EXHIBIT 10.40
   Allied Capital Corporation
 First Omnibus Waiver and Amendment to the Note Agreements




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Allied Capital Corporation  1919 Pennsylvania Avenue, N.W.  Washington, DC 20006
 First Omnibus Waiver and Amendment to the Note Agreements
  Re:
 First Waiver and Amendment
  2003 Note
Agreement 2003 Notes 2004 Note Agreement 2004 Series A Notes 2004 Series B Notes 2004 Notes 2005 Note Agreement 2005 Series A Notes 2005 Series B
Notes 2005 Notes




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2006 Note Agreement 2006 Notes 2008 Note Agreement 2008 Series A
Notes 2008
Series B Notes 2008 Notes Notes Company Noteholders Noteholder Note
Agreements Note Agreement
  Article 1.
 Waiver of Defaults.
 Section 1.1. Waiver of Defaults
 Section 1.2. Limited Waivers; Reservation of Rights.
 -2-




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Article 2.
 Amendment of the Note Agreements.
 Amendment of Section 5.10 (Restricted Payments).
 provided
 Article 3.
 Representations and Warranties.
      -3-




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Article 4.
 Miscellaneous.
 Section 4.1. Ratification of the Note Agreements.
 Section 4.2. References to the Agreement.
 Section 4.3. Successors and Assigns.
 Section 4.4. Requisite Approval; Expenses.
 Section 4.5. Counterparts.
 Section 4.6. Governing Law
 [Signature Pages Follow]
 -4-




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Allied Capital CorporationBy
    /s/ Penni RollName:
    Penni RollTitle:
    Chief Financial Officer -5-




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In Witness Whereof
 American Fidelity Assurance Company(as
Noteholder under the 2005 Note Agreement)American Republic Insurance Company (as
Noteholder under the 2008 Note Agreement)Blue Cross and Blue Shield of Florida, Inc.(as Noteholder under the 2005 Note
Agreement)The Catholic Aid Association(as
Noteholder under the 2008 Note Agreement)Catholic Knights(as Noteholder under
the 2008 Note Agreement)Cincinnati Insurance Company(as
Noteholder under the 2008 Note Agreement)Colorado Bankers Life Insurance Company(as Noteholder under the 2005 Note Agreement)Farm Bureau Life Insurance Company of
Michigan (as Noteholder under the 2005
Note Agreement)Fidelity Life Association(as Noteholder
under the 2008 Note Agreement)Fort Dearborn Life Insurance Company
(as Noteholder under the 2004 Note Agreement
and the 2005 Note Agreement)Great Western Insurance Company(as
Noteholder under the 2008 Note Agreement)GuideOne Mutual Insurance Company(as
Noteholder under the 2008 Note Agreement)The Lafayette Life Insurance Company(as
Noteholder under the 2008 Note Agreement)Minnesota Life Insurance Company(as
Noteholder under the 2005 Note Agreement and
the 2008 Note Agreement)Security National Life Insurance Company(as
Noteholder under the 2008 Note Agreement)By:   Advantus Capital Management, Inc.By
    /s/ Robert W. ThompsonName:
    Robert W. ThompsonTitle:
    Vice President -6-




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AIG Annuity Insurance Company(as
Noteholder under the 2003 Note Agreement)The Variable Annuity Life Insurance Company(as Noteholder under the 2003 Note Agreement)By:  AIG Global Investment Corp., investment
        adviserBy
    /s/ Gerald F. HermanName:
    Gerald F. HermanTitle:
    Vice PresidentAllianz Life Insurance Company of North
America(as Noteholder under the 2005
Note Agreement)

By:   Allianz of America, Inc., as the
authorized         signatory, investment manager, of
which,         the security should be registered
under the         Nominee Name (MAC & CO)By
    /s/ Brian F. LandryName:
    Brian F. LandryTitle:
    Vice President -7-




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Allstate Life Insurance Company
(as Noteholder under the 2003 Note
Agreement and the 2005 Note Agreement)By
    /s/ Robert B. BodettName:
    Robert B. BodettBy
    /s/ Allen DickName:
    Allen DickAuthorized SignatoriesAllstate Life Insurance Company ofNew York(as Noteholder under the
2003 Note Agreement and the 2005 Note
Agreement)By
    /s/ Robert B. BodettName:
    Robert B. BodettBy
    /s/ Allen DickName:
    Allen DickAuthorized SignatoriesAmerican Equity Investment Life Insurance
Company(as Noteholder under the 2004
Note Agreement and the 2005 Note Agreement)By
    /s/ Rachel StaufferName:
    Rachel StaufferTitle:
    Vice President InvestmentsAmerican Equity Investment Life Insurance
Company of New York(as Noteholder
under the 2004 Note Agreement)By
    /s/ Rachel StaufferName:
    Rachel StaufferTitle:
    Vice President Investments -8-




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American Family Life Assurance Company
of Columbus(as Noteholder under the
2005 Note Agreement and the 2006 Note
Agreement)By
    /s/ Mary Ellen KeimName:
    Mary Ellen KeimTitle:
    Vice President Fixed IncomeCalifornia National Bank(as Noteholder
under the 2005 Note Agreement)By
    /s/ Lisa AlexanderName:
    Lisa AlexanderTitle:
    Senior Vice President/TreasurerConnecticut General Life Insurance Company(as Noteholder under the 2003 Note
Agreement and the 2004 Note Agreement)


By:   Cigna Investments, Inc.
(authorized agent)By
    /s/ Debra J. HeightName:
    Debra J. HeightTitle:
    Managing DirectorLife Insurance Company of North America(as Noteholder under the 2004 Note
Agreement)By:   CIGNA Investments, Inc. (authorized agent)By
    /s/ Debra J. HeightName:
    Debra J. HeightTitle:
    Managing Director -9-




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CUNA Mutual Insurance Society (as
Noteholder under the 2008 Note Agreement)By:
    MEMBERS Capital Advisors, Inc., acting as Investment AdvisorBy
    /s/ Allen R. CantrellName:
    Allen R. CantrellTitle:
    Director, Private PlacementsEmployees Retirement System of Alabama(as Noteholder under the 2005 Note
Agreement)By
    /s/ Julie BarrancoName:
    Julie BarrancoTitle:
    Director of Fixed IncomeJudicial Retirement Fund(as Noteholder
under the 2005 Note Agreement)By
    /s/ Julie BarrancoName:
    Julie BarrancoTitle:
    Director of Fixed IncomePEIRAF  Deferred Compensation Plan(as
Noteholder under the 2005 Note Agreement)By
    /s/ Julie BarrancoName:
    Julie BarrancoTitle:
    Director of Fixed IncomeTeachers Retirement System of Alabama(as Noteholder under the 2005 Note
Agreement)By
    /s/ Julie BarrancoName:
    Julie BarrancoTitle:
    Director of Fixed Income -10-




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Federated Life Insurance Company(as
Noteholder under the 2003 Note Agreement)By
    /s/ Mark A. HoodName:
    Mark A. HoodTitle:
    Vice PresidentGenworth Life Insurance Company
(f/k/a General Electric Capital Assurance
Company) (as Noteholder under the 2004 Note
Agreement and the 2005 Note Agreement)By
    /s/ John EndresName:
    John EndresTitle:
    Investment OfficerThe Guardian Life Insurance Company of
America(as Noteholder under the 2004
Note Agreement)By
    /s/ Ellen I. WhittakerName:
    Ellen I. WhittakerTitle:
    Senior Director, Private PlacementsThe Guardian Insurance & Annuity Company,
Inc.(as Noteholder under the 2004 Note
Agreement)By
    /s/ Ellen I. WhittakerName:
    Ellen I. WhittakerTitle:
    Senior Director, Private Placements -11-




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John Hancock Life Insurance Company(as
Noteholder under the 2003 Note Agreement and
2004 Note Agreement)By
    /s/ Anthony J. Della PianaName:
    Anthony J. Della PianaTitle:
    Senior Managing DirectorJohn Hancock Variable Life Insurance Company(as Noteholder under the 2003 Note
Agreement and 2004 Note Agreement)By
    /s/ Anthony J. Della PianaName:
    Anthony J. Della PianaTitle:
    Authorized SignatoryJohn Hancock Life & Health Insurance Company(f/k/a Manulife Insurance Company) (as
Noteholder under the 2003 Note Agreement)By
    /s/ Anthony J. Della PianaName:
    Anthony J. Della PianaTitle:
    Authorized SignatoryJohn Hancock Life Insurance Company (U.S.A.)(f/k/a The Manufacturers Life Insurance
Company (U.S.A.)) (as Noteholder under the
2004 Note Agreement)By
    /s/ Anthony J. Della PianaName:
    Anthony J. Della PianaTitle:
    Authorized Signatory -12-




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Signature 7 L.P.(as Noteholder under
the 2004 Note Agreement)By:
    Hancock Capital Investment Management, LLC,as Portfolio AdvisorBy
    /s/ Anthony J. Della PianaName:
    Anthony J. Della PianaTitle:
    Senior Managing DirectorSignature 6 Limited(as Noteholder under
the 2004 Note Agreement)By:
    Hancock Capital Investment Management, LLC,as Portfolio AdvisorBy
    /s/ Anthony J. Della PianaName:
    Anthony J. Della PianaTitle:
    Senior Managing DirectorJPMorgan Chase Bank,not individually
but solely in its capacity as Directed
Trustee of the commingled assets of the Long
Term Investment Trust (fka AT&T Master
Pension Trust) and the SBC Master Pension
Trust (as Noteholder under the 2004 Note
Agreement)By
    /s/ Amy L. SchneebergerName:
    Amy L. SchneebergerTitle:
    Vice President -13-




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ING USA Annuity and Life Insurance Company(as Noteholder under the 2008 Note
Agreement)ING Life Insurance and Annuity Company(as Noteholder under the 2008 Note
Agreement)ReliaStar Life Insurance Company(as
Noteholder under the 2008 Note Agreement)Security Life of Denver Insurance Company(as Noteholder under the 2008 Note
Agreement)By:
    ING Investment Management LLC, as AgentBy
    /s/ Christopher P. LyonsName:
    Christopher P. LyonsTitle:
    Senior Vice PresidentMetropolitan Life Insurance Company(as
Noteholder under the 2004 Note Agreement)

MetLife Insurance Company of Connecticut,
by Metropolitan Life Insurance Company,
its Investment ManagerBy
    /s/ Judith A. GulottaName:
    Judith A. GulottaTitle:
    Managing Director(executed by Metropolitan Life Insurance
Company (i) as to itself as a Purchaser and (ii) 
as investment manager to MetLife Insurance 
Company of Connecticut as a Purchaser) -14-




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Midland National Life InsuranceCompany(as Noteholder under the 2005
Note Agreement)By:
    Guggenheim Partners Advisory CompanyBy
    /s/ Kaitlin TrinhName:
    Kaitlin TrinhTitle:
    DirectorNorth American Company for Lifeand Health Insurance(as Noteholder
under the 2005 Note Agreement)By:
    Guggenheim Partners Advisory CompanyBy
    /s/ Kaitlin TrinhName:
    Kaitlin TrinhTitle:
    Director -15-




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National Benefit Life Insurance Company(as Noteholder under the 2004 Note
Agreement)By:
    Conning Asset Management Company, as
Investment ManagerBy
    /s/ John H. DeMallieName:
    John H. DeMallieTitle:
    DirectorPrimerica Life Insurance Company(as
Noteholder under the 2004 Note Agreement)By:
    Conning Asset Management Company, as
Investment ManagerBy
    /s/ John H. DeMallieName:
    John H. DeMallieTitle:
    DirectorReassure America Life Insurance Company
(as Noteholder under the 2003 Note
Agreement)By:
    Conning Asset Management Company, as
Investment ManagerBy
    /s/ John H. DeMallieName:
    John H. DeMallieTitle:
    DirectorSwiss Re Life & Health America, Inc.(as
Noteholder under the 2003 Note Agreement and
the 2004 Note Agreement)By:
    Conning Asset Management Company, as
Investment ManagerBy
    /s/ John H. DeMallieName:
    John H. DeMallieTitle:
    Director -16-




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Nationwide Life and Annuity Insurance Company(as Noteholder under the 2004 Note
Agreement and the 2005 Note Agreement)
Nationwide Life Insurance Company (as
Noteholder under the 2004 Note Agreement and
the 2005 Note Agreement)
Nationwide Life Insurance Company of America(as Noteholder under the 2004 Note
Agreement)
Nationwide Multiple Maturity Separate Account(as Noteholder under the 2005 Note
Agreement)
Nationwide Mutual Insurance Company (as
Noteholder under the 2004 Note Agreement)By
    /s/ Thomas A. GleasonName:
    Thomas A. GleasonTitle:
    Authorized Signatory -17-




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New York Life Insurance Company
(as Noteholder under the 2003 Note Agreement,
the 2004 Note Agreement and the 2005 Note
Agreement)By
    /s/ A. Post HowlandName:
    A. Post HowlandTitle:
    Corporate Vice PresidentNew York Life Insurance and Annuity
Corporation(as Noteholder under the
2003 Note Agreement, the 2004 Note Agreement
and the 2005 Note Agreement)By
    New York Life Investment Management LLC,
its Investment ManagerBy
    /s/ A. Post HowlandName:
    A. Post HowlandTitle:
    DirectorNew York Life Insurance and Annuity
Corporation Institutionally Owned

Life Insurance Separate Account(as
Noteholder under the 2003 Note Agreement and
the 2005 Note Agreement)By
    New York Life Investment Management LLC,
its Investment ManagerBy
    /s/ A. Post HowlandName:
    A. Post HowlandTitle:
    Director -18-




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The Northwestern Mutual Life Insurance
Company(as Noteholder under the 2004
Note Agreement, the 2005 Note Agreement and
the 2008 Note Agreement)By
    /s/ David A. BarrasName:
    David A. BarrasIts Authorized RepresentativeOhio National Life Assurance Corporation
(as Noteholder under the 2005 Note Agreement
and the 2008 Note Agreement)By
    /s/ Jed R. MartinName:
    Jed R. MartinTitle:
    Vice President, Private PlacementsThe Ohio National Life Insurance Company
(as Noteholder under the 2004 Note Agreement
and the 2005 Note Agreement)By
    /s/ Jed R. MartinName:
    Jed R. MartinTitle:
    Vice President, Private Placements -19-




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Park National Bank(as Noteholder under
the 2005 Note Agreement)By
    /s/ John KratkoczkiName:
    John KratkoczkiTitle:
    Vice President / ControllerPhoenix Life Insurance Company(as
Noteholder under the 2005 Note Agreement)By
    /s/ Christopher M. WilkosName:
    Christopher M. WilkosTitle:
    Senior Vice President
Corporate Portfolio Management
Phoenix Life Insurance CompanyPHL Variable Insurance Company(as
Noteholder under the 2005 Note Agreement)By
    /s/ Christopher M. Wilkos, CFAName:
    Christopher M. WilkosTitle:
    Senior Vice President
Corporate Portfolio Management
PHL Variable Insurance CompanySan Diego National Bank(as Noteholder
under the 2005 Note Agreement)By
    /s/ Eric W. LarsonName:
    Eric W. LarsonTitle:
    Senior Vice President/Chief
Financial Officer -20-




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Sun Life Assurance Company of Canada(as
Noteholder under the 2004 Note Agreement and
the 2008 Note Agreement)By
    /s/ Paul SinclairName:
    Paul SinclairTitle:
    Managing Director
Head of Private Fixed Debt
Private Fixed IncomeBy
    /s/ Kevin PhelanName:
    Kevin PhelanTitle:
    Managing Director
Private Fixed Income -21-




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Sun Life Assurance Company of Canada (U.S.)(as Noteholder under the 2008 Note
Agreement)By
    /s/ Deborah J. FossName:
    Deborah J. FossTitle:
    Managing Director, Head of Private
Debt Private Fixed IncomeBy
    /s/ Ann C. KingName:
    Ann C. KingTitle:
    Assistant Vice President and Senior
CounselSun Life Insurance and Annuity Company of New
York(as Noteholder under the 2008 Note
Agreement)By
    /s/ Deborah J. FossName:
    Deborah J. FossTitle:
    Authorized SignerBy
    /s/ Ann C. KingName:
    Ann C. KingTitle:
    Senior CounselSun Life Assurance Company of Canada(as
Noteholder under the 2003 Note Agreement and
the 2008 Note Agreement) acting
through its U.S. branchBy
    /s/ Deborah J. FossName:
    Deborah J. FossTitle:
    Managing Director, Head of Private
Debt
Private Fixed IncomeBy
    /s/ Ann C. KingName:
    Ann C. KingTitle:
    Senior Counsel -22-




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Sun Life Hong Kong LimitedBy:
    Sun Capital Advisers LLC, its Investment
Advisor (as Noteholder under the 2003 Note Agreement)By
    /s/ Deborah J. FossName:
    Deborah J. FossTitle:
    Authorized SignerBy
    /s/ Ann C. KingName:
    Ann C. KingTitle:
    Authorized SignerTeachers Insurance and Annuity Association of
America(as Noteholder under the 2003
Note Agreement, the 2004 Note Agreement, the
2005 Note Agreement and the 2008 Note
Agreement)By
    /s/ Brian K. RoelkeName:
    Brian K. RoelkeTitle:
    DirectorTIAA-CREF Life Insurance Company(as
Noteholder under the 2004 Note Agreement)By:
    Teachers Insurance and Annuity Association
of America, as Investment ManagerBy
    /s/ Brian K. RoelkeName:
    Brian K. RoelkeTitle:
    Director -23-




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The Travelers Indemnity Company(as
Noteholder under the 2005 Note Agreement)By
    /s/ Annette M. MastersonName:
    Annette M. MastersonTitle:
    Vice PresidentWoodmen of the World Life Insurance Society(as Noteholder under the 2005 Note
Agreement)By
    /s/ James J. StolzeName:
    James J. StolzeTitle:
    Assistant Vice President -24-