exv10w20xby



 


Exhibit 10.20(b)


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].



	x 	 	(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.



	o 	 	(b) Collective bargaining Employees.



	o 	 	(c) Nonresident aliens.



	x 	 	(d) Leased Employees.



	x 	 	(e) Reclassified Employees.



	x 	 	(f) Classifications: Any part time employee who works less than 35
hours per work week and any Temporary Employee as defined in Allied Capital’s
Resource Guide who works less than 1 year.



	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.



	o 	 	(c) 415 compensation.



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Allied Capital 401(k) Plan



[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.



	x 	 	(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.



	x 	 	(l) Nonelective contributions. The following modifications apply to the
definition of Compensation for nonelective contributions: Excludes
cut-off awards, formula awards, retention awards, referral fees, relocation
bonuses, deferred compensation distributions and non-cash benefits.



	x 	 	(m) Deferral contributions. The following modifications apply to the
definition of Compensation for deferral contributions: Excludes cut-off
awards, formula awards, retention awards, referral fees, all bonuses, deferred
compensation distributions and non-cash benefits.



	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)



	x 	 	(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:     .



	x 	 	(b) Restated Plan. The restated Effective Date is:     September 1, 1999     .



	 	 	This Plan is an amendment and restatement of an existing retirement
plan(s) originally established effective as of:     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)



	x 	 	(a) Actual Method. See Plan Section 1.15(B).



© Copyright 2001 Wachovia Bank, National Association


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Allied Capital 401(k) Plan



	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:     .



	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):
NA.



[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).]



	x 	 	(a) Age. Attainment of age     21     (not to exceed age 21).



	x 	 	(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).



	 	x 	 	(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.]



© Copyright 2001 Wachovia Bank, National Association


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Allied Capital 401(k) Plan



	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)
	 	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 state 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.



	x	 	(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:             .



	x	 	(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)



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Allied Capital 401(k) Plan



	 	 	 	 	 	 	 
	 	(1)	x	Deferral/Employee contributions	(2)	o	Matching contributions
	 	 	 	(Choose one of a. through d.)
	 	 	(Choose one of e. through h.)
	 	 	 	 	 	 	 
	 	 	a.
	o  Semi-annual Entry Dates
	 	e.	o Semi-annual Entry Dates
	 	 	b.
	o  The first day of the Plan Year
	 	f.
	o The first day of the Play Year
	 	 	c.
	o  Employment
Commencement Date

      (immediate eligibility)
	 	g.
	o
Employment Commencement Date

     (immediate eligibility)
	 	 	d.
	x  The first day of each:
	 	h.	o The first day of each:
	 	 	 	      Quarter
	 	 	            





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.]



	x	 	(l)  Immediately following or coincident with



	o	 	(m)  Immediately preceding or coincident with



	o	 	(n)  Nearest



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




	 	 	 	 	 	 	 
	 	(1)	
o
	Deferral contributions
	(2)	o
	Matching contributions

(Choose one of b., c. or d.)
	 	 	 	 	 	 	 
	 	 	a.	o  Immediately following or coincident with
	 	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, and 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))



	x	 	(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.



© Copyright 2001 Wachovia Bank, National Association




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Allied Capital 401(k) Plan



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


	x	 	(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)


	x	 	(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.



	x	 	(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.



	 	x	 	(2) Fixed. The following amount: 2% of eligible compensation under the Plan



	x	 	(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)



	x	 	(1) Safe harbor nonelective contribution. The safe harbor nonelective
contribution equals 3% 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”.]



	o	 	(3) Enhanced safe harbor matching contribution. (Choose one of a. or
b.).



	 	o	 	a. Uniform percentage. An amount equal to         % of each
Participant’s deferral contributions not exceeding         % of the
Participant’s Compensation. For this purpose, “Compensation” means
Compensation for:         . [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:        .




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Allied Capital 401(k) 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)


	x	 	(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)



	 	x	 	(1) Maximum deferral amount: any whole percentage of eligible compensation under the Plan.



	 	x	 	(2) Minimum deferral amount: 1%.



	 	o	 	(3) No limitations.



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))


	 	x	 	(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





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Allied Capital 401(k) Plan



	 	 	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.]



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.]



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	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)



	x	 	(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.



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.



	 	x	 	(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.]



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



	 	o	 	(1) As a discretionary matching contribution.



	 	o	 	(2) To reduce matching contributions.



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Allied Capital 401(k) Plan



	 	o	 	(3) As a discretionary nonelective contribution.



	 	o	 	(4) To reduce nonelective contributions.



	x	 	(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.



	 	x	 	(2) To reduce nonelective
contributions.



	 	o	 	(3) As a discretionary matching contribution.



	 	o	 	(4) To reduce matching contributions.



	o	 	(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.



	x	 	(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)



	x	 	(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:      1000      .



	x	 	(b) Employment condition. The Participant must be employed by the Employer
on the last day of the      Plan Year      (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.]



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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)



	x	 	(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)



	x	 	(a) Specific age. The date the Participant attains age      59 1/2      . [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.



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)



	x	 	(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



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Allied Capital 401(k) Plan




	 	 	 	 	 
	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.



	 	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).]



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Allied Capital 401(k) Plan



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))



	x	 	(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).]



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)



	x	 	(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.



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Allied Capital 401(k) Plan



	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).





	x	 	(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)





	 	x	 	(1) Hardship (safe harbor hardship rule). The Participant has incurred a hardship in accordance with Plan
Sections 6.09 and 14.11(A).





	 	x	 	(2) Age. The Participant has attained age 59 1/2 (Must be at least age 59 1/2).





	 	o	 	(3) Disability. The Participant has incurred a Disability.





	o	 	(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)




	 	o	 	(1) Age. The Participant has attained age                  (Must be at least age 59 1/2).




	 	o	 	(2) Disability. The Participant has incurred a Disability.




	x	 	(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)





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






	 	x	 	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.]





	 	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.





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Allied Capital 401(k) Plan



	 	o	 	(3) Hardship (safe harbor hardship rule). The Participant has incurred a hardship in accordance with Plan
Sections 6.09 and 14.11(A).





	 	o	 	(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.]





	x	 	(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.





	 	x	 	(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)



	x	 	(a) Lump sum.





	x	 	(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))



	x	 	(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)



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





	 	x	 	(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.






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Allied Capital 401(k) Plan



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



	 	o	 	(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.



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



	 	x	 	(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))



	x	 	(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:
	/s/ Kelly A. Anderson
	 	 	

	 	 	Kelly A. Anderson
	 	 	

	 	 	[Name/Title]
	 	 	 
	 	Name(s) of Trustee:
	 	 	Wachovia Bank, National Association
	 	 	

	 	 	 
	 	 	/s/ Lathan C. Mahaffey 8/6/03
	 	 	

	 	 	 
	 	 	

	 	 	 
	 	 	

	 	 	 
	 	 	

	 	 	 
	 	 	

	 	 	 
	 	 	

	 	 	 
	 	 	

	 	 	 
	 	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: 002.


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) 9
effective September 1, 1999, by substitute Adoption Agreement page number(s) 4
and 5.


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 Determination of the
Internal Revenue Service.


     © Copyright 2001 Wachovia Bank, National Association




18








 



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:      May 1, 2001     .



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.



	x	 	(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:      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.]



	x	 	(a) Eligibility. For eligibility under Article II. See Plan
Section 1.30 for time of Plan entry.



	x	 	(b) Vesting. For vesting
under Article V.



	x	 	(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





19







 




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.]



	o	 	(c) Compensation. The Compensation definition under Section 1.07 will apply for Plan Years beginning after:
      .



	o	 	(d) Election not to participate. The election not to participate under Section 2.06 is effective:       .



	x	 	(e) 401(k) safe harbor. The 401(k) safe harbor provisions under Section 3.01(d) are effective:      January 1, 2000      .



	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:       .



	x	 	(h) Allocation conditions. The allocation conditions of Section 3.06 are effective:      January 1, 2001      .



	o	 	(i) Benefit payment elections. The distribution elections of Section(s)       are effective:       .



	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:       .



	o	 	(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:       .



	 	o	 	(2) Installment distributions as described in Section 6.03 effective:       .



	 	o	 	(3) Other optional forms of benefit (Any election to eliminate must be consistent with Treas. Reg. §1.411(d)-4):       .



	x	 	(n) Special effective date(s):      Employee Deferral Contributions
modified to increase the deferral percentage (Section 14 (a) (1)) and Employee
Classifications modified to include participation exclusions (Section 3 (f))
effective July 1, 2002      .



     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





20








 



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)



	x	 	(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:	x	Top paid group election
	o
	Calendar year data election.





	x	 	(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:	x	prior year	o	current year	2002:	x	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.]



© Copyright 2001 Wachovia Bank, National Association


21







 


Allied Capital 401(k) Plan



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





22








 


Allied Capital 401(k) Plan



CHECKLIST OF EMPLOYER INFORMATION AND EMPLOYER ADMINISTRATIVE ELECTIONS




Commencing with the      2002     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) 331-1112
	
	 	


	[City, State and Zip Code]	 	
[Telephone Number]





	38.	 	Form of Business.




	 	 	 
	(a) x 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) x The Plan will “gross up” Compensation for Elective Contributions.
	(b) o The Plan will exclude Elective Contributions.





	40.	 	Section 4.04 — Rollover contributions.




	 
	(a) x 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) x 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) x TThe Plan permits Participant loans subject to the following conditions:
	 	(1) x Minimum loan amount: $1000.
	 	(2) x Maximum number of outstanding loans: 2.
	 	(3) x Reasons for which a Participant may request a loan:
	 	 	a. x Any purpose.
	 	 	b. o Hardship events.
	 	 	c. o Other:       
	 	(4) x Suspension of loan repayments:
	 	 	a. o Not permitted.
	 	 	b. x Permitted for non-military leave of absence.
	 	 	c. x 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) x The Plan will not invest in life insurance contracts





	44.	 	Surety bond company: Gulf Insurance Group. Surety bond amount: $25,000,000.00



© Copyright 2001 Wachovia Bank, National Association


23


 







 



	 	 	 
	EGTRRA — Employer	 	
Allied Capital 401(k) Plan





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 2001 Wachovia Bank, National Association


1






 




	 	 	 
	EGTRRA — Employer	 	
Allied Capital 401(k) Plan






	 	 	 	 	 
	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.	x	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



© Copyright 2001 Wachovia Bank, National Association



2








 




	 	 	 
	EGTRRA — Employer	 	
Allied Capital 401(k) Plan





	 	 	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 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.



© Copyright 2001 Wachovia Bank, National Association


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	EGTRRA — Employer	 	
Allied Capital 401(k) Plan





	 	 	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



© Copyright 2001 Wachovia Bank, National Association




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	EGTRRA – Employer	 	
Allied Capital 401(k) Plan





	 	 	transferred into such plan from this plan. The definition of eligible
retirement plan shall also apply in the case of a 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.



© Copyright 2001 Wachovia Bank, National Association


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	EGTRRA – Employer	 	
Allied Capital 401(k) Plan





This amendment has been executed this ______ day of ____________, ______ .

Name of Employer: Allied Capital Corporation




	 	 	 	 	 
	By:	 	
 



EMPLOYER
	 	 





 


Name of Plan:      Allied Capital 401(k) Plan     


© Copyright 2001 Wachovia Bank, National Association





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