AMENDED & RESTATEDAMENDMENT AND WAIVER AGREEMENT

THIS AMENDED & RESTATED AMENDMENT AND WAIVER AGREEMENT, dated as of April 15, 2001(this "Agreement"), is among ALLEGIANCE FUNDING I, LLC (the"Depositor"), MANUFACTURERS AND TRADERS TRUST COMPANY (the "Trustee"),POINT WEST CAPITAL CORPORATION (the "Servicer") and as consented to by theCertificateholders named on the signature pages hereto.

RECITALS

                   WHEREAS, (i) the Depositor, the Trustee and the Servicer are parties to that certain TrustAgreement, dated as of August 1, 1998 (as amended from time to time, and including allsupplements thereto, the "Trust Agreement"), and (ii) the Depositor, the Trusteeand the Servicer are parties to that certain Third Amended and Restated Supplement toTrust Agreement for Revolving Series 1998-1, dated as of April 14, 2000 (the "Series1998-1 Revolving Supplement"), pursuant to which the Depositor issued the AllegianceCapital Trust I Revolving Certificates, Series 1998-1 (the "98-1 RevolvingCertificates").

                   WHEREAS, the Loan to Peavy & Brooks International, Inc. (the "PBI Loan")held by the Depositor and the Loan to Southern Acquisitions, Inc. (the "SouthernLoan") held by the Depositor have become Defaulted Loans and have caused theDepositor to be in violation of certain provisions of the Trust Agreement.

                   WHEREAS, the parties previously agreed to amend a provision of the Series 1998-1 RevolvingSupplement and to amend and waive certain provisions of the Trust Agreement on the termsand conditions set forth in the Amendment and Waiver Agreement dated as of December 15,2000 (the "Initial Waiver").

                   WHEREAS, the Scheduled Maturity of the 98-1 Revolving Certificates, as amended under theInitial Waiver, is February 15, 2001.

                   WHEREAS, pursuant to Section 9.02 of the Trust Agreement, the Depositor, the Servicer andthe Trustee may amend, modify or waive the provisions thereof with the prior writtenconsent of the Holders of each Outstanding Certificate and may amend, modify or waive theprovisions of the Series 1998-1 Revolving Supplement with the prior written consent of theHolders of the 98-1 Revolving Certificates.

                   WHEREAS, the parties have agreed to further amend a provision of the Series 1998-1Revolving Supplement and to amend and waive certain provisions of the Trust Agreement onthe terms and conditions set forth in this Agreement.

                   NOW, THEREFORE, the parties hereto agree as follows: 

                   1.      Definitions. Each capitalized term used and nototherwise defined herein, including those used in the Recitals, has the meaning set forthin the Trust Agreement.

                   2.      Amendments to Series 1998-1 Revolving Supplement.  The definition of "Scheduled Maturity" in the Series 1998-1 RevolvingSupplement is hereby amended by deleting the date "December 15, 2000" thereinand substituting in its place the date "May 15, 2001". Notwithstanding theforegoing, the 

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increase in interest rate that became effective on March 1, 2001 under Section 5 of the1998-1 Revolving Supplement (as amended by the Initial Waiver) shall remain in effect.

                   3.      Amendments to Trust Agreement. Solely with respect tothe PBI Loan and the Southern Loan, each of the Depositor, the Servicer, the Trustee andthe Certificateholders agree to amend the following provisions of the Trust Agreement onthe following terms:

                           (a)      Clause (b) of the definition of "AdjustmentAmount". The words "within sixty (60) days from the date the Loan became aDefaulted Loan" in clause (b) of the definition of "Adjustment Amount" arehereby deleted and replaced with the words "on or before July 16, 2001";

                           (b)     Clause (c) of the definition of "Adjustment Amount".The words "within one hundred twenty (120) days from the date of receipt of suchletter of intent" in clause (c) of the definition of "Adjustment Amount"are hereby deleted and replaced with the words "on or before September 17,2001";

                           (c)     Section 1.03(b). Section 1.03(b) is hereby amended toprovide that Recoveries in respect of the PBI Loan or the Southern Loan shall be appliedfirst to reimburse the Reserve Account for any Recovery Expenses allocable to such PBILoan or Southern Loan and previously withdrawn from the Reserve Account.

                           (d)     Section 5.03(d). Section 5.03(d) is hereby amended to allowdisbursement of funds from the Reserve Account on each Distribution Date to reimburse theServicer or the Special Servicer, as applicable, for Recovery Expenses allocable to thePBI Loan and/or Southern Loan if (i) the Certificateholder Agent has provided to theDepositor, the Servicer and the Special Servicer written consent to such disbursement and(ii) the remaining balance in the Reserve Account after such disbursement would equal orexceed the Reserve Account Floor Amount. The Depositor, the Servicer or the SpecialServicer, as applicable, shall provide a written request for such disbursement to theCertificateholder Agent by the 3rd day of the calendar month in which such disbursement isto be made (or the next Business Day if such day is not a Business Day) and theCertificateholder Agent shall provide written consent or refusal to consent no later thanthe 10th day of such calendar month (or the next Business Day if such day is not aBusiness Day) and, assuming such request is timely delivered, the CertificateholderAgent's approval shall not be unreasonably withheld. The Certificateholder Agent's writtenconsent shall be deemed to be direction to the Trustee to make such disbursement pursuantto Schedule 9 of the Servicing Report.

                           (e)      Section 6.01. Section 6.01 is hereby amended to deletethe period at the end of subparagraph (j) thereof and replace it with a semi-colon and toadd the following new clause at the end thereof:

                           (k)      the failure of the Special Servicer to provide to theCertificateholders and the Certificateholder Agent weekly reports as to the status of thePBI Loan and the Southern Loan, including a comparison of actual results to the projectedtimeline for completion of the workout of each such Defaulted Loans indicated on Exhibit Ahereto, so long as such Loans are included in the Trust Estate and have not beenre-classified as performing Loans or Liquidated Loans.

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                   4.      Waivers. The Trustee and the Certificateholders herebywaive through but not beyond July 16, 2001, any Default by the Depositor under Section6.01(f) of the Trust Agreement, provided, however, that a Depositor Event of Default underSection 6.01(f) shall be deemed to exist on and after July 17, 2001 if the 98-1 RevolvingCertificates that are Rated Certificates have not been paid in full on or before July 16,2001.

                   5.      Expenses. The Trust shall reimburse from funds ondeposit in the Reserve Account all reasonable fees, costs and expenses incurred by theCertificateholder Agent and the Holders of the Rated Certificates in connection with theirreview of this Agreement, including without limitation the reasonable fees of theirspecial counsel (namely, Day, Berry & Howard LLP). In each applicable monthly ServicerReport the Servicer shall from time to time instruct the Trustee to effect any suchreimbursements.

                   6.      Governing Law. This Agreement shall be governed by andconstrued in accordance with the internal laws of the State of New York.

                   7.      General. This Agreement and all the provisions hereofshall be binding upon and inure to the benefit of the parties hereto and their respectivesuccessors and permitted assigns. This Agreement may be executed in one or morecounterparts, all of which taken together shall constitute one instrument. Delivery of anexecuted counterpart of a signature page to this Agreement by telecopier shall be aseffective as delivery of a manually executed counterpart of this Agreement.

                   8.      Ratification. Except as expressly modified andsuperseded by this Agreement, each of the Trust Agreement and the Series 1998-1 RevolvingSupplement is ratified and confirmed in all respects and shall continue in full force andeffect.

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IN WITNESS WHEREOF, the parties hereto have executed this Amended &Restated Amendment and Waiver Agreement as of the day and year first above written.

 

> **ALLEGIANCE FUNDING I, LLC, as Depositor 
**/s/Michael W. McDermittVP & Secretary
 

MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee

 
/s/Russell T. Whitley****Asst. Vice President** 

POINT WEST CAPITAL CORPORATION, as Servicer

 

 
/s/Alan B. Perper****President** 

Consented and Agreed:**
Each of the Certificateholders authorizes and directs the Trustee toexecute the foregoing Amended & Restated Amendment and Waiver Agreement..
**TICE & CO., as registered owner of the Class A-RCertificates
/s/Brian D. HuntPartner
 
**TICE & CO., as registered owner of the Class B-RCertificates

 
/s/Brian D. HuntPartner
 
**TICE & CO., as registered owner of the Class C-RCertificates

 
/s/Brian D. HuntPartner
________

 
**ALLEGIANCE FUNDING I, LLC, as registered owner of the Class D-RCertificates

 
/s/Michael W. McDermittVP & Secretary
 
**PACIFIC LIFE INSURANCE COMPANY**/s/Cathy SchwartzAsst. Vice President/s/Jane M. GuonAsst.  Secretary
**UNITED OF OMAHA LIFE INSURANCE COMPANY**

 
/s/Kent KnudsenSr. Vice President**NATIONWIDE LIFE INSURANCE COMPANY**
 
/s/Mark W. PoeppelmanAssociate Vice President**LIBERTY LIFE INSURANCE COMPANY (Certificates held in the nomineename HARE & CO.)

 
/s/Adam EmersonAuthorized Officer
 
**TICE & CO., registered owner of the Class C Certificates

 
/s/Brian D. HuntPartner
 
**TICE & CO., registered owner of the Class D Certificates
/s/Brian D. HuntPartner**TICE & CO., registered owner of the Class E Certificates

 
/s/Brian D. HuntPartner
 

 

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