##### 









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-K/A


Amendment No. 1




| |   |                                                                                         
| | - | ----------------------------------------------------------------------------------------
| | x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2006


OR




| |   |                                                                                             
| | - | --------------------------------------------------------------------------------------------
| | o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

Commission File
No. 0-22832


ALLIED CAPITAL CORPORATION


(Exact Name of Registrant as specified in its Charter)


|                                                   |  |                                         
|-------------------------------------------------- |  | ----------------------------------------
|Maryland                                           |  | 52-1081052                              
|(State or Other Jurisdiction
    of Incorporation) |  | (I.R.S. Employer
    Identification No.)
|                                                  
|1919 Pennsylvania Avenue NW
    Washington, D.C.   |  | 20006                                   
|(Address of Principal Executive Office)            |  | (Zip Code)                              

Registrants Telephone Number, Including Area Code:
(202) 721-6100


Securities Registered Pursuant to Section 12(b) of the
Act:


|                                |  |                        
|------------------------------- |  | -----------------------
|                                |  | Name of Each Exchange  
|Title of Each Class             |  | On Which Registered    
|                                |  |                        
|Common Stock, $0.0001 par value |  | New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the
Act:


NONE


o x


o x


x o


o


12b-2  x o o


o x




DOCUMENTS INCORPORATED BY REFERENCE












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##### 



PRELIMINARY NOTE


10-K/A 10-K


10-K 10-K. 10-K.


10-K/A,


PART III


Item 11. Executive Compensation.


COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS




2



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##### 



DIRECTOR COMPENSATION




|                         |  |           |         |  |        |  |     |           |            |               |                |          |  |              |     |              |  |       |   |  |  |   |   |  |  |   |         | 
|------------------------ |  | --------- | ------- |  | ------ |  | --- | --------- | ---------- | ------------- | -------------- | -------- |  | ------------ | --- | ------------ |  | ----- | - |  |  | - | - |  |  | - | ------- | 
|                         |  |           |         |  |        |  |     |           |            | Change in     |                |          |  |             
|                         |  |           |         |  |        |  |     |           |            | Pension Value |                |          |  |             
|                         |  |           |         |  |        |  |     |           |            | and Non-      |                |          |  |             
|                         |  | Fees      |         |  |        |  |     |           |            |               | Qualified      |          |  |              |    
|                         |  | Earned or |         |  |        |  |     |           | Non-Equity |               |                | Deferred |  |              |     |             
|                         |  | Paid in   |         |  | Stock  |  |     | Option    |            |               | Incentive Plan |          |  | Compensation |     | All Other    |  |      
|Name                     |  | Cash      |         |  | Awards |  |     | Awards(1) |            |               | Compensation   |          |  | Earnings(4)  |     | Compensation |  | Total |  
|                         |  |           |         |  |        |  |     |           |            |               |                |          |  |              |     |              |  |       |  
|Interested Directors     |  |           |         |  |        |  |     |           |            |               |                |          |  |              |     |              |  |       |   |  |  |   |   |  |  |   |         | 
|William L.
    Walton(2) |  | $         |        |  |        |  | n/a |           |            | $             |               |          |  |              | n/a |              |  | $     |  |  |  | $ |  |  |  | $ |        | 
|Joan M.
    Sweeney(2)   |  | $         |        |  |        |  | n/a |           |            | $             |               |          |  |              | n/a |              |  | $     |  |  |  | $ |  |  |  | $ |        | 
|Robert E. Long           |  | $         | 109,000 |  |        |  | n/a |           |            | $             | 18,169         |          |  |              | n/a |              |  | $     |  |  |  | $ |  |  |  | $ | 127,169 | 
|Independent Directors    |  |           |         |  |        |  |     |           |            |               |                |          |  |              |     |              |  |       |   |  |  |   |   |  |  |   |         | 
|Ann Torre Bates          |  | $         | 84,000  |  |        |  | n/a |           |            | $             | 18,169         |          |  |              | n/a |              |  | $     |  |  |  | $ |  |  |  | $ | 102,169 | 
|Brooks H. Browne         |  | $         | 102,000 |  |        |  | n/a |           |            | $             | 18,169         |          |  |              | n/a |              |  | $     |  |  |  | $ |  |  |  | $ | 120,169 | 
|John D. Firestone        |  | $         | 66,000  |  |        |  | n/a |           |            | $             | 18,169         |          |  |              | n/a |              |  | $     |  |  |  | $ |  |  |  | $ | 84,169  | 
|Anthony T. Garcia        |  | $         | 102,000 |  |        |  | n/a |           |            | $             | 18,169         |          |  |              | n/a |              |  | $     |  |  |  | $ |  |  |  | $ | 120,169 | 
|Edwin L. Harper          |  | $         | 86,500  |  |        |  | n/a |           |            | $             | 36,337         | (3)      |  |              | n/a |              |  | $     |  |  |  | $ |  |  |  | $ | 122,837 | 
|Lawrence I. Hebert       |  | $         | 126,500 |  |        |  | n/a |           |            | $             | 18,169         |          |  |              | n/a |              |  | $     |  |  |  | $ |  |  |  | $ | 144,669 | 
|John I. Leahy            |  | $         | 138,000 |  |        |  | n/a |           |            | $             | 18,169         |          |  |              | n/a |              |  | $     |  |  |  | $ |  |  |  | $ | 156,169 | 
|Alex J. Pollock          |  | $         | 115,500 |  |        |  | n/a |           |            | $             | 18,169         |          |  |              | n/a |              |  | $     |  |  |  | $ |  |  |  | $ | 133,669 | 
|Marc F. Racicot          |  | $         | 64,000  |  |        |  | n/a |           |            | $             | 18,169         |          |  |              | n/a |              |  | $     |  |  |  | $ |  |  |  | $ | 82,169  | 
|Guy T. Steuart II        |  | $         | 106,500 |  |        |  | n/a |           |            | $             | 18,169         |          |  |              | n/a |              |  | $     |  |  |  | $ |  |  |  | $ | 124,669 | 
|Laura W. van Roijen      |  | $         | 79,000  |  |        |  | n/a |           |            | $             | 18,169         |          |  |              | n/a |              |  | $     |  |  |  | $ |  |  |  | $ | 97,169  | 




|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Reflects the annual grant of 5,000 options. Options granted vest
    immediately. The fair value of the options was estimated on the
    grant date for financial reporting purposes using the
    Black-Scholes option pricing model and pursuant to the
    requirements of FASB Statement No. 123 (Revised) (FAS
    123R). See Note 2 to our consolidated financial statements
    for the assumptions used in determining FAS 123R values.
|   
|(2) | Mr. Walton and Ms. Sweeney did not receive any
    compensation for serving on the Board of Directors. See
    Executive Compensation  Summary
    Compensation below.                                                                                                                                                                                                                                                                      
|   
|(3) | Reflects the grant of 10,000 options made upon
    Mr. Harpers initial election to the Board.                                                                                                                                                                                                                                                                                                                                                 
|   
|(4) | There were no above market or preferential earnings on the
    non-qualified deferred compensation plans. See
    Non-Qualified Deferred Compensation below.                                                                                                                                                                                                                                                                                 







3



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##### 



EXECUTIVE COMPENSATION


Compensation Discussion and Analysis


Overview of the Compensation
Program


Compensation Philosophy.






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Competitiveness and Market Alignment  Our
    compensation and benefits programs are designed to be
    competitive with those provided by companies with whom we
    compete for talent and to be sufficient to attract the best
    talent from an increasingly competitive market for top
    performers in the private equity industry. In general, programs
    are considered competitive when they are in a range between the
    median (50th percentile) and 75th percentile of market
    compensation levels as measured against similarly situated
    competitor companies. Benefit programs are designed to provide
    competitive levels of protection and financial security and are
    not based on performance. As part of its annual review process,
    the Committee reviews the competitiveness of our current
    compensation levels of its key employees and executives with a
    third-party compensation consultant against the competitive
    market and relative to overall corporate performance during the
    year.
|
| |  | Achievement of Corporate and Individual Performance
    Objectives  We believe that the best way to
    accomplish alignment of compensation with the interests of our
    stockholders is to link pay to individual performance and
    individual contributions to the returns generated for
    stockholders. Compensation is determined by the Compensation
    Committee on a discretionary basis and is dependent on the
    achievement of certain corporate and executive performance
    objectives that have been established to achieve long-term
    objectives of Allied Capital. When individual performance
    exceeds expectations and performance goals established during
    the year, pay levels for the individual are expected to be above
    competitive market levels. When individual performance falls
    below expectations, pay levels are expected to be below
    competitive levels.                                                                                                                                 
|
| |  | Alignment with Requirements of the 1940 Act 
    Our compensation program must align with the requirements of the
    1940 Act, which imposes certain limitations on the structure of
    a BDCs compensation program. For example, the 1940 Act
    prohibits a BDC from maintaining a stock option plan and a
    profit sharing arrangement simultaneously. As a result, if a BDC
    has a stock option plan, it is prohibited from using a carried
    interest formula, a common form of compensation in the private
    equity industry, as a form of compensation. Because of these and
    other similar limitations imposed by the 1940 Act, the
    Compensation Committee is limited as to the type of compensation
    arrangements that can be utilized in order to attract, retain
    and motivate employees.                                                                                                                                                                                                                         

Components of Total Compensation.




| |   |                                                                                                                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Annual base salary;                                                                                                                                                                                                                                                                                               
|
| |  | Annual cash bonus;                                                                                                                                                                                                                                                                                                
|
| |  | Stock options, priced at current market value;                                                                                                                                                                                                                                                                    
|
| |  | Individual Performance Award (IPA), which is a cash award that
    is generally determined at the beginning of the year based upon
    the individual performance of the officer, which is used
    exclusively to purchase shares of our common stock in the market
    through a deferred compensation plan; and

4



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##### 





| |   |                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Individual Performance Bonus (IPB), which is a cash award that
    is generally determined at the beginning of the year based upon
    the individual performance of the officer and is paid as current
    compensation during the year.

Base Salary.




Annual Cash Bonus.


Stock Options.


IPA and IPB.




5



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##### 





Employment Agreements and Severance Arrangements.


401(k) Plan.


Insurance.


Perquisites.


Establishing Compensation
Levels


Role of the Compensation Committee and Management. 16b-3




6



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##### 







Company Compensation Policies.


Assessment of Market Data, Peer Comparisons and
Benchmarking of Compensation.


th


Assessment of Company Performance.


Compensation
Determination




7



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##### 















Determination of 2006 Compensation for the CEO and other
NEOs.






8



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##### 













Determination of 2007 IPA and 2007 IPB for NEOs.






Stock
Option Practices




9



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##### 





Stock
Ownership Initiative




Impact
of Regulatory Requirements  Tax Deductibility of
Pay




10



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##### 



Summary Compensation




|                                               |  |      |      |  |        |   |           |          |  |   |           |            |  |               |           |  |              |   |         |             |  |  |                 |  |  |       |     |  |  |   |         |  |  |   |           | 
|---------------------------------------------- |  | ---- | ---- |  | ------ | - | --------- | -------- |  | - | --------- | ---------- |  | ------------- | --------- |  | ------------ | - | ------- | ----------- |  |  | --------------- |  |  | ----- | --- |  |  | - | ------- |  |  | - | --------- | 
|                                               |  |      |      |  |        |   |           |          |  |   |           |            |  | Change in     |           |  |              |   |        
|                                               |  |      |      |  |        |   |           |          |  |   |           |            |  | Pension Value |           |  |              |   |        
|                                               |  |      |      |  |        |   |           |          |  |   |           |            |  | and Non-      |           |  |              |   |        
|                                               |  |      |      |  |        |   |           |          |  |   |           | Non-Equity |  |               | Qualified |  |              |   |         |            
|                                               |  |      |      |  |        |   |           |          |  |   |           | Incentive  |  |               | Deferred  |  |              |   |         |            
|Name and Principal                             |  |      |      |  |        |   |           | Stock    |  |   | Option    |            |  | Plan          |           |  | Compensation |   |         | All Other   |  |  |                
|Position                                       |  | Year |      |  | Salary |   |           | Bonus(1) |  |   | Awards    |            |  | Awards(2)     |           |  | Compensation |   |         | Earnings(3) |  |  | Compensation(4) |  |  | Total |    
|                                               |  |      |      |  |        |   |           |          |  |   |           |            |  |               |           |  |              |   |         |             |  |  |                 |  |  |       |    
|William L. Walton,
    Chief Executive Officer |  |      | 2006 |  |        | $ | 1,500,000 |          |  | $ | 5,700,000 |            |  |               | n/a       |  |              | $ | 421,142 |             |  |  | n/a             |  |  |       | n/a |  |  | $ | 250,763 |  |  | $ | 7,871,905 | 
|Joan M. Sweeney,
    Chief Operating Officer   |  |      | 2006 |  |        | $ | 1,000,000 |          |  | $ | 3,000,000 |            |  |               | n/a       |  |              | $ | 314,827 |             |  |  | n/a             |  |  |       | n/a |  |  | $ | 134,418 |  |  | $ | 4,449,245 | 
|Penni F. Roll,
    Chief Financial Officer     |  |      | 2006 |  |        | $ | 523,568   |          |  | $ | 1,550,000 |            |  |               | n/a       |  |              | $ | 490,659 |             |  |  | n/a             |  |  |       | n/a |  |  | $ | 70,571  |  |  | $ | 2,634,798 | 
|John D. Shulman,
    Managing Director         |  |      | 2006 |  |        | $ | 561,250   |          |  | $ | 5,000,000 |            |  |               | n/a       |  |              | $ | 633,987 |             |  |  | n/a             |  |  |       | n/a |  |  | $ | 130,772 |  |  | $ | 6,326,009 | 
|Michael J. Grisius,
    Managing Director      |  |      | 2006 |  |        | $ | 556,538   |          |  | $ | 2,500,000 |            |  |               | n/a       |  |              | $ | 596,974 |             |  |  | n/a             |  |  |       | n/a |  |  | $ | 81,945  |  |  | $ | 3,735,457 | 






|    |                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | This column includes annual cash bonus, IPA and IPB. See
    Compensation Discussion and Analysis above for a
    discussion of these components. The following table provides
    detail as to the composition of the bonus received by each of
    the NEOs:

|            |  |       |           |  |     |   |           |     |  |   |           | 
|----------- |  | ----- | --------- |  | --- | - | --------- | --- |  | - | --------- | 
|            |  | Bonus |           |  | IPA |   |           | IPB | 
|            |  |       |           |  |     |   |           |     | 
|Mr. Walton  |  | $     | 2,750,000 |  |     | $ | 1,475,000 |     |  | $ | 1,475,000 | 
|Ms. Sweeney |  | $     | 1,500,000 |  |     | $ | 750,000   |     |  | $ | 750,000   | 
|Ms. Roll    |  | $     | 850,000   |  |     | $ | 350,000   |     |  | $ | 350,000   | 
|Mr. Shulman |  | $     | 3,000,000 |  |     | $ | 1,000,000 |     |  | $ | 1,000,000 | 
|Mr. Grisius |  | $     | 1,500,000 |  |     | $ | 500,000   |     |  | $ | 500,000   | 



|    |                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | No option grants were made to NEOs in 2006. This column includes
    amounts from awards granted prior to 2006 which were recognized
    for financial statement reporting purposes without regard to
    estimated forfeitures in 2006 in accordance with FAS 123R.
    See Note 2 to our consolidated financial statements for the
    assumptions used in determining FAS 123R values.
|   
|(3) | There were no above market or preferential earnings on the
    non-qualified deferred compensation plans. See
    Non-Qualified Deferred Compensation below.                                                                                                                                                                                                                           
|   
|(4) | All Other Compensation is composed of the following:                                                                                                                                                                                                                                                                                                                                     

|            |  |              |        |  |              |   |         |          |  |   |        | 
|----------- |  | ------------ | ------ |  | ------------ | - | ------- | -------- |  | - | ------ | 
|            |  | Company      |        |  |              |   |        
|            |  | Contribution |        |  | Company      |   |         |         
|            |  | to 401(k)    |        |  | Contribution |   |         |         
|            |  | Plan         |        |  | to DCP I     |   |         | Other(5) | 
|            |  |              |        |  |              |   |         |          | 
|Mr. Walton  |  | $            | 11,000 |  |              | $ | 201,500 |          |  | $ | 38,263 | 
|Ms. Sweeney |  | $            | 11,000 |  |              | $ | 114,000 |          |  | $ | 9,418  | 
|Ms. Roll    |  | $            | 11,000 |  |              | $ | 55,154  |          |  | $ | 4,417  | 
|Mr. Shulman |  | $            | 11,000 |  |              | $ | 117,000 |          |  | $ | 2,772  | 
|Mr. Grisius |  | $            | 11,000 |  |              | $ | 66,770  |          |  | $ | 4,175  | 



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(5) | This amount includes perquisites such as Company-paid parking
    and the imputed income value of split dollar life insurance
    arrangements. For Mr. Walton, the amount also includes the
    premiums associated with executive long-term disability
    insurance. In addition, the amount includes approximately
    $28,000 for Mr. Walton and approximately $3,000 for
    Ms. Sweeney related to the direct variable costs associated
    with the travel of non-employee family members when they have
    accompanied the NEOs on trips for business purposes. The value
    of this perquisite is different than each NEOs imputed
    income, which is calculated in accordance with IRS requirements.

Grants of Plan-Based
Awards(1)


|                   |  |       |   |                            |           |  |                             |           |          |           |           |            |            |           |        |          |        |        |              |         |  |  |       |  |  |         |   |  |        |  |   |        |  |  |   |  |  |  |   |  |  |  |   | 
|------------------ |  | ----- | - | -------------------------- | --------- |  | --------------------------- | --------- | -------- | --------- | --------- | ---------- | ---------- | --------- | ------ | -------- | ------ | ------ | ------------ | ------- |  |  | ----- |  |  | ------- | - |  | ------ |  | - | ------ |  |  | - |  |  |  | - |  |  |  | - | 
|                   |  |       |   |                            |           |  |                             | All Other |          |           | All Other |            |            |           |        |         
|                   |  |       |   | Estimated Future Payouts   |           |  | Estimated Future Payouts    |           |          | Stock     |           |            | Option     |           |        |          |        |       
|                   |  |       |   | Under Non-Equity Incentive |           |  | Under Equity Incentive Plan |           |          | Awards;   |           |            | Awards;    |           |        | Exercise |        |        | Grant Date   |        
|                   |  |       |   | Plan Awards                |           |  | Awards                      |           |          | Number of |           |            | Number of  |           |        | or Base  |        |        | Fair Value   |        
|                   |  |       |   |                            |           |  |                             |           |          | Shares of |           |            | Securities |           |        | Price of |        |        | of Stock and |        
|                   |  | Grant |   |                            |           |  |                             |           | Stock or |           |           | Underlying |            |           | Option |          |        | Option |             
|Name               |  | Date  |   |                            | Threshold |  |                             | Target    |          |           | Maximum   |            |            | Threshold |        |          | Target |        |              | Maximum |  |  | Units |  |  | Options |   |  | Awards |  |   | Awards | 
|                   |  |       |   |                            |           |  |                             |           |          |           |           |            |            |           |        |          |        |        |              |         |  |  |       |  |  |         |   |  |        |  |   |        | 
|William L. Walton  |  |       |  |                            |           |  |                            |           |          |           |          |            |            |           |       |          |        |        |             |         |  |  |      |  |  |         |  |  |        |  |  |        |  |  |  |  |  |  |  |  |  |  |  | 
|Joan M. Sweeney    |  |       |  |                            |           |  |                            |           |          |           |          |            |            |           |       |          |        |        |             |         |  |  |      |  |  |         |  |  |        |  |  |        |  |  |  |  |  |  |  |  |  |  |  | 
|Penni F. Roll      |  |       |  |                            |           |  |                            |           |          |           |          |            |            |           |       |          |        |        |             |         |  |  |      |  |  |         |  |  |        |  |  |        |  |  |  |  |  |  |  |  |  |  |  | 
|John D. Shulman    |  |       |  |                            |           |  |                            |           |          |           |          |            |            |           |       |          |        |        |             |         |  |  |      |  |  |         |  |  |        |  |  |        |  |  |  |  |  |  |  |  |  |  |  | 
|Michael J. Grisius |  |       |  |                            |           |  |                            |           |          |           |          |            |            |           |       |          |        |        |             |         |  |  |      |  |  |         |  |  |        |  |  |        |  |  |  |  |  |  |  |  |  |  |  | 




|    |                                            
|--- | -------------------------------------------
|(1) | No option grants were made to NEOs in 2006.

11



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##### 



Employment Agreements








Amended Stock Option
Plan












12



---



##### 





13



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##### 



Outstanding Equity Awards at Fiscal Year-end




|                   |  |                |         |           |                 |           |         |             |           |  |          |  |           |            |        |           |            |  |            |            |  |          |        |  |  |             |     |  |  |  |     |  |  |  |     | 
|------------------ |  | -------------- | ------- | --------- | --------------- | --------- | ------- | ----------- | --------- |  | -------- |  | --------- | ---------- | ------ | --------- | ---------- |  | ---------- | ---------- |  | -------- | ------ |  |  | ----------- | --- |  |  |  | --- |  |  |  | --- | 
|                   |  | Option Awards  |         |           | Stock Awards(4) |          
|                   |  |                |         |           |                 |          
|                   |  |                |         |           |                 | Equity    |         |             |          
|                   |  |                |         |           |                 | Incentive |         |             | Equity    | 
|                   |  |                |         |           |                 | Plan      |         |             | Incentive | 
|                   |  |                |         |           |                 | Awards:   |         |             | Plan      | 
|                   |  |                |         |           |                 | Number    |         |             | Awards:   | 
|                   |  |                |         | Equity    |                 |           |         |             |           |  | of       |  |           | Market or  |       
|                   |  |                |         | Incentive |                 |           |         |             |           |  | Unearned |  |           | Payout     |       
|                   |  |                |         | Plan      |                 |           |         |             |           |  | Shares,  |  |           | Value of   |       
|                   |  |                |         | Awards:   |                 |           |         |             |           |  | Market   |  |           | Units or   |        |           | Unearned   | 
|                   |  | Number of      |         |           | Number of       |           |         | Number of   |           |  |          |  | Number of |            |        | Value of  |            |  | Other      |            |  | Shares,  |       
|                   |  | Securities     |         |           | Securities      |           |         | Securities  |           |  |          |  | Shares or |            |        | Shares or |            |  | Rights     |            |  | Units    |       
|                   |  | Underlying     |         |           | Underlying      |           |         | Underlying  |           |  |          |  | Units of  |            |        | Units of  |            |  | That       |            |  | of Other |       
|                   |  | Unexercised    |         |           | Unexercised     |           |         | Unexercised |           |  | Option   |  |           | Option     |        |           | Stock That |  |            | Stock That |  |          | Have   |  |  | Rights That |    
|                   |  | Options        |         |           | Options         |           |         | Unearned    |           |  | Exercise |  |           | Expiration |        |           | Have Not   |  |            | Have Not   |  |          | Not    |  |  | Have Not    |    
|Name               |  | Exercisable(1) |         |           | Unexercisable   |           |         | Options     |           |  | Price    |  |           | Date       |        |           | Vested     |  |            | Vested     |  |          | Vested |  |  | Vested      |    
|                   |  |                |         |           |                 |           |         |             |           |  |          |  |           |            |        |           |            |  |            |            |  |          |        |  |  |             |    
|William L. Walton  |  |                | 659,188 |           |                 |           |        |             |           |  |         |  |           | $          | 21.375 |           |            |  | 01/08/2008 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 51,196  |           |                 |           |        |             |           |  |         |  |           | $          | 17.875 |           |            |  | 12/08/2008 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 90,922  |           |                 |           |        |             |           |  |         |  |           | $          | 17.750 |           |            |  | 12/30/2009 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 755,500 |           |                 |           |        |             |           |  |         |  |           | $          | 16.813 |           |            |  | 05/26/2010 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 254,274 |           |                 |           |        |             |           |  |         |  |           | $          | 21.590 |           |            |  | 09/20/2011 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 607,554 |           |                 |           |        |             |           |  |         |  |           | $          | 21.520 |           |            |  | 12/13/2012 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 300,000 |           |                 |           | 100,000 | (2)         |           |  |         |  |           | $          | 28.980 |           |            |  | 03/11/2014 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                  
|Joan M. Sweeney    |  |                | 310,049 |           |                 |           |        |             |           |  |         |  |           | $          | 21.375 |           |            |  | 01/08/2008 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 32,469  |           |                 |           |        |             |           |  |         |  |           | $          | 17.875 |           |            |  | 12/08/2008 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 75,511  |           |                 |           |        |             |           |  |         |  |           | $          | 17.750 |           |            |  | 12/30/2009 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 285,000 |           |                 |           |        |             |           |  |         |  |           | $          | 16.813 |           |            |  | 05/26/2010 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 151,722 |           |                 |           |        |             |           |  |         |  |           | $          | 21.590 |           |            |  | 09/20/2011 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 462,281 |           |                 |           |        |             |           |  |         |  |           | $          | 21.520 |           |            |  | 12/13/2012 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 225,000 |           |                 |           | 75,000  | (2)         |           |  |         |  |           | $          | 28.980 |           |            |  | 03/11/2014 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                  
|Penni F. Roll      |  |                | 19,254  |           |                 |           |        |             |           |  |         |  |           | $          | 21.375 |           |            |  | 01/08/2008 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 48,000  |           |                 |           |        |             |           |  |         |  |           | $          | 19.875 |           |            |  | 07/28/2008 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 3,656   |           |                 |           |        |             |           |  |         |  |           | $          | 17.750 |           |            |  | 12/30/2009 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 75,398  |           |                 |           |        |             |           |  |         |  |           | $          | 16.813 |           |            |  | 05/26/2010 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 58,927  |           |                 |           |        |             |           |  |         |  |           | $          | 21.590 |           |            |  | 09/20/2011 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 245,354 |           |                 |           |        |             |           |  |         |  |           | $          | 21.520 |           |            |  | 12/13/2012 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 150,000 |           |                 |           | 50,000  | (2)         |           |  |         |  |           | $          | 28.980 |           |            |  | 03/11/2014 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 66,667  |           |                 |           | 133,333 | (3)         |           |  |         |  |           | $          | 27.510 |           |            |  | 08/03/2015 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                  
|John D. Shulman    |  |                | 295,429 |           |                 |           |        |             |           |  |         |  |           | $          | 21.875 |           |            |  | 04/05/2011 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 22,053  |           |                 |           |        |             |           |  |         |  |           | $          | 21.590 |           |            |  | 09/20/2011 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 289,620 |           |                 |           |        |             |           |  |         |  |           | $          | 21.520 |           |            |  | 12/13/2012 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 300,000 |           |                 |           | 100,000 | (2)         |           |  |         |  |           | $          | 28.980 |           |            |  | 03/11/2014 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 50,000  |           |                 |           | 100,000 | (3)         |           |  |         |  |           | $          | 27.510 |           |            |  | 08/03/2015 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                  
|Michael J. Grisius |  |                | 140,410 |           |                 |           |        |             |           |  |         |  |           | $          | 21.375 |           |            |  | 01/08/2008 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 140,797 |           |                 |           |        |             |           |  |         |  |           | $          | 16.813 |           |            |  | 05/26/2010 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 13,767  |           |                 |           |        |             |           |  |         |  |           | $          | 21.590 |           |            |  | 09/20/2011 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 71,746  |           |                 |           |        |             |           |  |         |  |           | $          | 21.520 |           |            |  | 12/13/2012 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 225,000 |           |                 |           | 75,000  | (2)         |           |  |         |  |           | $          | 28.980 |           |            |  | 03/11/2014 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 
|                   |  |                | 66,667  |           |                 |           | 133,333 | (3)         |           |  |         |  |           | $          | 27.510 |           |            |  | 08/03/2015 |            |  |          | n/a    |  |  |             | n/a |  |  |  | n/a |  |  |  | n/a | 




|    |                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | No stock option awards have been transferred.                                                                                                                                       
|(2) | The options granted vest in four installments on 6/30/04,
    6/30/05, 6/30/06 and 6/30/07 and vest immediately upon a change
    in control.                                       
|(3) | The options granted vest in three installments on 6/30/06,
    6/30/07 and 6/30/08 and vest immediately upon a change in
    control.                                               
|(4) | We have not made any stock awards. As a business development
    company, we are prohibited by the 1940 Act from issuing stock
    awards except pursuant to an SEC exemptive order.

14



---



##### 



Option Exercises and Stock Vested




|                   |  |                  |        |  |                |   |                  |             |  |  |                |  |  |  |     | 
|------------------ |  | ---------------- | ------ |  | -------------- | - | ---------------- | ----------- |  |  | -------------- |  |  |  | --- | 
|                   |  | Option Awards(1) |        |  | Stock Awards   |  
|                   |  |                  |        |  |                |  
|                   |  | Number of Shares |        |  |                |   | Number of Shares |             |  | 
|                   |  | Acquired on      |        |  | Value Realized |   |                  | Acquired on |  |  | Value Realized | 
|Name               |  | Exercise         |        |  | on Exercise(2) |   |                  | Vesting     |  |  | on Vesting     | 
|                   |  |                  |        |  |                |   |                  |             |  |  |                | 
|William L. Walton  |  |                  | 4,646  |  |                | $ | 35,588           |             |  |  | n/a            |  |  |  | n/a | 
|Joan M. Sweeney    |  |                  | 11,188 |  |                | $ | 128,494          |             |  |  | n/a            |  |  |  | n/a | 
|Penni F. Roll      |  |                  | 20,871 |  |                | $ | 221,644          |             |  |  | n/a            |  |  |  | n/a | 
|John D. Shulman    |  |                  |       |  |                |   |                 |             |  |  | n/a            |  |  |  | n/a | 
|Michael J. Grisius |  |                  | 13,306 |  |                | $ | 131,751          |             |  |  | n/a            |  |  |  | n/a | 






|    |                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | See Compensation Discussion and Analysis for more
    information about the options.                                                                                                         
|   
|(2) | Represents the difference between the market price at the date
    of exercise and the exercise price. These options were exercised
    and the underlying shares were held by the individuals.

Non-Qualified Deferred Compensation


|                   |  |                  |           |  |                  |   |         |             |  |           |                  |  |              |   |   |  |  |   |            | 
|------------------ |  | ---------------- | --------- |  | ---------------- | - | ------- | ----------- |  | --------- | ---------------- |  | ------------ | - | - |  |  | - | ---------- | 
|                   |  |                  |           |  |                  |   |         | Aggregate   |  | Aggregate |                 
|                   |  | Executive        |           |  | Company          |   |         | Aggregate   |  |           | Withdrawals/     |  | Balance at   |  
|                   |  | Contributions in |           |  | Contributions in |   |         | Earnings in |  |           | Distributions in |  | December 31, |  
|Name               |  | 2006(1)(4)       |           |  | 2006(2)(4)       |   |         | 2006(3)     |  |           | 2006             |  | 2006         |  
|                   |  |                  |           |  |                  |   |         |             |  |           |                  |  |              |  
|William L. Walton  |  | $                | 1,453,612 |  |                  | $ | 100,521 |             |  | $         | 1,565,725        |  |              | $ |  |  |  | $ | 12,027,985 | 
|Joan M. Sweeney    |  | $                | 739,125   |  |                  | $ | 63,565  |             |  | $         | 949,212          |  |              | $ |  |  |  | $ | 6,074,302  | 
|Penni F. Roll      |  | $                | 344,925   |  |                  | $ | 26,609  |             |  | $         | 252,786          |  |              | $ |  |  |  | $ | 2,257,335  | 
|John D. Shulman    |  | $                | 985,500   |  |                  | $ | 34,000  |             |  | $         | 278,929          |  |              | $ |  |  |  | $ | 2,355,683  | 
|Michael J. Grisius |  | $                | 492,750   |  |                  | $ | 26,609  |             |  | $         | 260,040          |  |              | $ |  |  |  | $ | 1,899,901  | 






|    |                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Executive contributions are based on the IPAs earned during the
    2006 plan year (net of FICA tax) and contributed to the 2005
    DCP II. There are no other executive deferrals.  
|   
|(2) | Company contributions are based on the excess 401(k) employer
    contribution made to the 2005 DCP I in 2006 (for the 2005
    plan year) and allocated to the participants account.
|   
|(3) | Includes interest and dividend income and realized and
    unrealized gains and losses.                                                                                               
|   
|(4) | Executive and company contributions are included in the Summary
    Compensation table above.                                                                                         

The 2005 Deferred
Compensation Plan I








15



---



##### 



13d-3




13d-3




The 2005 Deferred
Compensation Plan II




16



---



##### 





Pre-JCA










Severance and Change in Control Arrangements






17



---



##### 















18



---



##### 



Indemnification Agreements




19



---



##### 



PART IV


Item 15. Exhibits and Financial Statement Schedules


10-K 10-K/A.


S-K.


|        |    |     |             |                                                                                                                                        
|------- | -- | --- | ----------- | ---------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |            
|Number  |    |     | Description
|        |    |     |            
|        | 31 | .1* |             | Certification of the Chief Executive Officer pursuant to Rule
    13a-14 of the Securities Exchange Act of 1934.                       
|        | 31 | .2* |             | Certification of the Chief Financial Officer pursuant to Rule
    13a-14 of the Securities Exchange Act of 1934.                       
|        | 32 | .1* |             | Certification of the Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
    Section 1350.
|        | 32 | .2* |             | Certification of the Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
    Section 1350.






|  |                
|- | ---------------
|* | Filed herewith.

20



---



##### 



SIGNATURES






| |                                             
| | --------------------------------------------
| | /s/ William L. Walton                       
| |                                             
| | William L. Walton                           
| | Chairman of the Board and                   
| | Chief Executive Officer                     
|
| | /s/ Penni F. Roll                           
| |                                             
| | Penni F. Roll                               
| | Chief Financial Officer                     
| | (Principal Financial and Accounting Officer)

21



---



##### 



EXHIBIT INDEX


|        |    |    |             |                                                                                                                                        
|------- | -- | -- | ----------- | ---------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |    |            
|Number  |    |    | Description
|        |    |    |            
|        | 31 | .1 |             | Certification of the Chief Executive Officer pursuant to Rule
    13a-14 of the Securities Exchange Act of 1934.                       
|        | 31 | .2 |             | Certification of the Chief Financial Officer pursuant to Rule
    13a-14 of the Securities Exchange Act of 1934.                       
|        | 32 | .1 |             | Certification of the Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
    Section 1350.
|        | 32 | .2 |             | Certification of the Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
    Section 1350.

22