration Statement to become effective on or prior to 180 days after the
Closing Date, (iii) in connection with the foregoing, (A) file all pre-effective
amendments to such Registration Statement as may be necessary in order to cause
such Registration Statement to become effective, (B) if applicable, file a
post-effective amendment to such Registration Statement pursuant to Rule 430A
under the Securities Act and (C) cause all filings which to the knowledge of the
Company are reasonably necessary, if any, in connection with the registration
and qualification of the Exchange Notes to be made under the Blue Sky laws of
such jurisdictions as are necessary to permit Consummation of the Exchange
Offer, and (iv) upon the effectiveness of such Registration Statement, commence
the Exchange Offer. The Exchange Offer shall be on the appropriate form
permitting registration of the Exchange Notes to be offered in exchange for the
Transfer Restricted Securities and to permit resales of Notes held by
Broker-Dealers as contemplated by Section 3(c) below.

      (b) The Company and the Guarantors shall use their reasonable best efforts
to cause the Exchange Offer Registration Statement to be effective

                                       5
<PAGE>

continuously and shall keep the Exchange Offer open for a period of not less
than the minimum period required under applicable federal and state securities
laws to Consummate the Exchange Offer (the last date of acceptance for exchange
being referred to as the "Exchange Date"); provided, however, that in no event
shall such period be less than 30 days after the date notice of the Exchange
Offer is mailed to the Holders. The Company and the Guarantors shall cause the
Exchange Offer to comply with all applicable federal and state securities laws.
No securities other than the Notes (and guarantees thereof) shall be included in
the Exchange Offer Registration Statement. The Company and the Guarantors shall
use their reasonable best efforts to cause the Exchange Offer to be Consummated
within 30 Business Days after the Exchange Offer Registration Statement has
become effective (or longer, if required by federal securities laws).

      (c) The Company and the Guarantors shall indicate in a "Plan of
Distribution" section contained in the Prospectus forming a part of the Exchange
Offer Registration Statement that any Broker-Dealer who holds Initial Notes that
are Transfer Restricted Securities and that were acquired for its own account as
a result of market-making activities or other trading activities (other than
Transfer Restricted Securities acquired directly from the Company), may exchange
such Initial Notes pursuant to the Exchange Offer; however, such Broker-Dealer
may be deemed to be an "underwriter" within the meaning of the Securities Act
and must, therefore, deliver a prospectus meeting the requirements of the
Securities Act in connection with any resales of the Exchange Notes received by
such Broker-Dealer in the Exchange Offer, which prospectus delivery requirement
may be satisfied by the delivery by such Broker-Dealer of the Prospectus
contained in the Exchange Offer Registration Statement. Such "Plan of
Distribution" section shall also contain all other information with respect to
such resales by Broker-Dealers that the Commission may require in order to
permit such resales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Notes held by any such
Broker-Dealer except to the extent required by the Commission as a result of a
change in policy after the date of this Agreement.

      The Company and the Guarantors shall use their reasonable best efforts to
keep the Exchange Offer Registration Statement continuously effective,
supplemented and amended as required by and subject to the provisions of
Sections 6(a) and 6(c) below to the extent necessary to ensure that it is
available for resales of Notes acquired by Broker-Dealers for their own accounts
as a result of market-making activities or other trading activities, and to
ensure that it conforms with the requirements of this Agreement, the Securities
Act and the policies, rules and regulations of the Commission as announced from
time to time, for a period ending on the earlier of (i) 180 days from the date
on which the Exchange Offer Registration Statement is declared effective and
(ii) the date on which Broker-Dealers are no longer required to deliver a
prospectus in connection with market-making or other trading activities;
provided, however, that any such Broker-Dealer desiring the Company to keep the
Exchange Offer Registration Statement continuously effective shall notify the
Company in writing that such Broker-Dealer acquired Exchange Notes as a result
of market-making or other similar activities such that the Broker-Dealer would
be required to deliver a

                                       6
<PAGE>

prospectus under the Securities Act upon a subsequent sale or other disposition
of the Exchange Notes.

      The Company shall provide sufficient copies of the latest version of such
Prospectus to Broker-Dealers promptly upon request at any time during such
180-day (or shorter as provided in the foregoing sentence) period in order to
facilitate such resales.

      Section 4. Shelf Registrations.

      (a) Shelf Registration. If (i) the Company and the Guarantors are not
permitted to consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy (after the procedures set forth
in Section 6(a) below have been complied with), or (ii) any Holder notifies the
Company prior to the 20th day following Consummation of the Exchange Offer that
(A) such Holder is prohibited by applicable law or Commission policy from
participating in the Exchange Offer, (B) such Holder may not resell the Exchange
Notes acquired by it in the Exchange Offer to the public without delivering a
prospectus and that the Prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales by such Holder, or
(C) such Holder is a Broker-Dealer and holds Initial Notes acquired directly
from the Company or one of its affiliates, then, upon such Holder's request, the
Company and the Guarantors shall:

                  (x) cause to be filed a shelf registration statement pursuant
            to Rule 415 under the Securities Act, which may be an amendment to
            the Exchange Offer Registration Statement (in either event, the
            "Shelf Registration Statement") on or prior to the earliest to occur
            of the 120th day after (1) the date on which the Company determines
            that it is not permitted to file the Exchange Offer Registration
            Statement as contemplated by clause (i) above or (2) the date on
            which the Company receives notice from a Holder of Transfer
            Restricted Securities as contemplated by clause (ii) above (such
            earliest date being the "Shelf Trigger Date"), which Shelf
            Registration Statement shall provide for resales of all Transfer
            Restricted Securities the Holders of which shall have provided the
            information required pursuant to Section 4(b) hereof; and

                  (y) use their reasonable best efforts to cause such Shelf
            Registration Statement to be declared effective by the Commission on
            or before the 180th day after the Shelf Trigger Date (such 180th day
            the "Effectiveness Deadline").

      If, after the Company and the Guarantors have filed an Exchange Offer
Registration Statement that satisfies the requirements of Section 3(a) hereof,
the Company and the Guarantors are required to file and make effective a Shelf
Registration Statement solely because the Exchange Offer is not permitted under
applicable federal law pursuant to clause (a)(i) above, then the filing of the

                                       7
<PAGE>

Exchange Offer Registration Statement shall be deemed to satisfy the
requirements of clause (x) above; it being understood that in such event the
Company and the Guarantors shall remain obligated to use their reasonable best
efforts to meet the Effectiveness Deadline set forth in clause (y).

      The Company and the Guarantor shall use their reasonable best efforts to
keep such Shelf Registration Statement continuously effective, supplemented and
amended as required by and subject to the provisions of Sections 6(b) and (c)
hereof to the extent necessary to ensure that it is available for resales of
Notes by the Holders of Transfer Restricted Securities entitled to the benefit
of this Section 4(a), and to ensure that it conforms with the requirements of
this Agreement, the Securities Act and the policies, rules and regulations of
the Commission as announced from time to time, for a period of at least two
years following the effective date of such Shelf Registration Statement (or such
shorter period that will terminate when all the Notes covered by such Shelf
Registration Statement have been sold pursuant to such Shelf Registration
Statement).

      (b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing within 20 days after receipt of a request therefor such
information as the Company may reasonably request for use in connection with any
Shelf Registration Statement or Prospectus or preliminary Prospectus included
therein, including, without limitation, the information specified in Item 507 or
508 of Regulation S-K, as applicable. No Holder of Transfer Restricted
Securities shall be entitled to liquidated damages pursuant to Section 5 hereof
because of the Company's failure to include such Holder's Transfer Restricted
Securities in Shelf Registration Statement, unless and until such Holder shall
have provided all such information. By acquiring the Initial Notes each Holder
agrees to provide the indemnity set forth in Section 8(b) hereof with respect to
the information such Holder furnishes to the Company in writing expressly for
use in any Shelf Registration Statement. The Company and the Guarantors shall
not be obligated to supplement such Shelf Registration Statement after it has
been declared effective by the Commission more than two times quarterly solely
to reflect additional Holders. Each Holder as to which any Shelf Registration
Statement is being effected agrees to furnish promptly to the Company all
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.

      Section 5. Liquidated Damages. If (i) any of the Registration Statements
required by this Agreement is not filed with the Commission on or prior to the
date specified for such filing in this Agreement, (ii) any of such Registration
Statements has not been declared effective by the Commission on or prior to the
date specified for such effectiveness in this Agreement (the "Effectiveness
Target Date"), (iii) the Exchange Offer has not been Consummated within 30
Business Days after the Effectiveness Target Date with respect to the Exchange
Offer Registration Statement (or longer, if required by federal securities laws)
or (iv) any Registration Statement required by this Agreement is filed and
declared

                                       8
<PAGE>

effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose during the period in which it is required to be effective
pursuant to Section 3 or Section 4 without being succeeded within two business
days by a post-effective amendment to such Registration Statement that cures
such failure and that is itself promptly declared effective (each such event
referred to in clauses (i) through (iv), a "Registration Default"), then the
Company and each Guarantor (to the extent of its Note Guaranty set forth in the
Indenture) jointly and severally agrees to pay to each Holder of Transfer
Restricted Securities liquidated damages ("Liquidated Damages") in an amount
equal to $.05 per week per $1,000 in principal amount of Transfer Restricted
Securities held by such Holder for each week or portion thereof that the
Registration Default continues for the first 90-day period immediately following
the occurrence of such Registration Default. The amount of the Liquidated
Damages shall increase by an additional $.05 per week per $1,000 in principal
amount of Transfer Restricted Securities with respect to each subsequent 90-day
period until all Registration Defaults have been cured, up to a maximum amount
of Liquidated Damages for all Registration Defaults of $.25 per week per $1,000
in principal amount of Transfer Restricted Securities. Following the cure of all
Registration Defaults, Liquidated Damages shall cease to accrue; provided that,
if after any such cessation, a Registration Default occurs, Liquidated Damages
shall again accrue at the initial rate of $.05 per week per $1,000 in principal
amount of Transfer Restricted Securities pursuant to the foregoing provisions.

      All accrued Liquidated Damages shall be paid to the Record Holders
entitled thereto in the manner provided for the payment of interest in the
Indenture on each Interest Payment Date, as more fully set forth in the
Indenture and the Notes. Notwithstanding the fact that any securities for which
Liquidated Damages are due cease to be Transfer Restricted Securities, all
obligations of the Company and the Guarantors to pay accrued Liquidated Damages
with respect to such securities shall survive until such time as such
obligations with respect to such securities shall have been satisfied in full.

      Notwithstanding anything to the contrary in this Section 5, the Company
shall not be required to pay Liquidated Damages to a Holder of Transfer
Restricted Securities if such Holder's failure to receive Exchange Notes and/or
inability to use a Shelf Registration Statement arises from such Holder's
failure to comply with its obligations to make the representations set forth in
Section 6(a) or to provide the information required to be provided by it, if
any, pursuant to Section 4(b).

      Section 6. Registration Procedures.

      (a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Company and the Guarantors shall use their reasonable best efforts to
comply with all of the relevant provisions of Section 6(c) below and shall use
their reasonable best efforts to effect such exchange. As a condition to its
participation in the Exchange Offer pursuant to the terms of this Agreement,
each Holder of Transfer Restricted Securities shall furnish, upon the request of
the Company, prior to the Consummation thereof, a written representation to the

                                       9
<PAGE>

Company (which may be contained in the letter of transmittal contemplated by the
Exchange Offer Registration Statement) to the effect that (A) it is not an
affiliate of the Company, (B) it is not engaged in, and does not intend to
engage in, and has no arrangement or understanding with any person to
participate in, a distribution of the Exchange Notes to be issued in the
Exchange Offer, (C) it is acquiring the Exchange Notes in its ordinary course of
business, (D) it is not acting on behalf of any person who could not truthfully
make the foregoing representations and (E) such other representations as may be
reasonably necessary under applicable Commission rules, regulations or
interpretations. Each Holder tendering Initial Notes in the Exchange Offer will
be required to acknowledge and agree that any Broker-Dealer and any such Holder
using the Exchange Offer to participate in a distribution of the securities to
be acquired in the Exchange Offer (1) could not under Commission policy, as in
effect on the date of this Agreement, rely on the position of the Commission
enunciated in its no-action letters entitled Morgan Stanley and Co., Inc.
(available June 5, 1991) and Exxon Capital Holdings Corporation (available May
13, 1988), as interpreted in Shearman & Sterling (available July 2, 1993), and
similar no-action letters, and (2) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction and that such transaction should be covered by an
effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K if the
resales are of Exchange Notes obtained by such Holder in exchange for Initial
Notes acquired by such Holder directly from the Company.

      (b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company and the Guarantors shall use reasonable best
efforts to comply with all the relevant provisions of Section 6(c) below and
shall use their reasonable best efforts to effect such registration to permit
the sale of the Transfer Restricted Securities being sold in accordance with the
intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 4(b) hereof), and
pursuant thereto the Company will as expeditiously as possible prepare and file
with the Commission a Registration Statement relating to the registration on any
appropriate form under the Securities Act, which form shall be available for the
sale of the Transfer Restricted Securities in accordance with the intended
method or methods of distribution thereof.

      (c) General Provisions. In connection with any Shelf Registration
Statement and, to the extent applicable, an Exchange Offer Registration
Statement, required by this Agreement, the Company and the Guarantors shall:

            (i) use their reasonable best efforts to keep such Registration
      Statement continuously effective and provide all requisite financial
      statements (including, if required by the Securities Act or any regulation
      thereunder, financial statements of the Company or any or all of the
      Subsidiary Guarantors) for the period specified in Section 3 or 4 of this
      Agreement, as applicable; upon the occurrence of any event that would
      cause any such Registration Statement or the Prospectus contained therein
      (A) to contain a material misstatement or omission or (B) not to be

                                       10
<PAGE>

      effective and usable during the period required by this Agreement, the
      Company shall file promptly an appropriate amendment to such Registration
      Statement, in the case of clause (A), correcting any such misstatement or
      omission, and, in the case of either clause (A) or (B), use its reasonable
      best efforts to cause such amendment to be declared effective and such
      Registration Statement and the related Prospectus to become usable for
      their intended purpose(s) as soon as practicable thereafter;

            (ii) prepare and file with the Commission such amendments and
      post-effective amendments to the Registration Statement as may be
      necessary to keep the Registration Statement effective for the applicable
      period set forth in Section 3 or 4 hereof, as applicable or such shorter
      period as will terminate when all Transfer Restricted Securities covered
      by such Registration Statement have been sold; cause the Prospectus to be
      supplemented by any required Prospectus supplement, and as so supplemented
      to be filed pursuant to Rule 424 under the Securities Act, and to comply
      with the applicable provisions of Rules 424 and 430A under the Securities
      Act in a timely manner during the applicable period; and comply with the
      provisions of the Securities Act with respect to the disposition of all
      securities covered by such Registration Statement during the applicable
      period in accordance with the intended method or methods of distribution
      by the sellers thereof set forth in such Registration Statement or
      supplement to the Prospectus;

            (iii) with respect to a Shelf Registration Statement, advise the
      underwriter(s), if any, and the selling Holders promptly and, if requested
      by such Persons, confirm such advice in writing, (A) when the Prospectus
      or any Prospectus supplement or post-effective amendment has been filed,
      and, with respect to any Registration Statement or any post-effective
      amendment thereto, when the same has become effective, (B) of any request
      by the Commission for amendments to the Registration Statement or
      amendments or supplements to the Prospectus or for additional information
      relating thereto, (C) of the issuance by the Commission of any stop order
      suspending the effectiveness of the Registration Statement under the
      Securities Act or of the suspension by any state securities commission of
      the qualification of the Transfer Restricted Securities for offering or
      sale in any jurisdiction, or the initiation of any proceeding for any of
      the preceding purposes, (D) (1) of the existence of any fact or the
      happening of any event that makes any statement of a material fact made in
      the Registration Statement, the Prospectus, any amendment or supplement
      thereto, or any document incorporated by reference therein untrue, or that
      requires the making of any additions to or changes in the Registration
      Statement or the Prospectus in order to make the statements therein not
      misleading, or (2) of the Company's determination, after consultation with
      counsel and evidenced by a resolution of the Board of Directors of the
      Company, that the continued effectiveness and use of the Shelf
      Registration Statement would require the disclosure of confidential
      information or interfere with any financing, acquisition, reorganization
      or

                                       11
<PAGE>

      other material transaction involving the Company and the Guarantors (it
      being understood that (in the case of both clauses D(1) and D(2)) only the
      existence of the fact or event must be disclosed and the nature of the
      facts or events may be kept confidential for such period as required for
      bona fide business reasons). If at any time the Commission shall issue any
      stop order suspending the effectiveness of the Registration Statement, or
      any state securities commission or other regulatory authority shall issue
      an order suspending the qualification or exemption from qualification of
      the Transfer Restricted Securities under state securities or Blue Sky
      laws, the Company and the Guarantors shall use their reasonable best
      efforts to obtain the withdrawal or lifting of such order at the earliest
      possible time;

            (iv) with respect to a Shelf Registration Statement, furnish without
      charge to each selling Holder named in any Registration Statement, and
      each of the underwriter(s), if any, before filing with the Commission,
      copies of any Registration Statement or any Prospectus included therein or
      any amendments or supplements to any such Registration Statement or
      Prospectus (including all documents incorporated by reference after the
      initial filing of such Registration Statement), which documents will be
      subject to the review of such Holders and underwriter(s) in connection
      with such sale, if any, for a period of at least five business days, and
      the Company will not file any such Registration Statement or Prospectus or
      any amendment or supplement to any such Registration Statement or
      Prospectus (including all such documents incorporated by reference) to
      which a Holder of Transfer Restricted Securities covered by such
      Registration Statement or the underwriter(s), if any, shall reasonably
      object in writing within five business days after the receipt thereof
      (such objection to be deemed timely made upon confirmation of telecopy
      transmission within such period). The objection of a Holder or
      underwriter, if any, shall be deemed to be reasonable if such Registration
      Statement, amendment, Prospectus or supplement, as applicable, as proposed
      to be filed, contains a material misstatement or omission;

            (v) with respect to a Shelf Registration Statement, promptly after
      the filing of any document that is to be incorporated by reference into a
      Registration Statement or Prospectus, provide copies of such document to
      each selling Holder named in any Registration Statement, and to the
      underwriter(s), if any and, make representatives of the Company and the
      Guarantors available as may be reasonably necessary for discussion of such
      document and other customary due diligence matters;

            (vi) with respect to a Shelf Registration Statement, make available
      at reasonable business hours for inspection in the offices where such
      records are normally maintained by selling Holders, any managing
      underwriter participating in any disposition pursuant to such Registration
      Statement and any attorney or accountant retained by such selling Holders
      or any of the underwriter(s), all relevant financial and other records,
      pertinent corporate documents and relevant properties of the Company and

                                       12
<PAGE>

      the Guarantors as may be reasonably necessary to enable them to exercise
      applicable due diligence responsibility subject to appropriate
      confidentiality agreements and cause the Company's and the Guarantors'
      officers, directors and employees to supply all information reasonably
      requested by any such Holder, underwriter, attorney or accountant in
      connection with such Registration Statement subsequent to the filing
      thereof and prior to its effectiveness;

            (vii) with respect to a Shelf Registration Statement, if requested
      by any selling Holders or the underwriter(s), if any, promptly incorporate
      in any Registration Statement or Prospectus, pursuant to a supplement or
      post-effective amendment if necessary, such information as such selling
      Holders and underwriter(s), if any, may reasonably request to have
      included therein, including, without limitation, information relating to
      the "Plan of Distribution" of the Transfer Restricted Securities,
      information with respect to the principal amount of Transfer Restricted
      Securities being sold to such underwriter(s), the purchase price being
      paid therefor and any other terms of the offering of the Transfer
      Restricted Securities to be sold in such offering; and make all required
      filings of such Prospectus supplement or post-effective amendment as soon
      as reasonably practicable after the Company is notified of the matters to
      be incorporated in such Prospectus supplement or post-effective amendment;

            (viii)if the Transfer Restricted Securities are not rated, cause the
      Transfer Restricted Securities covered by the Registration Statement to be
      rated with the appropriate rating agencies if so requested by the Holders
      of a majority in aggregate principal amount of Notes covered thereby or
      the underwriter(s), if any;

            (ix) with respect to a Shelf Registration Statement, furnish to each
      selling Holder and each of the underwriter(s), if any, without charge, at
      least one copy, or notice of filing, of the Registration Statement, as
      first filed with the Commission, and of each amendment thereto, including
      financial statements and schedules, all documents incorporated by
      reference therein and all exhibits (including exhibits incorporated
      therein by reference);

            (x) with respect to a Shelf Registration Statement, deliver to each
      selling Holder and each of the underwriter(s), if any, without charge, as
      many copies of the Prospectus (including each preliminary prospectus) and
      any amendment or supplement thereto as such Persons reasonably may
      request; the Company and the Guarantors hereby consent to the use of the
      Prospectus and any amendment or supplement thereto by each of the selling
      Holders and each of the underwriter(s), if any, in connection with the
      offering and the sale of the Transfer Restricted Securities covered by the
      Prospectus or any amendment or supplement thereto;

            (xi) in the case of a Shelf Registration Statement, upon request of
      Holders who collectively hold an aggregate principal amount of

                                       13
<PAGE>

      Transfer Restricted Securities in excess of 50% of the outstanding
      principal amount of Transfer Restricted Securities (the "Requesting
      Holders"), enter into such agreements (including an underwriting
      agreement), and make such reasonable representations and warranties, and
      take all such other actions in connection therewith in order to expedite
      or facilitate the disposition of the Transfer Restricted Securities
      pursuant to any Registration Statement contemplated by this Agreement, all
      to such extent as may be requested by any Holder of Transfer Restricted
      Securities or underwriter in connection with any sale or resale pursuant
      to any Shelf Registration Statement contemplated by this Agreement, which
      agreements must be in customary form, and whether or not an underwriting
      agreement is entered into and whether or not the registration is an
      Underwritten Registration, the Company and the Guarantors shall:

            (A) upon request of the Requesting Holders, furnish (or in the case
      of paragraphs (2) and (3), use their reasonable best efforts to furnish)
      to each selling Holder and each underwriter, if any, upon the
      effectiveness of the Shelf Registration Statement:

                  (1) a certificate, dated the date of effectiveness of the
            Shelf Registration Statement, signed by an officer of the Company
            and each Guarantor, confirming, as of the date thereof, the matters
            set forth in paragraphs (i), (ii), (iv) and (v) of Section 5(e) of
            the Purchase Agreement;

                  (2) an opinion, dated the date of effectiveness of the Shelf
            Registration Statement, of counsel (which may be the General Counsel
            of the Company) for the Company and the Guarantors, covering such
            matters customarily covered in such opinions as such parties may
            reasonably request, which shall be reasonably satisfactory to the
            managing underwriters and Requesting Holders;,

                  (3) a customary comfort letter, dated as of the effectiveness
            of the Shelf Registration Statement from the Company's independent
            accountants, in the customary form and covering matters of the type
            customarily covered in comfort letters by underwriters in connection
            with primary underwritten offerings; and

            (B) set forth in full or incorporate by reference in the
      underwriting agreement, if any, the indemnification provisions and
      procedures of Section 8 hereof with respect to all parties to be
      indemnified pursuant to said Section.

      If at any time the representations and warranties of the Company or any of
the Guarantors contemplated in clause (A)(1) above cease to be

                                       14
<PAGE>

true and correct, the Company shall so advise the Initial Purchasers and the
underwriter(s), if any, and each selling Holder promptly and, if requested by
such Persons, shall confirm such advice in writing;

            (xii) prior to any public offering of Transfer Restricted
      Securities, cooperate with the selling Holders, the underwriter(s), if
      any, and their respective counsel in connection with the registration and
      qualification of the Transfer Restricted Securities under the securities
      or Blue Sky laws of such jurisdictions as the selling Holders or
      underwriter(s) may request and do any and all other acts or things
      reasonably necessary or advisable to enable the disposition in such
      jurisdictions of the Transfer Restricted Securities covered by the Shelf
      Registration Statement; provided, however, that neither the Company nor
      the Guarantors shall be required to register or qualify as a foreign
      corporation where it is not then so qualified or to take any action that
      would subject it to the service of process in suits or to taxation, other
      than as to matters and transactions relating to the Registration
      Statement, in any jurisdiction where it is not then so subject;

            (xiii) issue, upon the request of any Holder of Initial Notes
      covered by the Shelf Registration Statement, Exchange Notes, having an
      aggregate principal amount equal to the aggregate principal amount of
      Initial Notes surrendered to the Company by such Holder in exchange
      therefor or being sold by such Holder; such Exchange Notes to be
      registered in the name of such Holder or in the name of the purchaser(s)
      of such Notes, as the case may be; in return, the Initial Notes held by
      such Holder shall be surrendered to the Company for cancellation;

            (xiv) in connection with any sale of Transfer Restricted Securities
      that will result in such securities no longer being Transfer Restricted
      Securities, cooperate with the selling Holders and the underwriter(s), if
      any, to facilitate the timely preparation and delivery of certificates
      representing Transfer Restricted Securities to be sold and not bearing any
      restrictive legends; and enable such Transfer Restricted Securities to be
      in such denominations and registered in such names as the Holders or the
      underwriter(s), if any, may request at least two business days prior to
      any sale of Transfer Restricted Securities made by such underwriter(s);

            (xv) use their reasonable best efforts to cause the disposition of
      the Transfer Restricted Securities covered by the Registration Statement
      to be registered with or approved by such other governmental agencies or
      authorities as may be necessary to enable the seller or sellers thereof or
      the underwriter(s), if any, to consummate the disposition of such Transfer
      Restricted Securities, subject to the proviso contained in clause (xii)
      above;

            (xvi) subject to clause (c)(i) above, if any fact or event
      contemplated by clause (c)(iii)(D) above shall exist or have occurred,

                                       15
<PAGE>

      prepare a supplement or post-effective amendment to the Registration
      Statement or related Prospectus or any document incorporated therein by
      reference or file any other required document so that, as thereafter
      delivered to the purchasers of Transfer Restricted Securities, the
      Prospectus will not contain an untrue statement of a material fact or omit
      to state any material fact necessary to make the statements therein not
      misleading;

            (xvii) provide a CUSIP number for all Transfer Restricted Securities
      not later than the effective date of the Registration Statement and
      provide the Trustee under the Indenture with printed certificates for the
      Transfer Restricted Securities which are in a form eligible for deposit
      with the Depositary Trust Company;

            (xviii) cooperate and assist in any filings required to be made with
      the NASD and in the performance of any due diligence investigation by any
      underwriter (including any "qualified independent underwriter") that is
      required to be retained in accordance with the rules and regulations of
      the NASD, and use their reasonable best efforts to cause such Registration
      Statement to become effective and approved by such governmental agencies
      or authorities as may be necessary to enable the Holders selling Transfer
      Restricted Securities to consummate the disposition of such Transfer
      Restricted Securities;

            (xix) otherwise use their reasonable best efforts to comply with all
      applicable rules and regulations of the Commission, and make generally
      available to Playboy's security holders with regard to any applicable
      Registration Statement, as soon as practicable, a consolidated earnings
      statement meeting the requirements of Rule 158 (which need not be audited)
      for the twelve-month period beginning, after the effective date of the
      Registration Statement (as such term is defined in paragraph (c) of Rule
      158 under the Act); and

            (xx) cause the Indenture to be qualified under the Trust Indenture
      Act not later than the effective date of the first Registration Statement
      required by this Agreement, and, in connection therewith, cooperate with
      the Trustee and the Holders of Notes to effect such changes to the
      Indenture as may be required for such Indenture to be so qualified in
      accordance with the terms of the Trust Indenture Act; and to execute and
      use their reasonable best efforts to cause the Trustee to execute, all
      documents that may be required to effect such changes and all other forms
      and documents required to be filed with the Commission to enable such
      Indenture to be so qualified in a timely manner.

      Each Holder agrees by acquisition of a Transfer Restricted Security that,
upon receipt of any notice from the Company of the existence of any fact of the
kind described in Section 6(c)(iii)(C) or (D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the

                                       16
<PAGE>

supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof, or
until it is advised in writing (the "Advice") by the Company that the use of the
Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus. If so
directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of such notice. In the event
the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice to and including the date
when each selling Holder covered by such Registration Statement shall have
received the copies of the supplemented or amended Prospectus contemplated by
Section 6(c)(xvi) hereof or shall have received the Advice, it being agreed,
however, that the Company's option to suspend use of a Registration Statement
pursuant to this paragraph for more than 10 business days in any calendar year
or more than twice in any calendar year shall be treated as a Registration
Default for purposes of Section 5.

      Section 7. Registration Expenses.

      (a) All expenses incident to the performance of, and compliance with, this
Agreement by the Company and the Guarantors will be borne by the Company and the
Guarantors, regardless of whether a Registration Statement becomes effective,
including without limitation: (i) all registration and filing fees and expenses;
(ii) all fees and expenses of compliance with federal securities and state Blue
Sky laws; (iii) all expenses of printing (including printing certificates for
the Exchange Notes to be issued in the Exchange Offer and printing of
Prospectuses), messenger and delivery services and telephone; (iv) all fees and
disbursements of counsel for the Company and the Guarantors; (v) all application
and filing fees in connection with listing, if any, the Exchange Notes on a
national securities exchange or automated quotation system pursuant to the
requirements thereof; and (vi) all fees and disbursements of independent
certified public accountants of the Company and the Guarantors (including the
expenses of any special audit and comfort letters required by or incident to
such performance).

      The Company and the Guarantors will, in any event, bear their internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or any Guarantor.

      (b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities being tendered in the Exchange Offer and/or resold pursuant to the
"Plan of Distribution" contained in the Exchange Offer Registration Statement or

                                       17
<PAGE>

      registered pursuant to the Shelf Registration Statement, as applicable,
for the reasonable fees and disbursements of not more than one counsel for both,
who shall be Davis Polk & Wardwell or such other counsel as may be chosen by the
Holders of a majority in principal amount of the Transfer Restricted Securities
for whose benefit such Registration Statement is being prepared. Each Holder
shall pay all expenses of its counsel except as provided in this paragraph (b),
all underwriting discounts and commissions and transfer taxes, if any, relating
to the sale or disposition of such Holder's Transfer Restricted Securities
pursuant to a Shelf Registration Statement.

      Section 8. Indemnification And Contribution.

      (a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless (i) each Holder (including any Broker-Dealer selling
Exchange Notes pursuant to the "Plan of Distribution" contained in the Exchange
Offer Registration Statement) and (ii) each person, if any, who controls (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) any Holder (any of the persons referred to in this clause (ii) being
hereinafter referred to as a "controlling person") and (iii) the respective
officers, directors, partners, employees, representatives and agents of any
Holder or any controlling person (any person referred to in clause (i), (ii) or
(iii) may hereinafter be referred to as an "Indemnified Holder"), to the fullest
extent lawful, from and against any and all losses, claims, damages,
liabilities, judgments, actions and expenses (including without limitation and
as incurred, reimbursement of all reasonable costs of investigating, preparing,
pursuing, settling, compromising, paying or defending any claim or action, or
any investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
Indemnified Holder), joint or several, directly or indirectly caused by, related
to, based upon, arising out of or in connection with any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus (or any amendment or supplement thereto), or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses are
caused by an untrue statement or omission or alleged untrue statement or
omission that is made in reliance upon and in conformity with information
relating to any of the Holders furnished in writing to the Company by any of the
Holders expressly for use therein; provided, however, that neither the Company
nor any Guarantor will be liable to any Initial Purchaser, Indemnified Holder
(in its capacity as Holder) or underwriter (or any person who controls such
party within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act) with respect to any untrue statement or alleged untrue
statement or omission or alleged omission of a material fact made in any
preliminary Prospectus to the extent that any such loss, liability, claim,
damage or expense resulted from the fact that such Initial Purchaser,
Indemnified Holder (in its capacity as Holder), or underwriter, as the case may
be, sold Transfer Restricted Securities to a Person to whom such Initial
Purchaser, Indemnified Holder (in its capacity as Holder) or underwriter, as the
case may be, failed to send or give, at or prior to the written confirmation of
sale of such securities, a copy of a final

                                       18
<PAGE>

Prospectus (as amended or supplemented), if the Company or any Guarantor has
previously furnished copies thereof (sufficiently in advance of the closing of
such sale to allow for distribution thereof in a timely manner) to such Initial
Purchaser, Indemnified Holder (in its capacity as Holder) or underwriter, as the
case may be, and the loss, liability, claim, damage or expense of such Initial
Purchaser, Indemnified Holder (in its capacity as Holder) or underwriter, as the
case maybe, resulted from an untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in or omitted from
such preliminary Prospectus which was corrected in such final Prospectus. The
Company and the Guarantors shall also jointly and severally indemnify the
underwriters in any Underwritten Offering, their officers and directors and each
controlling person (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) of such underwriters to the same extent as
provided above with respect to the indemnification of the Holders of the Notes,
if requested by such Holders.

      In case any action or proceeding (including any governmental or regulatory
investigation or proceeding) shall be brought or asserted against any of the
Indemnified Holders with respect to which indemnity may be sought against the
Company or the Guarantors, such Indemnified Holder (or the Indemnified Holder
controlled by such controlling person) shall promptly notify the Company and the
Guarantors in writing (provided, that the failure to give such notice shall not
relieve the Company or the Guarantors of their respective obligations pursuant
to this Agreement except to the extent that the Company or any Guarantor is
prejudiced as a result of such failure). The Company and the Guarantors shall be
liable for any settlement of any such action or proceeding effected with the
Company's prior written consent, which consent shall not be withheld
unreasonably, and the Company and the Guarantors agree to indemnify and hold
harmless any Indemnified Holder from and against any loss, claim, damage,
liability or expense by reason of any settlement of any action effected with the
written consent of the Company. The Company and the Guarantors shall not,
without the prior written consent of each Indemnified Holder, settle or
compromise or consent to the entry of judgment in or otherwise seek to terminate
any pending or threatened action, claim, litigation or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether or not
any Indemnified Holder is a party thereto), unless such settlement, compromise,
consent or termination includes an unconditional release of each Indemnified
Holder from all liability arising out of such action, claim, litigation or
proceeding.

      (b) Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless the Company and the Guarantors and
their respective directors and officers who sign a Registration Statement, and
any person controlling (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) the Company or any Guarantor, and the
respective officers, directors, partners, employees, representatives and agents
of each such person, to the same extent as the foregoing indemnity from the
Company and the Guarantors to each of the Indemnified Holders, but only with
respect to claims and actions based on information relating to such Holder
furnished in writing by such Holder expressly for use in any Registration

                                       19
<PAGE>

Statement. In case any action or proceeding shall be brought against the Company
or any Guarantor or any of their respective directors or officers or any such
controlling person in respect of which indemnity may be sought against a Holder
of Transfer Restricted Securities, such Holder shall have the rights and duties
given the Company and any Guarantor and each of the Company or such Guarantor or
its directors or officers or such controlling person shall have the rights and
duties given to each Holder by the preceding paragraph. In no event shall the
liability of any selling Holder hereunder be greater in amount than the dollar
amount of the proceeds received by such Holder upon the sale of the Notes giving
rise to such indemnification obligation.

      (c) In case any such action is brought against any indemnified party under
this Section 8 and such indemnified party seeks or intends to seek indemnity
from an indemnifying party under this Section 8, the indemnifying party will be
entitled to participate in and, to the extent that it shall elect, jointly with
all other indemnifying parties similarly notified, by written notice delivered
to the indemnified party promptly after receiving from such indemnified party
the notice required pursuant Section 8(a), to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however, if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party's election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel (together with local counsel), approved by the
indemnifying party, representing the indemnified parties who are parties to such
action) or (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the action, in
each of which cases the fees and expenses of counsel shall, to the extent
required by subsection (a) or subsection (b), as applicable, of this Section 8,
be at the expense of the indemnifying party.

      (d) If the indemnification provided for in this Section 8 is unavailable
to an indemnified party under Section 8(a) or Section 8(b) hereof (other than by
reason of exceptions provided in those Sections) in respect of any losses,
claims, damages, liabilities, judgments, or expenses referred to therein, then
(i) each applicable indemnifying party, in lieu of indemnifying such indemnified
party,

                                       20
<PAGE>

shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities, judgments or expenses in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Guarantors, on the one hand, and the Indemnified Holders, on
the other hand, from their sale or exchange of Transfer Restricted Securities or
(ii) if the allocation provided by clause 8(d)(i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause 8(d)(i) above but also the relative fault of the
Company and the Guarantors on the one hand, and of the Indemnified Holder, on
the other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of the Company and the
Guarantors on the one hand and of the Indemnified Holder on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or any Guarantor,
on the one hand, or by the Indemnified Holder, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities, judgments and
expenses referred to above shall be deemed to include, subject to the
limitations set forth in the second paragraph of Section 8(a), any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.

      The Company, the Guarantors and each Holder of Transfer Restricted
Securities agree that it would not be just and equitable if contribution
pursuant to this Section 8(d) were determined by pro rata allocation (even if
the Holders were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities,
judgments or expenses referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, none of the Holders (and its related Indemnified
Holders) shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the proceeds received by such Holder with respect to the
Initial Notes sold pursuant to the Shelf Registration Statement exceed the
amount of any damages which such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 8(d) are several in
proportion to the respective principal amount of Initial Notes sold by each of
the Holders and not joint.

      Section 9. Rule 144A. The Company and the Guarantors each hereby agrees
with each Holder, for so long as any Transfer Restricted Securities remain

                                       21
<PAGE>

outstanding and during any period in which the Company or such Guarantor is not
subject to Section 13 or 15(d) of the Exchange Act, to make available to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of such Transfer Restricted
Securities from such Holder or beneficial owner, the information required by
Rule 144A(d)(4) under the Securities Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A.

      Section 10. Participation In Underwritten Registrations. No Holder may
participate in any Underwritten Registration unless such Holder (a) agrees to
sell such Holder's Transfer Restricted Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all reasonable questionnaires,
powers of attorney, indemnities, underwriting agreements, lock-up letters and
other documents required under the terms of such underwriting arrangements.

      Section 11. Selection Of Underwriters. The Holders of Transfer Restricted
Securities covered by the Shelf Registration Statement who desire to do so may
sell such Transfer Restricted Securities in an Underwritten Offering. In any
such Underwritten Offering, the investment banker or investment bankers and
manager or managers that will administer the offering will be selected by the
Holders of a majority in aggregate principal amount of the Transfer Restricted
Securities included in such offering; provided, that such investment bankers and
managers must be reasonably satisfactory to the Company.

      Section 12. Miscellaneous.

      (a) Remedies. The Company and the Guarantors each hereby agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by them of the provisions of this Agreement and hereby agree
to waive the defense in any action for specific performance that a remedy at law
would be adequate.

      (b) No Inconsistent Agreements. The Company and the Guarantors will not,
on or after the date of this Agreement, enter into any agreement with respect to
its securities that is inconsistent with the rights granted to the Holders in
this Agreement or otherwise conflicts with the provisions hereof. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to holders of securities of the Company or
any Guarantor under any agreement in effect on the date hereof.

      (c) Adjustments Affecting the Notes. The Company and the Guarantors will
not knowingly take any action, or permit any change to occur, with respect to
the Notes that would materially and adversely affect the ability of the Holders
to Consummate any Exchange Offer.

      (d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless the Company has

                                       22
<PAGE>

obtained the written consent of Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose securities are being tendered
pursuant to the Exchange Offer and that does not affect directly or indirectly
the rights of other Holders whose securities are not being tendered pursuant to
such Exchange Offer may be given by the Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities being tendered.

      (e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), facsimile, or courier
guaranteeing overnight delivery:

            (i) if to a Holder, at the address set forth on the records of the
      Registrar under the Indenture, with a copy to the Registrar under the
      Indenture;

            (ii) if to an Initial Purchaser:

            c/o Banc of America Securities LLC
            9 West 57th Street
            New York, New York
            Fax No.: (212) 583-8295
            Attention: High Yield Capital Markets

      With a copy to:

            Davis Polk & Wardwell
            450 Lexington Avenue
            New York, New York
            Fax No. (212) 450-3800
            Attention: Richard D. Truesdell, Jr.; and

            (iii) if to the Company and the Guarantors:

            Playboy Enterprises, Inc.
            680 North Lakeshore Drive
            Chicago, Illinois
            Fax No.: (312) 266-2042
            Attention: Howard Shapiro, Esq.

      With a copy to:

            Skadden, Arps, Slate, Meagher & Flom (Illinois)
            333 West Wacker Drive, Suite 2100
            Chicago, Illinois  60606
            Fax No.: (312) 407-0411
            Attention: Rodd M. Schreiber, Esq.

                                       23
<PAGE>

      All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if sent via fax; and on the next business day, if timely delivered
to a courier guaranteeing overnight delivery.

      Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.

      (f) Successors and Assigns. This Agreement shall inure to the benefit of,
and be binding upon, the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder, provided, further, that nothing
herein shall be deemed to permit any assignment, transfer or other disposition
of Transfer Restricted Securities in violation of the terms hereof or of the
Purchase Agreement or the Indenture. If any transferee of any Holder shall
acquire Transfer Restricted Securities in any manner, whether by operation of
law or otherwise, such Transfer Restricted Securities shall be held subject to
all of the terms of this Agreement, and by taking and holding such Transfer
Restricted Securities such Person shall be conclusively deemed to have agreed to
be bound by and to perform all of the terms and provisions of this Agreement,
including the restrictions on resale set forth in this Agreement and, if
applicable, the Purchase Agreement, and such Person shall be entitled to receive
the benefits hereof.

      (g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

      (h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

      (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.

      (j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

      (k) Entire Agreement. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the

                                       24
<PAGE>

registration rights granted by the Company and the Guarantors with respect to
the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.

                                       25
<PAGE>

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

                                        PEI HOLDINGS, INC.

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

                                        PLAYBOY ENTERPRISES, INC.

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

                                       26
<PAGE>

                                        ADULTVISION COMMUNICATIONS, INC.
                                        AFTER DARK VIDEO, INC.
                                        AL ENTERTAINMENT, INC.
                                        ALTA LOMA DISTRIBUTION, INC.
                                        ALTA LOMA ENTERTAINMENT, INC.
                                        IMPULSE PRODUCTIONS, INC.
                                        INDIGO ENTERTAINMENT, INC.
                                        ITASCA HOLDINGS, INC.
                                        LAKE SHORE PRESS, INC.
                                        LIFESTYLE BRANDS, LTD.
                                        MYSTIQUE FILMS, INC.
                                        PLAYBOY GAMING NEVADA, INC.
                                        PLAYBOY GAMING UK, LTD.
                                        PLAYBOY CLUB OF HOLLYWOOD, INC.
                                        PLAYBOY CLUB OF NEW YORK, INC.
                                        PLAYBOY CLUBS INTERNATIONAL, INC.
                                        PLAYBOY CRUISE GAMING, INC.
                                        PLAYBOY GAMING INTERNATIONAL, LTD.
                                        PLAYBOY OF LYONS, INC.
                                        PLAYBOY JAPAN, INC.
                                        PLAYBOY MODELS, INC.
                                        PLAYBOY PREFERRED, INC.
                                        PLAYBOY ENTERTAINMENT GROUP, INC.
                                        PLAYBOY ENTERPRISES INTERNATIONAL, INC.
                                        PRECIOUS FILMS, INC.
                                        PLAYBOY PROPERTIES, INC.
                                        PLAYBOY OF SUSSEX, INC.
                                        STEELTON, INC.
                                        TELECOM INTERNATIONAL, INC.
                                        WOMEN PRODUCTIONS, INC.
                                        SPECIAL EDITIONS, LTD.
                                        CPV PRODUCTIONS, INC.
                                        CYBERSPICE, INC.
                                        SPICE ENTERTAINMENT, INC.
                                        SPICE DIRECT, INC.
                                        SPICE NETWORKS, INC.
                                        SPICE PRODUCTIONS, INC.
                                        SPICE INTERNATIONAL, INC.
                                        MH PICTURES, INC.
                                        PLAYBOY SHOWS, INC.
                                        PLANET PLAYBOY, INC.
                                        PLANET SPICE, INC.

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

                                       27
<PAGE>

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

                                        By: /s/ James L. English
                                            ------------------------------------
                                            Name:  James L. English
                                            Title: President

                                       28
<PAGE>

                                   PLAYBOY TV INTERNATIONAL, LLC

                                   By:    Playboy Entertainment Group, Inc., its
                                          Sole Member

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

                                   CLARIDGE ORGANIZATION, LLC
                                   CHELSEA COURT HOLDINGS, LLC
                                   CANDLELIGHT MANAGEMENT, LLC

                                   By:    Playboy TV International, LLC,
                                          its Sole Member

                                          By:   Playboy Entertainment Group,
                                                Inc., its Sole Member

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

                                       29
<PAGE>

                                        The foregoing Registration Rights
                                            Agreement is hereby confirmed and
                                            accepted as of the date first above
                                            written:

BANC OF AMERICA SECURITIES LLC
LAZARD FRERES & CO. LLC

By: Banc of America Securities LLC

By: /s/ Kelly Daniel
    -------------------------------
    Managing Director

                                       30Exhibit 4.2

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

                               EXCHANGE AGREEMENT

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

                           dated as of March 11, 2003

                                      among

                                 HUGH M. HEFNER,

                                PLAYBOY.COM, INC.

                               PEI HOLDINGS, INC.

                                       and

                            PLAYBOY ENTERPRISES, INC.

<PAGE>

                               EXCHANGE AGREEMENT

            EXCHANGE AGREEMENT, dated as of March 11, 2003 (this "Agreement"),
among Hugh M. Hefner, an individual (the "Holder"), Playboy.com, Inc., a
Delaware corporation ("Playboy.com"), PEI Holdings, Inc., a Delaware corporation
("Holdings"), and Playboy Enterprises, Inc., a Delaware corporation ("Parent").

                                    RECITALS

            WHEREAS, on September 26, 2001, Playboy.com issued a promissory
note, pursuant to which it promised to pay to the order of the Holder the
principal amount of five million dollars ($5,000,000), together with interest
incurred thereon, as therein provided;

            WHEREAS, on July 1, 2002, Playboy.com and the Holder entered into
Amendment No. 1 to the September 26, 2001 note (such note, as so amended, the
"First Note") in order to, among other things, modify the repayment provisions
thereof;

            WHEREAS, on December 17, 2001, Playboy.com issued a promissory note
(the "Second Note"), pursuant to which it promised to pay to the order of the
Holder the principal amount of up to ten million dollars ($10,000,000), together
with interest incurred thereon, as therein provided, and the Holder agreed to
lend to Playboy.com such amounts as Playboy.com may request between such date
and December 31, 2002, as therein provided;

            WHEREAS, on or prior to December 31, 2002, the Holder lent to
Playboy.com an aggregate of ten million dollars ($10,000,000) pursuant to the
Second Note, such that the principal amount of the Second Note is currently ten
million dollars ($10,000,000);

<PAGE>

            WHEREAS, on September 27, 2002, Playboy.com issued a promissory note
(the "Third Note," and, together with the First Note and the Second Note,
collectively, the "Original Notes"), pursuant to which it promised to pay to the
order of the Holder the principal amount of twelve million two hundred
thirty-five thousand four hundred ninety and 69/100ths dollars ($12,235,490.69),
together with interest incurred thereon, as therein provided;

            WHEREAS, in connection with a proposed refinancing of Parent and its
subsidiaries, including the repayment of outstanding indebtedness under
Holdings' existing credit agreement with a group of banks (the "Refinancing"),
Holdings has agreed to issue and sell a series of senior secured notes (the
"Secured Notes"), which would be guaranteed by Parent and specified subsidiaries
of Holdings, pursuant to that certain Purchase Agreement, dated March 6, 2003,
among Holdings, Parent, the Subsidiary Guarantors (as defined therein) listed on
Schedule B thereto and the several Initial Purchasers named in Schedule A
thereto (the "Initial Purchasers");

            WHEREAS, as a condition to their willingness to purchase the Secured
Notes, the Initial Purchasers have required that the indebtedness of Playboy.com
represented by the Original Notes be restructured;

            WHEREAS, it is proposed that the Holder, Parent, Holdings and
Playboy.com enter into and consummate the transactions contemplated by this
Agreement, including (i) the surrender by the Holder of the Original Notes in
exchange for (A) the payment to the Holder of $500,000, (B) the issuance to the
Holder of an aggregate of one thousand (1,000) shares of Series A Exchangeable
Preferred Stock, par value $0.01 per share, of Holdings (the "Holdings Series A
Preferred Stock") and (C) the issuance to the Holder of an aggregate of one
thousand six hundred seventy-three and five hundred forty-nine thousand
sixty-nine millionths (1,673.549069) shares of Series B Exchangeable Preferred
Stock, par value $0.01 per share, of Holdings (the "Holdings Series B Preferred
Stock") and (ii) the subsequent exchange, pursuant to the terms of the Holdings
Series A Preferred Stock and the Holdings Series B Preferred Stock,
respectively, of the Holdings Series A Preferred Stock for shares of Class B
Common Stock, par value $0.01 per share, of Parent (the "Parent Class B Common
Stock") and of the Holdings Series B Preferred Stock for shares of a newly
created series of preferred stock, par value $0.01 per share, of Parent (the
"Parent Series A Preferred Stock") with the powers, designation, dividend
rights, voting powers, rights on liquidation, redemption rights and other
preferences and relative, participating, optional or other special rights and
with the qualifications, limitations or restrictions on the shares of such
series of preferred stock to be governed by the Certificate of the Designations,
Powers, Preferences and Rights of Series A Convertible Preferred Stock of
Playboy Enterprises, Inc. (the "Parent Series A Certificate of Designations") in
the form attached hereto as Exhibit A;

            WHEREAS, the board of directors of Parent (the "Board") has
established a special committee of the Board (the "Special Committee") for the

                                        2
<PAGE>

purpose of evaluating, negotiating and approving the restructuring of the terms
of the Original Notes;

            WHEREAS, the Special Committee has, with the assistance of legal and
financial advisors selected by it, informed itself about, and has negotiated,
the restructuring of the Original Notes and, in connection therewith, received
the opinion of its financial advisors that the restructuring of the Original
Notes on the terms set forth in this Agreement (the "Debt Restructuring") was
fair to Parent and its stockholders, from a financial point of view, as of the
date of such opinion;

            WHEREAS, the Special Committee has determined that the terms of the
Debt Restructuring are in the best interests of Parent and its stockholders and
has approved this Agreement and the Debt Restructuring and has recommended that
the Board approve and declare advisable this Agreement and the Debt
Restructuring and take all actions required to be taken of the full board to
effectuate the foregoing, and the Board, has effected such approval and taken
such action;

            WHEREAS, the Holder wishes to facilitate the Refinancing and the
issuance and sale of the Secured Notes by engaging in the transactions provided
for herein;

            WHEREAS, Holdings has heretofore amended its certificate of
incorporation to provide for the issuance of preferred stock in one or more
classes or series and has filed with the Secretary of State of the State of
Delaware (the "Delaware Secretary") certificates of designations setting forth
the powers, designations, dividend rights, voting powers, rights on liquidation,
redemption rights and other preferences and relative, participating, optional or
other special rights and the qualifications, limitations or restrictions of the
shares of Holdings Series A Preferred Stock and Holdings Series B Preferred
Stock;

            WHEREAS, the certificate of incorporation of Parent (the "Parent
Charter") does not currently authorize preferred stock;

            WHEREAS, Parent and the Holder wish to cause the amendment of the
Parent Charter to authorize the issuance by Parent of preferred stock in one or
more series and to give the board of directors of Parent the authority to
provide by resolution for the creation and issuance of any series thereof and
for the terms of any such series (the "Charter Amendment"); and

                                        3
<PAGE>

            WHEREAS, the Charter Amendment, and the issuance to Holder of the
Parent Class B Common Stock in exchange for the Holdings Series B Preferred
Stock as contemplated hereby, are subject to prior approval by the holders of
Class A Common Stock, par value $0.01 per share, of Parent ("Parent Class A
Common Stock"); and

            WHEREAS, the Holder, as the beneficial owner of more than 50 percent
of the outstanding Parent Class A Common Stock, may, in accordance with the
Parent Charter, effect such prior approval by written consent and has executed
such written consent, a copy of which is attached hereto as Exhibit B.

                                    AGREEMENT

            NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, each of the parties hereto agrees as follows:

                                    ARTICLE I
                              EXCHANGE AND RELEASE

            Section 1.1 Exchange. Subject to the terms and conditions set forth
herein, simultaneously with the closing of the sale of the Secured Notes to the
Initial Purchasers (the "Secured Note Closing"), in exchange for the surrender
by the Holder to Holdings of the Original Notes, Holdings shall pay to Holder
five hundred thousand dollars ($500,000) in cash in immediately available funds
(the "Exchange Cash") in accordance with the wire transfer instructions provided
by Holder and shall issue to Holder 1,000 shares of Holdings Series A Preferred
Stock (the "Exchange A Shares") and one thousand six hundred seventy-three and
five hundred forty-nine thousand sixty-nine millionths (1,673.549069) shares of
Holdings Series B Preferred Stock (together with the Exchange A Shares, the
"Exchange Shares"). The Original Notes shall thereupon be cancelled. The
consummation of the exchange of the Original Notes for the Exchange Cash and
Exchange Shares as described in this Section 1.1 (the "Debt Exchange") is
referred to as the "Debt Exchange Closing."

            Section 1.2 Debt Exchange Closing Deliveries. Upon the Debt Exchange
Closing, Holdings will deliver or cause to be delivered to the Holder
certificates registered in the name of the Holder evidencing the Exchange
Shares, and the Holder will deliver to Holdings each of the Original Notes;
provided, however, that in no event shall the delivery of such certificates or
the Original Notes be a condition to the Debt Exchange Closing.

                                        4
<PAGE>

            Section 1.3 Debt Exchange Release. Upon the Debt Exchange Closing,
Playboy.com's indebtedness under the Original Notes will be immediately
extinguished and cancelled, and any and all obligations of Parent and its
subsidiaries in respect of the Original Notes (including, without limitation,
that certain agreement by and between the Holder and Parent, dated December 17,
2001 (the "Letter Agreement," relating to certain redemption obligations with
respect to Series A Preferred Stock of Playboy.com) shall be terminated and
released and be of no further force and effect. The Holder hereby, with effect
from and after the Debt Exchange Closing, irrevocably waives, releases and
forever discharges Parent and its subsidiaries and each of Parent's and such
subsidiaries' respective successors, predecessors, assigns, affiliates,
subsidiaries and divisions and each and all of their respective directors,
officers, stockholders, employees, representatives and agents (the "Releasees")
from any and all actions, causes of action, suits, claims, demands, proceedings,
orders, judgments, obligations, rights, privileges, covenants, contracts,
agreements, debts, dues, sums of money, deliveries and liabilities whatsoever,
whether known or unknown, suspected or unsuspected, both at law and in equity
(collectively, "Claims") which the Holder and his heirs, executors,
administrators, successors and assigns may then have, ever will have had or may
thereafter have against the Releasees in connection with, or related directly or
indirectly to, the Original Notes (including, without limitation, the Letter
Agreement) or the indebtedness or obligations represented thereby or the terms
of such indebtedness or Letter Agreement, but not including any claims arising
out of any breach by Holdings or Parent of their respective obligations under
this Agreement.

            Section 1.4 Filing of Designations and Information Statement;
Stockholder Approval. As soon as practicable after the Debt Exchange Closing,
Parent shall file with the Securities and Exchange Commission and mail to
stockholders of Parent an information statement relating to the approval by
holders of Parent Class A Common Stock, as evidenced by the Holder's irrevocable
written consent attached hereto as Exhibit B, of the Charter Amendment and the
issuance to the Holder of shares of Parent Class B Common Stock and Parent
Series A Preferred Stock in accordance with terms of the Exchange Shares as set
forth in the applicable certificates of designations.

                                   ARTICLE II
                  REPRESENTATIONS AND WARRANTIES OF THE HOLDER

      The Holder represents and warrants to Parent, Holdings and Playboy.com as
follows:

                                        5
<PAGE>

            Section 2.1 Ownership of Notes. The Holder is the sole record owner
of and Beneficially Owns (as defined in Section 3.4(a)) the Original Notes,
which are owned by the Holder free and clear of all pledges, security interests,
liens, charges, encumbrances, claims and options of any nature.

            Section 2.2 Consent. The written consent of the Holder attached
hereto as Exhibit B has not been amended, rescinded or modified and remains in
full force and effect as of the date hereof.

            Section 2.3 No Conflict; Enforceability. The Holder has full legal
right, power and authority to enter into and deliver this Agreement and to
perform the terms, conditions and obligations hereof. The execution, delivery
and performance of this Agreement do not, and the transactions contemplated
hereby will not, (i) violate or conflict with (a) any law, rule or regulation
applicable to the Holder or (b) any agreement, instrument or license to which
the Holder is a party, or by which the Holder or any of its assets or properties
may be bound or subject, (ii) result in the creation of any encumbrance or
charge upon the Original Notes or the Exchange Shares or (iii) or violate any
order, judgment, injunction, award or decree applicable to the Holder of any
court, arbitrator, governmental or regulatory body. This Agreement constitutes
the valid and legally binding obligation of the Holder enforceable against the
Holder in accordance with its terms except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting enforcement of creditors' rights generally or general principles
of equity.

            Section 2.4 Investment Purpose. The Holder is acquiring the Exchange
Shares, any Parent Class B Common Stock and Parent Series A Preferred Stock
(collectively, the "Exchange Securities") for his own account and not with a
view to, or for sale in connection with, any resale (other than pursuant to the
terms of the Exchange Shares) or distribution.

            Section 2.5 Accredited Investor. The Holder is an "accredited
investor" within the meaning of Rule 501 under the Securities Act of 1933, as
amended (the "Securities Act").

            Section 2.6 No Registration. The Holder understands that (a) the
Exchange Securities will not be registered under the Securities Act or any other
applicable securities law, (b) neither Parent nor Holdings has any obligation to
register the Exchange Securities, (c) the Holder will not be able to sell the
Exchange

                                        6
<PAGE>

Securities or effect a transfer thereof unless an exemption is available to the
Holder from the registration requirements under the Securities Act and any other
applicable securities law.

                                   ARTICLE III
                                    COVENANTS

            Section 3.1 Consummation of Transactions. Subject to the terms and
conditions of this Agreement, each party to this Agreement agrees to use
reasonable best efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things reasonably necessary, proper or advisable under
applicable laws to consummate the transactions contemplated by this Agreement.

            Section 3.2 Transfer Restrictions.

            (a) Except in accordance with this Section 3.2, the Holder shall not
      directly or indirectly sell, grant any option or other right to acquire,
      acquire any option to dispose of, assign, donate, gift, pledge,
      hypothecate, mortgage, encumber or otherwise transfer or dispose (
      "Disposition") of any of the Exchange Shares or Parent Series A Preferred
      Stock.

            (b) The Holder may make a Disposition of any of the Exchange Shares
      or the Parent Series A Preferred Stock to any Permitted Transferee for any
      purpose. Permitted Transferees are the Hugh M. Hefner 1991 Trust or its
      successor trusts, acting by its trustees; the Estate of Hugh M. Hefner,
      acting by its personal representatives; the Hugh M. Hefner Foundation,
      acting by its directors; the beneficiaries of the Hugh M. Hefner 1991
      Trust and its successor trusts; the beneficiaries of the Estate of Estate
      of Hugh M. Hefner; or the spouse, heirs at law, siblings or descendants of
      Hugh M. Hefner or any trust or trusts created for the benefit of Holder or
      his spouse, heirs at law, siblings or descendants.

            (c) Upon receipt of any Exchange Shares or any Parent Series A
      Shares, a Permitted Transferee shall be bound by all of the provisions of
      this Agreement as if such transferee were the Holder and shall, upon the
      request of the Company, sign a writing acknowledging that such transferee
      is bound by this Section 3.2.

            (d) Each certificate representing Exchange Securities shall be
      stamped or otherwise imprinted with a legend substantially similar to the

                                        7
<PAGE>

      following (in addition to any legend required under applicable state
      securities laws):

            THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
            SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR
            TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
            REGISTERED UNDER SUCH ACT OR UNLESS AN EXEMPTION FROM SUCH
            REGISTRATION IS AVAILABLE.

            (e) Each certificate representing shares of the Exchange Shares or
      Parent Series A Preferred Stock shall be stamped or otherwise imprinted
      with a legend substantially similar to the following:

            THE SHARES REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS ON
            TRANSFER CONTAINED IN THAT CERTAIN EXCHANGE AGREEMENT, DATED MARCH
            11, 2003 AMONG PLAYBOY ENTERPRISES, INC., PEI HOLDINGS, INC.,
            PLAYBOY.COM INC. AND HUGH M. HEFNER.

            (f) The Company shall be obligated to reissue promptly unlegended
      certificates for Class B Common Stock issuable in connection with the
      Exchange Securities at the request of the Holder thereof if the
      securities proposed to be disposed of may lawfully be so disposed of
      without registration, qualification or legend.

            Section 3.3 Holder's Covenant to Support. The Holder will not take
any action inconsistent in any material respect with the efforts of Parent and
Holdings to effectuate the transactions contemplated by this Agreement, and will
use his reasonable best efforts, including in his capacity as a stockholder of
Parent, to consummate, or cause the consummation of, the transactions
contemplated by this Agreement.

            Section 3.4 Agreement to Vote; Irrevocable Proxy.

            (a) The Holder hereby agrees that at any meeting of Parent
      stockholders, however called, or in connection with any written consent of
      the stockholders of Parent, the Holder shall vote (or cause to be voted)
      the shares of Parent Class A Common Stock ("Class A Shares") held of
      record or

                                        8
<PAGE>

      Beneficially Owned by the Holder, whether owned on the date hereof or
      hereafter acquired, in favor of approval of the Charter Amendment and the
      transactions contemplated by this Agreement, and any actions required in
      furtherance thereof.

            As used in this Agreement, the term "Beneficially Own" or
      "Beneficial Ownership" with respect to any securities means having
      "beneficial ownership" of such securities as determined pursuant to Rule
      13d-3 under the Securities Exchange Act of 1934, as amended, including
      pursuant to any agreement, arrangement or understanding, whether or not in
      writing, except that the term shall not include Class A Shares which the
      Holder has the right to acquire under any options to acquire Class A
      Shares from Parent ("Parent Stock Options") unless such Class A Shares
      have been acquired upon exercise of such Parent Stock Options.

            (b) Effective immediately upon the execution of this Agreement, and
      in order to secure its obligations hereunder, the Holder hereby grants to,
      and appoints Parent and any designee of Parent, and each of them
      individually, with full power of substitution and resubstitution, the
      Holder's true and lawful irrevocable proxy to vote the Holder's Class A
      Shares, or grant a consent or approval in respect of the Holder's Class A
      Shares, solely on such matters and as indicated in Section 1(a) above. The
      Holder (i) agrees to take such further action and execute such other
      instruments as may be reasonably necessary to effectuate the intent of
      this proxy, (ii) hereby represents that any proxy heretofore given in
      respect of the Holder's Class A Shares is not irrevocable, and (iii)
      hereby revokes any proxy previously granted by the Holder with respect to
      his Class A Shares; provided that nothing in this sentence or elsewhere in
      this Section 3.4(b) shall be construed as a revocation or limitation of
      the written consent of the Holder referred to in Section 2.2. The Holder
      hereby affirms that this irrevocable proxy is given in connection with the
      execution of this Agreement and further affirms that this irrevocable
      proxy is coupled with an interest in this Agreement and may under no
      circumstances be revoked prior to the earlier to occur of (x) the first
      anniversary of the date of this Agreement and (y) the issuance of Parent
      Series A Preferred Stock in exchange for Holdings Series B Preferred Stock
      in accordance with the terms of the Holdings Series B Preferred Stock.
      This proxy is executed and intended to be irrevocable in accordance with
      the provisions of Section 212(e) of the General Corporation Law of the
      State of Delaware.

                                        9
<PAGE>

                                   ARTICLE IV
                                  MISCELLANEOUS

            Section 4.1 Successors and Assigns. This Agreement shall be binding
on and shall insure to the benefit of each of the parties hereto and their
respective successors and assigns.

            Section 4.2 Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such costs and expenses.

            Section 4.3 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation), mailed by registered or certified mail (return
receipt requested) or delivered by an express courier (with confirmation) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):

            (i)   if to the Holder, at:

                  Hugh M. Hefner
                  10236 Charing Cross Road
                  Los Angeles, California 90024
                  Telephone: (310) 786-7400
                  Facsimile: (310) 273-1164

                  with copy to:

                  Glassman, Brownings & Saltsman
                  360 North Bedford Drive, Suite 204
                  Beverly Hills, California  90210
                  Attention:  Anthony Michael Glassman, Esquire
                  Telephone:  (310) 278-5100
                  Facsimile: (310) 271-6041

                                       10
<PAGE>

            (ii)  if to Parent, Holdings or Playboy.com, at

                  Playboy Enterprises, Inc.
                  680 North Lake Shore Drive
                  Chicago, Illinois  60611
                  Attention: Howard Shapiro, Esquire
                  Telephone:  (312) 373-2300
                  Facsimile:  (312) 266-2042

                  with a copy to:

                  Skadden, Arps, Slate, Meagher & Flom (Illinois)
                  333 West Wacker Drive, Suite 2100
                  Chicago, Illinois 60606
                  Attention:  Rodd M. Schreiber, Esquire
                  Telephone:  (312) 407-0700
                  Facsimile:  (312) 407-0411

                  with a copy to:

                  Morris, Nichols, Arsht & Tunnell
                  1201 N. Market Street
                  P.O. Box 1347
                  Wilmington, Delaware  19899
                  Attention:  A. Gilchrist Sparks, III, Esquire
                  Telephone:  (302) 658-9200
                  Facsimile:  (302) 658-3989

            Section 4.4 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE EXCEPT FOR
CONFLICTS OF LAW PRINCIPLES THEREOF THAT WOULD REQUIRE APPLICATION OF LAWS OF
ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.

            Section 4.5 CONSENT TO JURISDICTION AND VENUE. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE STATE OR FEDERAL
COURTS LOCATED IN THE STATE OF DELAWARE, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE PARTIES CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION

                                       11
<PAGE>

OF THOSE COURTS. EACH OF THE PARTIES IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. EACH OF THE PARTIES WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
DELAWARE LAW.

            Section 4.6 WAIVER OF JURY TRIAL. EACH OF THE PARTIES WAIVES HIS OR
ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

            Section 4.7 Counterparts. This Agreement may be executed in any
number of counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same instrument.

            Section 4.8 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement or the validity of
such provision in any other jurisdiction.

                            [Signature page follows.]

                                       12
<PAGE>

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

                                     /s/ Hugh M. Hefner
                                     -------------------------------------------
                                     Hugh M. Hefner, in his individual capacity

                                     PLAYBOY.COM, INC.

                                     By:
                                     -------------------------------------------
                                     Name:
                                     Title:

                                     PEI HOLDINGS, INC.

                                     By:
                                     -------------------------------------------
                                     Name:
                                     Title:

                                     PLAYBOY ENTERPRISES, INC.

                                     By:
                                     -------------------------------------------
                                     Name:
                                     Title:

                                                            [Exchange Agreement]

<PAGE>

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

                                     -------------------------------------------
                                     Hugh M. Hefner, in his individual capacity

                                     PLAYBOY.COM, INC.

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

                                     PEI HOLDINGS, INC.

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

                                     PLAYBOY ENTERPRISES, INC.

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

                                                            [Exchange Agreement]

<PAGE>

                                                                       EXHIBIT A

                        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 payable,
until such time as the

<PAGE>

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 Company ranking

                                       A-2
<PAGE>

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.

                                       A-3
<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.

                                       A-4
<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

                                       A-5
<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,
      following the

                                       A-6
<PAGE>

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

                                       A-7
<PAGE>

            (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: ____________________

                  (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

                                       A-8
<PAGE>

            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 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.

                                       A-9
<PAGE>

            (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.

            "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

                                      A-10
<PAGE>

      requires) on a day on which general trading of the Class B Common Stock is
      suspended."

                            [Execution Page Follows]

                                      A-11
<PAGE>

      IN WITNESS WHEREOF, the Company has caused this Certificate of
Designations to be signed by [officer], its [title], this ____ day of
___________, 2003.

                                        PLAYBOY ENTERPRISES, INC.

                                        By:_____________________________________
                                           Name:
                                           Title:

                                      A-12
<PAGE>

                            ACTION BY WRITTEN CONSENT

                       IN LIEU OF MEETING OF STOCKHOLDERS

                                       OF

                            PLAYBOY ENTERPRISES. INC.

      The undersigned, as the record owner of shares of Class A Common Stock of
Playboy Enterprises, Inc., a Delaware corporation (the "Company"), acting
pursuant to Section 228 of the General Corporation Law of the State of Delaware,
does hereby consent to the adoption, and does hereby adopt, the following
resolutions with the same force and effect as if adopted by a vote at a duly
convened meeting of the stockholders of the Company:

            WHEREAS, in connection with a proposed refinancing of the Company,
      PEI Holdings, Inc. ("Holdings") has agreed to issue and sell a series of
      senior secured notes (the "Notes"), which would be guaranteed by the
      Company and specified subsidiaries of Holdings, pursuant to a Purchase
      Agreement among Holdings, the Company, the Subsidiary Guarantors (as
      defined therein) listed on Schedule B thereto and the several Initial
      Purchasers named in Schedule A thereto (the "Initial Purchasers");

            WHEREAS, in connection with the purchase of the Notes, it is
      proposed that the indebtedness of Playboy.com, Inc. ("Playboy.com") owed
      to Mr. Hugh M. Hefner be restructured (the "Debt Restructuring");

            WHEREAS, pursuant to the terms of the Debt Restructuring and the
      Exchange Agreement by and among the Company, Holdings, Playboy.com and Mr.
      Hefner pursuant to which the Debt Restructuring will be consummated (the
      "Exchange Agreement"), it is proposed that (i) a $10.0 million
      Playboy.com promissory note owed to Mr. Hefner be extinguished in exchange
      for $10.0 million of a new series of preferred stock of Holdings that will
      be mandatorily exchanged for shares of the Company's Class B common stock
      (the "Class B Common Stock") upon the occurrence of specified events

                                       1
<PAGE>

      (the "Series A Exchange") and (ii) two other Playboy.com promissory notes,
      in a combined principal amount of $17.2 million, owed to Mr. Hefner be
      extinguished in exchange for $500,000 in cash and $16.7 million of a new
      series of preferred stock of Holdings that will be mandatorily exchanged
      for an equivalent amount of a new series of preferred stock of the Company
      (the "Preferred Stock"), which may be convertible into shares of Class B
      Common Stock, upon the occurrence of specified events (the "Series B
      Exchange");

            WHEREAS, the Board of Directors of the Company (the "Board") formed
      a special committee (the "Special Committee") for the purpose of
      evaluating, negotiating the terms of and making a recommendation to the
      Board with respect to the Debt Restructuring;

            WHEREAS, the Special Committee has (i) determined that the terms of
      the Debt Restructuring are in the best interests of the Company and has
      approved the Debt Restructuring and the Exchange Agreement and (ii)
      recommended that the Board ratify, approve and declare the advisability of
      the Debt Restructuring and the Exchange Agreement;

            WHEREAS, the Board, based upon the recommendation of the Special
      Committee, has determined that the terms of the Debt Restructuring are in
      the best interests of the Company and has approved and authorized in all
      respects the Debt Restructuring and the Exchange Agreement; and

            WHEREAS, the Board deems it advisable and in the best interests of
      the Company, and has authorized the Company, to effect an amendment to the
      Company's amended and restated certificate of incorporation (the "Charter
      Amendment"), the form of which is attached hereto as Exhibit A, providing
      for the establishment of preferred stock of the Company, in one or more
      classes or series, and authorizing and empowering the Board to fix for
      each such class or series such voting power and such distinctive
      designations, preferences and rights and such qualifications, limitations
      or restrictions thereof as the Board may deem appropriate; and

            WHEREAS, the undersigned is the holder of outstanding Class A Common
      Stock of the Company having not less than the minimum number of
      votes that are necessary to authorize the (i) Charter Amendment, (ii)
      issuance of the Class B Common Stock in connection with the Series A
      Exchange and the conversion of the Preferred Stock and (iii) issuance of
      the Preferred Stock in connection with the Series B Exchange.

                                        2
<PAGE>

            NOW, THEREFORE BE IT:

            RESOLVED, that the form, terms and provisions of the Charter
      Amendment, substantially in the form attached hereto as Exhibit A, be, and
      they hereby are, approved and adopted in all respects, such Charter
      Amendment to become effective upon its filing with the Secretary of State
      of the State of Delaware; and

            FURTHER RESOLVED, that the issuance of fully paid and nonassessable
      shares of Class B Common Stock, as may be required to comply with the
      terms and conditions of the Series A Exchange and the conversion of
      Preferred Stock into shares of Class B Common Stock, be, and the same
      hereby is, authorized and approved; and

            FURTHER RESOLVED, that upon the effectiveness of the Charter
      Amendment, the issuance of fully paid and nonassessable shares of the
      Preferred Stock in accordance with the Series B Exchange with the powers,
      designations, dividend rights, voting powers, rights on liquidation,
      redemption rights and other preferences and relative participating,
      optional or other special rights and with the qualifications, limitations
      or restrictions on the shares of such series of Preferred Stock to be
      governed by the Certificate of Designations, Powers, Preferences and
      Rights of Series A Preferred Stock of the Company in the form attached
      hereto as Exhibit B, be, and the same hereby is, authorized and approved.

                                        3
<PAGE>

            IN WITNESS WHEREOF, the undersigned has executed this Consent in
Lieu of Meeting of Stockholders as of the 11th day of March, 2003.

                                        THE HUGH M. HEFNER 1991 TRUST

                                        /s/ Hugh M. Hefner
                                        ---------------------------
                                        By: Hugh M. Hefner, Trustee

<PAGE>

                                                                       EXHIBIT A
                                                    to Action by Written Consent

                            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

<PAGE>

      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 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 ___ day of
______ 2003.

                                        PLAYBOY ENTERPRISES, INC.

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

                                      A-2
<PAGE>

                                                                       EXHIBIT B
                                                    to Action by Written Consent

                        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 payable, until such
time as the

<PAGE>

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

                                      B-2
<PAGE>

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 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.

                                      B-3
<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.

                                      B-4
<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

                                      B-5
<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,
      following the

                                      B-6
<PAGE>

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

                                      B-7
<PAGE>

      (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:  ____________________

            (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

                                      B-8
<PAGE>

      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 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.

                                      B-9
<PAGE>

      (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.

            "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

                                     B-10
<PAGE>

      requires) on a day on which general trading of the Class B Common Stock is
      suspended."

                            [Execution Page Follows]

                                     B-11
<PAGE>

      IN WITNESS WHEREOF, the Company has caused this Certificate of
Designations to be signed by [officer], its [title], this ____ day of
___________, 2003.

                                           PLAYBOY ENTERPRISES, INC.

                                           By:
                                              __________________________________
                                                Name:
                                                Title:

                                     B-12

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