AMENDMENT AND WAIVER AGREEMENT

                   THIS AMENDMENT AND WAIVER AGREEMENT, dated as of December 15, 2000 (this"Agreement"), is among ALLEGIANCE FUNDING I, LLC (the "Depositor"),MANUFACTURERS AND TRADERS TRUST COMPANY (the "Trustee"), POINT WEST CAPITALCORPORATION (the "Servicer") and as consented to by the Certificateholders namedon 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 Scheduled Maturity of the 98-1 Revolving Certificates is December 15, 2000.

                   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 Certficates.

                   WHEREAS, the parties have 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 herein. 

                   NOW, THEREFORE, the parties hereto agree as follows:

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

                   2. Amendment to Series 1998-1 Revolving Supplement. The definition of"Scheduled Maturity" in the Series 1998-1 Revolving Supplement is hereby amendedby deleting the date "December 15, 2000" therein and substituting in its placethe date "February 15, 2001."

                   3. Amendments to Trust Agreement. Solely with respect to the PBI Loan and theSouthern Loan, each of the Depositor, the Servicer, the Trustee and the Certificateholdersagree to amend the following provisions of the Trust Agreement on the following terms:

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(a) Clause (b) of the definition of "Adjustment Amount".    The reference to "sixty (60) days" in clause (b) of the definition of    "Adjustment Amount" is hereby amended to read as "one hundred fifty (150)    days";

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(b) Clause (c) of the definition of "Adjustment Amount".    The reference to "one hundred twenty (120) days" in clause (c) of the definition    of "Adjustment Amount" is hereby amended to read as "two hundred ten (210)    days";

(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.

               4. Waivers. The Trustee and the Certificateholders hereby waive for a period ofninety (90) days from the date of default, any default by the Depositor under Section6.01(f) of the Trust Agreement.

               5. Expenses. The Trust shall reimburse from funds on deposit in the Reserve Accountall reasonable fees, costs and expenses incurred by the Certificateholder Agent and theHolders of the Rated Certificates in connection with their review of this Agreement,including without limitation the reasonable fees of their special counsel (namely, Day,Berry & Howard LLP). In each applicable monthly Servicer Report the Servicer shallfrom time to time instruct the Trustee to effect any such reimbursements.

                   6. Governing Law. This Agreement shall be governed by and construed in accordancewith the internal laws of the State of New York. 

                   7. General. This Agreement and all the provisions hereof shall be binding upon andinure to the benefit of the parties hereto and their respective successors and permittedassigns. This Agreement may be executed in one or more counterparts, all of which takentogether shall constitute one instrument. Delivery of an executed counterpart of asignature page to this Agreement by telecopier shall be as effective as delivery of amanually executed counterpart of this Agreement. 

                   8. Ratification. Except as expressly modified and superseded by this Agreement,each of the Trust Agreement and the Series 1998-1 Revolving Supplement is ratified andconfirmed in all respects and shall continue in full force and effect. 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement asof 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.
**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/Audrey L. MilfsCorp. Secretary
**UNITED OF OMAHA LIFE INSURANCE COMPANY**

 
/s/Kent KnudsenVice 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******************************