Exhibit 10.20(h)

ALLIED CAPITAL 401(K) PLAN
ADOPTION AGREEMENT #005
NONSTANDARDIZED 401(k) PROFIT SHARING PLAN
          The undersigned, Allied Capital Corporation (“Employer”), by executing
this Adoption Agreement, elects to establish a retirement plan and trust
(“Plan”) under the Wachovia Bank, National Association (basic plan document # 01
). The Employer, subject to the Employer’s Adoption Agreement elections, adopts
fully the Prototype Plan and Trust provisions. This Adoption Agreement, the
basic plan document and any attached appendices or addenda, constitute the
Employer’s entire plan and trust document. All section references within this
Adoption Agreement are Adoption Agreement section references unless the Adoption
Agreement or the context indicate otherwise. All article references are basic
plan document and Adoption Agreement references as applicable. Numbers in
parenthesis which follow headings are references to basic plan document
sections. The Employer makes the following elections granted under the
corresponding provisions of the basic plan document.
ARTICLE I
DEFINITIONS

1.   PLAN (1.21). The name of the Plan as adopted by the Employer is Allied
Capital 401(k) Plan.   2.   TRUSTEE (1.33). The Trustee executing this Adoption
Agreement is: (Choose one of (a), (b) or (c))   o   (a) A discretionary Trustee.
See Plan Section 10.03[A].   þ   (b) A nondiscretionary Trustee. See Plan
Section 10.03[B].   o   (c) A Trustee under a separate trust agreement. See Plan
Section 10.03[G].

3.       EMPLOYEE (1.11). The following Employees are not eligible to
participate in the Plan: (Choose (a) or one or more of (b) through (g) as
applicable)

o   (a) No exclusions.   þ   (b) Collective bargaining Employees.   þ   (c)
Nonresident aliens.   þ   (d) Leased Employees.   þ   (e) Reclassified
Employees.   o   (f) Classifications:          .   o   (g) Exclusions by types
of contributions. The following classification(s) of Employees are not eligible
for the specified contributions:

Employee classification:          
Contribution type:          
4.       COMPENSATION (1.07). The Employer makes the following election(s)
regarding the definition of Compensation for purposes of the contribution
allocation formula under Article III: (Choose one of (a), (b) or (c))

o   (a) W-2 wages increased by Elective Contributions.   o   (b) Code §3401(a)
federal income tax withholding wages increased by Elective Contributions.   þ  
(c) 415 compensation.

[Note: Each of the Compensation definitions in (a), (b) and (c) includes
Elective Contributions. See Plan Section 1.07(D). To exclude Elective
Contributions, the Employer must elect (g).]
Compensation taken into account. For the Plan Year in which an Employee first
becomes a Participant, the Plan Administrator will determine the allocation of
Employer contributions (excluding deferral contributions) by taking into
account: (Choose one of (d) or (e))

o   (d) Plan Year. The Employee’s Compensation for the entire Plan Year.

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Allied Capital 401(k) Plan

þ   (e) Compensation while a Participant. The Employee’s Compensation only for
the portion of the Plan Year in which the Employee actually is a Participant.

Modifications to Compensation definition. The Employer elects to modify the
Compensation definition elected in (a), (b) or (c) as follows. (Choose one or
more of (f) through (n) as applicable. If the Employer elects to allocate its
nonelective contribution under Plan Section 3.04 using permitted disparity, (i),
(j), (k) and (l) do not apply):

o   (f) Fringe benefits. The Plan excludes all reimbursements or other expense
allowances, fringe benefits (cash and noncash), moving expenses, deferred
compensation and welfare benefits.   o   (g) Elective Contributions. The Plan
excludes a Participant’s Elective Contributions. See Plan Section 1.07(D).   o  
(h) Exclusion. The Plan excludes Compensation in excess of:          .   o   (i)
Bonuses. The Plan excludes bonuses.   o   (j) Overtime. The Plan excludes
overtime.   o   (k) Commissions. The Plan excludes commissions.   o   (l)
Nonelective contributions. The following modifications apply to the definition
of Compensation for nonelective contributions:          .   o   (m) Deferral
contributions. The following modifications apply to the definition of
Compensation for deferral contributions:          .   o   (n) Matching
contributions. The following modifications apply to the definition of
Compensation for matching contributions:          .

5.       PLAN YEAR/LIMITATION YEAR (1.24). Plan Year and Limitation Year mean
the 12-consecutive month period (except for a short Plan Year) ending every:
(Choose (a) or (b). Choose (c) if applicable)

þ   (a) December 31.   o   (b) Other:          .   o   (c) Short Plan Year:
commencing on:           and ending on:          .

6.       EFFECTIVE DATE (1.10). The Employer’s adoption of the Plan is a:
(Choose one of (a) or (b))

o   (a) New Plan. The Effective Date of the Plan is:          .   þ   (b)
Restated Plan. The restated Effective Date is: January 1, 2008.       This Plan
is an amendment and restatement of an existing retirement plan(s) originally
established effective as of: Original Effective Date, September 1, 1999 .

7.       HOUR OF SERVICE/ELAPSED TIME METHOD (1.15). The crediting method for
Hours of Service is: (Choose one or more of (a) through (d) as applicable)

þ   (a) Actual Method. See Plan Section 1.15(B).   o   (b) Equivalency Method.
The Equivalency Method is:          . [Note: Insert “daily,” “weekly,”
“semi-monthly payroll periods” or “monthly.”] See Plan Section 1.15(C).   o  
(c) Combination Method. In lieu of the Equivalency Method specified in (b), the
Actual Method applies for purposes of:          .

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o   (d) Elapsed Time Method. In lieu of crediting Hours of Service, the Elapsed
Time Method applies for purposes of crediting Service for: (Choose one or more
of (1), (2) or (3) as applicable)

  o   (1) Eligibility under Article II.     o   (2) Vesting under Article V.    
o   (3) Contribution allocations under Article III.

8.       PREDECESSOR EMPLOYER SERVICE (1.30). In addition to the predecessor
service the Plan must credit by reason of Section 1.30 of the Plan, the Plan
credits as Service under this Plan, service with the following predecessor
employer(s): N/A .
[Note: If the Plan does not credit any additional predecessor service under this
Section 1.30, insert “N/A” in the blank line. The Employer also may elect to
credit predecessor service with specified Participating Employers only. See the
Participation Agreement.] Service with the designated predecessor employer(s)
applies: (Choose one or more of (a) through (d) as applicable)

o   (a) Eligibility. For eligibility under Article II. See Plan Section 1.30 for
time of Plan entry.   o   (b) Vesting. For vesting under Article V.   o   (c)
Contribution allocation. For contribution allocations under Article III.   o  
(d) Exceptions. Except for the following Service:          .

ARTICLE II
ELIGIBILITY REQUIREMENTS
9.       ELIGIBILITY (2.01).
Eligibility conditions. To become a Participant in the Plan, an Employee must
satisfy the following eligibility conditions: (Choose one or more of (a) through
(e) as applicable) [Note: If the Employer does not elect (c), the Employer’s
elections under (a) and (b) apply to all types of contributions. The Employer as
to deferral contributions may not elect (b)(2) and may not elect more than
12 months in (b)(4) and (b)(5).]

þ   (a) Age. Attainment of age 21 (not to exceed age 21).   þ   (b) Service.
Service requirement. (Choose one of (1) through (5))

  o   (1) One Year of Service.     o   (2) Two Years of Service, without an
intervening Break in Service. See Plan Section 2.03(A).     þ   (3) One Hour of
Service (immediate completion of Service requirement). The Employee satisfies
the Service requirement on his/her Employment Commencement Date.     o   (4)
           months (not exceeding 24).     o   (5) An Employee must complete
           Hours of Service within the            time period following the
Employee’s Employment Commencement Date. If an Employee does not complete the
stated Hours of Service during the specified time period (if any), the Employee
is subject to the One Year of Service requirement. [Note: The number of hours
may not exceed 1,000 and the time period may not exceed 24 months. If the Plan
does not require the Employee to satisfy the Hours of Service requirement within
a specified time period, insert “N/A” in the second blank line.]

o   (c) Alternative 401(k)/401(m) eligibility conditions. In lieu of the
elections in (a) and (b), the Employer elects the following eligibility
conditions for the following types of contributions: (Choose (1) or (2) or both
if the Employer wishes to impose less restrictive eligibility conditions for
deferral/Employee contributions or for matching contributions)

  (1) o  Deferral/Employee contributions: (Choose one of a. through d. Choose e.
if applicable)     a. o  One Year of Service     b. o  One Hour of Service
(immediate completion of Service requirement)     c. o             months (not
exceeding 12)

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Allied Capital 401(k) Plan

  d. o  An Employee must complete            Hours of Service within the
           time period following an Employee’s Employment Commencement Date. If
an Employee does not complete the stated Hours of Service during the specified
time period (if any), the Employee is subject to the One Year of Service
requirement. [Note: The number of hours may not exceed 1,000 and the time period
may not exceed 12 months. If the Plan does not require the Employee to satisfy
the Hours of Service requirement within a specified time period, insert “N/A” in
the second blank line.]     e. o  Age            (not exceeding age 21)     (2)
o  Matching contributions: (Choose one of f. through i. Choose j. if applicable)
    f. o  One Year of Service     g. o  One Hour of Service (immediate
completion of Service requirement)     h. o             months (not exceeding
24)     i. o  An Employee must complete            Hours of Service within the
           time period following an Employee’s Employment Commencement Date. If
an Employee does not complete the stated Hours of Service during the specified
time period (if any), the Employee is subject to the One Year of Service
requirement. [Note: The number of hours may not exceed 1,000 and the time period
may not exceed 24 months. If the Plan does not require the Employee to satisfy
the Hours of Service requirement within a specified time period, insert “N/A” in
the second blank line.]     j. o  Age            (not exceeding age 21)

o   (d) Service requirements:          .
[Note: Any Service requirement the Employer elects in (d) must be available
under other Adoption Agreement elections or a combination thereof.]   o   (e)
Dual eligibility. The eligibility conditions of this Section 2.01 apply solely
to an Employee employed by the Employer after           . If the Employee was
employed by the Employer by the specified date, the Employee will become a
Participant on the latest of: (i) the Effective Date; (ii) the restated
Effective Date; (iii) the Employee’s Employment Commencement Date; or (iv) on
the date the Employee attains age            (not exceeding age 21).

Plan Entry Date. “Plan Entry Date” means the Effective Date and: (Choose one of
(f) through (j). Choose (k) if applicable) [Note: If the Employer does not elect
(k), the elections under (f) through (j) apply to all types of contributions.
The Employer must elect at least one Entry Date per Plan Year.]

o   (f) Semi-annual Entry Dates. The first day of the Plan Year and the first
day of the seventh month of the Plan Year.   o   (g) The first day of the Plan
Year.   þ   (h) Employment Commencement Date (immediate eligibility).   o   (i)
The first day of each:            (e.g., “Plan Year quarter”).   o   (j) The
following Plan Entry Dates:          .   o   (k) Alternative 401(k)/401(m) Plan
Entry Date(s). For the alternative 401(k)/401(m) eligibility conditions under
(c), Plan Entry Date means: (Choose (1) or (2) or both as applicable)

  (1)   o Deferral/Employee contributions
     (Choose one of a. through d.)

  a.   o Semi-annual Entry Dates     b.   o The first day of the Plan Year    
c.   o Employment Commencement Date (immediate eligibility)     d.   o The first
day of each:           

  (2)   o Matching contributions
     (Choose one of e. through h.)

  e.   o Semi-annual Entry Dates     f.   o The first day of the Plan Year    
g.   o Employment Commencement Date (immediate eligibility)     h.   o The first
day of each:           

Time of participation. An Employee will become a Participant, unless excluded
under Section 1.11, on the Plan Entry Date (if employed on that date): (Choose
one of (l), (m) or (n). Choose (o) if applicable): [Note: If the Employer does
not elect (o), the election under (l), (m) or (n) applies to all types of
contributions.]

þ   (l) Immediately following or coincident with   o   (m) Immediately preceding
or coincident with   o   (n) Nearest

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Allied Capital 401(k) Plan

o   (o) Alternative 401(k)/401(m) election(s): (Choose (1) or (2) or both as
applicable)

  (1)   o Deferral contributions

  a.   o Immediately following or coincident with

  (2)   o Matching contributions
     (Choose one of b., c. or d.)

  b.   o Immediately following or coincident with     c.   o Immediately
preceding or coincident with     d.   o Nearest

the date the Employee completes the eligibility conditions described in this
Section 2.01. [Note: Unless otherwise excluded under Section 1.11, an Employee
must become a Participant by the earlier of: (1) the first day of the Plan Year
beginning after the date the Employee completes the age and service requirements
of Code §410(a); or (2) 6 months after the date the Employee completes those
requirements.]
10.     YEAR OF SERVICE — ELIGIBILITY (2.02). (Choose (a) and (b) as
applicable): [Note: If the Employer does not elect a Year of Service condition
or elects the Elapsed Time Method, the Employer should not complete (a) or (b).]

o   (a) Year of Service. An Employee must complete            Hour(s) of Service
during an eligibility computation period to receive credit for a Year of Service
under Article II: [Note: The number may not exceed 1,000. If left blank, the
requirement is 1,000.]   o   (b) Eligibility computation period. After the
initial eligibility computation period described in Plan Section 2.02, the Plan
measures the eligibility computation period as: (Choose one of (1) or (2))

  o   (1) The Plan Year beginning with the Plan Year which includes the first
anniversary of the Employee’s Employment Commencement Date.     o   (2) The
12-consecutive month period beginning with each anniversary of the Employee’s
Employment Commencement Date.

11.     PARTICIPATION — BREAK IN SERVICE (2.03). The one year hold-out rule
described in Plan Section 2.03(B): (Choose one of (a), (b) or (c))

þ   (a) Not applicable. Does not apply to the Plan.   o   (b) Applicable.
Applies to the Plan and to all Participants.   o   (c) Limited application.
Applies to the Plan, but only to a Participant who has incurred a Separation
from Service.

12.     ELECTION NOT TO PARTICIPATE (2.06). The Plan: (Choose one of (a) or (b))

þ   (a) Election not permitted. Does not permit an eligible Employee to elect
not to participate.   o   (b) Irrevocable election. Permits an Employee to elect
not to participate if the Employee makes a one-time irrevocable election prior
to the Employee’s Plan Entry Date.

ARTICLE III
EMPLOYER CONTRIBUTIONS, DEFERRAL CONTRIBUTIONS AND FORFEITURES
13.     AMOUNT AND TYPE (3.01). The amount and type(s) of the Employer’s
contribution to the Trust for a Plan Year or other specified period will equal:
(Choose one or more of (a) through (f) as applicable)

þ   (a) Deferral contributions (401(k) arrangement). The dollar or percentage
amount by which each Participant has elected to reduce his/her Compensation, as
provided in the Participant’s salary reduction agreement and in accordance with
Section 3.02.   o   (b) Matching contributions (other than safe harbor matching
contributions under Section 3.01(d)). The matching contributions made in
accordance with Section 3.03.   o   (c) Nonelective contributions (profit
sharing). The following nonelective contribution (Choose (1) or (2) or both as
applicable): [Note: The Employer may designate as a qualified nonelective
contribution, all or any portion of its nonelective contribution. See Plan
Section 3.04(F).]

  o   (1) Discretionary. An amount the Employer in its sole discretion may
determine.

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  o   (2) Fixed. The following amount:           

þ   (d) 401(k) safe harbor contributions. The following 401(k) safe harbor
contributions described in Plan Section 14.02(D): (Choose one of (1), (2) or
(3). Choose (4), if applicable)

  o   (1) Safe harbor nonelective contribution. The safe harbor nonelective
contribution equals      % of a Participant’s Compensation [Note: the amount in
the blank must be at least 3%.].     o   (2) Basic safe harbor matching
contribution. A matching contribution equal to 100% of each Participant’s
deferral contributions not exceeding 3% of the Participant’s Compensation, plus
50% of each Participant’s deferral contributions in excess of 3% but not in
excess of 5% of the Participant’s Compensation. For this purpose, “Compensation”
means Compensation for:          . [Note: The Employer must complete the blank
line with the applicable time period for computing the Employer’s basic safe
harbor match, such as “each payroll period,” “each month,” “each Plan Year
quarter” or “the Plan Year”.]     þ   (3) Enhanced safe harbor matching
contribution. (Choose one of a. or b.).

  þ   a. Uniform percentage. An amount equal to 100% of each Participant’s
deferral contributions not exceeding 4% of the Participant’s Compensation. For
this purpose, “Compensation” means Compensation for: the Plan Year. [See the
Note in (d)(2).]     o   b. Tiered formula. An amount equal to the specified
matching percentage for the corresponding level of each Participant’s deferral
contribution percentage. For this purpose, “Compensation” means Compensation
for:          . [See the Note in (d)(2).]

      Deferral Contribution Percentage   Matching Percentage
                                                                  
                                                                

[Note: The matching percentage may not increase as the deferral contribution
percentage increases and the enhanced matching formula otherwise must satisfy
the requirements of Code §§401(k)(12)(B)(ii) and (iii). If the Employer wishes
to avoid ACP testing on its enhanced safe harbor matching contribution, the
Employer also must limit deferral contributions taken into account (the
“Deferral Contribution Percentage”) for the matching contribution to 6% of Plan
Year Compensation.]

  o   (4) Another plan. The Employer will satisfy the 401(k) safe harbor
contribution in the following plan:          .

o   (e) Davis-Bacon contributions. The amount(s) specified for the applicable
Plan Year or other applicable period in the Employer’s Davis-Bacon contract(s).
The Employer will make a contribution only to Participants covered by the
contract and only with respect to Compensation paid under the contract. If the
Participant accrues an allocation of nonelective contributions (including
forfeitures) under the Plan in addition to the Davis-Bacon contribution, the
Plan Administrator will: (Choose one of (1) or (2))

  o   (1) Not reduce the Participant’s nonelective contribution allocation by
the Davis-Bacon contribution.     o   (2) Reduce the Participant’s nonelective
contribution allocation by the Davis-Bacon contribution.

o   (f) Frozen Plan. This Plan is a frozen Plan effective:          . For any
period following the specified date, the Employer will not contribute to the
Plan, a Participant may not contribute and an otherwise eligible Employee will
not become a Participant in the Plan.

14. DEFERRAL CONTRIBUTIONS (3.02). The following limitations and terms apply to
an Employee’s deferral contributions: (If the Employer elects Section 3.01(a),
the Employer must elect (a). Choose (b) or (c) as applicable)

þ   (a) Limitation on amount. An Employee’s deferral contributions are subject
to the following limitation(s) in addition to those imposed by the Code: (Choose
(1), (2) or (3) as applicable)

  o   (1) Maximum deferral amount:          .     o   (2) Minimum deferral
amount:          .     þ   (3) No limitations.

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Allied Capital 401(k) Plan
For the Plan Year in which an Employee first becomes a Participant, the Plan
Administrator will apply any percentage limitation the Employer elects in (1) or
(2) to the Employee’s Compensation: (Choose one of (4) or (5) unless the
Employer elects (3))

  o   (4) Only for the portion of the Plan Year in which the Employee actually
is a Participant.     o   (5) For the entire Plan Year.

o   (b) Negative deferral election. The Employer will withhold        % from the
Participant’s Compensation unless the Participant elects a lesser percentage
(including zero) under his/her salary reduction agreement. See Plan
Section 14.02(C). The negative election will apply to: (Choose one of (1) or
(2))

  o   (1) All Participants who have not deferred at least the automatic deferral
amount as of:          .     o   (2) Each Employee whose Plan Entry Date is on
or following the negative election effective date.

o   (c) Cash or deferred contributions. For each Plan Year for which the
Employer makes a designated cash or deferred contribution under Plan
Section 14.02(B), a Participant may elect to receive directly in cash not more
than the following portion (or, if less, the 402(g) limitation) of his/her
proportionate share of that cash or deferred contribution: (Choose one of (1) or
(2))

  o   (1) All or any portion.     o   (2)      %.

Modification/revocation of salary reduction agreement. A Participant
prospectively may modify or revoke a salary reduction agreement, or may file a
new salary reduction agreement following a prior revocation, at least once per
Plan Year or during any election period specified by the basic plan document or
required by the Internal Revenue Service. The Plan Administrator also may
provide for more frequent elections in the Plan’s salary reduction agreement
form.

15.     MATCHING CONTRIBUTIONS (INCLUDING ADDITIONAL SAFE HARBOR MATCH UNDER
PLAN SECTION 14.02(D)(3)) (3.03). The Employer matching contribution is: (If the
Employer elects Section 3.01(b), the Employer must elect one or more of (a),
(b) or (c) as applicable. Choose (d) if applicable)

o   (a) Fixed formula. An amount equal to      % of each Participant’s deferral
contributions.   o   (b) Discretionary formula. An amount (or additional amount)
equal to a matching percentage the Employer from time to time may deem advisable
of the Participant’s deferral contributions. The Employer, in its sole
discretion, may designate as a qualified matching contribution, all or any
portion of its discretionary matching contribution. The portion of the
Employer’s discretionary matching contribution for a Plan Year not designated as
a qualified matching contribution is a regular matching contribution.   o   (c)
Multiple level formula. An amount equal to the following percentages for each
level of the Participant’s deferral contributions. [Note: The matching
percentage only will apply to deferral contributions in excess of the previous
level and not in excess of the stated deferral contribution percentage.]

      Deferral Contributions   Matching Percentage                       
                                                                
                                           

o   (d) Related Employers. If two or more Related Employers contribute to this
Plan, the Plan Administrator will allocate matching contributions and matching
contribution forfeitures only to the Participants directly employed by the
contributing Employer. The matching contribution formula for the other Related
Employer(s) is:          . [Note: If the Employer does not elect (d), the Plan
Administrator will allocate all matching contributions and matching forfeitures
without regard to which contributing Related Employer directly employs the
Participant.]

Time period for matching contributions. The Employer will determine its matching
contribution based on deferral contributions made during each: (Choose one of
(e) through (h))

o   (e) Plan Year.   o   (f) Plan Year quarter.   o   (g) Payroll period.   o  
(h) Alternative time period:          . [Note: Any alternative time period the
Employer elects in (h) must be the same for all Participants and may not exceed
the Plan Year.]

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Deferral contributions taken into account. In determining a Participant’s
deferral contributions taken into account for the above-specified time period
under the matching contribution formula, the following limitations apply:
(Choose one of (i), (j) or (k))

o   (i) All deferral contributions. The Plan Administrator will take into
account all deferral contributions.   o   (j) Specific limitation. The Plan
Administrator will disregard deferral contributions exceeding      % of the
Participant’s Compensation. [Note: To avoid the ACP test in a safe harbor 401(k)
plan, the Employer must limit deferrals and Employee contributions which are
subject to match to 6% of Plan Year Compensation.]   o   (k) Discretionary. The
Plan Administrator will take into account the deferral contributions as a
percentage of the Participant’s Compensation as the Employer determines.

Other matching contribution requirements. The matching contribution formula is
subject to the following additional requirements: (Choose (l) or (m) or both if
applicable)

o   (l) Matching contribution limits. A Participant’s matching contributions may
not exceed: (Choose one of (1) or (2))

  o   (1)           . [Note: The Employer may elect (1) to place an overall
dollar or percentage limit on matching contributions.]     o   (2) 4% of a
Participant’s Compensation for the Plan Year under the discretionary matching
contribution formula. [Note: The Employer must elect (2) if it elects a
discretionary matching formula with the safe harbor 401(k) contribution formula
and wishes to avoid the ACP test.]

o   (m) Qualified matching contributions. The Plan Administrator will allocate
as qualified matching contributions, the matching contributions specified in
Adoption Agreement Section:          . The Plan Administrator will allocate all
other matching contributions as regular matching contributions. [Note: If the
Employer elects two matching formulas, the Employer may use (m) to designate one
of the formulas as a qualified matching contribution.]

16.     CONTRIBUTION ALLOCATION (3.04).
Employer nonelective contributions (3.04(A)).The Plan Administrator will
allocate the Employer’s nonelective contribution under the following
contribution allocation formula: (Choose one of (a), (b) or (c). Choose (d) if
applicable)

o   (a) Nonintegrated (pro rata) allocation formula.   o   (b) Permitted
disparity. The following permitted disparity formula and definitions apply to
the Plan: (Choose one of (1) or (2). Also choose (3))

  o   (1) Two-tiered allocation formula.     o   (2) Four-tiered allocation
formula.     o   (3) For purposes of Section 3.04(b), “Excess Compensation”
means Compensation in excess of: (Choose one of a. or b.)

  o   a.      % of the taxable wage base in effect on the first day of the Plan
Year, rounded to the next highest $      (not exceeding the taxable wage base).
    o   b. The following integration level:          .
[Note: The integration level cannot exceed the taxable wage base in effect for
the Plan Year for which this Adoption Agreement first is effective.]

o   (c) Uniform points allocation formula. Under the uniform points allocation
formula, a Participant receives: (Choose (1) or both (1) and (2) as applicable)

  o   (1)            point(s) for each Year of Service. Year of Service
means:          .     o   (2) One point for each $     [not to exceed $200]
increment of Plan Year Compensation.

o   (d) Incorporation of contribution formula. The Plan Administrator will
allocate the Employer’s nonelective contribution under Section(s) 3.01(c)(2),
(d)(1) or (e) in accordance with the contribution formula adopted by the
Employer under that Section.

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Allied Capital 401(k) Plan
Qualified nonelective contributions. (3.04(F)). The Plan Administrator will
allocate the Employer’s qualified nonelective contributions to: (Choose one of
(e) or (f))

o   (e) Nonhighly compensated Employees only.   þ   (f) All Participants.

Related Employers. (Choose (g) if applicable)

o   (g) Allocate only to directly employed Participants. If two or more Related
Employers adopt this Plan, the Plan Administrator will allocate all nonelective
contributions and forfeitures attributable to nonelective contributions only to
the Participants directly employed by the contributing Employer. If a
Participant receives Compensation from more than one contributing Employer, the
Plan Administrator will determine the allocations under this Section 3.04 by
prorating the Participant’s Compensation between or among the participating
Related Employers. [Note: If the Employer does not elect 3.04(g), the Plan
Administrator will allocate all nonelective contributions and forfeitures
without regard to which contributing Related Employer directly employs the
Participant. The Employer may not elect 3.04(g) under a safe harbor 401(k)
Plan.]

17.     FORFEITURE ALLOCATION (3.05). The Plan Administrator will allocate a
Participant forfeiture: (Choose one or more of (a), (b) or (c) as applicable)
[Note: Even if the Employer elects immediate vesting, the Employer should
complete Section 3.05. See Plan Section 9.11.]

þ   (a) Matching contribution forfeitures. To the extent attributable to
matching contributions: (Choose one of (1) through (4))

  o   (1) As a discretionary matching contribution.     þ   (2) To reduce
matching contributions.     o   (3) As a discretionary nonelective contribution.
    o   (4) To reduce nonelective contributions.

þ   (b) Nonelective contribution forfeitures. To the extent attributable to
Employer nonelective contributions: (Choose one of (1) through (4))

  o   (1) As a discretionary nonelective contribution.     o   (2) To reduce
nonelective contributions.     o   (3) As a discretionary matching contribution.
    þ   (4) To reduce matching contributions.

þ   (c) Reduce administrative expenses. First to reduce the Plan’s ordinary and
necessary administrative expenses for the Plan Year and then allocate any
remaining forfeitures in the manner described in Sections 3.05(a) or (b) as
applicable.

Timing of forfeiture allocation. The Plan Administrator will allocate
forfeitures under Section 3.05 in the Plan Year: (Choose one of (d) or (e))

o   (d) In which the forfeiture occurs.   þ   (e) Immediately following the Plan
Year in which the forfeiture occurs.

18.     ALLOCATION CONDITIONS (3.06).
Allocation conditions. The Plan does not apply any allocation conditions to
deferral contributions, 401(k) safe harbor contributions (under Section 3.01(d))
or to Davis-Bacon contributions (except as the Davis-Bacon contract provides).
To receive an allocation of matching contributions, nonelective contributions,
qualified nonelective contributions or Participant forfeitures, a Participant
must satisfy the following allocation condition(s): (Choose one or more of
(a) through (i) as applicable)

o   (a) Hours of Service condition. The Participant must complete at least the
specified number of Hours of Service (not exceeding 1,000) during the Plan
Year:          .

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o
  (b) Employment condition. The Participant must be employed by the Employer on
the last day of the                      (designate time period).
 
   
o
  (c) No allocation conditions.
 
   
o
  (d) Elapsed Time Method. The Participant must complete at least the specified
number (not exceeding 182) of consecutive calendar days of employment with the
Employer during the Plan Year:                     .
 
   
o
  (e) Termination of Service/501 Hours of Service coverage rule. The Participant
either must be employed by the Employer on the last day of the Plan Year or must
complete at least 501 Hours of Service during the Plan Year. If the Plan uses
the Elapsed Time Method of crediting Service, the Participant must complete at
least 91 consecutive calendar days of employment with the Employer during the
Plan Year.
 
   
o
  (f) Special allocation conditions for matching contributions. The Participant
must complete at least                      Hours of Service during the
                     (designate time period) for the matching contributions made
for that time period.
 
   
o
  (g) Death, Disability or Normal Retirement Age. Any condition specified in
Section 3.06                      applies if the Participant incurs a Separation
from Service during the Plan Year on account of:                      (e.g.,
death, Disability or Normal Retirement Age).
 
   
o
  (h) Suspension of allocation conditions for coverage. The suspension of
allocation conditions of Plan Section 3.06(E) applies to the Plan.
 
   
o
  (i) Limited allocation conditions. The Plan does not impose an allocation
condition for the following types of contributions:                     . [Note:
Any election to limit the Plan’s allocation conditions to certain contributions
must be the same for all Participants, be definitely determinable and not
discriminate in favor of Highly Compensated Employees.]

ARTICLE IV
PARTICIPANT CONTRIBUTIONS
19.     EMPLOYEE (AFTER TAX) CONTRIBUTIONS (4.02). The following elections apply
to Employee contributions: (Choose one of (a) or (b). Choose (c) if applicable)

     
þ
  (a) Not permitted. The Plan does not permit Employee contributions.
 
   
o
  (b) Permitted. The Plan permits Employee contributions subject to the
following limitations:                     .
 
  [Note: Any designated limitation(s) must be the same for all Participants, be
definitely determinable and not discriminate in favor of Highly Compensated
Employees.]
 
   
o
  (c) Matching contribution. For each Plan Year, the Employer’s matching
contribution made with respect to Employee contributions is:
                     .

ARTICLE V
VESTING REQUIREMENTS
20.     NORMAL/EARLY RETIREMENT AGE (5.01). A Participant attains Normal
Retirement Age (or Early Retirement Age, if applicable) under the Plan on the
following date: (Choose one of (a) or (b). Choose (c) if applicable)

     
þ
  (a) Specific age. The date the Participant attains age 65 . [Note: The age may
not exceed age 65.]
 
   
o
  (b) Age/participation. The later of the date the Participant attains
                     years of age or the                      anniversary of the
first day of the Plan Year in which the Participant commenced participation in
the Plan. [Note: The age may not exceed age 65 and the anniversary may not
exceed the 5th.]
 
   
o
  (c) Early Retirement Age. Early Retirement Age is the later of: (i) the date a
Participant attains age        or (ii) the date a Participant reaches his/her
                     anniversary of the first day of the Plan Year in which the
Participant commenced participation in the Plan.

21.     PARTICIPANT’S DEATH OR DISABILITY (5.02). The 100% vesting rule under
Plan Section 5.02 does not apply to: (Choose (a) or (b) or both as applicable)

     
o
  (a) Death.
 
   
o
  (b) Disability.

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Allied Capital 401(k) Plan
22.     VESTING SCHEDULE (5.03). A Participant has a 100% Vested interest at all
times in his/her deferral contributions, qualified nonelective contributions,
qualified matching contributions, 401(k) safe harbor contributions and
Davis-Bacon contributions (unless otherwise indicated in (f)). The following
vesting schedule applies to Employer regular matching contributions and to
Employer nonelective contributions: (Choose (a) or choose one or more of
(b) through (f) as applicable)

     
o
  (a) Immediate vesting. 100% Vested at all times. [Note: The Employer must
elect (a) if the Service condition under Section 2.01 exceeds One Year of
Service or more than twelve months.]
 
   
o
  (b) Top-heavy vesting schedules. [Note: The Employer must choose one of
(b)(1), (2) or (3) if it does not elect (a).]

     
o
  (1) 6-year graded as specified in the Plan.
 
   
o
  (2) 3-year cliff as specified in the Plan.
 
   
o
  (3) Modified top-heavy schedule

          Years of   Vested Service   Percentage
Less than 1
                         %
1
                         %
2
                         %
3
                         %
4
                         %
5
                         %
6 or more
    100 %

     
o
  (c) Non-top-heavy vesting schedules. [Note: The Employer may elect one of
(c)(1), (2) or (3) in addition to (b).]

     
o
  (1) 7-year graded as specified in the Plan.
 
   
o
  (2) 5-year cliff as specified in the Plan.
 
   
o
  (3) Modified non-top-heavy schedule

          Years of   Vested Service   Percentage
Less than 1
                         %
1
                         %
2
                         %
3
                         %
4
                         %
5
                         %
6
                         %
7 or more
    100 %

If the Employer does not elect (c), the vesting schedule elected in (b) applies
to all Plan Years. [Note: The modified top-heavy schedule of (b)(3) must satisfy
Code §416. If the Employer elects (c)(3), the modified non-top-heavy schedule
must satisfy Code §411(a)(2).]

     
o
  (d) Separate vesting election for regular matching contributions. In lieu of
the election under (a), (b) or (c), the following vesting schedule applies to a
Participant’s regular matching contributions: (Choose one of (1) or (2))

     
o
  (1) 100% Vested at all times.

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Allied Capital 401(k) Plan

     
o
  (2) Regular matching vesting schedule:                     .
 
  [Note: The vesting schedule completed under (d)(2) must comply with Code
§411(a)(4).]

     
o
  (e) Application of top-heavy schedule. The non-top-heavy schedule elected
under (c) applies in all Plan Years in which the Plan is not a top-heavy plan.
[Note: If the Employer does not elect (e), the top-heavy vesting schedule will
apply for the first Plan Year in which the Plan is top-heavy and then in all
subsequent Plan Years.]
 
   
o
  (f) Special vesting provisions:                     . [Note: Any special
vesting provision must satisfy Code §411(a). Any special vesting provision must
be definitely determinable, not discriminate in favor of Highly Compensated
Employees and not violate Code §401(a)(4).]

23.      YEAR OF SERVICE — VESTING (5.06). (Choose (a) and (b)): [Note: If the
Employer elects the Elapsed Time Method or elects immediate vesting, the
Employer should not complete (a) or (b).]

     
o
  (a) Year of Service. An Employee must complete at least                     
Hours of Service during a vesting computation period to receive credit for a
Year of Service under Article V. [Note: The number may not exceed 1,000. If left
blank, the requirement is 1,000.]
 
   
o
  (b) Vesting computation period. The Plan measures a Year of Service on the
basis of the following 12-consecutive month period: (Choose one of (1) or (2))

     
o
  (1) Plan Year.
 
   
o
  (2) Employment year (anniversary of Employment Commencement Date).

24.      EXCLUDED YEARS OF SERVICE — VESTING (5.08). The Plan excludes the
following Years of Service for purposes of vesting: (Choose (a) or choose one or
more of (b) through (f) as applicable)

     
o
  (a) None. None other than as specified in Plan Section 5.08(a).
 
   
o
  (b) Age 18. Any Year of Service before the Year of Service during which the
Participant attained the age of 18.
 
   
o
  (c) Prior to Plan establishment. Any Year of Service during the period the
Employer did not maintain this Plan or a predecessor plan.
 
   
o
  (d) Parity Break in Service. Any Year of Service excluded under the rule of
parity. See Plan Section 5.10.
 
   
o
  (e) Prior Plan terms. Any Year of Service disregarded under the terms of the
Plan as in effect prior to this restated Plan.
 
   
o
  (f) Additional exclusions. Any Year of Service before:                     .
 
  [Note: Any exclusion specified under (f) must comply with Code §411(a)(4). Any
exclusion must be definitely determinable, not discriminate in favor of Highly
Compensated Employees and not violate Code §401(a)(4). If the Employer elects
immediate vesting, the Employer should not complete Section 5.08.]

ARTICLE VI
DISTRIBUTION OF ACCOUNT BALANCE
25.      TIME OF PAYMENT OF ACCOUNT BALANCE (6.01). The following time of
distribution elections apply to the Plan:
Separation from Service/Vested Account Balance not exceeding $5,000. Subject to
the limitations of Plan Section 6.01(A)(1), the Trustee will distribute in a
lump sum (regardless of the Employer’s election under Section 6.04) a separated
Participant’s Vested Account Balance not exceeding $5,000: (Choose one of
(a) through (d))

     
þ
  (a) Immediate. As soon as administratively practicable following the
Participant’s Separation from Service.
 
   
o
  (b) Designated Plan Year. As soon as administratively practicable in the
                     Plan Year beginning after the Participant’s Separation from
Service.
 
   
o
  (c) Designated Plan Year quarter. As soon as administratively practicable in
the                      Plan Year quarter beginning after the Participant’s
Separation from Service.
 
   
o
  (d) Designated distribution. As soon as administratively practicable in the:
                     following the Participant’s Separation from Service. [Note:
The designated distribution time must be the same for all Participants, be
definitely determinable, not discriminate in favor of Highly Compensated
Employees and not violate Code §401(a)(4).]

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Allied Capital 401(k) Plan
Separation from Service/Vested Account Balance exceeding $5,000. A separated
Participant whose Vested Account Balance exceeds $5,000 may elect to commence
distribution of his/her Vested Account Balance no earlier than: (Choose one of
(e) through (i). Choose (j) if applicable)

     
þ
  (e) Immediate. As soon as administratively practicable following the
Participant’s Separation from Service.
 
   
o
  (f) Designated Plan Year. As soon as administratively practicable in the
           Plan Year beginning after the Participant’s Separation from Service.
 
   
o
  (g) Designated Plan Year quarter. As soon as administratively practicable in
the            Plan Year quarter following the Plan Year quarter in which the
Participant elects to receive a distribution.
 
   
o
  (h) Normal Retirement Age. As soon as administratively practicable after the
close of the Plan Year in which the Participant attains Normal Retirement Age
and within the time required under Plan Section 6.01(A)(2).
 
   
o
  (i) Designated distribution. As soon as administratively practicable in the:
           following the Participant’s Separation from Service. [Note: The
designated distribution time must be the same for all Participants, be
definitely determinable, not discriminate in favor of Highly Compensated
Employees and not violate Code §401(a)(4).]
 
   
o
  (j) Limitation on Participant’s right to delay distribution. A Participant may
not elect to delay commencement of distribution of his/her Vested Account
Balance beyond the later of attainment of age 62 or Normal Retirement Age.
 
  [Note: If the Employer does not elect (j), the Plan permits a Participant who
has Separated from Service to delay distribution until his/her required
beginning date. See Plan Section 6.01(A)(2).]

Participant elections prior to Separation from Service. A Participant, prior to
Separation from Service may elect any of the following distribution options in
accordance with Plan Section 6.01(C). (Choose (k) or choose one or more of
(l) through (o) as applicable). [Note: If the Employer elects any in-service
distributions option, a Participant may elect to receive one in-service
distribution per Plan Year unless the Plan’s in-service distribution form
provides for more frequent in-service distributions.]

     
o
  (k) None. A Participant does not have any distribution option prior to
Separation from Service, except as may be provided under Plan Section 6.01(C).
 
   
þ
  (l) Deferral contributions. Distribution of all or any portion (as permitted
by the Plan) of a Participant’s Account Balance attributable to deferral
contributions if: (Choose one or more of (1), (2) or (3) as applicable)

     
þ
  (1) Hardship (safe harbor hardship rule). The Participant has incurred a
hardship in accordance with Plan Sections 6.09 and 14.11(A).
 
   
þ
  (2) Age. The Participant has attained age 59 1/2 (Must be at least age 59
1/2).
 
   
þ
  (3) Disability. The Participant has incurred a Disability.

     
þ
  (m) Qualified nonelective contributions/qualified matching contributions/safe
harbor contributions. Distribution of all or any portion of a Participant’s
Account Balance attributable to qualified nonelective contributions, to
qualified matching contributions, or to 401(k) safe harbor contributions if:
(Choose (1) or (2) or both as applicable)

     
þ
  (1) Age. The Participant has attained age 59 1/2 (Must be at least age 59
1/2).
 
   
þ
  (2) Disability. The Participant has incurred a Disability.

     
þ
  (n) Nonelective contributions/regular matching contributions. Distribution of
all or any portion of a Participant’s Vested Account Balance attributable to
nonelective contributions or to regular matching contributions if: (Choose one
or more of (1) through (5) as applicable)

     
þ
  (1) Age/Service conditions. (Choose one or more of a. through d. as
applicable):

     
þ
  a. Age. The Participant has attained age 59 1/2 .
 
   
o
  b. Two-year allocations. The Plan Administrator has allocated the
contributions to be distributed for a period of not less than
                     Plan Years before the distribution date. [Note: The minimum
number of years is 2.]
 
   
o
  c. Five years of participation. The Participant has participated in the Plan
for at least                      Plan Years. [Note: The minimum number of years
is 5.]

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Allied Capital 401(k) Plan

     
o
  d. Vested. The Participant is                     % Vested in his/her Account
Balance. See Plan Section 5.03(A). [Note: If an Employer makes more than one
election under Section 6.01(n)(1), a Participant must satisfy all conditions
before the Participant is eligible for the distribution.]

     
o
  (2) Hardship. The Participant has incurred a hardship in accordance with Plan
Section 6.09.
 
   
þ
  (3) Hardship (safe harbor hardship rule). The Participant has incurred a
hardship in accordance with Plan Sections 6.09 and 14.11(A).
 
   
þ
  (4) Disability. The Participant has incurred a Disability.
 
   
o
  (5) Designated condition. The Participant has satisfied the following
condition(s):                     .
 
  [Note: Any designated condition(s) must be the same for all Participants, be
definitely determinable and not discriminate in favor of Highly Compensated
Employees.]

     
þ
  (o) Participant contributions. Distribution of all or any portion of a
Participant’s Account Balance attributable to the following Participant
contributions described in Plan Section 4.01: (Choose one of (1), (2) or (3))

     
o
  (1) All Participant contributions.
 
   
o
  (2) Employee contributions only.
 
   
þ
  (3) Rollover contributions only.

Participant loan default/offset. See Section 6.08 of the Plan.
26.       DISTRIBUTION METHOD (6.03). A separated Participant whose Vested
Account Balance exceeds $5,000 may elect distribution under one of the following
method(s) of distribution described in Plan Section 6.03: (Choose one or more of
(a) through (d) as applicable)

     
þ
  (a) Lump sum.
 
   
o
  (b) Installments.
 
   
o
  (c) Installments for required minimum distributions only.
 
   
o
  (d) Annuity distribution option(s):                     .
 
  [Note: Any optional method of distribution may not be subject to Employer,
Plan Administrator or Trustee discretion.]

27.       JOINT AND SURVIVOR ANNUITY REQUIREMENTS (6.04). The joint and survivor
annuity distribution requirements of Plan Section 6.04: (Choose one of (a) or
(b))

     
þ
  (a) Profit sharing plan exception. Do not apply to a Participant, unless the
Participant is a Participant described in Section 6.04(H) of the Plan.
 
   
o
  (b) Applicable. Apply to all Participants.

ARTICLE IX
PLAN ADMINISTRATOR — DUTIES WITH RESPECT TO PARTICIPANTS’ ACCOUNTS
28.       ALLOCATION OF NET INCOME, GAIN OR LOSS (9.08). For each type of
contribution provided under the Plan, the Plan allocates net income, gain or
loss using the following method: (Choose one or more of (a) through (e) as
applicable)

     
þ
  (a) Deferral contributions/Employee contributions. (Choose one or more of
(1) through (5) as applicable)

     
þ
  (1) Daily valuation method. Allocate on each business day of the Plan Year
during which Plan assets for which there is an established market are valued and
the Trustee is conducting business.
 
   
o
  (2) Balance forward method. Allocate using the balance forward method.
 
   
o
  (3) Weighted average method. Allocate using the weighted average method, based
on the following weighting period:                     . See Plan Section 14.12.

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o
  (4) Balance forward method with adjustment. Allocate pursuant to the balance
forward method, except treat as part of the relevant Account at the beginning of
the valuation period                     % of the contributions made during the
following valuation period:                     .
 
   
o
  (5) Individual account method. Allocate using the individual account method.
See Plan Section 9.08.

     
þ
  (b) Matching contributions. (Choose one or more of (1) through (5) as
applicable)

     
þ
  (1) Daily valuation method. Allocate on each business day of the Plan Year
during which Plan assets for which there is an established market are valued and
the Trustee is conducting business.
 
   
o
  (2) Balance forward method. Allocate using the balance forward method.
 
   
o
  (3) Weighted average method. Allocate using the weighted average method, based
on the following weighting period:                     . See Plan Section 14.12.
 
   
o
  (4) Balance forward method with adjustment. Allocate pursuant to the balance
forward method, except treat as part of the relevant Account at the beginning of
the valuation period                     % of the contributions made during the
following valuation period:                     .
 
   
o
  (5) Individual account method. Allocate using the individual account method.
See Plan Section 9.08.

     
þ
  (c) Employer nonelective contributions. (Choose one or more of (1) through
(5) as applicable)

     
þ
  (1) Daily valuation method. Allocate on each business day of the Plan Year
during which Plan assets for which there is an established market are valued and
the Trustee is conducting business.
 
   
o
  (2) Balance forward method. Allocate using the balance forward method.
 
   
o
  (3) Weighted average method. Allocate using the weighted average method, based
on the following weighting period:                     . See Plan Section 14.12.
 
   
o
  (4) Balance forward method with adjustment. Allocate pursuant to the balance
forward method, except treat as part of the relevant Account at the beginning of
the valuation period                     % of the contributions made during the
following valuation period:                     .
 
   
o
  (5) Individual account method. Allocate using the individual account method.
See Plan Section 9.08.

     
o
  (d) Specified method. Allocate pursuant to the following method:
                    .
 
  [Note: The specified method must be a definite predetermined formula which is
not based on Compensation, which satisfies the nondiscrimination requirements of
Treas. Reg. §1.401(a)(4) and which is applied uniformly to all Participants.]
 
   
o
  (e) Interest rate factor. In accordance with Plan Section 9.08(E), the Plan
includes interest at the following rate on distributions made more than 90 days
after the most recent valuation date:                     .

ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES
29.       INVESTMENT POWERS (10.03). The following additional investment options
or limitations apply under Plan Section 10.03: NA . [Note: Enter “N/A” if not
applicable.]
30.       VALUATION OF TRUST (10.15). In addition to the last day of the Plan
Year, the Trustee must value the Trust Fund on the following valuation date(s):
(Choose one of (a) through (d))

     
þ
  (a) Daily valuation dates. Each business day of the Plan Year on which Plan
assets for which there is an established market are valued and the Trustee is
conducting business.
 
   
o
  (b) Last day of a specified period. The last day of each                     
of the Plan Year.
 
   
o
  (c) Specified dates:                     .
 
   
o
  (d) No additional valuation dates.

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Allied Capital 401(k) Plan
Execution Page
     The Trustee (and Custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Prototype Plan and Trust. The Employer hereby agrees to the provisions of this
Plan and Trust, and in witness of its agreement, the Employer by its duly
authorized officers, has executed this Adoption Agreement, and the Trustee (and
Custodian, if applicable) has signified its acceptance, on:
                                                                              
  .

              Name of Employer: Allied Capital Corporation     Employer’s EIN:
52-1081052     Signed:
 
       
 
       
 
       
 
      [Name/Title]
 
            Name(s) of Trustee:
 
        Wachovia Bank, National Association
 
       
 
       
 
       
 
       
 
       
 
       
 
       
 
       
 
       
 
       
 
       
 
       
 
       
 
       
 
            Trust EIN (Optional):
 
       
 
       
 
       
 
  Signed:    
 
       
 
       
 
       
 
      [Name/Title]
 
       
 
  Signed:    
 
       
 
       
 
       
 
      [Name/Title]
 
       
 
  Signed:    
 
       
 
       
 
       
 
      [Name/Title]
 
       
 
  Signed:    
 
       
 
       
 
       
 
      [Name/Title]
 
       
 
  Signed:    
 
       
 
       
 
       
 
      [Name/Title]
 
       
 
  Signed:    
 
       
 
       
 
       
 
      [Name/Title]
 
       
 
  Signed:    
 
       
 
       
 
       
 
      [Name/Title]
 
       
 
  Signed:    
 
       
 
       
 
       
 
      [Name/Title]

© Copyright 2001 Wachovia Bank, National Association

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Allied Capital 401(k) Plan

              Name of Custodian (Optional):
 
       
 
       
 
       
 
  Signed:    
 
       
 
       
 
       
 
      [Name/Title]

31. Plan Number. The 3-digit plan number the Employer assigns to this Plan for
ERISA reporting purposes (Form 5500 Series) is: 003.
Use of Adoption Agreement. Failure to complete properly the elections in this
Adoption Agreement may result in disqualification of the Employer’s Plan. The
Employer only may use this Adoption Agreement in conjunction with the basic plan
document referenced by its document number on Adoption Agreement page one.
Execution for Page Substitution Amendment Only. If this paragraph is completed,
this Execution Page documents an amendment to Adoption Agreement Section(s)
                     effective                     , by substitute Adoption
Agreement page number(s)                     .
Prototype Plan Sponsor. The Prototype Plan Sponsor identified on the first page
of the basic plan document will notify all adopting employers of any amendment
of this Prototype Plan or of any abandonment or discontinuance by the Prototype
Plan Sponsor of its maintenance of this Prototype Plan. For inquiries regarding
the adoption of the Prototype Plan, the Prototype Plan Sponsor’s intended
meaning of any Plan provisions or the effect of the opinion letter issued to the
Prototype Plan Sponsor, please contact the Prototype Plan Sponsor at the
following address and telephone number: 1525 West W.T. Harris Blvd., Charlotte,
NC 28288, (800) 669-5812.
Reliance on Sponsor Opinion Letter. The Prototype Plan Sponsor has obtained from
the IRS an opinion letter specifying the form of this Adoption Agreement and the
basic plan document satisfy, as of the date of the opinion letter, Code §401. An
adopting Employer may rely on the Prototype Sponsor’s IRS opinion letter only to
the extent provided in Announcement 2001-77, 2001-30 I.R.B. The Employer may not
rely on the opinion letter in certain other circumstances or with respect to
certain qualification requirements, which are specified in the opinion letter
and in Announcement 2001-77. In order to have reliance in such circumstances or
with respect to such qualification requirements, the Employer must apply for a
determination letter to Employee Plans Determinations of the Internal Revenue
Service.
© Copyright 2001 Wachovia Bank, National Association

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Allied Capital 401(k) Plan
PARTICIPATION AGREEMENT
o Check here if not applicable and do not complete this page.
     The undersigned Employer, by executing this Participation Agreement, elects
to become a Participating Employer in the Plan identified in Section 1.21 of the
accompanying Adoption Agreement, as if the Participating Employer were a
signatory to that Adoption Agreement. The Participating Employer accepts, and
agrees to be bound by, all of the elections granted under the provisions of the
Prototype Plan as made by the Signatory Employer to the Execution Page of the
Adoption Agreement, except as otherwise provided in this Participation
Agreement.
32. EFFECTIVE DATE (1.10). The Effective Date of the Plan for the Participating
Employer is: January 1, 2008.
33. NEW PLAN/RESTATEMENT. The Participating Employer’s adoption of this Plan
constitutes: (Choose one of (a) or (b))

     
o
  (a) The adoption of a new plan by the Participating Employer.
 
   
þ
  (b) The adoption of an amendment and restatement of a plan currently
maintained by the Participating Employer, identified as: A.C. Corporation, and
having an original effective date of: May 1, 2001; however original effective
date of Allied Capital 401(k) Plan is September, 1, 1999.

34. PREDECESSOR EMPLOYER SERVICE (1.30). In addition to the predecessor service
credited by reason of Section 1.30 of the Plan, the Plan credits as Service
under this Plan, service with this Participating Employer. (Choose one or more
of (a) through (d) as applicable): [Note: If the Plan does not credit any
additional predecessor service under Section 1.30 for this Participating
Employer, do not complete this election.]

     
þ
  (a) Eligibility. For eligibility under Article II. See Plan Section 1.30 for
time of Plan entry.
 
   
þ
  (b) Vesting. For vesting under Article V.
 
   
þ
  (c) Contribution allocation. For contribution allocations under Article III.
 
   
o
  (d) Exceptions. Except for the following Service:                     .

          Name of Plan:   Name of Participating Employer:
 
        Allied Capital 401(k) Plan   A.C. Corporation
 
       
 
  Signed:    
 
       
 
      [Name/Title]
 
             
 
      [Date]
 
            Participating Employer’s EIN: 52-2316212

Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.

              Name of Signatory Employer:   Name(s) of Trustee: Allied Capital
Corporation   Wachovia Bank, National Association
 
                 
 
  [Name/Title]       [Name/Title]
 
           
Signed:
      Signed:    
 
           
 
                 
 
  [Date]       [Date]

[Note: Each Participating Employer must execute a separate Participation
Agreement. If the Plan does not have a Participating Employer, the Signatory
Employer may delete this page from the Adoption Agreement.]
© Copyright 2001 Wachovia Bank, National Association

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Allied Capital 401(k) Plan
APPENDIX A
TESTING ELECTIONS/EFFECTIVE DATE ADDENDUM
35. The following testing elections and special effective dates apply: (Choose
one or more of (a) through (n) as applicable)

     
o
  (a) Highly Compensated Employee (1.14). For Plan Years beginning after
                    , the Employer makes the following election(s) regarding the
definition of Highly Compensated Employee:

     
 
  (1) o Top paid group election.
 
   
 
  (2) o Calendar year data election (fiscal year plan).

     
o
  (b) 401(k) current year testing. The Employer will apply the current year
testing method in applying the ADP and ACP tests effective for Plan Years
beginning after:                     . [Note: For Plan Years beginning on or
after the Employer’s execution of its “GUST” restatement, the Employer must use
the same testing method within the same Plan Year for both the ADP and ACP
tests.]
 
   
þ
  (c) Compensation. The Compensation definition under Section 1.07 will apply
for Plan Years beginning after: 12/31/2007.
 
   
o
  (d) Election not to participate. The election not to participate under
Section 2.06 is effective:                     .
 
   
o
  (e) 401(k) safe harbor. The 401(k) safe harbor provisions under
Section 3.01(d) are effective:                     .
 
   
o
  (f) Negative election. The negative election provision under Section 3.02(b)
is effective:                     .
 
   
o
  (g) Contribution/allocation formula. The specified contribution(s) and
allocation method(s) under Sections 3.01 and 3.04 are effective:
                    .
 
   
o
  (h) Allocation conditions. The allocation conditions of Section 3.06 are
effective:                    .
 
   
þ
  (i) Benefit payment elections. The distribution elections of Section(s) 6.01,
6.03, 6.09 are effective: 01/01/2008.
 
   
o
  (j) Election to continue pre-SBJPA required beginning date. A Participant may
not elect to defer commencement of the distribution of his/her Vested Account
Balance beyond the April 1 following the calendar year in which the Participant
attains age 70 1/2. See Plan Section 6.02(A).
 
   
o
  (k) Elimination of age 70 1/2 in-service distributions. The Plan eliminates a
Participant’s (other than a more than 5% owner) right to receive in-service
distributions on April 1 of the calendar year following the year in which the
Participant attains age 70 1/2 for Plan Years beginning after:
                    .
 
   
o
  (l) Allocation of earnings. The earnings allocation provisions under
Section 9.08 are effective:                     .
 
   
þ
  (m) Elimination of optional forms of benefit. The Employer elects
prospectively to eliminate the following optional forms of benefit: (Choose one
or more of (1), (2) and (3) as applicable)

     
o
  (1) QJSA and QPSA benefits as described in Plan Sections 6.04, 6.05 and 6.06
effective:                     .
 
   
þ
  (2) Installment distributions as described in Section 6.03 effective:
1/1/2008.
 
   
o
  (3) Other optional forms of benefit (Any election to eliminate must be
consistent with Treas. Reg. §1.411(d)-4):                     .

     
o
  (n) Special effective date(s):                     .

     For periods prior to the above-specified special effective date(s), the
Plan terms in effect prior to its restatement under this Adoption Agreement will
control for purposes of the designated provisions. A special effective date may
not result in the delay of a Plan provision beyond the permissible effective
date under any applicable law.
© Copyright 2001 Wachovia Bank, National Association

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Allied Capital 401(k) Plan
APPENDIX B
GUST Remedial Amendment Period Elections
36. The following GUST restatement elections apply: (Choose one or more of
(a) through (j) as applicable)

     
þ
  (a) Highly Compensated Employee elections. The Employer makes the following
remedial amendment period elections with respect to the Highly Compensated
Employee definition:

                 
(1) 1997:
  o   Top paid group election.   o   Calendar year election.
 
  o   Calendar year data election.        
(2) 1998:
  o   Top paid group election.   o   Calendar year data election.
(3) 1999:
  o   Top paid group election.   o   Calendar year data election.
(4) 2000:
  o   Top paid group election.   o   Calendar year data election.
(5) 2001:
  o   Top paid group election.   o   Calendar year data election.
(6) 2002:
  þ   Top paid group election.   o   Calendar year data election.

     
þ
  (b) 401(k) testing methods. The Employer makes the following remedial
amendment period elections with respect to the ADP test and the ACP test: [Note:
The Employer may use a different testing method for the ADP and ACP tests
through the end of the Plan Year in which the Employer executes its GUST
restated Plan.]

                                                  ADP test       ACP test
(1)
  1997:   o   prior year   o   current year   1997:   o   prior year   o  
current year
(2)
  1998:   o   prior year   o   current year   1998:   o   prior year   o  
current year
(3)
  1999:   o   prior year   o   current year   1999:   o   prior year   o  
current year
(4)
  2000:   o   prior year   o   current year   2000:   o   prior year   o  
current year
(5)
  2001:   o   prior year   o   current year   2001:   o   prior year   o  
current year
(6)
  2002:   þ   prior year   o   current year   2002:   þ   prior year   o  
current year

     
o
  (c) Delayed application of SBJPA required beginning date. The Employer elects
to delay the effective date for the required beginning date provision of Plan
Section 6.02 until Plan Years beginning after:                     .
 
   
o
  (d) Model Amendment for required minimum distributions. The Employer adopts
the IRS Model Amendment in Plan Section 6.02(E) effective                     .
[Note: The date must not be earlier than January 1, 2001.]

Defined Benefit Limitation

     
o
  (e) Code §415(e) repeal. The repeal of the Code §415(e) limitation is
effective for Limitation Years beginning after                     . [Note: If
the Employer does not make an election under (e), the repeal is effective for
Limitation Years beginning after December 31, 1999.]

Code §415(e) limitation. To the extent necessary to satisfy the limitation under
Plan Section 3.17 for Limitation Years beginning prior to the repeal of Code
§415(e), the Employer will reduce: (Choose one of (f) or (g))

     
o
  (f) The Participant’s projected annual benefit under the defined benefit plan.
 
   
o
  (g) The Employer’s contribution or allocation on behalf of the Participant to
the defined contribution plan and then, if necessary, the Participant’s
projected annual benefit under the defined benefit plan.

Coordination with top-heavy minimum allocation. The Plan Administrator will
apply the top-heavy minimum allocation provisions of Article XII with the
following modifications: (Choose (h) or choose (i) or (j) or both as applicable)

     
o
  (h) No modifications.
 
   
o
  (i) For Non-Key Employees participating only in this Plan, the top-heavy
minimum allocation is the minimum allocation determined by substituting
                    % (not less than 4%) for “3%,” except: (Choose one of (1) or
(2))

     
o
  (1) No exceptions.
 
   
o
  (2) Plan Years in which the top-heavy ratio exceeds 90%.

     
o
  (j) For Non-Key Employees also participating in the defined benefit plan, the
top-heavy minimum is: (Choose one of (1) or (2))

     
o
  (1) 5% of Compensation irrespective of the contribution rate of any Key
Employee: (Choose one of a. or b.)

     
o
  a. No exceptions.
 
   
o
  b. Substituting “7 1/2%” for “5%” if the top-heavy ratio does not exceed 90%.

     
o
  (2) 0%. [Note: The defined benefit plan must satisfy the top-heavy minimum
benefit requirement for these Non-Key Employees.]

Actuarial assumptions for top-heavy calculation. To determine the top-heavy
ratio, the Plan Administrator will use the following interest rate and mortality
assumptions to value accrued benefits under a defined benefit plan:
                    .
© Copyright 2001 Wachovia Bank, National Association

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Allied Capital 401(k) Plan
CHECKLIST OF EMPLOYER INFORMATION
AND EMPLOYER ADMINISTRATIVE ELECTIONS
Commencing with the 2008 Plan Year
     The Prototype Plan permits the Employer to make certain administrative
elections not reflected in the Adoption Agreement. This form lists those
administrative elections and provides a means of recording the Employer’s
elections. This checklist is not part of the Plan document.

         
37.
  Employer Information.    
 
       
 
  Allied Capital Corporation          
 
  [Employer Name]    
 
       
 
  1919 Pennsylvania Ave, NW          
 
  [Address]      
 
  Washington, District of Columbia 20006-3434   202-721-6100
 
       
 
  [City, State and Zip Code]   [Telephone Number]
 
       
38.
  Form of Business.      
 
  (a) þ Corporation   (b) o S Corporation
 
  (c) o Limited Liability Company   (d) o Sole Proprietorship
 
  (e) o Partnership   (f) o                     
 
        39.   Section 1.07(F) - Nondiscriminatory definition of Compensation.
When testing nondiscrimination under the Plan, the Plan permits the Employer to
make elections regarding the definition of Compensation. [Note: This election
solely is for purposes of nondiscrimination testing. The election does not
affect the Employer’s elections under Section 1.07 which apply for purposes of
allocating Employer contributions and Participant forfeitures.]
 
            (a) þ The Plan will “gross up” Compensation for Elective
Contributions.
 
            (b) o The Plan will exclude Elective Contributions.
 
        40.   Section 4.04 - Rollover contributions.
 
            (a) þ The Plan accepts rollover contributions.
 
            (b) o The Plan does not accept rollover contributions.
 
        41.   Section 8.06 - Participant direction of investment/404(c). The
Plan authorizes Participant direction of investment with Trustee consent. If the
Trustee permits Participant direction of investment, the Employer and the
Trustee should adopt a policy which establishes the applicable conditions and
limitations, including whether they intend the Plan to comply with ERISA
§404(c).
 
            (a) þ The Plan permits Participant direction of investment and is a
404(c) plan.
 
            (b) o The Plan does not permit Participant direction of investment
or is a non-404(c) plan.
 
        42.   Section 9.04[A] - Participant loans. The Plan authorizes the Plan
Administrator to adopt a written loan policy to permit Participant loans.
 
            (a) þ The Plan permits Participant loans subject to the following
conditions:          (1) þ Minimum loan amount: $ 1000 .          (2) þ Maximum
number of outstanding loans: 2 .          (3) þ Reasons for which a Participant
may request a loan:               a. þ Any purpose.               b. o Hardship
events.               c. o Other:                     .          (4) þ
Suspension of loan repayments:               a. o Not permitted.    
          b. þ Permitted for non-military leave of absence.               c. þ
Permitted for military service leave of absence.           (5) o The Participant
must be a party in interest.
 
            (b) o The Plan does not permit Participant loans.
 
        43.   Section 11.01 - Life insurance. The Plan with Employer approval
authorizes the Trustee to acquire life insurance.
 
            (a) o The Plan will invest in life insurance contracts.
 
            (b) þ The Plan will not invest in life insurance contracts.
 
        44.   Surety bond company: St. Paul Travelers . Surety bond amount:
$100000000.00

© Copyright 2001 Wachovia Bank, National Association

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EGTRRA
AMENDMENT TO THE
ALLIED CAPITAL 401(K) PLAN

 

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EGTRRA — Employer
ARTICLE I
PREAMBLE

1.1   Adoption and effective date of amendment. This amendment of the plan is
adopted to reflect certain provisions of the Economic Growth and Tax Relief
Reconciliation Act of 2001 (“EGTRRA”). This amendment is intended as good faith
compliance with the requirements of EGTRRA and is to be construed in accordance
with EGTRRA and guidance issued thereunder. Except as otherwise provided, this
amendment shall be effective as of the first day of the first plan year
beginning after December 31, 2001.   1.2   Supersession of inconsistent
provisions. This amendment shall supersede the provisions of the plan to the
extent those provisions are inconsistent with the provisions of this amendment.

ARTICLE II
ADOPTION AGREEMENT ELECTIONS
The questions in this Article II only need to be completed in order to override
the default provisions set forth below. If all of the default provisions will
apply, then these questions should be skipped.
Unless the employer elects otherwise in this Article II, the following defaults
apply:

  1)   The vesting schedule for matching contributions will be a 6 year graded
schedule (if the plan currently has a graded schedule that does not satisfy
EGTRRA) or a 3 year cliff schedule (if the plan currently has a cliff schedule
that does not satisfy EGTRRA), and such schedule will apply to all matching
contributions (even those made prior to 2002).     2)   Rollovers are
automatically excluded in determining whether the $5,000 threshold has been
exceeded for automatic cash-outs (if the plan is not subject to the qualified
joint and survivor annuity rules and provides for automatic cash-outs). This is
applied to all participants regardless of when the distributable event occurred.
    3)   The suspension period after a hardship distribution is made will be
6 months and this will only apply to hardship distributions made after 2001.    
4)   Catch-up contributions will be allowed.     5)   For target benefit plans,
the increased compensation limit of $200,000 will be applied retroactively
(i.e., to years prior to 2002).

2.1   Vesting Schedule for Matching Contributions       If there are matching
contributions subject to a vesting schedule that does not satisfy EGTRRA, then
unless otherwise elected below, for participants who complete an hour of service
in a plan year beginning after December 31, 2001, the following vesting schedule
will apply to all matching contributions subject to a vesting schedule:       If
the plan has a graded vesting schedule (i.e., the vesting schedule includes a
vested percentage that is more than 0% and less than 100%) the following will
apply:

      Years of vesting service   Nonforfeitable percentage 2   20% 3   40% 4  
60% 5   80% 6   100%

If the plan does not have a graded vesting schedule, then matching contributions
will be nonforfeitable upon the completion of 3 years of vesting service.
In lieu of the above vesting schedule, the employer elects the following
schedule:

             
 
  a.   o   3 year cliff (a participant’s accrued benefit derived from employer
matching contributions shall be nonforfeitable upon the participant’s completion
of three years of vesting service).
 
           
 
  b.   o   6 year graded schedule (20% after 2 years of vesting service and an
additional 20% for each year thereafter).
 
           
 
  c.   o   Other (must be at least as liberal as a. or the b. above):

© Copyright 2002 Wachovia Bank, National Association

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EGTRRA — Employer

      Years of vesting service   Nonforfeitable percentage                     
                      %                                            %
                                           %                       
                    %                                            %

The vesting schedule set forth herein shall only apply to participants who
complete an hour of service in a plan year beginning after December 31, 2001,
and, unless the option below is elected, shall apply to all matching
contributions subject to a vesting schedule.

             
 
  d.   o   The vesting schedule will only apply to matching contributions made
in plan years beginning after December 31, 2001 (the prior schedule will apply
to matching contributions made in prior plan years).

2.2   Exclusion of Rollovers in Application of Involuntary Cash-out Provisions
(for profit sharing and 401(k) plans only). If the plan is not subject to the
qualified joint and survivor annuity rules and includes involuntary cash-out
provisions, then unless one of the options below is elected, effective for
distributions made after December 31, 2001, rollover contributions will be
excluded in determining the value of the participant’s nonforfeitable account
balance for purposes of the plan’s involuntary cash-out rules.

             
 
  a.   o   Rollover contributions will not be excluded.
 
           
 
  b.   o   Rollover contributions will be excluded only with respect to
distributions made after ___. (Enter a date no earlier than December 31, 2001.)
 
           
 
  c.   þ   Rollover contributions will only be excluded with respect to
participants who separated from service after December 31, 2001 . (Enter a date.
The date may be earlier than December 31, 2001.)

2.3   Suspension period of hardship distributions. If the plan provides for
hardship distributions upon satisfaction of the safe harbor (deemed) standards
as set forth in Treas. Reg. Section 1.401(k)-1(d)(2)(iv), then, unless the
option below is elected, the suspension period following a hardship distribution
shall only apply to hardship distributions made after December 31, 2001.

             
 
      o   With regard to hardship distributions made during 2001, a participant
shall be prohibited from making elective deferrals and employee contributions
under this and all other plans until the later of January 1, 2002, or 6 months
after receipt of the distribution.

2.4   Catch-up contributions (for 401(k) profit sharing plans only): The plan
permits catch-up contributions (Article VI) unless the option below is elected.

             
 
      o   The plan does not permit catch-up contributions to be made.

2.5   For target benefit plans only: The increased compensation limit ($200,000
limit) shall apply to years prior to 2002 unless the option below is elected.

             
 
      o   The increased compensation limit will not apply to years prior to
2002.

ARTICLE III
VESTING OF MATCHING CONTRIBUTIONS

3.1   Applicability. This Article shall apply to participants who complete an
Hour of Service after December 31, 2001, with respect to accrued benefits
derived from employer matching contributions made in plan years beginning after
December 31, 2001. Unless otherwise elected by the employer in Section 2.1
above, this Article shall also apply to all such participants with respect to
accrued benefits derived from employer matching contributions made in plan years
beginning prior to January 1, 2002.   3.2   Vesting schedule. A participant’s
accrued benefit derived from employer matching contributions shall vest as
provided in Section 2.1 of this amendment.

ARTICLE IV
INVOLUNTARY CASH-OUTS

4.1   Applicability and effective date. If the plan provides for involuntary
cash-outs of amounts less than $5,000, then unless otherwise elected in
Section 2.2 of this amendment, this Article shall apply for distributions made
after December 31, 2001, and shall apply to all participants. However,
regardless of the preceding, this Article shall not apply if the plan is subject
to the qualified joint and survivor annuity requirements of Sections 401(a)(11)
and 417 of the Code.   4.2   Rollovers disregarded in determining value of
account balance for involuntary distributions. For purposes of the Sections of
the plan that provide for the involuntary distribution of vested accrued
benefits of $5,000 or less, the value of a participant’s nonforfeitable account
balance shall be determined without regard to that portion of the account

© Copyright 2002 Wachovia Bank, National Association

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EGTRRA — Employer
balance that is attributable to rollover contributions (and earnings allocable
thereto) within the meaning of Sections 402(c), 403(a)(4), 403(b)(8),
408(d)(3)(A)(ii), and 457(e)(16) of the Code. If the value of the participant’s
nonforfeitable account balance as so determined is $5,000 or less, then the plan
shall immediately distribute the participant’s entire nonforfeitable account
balance.
ARTICLE V
HARDSHIP DISTRIBUTIONS

5.1   Applicability and effective date. If the plan provides for hardship
distributions upon satisfaction of the safe harbor (deemed) standards as set
forth in Treas. Reg. Section 1.401(k)-1(d)(2)(iv), then this Article shall apply
for calendar years beginning after 2001.   5.2   Suspension period following
hardship distribution. A participant who receives a distribution of elective
deferrals after December 31, 2001, on account of hardship shall be prohibited
from making elective deferrals and employee contributions under this and all
other plans of the employer for 6 months after receipt of the distribution.
Furthermore, if elected by the employer in Section 2.3 of this amendment, a
participant who receives a distribution of elective deferrals in calendar year
2001 on account of hardship shall be prohibited from making elective deferrals
and employee contributions under this and all other plans until the later of
January 1, 2002, or 6 months after receipt of the distribution.

ARTICLE VI
CATCH-UP CONTRIBUTIONS
Catch-up Contributions. Unless otherwise elected in Section 2.4 of this
amendment, all employees who are eligible to make elective deferrals under this
plan and who have attained age 50 before the close of the plan year shall be
eligible to make catch-up contributions in accordance with, and subject to the
limitations of, Section 414(v) of the Code. Such catch-up contributions shall
not be taken into account for purposes of the provisions of the plan
implementing the required limitations of Sections 402(g) and 415 of the Code.
The plan shall not be treated as failing to satisfy the provisions of the plan
implementing the requirements of Section 401(k)(3), 401(k)(11), 401(k)(12),
410(b), or 416 of the Code, as applicable, by reason of the making of such
catch-up contributions.
ARTICLE VII
INCREASE IN COMPENSATION LIMIT
Increase in Compensation Limit. The annual compensation of each participant
taken into account in determining allocations for any plan year beginning after
December 31, 2001, shall not exceed $200,000, as adjusted for cost-of-living
increases in accordance with Section 401(a)(17)(B) of the Code. Annual
compensation means compensation during the plan year or such other consecutive
12-month period over which compensation is otherwise determined under the plan
(the determination period). If this is a target benefit plan, then except as
otherwise elected in Section 2.5 of this amendment, for purposes of determining
benefit accruals in a plan year beginning after December 31, 2001, compensation
for any prior determination period shall be limited to $200,000. The
cost-of-living adjustment in effect for a calendar year applies to annual
compensation for the determination period that begins with or within such
calendar year.
ARTICLE VIII
PLAN LOANS
Plan loans for owner-employees or shareholder-employees. If the plan permits
loans to be made to participants, then effective for plan loans made after
December 31, 2001, plan provisions prohibiting loans to any owner-employee or
shareholder-employee shall cease to apply.
ARTICLE IX
LIMITATIONS ON CONTRIBUTIONS (IRC SECTION 415 LIMITS)

9.1   Effective date. This Section shall be effective for limitation years
beginning after December 31, 2001.   9.2   Maximum annual addition. Except to
the extent permitted under Article VI of this amendment and Section 414(v) of
the Code, if applicable, the annual addition that may be contributed or
allocated to a participant’s account under the plan for any limitation year
shall not exceed the lesser of:

  a.   $40,000, as adjusted for increases in the cost-of-living under Section
415(d) of the Code, or     b.   100 percent of the participant’s compensation,
within the meaning of Section 415(c)(3) of the Code, for the limitation year.

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EGTRRA — Employer
The compensation limit referred to in b. shall not apply to any contribution for
medical benefits after separation from service (within the meaning of Section
401(h) or Section 419A(f)(2) of the Code) which is otherwise treated as an
annual addition.
ARTICLE X
MODIFICATION OF TOP-HEAVY RULES

10.1   Effective date. This Article shall apply for purposes of determining
whether the plan is a top-heavy plan under Section 416(g) of the Code for plan
years beginning after December 31, 2001, and whether the plan satisfies the
minimum benefits requirements of Section 416(c) of the Code for such years. This
Article amends the top-heavy provisions of the plan.   10.2   Determination of
top-heavy status.   10.2.1   Key employee. Key employee means any employee or
former employee (including any deceased employee) who at any time during the
plan year that includes the determination date was an officer of the employer
having annual compensation greater than $130,000 (as adjusted under Section
416(i)(1) of the Code for plan years beginning after December 31, 2002), a
5-percent owner of the employer, or a 1-percent owner of the employer having
annual compensation of more than $150,000. For this purpose, annual compensation
means compensation within the meaning of Section 415(c)(3) of the Code. The
determination of who is a key employee will be made in accordance with Section
416(i)(1) of the Code and the applicable regulations and other guidance of
general applicability issued thereunder.   10.2.2   Determination of present
values and amounts. This Section 10.2.2 shall apply for purposes of determining
the present values of accrued benefits and the amounts of account balances of
employees as of the determination date.

  a.   Distributions during year ending on the determination date. The present
values of accrued benefits and the amounts of account balances of an employee as
of the determination date shall be increased by the distributions made with
respect to the employee under the plan and any plan aggregated with the plan
under Section 416(g)(2) of the Code during the 1-year period ending on the
determination date. The preceding sentence shall also apply to distributions
under a terminated plan which, had it not been terminated, would have been
aggregated with the plan under Section 416(g)(2)(A)(i) of the Code. In the case
of a distribution made for a reason other than separation from service, death,
or disability, this provision shall be applied by substituting “5-year period”
for “1-year period.”     b.   Employees not performing services during year
ending on the determination date. The accrued benefits and accounts of any
individual who has not performed services for the employer during the 1-year
period ending on the determination date shall not be taken into account.

10.3   Minimum benefits.   10.3.1   Matching contributions. Employer matching
contributions shall be taken into account for purposes of satisfying the minimum
contribution requirements of Section 416(c)(2) of the Code and the plan. The
preceding sentence shall apply with respect to matching contributions under the
plan or, if the plan provides that the minimum contribution requirement shall be
met in another plan, such other plan. Employer matching contributions that are
used to satisfy the minimum contribution requirements shall be treated as
matching contributions for purposes of the actual contribution percentage test
and other requirements of Section 401(m) of the Code.   10.3.2   Contributions
under other plans. The employer may provide, in an addendum to this amendment,
that the minimum benefit requirement shall be met in another plan (including
another plan that consists solely of a cash or deferred arrangement which meets
the requirements of Section 401(k)(12) of the Code and matching contributions
with respect to which the requirements of Section 401(m)(11) of the Code are
met). The addendum should include the name of the other plan, the minimum
benefit that will be provided under such other plan, and the employees who will
receive the minimum benefit under such other plan.

ARTICLE XI
DIRECT ROLLOVERS

11.1   Effective date. This Article shall apply to distributions made after
December 31, 2001.   11.2   Modification of definition of eligible retirement
plan. For purposes of the direct rollover provisions of the plan, an eligible
retirement plan shall also mean an annuity contract described in Section 403(b)
of the Code and an eligible plan under Section 457(b) of the Code which is
maintained by a state, political subdivision of a state, or any agency or
instrumentality of a state or political subdivision of a state and which agrees
to separately account for amounts transferred into such plan from this plan. The
definition of eligible retirement plan shall also apply in the case of a

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EGTRRA — Employer

    distribution to a surviving spouse, or to a spouse or former spouse who is
the alternate payee under a qualified domestic relation order, as defined in
Section 414(p) of the Code.   11.3   Modification of definition of eligible
rollover distribution to exclude hardship distributions. For purposes of the
direct rollover provisions of the plan, any amount that is distributed on
account of hardship shall not be an eligible rollover distribution and the
distributee may not elect to have any portion of such a distribution paid
directly to an eligible retirement plan.   11.4   Modification of definition of
eligible rollover distribution to include after-tax employee contributions. For
purposes of the direct rollover provisions in the plan, a portion of a
distribution shall not fail to be an eligible rollover distribution merely
because the portion consists of after-tax employee contributions which are not
includible in gross income. However, such portion may be transferred only to an
individual retirement account or annuity described in Section 408(a) or (b) of
the Code, or to a qualified defined contribution plan described in Section
401(a) or 403(a) of the Code that agrees to separately account for amounts so
transferred, including separately accounting for the portion of such
distribution which is includible in gross income and the portion of such
distribution which is not so includible.

ARTICLE XII
ROLLOVERS FROM OTHER PLANS
Rollovers from other plans. The employer, operationally and on a
nondiscriminatory basis, may limit the source of rollover contributions that may
be accepted by this plan.
ARTICLE XIII
REPEAL OF MULTIPLE USE TEST
Repeal of Multiple Use Test. The multiple use test described in Treasury
Regulation Section 1.401(m)-2 and the plan shall not apply for plan years
beginning after December 31, 2001.
ARTICLE XIV
ELECTIVE DEFERRALS

14.1   Elective Deferrals — Contribution Limitation. No participant shall be
permitted to have elective deferrals made under this plan, or any other
qualified plan maintained by the employer during any taxable year, in excess of
the dollar limitation contained in Section 402(g) of the Code in effect for such
taxable year, except to the extent permitted under Article VI of this amendment
and Section 414(v) of the Code, if applicable.   14.2   Maximum Salary Reduction
Contributions for SIMPLE plans. If this is a SIMPLE 401(k) plan, then except to
the extent permitted under Article VI of this amendment and Section 414(v) of
the Code, if applicable, the maximum salary reduction contribution that can be
made to this plan is the amount determined under Section 408(p)(2)(A)(ii) of the
Code for the calendar year.

ARTICLE XV
SAFE HARBOR PLAN PROVISIONS
Modification of Top-Heavy Rules. The top-heavy requirements of Section 416 of
the Code and the plan shall not apply in any year beginning after December 31,
2001, in which the plan consists solely of a cash or deferred arrangement which
meets the requirements of Section 401(k)(12) of the Code and matching
contributions with respect to which the requirements of Section 401(m)(11) of
the Code are met.
ARTICLE XVI
DISTRIBUTION UPON SEVERANCE OF EMPLOYMENT

16.1   Effective date. This Article shall apply for distributions and
transactions made after December 31, 2001, regardless of when the severance of
employment occurred.   16.2   New distributable event. A participant’s elective
deferrals, qualified nonelective contributions, qualified matching
contributions, and earnings attributable to these contributions shall be
distributed on account of the participant’s severance from employment. However,
such a distribution shall be subject to the other provisions of the plan
regarding distributions, other than provisions that require a separation from
service before such amounts may be distributed.

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EGTRRA — Employer
This amendment has been executed this
                                        day of                         
                ,                     .
Name of Employer:      Allied Capital Corporation
By:                                                                 
                                     

                                        EMPLOYER
Name of Plan: Allied Capital 401(k) Plan
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POST-EGTRRA
AMENDMENT TO THE
ALLIED CAPITAL 401(K) PLAN

 

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POST-EGTRRA — Employer
ARTICLE I
PREAMBLE

1.1   Adoption and effective date of amendment. This amendment of the plan is
adopted to reflect certain provisions of the Economic Growth and Tax Relief
Reconciliation Act of 2001 (“EGTRRA”), the Job Creation and Worker Assistance
Act of 2002, and other IRS guidance. This amendment is intended as good faith
compliance with the requirements of EGTRRA and is to be construed in accordance
with EGTRRA and guidance issued thereunder. Except as otherwise provided, this
amendment shall be effective as of the first day of the first plan year
beginning after December 31, 2001.   1.2   Supersession of inconsistent
provisions. This amendment shall supersede the provisions of the plan to the
extent those provisions are inconsistent with the provisions of this amendment.

ARTICLE II
ADOPTION AGREEMENT ELECTIONS

      The questions in this Article II only need to be completed in order to
override the default provisions set forth below. If all of the default
provisions will apply, then these questions should be skipped.         Unless
the employer elects otherwise in this Article II, the following defaults apply:

  1.   If catch-up contributions are permitted, then the catch-up contributions
are treated like any other elective deferrals for purposes of determining
matching contributions under the plan.     2.   For plans subject to the
qualified joint and survivor annuity rules, rollovers are automatically excluded
in determining whether the $5,000 threshold has been exceeded for automatic
cash-outs (if the plan provides for automatic cash-outs). This is applied to all
participants regardless of when the distributable event occurred.     3.  
Amounts that are “deemed 125 compensation” are not included in the definition of
compensation.

2.1   Exclusion of Rollovers in Application of Involuntary Cash-out Provisions.
If the plan is subject to the joint and survivor annuity rules and includes
involuntary cash-out provisions, then unless one of the options below is
elected, effective for distributions made after December 31, 2001, rollover
contributions will be excluded in determining the value of a participant’s
nonforfeitable account balance for purposes of the plan’s involuntary cash-out
rules.

a. o   Rollover contributions will not be excluded.   b. o   Rollover
contributions will be excluded only with respect to distributions made after ___
(Enter a date no earlier than December 31, 2001).   c. þ   Rollover
contributions will only be excluded with respect to participants who separated
from service after December 31, 2001. (Enter a date. The date may be earlier
than December 31, 2001.)

2.2   Catch-up contributions (for 401(k) profit sharing plans only): The plan
permits catch-up contributions effective for calendar years beginning after
December 31, 2001, (Article V) unless otherwise elected below.

a. o   The plan does not permit catch-up contributions to be made.   b. o  
Catch-up contributions are permitted effective as of: ___ (enter a date no
earlier than January 1, 2002).

      And, catch-up contributions will be taken into account in applying any
matching contribution under the Plan unless otherwise elected below.

c. o   Catch-up contributions will not be taken into account in applying any
matching contribution under the Plan.

2.3   Deemed 125 Compensation. Article VI of this amendment shall not apply
unless otherwise elected below.

  o   Article VI of this amendment (Deemed 125 Compensation) shall apply
effective as of Plan Years and Limitation Years beginning on or after ___
(insert the later of January 1, 1998, or the first day of the first plan year
the Plan used this definition).

ARTICLE III
INVOLUNTARY CASH-OUTS

3.1   Applicability and effective date. If the plan is subject to the qualified
joint and survivor annuity rules and provides for involuntary cash-outs of
amounts less than $5,000, then unless otherwise elected in Section 2.1 of this
amendment, this Article shall apply for distributions made after December 31,
2001, and shall apply to all participants.

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POST-EGTRRA — Employer

3.2   Rollovers disregarded in determining value of account balance for
involuntary distributions. For purposes of the Sections of the plan that provide
for the involuntary distribution of vested accrued benefits of $5,000 or less,
the value of a participant’s nonforfeitable account balance shall be determined
without regard to that portion of the account balance that is attributable to
rollover contributions (and earnings allocable thereto) within the meaning of
Sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16) of the
Code. If the value of the participant’s nonforfeitable account balance as so
determined is $5,000 or less, then the plan shall immediately distribute the
participant’s entire nonforfeitable account balance.

ARTICLE IV
HARDSHIP DISTRIBUTIONS
Reduction of Section 402(g) of the Code following hardship distribution. If the
plan provides for hardship distributions upon satisfaction of the safe harbor
(deemed) standards as set forth in Treas. Reg. Section 1.401(k)-1(d)(2)(iv),
then effective as of the date the elective deferral suspension period is reduced
from 12 months to 6 months pursuant to EGTRRA, there shall be no reduction in
the maximum amount of elective deferrals that a Participant may make pursuant to
Section 402(g) of the Code solely because of a hardship distribution made by
this plan or any other plan of the Employer.
ARTICLE V
CATCH-UP CONTRIBUTIONS
Catch-up Contributions. Unless otherwise elected in Section 2.2 of this
amendment, effective for calendar years beginning after December 31, 2001, all
employees who are eligible to make elective deferrals under this plan and who
have attained age 50 before the close of the calendar year shall be eligible to
make catch-up contributions in accordance with, and subject to the limitations
of, Section 414(v) of the Code. Such catch-up contributions shall not be taken
into account for purposes of the provisions of the plan implementing the
required limitations of Sections 402(g) and 415 of the Code. The plan shall not
be treated as failing to satisfy the provisions of the plan implementing the
requirements of Sections 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416 of
the Code, as applicable, by reason of the making of such catch-up contributions.
If elected in Section 2.2, catch-up contributions shall not be treated as
elective deferrals for purposes of applying any Employer matching contributions
under the plan.
ARTICLE VI
DEEMED 125 COMPENSATION
If elected, this Article shall apply as of the effective date specified in
Section 2.3 of this amendment. For purposes of any definition of compensation
under this Plan that includes a reference to amounts under Section 125 of the
Code, amounts under Section 125 of the Code include any amounts not available to
a Participant in cash in lieu of group health coverage because the Participant
is unable to certify that he or she has other health coverage. An amount will be
treated as an amount under Section 125 of the Code only if the Employer does not
request or collect information regarding the Participant’s other health coverage
as part of the enrollment process for the health plan.
This amendment has been executed this                                         
day of
                                                                                ,                    .
Name of Plan: Allied Capital 401(k) Plan
Name of Employer: Allied Capital Corporation

         
By:
       
 
 
 
EMPLOYER    

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401(a)(9) MODEL
AMENDMENT TO THE
ALLIED CAPITAL 401(K) PLAN

 

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401(a)(9) — Sponsor
MINIMUM DISTRIBUTION REQUIREMENTS AMENDMENT
ARTICLE I
GENERAL RULES

1.1   Effective Date. Unless a later effective date is specified in Section 6.1
of this Amendment, the provisions of this Amendment will apply for purposes of
determining required minimum distributions for calendar years beginning with the
2002 calendar year.   1.2   Coordination with Minimum Distribution Requirements
Previously in Effect. If the effective date of this Amendment is earlier than
calendar years beginning with the 2003 calendar year, required minimum
distributions for 2002 under this Amendment will be determined as follows. If
the total amount of 2002 required minimum distributions under the Plan made to
the distributee prior to the effective date of this Amendment equals or exceeds
the required minimum distributions determined under this Amendment, then no
additional distributions will be required to be made for 2002 on or after such
date to the distributee. If the total amount of 2002 required minimum
distributions under the Plan made to the distributee prior to the effective date
of this Amendment is less than the amount determined under this Amendment, then
required minimum distributions for 2002 on and after such date will be
determined so that the total amount of required minimum distributions for 2002
made to the distributee will be the amount determined under this Amendment.  
1.3   Precedence. The requirements of this Amendment will take precedence over
any inconsistent provisions of the Plan.   1.4   Requirements of Treasury
Regulations Incorporated. All distributions required under this Amendment will
be determined and made in accordance with the Treasury regulations under
Section 401(a)(9) of the Internal Revenue Code.   1.5   TEFRA Section 242(b)(2)
Elections. Notwithstanding the other provisions of this Amendment, distributions
may be made under a designation made before January 1, 1984, in accordance with
Section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act (TEFRA) and
the provisions of the Plan that relate to Section 242(b)(2) of TEFRA.   1.6  
Adoption by prototype sponsor. Except as otherwise provided herein, pursuant to
Section 5.01 of Revenue Procedure 2000-20, the sponsoring organization hereby
adopts this amendment on behalf of all adopting employers.

ARTICLE II
TIME AND MANNER OF DISTRIBUTION

2.1   Required Beginning Date. The Participant’s entire interest will be
distributed, or begin to be distributed, to the Participant no later than the
Participant’s required beginning date.   2.2   Death of Participant Before
Distributions Begin. If the Participant dies before distributions begin, the
Participant’s entire interest will be distributed, or begin to be distributed,
no later than as follows:

(a) If the Participant’s surviving spouse is the Participant’s sole designated
beneficiary, then, except as provided in Article VI, distributions to the
surviving spouse will begin by December 31 of the calendar year immediately
following the calendar year in which the Participant died, or by December 31 of
the calendar year in which the Participant would have attained age 70 1/2, if
later.
(b) If the Participant’s surviving spouse is not the Participant’s sole
designated beneficiary, then, except as provided in Article VI, distributions to
the designated beneficiary will begin by December 31 of the calendar year
immediately following the calendar year in which the Participant died.
(c) If there is no designated beneficiary as of September 30 of the year
following the year of the Participant’s death, the Participant’s entire interest
will be distributed by December 31 of the calendar year containing the fifth
anniversary of the Participant’s death.
(d) If the Participant’s surviving spouse is the Participant’s sole designated
beneficiary and the surviving spouse dies after the Participant but before
distributions to the surviving spouse begin, this Section 2.2, other than
Section 2.2(a), will apply as if the surviving spouse were the Participant.
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401(a)(9) — Sponsor

    For purposes of this Section 2.2 and Article IV, unless Section 2.2(d)
applies, distributions are considered to begin on the Participant’s required
beginning date. If Section 2.2(d) applies, distributions are considered to begin
on the date distributions are required to begin to the surviving spouse under
Section 2.2(a). If distributions under an annuity purchased from an insurance
company irrevocably commence to the Participant before the Participant’s
required beginning date (or to the Participant’s surviving spouse before the
date distributions are required to begin to the surviving spouse under
Section 2.2(a)), the date distributions are considered to begin is the date
distributions actually commence.   2.3   Forms of Distribution. Unless the
Participant’s interest is distributed in the form of an annuity purchased from
an insurance company or in a single sum on or before the required beginning
date, as of the first distribution calendar year distributions will be made in
accordance with Articles III and IV of this Amendment. If the Participant’s
interest is distributed in the form of an annuity purchased from an insurance
company, distributions thereunder will be made in accordance with the
requirements of Section 401(a)(9) of the Code and the Treasury regulations.

ARTICLE III
REQUIRED MINIMUM DISTRIBUTIONS DURING PARTICIPANT’S LIFETIME

3.1   Amount of Required Minimum Distribution For Each Distribution Calendar
Year. During the Participant’s lifetime, the minimum amount that will be
distributed for each distribution calendar year is the lesser of:

(a) the quotient obtained by dividing the Participant’s account balance by the
distribution period in the Uniform Lifetime Table set forth in
Section 1.401(a)(9)-9 of the Treasury regulations, using the Participant’s age
as of the Participant’s birthday in the distribution calendar year; or
(b) if the Participant’s sole designated beneficiary for the distribution
calendar year is the Participant’s spouse, the quotient obtained by dividing the
Participant’s account balance by the number in the Joint and Last Survivor Table
set forth in Section 1.401(a)(9)-9 of the Treasury regulations, using the
Participant’s and spouse’s attained ages as of the Participant’s and spouse’s
birthdays in the distribution calendar year.

3.2   Lifetime Required Minimum Distributions Continue Through Year of
Participant’s Death. Required minimum distributions will be determined under
this Article 3 beginning with the first distribution calendar year and up to and
including the distribution calendar year that includes the Participant’s date of
death.

ARTICLE IV
REQUIRED MINIMUM DISTRIBUTIONS AFTER PARTICIPANT’S DEATH

4.1   Death On or After Date Distributions Begin.

(a) Participant Survived by Designated Beneficiary. If the Participant dies on
or after the date distributions begin and there is a designated beneficiary, the
minimum amount that will be distributed for each distribution calendar year
after the year of the Participant’s death is the quotient obtained by dividing
the Participant’s account balance by the longer of the remaining life expectancy
of the Participant or the remaining life expectancy of the Participant’s
designated beneficiary, determined as follows:
(1) The Participant’s remaining life expectancy is calculated using the age of
the Participant in the year of death, reduced by one for each subsequent year.
(2) If the Participant’s surviving spouse is the Participant’s sole designated
beneficiary, the remaining life expectancy of the surviving spouse is calculated
for each distribution calendar year after the year of the Participant’s death
using the surviving spouse’s age as of the spouse’s birthday in that year. For
distribution calendar years after the year of the surviving spouse’s death, the
remaining life expectancy of the surviving spouse is calculated using the age of
the surviving spouse as of the spouse’s birthday in the calendar year of the
spouse’s death, reduced by one for each subsequent calendar year.
(3) If the Participant’s surviving spouse is not the Participant’s sole
designated beneficiary, the designated beneficiary’s remaining life expectancy
is calculated using the age of the beneficiary in the year following the year of
the Participant’s death, reduced by one for each subsequent year.
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401(a)(9) — Sponsor
(b) No Designated Beneficiary. If the Participant dies on or after the date
distributions begin and there is no designated beneficiary as of September 30 of
the year after the year of the Participant’s death, the minimum amount that will
be distributed for each distribution calendar year after the year of the
Participant’s death is the quotient obtained by dividing the Participant’s
account balance by the Participant’s remaining life expectancy calculated using
the age of the Participant in the year of death, reduced by one for each
subsequent year.

4.2   Death Before Date Distributions Begin.

(a) Participant Survived by Designated Beneficiary. Except as provided in
Article VI, if the Participant dies before the date distributions begin and
there is a designated beneficiary, the minimum amount that will be distributed
for each distribution calendar year after the year of the Participant’s death is
the quotient obtained by dividing the Participant’s account balance by the
remaining life expectancy of the Participant’s designated beneficiary,
determined as provided in Section 4.1.
(b) No Designated Beneficiary. If the Participant dies before the date
distributions begin and there is no designated beneficiary as of September 30 of
the year following the year of the Participant’s death, distribution of the
Participant’s entire interest will be completed by December 31 of the calendar
year containing the fifth anniversary of the Participant’s death.
(c) Death of Surviving Spouse Before Distributions to Surviving Spouse Are
Required to Begin. If the Participant dies before the date distributions begin,
the Participant’s surviving spouse is the Participant’s sole designated
beneficiary, and if the surviving spouse dies before distributions are required
to begin to the surviving spouse under Section 2.2(a), this Section 4.2 will
apply as if the surviving spouse were the Participant.
ARTICLE V
DEFINITIONS

5.1   Designated beneficiary. The individual who is designated as the
Beneficiary under the Plan and is the designated beneficiary under
Section 401(a)(9) of the Internal Revenue Code and Section 1.401(a)(9)-1, Q&A-4,
of the Treasury regulations.   5.2   Distribution calendar year. A calendar year
for which a minimum distribution is required. For distributions beginning before
the Participant’s death, the first distribution calendar year is the calendar
year immediately preceding the calendar year which contains the Participant’s
required beginning date. For distributions beginning after the Participant’s
death, the first distribution calendar year is the calendar year in which
distributions are required to begin under Section 2.2. The required minimum
distribution for the Participant’s first distribution calendar year will be made
on or before the Participant’s required beginning date. The required minimum
distribution for other distribution calendar years, including the required
minimum distribution for the distribution calendar year in which the
Participant’s required beginning date occurs, will be made on or before
December 31 of that distribution calendar year.   5.3   Life expectancy. Life
expectancy as computed by use of the Single Life Table in Section 1.401(a)(9)-9
of the Treasury regulations.   5.4   Participant’s account balance. The account
balance as of the last valuation date in the calendar year immediately preceding
the distribution calendar year (valuation calendar year) increased by the amount
of any contributions made and allocated or forfeitures allocated to the account
balance as of the dates in the valuation calendar year after the valuation date
and decreased by distributions made in the valuation calendar year after the
valuation date. The account balance for the valuation calendar year includes any
amounts rolled over or transferred to the Plan either in the valuation calendar
year or in the distribution calendar year if distributed or transferred in the
valuation calendar year.   5.5   Required beginning date. The date specified in
the Plan when distributions under Section 401(a)(9) of the Internal Revenue Code
are required to begin.

ARTICLE VI
ADOPTION AGREEMENT ELECTIONS
The questions in this Article VI only need to be completed in order to override
the default provisions set forth below. If all of the default provisions will
apply, then these questions should be skipped.
Unless the employer elects otherwise in this Article VI, the following defaults
apply:

1)   The minimum distribution requirements are effective for distribution
calendar years beginning with the 2002

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401(a)(9) — Sponsor

    calendar year unless a later date is specified in Section 6.1 of this
Amendment.   2)   Participants or beneficiaries may elect on an individual basis
whether the 5-year rule or the life expectancy rule in the Plan applies to
distributions after the death of a Participant who has a designated beneficiary.
  6.1   Effective Date of Plan Amendment for Section 401(a)(9) Final and
Temporary Treasury Regulations.

  þ   This Amendment applies for purposes of determining required minimum
distributions for distribution calendar years beginning with the 2003 calendar
year, as well as required minimum distributions for the 2002 distribution
calendar year that are made on or after ___ (leave blank if this Amendment does
not apply to any minimum distributions for the 2002 distribution calendar year).

6.2   Election to not permit Participants or Beneficiaries to Elect 5-Year Rule.

  Unless elected below, Participants or beneficiaries may elect on an individual
basis whether the 5-year rule or the life expectancy rule in Sections 2.2 and
4.2 of this Amendment applies to distributions after the death of a Participant
who has a designated beneficiary. The election must be made no later than the
earlier of September 30 of the calendar year in which distribution would be
required to begin under Section 2.2 of this Amendment, or by September 30 of the
calendar year which contains the fifth anniversary of the Participant’s (or, if
applicable, surviving spouse’s) death. If neither the Participant nor
beneficiary makes an election under this paragraph, distributions will be made
in accordance with Sections 2.2 and 4.2 of this Amendment and, if applicable,
the elections in Section 6.3 of this Amendment below.

  o   The provision set forth above in this Section 6.2 shall not apply. Rather,
Sections 2.2 and 4.2 of this Amendment shall apply except as elected in
Section 6.3 of this Amendment below.

6.3   Election to Apply 5-Year Rule to Distributions to Designated
Beneficiaries.

  o   If the Participant dies before distributions begin and there is a
designated beneficiary, distribution to the designated beneficiary is not
required to begin by the date specified in the Plan, but the Participant’s
entire interest will be distributed to the designated beneficiary by December 31
of the calendar year containing the fifth anniversary of the Participant’s
death. If the Participant’s surviving spouse is the Participant’s sole
designated beneficiary and the surviving spouse dies after the Participant but
before distributions to either the Participant or the surviving spouse begin,
this election will apply as if the surviving spouse were the Participant.

      If the above is elected, then this election will apply to:

  o   All distributions.     o   The following distributions:___.

6.4   Election to Allow Designated Beneficiary Receiving Distributions Under
5-Year Rule to Elect Life Expectancy Distributions.

  o   A designated beneficiary who is receiving payments under the 5-year rule
may make a new election to receive payments under the life expectancy rule until
December 31, 2003, provided that all amounts that would have been required to be
distributed under the life expectancy rule for all distribution calendar years
before 2004 are distributed by the earlier of December 31, 2003 or the end of
the 5-year period.

Except with respect to any election made by the employer in Article VI, this
amendment is hereby adopted by the prototype sponsoring organization on behalf
of all adopting employers on:
[Sponsor’s signature and Adoption Date are on file with Sponsor]
NOTE: The employer only needs to execute this amendment if an election has been
made in Article VI of this amendment.
© Copyright 2003 Wachovia Bank, National Association

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401(a)(9) — Sponsor
This amendment has been executed this                                         
day of
                                                                                ,
                    .
Name of Plan: Allied Capital 401(k) Plan
Name of Employer: Allied Capital Corporation

         
By:
       
 
 
 
EMPLOYER    

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Sponsor — lower cash-out threshold
MANDATORY DISTRIBUTION AMENDMENT
(Code Section 401(a)(31)(B))
ARTICLE I
APPLICATION OF AMENDMENT

1.1   Effective Date. Unless a later effective date is specified in Article III
of this Amendment, the provisions of this Amendment will apply with respect to
distributions made on or after March 28, 2005.   1.2   Precedence. This
Amendment supersedes any inconsistent provision of the Plan.   1.3   Adoption by
prototype sponsor. Except as otherwise provided herein, pursuant to authority
granted by Section 5.01 of Revenue Procedure 2000-20, the sponsoring
organization of the prototype hereby adopts this amendment on behalf of all
adopting employers.

ARTICLE II
DEFAULT PROVISION: LOWER MANDATORY CASH-OUT
THRESHOLD TO $1,000
Unless the Employer otherwise elects in Article III of this Amendment, the
provisions of the Plan for the mandatory distribution of amounts not exceeding
$5,000, are amended as follows:
The $5,000 threshold in such provisions is reduced to $1,000 and the value of
the Participant’s interest in the Plan for such purpose shall include any
rollover contributions (and earnings thereon) within the meaning of Code
Sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16).
ARTICLE III
EMPLOYER’S ALTERNATIVE ELECTIONS

3.1  þ  Effective Date of Plan Amendment       This Amendment applies with
respect to distributions made on or after 11/1/2005 (may be a date later than
March 28, 2005, only if the terms of the Plan already comply with Code
Section 401(a)(31)(B)).   3.2  þ  Election to implement automatic IRA rollover
rules

  a. þ   IRA rollover of amounts over $1,000. In lieu of the default provision
in Article II of this Amendment, the provisions of the Plan concerning mandatory
distributions of amounts not exceeding $5,000 are amended as follows:         In
the event of a mandatory distribution greater than $1,000 that is made in
accordance with the provisions of the Plan providing for an automatic
distribution to a Participant without the Participant’s consent, if the
Participant does not elect to have such distribution paid directly to an
“eligible retirement plan” specified by the Participant in a direct rollover (in
accordance with the direct rollover provisions of the Plan) or to receive the
distribution directly, then the Administrator shall pay the distribution in a
direct rollover to an individual retirement plan designated by the
Administrator.     b. o   IRA rollover of amounts over and under $1,000. In lieu
of the default provision in Article II of this Amendment, the provisions of the
Plan concerning mandatory distributions of amounts not exceeding $5,000 are
amended as follows:         In the event of a mandatory distribution that is
made in accordance with the provisions of the Plan providing for an automatic
distribution to a Participant without the Participant’s consent, if the
Participant does not elect to have such distribution paid directly to an
“eligible retirement plan” specified by the Participant in a direct rollover (in
accordance with the direct rollover provisions of the Plan) or to receive the
distribution directly, then the Administrator shall pay the distribution in a
direct rollover to an individual retirement plan designated by the
Administrator.

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Sponsor — lower cash-out threshold

3.3  o  Election to modify mandatory distribution threshold (may not be elected
if 3.2 above is elected)       In lieu of the default provision in Article II of
this Amendment, the provisions of the Plan that provide for the involuntary
distribution of vested accrued benefits of $5,000 or less, are modified as
follows:

a.  o   No mandatory distributions. Participant consent to the distribution
shall now be required before the distribution may be made.   b.  o   Reduction
of threshold to amount less than $1,000. The $5,000 dollar threshold in such
provisions is reduced to $ ___ (enter an amount less than $1,000) and the value
of the Participant’s interest in the Plan for such purpose shall include any
rollover contributions (and earnings thereon) within the meaning of Code
Sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16).

Except with respect to any election made by the employer in Article III, this
amendment is hereby adopted by the prototype sponsor on behalf of all adopting
employers on:
[Sponsor’s signature and Adoption Date are on file with Sponsor]
NOTE: The employer only needs to execute this amendment if an election has been
made in Article III herein.
This amendment has been executed this                      day of
                    ,       .
Name of Plan: Allied Capital 401(k) Plan
Name of Employer: Allied Capital Corporation
By:                                                             
                    EMPLOYER
© Copyright 2005 Wachovia Bank, National Association

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ROTH Amendment
ROTH 401(k) AMENDMENT
ARTICLE I
PREAMBLE

1.1   Adoption and effective date of amendment. This amendment of the Plan is
adopted to reflect Code Section 402A, as enacted by the Economic Growth and Tax
Relief Reconciliation Act of 2001 (“EGTRRA”). This amendment is intended as good
faith compliance with the requirements of Code Section 402A and guidance issued
thereunder, and this amendment shall be interpreted in a manner consistent with
such guidance. This amendment shall be effective as of the date selected below.
  1.2   Supersession of inconsistent provisions. This amendment shall supersede
the provisions of the Plan to the extent those provisions are inconsistent with
the provisions of this amendment.

ARTICLE II
ADOPTION AGREEMENT ELECTIONS

2.1   Effective Date. Roth Elective Deferrals are permitted under the Plan as of
1/1/2008 (Enter a date no earlier than January 1, 2006).   2.2   Hardship
Distributions. If the Plan permits hardship distributions of Elective Deferrals,
may a Participant receive a hardship distribution of Roth Elective Deferrals?

  a. o   N/A. The Plan does not permit hardship distributions of Elective
Deferrals.     b. o   No, Roth Elective Deferrals may not be withdrawn for a
hardship.     c. þ   Yes, Roth Elective Deferrals may be withdrawn for a
hardship subject to the same conditions that apply to Pre-tax Elective
Deferrals.

2.3   In-Service Distributions. If the Plan permits in-service distributions,
other than hardship distributions, may a Participant receive an in-service
distribution of the Participant’s Roth Elective Deferral account?

  a. o   N/A. The Plan does not permit in-service distributions (other than
hardship distributions, if otherwise permitted).     b. o   No, the Roth
Elective Deferral account may not be withdrawn as part of an in-service
distribution.     c. þ   Yes, a Participant may receive an in-service
distribution from the Roth Elective Deferral account subject to the following
conditions (select only one):

  1. þ   The distribution must satisfy the same conditions that apply to
in-service distributions from the Pre-tax Elective Deferral account.     2. o
The distribution must satisfy the same conditions that apply to in-service
distributions from the Pre-tax Elective Deferral account and the distribution
must be a “qualified distribution” within the meaning of Code
Section 402A(d)(2).

ARTICLE III
ROTH ELECTIVE DEFERRALS

3.1   Roth Elective Deferrals are permitted. The Plan’s definitions and terms
shall be amended as follows to allow for Roth Elective Deferrals as of the
effective date entered at 2.1. Roth Elective Deferrals shall be treated in the
same manner as Elective Deferrals for all Plan purposes except as provided in
Article II of this amendment. The Employer may, in operation, implement deferral
election procedures provided such procedures are communicated to Participants
and permit Participants to modify their elections at least once each Plan Year.
  3.2   Elective Deferrals. For years beginning after 2005, the term “Elective
Deferrals” includes Pre-tax Elective Deferrals and Roth Elective Deferrals.  
3.3   Pre-Tax Elective Deferrals. “Pre-Tax Elective Deferrals” means a
Participant’s Elective Deferrals which are not includible in the Participant’s
gross income at the time deferred and have been irrevocably designated as
Pre-Tax Elective Deferrals by the Participant in his or her deferral election. A
Participant’s Pre-Tax Elective Deferrals will be separately accounted for, as
will gains and losses attributable to those Pre-Tax Elective Deferrals.   3.4  
Roth Elective Deferrals. “Roth Elective Deferrals” means a Participant’s
Elective Deferrals that are includible in the Participant’s gross income at the
time deferred and have been irrevocably designated as Roth Elective Deferrals by
the Participant in his or her deferral election. A Participant’s Roth Elective
Deferrals will be separately accounted for, as will gains and losses
attributable to those Roth Elective Deferrals, in a Roth Elective Deferral
account. However, forfeitures may not be allocated to such account. The Plan
must also maintain a record of a Participant’s investment in

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ROTH Amendment

    the contract (i.e., designated Roth contributions that have not been
distributed). Roth Elective Deferrals are not considered Employee Contributions
for Plan purposes.   3.5   Ordering Rules for Distributions. The Administrator
operationally may implement an ordering rule procedure for withdrawals
(including, but not limited to, hardship or other in-service withdrawals) from a
Participant’s accounts attributable to Pre-Tax Elective Deferrals or Roth
Elective Deferrals. Such ordering rules may specify whether the Pre-Tax Elective
Deferrals or Roth Elective Deferrals are distributed first. Furthermore, such
procedure may permit the Participant to elect which type of Elective Deferrals
shall be distributed first.   3.6   Corrective distributions attributable to
Roth Elective Deferrals. For any Plan Year in which a Participant may make both
Roth Elective Deferrals and Pre-Tax Elective Deferrals, the Administrator
operationally may implement an ordering rule procedure for the distribution of
Excess Deferrals (Code Section 402(g)), Excess Contributions (Code
Section 401(k)), Excess Aggregate Contributions (Code Section 401(m)), and
Excess Annual Additions (Code Section 415). Such ordering rules may specify
whether the Pre-Tax Elective Deferrals or Roth Elective Deferrals are
distributed first, to the extent such type of Elective Deferrals was made for
the year. Furthermore, such procedure may permit the Participant to elect which
type of Elective Deferrals shall be distributed first.   3.7   Loans. If
Participant loans are permitted under the Plan, then the Administrator may
modify the loan policy or program to provide limitations on the ability to
borrow from, or use as security, a Participant’s Roth Elective Deferral account.
Similarly, the loan policy or program may be modified to provide for an ordering
rule with respect to the default of a loan that is made from the Participant’s
Roth Elective Deferral account and other accounts under the Plan.   3.8  
Rollovers. A direct rollover of a distribution from a Participant’s Roth
Elective Deferral account shall only be made to another Roth Elective Deferral
account of an applicable retirement plan as described in Code Section 402A(e)(1)
or to a Roth IRA as described in Code Section 408A, and only to the extent the
rollover is permitted under the rules of Code Section 402(c).       3.8.1 The
Plan shall accept a rollover contribution to a Participant’s Roth Elective
Deferral account only if it is a direct rollover from another Roth Elective
Deferral account of an applicable retirement plan as described in Code
Section 402A(e)(1) and only to the extent the rollover is permitted under the
rules of Code Section 402(c). The Employer, operationally and on a uniform and
nondiscriminatory basis, may decide whether to accept any such rollovers.      
3.8.2 The Plan is not required to provide for a direct rollover (including an
automatic rollover) for distributions from a Participant’s Roth Elective
Deferral account if the amount of the distributions that are eligible rollover
distributions are reasonably expected to total less than $200 during a year. In
addition, any distribution from a Participant’s Roth Elective Deferral account
are not taken into account in determining whether distributions from a
Participant’s other accounts are reasonably expected to total less than $200
during a year. However, eligible rollover distributions from a Participant’s
Roth Elective Deferral account are taken into account in determining whether the
total amount of the Participant’s account balances under the Plan exceed the
Plan’s limits for purposes of mandatory distributions from the Plan.      
3.8.3 The provisions of the Plan that allow a Participant to elect a direct
rollover of only a portion of an eligible rollover distribution (but only if the
amount rolled over is at least $500) may be applied by treating any amount
distributed from a Participant’s Roth Elective Deferral account as a separate
distribution from any amount distributed from the Participant’s other accounts
in the plan, even if the amounts are distributed at the same time.   3.9  
Automatic Enrollment. If the Plan utilizes an automatic enrollment feature
(i.e., in the absence of an affirmative election by a Participant, a certain
amount or percentage of Compensation will automatically be contributed to the
Plan as an Elective Deferral), then such Elective Deferral shall be a Pre-Tax
Elective Deferral.   3.10   Operational Compliance. The Plan Administrator will
administer Roth Elective Deferrals in accordance with applicable regulations or
other binding authority not reflected in this amendment. Any applicable
regulations or other binding authority shall supersede any contrary provisions
of this amendment.

This amendment has been executed this                      day of
                    ,      .
Name of Plan: Allied Capital 401(k) Plan
Name of Employer: Allied Capital Corporation
By:
                                                                                
                              EMPLOYER
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Final 401(k) Amendment — Sponsor
FINAL 401(k)/401(m) REGULATIONS AMENDMENT
ARTICLE I
PREAMBLE

1.1   Adoption and effective date of amendment. The sponsor adopts this
Amendment to the Plan to reflect certain provisions of the Final Regulations
under Code Sections 401(k) and 401(m) that were published on December 29, 2004
(hereinafter referred to as the “Final 401(k) Regulations”). The sponsor intends
this Amendment as good faith compliance with the requirements of these
provisions. This Amendment shall be effective with respect to Plan Years
beginning after December 31, 2005 unless the Employer otherwise elects in
Section 2.1 below.   1.2   Supersession of inconsistent provisions. This
Amendment shall supersede the provisions of the Plan to the extent those
provisions are inconsistent with the provisions of this Amendment.   1.3  
Application of provisions. Certain provisions of this Amendment relate to
elective deferrals of a 401(k) plan; if the Plan to which this Amendment relates
is not a 401(k) plan, then those provisions of this Amendment do not apply.
Certain provisions of this Amendment relate to matching contributions and/or
after-tax employee contributions subject to Code Section 401(m); if the Plan to
which this Amendment relates is not subject to Code Section 401(m), then those
provisions of this Amendment do not apply.   1.4   Adoption by prototype
sponsor. Except as otherwise provided herein, pursuant to the provisions of the
Plan and Section 5.01 of Revenue Procedure 2005-16, the sponsor hereby adopts
this Amendment on behalf of all adopting employers.

ARTICLE II
EMPLOYER ELECTIONS

2.1   Effective Date. This Amendment is effective, and the Plan shall implement
the provisions of the Final 401(k) Regulations, with respect to Plan Years
beginning after December 31, 2005 unless the Employer elects an earlier
effective date in either a. or b.:

  a. þ   The Amendment is effective and the Final 401(k) Regulations apply to
Plan Years beginning after December 31, 2004 (2005 and subsequent Plan Years).  
  b. o   The Amendment is effective and the Final 401(k) Regulations apply to
Plan Years ending after December 29, 2004 (2004 and subsequent Plan Years).

2.2   ACP Test Safe Harbor. Unless otherwise selected below, if this Plan uses
the ADP Test Safe Harbor provisions, then the provisions of Amendment
Section 9.2(a) apply and all matching contributions under the Plan will be
applied without regard to any allocation conditions except as provided in that
Section.

  a. o   The provisions of Amendment Section 9.2(b) apply. The allocation
conditions applicable to matching contributions under the Plan continue to apply
(if selected, the Plan is not an ACP Test Safe Harbor Plan).     b. o   The
provisions of Amendment Section 9.2(c) apply. All matching contributions under
the Plan will be applied without regard to any allocation conditions as of the
effective date of this Amendment.

ARTICLE III
GENERAL RULES

3.1   Deferral elections. A cash or deferred arrangement (“CODA”) is an
arrangement under which eligible Employees may make elective deferral elections.
Such elections cannot relate to compensation that is currently available prior
to the adoption or effective date of the CODA. In addition, except for
occasional, bona fide administrative considerations, contributions made pursuant
to such an election cannot precede the earlier of (1) the performance of
services relating to the contribution and (2) when the compensation that is
subject to the election would be currently available to the Employee in the
absence of an election to defer.   3.2   Vesting provisions. Elective
Contributions are always fully vested and nonforfeitable. The Plan shall
disregard Elective Contributions in applying the vesting provisions of the Plan
to other contributions or benefits under Code Section 411(a)(2). However, the
Plan shall otherwise take a Participant’s Elective Contributions into account in
determining the Participant’s vested benefits under the Plan. Thus, for example,
the Plan shall take Elective Contributions into account in determining whether a
Participant has a nonforfeitable right to contributions under the Plan for
purposes of forfeitures, and for applying provisions permitting the repayment of
distributions to have forfeited amounts restored, and the provisions of Code
Sections 410(a)(5)(D)(iii) and 411(a)(6)(D)(iii) permitting a plan to disregard
certain service completed prior to breaks-in-service (sometimes referred to as
“the rule of parity”).

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Final 401(k) Amendment — Sponsor
ARTICLE IV
HARDSHIP DISTRIBUTIONS

4.1   Applicability. The provisions of this Article IV apply if the Plan
provides for hardship distributions upon satisfaction of the deemed immediate
and heavy financial need standards set forth in
Regulation Section 1.401(k)-1(d)(2)(iv)(A) as in effect prior to the issuance of
the Final 401(k) Regulations.   4.2   Hardship events. A distribution under the
Plan is hereby deemed to be on account of an immediate and heavy financial need
of an Employee if the distribution is for one of the following or any other item
permitted under Regulation Section 1.401(k)-1(d)(3)(iii)(B):

  (a)   Expenses for (or necessary to obtain) medical care that would be
deductible under Code Section 213(d) (determined without regard to whether the
expenses exceed 7.5% of adjusted gross income);     (b)   Costs directly related
to the purchase of a principal residence for the Employee (excluding mortgage
payments);     (c)   Payment of tuition, related educational fees, and room and
board expenses, for up to the next twelve (12) months of post-secondary
education for the Employee, the Employee’s spouse, children, or dependents (as
defined in Code Section 152, and, for taxable years beginning on or after
January 1, 2005, without regard to Code Section 152(b)(1), (b)(2), and
(d)(1)(B));     (d)   Payments necessary to prevent the eviction of the Employee
from the Employee’s principal residence or foreclosure on the mortgage on that
residence;     (e)   Payments for burial or funeral expenses for the Employee’s
deceased parent, spouse, children or dependents (as defined in Code Section 152,
and, for taxable years beginning on or after January 1, 2005, without regard to
Code Section 152(d)(1)(B)); or     (f)   Expenses for the repair of damage to
the Employee’s principal residence that would qualify for the casualty deduction
under Code Section 165 (determined without regard to whether the loss exceeds
10% of adjusted gross income).

4.3   Reduction of Code Section 402(g) limit following hardship distribution. If
the Plan provides for hardship distributions upon satisfaction of the safe
harbor standards set forth in Regulation Sections 1.401(k)-1(d)(3)(iii)(B)
(deemed immediate and heavy financial need) and 1.401(k)-1(d)(3)(iv)(E) (deemed
necessary to satisfy immediate need), then there shall be no reduction in the
maximum amount of elective deferrals that a Participant may make pursuant to
Code Section 402(g) solely because of a hardship distribution made by this Plan
or any other plan of the Employer.

ARTICLE V
ACTUAL DEFERRAL PERCENTAGE (ADP) TEST

5.1   Targeted contribution limit. Qualified Nonelective Contributions (as
defined in Regulation Section 1.401(k)-6) cannot be taken into account in
determining the Actual Deferral Ratio (ADR) for a Plan Year for a Non-Highly
Compensated Employee (NHCE) to the extent such contributions exceed the product
of that NHCE’s Code Section 414(s) compensation and the greater of five percent
(5%) or two (2) times the Plan’s “representative contribution rate.” Any
Qualified Nonelective Contribution taken into account under an Actual
Contribution Percentage (ACP) test under Regulation Section 1.401(m)-2(a)(6)
(including the determination of the representative contribution rate for
purposes of Regulation Section 1.401(m)-2(a)(6)(v)(B)), is not permitted to be
taken into account for purposes of this Section (including the determination of
the “representative contribution rate” under this Section). For purposes of this
Section:

  (a)   The Plan’s “representative contribution rate” is the lowest “applicable
contribution rate” of any eligible NHCE among a group of eligible NHCEs that
consists of half of all eligible NHCEs for the Plan Year (or, if greater, the
lowest “applicable contribution rate” of any eligible NHCE who is in the group
of all eligible NHCEs for the Plan Year and who is employed by the Employer on
the last day of the Plan Year), and     (b)   The “applicable contribution rate”
for an eligible NHCE is the sum of the Qualified Matching Contributions (as
defined in Regulation Section 1.401(k)-6) taken into account in determining the
ADR for the eligible NHCE for the Plan Year and the Qualified Nonelective
Contributions made for the eligible NHCE for the Plan Year, divided by the
eligible NHCE’s Code Section 414(s) compensation for the same period.

    Notwithstanding the above, Qualified Nonelective Contributions that are made
in connection with an Employer’s obligation to pay prevailing wages under the
Davis-Bacon Act (46 Stat. 1494), Public Law 71-798, Service Contract Act of 1965
(79 Stat. 1965), Public Law 89-286, or similar legislation can be taken into
account for a Plan Year for an

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Final 401(k) Amendment — Sponsor

    NHCE to the extent such contributions do not exceed 10 percent (10%) of that
NHCE’s Code Section 414(s) compensation.       Qualified Matching Contributions
may only be used to calculate an ADR to the extent that such Qualified Matching
Contributions are matching contributions that are not precluded from being taken
into account under the ACP test for the Plan Year under the rules of
Regulation Section 1.401(m)-2(a)(5)(ii) and as set forth in Section 7.1.   5.2  
Limitation on QNECs and QMACs. Qualified Nonelective Contributions and Qualified
Matching Contributions cannot be taken into account to determine an ADR to the
extent such contributions are taken into account for purposes of satisfying any
other ADP test, any ACP test, or the requirements of
Regulation Section 1.401(k)-3, 1.401(m)-3, or 1.401(k)-4. Thus, for example,
matching contributions that are made pursuant to
Regulation Section 1.401(k)-3(c) cannot be taken into account under the ADP
test. Similarly, if a plan switches from the current year testing method to the
prior year testing method pursuant to Regulation Section 1.401(k)-2(c),
Qualified Nonelective Contributions that are taken into account under the
current year testing method for a year may not be taken into account under the
prior year testing method for the next year.   5.3   ADR of HCE if multiple
plans. The Actual Deferral Ratio (ADR) of any Participant who is a Highly
Compensated Employee (HCE) for the Plan Year and who is eligible to have
Elective Contributions (as defined in Regulation Section 1.401(k)-6) (and
Qualified Nonelective Contributions and/or Qualified Matching Contributions, if
treated as Elective Contributions for purposes of the ADP test) allocated to
such Participant’s accounts under two (2) or more cash or deferred arrangements
described in Code Section 401(k), that are maintained by the same Employer,
shall be determined as if such Elective Contributions (and, if applicable, such
Qualified Nonelective Contributions and/or Qualified Matching Contributions)
were made under a single arrangement. If an HCE participates in two or more cash
or deferred arrangements of the Employer that have different Plan Years, then
all Elective Contributions made during the Plan Year being tested under all such
cash or deferred arrangements shall be aggregated, without regard to the plan
years of the other plans. However, for Plan Years beginning before the effective
date of this Amendment, if the plans have different Plan Years, then all such
cash or deferred arrangements ending with or within the same calendar year shall
be treated as a single cash or deferred arrangement. Notwithstanding the
foregoing, certain plans shall be treated as separate if mandatorily
disaggregated under the Regulations of Code Section 401(k).   5.4   Plans using
different testing methods for the ADP and ACP test. Except as otherwise provided
in this Section, the Plan may use the current year testing method or prior year
testing method for the ADP test for a Plan Year without regard to whether the
current year testing method or prior year testing method is used for the ACP
test for that Plan Year. However, if different testing methods are used, then
the Plan cannot use:

  (a)   The recharacterization method of Regulation Section 1.401(k)-2(b)(3) to
correct excess contributions for a Plan Year;     (b)   The rules of
Regulation Section 1.401(m)-2(a)(6)(ii) to take Elective Contributions into
account under the ACP test (rather than the ADP test); or     (c)   The rules of
Regulation Section 1.401(k)-2(a)(6)(v) to take Qualified Matching Contributions
into account under the ADP test (rather than the ACP test).

ARTICLE VI
ADJUSTMENT TO ADP TEST

6.1   Distribution of Income attributable to Excess Contributions. Distributions
of Excess Contributions must be adjusted for income (gain or loss), including an
adjustment for income for the period between the end of the Plan Year and the
date of the distribution (the “gap period”). The Administrator has the
discretion to determine and allocate income using any of the methods set forth
below:

  (a)   Reasonable method of allocating income. The Administrator may use any
reasonable method for computing the income allocable to Excess Contributions,
provided that the method does not violate Code Section 401(a)(4), is used
consistently for all Participants and for all corrective distributions under the
Plan for the Plan Year, and is used by the Plan for allocating income to
Participant’s accounts. A Plan will not fail to use a reasonable method for
computing the income allocable to Excess Contributions merely because the income
allocable to Excess Contributions is determined on a date that is no more than
seven (7) days before the distribution.     (b)   Alternative method of
allocating income. The Administrator may allocate income to Excess Contributions
for the Plan Year by multiplying the income for the Plan Year allocable to the
Elective Contributions and other amounts taken into account under the ADP test
(including contributions made for the Plan Year), by a fraction, the numerator
of which is the Excess Contributions for the Employee for the Plan Year, and the
denominator of which is the sum of the:

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  (1)   Account balance attributable to Elective Contributions and other amounts
taken into account under the ADP test as of the beginning of the Plan Year, and
    (2)   Any additional amount of such contributions made for the Plan Year.

  (c)   Safe harbor method of allocating gap period income. The Administrator
may use the safe harbor method in this paragraph to determine income on Excess
Contributions for the gap period. Under this safe harbor method, income on
Excess Contributions for the gap period is equal to ten percent (10%) of the
income allocable to Excess Contributions for the Plan Year that would be
determined under paragraph (b) above, multiplied by the number of calendar
months that have elapsed since the end of the Plan Year. For purposes of
calculating the number of calendar months that have elapsed under the safe
harbor method, a corrective distribution that is made on or before the fifteenth
(15th) day of a month is treated as made on the last day of the preceding month
and a distribution made after the fifteenth day of a month is treated as made on
the last day of the month.     (d)   Alternative method for allocating Plan Year
and gap period income. The Administrator may determine the income for the
aggregate of the Plan Year and the gap period, by applying the alternative
method provided by paragraph (b) above to this aggregate period. This is
accomplished by (1) substituting the income for the Plan Year and the gap
period, for the income for the Plan Year, and (2) substituting the amounts taken
into account under the ADP test for the Plan Year and the gap period, for the
amounts taken into account under the ADP test for the Plan Year in determining
the fraction that is multiplied by that income.

6.2   Corrective contributions. If a failed ADP test is to be corrected by
making an Employer contribution, then the provisions of the Plan for the
corrective contributions shall be applied by limiting the contribution made on
behalf of any NHCE pursuant to such provisions to an amount that does not exceed
the targeted contribution limits of Section 5.1 of this Amendment, or in the
case of a corrective contribution that is a Qualified Matching Contribution, the
targeted contribution limit of Section 7.1 of this Amendment.

ARTICLE VII
ACTUAL CONTRIBUTION PERCENTAGE (ACP) TEST

7.1   Targeted matching contribution limit. A matching contribution with respect
to an Elective Contribution for a Plan Year is not taken into account under the
Actual Contribution Percentage (ACP) test for an NHCE to the extent it exceeds
the greatest of:

  (a)   five percent (5%) of the NHCE’s Code Section 414(s) compensation for the
Plan Year;     (b)   the NHCE’s Elective Contributions for the Plan Year; and  
  (c)   the product of two (2) times the Plan’s “representative matching rate”
and the NHCE’s Elective Contributions for the Plan Year.

    For purposes of this Section, the Plan’s “representative matching rate” is
the lowest “matching rate” for any eligible NHCE among a group of NHCEs that
consists of half of all eligible NHCEs in the Plan for the Plan Year who make
Elective Contributions for the Plan Year (or, if greater, the lowest “matching
rate” for all eligible NHCEs in the Plan who are employed by the Employer on the
last day of the Plan Year and who make Elective Contributions for the Plan
Year).       For purposes of this Section, the “matching rate” for an Employee
generally is the matching contributions made for such Employee divided by the
Employee’s Elective Contributions for the Plan Year. If the matching rate is not
the same for all levels of Elective Contributions for an Employee, then the
Employee’s “matching rate” is determined assuming that an Employee’s Elective
Contributions are equal to six percent (6%) of Code Section 414(s) compensation.
      If the Plan provides a match with respect to the sum of the Employee’s
after-tax Employee contributions and Elective Contributions, then for purposes
of this Section, that sum is substituted for the amount of the Employee’s
Elective Contributions in subsections (b) & (c) above and in determining the
“matching rate,” and Employees who make either after-tax Employee contributions
or Elective Contributions are taken into account in determining the Plan’s
“representative matching rate.” Similarly, if the Plan provides a match with
respect to the Employee’s after-tax Employee contributions, but not Elective
Contributions, then for purposes of this subsection, the Employee’s after-tax
Employee contributions are substituted for the amount of the Employee’s Elective
Contributions in subsections (b) & (c) above and in determining the “matching
rate,” and Employees who make after-tax Employee contributions are taken into
account in determining the Plan’s “representative matching rate.”

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7.2   Targeted QNEC limit. Qualified Nonelective Contributions (as defined in
Regulation Section 1.401(k)-6) cannot be taken into account under the Actual
Contribution Percentage (ACP) test for a Plan Year for an NHCE to the extent
such contributions exceed the product of that NHCE’s Code Section 414(s)
compensation and the greater of five percent (5%) or two (2) times the Plan’s
“representative contribution rate.” Any Qualified Nonelective Contribution taken
into account under an Actual Deferral Percentage (ADP) test under
Regulation Section 1.401(k)-2(a)(6) (including the determination of the
“representative contribution rate” for purposes of Regulation Section
1.401(k)-2(a)(6)(iv)(B)) is not permitted to be taken into account for purposes
of this Section (including the determination of the “representative contribution
rate” for purposes of subsection (a) below). For purposes of this Section:

  (a)   The Plan’s “representative contribution rate” is the lowest “applicable
contribution rate” of any eligible NHCE among a group of eligible NHCEs that
consists of half of all eligible NHCEs for the Plan Year (or, if greater, the
lowest “applicable contribution rate” of any eligible NHCE who is in the group
of all eligible NHCEs for the Plan Year and who is employed by the Employer on
the last day of the Plan Year), and     (b)   The “applicable contribution rate”
for an eligible NHCE is the sum of the matching contributions (as defined in
Regulation Section 1.401(m)-1(a)(2)) taken into account in determining the ACR
for the eligible NHCE for the Plan Year and the Qualified Nonelective
Contributions made for that NHCE for the Plan Year, divided by that NHCE’s Code
Section 414(s) compensation for the Plan Year.

    Notwithstanding the above, Qualified Nonelective Contributions that are made
in connection with an Employer’s obligation to pay prevailing wages under the
Davis-Bacon Act (46 Stat. 1494), Public Law 71-798, Service Contract Act of 1965
(79 Stat. 1965), Public Law 89-286, or similar legislation can be taken into
account for a Plan Year for an NHCE to the extent such contributions do not
exceed 10 percent (10%) of that NHCE’s Code Section 414(s) compensation.   7.3  
ACR of HCE if multiple plans. The Actual Contribution Ratio (ACR) for any
Participant who is a Highly Compensated Employee (HCE) and who is eligible to
have matching contributions or after-tax Employee contributions allocated to his
or her account under two (2) or more plans described in Code Section 401(a), or
arrangements described in Code Section 401(k) that are maintained by the same
Employer, shall be determined as if the total of such contributions was made
under each plan and arrangement. If an HCE participates in two (2) or more such
plans or arrangements that have different plan years, then all matching
contributions and after-tax Employee contributions made during the Plan Year
being tested under all such plans and arrangements shall be aggregated, without
regard to the plan years of the other plans. For plan years beginning before the
effective date of this Amendment, all such plans and arrangements ending with or
within the same calendar year shall be treated as a single plan or arrangement.
Notwithstanding the foregoing, certain plans shall be treated as separate if
mandatorily disaggregated under the Regulations of Code Section 401(m).   7.4  
Plans using different testing methods for the ACP and ADP test. Except as
otherwise provided in this Section, the Plan may use the current year testing
method or prior year testing method for the ACP test for a Plan Year without
regard to whether the current year testing method or prior year testing method
is used for the ADP test for that Plan Year. However, if different testing
methods are used, then the Plan cannot use:

  (a)   The recharacterization method of Regulation Section 1.401(k)-2(b)(3) to
correct excess contributions for a Plan Year;     (b)   The rules of
Regulation Section 1.401(m)-2(a)(6)(ii) to take Elective Contributions into
account under the ACP test (rather than the ADP test); or     (c)   The rules of
Regulation Section 1.401(k)-2(a)(6) to take Qualified Matching Contributions
into account under the ADP test (rather than the ACP test).

ARTICLE VIII
ADJUSTMENT TO ACP TEST

8.1   Distribution of Income attributable to Excess Aggregate Contributions.
Distributions of Excess Aggregate Contributions must be adjusted for income
(gain or loss), including an adjustment for income for the period between the
end of the Plan Year and the date of the distribution (the “gap period”). For
the purpose of this Section, “income” shall be determined and allocated in
accordance with the provisions of Section 6.1 of this Amendment, except that
such Section shall be applied by substituting “Excess Contributions” with
“Excess Aggregate Contributions” and by substituting amounts taken into account
under the ACP test for amounts taken into account under the ADP test.   8.2  
Corrective contributions. If a failed ACP test is to be corrected by making an
Employer contribution, then the provisions of the Plan for the corrective
contributions shall be applied by limiting the contribution made on behalf of
any NHCE pursuant to such provisions to an amount that does not exceed the
targeted contribution limits of Sections 7.1 and 7.2 of this Amendment.

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ARTICLE IX
SAFE HARBOR PLAN PROVISIONS

9.1   Applicability. The provisions of this Article IX apply if the Plan uses
the alternative method of satisfying the Actual Deferral Percentage (ADP) test
set forth in Code Section 401(k)(12) (ADP Test Safe Harbor) and/or the Actual
Contribution Percentage (ACP) test set forth in Code Section 401(m)(11) (ACP
Test Safe Harbor).   9.2   Elimination of conditions on matching contributions.
Unless otherwise provided in Section 2.2 of this Amendment, the provisions of
subsection (a) below shall apply. However, if the Employer so elects in
Section 2.2 of this Amendment, then the provisions of subsection (b) or (c)
below shall apply.

  (a)   Default provision. If, prior to the date this Amendment has been
executed, an ADP Test Safe Harbor notice has been given for a Plan Year for
which this Amendment is effective (see Amendment Section 1.1) and such notice
provides that there are no allocation conditions imposed on any matching
contributions under the Plan, then (1) the Plan will be an ACP Test Safe Harbor
plan, provided the ACP Test Safe Harbor requirements are met and (2) the Plan
will not impose any allocation conditions on matching contributions. However,
if, prior to the date this Amendment has been executed, an ADP Test Safe Harbor
notice has been given for a Plan Year for which this Amendment is effective and
such notice provides that there are allocation conditions imposed on any
matching contributions under the Plan, then the provisions of this Amendment do
not modify any such allocation conditions or provisions for that Plan Year and
the Plan must satisfy the ACP Test for such Plan Year using the current year
testing method. With respect to any Plan Year beginning after the date this
Amendment has been executed, if the Plan uses the ADP Test Safe Harbor and
provides for matching contributions, then (1) the Plan will be an ACP Test Safe
Harbor plan, provided the ACP Test Safe Harbor requirements are met and (2) the
Plan will not impose any allocation conditions on matching contributions.    
(b)   Retention of allocation conditions. If the Employer so elects in
Section 2.2 of this Amendment, then the Plan will retain any allocation
conditions contained in the Plan with regard to matching contributions for any
Plan Year for which this Amendment is effective. In that case, the Plan must
satisfy the ACP Test for each such Plan Year.     (c)   Elimination of
allocation conditions. If the Employer so elects in Section 2.2 of this
Amendment, then (1) the Plan will be an ACP Test Safe Harbor plan, provided the
ACP Test Safe Harbor requirements are met, and (2) the Plan will not impose any
allocation conditions on matching contributions.

9.3   Matching Catch-up contributions. If the Plan provides for ADP Test Safe
Harbor matching contributions or ACP Test Safe Harbor matching contributions,
then catch-up contributions (as defined in Code Section 414(v)) will be taken
into account in applying such matching contributions under the Plan.   9.4  
Plan Year requirement. Except as provided in Regulation Sections 1.401(k)-3(e)
and 1.401(k)-3(f), and below, the Plan will fail to satisfy the requirements of
Code Section 401(k)(12) and this Section for a Plan Year unless such provisions
remain in effect for an entire twelve (12) month Plan Year.   9.5   Change of
Plan Year. If a Plan has a short Plan Year as a result of changing its Plan
Year, then the Plan will not fail to satisfy the requirements of Section 9.4 of
this Amendment merely because the Plan Year has less than twelve (12) months,
provided that:

  (a)   The Plan satisfied the ADP Test Safe Harbor and/or ACP Test Safe Harbor
requirements for the immediately preceding Plan Year; and     (b)   The Plan
satisfies the ADP Test Safe Harbor and/or ACP Test Safe Harbor requirements
(determined without regard to Regulation Section 1.401(k)-3(g)) for the
immediately following Plan Year (or for the immediately following twelve
(12) months if the immediately following Plan Year is less than twelve
(12) months).

9.6   Timing of matching contributions. If the ADP Test Safe Harbor contribution
being made to the Plan is a matching contribution (or any ACP Test Safe Harbor
matching contribution) that is made separately with respect to each payroll
period (or with respect to all payroll periods ending with or within each month
or quarter of a Plan Year) taken into account under the Plan for the Plan Year,
then safe harbor matching contributions with respect to any elective deferrals
and/or after-tax employee contributions made during a Plan Year quarter must be
contributed to the Plan by the last day of the immediately following Plan Year
quarter.   9.7   Exiting safe harbor matching. The Employer may amend the Plan
during a Plan Year to reduce or eliminate prospectively any or all matching
contributions under the Plan (including any ADP Test Safe Harbor matching
contributions) provided: (a) the Plan Administrator provides a supplemental
notice to the Participants which explains the consequences of the amendment,
specifies the amendment’s effective date, and informs Participants that they
will

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    have a reasonable opportunity to modify their cash or deferred elections
and, if applicable, after-tax Employee contribution elections; (b) Participants
have a reasonable opportunity (including a reasonable period after receipt of
the supplemental notice) prior to the effective date of the amendment to modify
their cash or deferred elections and, if applicable, after-tax Employee
contribution elections; and (c) the amendment is not effective earlier than the
later of: (i) thirty (30) days after the Plan Administrator gives supplemental
notice; or (ii) the date the Employer adopts the amendment. An Employer which
amends its Plan to eliminate or reduce any matching contribution under this
Section, effective during the Plan Year, must continue to apply all of the ADP
Test Safe Harbor and/or ACP Test Safe Harbor requirements of the Plan until the
amendment becomes effective and also must apply for the entire Plan Year, using
current year testing, the ADP test and the ACP test.

9.8   Plan termination. An Employer may terminate the Plan during a Plan Year in
accordance with Plan termination provisions of the Plan and this Section.

  (a)   Acquisition/disposition or substantial business hardship. If the
Employer terminates the Plan resulting in a short Plan Year, and the termination
is on account of an acquisition or disposition transaction described in Code
Section 410(b)(6)(C), or if the termination is on account of the Employer’s
substantial business hardship within the meaning of Code Section 412(d), then
the Plan remains an ADP Test Safe Harbor and/or ACP Test Safe Harbor Plan
provided that the Employer satisfies the ADP Test Safe Harbor and/or ACP Test
Safe Harbor provisions through the effective date of the Plan termination.    
(b)   Other termination. If the Employer terminates the Plan for any reason
other than as described in Section 9.8(a) above, and the termination results in
a short Plan Year, the Employer must conduct the termination under the
provisions of Section 9.7 above, except that the Employer need not provide
Participants with the right to change their cash or deferred elections.

Except with respect to any election made by the employer in Article II, this
amendment is hereby adopted by the prototype sponsor on behalf of all adopting
employers on:
[Sponsor’s signature and Adoption Date are on file with Sponsor]
NOTE: The Employer only needs to execute this Amendment if an election has been
made in Article II of this Amendment.
This amendment has been executed this                      day of
                    ,      .
Name of Plan: Allied Capital 401(k) Plan
Name of Employer: Allied Capital Corporation
By:                                                             
                         EMPLOYER
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