Committee after consideration of the compensation levels of executives at other similarlysituated New York Stock Exchange-listed companies and appropriate consultation with you.Your Base Compensation shall be paid in equal biweekly installments, less deductionsrequired by law.3. You and the Company hereby delete in its entirety Section 5(b)(iii) of the 2008 EmploymentAgreement and substitute the following language in its place:(iii) you cease to be the Chairman of the Board of Directors.4. **Change in Position****.**As of the Effective Date set forth above, you shall cease to be theCompany’s Chief Executive Officer.5. **Waiver and Release****.**The Employment Agreement, the First Amendment, the Second Amendmentand the Third Amendment shall be referred to collectively as the “2009 Employment Agreement.” Youhereby forever waive and release any claim that the changes made in this Third Amendment constitute“Good Reason” under Section 5(b) of the 2008 Employment Agreement. You further hereby foreverwaive and release any claim that the changes made in this Third Amendment constitute “Good Reason”under Section 5(b) of the 2009 Employment Agreement.6. **Knowing and Voluntary****.**Each party has read and fully understands this Third Amendmentand has consulted with counsel of its own choosing before entering into this Third Amendment.Each party has had a reasonable time to consider this Third Amendment and is entering into itknowingly and voluntarily without any duress or coercion.7. **Complete Agreement****.**This Third Amendment constitutes the entire agreement between youand the Company regarding the amendment of Sections 1(a), 3(a), and 5(b)(iii) of the 2008Employment Agreement and supersedes all prior agreements and understandings between you and theCompany regarding Sections 1(a), 3(a), and 5(b)(iii) of the 2008 Employment Agreement. In makingthis Third Amendment, the parties warrant that they did not rely on any representations orstatements other than those contained in this Third Amendment. This Third Amendment may not beamended except by an instrument in writing signed by you and by the Chair of Company’s CompensationCommittee on behalf of the Company.8. **Conflict of Terms**. In the event of a conflict or inconsistency between the 2008Employment Agreement and this Third Amendment, this Third Amendment shall control and govern therights and obligations of the parties.9. **Construction****.**In the event an ambiguity or question of intent or interpretationarises, this Third Amendment shall be construed as if drafted jointly by the parties and nopresumption or burden of proof shall arise favoring or disfavoring either party by virtue of theauthorship of any of the provisions of this Third Amendment.
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10. **Execution****.**This Third Amendment may be executed in two or more counterparts, eachof which shall be deemed an original but all of which together shall constitute one and the sameinstrument. This Third Amendment may be executed by facsimile signatures.IN WITNESS WHEREOF, each of the parties has executed this Third Amendment, in the case of theCompany by its authorized officer, as of the day and year set forth under their signatures below.         ALLIED CAPITAL CORPORATION         /s/ William L. Walton  BY: /s/ Anthony T. Garcia    William L. Walton Anthony T. Garcia    Compensation Committee Chair  
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