EXHIBIT 10.1

             SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT
                                   AGREEMENT

                  This SECOND  AMENDMENT TO SECOND  AMENDED AND RESTATED  CREDIT
AGREEMENT (this  "Amendment"),  made and entered into as of March 2, 1998, is by
and between PILGRIM AMERICA GROUP, INC., a Delaware corporation ("PAG"), PILGRIM
AMERICA CAPITAL  CORPORATION,  a Delaware  corporation  ("PACC") (together,  the
"Borrowers"  and each a  "Borrower"),  and FIRST BANK  NATIONAL  ASSOCIATION,  a
national banking association (the "Bank").

                                    RECITALS
                                    --------

                  1. The Bank and the  Borrowers  entered into a Second  Amended
and Restated  Credit  Agreement dated as of July 31, 1997, as amended by a First
Amendment to Second Amended and Restated Credit  Agreement dated as of September
16, 1997 (as so amended, the "Credit Agreement"); and

                  2. The  Borrowers  desire to amend  certain  provisions of the
Credit  Agreement,  and the Bank has agreed to make such amendments,  subject to
the terms and conditions set forth in this Amendment.

                                    AGREEMENT
                                    ---------

                  NOW,  THEREFORE,  for good  and  valuable  consideration,  the
receipt and adequacy of which are hereby acknowledged, the parties hereto hereby
covenant and agree to be bound as follows:

                  Section 1. Capitalized  Terms.  Capitalized  terms used herein
and not otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement, unless the context shall otherwise require.

                  Section 2.  Amendments. The Credit Agreement is hereby amended
as follows:

                  2.1    Definitions.     The    definition    of    "Commitment
         Amount"contained  in Section 1.1 of the Credit  Agreement is amended to
         read in its entirety as follows:

                           "Commitment Amount":  $35,000,000, as the same may be
                  reduced pursuant to Section 2.14.

                  2.2  Revolving  Note.  Exhibit A to the  Credit  Agreement  is
         hereby  amended  to read as set  forth on  Exhibit A  attached  to this
         Amendment  which is made a part of the  Credit  Agreement  as Exhibit A
         thereto.
                                      -1-
<PAGE>
                  Section  3.   Effectiveness  of  Amendments.   The  amendments
contained  in  this  Amendment  shall  become  effective  upon  delivery  by the
Borrowers of, and compliance by the Borrowers with, the following:

                  3.1 The Bank shall have  received this  Amendment  executed by
         duly authorized officers of the Borrowers.

                  3.2 The Bank shall have received a Second  Restated  Revolving
         Note in the form of Exhibit A hereto,  duly  executed by the  Borrowers
         (the "New Note"),  which shall replace the existing Restated  Revolving
         Note evidencing the Borrowers' Obligations.

                  3.3 The Bank shall have  received  Reaffirmations  of Security
         Agreement,  in the form of Exhibits E, F, G hereto and executed by PAG,
         PAII and PASI, respectively.

                  3.4 The Bank  shall  have  received  Reaffirmations  of Pledge
         Agreement,  in the form of  Exhibits  H and I hereto,  executed  by the
         Borrowers.

                  3.5 The Bank shall have received a Reaffirmation  of Guaranty,
         in the form of Exhibit J hereto, executed by PAII.

                  3.6 The Bank  shall  have  received  copies  of the  corporate
         resolutions of the Borrowers  authorizing  the execution,  delivery and
         performance of this Amendment, the New Note and reaffirmations to which
         each  of  them is a  party,  certified  as of the  date  hereof  by the
         respective   Secretary  or  an  Assistant  Secretary  of  each  of  the
         Borrowers.

                  3.7 The Bank  shall  have  received  copies  of the  corporate
         resolutions of PAII and PASI  authorizing  the execution,  delivery and
         performance  of the  reaffirmations  to which  each of them is a party,
         certified  as of the date  hereof  by the  respective  Secretary  or an
         Assistant Secretary of PAII and PASI.

                  3.8  The  Bank  shall  have  received  a  certificate  of  the
         Secretary of each  Borrower,  PAII and PASI,  respectively,  certifying
         that  there has been no  change in the  Articles  of  Incorporation  or
         bylaws of each respective entity since July 31, 1997.

                  3.9 The Bank  shall have  received a written  opinion of Bryan
         Cave LLP,  counsel to the  Borrowers,  PAII and PASI,  addressed to the
         Bank and dated  the date  hereof,  covering  the  matters  set forth in
         Exhibit K hereto.

                  3.10  The  Bank  shall  have  received  certificates  of  good
         standing for the Borrowers  from the Secretary of State of Delaware and
         in each state in which such entities  transact business as of a current
         date.

                  3.11  The Bank  shall  have  received  such  other  documents,
         instruments, opinions and approvals as the Bank may reasonably request.
                                      -2-
<PAGE>
                  3.12 The Borrowers shall have satisfied such other  conditions
         as  specified by the Bank,  including  payment of all unpaid legal fees
         and expenses incurred by the Bank through the date of this Amendment.

                  Section 4.  Representations, Warranties, Authority, No Adverse
Claim.

                  4.1 Reassertion of Representations and Warranties, No Default.
The  Borrowers  hereby  represent  that on and as of the date  hereof  and after
giving effect to this  Amendment and the New Note (a)all of the  representations
and warranties  contained in the Credit Agreement are true, correct and complete
in all  respects  as of the date  hereof as though  made on and as of such date,
except for changes permitted by the terms of the Credit Agreement, and (b) there
will exist no Default or Event of Default under the Credit  Agreement as amended
by this Amendment on such date which has not been waived by the Bank.

                  4.2 Authority, No Conflict, No Consent Required. The Borrowers
represent  and  warrant  that the  Borrowers  have the power and legal right and
authority to enter into this Amendment and the New Note (hereinafter referred to
as the  "Amendment  Documents")  and have duly  authorized  as  appropriate  the
execution  and delivery of the  Amendment  Documents  and other  agreements  and
documents  executed and  delivered by the  Borrowers in  connection  herewith or
therewith  by proper  corporate,  and none of the  Amendment  Documents  nor the
agreements  contained herein or therein contravene or constitute a default under
any  agreement,  instrument or indenture to which the Borrowers are parties or a
signatory or any  provision of the  Borrowers'  Certificates  of  Incorporation,
Bylaws or any other agreement or requirement of law, or result in the imposition
of any lien on any of its property under any agreement  binding on or applicable
to the Borrowers or any of their property except,  if any, in favor of the Bank.
The Borrowers  represent and warrant that no consent,  approval or authorization
of or registration or declaration with any Person,  including but not limited to
any  governmental  authority,  is required in connection  with the execution and
delivery by the Borrowers of the  Amendment  Documents or other  agreements  and
documents executed and delivered by the Borrowers in connection therewith or the
performance of obligations of the Borrowers therein described,  except for those
which the Borrowers have obtained or provided and as to which the Borrowers have
delivered certified copies of documents evidencing each such action to the Bank.

                  4.3  No  Adverse   Claim.   The   Borrowers   each   warrants,
acknowledges   and  agrees   that  no  events  have  been  taken  place  and  no
circumstances exist at the date hereof which would give the Borrowers a basis to
assert a defense,  offset or  counterclaim to any claim of the Bank with respect
to the Obligations as amended by this Amendment.

                  Section   5.   Affirmation   of  Credit   Agreement,   Further
References,  Affirmation of Security  Interest.  The Bank and the Borrowers each
acknowledge  and affirm that the Credit  Agreement  and the New Note,  as hereby
amended,  are hereby  ratified  and  confirmed  in all  respects  and all terms,
conditions  and  provisions of the Credit  Agreement,  except as amended by this
Amendment,  shall remain unmodified and in full force and effect. All references
in any  document  or  instrument  to the Credit  Agreement  or the Note,  or any
similar terms contained in any Loan Document, are hereby amended and shall refer
to the Credit
                                      -3-
<PAGE>
Agreement  and the New Note,  respectively,  as amended by this  Amendment.  The
Borrowers  confirm  to the  Bank  that  the  Obligations,  as  amended  by  this
Amendment,  are and continue to be secured by the security  interest  granted by
the Borrowers in favor of the Bank under the Security Documents,  and all of the
terms, conditions, provisions, agreements,  requirements, promises, obligations,
duties,  covenants and representations of the Borrowers under such documents and
any and all other  documents  and  agreements  entered  into with respect to the
obligations under the Credit Agreement are incorporated  herein by reference and
are hereby ratified and affirmed in all respects by the Borrowers.

                  Section 6. Merger and Integration,  Superseding  Effect.  This
Amendment,  from and after the date hereof,  embodies the entire  agreement  and
understanding between the parties hereto and supersedes and has merged into this
Amendment  all prior oral and  written  agreements  on the same  subjects by and
between the parties  hereto with the effect that this  Amendment,  shall control
with respect to the specific subjects hereof and thereof.

                  Section 7. Severability.  Whenever possible, each provision of
this  Amendment  and the other  Amendment  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,  valid and
enforceable under the applicable law of any jurisdiction,  but, if any provision
of this  Amendment,  the  other  Amendment  Documents  or any  other  statement,
instrument or transaction  contemplated  hereby or thereby or relating hereto or
thereto  shall be held to be  prohibited,  invalid  or  unenforceable  under the
applicable law, such provision shall be ineffective in such jurisdiction only to
the  extent  of  such  prohibition,  invalidity  or  unenforceability,   without
invalidating or rendering  unenforceable  the remainder of such provision or the
remaining  provisions of this Amendment,  the other  Amendment  Documents or any
other  statement,  instrument or transaction  contemplated  hereby or thereby or
relating hereto or thereto in such jurisdiction, or affecting the effectiveness,
validity or enforceability of such provision in any other jurisdiction.

                  Section  8.  Successors.  The  Amendment  Documents  shall  be
binding upon the  Borrowers  and the Bank and their  respective  successors  and
assigns,  and shall inure to the benefit of the  Borrowers  and the Bank and the
successors and assigns of the Bank.

                  Section 9. Legal  Expenses.  The Borrowers  agree to reimburse
the Bank,  upon execution of this  Amendment,  for all reasonable  out-of-pocket
expenses (including  attorneys' fees and legal expenses of Dorsey & Whitney LLP,
counsel  for the  Bank)  incurred  in  connection  with  the  Credit  Agreement,
including in connection with the  negotiation,  preparation and execution of the
Amendment Documents and all other documents negotiated, prepared and executed in
connection with the Amendment Documents, and in enforcing the obligations of the
Borrowers under the Amendment  Documents,  and to pay and save the Bank harmless
from all  liability  for,  any stamp or other  taxes  which may be payable  with
respect  to  the  execution  or  delivery  of  the  Amendment  Documents,  which
obligations  of the  Borrowers  shall  survive  any  termination  of the  Credit
Agreement.
                                      -4-
<PAGE>
                  Section 10. Headings. The headings of various sections of this
Amendment  have been inserted for reference only and shall not be deemed to be a
part of this Amendment.

                  Section  11.  Counterparts.  The  Amendment  Documents  may be
executed in several  counterparts  as deemed  necessary or  convenient,  each of
which,  when so executed,  shall be deemed an original,  provided  that all such
counterparts shall be regarded as one and the same document, and either party to
the  Amendment   Documents  may  execute  any  such  agreement  by  executing  a
counterpart of such agreement.

                  Section 12.  Governing Law. THE AMENDMENT  DOCUMENTS  SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA,  WITHOUT  GIVING EFFECT
TO  CONFLICT  OF LAW  PRINCIPLES  THEREOF,  BUT GIVING  EFFECT TO  FEDERAL  LAWS
APPLICABLE TO NATIONAL BANKS, THEIR HOLDING COMPANIES AND THEIR AFFILIATES.
                                      -5-
<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: \S\ James R. Reis
                                              ----------------------------
                                           Title:   Vice-Chairman

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


                                           PILGRIM AMERICA GROUP, INC.


                                           By: \S\ James R. Reis
                                              ----------------------------
                                           Title:   Vice-Chairman

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


                                           FIRST BANK NATIONAL ASSOCIATION

                                           By: \S\ Mark A. Bagley
                                              ----------------------------
                                           Title:   Vice-President

                                           Address:
                                           First Bank Place - MPFP0702
                                           601 Second Avenue South
                                           Minneapolis, MN 55402-4302
                                           Attention:  Mark A. Bagley
                                           Telecopier:  (612) 973-0665
<PAGE>
EXHIBITS
--------

A   -    Revolving Note

E   -    Reaffirmation of PAG Security Agreement

F   -    Reaffirmation of PAII Security Agreement

G   -    Reaffirmation of PASI Security Agreement

H   -    Reaffirmation of PAG Pledge Agreement

I   -    Reaffirmation of the PACC Pledge Agreement

J   -    Reaffirmation of the PAII Guaranty

K   -    Matters to be Covered by Opinion of Counsel to the  Borrowers, PAII and
         PSII
<PAGE>
                                                   EXHIBIT A TO SECOND AMENDMENT

                         SECOND RESTATED REVOLVING NOTE


$35,000,000       March 2, 1998
                                                          Minneapolis, Minnesota

                  FOR VALUE RECEIVED,  PILGRIM  AMERICA GROUP,  INC., a Delaware
corporation,  and PILGRIM AMERICA CAPITAL CORPORATION,  a Delaware  corporation,
hereby jointly and severally  promise to pay to the order of FIRST BANK NATIONAL
ASSOCIATION (the "Bank") at its main office in Minneapolis, Minnesota, in lawful
money of the United States of America in  Immediately  Available  Funds (as such
term and each  other  capitalized  term used  herein  are  defined in the Credit
Agreement  hereinafter  referred  to) at  the  times  set  forth  in the  Credit
Agreement  the  principal  amount of  THIRTY-FIVE  MILLION  AND  NO/100  DOLLARS
($35,000,000)  or, if less, the aggregate  unpaid  principal amount of all Loans
made by the Bank under the Credit  Agreement,  and to pay interest  (computed on
the basis of actual  days  elapsed  and a year of 360 days) in like funds on the
unpaid  principal  amount hereof from time to time  outstanding at the rates and
times set forth in the Credit Agreement.

                  This note is the Note  referred  to in the Second  Amended and
Restated  Credit  Agreement dated as of July 31, 1997 (as the same may hereafter
be from time to time  amended,  restated  or  otherwise  modified,  the  "Credit
Agreement")  between the undersigned  and the Bank. This note is secured,  it is
subject to certain  permissive  and  mandatory  prepayments  and its maturity is
subject to  acceleration,  in each case upon the terms  provided  in said Credit
Agreement.

                  In the event of default  hereunder,  the undersigned agrees to
pay all costs and expenses of collection,  including reasonable attorneys' fees.
The  undersigned  waives demand,  presentment,  notice of  nonpayment,  protest,
notice of protest and notice of dishonor.

                  THE VALIDITY,  CONSTRUCTION  AND  ENFORCEABILITY  OF THIS NOTE
SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA  WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS
<PAGE>
PRINCIPLES  THEREOF,  BUT  GIVING  EFFECT TO FEDERAL  LAWS OF THE UNITED  STATES
APPLICABLE TO NATIONAL BANKS.

                                             PILGRIM AMERICA GROUP, INC.

                                             By: \S\ James R. Reis
                                                ------------------------
                                               Its  Vice-Chairman


                                             PILGRIM AMERICA CAPITAL CORPORATION

                                             By: \S\ James R. Reis
                                                ------------------------
                                               Its  Vice-Chairman
<PAGE>
                                                   EXHIBIT E TO SECOND AMENDMENT


                       REAFFIRMATION OF SECURITY AGREEMENT


                  The  undersigned,  Pilgrim America Group,  Inc. ("PAG") hereby
reaffirms  that (i) the  Security  Agreement  by and  between PAG and First Bank
National  Association  (the "Bank")  dated as of April 28, 1995, as the same may
have been amended from time to time (the "Security Agreement"),  remains in full
force and  effect,  and (ii) the  security  interests  granted  pursuant  to the
Security  Agreement  secure,  among other  things,  the  obligations  of PAG and
Pilgrim America Capital Corporation  (collectively,  the "Borrowers") and duties
under that certain Second Amended and Restated  Credit  Agreement by and between
the  Borrowers  and the Bank and dated as of July 31,  1997,  as  amended by the
First  Amendment to Second  Amended and Restated  Credit  Agreement  dated as of
September  16, 1997 and by the Second  Amendment to Second  Amended and Restated
Credit Agreement dated as of even date herewith.

Date:    March 2, 1998.

                                                     PILGRIM AMERICA GROUP, INC.

                                                     By: \S\ James R. Reis
                                                        ------------------------
                                                       Its  Vice-Chairman
<PAGE>
                                                   EXHIBIT F TO SECOND AMENDMENT


                       REAFFIRMATION OF SECURITY AGREEMENT



                  Reference  is made to that  certain  Security  Agreement  (the
"Security  Agreement")  dated  as of  April  28,  1995,  made  and  given by the
undersigned to secure the Obligations (as defined in the Security  Agreement) of
Pilgrim  America Group,  Inc.  ("PAG") to First Bank National  Association  (the
"Bank").

                  The  undersigned  hereby  (a)  consents  to the  terms of that
certain Second Amended and Restated  Credit  Agreement dated as of July 31, 1997
by and between PAG and Pilgrim America Capital  Corporation  (collectively,  the
"Borrowers")  and the Bank, as amended by the First  Amendment to Second Amended
and Restated  Credit  Agreement dated as of September 16, 1997 and by the Second
Amendment to Second Amended and Restated Credit  Agreement dated as of even date
herewith  (as so  amended,  the "Credit  Agreement")  and to the  execution  and
delivery  of the  Credit  Agreement  by  the  Borrowers;  (b)  agrees  that  the
obligations of the Borrowers to the Bank under the Credit  Agreement  constitute
"Obligations" within the meaning of the above-referenced Security Agreement; and
(c) agrees and reaffirms  that the security  interests  granted  pursuant to the
Security Agreement secure,  among other things,  the Borrowers'  obligations and
duties under the Credit  Agreement and the obligations of the undersigned  under
the Security Agreement. The undersigned further reaffirms that all of the terms,
covenants  and  conditions  of the Security  Agreement  remain in full force and
effect.


Date:    March 2, 1998.

                                              PILGRIM AMERICA INVESTMENTS, INC.

                                              By: \S\ James R. Reis
                                                 ------------------------
                                                Its    Vice-Chairman
<PAGE>
                                                   EXHIBIT G TO SECOND AMENDMENT


                       REAFFIRMATION OF SECURITY AGREEMENT


                  Reference  is made to that  certain  Security  Agreement  (the
"Security  Agreement")  dated  as of  April  28,  1995,  made  and  given by the
undersigned to secure the Obligations (as defined in the Security  Agreement) of
Pilgrim  America Group,  Inc.  ("PAG") to First Bank National  Association  (the
"Bank").

                  The  undersigned  hereby  (a)  consents  to the  terms of that
certain Second Amended and Restated  Credit  Agreement dated as of July 31, 1997
by and between PAG and Pilgrim America Capital  Corporation  (collectively,  the
"Borrowers")  and the Bank, as amended by the First  Amendment to Second Amended
and Restated  Credit  Agreement dated as of September 16, 1997 and by the Second
Amendment to the Second Amended and Restated  Credit  Agreement dated as of even
date herewith (as so amended,  the "Credit  Agreement") and to the execution and
delivery  of the  Credit  Agreement  by  the  Borrowers;  (b)  agrees  that  the
obligations of the Borrowers to the Bank under the Credit  Agreement  constitute
"Obligations" within the meaning of the above-referenced Security Agreement; and
(c) agrees and reaffirms  that the security  interests  granted  pursuant to the
Security Agreement secure,  among other things,  the Borrowers'  obligations and
duties under the Credit  Agreement and the obligations of the undersigned  under
the Security Agreement. The undersigned further reaffirms that all of the terms,
covenants  and  conditions  of the Security  Agreement  remain in full force and
effect.

Date:    March 2, 1998.

                                              PILGRIM AMERICA SECURITIES, INC.

                                              By: \S\ James R. Reis
                                                 -----------------------------
                                                 Its    Vice-Chairman
<PAGE>
                                                   EXHIBIT H TO SECOND AMENDMENT


                        REAFFIRMATION OF PLEDGE AGREEMENT


                  The  undersigned,  Pilgrim America Group,  Inc. ("PAG") hereby
reaffirms  that (i) the  Pledge  Agreement  by and  between  PAG and First  Bank
National  Association  (the "Bank")  dated as of April 28, 1995, as the same may
have been amended from time to time (the  "Pledge  Agreement"),  remains in full
force and effect, and (ii) the security interests granted pursuant to the Pledge
Agreement  secure,  among other things,  the  obligations  and duties of PAG and
Pilgrim America Capital Corporation  (collectively,  the "Borrowers") under that
certain  Second  Amended  and  Restated  Credit  Agreement  by and  between  the
Borrowers  and the Bank  dated as of July 31,  1997,  as  amended  by the  First
Amendment to Second Amended and Restated Credit  Agreement dated as of September
16, 1997 and by the Second  Amendment to the Second Amended and Restated  Credit
Agreement dated as of even date herewith.


Date:    March 2, 1998
                                            PILGRIM AMERICA GROUP, INC.

                                            By: \S\ James R. Reis
                                               -----------------------
                                              Its   Vice-Chairman
<PAGE>
                                                   EXHIBIT I TO SECOND AMENDMENT


                        REAFFIRMATION OF PLEDGE AGREEMENT


                  Reference  is made  to  that  certain  Pledge  Agreement  (the
"Pledge"),  dated as of April 28,  1995,  made and given by the  undersigned  to
secure the Obligations (as defined in the Pledge) of Pilgrim America Group, Inc.
("PAG") to First Bank National Association (the "Bank").

                  The  undersigned  hereby  (a)  consents  to the  terms of that
certain Second Amended and Restated  Credit  Agreement dated as of July 31, 1997
by and  between  the  undersigned  and  PAG,  as  borrowers  (collectively,  the
"Borrowers")  and the Bank, as amended by the First  Amendment to Second Amended
and Restated  Credit  Agreement dated as of September 16, 1997 and by the Second
Amendment to the Second Amended and Restated  Credit  Agreement dated as of even
date herewith (as so amended,  the "Credit  Agreement") and to the execution and
delivery of the Credit  Agreement by PAG; (b) agrees that the obligations of the
Borrowers to the Bank under the Credit Agreement constitute "Obligations" within
the meaning of the  above-referenced  Pledge;  and (c) agrees and reaffirms that
the security  interests granted pursuant to the Pledge Agreement  secure,  among
other things, the Borrowers'  obligations and duties under the Credit Agreement.
The  undersigned  further  reaffirms  that  all  of  the  terms,  covenants  and
conditions of the Pledge remain in full force and effect.

Date:    March 2, 1998

                                         PILGRIM AMERICA CAPITAL CORPORATION

                                         By: \S\ James R. Reis
                                            --------------------------------
                                         Its   Vice-Chairman
<PAGE>
                                                   EXHIBIT J TO SECOND AMENDMENT


                            REAFFIRMATION OF GUARANTY


                  Reference is made to that certain  Guaranty  (the  "Guaranty")
dated as of April 28,  1995,  made and given by the  undersigned  to secure  the
Obligations (as defined in the Guaranty) of Pilgrim America Group,  Inc. ("PAG")
to First Bank National Association (the "Bank").

                  The  undersigned  hereby  (a)  consents  to the  terms of that
certain Amended and Restated  Credit  Agreement dated as of July 31, 1997 by and
between  PAG  and  Pilgrim  America  Capital  Corporation   (collectively,   the
"Borrowers")  and the Bank, as amended by the First  Amendment to Second Amended
and Restated  Credit  Agreement dated as of September 16, 1997 and by the Second
Amendment to the Second Amended and Restated  Credit  Agreement dated as of even
date herewith (as so amended,  the "Credit  Agreement") and to the execution and
delivery  of the Credit  Agreement  by the  Borrowers;  and (b) agrees  that the
obligations of the Borrowers to the Bank under the Credit  Agreement  constitute
"Obligations"  within  the  meaning  of  the  above-referenced   Guaranty.   The
undersigned further agrees and reaffirms that such Obligations are guaranteed by
the undersigned in accordance with the terms and conditions of the Guaranty, and
that all of the terms,  covenants and conditions of the Guaranty  remain in full
force and effect.

Date:    March 2, 1998
                                            PILGRIM AMERICA INVESTMENTS, INC.


                                            By: \S\ James R. Reis
                                               ------------------------------
                                              Its  Vice-Chairman
<PAGE>
                                                                    EXHIBIT K TO
                                                                SECOND AMENDMENT


                            MATTERS TO BE COVERED BY
                               OPINION OF COUNSEL
                       TO THE BORROWERS AND PAII and PSII

                  The  opinion of counsel to the  Pilgrim  America  Group,  Inc.
("PAG") and Pilgrim America Capital Corporation (collectively,  the "Borrowers")
which is called for by Section 3.8 of the Second Amendment to Second Amended and
Restated  Credit  Agreement  shall be  addressed  to the Bank and dated the date
thereof.  It shall be  satisfactory  in form and substance to the Bank and shall
cover the matters set forth below,  subject to such assumptions,  exceptions and
qualifications  as may be acceptable  to the Bank and counsel to the Bank.  With
respect to opinions on the validity and  enforceability  of those loan documents
which  provide  that  they  are to be  governed  by the  laws  of the  State  of
Minnesota,  counsel  may opine that such  documents  would be valid and  binding
under the laws of the State of Arizona.  Capitalized  terms used herein have the
respective meanings given such terms in the Credit Agreement.

                  1. Each Borrower is a corporation duly  incorporated,  validly
existing  and in good  standing  under the laws of the State of Delaware and has
all  requisite  corporate  power and  authority  to carry on its business as now
conducted,  to enter  into the  Second  Amendment  to which it is a party and to
perform  all of its  obligations  under  each  and  all of the  foregoing.  Each
Borrower is duly qualified and in good standing as a foreign  corporation 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 and the
failure to so qualify would  permanently  preclude such Borrower from  enforcing
its rights with  respect to any  material  asset or expose such  Borrower to any
material liability.

                  2. The execution, delivery and performance by each Borrower of
the Second Amendment and the New Note have been duly authorized by all necessary
corporate action by such Borrower.

                  3. The Credit  Agreement,  as  amended by the First  Amendment
dated as of  September  16, 1997 and by the Second  Amendment,  and the New Note
constitute  the  legal,   valid  and  binding   obligations  of  each  Borrower,
enforceable against such Borrower in accordance with their respective terms.

                  4. The execution, delivery and performance by each Borrower of
the Second  Amendment to which it is a party will not (i) violate any  provision
of any law,  statute,  rule or  regulation  or,  to the best  knowledge  of such
counsel, any order, writ, judgment,  injunction,  decree, determination or award
of any court,  governmental  agency or  arbitrator  presently  in effect  having
applicability  to either  Borrower,  (ii) violate or contravene any provision of
the Certificate of Incorporation  or bylaws of either Borrower,  or (iii) result
in a breach of or  constitute  a default  under  any  indenture,  loan or credit
agreement or any other agreement, lease
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or  instrument  known to such counsel to which either  Borrower is a party or by
which it or any of its  properties may be bound or result in the creation of any
Lien thereunder.

                  5. 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 either
Borrower to authorize, or is required in connection with the execution, delivery
and performance of, or the legality,  validity, binding effect or enforceability
of, the Second Amendment.

                  6.  To the  best  knowledge  of  such  counsel,  there  are no
actions,  suits or proceedings pending or threatened against or affecting either
Borrower,  any  Subsidiary  of  either  Borrower  or  any  of  their  respective
properties  before  any court or  arbitrator,  or any  governmental  department,
board,  agency  or other  instrumentality  which  (i)  challenge  the  legality,
validity or  enforceability  of the Credit  Agreement,  as amended by the Second
Amendment,  or the New Note or (ii) if  determined  adversely to such  Borrower,
would have a material  adverse effect on the business,  operations,  property or
condition  (financial or otherwise) of the Borrowers and the  Subsidiaries  as a
consolidated  enterprise  or on the ability of the  Borrowers  to perform  their
obligations under the Credit Agreement, as amended by the Second Amendment.

                  7. Each of PAII and PASI is a  corporation  duly  incorporated
and  validly  existing  and in good  standing  under  the  laws of the  State of
Delaware 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 all of its obligations under each and all of the foregoing.
Each of PAII  and  PASI is duly  qualified  and in good  standing  as a  foreign
corporation 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  and the  failure to so qualify  would  permanently  preclude  it from
enforcing  its rights  with  respect to any  material  asset or expose it to any
material liability.

                  8. The execution, delivery and performance by each of PAII and
PASI of the reaffirmations of the Loan Documents to which it is a party required
under the Second Amendment have been duly authorized by all necessary  corporate
action by it.

                  9. The  Loan  Documents  to  which  each of PAII and PASI is a
party,  as reaffirmed  and  modified,  constitute  the legal,  valid and binding
obligations of each of PAII and PASI,  enforceable against it in accordance with
their respective terms.

                  10. The execution,  delivery and  performance by PAII and PSII
of the  reaffirmations of the Loan Documents to which it is a party will not (i)
violate any provision of any law,  statute,  rule or regulation  or, to the best
knowledge  of such  counsel,  any order,  writ,  judgment,  injunction,  decree,
determination or award of any court, governmental agency or arbitrator presently
in effect having  applicability  to PAII or PSII, (ii) violate or contravene any
provision of the Articles of  Incorporation  or bylaws of PAII or PSII, or (iii)
result  in a breach of or  constitute  a default  under any  indenture,  loan or
credit agreement or any other agreement, 
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<PAGE>
lease or instrument known to such counsel to which PAII or PSII is a party or by
which it or any of its  properties may be bound or result in the creation of any
Lien thereunder.

                  11. 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 PAII or PSII
to authorize,  or is required in  connection  with the  execution,  delivery and
performance of, or the legality,  validity, binding effect or enforceability of,
the reaffirmations of the Loan Documents.

                  12.  After  giving  effect  to the  amendment  of  the  Credit
Agreement pursuant to the Second Amendment,  the New Note and the reaffirmations
of the  Security  Agreements  and Pledge  Agreements  required  under the Second
Amendment,  the Liens created pursuant to the Security Agreements and the Pledge
Agreements  will remain in full force and effect,  will secure the  Obligations,
and will have the same priority as they had prior to such amendment, restatement
and reaffirmations.
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