FOURTH AMENDED AND RESTATED
                                CREDIT AGREEMENT


     THIS FOURTH AMENDED AND RESTATED CREDIT AGREEMENT (the "Agreement"),  dated
as of May 21,  1999 is by and  among  PILGRIM  GROUP,  INC.,  formerly  known as
Pilgrim America Group,  Inc., a Delaware  corporation  ("PGI"),  PILGRIM AMERICA
CAPITAL CORPORATION, a Delaware corporation ("PACC"), (together, the "Borrowers"
and each a "Borrower"), the banks which are signatories hereto (individually,  a
"Bank" and,  together  with any Persons that become a party  hereto  pursuant to
Section 9.6, the "Banks"),  U.S. BANK NATIONAL  ASSOCIATION,  a national banking
association,  one of the Banks,  as agent for the Banks (in such  capacity,  the
"Agent"),  and as swing-line  lender,  and  COMMERZBANK  AG, a national  banking
association,  one of the Banks as co-agent for the Banks (in such capacity,  the
"Agent").

     WHEREAS,  PGI, PACC and certain of the Banks (the "Existing Banks") are the
parties to that certain Third Amended and Restated Credit  Agreement dated as of
July 31, 1998, as amended (the "Existing Credit Agreement");

     WHEREAS,  PACC  and  "NACM"  (as  defined  below)  have  entered  into  the
"Acquisition  Agreement (NACM)" (as defined below) dated as of January 28, 1999,
pursuant to which PACC will purchase certain of the assets of NACM;

     WHEREAS,  in connection  with the  acquisition  of NACM, the Borrowers have
requested additional financing from the Banks; and

     WHEREAS,  PGI, PACC and the Existing  Banks desire to amend and restate the
Existing Credit  Agreement in its entirety,  and to add the additional  Banks as
parties hereto,  and such  additional  Banks desire to become parties hereto and
provide financing to the Borrower on the terms set forth herein.

     NOW,  THEREFORE,  in  consideration  of the  foregoing  and other  good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, the parties hereto agree as follows:

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

     SECTION 1.1 DEFINED TERMS.  As used in this  Agreement the following  terms
shall have the following respective meanings (and such meanings shall be equally
applicable  to both the  singular and plural form of the terms  defined,  as the
context may require):

                                       -1-
<PAGE>
     "12b-1  FEES":  With  respect  to any Fund,  rights to  receive  investment
distribution  fees from such Fund as provided in rule 12b-1 of the SEC under the
Investment Company Act in accordance with the Prospectus relating to such Fund.

     "12b-1  SALE":  Sales by PSI of certain  12b-1 Fees and related  Contingent
Deferred Sales Charges  pursuant to a Pilgrim  Program  Master  Agreement by and
among PGI, PII, PSI, PLT Finance,  L.P., Putnam, Lovell, de Guardiola & Thornton
Inc. and Bankers Trust Company,  as Funding and Collection Agent, dated December
11, 1998,  and the other  agreements,  documents  and  instruments  contemplated
thereby,  as  originally  in effect and as amended,  supplemented  or  otherwise
modified with the consent of the Agent.

     "ACQUISITION":  Any  transaction or series of  transactions by which either
Borrower  acquires,  either  directly or through an Affiliate or  Subsidiary  or
otherwise,  (a) any or all of the stock or other  securities of any class of any
Person or (b) a substantial portion of the assets or management and distribution
rights with respect to funds, or a division or line of business of any Person.

     "ACQUISITION  AGREEMENT (NACM)": That certain Agreement dated as of January
28, 1999 by and between PACC and NACM.

     "ACQUISITION  (NACM)":  The  purchase  by PACC of  certain  management  and
distribution  rights associated with certain funds managed by NACM identified on
Schedule  1.1(a)  hereto,  pursuant  to the terms of the  Acquisition  Agreement
(NACM).

     "ACQUISITION  CLOSING DATE (NACM)": May 21, 1999, or such other date as may
be  proposed  by the  Borrowers  and  agreed  to by the  Banks on which  all the
conditions in the Acquisition Documents have been satisfied or (with the consent
of the Banks), waived.

     "ACQUISITION  DOCUMENTS (NACM)": The Acquisition  Agreement (NACM), and all
other  agreements,  instruments,  certificates and other documents  executed and
delivered  pursuant  to  or  in  connection  therewith,   as  the  same  may  be
supplemented, amended or otherwise modified.

     "ADJUSTED EURODOLLAR RATE": With respect to each Eurodollar Rate Advance or
Swing  Line  Loan,  the  rate  (rounded  upward,  if  necessary,   to  the  next
one-hundredth of one percent)  determined by dividing the applicable  Eurodollar
Rate by 1.00 minus the Eurodollar Reserve Percentage.

     "ADVANCE":  Any portion of the outstanding Revolving Loans or any Term Loan
made by a Bank as to which one of the  available  interest  rate options and, if
pertinent,  an Interest  Period,  is applicable.  An Advance may be a Eurodollar
Rate Advance or a Reference Rate Advance.

                                       -2-
<PAGE>
     "ADVISORY  CONTRACTS":  Contracts of the type  described  in 15 U.S.C.  ss.
80a-15(a).

     "ADVISORY  FUND":  Any  Fund  for  which  an  Advisory  Subsidiary  acts as
investment  adviser and is  entitled  to receive  fees out of the assets of such
Fund pursuant to an Advisory Contract.

     "ADVISORY  SUBSIDIARY":  PII and any other  Subsidiary  of PGI that acts as
investment  adviser for any  Advisory  Fund and,  as such,  is party to Advisory
Contracts.

     "AFFILIATE":  When used with reference to any Person, (a) each Person that,
directly or  indirectly,  controls,  is controlled by or is under common control
with, the Person referred to, (b) each Person which  beneficially owns or holds,
directly or indirectly, twenty-five percent or more of any class of voting stock
of the Person  referred to (or if the Person  referred to is not a  corporation,
twenty-five  percent  or  more  of  the  equity  interest),   (c)  each  Person,
twenty-five  percent  of more of the  voting  stock (or if such  Person is not a
corporation,  twenty-five  percent or more of the equity  interest)  of which is
beneficially owned or held,  directly or indirectly,  by the Person referred to,
and (d) each of such Person's officers, directors, joint venturers and partners.
The term control  (including the terms "controlled by" and "under common control
with")  means  the  possession,  directly,  of the  power to direct or cause the
direction of the management and policies of the Person in question.

     "AGENT": As defined in the opening paragraph hereof.

     "AGENT FEES": As defined in SECTION 2.10(a).

     "AGGREGATE  REVOLVING  COMMITMENT AMOUNT": As of any date of determination,
up to and including the date preceding the Transformation  Date (or, if there is
no  Transformation  Date,  up to and  including  the date on which the Revolving
Notes  are paid in full  and the  Revolving  Commitments  have  expired  or been
terminated), the sum of the Revolving Commitment Amounts of all the Banks.

     "APPLICABLE  FEE  PERCENTAGE":   Subject  to  the  last  sentence  of  this
definition,  with respect to the period  beginning on the first day of the first
month  after  the  month  in  which  the  financial  statements  and  compliance
certificate required by Sections 5.1(c) and (d) with respect to a fiscal quarter
are  delivered  and  ending on the last day of the month in which the  financial
statements and  compliance  certificate  required by Sections  5.1(c) and 5.1(d)
with respect to the  subsequent  fiscal  quarter are  delivered,  the percentage
specified as the Applicable Fee Percentage based on the Cash Flow Leverage Ratio
calculated  as of  the  end of the  preceding  fiscal  quarter  for  which  such
financial statements and compliance certificate have been delivered:

                                       -3-
<PAGE>
       Cash Flow Leverage Ratio                        Applicable Fee Percentage
       ------------------------                        -------------------------

       Less than or equal to 1.25:1                              0.125%

       Greater than 1.25:1
       but less than 1.75:1                                       0.15%

       Greater than or equal to
       1.75:1 but less than 2.25:1                                0.20%

       Greater than or equal to 2.25:1                            0.25%

During the period  beginning  on the Closing Date and ending on August 31, 1999,
the  Applicable  Fee  Percentage  shall  be  0.15%.  For any  subsequent  period
beginning  on the first day of the month after the month in which the  financial
statements and compliance  certificate  required by Sections 5.1(c) and (d) with
respect to a quarter are required to be but are not  delivered and ending on the
last  day of the  month  in  which  such  financial  statements  and  compliance
certificate are delivered,  the Applicable Fee Percentage  shall be as specified
for a Cash Flow Leverage Ratio greater than or equal to 2.25 to 1.0.

     "APPLICABLE  LENDING  OFFICE":  For each Bank and for each type of Advance,
the  office  of such Bank  listed on the  signature  Page  hereof or such  other
domestic  or foreign  office of such Bank (or of an  Affiliate  of such Bank) as
such Bank may specify  from time to time to the Agent and the  Borrowers  as the
office by which its Advances of such type are to be made and maintained.

     "APPLICABLE MARGIN": Subject to the last sentence of this definition,  with
respect to the period  beginning  on the first day of the first  month after the
month in which the financial  statements and compliance  certificate required by
Sections  5.1(c) and (d) with  respect to a fiscal  quarter  are  delivered  and
ending  on the last  day of the  month in which  the  financial  statements  and
compliance  certificate  required by Sections  5.1(c) and 5.1(d) with respect to
the subsequent fiscal quarter are delivered, shall mean the percentage specified
as appropriate  to Reference  Rate Advances or Eurodollar  Rate Advances for the
Cash Flow  Leverage  Ratio  calculated  as of the end of the fiscal  quarter for
which such financial statements and compliance certificate have been delivered:

             Cash Flow                      Eurodollar              Reference
          Leverage Ratio                   Rate Advances          Rate Advances
          --------------                   -------------          -------------

     Less than or equal to 1.25:1             0.85%                     0%

     Greater than 1.25:1
     but less than 1.75:1                     1.00%                     0%

     Greater than or equal to
     1.75:1 but less than 2.25:1              1.30%                     0%

     Greater than or equal to 2.25:1          1.60%                     0%

                                       -4-
<PAGE>
During the period  beginning  on the Closing Date and ending on August 31, 1999,
the  Applicable  Margin for  Eurodollar  Rate Advances  shall be 1.00%.  For any
subsequent  period beginning on the first day of the first month after the month
in which  the  financial  statements  and  compliance  certificate  required  by
Sections 5.1(c) and (d) with respect to a quarter are required to be but are not
delivered  and  ending  on the last day of the  month  in which  such  financial
statements and compliance  certificate are delivered,  the Applicable Margin for
Eurodollar  Rate Advances  shall be as specified for a Cash Flow Leverage  Ratio
greater than or equal to 2.25:1.

     "ASSIGNEE": As defined in SECTION 9.6.

     "BANK": As defined in the opening paragraph hereof.

     "BOARD":  The  Board of  Governors  of the  Federal  Reserve  System or any
successor thereto.

     "BORROWER": As defined in the opening paragraph hereof.

     "BORROWER  LOAN  DOCUMENTS":  This  Agreement,  the  Notes,  and any of the
Security Documents to be executed by the Borrowers.

     "BUSINESS DAY": Any day (other than a Saturday,  Sunday or legal holiday in
the State of  Minnesota)  on which  national  banks are  permitted to be open in
Minneapolis, Minnesota.

     "CAPITAL EXPENDITURES":  For any period, the sum of all amounts that would,
in  accordance  with GAAP,  be  included as  additions  to  property,  plant and
equipment on a consolidated statement of cash flow for the Borrowers during such
period.

     "CAPITALIZED  LEASE": A lease of (or other agreement conveying the right to
use) real or personal  property  with respect to which at least a portion of the
rent or other amounts thereon constitute Capitalized Lease Obligations.

                                       -5-
<PAGE>
     "CAPITALIZED LEASE OBLIGATIONS":  As to any Person, the obligations of such
Person  to pay  rent or  other  amounts  under a lease  of (or  other  agreement
conveying  the right to use) real or personal  property  which  obligations  are
required to be  classified  and  accounted  for as a capital  lease on a balance
sheet of such Person under GAAP  (including  Statement  of Financial  Accounting
Standards No. 13 of the Financial Accounting Standards Board), and, for purposes
of this  Agreement,  the  amount of such  obligations  shall be the  capitalized
amount thereof, determined in accordance with GAAP (including such Statement No.
13).

     "CASH BALANCES": As of any date of determination,  on a consolidated basis,
cash balances as reflected on the books of the Borrowers and their Subsidiaries,
giving effect to any checks drawn on any accounts.

     "CASH  EQUIVALENTS":  Investments of the Borrowers of the type described in
Sections 6.10(c), (d), (e) and (f).

     "CASH FLOW LEVERAGE RATIO": On any date of determination,  the ratio of (a)
Interest-bearing  Indebtedness  on such date to (b) EBITDA  for the  Measurement
Period ending on such date.

     "CHANGE OF CONTROL": The occurrence,  after the Closing Date, of any of the
following circumstances: (a) PACC not owning, directly or indirectly, all equity
securities  of PGI; or (b) PGI not owning,  directly or  indirectlt,  all equity
securities  of any  Subsidiary  that  has  executed  and  delivered  a  Security
Agreement;  or (c) any Person or two or more Persons acting in concert acquiring
beneficial  ownership  (within the meaning of Rule 13d-3 of the  Securities  and
Exchange  Commission  under the  Securities  Exchange Act of 1934),  directly or
indirectly,  of securities of PACC (or other  securities  convertible  into such
securities)  representing  twenty-five  percent or more of the  combined  voting
power of all  securities  of PACC entitled to vote in the election of directors;
or (d) any event or occurrence as a result of which a majority of the members of
the Board of Directors of the Borrower are not Continuing Directors.

     "CLOSING DATE": May 21, 1999,  provided that on or before such date all the
conditions  precedent to the  obligation of the Banks to make the initial Loans,
as set forth in Article III, have been satisfied.

     "CLOSING FEE": As defined in SECTION 2.10(c) hereto.

     "CLO  INVESTMENTS":  Investments by an Advisory  Subsidiary in subordinated
Collateralized Loan Obligations for which PII has a CLO Management Contract.

     "CLO MANAGEMENT CONTRACT":  A contract or agreement entered into by PII for
its own account  (and not as nominee or  subservicer),  whether now  existing or
hereafter  entered  into,  pursuant  to which PII  manages or services a pool of
assets securing or otherwise backing Collateralized Loan Obligations.

                                       -6-
<PAGE>
     "CODE": The Internal Revenue Code of 1986, as amended.

     "COLLATERALIZED  LOAN  OBLIGATION":  A security issued by a special purpose
vehicle  secured  or  otherwise  backed by a pool of assets,  including  but not
limited to commercial loans,  public and private  high-yield bonds,  equities or
distressed situation debt.

     "COMMITMENTS": The Revolving Commitments and the Term Loan A Commitments.

     "CONTINGENT  DEFERRED  SALES  CHARGE":   With  respect  to  any  Fund,  the
contingent  deferred sales charges  payable,  either  directly or by withholding
from  the  proceeds  of the  redemption  of the  shares  of  such  Fund,  by the
shareholders of such Fund on any redemption of shares of such Fund in accordance
with the Prospectus relating to such Fund and the Rules of Fair Practice.

     "CONTINGENT  OBLIGATION":  With  respect  to any  Person at the time of any
determination,  without duplication, any obligation, contingent or otherwise, of
such Person  guaranteeing  or having the  economic  effect of  guaranteeing  any
Indebtedness of any other Person (the "primary obligor") in any manner,  whether
directly or otherwise; provided, that the term "Contingent Obligation" shall not
include  endorsements  for  collection or deposit,  in each case in the ordinary
course of business.

     "CONTINUING DIRECTOR":  means, as of any date of determination,  any member
of the Board of  Directors of the Borrower who (i) was a member of such Board of
Directors on the date of this  Agreement or (ii) was  nominated  for election or
elected or  appointed  to such Board of Directors by the Board of Directors at a
time when a majority of the Board consisted of Continuing Directors.

     "DEFAULT":  Any event which, with the giving of notice (whether such notice
is required under SECTION 7.1, or under some other  provision of this Agreement,
or otherwise) or lapse of time, or both, would constitute an Event of Default.

     "EBITDA":  For any period of determination,  the consolidated net income of
PACC before  deductions for income taxes,  interest  expense,  depreciation  and
amortization, all as determined in accordance with GAAP.

     "EBITDA  MARGIN":  For any Measurement  Period,  the ratio  (expressed as a
percentage)  (a)  EBITDA  bears  to (b)  the  total  revenue  of  PACC  and  its
Subsidiaries on a consolidated basis.

                                       -7-
<PAGE>
     "ERISA": The Employee Retirement Income Security Act of 1974, as amended.

     "ERISA AFFILIATE": Any trade or business (whether or not incorporated) that
is a member of a group of which the  Borrowers are a member and which is treated
as a single employer under SECTION 414 of the Code.

     "EURODOLLAR  BUSINESS  DAY": A Business Day which is also a day for trading
by and  between  banks  in  United  States  dollar  deposits  in  the  interbank
Eurodollar  market and a day on which  banks are open for  business  in New York
City.

     "EURODOLLAR  RATE":  With  respect  to each  Swing Line Loan on any date of
determination,  the average  offered rate for deposits in United States  dollars
(rounded upward,  if necessary,  to the nearest 1/16 of 1%) for delivery of such
deposits for 30 days,  which appears on the Reuters Screen LIBO Page as of 11:00
a.m.,  London  time (or such other time as of which such rate  appears)  on such
date, and with respect to each Interest  Period  applicable to a Eurodollar Rate
Advance, the average offered rate for deposits in United States dollars (rounded
upward,  if necessary,  to the nearest 1/16 of 1%) for delivery of such deposits
on the first day of such Interest Period for the number of days in such Interest
Period,  which appears on the Reuters Screen LIBO Page as of 11:00 a.m.,  London
time (or such other time as of which such rate appears) two Eurodollar  Business
Days prior to the first day of such Interest Period,  or in either case the rate
for such  deposits  determined  by the  Agent at such time  based on such  other
published  service of general  application as shall be selected by the Agent for
such purpose;  provided,  that in lieu of determining  the rate in the foregoing
manner,  the Agent may  determine the rate based on rates at which United States
dollar deposits are offered to the Agent in the interbank  Eurodollar market for
delivery  in  Immediately  Available  Funds on such date and for the  applicable
period in an amount approximately equal to the Swing Line Loan or Advance by the
Agent to which the Eurodollar Rate is to apply (rounded upward, if necessary, to
the nearest 1/16 of 1%). "Reuters Screen LIBO Page" means the display designated
as Page "LIBO" on the Reuters  Monitor  Money Rate Screen (or such other Page as
may replace the LIBO Page on such service for the purpose of  displaying  London
interbank offered rates of major banks for United States dollar deposits).

     "EURODOLLAR  RATE  ADVANCE":  An Advance with respect to which the interest
rate is determined by reference to the Adjusted Eurodollar Rate.

     "EURODOLLAR RESERVE PERCENTAGE":  As of any day, that percentage (expressed
as a decimal)  which is in effect on such day,  as  prescribed  by the Board for
determining the maximum reserve requirement  (including any basic,  supplemental
or emergency  reserves) for a member bank of the Federal  Reserve  System,  with
deposits  comparable  in  amount  to  those  held by the  Bank,  in  respect  of
"Eurocurrency Liabilities" as such term is defined in Regulation D of the Board.
The rate of interest  applicable  to any  outstanding  Eurodollar  Rate Advances
shall be adjusted automatically on and as of the effective date of any change in
the Eurodollar Reserve Percentage.

                                       -8-
<PAGE>
     "EVENT OF DEFAULT": Any event described in SECTION 7.1.

     "EXCHANGE ACT": The Securities Exchange Act of 1934, as amended.

     "EXISTING CREDIT AGREEMENT": As defined in the recitals hereto.

     "FIXED CHARGE COVERAGE RATIO":  For any Measurement  Period, the ratio that
(a) EBITDA for such  Measurement  Period bears to (b) the sum of the  Borrowers'
consolidated  interest expense for such Measurement  Period PLUS one-fifth (1/5)
of the outstanding principal balance of the Revolving Loans, PLUS the sum of the
scheduled payments on Term Loans required during the twelve months following the
end of such  Measurement  Period,  determined  on a  consolidated  basis for the
Borrowers and their Subsidiaries.

     "FUND": Each open-end or closed-end investment company registered under the
Investment  Company  Act,  or  separate  series of  shares  of any such  company
representing interests in a separate pool of Investments.

     "FUND  AGREEMENTS":   All  investment  advisory  agreements,   distribution
agreements and other  agreements  under which the Borrowers or any Subsidiary is
entitled to compensation  (including,  without  limitation,  contingent deferred
sales charges) for services rendered to any Fund.

     "GAAP":  Generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting  Principles Board of the American Institute
of  Certified  Public  Accountants  and  statements  and  pronouncements  of the
Financial  Accounting  Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting profession,
which are applicable to the circumstances as of any date of determination.

     "GUARANTEED OBLIGATIONS": As defined in SECTION 9.17.

     "GUARANTY": The guaranty of PII, dated as of July 31, 1998 (as the same may
have been and may hereafter be amended, modified,  supplemented or restated) and
any acknowledgments or affirmations thereof, or a guaranty of any other Advisory
Subsidiary,  in the form of  Exhibit  A (as the same may be  amended,  modified,
supplemented or restated, and any acknowledgments or affirmations thereof).

     "IMMEDIATELY  AVAILABLE FUNDS": Funds with good value on the day and in the
city in which payment is received.

                                       -9-
<PAGE>
     "INDEBTEDNESS":   With   respect   to  any   Person  at  the  time  of  any
determination, without duplication, all obligations, contingent or otherwise, of
such Person which in accordance  with GAAP should be classified upon the balance
sheet  of such  Person  as  liabilities,  but in any  event  including:  (a) all
obligations  of such Person for  borrowed  money,  (b) all  obligations  of such
Person evidenced by bonds, debentures,  notes or other similar instruments,  (c)
all obligations of such Person upon which interest  charges are customarily paid
or accrued,  (d) all obligations of such Person under  conditional sale or other
title retention  agreements  relating to property  purchased by such Person, (e)
all obligations of such Person issued or assumed as the deferred  purchase price
of property or services,  (f) all  obligations  of others secured by any Lien on
property  owned or  acquired  by such  Person,  whether  or not the  obligations
secured thereby have been assumed, (g) all Capitalized Lease Obligations of such
Person,  (h)  all  obligations  of such  Person  in  respect  of  interest  rate
protection agreements, (i) all obligations of such Person, actual or contingent,
as an account party in respect of letters of credit or bankers' acceptances, (j)
all  obligations of any  partnership or joint venture as to which such Person is
or may become  personally  liable,  and (k) all  Contingent  Obligations of such
Person.

     "INTEREST-BEARING  INDEBTEDNESS":  At the  time of any  determination,  all
Indebtedness  of  the  Borrowers  and  their  Subsidiaries  other  than  current
liabilities   incurred  in  the  ordinary  course  of  business  which  are  not
indebtedness for borrowed money.

     "INTEREST PERIOD": With respect to each Eurodollar Rate Advance, the period
commencing  on the date of such  Advance  or on the last day of the  immediately
preceding  Interest  Period,  if any,  applicable to an outstanding  Advance and
ending one, two, three or six months  thereafter,  as the Borrowers may elect in
the applicable notice of borrowing, continuation or conversion; PROVIDED THAT:

          (a) Any Interest Period that would otherwise end on a day which is not
     a  Eurodollar  Business  Day  shall  be  extended  to the  next  succeeding
     Eurodollar  Business  Day  unless  such  Eurodollar  Business  Day falls in
     another calendar month, in which case such Interest Period shall end on the
     next preceding Eurodollar Business Day;

          (b) Any Interest  Period that begins on the last  Eurodollar  Business
     Day of a  calendar  month  (or a day  for  which  there  is no  numerically
     corresponding day in the calendar month at the end of such Interest Period)
     shall end on the last Eurodollar Business Day of a calendar month; and

          (c) Any Interest  Period  applicable to an Advance on a Revolving Loan
     that would  otherwise  end after the  Transformation  Date shall end on the
     Transformation  Date, and any Interest Period applicable to an Advance on a
     Term Loan that would  otherwise  end after the  scheduled  maturity of such
     Term Loan shall end on such maturity.

                                      -10-
<PAGE>
     Interest Periods shall be selected so that the installment  payments on the
     Term Notes and mandatory  payments of Revolving  Loans and Swing Line Loans
     can be paid without  having to pay a Eurodollar  Rate Advance  prior to the
     last day of the Interest Period applicable thereto.

     "INVESTMENT": The acquisition,  purchase, making or holding of any stock or
other security, any loan, advance,  contribution to capital, extension of credit
(except  for  trade and  customer  accounts  receivable  for  inventory  sold or
services  rendered in the ordinary  course of business and payable in accordance
with  customary  trade terms),  any  acquisitions  of real or personal  property
(other  than real and  personal  property  acquired  in the  ordinary  course of
business) and any purchase or  commitment  or option to purchase  stock or other
debt or equity  securities of or any interest in another  Person or any integral
part of any business or the assets comprising such business or part thereof. The
amount of any Investment  shall be the original cost of such Investment plus the
cost  of all  additions  thereto,  without  any  adjustments  for  increases  or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment.

     "INVESTMENT ADVISERS ACT": The Investment Advisers Act of 1940, as amended.

     "INVESTMENT COMPANY ACT": The Investment Company Act of 1940, as amended.

     "LIEN":  With  respect to any  Person,  any  security  interest,  mortgage,
pledge,  lien,  charge,  encumbrance,  title  retention  agreement  or analogous
instrument  or  device   (including  the  interest  of  each  lessor  under  any
Capitalized  Lease),  in, of or on any assets or properties of such Person,  now
owned or hereafter acquired, whether arising by agreement or operation of law.

     "LOANS": A Revolving Loan, Term Loan or a Swing Line Loan.

     "LOAN DOCUMENTS": This Agreement, the Notes, the Security Documents and the
Guaranty.

     "MAJORITY  BANKS":  At any time,  Banks  holding  at least  66-2/3%  of the
aggregate  unpaid  principal amount of the Notes or, if no Loans are at the time
outstanding hereunder, Banks whose Total Percentages aggregate at least 66-2/3%.

     "MATURITY  DATE (TERM LOAN A)":  The  earlier of (a) March 31, 2003 and (b)
the date on which the Obligations become due and payable pursuant to SECTION 7.2
hereof.

                                      -11-
<PAGE>
     "MATURITY  DATE (TERM LOAN B)":  The earlier of (a) the  twelfth  Quarterly
Payment Date occurring after the  Transformation  Date and (b) the date on which
the Obligations become due and payable pursuant to SECTION 7.2 hereof.

     "MEASUREMENT  PERIOD":  The twelve  consecutive  months or four consecutive
fiscal  quarters,  as applicable,  ending on the last day of any month or fiscal
quarter.

     "MULTIEMPLOYER  PLAN":  A  multiemployer  plan,  as such term is defined in
SECTION 4001 (a) (3) of ERISA,  which is maintained (on the Closing Date, within
the five years  preceding  the  Closing  Date,  or at any time after the Closing
Date) for employees of the Borrowers or any ERISA Affiliate.

     "NACM":  Nicholas  Applegate  Capital  Management,   a  California  Limited
Partnership.

     "NASD":  The National  Association  of Securities  Dealers,  Inc.,  and any
successor thereto or to the functions thereof.

     "NET  ASSET  VALUE":  With  respect  to any  Fund,  as of the  date  of any
determination, the net asset value of such Fund computed in the manner net asset
value was  computed  for  purposes  of its reports to the  shareholders  of such
Funds.

     "NOTE": A Revolving Note, a Term Note or the Swing Line Note.

     "OBLIGATIONS":  The  Borrowers'  obligations  in  respect  of the  due  and
punctual  payment of principal and interest on the Note when and as due, whether
by acceleration or otherwise and all fees (including Revolving Commitment Fees),
expenses,  indemnities,  reimbursements  and other  obligations of the Borrowers
under  this  Agreement  or any other Loan  Document,  in all cases  whether  now
existing or hereafter arising or incurred.

     "PBGC": The Pension Benefit Guaranty  Corporation,  established pursuant to
Subtitle A of Title IV of ERISA,  and any successor  thereto or to the functions
thereof.

     "PERMITTED ADVISORY SUBSIDIARY AGREEMENTS": As defined in SECTION 5.12(b).

     "PERSON":   Any   natural   person,   corporation,   partnership,   limited
partnership, limited liability company, joint venture, firm, association, trust,
unincorporated  organization,  government  or  governmental  agency or political
subdivision or any other entity,  whether acting in an individual,  fiduciary or
other capacity.

     "PII": Pilgrim Investments, Inc., a Delaware corporation.

                                      -12-
<PAGE>
     "PLAN":  Each  employee  benefit plan  (whether in existence on the Closing
Date or thereafter  instituted),  as such term is defined in SECTION 3 of ERISA,
maintained for the benefit of employees,  officers or directors of the Borrowers
or of any ERISA Affiliate.

     "PLEDGE AGREEMENTS":  The Pledge Agreement of PACC and the Pledge Agreement
of PGI  each  dated  as of July 31,  1998,  as the  same  may have  been and may
hereafter be supplemented, amended or otherwise modified and in effect from time
to time, and any acknowledgments or affirmations thereof.

     "PROHIBITED TRANSACTION":  The respective meanings assigned to such term in
SECTION 4975 of the Code and SECTION 406 of ERISA.

     "PROSPECTUS":  With  respect  to  any  Fund,  the  prospectus  and  related
statement of additional  information filed with the SEC under the Securities Act
in  respect  of the  shares  of  such  Fund,  as the  same  may  be  amended  or
supplemented from time to time.

     "PSI": Pilgrim Securities, Inc., a Delaware corporation.

     "QUARTERLY  PAYMENT  DATE":  The last Business Day of each of March,  June,
September and December.

     "RATE  PROTECTION  AGREEMENTS":  Any  interest  rate  swap,  cap or  option
agreement,  or any other agreement  between the Borrower and any Bank or another
counterparty  acceptable  to the Agent  pursuant  to which the  Borrower  hedges
interest rate risk with respect to a portion of its floating-rate financing.

     "REFERENCE RATE": The rate of interest from time to time publicly announced
by the Agent as its  "reference  rate." The Agent may lend to its  customers  at
rates  that  are at,  above  or  below  the  Reference  Rate.  For  purposes  of
determining  any interest rate  hereunder or under any other Loan Document which
is based on the Reference  Rate, such interest rate shall change as and when the
Reference Rate shall change.

     "REFERENCE  RATE  ADVANCE":  An Advance  with respect to which the interest
rate is determined by reference to the Reference Rate.

     "REGULATORY CHANGE": Any change after the Closing Date in federal, state or
foreign  laws or  regulations  or the  adoption or making after such date of any
interpretations,  directives or requests  applying to a class of banks including
the Banks under any federal,  state or foreign laws or  regulations  (whether or
not having the force of law) by any court or governmental or monetary  authority
charged with the interpretation or administration thereof.

     "REPORTABLE  EVENT": A reportable event as defined in SECTION 4043 of ERISA
and  the  regulations  issued  under  such  Section,  with  respect  to a  Plan,

                                      -13-
<PAGE>
excluding,  however,  such events as to which the PBGC by regulation  has waived
the  requirement of SECTION  4043(a) of ERISA that it be notified within 30 days
of the  occurrence  of such event,  PROVIDED  that a failure to meet the minimum
funding standard of SECTION 412 of the Code and of SECTION 302 of ERISA shall be
a Reportable  Event  regardless of the issuance of any waiver in accordance with
SECTION 412(d) of the Code.

     "RESTRICTED  PAYMENTS":  With respect to the Borrowers,  collectively,  all
dividends or other  distributions  of any nature  (cash,  securities  other than
common stock of the  Borrowers,  assets or  otherwise),  and all payments on any
class of equity  securities  (including  warrants,  options or rights  therefor)
issued by the Borrowers,  whether such  securities are authorized or outstanding
on the Closing Date or at any time thereafter and any redemption or purchase of,
or  distribution  in  respect  of, any of the  foregoing,  whether  directly  or
indirectly.

     "REVOLVING  COMMITMENT":  With respect to any Bank,  the  agreement of such
Bank to make Revolving Loans to, and purchase risk  participations in Swing Line
Loans  issued by the Swing Line Lender for the account of, the  Borrowers  in an
aggregate  principal  amount  outstanding  at any time not to exceed such Bank's
Revolving  Commitment  Amount,  and on the  Transformation  Date to convert  the
outstanding  principal  balance  thereof  to a Term  Loan B,  upon the terms and
subject to the conditions and limitations of this Agreement.

     "REVOLVING  COMMITMENT  AMOUNT":  With respect to any Bank,  initially  the
amount set opposite such Bank's name on Schedule  1.1(b) hereto as its Revolving
Commitment Amount, but as the same may be reduced pursuant to SECTION 2.09.

     "REVOLVING COMMITMENT FEES": As defined in SECTION 2.10(b).

     "REVOLVING COMMITMENT PERCENTAGE": With respect to any Bank, the percentage
equivalent of a fraction,  the  numerator of which is the  Revolving  Commitment
Amount  of such Bank and the  denominator  of which is the  Aggregate  Revolving
Commitment Amount.

     "REVOLVING LOAN": As defined in SECTION 2.1(b).

     "REVOLVING  LOAN  DATE":  The date of the  making  of any  Revolving  Loans
hereunder.

     "REVOLVING  LOAN PERIOD" The period from the Closing Date to and  including
the day preceding the  Transformation  Date,  and if there is no  Transformation
Date,  from the Closing Date to and  including  the date on which the  Revolving
Notes  are paid in full  and the  Revolving  Commitments  have  expired  or been
terminated.

     "REVOLVING NOTE": A promissory note in the form of Exhibit B hereto.

                                      -14-
<PAGE>
     "RULES OF FAIR  PRACTICE":  The  Rules of Fair  Practice  of the  NASD,  as
amended,  and the rules,  regulations and interpretations of the NASD in respect
thereto.

     "SEC": The Securities and Exchange Commission, and any successor thereto or
to the functions thereof.

     "SECURITIES ACT": The Securities Act of 1933, as amended.

     "SECURITY  AGREEMENTS":  The Security Agreements of PGI, PII and PSI, dated
as of July 31, 1998,  any Security  Agreement of an Advisory  Subsidiary  in the
form of Exhibit C; and any  Security  Agreement of any other  Subsidiary  in the
form of Exhibit D; in each case  whereby the  respective  grantors  grant to the
Agent,  for the  benefit  of the  Banks,  a security  interest  in the  personal
property  described therein to secure the Obligations,  in each case as the same
has been and may hereafter be supplemented, amended or otherwise modified and in
effect from time to time, and any acknowledgments or affirmations thereof.

     "SECURITY DOCUMENTS":  The Security Agreements,  the Pledge Agreements, the
Trademark Assignment and any other agreement or instrument pursuant to which the
Borrowers or any other Person creates or perfects a Lien on property in favor of
the Agent to secure  the  Obligations,  in each case as  amended,  supplemented,
restated or otherwise modified and in effect from time to time.

     "SELLING  AGENT":  Each  Person  which acts as any  Subsidiary's  direct or
indirect distributor, underwriter, broker, dealer or agent for the shares of any
Fund.

     "SIPA": The Securities Investor Protection Act of 1970, as amended.

     "SIPC": The Securities Investor  Corporation  established pursuant to SIPA,
or any successor thereto or to the functions thereof.

     "SUBSIDIARY":  With respect to any Person,  any corporation or other entity
of which  securities or other ownership  interests  having ordinary voting power
for the  election  of a  majority  of the board of  directors  or other  Persons
performing similar functions are owned by such Person either directly or through
one or more Subsidiaries.

     "SWING LINE FACILITY": The discretionary revolving credit facility provided
by the Swing Line Lender to the  Borrowers in an aggregate  amount not to exceed
$2,500,000 at any time  outstanding upon the terms and subject to the conditions
of this Agreement.

     "SWING LINE LENDER": U.S. Bank National Association, acting in the capacity
of the lender of Swing Line Loans hereunder.

     "SWING LINE LOANS": As defined in SECTION 2.1(c).

                                      -15-
<PAGE>
     "SWING  LINE LOAN  DATE":  The date of the  making of any Swing  Line Loans
hereunder.

     "SWING  LINE  LOAN  OUTSTANDINGS":  As of any  date of  determination,  the
aggregate unpaid principal balance of Swing Line Loans outstanding on such date.

     "SWING LINE NOTE": A promissory note in the form of Exhibit E.

     "TERM LOAN A": As defined in SECTION 2.1(a).

     "TERM LOAN A  COMMITMENT":  With respect to a Bank,  the  agreement of such
Bank to make a Term Loan A to the  Borrower  in an amount  equal to such  Bank's
Term Loan A Commitment  Amount upon the terms and subject to the  conditions  of
this Agreement.

     "TERM LOAN A COMMITMENT  AMOUNT":  With  respect to a Bank,  the amount set
forth  opposite  such Bank's name on Schedule  1.1(b)  hereof as its Term Loan A
Commitment Amount.

     "TERM  LOAN A  PERCENTAGE":  With  respect  to  any  Bank,  the  percentage
equivalent of a fraction,  the numerator of which is the amount of the Term Loan
A Commitment  of such Bank and the  denominator  of which is the sum of the Term
Loan A Commitments of all the Banks.

     "TERM LOAN B": As defined in SECTION 2.1(d).

     "TERM  LOAN B  PERIOD":  The  period  from the  Transformation  Date to and
including the Maturity Date (Term Loan B).

     "TERM NOTE": A promissory note in the form of Exhibit F hereto.

     "TOTAL OUTSTANDINGS": As of any date of determination, the aggregate unpaid
principal balance of Loans outstanding on such date.

     "TOTAL   PERCENTAGE":   With  respect  to  any  Bank,   (a)  prior  to  the
Transformation Date, the percentage  equivalent of a fraction,  the numerator of
which  is the  sum of the  Revolving  Commitment  Amount  of such  Bank  and the
outstanding  principal balance of such Bank's Term Loan A and the denominator of
which is the sum of the  Aggregate  Revolving  Commitment  Amount and  aggregate
outstanding  principal  balance  of the Term  Loan A, and (b) from and after the
Transformation Date, the percentage  equivalent of a fraction,  the numerator of
which is the  outstanding  principal  balance of such  Bank's  outstanding  Term
Loans,  and the  denominator  of which is the  aggregate  outstanding  principal
balance of the Term Loan.

                                      -16-
<PAGE>
     "TOTAL  REVOLVING  OUTSTANDINGS":  As of any  date  of  determination,  the
aggregate  unpaid  principal  balance  of  Revolving  Loans and Swing Line Loans
outstanding on such date.

     "TRADEMARK ASSIGNMENT": The Collateral Assignment (Trademarks) of PGI dated
as of  July  31,  1998,  as  the  same  may  have  been  and  may  hereafter  be
supplemented,  amended,  or otherwise  modified and in effect from time to time,
and any acknowledgments or affirmations thereof.

     "TRANSFORMATION  DATE": May 19, 2000, as the same may be extended  pursuant
to SECTION 2.20.

     "U.S. BANK": U.S. Bank National Association,  in its capacity as one of the
Banks hereunder.

     "UNUSED  REVOLVING  COMMITMENT":  As of  any  date  of  determination,  the
Aggregate Revolving Commitment Amount minus the Total Revolving Outstandings.

     SECTION 1.2 ACCOUNTING TERMS AND  CALCULATIONS.  Except as may be expressly
provided to the  contrary  herein,  all  accounting  terms used herein  shall be
interpreted  and  all  accounting  determinations  hereunder  shall  be  made in
accordance  with GAAP. To the extent any change in GAAP affects any  computation
or  determination  required  to  be  made  pursuant  to  this  Agreement,   such
computation  or  determination  shall be made as if such  change in GAAP had not
occurred unless the Borrowers and the Banks agree in writing on an adjustment to
such computation or determination to account for such change in GAAP.

     SECTION  1.3  COMPUTATION  OF  TIME  PERIODS.  In  this  Agreement,  in the
computation of a period of time from a specified date to a later specified date,
unless  otherwise stated the word "from" means "from and including" and the word
"to" or "until" each means "to but excluding".

     SECTION 1.4 OTHER  DEFINITIONAL  TERMS.  The words  "hereof",  "herein" and
"hereunder"  and words of similar import when used in this Agreement shall refer
to  this  Agreement  as a  whole  and not to any  particular  provision  of this
Agreement.  References to Sections,  Exhibits, Schedules and like references are
to this Agreement  unless  otherwise  expressly  provided.  The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". Unless the context in which used herein otherwise clearly requires,
"or" has the inclusive meaning represented by the phrase "and/or".

                                      -17-
<PAGE>
                                   ARTICLE II

                         TERMS OF THE CREDIT FACILITIES

                           PART A -- TERMS OF LENDING

     SECTION 2.1 LENDING COMMITMENTS. On the terms and subject to the conditions
hereof,  each Bank  severally  agrees to make the following  lending  facilities
available to the Borrowers:

          2.1(a)  TERM LOAN A. A term loan  from each Bank  (each  being a "Term
     Loan A" and,  collectively,  the "Term  Loans A") to the  Borrowers  on the
     Closing  Date  in an  amount  from  each  Bank  equal  to its  Term  Loan A
     Commitment  Amount.  The  sum of the  Term  Loan A  Commitment  Amounts  is
     $25,000,000. The Term Loans A and any portion of the balance thereof may be
     made,  maintained,  continued and  converted to Reference  Rate Advances or
     Eurodollar  Rate  Advances as the  Borrowers  may elect in their  notice of
     borrowing, continuation or conversion.

          2.1(b)  REVOLVING  CREDIT.  A revolving  credit facility  available as
     loans (each, a "Revolving Loan" and,  collectively,  the "Revolving Loans")
     to the  Borrowers  on a  revolving  basis at any time and from time to time
     from the Closing Date to the  Transformation  Date, during which period the
     Borrowers may borrow,  repay and reborrow in accordance with the provisions
     hereof,  PROVIDED, that no Revolving Loan will be made in any amount which,
     after giving effect thereto,  would cause the Total Revolving  Outstandings
     to  exceed  the  Aggregate  Revolving  Commitment  Amounts,  and  provided,
     further,  that no Bank shall be required to make any Loan if,  after giving
     effect thereto, the sum of the outstanding principal balance of such Bank's
     Revolving  Note plus such Bank's  Revolving  Commitment  Percentage  of the
     outstanding  principal  balance of the Swing Line Note  would  exceed  such
     Bank's Revolving Commitment Amount. Revolving Loans hereunder shall be made
     by  the  several  Banks  ratably  in the  proportion  of  their  respective
     Revolving   Commitment  Amounts.   Revolving  Loans  may  be  obtained  and
     maintained, at the election of the Borrowers but subject to the limitations
     hereof, as Reference Rate Advances or Eurodollar Rate Advances.

          2.1(c)  SWING LINE LOANS.  A swing line credit  facility  available as
     loans (each, a "Swing Line Loan" and, collectively,  the Swing Line Loans")
     from the Swing Line Lender at its sole  discretion  to the  Borrowers  on a
     revolving  basis at any time and from time to time from the Closing Date to
     the  Transformation  Date,  subject  to the  terms and  conditions  of this
     Agreement, during which period the Borrowers may borrow, repay and reborrow
     in accordance with the provisions hereof; PROVIDED, that no Swing Line Loan
     will be made in any amount which, after giving effect thereto,  would cause
     the  Total  Revolving   Outstandings  to  exceed  the  Aggregate  Revolving
     Commitment Amount.

                                      -18-
<PAGE>
          2.1(d) CONVERSION TO TERM LOAN B. On the Transformation Date, provided
     that no Default or Event of Default has  occurred  and is  continuing,  the
     aggregate  outstanding  principal  balance  on such  date  of  each  Bank's
     Revolving  Loans shall be converted  into a term loan (each a "Term Loan B"
     and  collectively  the  "Term  Loans  B") from  each  Bank on the terms and
     subject to the  conditions  set forth herein.  The Term Loans B or portions
     thereof may be maintained,  at the election of the Borrowers but subject to
     the  limitations  hereof,  as Reference  Rate Advances or  Eurodollar  Rate
     Advances.

     SECTION 2.2 PROCEDURE FOR LOANS.

          2.2(a)  PROCEDURE FOR REVOLVING  LOANS. On the Closing Date, each Bank
     shall make a Revolving  Loan  hereunder in an amount equal to its Revolving
     Commitment Percentage of the amount of loans outstanding under the Existing
     Credit  Agreement.  Any  subsequent  request by the Borrowers for Revolving
     Loans  hereunder  shall be made by PACC,  on  behalf of the  Borrowers,  in
     writing or by telephone and must be given so as to be received by the Agent
     not later than 11:00 a.m.  (Minneapolis time) two Eurodollar  Business Days
     prior to the  requested  Revolving  Loan  Date if the  Revolving  Loans are
     requested  as  Eurodollar  Rate  Advances  and not later  than  11:00  a.m.
     (Minneapolis  time) one Business Day prior to the requested  Revolving Loan
     Date if the Revolving Loans are requested as Reference Rate Advances.  Each
     request for Revolving  Loans  hereunder  shall be irrevocable  and shall be
     deemed a  representation  by the Borrower that on the  requested  Revolving
     Loan Date and after giving effect to the  requested  Revolving  Loans,  the
     applicable  conditions  specified  in  Article  III  have  been and will be
     satisfied. Each request for Revolving Loans hereunder shall specify (i) the
     requested Revolving Loan Date, (ii) the aggregate amount of Revolving Loans
     to be made on such date,  which shall be in a minimum  amount of $1,000,000
     or, if more, an integral  multiple  thereof,  (iii) whether such  Revolving
     Loans  are to be funded as  Reference  Rate  Advances  or  Eurodollar  Rate
     Advances  (and, if such  Revolving  Loans are to be made with more than one
     applicable  interest  rate  choice,  specifying  the  amount to which  each
     interest  rate choice is  applicable),  and (iv) in the case of  Eurodollar
     Rate  Advances,  the  duration of the initial  Interest  Period  applicable
     thereto.  The Agent may rely on any telephone  request for Revolving  Loans
     hereunder which it believes in good faith to be genuine,  and the Borrowers
     hereby  waive the right to dispute the Agent's  record of the terms of such
     telephone  request.  The Agent shall promptly notify each other Bank of the
     receipt of such request,  the matters specified therein, and of such Bank's
     ratable  share  of  the  requested  Revolving  Loans.  On the  date  of the
     requested  Revolving  Loans,  each  Bank  shall  provide  its  share of the
     requested  Revolving Loans to the Agent in Immediately  Available Funds not
     later than 3:00 p.m., Minneapolis time.

                                      -19-
<PAGE>
     Unless the Agent  determines  that any  applicable  condition  specified in
     Article III has not been  satisfied,  the Agent will make  available to the
     Borrowers  at the Agent's  principal  office in  Minneapolis,  Minnesota in
     Immediately  Available Funds not later than 4:00 p.m. (Minneapolis time) on
     the requested  Revolving  Loan Date the amount of the  requested  Revolving
     Loans. If the Agent has made a Revolving Loan to the Borrowers on behalf of
     a Bank but has not  received  the amount of such  Revolving  Loan from such
     Bank by the time herein required, such Bank shall pay interest to the Agent
     on the amount so advanced at the overnight Federal Funds rate from the date
     of such  Revolving  Loan to the date funds are  received  by the Agent from
     such Bank,  such interest to be payable with such remittance from such Bank
     of the principal amount of such Revolving Loan (provided, however, that the
     Agent  shall not make any  Revolving  Loan on behalf of a Bank if the Agent
     has  received  prior  notice  from  such  Bank  that it will not make  such
     Revolving  Loan).  If the Agent does not receive  payment from such Bank by
     the next Business Day after the date of any Revolving Loan, the Agent shall
     be entitled to recover such Revolving  Loan,  with interest  thereon at the
     rate (or rates) then applicable to the such Revolving Loan, on demand, from
     the Borrowers,  without prejudice to the Agent's and such Borrower's rights
     against such Bank. If such Bank pays the Agent the amount  herein  required
     with  interest  at the  overnight  Federal  Funds rate before the Agent has
     recovered  from the  Borrower,  such Bank shall be entitled to the interest
     payable by the  Borrower  with  respect to the  Revolving  Loan in question
     accruing from the date the Agent made such Revolving Loan.

          2.2(b)  PROCEDURE  FOR  TERM  LOANS  A.  Not  later  than  11:00  a.m.
     (Minneapolis  time) two Eurodollar  Business Days prior to the Closing Date
     if the Term Loans A are requested as Eurodollar Rate Advances and not later
     than 11:00 a.m.  (Minneapolis  time) one  Business Day prior to the Closing
     Date if the Term Loans A are requested as Reference Rate Advances, PACC, on
     behalf of the  Borrowers  shall  deliver  to the Agent a written  notice of
     borrowing.  Such  notice of  borrowing  shall be  irrevocable  and shall be
     deemed a representation by the Borrowers that on the Closing Date and after
     giving effect to the Term Loans A the  applicable  conditions  specified in
     Article III have been and will be satisfied. Such notice of borrowing shall
     specify (i) the Closing  Date and (ii)  whether such Term Loans A are to be
     funded as Eurodollar Rate Advances or Reference Rate Advances (and, if such
     Revolving Loans are to be made with more than one applicable  interest rate
     choice,  specifying  the  amount  to which  each  interest  rate  choice is
     applicable) and (iii) in the case of Eurodollar Rate Advances, the duration
     of the initial Interest Period applicable thereto. The Agent shall promptly
     notify each Bank of the  receipt of such  notice and the matters  specified
     therein.  On the  requested  Closing  Date,  each Bank shall provide to the
     Agent the amount of such Bank's Term Loan A in Immediately  Available Funds
     not later than 11:00 a.m.  (Minneapolis  time). Unless the Agent determines
     that  any  applicable  condition  specified  in  Article  III has not  been

                                      -20-
<PAGE>
     satisfied,  the Agent will make the  proceeds of the Term Loans A available
     to the Borrower at the Agent's main office in  Minneapolis,  Minnesota,  on
     the requested date.

          2.2(c)  PROCEDURE  FOR SWING LINE LOANS.  Any request by the Borrowers
     for Swing Line Loans hereunder shall be in writing or by telephone and must
     be given so as to be  received by the Swing Line Lender not later than 1:00
     p.m. (Minneapolis time) on the requested Swing Line Loan Date. Each request
     for Swing Line Loans  hereunder  shall be irrevocable and shall be deemed a
     representation  by the Borrowers that on the requested Swing Line Loan Date
     and after giving  effect to the requested  Swing Line Loans the  applicable
     conditions  specified in Article III have been and will be satisfied.  Each
     request for Swing Line Loans  hereunder  shall  specify  (i) the  requested
     Swing Line Loan Date and (ii) the  aggregate  amount of Swing Line Loans to
     be made on such date  which  shall be in a minimum  amount of  $250,000  or
     integral multiples of $50,000 in excess thereof.  The Swing Line Lender may
     rely on any  telephone  request  for Swing  Line Loans  hereunder  which it
     believes in good faith to be genuine;  and the  Borrowers  hereby waive the
     right to  dispute  the  Swing  Line  Lender's  record  of the terms of such
     telephone  request.  On the date of the requested Swing Line Loans,  unless
     the Agent determines that any applicable condition specified in Article III
     has not been  satisfied  and has  communicated  the same to the Swing  Line
     Lender,  the Swing Line Lender will make  available to the Borrowers at the
     Swing  Line  Lender's  office in  Minneapolis,  Minnesota,  in  Immediately
     Available Funds no later than 4:00 p.m. (Minneapolis time) on the requested
     Swing Line Loan Date the amount of the requested Swing Line Loans.

          2.2(d)  PROCEDURE FOR  CONVERSION TO TERM LOAN B. Not later than 11:00
     a.m. (Minneapolis time) two Business Days prior to the Transformation Date,
     the Borrowers shall deliver to the Agent a written notice electing  whether
     the Term Loans B are to be funded as Eurodollar  Rate Advances or Reference
     Rate Advances.

     SECTION 2.3 NOTES.  The Revolving  Loans and Term Loan B of each Bank shall
be evidenced by a single  Revolving  Note payable to the order of such Bank in a
principal amount equal to such Bank's Revolving  Commitment Amount originally in
effect.  The Term Loan A of each Bank shall be  evidenced by a Term Note payable
to the order of such Bank in the principal amount equal to such Bank's Term Loan
A  Commitment  Amount.  The Swing Line Loans shall be  evidenced by a Swing Line
Note  payable to the order of the Swing Line Lender in the  principal  amount of
the Swing Line Commitment. Upon receipt of each Bank's Notes from the Borrowers,
the Agent shall  deliver  such Notes to such Bank by  registered  mail/overnight
courier. Each Bank shall enter in its ledgers and records the amount of its Term
Loan A and  each  Revolving  Loan,  the  various  Advances  made,  converted  or
continued  and the payments  made  thereon,  and each Bank is  authorized by the
Borrowers to enter on a schedule attached to its Term Note or Revolving Note, as
appropriate,  a record  of such  Term  Loan A,  Revolving  Loans,  Advances  and
payments;  provided, however that the failure by any Bank to make any such entry

                                      -21-
<PAGE>
or any error in making  such  entry  shall not  limit or  otherwise  affect  the
obligation of the Borrowers  hereunder and on the Notes, and, in all events, the
principal amounts owing by the Borrowers in respect of the Revolving Notes shall
be the  aggregate  amount of all  Revolving  Loans  made by the  Banks  less all
payments of principal  thereof made by the  Borrower  and the  principal  amount
owing by the  Borrowers  in respect of the Term Notes shall be the amount of the
Term Loans A made by the Banks less all  payments of  principal  thereof made by
the Borrowers.

     SECTION 2.4 CONVERSIONS AND CONTINUATIONS.  On the terms and subject to the
limitations  hereof,  the  Borrowers  shall have the option at any time and from
time to time to convert all or any portion of the Advances into  Reference  Rate
Advances or Eurodollar  Rate Advances,  or to continue a Eurodollar Rate Advance
as such;  provided,  however that a Eurodollar  Rate Advance may be converted or
continued only on the last day of the Interest Period applicable  thereto and no
Advance may be  converted  to or  continued  as a  Eurodollar  Rate Advance if a
Default or Event of Default has occurred and is  continuing on the proposed date
of  continuation or conversion.  Advances may be requested as,  converted to, or
continued as,  Eurodollar  Rate Advances only in integral  multiples,  as to the
aggregate  amount of the  Advances of all Banks so converted  or  continued,  of
$1,000,000.   The  Borrowers   shall  give  the  Agent  written  notice  of  any
continuation  or  conversion of any Advances and such notice must be given so as
to be  received  by the Agent not later than 11:00 a.m.  (Minneapolis  time) two
Eurodollar   Business  Days  prior  to  the  requested  date  of  conversion  or
continuation in the case of the  continuation  of, or conversion to,  Eurodollar
Rate  Advances and on the date of the  requested  conversion  to Reference  Rate
Advances.  Each such  notice  shall  specify (a) the amount to be  continued  or
converted,  (b) the date for the  continuation or conversion  (which must be (i)
the last day of the preceding Interest Period for any continuation or conversion
of Eurodollar Rate Advances,  and (ii) a Eurodollar  Business Day in the case of
continuations  as or conversions to Eurodollar  Rate Advances and a Business Day
in the case of conversions to Reference Rate  Advances),  and (c) in the case of
conversions to or continuations as Eurodollar Rate Advances, the Interest Period
applicable  thereto.  Any notice given by the Borrowers under this SECTION shall
be  irrevocable.  If the  Borrowers  shall  fail  to  notify  the  Agent  of the
continuation  of any Eurodollar  Rate Advances  within the time required by this
Section,  such Advances shall, on the last day of the Interest Period applicable
thereto,  automatically  be converted  into  Reference Rate Advances of the same
principal  amount.  All  conversions  and  continuation of Advances must be made
uniformly and ratably among the Banks (e.g., when continuing a 60 day Eurodollar
Rate Advance of one Bank to a 90 day Eurodollar Rate Advance,  the Borrower must
simultaneously  continue all 60 day Eurodollar Rate Advances of all Banks having
Interest  Periods ending on the date of  continuation  as 90 day Eurodollar Rate
Advances.)

     SECTION 2.5 INTEREST RATES, DEFAULT INTEREST AND PAYMENTS.

          2.5(a)  REVOLVING  LOANS AND TERM LOANS.  Interest shall accrue and be
     payable on the Revolving Loans (other than Swing Line Loans) and Term Loans
     as follows:

                                      -22-
<PAGE>
               (i) Each  Eurodollar  Rate  Advance  shall bear  interest  on the
          unpaid principal amount thereof during the Interest Period  applicable
          thereto  at a rate  per  annum  equal  to the sum of (A) the  Adjusted
          Eurodollar  Rate for such  Interest  Period,  PLUS (B) the  Applicable
          Margin;

               (ii) Each  Reference  Rate  Advance  shall bear  interest  on the
          unpaid principal amount thereof during the Interest Period  applicable
          thereto  at a rate per  annum  equal  to the sum of (A) the  Reference
          Rate, plus (B) the Applicable Margin;

               (iii) Upon the  occurrence  of any Event of Default  each Advance
          shall, at the option of the Majority  Banks,  bear interest until paid
          in full at the  "Default  Rate," which shall be (A) during the balance
          of any Interest Period  applicable to a Eurodollar  Advance a rate per
          annum  equal to the sum of (1) the  rate  applicable  to such  Advance
          during such Interest Period, plus (2) 2.0%, and (b) otherwise,  a rate
          per  annum  equal  to the  sum of (i)  the  Reference  Rate,  (2)  the
          Applicable Margin for Reference Rate Advances, plus (3) 2%;

               (iv)  Interest   shall  be  payable  (A)  with  respect  to  each
          Eurodollar  Rate Advance having an Interest Period of 90 days or less,
          on the last day of the Interest Period  applicable  thereto;  (B) with
          respect to any Reference Rate Advance,  on the last day of each month;
          [(C) with respect to all Advances,  upon any permitted  prepayment (on
          the amount prepaid);] and (D) with respect to all Revolving  Advances,
          on the  Transformation  Date;  provided  that  interest  under Section
          2.5(a)(iii) shall be payable on demand; and

               (v) Interest accrued under the Existing Credit Agreement  through
          the Closing Date shall be payable on the first Quarterly  Payment Date
          after the Closing Date.

          2.5(b) SWING LINE LOANS.  Interest  shall accrue and be payable on the
     Swing Line Loans as follows:

               (i) Each  Swing  Line Loan  shall  bear  interest  on the  unpaid
          principal amount thereof at a floating rate per annum equal to the sum
          of (A) the Adjusted Eurodollar Rate, PLUS (B) the Applicable Margin;

               (ii) Upon the  occurrence of any Event of Default each Swing Line
          Loan shall,  at the option of the Agent,  bear interest  until paid in
          full at the  "Default  Rate," which shall be (A) during the balance of
          any Interest  Period  applicable  to a  Eurodollar  Advance a rate per
          annum  equal to the sum of (1) the  rate  applicable  to such  Advance

                                      -23-
<PAGE>
          during such Interest  Period,  plus (2) 2.0%, and (b) otherwise a rate
          per  annum  equal  to the  sum of (i)  the  Reference  Rate,  (2)  the
          Applicable Margin for Reference Rate Advances, plus (3) 2%;

               (iii)  Interest  shall  be  payable  (A) on the  last day of each
          month; [(B) upon any permitted prepayment (on the amount prepaid); and
          (C) on each principal  payment date of the Swing Line Loans;] provided
          that interest under SECTION 2.5(b)(ii) shall be payable on demand.

     SECTION 2.6 REFINANCING OF SWING-LINE LOANS.

          (a) PERMISSIVE  FINANCINGS OF SWING-LINE LOANS. The Swing Line Lender,
     at any time in its sole and absolute discretion,  may notify the Agent, not
     later than 11:00  a.m.  (Minneapolis  time) on any  Business  Day,  that it
     desires to have any portion of the  outstanding  Swing-Line  Loans refunded
     with Revolving Loans (which shall not be considered  Swing-Line Loans) made
     by the Banks under  SECTION  2.1(b),  whereupon  the Agent  shall  promptly
     request that each Bank  (including  the Swing Loan Lender) make a Revolving
     Loan in an amount equal to its ratable share of the  Revolving  Loans to be
     made to repay to the Swing Loan Lender the portion of the aggregate  unpaid
     principal  amount of the  Swing-Line  Loans  specified in such notice.  The
     Agent shall promptly notify the Borrowers of its receipt of any such notice
     from the Swing Line Lender.

          (b) MANDATORY REFINANCINGS OF SWING-LINE LOANS. On the second Business
     Day of each week if the  outstanding  principal  balance  of the Swing Line
     facility is greater than or equal to $1,000,000,  and on the Transformation
     Date,  the  Agent  shall  notify  each  Bank  of the  aggregate  amount  of
     Swing-Line  Loans  outstanding  as of the end of the  previous  day and the
     amount of Revolving Loans (which shall not be considered  Swing-Line Loans)
     required to be made by each Bank to refinance such  outstanding  Swing-Line
     Loans (which shall be in the amount of each Lender's  ratable share of such
     outstanding Swing-Line Loans).

          (c) LENDERS' OBLIGATION TO FUND REFINANCINGS OF SWING-LINE LOANS. Upon
     its receipt of a request  from the Agent under  SECTION  2.6(a) or a notice
     from the Agent under SECTION  2.6(b),  each Bank  (including the Swing Loan
     Lender)  shall make a  Revolving  Loan  (which  shall not be  considered  a
     Swing-Line  Loan) in an amount equal to its ratable  share of the aggregate
     principal  amount  of  Swing-Line  Loans  to be  refinanced,  and  make the
     proceeds of such  Revolving  Loans  available to the Swing Line Lender,  in
     Immediately Available Funds, at the main office of the Agent in Minneapolis
     not later  than 3:00 p.m.  (Minneapolis  time) on the date such  notice was
     received; PROVIDED, HOWEVER, that a Bank shall not be obligated to make any
     such Revolving Loan unless (A) the Swing Loan Lender believed in good faith
     that all conditions to making the subject Swing-Line Loan were satisfied at
     the time  such  Swing-Line  Loan was  made,  or (B)  such  Bank had  actual

                                      -24-
<PAGE>
     knowledge, by receipt of the statements furnished to it pursuant to Section
     5.1 or otherwise, that any such condition had not been satisfied and failed
     to notify the Swing Loan  Lender in a writing  received  by such Swing Loan
     Lender  prior to the time it made such Swing- Line Loan that the Swing Loan
     Lender was not  authorized to make a Swing-Line  Loan until such  condition
     has been satisfied,  or (C) the satisfaction of any such condition that was
     not  satisfied  had been  waived in a  writing  by the  requisite  Banks in
     accordance with the provisions of this Agreement. The proceeds of Revolving
     Loans made  pursuant to the  preceding  sentence  shall be delivered to the
     Swing Loan Lender (and not to the Borrowers) and applied to the outstanding
     Swing-Line  Loans,  and the  Borrowers  authorize  the Agent to charge  any
     account  maintained  by it with the Agent in order to  immediately  pay the
     Swing Loan Lender the amount of such Swing-Line Loans to the extent amounts
     received  from the  other  Banks  are not  sufficient  to repay in full the
     outstanding  Swing-Line Loans requested or required to be refinanced.  Upon
     the making of a Revolving  Loan by a Bank pursuant to this SECTION  2.6(c),
     the amount so funded shall become an Obligation  evidenced by such Lender's
     Revolving  Note and  shall no  longer  be an  Obligation  evidenced  by the
     Swing-Line Note. If for any reason any Bank is unable to make a Loan to the
     Borrowers to refinance a Swing- Line Loan  hereunder,  then such Bank shall
     immediately purchase from the Swing Loan Lender a participation interest in
     such  Swing-Line  Loan,  at par, in an amount equal to such Bank's  ratable
     share of such Swing-Line Loan, which participation  interest shall, for all
     purposes  hereunder  except  SECTION 2.1 be deemed a Revolving Loan made by
     such Bank  hereunder.  If any  portion of any such amount paid to the Swing
     Loan Lender should be recovered by or on behalf of the  Borrowers  from the
     Swing Loan Lender in  bankruptcy  or  otherwise,  the loss of the amount so
     recovered  shall be ratably  shared among all the Banks in accordance  with
     their respective  ratable shares.  Each Bank's obligation to make Revolving
     Loans referred to in this SECTION  2.6(c) shall,  subject to the proviso to
     the first sentence of this SECTION  2.6(c),  be absolute and  unconditional
     and  shall  not  be  affected  by  any  circumstance,   including,  without
     limitation,  (i) any  setoff,  counterclaim,  recoupment,  defense or other
     right which such Bank may have against the Swing Loan Lender, the Borrowers
     or  anyone  else  for  any  reason  whatsoever;   (ii)  the  occurrence  or
     continuance of an Event of Default or Unmatured Event of Default; (iii) any
     adverse change in the condition  (financial or otherwise) of the Borrowers;
     (iv) any breach of this Agreement by the Borrowers,  the Agent or any Bank;
     or (v) any other  circumstance,  happening or event whatsoever,  whether or
     not  similar to any of the  foregoing;  PROVIDED,  that in no event shall a
     Bank be obligated to make a Revolving Loan if, after giving effect thereto,
     the outstanding  principal  amount of such Bank's  Revolving Note plus such
     Bank's ratable share of the remaining  principal  balance of the Swing-Line
     Note (after giving  effect to the repayment  thereof to be funded with such
     Revolving  Loan and  Revolving  Loans made the same day by the other Banks)
     would exceed such Bank's Revolving Commitment Amount.

                                      -25-
<PAGE>
     SECTION 2.7 REPAYMENT.

          2.7(a) REVOLVING LOANS. The unpaid principal  balance of all Revolving
     Loans, together with all accrued and unpaid interest thereon,  shall be due
     and payable on the  Transformation  Date (subject to conversion  thereof in
     accordance with SECTION 2.1(d)).

          2.7(b) TERM LOANS A. The remaining principal balance of the Term Loans
     A shall be payable as follows:

               (i) on each of June 30, 1999,  September  30, 1999,  December 31,
          1999 and March 31, 2000, $937,500.00;

               (ii) on each of June 30, 2000,  September 29, 2000,  December 29,
          2000, and March 30, 2001, $1,562,500.00;

               (iii) on each of June 29, 2001,  September 28, 2001, December 28,
          2001, and March 29, 2002, $1,875,000.00;

               (iv) on each of June 28,  2002,  September  25, 2002 and December
          27, 2002, $1,875,000.00; and

               (v) on March 31, 2003 any other amount then remaining unpaid with
          respect to the Term A Loans;

          PROVIDED,  HOWEVER that if the aggregate  principal amount outstanding
          under Term Loan A as of the date any principal  payment is due is less
          than the amount  specified for such date in the table above,  then the
          remaining  principal  shall be payable at such time. All such payments
          of the Term Loans A shall be applied ratably among the Banks.

          2.7(c)  SWING LINE LOANS.  The unpaid  principal  balance of the Swing
     Line Loans on the  Transformation  Date  shall be  refinanced  pursuant  to
     SECTION 2.6(b).

          2.7(d)  TERM  LOAN  B.  The  Total   Revolving   Outstandings  on  the
     Transformation Date shall be reduced in twelve quarterly installments, each
     in an amount equal to one-twelveth  of the Total Revolving  Outstandings as
     of the  Transformation  Date, on each Quarterly Payment Date beginning with
     the first  Quarterly  Payment  Date  after  the  Transformation  Date.  The
     Borrowers shall prepay the Term Loan B on each Quarterly Payment date in an
     amount equal to the required reduction.

                                      -26-
<PAGE>
     SECTION 2.8 PREPAYMENTS.

          2.8(a)  MANDATORY   PREPAYMENTS.   If  at  any  time  Total  Revolving
     Outstandings  exceed  the  Aggregate  Revolving   Commitment  Amounts,  the
     Borrowers shall immediately repay to the Agent for the account of the Banks
     the amount of such excess. Any such payments shall be applied first against
     Swing Line Loans,  then against  Reference  Rate  Advances and then against
     Eurodollar  Rate  Advances  in  order  starting  with the  Eurodollar  Rate
     Advances  having the shortest  time to the end of the  applicable  Interest
     Period.

          2.8(b) OPTIONAL PREPAYMENTS. The Borrowers may prepay Swing Line Loans
     and Reference  Rate  Advances,  in whole or in part,  at any time,  without
     premium or penalty.  Any such prepayment must be accompanied by accrued and
     unpaid interest on the amount prepaid. Each partial prepayment of the Swing
     Line  Loans  shall be in an  amount of  $250,000  or an  integral  multiple
     thereof. Each partial prepayment of the Revolving Loans or Term Loans shall
     be in an amount of $1,000,000 or an integral multiple thereof.  Except upon
     an  acceleration  following an Event of Default or upon  termination of the
     Revolving  Commitment  in  whole,  the  Borrower  may pay  Eurodollar  Rate
     Advances only on the last day of the Interest  Period  applicable  thereto.
     Amounts paid (unless  following an acceleration or upon  termination of the
     Revolving  Commitment  in whole) or prepaid on  Revolving  Loans under this
     paragraph  (b)  may  be  reborrowed  upon  the  terms  and  subject  to the
     conditions and limitations of this  Agreement.  Amounts prepaid on the Term
     Loans may not be reborrowed.

          2.8(c) APPLICATION OF PREPAYMENTS. All principal paid or prepaid under
     SECTION 2.7 or this SECTION 2.8 on the Revolving Loans and Swing Line Loans
     shall be applied first, to the outstanding  principal  balance of the Swing
     Line  Loans and  thereafter  to the  outstanding  principal  balance of the
     Revolving  Loans in  proportion  to each Bank's  share of such  outstanding
     Loans.  All principal paid or prepaid under SECTION 2.7 or this SECTION 2.8
     on the Term  Loans  shall be applied  to the  installments  due on the Term
     Loans in the inverse order of their maturities.

                                PART B -- GENERAL

     SECTION 2.9 OPTIONAL REDUCTION OF AGGREGATE REVOLVING COMMITMENT AMOUNTS OR
TERMINATION OF REVOLVING  COMMITMENT.  The Borrowers may, at any time,  upon not
less than thirty days prior  written  notice to the Agent,  reduce the Aggregate
Revolving  Commitment  Amounts  ratably,  with any such  reduction  in a minimum
amount for all the Banks of $5,000,000,  or, if more, in an integral multiple of
$1,000,000; PROVIDED, HOWEVER, that the Borrowers may not at any time reduce the
Aggregate Revolving  Commitment Amounts below the Total Revolving  Outstandings.
The Borrowers  may,  upon not less than thirty days prior written  notice to the
Agent, terminate the Revolving Commitments in their entirety.

                                      -27-
<PAGE>
     SECTION 2.10 FEES.

          2.10(a)  AGENT FEES.  The  Borrowers  shall pay to the Agent fees (the
     "Agent Fees") in accordance with a letter  agreement  between the Borrowers
     and the Agent concerning such Fees.

          2.10(b)  REVOLVING  COMMITMENT  FEE.  The  Borrowers  shall pay to the
     Agent, for the account of each Bank, fees (the "Revolving Commitment Fees")
     in an  amount  determined  by  applying  a  rate  per  annum  equal  to the
     Applicable Fee Percentage to the average daily Unused Revolving  Commitment
     of such Bank for the period  from the  Closing  Date to the  Transformation
     Date.  Such  Revolving  Commitment  Fees are  payable  in  arrears  on each
     Quarterly Payment Date and on the Transformation Date.

          2.10(c)  CLOSING FEES. On the Closing Date the Borrowers shall pay the
     Agent for the account of each Bank closing fees in the amount determined by
     applying  a rate  equal to  0.125% of the sum of the  Revolving  Commitment
     Amount and Term Loan A Commitment Amount of each Bank.

     SECTION  2.11  COMPUTATION.  Revolving  Commitment  Fees  and  interest  on
Revolving Loans,  Term Loans and Swing Line Loans shall be computed on the basis
of actual days elapsed and a year of 360 days.

     SECTION 2.12  PAYMENTS.  Payments  and  prepayments  of  principal  of, and
interest on, the Note and all fees,  expenses and other  obligations  under this
Agreement  payable  to the Agent or the Banks  shall be made  without  setoff or
counterclaim   in  Immediately   Available   Funds  not  later  than  3:00  p.m.
(Minneapolis  time) on the dates called for under this Agreement to the Agent at
its main office in Minneapolis,  Minnesota. Funds received after such time shall
be  deemed  to have been  received  on the next  Business  Day.  The Agent  will
promptly  distribute  in like funds to each Bank its ratable  share of each such
payment of principal,  interest and Revolving  Commitment  Fees by the Agent for
the account of the Banks.  Whenever  any payment to be made  hereunder or on the
Notes  shall be  stated  to be due on a day which is not a  Business  Day,  such
payment shall be made on the next succeeding  Business Day and such extension of
time,  in  the  case  of a  payment  of  principal,  shall  be  included  in the
computation of any interest on such principal payment.

     SECTION 2.13 USE OF LOAN PROCEEDS.  The Revolving Loans and Swing Line Loan
shall be used by the Borrowers and the  Subsidiaries  for their general business
purposes,  including, without limitation,  acquisition of Advisory Contracts and
related rights,  CLO Management  Contracts,  Restricted  Payments (to the extent

                                      -28-
<PAGE>
permitted herein), CLO Investments, and financing 12b-1 Fees, in a manner not in
conflict with any of the Borrowers' covenants in this Agreement. The proceeds of
the Term Loan A shall be used in connection with the Acquisition (NACM).

     SECTION 2.14 INTEREST RATE NOT  ASCERTAINABLE,  ETC. If, on or prior to the
date for  determining  the  Adjusted  Eurodollar  Rate for any  Eurodollar  Rate
Advance,  any  Bank  determines  in good  faith  (which  determination  shall be
conclusive and binding, absent error) that:

          (a) deposits in dollars (in the applicable  amount) are not being made
     available to such Bank in the relevant market, or

          (b) the  Adjusted  Eurodollar  Rate  will not  adequately  and  fairly
     reflect  the cost to such Bank of funding or  maintaining  Eurodollar  Rate
     Advances,  such Bank shall  promptly  give notice to the  Borrower  and the
     Agent of such determination,  whereupon the obligation of such Bank to make
     or continue,  or to convert any Advances to, Eurodollar Rate Advances shall
     be suspended  until such Bank  notifies the Borrower and the Agent that the
     circumstances  giving rise to such  suspension no longer  exist.  While any
     such suspension continues,  all further Advances by such Bank shall be made
     as Reference Rate Advances.  No such  suspension  shall affect the interest
     rate then in effect for any Eurodollar Rate Advance outstanding at the time
     such suspension is imposed.

     SECTION 2.15 INCREASED COST. If any Regulatory Change:

          (a) shall subject any Bank (or its Applicable  Lending  Office) to any
     tax, duty or other charge with respect to its Eurodollar Rate Advances, its
     Notes or its  obligation to make  Eurodollar  Rate Advances or shall change
     the basis of  taxation  of payment to any Bank (or its  Applicable  Lending
     Office) of the principal of or interest on its Eurodollar  Rate Advances or
     any other  amounts due under this  Agreement  in respect of its  Eurodollar
     Rate Advances or its obligation to make  Eurodollar  Rate Advances  (except
     for  changes in the rate of tax on the  overall  net income of such Bank or
     its Applicable  Lending Office  imposed by the  jurisdiction  in which such
     Bank's principal office or Applicable Lending Office is located); or

          (b) shall  impose,  modify or deem  applicable  any  reserve,  special
     deposit or similar requirement  (including,  without  limitation,  any such
     requirement  imposed  by the  Board,  but  excluding  with  respect  to any
     Eurodollar  Rate  Advance any such  requirement  to the extent  included in
     calculating  the applicable  Adjusted  Eurodollar  Rate) against assets of,
     deposits  with or for the  account  of, or credit  extended  by, any Bank's
     Applicable  Lending  Office or shall impose on any Bank (or its  Applicable
     Lending  Office) or the  interbank  Eurodollar  market any other  condition
     affecting its Eurodollar Rate Advances, its Notes or its obligation to make
     Eurodollar Rate Advances;

                                      -29-
<PAGE>
and the result of any of the  foregoing is to increase the cost to such Bank (or
its  Applicable  Lending  Office) of making or maintaining  any Eurodollar  Rate
Advance,  or to reduce the amount of any sum received or receivable by such Bank
(or its  Applicable  Lending  Office)  under this  Agreement or under its Notes,
then,  within 30 days after demand by such Bank (with a copy to the Agent),  the
Borrower  shall pay to such  Bank such  additional  amount  or  amounts  as will
compensate  such  Bank for such  increased  cost or  reduction.  Each  Bank will
promptly  notify  the  Borrower  and the  Agent  of any  event  of  which it has
knowledge,  occurring  after the date  hereof,  which will  entitle such Bank to
compensation  pursuant to this SECTION and will designate a different Applicable
Lending Office if such designation will avoid the need for, or reduce the amount
of, such  compensation  and will not, in the judgment of such Bank, be otherwise
disadvantageous  to such Bank. A certificate  of any Bank claiming  compensation
under this Section, setting forth the additional amount or amounts to be paid to
it hereunder and stating in  reasonable  detail the basis for the charge and the
method  of  computation,  shall  be  conclusive  in the  absence  of  error.  In
determining  such  amount,   each  Bank  shall  use  reasonable   averaging  and
attribution methods.  Failure on the part of any Bank to demand compensation for
any increased costs or reduction in amounts  received or receivable with respect
to any  Eurodollar  Rate  Advance  shall not  constitute a waiver of such Bank's
rights to demand  compensation  for any increased  costs or reduction in amounts
received or receivable in any  subsequent  period.  No Bank shall be entitled to
compensation  otherwise payable under this SECTION 2.15 for any period more than
six months  prior to the date on which the Bank first  notifies  the Borrower of
the change resulting in the increased cost.

     SECTION 2.16 ILLEGALITY. If any Regulatory Change shall make it unlawful or
impossible for any Bank to make,  maintain or fund any Eurodollar Rate Advances,
such Bank shall notify the Borrower and the Agent,  whereupon the  obligation of
such Bank to make or continue,  or to convert any Advances to,  Eurodollar  Rate
Advances shall be suspended  until such Bank notifies the Borrower and the Agent
that the  circumstances  giving rise to such suspension no longer exist.  Before
giving any such notice, such Bank shall designate a different Applicable Lending
Office if such  designation  will avoid the need for giving such notice and will
not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. If
such  Bank  determines  that  it may  not  lawfully  continue  to  maintain  any
Eurodollar Rate Advances,  all of the affected  Advances shall be  automatically
converted to Reference Rate Advances as of the date of such Bank's  notice,  and
upon such  conversion the Borrower shall  indemnify such Bank in accordance with
SECTION 9.12.

     SECTION  2.17 CAPITAL  ADEQUACY.  In the event that any  Regulatory  Change
reduces or shall have the  effect of  reducing  the rate of return on any Bank's
capital or the capital of its parent  corporation  (by an amount such Bank deems
material) as a consequence of its Commitments  and/or its Loans to a level below

                                      -30-
<PAGE>
that which such Bank or its parent  corporation could have achieved but for such
Regulatory  Change (taking into account such Bank's policies and the policies of
its  parent   corporation   with  respect  to  implementing   capital   adequacy
requirements),  then the Borrower shall, within 30 days after written notice and
demand  from such Bank (with a copy to the Agent),  pay to such Bank  additional
amounts  sufficient to compensate  such Bank or its parent  corporation for such
reduction. Any determination by such Bank under this SECTION and any certificate
as to the amount of such  reduction  given to the Borrower by such Bank shall be
final,  conclusive and binding for all purposes,  absent error. No Bank shall be
entitled to  compensation  otherwise  payable  under this  SECTION  2.17 for any
period more than six months  prior to the date on which the Bank first  notifies
the Borrower of the change resulting in the reduced rate of return.

     SECTION 2.18 WITHHOLDING TAXES.

          (a) BANKS TO SUBMIT FORMS.  Each Bank  represents to the Borrowers and
     the  Agent  that,  as of  the  date  it  becomes  a Bank  and at all  times
     thereafter,  it is either (i) a corporation organized under the laws of the
     United States or any State  thereof or (ii) entitled to complete  exemption
     from  United  States  withholding  tax  imposed  on or with  respect to any
     payments,  including  fees, to be made pursuant to this Agreement (x) under
     an applicable provision of a tax convention to which the United States is a
     party or (y) because it is acting through a branch, agency or office in the
     United States and any payment to be received by it hereunder is effectively
     connected with a trade or business in the United States.  Each Bank that is
     not a United States person (as such term is defined in SECTION  7701(a)(30)
     of the Code) shall submit to the Borrowers and the Agent,  on or before the
     later of the  Closing  Date or the day on which  such Bank  becomes a Bank,
     duly completed and signed copies of either Form 1001 (relating to such Bank
     and entitling it to a complete  exemption from  withholding on all payments
     to be  received  by such  Bank  hereunder)  or Form 4224  (relating  to all
     payments  to be  received  by such Bank  hereunder)  of the  United  States
     Internal Revenue Service.  Thereafter and from time to time, each such Bank
     shall submit to the Borrowers and the Agent such  additional duly completed
     and  signed  copies  of one or the other of such  Forms (or such  successor
     Forms as shall be adopted from time to time by the relevant  United  States
     taxing authorities) as may be (i) reasonably  requested by the Borrowers or
     the Agent and (ii) required and permitted under then-current  United States
     law or regulations to avoid United States  withholding taxes on payments in
     respect of all  payments to be received  by such Bank  hereunder.  Upon the
     request of the  Borrowers or the Agent,  each Bank that is a United  States
     person (as such term is defined in SECTION  7701(a)(30)  of the Code) shall
     submit  to the  Borrowers  and the Agent a  certificate  in such form as is
     reasonably  satisfactory  to the Borrowers and the Agent to the effect that
     it is such a United States person.

          (b)  INABILITY  OF A BANK.  If any Bank  that is not a  United  States
     person  (as such  term is  defined  in  SECTION  7701(a)(30)  of the  Code)
     determines  that, as a result of any Regulatory  Change,  the Borrowers are
     required by law or regulation to make any deduction,  withholding or backup
     withholding of any taxes, levies,  imposts,  duties,  fees,  liabilities or
     similar  charges  of the  United  States  of  America,  any  possession  or

                                      -31-
<PAGE>
     territory of the United States of America  (including the  Commonwealth  of
     Puerto Rico) or any area subject to the  jurisdiction  of the United States
     of America ("U.S.  TAXES") from any payments to a Bank pursuant to any Loan
     Document  in  respect  of the  Obligations  payable  to such  Bank  then or
     thereafter outstanding,  the amount payable will be increased to the amount
     which,  after  deduction  from  such  increased  amount  of all U.S.  Taxes
     required  to be  withheld  or  deducted  therefrom,  will  yield the amount
     required under any Loan Document to be paid with respect thereto; PROVIDED,
     that the  Borrowers  shall not be  required  to pay any  additional  amount
     pursuant to this SECTION 2.18(b) to any Bank (i) that is not, either on the
     date  this  Agreement  is  executed  by such  Bank or on the date such Bank
     becomes such under SECTION 9.6(c),  either (x) entitled to submit Form 1001
     (relating  to such  Bank and  entitling  it to a  complete  exemption  from
     withholding on all payments to be received by such Bank  hereunder) or Form
     4224  (relating to all payments to be received by such Bank  hereunder)  or
     (y) a United States person (as such term is defined in SECTION  7701(a)(30)
     of the Code),  or (ii) that has  failed to submit  any form or  certificate
     that it was  required to file  pursuant to  subsection  (a) and entitled to
     file under  applicable  law or (iii)  arising  from such Bank's  failure to
     comply with any certification,  identification or other similar requirement
     under  United  States  income  tax laws or  regulations  (including  backup
     withholding)  to establish  entitlement to exemption from such U.S.  Taxes;
     and  PROVIDED,  FURTHER,  that if a Bank, as a result of any amount paid by
     the Borrowers to such Bank  pursuant to this SECTION 2.18,  shall realize a
     tax  credit  or  refund,  which tax  credit  or refund  would not have been
     realized but for the Borrowers' payment of such amount, such Bank shall pay
     to the  Borrowers an amount  equal to such tax credit or refund.  Each Bank
     may determine the portion, if any, of any tax credit or refund attributable
     to the Borrowers' payments using such attribution and accounting methods as
     such Bank reasonably selects,  and such Bank's determination of the portion
     of any tax credit or refund  attributable to the Borrower's  payments shall
     be  conclusive  in the absence of manifest  error.  The  obligation  of the
     Borrowers  under this SECTION  2.18(b) shall survive the payment in full of
     the Obligations and the termination of the Commitments of such Bank.

          (c)  SUBSTITUTION  OF BANK.  In the event either  Borrower is required
     pursuant to this  SECTION  2.18 to pay any  additional  amount to any Bank,
     such Bank shall,  if no Event of Default has  occurred  and is  continuing,
     upon the  request  of such  Borrower  to such Bank and the  Agent,  assign,
     pursuant to and in  accordance  with the  provisions of SECTION 9.6, all of
     its rights and  obligations  under  this  Agreement  and under the Notes to
     another  Bank  or an  Assignee  selected  by the  Borrower  and  reasonably
     satisfactory  to the Agent,  in  consideration  for (i) the payment by such
     assignee to the assigning  Bank of the  principal of, and interest  accrued
     and  unpaid to the date of such  assignment  on,  the Note or Notes of such
     Bank,  (ii) the payment by such Borrower to the  assigning  Bank of any and
     all other amounts owing to such Bank under any provision of this  Agreement
     accrued and unpaid to the date of such assignment and (iii) such Borrower's
     release of the  assigning  Bank from any further  obligation  or  liability
     under this  Agreement.  Notwithstanding  anything  to the  contrary in this
     SECTION 2.18(c),  in no event shall the replacement of any Bank result in a
     decrease in the aggregate  Commitments  without the written  consent of the
     Majority Banks.

                                      -32-
<PAGE>
     SECTION 2.19 FUNDING LOSSES;  EURODOLLAR RATE ADVANCES. The Borrowers shall
compensate each Bank,  upon its written  request,  for all losses,  expenses and
liabilities  (including  any  interest  paid by such  Bank to  lenders  of funds
borrowed  by it to make or carry  Eurodollar  Rate  Advances  to the  extent not
recovered by such Bank in connection  with the  re-employment  of such funds and
including loss of anticipated  profits) which such Bank may sustain:  (i) if for
any reason,  other than a default by such Bank, a funding of a  Eurodollar  Rate
Advance does not occur on the date specified  therefor in the Borrower's request
or notice as to such Advance  under SECTION 2.2 or 2.4, or (ii) if, for whatever
reason (including,  but not limited to, acceleration of the maturity of Advances
following an Event of Default), any repayment of a Eurodollar Rate Advance, or a
conversion  pursuant to SECTION 2.16,  occurs on any day other than the last day
of the Interest Period  applicable  thereto.  A Bank's request for  compensation
shall set forth the  calculation  of the  amount  requested  and shall be final,
conclusive and binding, absent error.

     SECTION 2.20  EXTENSION OF  TRANSFORMATION  DATE.  The Borrowers  may, upon
written  notice to the Agent  not less than  thirty  (30) days and not more than
ninety (90) days prior to the  Transformation  Date,  request the Majority Banks
extend the Transformation  Date; PROVIDED,  HOWEVER,  that any such agreement on
the part of the Majority Banks must be in writing, and PROVIDED,  FURTHER,  that
if one or more Banks does not approve the extension of the Transformation  Date,
the  Borrowers  may at any  time  thereafter  prior to the  Transformation  Date
previously in effect,  in its sole  discretion,  require the  assignment of such
Bank's  rights  and  delegation  of  such  Bank's  obligations  under  the  Loan
Documents,  pursuant  to  SECTION  9.6 to any  other  Bank or  another  assignee
selected by the Borrowers  and  acceptable to the Agent that is willing to agree
to such extension,  in consideration for (i) the payment by such assignee to the
assigning Bank of the principal of, and interest  accrued and unpaid to the date
of such  assignment on, the Note of such Bank, (ii) the payment by the Borrowers
to the assigning Bank of any and all fees owing to such Bank under any provision
of this  Agreement  accrued and unpaid to the date of such  assignment and (iii)
the  Borrowers'  release of the  assigning  Bank from any further  obligation or
liability under its Commitment.  The Transformation  Date shall be extended with
respect to all Banks that have approved the  extension  and all such  assignees.
The  Transformation  Date shall be deemed to have  occurred  with respect to any
Bank that has not approved the extension and whose Loans and Commitment have not
been assigned as described above, and the outstanding  principal  balance of the
Loans made by each such Bank that has not approved the extension or assigned its
Loans and Commitments  shall be payable as provided in SECTION  2.7(d).  On such
date, the Aggregate Revolving Commitment Amounts shall be reduced to reflect the
termination of such Banks' Revolving Commitments. The Borrowers may make no more
than three (3) such requests to extend the Transformation Date.

                                      -33-
<PAGE>
                                   ARTICLE III

                              CONDITIONS PRECEDENT

     SECTION 3.1 CONDITIONS PRECEDENT TO THE TRANSACTION. The making of the Term
Loan A, the Revolving  Loans and the initial Swing Line Loan shall be subject to
the prior or simultaneous fulfillment of the following conditions:

          3.1(a)  DOCUMENTS.  The Agent shall have  received  the  following  in
     sufficient counterparts (except for the Notes) for each Bank:

               (i) A Revolving Note and a Term Note A drawn to the order of each
          Bank,  and a Swing  Line Note  drawn to the  order of the  Swing  Line
          Lender,  each  executed  by the  Borrowers  and dated the date of this
          Agreement.

               (ii)  Acknowledgments  with respect to the Security Agreements in
          the  forms  of  Exhibits  G, H and I  executed  by PGI,  PII and  PSI,
          respectively.

               (iii)  Acknowledgments with respect to the Pledge Agreements,  in
          the forms of Exhibits J and K, executed by the Borrowers.

               (iv) An  Acknowledgment  with respect to the Guaranty in the form
          of Exhibit L, executed by PII.

               (v) An  Amendment  to the  Trademark  Assignment,  in the form of
          Exhibit M, executed by PGI.

               (vi) Copies of the  corporate  resolutions  of PGI,  PII, PSI and
          PACC  authorizing the execution,  delivery and performance of the Loan
          Documents  to  which  each  of them is a  party,  certified  as of the
          Closing Date by the respective  Secretary or an Assistant Secretary of
          PGI, PII, PSI and PACC.

               (vii)  Copies  of the  corporate  resolutions  of each  of  PACC,
          authorizing the execution, delivery and performance of the Acquisition
          Documents  (NACM) to which it is a party,  certified as of the Closing
          Date by the Secretary or an Assistant Secretary of PACC.

               (viii) Incumbency  certificates  showing the names and titles and
          bearing  the  signatures  of the  officers of PGI,  PII,  PSI and PACC
          authorized  to execute the Loan  Documents  to which each of them is a
          party  and,  in the  case of  each  Borrower,  to  request  Loans  and
          conversions and continuations of Advances  hereunder,  certified as of
          the Closing Date by the respective Secretary or an Assistant Secretary
          of PGI, PII, PSI and PACC.

                                      -34-
<PAGE>
               (ix) A  certificate  of the  Secretary or Assistant  Secretary of
          each  of  PGI,  PACC,  PII  and  PSI   certifying   their   respective
          Certificates of Incorporation and Bylaws.

               (x) Long-form certificates of good standing for PGI, PII, PSI and
          PACC in the  respective  jurisdictions  of  their  incorporation,  and
          certificates of good standing in all of the jurisdictions in which the
          character  of the  properties  owned or leased  by it or the  business
          conducted by it makes such qualification  necessary,  certified by the
          appropriate  governmental  officials as of a date not more than thirty
          (30) days prior to the Closing Date.

               (xi) The  Agent  shall  have  received  from  PACC  copies of all
          agreements and documents related to the Acquisition  Documents (NACM),
          including all amendments thereof and supplements thereto, all of which
          shall be in form and  substance  satisfactory  to the Banks,  together
          with a certificate  of an officer of PACC  certifying  that:  (A) such
          copies are true and  correct,  (B) such  documents  in the  respective
          forms certified to the Banks,  remain in full force and effect without
          supplement,  amendment  or  other  modification,  (C) The  Acquisition
          Documents  (NACM) in the form delivered to the Agent,  remains in full
          force and effect,  without  modification or amendment and embodies the
          entire  agreement and  understanding  between the parties thereto with
          respect to the matters therein,  and (D) All conditions to the closing
          of the Acquisition (NACM) are satisfied or waived.

               (xiii) A letter from the Borrowers  directing the Agent as to the
          disbursement of the Term Loans A and any Revolving Loans to be used to
          finance the Acquisition (NACM).

               (xiv) A certificate dated the Closing Date of the chief executive
          officer or chief financial officer of the Borrowers certifying that:

                    (A) All  representations and warranties set forth in Article
               IV are true and correct as of the Closing Date, and

                    (B) On the Closing  Date,  after giving effect to the making
               of the Loans,  no Event of Default or Default shall have occurred
               or will exist.

               (xv) Evidence of compliance  with the insurance  requirements  of
          SECTION 5.3.

               (xvi) Tax, lien and judgment searches.

                                      -35-
<PAGE>
               (xvii) A  written  opinion  of Bryan  Cave  LLP,  counsel  to the
          Borrowers,  PII and PSI,  addressed to the Agent and dated the Closing
          Date, covering the matters set forth in Exhibit N hereto.

          3.1(b) ADDITIONAL CONDITIONS. The following conditions shall exist:

               (i) The  Borrowers  shall have  performed  and complied  with all
          agreements,  terms and conditions contained in this Agreement required
          to be  performed  or  complied  with  by  the  Borrowers  prior  to or
          simultaneously with the Closing Date.

               (ii)  The  Agent  shall  have   received  for  itself,   and,  as
          applicable,  for the  account of the Banks,  (A) the Agent Fee and (B)
          all fees and other  amounts  due and  payable by the  Borrowers  on or
          prior to the Closing Date,  including the reasonable fees and expenses
          of counsel to the Agent payable pursuant to SECTION 8.2.

               (iii) The Acquisition (NACM) shall have been consummated, and the
          Agent  and its  counsel  shall  have  received  satisfactory  evidence
          thereof.

          3.1(c)  SECURITY  DOCUMENTS.  All  Security  Documents  (or  financing
     statements  with respect  thereto) shall have been  appropriately  filed or
     recorded to the satisfaction of the Agent; any pledged collateral (together
     with stock powers and other instruments of assignment, as applicable) shall
     have been duly  delivered to the Agent;  and the priority and perfection of
     the Liens created by the Security  Documents shall have been established to
     the satisfaction of the Agent and its counsel.

     SECTION 3.2 CONDITIONS  PRECEDENT TO ALL LOANS. The obligation of the Banks
to make any Loans or the Swing Line Lender to make any Swing Line Loan hereunder
shall be subject to the fulfillment of the following conditions:

          3.2(a)   REPRESENTATIONS  AND  WARRANTIES.   The  representations  and
     warranties  contained  in Article IV shall be true and correct on and as of
     each Revolving Loan Date, with the same force and effect as if made on such
     date.

          3.2(b) NO DEFAULT.  No Default or Event of Default shall have occurred
     and be continuing  on any  Revolving  Loan Date or Swing Line Loan Date, or
     will exist after giving effect to the Loans made on such date.

          3.2(c)  NOTICES  AND  REQUESTS.  The Agent  shall  have  received  the
     Borrowers' request for such Revolving Loan as required under SECTION 2.2.

                                      -36-
<PAGE>
                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

     To  induce  the  Banks to  enter  into  this  Agreement  and to make  Loans
hereunder,  and to  induce  the  Swing  Line  Lender to make  Swing  Line  Loans
hereunder, the Borrowers represent and warrant to the Banks:

     SECTION 4.1  ORGANIZATION,  STANDING,  ETC.  Each Borrower is a corporation
duly  incorporated  and validly  existing and in good standing under the laws of
the jurisdiction of its incorporation and has all requisite  corporate power and
authority  to carry on its  business  as now  conducted,  to enter into the Loan
Documents to which it is a party and to perform its  obligations  under the Loan
Documents  to  which  it is a  party.  Each  Subsidiary  is a  corporation  duly
incorporated  and validly  existing and in good  standing  under the laws of the
jurisdiction  of its  incorporation  and has all requisite  corporate  power and
authority  to carry on its  business  as now  conducted,  to enter into the Loan
Documents to which it is a party, and to perform its obligations  under the Loan
Documents  to  which  it is a  party.  Each of the  Borrowers  and each of their
Subsidiaries  (a) holds all  certificates  of  authority,  licenses  and permits
necessary to carry on the  business as now  conducted  in each  jurisdiction  in
which it is carrying  on such  business,  except  where the failure to hold such
certificates,  licenses or permits would not have a material  adverse  effect on
the business, operations, property, assets or condition, financial or otherwise,
of the  Borrowers  and  the  Subsidiaries  taken  as a  whole,  and  (b) is duly
qualified and in good standing as a foreign  corporation in each jurisdiction in
which the  character of the  properties  owned,  leased or operated by it or the
business conducted by it make such qualification necessary and the failure so to
qualify would  permanently  preclude such Borrower or Subsidiary  from enforcing
its rights with respect to any assets or expose such  Borrower or  Subsidiary to
any  liability,  which in either case would be material to the Borrowers and the
Subsidiaries  taken  as a  whole.  PSI is  duly  registered  with  the  SEC as a
broker-dealer,  is a member in good standing of the NASD,  and is not in arrears
with respect to any assessment made on it by the SIPC. Each Advisory  Subsidiary
is  duly  registered  with  the  SEC as an  investment  adviser.  PSI  maintains
procedures and internal controls  reasonably  adapted to insure that it does not
extend or maintain  credit to or for its customers other than in accordance with
the  provisions  of  Regulation T of the Board,  and  officers of PSI  regularly
supervise its  activities  and the  activities of employees of PSI to reasonably
ensure that PSI does not extend or  maintain  credit to or for  customers  other
than in accordance with the provisions of Regulation T of the Board.

     SECTION  4.2  AUTHORIZATION  AND  VALIDITY.  The  execution,  delivery  and
performance  by each of the Borrowers and each  Subsidiary of the Loan Documents
to which it is a party  have been duly  authorized  by all  necessary  corporate
action,  and Loan Documents when executed will  constitute the legal,  valid and
binding  obligations of the Borrowers and each Subsidiary,  enforceable  against
each of them in accordance with their respective  terms,  subject to limitations
as to enforceability which might result from bankruptcy,  insolvency, moratorium
and other  similar  laws  affecting  creditors'  rights  generally  and  general
principles of equity.

                                      -37-
<PAGE>
     SECTION  4.3  NO  CONFLICT;   NO  DEFAULT.  The  execution,   delivery  and
performance by the Borrowers and each  Subsidiary of the Loan Documents to which
each of them is a party will not (a) violate any provision of any law,  statute,
rule  or  regulation  or  any  order,  writ,   judgment,   injunction,   decree,
determination or award of any court, governmental agency or arbitrator presently
in effect having applicability to the Borrowers and such Subsidiary, (b) violate
or contravene any provision of the Certificate of Incorporation or bylaws of the
Borrowers or any such  Subsidiary,  or (c) result in a breach of or constitute a
default under any  agreement,  lease or instrument to which the Borrowers or any
such  Subsidiary is a party or by which they or any of their  properties  may be
bound or result in the creation of any Lien thereunder. None of the Borrowers or
any  Subsidiary  is in default  under or in violation of any such law,  statute,
rule or regulation, order, writ, judgment,  injunction, decree, determination or
award or any such indenture, loan or credit agreement or other agreement,  lease
or instrument in any case in which the consequences of such default or violation
could have a material  adverse effect on the business,  operations,  properties,
assets  or  condition  (financial  or  otherwise)  of the  Borrowers  and  their
Subsidiaries taken as a whole. Without limiting the foregoing, the Borrowers and
each  Subsidiary are in compliance with all applicable  capital  requirements of
all governmental authorities applicable to them, including,  without limitation,
Rule 15c3-1 under the Exchange  Act, as the same is modified with respect to PSI
in accordance with the  undertaking  outlined in paragraph 2 of the letter dated
March 2, 1995 from PSI to the NASD District Committee for District No. 2, and as
the same may be further modified from time to time by the NASD.

     SECTION 4.4  GOVERNMENT  CONSENT.  No order,  consent,  approval,  license,
authorization  or validation of, or filing,  recording or registration  with, or
exemption  by, any  governmental  or public body or authority is required on the
part  of the  Borrowers  or any  Subsidiary  to  authorize,  or is  required  in
connection  with the execution,  delivery and  performance  of, or the legality,
validity,  binding  effect  or  enforceability  of,  the Loan  Documents  or the
Acquisition  Documents (NACM), except for any necessary filing or recordation of
or with respect to any of the Security Documents.

     SECTION 4.5 FINANCIAL  STATEMENTS AND CONDITION.  The audited  consolidated
financial  statements of each of the Borrowers,  as at [September 30, 1998], and
the  unaudited  financial  statements  of each of the Borrowers as at [March 31,
1999],  as heretofore  furnished to the Banks,  have been prepared in accordance
with GAAP on a consistent basis (except for the absence of footnotes and subject
to year-end audit  adjustments as to the interim  statements) and fairly present
the financial  condition of each Borrower and its  Subsidiaries as at such dates
and the results of their  operations  and changes in financial  position for the
respective  periods then ended.  As of the dates of such  financial  statements,
neither  Borrower nor any  Subsidiary  had any material  obligation,  contingent
liability,  liability  for  taxes or  long-term  lease  obligation  which is not

                                      -38-
<PAGE>
reflected in such financial statements or in the notes thereto. Since [September
30,  1998],  there  has  been  no  material  adverse  change  in  the  business,
operations,  property,  assets or condition,  financial or otherwise,  of either
Borrower and its Subsidiaries taken as a whole.

     SECTION 4.6  LITIGATION.  Except as described on Schedule 4.6, there are no
actions,  suits or  proceedings  pending or, to the knowledge of the  Borrowers,
threatened against or affecting the Borrowers or any Subsidiary, or any of their
properties  before  any court or  arbitrator,  or any  governmental  department,
board,  agency or other  instrumentality  which, if determined  adversely to the
Borrowers  or any  Subsidiary,  would  have a  material  adverse  effect  on the
business,  operations,  property or condition  (financial  or  otherwise) of the
Borrowers  and the  Subsidiaries  taken as a whole or on the  ability  of either
Borrower or any Subsidiary to perform its obligations under the Loan Documents.

     SECTION  4.7  ERISA.  Each  Plan  is in  substantial  compliance  with  all
applicable  requirements of ERISA and the Code and with all material  applicable
rulings  and  regulations  issued  under  the  provisions  of ERISA and the Code
setting  forth those  requirements.  No  Reportable  Event has  occurred  and is
continuing  with  respect  to any Plan.  All of the  minimum  funding  standards
applicable  to such  Plans  have been  satisfied  and  there  exists no event or
condition  which would  reasonably be expected to result in the  institution  of
proceedings  to terminate any Plan under SECTION 4042 of ERISA.  With respect to
each Plan subject to Title IV of ERISA, as of the most recent valuation date for
such Plan, the present value (determined on the basis of reasonable  assumptions
employed by the  independent  actuary for such Plan and previously  furnished in
writing to the  Banks) of such  Plan's  projected  benefit  obligations  did not
exceed the fair market value of such Plan's assets.

     SECTION 4.8 FEDERAL  RESERVE  REGULATIONS.  Neither of the Borrowers and no
Subsidiary is engaged  principally or as one of its important  activities in the
business of extending  credit for the purpose of purchasing  or carrying  margin
stock (as defined in  Regulation U of the Board).  The value of all margin stock
owned by either of the Borrowers does not constitute  more than 25% of the value
of the assets of that Borrower.

     SECTION 4.9 TITLE TO PROPERTY;  LEASES; LIENS;  SUBORDINATION.  Each of the
Borrowers and each of their  Subsidiaries  has (a) good and marketable  title to
its real properties and (b) good and sufficient  title to, or valid,  subsisting
and enforceable leasehold interest in, its other material properties,  including
all real  properties  (other  than  property  disposed of since the date of such
financial  statements  in  the  ordinary  course  of  business).  None  of  such
properties is subject to a Lien,  except as allowed under SECTION 6.12.  Neither
of the Borrowers and no Subsidiary  has  subordinated  any of their rights under
any obligation owing to them to the rights of any other person.

     SECTION 4.10 TAXES.  The  Borrowers and their  Subsidiaries  have filed all
federal,  state and local tax returns  required to be filed and has paid or made
provision for the payment of all taxes due and payable  pursuant to such returns

                                      -39-
<PAGE>
and pursuant to any  assessments  made against it or any of its property and all
other taxes,  fees and other charges imposed on it or any of its property by any
governmental authority (other than taxes, fees or charges the amount or validity
of which is currently being  contested in good faith by appropriate  proceedings
and with respect to which reserves in accordance with GAAP have been provided on
the books of the Borrowers).  The charges, accruals and reserves on the books of
the  Borrowers in respect of taxes and other  governmental  charges are adequate
and the  Borrowers  know of no  proposed  material  tax  assessment  against the
Borrowers, any Subsidiary or any of their assets or of any basis therefor.

     SECTION 4.11  TRADEMARKS,  PATENTS.  The Borrowers  and their  Subsidiaries
possess or have the right to use all of the  patents,  trademarks,  trade names,
service marks and copyrights,  and  applications  therefor,  and all technology,
know-how, processes, methods and designs used in or necessary for the conduct of
their business, without known conflict with the rights of others.

     SECTION  4.12  BURDENSOME  RESTRICTIONS.  Neither of the  Borrowers  and no
Subsidiary  is a party to or otherwise  bound by any  indenture,  loan or credit
agreement  or any lease or other  agreement  or  instrument  or  subject  to any
charter,  corporate or partnership  restriction  which would  foreseeably have a
material  adverse  effect on the  business,  properties,  assets,  operations or
condition  (financial or otherwise) of the Borrowers and the Subsidiaries  taken
as a whole or on the ability of the Borrowers and the  Subsidiaries to carry out
their obligations under any Loan Document.

     SECTION  4.13 FORCE  MAJEURE.  Since the date of the most recent  financial
statement referred to in SECTION 4.5, the business,  properties and other assets
of the Borrowers and the  Subsidiaries  have not been  materially  and adversely
affected  in any way as the  result  of any  fire  or  other  casualty,  strike,
lockout, or other labor trouble, embargo, sabotage, confiscation,  condemnation,
riot, civil disturbance, activity of armed forces or act of God.

     SECTION  4.14  INVESTMENT  COMPANY  ACT.  Neither of the  Borrowers  and no
Subsidiary is an "investment company" or a company "controlled" by an investment
company within the meaning of the Investment Company Act of 1940, as amended.

     SECTION 4.15 PUBLIC UTILITY HOLDING  COMPANY ACT.  Neither of the Borrowers
and no Subsidiary is a "holding company" or a "subsidiary  company" of a holding
company or an "affiliate" of a holding  company or of a subsidiary  company of a
holding  company within the meaning of the Public Utility Holding Company Act of
1935, as amended.

     SECTION 4.16 RETIREMENT BENEFITS. Except as required under SECTION 4980B of
the Code, SECTION 601 of ERISA or applicable state law, neither of the Borrowers
and no Subsidiary is obligated to provide  post-retirement  medical or insurance
benefits with respect to employees or former employees.

                                      -40-
<PAGE>
     SECTION 4.17 SUBSIDIARIES.  Schedule 4.17 sets forth as of the date of this
Agreement a list of all Subsidiaries and the number and percentage of the shares
of each class of capital stock owned  beneficially or of record by the Borrowers
or any  Subsidiary  therein,  and  the  jurisdiction  of  incorporation  of each
Subsidiary.

     SECTION 4.18 FUND  AGREEMENTS.  Schedule  4.18 sets forth as of the date of
this agreement,  a list of all Funds for which PII acts as investment adviser or
PSI acts as principal distributor,  a list of all related Fund Agreements, and a
list of all issuers of  Collateralized  Loan  Obligations for which PII manages,
services  and advises the issuer with respect to the pool of  commercial  loans,
high-yield bonds and emerging market  obligations  securing or otherwise backing
such Collateralized Loan Obligations.  All Fund Agreements are in full force and
effect.

     SECTION  4.19  MILLENNIUM  COMPLIANCE.  The  Borrowers  have  reviewed  and
assessed  their  business  operations  and computer  systems with respect to the
"year 2000 problem" (that is, that computer  applications  and equipment used by
the Borrowers,  directly or indirectly through third parties, may not be able to
properly perform  date-sensitive  functions before,  during and after January 1,
2000) and, based on that review and assessment,  the Borrowers have no reason to
believe that the year 2000 problem will result in a material  adverse  change on
the business, condition (financial or otherwise), operations or prospects of the
Borrowers and their  Subsidiaries taken as a whole, or on the Borrowers' ability
to repay the Banks.

     SECTION 4.20 SOLVENCY.  As of the Closing Date,  after giving effect to the
Acquisition (NACM) and the making of the Term Loans A and any Revolving Loans to
be made on  such  date,  the  Borrowers  and  their  Subsidiaries  have  capital
sufficient to carry on their  business and  transactions  and all businesses and
transactions  in which they are about to engage and are  solvent and able to pay
their  debts as they  mature,  and the  Borrowers  and  their  Subsidiaries  own
property the fair saleable  value of which (on a going concern basis) is greater
than the amount required to pay their  Indebtedness.  No transfer of property is
being  made  and no  Indebtedness  is  being  incurred  in  connection  with the
transactions  contemplated by this Agreement or the Acquisition  (NACM) with the
intent to hinder,  delay or defraud either present or future creditors of either
Borrower, any Subsidiary or any Affiliate.

     SECTION 4.21 FULL DISCLOSURE.  Subject to the following  sentence,  neither
the financial  statements  referred to in SECTION 4.5 nor any other certificate,
written statement,  exhibit or report furnished by or on behalf of the Borrowers
in connection with or pursuant to this Agreement  contains any untrue  statement
of a material  fact or omits to state any  material  fact  necessary in order to
make the statements contained therein not misleading. Certificates or statements
furnished  by or  on  behalf  of  the  Borrowers  to  the  Banks  consisting  of
projections  or forecasts of future results or events have been prepared in good
faith and based on good faith estimates and assumptions of the management of the
Borrowers,  and the Borrowers have no reason to believe that such projections or
forecasts are not reasonable.

                                      -41-
<PAGE>
                                    ARTICLE V

                              AFFIRMATIVE COVENANTS

     Until any  obligation  of the  Banks  hereunder  to make the Term  Loans A,
Revolving  Loans and of the Swing Line Lender to make the Swing Line Loans shall
have expired or been  terminated and the Notes and all of the other  Obligations
have been paid in full,  unless the Majority  Banks shall  otherwise  consent in
writing:

     SECTION 5.1 FINANCIAL STATEMENTS AND REPORTS. The Borrowers will furnish to
the Banks:

          5.1(a) As soon as  available  and in any event within (90) ninety days
     after  the  end of each  fiscal  year of the  Borrowers,  the  consolidated
     financial   statements  of  each  of  the  Borrowers  and  its   respective
     Subsidiaries  consisting of at least  statements  of income,  cash flow and
     changes in stockholders' equity, and a consolidated balance sheet as at the
     end  of  such  year,  setting  forth  in  each  case  in  comparative  form
     corresponding  figures from the previous  annual audit,  certified  without
     qualification  by KPMG Peat Marwick or other  independent  certified public
     accountants of recognized  national  standing selected by the Borrowers and
     acceptable to the Agent,  together with any management letters,  management
     reports or other supplementary written comments or reports to the Borrowers
     or their boards of directors furnished by such accountants.

          5.1(b) Together with the audited financial  statements  required under
     SECTION 5.1(a), a statement by the accounting firm performing such audit to
     the effect that it has reviewed  this  Agreement  and that in the course of
     performing its examination  nothing came to its attention that caused it to
     believe that any Default or Event of Default exists, or, if such Default or
     Event of Default exists, describing its nature.

          5.1(c) As soon as available  and in any event  within (45)  forty-five
     days after the end of each March, June, September and December,  and thirty
     days after the end of each other month, unaudited  consolidated  statements
     of income,  cash flow and changes in  stockholders'  equity for each of the
     Borrowers and its respective Subsidiaries for such month and for the period
     from the  beginning  of such fiscal  year to the end of such  month,  and a
     consolidated  balance  sheet of each of the Borrowers as at the end of such
     month,  setting  forth in  comparative  form figures for the  corresponding
     period for the preceding fiscal year,  accompanied by a certificate  signed
     by the chief financial  officers of each of the Borrowers stating that such
     financial   statements  present  fairly  the  financial  condition  of  the
     Borrowers  and the  Subsidiaries  and that the same have been  prepared  in
     accordance with GAAP.

                                      -42-
<PAGE>
          5.1(d) Together with the unaudited financial statements required under
     SECTION 5.1(c), (i) a compliance  certificate signed by the chief financial
     officers  of each  of the  Borrowers  demonstrating  in  reasonable  detail
     compliance (or noncompliance, as the case may be) with Sections 6.10(h) and
     6.13  through  6.17 as at the end of such month and stating  that as at the
     end of such month  there did not exist any  Default or Event of Default or,
     if such  Default or Event of  Default  existed,  specifying  the nature and
     period of existence  thereof and what action the Borrower  proposes to take
     with respect thereto,  (ii) a report on the Net Asset Value of all Advisory
     Funds,  and  (iii)  a  report  on  all   Collateralized   Loan  Obligations
     outstanding, in form acceptable to the Agent, signed by the chief financial
     officers of each of the Borrowers.

          5.1(e) As soon as practicable  and in any event prior to the beginning
     of each fiscal year of the Borrowers,  statements of forecasted  income and
     cash flow for the  Borrowers  and the  Subsidiaries  for each month in such
     fiscal year and a forecasted  consolidated  balance  sheet of the Borrowers
     and the Subsidiaries,  together with supporting assumptions,  as at the end
     of each month,  all in reasonable  detail and  reasonably  satisfactory  in
     scope to the Agent.

          5.1(f)  Immediately  upon  any  officer  of  either  of the  Borrowers
     becoming aware of any Default or Event of Default,  a notice describing the
     nature thereof and what action such Borrower  proposes to take with respect
     thereto.

          5.1(g) Immediately upon any officer of the Borrowers becoming aware of
     the  occurrence,  with respect to any Plan, of any Reportable  Event or any
     Prohibited  Transaction,  a notice  specifying  the nature thereof and what
     action the  Borrower  proposes  to take with  respect  thereto,  and,  when
     received,  copies of any notice from PBGC of intention to terminate or have
     a trustee appointed for any Plan.

          5.1(h)  Promptly  upon the  mailing or filing  thereof,  copies of all
     financial   statements,   reports  and  proxy  statements   mailed  to  the
     shareholders  of  PACC  or  any  Fund,  and  copies  of  all   registration
     statements,  periodic reports and other documents filed with the Securities
     and  Exchange  Commission  (or  any  successor  thereto)  or  any  national
     securities exchange.

          5.1(i) Immediately upon any officer of the Borrowers becoming aware of
     (a) any action by the  Borrowers,  any  Subsidiary  or any Fund to make any
     modification  to,  waive  any  provision  of,  or fail to  renew  any  Fund
     Agreement,  or (b) any  action  by the  Borrowers,  any  Subsidiary  or any
     issuer,  trustee or holders of any Collateralized  Loan Obligations to make
     any  modification  to,  waive  any  provision  of, or fail to renew any CLO
     Investment  or Permitted  Advisory  Subsidiary  Agreement  relating to such
     Collateralized Loan Obligations, to the extent such modification, waiver or
     non-renewal  would  have  an  adverse  effect on the amount of compensation

                                      -43-
<PAGE>
     payable to the Borrowers or any Subsidiary by any Fund or the issuer of any
     Collateralized Loan Obligations,  or on the value of any CLO Investment, in
     an amount exceeding $250,000,  a notice describing the same and what action
     the Borrowers propose to take with respect thereto.

          5.1(j)  From  time to  time,  such  other  information  regarding  the
     business,   operation  and  financial  condition  of  the  Borrowers,   the
     Subsidiaries, the Funds and the Collateralized Loan Obligations as any Bank
     may reasonably request.

     SECTION 5.2 CORPORATE  EXISTENCE.  The Borrowers will  maintain,  and cause
their Subsidiaries to maintain, their corporate existence in good standing under
the  laws  of  their  respective   jurisdictions  of  incorporation   and  their
qualification  to transact  business in each  jurisdiction  where  failure so to
qualify would  permanently  preclude either Borrower or any such Subsidiary from
enforcing  its rights with respect to any material  asset or would expose either
Borrower or any such Subsidiary to any material  liability;  provided,  however,
that nothing  herein shall  prohibit the merger or liquidation of any Subsidiary
allowed under SECTION 6.1.

     SECTION 5.3 INSURANCE.  The Borrowers shall maintain, and shall cause their
Subsidiaries  to  maintain,  with  financially  sound  and  reputable  insurance
companies such  insurance as may be required by law and such other  insurance in
such  amounts and against  such hazards as is customary in the case of reputable
firms engaged in the same or similar business and similarly situated.

     SECTION 5.4  PAYMENT OF TAXES AND CLAIMS.  The  Borrowers  shall file,  and
cause their Subsidiaries to file, all tax returns and reports which are required
by law to be filed by them and will pay,  and cause their  Subsidiaries  to pay,
before they become  delinquent all taxes,  assessments and governmental  charges
and levies imposed upon it or its property and all claims or demands of any kind
(including  but  not  limited  to  those  of  suppliers,   mechanics,  carriers,
warehouses,  landlords and other like Persons) which, if unpaid, might result in
the creation of a Lien upon its property; provided that the foregoing items need
not  be  paid  if  they  are  being  contested  in  good  faith  by  appropriate
proceedings,  and as  long  as the  Borrowers'  or  Subsidiaries'  title  to its
property is not materially adversely affected, their use of such property in the
ordinary  course of its business is not materially  interfered with and adequate
reserves  with  respect  thereto have been set aside on the  Borrowers'  or such
Subsidiary's books in accordance with GAAP.

     SECTION 5.5 INSPECTION. The Borrowers shall permit any Person designated by
the  Agent or any Bank to visit and  inspect  any of the  properties,  corporate
books and financial  records of the Borrowers and the  Subsidiaries,  to examine
and to make copies of the books of accounts and other  financial  records of the
Borrowers  and the  Subsidiaries,  and to  discuss  the  affairs,  finances  and
accounts of the Borrowers and the Subsidiaries with, and to be advised as to the
same  by,  its officers at  such reasonable  times and intervals as the Agent or

                                      -44-
<PAGE>
such Bank may designate.  So long as no Event of Default exists, the expenses of
the Agent or any Bank for such visits,  inspections and examinations shall be at
the  expense  of the Agent or the Bank,  but any such  visits,  inspections  and
examinations  made  while any Event of  Default  is  continuing  shall be at the
expense of the Borrowers.

     SECTION 5.6  MAINTENANCE  OF PROPERTIES.  The Borrowers will maintain,  and
cause their  Subsidiaries  to maintain,  their  properties used or useful in the
conduct of its  business  in good  condition,  repair  and  working  order,  and
supplied with all necessary equipment, and make all necessary repairs, renewals,
replacements,  betterments and improvements  thereto, all as may be necessary so
that the  business  carried  on in  connection  therewith  may be  properly  and
advantageously conducted at all times.

     SECTION 5.7 BOOKS AND  RECORDS.  The  Borrowers  will keep,  and will cause
their Subsidiaries to keep,  adequate and proper records and books of account in
which full and correct  entries  will be made of their  dealings,  business  and
affairs.

     SECTION 5.8  COMPLIANCE.  The Borrowers  will comply,  and will cause their
Subsidiaries  to  comply,  in  all  material  respects  with  all  laws,  rules,
regulations,  orders, writs, judgments,  injunctions, decrees or awards to which
they may be subject; provided, however, that failure so to comply shall not be a
breach of this  covenant if such  failure  does not have,  or is not  reasonably
expected to have,  a  materially  adverse  effect on the  properties,  business,
prospects  or  condition  (financial  or  otherwise)  of  the  Borrowers  or the
Subsidiaries  and the Borrowers or the Subsidiaries are acting in good faith and
with reasonable dispatch to cure such noncompliance.

     SECTION 5.9 NOTICE OF  LITIGATION.  The Borrowers  will give prompt written
notice to the Agent of the commencement of any action, suit or proceeding before
any court or arbitrator or any governmental  department,  board, agency or other
instrumentality affecting the Borrowers or their Subsidiaries or any property of
the  Borrowers  or  their  Subsidiaries  or to  which  either  Borrower  or  any
Subsidiary is a party in which an adverse  determination  or result could have a
material  adverse  effect on the  business,  operations,  property or  condition
(financial or otherwise) of the Borrowers and the Subsidiaries  taken as a whole
or on the  ability  of the  Borrowers  and the  Subsidiaries  to  perform  their
obligations  under the Loan  Documents,  stating  the  nature and status of such
action, suit or proceeding.

     SECTION  5.10  ERISA.   The  Borrowers  will  maintain,   and  cause  their
Subsidiaries to maintain,  each Plan in compliance with all material  applicable
requirements  of ERISA  and of the Code and  with  all  applicable  rulings  and
regulations  issued under the  provisions  of ERISA and of the Code and will not
and not permit any of the ERISA  Affiliates to (a) engage in any  transaction in
connection  with which the  Borrowers  or any of the ERISA  Affiliates  would be
subject to either a civil penalty  assessed  pursuant to SECTION 502(i) of ERISA
or a tax  imposed  by  SECTION  4975 of the Code,  in  either  case in an amount
exceeding $50,000,  (b) fail to make full payment when due of all amounts which,

                                      -45-
<PAGE>
under the  provisions  of any Plan,  the  Borrowers  or any ERISA  Affiliate  is
required to pay as  contributions  thereto,  or permit to exist any  accumulated
funding  deficiency (as such term is defined in SECTION 302 of ERISA and Section
412 of the  Code),  whether  or not  waived,  with  respect  to any  Plan  in an
aggregate  amount  exceeding  $50,000  or (c)  fail to make any  payments  in an
aggregate amount exceeding $50,000 to any Multiemployer  Plan that the Borrowers
or any of the ERISA  Affiliates  may be  required  to make  under any  agreement
relating to such Multiemployer Plan or any law pertaining thereto.

     SECTION 5.11 FUND  AGREEMENTS.  Subject to its  fiduciary  obligations  and
except as may  otherwise be required by law, the  Borrowers  will use their best
efforts to (a) cause each Fund for which a Subsidiary acts as investment advisor
or principal  distributor  to continue such  Subsidiary in such capacity and (b)
except in the ordinary  course of business and consistent  with past  practices,
not to reduce the  compensation  payable to such  Subsidiary for its services to
such Fund in any material respect.

     SECTION 5.12 ADVISORY SUBSIDIARIES. The Borrowers will cause PII, on and at
all times after the Closing Date, and any Advisory Subsidiary acquired hereafter
as a result of an  Investment  permitted  under SECTION  6.10(h),  on and at all
times after the  Business Day  following  such  acquisition,  to comply with the
following requirements:

          (a) not have any (i)  business  other than (A) the business of serving
     as investment adviser for Advisory Funds pursuant to Advisory Contracts and
     receiving  payments   thereunder,   and  (B)  the  business  of  performing
     collateral  management,  servicing  and advisory  duties for the issuers of
     Collateralized  Loan  Obligations  and receiving  payments  therefor,  (ii)
     assets other than Advisory  Contracts,  CLO  Management  Contracts,  assets
     necessary to the performance by such Advisory Subsidiary of its obligations
     under such Advisory  Contracts and CLO  Investments,  or (iii)  liabilities
     other than  liabilities  under  agreements  permitted  pursuant  to Section
     5.12(b);

          (b) not  enter  into any  agreements  or other  arrangements  with any
     Affiliate or any unaffiliated Person, other than (y) Advisory Contracts and
     CLO  Management  Contracts  and  (z)  other  agreements  necessary  to  the
     performance by such Advisory Subsidiary of its obligations under agreements
     described  in  clause  (y) above  (collectively,  the  "Permitted  Advisory
     Subsidiary  Agreements");  provided that such  agreements  are entered into
     upon  fair  and  reasonable  terms  no  less  favorable  to  such  Advisory
     Subsidiary  than would obtain in a comparable  arm's-length  available to a
     Person unaffiliated with the Borrowers;

          (c)  distribute  (by dividend or otherwise)  all of its revenue,  less
     actual  expenses  incurred in performing its  obligations  under  Permitted
     Advisory Subsidiary Agreements,  and subject to any restrictions applicable
     under the Delaware General  Corporation Act or other  applicable  corporate

                                      -46-
<PAGE>
     statute,  or the  Investment  Advisers Act or any state law  applicable  to
     investment  advisers,  to PGI by means of a deposit  into an account of PGI
     with the Agent;

          (d) be incorporated under the Delaware General Corporation Act;

          (e)  conduct  its  business  solely in its own name  through  its duly
     authorized  officers  or  agents  so as not  to  mislead  others  as to the
     identity of the Person with which those others are  concerned,  and use its
     best efforts to avoid the  appearance of  conducting  business on behalf of
     the  Borrowers or any other  Subsidiary or Affiliate of the  Borrowers,  or
     that the  assets  of such  Advisory  Subsidiary  are  available  to pay the
     creditors of the Borrowers or any  Subsidiary or Affiliate of the Borrowers
     (without  limiting the  generality of the  foregoing,  all oral and written
     communications,  including, without limitation, letters, invoices, purchase
     orders,  contracts and  statements  will be made solely in the name of such
     Advisory Subsidiary);

          (f)  maintain  corporate  records and books of account  separate  from
     those of the Borrowers and any Subsidiary or Affiliate of the Borrowers;

          (g) obtain  proper  authorization  from its board of  directors of all
     corporate action requiring such authorization;

          (h) obtain proper  authorization from its shareholder of all corporate
     action requiring shareholder approval;

          (i) pay its operating expenses and liabilities from its own funds;

          (j)  disclose  in its  annual and  interim  financial  statements  the
     effects of such  Advisory  Subsidiary's  transactions  in  accordance  with
     generally accepted accounting principles; and

          (k) keep its assets and its liabilities  wholly separate from those of
     all other  Persons,  including,  but not limited to, the  Borrowers and any
     other Subsidiaries or Affiliates of the Borrowers.

     SECTION 5.13 FURTHER  ASSURANCES.  The Borrowers will, and will cause their
Subsidiaries  to, promptly correct any defect or error that may be discovered in
any Loan Document or in the execution,  acknowledgment  or recordation  thereof.
Promptly upon request by the Agent or the Majority  Banks,  the  Borrowers  also
will, and will cause their Subsidiaries to, do, execute,  acknowledge,  deliver,
record,  re-record,  file,  re-file,  register  and  re-register,  any  and  all
assignments,  estoppel  certificates,  financing  statements  and  continuations
thereof, notices of assignment,  transfers,  certificates,  assurances and other
instruments as the Agent or the Majority Banks may reasonable  require from time

                                      -47-
<PAGE>
to time in order:  (a) to carry out more  effectively  the  purposes of the Loan
Documents; (b) to perfect and maintain the validity,  effectiveness and priority
of any Liens  intended  to be created by the Loan  Documents;  and (c) to better
assure, convey, grant, assign, transfer,  preserve, protect and confirm unto the
Agent or the Banks the rights granted now or hereafter intended to be granted to
the Agent or the Banks  under any Loan  Document  or under any other  instrument
executed in  connection  with any Loan  Document or that the  Borrowers or their
Subsidiaries  may be or become bound to convey,  mortgage or assign to the Agent
or the Banks in order to carry out the intention or facilitate  the  performance
of the provisions of any Loan Document.  The Borrowers will furnish to the Agent
evidence  satisfactory  to  the  Agent  of  every  such  recording,   filing  or
registration.

                                   ARTICLE VI

                               NEGATIVE COVENANTS

     Until any  obligation  of the Banks  hereunder  to make  Loans  shall  have
expired or been terminated and the Notes and all of the other  Obligations  have
been paid in full, unless the Majority Banks shall otherwise consent in writing:

     SECTION 6.1 MERGER.  The Borrowers  will not merge or  consolidate or enter
into any analogous  reorganization  or transaction with any Person or liquidate,
wind up or dissolve  itself (or suffer any liquidation or dissolution) or permit
any Subsidiary to do any of the foregoing;  PROVIDED, HOWEVER, any Subsidiary of
PGI, other than an Advisory  Subsidiary,  may be merged with or liquidated  into
any wholly-owned  Subsidiary (if such  wholly-owned  Subsidiary is the surviving
corporation)  of PGI, and any Subsidiary of PACC that is not PGI or a Subsidiary
of PGI may be merged with or liquidated into any other  wholly-owned  Subsidiary
of PACC that is not PGI or a Subsidiary of PGI (if such wholly-owned  Subsidiary
is the surviving corporation).

     SECTION 6.2  DISPOSITION  OF ASSETS.  The Borrowers  will not, and will not
permit any of their  Subsidiaries  to,  directly or  indirectly,  sell,  assign,
lease, convey, transfer or otherwise dispose of (whether in one transaction or a
series of transactions) any property  (including  accounts and notes receivable,
with  or  without  recourse)  or  enter  into  any  agreement  to do  any of the
foregoing, except:

          6.2(a) sales of Fund shares and  Collateralized  Loan  Obligations (i)
     underwritten  by any  Subsidiary  of the  Borrower  or  (ii) in  which  the
     Borrowers or any  Subsidiary of a Borrower  makes an  Investment  permitted
     under  SECTION  6.10(i)  or  SECTION  6.10(j),  in the  ordinary  course of
     business;

          6.2(b)  sales  of  rights  to  receive  12b-1  Fees  and  the  related
     Contingent  Deferred  Sales Charges,  provided that,  both before and after
     giving effect  thereto,  no Default or Event of Default would have occurred
     and be continuing;

                                      -48-
<PAGE>
          6.2(c) the sale of equipment to the extent that (i) such  equipment is
     no longer  useful in such  Borrower's  or  Subsidiary's  business,  (ii) is
     exchanged  for credit  against the  purchase  price of similar  replacement
     equipment,  or (iii) the proceeds of such sale are applied with  reasonable
     promptness to the purchase price of similar replacement equipment;

          6.2(d)  the  resale  of  mortgage  related  assets  reacquired  by the
     Borrowers  or  their  Subsidiaries  pursuant  to the  terms  of  agreements
     relating to the sale of such mortgage  related assets  existing on the date
     hereof; and

          6.2(e)  the sale of not more than two CLO  Investments,  provided  the
     aggregate book value thereof does not exceed $9,000,000.

     SECTION 6.3 PLANS. The Borrowers will not permit,  and will not allow their
Subsidiaries  to permit,  any event to occur or  condition  to exist which would
permit any Plan to terminate under any circumstances  which would cause the Lien
provided for in SECTION  4068 of ERISA to attach to any assets of the  Borrowers
or any  Subsidiary;  and the  Borrower  will not  permit,  as of the most recent
valuation  date for any Plan  subject to Title IV of ERISA,  the  present  value
(determined on the basis of reasonable  assumptions  employed by the independent
actuary for such Plan and previously  furnished in writing to the Agent) of such
Plan's  projected  benefit  obligations  to exceed the fair market value of such
Plan's assets.

     SECTION 6.4 CHANGE IN NATURE OF BUSINESS.  The  Borrowers  will not (a) own
any assets other than the stock of their  Subsidiaries,  Cash  Balances and Cash
Equivalents held through the Agent or its Affiliates,  the trademarks subject to
the  Trademark  Assignment,  and fixed assets or personal  property  used in the
business  of the  Borrowers  and their  Subsidiaries,  (b) will not  permit  any
Advisory  Subsidiaries  to take any action that would cause,  or authorize,  any
violation of SECTION  5.12,  and (c) will not permit any  Subsidiary to make any
material  change in the nature of the business of such  Subsidiary as carried on
at the date hereof or, if later, the date such Subsidiary is acquired.

     SECTION 6.5 SUBSIDIARIES.  After the date of this Agreement,  the Borrowers
will not,  and will not  permit  their  Subsidiaries  to,  form or  acquire  any
corporation  which would thereby  become a Subsidiary,  except for  Subsidiaries
acquired as a result of Investments permitted pursuant to SECTION 6.10(h).

     SECTION 6.6 NEGATIVE PLEDGES;  SUBSIDIARY RESTRICTIONS.  The Borrowers will
not, and will not permit their Subsidiaries to, enter into any agreement,  bond,
note or other  instrument  with or for the benefit of any Person  other than the
Banks which would (i) prohibit the Borrowers or any Subsidiary from granting, or
otherwise  limit the ability of the Borrowers or any Subsidiary to grant, to the
Banks any Lien on any assets or properties  of the Borrowers or any  Subsidiary,
or (ii)  require the  Borrowers or any  Subsidiary  to grant a Lien to any other
Person if  the Borrowers  or any  Subsidiary  grants any  Lien to the Agent. The

                                      -49-
<PAGE>
Borrowers  will not permit  any  Subsidiary  to place or allow any  restriction,
directly or indirectly,  on the ability of such  Subsidiary to (a) pay dividends
or any  distributions on or with respect to such  Subsidiary's  capital stock or
(b) make loans or other cash payments to the Borrowers.

     SECTION 6.7 RESTRICTED  PAYMENTS.  The Borrowers  will not make  Restricted
Payments,  other  than  (a)  Restricted  Payments  in an  amount  not to  exceed
$20,000,000 in the aggregate, and (b) additional Restricted Payments if the Cash
Flow  Leverage  Ratio as of the last day of the most recently  completed  fiscal
quarter,  adjusted to account  for any  Indebtedness  incurred  to finance  such
Restricted  Payment (if it had been  outstanding on such date),  is less than or
equal to 2.0:1.

     SECTION 6.8 TRANSACTIONS WITH AFFILIATES.  The Borrowers will not, and will
not permit their  Subsidiaries to, enter into any transaction with any Affiliate
of the Borrowers, except upon fair and reasonable terms no less favorable to the
Borrowers or such  Subsidiaries  than would obtain in a comparable  arm's-length
transaction with a Person not an Affiliate.

     SECTION 6.9 ACCOUNTING CHANGES. The Borrowers will not, and will not permit
their  Subsidiaries to, make any significant  change in accounting  treatment or
reporting practices, except as required by GAAP, or change their fiscal year.

     SECTION 6.10 INVESTMENTS. The Borrowers will not, and will not permit their
Subsidiaries to, acquire for value, make, have or hold any Investments, except:


          6.10(a) Investments existing on the date of this Agreement.

          6.10(b)  Travel and  relocation  advances to management  personnel and
     employees in the ordinary course of business.

          6.10(c) Investments by the Borrowers in readily marketable obligations
     issued or  guaranteed  by the  United  States  or any  agency  thereof  and
     supported by the full faith and credit of the United States.

          6.10(d)  Investments  by the Borrowers in  certificates  of deposit or
     bankers'  acceptances  issued  by the Agent or any  other  commercial  bank
     organized  under the laws of the United  States or any State  thereof which
     has (i) combined capital and surplus of at least  $100,000,000,  and (ii) a
     credit rating with respect to its unsecured  indebtedness from a nationally
     recognized rating service that is satisfactory to the Agent.

                                      -50-
<PAGE>
          6.10(e)  Investments  by the Borrowers in  commercial  paper given the
     highest rating by a nationally recognized rating service.

          6.10(f) Investments by the Borrowers in repurchase agreements relating
     to  securities  issued or  guaranteed  as to principal  and interest by the
     United States of America.

          6.10(g)  Investments  by the  Borrowers  in other  readily  marketable
     Investments  in debt  securities  which are  reasonably  acceptable  to the
     Agent.

          6.10(h) Other  Investments by PGI consisting of the acquisition of all
     or substantially all of the capital stock of, or assets of, Persons engaged
     in  the  business  of  serving  as  investment  advisors  to  or  principal
     distributors  for Funds,  provided (i) the aggregate Net Asset Value of all
     Funds with respect to which any Subsidiary becomes the investment  advisor,
     or the  investment  advisor  becomes a Subsidiary,  as a result of all such
     Investments does not exceed $500,000,000,  (ii) the aggregate consideration
     paid for any such  Investment  does not exceed five percent (5%) of the Net
     Asset Value of all Funds with respect to which any  Subsidiary  becomes the
     investment  advisor,  or the investment advisor becomes a Subsidiary,  as a
     result  of such  Investments,  and  (iii)  in the  case  of any  Investment
     resulting in the  acquisition  of new  Subsidiary,  such  Subsidiary  is or
     becomes a wholly-owned  Subsidiary and executes and delivers to the Agent a
     Security  Agreement and, if such  Subsidiary is an Advisory  Subsidiary,  a
     Guaranty simultaneously with such Investment.

          6.10(i)  Investments in Advisory Funds, or any similar investment in a
     management  investment  pool that is not a Fund but that is  managed  by an
     Advisory Subsidiary.

          6.10(j)  Investments  by  Advisory  Subsidiaries  in  CLO  Investments
     (including,   without   limitation,   Investments  in  Collateralized  Loan
     Obligations).

Any Investments  under clauses (c), (d), (e) or (f) above must mature within one
year of the acquisition thereof by the Borrowers.

     SECTION  6.11  INDEBTEDNESS.  The  Borrowers  will not, and will not permit
their  Subsidiaries  to,  incur,  create,  issue,  assume or suffer to exist any
Indebtedness, except:

          6.11(a) The Obligations.

          6.11(b) Current liabilities,  other than for borrowed money,  incurred
     in the ordinary course of business.

                                      -51-
<PAGE>
          6.11(c)  Indebtedness secured by Liens permitted under SECTION 6.12(h)
     hereof in an amount not to exceed $1,000,000.

     SECTION  6.12 LIENS.  The  Borrowers  will not,  and will not permit  their
Subsidiaries  to,  create,  incur,  assume or suffer to exist any Lien, or enter
into, or make any commitment to enter into, any  arrangement for the acquisition
of  any  property  through  conditional  sale,  lease-purchase  or  other  title
retention  agreements,  with  respect  to any  property  now owned or  hereafter
acquired by either Borrower or a Subsidiary, except:

          6.12(a) Liens granted to the Banks.

          6.12(b)   Deposits   or   pledges  to  secure   payment  of   workers'
     compensation,  unemployment  insurance,  old age  pensions or other  social
     security obligations, in the ordinary course of business of either Borrower
     or a Subsidiary.

          6.12(c) Liens for taxes,  fees,  assessments and governmental  charges
     not delinquent or to the extent that payment therefor shall not at the time
     be required to be made in accordance with the provisions of SECTION 5.4.

          6.12(d) Liens of carriers,  warehousemen,  mechanics and  materialmen,
     and other like Liens arising in the ordinary  course of business,  for sums
     not due or to the extent  that  payment  therefor  shall not at the time be
     required to be made in accordance with the provisions of SECTION 5.4.

          6.12(e)  Liens  incurred  or  deposits  or  pledges  made or  given in
     connection with, or to secure payment of,  indemnity,  performance or other
     similar bonds.

          6.12(f) Liens arising  solely by virtue of any statutory or common law
     provision  relating to banker's liens,  rights of set-off or similar rights
     and  remedies  as to deposit  accounts  or other  funds  maintained  with a
     creditor depository institution;  PROVIDED THAT (i) such deposit account is
     not a dedicated cash  collateral  account and is not subject to restriction
     against  access by the  Borrowers  or a  Subsidiary  in excess of those set
     forth by  regulations  promulgated  by the  Board,  and (ii)  such  deposit
     account is not  intended  by the  Borrowers  or any  Subsidiary  to provide
     collateral to the depository institution.

          6.12(g) Encumbrances in the nature of zoning  restrictions,  easements
     and  rights  or  restrictions  of record  on the use of real  property  and
     landlord's  Liens  under  leases  on  the  premises  rented,  which  do not
     materially  detract  from the  value of such  property  or  impair  the use
     thereof in the business of the Borrowers or a Subsidiary.

                                      -52-
<PAGE>
          6.12(h) The interest of any lessor under any Capitalized Lease entered
     into after the Closing Date or purchase  money Liens on equipment  acquired
     after the  Closing  Date;  provided,  that,  (i) the  Indebtedness  secured
     thereby is otherwise  permitted by this  Agreement  and (ii) such Liens are
     limited to the equipment acquired and do not secure Indebtedness other than
     the related  Capitalized  Lease  Obligations  or the purchase price of such
     equipment.

          6.12(i)  Liens  in  favor  of  any  landlord  covering  any  leasehold
     improvements at the leased premises.

     SECTION 6.13 CONTINGENT  OBLIGATIONS.  The Borrowers will not, and will not
permit their Subsidiaries to, be or become liable on any Contingent Obligations.

     SECTION 6.14 CASH FLOW LEVERAGE  RATIO.  The Borrowers  will not permit the
Cash  Flow  Leverage  Ratio  as of the  last day of any  fiscal  quarter  of the
Borrowers to be more than 3.0 to 1.0.

     SECTION 6.15 FIXED CHARGE COVERAGE RATIO. The Borrowers will not permit the
Fixed  Charge  Coverage  Ratio,  as of  the  last  day  of any  month,  for  the
Measurement Period ending on that date, to be less than 1.50 to 1.00.

     SECTION 6.16 MINIMUM FUND  BALANCES.  The Borrowers will not permit the sum
of the Net Asset  Values of all  Advisory  Funds at any time to be less than the
greater of (a) eighty-five  percent (85%) of the Net Asset Value of all Advisory
Funds at the Closing Date (after giving effect to the Acquisition (NACM)) or (b)
ninety  percent (90%) of the sum of such Net Asset Values at the end of the most
recently  completed  fiscal quarter (or, in the case of a measurement at the end
of any fiscal quarter, the preceding fiscal quarter).

     SECTION 6.17 EBITDA. The Borrower will not permit the EBITDA Margin, as the
last day of any month,  for the  Measurement  Period  ending on that date, to be
less than 25.0%.

     SECTION  6.18 LOAN  PROCEEDS.  The  Borrowers  will not use any part of the
proceeds  of  the  Loans  directly  or  indirectly,   and  whether  immediately,
incidentally or ultimately, (a) to purchase or carry margin stock (as defined in
Regulation  U of the  Board),  or to extend  credit to others for the purpose of
purchasing  or  carrying  margin  stock  or to  refund  Indebtedness  originally
incurred for such purpose or (b) for any purpose  which  entails a violation of,
or which is  inconsistent  with,  the  provisions  of  Regulations U or X of the
Board.

     SECTION 6.19 CORPORATE DOCUMENTS; CERTAIN MATERIAL CONTRACTS. The Borrowers
will not,  and will not permit any  Subsidiary  of the  Borrowers  to,  amend or
modify  any  of the  NACM  Acquisition  Documents  in any  way  that  materially
adversely affects the Banks.

                                      -53-
<PAGE>
                                   ARTICLE VII

                         EVENTS OF DEFAULT AND REMEDIES

     SECTION 7.1 EVENTS OF  DEFAULT.  The  occurrence  of any one or more of the
following events shall constitute an Event of Default:

          7.1(a)  The  Borrowers  shall  fail  to  make  when  due,  whether  by
     acceleration  or  otherwise,  any  payment of  principal  of or interest on
     either Note or any other Obligation required to be made to the Agent of any
     Bank or to the Swing Line Lender pursuant to this Agreement.

          7.1(b) Any  representation  or warranty made by or on behalf of either
     Borrower or any  Subsidiary in this Agreement or any other Loan Document or
     by or on behalf of either  Borrower or any  Subsidiary in any  certificate,
     statement,  report or document herewith or hereafter furnished to the Agent
     or any Bank  pursuant to this  Agreement or any other Loan  Document  shall
     prove to have been false or misleading in any material  respect on the date
     as of which the facts set forth are stated or certified.

          7.1(c) The Borrowers shall fail to comply with Sections 5.2, 5.3, 5.12
     or 5.13,  any SECTION of Article  VI, or the  Borrowers  or any  Subsidiary
     shall fail to comply  with  SECTION 4, 6, 8 or 13,  the first  sentence  of
     SECTION 7 or the second  sentence of SECTION 14 of the Security  Agreements
     to which it is a party.

          7.1(d) The Borrowers or any  Subsidiary  shall fail to comply with any
     other agreement,  covenant, condition,  provision or term contained in this
     Agreement  or any other Loan  Document  (other than those  hereinabove  set
     forth in this SECTION  7.1) and such  failure to comply shall  continue for
     thirty  calendar  days  after  whichever  of  the  following  dates  is the
     earliest:  (i) the date the  Borrowers  give notice of such  failure to the
     Banks, (ii) the date the Borrowers should have given notice of such failure
     to the Banks  pursuant  to SECTION  5.1, or (iii) the date the Agent or any
     Bank gives notice of such failure to the Borrowers.

          7.1(e) Either  Borrower or any  Subsidiary  shall become  insolvent or
     shall  generally not pay its debts as they mature or shall apply for, shall
     consent to, or shall acquiesce in the  appointment of a custodian,  trustee
     or receiver of such Borrower or Subsidiary or for a substantial part of the
     property  thereof  or,  in the  absence  of such  application,  consent  or
     acquiescence,  a  custodian,  trustee or receiver  shall be  appointed  for
     either  Borrower or a Subsidiary or for a substantial  part of the property
     thereof and shall not be discharged  within 45 days, or either  Borrower or
     any Subsidiary shall make an assignment for the benefit of creditors.

                                      -54-
<PAGE>
          7.1(f)  Any  bankruptcy,  reorganization,  debt  arrangement  or other
     proceedings  under any  bankruptcy or insolvency law shall be instituted by
     or against either  Borrower or any Subsidiary,  and, if instituted  against
     either  Borrower  or  any  Subsidiary,  shall  have  been  consented  to or
     acquiesced in by such Borrower or Subsidiary,  or shall remain  undismissed
     for 60 days,  or an order for relief shall have been  entered  against such
     Borrower or Subsidiary.

          7.1(g) Any  dissolution  or  liquidation  proceeding  not permitted by
     SECTION  6.1 shall be  instituted  by or  against  either  Borrower  or any
     Subsidiary  and, if instituted  against either  Borrower or any Subsidiary,
     shall be consented to or  acquiesced  in by such  Borrower or Subsidiary or
     shall remain for 45 days undismissed.

          7.1(h) A judgment or  judgments  for the payment of money in excess of
     the sum of  $500,000 in the  aggregate  shall be  rendered  against  either
     Borrower or any Subsidiary and either (i) the judgment creditor executes on
     such judgment or (ii) such judgment remains unpaid or undischarged for more
     than 60 days from the date of entry  thereof or such longer  period  during
     which execution of such judgment shall be stayed during an appeal from such
     judgment.

          7.1(i) The maturity of any material  Indebtedness  of either  Borrower
     (other than  Indebtedness  under this Agreement) or any Subsidiary shall be
     accelerated,  or either  Borrower or any  Subsidiary  shall fail to pay any
     such  material  Indebtedness  when due (after  the lapse of any  applicable
     grace period) or, in the case of such Indebtedness  payable on demand, when
     demanded  (after the lapse of any applicable  grace  period),  or any event
     shall occur or condition  shall exist and shall  continue for more than the
     period of grace,  if any,  applicable  thereto and shall have the effect of
     causing,  or permitting the holder of any such  Indebtedness or any trustee
     or other  Person  acting on behalf of such holder to cause,  such  material
     Indebtedness  to become due prior to its stated maturity or to realize upon
     any collateral  given as security  therefor.  For purposes of this Section,
     Indebtedness  of  either  Borrower  or  any  Subsidiary   shall  be  deemed
     "material" if it exceeds  $500,000 as to any item of Indebtedness or in the
     aggregate  for all items of  Indebtedness  with respect to which any of the
     events described in this SECTION 7.1(i) has occurred.

          7.1(j)  Any  execution  or  attachment  shall be  issued  whereby  any
     substantial  part of the property of either  Borrower or any  Subsidiary or
     any of the stock of either  Borrower  or any  Subsidiary  shall be taken or
     attempted  to be taken and the same  shall not have been  vacated or stayed
     within 30 days after the issuance thereof.

                                      -55-
<PAGE>
          7.1(k) Any Advisory  Subsidiary  shall  repudiate or purport to revoke
     its Guaranty or any Guaranty for any reason shall cease to be in full force
     and effect as to any Advisory  Subsidiary,  or shall be judicially declared
     null and void.

          7.1(l) Any Security  Document shall, at any time,  cease to be in full
     force and  effect or shall be  judicially  declared  null and void,  or the
     validity or enforceability thereof shall be contested by either Borrower or
     any  Subsidiary,  or the Agent  shall  cease to have a valid and  perfected
     security interest having the priority contemplated thereunder in all of the
     collateral described therein, other than by action or inaction of the Agent
     , the Banks or the Swing  Line  Lender  if (i) the  aggregate  value of the
     collateral affected by any of the foregoing exceeds $25,000 and (ii) any of
     the foregoing shall remain unremedied for ten days or more after receipt of
     notice thereof by the Borrowers from the Agent.

          7.1(m) The SEC shall have revoked,  or taken any action to revoke, the
     broker/dealer or investment adviser registration of any Subsidiary.

          7.1(n) PGI or any  Subsidiary  shall have  failed to meet the  minimum
     capital requirements  prescribed from time to time by Rule 15c3-1 under the
     Exchange Act and applicable to it.

          7.1(o) The SEC, the NASD or any other authority shall have modified or
     terminated,  or  proposed  to  modify or  terminate  Rule  12b-1  under the
     Investment  Company  Act or the Rules of Fair  Practice  in a manner  which
     could, in the judgment of the Majority Banks,  result in a material adverse
     effect  on  the  business,  operations,  properties,  assets  or  condition
     (financial or otherwise) of the Borrowers and the  Subsidiaries  taken as a
     whole.

          7.1(p) PSI or any other Subsidiary that is a broker/dealer shall cease
     to be a member in good standing of the NASD.

          7.1(q)  The SIPC  shall  have  applied  or shall  have  announced  its
     intention to apply for a decree  adjudicating  that customers of PGI or any
     Subsidiary are in need of protection under SIPA.

          7.1(r) Any Change of Control shall occur.

     SECTION 7.2  REMEDIES.  If (a) any Event of Default  described  in Sections
7.1(e),  (f),  (g) or (q) shall  occur  with  respect  to either  Borrower,  the
Revolving Commitment and Swing Line Commitment shall automatically terminate and
the Notes and all other Obligations shall  automatically  become immediately due
and payable;  or (b) any other Event of Default  shall occur and be  continuing,
then the Agent,  at the  direction  of the Majority  Banks,  may (i) declare the
Revolving  Commitments  terminated,  whereupon the Revolving  Commitments  shall

                                      -56-
<PAGE>
terminate  and (ii)  declare the  outstanding  unpaid  principal  balance of the
Notes, the accrued and unpaid interest  thereon and all other  Obligations to be
forthwith due and payable,  whereupon the Notes, all accrued and unpaid interest
thereon and all such Obligations  shall immediately  become due and payable,  in
each case without presentment,  demand, protest or other notice of any kind, all
of which are hereby expressly waived, anything in this Agreement or in the Notes
to the  contrary  notwithstanding.  Upon  the  occurrence  of any of the  events
described in clauses (a) or (b) of the preceding sentence the Agent may exercise
all rights and remedies under any of the Loan Documents,  and enforce all rights
and remedies under any applicable law.

     SECTION 7.3 OFFSET.  In addition to the  remedies set forth in SECTION 7.2,
upon the  occurrence  of any Event of Default and  thereafter  while the same be
continuing, the Borrowers hereby irrevocably authorizes each Bank to set off any
Obligations  against all deposits and credits of the Borrowers with, and any and
all claims of the Borrowers or any  Subsidiary  against,  such Bank.  Such right
shall  exist  whether or not such Bank shall have made any demand  hereunder  or
under any other  Loan  Document,  whether  or not the  Obligations,  or any part
thereof, or deposits and credits held for the account of the Borrowers or any of
their  Subsidiaries  is or are  matured  or  unmatured,  and  regardless  of the
existence or adequacy of any collateral,  guaranty or any other security,  right
or remedy  available  to the Bank.  Each Bank  agrees  that,  as  promptly as is
reasonably possible after the exercise of any such setoff right, it shall notify
the  Borrowers  and the Agent of its  exercise of such setoff  right;  provided,
however,  that the failure of any Bank to provide  such notice  shall not affect
the validity of the exercise of such setoff  rights.  Nothing in this  Agreement
shall be deemed a waiver or  prohibition  of or  restriction  on any Bank to all
rights of banker's Lien, setoff and counterclaim available pursuant to law.

                                  ARTICLE VIII

                                    THE AGENT

     The following  provisions  shall govern the  relationship of the Agent with
the Banks.

     SECTION  8.1  APPOINTMENT  AND   AUTHORIZATION.   Each  Bank  appoints  and
authorizes  the Agent to take such action as agent on its behalf and to exercise
such respective powers under the Loan Documents as are delegated to the Agent by
the terms  thereof,  together  with such  powers  as are  reasonably  incidental
thereto. Neither the Agent nor any of its directors, officers or employees shall
be  liable  for any  action  taken  or  omitted  to be  taken  by it under or in
connection  with the Loan  Documents,  except  for its own gross  negligence  or
willful  misconduct.  The  Agent  shall  act  as an  independent  contractor  in
performing its obligations as Agent hereunder and nothing herein contained shall
be deemed to create any fiduciary  relationship  among or between the Agent, the
Borrowers or the Banks.

                                      -57-
<PAGE>
     SECTION 8.2 NOTE HOLDERS.  The Agent may treat the payee of any Note as the
holder  thereof until written  notice of transfer shall have been filed with it,
signed by such payee and in form satisfactory to the Agent.

     SECTION 8.3  CONSULTATION  WITH  COUNSEL.  The Agent may consult with legal
counsel  selected by it and shall not be liable for any action taken or suffered
in good faith by it in accordance with the advice of such counsel.

     SECTION 8.4 LOAN DOCUMENTS.  The Agent shall not be under a duty to examine
or pass upon the  validity,  effectiveness,  genuineness  or value of any of the
Loan Documents or any other instrument or document  furnished  pursuant thereto,
and the Agent shall be entitled to assume that the same are valid, effective and
genuine and what they purport to be.

     SECTION 8.5 U.S. BANK AND  AFFILIATES.  With respect to its Commitments and
the Loans made by it, U.S.  Bank shall have the same rights and powers under the
Loan Documents as any other Bank and may exercise the same as though it were not
the Agent  consistent  with the terms thereof,  and U.S. Bank and its Affiliates
may accept  deposits  from,  lend money to and  generally  engage in any kind of
business with the Borrower as if it were not the Agent.

     SECTION 8.6 ACTION BY AGENT. Except as may otherwise be expressly stated in
this  Agreement,  the Agent shall be entitled to use its discretion with respect
to exercising or refraining from exercising any rights which may be vested in it
by, or with  respect to taking or  refraining  from taking any action or actions
which it may be able to take under or in respect  of,  the Loan  Documents.  The
Agent  shall be  required  to act or to refrain  from acting (and shall be fully
protected in so acting or refraining  from acting) upon the  instructions of the
Majority  Banks,  and such  instructions  shall be binding  upon all  holders of
Notes;  provided,  however,  that the Agent  shall not be  required  to take any
action which exposes the Agent to personal liability or which is contrary to the
Loan Documents or applicable law. The Agent shall incur no liability under or in
respect  of any of the  Loan  Documents  by  acting  upon any  notice,  consent,
certificate,  warranty or other paper or instrument believed by it to be genuine
or authentic or to be signed by the proper party or parties and to be consistent
with the terms of this Agreement.

     SECTION  8.7 CREDIT  ANALYSIS.  Each Bank has made,  and shall  continue to
make,  its  own  independent  investigation  or  evaluation  of the  operations,
business,  property and condition,  financial and otherwise, of the Borrowers in
connection  with entering into this  Agreement and has made its own appraisal of
the creditworthiness of the Borrowers. Except as explicitly provided herein, the
Agent has no duty or responsibility,  either initially or on a continuing basis,
to provide any Bank with any credit or other  information  with  respect to such
operations,  business,  property,  condition or  creditworthiness,  whether such
information comes into its possession on or before the first Event of Default or
at any time thereafter.

                                      -58-
<PAGE>
     SECTION 8.8  NOTICES OF EVENT OF DEFAULT,  ETC. In the event that the Agent
shall have  acquired  actual  knowledge of any Event of Default or Default,  the
Agent shall promptly give notice thereof to the Banks.

     SECTION 8.9  INDEMNIFICATION.  Each Bank agrees to indemnify the Agent,  as
Agent (to the extent not reimbursed by the Borrower),  ratably according to such
Bank's  Revolving   Commitment   Percentage,   from  and  against  any  and  all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses or disbursements of any kind or nature  whatsoever which may be
imposed on or incurred by the Agent in any way relating to or arising out of the
Loan  Documents  or any  action  taken or  omitted  by the Agent  under the Loan
Documents,  provided  that no Bank  shall  be  liable  for any  portion  of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements  resulting from the Agent's gross negligence or
willful misconduct.  No payment by any Bank under this SECTION shall relieve the
Borrower of any of its obligations under this Agreement.

     SECTION 8.10 PAYMENTS AND  COLLECTIONS.  All funds received by the Agent in
respect  of any  payments  made by the  Borrower  on the  Term  Notes  shall  be
distributed  forthwith by the Agent among the Banks,  in like currency and funds
as received,  ratably  according to each Bank's Term Loan Percentage.  All funds
received  by the Agent in respect of any  payments  made by the  Borrower on the
Revolving Notes, or Revolving Commitment Fees shall be distributed  forthwith by
the Agent  among the Banks,  in like  currency  and funds as  received,  ratably
according to each Bank's  Revolving  Percentage.  After any Event of Default has
occurred,  all funds received by the Agent,  whether as payments by the Borrower
or as  realization  on  Collateral  or on any  Guaranties,  shall (except as may
otherwise  be  required  by law) be  distributed  by the Agent in the  following
order: (a) first to the Agent or any Bank who has incurred unreimbursed costs of
collection with respect to any Obligations  hereunder,  ratably to the Agent and
each Bank in the  proportion  that the costs  incurred by the Agent or such Bank
bear to the total of all such costs  incurred  by the Agent and all  Banks;  (b)
next to the Swing Line  Lender in an amount not to exceed the  aggregate  amount
remaining to satisfy any  requirement  that the  Borrowers  make payments to the
Swing Line Lender for  application on the Swing Line Note, (c) next to the Agent
for the  account  of the  Banks  (in  accordance  with  their  respective  Total
Percentages) for application on the Notes; (d) next to the Agent for the account
of the Banks (in accordance with their respective Revolving Percentages) for any
unpaid Revolving Commitment Fees owing by the Borrowers hereunder; and (e) last,
any remaining  amounts to the Borrower or to such Person as a court of competent
jurisdiction may otherwise direct.

     SECTION 8.11 SHARING OF PAYMENTS.  If any Bank shall receive and retain any
payment,  voluntary or  involuntary,  whether by setoff,  application of deposit
balance  or  security,  or  otherwise,  in respect  of  Indebtedness  under this
Agreement  or the Notes in excess of such  Bank's  share  thereof as  determined
under this  Agreement,  then such Bank shall  purchase  from the other Banks for
cash and at face value and  without recourse,  such  participation  in the Notes

                                      -59-
<PAGE>
held by such other Banks as shall be necessary  to cause such excess  payment to
be shared  ratably as aforesaid  with such other Banks;  provided,  that if such
excess  payment or part thereof is  thereafter  recovered  from such  purchasing
Bank, the related  purchases from the other Banks shall be rescinded ratably and
the  purchase  price  restored  as to the  portion  of such  excess  payment  so
recovered,   but  without  interest.   Subject  to  the  participation  purchase
obligation  above,  each Bank agrees to  exercise  any and all rights of setoff,
counterclaim  or banker's lien first fully against any Notes and  participations
therein  held by such Bank,  next to any other  Indebtedness  of the Borrower to
such Bank arising under or pursuant to this Agreement and to any  participations
held by such Bank in Indebtedness  of the Borrower  arising under or pursuant to
this Agreement,  and only then to any other Indebtedness of the Borrower to such
Bank.

     SECTION 8.12 ADVICE TO BANKS.  The Agent shall  forward to the Banks copies
of all notices,  financial reports and other  communications  received hereunder
from the  Borrower  by it as Agent,  excluding,  however,  notices,  reports and
communications  which by the terms hereof are to be  furnished by the  Borrowers
directly to each Bank.

     SECTION 8.13 RESIGNATION. If at any time U.S. Bank shall deem it advisable,
in its sole  discretion,  it may submit to each of the Banks and the Borrowers a
written  notification  of its  resignation as Agent under this  Agreement,  such
resignation to be effective upon the appointment of a successor Agent, but in no
event later than 30 days from the date of such notice.  Upon  submission of such
notice of resignation,  the Majority Banks may appoint a successor  Agent,  with
the  prior  written  approval  of the  Borrowers  (which  approval  will  not be
unreasonably withheld).

                                   ARTICLE IX

                                  MISCELLANEOUS

     SECTION 9.1 MODIFICATIONS.  Notwithstanding  any provisions to the contrary
herein,  any term of this  Agreement may be amended with the written  consent of
the  Borrower;  provided  that  no  amendment,  modification  or  waiver  of any
provision  of this  Agreement  or any other  Loan  Document  or  consent  to any
departure therefrom by the Borrower or other party thereto shall in any event be
effective  unless the same shall be in writing and signed by the Majority Banks,
and then such amendment, modification, waiver or consent shall be effective only
in the specific  instance  and for the purpose for which  given.  (The Agent may
enter into  amendments or  modifications  of, and grant  consents and waivers to
departure  from the  provisions  of, those Loan Documents to which the Banks are
not signatories without the Banks joining therein,  PROVIDED the Agent has first
obtained the separate  prior written  consent to such  amendment,  modification,
consent or waiver from the Majority Banks.)  Notwithstanding  the foregoing,  no
such amendment, modification, waiver or consent shall:

                                      -60-
<PAGE>
          9.1(a)  Reduce the rate or extend the time of payment of any principal
     of or interest on the Notes,  or modify any of the  provisions  of any Note
     with  respect to the payment or repayment  thereof,  without the consent of
     the holder of each Note so affected; or

          9.1(b)  Increase  the  amount  or  extend  the  time  of  any  of  the
     Commitments of any Bank, without the consent of such Bank; or

          9.1(c)  Reduce  the  rate or  extend  the time of  payment  of any fee
     payable to a Bank, without the consent of the Bank affected; or

          9.1(d)  Except as may  otherwise be  expressly  provided in any of the
     other Loan Documents,  release any material portion of collateral securing,
     or any  guaranties  for,  all or any part of the  Obligations  without  the
     consent of all the Banks; or

          9.1(e) Amend the definition of Majority Banks or otherwise  reduce the
     percentage  of the  Banks  required  to  approve  or  effectuate  any  such
     amendment, modification, waiver, or consent, without the consent of all the
     Banks; or

          9.1(f) Amend any of the foregoing Sections 9.1 (a) through (e) or this
     SECTION 9.1 (f) without the consent of all the Banks; or

          9.1(g) Amend any provision of this Agreement  relating to the Agent in
     its capacity as Agent without the consent of the Agent;

          9.1(h)  Amend any  provision of this  Agreement  relating to the Swing
     Line  Lender,  in its  capacity as Swing Line Lender or the making of Swing
     Line Loans without the consent of the Swing Line Lender; or

     SECTION  9.2  EXPENSES;  AMENDMENT  OR  WAIVER  FEE.  Whether  or  not  the
transactions  contemplated  hereby  are  consummated,  the  Borrowers  agree  to
reimburse the Agent upon demand for all reasonable  out-of-pocket  expenses paid
or  incurred  by the Bank  (including  filing and  recording  costs and fees and
expenses of Dorsey & Whitney LLP,  counsel to the Agent) in connection  with the
negotiation, preparation, approval, review, execution, delivery, administration,
amendment,  modification and interpretation of this Agreement and the other Loan
Documents and any commitment letters relating thereto.  The Borrowers shall also
reimburse the Agent and each Bank upon demand for all  reasonable  out-of-pocket
expenses  (including expenses of legal counsel) paid or incurred by the Agent or
any Bank in connection with the collection and enforcement of this Agreement and
any other Loan Document.  The  obligations  of the Borrowers  under this Section
shall survive any termination of this Agreement. In addition, the PACC shall pay
a fee of $1,500.00 (or such greater  amount as may be specified by the Banks) to

                                      -61-
<PAGE>
each Bank on the effective date of any amendment to,  modification  of or waiver
of  any  provision  of  this  Agreement  if any  Bank  determines,  in its  sole
discretion,  that its  policies or  practices  required  such Bank to obtain the
approval of any credit committee or similar approval authority for the execution
of such amendment, modification or waiver.

     SECTION 9.3  WAIVERS,  ETC. No failure on the part of the Agent or any Bank
or the  holder of a Note to  exercise  and no delay in  exercising  any power or
right  hereunder  or under any other  Loan  Document  shall  operate as a waiver
thereof; nor shall any single or partial exercise of any power or right preclude
any other or further  exercise  thereof or the  exercise  of any other  power or
right.  The  remedies  herein  and in the  other  Loan  Documents  provided  are
cumulative and not exclusive of any remedies provided by law.

     SECTION 9.4 NOTICES.  Except when telephonic notice is expressly authorized
by this Agreement,  any notice or other communication to any party in connection
with this  Agreement  shall be in writing and shall be sent by manual  delivery,
telegram, telex, facsimile transmission, overnight courier or United States mail
(postage  prepaid)  addressed  to such  party at the  address  specified  on the
signature  Page  hereof,  or at such  other  address  as such  party  shall have
specified to the other party  hereto in writing.  All periods of notice shall be
measured from the date of delivery thereof if manually delivered,  from the date
of sending thereof if sent by telegram,  telex or facsimile  transmission,  from
the first  Business Day after the date of sending if sent by overnight  courier,
or from four days after the date of mailing if mailed;  provided,  however, that
any notice to the Agent  under  Article  II hereof  shall be deemed to have been
given only when received by the Agent.

     SECTION 9.5 TAXES.  The Borrowers  agree to pay, and save the Agent and any
Bank  harmless  from all  liability  for,  any stamp or other taxes which may be
payable  with  respect to the  execution  or delivery of this  Agreement  or the
issuance  of the Note,  which  obligation  of the  Borrowers  shall  survive the
termination of this Agreement.

     SECTION 9.6 SUCCESSORS AND ASSIGNS; DISPOSITION OF LOANS; TRANSFEREES.

          9.6(a) This  Agreement  shall be binding upon and inure to the benefit
     of the Borrower, the Banks, the Agent, all future holders of the Notes, and
     their respective  successors and assigns,  except that the Borrower may not
     assign or transfer any of its rights or  obligations  under this  Agreement
     without the prior written consent of each Bank.

          9.6(b) Any Bank may, in the ordinary course of its commercial  banking
     business and in accordance  with applicable law, at any time sell to one or
     more banks or other entities  ("PARTICIPANTS")  participating  interests in
     any Revolving Loan, Term Loan or other  Obligation  owing to such Bank, any
     Revolving Note or Term Note held by such Bank, and any Revolving Commitment
     or Term Loan  Commitment of such Bank,  or any other  interest of such Bank

                                      -62-
<PAGE>
     hereunder.  In the  event  of any  such  sale  by a Bank  of  participating
     interests  to  a  Participant,  (i)  such  Bank's  obligations  under  this
     Agreement to the other parties to this  Agreement  shall remain  unchanged,
     (ii) such Bank shall remain solely responsible for the performance thereof,
     (iii) such Bank shall remain the holder of any such  Revolving Note or Term
     Note for all purposes under this Agreement, (iv) the Borrower and the Agent
     shall  continue to deal solely and  directly  with such Bank in  connection
     with such Bank's rights and  obligations  under this  Agreement and (v) the
     agreement  pursuant to which such  Participant  acquires its  participating
     interest  herein  shall  provide that such Bank shall retain the sole right
     and   responsibility  to  enforce  the  Obligations,   including,   without
     limitation  the right to consent or agree to any  amendment,  modification,
     consent  or  waiver  with  respect  to this  Agreement  or any  other  Loan
     Document,  PROVIDED that such agreement may provide that such Bank will not
     consent  or agree to any such  amendment,  modification,  consent or waiver
     with  respect to the matters set forth in Sections  9.1(a) - (d), or to any
     release of all or  substantially  all of the collateral,  without the prior
     consent  of  such   Participant.   The  Borrower  agrees  that  if  amounts
     outstanding  under this Agreement,  the Revolving Notes, the Term Notes and
     the Loan Documents are due and unpaid, or shall have been declared or shall
     have become due and  payable  upon the  occurrence  of an Event of Default,
     each  Participant  shall be  deemed to have,  to the  extent  permitted  by
     applicable  law,  the  right of  setoff  in  respect  of its  participating
     interest in amounts owing under this Agreement and any Revolving Note, Term
     Note or other  Loan  Document  to the same  extent as if the  amount of its
     participating  interest  were  owing  directly  to it as a Bank  under this
     Agreement  or any  Revolving  Note,  Term  Note  or  other  Loan  Document;
     PROVIDED,  that such right of setoff shall be subject to the  obligation of
     such Participant to share with the Banks, and the Banks agree to share with
     such Participant,  as provided in subsection 8.11. The Borrower also agrees
     that each  Participant  shall be  entitled to the  benefits of  subsections
     2.15,   2.16,   2.17,  2.18,  2.19,  2.20  and  9.2  with  respect  to  its
     participation in the Commitments, Revolving Loans and Term Loans; PROVIDED,
     that no  Participant  shall be  entitled  to  receive  any  greater  amount
     pursuant  to such  subsections  than the  transferor  Bank  would have been
     entitled  to  receive  in  respect  of  the  amount  of  the  participation
     transferred  by  such  transferor  Bank  to  such  Participant  had no such
     transfer occurred.

          9.6(c) Each Bank may, from time to time, with the consent of the Agent
     and, except during the occurrence and during the continuance of an Event of
     Default, the Borrowers (which consents shall not be unreasonably withheld),
     assign to other  lenders  ("ASSIGNEES")  part of its  Revolving  Commitment
     Amount,  together with  equivalent  proportions of the Revolving  Loans and
     obligation  to  purchase  risk  participations  in Swing  Line Loans and an
     equivalent  proportion  of its Term Loans (but not less than  $5,000,000 in
     the  aggregate  to any Bank) then held by that Bank.  Each such  assignment
     shall be pursuant to an agreement in  substantially  the form of Exhibit O,
     which  agreement  shall  specify  in  each  instance  the  portion  of  the
     Obligations evidenced  by the Revolving Notes and Term Notes which is to be

                                      -63-
<PAGE>
     assigned  to each  Assignee  and the  portion of the  Revolving  Commitment
     Amount of the  assigning  Bank to be assumed  by each  Assignee  (each,  an
     "Assignment Agreement");  PROVIDED,  HOWEVER, that unless the assignment is
     to the  affiliate  of a Bank the  assigning  Bank  must pay to the  Agent a
     processing  and  recordation  fee of $3,500;  PROVIDED,  FURTHER,  that the
     aggregate  amount of the Revolving  Commitment  Amount or outstanding  Term
     Loan  which is the  subject of the  assignment  shall be  $5,000,000  or an
     integral  multiple of $1,000,000 in excess thereof,  except (I) in the case
     of an  assignment  by one Bank to another Bank, in which case the aggregate
     amount of the Revolving Commitment Amount or outstanding Term Loan which is
     the subject of the assignment  shall be $1,000,000 or an integral  multiple
     of $1,000,000 in excess thereof,  and (II) in the case of the assignment by
     any Bank of its Commitments and Loans in full, and PROVIDED, that following
     any such  assignment,  the  transferring  Bank shall (i) continue to hold a
     Revolving Commitment Amount and a Term Loan in an aggregate amount not less
     than  $5,000,000.  Any Assignee,  to the extent of such assignment  (unless
     otherwise provided therein), shall have all the rights and obligations of a
     Bank hereunder and the assigning Bank shall be released from its duties and
     obligations under this Agreement to the extent of such assignment. Upon the
     execution of each Assignment  Agreement by the assigning Bank, the relevant
     Assignee, the Borrower and the Agent, payment to the assigning Bank by such
     Assignee of the  purchase  price for the portion of the  Obligations  being
     acquired  by it,  payment  by  the  assigning  bank  to  the  Agent  of the
     processing  and  recording fee and receipt by the Borrower of a copy of the
     relevant  Assignment  Agreement,  (x) such Assignee  lender shall thereupon
     become a "Bank"  for all  purposes  of this  Agreement  with a  Commitment,
     Commitment  Percentage  and a Total  Percentage  in the amount set forth in
     such Assignment  Agreement and with all the rights,  powers and obligations
     afforded a Bank under this Agreement, (y) such assigning Bank shall have no
     further liability for funding the portion of its Commitment assumed by such
     Assignee  and (z) the  address  for  notices to such  Assignee  shall be as
     specified in the Assignment Agreement executed by it. Concurrently with the
     execution and delivery of each  Assignment  Agreement,  the assigning  Bank
     shall surrender to the Agent the Note a portion of which is being assigned,
     and the  Borrower  shall  execute and deliver a Note to the Assignee in the
     amount of its Commitment or the outstanding  principal amount of its Loans,
     as  applicable,  and a new Note to the assigning  Bank in the amount of its
     Commitment or the outstanding principal amount of its Loans, as applicable,
     after giving effect to the reduction  occasioned  by such  assignment,  all
     such Notes to constitute  "Notes" for all purposes of this Agreement and of
     the other Loan Documents.

          9.6(d) The Borrower  shall not be liable for any costs incurred by the
     Banks in effecting any participation or assignment.

          9.6(e) Each Bank may  disclose to any Assignee or  Participant  and to
     any prospective  Assignee or Participant any and all financial  information

                                      -64-
<PAGE>
     in  such  Bank's   possession   concerning  the  Borrower  or  any  of  its
     Subsidiaries  which has been  delivered to such Bank by or on behalf of the
     Borrower or any of its Subsidiaries pursuant to this Agreement or which has
     been  delivered  to such Bank by or on behalf of the Borrower or any of its
     Subsidiaries  in  connection  with such  Bank's  credit  evaluation  of the
     Borrower or any of its Subsidiaries  prior to entering into this Agreement,
     PROVIDED that prior to disclosing such  information,  such Bank shall first
     obtain the written agreement of such prospective Assignee or Participant to
     comply with the provisions of SECTION 9.7.

     SECTION 9.7  CONFIDENTIALITY OF INFORMATION.  The Agent and each Bank shall
use reasonable  efforts to assure that information about the Borrowers and their
operations,  affairs and financial  condition,  not  generally  disclosed to the
public or to trade and other creditors,  which is furnished to the Agent and any
Bank  pursuant to the  provisions  hereof is used only for the  purposes of this
Agreement  and any other  relationship  between  the Agent,  the Banks,  and the
Borrowers  and shall not be  divulged  to any Person  other than the Agent,  the
Banks,  the  Borrowers  and their  Affiliates,  and their  respective  officers,
directors, employees and agents, except: (a) to their attorneys and accountants,
(b) in connection  with the  enforcement  of the rights of the Agent or any Bank
hereunder  and under the Note,  the  Guaranties  and the  Security  Documents or
otherwise in connection  with  applicable  litigation,  (c) in  connection  with
assignments and participations and the solicitation of prospective assignees and
participants  referred to in the immediately  preceding Section,  and (d) as may
otherwise  be  required  or  requested  by  any  regulatory   authority   having
jurisdiction  over  any  Bank or by any  applicable  law,  rule,  regulation  or
judicial  process,  the opinion of such Bank's counsel  concerning the making of
such  disclosure  to be binding on the parties  hereto.  No Bank shall incur any
liability to the Borrowers by reason of any disclosure permitted by this Section
9.7.

     SECTION 9.8 GOVERNING LAW AND CONSTRUCTION. THE VALIDITY,  CONSTRUCTION AND
ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE  STATE OF  MINNESOTA,  WITHOUT  GIVING  EFFECT TO  CONFLICT  OF LAWS
PRINCIPLES  THEREOF,  BUT  GIVING  EFFECT TO FEDERAL  LAWS OF THE UNITED  STATES
APPLICABLE  TO  NATIONAL  BANKS.  Whenever  possible,  each  provision  of  this
Agreement and the other Loan  Documents and any other  statement,  instrument or
transaction  contemplated  hereby or thereby or relating hereto or thereto shall
be interpreted in such manner as to be effective and valid under such applicable
law, but, if any provision of this  Agreement,  the other Loan  Documents or any
other  statement,  instrument or transaction  contemplated  hereby or thereby or
relating  hereto or thereto shall be held to be prohibited or invalid under such
applicable law, such provision  shall be ineffective  only to the extent of such
prohibition or invalidity,  without invalidating the remainder of such provision
or the remaining  provisions of this Agreement,  the other Loan Documents or any
other  statement,  instrument or transaction  contemplated  hereby or thereby or
relating hereto or thereto.

                                      -65-
<PAGE>
     SECTION  9.9  CONSENT TO  JURISDICTION.  AT THE  OPTION OF THE AGENT,  THIS
AGREEMENT  AND THE OTHER LOAN  DOCUMENTS MAY BE ENFORCED IN ANY FEDERAL COURT OR
MINNESOTA STATE COURT SITTING IN HENNEPIN COUNTY,  MINNESOTA;  AND THE BORROWERS
CONSENT TO THE  JURISDICTION  AND VENUE OF ANY SUCH COURT AND WAIVE ANY ARGUMENT
THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWERS COMMENCE
ANY ACTION IN ANOTHER  JURISDICTION  OR VENUE UNDER ANY TORT OR CONTRACT  THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP  CREATED BY THIS AGREEMENT,
THE BANK AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE  TRANSFERRED TO ONE OF
THE  JURISDICTIONS  AND VENUES  ABOVE-DESCRIBED,  OR IF SUCH TRANSFER  CANNOT BE
ACCOMPLISHED   UNDER  APPLICABLE  LAW,  TO  HAVE  SUCH  CASE  DISMISSED  WITHOUT
PREJUDICE.

     SECTION 9.10 WAIVER OF JURY TRIAL.  EACH OF THE BORROWERS,  THE BANKS,  AND
THE  AGENT  IRREVOCABLY  WAIVES  ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING  ARISING  OUT OF OR  RELATING  TO THIS  AGREEMENT  OR ANY OTHER  LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

     SECTION  9.11  SURVIVAL  OF  AGREEMENT.  All  representations,  warranties,
covenants  and  agreement  made by the  Borrower  herein  or in the  other  Loan
Documents and in the certificates or other instruments  prepared or delivered in
connection  with or pursuant to this  Agreement or any other Loan Document shall
be deemed to have been relied upon by the Agent and shall  survive the making of
the  Loans by the  Banks  and the  execution  and  delivery  to the Agent by the
Borrowers of the Note,  regardless of any investigation  made by or on behalf of
the Agent, and shall continue in full force and effect as long as any Obligation
is  outstanding  and  unpaid  and  so  long  as the  Commitment  have  not  been
terminated;  provided,  however,  that the  obligations  of the Borrowers  under
Sections 9.2, 9.5 and 9.12 shall survive  payment in full of the Obligations and
the termination of the Commitment.

     SECTION  9.12  INDEMNIFICATION.  The  Borrower  hereby  agrees  to  defend,
protect,  indemnify  and  hold  harmless  the  Agent  and the  Banks  and  their
respective  Affiliates and the  directors,  officers,  employees,  attorneys and
agents of the Agent and the Banks and their  respective  Affiliates (each of the
foregoing being an "Indemnitee" and all of the foregoing being  collectively the
"Indemnitees")  from  and  against  any  and  all  claims,   actions,   damages,
liabilities,  judgments,  costs and expenses  (including all reasonable fees and
disbursements  of counsel which may be incurred in the  investigation or defense
of any matter but  excluding  costs  incurred  by the Agent and the Banks in the
ordinary course of their business, such as costs of funds, employee salaries and
overhead,  except to the extent the Borrower is liable  thereunder under another
provision of the Loan Documents)  imposed upon,  incurred by or asserted against
any Indemnitee, whether direct,  indirect or consequential and whether  based on

                                      -66-
<PAGE>
on  any  federal,  state,  local  or  foreign  laws  or  regulations  (including
securities laws,  environmental  laws,  commercial laws and regulations),  under
common law or on equitable cause, or on contract or otherwise:

               (a)  by  reason  of,  relating  to  or  in  connection  with  the
          execution,  delivery, performance or enforcement of any Loan Document,
          any commitments  relating thereto,  the creation of a Lien in favor of
          the Agent or the  Banks  under any Loan  Document  or any  transaction
          contemplated by any Loan Document; or

               (b) by reason of,  relating to or in  connection  with any credit
          extended or used under the Loan  Documents  or any act done or omitted
          by any Person,  or the exercise of any rights or remedies  thereunder,
          including  the  acquisition  of any  collateral by the Banks by way of
          foreclosure of the Lien thereon,  deed or bill of sale in lieu of such
          foreclosure or otherwise;

provided,  however, that the Borrowers shall not be liable to any Indemnitee for
any portion of such claims, damages, liabilities and expenses (i) resulting from
such  Indemnitee's  gross negligence or willful  misconduct,  or (ii) arising in
connection  with a dispute between the Borrower and such Indemnitee in which the
Borrowers is  determined,  in a final  judgment  entered by a court of competent
jurisdiction,  to have no liability to or a definitive  right to recover damages
from such  Indemnitee.  In the event this indemnity is unenforceable as a matter
of law as to a particular matter or consequence  referred to herein, it shall be
enforceable to the full extent permitted by law.

     This  indemnification  applies,  without limitation,  to any act, omission,
event or  circumstance  existing  or  occurring  on or prior to the later of the
Maturity  Date or the  date of  payment  in full of the  Obligations,  including
specifically   Obligations  arising  under  clause  (b)  of  this  Section.  The
indemnification provisions set forth above shall be in addition to any liability
the Borrowers may otherwise have. Without prejudice to the survival of any other
obligation of the Borrower  hereunder the  indemnities  and  obligations  of the
Borrower  contained  in this  SECTION  shall  survive the payment in full of the
other Obligations.

     SECTION 9.13  CAPTIONS.  The  captions or headings  herein and any table of
contents hereto are for convenience only and in no way define, limit or describe
the scope or intent of any provision of this Agreement.

     SECTION 9.14 ENTIRE AGREEMENT.  This Agreement and the other Loan Documents
embody the entire  agreement  and  understanding  between the  Borrowers and the
Banks with  respect to the subject  matter  hereof and thereof.  This  Agreement
supersedes  all prior  agreements  and  understandings  relating  to the subject
matter  hereof.  Nothing  contained  in  this  Agreement  or in any  other  Loan
Document,  expressed  or implied,  is intended to confer upon any Persons  other
than the  parties  hereto  any  rights,  remedies,  obligations  or  liabilities
hereunder or thereunder.

                                      -67-
<PAGE>
     SECTION 9.15 COUNTERPARTS.  This Agreement may be executed in any number of
counterparts,  all of which taken  together  shall  constitute  one and the same
instrument,  and any of the parties hereto may execute this Agreement by signing
any such counterpart.

     SECTION 9.16 BORROWER  ACKNOWLEDGMENTS.  The Borrowers  hereby  acknowledge
that (a) they have been  advised by counsel in the  negotiation,  execution  and
delivery  of this  Agreement  and the other  Loan  Documents,  (b) no Bank has a
fiduciary  relationship to the Borrowers,  the relationship being solely that of
debtor and creditor,  (c) no joint venture  exists between the Borrowers and any
Bank, and (d) no Bank undertakes any  responsibility  to the Borrowers to review
or  inform  the  Borrowers  of any  matter in  connection  with any phase of the
business or operations  of the  Borrowers and the Borrowers  shall rely entirely
upon their own judgment with respect to its business, and any review, inspection
or supervision of, or information supplied to, the Borrowers by the Agent or any
Bank is for the  protection  of the Banks and neither of the  Borrowers  nor any
third party is entitled to rely thereon.

     SECTION 9.17 JOINT AND SEVERAL OBLIGATIONS.  Each Borrower shall be jointly
and severally  liable for the Obligations  arising in connection with Loans made
to it, and the  Obligations  arising in connection  with Loans made to the other
Borrower;  PROVIDED,  HOWEVER,  that if it is at any time determined that either
Borrower is liable as a guarantor (and not as a co-obligor or co-borrower)  with
respect to such  Obligations  arising in connection with Loans made to the other
Borrower (the  "Guaranteed  Obligations"),  each  Borrower  hereby agrees to the
terms set forth on Exhibit P hereto with respect to the Guaranteed Obligations.



            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]


                                      -68-
<PAGE>
     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed as of the date first above written.

                                               PILGRIM AMERICA CAPITAL
                                               CORPORATION

                                               By
                                                   -----------------------------
                                               Title
                                                     ---------------------------

                                               Address for Borrower:
                                               Two Renaissance Square, Ste. 1200
                                               40 North Central Avenue
                                               Phoenix, AZ  85004-4424
                                               Attention:  James R. Reis
                                               Facsimile:  (602) 417-8327

                                               PILGRIM GROUP, INC.

                                               By
                                                   -----------------------------
                                               Title
                                                     ---------------------------

                                               Address for Borrower:
                                               Two Renaissance Square, Ste. 1200
                                               40 North Central Avenue
                                               Phoenix, AZ  85004-4424
                                               Attention:  James M. Hennessy
                                               Facsimile:  (602) 417-8301




                        [SIGNATURE PAGE TO FOURTH AMENDED
                         AND RESTATED CREDIT AGREEMENT]

                                      S-69
<PAGE>
                                               U.S. BANK NATIONAL
                                               ASSOCIATION


                                               By
                                                   -----------------------------
                                               Title
                                                     ---------------------------


                                               Address:
                                               U.S. Bank Place - MPFP0702
                                               601 Second Avenue South
                                               Minneapolis, MN 55402-4302
                                               Attention:  Mark A. Bagley
                                               Facsimile:  (612) 973-0832


                                               BANK ONE ARIZONA, NA


                                               By
                                                   -----------------------------
                                               Title
                                                     ---------------------------


                                               Address:
                                               201 North Central Avenue
                                               21st Floor AZ1-1178
                                               Phoenix, AZ   85004
                                               Attention: Michael McCann
                                               Facsimile: (602) 221-1259



                        [SIGNATURE PAGE TO FOURTH AMENDED
                         AND RESTATED CREDIT AGREEMENT]

                                      S-70
<PAGE>




                                               STATE STREET BANK AND
                                               TRUST COMPANY


                                               By
                                                  ------------------------------
                                               Its
                                                   -----------------------------

                                               Address:
                                               1776 Heritage Drive
                                               JAB4SW
                                               North Quincy, MA   02171
                                               Attention:  Edward A. Siegel
                                               Facsimile: (617) 662-2325



                                               BANK OF AMERICA NATIONAL
                                               TRUST AND SAVINGS
                                               ASSOCIATION


                                               By
                                                   -----------------------------
                                               Title
                                                     ---------------------------


                                               Address:
                                               231 South LaSalle Street
                                               Chicago, IL   60697

                                               Attention: John Hayes
                                               Facsimile: (312) 987-0889


                        [SIGNATURE PAGE TO FOURTH AMENDED
                         AND RESTATED CREDIT AGREEMENT]

                                      S-71
<PAGE>
                                               COMMERZBANK AG


                                               By
                                                   -----------------------------
                                               Title
                                                     ---------------------------


                                               Address:
                                               Two World Financial Center
                                               225 Liberty Street
                                               New York, NY   10281

                                               Attention: Joseph Hayes
                                               Facsimile: (212) 266-7629
<PAGE>
     EXHIBITS

     A       -      Guaranty

     B       -      Revolving Note

     C       -      PGI Security Agreement

     D       -      Other Subsidiary Security Agreement

     E       -      Swing Line Note

     F       -      Term Note

     G       -      Reaffirmation of PGI Security Agreement

     H       -      Reaffirmation of PII Security Agreement

     I       -      Reaffirmation of PSI Security Agreement

     J       -      Reaffirmation of PGI Pledge Agreement

     K       -      Reaffirmation of PACC Pledge Agreement

     L       -      Reaffirmation of Guaranty

     M       -      Amendment to Collateral Assignment (Trademarks)

     N       -      Matters to be Covered by Opinion of Counsel to the Borrowers

     O       -      Form of Assignment Agreement

     P       -      Terms With Respect to Guaranteed Obligations

     SCHEDULES
     ---------
     1.1(a)  -      NACM Funds
     1.1(b)  -      List of Commitment Amounts
     4.6     -      Litigation
     4.17    -      Subsidiaries
     4.18    -      Funds