SECOND AMENDED & RESTATEDAMENDMENT AND WAIVER AGREEMENT

     THIS SECOND AMENDED & RESTATED AMENDMENTAND WAIVER AGREEMENT, dated as of July 16, 2001 (this "Agreement"), is amongALLEGIANCE FUNDING I, LLC (the "Depositor"), MANUFACTURERS AND TRADERS TRUSTCOMPANY (the "Trustee"), POINT WEST CAPITAL CORPORATION (the"Servicer") and as consented to by the Certificateholders named on the signaturepages hereto. 

RECITALS

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

     WHEREAS, the Loan to Peavy & BrooksInternational, Inc. (the "PBI Loan") held by the Depositor and the Loan toSouthern Acquisitions, Inc. (the "Southern Loan") held by the Depositor havebecome Defaulted Loans and have caused the Depositor to be in violation of certainprovisions of the Trust Agreement.

     WHEREAS, the parties previously agreed toamend a provision of the Series 1998-1 Revolving Supplement and to amend and waive certainprovisions of the Trust Agreement on the terms and conditions set forth in the Amendmentand Waiver Agreement dated as of December 15, 2000 (the "Initial Waiver"), asmodified by the Amendment & Restated Amendment and Waiver Agreement, dated as of April15, 2001 (together with the Initial Waiver, the "Existing Waiver").

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

     WHEREAS, pursuant to Section 9.02 of the TrustAgreement, the Depositor, the Servicer and the Trustee may amend, modify or waive theprovisions thereof with the prior written consent of the Holders of each OutstandingCertificate and may amend, modify or waive the provisions of the Series 1998-1 RevolvingSupplement with the prior written consent of the Holders of the 98-1 RevolvingCertificates.

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

     NOW, THEREFORE, the parties hereto agree asfollows:

     1.   Definitions. Eachcapitalized term used and not otherwise defined herein, including those used in theRecitals, has the meaning set forth in the Trust Agreement. 

     2.   Amendments to Series 1998-1Revolving Supplement. The definition of "Scheduled Maturity" in the Series1998-1 Revolving Supplement is hereby amended by deleting the date "December 15,2000" therein and substituting in its place the date "September 17, 2001".Notwithstanding the foregoing, the increase in interest rate that became effective onFebruary 15, 2001 under Section 5 of the 1998-1 Revolving Supplement (as amended by theInitial Waiver) shall remain in effect.

     3.    Amendments to TrustAgreement. Solely with respect to the PBI Loan and the Southern Loan, each of theDepositor, the Servicer, the Trustee and the Certificateholders agree to amend thefollowing provisions of the Trust Agreement on the following terms:

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(a) Clause (b) of the definition of "Adjustment Amount".    The words "within sixty (60) days from the date the Loan became a Defaulted    Loan" in clause (b) of the definition of "Adjustment Amount" are hereby    deleted and replaced with the words "on or before November 15, 2001";

(b) Clause (c) of the definition of "Adjustment Amount".    The words "within one hundred twenty (120) days from the date of receipt of such    letter of intent" in clause (c) of the definition of "Adjustment Amount"    are hereby deleted and replaced with the words "on or before January 15, 2002";

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

(d) Section 5.03(d). Section 5.03(d) is hereby amended to allow    disbursement of funds from the Reserve Account on each Distribution Date to reimburse the    Servicer or the Special Servicer, as applicable, for Recovery Expenses allocable to the    PBI Loan and/or Southern Loan if (i) the Certificateholder Agent has provided to the    Depositor, 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 or    exceed the Reserve Account Floor Amount. The Depositor, the Servicer or the Special    Servicer, as applicable, shall provide a written request for such disbursement to the    Certificateholder Agent by the 3rd day of the calendar month in which such disbursement is    to be made (or the next Business Day if such day is not a Business Day) and the    Certificateholder Agent shall provide written consent or refusal to consent no later than    the 10th day of such calendar month (or the next Business Day if such day is not a    Business Day) and, assuming such request is timely delivered, the Certificateholder    Agent's approval shall not be unreasonably withheld. The Certificateholder Agent's written    consent shall be deemed to be direction to the Trustee to make such disbursement pursuant    to Schedule 9 of the Servicing Report.

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

(k) the failure of the Special Servicer to provide to the    Certificateholders and the Certificateholder Agent weekly reports as to the status of the    PBI Loan and the Southern Loan, including a comparison of actual results to the projected    timeline for completion of the workout of each such Defaulted Loans indicated on Exhibit A    hereto, so long as such 

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Loans are included in the Trust Estate and have not been re-classified    as performing Loans or Liquidated Loans.

     4.   Waivers. The Trustee andthe Certificateholders hereby waive through but not beyond November 15, 2001, any Defaultby the Depositor under Section 6.01(f) of the Trust Agreement, provided, however, that aDepositor Event of Default under Section 6.01(f) shall be deemed to exist on and afterNovember 16, 2001 if the 98-1 Revolving Certificates that are Rated Certificates have notbeen paid in full on or before November 15, 2001. 

     5.  Expenses. The Trust shallreimburse from funds on deposit in the Reserve Account all reasonable fees, costs andexpenses incurred by the Certificateholder Agent and the Holders of the Rated Certificatesin connection with their review of this Agreement, including without limitation thereasonable fees of their special counsel (namely, Day, Berry & Howard LLP). In eachapplicable monthly Servicer Report the Servicer shall from time to time instruct theTrustee to effect any such reimbursements.

     6.  Governing Law. This Agreementshall be governed by and construed in accordance with the internal laws of the State ofNew York. 

     7.  General. This Agreement andall the provisions hereof shall be binding upon and inure to the benefit of the partieshereto and their respective successors and permitted assigns. This Agreement may beexecuted in one or more counterparts, all of which taken together shall constitute oneinstrument. Delivery of an executed counterpart of a signature page to this Agreement bytelecopier shall be as effective as delivery of a manually executed counterpart of thisAgreement. 

     8.   Ratification. Except asexpressly modified and superseded by this Agreement, each of the Trust Agreement and theSeries 1998-1 Revolving Supplement is ratified and confirmed in all respects and shallcontinue in full force and effect. 

 

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     IN WITNESS WHEREOF, the parties hereto haveexecuted this Second Amended & Restated Amendment and Waiver Agreement as of the dayand 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/John W Rotter****CEO****Consented and Agreed**

Each of the Certificateholders authorizes and directs the Trustee toexecute the foregoing Second 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/Peter S. FiskAsst.  Secretary
**UNITED OF OMAHA LIFE INSURANCE COMPANY**

 
/s/Rodney P. WalkerSr. 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
                                                                                                                                                    **EXHIBITA**
**Nichols Family Services, LLCTimeline for Disposition- 
April    - May - June, 2001- 
Complete business renewal activities;

- 
Get bookkeeping established;

- 
Account for pre-need assets & liabilities;

- 
Establish budget and free cash flow expectations;

- 
Decide whether to hire a broker for sale process;

- 
Collect info for sales prospectus;

- 
Prepare sales prospectus;

- 
Begin identifying possible buyers 

- 
Business begins generating free cash flow

- 
June    – July, 2001- Marketing Process 
- Business continues generating free cash flow 
- 
August,    2001
- 
Complete marketing process

- 
Select buyer

- 
Negotiate and Enter into LOI

- 
Business continues generating free cash flow

- 
September    - October, 2001- 
Complete sale process

- 
Possible foreclosure and/or negotiation with      Specialized Commercial Lending (junior mortgage holder) and/or the Nichols (former owners/             unsecured creditors), also Brown-Service (landlord in      main funeral home) 
September 30 October 30: close sale 

 

 
**Southern Family Funeral Care, LLC  Timeline for Disposition**- 
April    – May – June – July, 2001- 
Get bookkeeping established;

- 
Accounting for pre-need assets & liabilities;

- 
Establish budget and free cash flow expectations;

- 
Decide whether to hire broker;

- 
Collect info for sales prospectus;

- 
Prepare sales prospectus;

- 
Begin identifying possible buyers

- 
July    – August – September – October, 2001- 
Marketing process

- 
Business generating free cash flow

- 
October    – November – December, 2001- 
Complete marketing process;

- 
Select buyer, negotiate and enter into LOI

- 
December    – January – February, 2002- 
Complete sale process;

- 
Possible foreclosure and/or negotiation with junior      creditors (Kents in respect of Kent FHs/ Morrows in respect of       Pineview Memory Gardens). 
    - 
   January 30: close sale  
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