Exhibit 10.2


                              EMPLOYMENT AGREEMENT

                             DATED FEBRUARY 1, 1998
                                 BY AND BETWEEN

                        PILGRIM AMERICA INVESTMENTS, INC.

                                       AND

                                HOWARD C. TIFFEN







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                                TABLE OF CONTENTS


ARTICLE I         DUTIES AND TERM...........................................1
         1.1      Employment................................................1
         1.2      Position and Responsibilities.............................1
         1.3      Term......................................................2
         1.4      Location..................................................2

ARTICLE II        COMPENSATION..............................................2
         2.1      Base Salary...............................................2
         2.2      Bonus Payment.............................................2
         2.3      Additional Benefits.......................................3

ARTICLE III       TERMINATION OF EMPLOYMENT.................................4
         3.1      Death or Retirement of Executive..........................4
         3.2      By Executive..............................................4
         3.3      By Company................................................4

ARTICLE IV        COMPENSATION UPON TERMINATION OF EMPLOYMENT...............5
         4.1      Upon Termination for Death or Disability..................5
         4.2      Upon Termination by Company for Cause or by Executive
                  Without Good Reason.......................................6
         4.3      Upon Termination by the Company Without Cause or
                  by Executive for Good Reason..............................6

ARTICLE V         RESTRICTIVE COVENANTS.....................................8
         5.1      Non-Competition...........................................8
         5.2      Non-Disparagement.........................................9
         5.3      Remedies..................................................9
         5.4      Scope of Article.........................................10

ARTICLE VI        MISCELLANEOUS............................................10
         6.1      Definitions..............................................10
         6.2      Key Man Insurance........................................12
         6.3      Mitigation of Damages; Set-Off; Dispute Resolution.......12
         6.4      Successors; Binding Agreement............................13
         6.5      Modification; No Waiver..................................13
         6.6      Severability.............................................13
         6.7      Notices..................................................14

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         6.8      Assignment...............................................14
         6.9      Entire Understanding.....................................14
         6.10     Executive's Representations..............................14
         6.11     Governing Law............................................14

EXHIBIT A         DISPUTE RESOLUTION PROCEDURES............................16



                                      * * *



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                              EMPLOYMENT AGREEMENT


         This EMPLOYMENT  AGREEMENT (this  "Agreement") made and entered into as
of this 1st day of February,  1998, by and between PILGRIM AMERICA  INVESTMENTS,
INC. a Delaware corporation (the "Company"), and HOWARD C. TIFFEN ("Executive").

                                R E C I T A L S:
                                - - - - - - - -

         WHEREAS,  the Company believes continued employment of the Executive is
important for the continued  success of the Company,  and the Board of Directors
has  directed  the  Company  to  enter  into an  Employment  Agreement  with the
Executive to assure the Executive's continued service; and

         WHEREAS,  the  Executive has agreed to continue to serve the Company as
Senior  Vice  President  and Senior  Portfolio  Manager of the Company and as an
officer of  Pilgrim  America  Prime  Rate  Trust  (the  "Fund") on the terms and
conditions hereinafter set forth;

         NOW,  THEREFORE,  in consideration  of the premises,  and of the mutual
covenants and agreements herein contained, the parties hereby agree as follows:

                               A G R E E M E N T:
                               - - - - - - - - -

                                    ARTICLE I

                                 DUTIES AND TERM

         1.1 Employment.  In  consideration  of their mutual covenants and other
good and valuable consideration,  the receipt, adequacy and sufficiency of which
is hereby  acknowledged,  the Company agrees to retain  Executive in its employ,
and Executive agrees to remain in the employ of the Company,  upon the terms and
conditions herein provided.

         1.2 Position and Responsibilities.

                  (a) Executive  shall serve as Senior Vice President and Senior
Portfolio  Manager of the Company and as President and Senior Portfolio  Manager
of the  Fund  (or in a  capacity  and  with a title  of at  least  substantially
equivalent  quality).  In  the  foregoing  roles,  the  Executive  shall  render
investment advisory and other management services to the Company and the Fund of
the type  customarily  performed  by  persons  situated  in a similar  capacity.
Executive agrees to perform services not inconsistent with his position as shall
from time to time be assigned to him by the Chairman of the Company.

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         (b) During  the period of his  employment  hereunder,  Executive  shall
devote substantially all of his business time,  attention,  skill and efforts to
the faithful performance of his duties hereunder.

         1.3 Term. The term of Executive's employment under this Agreement shall
commence  on the date first  above  written and shall  continue,  unless  sooner
terminated,  until January 31, 1999.  Upon the  expiration of the initial or any
subsequent term of this Agreement, this Agreement shall be automatically renewed
for an  additional  one (1) year term,  unless  either party has, at least sixty
(60) days prior to the  expiration of the then current term,  provided the other
party with written notice of its or his intention not to renew this Agreement.

         1.4 Location. During the period of his employment under this Agreement,
Executive  shall not be  required,  except with his prior  written  consent,  to
relocate his principal place of employment  outside  Maricopa  County,  Arizona.
Required travel on the Company's business shall not be deemed a relocation.

                                   ARTICLE II

                                  COMPENSATION

         For all  services  rendered by  Executive  in any  capacity  during his
employment under this Agreement,  including, without limitation,  services as an
officer or member of any committee of the Company,  the Company shall compensate
Executive as follows:

         2.1 Base  Salary.  The Company  shall pay to  Executive  an annual base
salary of not less that $200,000 (such amount is hereinafter  referred to as the
"Base Salary") during the term hereof; provided,  however, that in the event the
Company  institutes  a salary  reduction  program  which  affects the  aggregate
compensation  and  benefits of all of the  Company's  executive  personnel by at
least the same  percentage,  then Executive's Base Salary may be reduced by such
percentage  (and the term "Base Salary" as used in this Agreement shall refer to
Base Salary as so  adjusted).  Executive's  Base  Salary  shall be paid in equal
semi-monthly  installments.  The Base Salary  shall be reviewed  annually by the
Board or a  committee  designated  by the Board and the Board or such  committee
may, in its discretion, increase the Base Salary.

         2.2 Bonus Payment.  During the period of Executive's  employment  under
this Agreement,  Executive shall be entitled to bonus payments,  if any shall be
due, as  authorized  by the Chairman of the Company.  Such cash or other bonuses
shall be in addition  to, and shall not be deemed to be a  substitute  for,  the
Executive's right to the annual Base Salary described above.

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         2.3 Additional Benefits.  Executive shall be entitled to participate in
all employee benefit and welfare  programs,  plans and arrangements  (including,
without  limitation,  pension,  profit sharing,  supplemental  pension and other
retirement  plans,  insurance,  hospitalization,  medical  and group  disability
benefits,  travel or accident  insurance  plans) and to receive fringe benefits,
such as dues and fees of professional organizations and associations,  which are
from time to time  available to the  Company's  executive  personnel;  provided,
however, there shall be no duplication of termination or severance benefits, and
to the extent that such  benefits  are  specifically  provided by the Company to
Executive under other provisions of this Agreement, the benefits available under
the foregoing  plans and programs  shall be reduced by any benefit  amounts paid
under such other provisions. Executive shall during the period of his employment
hereunder  continue  to be provided  with  benefits at a level which shall in no
event be less in any  material  respect  than the  benefits  made  available  to
Executive by the Company as of the date of this Agreement.  Notwithstanding  the
foregoing,  the Company may terminate or reduce benefits under any benefit plans
and programs to the extent such reductions apply uniformly to all key executives
of the Company entitled to participate  therein,  and Executive's benefits shall
be  reduced  or  terminated  accordingly.   Specifically,   without  limitation,
Executive shall receive the following benefits:

                  (a)   Short-Term   Disability   Benefits.   In  the  event  of
Executive's failure substantially to perform his duties hereunder on a full-time
basis as a result of incapacity due to physical or mental  illness,  the Company
shall  continue  to pay the Base Salary to  Executive  during the period of such
incapacity  for a  period  not  exceeding  90  consecutive  days or for  periods
aggregating not more than 90 days during any  twelve-month  period,  but only in
the amounts  and to the extent that  disability  benefits  payable to  Executive
under Company-sponsored insurance policies are less than Executive's Base Salary
as of the date the incapacity  began.  In addition,  if  Executive's  incapacity
continues  through the end of the year and if, based on the criteria utilized by
the Company to  determine  Annual  Bonuses for its  executive  personnel  and on
Executive's  performance  prior to his  incapacity,  Executive  would  have been
entitled to an Annual Bonus for that year had he continued in active  employment
until the end of the year,  the Company  shall pay  Executive a prorated  Annual
Bonus for the year in which his incapacity commenced equal to the product of the
Annual Bonus which  Executive would have received for that year had he continued
active  employment  to the  end of  the  year,  multiplied  by a  fraction,  the
numerator of which is the number of months during the year prior to  Executive's
incapacity, and the denominator of which is twelve (12).

                  (b) Relocation  Expenses.  In the event Executive's  principal
place of  employment  is  relocated  by mutual  consent of the  parties  outside
Maricopa County,  Arizona,  the Company shall reimburse  Executive for all usual
relocation expenses reasonably incurred by Executive and his household in moving
to the new location,  including, without limitation,  moving expenses and rental
payments for temporary  living  quarters in the area of relocation  for a period
not to exceed six months.

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                  (c) Reimbursement of Business Expenses.  The Company shall, in
accordance with standard Company policies,  pay, or reimburse Executive for, all
reasonable  travel and other  expenses  incurred by Executive in performing  his
obligations under this Agreement such expenses shall include, but not be limited
to,  any  seminars,  courses  or other  educational  materials  or  arrangements
required in order for  Executive to retain his National  Association  Securities
Dealer ("NASD") license.

                  (d)  Vacations.  The  Executive  shall  be  entitled  to  paid
vacations in accordance with policies generally applicable to executive officers
of the Company in effect from time to time. The timing of such  vacations  shall
be scheduled in a reasonable manner by the Executive, consistent with his duties
and responsibilities to the Company.

                                   ARTICLE III

                            TERMINATION OF EMPLOYMENT

         3.1 Death or Retirement of Executive. Executive's employment under this
Agreement shall automatically terminate upon the death or Retirement (as defined
in Section 6.1) of Executive.

         3.2  By  Executive.  Executive  shall  be  entitled  to  terminate  his
employment  under this Agreement by giving Notice of Termination  (as defined in
Section 6.1) to the Company:

                  (a)      for Good Reason (as defined in Section 6.1);

                  (b)      at any time without Good Reason.

         3.3 By Company. The Company shall be entitled to terminate  Executive's
employment under this Agreement by giving Notice of Termination to Executive:

                  (a)      in the  event of  Executive's  Total  Disability  (as
defined in Section 6.1);

                  (b)      for Cause (as defined in Section 6.1); and

                  (c)      at any time without Cause.

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                                   ARTICLE IV

                   COMPENSATION UPON TERMINATION OF EMPLOYMENT

         If Executive's  employment  hereunder is terminated in accordance  with
the  provisions  of Article III hereof,  except for any other rights or benefits
specifically provided for herein following his period of employment, the Company
shall be obligated  to provide  compensation  and benefits to Executive  only as
follows, subject to the provisions of Section 5.3 hereof:

         4.1  Upon   Termination  for  Death,   Retirement  or  Disability.   If
Executive's   employment  hereunder  is  terminated  by  reason  of  his  death,
Retirement or Total Disability, the Company shall:

                  (a) pay  Executive (or his estate) or  beneficiaries  any Base
Salary  which  has  accrued  but not been paid as of the  termination  date (the
"Accrued Base Salary");

                  (b) pay Executive (or his estate) or beneficiaries  for unused
vacation days accrued as of the termination  date in an amount equal to his Base
Salary  multiplied by a fraction the numerator of which is the number of accrued
unused vacation days and the denominator of which is 260 (the "Accrued  Vacation
Payment");

                  (c) reimburse  Executive (or his estate) or beneficiaries  for
expenses  incurred by him prior to the date of termination  which are subject to
reimbursement pursuant to this Agreement (the "Accrued Reimbursable Expenses");

                  (d) provide to Executive (or his estate) or beneficiaries  any
accrued  and  vested  benefits  required  to be  provided  by the  terms  of any
Company-sponsored  benefit plans or programs (the "Accrued Benefits"),  together
with any  benefits  required to be paid or provided in the event of  Executive's
death or Total Disability under applicable law;

                  (e) pay Executive (or his estate) or  beneficiaries a prorated
Annual Bonus for the year in which  Executive  died,  retired or became  totally
disabled  equal to the product of the Annual  Bonus which  Executive  would have
received for that year had he continued his active  employment  until the end of
the year,  based on the  criteria  utilized by the Company to  determine  Annual
Bonuses for its executive personnel and on his performance for the year prior to
his  death,  retirement  or total  disability,  multiplied  by a  fraction,  the
numerator of which is the number of months during the year prior to  Executive's
death,  retirement or total  disability,  and the denominator of which is twelve
(12) ("Accrued Bonus");

                  (f) Executive (or his estate) or beneficiaries  shall have the
right to  exercise  all vested  unexercised  stock  options  outstanding  at the
termination date in

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accordance with terms of the plans and agreements pursuant to which such options
or warrants were issued.

The  amounts  specified  in  Section  4.1(a),  (b) and (c)  shall be paid by the
Company  as soon as  practical  after  Executive's  death,  retirement  or total
disability but in no event later than required by law. The benefits specified in
Section  4.1(d) shall be paid or provided at the time specified in the governing
plan  documents  and/or under  applicable  law. The amount  specified in Section
4.1(e) shall be paid no later than the date on which Annual Bonuses for the year
in which the Executive died, retired or become totally disabled would be paid to
the Company's executive personnel in the ordinary course of business.

         4.2 Upon Termination by Company for Cause or by Executive  Without Good
Reason.  If  Executive's  employment  hereunder is terminated by the Company for
Cause, or if Executive terminates his employment with the Company other than (x)
upon Executive's  death or Total Disability or (y) for Good Reason,  the Company
shall:

                  (a)      pay Executive the Accrued Base Salary;

                  (b)      pay Executive the Accrued Vacation Payment;

                  (c)      pay Executive the Accrued Reimbursable Expenses;

                  (d) pay  Executive  the Accrued  Benefits,  together  with any
benefits required to be paid or provided under applicable law;

                  (e) pay  Executive  any Annual  Bonus with  respect to a prior
fiscal year which has accrued but has not been paid; and

                  (f) if Executive's employment is terminated by the Company for
Cause,  he shall forfeit the right to exercise any vested  options not exercised
prior to his  termination,  but if Executive  terminates his employment  without
Good Reason,  Executive shall have the right to exercise all vested  unexercised
stock options  outstanding at the  termination  date in accordance with terms of
the plans and agreements pursuant to which such options or warrants were issued.

The amount  specified in Section  4.2(e) shall be paid no later than the date on
which Annual Bonuses for the year in which the Executive is terminated  would be
paid to the Company's executive personnel in the ordinary course of business.


         4.3 Upon  Termination by the Company  Without Cause or by Executive for
Good Reason.  If Executive's  employment  hereunder is terminated by the Company
without Cause or by Executive for Good Reason, the Company shall:

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                  (a)      pay Executive the Accrued Base Salary;

                  (b)      pay Executive the Accrued Vacation Payment;

                  (c)      pay Executive the Accrued Reimbursable Expenses;

                  (d) the  Executive  and his  dependants  shall  continue to be
covered  for twelve (12)  months,  under the same terms and  conditions,  by the
medical, dental, vision and group life insurance plans maintained by the Company
which  covered  that  Executive  and his  dependants  prior  to the  Executive's
termination  date.  The  Executive  and the Company shall share the cost of such
continued  coverage  in the same  proportions  as they  shared  the cost of such
coverage  prior to the  Executive's  termination  date. To the extent allowed by
applicable  law for purposes of satisfying  the Company's  obligation  under the
Consolidated  Omnibus  Budget  Reconciliation  Act  ("COBRA") to continue  group
health care  coverage to the  Executive  and his  dependents  as a result of the
Executive's termination of employment,  the period during which the Executive is
permitted to continue to  participate  in the Company's  medical,  dental and/or
vision  plans  under  this  Section  4.3(c)  shall not be treated as part of the
period during which the Executive and his  dependants  are entitled to continued
coverage under the Company's  group health plans under COBRA.  Following the end
of the continuation  period specified in this Section 4.3(c),  the Executive and
his  dependants  shall be covered  under the  Company's  medical,  dental and/or
vision plans as required under the provisions of COBRA;

                  (e) pay  Executive  the Accrued  Benefits,  together  with any
benefits required to be paid or provided under applicable law;

                  (f) pay  Executive  any Annual  Bonus with  respect to a prior
fiscal year which has accrued but has not been paid; and

                  (g) pay  Executive  a lump  sum  cash  payment  as  liquidated
damages an amount equal to 1.5 times the sum of Executive's  annual rate of Base
Salary as in effect at the time of Executive's  termination of employment,  plus
an amount equal to 1.5 times the average  Annual  Bonus paid to  Executive  with
respect to the three (3) years (or the number of years of Executive's employment
if less than three (3) years)  preceding  Executive's  termination  date,  which
amount shall be determined by dividing the total dollar amount paid to Executive
as Annual  Bonuses  during  such  period of years by three (3) (or the number of
years of Executive's  employment if less than three (3) years).  Such payment to
the Executive shall be made within fifteen (15) days after the Executive's  last
day of employment with the Company.  The liquidated  damages amount shall not be
reduced by any compensation which the Executive may receive for other employment
with another  employer after  termination of his employment  with the Company or
otherwise; and in addition;

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                  (h)  Executive  shall  have the right to  exercise  all vested
unexercised stock options outstanding at the termination date in accordance with
terms of the plans and  agreements  pursuant  to which such  options or warrants
were issued.


                                    ARTICLE V

                              RESTRICTIVE COVENANTS

         5.1      Non-Competition.

                  (a) By  execution  of this  Agreement,  Executive  agrees that
during his employment  with the Company and for a period of 18 months  following
the date of termination of his employment  hereunder for Cause by the Company or
for other than Good  Reason by the  Executive  (the  "Non-Competition  Period"),
Executive  will not,  within the United  States  (in which  territory  Executive
acknowledges  that the Company has sold or marketed its products or services and
conducted  its  Business,  as defined in Section  5.1(d) as of the date hereof),
directly or indirectly,  compete with the Company by carrying on a business that
is  substantially  similar to the  management  of senior loans  conducted by the
Company and Executive.  Executive agrees that the 18 month period referred to in
the preceding  sentence  shall be extended by the number of days included in any
period of time during which he is or was engaged in  activities  constituting  a
breach of this Section 5.1.

                  (b) Definition of "Compete".  For the purposes of this Section
5.1, the term "compete"  shall mean with respect to the Business:  (i) managing,
supervising,  or otherwise participating in a management or sales capacity; (ii)
calling on,  soliciting,  taking away,  accepting  as a client or  customer,  or
attempting  to call on,  solicit,  take away, or accept as a client or customer,
any individual, partnership,  corporation, company, association, or other entity
that was a client or customer of the Company as of immediately prior to the date
hereof; (iii) hiring,  soliciting,  taking away, or attempting to hire, solicit,
or take away,  either on Executive's  behalf or on behalf of any other person or
entity,  any person serving  immediately  prior to the date hereof or during the
term hereof as an employee in  connection  with the  Business;  or (iv) entering
into or  attempting  to enter  into any  business  substantially  similar to the
Business,  either  alone  or  with  any  individual,  partnership,  corporation,
company, association, or other entity.

                  (c) Direct or Indirect  Competition.  For the purposes of this
Section  5.1,  the  words  "directly  or  indirectly"  as they  modify  the word
"compete" shall mean (i) acting as an agent,  representative,  consultant,  fund
manager, officer,  director,  member, independent contractor, or employee of any
entity or  enterprise  that is competing (as defined in Section  5.1(b)  hereof)
with the Business, (ii) participating in any such competing entity or enterprise
as an owner, partner, limited partner, joint venturer,

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member,  creditor,  or stockholder  (except as a stockholder holding less than a
five percent (5%) interest in a corporation  whose shares are actively traded on
a regional or national securities exchange or in the  over-the-counter  market),
and (iii)  communicating to any such competing entity or enterprise the names or
addresses or any other information  concerning any past,  present, or identified
prospective  client or customer of the Company or any entity having title to the
goodwill of the Company with respect to the Business.

                  (d)  Business.  For  purposes  of  this  Agreement,  the  term
"Business"  shall mean the Fund and any business the Company is engaged in as of
the date that this  Agreement  is executed or may  subsequently  engage in while
this Agreement is in effect.

                  (e)  Executive  expressly  agrees and  acknowledges  that this
covenant not to compete is reasonable as to time and geographical  area and does
not place any unreasonable burden upon him;

         5.2  Non-Disparagement.  During  the  term  of this  Agreement  and the
Non-Competition  Period,  neither  Executive nor the Company shall disparage the
other,  and  neither  shall  disclose  to any  third  party  the  conditions  of
Executive's  employment  with the Company except as may be required (i) pursuant
to applicable  law or  regulations,  including the rules and  regulations of the
Securities  and  Exchange  Commission,  (ii) to  effectuate  the  provisions  of
employee plans or programs and insurance policies,  or (iii) as may be otherwise
contemplated  herein or  unless  such  information  becomes  publicly  available
without fault of the party making such disclosure.

         5.3 Remedies.  Executive  expressly  agrees and  acknowledges  that the
covenants set forth in Sections 5.1 and 5.2 are necessary for the  protection of
the interests of the Company and its affiliates  because of the nature and scope
of  their  business  and his  position  with  the  Company.  Further,  Executive
acknowledges  that any  breach of such  covenants  would  result in  irreparable
damage to the Company,  and that money damages will not sufficiently  compensate
the Company for its injury  caused  thereby,  and that the remedy at law for any
breach or threatened  breach of any of such  covenants  will be inadequate  and,
accordingly  agrees,  that the Company shall, in addition to all other available
remedies (including without  limitation,  seeking such damages as it can show it
has  sustained  by reason of such breach but  excluding  punitive  damages),  be
entitled to injunctive  relief or specific  performance  and that in addition to
such money damages he may be restrained and enjoined from any continuing  breach
of this  covenant  not to  compete  without  any  bond or other  security  being
required of any court.  Executive  further  acknowledges and agrees that if such
covenants,  or any of them, are deemed to be unenforceable  and/or the Executive
fails to comply with this  Article V, the Company has no  obligation  to provide
any compensation or other benefits  described in Article IV hereof. The remedies
set forth in this  Section  5.3 shall be  included  in any award in favor of the
Company under Exhibit A hereto.

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         5.4 Scope of  Article.  For  purposes  of this  Article  V,  unless the
context otherwise requires,  the term "Company" includes Pilgrim America Capital
Corporation and its direct and indirect subsidiaries.



                                   ARTICLE VI

                                  MISCELLANEOUS

         6.1  Definitions.  For purposes of this Agreement,  the following terms
shall have the following meanings:

                  (a)      "Accrued Base Salary" - as defined in Section 4.1(a);

                  (b)      "Accrued Benefits" - as defined in Section 4.1(d);

                  (c)      "Accrued Bonus" - as defined in Section 4.1(e);

                  (d)      "Accrued  Reimbursable  Expenses"  -  as  defined  in
Section 4.1(c);

                  (e)      "Accrued  Vacation  Payment"  - as defined in Section
4.1(b);

                  (f)      "Annual Bonus" - as defined in Section 2.2;

                  (g)      "Base Salary" - as defined in Section 2.1;

                  (h)      "Board" - shall  mean the Board of  Directors  of the
Company;

                  (i) "Cause" shall mean the occurrence of any of the following:

                           (i) Executive's  gross and willful  misconduct  which
         causes demonstrable and serious INJURY to the Company;

                           (ii)  Executive's  engaging  in conduct of a criminal
         nature that may have an adverse  impact on the  Company's  standing and
         reputation  (including a conviction of a crime for violating applicable
         securities laws);

                           (iii)  the  continued  and  unjustified   failure  or
         refusal by  Executive  to perform  the duties  required  of him by this
         Agreement  which  failure or refusal  shall not be cured within  thirty
         (30) days  following  receipt by Executive  of written  notice from the
         Board  specifying  the factors or events  constituting  such failure or
         refusal; or

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                           (iv)  Executive's  breach  of  his  obligation  under
         Section  1.2(b) hereof which shall not be cured within thirty (30) days
         after written notice thereof to Executive.

                  (j)  "Expiration"  shall mean the  expiration  of  Executive's
         employment hereunder in accordance with Section 1.3;

                  (k) "Good  Reason"  shall  mean the  occurrence  of any of the
following:

                           (i)  Material  change by the  Company in  Executive's
         positions,  function,  duties, staff support or responsibilities  which
         would  cause  Executive's  position  with the Company to become of less
         dignity,  responsibility  and importance than those associated with his
         functions, duties or responsibilities as of January 31, 1998;

                           (ii)  Executive's  Base  Salary  as the  same  may be
         increased  from time to time is  significantly  reduced by the  Company
         (unless  such  reduction is pursuant to a salary  reduction  program as
         described  in Section 2.1 hereof) or there is a material  reduction  in
         the benefits  that are in effect for the  Executive on January 31, 1998
         in accordance  with Section 2.3 (unless such reduction is pursuant to a
         uniform  reduction in benefits for all key executives  participating in
         such benefit plans);

                           (iii) Except with Executive's  prior written consent,
         relocation of Executive's  principal  place of employment to a location
         outside of Maricopa County, Arizona; or

                           (iv) Other  material  breach of this Agreement by the
         Company,  which  breach  is not cured  within  thirty  (30) days  after
         written notice thereof is received by the Company.

                  (l) "Non-Competition Period" - as defined in Section 5.1(a);

                  (m) "Notice of  Termination"  shall mean a notice  which shall
indicate the specific  termination  provision of this Agreement  relied upon and
shall set forth in  reasonable  detail  the facts and  circumstances  claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.  Each Notice of  Termination  shall be delivered at least thirty (30)
days prior to the effective date of termination;

                  (n) "Retirement"  shall mean normal retirement on or after age
65;

                                       11
<PAGE>
                  (o)  "Termination"  shall mean the  termination of Executive's
employment  hereunder  other than upon expiration of the term of such employment
in accordance with Section 1.3;

                  (p)  "Total   Disability"   shall  mean  Executive's   failure
substantially  to perform his duties hereunder on a full-time basis for a period
exceeding  90  consecutive  days or for  periods  aggregating  more than 90 days
during any  twelve-month  period as a result of  incapacity  due to  physical or
mental  illness.  If  there  is a  dispute  as to  whether  Executive  is or was
physically or mentally unable to perform his duties under this  Agreement,  such
dispute shall be submitted for resolution to a licensed physician agreed upon by
the Board and  Executive,  or if an agreement  cannot be promptly  reached,  the
Board and Executive shall promptly select a physician,  and if these  physicians
cannot agree,  the physicians  shall  promptly  select a third  physician  whose
decision shall be binding on all parties.  If such a dispute  arises,  Executive
shall submit to such  examinations  and shall provide such  information  as such
physician(s)  may  request,  and the  determination  of the  physician(s)  as to
Executive's  physical  or mental  condition  shall be  binding  and  conclusive.
Notwithstanding the foregoing, if Executive participates in any group disability
plan provided by the Company which offers long-term disability benefits,  "Total
Disability" shall mean total disability as defined therein.

         6.2 Key Man  Insurance.  The Company shall have the right,  in its sole
discretion,  to  purchase  "key man"  insurance  on the life of  Executive.  The
Company shall be the owner and  beneficiary  of any such policy.  If the Company
elects  to  purchase  such  a  policy,   Executive   shall  take  such  physical
examinations and supply such  information as may be reasonably  requested by the
insurer.  To the extent  allowed by law, the Company shall direct the insurer to
treat such information  provided by Executive as confidential  information which
shall not be disclosed to the Company, its employees or agents.

         6.3      Mitigation of Damages; Set-Off; Dispute Resolution.

                  (a) Executive  shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment.

                  (b) If there  shall be any  dispute  between  the  Company and
Executive (i) in the event of any  termination of Executive's  employment by the
Company,  whether such  termination  was for Cause,  or (ii) in the event of any
termination of employment by Executive,  whether Good Reason  existed,  or (iii)
otherwise  arising  out of this  Agreement,  the  dispute  shall be  resolved in
accordance with the dispute resolution procedures set forth in Exhibit A hereto,
the  provisions  of which are  incorporated  as a part  hereof,  and the parties
hereto  hereby agree that (a) such dispute  resolution  procedures  shall be the
exclusive  method for resolution of disputes under this Agreement and (b) to the
extent  allowed  by law the  NASD  arbitration  provisions  shall  not  apply to
disputes arising under this Agreement;  provided, however, that (1) either party
may seek preliminary judicial

                                       12
<PAGE>
relief if, in its judgment, such action is necessary to avoid irreparable injury
during  the  tendency  of such  procedures,  and (2)  nothing in Exhibit A shall
prevent either party from exercising the rights of termination set forth in this
Agreement.  In the event of a dispute  hereunder as to whether a termination  by
the Company was for Cause or by the Executive for Good Reason,  until there is a
resolution  and  award as  provided  in  Exhibit  A, the  Company  shall pay all
amounts,  and provide all benefits,  to Executive and/or  Executive's  family or
other  beneficiaries,  as the case may be, that the Company would be required to
pay or provide  hereunder as though such termination were by the Company without
Cause or by Executive for Good Reason; provided, however, that the Company shall
not be required to pay any  disputed  amounts,  except upon receipt of a written
undertaking  by or on behalf of Executive  (and/or  Executive's  family or other
beneficiaries,  as the case may be) to repay,  without  interest or penalty,  as
soon as practicable after completion of the dispute  resolution all such amounts
to which Executive (or Executive's  family or other  beneficiaries,  as the case
may be) is ultimately adjudged not to be entitled with respect to the payment of
such  disputed  amount(s).  IT IS  EXPRESSLY  UNDERSTOOD  THAT BY  SIGNING  THIS
AGREEMENT,  WHICH INCORPORATES  BINDING  ARBITRATION,  THE COMPANY AND EXECUTIVE
AGREE, EXCEPT AS SPECIFICALLY PROVIDED OTHERWISE IN SECTION 5.3 AND THIS SECTION
6.3(B),  TO  WAIVE  COURT  OR  JURY  TRIAL  AND TO  WAIVE  PUNITIVE,  STATUTORY,
CONSEQUENTIAL AND ANY DAMAGES, OTHER THAN COMPENSATORY DAMAGES.

         6.4 Successors; Binding Agreement. This Agreement shall be binding upon
any  successor  to  the  Company  and  shall  inure  to  the  benefit  of and be
enforceable by  Executive's  personal or legal  representatives,  beneficiaries,
designees,  executors,   administrators,   heirs,  distributees,   devisees  and
legatees.

         6.5  Modification;  No Waiver.  This  Agreement  may not be modified or
amended except by an instrument in writing signed by the parties hereto. No term
or condition of this  Agreement  shall be deemed to have been waived,  nor shall
there  be any  estoppel  against  the  enforcement  of  any  provision  of  this
Agreement, except by written instrument by the party charged with such waiver or
estoppel.  No such written  waiver shall be deemed a  continuing  waiver  unless
specifically  stated therein,  and each such waiver shall operate only as to the
specific term or condition waived and shall not constitute a waiver of such term
or condition for the future or as to any other term or condition.

         6.6  Severability.  The covenants and agreements  contained  herein are
separate and severable and the invalidity or unenforceability of any one or more
of such covenants or agreements,  if not material to the employment  arrangement
that is the  basis  for  this  Agreement,  shall  not  affect  the  validity  or
enforceability of any other covenant or agreement  contained herein.  If, in any
judicial  proceeding,  a  court  shall  refuse  to  enforce  one or  more of the
covenants or agreements  contained  herein  because the duration  thereof is too
long,  or the scope  thereof is too broad,  it is expressly  agreed  between the

                                       13
<PAGE>
parties hereto that such duration or scope shall be deemed reduced to the extent
necessary to permit the enforcement of such covenants or agreements.

         6.7  Notices.  All the  notices  and other  communications  required or
permitted  hereunder  shall be in writing and shall be delivered  personally  or
sent by registered or certified mail, return receipt  requested,  to the parties
hereto at the following addresses:

                           If to the Company, to it at:

                           Pilgrim America Investments, Inc.
                           Two Renaissance Square
                           40 North Central Avenue, Suite 1200
                           Phoenix, Arizona 85004
                           Attn: Chairman

                           If Executive, to him at:

                           Howard C. Tiffen (At his personal  residence as noted
                           In the Company records).

         6.8  Assignment.  This Agreement and any rights  hereunder shall not be
assignable by either party without the prior written  consent of the other party
except as otherwise specifically provided for herein.

         6.9 Entire  Understanding.  This  Agreement  (together with the Exhibit
incorporated as a part hereof) constitutes the entire understanding  between the
parties hereto and no agreement,  representation,  warranty or covenant has been
made by either party except as expressly set forth herein.

         6.10  Executive's  Representations.  Executive  represents and warrants
that neither the execution and delivery of this Agreement nor the performance of
his duties hereunder  violates the provisions of any other agreement to which he
is a party or by which he is bound.

         6.11  Governing  Law. This  Agreement  shall be construed in accordance
with  and  governed  for all  purposes  by the  laws  of the  State  of  Arizona
applicable to contracts executed and wholly performed within such state.

                                       14
<PAGE>
         IN  WITNESS  WHEREOF,  the  parties  hereto  have  duly  executed  this
Agreement as of the day and year first above written.

                                    Company:

                                    PILGRIM AMERICA INVESTMENTS, INC.



                                    By:
                                        ----------------------------------
                                        Robert W. Stallings

                                    Executive:

                                    HOWARD C. TIFFEN



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

                                       15
<PAGE>
                                    EXHIBIT A

                          DISPUTE RESOLUTION PROCEDURES
                          -----------------------------


         A. If a  controversy  should  arise  which is covered by Section 6.3 of
Article  VI,  then not later than  three (3)  months  from the date of the event
which is the  subject of dispute  either  party may serve on the other a written
notice  specifying  the  existence  of such  controversy  and  setting  forth in
reasonably  specific  detail the  grounds  thereof  ("Notice  of  Controversy");
provided  that,  in any event,  the other party shall have at least  thirty (30)
days  from and after the date of the  Notice of  Controversy  to serve a written
notice  of  any  counterclaim   ("Notice  of   Counterclaim").   The  Notice  of
Counterclaim shall specify the claim or claims in reasonably specific detail. If
the Notice of Controversy or the Notice of Counterclaim,  as the case may be, is
not served  within the  applicable  period,  the claim set forth therein will be
deemed to have been waived, abandoned and rendered unenforceable.

         B.  Following  receipt of the Notice of  Controversy  (or the Notice of
Counterclaim,  as the case may be),  there shall be a three week  period  during
which the parties will make a good faith  effort to resolve the dispute  through
negotiation  ("Period  of  Negotiation").  Neither  party  shall take any action
during the Period of Negotiation to initiate arbitration proceedings.

         C. If the parties  should  agree  during the Period of  Negotiation  to
mediate  the  dispute,  then the Period of  Negotiation  shall be extended by an
amount of time to be agreed upon by the parties to permit such mediation.  In no
event,  however,  may the Period of  Negotiation  be  extended by more than five
weeks or,  stated  differently,  in no event may the  Period of  Negotiation  be
extended to encompass more than a total of eight weeks.

         D. If the  parties  agree to mediate  the  dispute  but are  thereafter
unable to agree within a week on the format and  procedures  for the  mediation,
then the effort to mediate  shall  cease,  and the Period of  Negotiation  shall
terminate  four  weeks  from  the  Notice  of  Controversy  (or  the  Notice  of
Counterclaim, as the case may be).

         E. Following the termination of the Period of Negotiation,  the dispute
(including  the  main  claim  and  counterclaim,  if any)  shall be  settled  by
arbitration,  governed by the Federal  Arbitration  Act, 9 U.S.C.  ss. 1 et seq.
("FAA"),  and  judgment  upon the  award  may be  entered  in any  court  having
jurisdiction thereof. The format and procedures of the arbitration are set forth
below (referred to below as the "Arbitration Agreement").

                                       16
<PAGE>
         F. A notice of intention to arbitrate  ("Notice of Arbitration")  shall
be served within 45 days of the termination of the Period of Negotiation. If the
Notice of Arbitration  is not served within this period,  the claim set forth in
the Notice of Controversy  (or the Notice of  Counterclaim,  as the case may be)
will be deemed to have been waived, abandoned and rendered unenforceable.

         G. The  arbitration,  including  the  Notice  of  Arbitration,  will be
governed by the Commercial Rules of the America Arbitration  Association ("AAA")
in effect on the date of the  Notice of  Arbitration,  except  that the terms of
this  Arbitration  Agreement  shall  control in the event of any  difference  or
conflict between such Rules and the terms of this Arbitration Agreement.

         H. The arbitrator  shall reach a decision on the merits on the basis of
applicable legal principles as embodied in the law of the State of Arizona.  The
arbitration hearing shall take place in Phoenix, Arizona.

         I.  There  shall  be  one  arbitrator,  regardless  of  the  amount  in
controversy. The arbitrator selected, in order to be eligible to serve, shall be
a lawyer  in  Phoenix,  Arizona  with at least 15 years  specializing  in either
general commercial  litigation or general corporate and commercial  matters.  In
the event the parties cannot agree on a mutually  acceptable  single  arbitrator
from the list  submitted by the AAA, the AAA shall  appoint the  arbitrator  who
shall meet the foregoing criteria.

         J.  At  the  time  of  appointment  and  as a  condition  thereto,  the
arbitrator will be apprised of the time limitations and other provisions of this
Arbitration  Agreement and shall indicate such dispute  resolver's  agreement to
comply with such provisions and time limitations.

         K. During the 30 day period  following  appointment of the  arbitrator,
either  party may serve on the other a request for limited  numbers of documents
directly  related to the dispute.  Such documents will be produced  within seven
days of the request.

         L. Following the thirty-day period of document  production,  there will
be a forty-five day period during which limited depositions will be permissible.
Neither party will take more than 5 depositions,  and no deposition  will exceed
three hours of direct testimony.

         M.  Disputes as to  discovery  or  prehearing  matters of a  procedural
nature  shall be promptly  submitted  to the  arbitrator  pursuant to  telephone
conference call or otherwise. The arbitrator shall make every effort to render a
ruling on such interim  matters at the time of the hearing (or conference  call)
or within five business days thereafter.

                                       17
<PAGE>
         N. Following the period of depositions,  the arbitration  hearing shall
promptly commence. The arbitrator will make every effort to commence the hearing
within thirty days of the conclusion of the deposition  period and, in addition,
will make every effort to conduct the hearing on  consecutive  business  days to
conclusion.

         O. An award will be rendered,  at the latest, within nine months of the
date of the Notice of  Arbitration  and within  thirty  days of the close of the
arbitration  hearing.  The award shall set forth the  grounds  for the  decision
(findings of fact and  conclusions of law) in reasonably  specific  detail.  The
award shall be final and nonappealable  except as provided in the FAA and except
that a court of competent  jurisdiction  shall have the power to review whether,
as a matter of law, based upon the findings of fact by the arbitrator, the award
should be  confirmed  or should be  modified  or vacated in order to correct any
errors of law made by the  arbitrator.  Such judicial review shall be limited to
issues of law,  and the  parties  agree  that the  findings  of fact made by the
arbitrator  shall be final and  binding on the  parties  and shall  serve as the
facts to be relied  upon by the  court in  determining  the  extent to which the
award should be confirmed, modified or vacated.

         The award may only be made for compensatory  damages,  and if any other
damages (whether  exemplary,  punitive,  consequential,  statutory or other) are
included, the award shall be vacated and remanded, or modified or corrected,  as
appropriate to promote this damage limitation.

                                       18