FOURTH AMENDMENT TO CREDIT AGREEMENT
                                       and
                    FIRST AMENDMENT TO PLEDGE AND COLLATERAL
                            ADMINISTRATION AGREEMENT

        This  Amendment is made as of this 9th day of May,  1997, by and between
Norwest Bank Minnesota, National Association (the "Bank") and Piper Jaffray Inc.
(the "Company").

        The Bank and the Company have made and entered  into a Credit  Agreement
dated as of  November  23,  1994,  as amended by a First  Amendment  dated as of
December 28, 1994, extended by the Bank's letter dated October 13, 1995, amended
by a Second  Amendment  dated November 7, 1995, and amended by a Third Amendment
dated as of March 27, 1996 (the "Credit Agreement").

        The Credit  Agreement  includes  provisions  setting loan  pricing;  the
Company's covenants concerning,  among other things, maintenance of Tangible Net
Worth and delivery of certain  financial  reports;  and a  requirement  that the
Company's parent,  Piper Jaffray Companies Inc.,  maintain a specified  Tangible
Net Worth.

        The Bank,  the  Company  and two other  banks have also made and entered
into a Pledge and Collateral  Administration  Agreement dated as of November 23,
1994 (the "Pledge  Agreement") which includes a provision  requiring the Company
to maintain a Minimum Collateral Amount as a condition to certain borrowings.

        The Bank and the Company have agreed to amend the  foregoing  provisions
of the Credit Agreement and the Pledge Agreement.

        Now,  therefore,  in  consideration  of the  premises  and of the mutual
covenants and agreements hereinafter contained, the parties agree as follows:

        1.  Capitalized  terms used herein and not otherwise  defined shall have
the meanings ascribed to such terms in the Credit Agreement.

        2. Section 1.1 of the Credit Agreement is hereby amended by changing the
definition  of  "Applicable  Margin" to provide that the  Applicable  Margin for
Committed  Loans  maintained as Federal  Funds Rate  Advances  shall be .45% per
annum and the Applicable  Margin for  Discretionary  Loans maintained as Federal
Funds Rate Advances shall be 1/2 of 1% per annum.

        3.  Section 2.14 of the Credit  Agreement is hereby  amended by changing
the Commitment Ending Date to May 31, 1998.

        4.  Section 5.1(h) of the Credit Agreement is hereby amended to be and
read as follows:

        "(h)  Promptly  upon  the  mailing  or  filing  thereof,  copies  of all
        financial  statements,  reports  and  proxy  statements  mailed  to  the
        Parent's shareholders;  copies of all registration statements,  periodic
        reports and other  documents  filed by the Parent with the Commission or
        any national securities exchange, provided, however, that so long as the
        Company  delivers  to the  Bank a copy  of the  Parent's  press  release
        associated with each Form 8-K, the Company need not deliver the Form 8-K
        unless requested by the Bank; and copies of all registration  statements
        relating  to the  Company's  own  securities  and of all  Financial  and
        Operational  Combined  Uniform  Single Reports filed by the Company with
        the Commission or any national securities exchange."

        5. Section 6.8 of the Credit Agreement is hereby amended by changing the
required Tangible Net Worth of the Company from $100,000,000 to $125,000,000.

        6. Section 7.1(s) of the Credit  Agreement is hereby amended by changing
the required Tangible Net Worth of the Parent from $125,000,000 to $135,000,000.

        7.  Section 1.1 of the Pledge Agreement is hereby amended by changing
the figure "110%" to "100%".

        8. Upon and  following  the date of this  Amendment,  references  in the
Credit Agreement and the Pledge Agreement to "this Agreement" shall be deemed to
refer to the Credit Agreement or Pledge Agreement, as amended by this Amendment.

        9.  Except as amended  hereby,  all of the terms and  conditions  of the
Credit Agreement and the Pledge Agreement shall remain in full force and effect.

        In  witness  whereof,  the  Bank  and the  Company  have  executed  this
Amendment as of the day and year first above written.

PIPER JAFFRAY INC.                          NORWEST BANK MINNESOTA,
                                            NATIONAL ASSOCIATION

By   /s/ Deborah K. Roesler                 By   /s/ Edward J. Meyer, Jr.
     Deborah K. Roesler                          Edward J. Meyer, Jr.
     Chief Financial Officer                     Vice President
<PAGE>
                      FOURTH AMENDMENT TO CREDIT AGREEMENT
                                       and
                    FIRST AMENDMENT TO PLEDGE AND COLLATERAL
                            ADMINISTRATION AGREEMENT

        This  Amendment is made as of this 9th day of May,  1997, by and between
The Northern Trust Company (the "Bank") and Piper Jaffray Inc. (the "Company").

        The Bank and the Company have made and entered  into a Credit  Agreement
dated as of  November  23,  1994,  as amended by a First  Amendment  dated as of
December 23, 1994, extended by the Bank's letter dated October 20, 1995, amended
by a Second  Amendment  dated November 9, 1995, and amended by a Third Amendment
dated as of March 27, 1996 (the "Credit Agreement").

        The Credit  Agreement  includes  provisions  setting loan  pricing;  the
Company's covenants concerning,  among other things, maintenance of Tangible Net
Worth and delivery of certain  financial  reports;  and a  requirement  that the
Company's parent,  Piper Jaffray Companies Inc.,  maintain a specified  Tangible
Net Worth.

        The Bank,  the  Company  and two other  banks have also made and entered
into a Pledge and Collateral  Administration  Agreement dated as of November 23,
1994 (the "Pledge  Agreement") which includes a provision  requiring the Company
to maintain a Minimum Collateral Amount as a condition to certain borrowings.

        The Bank and the Company have agreed to amend the  foregoing  provisions
of the Credit Agreement and the Pledge Agreement.

        Now,  therefore,  in  consideration  of the  premises  and of the mutual
covenants and agreements hereinafter contained, the parties agree as follows:

        1.  Capitalized  terms used herein and not otherwise  defined shall have
the meanings ascribed to such terms in the Credit Agreement.

        2. Section 1.1 of the Credit Agreement is hereby amended by changing the
definition  of  "Applicable  Margin" to provide that the  Applicable  Margin for
Committed  Loans  maintained as Federal  Funds Rate  Advances  shall be .45% per
annum and the Applicable  Margin for  Discretionary  Loans maintained as Federal
Funds Rate Advances shall be 1/2 of 1% per annum.

        3.  Section 2.14 of the Credit  Agreement is hereby  amended by changing
the Commitment Ending Date to May 31, 1998.

        4.  Section 5.1(h) of the Credit Agreement is hereby amended to be and
read as follows:

        "(h)  Promptly  upon  the  mailing  or  filing  thereof,  copies  of all
        financial  statements,  reports  and  proxy  statements  mailed  to  the
        Parent's shareholders;  copies of all registration statements,  periodic
        reports and other  documents  filed by the Parent with the Commission or
        any national securities exchange, provided, however, that so long as the
        Company  delivers  to the  Bank a copy  of the  Parent's  press  release
        associated with each Form 8-K, the Company need not deliver the Form 8-K
        unless requested by the Bank; and copies of all registration  statements
        relating  to the  Company's  own  securities  and of all  Financial  and
        Operational  Combined  Uniform  Single Reports filed by the Company with
        the Commission or any national securities exchange."

        5. Section 6.8 of the Credit Agreement is hereby amended by changing the
required Tangible Net Worth of the Company from $100,000,000 to $125,000,000.

        6. Section 7.1(s) of the Credit  Agreement is hereby amended by changing
the required Tangible Net Worth of the Parent from $125,000,000 to $135,000,000.

        7.  Section 1.1 of the Pledge Agreement is hereby amended by changing
the figure "110%" to "100%".

        8. Upon and  following  the date of this  Amendment,  references  in the
Credit Agreement and the Pledge Agreement to "this Agreement" shall be deemed to
refer to the Credit Agreement or Pledge Agreement, as amended by this Amendment.

        9.  Except as amended  hereby,  all of the terms and  conditions  of the
Credit Agreement and the Pledge Agreement shall remain in full force and effect.

        In  witness  whereof,  the  Bank  and the  Company  have  executed  this
Amendment as of the day and year first above written.

PIPER JAFFRAY INC.                          THE NORTHERN TRUST COMPANY


By   /s/ Deborah K. Roesler                 By   /s/ Christina L. Jakuc
     Deborah K. Roesler                          Christina L. Jakuc
     Chief Financial Officer                     Officer


<PAGE>
                      FOURTH AMENDMENT TO CREDIT AGREEMENT


        This  Amendment is made as of this 9th day of May,  1997, by and between
First Bank  National  Association  (the  "Bank")  and Piper  Jaffray  Inc.  (the
"Company").

        The Bank and the Company have made and entered  into a Credit  Agreement
dated as of  November  23,  1994,  as amended by a First  Amendment  dated as of
December  27, 1994,  extended by the Bank's  letter  dated  September  12, 1995,
amended by a Second  Amendment  dated  November 7, 1995,  and amended by a Third
Amendment dated as of March 27, 1996 (the "Credit Agreement").

        The  Credit  Agreement   includes   provisions   setting  loan  pricing;
procedures for obtaining  Committed Loans; the Company's  covenants  concerning,
among other  things,  maintenance  of Tangible Net Worth and delivery of certain
financial  reports;  and a requirement that the Company's parent,  Piper Jaffray
Companies Inc., maintain a specified Tangible Net Worth.

        The Bank,  the  Company  and two other  banks have also made and entered
into a Pledge and Collateral  Administration  Agreement dated as of November 23,
1994 (the "Pledge Agreement").

        The Bank and the Company have agreed to amend the  foregoing  provisions
of the Credit  Agreement  and the Bank has agreed to cease to be a Lender  under
the terms of the Pledge Agreement.

        Now,  therefore,  in  consideration  of the  premises  and of the mutual
covenants and agreements hereinafter contained, the parties agree as follows:

        1.  Capitalized  terms used herein and not otherwise  defined shall have
the meanings ascribed to such terms in the Credit Agreement.

        2.  Section 1.1 of the Credit Agreement is hereby amended as follows:

               (a)  The definition of "Agreement to Pledge" is amended to be and
        read as follows:  "`Agreement to Pledge':  An agreement substantially in
        the form of Exhibit A to the Fourth Amendment to this Agreement."

               (b) The definition of  "Applicable  Margin" is amended to provide
        that the Applicable Margin for Federal Funds Rate Advances shall be .45%
        per annum.

               (c)  The definition of "Collateral Agreement" is amended to be
        and read as follows: "`Collateral Agreement':  The Collateral Agreement
        between the Company and the Bank dated as of May 9, 1997."

               (d) The  definition  of  "Collateral  Value" is amended to be and
        read as follows: "`Collateral Value': At any time of determination,  80%
        of the amount  determined  by the Bank to be the Market  Value of a Firm
        Security;  provided,  however,  that  the  Collateral  Value of any Firm
        Security that is not an Eligible Security shall be zero."

               (e)  The definition of "Customer Securities Availability" is be
        amended to be and read as follows:  "`Customer Securities Availability'
        has the meaning specified in Section 2.1(b)(i) or Section 2.1 (b)(ii),
        as applicable."

               (f) The  definition  of "Eligible  Security" is amended to be and
        read as follows:  "`Eligible  Security':  A Security that (a) is legally
        available to be pledged or  hypothecated by the Company to the Bank, (b)
        is subject to (i) a validly  perfected first priority  security interest
        in favor of the Bank,  (ii) no Lien,  other  than a Lien in favor of the
        Bank,  and (iii) no adverse  claims  known to the  Company  which  would
        impair  the  value of such  Security  as  collateral,  (c) is a DTC Debt
        Security,  GNMA Security,  Government  Security,  or DTC Equity Security
        with  respect to which the Company is a qualified  OTC market  maker (as
        such term is used in  Regulation  U), (d) has not matured or been called
        prior to its stated maturity and is not in default, and (e) has not been
        deemed by the Bank in its sole discretion to be illiquid."

               (g) The  definition of "GNMA  Security" is amended to be and read
        as follows:  "`GNMA Security' means a mortgage-backed  Security which is
        (i) guaranteed by the Government  National  Mortgage  Association,  (ii)
        shown on the books of PTC, (iii) subject to the control of PTC, and (iv)
        registered  in the  name  of PTC,  another  clearing  corporation,  or a
        nominee of either of them."

               (h) The definition of "Market Value" is amended to be and read as
        follows: "`Market Value': means, with respect to any Security, the final
        price bid for such  Security on the Business Day  immediately  preceding
        the date of valuation of such  Security,  as determined by reference (a)
        in the case of DTC Equity Securities, DTC Debt Securities and Government
        Securities at DTC, to the DTC `Participant  Terminal  Services'  system,
        (b) in the case of Government Securities (other than those held at DTC),
        to any  securities  pricing  services that are  regularly  recognized in
        national  financial  markets,  or,  if  no  such  pricing  services  are
        available on any Business  Day, to the Wall Street  Journal,  and (c) in
        the case of GNMA Securities, to the pricing system provided by PTC."

               (i) The  definition of "Pledged  Securities" is amended to be and
        read as  follows:  "`Pledged  Securities'  means  Securities  subject to
        Agreements to Pledge or Securities  that have been delivered and pledged
        to the Bank as provided by Section 3.2 of the Collateral Agreement."

               (j)  The  definitions  of  "Administrator,"   "Cash  Collateral,"
        "Collateral Pool," "Firm Collateral Agreement," "Lenders,"  "Liquidation
        Notice," "Pro Rata Share," and "Secured Obligations" are hereby deleted.

        3.  Section 2.1 of the Credit Agreement is hereby amended to be and read
as follows:

        "Section 2.1  The Commitment.

               2.1(a)   Committed  Loans.  On  the  terms  and  subject  to  the
        conditions  hereof,  the Bank  agrees to make loans  (each a  "Committed
        Loan" and,  collectively,  the  "Committed  Loans") to the  Company on a
        revolving  basis at any time and from time to time from the Closing Date
        to the  Termination  Date,  during  which period the Company may borrow,
        repay and reborrow in accordance with the provisions  hereof;  provided,
        that (a) the unpaid principal amount of outstanding  Loans (inclusive of
        outstanding  Discretionary  Loans)  shall  not at any  time  exceed  the
        Commitment  Amount,  and (b) the unpaid  principal amount of outstanding
        Committed  Loans  shall not at any time exceed the  Customer  Securities
        Availability.  Loans may be obtained and maintained,  at the election of
        the Company but subject to the limitations hereof, as Federal Funds Rate
        Advances or Eurodollar Rate Advances or any combination thereof.

               2.1(b)  Committed Loan Borrowing Procedures.

                      (i) Procedures in the Absence of Hard Pledge  Notice.  The
               procedures  in this  clause  2.1(b)(i)  shall apply so long as no
               notice pursuant to clause 2.1(b)(ii) (a "Hard Pledge Notice") has
               been  given  and is in  effect.  In  addition  to the  procedures
               specified in Section 2.3 of this  Agreement,  on any day on which
               the Company has made a request for a Committed  Loan, the Company
               will deliver to the Bank no later than 5:00 P.M.  (Chicago  time)
               an Agreement to Pledge covering  Customers'  Securities that upon
               delivery to the Bank must qualify as Eligible  Securities with an
               attached list of such  Customers'  Securities  stating the Market
               Value  thereof.  On any  Business  Day on which a Committed  Loan
               remains  outstanding as of 3:30 P.M.  (Chicago time), the Company
               shall deliver to the Bank no later than 5:00 P.M.  (Chicago time)
               a list of the Customers'  Securities  subject to the Agreement to
               Pledge that was  delivered  with the  request for such  Committed
               Loan,  stating the Market Value thereof.  By delivering each such
               list or Agreement to Pledge, the Company shall be deemed to grant
               the Bank a security interest in the listed Customers'  Securities
               and to represent and covenant that: (i) the listed Securities are
               Eligible Securities; (ii) the listed Securities will not be sold,
               pledged or  otherwise  transferred  to any person  other than the
               Bank  prior to 9:00  A.M.  on the  Business  Day after the day on
               which  the  Company  delivers  the list to the  Bank;  (iii)  the
               Company  will,  upon demand by the Bank,  deliver to the Bank all
               Securities  described in any such list then current,  or (if such
               demand is made  after  9:00 A.M.  on the  Business  Day after the
               Bank's  receipt of the most recent such list),  other  Customers'
               Securities  acceptable  to the Bank that are Eligible  Securities
               with an aggregate  Market  Value at least equal to the  aggregate
               Market  Value  of  the  listed   Securities,   and  pledge  those
               Securities to the Bank as security for all  Committed  Loans then
               outstanding;  and (iv) any  Securities  listed in  Agreements  to
               Pledge in effect for fifteen  consecutive  calendar  days will be
               delivered  and pledged to the Bank by the Company as security for
               all Committed Loans then  outstanding (as applicable on the first
               Business Day following that fifteenth  consecutive  day). So long
               as no Hard  Pledge  Notice  is in  effect,  "Customer  Securities
               Availability"  means  the sum of 80% of the  Market  Value of DTC
               Equity Securities, 90% of the Market Value of DTC Debt Securities
               and 95% of the Market  Value of GNMA  Securities  and  Government
               Securities subject to the then outstanding Agreements to Pledge.

                      (ii) Procedures when Hard Pledge Notice is in Effect.  The
               Bank may at any time in its sole  discretion give notice (a "Hard
               Pledge  Notice") to the Company that  henceforth,  until the Bank
               notifies the Company to the contrary,  all outstanding  Committed
               Loans are to be secured by a pledge of Customers' Securities. The
               procedures in this clause shall apply from the time a Hard Pledge
               Notice is given until the Bank, in its sole discretion,  notifies
               the  Company  that it is again  willing to make  Committed  Loans
               pursuant to clause  2.1(b)(i),  above. If a Hard Pledge Notice is
               received at or before 11:00  o'clock A.M. on a Business  Day, the
               Company shall deliver Securities to the Bank that Business Day in
               an  amount  (the  "Required   Amount")  such  that  the  Customer
               Securities Availability is equal to or greater than the amount of
               all outstanding  Committed Loans, giving effect to any borrowings
               and  repayments  that day. If a Hard Pledge Notice is received by
               the Company  after 11:00  o'clock  A.M.  on a Business  Day,  the
               Company shall use best efforts to deliver the Required  Amount of
               Securities  to the Bank that  Business Day, and shall deliver the
               Required  Amount  of  Securities  no later  than the time when it
               would have been required to deliver the  Securities  had the Hard
               Pledge Notice been received prior to 11:00 A.M. the next Business
               Day.  If a Hard  Pledge  Notice is  received at any time on a day
               that is not a  Business  Day,  the Hard  Pledge  Notice  shall be
               treated as having been  received  prior to 11:00  o'clock A.M. on
               the next  Business  Day.  Thereafter,  so long as the Hard Pledge
               Notice  remains in effect,  (i) the Company shall be obligated to
               deliver  Securities  to the Bank each  Business  Day in an amount
               sufficient so that the Customer  Securities  Availability  at the
               end of  such  Business  Day  is  equal  to or  greater  than  the
               then-outstanding  Committed  Loans,  taking into  account any new
               borrowings and repayments; (ii) provided that no Default or Event
               of Default  then  exists,  the Bank shall be  obligated to return
               cash or specific  Securities to the Company upon written  request
               delivered  by the Company to the Bank on or before  3:30  o'clock
               P.M. on any  Business  Day,  provided,  that  following  any such
               return,  the Customer  Securities  Availability is equal to or in
               excess of the outstanding Committed Loans, taking into effect any
               new  borrowings  and  repayments;  and (iii)  the term  "Customer
               Securities  Availability" shall mean the sum of 80% of the Market
               Value of DTC Equity  Securities,  90% of the Market  Value of DTC
               Debt  Securities  and 95% of the Market Value of GNMA  Securities
               and Government  Securities  that have been delivered or otherwise
               transferred  to the Bank by the Company and remain subject to the
               Bank's security interest pursuant to this Section 2.1(b)(ii).

                      (iii)  Method of Collateral Delivery.  The Company shall
               deliver Securities to the Bank, when required pursuant to clause
               2.1(b)(ii) in the following manner:


                             (A) In the  case  of DTC  Debt  Securities  and DTC
                      Equity Securities,  by causing DTC to make all appropriate
                      entries in its  records  identifying  such  Securities  as
                      being pledged to the Bank;

                             (B)  In  the  case  of  Government  Securities,  by
                      transfer of such Government Securities to one or more book
                      entry accounts of the Bank at the Federal  Reserve Bank of
                      Minneapolis  or, in the case of  Government  Securities at
                      DTC,  by causing  DTC to make  appropriate  entries in its
                      records  identifying  such  Securities as being pledged to
                      the Bank; and

                             (C) In the case of GNMA Securities, by the transfer
                      of such GNMA Securities to one or more "pledgee  accounts"
                      at PTC maintained by the Bank and specified by the Bank.

                      (iv)  Method of Collateral Return.  The Bank shall return
               Securities to the Company, when required, pursuant to clause
               2.1(b)(ii), in the following manner:


                             (A) In the case of DTC Equity Securities,  DTC Debt
                      Securities and Government Securities maintained at DTC, by
                      implementing  a  release  of  such  Securities  on the DTC
                      system;

                             (B) In the case of Government Securities other than
                      Government   Securities   at  DTC,  by  transfer  of  such
                      Securities to a book entry  account  designated in writing
                      to the Bank by the Company;

                             (C) In the case of GNMA Securities,  by transfer of
                      such  GNMA   Securities   to  one  or  more  PTC  accounts
                      designated in writing from time to time to the Bank by the
                      Company; and

                             (D) In the case of cash,  by wire  transfer  to the
                      Company's account, designated in writing from time to time
                      by the Company.

        4. Section 2.3 of the Credit Agreement is hereby amended by adding a new
sentence as follows,  immediately  following the first sentence of such Section:
"Each  request  by  the  Company  for a  Loan  shall  be  deemed  to  include  a
representation  that the Company has  Eligible  Securities  available  to pledge
whose Market Value is sufficient such that,  giving effect to the requested Loan
and and the subsequent pledge of such Eligible Securities,  the unpaid principal
amount of outstanding  Committed  Loans will not exceed the Customer  Securities
Availability and the aggregate  Collateral Value of pledged Firm Securities will
equal or exceed the unpaid principal amount of outstanding Discretionary Loans."

        5.  Section 2.10(a) of the Credit Agreement is hereby amended to be and
read as follows:

               "2.10(a) At any time that the outstanding principal amount of the
        Customers' Securities Note exceeds the Customer Securities Availability,
        the Company shall immediately  either (i) prepay the principal amount of
        the Customers'  Securities Note in the amount of such excess, or (ii) if
        no Hard  Pledge  Notice  is in  effect,  deliver  a list  of  additional
        Customers'  Securities  whose  Market  Value is at  least  equal to such
        excess,  or (iii) if a Hard Pledge  Notice has been given and remains in
        effect,  deliver  additional  Customers'  Securities  to the Bank  whose
        Market Value is at least equal to such excess."

        6.  Section 2.14 of the Credit  Agreement is hereby  amended by changing
the Commitment Ending Date to May 8, 1998.

        7.  Section 3.2(d) of the Credit Agreement is hereby deleted.

        8.  Section 5.1(h) of the Credit Agreement is hereby amended to be and
read as follows:

        "(h)  Promptly  upon  the  mailing  or  filing  thereof,  copies  of all
        financial  statements,  reports  and  proxy  statements  mailed  to  the
        Parent's shareholders;  copies of all registration statements,  periodic
        reports and other  documents  filed by the Parent with the Commission or
        any national securities exchange, provided, however, that so long as the
        Company  delivers  to the  Bank a copy  of the  Parent's  press  release
        associated with each Form 8-K, the Company need not deliver the Form 8-K
        unless requested by the Bank; and copies of all registration  statements
        relating to the Company's own  securities and each Focus Report filed by
        the Company with the Commission or any national securities exchange."

        9. Section 6.8 of the Credit Agreement is hereby amended by changing the
required Tangible Net Worth of the Company from $100,000,000 to $125,000,000.

        10. Section 7.1(s) of the Credit Agreement is hereby amended by changing
the required Tangible Net Worth of the Parent from $125,000,000 to $135,000,000.

        11.  It shall be a  condition  precedent  to the  effectiveness  of this
Fourth  Amendment  that the  Company  shall  have  executed  and  delivered  the
Collateral Agreement to the Bank. Upon delivery of the Collateral Agreement, the
Collateral  Agreement  dated  November  23,  1994,  made by the  Company for the
benefit of the Bank shall be of no further force or effect.

        12. As soon as possible  following the date of this Amendment,  the Bank
shall notify The Northern Trust Company pursuant to Section 3.1(a) of the Pledge
Agreement that any credit  extensions then outstanding  which are secured by the
Pledge  Agreement  have  been  paid  and  shall  in  addition  send  the  notice
contemplated by Section  12.1(c) of the Pledge  Agreement to the effect that the
Bank shall cease to be a Lender  under the terms of the Pledge  Agreement  as of
the date not more than 30 days following the effective date of this Amendment.

        13. Upon and  following  the date of this  Amendment,  references in the
Credit  Agreement  to "this  Agreement"  shall be deemed to refer to the  Credit
Agreement, as amended by this Amendment.

        14.  Except as amended hereby, all of the terms and conditions of the
Credit Agreement shall remain in full force and effect.

        In  witness  whereof,  the  Bank  and the  Company  have  executed  this
Amendment as of the day and year first above written.

PIPER JAFFRAY INC.                      FIRST BANK NATIONAL ASSOCIATION


By   /s/ Deborah K. Roesler             By   /s/ Jose A. Peris
     Deborah K. Roesler                      Jose A. Peris
     Chief Financial Officer                 Senior Vice President/Division Head

By   /s/ Jennifer A. Olson-Goude
     Jennifer A. Olson-Goude
     Assistant Vice President /Assistant Treasurer



<PAGE>
                              COLLATERAL AGREEMENT



        COLLATERAL  AGREEMENT,  dated May 9, 1997, made by PIPER JAFFRAY INC., a
Delaware   corporation  (the  "Company"),   in  favor  of  FIRST  BANK  NATIONAL
ASSOCIATION, a national banking association (the "Bank").


        WHEREAS the Company has entered  into a credit  agreement  with the Bank
(the  "Credit  Agreement")  which  provides,  among  other  things,  for  credit
facilities made available to the Company by the Bank; and


        WHEREAS it is a condition precedent to the Bank's making any Loans under
the Credit  Agreement  after the date hereof that the Company  shall execute and
deliver to the Bank this Collateral Agreement.


        NOW, THEREFORE,  in consideration of the mutual covenants and agreements
hereinafter  and in the Credit  Agreement set forth,  the parties  hereto hereby
agree as follows:

ARTICLE I
DEFINITIONS
1.1 Terms used in Credit  Agreement.  Capitalized  terms used in this Collateral
Agreement and not otherwise  defined herein shall have the meanings  assigned to
them  in the  Credit  Agreement.  
1.2 Pledged  Securities.  The  term  "Pledged
Securities" means Customers' Securities and Firm Securities listed by theCompany
pursuant to Section 2.1 or Section 2.2 of the Credit Agreement  (whetherattached
to an  Agreement  to  Pledge  or  delivered  on a day on  which  a Loan  remains
outstanding)  and  all  Customers'  Securities  and  Firm  Securities  delivered
to,deposited with,  transferred to or otherwise put in the possession or control
of the Bank. Securities that are so listed or delivered to the Bank shall remain
"Pledged Securities"  thereafter until they are released or replaced pursuant to
a provision of the Credit Agreement or this Collateral Agreement.

ARTICLE II
REPRESENTATION OF THE COMPANY

    The Company hereby  represents that any Pledged  Securities will be Eligible
Securities at the time they are listed by the Company pursuant to Section 2.1 or
Section 2.2 of the Credit  Agreement  and at all times that they remain  Pledged
Securities. The Company will defend the Pledged Securities against all claims or
demands of all persons (other than the Bank) claiming the Pledged  Securities or
any interest therein.

ARTICLE III
COLLATERAL
3.1 Pledge,  assignment  and grant of  security  interest.  As security  for its
collective  obligations  under  the  Note(s),  the  Credit  Agreement  and  this
Collateral Agreement,  now existing or hereafter arising, however evidenced, the
Company hereby grants, bargains, pledges, assigns,  transfers,  conveys and sets
over to the Bank a first  priority  security  interest  in all of the  Company's
right, title and interest in, to and under (a) all Pledged  Securities;  (b) all
additions to and  substitutions for the Pledged  Securities;  (c) all dividends,
cash,  instruments and other property from time to time received,  receivable or
otherwise  distributed  in  respect  of or in  exchange  for any or all  Pledged
Securities;  (d) all proceeds and collections derived from or in connection with
such Pledged Securities; and (e) all powers and rights of the Company, including
rights of enforcement, under such Pledged Securities. The Bank shall have all of
the rights,  remedies  and  recourses  with  respect to the  Pledged  Securities
afforded a secured  party,  in addition to, and not in limitation  of, the other
rights,  remedies and recourses  afforded the Bank under this  Agreement and the
Credit Agreement. 
3.2 Delivery of Pledged Securities.  The Company shall: (a) at
all times maintain Pledged  Securities  available for delivery and pledge to the
Bank as required by Section 2.1 and Section 2.2 of the Credit Agreement; and (b)
actually  deliver and pledge  Pledged  Securities to the Bank  immediately  upon
demand, as required by Section  2.1(b)(ii) or Section  2.2(b)(iii) of the Credit
Agreement and, whether or not demand is made, as required by Section 2.2(b)(iv).
Upon such  demand,  or when  otherwise  required in  accordance  with the Credit
Agreement,  the  Company  shall  deliver  to the Bank or its agent  all  Pledged
Securities  in a manner  permitted by the UCC. The Company shall also deliver to
the Bank, with respect to any Pledged  Security other than a bearer  instrument,
any necessary or appropriate stock powers,  endorsements or assignments thereof,
in form and substance  satisfactory to the Bank. The Company will at any time or
times hereafter  execute and deliver such other documents and perform such other
acts as the Bank may  reasonably  request to  establish,  maintain,  perfect and
enforce the Bank's security interest in the Pledged  Securities and rights under
this Agreement, including, without limitation,  financing statements executed by
the  Company  and  naming  the  Company  as  debtor.  
3.3 Hypothecation   Rule.   Notwithstanding  any  contrary  provision  of  this
Collateral  Agreement  or of any of the  Loan  Documents,  the  Bank's  security
interest in Customers'  Securities  shall secure only the Company's  obligations
under the Customers'  Securities Note and the Bank's  security  interest in Firm
Securities shall secure all the Company's  obligations under the Firm Securities
Note, the Credit Agreement and this Collateral Agreement, but not the Customers'
Securities  Note.  The Bank  will  assure  that  Customers'  Securities  are not
commingled  with Firm  Securities in a manner that may violate SEC Rules 8c-1 or
15c-3;  provided,  however,  that  (i)  when the  Company  delivers  any list of
Securities or delivers any Securities  pursuant to Section 2.1 or Section 2.2 of
the  Credit  Agreement,  the  Company  shall  represent  whether  the  listed or
delivered Securities are Customers' Securities or Firm Securities,  and (ii) the
Bank may rely without  inquiry upon such  representations  and upon the terms of
any Agreements to Pledge delivered by the Company in determining whether Pledged
Securities are Firm Securities or Customers' Securities.
3.4 Covenants of the Company. The Company hereby agrees:
(a) not to perform or fail to perform any act, if such performance or failure to
perform would encumber,  pledge or hypothecate any Pledged  Securities or in any
manner impair the security intended to be afforded thereby; 
(b) to pay all taxes and other impositions lawfully levied,  assessed or imposed
against the Pledged Securities,  or upon or against the creation,  perfection or
continuance of the security interest created hereby;
(c) to  conform  to and  comply  with  each and  every  requirement  imposed  by
governmental authority with respect to the Pledged Securities;
(d) to do all things  required to preserve the security  interest in the Pledged
Securities  created by this  Agreement as a perfected  first and prior  security
interest,  and to  preserve  and  protect  its title to the  Pledged  Securities
against  loss by  foreclosure  or other  proceedings  to  enforce  any  security
interest  prior to or on a parity with the  security  interest  held by the Bank
hereunder; and
(e) at any time during the continuance of any Event of Default,  upon request by
the Bank, to deliver to the Bank all notices,  financial statements,  reports or
other communications received by the Company as owner of any Pledged Securities.
3.5  Release  and  Substitution  of  Pledged  Securities.  Except as  explicitly
provided herein and in the Credit Agreement,  the Company shall have no right to
substitute other Securities for any Pledged  Securities (unless the substitution
would cause the aggregate  market value of all Pledged  Securities to increase),
nor to withdraw such Pledged Securities.
3.6 Income from  Pledged  Securities;  voting  rights.  Unless  there shall have
occurred  and be  continuing  an Event of Default  (as  defined  in Section  4.1
hereof),  the Company  shall be entitled to exercise any voting  rights or other
powers  relating or  pertaining  to the Pledged  Securities  for any purpose not
inconsistent  with this  Agreement,  the Company shall have the right to receive
and  retain,  for its own use and  benefit,  all  income and  receipts  from the
Pledged  Securities,  and the Bank shall pay to the  Company all such income and
receipts  received or collected by the Bank.  Upon the occurrence and during the
continuance  of an Event of Default,  the Bank shall have the sole and exclusive
right and  authority  to  exercise  such voting  rights and other  powers and to
receive  and  retain all income and  receipts  payable  thereon or with  respect
thereto,  and the  Company  shall  promptly  pay over to the bank all income and
receipts from the Pledged  Securities  received or collected by the company from
and after the date of the Event of Default, and the same shall constitute a part
of the  collateral  subject  to this  Agreement  (and  may,  in the case of cash
proceeds, be applied to the debts secured hereby).

ARTICLE IV
DEFAULTS AND REMEDIES
4.1 Events of Default.  Either of the following  occurrences shall constitute an
Event of Default  hereunder:  
(a) the  occurrence  of an Event of Default  under
Section 7.1 of the Credit Agreement; or 
(b) any failure by the Company to comply
with the terms of this Agreement.  
4.2 Remedies.  Upon the  occurrence  and during the  continuance of any Event of
Default, the Bank may at its option take any one or more of the following steps:
(a) by mandamus or other suit, action or proceeding, at law or in equity, obtain
orders requiring the Company to perform its covenants and obligations under this
Agreement or  enjoining  any acts or things that may be unlawful or in violation
of the rights of the Bank;
(b) have access to and inspect,  examine and make copies of all of the books and
records and any and all accounts and similar data of the Company relating to the
Pledged Securities;
(c) exercise any of the remedies available to a secured party under the UCC with
respect to the Pledged  Securities,  including any remedy referred to in Section
4.3 hereof; and
(d) take  whatever  other  action at law or in equity  may appear  necessary  or
desirable to collect the payments due hereunder or under the Notes or the Credit
Agreement  and  any  other  monetary  obligation  of the  Company  hereunder  or
thereunder then due, or to enforce any obligation,  covenant or agreement of the
Company under this Agreement, the Notes or the Credit Agreement.
4.3 Disposition of Pledged  Securities.  Upon the occurrence and continuation of
any  Event  of  Default,   the  Bank  may,  without  any  demand  of  any  kind,
advertisement,  notice to or consent of the Company or any other  person (all of
which are, to the extent permitted by law, hereby expressly waived),  collect or
otherwise  convert  into money the whole or any  portion of or  interest  in the
Pledged  Securities,  and sell,  assign and deliver or  otherwise  dispose of or
liquidate  the whole or any portion of or interest in the Pledged  Securities in
such manner,  at any exchange,  brokers' board or elsewhere,  at such prices and
upon such  terms and  conditions  as the Bank may deem  reasonable  and  proper;
provided,  however,  that all such  dispositions  must be made in a commercially
reasonable manner and in good faith, as required by UCC.

    At any such sale, any Pledged  Securities or any portion thereof or interest
therein may be sold as an entirety or in separate  parcels,  as the Bank may (in
its sole discretion) determine. The Bank shall not be obligated to make any sale
of the Pledged  Securities if it shall determine not to do so, regardless of the
fact that notice of sale of the Pledged Securities may have been given. The Bank
may, without notice or publication,  adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may,  without further notice,  be made at the time
and place to which the same was so adjourned. In case sale of all or any portion
of the Pledged Securities is made on credit or for future delivery,  the Pledged
Securities  or such  portion so sold may be  retained by the Bank until the sale
price is paid by the  purchaser or  purchasers  thereof,  but the Bank shall not
incur any liability in case any such purchaser or purchasers  shall fail to take
up and pay for the Pledged  Securities  or such  portion so sold and, in case of
any such failure, such Pledged Securities or such portion may be sold again upon
like notice.

    At any public sale,  the Bank may bid for or  purchase,  free (to the extent
permitted by law) from any right of  redemption,  stay and appraisal on the part
of the Company  (all said rights  being also hereby  waived and  released to the
extent  permitted  by law),  any  portion of or  interest  in or all the Pledged
Securities offered for sale and may make payment on account thereof by using any
portion of the  obligations  secured  hereby,  as a credit  against the purchase
price,  and the Bank may,  upon  compliance  with the  terms of the sale,  hold,
retain and  dispose  of such  property  without  further  accountability  to the
Company  therefor.  For purposes hereof, a written  agreement to purchase all or
any portion of or interest in the Pledged  Securities shall be treated as a sale
thereof  and the Bank  shall be free to carry  out such  sale  pursuant  to such
agreement  and the  Company  shall not be  entitled to the return of the Pledged
Securities or any portion thereof subject thereto, notwithstanding the fact that
after the Bank  shall have  entered  into such  agreement  all  obligations  and
liabilities  secured  hereby may have been paid in full.  As an  alternative  to
exercising  the power of sale herein  conferred upon it, the Bank may proceed by
suit or suits at law or in equity to foreclose  its  security  interest and sell
the Pledged  Securities or any portion thereof pursuant to judgment or decree of
a court or courts having competent jurisdiction.

    In the event of sale,  collection  or  conversion  into money of any Pledged
Securities or any portion  thereof or interest  therein,  the Bank,  after first
deducting the ordinary and reasonable costs and expenses relating thereto, shall
apply the balance of such  proceeds  to the  amounts  owed to the Bank under the
Firm Securities Note, the Customers'  Securities Note and the Credit  Agreement.
If such  application  leaves  any  surplus,  such  surplus  shall be paid to the
Company.

    Upon consummation of any such sale, the Bank shall have the right to assign,
transfer,  endorse and  deliver to the  purchaser  or  purchasers  thereof  such
Pledged  Securities,  or any portion thereof or any interest  therein,  so sold.
Each such  purchaser  at any such sale shall hold the property  sold  absolutely
free from any claim or right on the part of the Company,  and the Company hereby
waives (to the extent  permitted by law) all rights of  redemption,  stay and/or
appraisal  which the Company now has or may at any time in the future have under
the rule of law or statute  now  existing  or  hereafter  enacted.  The  Company
acknowledges  that the Pledged  Securities are of a type  customarily  sold on a
recognized  market and that no notice of intended  sale or  disposition  thereof
need be given to the Company under the UCC.

    The Bank  shall  not  incur  any  liability  as a result  of the sale of the
Pledged  Securities  or any portion  thereof or interest  therein at any private
sale in a manner  which is  commercially  reasonable  (within the meaning of the
UCC). The Company hereby waives any claims against the Bank arising by reason of
the fact that the price at which the  Pledged  Securities  may have been sold at
such sale was less than the price  which  might have been  obtained  at a public
sale or was less than the aggregate  amount of the  obligations  and liabilities
secured thereby,  even if the Bank accepts the first offer received and does not
offer any portion of the Pledged Securities to more than one possible purchaser.
Without  limiting  the  generality  of the  foregoing,  the  provisions  of this
paragraph would apply if, for example, the Bank were to place all or any portion
of the Pledged  Securities for private placement by an investment  banking firm,
or if such  investment  banking firm purchased all or any portion of the Pledged
Securities  for its own  account or if the Bank placed all or any portion of the
Pledged Securities privately with a purchaser or purchasers.

    Any  duty of  care  imposed  by law on the  Bank  with  respect  to  Pledged
Securities  shall be deemed  fulfilled if the Bank exercises  reasonable care in
physically  safekeeping  such  Pledged  Securities  or,  in the case of  Pledged
Securities in the custody or  possession of a bailee or third person,  exercises
reasonable  care in the  selection of the bailee or third  person,  and the Bank
need not otherwise preserve, protect, insure or care for any Pledged Securities.
The Bank shall be deemed to have  exercised  reasonable  care in the custody and
preservation of Pledged  Securities in its possession if the Pledged  Securities
are accorded  treatment  substantially  equal to that which the Bank accords its
own property. The Bank shall not be obligated to preserve any rights the Company
may have against prior parties,  nor to realize on the Pledged Securities at all
or in any  particular  manner or  order.  The Bank  shall not be liable  for any
failure  to  collect  or  realize  upon the  obligations  secured  hereby or any
collateral security therefor, or any part thereof, or for any delay in so doing,
nor shall it be under any obligation to take any action  whatsoever with respect
thereto.  Prior to the Bank's foreclosure of its security interest,  the Company
and not the Bank shall have full  responsibility  for (a) ascertaining or taking
action with respect to calls, maturities,  conversions, tenders or other matters
relative to the Pledged  Securities or any portion  thereof,  whether or not the
Bank has or is deemed to have  knowledge  of such  matters,  or (b)  taking  any
necessary  steps to preserve  rights  against any  parties  with  respect to the
Pledged  Securities or any portion  thereof  (provided,  however,  that the Bank
shall pass on to the Company any notices of any event described in this sentence
that  are  actually  received  by the  Bank,  and  the  Bank  shall  follow  any
instructions  received  from the Company with respect to such events that do not
impose costs on the Bank or reduce the value of the Pledged Securities).  If any
notification  of  intended  disposition  of  any of the  Pledged  Securities  is
required by law, such notification shall be deemed reasonably and properly given
if mailed  at least ten (10) days  before  such  disposition,  postage  prepaid,
addressed to the Company at the address shown below.

    At any sale of the Pledged Securities, the Bank may restrict the prospective
bidders or purchasers to purchasers who agree to take the Pledged Securities for
investment  and not  with  the view to  distribution  and who will  agree to the
imposition  of  restrictive  legends  on any  certificates  or  other  documents
representing the Pledged Securities, and the Bank has the right to arrange for a
sale  which  would  otherwise  qualify  as exempt  from  registration  under the
Securities Act of 1933. The Company  acknowledges that questions may arise under
the  Securities  Act of 1933,  as now or  hereafter  in effect,  or any  similar
statute  hereafter enacted analogous in purpose or effect (such Act and any such
similar statute as may from time to time in effect being hereinafter  called the
"Federal  Securities  Laws"),  with  respect to any  disposition  of the Pledged
Securities.  The Company understands that compliance with the Federal Securities
Laws may  strictly  limit the  course of conduct of the Bank if the Bank were to
attempt to dispose of all or any portion of the Pledged Securities, and may also
limit the extent to which or the manner in which any  subsequent  transferee  of
the Pledged Securities or any portion thereof may dispose of the same. There may
be other legal restrictions or limitations affecting the Bank in any attempts to
dispose of all or any portion of the Pledged  Securities  under  applicable blue
sky or other securities law or similar laws analogous in purpose or effect.  The
Company agrees that private sales made in compliance with applicable federal and
state  securities  law  shall be  deemed  to have  been  made in a  commercially
reasonable manner.

4.4 Remedies not exclusive.  No remedy  conferred herein or reserved to the Bank
is intended to be exclusive of any other available remedy or remedies,  but each
and every such  remedy  shall be  cumulative  and shall be in  addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute.  
4.5  Restoration  of  rights  and  remedies.  If the  Bank  has  instituted  any
proceeding to enforce any right or remedy under this Agreement, the Notes or the
Credit Agreement and such proceeding has been  discontinued or abandoned for any
reason or has been determined adversely to the Bank, then and in every such case
the Company and the Bank shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder,  and
thereafter  all rights and remedies of the Bank shall continue as though no such
proceeding had been instituted.
4.6 Delay or omission not waiver. The failure of the Bank either to exercise any
right or  remedy  provided  hereunder,  under  the  Notes or  under  the  Credit
Agreement  upon an Event of  Default  or to  exercise  any such  right or remedy
promptly shall not impair any such right or remedy or constitute a waiver of any
such Event of Default. Every right and remedy given by this Article IV or by law
to the Bank may be  exercised  from time to time,  and as often as may be deemed
expedient, by the Bank.

ARTICLE V
MISCELLANEOUS
5.1 Term of Agreement.  This Agreement shall be valid and  enforceable  from the
date of  execution  and delivery  hereof  until the later of (a) the  Commitment
Ending Date, or (b) the date on which all of the Company's obligations under the
Notes,  the Credit  Agreement and this  Collateral  Agreement  have been paid in
full.  On the later of such dates,  the Bank shall deliver to the Company all of
the Pledged  Securities  then remaining in the possession of the Bank,  together
with any instrument  requested by the Company indicating that the Bank no longer
retains a lien on, security interest in or right to such Pledged  Securities and
shall  instruct the issuer or registrar  for any Pledged  Securities to register
the Pledged Securities in the name of the Company, all without recourse upon, or
warranty by the Bank and at the cost and expense of the Company.  
5.2  Amendment.  This  Agreement may be amended only by an instrument in writing
executed by the duly authorized representatives of the Bank and the Company.
5.3 Notice.  All  notices,  demands and  requests to be given or made  hereunder
shall be in writing and shall be mailed,  telegraphed or  hand-delivered  to the
respective  addresses set out on the signature page hereof or, as to each party,
at such other address as shall be  designated by that party in a written  notice
to the other party. Mailed notice shall be effective when deposited in the mail.
5.4  Governing  law.  This  Agreement  shall be  governed  by and  construed  in
accordance with the laws of the State of Minnesota.
5.5  Headings.  Section  headings  in this  Agreement  are  included  herein for
convenience of reference only and shall not constitute a party of this Agreement
for any other purpose.

    IN WITNESS  WHEREOF,  the Bank and the Company have caused this Agreement to
be duly executed by their duly authorized  officers as of the date first written
hereinabove.


ADDRESS:                       PIPER JAFFRAY INC.


Piper Jaffray Tower            By   /s/ Deborah K. Roesler
P.O. Box 28                         Deborah K. Roesler
Minneapolis, MN 55440               Chief Financial Officer



                               By   /s/ Jennifer A. Olson-Goude
                                    Jennifer A. Olson-Goude
                                    Assistant Vice President/Assistant Treasurer



                               FIRST BANK NATIONAL ASSOCIATION


                               By   /s/ Jose A. Peris
                                    Jose A. Peris
                                    Senior Vice President/Division Head
<PAGE>                                                      
                        FIRST AMENDMENT TO LOAN AGREEMENT


         This FIRST  AMENDMENT TO LOAN AGREEMENT  (this  "Amendment"),  made and
entered  into as of April 1, 1997,  is by and between  Piper  Jaffray  Companies
Inc.,  a  corporation  organized  under the laws of the State of  Delaware  (the
"Borrower"), and First Bank National Association, a national banking association
(the "Bank").

                                    RECITALS

         1. The Bank and the Borrower  entered into a Loan Agreement dated as of
August 27,  1996 (the "Loan  Agreement")  pursuant to which the Bank made a term
loan to the Borrower in the amount of $30,000,000 (the "Term Loan"); and

         2. The outstanding principal balance of the Term Loan is $15,000,000; 
and

         3. The Borrower has requested that the Bank provide to the Borrower a 
committed revolving credit facility in the amount of $15,000,000, with the 
initial advance thereunder to be used to pay the Term Loan in full; and

         4. The Bank has agreed to provide such revolving credit facility to the
Borrower and to make  amendments  to the Loan  Agreement to provide for the same
and to make certain  other  amendments  to the Loan  Agreement  requested by the
Borrower,  upon the  terms  and  subject  to the  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 Loan
Agreement, unless the context shall otherwise require.

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

                  2.1  Definitions.  The  definitions  of  "Adjusted  Eurodollar
         Rate," "Advance,"  "Applicable  Margin," "Eurodollar Rate," "Eurodollar
         Rate Advance," "Interest Period," "Loan Documents," "Obligations," "PJI
         Credit Agreement," "Term Loan," and "Term Note" contained in Section1.1
         of the  Loan  Agreement  are  amended  to read in their  entireties  as
         follows:

                           "Adjusted Eurodollar Rate":  The Adjusted Fixed 
                  Eurodollar Rate or the Adjusted Floating Eurodollar Rate.

                           "Advance":  Any portion of the outstanding  Revolving
                  Loans by the 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.

                           "Applicable Margin":  With respect to:

                                    (a)      Reference Rate Advances -- 0%.

                                    (b)      Eurodollar Rate Advances -- 1.00%

                           "Eurodollar  Rate":  With respect to each  Eurodollar
                  Rate Advance on any date of determination, the average offered
                  rate for deposits in United States dollars (rounded upward, if
                  necessary  to the nearest  1/16th of 1%) for  delivery of such
                  deposits  on  such  date,  for  one  month,  in the  case of a
                  Floating  Eurodollar  Advance  or the  number  of  days in the
                  Interest  Period  in  the  case  of a  Fixed  Eurodollar  Rate
                  Advance,  which  appears on the  Reuters  Screen  LIBO page of
                  11:00a.m.,  London  time (or such  other time as of which such
                  rate appears) two Eurodollar Business Days prior to such date,
                  or the rate for such  deposits  determined by the Bank at such
                  time  based  on  such  other  published   service  of  general
                  application as shall be selected by the Bank for such purpose;
                  provided,  that  in  lieu  of  determining  the  rate  in  the
                  foregoing  manner,  the Bank may  determine  the rate based on
                  rates at which United  States  dollar  deposits are offered to
                  the Bank in the interbank  Eurodollar  market at such time for
                  delivery  in  Immediately  Available  Funds on such date in an
                  amount approximately equal to the Advance by the Bank to which
                  such  Interest  Period  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  purposes  of
                  displaying  London interbank  offered rates of major banks for
                  United States dollar deposits).

                           "Eurodollar Rate Advance":  A Fixed Eurodollar Rate 
                  Advance or a Floating Eurodollar Rate Advance.

                           "Interest   Period":   With  respect  to  each  Fixed
                  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 month or two months thereafter, as the Borrower
                  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 a
                           Fixed  Eurodollar  Rate Advance that would  otherwise
                           end  after  the  Termination  Date,  shall end on the
                           Termination Date.

                           "Loan Documents":  This Agreement and the Revolving 
                  Note.

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

                           "PJI Credit Agreement": That certain Credit Agreement
                  dated as of November 23, 1994 between the Bank and PJI, as the
                  same may be amended from time to time.

                           "Term Loan": The term loan in the original  principal
                  amount of  $30,000,000  made to the  Borrower  by the Bank and
                  evidenced by the Term Note.

                           "Term  Note":  That  certain  promissory  note  dated
                  September  27,  1996  in  the  original  principal  amount  of
                  $30,000,000  made by the Borrower  payable to the order of the
                  Bank.  
                  Section 1.1 of the Loan Agreement is further amended by 
         deleting the definitions "Maturity," "Security Documents," and "Term 
         Loan Commitment," in their entireties.

                  Section 1.1 of the Loan Agreement is further amended by adding
         the definitions of "Adjusted Fixed Eurodollar Rate," "Adjusted Floating
         Eurodollar Rate," "Facility Fee," "First  Amendment," "Fixed Eurodollar
         Rate  Advance,"   "Floating   Eurodollar   Rate  Advance,"   "Revolving
         Commitment,"   "Revolving   Commitment   Amount,"   "Revolving   Loan,"
         "Revolving Loan Date," "Revolving Note," and "Termination Date" thereto
         in correct alphabetical order:

                                    "Adjusted  Fixed  Eurodollar   Rate":   With
                           respect to each Interest Period applicable to a Fixed
                           Eurodollar Rate Advance, the rate (rounded upward, if
                           necessary,  to the next one hundredth of one percent)
                           determined by dividing the Eurodollar  Rate as of the
                           first day of such  Interest  Period by 1.00 minus the
                           Eurodollar Reserve Percentage.

                                    "Adjusted Floating  Eurodollar Rate": On any
                           date of  determination,  the rate (rounded upward, if
                           necessary,  to the next one-hundredth of one percent)
                           determined  by dividing the  Eurodollar  Rate on such
                           date by 1.00 minus the Eurodollar Reserve Percentage.

                                    "Facility Fee":  As defined in Section2.9.

                                    "First   Amendment":   That  certain   First
                           Amendment to Loan Agreement dated as of April 1, 1997
                           between the Borrower and the Bank.

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

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

                                    "Revolving  Commitment":  The  obligation of
                           the Bank to make  Revolving  Loans to the Borrower in
                           an aggregate principal amount outstanding at any time
                           not to exceed the  Revolving  Commitment  Amount upon
                           the  terms  and   subject  to  the   conditions   and
                           limitations of this Agreement.
                                    "Revolving Commitment Amount":  Initially 
                           $15,000,000 but as the same may be reduced from time 
                           to time pursuant to Section 2.8.

                                    "Revolving Loan": As defined in Section 2.1.

                                    "Revolving Loan Date": The date of the 
                           making of any Revolving Loan hereunder.

                                    "Revolving Note": A promissory note of the 
                           Borrower in the form of Exhibit A-1.

                                    "Termination  Date":  The  earliest  of  (a)
                           March31,  1998,  (b) the date on which the  Revolving
                           Commitment  is  terminated  pursuant  to Section  7.2
                           hereof  or  (c)  the  date  on  which  the  Revolving
                           Commitment  Amount is  reduced  to zero  pursuant  to
                           Section 2.8 hereof.

                  2.2  Terms of Lending. Article II of the Loan Agreement is
         amended to read in its entirety as follows:

                                   ARTICLE II

                                TERMS OF LENDING

                           Section 2.1 The  Revolving  Commitment.  On the terms
                  and subject to the conditions  hereof, the Bank agrees to make
                  loans  (each,  a  "Revolving  Loan"  and,  collectively,   the
                  "Revolving Loans") to the Borrower on a revolving basis at any
                  time  and  from  time  to  time  from  April 1,  1997  to  the
                  Termination Date, during which period the Borrower may borrow,
                  repay and reborrow in accordance  with the provisions  hereof,
                  provided,  that the  unpaid  principal  amount of  outstanding
                  Revolving  Loans  shall not at any time  exceed the  Revolving
                  Commitment  Amount.   Revolving  Loans  may  be  obtained  and
                  maintained, at the election of the Borrower but subject to the
                  limitations  hereof,  as Reference Rate Advances or Eurodollar
                  Rate Advances or any combination thereof.

                           Section 2.2 Procedure for Revolving Loans.

                           2.2(a) Any  request by the  Borrower  for a Revolving
                  Loan hereunder shall be in writing or by telephone and must be
                  given so as to be  received  by the Bank not later  than 12:00
                  Noon (Minneapolis time) two Eurodollar  Business Days prior to
                  the requested  Revolving  Loan Date if the Revolving  Loan (or
                  any portion  thereof) is requested as a Fixed  Eurodollar Rate
                  Advance  and not later than 12:00 Noon  (Minneapolis  time) on
                  the requested  Revolving  Loan Date if the  Revolving  Loan is
                  requested as a Floating Eurodollar Rate Advance or a Reference
                  Rate  Advance.  Each  request for a Revolving  Loan  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  Loan  the
                  applicable  conditions specified in the First Amendment,  with
                  respect to the  initial  Revolving  Loan,  and the  conditions
                  specified in Section 2.2(b) in the case of all Advances,  have
                  been and will be satisfied.  The initial  Revolving Loan shall
                  be deemed to have been made on April 1, 1997 in the amount of,
                  and applied in payment of, the outstanding  principal  balance
                  of and all accrued and unpaid interest on and fees relating to
                  the Term Loan as of such date and shall be deemed to have been
                  a Floating  Eurodollar Rate Advance unless and until converted
                  to a Fixed Eurodollar Rate Advance or a Reference Rate Advance
                  subsequent to the  effectiveness of the First Amendment.  Each
                  request for a Revolving Loan  hereunder  shall specify (i) the
                  requested   Revolving  Loan  Date,  (ii)  the  amount  of  the
                  Revolving  Loan to be made on such  date  which  shall be in a
                  minimum  amount of $100,000,  provided that any Revolving Loan
                  requested  as a  Eurodollar  Rate  Advance  must in a  minimum
                  amount of $100,000 or, if more, an integral  multiple thereof,
                  (iii)whether  such  Revolving  Loan  is  to  be  funded  as  a
                  Reference Rate Advance,  a Fixed  Eurodollar Rate Advance or a
                  Floating  Eurodollar Rate Advance (and, if such Revolving Loan
                  is 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 a  Fixed
                  Eurodollar Rate Advance,  the duration of the initial Interest
                  Period applicable thereto.  The Bank may rely on any telephone
                  request for a Revolving  Loan  hereunder  which it believes in
                  good faith to be genuine;  and the Borrower  hereby waives the
                  right  to  dispute  the  Bank's  record  of the  terms of such
                  telephone  request.   Unless  the  Bank  determines  that  any
                  applicable  condition  specified in the First  Amendment  with
                  respect to the  initial  Revolving  Loan,  and the  conditions
                  specified in Section  2.2(b) in the case of all Advances,  has
                  not  been  satisfied,  the Bank  will  make  available  to the
                  Borrower  at  the  Bank's  principal  office  in  Minneapolis,
                  Minnesota  in  Immediately  Available  Funds  not  later  than
                  5:00p.m.  (Minneapolis  time) on the requested  Revolving Loan
                  Date the amount of the requested Revolving Loan.

                           2.2(b)  Conditions  Precedent to all Revolving Loans.
                  The  obligation  of the  Bank  to  make  any  Revolving  Loans
                  hereunder  (including  the  initial  Revolving  Loan) shall be
                  subject to the fulfillment of the following conditions:

                                    (i)  Representations  and  Warranties.   The
                           representations  and warranties  contained in Article
                           IV shall be true and correct on and as of the Closing
                           Date and on the date of each Revolving Loan, with the
                           same force and effect as if made on such date.

                                    (ii) No  Default.  No  Default  or  Event of
                           Default  shall have occurred and be continuing on the
                           Closing Date and on the date of each  Revolving  Loan
                           or will exist after  giving  effect to the  Revolving
                           Loan made on such date.

                                    (iii)Notices and  Requests.  The Bank shall
                           have  received  the   Borrower's   request  for  such
                           Revolving Loan as required under Section 2.2(a).

                           Section 2.3 The Revolving  Note. The Advances shall
                  be evidenced by a single  Revolving  Note payable to the order
                  of the  Bank in a  principal  amount  equal  to the  Revolving
                  Commitment Amount  originally in effect.  The Bank shall enter
                  in its ledgers and records the amount of each Revolving  Loan,
                  the various  Advances  made,  converted or  continued  and the
                  payments  made  thereon,  and the  Bank is  authorized  by the
                  Borrower to enter on a schedule attached to the Revolving Note
                  a record  of such  Revolving  Loans,  Advances  and  payments;
                  provided,  however  that the  failure  by the Bank to make any
                  such entry or any error in making  such entry  shall not limit
                  or otherwise  affect the obligation of the Borrower  hereunder
                  and on the Revolving Note,  and, in all events,  the principal
                  amounts owing by the Borrower in respect of the Revolving Note
                  shall be the aggregate  amount of all Revolving  Loans made by
                  the Bank less all  payments of  principal  thereof made by the
                  Borrower.

                           Section 2.4 Conversions  and  Continuations.  On the
                  terms and  subject to the  limitations  hereof,  the  Borrower
                  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,   Fixed   Eurodollar  Rate  Advances,   or  Floating
                  Eurodollar  Rate Advances,  or to continue a Fixed  Eurodollar
                  Rate  Advance  as  such;   provided,   however  that  a  Fixed
                  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 converted to, or continued as, Eurodollar Rate
                  Advances only in integral multiples of $100,000.  The Borrower
                  shall  give the Bank  written  notice of any  continuation  or
                  conversion of any Advances and such notice must be given so as
                  to  be  received  by  the  Bank  not  later  than  12:00  Noon
                  (Minneapolis  time)  two  Eurodollar  Business  Days  prior to
                  requested  date of conversion or  continuation  in the case of
                  the  continuation  of, or conversion to, Fixed Eurodollar Rate
                  Advances  and  on the  date  of the  requested  conversion  to
                  Floating  Eurodollar Rate Advances or 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 Fixed Eurodollar
                  Rate Advances,  and (ii) a Eurodollar Business Day in the case
                  of  continuations  as or conversion to Fixed  Eurodollar  Rate
                  Advances  and a  Business  Day in the case of  conversions  to
                  Floating Eurodollar Rate Advances or Reference Rate Advances),
                  and (c) in the  case of  conversions  to or  continuations  as
                  Fixed Eurodollar Rate Advances, the Interest Period applicable
                  thereto.  Any notice given by the Borrower  under this Section
                  shall be irrevocable. If the Borrower shall fail to notify the
                  Bank of the continuation of any Fixed 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.

                           Section 2.5 Interest Rates, Interest Payments and 
                  Default Interest.  Interest shall accrue and be payable on the
                  Revolving Loans as follows:

                                    (a)  Subject to  paragraph  (d) below,  each
                           Fixed  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 (i) the  Adjusted  Fixed
                           Eurodollar Rate for such Interest  Period,  plus (ii)
                           the Applicable Margin.

                                    (b)  Subject  to  paragraph(d)  below,  each
                           Floating  Eurodollar Rate Advance shall bear interest
                           on the unpaid  principal  amount thereof at a varying
                           rate per annum  equal to the sum of  (i)the  Adjusted
                           Floating  Eurodollar  Rate  plus  (ii)the  Applicable
                           Margin.

                                    (c)  Subject to  paragraph  (d) below,  each
                           Reference  Rate  Advance  shall bear  interest on the
                           unpaid principal amount thereof at a varying rate per
                           annum  equal  to the sum of (i) the  Reference  Rate,
                           plus (ii) the Applicable Margin.

                                    (d) Any Advance not paid when due (including
                           on  acceleration)  shall,  at the option of the Bank,
                           bear  interest  until  paid in full  (i)  during  the
                           balance of any  Interest  Period  applicable  to such
                           Advance,  at a rate per annum equal to the sum of the
                           rate  applicable to such Advance during such Interest
                           Period plus 2.0%, and (ii)  otherwise,  at a rate per
                           annum  equal  to the sum of (1) the  Reference  Rate,
                           plus (2) the  Applicable  Margin for  Reference  Rate
                           Advances, plus (3) 2.0%.

                                    (e)  Interest  shall  be  payable  (i)  with
                           respect to each Fixed  Eurodollar Rate Advance having
                           an Interest Period of sixty days or less, on the last
                           day of the Interest Period applicable  thereto;  (ii)
                           with  respect  to each  Reference  Rate  Advance  and
                           Floating Eurodollar Rate Advance,  monthly in arrears
                           on the  last  day of  each  such  month;  (iii)  with
                           respect   to  all   Advances,   upon  any   permitted
                           prepayment  (on the  amount  prepaid);  and  (iv)with
                           respect to all  Advances,  on the  Termination  Date;
                           provided that interest under  Section2.5(d)  shall be
                           payable on demand.

                           Section 2.6 Repayment and Mandatory  Prepayment.  The
                  unpaid  principal  amount of all  Advances,  together with all
                  accrued and unpaid interest thereon,  shall be due and payable
                  on the Termination  Date. If at any time the unpaid  principal
                  balance of the Revolving Note exceeds the Revolving Commitment
                  Amount,  the Borrower shall  immediately repay to the Bank the
                  amount of such  excess.  Any such  payments  shall be  applied
                  first against Reference Rate Advances and Floating  Eurodollar
                  Rate  Advances and then to Fixed  Eurodollar  Rate Advances in
                  order starting with the Fixed  Eurodollar Rate Advances having
                  the  shortest  time  to the  end of  the  applicable  Interest
                  Period.

                           Section 2.7 Optional  Prepayments.  The Borrower may
                  prepay  Reference  Rate Advances or Floating  Eurodollar  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  shall be in a minimum  amount of  $100,000  or, if
                  more,   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
                  Fixed  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 Advances under this Section
                  2.7 may be  reborrowed  upon  the  terms  and  subject  to the
                  conditions and limitations of this Agreement.

                           Section 2.8 Optional   Reduction   of   Revolving
                  Commitment Amount or Termination of Revolving Commitment.  The
                  Borrower may, at any time,  upon not less than thirty Business
                  Days prior  written  notice to the Bank,  reduce the Revolving
                  Commitment Amount, with any such reduction in a minimum amount
                  of $100,000, or, if more, in an integral multiple of $100,000;
                  provided,  however,  that  the  Borrower  may not at any  time
                  reduce the Revolving  Commitment  Amount below the then unpaid
                  balance of the Revolving  Note. The Borrower may, at any time,
                  upon not less than thirty  Business Days prior written  notice
                  to  the  Bank,  terminate  the  Revolving  Commitment  in  its
                  entirety.   Upon  termination  of  the  Revolving   Commitment
                  pursuant to this Section,  the Borrower  shall pay to the Bank
                  the full amount of all outstanding  Advances,  all accrued and
                  unpaid interest  thereon,  all unpaid Facility Fees accrued to
                  the date of such  termination,  any  indemnities  payable with
                  respect to  Advances  pursuant  to Section  2.17 and all other
                  unpaid Obligations of the Borrower to the Bank hereunder.

                           Section 2.9 Facility  Fee. The Borrower  shall pay to
                  the Bank a fee (the "Facility Fee") in an amount determined by
                  applying a rate of .20% per annum to the Revolving  Commitment
                  Amount  for the period  from April 1, 1997 to the  Termination
                  Date.  Such Facility Fees are payable in arrears  quarterly on
                  the last day of each quarter, commencing June 30, 1997, and on
                  the Termination Date.

                           Section 2.10 Computation.  Facility Fees and interest
                  on Advances shall be computed on the basis of actual days 
                  elapsed  and a year of 360 days.

                           Section 2.11 Payments.  Payments and  prepayments of
                  principal  of, and  interest  on, the  Revolving  Note and all
                  fees,  expenses  and other  obligations  under this  Agreement
                  payable  to  the  Bank  shall  be  made   without   setoff  or
                  counterclaim  in  Immediately  Available  Funds not later than
                  2:00 p.m.  (Minneapolis  time) on the dates  called  for under
                  this  Agreement and the Revolving Note to the Bank at its main
                  office in  Minneapolis,  Minnesota.  Funds received after such
                  time  shall  be  deemed  to have  been  received  on the  next
                  Business Day.  Whenever any payment to be made hereunder or on
                  the Revolving Note 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  2.12 Use of Loan  Proceeds.  The proceeds of
                  the initial  Revolving  Loan shall be used for payment in full
                  of the Term Loan and accrued and unpaid  interest  thereon and
                  all fees  related  thereto.  The  proceeds  of any  subsequent
                  Revolving  Loan  shall  be  used  for the  Borrower's  general
                  business  purposes in a manner not in conflict with any of the
                  Borrower's covenants in this Agreement.

                           Section 2.13 Interest Rate Not  Ascertainable,  Etc.
                  If,  on or  prior to the date  for  determining  the  Adjusted
                  Eurodollar  Rate for any  Eurodollar  Rate  Advance,  the Bank
                  determines  (which   determination  shall  be  conclusive  and
                  binding, absent error) that:

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

                                    (b) the  Adjusted  Eurodollar  Rate will not
                           adequately and fairly reflect the cost to the Bank of
                           funding or maintaining  Eurodollar  Rate Advances for
                           such Interest Period,

                  the Bank shall  forthwith  give notice to the Borrower of such
                  determination, whereupon the obligation of the Bank to make or
                  continue,  or to convert  any  Advances  to,  Eurodollar  Rate
                  Advances  shall  be  suspended  until  the Bank  notifies  the
                  Borrower that the circumstances giving rise to such suspension
                  no longer  exist.  While any such  suspension  continues,  all
                  further  Advances by the Bank shall be made as Reference  Rate
                  Advances.  No such  suspension  shall affect the interest rate
                  then in effect during the applicable  Interest  Period for any
                  Eurodollar   Rate  Advance   outstanding   at  the  time  such
                  suspension is imposed.

                           Section 2.14 Increased Cost.  If any Regulatory 
                  Change:

                                    (a) shall  subject the Bank to any tax, duty
                           or other charge with respect to its  Eurodollar  Rate
                           Advances,  the  Revolving  Note or its  obligation to
                           make  Eurodollar  Rate  Advances or shall  change the
                           basis  of  taxation  of  payment  to the  Bank of the
                           principal of or interest on Eurodollar  Rate Advances
                           or any other  amounts  due under  this  Agreement  in
                           respect of 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 the
                           Bank imposed by the  jurisdiction in which the Bank's
                           principal 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,
                           the Bank or shall impose on the Bank or the interbank
                           Eurodollar  market any other condition  affecting its
                           Eurodollar  Rate Advances,  the Revolving Note or its
                           obligation to make Eurodollar Rate Advances;

                  and the result of any of the foregoing is to increase the cost
                  to the Bank of  making  or  maintaining  any  Eurodollar  Rate
                  Advance,  or to  reduce  the  amount  of any sum  received  or
                  receivable  by the Bank  under  this  Agreement  or under  the
                  Revolving Note, then, within 30 days after demand by the Bank,
                  the Borrower shall pay to the Bank such  additional  amount or
                  amounts as will compensate the Bank for such increased cost or
                  reduction.  The Bank will promptly  notify the Borrower of any
                  event of  which it has  knowledge,  occurring  after  the date
                  hereof,  which will entitle the Bank to compensation  pursuant
                  to this Section.  If the Bank fails to give such notice within
                  45 days after it obtains  knowledge of such an event, the Bank
                  shall,  with respect to compensation  payable pursuant to this
                  Section,  only be entitled to payment  under this  Section for
                  costs  incurred  from and after the date 45 days  prior to the
                  date that the Bank does give such notice. A certificate of the
                  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,  the Bank may use any
                  reasonable averaging and attribution  methods.  Failure on the
                  part of the  Bank to  demand  compensation  for any  increased
                  costs or  reduction  in amounts  received or  receivable  with
                  respect to any Interest  Period shall not  constitute a waiver
                  of the Bank's rights to demand  compensation for any increased
                  costs or reduction in amounts  received or  receivable  in any
                  subsequent Interest Period.

                           Section 2.15 Illegality.  If any  Regulatory  Change
                  shall make it  unlawful  or  impossible  for the Bank to make,
                  maintain or fund any Eurodollar Rate Advances,  the Bank shall
                  notify the Borrower,  whereupon the  obligation of the Bank to
                  make or continue,  or to convert any  Advances to,  Eurodollar
                  Rate Advances  shall be suspended  until the Bank notifies the
                  Borrower that the circumstances giving rise to such suspension
                  no  longer  exist.  If the  Bank  determines  that  it may not
                  lawfully  continue to maintain any Eurodollar Rate Advances to
                  the  end  of  the  applicable  Interest  Periods,  all  of the
                  affected   Advances  shall  be   automatically   converted  to
                  Reference  Rate Advances as of the date of the Bank's  notice,
                  and upon such conversion the Borrower shall indemnify the Bank
                  in accordance with Section 2.17.

                           Section 2.16 Capital Adequacy.  In the event that any
                  Regulatory Change reduces or shall have the effect of reducing
                  the rate of return on the Bank's capital or the capital of its
                  parent corporation (by an amount the Bank deems material) as a
                  consequence of the Revolving  Commitment  and/or Advances to a
                  level  below  that  which the Bank or its  parent  corporation
                  could have  achieved but for such  Regulatory  Change  (taking
                  into  account  the Bank's  policies  and the  policies  of its
                  parent corporation with respect to capital adequacy), then the
                  Borrower shall, within 30 days after written notice and demand
                  from the Bank, pay to the Bank additional  amounts  sufficient
                  to  compensate  the Bank or its  parent  corporation  for such
                  reduction.  If the Bank  fails to give such  notice  within 45
                  days after it  obtains  knowledge  of such an event,  the Bank
                  shall,  with respect to compensation  payable pursuant to this
                  Section,  only be entitled to payment  under this  Section for
                  diminished  returns  as a  result  of such  reduction  for the
                  period  from and after the date 45 days prior to the date that
                  the Bank does give such notice.  Any determination by the Bank
                  under this  Section  and any  certificate  as to the amount of
                  such  reduction  given to the  Borrower  by the Bank  shall be
                  final, conclusive and binding for all purposes, absent error.

                           Section  2.17 Funding   Losses;   Eurodollar   Rate
                  Advances.  The Borrower shall  compensate  the Bank,  upon its
                  written  request,  for all losses,  expenses  and  liabilities
                  (including  any interest  paid by the Bank to lenders of funds
                  borrowed by it to make or carry  Eurodollar  Rate  Advances to
                  the extent not  recovered by the Bank in  connection  with the
                  re-employment  of such funds and including loss of anticipated
                  profits)  which the Bank may  sustain:  (i) if for any reason,
                  other  than a default by the 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
                  2.15,  occurs  on any  day  other  than  the  last  day of the
                  Interest  Period  applicable  thereto.  The Bank's request for
                  compensation   shall  set  forth  the  basis  for  the  amount
                  requested and shall be final,  conclusive and binding,  absent
                  error.

                           Section  2.18 Discretion  of  Bank as to  Manner  of
                  Funding.  The Bank shall be entitled to fund and  maintain its
                  funding  of  Eurodollar  Rate  Advances  in any  manner it may
                  elect, it being understood,  however, that for the purposes of
                  this Agreement all determinations  hereunder  (including,  but
                  not limited to,  determinations  under  Section 2.17) shall be
                  made as if the Bank had actually  funded and  maintained  each
                  Fixed  Eurodollar Rate Advances during the Interest Period for
                  such  Advance  through  the  purchase  of  deposits  having  a
                  maturity  corresponding to the last day of the Interest Period
                  and bearing an interest rate equal to the Eurodollar  Rate for
                  such Interest Period.

                           Section  2.19 Clean up Period.  On or after  April1,
                  1997 and prior to March 30, 1998, the Company shall prepay the
                  Revolving  Loans in full from  time to time  such  that  there
                  shall be no fewer than 30 days (which may be  non-consecutive)
                  during   such   period  on  which  no   Revolving   Loans  are
                  outstanding.

                  2.3  Negative Pledges; Subsidiary Restrictions.  The first 
         sentence of Section6.5 of the Loan Agreement is amended to read as 
         follows:

                                    The   Borrower   will  not  enter  into  any
                           agreement,  bond, note or other instrument that would
                           prohibit  or limit the  ability  of the  Borrower  to
                           grant a Lien on the  outstanding  shares  of stock of
                           PJI owned by the Borrower, or require the Borrower to
                           grant Liens to any other  Person on such shares if it
                           grants Liens thereon to the Bank.

                  2.4  Indebtedness.  Section 6.8 of the Loan Agreement is 
         amended to add clause (h) as follows:

                           6.8(h)  Contingent Obligations permitted pursuant to 
                           Section 6.10.

                  2.5  Contingent Obligations.  Section 6.10 of the Loan 
         Agreement is amended to read in its entirety as follows:

                                    Section  6.10  Contingent  Obligations.  The
                           Borrower  will not,  and will not permit any Material
                           Subsidiary  to, be or become liable on any Contingent
                           Obligations except:

                                             6.10(a)   Contingent    Obligations
                                    existing on the date of this  Agreement  and
                                    described on Schedule 6.10.

                                             6.10(b)   Contingent    Obligations
                                    incurred in the ordinary  course of business
                                    of the Borrower or such Material Subsidiary.

                                             6.10(c)  Guarantees of Indebtedness
                                    for   borrowed   money   of    Subsidiaries;
                                    provided,    that   (i)   such    guaranteed
                                    Indebtedness   for  borrowed  money  of  the
                                    Subsidiaries  does  not  exceed  at any time
                                    $50,000,000  in  the  aggregate,   (ii)  the
                                    Indebtedness  of each Subsidiary that is the
                                    subject of such  guarantee is secured by the
                                    Subsidiary's   pledge   of  the   underlying
                                    secured loans made by the  Subsidiary to its
                                    customers,  including  the stock  pledged by
                                    customers  as  the  security  therefor,  and
                                    (iii) the loans  made by any  Subsidiary  to
                                    its  customers  are  secured  by stock  that
                                    meets  the  following   minimum   equity  to
                                    collateral requirement in the aggregate with
                                    respect  to such  pledged  stock:  (A)  with
                                    respect  to each  loan at the time such loan
                                    is  made,  the  ratio of the  pledged  stock
                                    value  minus the loan  amount to the pledged
                                    stock  value  is at  least  50%  and (B) the
                                    ratio of the  aggregate  pledged stock value
                                    minus  the  aggregate  loan  amount  to  the
                                    aggregate  pledged  stock  value is at least
                                    35%.

                  2.6  Tangible Net Worth.  Section 6.11 of the Loan Agreement 
         is amended  to read in its entirety as follows:

                                    Section  6.11   Tangible   Net  Worth.   The
                           Borrower  will not permit its  Tangible  Net Worth at
                           any time to be less than $135,000,000 or the Tangible
                           Net  Worth  of  PJI  at  any  time  to be  less  than
                           $125,000,000.

                  2.7  Remedies.  Section 7.2 of the Loan Agreement is amended 
         in its entirety as follows:

                                    Section  7.2  Remedies.  If (a) any Event of
                           Default  described  in  Sections  7.1(f),  (g) or (h)
                           shall  occur  with  respect  to  the  Borrower,   the
                           Revolving  Commitment shall  automatically  terminate
                           and the  Revolving  Note  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  Bank  may  (i)
                           declare   the   Revolving   Commitment    terminated,
                           whereupon the Revolving  Commitment  shall  terminate
                           and (ii)  declare the  outstanding  unpaid  principal
                           balance of the Revolving Note, the accrued and unpaid
                           interest  thereon  and all  other  Obligations  to be
                           forthwith  due and payable,  whereupon  the Revolving
                           Note, 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   Revolving   Note   to   the   contrary
                           notwithstanding.  Upon the  occurrence  of any of the
                           events  described  in  clauses  (a)  or  (b)  of  the
                           preceding  sentence  the Bank may exercise all rights
                           and  remedies  under any of the Loan  Documents,  and
                           enforce all rights and remedies  under any applicable
                           law.

                  2.8  Revolving Note.  The Loan Agreement is hereby amended to 
         attach thereto Exhibit A-1 in the form attached hereto.

                  2.9  Compliance Certificate, Exhibit D of the Loan Agreement 
         is hereby amended to be in the form attached hereto as Exhibit D-1.

                  2.10 Term Loan; Term Note. With the exception of references in
         the definition of "Term Loan" and in Section 2.2(a) and Section 2.12 of
         the  Loan  Agreement  to the  "Term  Loan"  and the  "Term  Note,"  all
         references  in the Loan  Agreement  to the "Term  Loan" or "Term  Note"
         remaining  after the effective date of this  Amendment  shall be to the
         "Revolving   Loans"  and  the  "Revolving  Note,"  unless  the  context
         otherwise requires.

         Section 3. Effectiveness  of Amendments.  The amendments  contained in
this Amendment  shall become  effective as of April 1, 1997 upon delivery by the
Borrower of, and compliance by the Borrower with, the following:

                  3.1 This  Amendment  and the  Revolving  Note in the  form of
         Exhibit A-1 hereto (the "Note"), each duly executed by the Borrower.

                  3.2 A copy of the resolutions of the Board of Directors of 
         the Borrower  authorizing  the execution,  delivery and performance of 
         this Amendment and the Note  certified as true and accurate by its 
         Secretary or Assistant Secretary, along with a certification by such 
         Secretary or Assistant  Secretary  (i)certifying that there has been no
         amendment to the Certificate of  Incorporation  or Bylaws of the 
         Borrower since trueand accurate  copies  of the same  were  delivered  
         to the Bank with a certificate of the Secretary of the Borrower dated  
         September 27, 1996, and (ii) identifying each officer of the Borrower 
         authorized to execute this Amendment, the Note and any other instrument
         or agreement executed by the Borrower in connection  with this 
         Amendment (collectively, the "Amendment  Documents"), and certifying as
         to specimens of such officer's signature and such officer's incumbency 
         in such offices as such officer holds.

                  3.3 Certified copies of all documents evidencing any 
         necessary corporate  action,  consent or governmental or regulatory  
         approval (if any) with respect to this Amendment.

                  3.4 Good standing certificates for the Borrower from the 
         State of Delaware and Minnesota issued as of a date or dates  
         satisfactory to the Bank.

                  3.5 The Borrower 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
         in connection with the Loan Agreement and the Amendment Documents.

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

                  4.1 Reassertion of Representations and Warranties, No Default.
         The Borrower  hereby  represents  that on and as of the date hereof and
         after giving effect to this Amendment (a)all of the representations and
         warranties  contained  in the Loan  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 Loan
         Agreement,  and (b) there  will  exist no  Default  or Event of Default
         under the Loan  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 Borrower
         represents and warrants that the Borrower has the power and legal right
         and  authority  to enter  into  the  Amendment  Documents  and has duly
         authorized as  appropriate  the execution and delivery of the Amendment
         Documents and other agreements and documents  executed and delivered by
         the Borrower 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 Borrower is a party or a signatory
         or a provision of the Borrower's  Certificate 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 Borrower or any of its property except,
         if any, in favor of the Bank. The Borrower represents and warrants 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  Borrower  of the  Amendment  Documents  or  other  agreements  and
         documents   executed  and  delivered  by  the  Borrower  in  connection
         therewith or the  performance of  obligations  of the Borrower  therein
         described, except for those which the Borrower has obtained or provided
         and  as to  which  the  Borrower  has  delivered  certified  copies  of
         documents evidencing each such action to the Bank.

         Section 5.  Affirmation of Loan Agreement, Further References. The Bank
and the Borrower each acknowledge and affirm that the Loan Agreement,  as hereby
amended,  is hereby  ratified  and  confirmed  in all  respects  and all  terms,
conditions  and  provisions  of the Loan  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 Loan Agreement are hereby amended and shall
refer to the Loan Agreement as amended by this Amendment.

         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 Borrower and the Bank and their respective successors and assigns, and 
shall inure to the benefit of the Borrower and the Bank and the successors and 
assigns of the Bank.

         Section 9.  Legal  Expenses.  As  provided  in Section  8.2 of the Loan
Agreement,  the Borrower  agrees 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, not to exceed
$2,000) incurred in connection with the Loan 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 Borrower 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 Borrower shall
survive any termination of the Loan Agreement.

         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.


                  (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

<PAGE>



        IN WITNESS WHEREOF, the parties hereto have caused this Amendment
           to be executed as of the date and year first above written.


BORROWER:                             PIPER JAFFRAY COMPANIES INC.


                                 By:   /s/ Deborah K. Roesler
                                       Deborah K. Roesler
                                       Chief Financial Officer


                                 By:   /s/ Jenniefer A. Olson-Goude
                                       Jennifer A. Olson-Goude
                                       Assistant Vice President and
                                       Assistant Treasurer


BANK:                                  FIRST BANK NATIONAL ASSOCIATION


                                 By:   /s/ Jose A. Peris
                                       Jose A. Peris
                                       Senior Vice President