<PAGE>   1
                                                                   EXHIBIT 10.10





                       THE ALLIED CAPITAL ADVISERS, INC.
                           DEFERRED COMPENSATION PLAN




                            Adopted January 1, 1997
<PAGE>   2
                       THE ALLIED CAPITAL ADVISERS, INC.
                           DEFERRED COMPENSATION PLAN


                               Table of Contents

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ARTICLE I - GENERAL

         Section 1.1      Effective Date  . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
         Section 1.2      Intent  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2

ARTICLE II - DEFINITIONS AND USAGE

         Section 2.1      Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3
         Section 2.2      Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5

ARTICLE III - ELIGIBILITY AND PARTICIPATION

         Section 3.1      Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
         Section 3.2      Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6

ARTICLE IV - PLAN BENEFIT

         Section 4.1      Plan Benefit  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7
         Section 4.2      Accounts  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7
         Section 4.3      Participant's Deferral Election . . . . . . . . . . . . . . . . . . .  7
         Section 4.4      Investment Procedure  . . . . . . . . . . . . . . . . . . . . . . . .  8
         Section 4.5      Valuation of Accounts . . . . . . . . . . . . . . . . . . . . . . . .  8

ARTICLE V - VESTING AND DISTRIBUTION

         Section 5.1      Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9
         Section 5.2      Distributable Events  . . . . . . . . . . . . . . . . . . . . . . . .  9
         Section 5.3      Amount of Plan Benefits . . . . . . . . . . . . . . . . . . . . . . .  9
         Section 5.4      Plan Benefit Payment Options  . . . . . . . . . . . . . . . . . . . .  9
         Section 5.5      Commencement of Benefit Payments  . . . . . . . . . . . . . . . . .   10
         Section 5.6      Form of Benefit Payments  . . . . . . . . . . . . . . . . . . . . .   10
         Section 5.7      Age 60 and Age 65 Benefit Payment Distribution Options  . . . . . .   10
         Section 5.8      Plan Benefit Payment Election Procedures  . . . . . . . . . . . . .   11
         Section 5.9      Form of Benefit Payments Upon Death . . . . . . . . . . . . . . . .   11
         Section 5.10     Designation of Beneficiary  . . . . . . . . . . . . . . . . . . . .   11
         Section 5.11     Hardship Withdrawals of Elective Deferral and
                          Employer Contributions  . . . . . . . . . . . . . . . . . . . . . .   11
</TABLE>
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                       THE ALLIED CAPITAL ADVISERS, INC.
                           DEFERRED COMPENSATION PLAN


                         Table of Contents (continued)

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ARTICLE VI - ADMINISTRATION

         Section 6.1      General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
         Section 6.2      Administrative Rules  . . . . . . . . . . . . . . . . . . . . . . .   12
         Section 6.3      Duties  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
         Section 6.4      Fees  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   13

ARTICLE VII - CLAIMS PROCEDURE

         Section 7.1      General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   14
         Section 7.2      Denials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   14
         Section 7.3      Notice  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   14
         Section 7.4      Appeals Procedure . . . . . . . . . . . . . . . . . . . . . . . . .   14
         Section 7.5      Review  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   14

ARTICLE VIII - TRUST

         Section 8.1      Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   15
         Section 8.2      Contributions and Expenses  . . . . . . . . . . . . . . . . . . . .   15
         Section 8.3      Trustee Duties  . . . . . . . . . . . . . . . . . . . . . . . . . .   15
         Section 8.4      Reversion to the Employer . . . . . . . . . . . . . . . . . . . . .   15

ARTICLE IX - MISCELLANEOUS PROVISION

         Section 9.1      Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   16
         Section 9.2      Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . .   16
         Section 9.3      No Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . .   16
         Section 9.4      Successors and Assigns  . . . . . . . . . . . . . . . . . . . . . .   16
         Section 9.5      Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . .   16
         Section 9.6      No Guarantee of Employment  . . . . . . . . . . . . . . . . . . . .   16
         Section 9.7      Severability  . . . . . . . . . . . . . . . . . . . . . . . . . . .   16
         Section 9.8      Notification of Addresses . . . . . . . . . . . . . . . . . . . . .   16
         Section 9.9      Bonding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   17
</TABLE>
<PAGE>   4
                       THE ALLIED CAPITAL ADVISERS, INC.
                           DEFERRED COMPENSATION PLAN


                                    PREAMBLE



WHEREAS, the Employer recognizes the unique qualifications of its executive
employees and the valuable services that they have provided to or for the
Employer; and

WHEREAS, the Employer now desires to adopt the Deferred Compensation Agreement
for Officers of Allied Capital Advisers, Inc., and to rename the plan the
Allied Capital Advisers, Inc. Deferred Compensation Plan.

NOW, THEREFORE, in consideration of the premises and of the provisions
hereinafter set forth, the Allied Capital Advisers, Inc.  Deferred Compensation
Plan (the "Plan") shall be and hereby is established as follows:





                                       1
<PAGE>   5
                                   ARTICLE I
                                    GENERAL


SECTION 1.1  Effective Date.  The provisions of this Plan, as amended and
restated, shall be effective as of January 1, 1997.  The rights, if any, of any
person whose status as an employee of the Employer has terminated shall be
determined pursuant to the Plan as in effect on the date such employee
terminated, unless a subsequently adopted provision of the Plan is made
specifically applicable to such person.

SECTION 1.2  Intent.  The Plan is intended to be an unfunded plan for the
purpose of providing deferred compensation to a select group of management or
highly compensated employees as such group is described under Sections 201(2)
and 301(a)(3) of ERISA.  The Plan is not intended to be a plan described in
Section 401(a)(1) of the Code.





                                       2
<PAGE>   6
                                   ARTICLE II
                             DEFINITIONS AND USAGE


SECTION 2.1      Definitions.  Wherever used in the Plan, the following words
and phrases shall have the meaning set forth below unless the context plainly
requires a different meaning:

         "Account" means the account established on behalf of each Participant
         as described in Section 4.2.

         "Administrator" means the person or persons described in Article VI.

         "Beneficiary" means those persons designated as a Beneficiary by the
         Participant in the Participant Deferral Agreement.

         "Board" means the Board of Directors of Allied Capital Advisers, Inc.

         "Bonus" means any amount paid to an employee, which is designated by
         the Employer as a bonus.

         "Bonus Deferral Election" means an election made pursuant to Section
         4.3(b) of the Plan.

         "Change in Control"  means any change in control of the Employer as
         the result of (a) the acquisition by any individual, entity or group
         of persons, within the meaning of sections 13(d)(3) or 14(d) of the
         Securities Exchange Act of 1934, or any other comparable successor
         provisions, of beneficial ownership (within the meaning of Rule 13d-3
         of the Securities Exchange Act of 1934) of 25 percent or more of
         either the outstanding shares of common stock or the combined voting
         power of the Employer's then outstanding voting securities entitled to
         vote generally, or (b) the approval by the stockholders of the
         Employer of a reorganization, merger, or consolidation, in each case,
         with respect to which persons who were stockholders of the Employer
         immediately prior to such reorganization, merger or consolidation do
         not immediately thereafter own more than 25 percent of the combined
         voting power of the reorganized, merged, or consolidated Employer's
         then outstanding securities that are entitled to vote generally in the
         election of directors, or (c) the sale of substantially all of the
         Employer's assets, or (d) bankruptcy, which results in a change of
         beneficial ownership (within the meaning of Rule 13d-3 of the
         Securities Exchange Act of 1934) of 25 percent or more of either the
         outstanding shares of common stock or the combined voting power of the
         Employer's then outstanding voting securities entitled to vote
         generally.

         "Code" means the Internal Revenue Code of 1986, as amended from time
         to time.





                                       3
<PAGE>   7
         "Compensation" means "Compensation" as defined under the Retirement
         Plan.  However, for purposes of this Plan "Compensation" shall not
         include Bonuses and shall be determined without regard to the
         limitations imposed by Code Section 401(a)(17).

         "Compensation Deferral Election" means an election made pursuant to
         Section 4.3(a) of the plan.

         "Disability" means a physical or mental condition of a Participant
         resulting from a bodily injury, disease, or mental disorder which
         renders him or her incapable of continuing in the employment of the
         Employer. Such Disability shall be determined by the Administrator, in
         its discretion, based upon appropriate medical advice and examination.

         "Employer" means Allied Capital Advisers, Inc., its successors and its
         subsidiaries.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
         amended from time to time.

         "Insolvency" means the Employer (a) is unable to pay its debts as they
         become due, or (b) is subject to a pending proceeding as a debtor
         under the United States Bankruptcy Code.

         "Normal Retirement Age" means age sixty (60).

         "Participant" means an eligible employee of the Employer designated by
         the Board for participation in the Plan, or a person who was such a
         Participant at the time of retirement, death, disability or
         resignation, or a Beneficiary who is presently entitled to benefits
         under the Plan in accordance with its terms.

         "Participant Deferral Agreement" means an agreement entered into
         between a Participant and the Employer for the Purposes set forth in
         Articles IV and V.

         "Plan" means the Allied Capital Advisers, Inc. Deferred Compensation
         Plan, as amended from time to time.

         "Plan Benefit" means the benefit of a Participant as determined under
         Article IV of the Plan.

         "Plan Year" means the calendar year.

         "Retirement" means the date on or after a Participant reaches Normal
         Retirement Age on which such Participant retires from the Employer.





                                       4
<PAGE>   8
         "Trust" means a trust which may be established by the Employer in
         accordance with Article VIII to provide the benefits described in this
         Plan.

         "Trustee" means the corporation or individual(s) selected by the
         Employer to serve as trustee for the Trust.


SECTION 2.2      Usage.  Except where otherwise indicated by the context, any
masculine terminology used herein shall also include the feminine and vice
versa, and the definition of any term herein in the singular shall also include
the plural and vice versa.





                                       5
<PAGE>   9
                                  ARTICLE III
                         ELIGIBILITY AND PARTICIPATION


SECTION 3.1      Eligibility.  Any officer of the Employer shall be eligible to
participate in the Plan at such time and for such period as designated by the
Board.

SECTION 3.2      Participation.  An employee who is eligible to participate in
the Plan pursuant to Section 3.1 shall become a Participant at such time and
for the period he is designated by the Board.

If, at any time, an employee is determined or reasonably believed, based on a
judicial or administrative determination or opinion of counsel, not to qualify
as "management" or a "highly compensated employee" under ERISA Sections 201(2),
301(a)(3), and 401(a)(1), the employee shall cease participation in the Plan as
of the date of that determination and the Plan Benefit to which he is entitled
will be distributed to him as soon as administratively possible in a single
lump-sum payment, notwithstanding any other provision of the Plan.





                                       6
<PAGE>   10
                                   ARTICLE IV
                                  PLAN BENEFIT


SECTION 4.1      Plan Benefit.  A Participant's Plan Benefit shall be equal to
the total amount credited to the Participant's Account under this Article IV.
Such Plan Benefit shall become nonforfeitable and payable to the Participant as
provided under Article V.

SECTION 4.2      Accounts.  For each Participant, the Administrator shall
establish and maintain a Participant Account.  All amounts which are credited
to the Account shall be credited solely for purposes of accounting and
computation, and shall remain assets of the Employer subject to the claims of
the Employer's general creditors.  A Participant's Account shall be reduced by
an amount equal to any Plan Benefit previously distributed to him pursuant to
Article V.  A Participant's Account shall include amounts credited under the
Plan for the Plan Year beginning January 1, 1997.

SECTION 4.3      Participant's Deferral Elections.  For each Plan Year, each
eligible Participant may make the following deferral elections:

         (a)     Compensation Deferral Election:  Prior to the beginning of the
                 Plan Year, or prior to the date of entry as a Participant
                 under the Plan, an eligible Participant may authorize the
                 Employer to reduce his or her Compensation by any specific
                 amount or percentage as specified in a Participant Deferral
                 Agreement in effect for each Plan Year (in lieu of receiving
                 cash Compensation), and to have such amount credited to the
                 Participant's Account under this Article IV.  The Participant
                 Deferral Agreement shall be effective only with respect to
                 Compensation earned after the agreement becomes effective.  No
                 more than one Compensation Deferral Election may be made
                 during each Plan Year.  However, a Participant may terminate
                 the election at any time with respect to Compensation not yet
                 earned.

         (b)     Bonus Deferral Election:  Prior to the end of the Plan Year in
                 which the Bonus is earned, an eligible Participant may
                 authorize the Employer to reduce his or her Bonus by any
                 specific amount or percentage as specified in a Participant
                 Deferral Agreement in effect for each Plan Year (in lieu of
                 receiving a cash Bonus), and to have such amount credited to
                 the Participant's Account under this Article IV.





                                       7
<PAGE>   11
SECTION 4.4      Investment Procedure.  The Employer and each employee who is
eligible to participate in the Plan may, at the discretion of the Employer,
execute an agreement which reflects the deemed investment of the portion of the
Participant's Compensation and Bonus which shall be applied to the payment of
the Participant's Plan Benefit under the Plan.  The Administrator shall retain
overriding discretion over the selection of investment vehicles and the
Administrator may change, alter or modify its investment policy as it deems
appropriate, from time to time, to maximize benefits under the Plan.  Any such
change, alteration or modification shall be communicated to the Participants
under procedures adopted by the Administrator.

SECTION 4.5      Valuation of Accounts.  The value of a Participant's Account
shall be determined from time to time by the Trustee in the following manner.

         (a)     During any period of time in which a Participant's Account is
                 deemed invested in whole or in part pursuant to the agreement
                 with the Participant (in the manner described in Section 4.4),
                 the income and expenses, gains and losses, both realized and
                 unrealized, from such deemed investments shall be determined
                 by the Trustee.  The amount so determined shall be credited to
                 the Account of the Participant proportionately in accordance
                 with procedures established by the Administrator.

         (b)     All benefits and deferrals on behalf of a Participant shall be
                 credited to the Account of the Participant in accordance with
                 this Article IV.

         (c)     Each Participant's Account shall be valued as of the last day
                 of each Plan Year or more frequently as determined by the
                 Administrator.

         (d)     All credits to a Participant's Account under this Section 4.5
                 shall be deemed to have been made on the applicable valuation
                 date in the order of priority set forth in this Section 4.5,
                 even though actually determined at a later date.

         (e)     Each Participant's Account shall include amounts previously
                 credited under the Plan prior to the effective date of this
                 amendment and restatement, January 1, 1997.





                                       8
<PAGE>   12
                                   ARTICLE V
                            VESTING AND DISTRIBUTION


SECTION 5.1      Vesting.  Amounts credited under the Plan shall at all times
be 100% vested and non-forfeitable.

SECTION 5.2      Distributable Events.  Except as otherwise provided in Section
5.7, a Participant's Plan Benefit shall become distributable upon the
occurrence of one of the following events:


           1.    Separation from service (other than on account of Retirement,
                 death, or Disability)

           2.    Retirement

           3.    Disability

           4.    Death

           5.    Insolvency

           6.    Change in Control (as defined in Section 2.1)

           7.    Future determined date (at least 2 years from the signing date
                 of the Participant Deferral Agreement)

           8.    Termination of the Plan


SECTION 5.3      Amount of Plan Benefits.  A Participant's Plan Benefit shall
equal the total amount credited to the Participant's Account in accordance with
Article IV as of the date a distributable event occurs.

SECTION 5.4      Plan Benefit Payment Options.  Subject to the provisions of
Section 5.9, upon the occurrence of a distributable event listed in Section
5.2, a Participant may elect one of the following Plan Benefit payment options:

         (a)     Lump-sum - A Participant may elect to receive his Plan Benefit
                 in a single lump sum distribution.

         (b)     Installments - Alternatively, a Participant may elect to
                 receive his Plan Benefit in equal annual installments over a
                 period of not less than three years and not greater than ten
                 years.





                                       9
<PAGE>   13
SECTION 5.5      Commencement of Benefit Payments.   At the election of the
Participant or Beneficiary, if applicable, the payment of Plan Benefits shall
commence no earlier than three months and no later than six months from the
expiration of the ninety-day election period provided for in Section 5.8.  In
the event of a distribution on account of hardship, the payment of Plan
Benefits shall commence as soon as administratively feasible from the date the
Administrator determines that a Participant is entitled to a hardship
distribution under the Plan.

SECTION 5.6      Form of Benefit Payments.  At the discretion of the
Administrator, Plan Benefits will be paid in the form of cash equal to the
value of Plan Benefit payable on such benefit payment date.

SECTION 5.7      Age 60 and Age 65 Benefit Payment Distribution Options.

         (a)     Upon the consent of the Employer, and subject to the
                 conditions prescribed in subparagraph (b) below, before the
                 end of the Plan Year beginning immediately prior to the Plan
                 Year in which an active Participant reaches age 60 or age 65,
                 such Participant can elect to begin receiving his or her Plan
                 Benefit determined, as of the end of such preceding Plan Year,
                 in monthly or annual installments (as such participant elects)
                 over a period of not less than three years and not longer than
                 ten years.  If inactive Participant does not affirmatively
                 elect to begin receiving his or her Plan Benefit under this
                 paragraph or, if the Employer does not consent to such an
                 election, the Participant shall not be eligible to begin
                 receiving benefits until the earlier of a distributable event
                 described in Section 5.2, or in the case of an active
                 Participant who has not attained age 60, the Plan year ending
                 immediately prior to the Plan Year in which he reaches age 65.

         (b)     In order to begin receiving Plan Benefits under this Section
                 5.7, a Participant must be an active employee on the date such
                 benefits are elected and on the date payment of such benefits
                 subsequently commence.

         (c)     If a Participant experiences a distributable event described
                 in Section 5.2 after an election is made and consent is given
                 by the Board under this Section 5.7, the Participant or
                 Beneficiary shall have the same distribution options provided
                 in Section 5.4, with the value of his Plan Benefit as of such
                 date decreased by amounts distributed under this Section 5.7.

         (d)     A Participant who begins receiving Plan Benefits under this
                 Section 5.7 shall continue to be eligible for future credits
                 under the Plan to the extent such Participant is otherwise
                 entitled to receive credits under the terms and operation of
                 the Plan.





                                       10
<PAGE>   14
         (e)     If a Participant elects to receive benefits under this Section
                 5.7 and the Employer consents to such election, the
                 distribution of the Participant's benefits will commence at a
                 time mutually agreed to between the Participant and the
                 Employer when the election is made and consent given under
                 this Section 5.7.

SECTION 5.8      Plan Benefit Payment Election Procedures.  For purposes of
making the elections provided in Section 5.4, 5.5 and 5.7, each Participant and
Beneficiary, if applicable, shall be provided with an election form prepared by
the Administrator within a reasonable period of time after the Participant
experiences a distributable event or becomes eligible for the special Age 60 or
Age 65 Benefit Payment Distribution Options prescribed in Section 5.7.  This
election form must be properly executed by the Participant on or before the
ninetieth day from the day such form is provided to the Participant.  If an
election form is not properly executed as provided herein, the Participant will
be deemed (a) in the case of the elections provided in Section 5.4 and 5.5 to
have elected to receive his or her Plan Benefits in annual installments over a
three to ten year period commencing three months from the date the ninety-day
period provided herein expires; or (b) in the case of the elections provided in
Section 5.7 to have declined to begin receiving Plan Benefits under the special
Age 60 or Age 65 Benefit Payments Distribution Option provided in Section 5.7.

SECTION 5.9      Form of Benefit Payments Upon Death.   Upon the death of a
Participant who has not yet begun to receive benefits under this Plan, the
Participant's Beneficiary or Beneficiaries may elect to receive the Plan
Benefit in accordance with Section 5.4.  Upon the death of a Participant who
has already begun to receive his Plan Benefit under this Plan in the form of
installments, the Participant's Beneficiaries will receive the remaining Plan
Benefits in equal annual installments in the same manner elected by the
Participant.

SECTION 5.10     Designation of Beneficiary.  A Participant may, in the
Participant Deferral Agreement, designate one or more primary and contingent
Beneficiaries to receive the Plan Benefit which may be payable hereunder
following the Participant's death, and may designate the proportions in which
such Beneficiaries are to receive such payments.  A Participant may change such
designations from time to time, and the last written designation filed with the
Administrator prior to the Participant's death shall control.  If a Participant
fails to specifically designate a Beneficiary or, if no designated Beneficiary
survives the Participant, payment shall be made to the Participant's estate in
a single lump-sum, notwithstanding any other provision of this Plan.

SECTION 5.11     Hardship Withdrawals of Elective Deferral and Employer
Contributions.  A distribution in an amount no greater than to a Participant's
Account balance may be made to a Participant in the event of hardship.  For
this purpose, a withdrawal will be considered to be required due to a hardship
only if, under uniform rules and polices, the Administrator determines that the
purpose of the withdrawal is to meet an immediate and heavy financial need.
The decision of the Administrator as to whether a hardship withdrawal shall be
permitted is final and conclusive.





                                       11
<PAGE>   15
                                   ARTICLE VI
                                 ADMINISTRATION


SECTION 6.1      General.  The Administrator shall be the Board, or such other
person or persons as designated by the Board.  Except as otherwise specifically
provided in the Plan, the Administrator shall be responsible for administration
of the Plan.  The Administrator shall be the "named fiduciary" within the
meaning of Section 402(c)(2) of ERISA.

SECTION 6.2      Administrative Rules.  The Administrator may adopt such rules
of procedure as it deems desirable for the conduct of its affairs, except to
the extent that such rules conflict with the provisions of the Plan.

SECTION 6.3      Duties.  The Administrator shall have the following rights,
powers and duties:

         (a)     The decision of the Administrator in matters within its
                 jurisdiction shall be final, binding and conclusive upon the
                 Employer and upon any other person affected by such decision,
                 subject to the claims procedure hereinafter set forth.

         (b)     The Administrator shall have the duty and authority to
                 interpret and construe the provisions of the Plan, to decide
                 any question which may arise regarding the rights of
                 employees, Participants, and Beneficiaries, and the amount of
                 their respective interests, to adopt such rules and to
                 exercise such powers as the Administrator may deem necessary
                 for the administration of the Plan, and to exercise any other
                 rights, powers or privileges granted to the Administrator by
                 the terms of the Plan.

         (c)     The Administrator shall maintain full and complete records of
                 its decisions. Its records shall contain all relevant data
                 pertaining to the Participant and his rights and duties under
                 the Plan.  The Administrator shall have the duty to maintain
                 Account records of all Participants.  The Administrator shall
                 also have the duty to report pertinent information regarding
                 Participant Accounts to Participants at least annually.

         (d)     The Administrator shall cause the principal provisions of the
                 Plan to be communicated to the Participants, and a copy of the
                 Plan and other documents shall be available at the principal
                 office of the Employer for inspection by the Participants at
                 reasonable times determined by the Administrator.

         (e)     The Administrator shall periodically report to the Board with
                 respect to the status of the Plan.





                                       12
<PAGE>   16
SECTION 6.4      Fees.  No fee or compensation shall be paid to any person for
services as the Administrator.





                                       13
<PAGE>   17
                                  ARTICLE VII
                                CLAIMS PROCEDURE


SECTION 7.1      General.  Any claim for Plan Benefits under the Plan shall be
filed by the Participant or Beneficiary ("claimant") on the form prescribed for
such purpose with the Administrator.

SECTION 7.2      Denials.  If a claim for Plan Benefits under the Plan is
wholly or partially denied, notice of the decision shall be furnished to the
claimant by the Administrator within sixty days after receipt of the claim by
the Administrator, unless special circumstances require an extension of time of
sixty days (for a total of 120 days).

SECTION 7.3      Notice.  Any claimant who is denied a claim for Plan Benefits
shall be furnished written notice setting forth:

         (a)     the specific reason or reasons for the denial;

         (b)     specific reference to the pertinent provision of the Plan upon
                 which the denial is based;

         (c)     a description of any additional material or information
                 necessary for the claimant to perfect the claim; and

         (d)     an explanation of the claim review procedure under Section
                 7.5.

SECTION 7.4      Appeals Procedure.  In order that a claimant may appeal a
denial of a claim, the claimant or the claimant's duly authorized
representative may:

         (a)     request a review by written application to the Administrator,
                 or its designate, no later than sixty days after receipt by
                 the claimant of written notification of denial of a claim;

         (b)     review pertinent documents; and

         (c)     submit issues and comments in writing.

SECTION 7.5      Review.  A decision on review of a denied claim shall be made
not later than sixty days after receipt of a request for review, unless special
circumstances require an extension of time for processing, in which case a
decision shall be rendered within a reasonable period of time, but not later
than 120 days after receipt of a request for review.  The decision on review
shall be in writing and shall include the specific reason(s) for the decision
and the specific reference(s) to the pertinent provisions of the Plan on which
the decision is based.





                                       14
<PAGE>   18
                                  ARTICLE VIII
                                     TRUST


SECTION 8.1      Trust.  A trust to be known as the Allied Capital Advisers,
Inc. Deferred Compensation Trust (the "Trust") has been established by the
execution of a Trust agreement with one or more Trustees and is intended to be
maintained as a "grantor trust" under Code Section 677.  The assets of the
Trust will be held, invested and disposed of by the Trustee, in accordance with
the terms of the Trust, for the purpose of providing Plan Benefits for the
Participants.  Notwithstanding any provision of the Plan or the Trust to the
contrary, the assets of the Trust shall at all times be subject to the claims
of the Employer's general creditors in the event of insolvency or bankruptcy.

SECTION 8.2      Contributions and Expenses.  The Employer, in its sole
discretion, and from time to time, may make contributions to the Trust.  All
Plan Benefits under the Plan and expenses chargeable to the Plan, to the extent
not paid directly by the Employer, shall be paid from the Trust.

SECTION 8.3      Trustee Duties.  The powers, duties and responsibilities of
the Trustee shall be as set forth in the Trust agreement and nothing contained
in the Plan, either expressly or by implication, shall impose any additional
powers, duties or responsibilities upon the Trustee.

SECTION 8.4      Reversion to the Employer.  The Employer shall have no
beneficial interest in the Trust and no part of the Trust shall ever revert or
be repaid to the Employer, directly or indirectly, except as otherwise provided
in Section 8.1 or the Trust agreement.





                                       15
<PAGE>   19
                                   ARTICLE IX
                            MISCELLANEOUS PROVISIONS


SECTION 9.1      Amendment.  The Employer reserves the right to amend the Plan
in any manner that it deems advisable, by a resolution of the Board.  No
amendment shall, without the Participant's consent, affect the amount of the
Participant's Plan Benefit at the time the amendment becomes effective or the
right of the Participant to receive a Plan Benefit.

SECTION 9.2      Termination.  The Employer reserves the right to terminate the
Plan at any time by resolution of its Board.  No termination shall, without the
Participant's consent, affect the amount of the Participant's Plan Benefit
prior to the termination or the right of the Participant to receive a Plan
Benefit.

SECTION 9.3      No Assignment.  The Participant shall not have the power to
pledge, transfer, assign, anticipate, mortgage or otherwise encumber or dispose
of in advance any interest in amounts payable hereunder or any of the payments
provided for herein, nor shall any interest in amounts payable hereunder or in
any payments be subject to seizure for payments of any debts, judgments,
alimony or separate maintenance, or be reached or transferred by operation of
law in the event of bankruptcy, insolvency or otherwise.

SECTION 9.4      Successors and Assigns.  The provisions of the Plan are
binding upon and inure to the benefit of the Employer, its successors and
assigns, and the Participant, his Beneficiaries, heirs, legal representatives
and assigns.

SECTION 9.5      Governing Law.  The Plan shall be subject to and construed in
accordance with the laws of the Commonwealth of Virginia to the extent not
preempted by the provisions of ERISA.

SECTION 9.6      No Guarantee of Employment.  Nothing contained in the Plan
shall be construed as a contract of employment or deemed to give any
Participant the right to be retained in the employ of an Employer or any equity
or other interest in the assets, business or affairs of the Employer.  No
Participant hereunder shall have a security interest in assets of the Employer
used to make contributions or pay Plan Benefits.

SECTION 9.7      Severability.  If any provision of the Plan shall be held
illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining provisions of the Plan, but the Plan shall be construed
and enforced as if such illegal or invalid provision had never been included
herein.

SECTION 9.8      Notification of Addresses.  Each Participant and each
Beneficiary shall file with the Administrator, from time to time, in writing,
the post office address of the Participant, the post office address of each
Beneficiary, and each change of post office address.  Any communication,
statement or notice addressed to the last post office address filed with the
Administrator (or if no such address was filed with the Administrator, then to
the last post office





                                       16
<PAGE>   20
address of the Participant or Beneficiary as shown on the Employer's records)
shall be binding on the Participant and each Beneficiary for all purposes of
the Plan and neither the Administrator nor the Employer shall be obligated to
search for or ascertain the whereabouts of any Participant or Beneficiary.

SECTION 9.9      Bonding.  The Administrator and all agents and advisors
employed by it shall not be required to be bonded, except as otherwise required
by ERISA.

The undersigned, pursuant to the approval of the Board, does hereby execute the
Allied Capital Advisers, Inc. Deferred Compensation Plan on this 1st day of
January, 1997.

                                                  ALLIED CAPITAL ADVISERS, INC.

Attest:   /s/ SUZANNE V. SPARROW           By:        /s/ JOAN M. SWEENEY
         -------------------------             ---------------------------------
                (Signature)                                (Signature)


             Suzanne V. Sparrow                          Joan M. Sweeney
         -------------------------             ---------------------------------
                (Print Name)                                (Print Name)





                                       17