exv10w20xhy



 





Exhibit 10.20(h)









ALLIED CAPITAL 401(K) PLAN








ADOPTION AGREEMENT #005

NONSTANDARDIZED 401(k) PROFIT SHARING PLAN




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




ARTICLE I

DEFINITIONS





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




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





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




Employee classification:          

Contribution type:          



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





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




[Note: Each of the Compensation definitions in (a), (b) and (c) includes Elective Contributions.
See Plan Section 1.07(D). To exclude Elective Contributions, the Employer must elect (g).]



Compensation taken into account. For the Plan Year in which an Employee first becomes a
Participant, the Plan Administrator will determine the allocation of Employer contributions
(excluding deferral contributions) by taking into account: (Choose one of (d) or (e))





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





© Copyright 2001 Wachovia Bank, National Association






 









 








Allied Capital 401(k) Plan





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




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





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




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





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




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





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




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





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





© Copyright 2001 Wachovia Bank, National Association




2









 








Allied Capital 401(k) Plan





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






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




8.       PREDECESSOR EMPLOYER SERVICE (1.30). In addition to the predecessor service the Plan must credit
by reason of Section 1.30 of the Plan, the Plan credits as Service under this Plan, service with
the following predecessor employer(s): N/A .



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





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





ARTICLE II

ELIGIBILITY REQUIREMENTS



9.       ELIGIBILITY (2.01).



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





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






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






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






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





© Copyright 2001 Wachovia Bank, National Association




3









 









Allied Capital 401(k) Plan





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






	o	 	(d) Service requirements:          .

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




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





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






	 	(1)	 	o Deferral/Employee contributions


     (Choose one of a. through d.)






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






	 	(2)	 	o Matching contributions 

     (Choose one of e. through h.)






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




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





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





© Copyright 2001 Wachovia Bank, National Association




4









 








Allied Capital 401(k) Plan





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






	 	(1)	 	o Deferral contributions






	 	a.	 	o Immediately following or coincident with






	 	(2)	 	o Matching contributions 

     (Choose one of b., c. or d.)






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




the date the Employee completes the eligibility conditions described in this Section 2.01. [Note:
Unless otherwise excluded under Section 1.11, an Employee must become a Participant by the earlier
of: (1) the first day of the Plan Year beginning after the date the Employee completes the age and
service requirements of Code §410(a); or (2) 6 months after the date the Employee completes those
requirements.]



10.     YEAR OF SERVICE — ELIGIBILITY (2.02). (Choose (a) and (b) as applicable): [Note: If the
Employer does not elect a Year of Service condition or elects the Elapsed Time Method, the Employer
should not complete (a) or (b).]





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






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




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





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




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






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





ARTICLE III

EMPLOYER CONTRIBUTIONS, DEFERRAL CONTRIBUTIONS AND FORFEITURES



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





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






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





© Copyright 2001 Wachovia Bank, National Association




5









 








Allied Capital 401(k) Plan





	 	o	 	(2) Fixed. The following amount:           






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






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






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





	 	 	 
	Deferral Contribution Percentage	 	Matching Percentage
	                    
	 	                    
	                    
	 	                    
	                    
	 	                    





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





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






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






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






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




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





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






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





© Copyright 2001 Wachovia Bank, National Association




6









 








Allied Capital 401(k) Plan



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





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






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






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






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






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




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




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





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





	 	 	 
	Deferral Contributions	 	Matching Percentage
	                    
	 	                    
	                    
	 	                    
	                    
	 	                    







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




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





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





© Copyright 2001 Wachovia Bank, National Association




7









 








Allied Capital 401(k) Plan



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





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




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





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






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






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




16.
    CONTRIBUTION ALLOCATION (3.04).



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





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






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






	 	o	 	a.      % of the taxable wage base in effect on the first day of the Plan Year,
rounded to the next highest $      (not exceeding the taxable wage base).
	 
	 	o	 	b. The following integration level:          .

[Note: The integration level cannot exceed the taxable wage base in effect for the
Plan Year for which this Adoption Agreement first is effective.]






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






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






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





© Copyright 2001 Wachovia Bank, National Association




8









 





Allied Capital 401(k) Plan



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





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




Related Employers. (Choose (g) if applicable)





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




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






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






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






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






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






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




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





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




18.     ALLOCATION CONDITIONS (3.06).



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





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





© Copyright 2001 Wachovia Bank, National Association





9











 





Allied Capital 401(k) Plan




	 	 	 
	o

	 	(b) Employment condition. The Participant must be employed by the Employer on the last day of the                     
(designate time period).
	 
	 	 
	o

	 	(c) No allocation conditions.
	 
	 	 
	o

	 	(d) Elapsed Time Method. The Participant must complete at least the specified number (not
exceeding 182) of consecutive calendar days of employment with the Employer during the Plan
Year:                     .
	 
	 	 
	o

	 	(e) Termination of Service/501 Hours of Service coverage rule. The Participant either must be
employed by the Employer on the last day of the Plan Year or must complete at least 501 Hours of
Service during the Plan Year. If the Plan uses the Elapsed Time Method of crediting Service, the
Participant must complete at least 91 consecutive calendar days of employment with the Employer
during the Plan Year.
	 
	 	 
	o

	 	(f) Special allocation conditions for matching contributions. The Participant must complete at
least                      Hours of Service during the                      (designate time period) for the matching contributions made for
that time period.
	 
	 	 
	o

	 	(g) Death, Disability or Normal Retirement Age. Any condition specified in Section 3.06                      applies
if the Participant incurs a Separation from Service during the Plan Year on account of:                      (e.g.,
death, Disability or Normal Retirement Age).
	 
	 	 
	o

	 	(h) Suspension of allocation conditions for coverage. The suspension of allocation conditions
of Plan Section 3.06(E) applies to the Plan.
	 
	 	 
	o

	 	(i) Limited allocation conditions. The Plan does not impose an allocation condition for the
following types of contributions:                     . [Note: Any election to limit the Plan’s allocation conditions
to certain contributions must be the same for all Participants, be definitely determinable and not
discriminate in favor of Highly Compensated Employees.]






ARTICLE IV

PARTICIPANT CONTRIBUTIONS



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




	 	 	 
	þ

	 	(a) Not permitted. The Plan does not permit Employee contributions.
	 
	 	 
	o

	 	(b) Permitted. The Plan permits Employee contributions subject to the following
limitations:                     .
	 

	 	[Note: Any designated limitation(s) must be the same for all Participants,
be definitely determinable and not discriminate in favor of Highly Compensated
Employees.]
	 
	 	 
	o

	 	(c) Matching contribution. For each Plan Year, the Employer’s matching contribution made
with respect to Employee contributions is:                      .






ARTICLE V

VESTING REQUIREMENTS



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




	 	 	 
	þ

	 	(a) Specific age. The date the Participant attains age 65 . [Note: The age may not exceed age 65.]
	 
	 	 
	o

	 	(b) Age/participation. The later of the date the Participant attains                      years of age or the                     
anniversary of the first day of the Plan Year in which the Participant commenced participation in
the Plan. [Note: The age may not exceed age 65 and the anniversary may not exceed the 5th.]
	 
	 	 
	o

	 	(c) Early Retirement Age. Early Retirement Age is the later of: (i) the date a Participant
attains age        or
(ii) the date a Participant reaches his/her                      anniversary of the first day of the
Plan Year in which the Participant commenced participation in the Plan.





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




	 	 	 
	o

	 	(a) Death.
	 
	 	 
	o

	 	(b) Disability.






© Copyright 2001 Wachovia Bank, National Association




10









 








Allied Capital 401(k) Plan



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




	 	 	 
	o

	 	(a) Immediate vesting. 100% Vested at all times. [Note: The Employer must elect (a) if the
Service condition under Section 2.01 exceeds One Year of Service or more than twelve months.]
	 
	 	 
	o

	 	(b) Top-heavy vesting schedules. [Note: The Employer must choose one of (b)(1), (2) or (3) if it
does not elect (a).]






	 	 	 
	o

	 	(1) 6-year graded as specified in the Plan.
	 
	 	 
	o

	 	(2) 3-year cliff as specified in the Plan.
	 
	 	 
	o

	 	(3) Modified top-heavy schedule






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






	 	 	 
	o

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






	 	 	 
	o

	 	(1) 7-year graded as specified in the Plan.
	 
	 	 
	o

	 	(2) 5-year cliff as specified in the Plan.
	 
	 	 
	o

	 	(3) Modified non-top-heavy schedule






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





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




	 	 	 
	o

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






	 	 	 
	o

	 	(1) 100% Vested at all times.






© Copyright 2001 Wachovia Bank, National Association




11









 








Allied Capital 401(k) Plan




	 	 	 
	o

	 	(2) Regular matching vesting schedule:                     .
	 

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






	 	 	 
	o

	 	(e) Application of top-heavy schedule. The non-top-heavy schedule elected under (c) applies
in all Plan Years in which the Plan is not a top-heavy plan. [Note: If the Employer does not
elect (e), the top-heavy vesting schedule will apply for the first Plan Year in which the Plan
is top-heavy and then in all subsequent Plan Years.]
	 
	 	 
	o

	 	(f) Special vesting provisions:                     . [Note: Any special vesting provision must satisfy Code
§411(a). Any special vesting provision must be definitely determinable, not discriminate in
favor of Highly Compensated Employees and not violate Code §401(a)(4).]





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




	 	 	 
	o

	 	(a) Year of Service. An
Employee must complete at least                      Hours of Service during a vesting
computation period to receive credit for a Year of Service under Article V. [Note: The number
may not exceed 1,000. If left blank, the requirement is 1,000.]
	 
	 	 
	o

	 	(b) Vesting computation period. The Plan measures a Year of Service on the basis of the
following 12-consecutive month period: (Choose one of (1) or (2))






	 	 	 
	o

	 	(1) Plan Year.
	 
	 	 
	o

	 	(2) Employment year (anniversary of Employment Commencement Date).





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




	 	 	 
	o

	 	(a) None. None other than as specified in Plan Section 5.08(a).
	 
	 	 
	o

	 	(b) Age 18. Any Year of Service before the Year of Service during which the Participant
attained the age of 18.
	 
	 	 
	o

	 	(c) Prior to Plan establishment. Any Year of Service during the period the Employer did not
maintain this Plan or a predecessor plan.
	 
	 	 
	o

	 	(d) Parity Break in Service. Any Year of Service excluded under the rule of parity. See
Plan Section 5.10.
	 
	 	 
	o

	 	(e) Prior Plan terms. Any Year of Service disregarded under the terms of the Plan as in
effect prior to this restated Plan.
	 
	 	 
	o

	 	(f) Additional exclusions. Any Year of Service before:                     .
	 

	 	[Note: Any exclusion specified under (f) must comply with Code §411(a)(4). Any exclusion
must be definitely determinable, not discriminate in favor of Highly Compensated Employees
and not violate Code §401(a)(4). If the Employer elects immediate vesting, the Employer
should not complete Section 5.08.]






ARTICLE VI

DISTRIBUTION OF ACCOUNT BALANCE



25.      TIME OF PAYMENT OF ACCOUNT BALANCE (6.01). The following time of distribution elections apply
to the Plan:



Separation from Service/Vested Account Balance not exceeding $5,000. Subject to the limitations of
Plan Section 6.01(A)(1), the Trustee will distribute in a lump sum (regardless of the Employer’s
election under Section 6.04) a separated Participant’s Vested Account Balance not exceeding $5,000:
(Choose one of (a) through (d))




	 	 	 
	þ

	 	(a) Immediate. As soon as administratively practicable following the Participant’s Separation
from Service.
	 
	 	 
	o

	 	(b) Designated Plan Year. As
soon as administratively practicable in the                      Plan Year
beginning after the Participant’s Separation from Service.
	 
	 	 
	o

	 	(c) Designated Plan Year
quarter. As soon as administratively practicable in the                      Plan Year
quarter beginning after the Participant’s Separation from Service.
	 
	 	 
	o

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






© Copyright 2001 Wachovia Bank, National Association




12









 








Allied Capital 401(k) Plan



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




	 	 	 
	þ

	 	(e) Immediate. As soon as administratively practicable following the Participant’s Separation
from Service.
	 
	 	 
	o

	 	(f) Designated Plan Year. As
soon as administratively practicable in the
           Plan Year
beginning after the Participant’s Separation from Service.
	 
	 	 
	o

	 	(g) Designated Plan Year
quarter. As soon as administratively practicable in the
           Plan Year
quarter following the Plan Year quarter in which the Participant elects to receive a
distribution.
	 
	 	 
	o

	 	(h) Normal Retirement Age. As soon as administratively practicable after the close of the
Plan Year in which the
Participant attains Normal Retirement Age and within the time required under Plan Section
6.01(A)(2).
	 
	 	 
	o

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

	 	(j) Limitation on Participant’s right to delay distribution. A Participant may not elect to
delay commencement of distribution of his/her Vested Account Balance beyond the later of
attainment of age 62 or Normal Retirement Age.
	 

	 	[Note: If the Employer does not elect (j), the Plan permits a Participant who has Separated
from Service to delay distribution until his/her required beginning date. See Plan Section
6.01(A)(2).]





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




	 	 	 
	o

	 	(k) None. A Participant does not have any distribution option prior to Separation from
Service, except as may be provided under Plan Section 6.01(C).
	 
	 	 
	þ

	 	(l) Deferral contributions. Distribution of all or any portion (as permitted by the Plan) of a
Participant’s Account
Balance attributable to deferral contributions if: (Choose one or more of (1), (2) or (3)
as applicable)






	 	 	 
	þ

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

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

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






	 	 	 
	þ

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






	 	 	 
	þ

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

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






	 	 	 
	þ

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






	 	 	 
	þ

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






	 	 	 
	þ

	 	a. Age. The Participant has attained age 59 1/2 .
	 
	 	 
	o

	 	b. Two-year allocations. The Plan Administrator has allocated the
contributions to be distributed for a period of not less than                      Plan Years before the
distribution date. [Note: The minimum number of years is 2.]
	 
	 	 
	o

	 	c. Five years of participation. The Participant has participated in the
Plan for at least                      Plan Years. [Note: The minimum number of years is 5.]






© Copyright 2001 Wachovia Bank, National Association




13









 








Allied Capital 401(k) Plan




	 	 	 
	o

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






	 	 	 
	o

	 	(2) Hardship. The Participant has incurred a hardship in accordance with Plan
Section 6.09.
	 
	 	 
	þ

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

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

	 	(5) Designated condition. The Participant has satisfied the following condition(s):                     .
	 

	 	[Note: Any designated condition(s) must be the same for all Participants, be definitely
determinable and not discriminate in favor of Highly Compensated Employees.]






	 	 	 
	þ

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






	 	 	 
	o

	 	(1) All Participant contributions.
	 
	 	 
	o

	 	(2) Employee contributions only.
	 
	 	 
	þ

	 	(3) Rollover contributions only.





Participant loan default/offset. See Section 6.08 of the Plan.



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




	 	 	 
	þ

	 	(a) Lump sum.
	 
	 	 
	o

	 	(b) Installments.
	 
	 	 
	o

	 	(c) Installments for required minimum distributions only.
	 
	 	 
	o

	 	(d) Annuity distribution option(s):                     .
	 

	 	[Note: Any optional method of distribution may not be subject to Employer, Plan Administrator
or Trustee discretion.]





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




	 	 	 
	þ

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

	 	(b) Applicable. Apply to all Participants.






ARTICLE IX

PLAN ADMINISTRATOR — DUTIES WITH RESPECT TO PARTICIPANTS’ ACCOUNTS



28.       ALLOCATION OF NET INCOME, GAIN OR LOSS (9.08). For each type of contribution provided under the
Plan, the Plan allocates net income, gain or loss using the following method: (Choose one or more
of (a) through (e) as applicable)




	 	 	 
	þ

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






	 	 	 
	þ

	 	(1) Daily valuation method. Allocate on each business day of the Plan Year during which
Plan assets for which there is an established market are valued and the Trustee is conducting
business.
	 
	 	 
	o

	 	(2) Balance forward method. Allocate using the balance forward method.
	 
	 	 
	o

	 	(3) Weighted average method. Allocate using the weighted average method, based on
the following weighting period:                     . See Plan Section 14.12.






© Copyright 2001 Wachovia Bank, National Association




14









 








Allied Capital 401(k) Plan




	 	 	 
	o

	 	(4) Balance forward method with adjustment. Allocate pursuant to the balance
forward method, except treat as part of the relevant Account at the beginning of the
valuation period                     % of the contributions made during the following valuation period:                     .
	 
	 	 
	o

	 	(5) Individual account method. Allocate using the individual account method. See
Plan Section 9.08.






	 	 	 
	þ

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






	 	 	 
	þ

	 	(1) Daily valuation method. Allocate on each business day of the Plan Year during which
Plan assets for which there is an established market are valued and the Trustee is conducting
business.
	 
	 	 
	o

	 	(2) Balance forward method. Allocate using the balance forward method.
	 
	 	 
	o

	 	(3) Weighted average method. Allocate using the weighted average method, based on
the following weighting period:                     . See Plan Section 14.12.
	 
	 	 
	o

	 	(4) Balance forward method with adjustment. Allocate pursuant to the balance
forward method, except treat as part of the relevant Account at the beginning of the
valuation period                     % of the contributions made during the following valuation period:                     .
	 
	 	 
	o

	 	(5) Individual account method. Allocate using the individual account method. See
Plan Section 9.08.






	 	 	 
	þ

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






	 	 	 
	þ

	 	(1) Daily valuation method. Allocate on each business day of the Plan Year during which
Plan assets for which there is an established market are valued and the Trustee is conducting
business.
	 
	 	 
	o

	 	(2) Balance forward method. Allocate using the balance forward method.
	 
	 	 
	o

	 	(3) Weighted average method. Allocate using the weighted average method, based on
the following weighting period:                     . See Plan Section 14.12.
	 
	 	 
	o

	 	(4) Balance forward method with adjustment. Allocate pursuant to the balance
forward method, except treat as part of the relevant Account at the beginning of the
valuation period                     % of the contributions made during the following valuation period:                     .
	 
	 	 
	o

	 	(5) Individual account method. Allocate using the individual account method. See
Plan Section 9.08.






	 	 	 
	o

	 	(d) Specified method. Allocate pursuant to the following method:                     .
	 

	 	[Note: The specified method must be a definite predetermined formula which is not based on
Compensation, which satisfies the nondiscrimination requirements of Treas. Reg.
§1.401(a)(4) and which is applied uniformly to all Participants.]
	 
	 	 
	o

	 	(e) Interest rate factor. In accordance with Plan Section 9.08(E), the Plan includes
interest at the following rate on distributions made more than 90 days after the most recent
valuation date:                     .






ARTICLE X

TRUSTEE AND CUSTODIAN, POWERS AND DUTIES



29.       INVESTMENT POWERS (10.03). The following additional investment options or limitations apply
under Plan Section 10.03: NA . [Note: Enter “N/A” if not applicable.]



30.       VALUATION OF TRUST (10.15). In addition to the last day of the Plan Year, the Trustee must
value the Trust Fund on the following valuation date(s): (Choose one of (a) through (d))




	 	 	 
	þ

	 	(a) Daily valuation dates. Each business day of the Plan Year on which Plan assets for which
there is an established market are valued and the Trustee is conducting business.
	 
	 	 
	o

	 	(b) Last day of a specified
period. The last day of each                      of the Plan Year.
	 
	 	 
	o

	 	(c) Specified dates:                     .
	 
	 	 
	o

	 	(d) No additional valuation dates.






© Copyright 2001 Wachovia Bank, National Association




15









 








Allied Capital 401(k) Plan




Execution Page




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



	 	 	 	 	 
	 	 	Name of Employer: Allied Capital Corporation
	 	 	Employer’s EIN: 52-1081052
	 	 	Signed:
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	[Name/Title]
	 
	 	 	 	 
	 	 	Name(s) of Trustee:
	 

	 	 	 	  Wachovia Bank, National Association
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	Trust EIN (Optional):
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Signed:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	[Name/Title]
	 
	 	 	 	 
	 

	 	Signed:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	[Name/Title]
	 
	 	 	 	 
	 

	 	Signed:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	[Name/Title]
	 
	 	 	 	 
	 

	 	Signed:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	[Name/Title]
	 
	 	 	 	 
	 

	 	Signed:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	[Name/Title]
	 
	 	 	 	 
	 

	 	Signed:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	[Name/Title]
	 
	 	 	 	 
	 

	 	Signed:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	[Name/Title]
	 
	 	 	 	 
	 

	 	Signed:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	[Name/Title]






© Copyright 2001 Wachovia Bank, National Association




16









 








Allied Capital 401(k) Plan




	 	 	 	 	 
	 	 	Name of Custodian (Optional):
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Signed:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	[Name/Title]





31. Plan Number. The 3-digit plan number the Employer assigns to this Plan for ERISA reporting
purposes (Form 5500 Series) is: 003.



Use of Adoption Agreement. Failure to complete properly the elections in this Adoption Agreement
may result in disqualification of the Employer’s Plan. The Employer only may use this Adoption
Agreement in conjunction with the basic plan document referenced by its document number on Adoption
Agreement page one.



Execution for Page Substitution Amendment Only. If this paragraph is completed, this Execution Page
documents an amendment to Adoption Agreement Section(s)                      effective                     , by substitute Adoption
Agreement page number(s)                     .



Prototype Plan Sponsor. The Prototype Plan Sponsor identified on the first page of the basic plan
document will notify all adopting employers of any amendment of this Prototype Plan or of any
abandonment or discontinuance by the Prototype Plan Sponsor of its maintenance of this Prototype
Plan. For inquiries regarding the adoption of the Prototype Plan, the Prototype Plan Sponsor’s
intended meaning of any Plan provisions or the effect of the opinion letter issued to the Prototype
Plan Sponsor, please contact the Prototype Plan Sponsor at the following address and telephone
number: 1525 West W.T. Harris Blvd., Charlotte, NC 28288, (800) 669-5812.



Reliance on Sponsor Opinion Letter. The Prototype Plan Sponsor has obtained from the IRS an opinion
letter specifying the form of this Adoption Agreement and the basic plan document satisfy, as of
the date of the opinion letter, Code §401. An adopting Employer may rely on the Prototype Sponsor’s
IRS opinion letter only to the extent provided in Announcement 2001-77, 2001-30 I.R.B. The Employer
may not rely on the opinion letter in certain other circumstances or with respect to certain
qualification requirements, which are specified in the opinion letter and in Announcement 2001-77.
In order to have reliance in such circumstances or with respect to such qualification requirements,
the Employer must apply for a determination letter to Employee Plans Determinations of the Internal
Revenue Service.




© Copyright 2001 Wachovia Bank, National Association




17









 








Allied Capital 401(k) Plan




PARTICIPATION AGREEMENT




o Check here if not applicable and do not complete this page.




     The undersigned Employer, by executing this Participation Agreement, elects to become a
Participating Employer in the Plan identified in Section 1.21 of the accompanying Adoption
Agreement, as if the Participating Employer were a signatory to that Adoption Agreement. The
Participating Employer accepts, and agrees to be bound by, all of the elections granted under the
provisions of the Prototype Plan as made by the Signatory Employer to the Execution Page of the
Adoption Agreement, except as otherwise provided in this Participation Agreement.


32. EFFECTIVE DATE (1.10). The Effective Date of the Plan for the Participating Employer is:
January 1, 2008.



33. NEW PLAN/RESTATEMENT. The Participating Employer’s adoption of this Plan constitutes: (Choose
one of (a) or (b))




	 	 	 
	o

	 	(a) The adoption of a new plan by the Participating Employer.
	 
	 	 
	þ

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





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




	 	 	 
	þ

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

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

	 	(c) Contribution
allocation. For contribution allocations under Article III.
	 
	 	 
	o

	 	(d) Exceptions. Except for the following Service:                     .






	 	 	 	 	 
	Name of Plan:	 	Name of Participating Employer:
	 
	 	 	 	 
	Allied Capital 401(k) Plan	 	A.C. Corporation
	 
	 	 	 	 
	 

	 	Signed:	 	 
	 

	 	 	 	 
	 

	 	 	 	[Name/Title]
	 
	 	 	 	 
	 	 	 
	 

	 	 	 	[Date]
	 
	 	 	 	 
	 	 	Participating Employer’s EIN: 52-2316212





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




	 	 	 	 	 	 	 
	Name of Signatory Employer:	 	Name(s) of Trustee:
	Allied Capital Corporation	 	Wachovia Bank, National Association
	 
	 	 	 	 	 	 
	 	 	 
	 

	 	[Name/Title]
	 	 	 	[Name/Title]
	 
	 	 	 	 	 	 
	Signed:

	 	 	 	Signed:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 
	 

	 	[Date]
	 	 	 	[Date]





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




© Copyright 2001 Wachovia Bank, National Association




18









 








Allied Capital 401(k) Plan




APPENDIX A

TESTING ELECTIONS/EFFECTIVE DATE ADDENDUM



35. The following testing elections and special effective dates apply: (Choose one or more of (a)
through (n) as applicable)




	 	 	 
	o

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






	 	 	 
	 

	 	(1) o Top paid group election.
	 
	 	 
	 

	 	(2) o Calendar year data election (fiscal year plan).






	 	 	 
	o

	 	(b) 401(k) current year testing. The Employer will apply the current year testing method in
applying the ADP and
ACP tests effective for Plan Years beginning after:                     . [Note: For Plan Years beginning on or
after the
Employer’s execution of its “GUST” restatement, the Employer must use the same testing
method within the same Plan Year for both the ADP and ACP tests.]
	 
	 	 
	þ

	 	(c) Compensation. The Compensation definition under Section 1.07 will apply for Plan Years
beginning after: 12/31/2007.
	 
	 	 
	o

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

	 	(e) 401(k) safe harbor. The 401(k) safe harbor provisions under Section 3.01(d) are effective:                     .
	 
	 	 
	o

	 	(f) Negative election. The negative election provision under Section 3.02(b) is effective:                     .
	 
	 	 
	o

	 	(g) Contribution/allocation formula. The specified contribution(s) and allocation method(s)
under Sections 3.01 and
3.04 are effective:                     .
	 
	 	 
	o

	 	(h) Allocation conditions. The allocation conditions of Section 3.06 are effective:                    .
	 
	 	 
	þ

	 	(i) Benefit payment elections. The distribution elections of Section(s) 6.01, 6.03, 6.09 are
effective: 01/01/2008.
	 
	 	 
	o

	 	(j) Election to continue pre-SBJPA required beginning date. A Participant may not elect to
defer commencement of the distribution of his/her Vested Account Balance beyond the April 1
following the calendar year in which the Participant attains age 70 1/2. See Plan Section
6.02(A).
	 
	 	 
	o

	 	(k) Elimination of age 70 1/2 in-service distributions. The Plan eliminates a Participant’s
(other than a more than
5% owner) right to receive in-service distributions on April 1 of the calendar year
following the year in which the Participant attains age 70 1/2 for Plan Years beginning
after:                     .
	 
	 	 
	o

	 	(l) Allocation of earnings. The earnings allocation provisions under Section 9.08 are
effective:                     .
	 
	 	 
	þ

	 	(m) Elimination of optional forms of benefit. The Employer elects prospectively to eliminate
the following optional forms of benefit: (Choose one or more of (1), (2) and (3) as applicable)






	 	 	 
	o

	 	(1) QJSA and QPSA benefits as described in Plan Sections 6.04, 6.05 and 6.06
effective:                     .
	 
	 	 
	þ

	 	(2) Installment distributions as described in Section 6.03 effective: 1/1/2008.
	 
	 	 
	o

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






	 	 	 
	o

	 	(n) Special effective date(s):                     .






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



© Copyright 2001 Wachovia Bank, National Association




19









 








Allied Capital 401(k) Plan




APPENDIX B

GUST Remedial Amendment Period Elections



36. The following GUST restatement elections apply: (Choose one or more of (a) through (j) as
applicable)




	 	 	 
	þ

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






	 	 	 	 	 	 	 	 	 
	(1) 1997:

	 	o
	 	Top paid group election.
	 	o
	 	Calendar year election.
	 

	 	o
	 	Calendar year data election.	 	 	 	 
	(2) 1998:

	 	o
	 	Top paid group election.
	 	o
	 	Calendar year data election.
	(3) 1999:

	 	o
	 	Top paid group election.
	 	o
	 	Calendar year data election.
	(4) 2000:

	 	o
	 	Top paid group election.
	 	o
	 	Calendar year data election.
	(5) 2001:

	 	o
	 	Top paid group election.
	 	o
	 	Calendar year data election.
	(6) 2002:

	 	þ
	 	Top paid group election.
	 	o
	 	Calendar year data election.






	 	 	 
	þ

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






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	ADP test	 	 	 	ACP test
	(1)

	 	1997:
	 	o
	 	prior year
	 	o
	 	current year
	 	1997:
	 	o
	 	prior year
	 	o
	 	current year
	(2)

	 	1998:
	 	o
	 	prior year
	 	o
	 	current year
	 	1998:
	 	o
	 	prior year
	 	o
	 	current year
	(3)

	 	1999:
	 	o
	 	prior year
	 	o
	 	current year
	 	1999:
	 	o
	 	prior year
	 	o
	 	current year
	(4)

	 	2000:
	 	o
	 	prior year
	 	o
	 	current year
	 	2000:
	 	o
	 	prior year
	 	o
	 	current year
	(5)

	 	2001:
	 	o
	 	prior year
	 	o
	 	current year
	 	2001:
	 	o
	 	prior year
	 	o
	 	current year
	(6)

	 	2002:
	 	þ
	 	prior year
	 	o
	 	current year
	 	2002:
	 	þ
	 	prior year
	 	o
	 	current year






	 	 	 
	o

	 	(c) Delayed application of SBJPA required beginning date. The Employer elects to delay the
effective date for the required beginning date provision of Plan Section 6.02 until Plan Years
beginning after:                     .
	 
	 	 
	o

	 	(d) Model Amendment for required minimum distributions. The Employer adopts the IRS Model
Amendment in
Plan Section 6.02(E) effective                     . [Note: The date must not be earlier than January 1, 2001.]






Defined Benefit Limitation




	 	 	 
	o

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





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




	 	 	 
	o

	 	(f) The Participant’s projected annual benefit under the defined benefit plan.
	 
	 	 
	o

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





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




	 	 	 
	o

	 	(h) No modifications.
	 
	 	 
	o

	 	(i) For Non-Key Employees participating only in this Plan, the top-heavy minimum allocation
is the minimum allocation determined by substituting
                    % (not less than 4%) for “3%,” except: (Choose one of (1) or (2))






	 	 	 
	o

	 	(1) No exceptions.
	 
	 	 
	o

	 	(2) Plan Years in which the top-heavy ratio exceeds 90%.






	 	 	 
	o

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






	 	 	 
	o

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






	 	 	 
	o

	 	a. No exceptions.
	 
	 	 
	o

	 	b. Substituting “7 1/2%” for “5%” if the top-heavy ratio does not exceed 90%.






	 	 	 
	o

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





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




© Copyright 2001 Wachovia Bank, National Association




20









 








Allied Capital 401(k) Plan




CHECKLIST OF EMPLOYER INFORMATION 

AND
EMPLOYER ADMINISTRATIVE ELECTIONS




Commencing with the 2008 Plan Year




     The Prototype Plan permits the Employer to make certain administrative elections not reflected
in the Adoption Agreement. This form lists those administrative elections and provides a means of
recording the Employer’s elections. This checklist is not part of the Plan document.



	 	 	 	 	 
	37.

	 	Employer Information.	 	 
	 
	 	 	 	 
	 

	 	Allied Capital Corporation	 	 
	 	 	 
	 

	 	[Employer Name]	 	 
	 
	 	 	 	 
	 

	 	1919 Pennsylvania Ave, NW	 	 
	 	 	 
	 

	 	[Address]	 	 
	 
	 

	 	Washington, District of Columbia 20006-3434
	 	202-721-6100
	 

	 	 
	 	 
	 

	 	[City, State and Zip Code]
	 	[Telephone Number]
	 
	 	 	 	 
	38.

	 	Form of Business.	 	 
	 
	 

	 	(a) þ Corporation
	 	(b) o S Corporation
	 

	 	(c) o Limited Liability Company
	 	(d) o Sole Proprietorship
	 

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






© Copyright 2001 Wachovia Bank, National Association





21












 





EGTRRA

AMENDMENT TO THE




ALLIED CAPITAL 401(K) PLAN




 









 





EGTRRA — Employer




ARTICLE I

PREAMBLE





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





ARTICLE II

ADOPTION AGREEMENT ELECTIONS





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




Unless the employer elects otherwise in this Article II, the following defaults apply:




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






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





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







If the plan does not have a graded vesting schedule, then matching contributions will be
nonforfeitable upon the completion of 3 years of vesting service.




In lieu of the above vesting schedule, the employer elects the following schedule:



	 	 	 	 	 	 	 
	 

	 	a.
	 	o
	 	3 year cliff (a participant’s accrued benefit derived from employer matching contributions shall be
nonforfeitable upon the participant’s completion of three years of vesting service).
	 
	 	 	 	 	 	 
	 

	 	b.
	 	o
	 	6 year graded schedule (20% after 2 years of vesting service and an additional 20% for each year
thereafter).
	 
	 	 	 	 	 	 
	 

	 	c.
	 	o
	 	Other (must be at least as liberal as a. or the b. above):






© Copyright 2002 Wachovia Bank, National Association




1









 





EGTRRA — Employer




	 	 	 
	Years of vesting service	 	Nonforfeitable percentage
	                    
	 	                    %
	                    
	 	                    %
	                    
	 	                    %
	                    
	 	                    %
	                    
	 	                    %







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



	 	 	 	 	 	 	 
	 

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







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





	 	 	 	 	 	 	 
	 

	 	a.
	 	o
	 	Rollover contributions will not be excluded.
	 
	 	 	 	 	 	 
	 

	 	b.
	 	o
	 	Rollover contributions will be
excluded only with respect to distributions made after ___. (Enter a date
no earlier than December 31, 2001.)
	 
	 	 	 	 	 	 
	 

	 	c.
	 	þ
	 	Rollover contributions will only be excluded with respect to participants who separated from service after
December 31, 2001 . (Enter a date. The date may be earlier than December 31, 2001.)







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





	 	 	 	 	 	 	 
	 

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







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





	 	 	 	 	 	 	 
	 

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







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





	 	 	 	 	 	 	 
	 

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






ARTICLE III

VESTING OF MATCHING CONTRIBUTIONS





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





ARTICLE IV

INVOLUNTARY CASH-OUTS





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





© Copyright 2002 Wachovia Bank, National Association




2









 





EGTRRA — Employer





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



ARTICLE V

HARDSHIP DISTRIBUTIONS





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





ARTICLE VI

CATCH-UP CONTRIBUTIONS



Catch-up Contributions. Unless otherwise elected in Section 2.4 of this amendment, all
employees who are eligible to make elective deferrals under this plan and who have attained age 50
before the close of the plan year shall be eligible to make catch-up contributions in accordance
with, and subject to the limitations of, Section 414(v) of the Code. Such catch-up contributions
shall not be taken into account for purposes of the provisions of the plan implementing the
required limitations of Sections 402(g) and 415 of the Code. The plan shall not be treated as
failing to satisfy the provisions of the plan implementing the requirements of Section 401(k)(3),
401(k)(11), 401(k)(12), 410(b), or 416 of the Code, as applicable, by reason of the making of such
catch-up contributions.




ARTICLE VII

INCREASE IN COMPENSATION LIMIT



Increase in Compensation Limit. The annual compensation of each participant taken into
account in determining allocations for any plan year beginning after December 31, 2001, shall not
exceed $200,000, as adjusted for cost-of-living increases in accordance with Section 401(a)(17)(B)
of the Code. Annual compensation means compensation during the plan year or such other consecutive
12-month period over which compensation is otherwise determined under the plan (the determination
period). If this is a target benefit plan, then except as otherwise elected in Section 2.5 of this
amendment, for purposes of determining benefit accruals in a plan year beginning after December 31,
2001, compensation for any prior determination period shall be limited to $200,000. The
cost-of-living adjustment in effect for a calendar year applies to annual compensation for the
determination period that begins with or within such calendar year.




ARTICLE VIII

PLAN LOANS



Plan loans for owner-employees or shareholder-employees. If the plan permits loans to be
made to participants, then effective for plan loans made after December 31, 2001, plan provisions
prohibiting loans to any owner-employee or shareholder-employee shall cease to apply.




ARTICLE IX

LIMITATIONS ON CONTRIBUTIONS (IRC SECTION 415 LIMITS)





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






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





© Copyright 2002 Wachovia Bank, National Association




3









 





EGTRRA — Employer





The compensation limit referred to in b. shall not apply to any contribution for medical
benefits after separation from service (within the meaning of Section 401(h) or Section
419A(f)(2) of the Code) which is otherwise treated as an annual addition.



ARTICLE X

MODIFICATION OF TOP-HEAVY RULES





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






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






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





ARTICLE XI

DIRECT ROLLOVERS





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





© Copyright 2002 Wachovia Bank, National Association




4









 





EGTRRA — Employer





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





ARTICLE XII

ROLLOVERS FROM OTHER PLANS



Rollovers from other plans. The employer, operationally and on a nondiscriminatory basis,
may limit the source of rollover contributions that may be accepted by this plan.




ARTICLE XIII

REPEAL OF MULTIPLE USE TEST



Repeal of Multiple Use Test. The multiple use test described in Treasury Regulation Section
1.401(m)-2 and the plan shall not apply for plan years beginning after December 31, 2001.




ARTICLE XIV

ELECTIVE DEFERRALS





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





ARTICLE XV

SAFE HARBOR PLAN PROVISIONS



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




ARTICLE XVI

DISTRIBUTION UPON SEVERANCE OF EMPLOYMENT





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





© Copyright 2002 Wachovia Bank, National Association




5









 





EGTRRA — Employer




This amendment has been executed this                                         day of                         
                ,                     .




Name of Employer:      Allied Capital Corporation




By:      
               
               
              
           
              
             
        



     
               
               
  EMPLOYER




Name of Plan: Allied Capital 401(k) Plan




© Copyright 2002 Wachovia Bank, National Association





6











 





POST-EGTRRA

AMENDMENT TO THE




ALLIED CAPITAL 401(K) PLAN




 









 








POST-EGTRRA — Employer




ARTICLE I

PREAMBLE





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





ARTICLE II

ADOPTION AGREEMENT ELECTIONS





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






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






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






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






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






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






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






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






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






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





ARTICLE III

INVOLUNTARY CASH-OUTS





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




©
Copyright 2003 Wachovia Bank, National Association



1









 











POST-EGTRRA — Employer





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





ARTICLE IV

HARDSHIP DISTRIBUTIONS



Reduction of Section 402(g) of the Code following hardship distribution. If the plan provides for
hardship distributions upon satisfaction of the safe harbor (deemed) standards as set forth in
Treas. Reg. Section 1.401(k)-1(d)(2)(iv), then effective as of the date the elective deferral
suspension period is reduced from 12 months to 6 months pursuant to EGTRRA, there shall be no
reduction in the maximum amount of elective deferrals that a Participant may make pursuant to
Section 402(g) of the Code solely because of a hardship distribution made by this plan or any other
plan of the Employer.




ARTICLE V

CATCH-UP CONTRIBUTIONS



Catch-up Contributions. Unless otherwise elected in Section 2.2 of this amendment, effective for
calendar years beginning after December 31, 2001, all employees who are eligible to make elective
deferrals under this plan and who have attained age 50 before the close of the calendar year shall
be eligible to make catch-up contributions in accordance with, and subject to the limitations of,
Section 414(v) of the Code. Such catch-up contributions shall not be taken into account for
purposes of the provisions of the plan implementing the required limitations of Sections 402(g) and
415 of the Code. The plan shall not be treated as failing to satisfy the provisions of the plan
implementing the requirements of Sections 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416 of the
Code, as applicable, by reason of the making of such
catch-up contributions.



If elected in Section 2.2, catch-up contributions shall not be treated as elective deferrals for
purposes of applying any Employer matching contributions under the plan.




ARTICLE VI

DEEMED 125 COMPENSATION



If elected, this Article shall apply as of the effective date specified in Section 2.3 of this
amendment. For purposes of any definition of compensation under this Plan that includes a reference
to amounts under Section 125 of the Code, amounts under Section 125 of the Code include any amounts
not available to a Participant in cash in lieu of group health coverage because the Participant is
unable to certify that he or she has other health coverage. An amount will be treated as an amount
under Section 125 of the Code only if the Employer does not request or collect information
regarding the Participant’s other health coverage as part of the enrollment process for the health
plan.



This amendment has been executed this                                          day of                                                                                 ,                    .




Name of Plan: Allied Capital 401(k) Plan




Name of Employer: Allied Capital Corporation




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

EMPLOYER
	 	 





©
Copyright 2003 Wachovia Bank, National Association




2









 






401(a)(9) MODEL

AMENDMENT TO THE




ALLIED CAPITAL 401(K) PLAN




 









 





401(a)(9) — Sponsor




MINIMUM DISTRIBUTION REQUIREMENTS AMENDMENT




ARTICLE I

GENERAL RULES





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





ARTICLE II

TIME AND MANNER OF DISTRIBUTION





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






(a) If the Participant’s surviving spouse is the Participant’s sole designated beneficiary,
then, except as provided in Article VI, distributions to the surviving spouse will begin by
December 31 of the calendar year immediately following the calendar year in which the
Participant died, or by December 31 of the calendar year in which the Participant would
have attained age 70 1/2, if later.




(b) If the Participant’s surviving spouse is not the Participant’s sole designated
beneficiary, then, except as provided in Article VI, distributions to the designated
beneficiary will begin by December 31 of the calendar year immediately following the
calendar year in which the Participant died.




(c) If there is no designated beneficiary as of September 30 of the year following the year
of the Participant’s death, the Participant’s entire interest will be distributed by
December 31 of the calendar year containing the fifth anniversary of the Participant’s
death.




(d) If the Participant’s surviving spouse is the Participant’s sole designated beneficiary
and the surviving spouse dies after the Participant but before distributions to the
surviving spouse begin, this Section 2.2, other than Section 2.2(a), will apply as if the
surviving spouse were the Participant.


©
Copyright 2003 Wachovia Bank, National Association




1









 





401(a)(9) — Sponsor





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





ARTICLE III

REQUIRED MINIMUM DISTRIBUTIONS DURING PARTICIPANT’S LIFETIME





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






(a) the quotient obtained by dividing the Participant’s account balance by the distribution
period in the Uniform Lifetime Table set forth in Section 1.401(a)(9)-9 of the Treasury
regulations, using the Participant’s age as of the Participant’s birthday in the
distribution calendar year; or




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




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





ARTICLE IV

REQUIRED MINIMUM DISTRIBUTIONS AFTER PARTICIPANT’S DEATH





	4.1	 	Death On or After Date Distributions Begin.






(a) Participant Survived by Designated Beneficiary. If the Participant dies on or after the
date distributions begin and there is a designated beneficiary, the minimum amount that
will be distributed for each distribution calendar year after the year of the Participant’s
death is the quotient obtained by dividing the Participant’s account balance by the longer
of the remaining life expectancy of the Participant or the remaining life expectancy of the
Participant’s designated beneficiary, determined as follows:




(1) The Participant’s remaining life expectancy is calculated using the age of the
Participant in the year of death, reduced by one for each subsequent year.




(2) If the Participant’s surviving spouse is the Participant’s sole designated
beneficiary, the remaining life expectancy of the surviving spouse is calculated for
each distribution calendar year after the year of the Participant’s death using the
surviving spouse’s age as of the spouse’s birthday in that year. For distribution
calendar years after the year of the surviving spouse’s death, the remaining life
expectancy of the surviving spouse is calculated using the age of the surviving spouse
as of the spouse’s birthday in the calendar year of the spouse’s death, reduced by one
for each subsequent calendar year.




(3) If the Participant’s surviving spouse is not the Participant’s sole designated
beneficiary, the designated beneficiary’s remaining life expectancy is calculated
using the age of the beneficiary in the year following the year of the Participant’s
death, reduced by one for each subsequent year.


©
Copyright 2003 Wachovia Bank, National Association




2









 





401(a)(9) — Sponsor





(b) No Designated Beneficiary. If the Participant dies on or after the date distributions
begin and there is no designated beneficiary as of September 30 of the year after the year
of the Participant’s death, the minimum amount that will be distributed for each
distribution calendar year after the year of the Participant’s death is the quotient
obtained by dividing the Participant’s account balance by the Participant’s remaining life
expectancy calculated using the age of the Participant in the year of death, reduced by one
for each subsequent year.




	4.2	 	Death Before Date Distributions Begin.






(a) Participant Survived by Designated Beneficiary. Except as provided in Article VI, if
the Participant dies before the date distributions begin and there is a designated
beneficiary, the minimum amount that will be distributed for each distribution calendar
year after the year of the Participant’s death is the quotient obtained by dividing the
Participant’s account balance by the remaining life expectancy of the Participant’s
designated beneficiary, determined as provided in Section 4.1.




(b) No Designated Beneficiary. If the Participant dies before the date distributions begin
and there is no designated beneficiary as of September 30 of the year following the year of
the Participant’s death, distribution of the Participant’s entire interest will be
completed by December 31 of the calendar year containing the fifth anniversary of the
Participant’s death.




(c) Death of Surviving Spouse Before Distributions to Surviving Spouse Are Required to
Begin. If the Participant dies before the date distributions begin, the Participant’s
surviving spouse is the Participant’s sole designated beneficiary, and if the surviving
spouse dies before distributions are required to begin to the surviving spouse under
Section 2.2(a), this Section 4.2 will apply as if the surviving spouse were the
Participant.



ARTICLE V

DEFINITIONS





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





ARTICLE VI

ADOPTION AGREEMENT ELECTIONS



The questions in this Article VI only need to be completed in order to override the default
provisions set forth below. If all of the default provisions will apply, then these questions
should be skipped.



Unless the employer elects otherwise in this Article VI, the following defaults apply:





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




©
Copyright 2003 Wachovia Bank, National Association




3









 











401(a)(9) — Sponsor





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






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






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





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






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






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






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






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






	 	o 	 	All distributions.
	 
	 	o	 	 The following distributions:___.






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






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




Except with respect to any election made by the employer in Article VI, this amendment is hereby
adopted by the prototype


sponsoring organization on behalf of all adopting employers on:




[Sponsor’s signature and Adoption Date are on file with Sponsor]




NOTE: The employer only needs to execute this amendment if an election has been made in Article VI
of this amendment.



©
Copyright 2003 Wachovia Bank, National Association




4









 





401(a)(9) — Sponsor



This
amendment has been executed this                                          day of                                                                                 ,                     .




Name of Plan: Allied Capital 401(k) Plan




Name of Employer: Allied Capital Corporation




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

EMPLOYER
	 	 





©
Copyright 2003 Wachovia Bank, National Association




5











 





Sponsor — lower cash-out threshold




MANDATORY DISTRIBUTION AMENDMENT



(Code Section 401(a)(31)(B))




ARTICLE I



APPLICATION OF AMENDMENT





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





ARTICLE II



DEFAULT PROVISION: LOWER MANDATORY CASH-OUT



THRESHOLD TO $1,000



Unless the Employer otherwise elects in Article III of this Amendment, the provisions of the Plan
for the mandatory distribution of amounts not exceeding $5,000, are amended as follows:



The $5,000 threshold in such provisions is reduced to $1,000 and the value of the Participant’s
interest in the Plan for such purpose shall include any rollover contributions (and earnings
thereon) within the meaning of Code Sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and
457(e)(16).




ARTICLE III



EMPLOYER’S ALTERNATIVE ELECTIONS





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






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





©
Copyright 2005 Wachovia Bank, National Association




1









 








Sponsor — lower cash-out threshold





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






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




Except with respect to any election made by the employer in Article III, this amendment is hereby
adopted by the prototype sponsor on behalf of all adopting employers on:



[Sponsor’s signature and Adoption Date are on file with Sponsor]



NOTE: The employer only needs to execute this amendment if an election has been made in Article III
herein.



This amendment has been executed this                      day of                     ,       .



Name of Plan: Allied Capital 401(k) Plan



Name of Employer: Allied Capital Corporation



By:                                                             



                    EMPLOYER




©
Copyright 2005 Wachovia Bank, National Association






2









 








ROTH Amendment




ROTH 401(k) AMENDMENT




ARTICLE I

PREAMBLE





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





ARTICLE II



ADOPTION AGREEMENT ELECTIONS





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






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






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






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






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





ARTICLE III


ROTH ELECTIVE DEFERRALS





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





© Copyright 2006 Wachovia Bank, National Association




1









 








ROTH Amendment





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




This amendment has been executed this                      day of                     ,      .



Name of Plan: Allied Capital 401(k) Plan



Name of Employer: Allied Capital Corporation



By:                                                                                 



                              EMPLOYER




© Copyright 2006 Wachovia Bank, National Association




2









 








Final 401(k) Amendment — Sponsor




FINAL 401(k)/401(m) REGULATIONS AMENDMENT




ARTICLE I

PREAMBLE





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





ARTICLE II 

EMPLOYER ELECTIONS





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






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






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






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





ARTICLE III

GENERAL RULES





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





© Copyright 2006 Wachovia Bank, National Association




1









 








Final 401(k) Amendment — Sponsor




ARTICLE IV



HARDSHIP DISTRIBUTIONS





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






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






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





ARTICLE V



ACTUAL DEFERRAL PERCENTAGE (ADP) TEST





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






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






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





© Copyright 2006 Wachovia Bank, National Association





2









 








Final 401(k) Amendment — Sponsor





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






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





ARTICLE VI



ADJUSTMENT TO ADP TEST




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






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





© Copyright 2006 Wachovia Bank, National Association






3









 








Final 401(k) Amendment — Sponsor





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






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






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





ARTICLE VII



ACTUAL CONTRIBUTION PERCENTAGE (ACP) TEST





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






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






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





© Copyright 2006 Wachovia Bank, National Association





4









 








Final 401(k) Amendment — Sponsor





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






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






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






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





ARTICLE VIII

ADJUSTMENT TO ACP TEST





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





© Copyright 2006 Wachovia Bank, National Association




5









 








Final 401(k) Amendment — Sponsor




ARTICLE IX



SAFE HARBOR PLAN PROVISIONS





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






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






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






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






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





© Copyright 2006 Wachovia Bank, National Association





6









 








Final 401(k) Amendment — Sponsor





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






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






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




Except with respect to any election made by the employer in Article II, this amendment is hereby
adopted by the prototype sponsor on behalf of all adopting employers on:



[Sponsor’s signature and Adoption Date are on file with Sponsor]



NOTE: The Employer only needs to execute this Amendment if an election has been made in Article
II of this Amendment.



This amendment has been executed this                      day of                     ,      .



Name of Plan: Allied Capital 401(k) Plan



Name of Employer: Allied Capital Corporation



By:                                                             



                         EMPLOYER




© Copyright 2006 Wachovia Bank, National Association





7