EX-10.1






EXECUTION COPY




RETENTION AGREEMENT




THIS RETENTION AGREEMENT (the “Agreement”) is entered into by and between Joan M. Sweeney
(“you”) and Allied Capital Corporation (the “Company”), a Maryland corporation, and will be
effective on May 13, 2009 (the “Effective Date”). You and the Company shall be referred to
collectively as the “Parties.” This Agreement is an important document and you are hereby advised
to review it with an attorney before signing it.



WHEREAS, as Chief Operating Officer, you have had a central role in the management of the
Company;



WHEREAS, in November 2008 you postponed your retirement that you had planned for December 31,
2008;



WHEREAS, you and the Company want to have a transition period before you retire from the
Company;



WHEREAS, the Company will provide you with compensation and other benefits on the terms and
conditions set forth in this Agreement;



WHEREAS, you are willing to continue your employment and perform services for the Company on
the terms and conditions hereinafter set forth;



NOW, THEREFORE, in consideration of the promises and the mutual agreements contained herein,
the Parties agree as follows:



1. Responsibilities.



You agree to serve as a Managing Director and Senior Advisor to the Chief Executive Officer
(“CEO”). In that position, you shall report to the CEO and be responsible for advising him on
strategic business and management issues and for such special projects as directed by the CEO. You
shall devote sufficient time, attention, skill and energy to the business of the Company to
accomplish assigned tasks. Except when the CEO reasonably requires your presence in the office or
at meetings at other locations, you may regularly perform your services from any location you
choose as long as you take appropriate precautions to protect the Company’s Confidential
Information (as defined in Section 5 below). You shall perform your responsibilities in accordance
with the standards and policies that the Company may from time to time establish. You may engage
in appropriate civic, charitable, non-profit activities or business activities and devote a
reasonable amount of time to private investments or boards or other activities, provided that you
notify the CEO in writing of any such activities and the CEO reasonably determines that such
activities do not interfere or conflict with your job responsibilities and are not or are not
likely to be contrary to the Company’s interests. Nothing in this Agreement shall preclude you
from managing any passive investment made by you in publicly traded equity securities or other
property (provided that no such investment may exceed 5% of the equity of any entity), without the
prior approval of the Company. You and the Company agree that your position is important to the
Company’s success and that the highest level of performance is required from you. You represent
that you are not subject to any legal obligations or restrictions that would prevent or limit you
from performing your responsibilities under this Agreement.



2. Compensation. During the Term (as defined in Section 3(a) below):



(a) Base Compensation. Your “Base Compensation” shall be $125,000.00 per month (which
would equal one million five hundred thousand dollars on an annualized basis) payable in accordance
with the Company’s regular payroll practices in effect from time to time and subject to withholding
of amounts required by law. The Company may review and adjust your Base Compensation periodically,
usually annually, but may not decrease your Base Compensation.



(b) Business Expenses. The Company shall pay or reimburse you for all ordinary and
reasonable business-related expenses you incur in the performance of your duties under this
Agreement, including reasonable and necessary travel expenses. The Company will reimburse you for
all such expenses upon the presentation by you of an itemized account of such expenditures,
together with supporting receipts and other appropriate documentation.



(c) Stock Options. At a meeting of the Compensation Committee of the Company’s Board
of Directors on May 13, 2009, the Company awarded you 500,000 stock options in accordance with the
terms and conditions of the Allied Capital Corporation Amended Stock Option Plan and a Notice of
Grant of Stock Options and Option Agreement in a form substantially similar to that in Attachment
A.



(d) Special Retention Bonuses. You will receive special retention bonuses, which
shall be subject to withholdings of amounts required by law, as follows: (A) $150,000 to be paid on
the next regularly scheduled payroll date after the first anniversary of the Effective Date, and
(B) $300,000 to be paid on the next regularly scheduled payroll date after the second anniversary
of the Effective Date (“Special Retention Bonuses”).



3. Term of Retention.



(a) The Company agrees to employ you, and you agree to remain in employment with the Company,
up to but not including the third anniversary of the Effective Date (the “Term”), provided that
either you or the Company may end your employment earlier under the terms set forth in Section 3(b)
through 3(f) below. At the end of the Term, your employment with the Company shall terminate.
“Termination Date” shall mean the day that your employment with the Company ends for any reason.
Unless the Company requests otherwise, when your employment ends for any reason, you shall be
deemed to have resigned as of the Termination Date from all positions you hold with the Company or
any affiliated entity, or based on your employment with the Company.



(b) The Company has the right to terminate your employment at any time with or without Cause.
For all purposes under this Agreement, “Cause” shall mean:




	 	(i)	 	a willful refusal by you to substantially perform your duties
under this Agreement, other than a refusal resulting from your complete or
partial incapacity due to physical or mental illness or impairment, which
refusal is materially injurious to the Company and which continues on an
uninterrupted basis for more than thirty (30) days after written notice by the
Company to you specifying in reasonable detail your claimed refusal; provided,
however, that you shall have no authority to bind the Company during the thirty
(30) days after written notice is delivered hereunder;






	 	(ii)	 	a willful act by you, which constitutes embezzlement or
criminal fraud and which is materially injurious to the Company;






	 	(iii)	 	your ineligibility to serve as employee, officer or director
of the Company pursuant to Section 9 of the Investment Company Act of 1940, as
amended; or






	 	(iv)	 	a breach by you of your duty of loyalty to the Company, which
breach is materially injurious to the Company and continues unremedied for more
than thirty (30) days after written notice by the Company to you specifying in
reasonable detail such breach; provided, however, that you shall have no
authority to bind the Company during the thirty (30) days after written notice
is delivered hereunder.





No act, or failure to act, by you shall be considered “willful” if done in good faith and with a
reasonable belief that the act or omission was lawful and in the Company’s best interest. Any
determination of Cause under this Agreement shall be made by a resolution duly adopted by the
affirmative vote of at least two-thirds (2/3) of the members of the Board (not including you if you
are a member of the Board) at a meeting of the Board called and held for that purpose provided that
you shall have been given written notice of such meeting at least ten (10) business days prior to
the meeting and shall have been given the opportunity to be heard by the Board before any such
resolution is passed. Any failure by the Company to follow the procedures set forth in this
Section 3(b) in connection with a termination of your employment shall result in such termination
being deemed to be a termination by the Company without Cause under this Agreement.



(c) You have the right to resign your employment with the Company at any time with or without
Good Reason after having given the Company thirty (30) days written notice. The Company may, in
its sole discretion, select any date prior to the end of such thirty (30) day period as the
Termination Date.



Before you can resign for Good Reason, you must give the Company thirty (30) days written
notice of your intent to resign for Good Reason and of the facts and circumstances you believe
constitute Good Reason. If the Company fails to cure within thirty (30) days after receipt of such
notice, your employment will end on the day following the expiration of that thirty (30) day
period. For purposes of this Agreement, “Good Reason” shall mean that within the sixty (60) days
prior to your notice of intent to resign for Good Reason there has been: (1) a material breach of
this Agreement by the Company; (2) a reduction in your Base Compensation or Special Retention Bonus
(as defined in Section 2 above); (3) a failure by the Company to maintain directors’ and officers’
liability coverage; (4) John Scheurer ceases to be Chief Executive Officer of the Company other
than due to his death or Disability; or (5) a Change in Control. For purposes of this Agreement,
“Change in Control” shall mean the occurrence of any of the following events after the Effective
Date of this Agreement:




(i) the sale or other disposition of all or substantially all of the Company’s
assets;




	 	(ii)	 	the acquisition, whether directly, indirectly, beneficially
(within the meaning of rule 13d-3 of the Securities Exchange Act of 1934, as
amended (the “1934 Act”)) or of record, as a result of a merger, consolidation
or otherwise, of securities of the Company representing fifteen percent (15%)
or more of the aggregate voting power of the Company’s then-outstanding Common
Stock by any “person” (within the meaning of Sections 13(d) and 14(d) of the
1934 Act), including, but not limited to, any corporation or group of persons
acting in concert, other than (i) the Company or its subsidiaries and/or (ii)
any employee pension benefit plan (within the meaning of Section 3(2) of the
Employee Retirement Income Security Act of 1974) of the Company or its
subsidiaries, including a trust established pursuant to any such plan; or






	 	(iii)	 	the individuals who were members of the Board as of the
Effective Date (the “Incumbent Board”) cease to constitute at least two-thirds
of the Board; provided, however, that any director appointed by at least
two-thirds of the then Incumbent Board or nominated by at least two-thirds of
the Nominating Committee of the Board (a majority of the members of the
Nominating Committee shall be the then Incumbent Board or appointees thereof),
other than any director appointed or nominated in connection with, or as a
result of, a threatened or actual proxy or control contest, shall be deemed to
constitute a member of the Incumbent Board.





(d) Your employment shall be deemed to have been terminated by you upon your (i) death or (ii)
inability to perform your duties under this Agreement due to your physical or mental illness or
impairment, even with reasonable accommodation, for more than twenty-six (26) substantially
consecutive weeks in any twelve (l2)-month period (“Disability”). For purposes of this Section
3(d), the Termination Date will be the date of your death or the first day after the substantially
consecutive 26th week that you receive notice of Disability, as applicable.



(e) Under the conditions set forth under this Section 3(e) or Section 3(f) below, you may
become eligible to receive additional payments from the Company, provided, however, that in no
event shall any such payment be made unless you have entered into a Designated Release that has
become final and binding within 36 days after your receive the form of Designated Release from the
Company. “Designated Release” means a form of release that is substantially similar to Attachment
B to this Agreement that the Company may modify as necessary for the release to have the same legal
effect on any claims at that time as the current form of Attachment B would have on any claims if
it were signed today, which the Company shall provide you within seven (7) days after the other
conditions for any payment under this Section 3(e) or Section 3(f) have been met. If during the
Term (i) your employment is terminated by the Company without Cause, by you for Good Reason or due
to your death or Disability and (ii) provided that within thirty-six (36) days after you receive
the form of Designated Release from the Company you (or in the event of your death or legal
incapacity, the legal representative of you or your estate) have released any claims you, your
legal representatives or your heirs, may have against the Company, its predecessors, successors,
parents, portfolio companies or affiliates or any of their then current or former shareholders,
officers, directors, agents, legal representatives, or employees in accordance with the Designated
Release, then the Company shall pay you a lump sum equal to the sum of (x) the total amount of Base
Compensation (as defined in Section 2(a) above) and any Special Retention Bonuses (as defined in
Section 2(d) above) that you would have received if your employment had continued from the
Termination Date through the end of the Term and (y) an amount equal to $2,300 for the first full
month after the Termination Date and for every following month through the last month of the Term.



(f) Subject to the Designated Release requirement set forth in Section 3(e):




	 	(i)	 	If the conditions in either subsection 3(f)(i)(a) or 3(f)(i)(b)
are met, you shall be eligible to receive an additional payment under any such
subsection or subsections, provided, however, that the total amount paid out
under 3(f)(i) shall in no event exceed two million dollars:






	 	a.	 	If there is a Change in Control before the
second anniversary of the Effective Date and your employment is
terminated by you for Good Reason as a result of such Change in Control
or has previously been terminated either by the Company without Cause
or by you for Good Reason, you shall receive a lump sum payment of two
million dollars;






	 	b.	 	If before the second anniversary of the
Effective Date your employment is terminated by the Company without
Cause or by you for a Good Reason other than Good Reason due to a
Change in Control and you also cease to be a member of the Company’s
Board of Directors other than due to your resignation, death or
disability, you shall receive a lump sum payment of one million
dollars.






	 	(ii)	 	If there has not been a Change in Control that would entitle
you to a payment under Section 3(f)(i)(a) above and the conditions in either
subsection 3(f)(ii)(a) or 3(f)(ii)(b) are met, you shall be eligible to receive
an additional payment under any such subsection or subsections, provided,
however, that the total amount paid out under 3(f)(ii) shall in no event exceed
one million dollars:






	 	a.	 	If there is a Change in Control on or after the
second anniversary of the Effective Date but before the third
anniversary of the Effective Date and your employment is terminated by
you for Good Reason as a result of such Change in Control or has
previously been terminated either by the Company without Cause or by
you for Good Reason, you shall receive an additional lump sum payment
of one million dollars;






	 	b.	 	If on or after the second anniversary of the
Effective Date but before the end of the Term your employment is
terminated by the Company without Cause or by you for a Good Reason
other than Good Reason due to a Change in Control and you also cease to
be a member of the Company’s Board of Directors other than due to your
resignation, death or disability, you shall receive a lump sum payment
of five hundred thousand dollars.





(g) Any payment that becomes due under Section 3(e) above shall be made within seven (7) days
following the end of the six-month period after the Termination Date. Any payment(s) that become
due under Section 3(f) above shall be made within the later of: (A) seven (7) days following the
end of the six-month period after the Termination Date; and (B) thirty (30) days following the
Change in Control. All such payments shall be subject to withholdings required by law.



(h) If any provision of this Agreement would cause you to incur any additional tax or interest
under Section 409A of the Internal Revenue Code of 1986, as amended (“the Code”), or any
regulations or Treasury guidance promulgated thereunder, the Company shall reform such provision,
provided that the Company shall: (i) maintain, to the maximum extent practicable, the original
intent of the applicable provision without violating the provisions of Section 409A of the Code;
and (ii) notify and consult with you regarding such amendments or modifications prior to the
effective date of any such change.



(i) In addition to the payments under Section 3 hereof, if it shall be determined that any
event or any payment, vesting, distribution, or transfer by the Company (or any successor,
affiliate or by any other person) to you or for your benefit under the terms of this Agreement or
otherwise (including, without limitation, the Stock Option Agreement(s), the Split Dollar Life
Insurance Agreement or any employee benefit plan)(collectively, a “Payment”) would be subject to or
result in the imposition of the excise tax under Section 4999 of the Code (and any regulations
issued thereunder, any successor provision, and any similar provision of state or local income tax
law)(collectively, the “Excise Tax”), then the Company shall pay to you a lump sum (“Tax
Equalization Payment”) in an amount sufficient that, after payment of the federal, state or local
income, employment or other required taxes (other than taxes that may be imposed by Section 409A of
the Code)(“Regular Taxes”), you shall receive an amount equal to the Excise Tax. Such payment
shall be made within 15 days of the date which you remit such Excise Tax. In determining the
amount of any Regular Taxes, the maximum applicable, marginal rate of tax for the year in which the
Tax Equalization Payment is payable shall be used. The amount of this Tax Equalization Payment
shall be determined by the Company’s independent accountants.



(j) You shall not be required to mitigate the amount of any payment contemplated under Section
3(e) or Section 3(f) above, nor shall any payment be reduced by any earnings that you may receive
from any other source.



4. Employee Benefits.



You shall be eligible to participate in all employee benefit plans and programs that the
Company may provide from time to time to employees at your level, subject in each case to the
generally applicable terms and conditions of any such plan or program and to the determinations of
any person or committee administering any such plan or program. The Company may modify or
terminate any such benefit or program at any time.



5. Confidential Information.



(a) Except as specifically provided below, you shall not disclose or use at any time, either
during or after the Term, any Confidential Information (defined below) of the Company, its parents,
subsidiaries, portfolio companies, predecessors, successors or affiliates (collectively “the
Companies”), whether patentable or not, that you have learned or will learn as a result of your
service to the Companies in any capacity, whether or not you developed such information. For
purposes of this Agreement, “Confidential Information” shall include, without limitation,
information regarding either the Companies’ or their customers’ or business partners’:




	 	•	 	trade secrets or proprietary information;






	 	•	 	existing and prospective investments;






	 	•	 	financing information and sources;






	 	•	 	patent applications, developmental or experimental work, formulas, test data,
prototypes, models, and product specifications;






	 	•	 	financial information;






	 	•	 	financial projections and pro forma financial information;






	 	•	 	sales and marketing strategies, plans and programs and product development
information;






	 	•	 	employees’ and consultants’ benefits, perquisites, salaries, stock options,
compensation, formulas or bonuses, and their non-business addresses and telephone
numbers;






	 	•	 	organizational structure and reporting relationships; and






	 	•	 	business plans.





(b) Information that is or later becomes publicly available in a manner wholly unrelated to
any breach of this Agreement by you will not be considered Confidential Information as of the date
it enters the public domain. If you are uncertain whether something is Confidential Information
you shall treat it as Confidential Information until you receive clarification from the CEO that it
is not Confidential Information.



(c) Confidential Information shall remain at all times the property of the Companies. You may
use or disclose Confidential Information only:




	 	(i)	 	as authorized by the Company and necessary in providing service
to the Company in any capacity; or






	 	(ii)	 	with the prior written consent of the CEO; or






	 	(iii)	 	in a legal proceeding between you and the Company to establish
the rights of either party under this Agreement, provided that you stipulate to
a protective order to prevent any unnecessary use or disclosure; or






	 	(iv)	 	subject to a compulsory legal process that requires disclosure
of such information, provided that you have complied with the procedures in
Section 5(d) below to ensure that the Company has an adequate opportunity to
protect its legal interests in preventing disclosure.





(d) Within two (2) business days of your receipt of a subpoena or other legal process that
could possibly require disclosure of Confidential Information, you shall provide notice to the
Company, including a copy of such process and complete information regarding the circumstances
under which you received it. You shall not make any disclosure of Confidential Information until
the latest possible date for making such disclosure in accordance with the compulsory process
(“Latest Possible Date”). If the Company seeks to prevent disclosure in accordance with any
applicable legal procedures, and provides you with notice before the Latest Possible Date that it
has initiated such procedures, you shall not make disclosures of any Confidential Information that
is the subject of such procedures until such objections are withdrawn or ruled on.



(e) You hereby acknowledge that any breach of this Section 5 would cause the Company
irreparable harm.



6. Non-Disparagement.



During the Term, neither of the parties shall in any way, manner or form, directly or indirectly,
disparage or defame the other party and, in your case, any director, officer or employee of the
Company; provided, however, that this Section shall not prohibit you from making a good faith
assessment of the person’s performance of his or her duties for the Company and where such
assessment is necessary to fulfill your duties to the Company. After the Term, neither of the
parties shall in any way, manner or form, directly or indirectly, disparage or defame the other
party and, in your case, any directors, officers or employees of the Company.



7. Non-Solicitation.



(a) From the Effective Date until the second anniversary of the Termination Date (the
“Restricted Period”), you shall not, directly or indirectly, individually or as part of or on
behalf of any other person or entity (i) hire, or attempt to solicit for hire (other than on behalf
of the Company) any person, who at that time either is or has been within the last six months an
employee of the Company (“Covered Employee”), or (ii) solicit, encourage or attempt to persuade any
consultant, vendor, client or customer to terminate or adversely modify its existing relationship
with the Company, except during the Term where you are authorized to do so and have a reasonable
good faith belief that such termination or modification is in the best interests of the Company.



(b) If, during the Restricted Period, any Covered Employee accepts employment with any person,
company, employer or other entity in which you are an officer, director, employee, partner,
shareholder (other than of less than 5% of the stock in a publicly traded company) or joint
venturer, it shall be presumed that the Covered Employee was hired in violation of this provision
(“Presumption”). This Presumption may be overcome by your showing by a preponderance of the
evidence that you were not directly or indirectly involved in soliciting or encouraging the Covered
Employee to leave employment with the Company.



(c) You agree to notify any person or entity to which you provide services during the
Restricted Period of the terms of your obligations under this Section 7. The Parties agree that
any breach of this Section 7 shall entitle the Company to injunction without bond enforcing this
Section 7 or for breaching Section 7(a) the Company shall be entitled to liquidated damages equal
to the amount of the annual total compensation of any person solicited or hired in breach or
Section 7(a). The Parties are agreeing to liquidated damages for a breach of Section 7(a) as an
option to actual damages in recognition that the Company’s employees are among it most valuable
assets, but it is often difficult to prove the actual damages resulting from such a breach.



8. Indemnification.



Commencing on the Effective Date and at all times thereafter, you shall be indemnified by the
Company pursuant to the Indemnification Agreement entered into between you and the Company on the
27th day of February, 2004. You shall be a beneficiary of a commercially available
directors’ and officers’ liability insurance policy maintained by the Company, on terms and
conditions deemed appropriate by the Board, with the advice of counsel, as long as you remain an
officer or director and any periods thereafter for acts relating to the period of time in which you
served as an officer and/or director.



9. Return of Property.



Upon termination of your employment with the Company for any reason, you agree to immediately
return to the Company all property belonging to the Company. This includes without limitation all
equipment, materials, credit cards and all documents and other information prepared by you or on
your behalf or provided to you in connection with performing your duties for the Company,
regardless of the form in which such documents or information are maintained or stored, including
computer, typed, handwritten, imaged, audio, video, micro-fiche, digital, audio, electronic or any
other means of recording or storing documents or other information. You hereby agree that you will
not retain in any written, printed or electronic or similar form any such document or other
information or copies thereof; provided, however, that you may retain a copy of this Agreement.



10. Cooperation with Legal Proceedings.



During the Term and at all times thereafter, you agree to reasonably cooperate with the
Company or any of its affiliated entities in pursuing or defending any claims or actions now in
existence or which may be brought in the future against or on behalf of the Company, which relate
to events or occurrences that transpired while you were providing services to the Company.  Your
reasonable cooperation in connection with such claims or actions shall include, but not be limited
to, being available to meet with counsel to prepare for discovery or trial and to act as a witness
on behalf of the Company.  You also agree to reasonably cooperate with the Company in connection
with any investigation or review by the Company or any federal, state, or local regulatory
authority that relates to events that occurred while you were providing services to the Company.
You understand that in any legal action, investigation, or review covered by this Section 10 that
the Company expects you to provide only accurate and truthful information or testimony. The
Company shall reimburse you within 30 days after submitting appropriate documentation for all
reasonable expenses, including travel expenses that you necessarily incur in connection with this
Section.



11. Intellectual Property.



You acknowledge that all inventions, innovations, improvements, developments, methods,
designs, analyses, drawings, concepts reports, original works of authorship, copyrights
(“Intellectual Property”) and all similar or related information or materials (whether or not
patentable or copyrightable) belong to the Company provided that they (1) relate to the Company or
its or any affiliate’s actual or demonstrably anticipated business, research and development or
existing or future products or services and (2) are conceived, developed or are made by you,
individually or with others, while you are serving the Company in any capacity (“Work Product”).
To the maximum extent permissible under law, you hereby assign all the rights to any such Work
Product to the Company and agree to execute any document necessary to achieve such assignment and
ensure that the Company has all rights to such Work Product. You have attached a list of any
Intellectual Property you have created or in which you have any right, title or interest as of the
date you sign this Agreement. If no list is attached, it shall mean that there is no such
Intellectual Property. The Parties agree that any breach or threatened breach of this Section 11
shall entitle the Company to injunctive relief enforcing this Section 11 without bond. If any part
of this Section 11 is found to be overbroad, the Parties authorize the court to reform this
provision to provide the maximum protection for the Company that is legally permitted and to
enforce it as reformed.




	12.	 	Release of Claims.





(a) You hereby release each of the Released Parties (as defined below) from any and all
claims, damages, injuries and actions that may as a matter of law be released by agreement that you
or your heirs, agents or any other legal representatives ever had, now have, or may have based on
any act, omission, matter, cause or thing that has happened through the date that you sign this
Agreement (“Released Claims”). For purposes of this Agreement, “Released Parties” shall mean the
Company and its subsidiaries, predecessors, successors, parents, portfolio companies and affiliated
entities and for each of the foregoing entities, their former or current directors, officers,
employees, shareholders, members, agents, parent companies, portfolio companies, successors,
predecessors, subsidiaries, affiliates, assigns and attorneys.



(b) By way of example without reducing the generality of the Released Claims
described above, the Released Claims include, without limitation, any claims under any federal,
state or local law:




	 	•	 	prohibiting discrimination, retaliation, or harassment, including but not
limited to Title VII of the Civil Rights Act of 1964, Civil Rights Acts of 1866
and 1991, the Equal Pay Act, the Americans with Disabilities Act, the Age
Discrimination in Employment Act, Executive Order 11246, Executive Order 11141
and any state or local laws relating to such issues;






	 	•	 	relating to layoffs, termination of employment, conditions of employment,
leave, corporate governance, employee benefits (other than any vested benefits
to which you have a right under any benefits plan), or whistleblowing,
including but not limited to the Employee Retirement Income Security Act, the
Family and Medical Leave Act, the Worker Adjustment and Retraining Notification
Act, and the Sarbanes-Oxley Act, and any state or local laws relating to such
issues; and






	 	•	 	based on the common law of tort or contract, including but not limited to
breach of contract, wrongful discharge, emotional distress, injury to
reputation, tortious interference, promissory estoppel, and negligent
retention.





(c) The Released Claims include any claims that you do not know about when you sign this
Agreement, even if knowing about such claims could have affected your decision to sign the
Agreement.



(d) Nothing in this Agreement shall be construed to prohibit you from filing a charge or
participating in any investigation or proceeding conducted by the Equal Employment Opportunity
Commission or a comparable state or local agency; provided, however, that by signing this
Agreement, you waive any right to recover monetary damages or any other relief in connection with
any such charge, investigation or proceeding.




	13.	 	Review and Revocation Period.





(a) You may take up to twenty-one (21) calendar days after you receive this Agreement to
consider whether to sign and deliver it to John Scheurer, CEO, Allied Capital Corporation, 1919
Pennsylvania Avenue, NW, Washington, DC 20006. If you choose to sign the Agreement before the
twenty-one (21) day period ends, you hereby represent that you did so voluntarily for your own
benefit without pressure from the Company. You have been advised by the Company
to review this Agreement with an attorney before you sign it.



(b) If you sign this Agreement within the twenty-one (21) day period, you then will have seven
(7) calendar days in which to revoke the Agreement by delivering written notice to John Scheurer
before the end of the seven-day period. If you timely revoke this Agreement, this Agreement will
be null and void.



14. Miscellaneous Provisions.



(a) Notices. Unless otherwise provided herein, any notice or other information to be
provided to the Company will be delivered by hand to the CEO, or sent by overnight delivery with
acknowledgement of receipt requested, to:




Chief Executive Officer




Allied Capital Corporation




1919 Pennsylvania Avenue, NW, 3rd Floor




Washington, DC 20006




Copy to:




Sally D. Garr, Esq.




Patton Boggs LLP




2550 M Street, NW




Washington, DC 20037



Any notice or other information to be provided to you will be delivered by hand to you, or sent by
overnight delivery with acknowledgement of receipt requested to (or to such other address as you
may provide notice of in writing):



Joan M. Sweeney



c/o Elaine Charlson Bredehoft



Charlson Bredehoft & Cohen, P.C.



11260 Roger Bacon Drive



Suite 201




Reston, VA 20190



(b) Dispute Resolution. You and the Company agree that arbitration in accordance with
the Federal Arbitration Act (“FAA”) and the Dispute Resolution Procedures set forth in Attachment C
to this Agreement shall be the exclusive means for final resolution of any dispute between the
Parties arising out of or relating to your employment or this Agreement, except: (1) for workers’
compensation or unemployment claims; (2) whenever injunctive relief is necessary to preserve the
status quo or to prevent irreparable injury; (3) disputes relating to Sections 5, 6, 7, 9 or 10 of
this Agreement; or (4) disputes over benefits or payments that are provided under any employee
benefit plan that contains a procedure for resolving disputes. Injunctive relief or enforcement of
any arbitration award may be sought only from any court of competent jurisdiction located in the
Distict of Columbia and you hereby consent to personal jurisdiction and venue in such court.



(c) Company Claims; Prevailing Party. In the event that the Company alleges that you
breached any of your covenants contained in Sections 5, 6, 7, 9 or 10 of this Agreement, the
Company agrees that it shall not offset or suspend any its obligations to make payments pursuant to
Section 3(e) and Section 3(f) hereof, but instead shall be required to maintain a separate action
for damages relating to any such alleged breach. Subject to the provisions of Section 14(b)
hereof, the prevailing party in any dispute brought under this Agreement shall be entitled to
receive her or its attorneys’ fees and related costs associated with resolving such dispute(s).



(d) Nature of Agreement. You and the Company each have been represented by separate
counsel and are entering into this Agreement voluntarily with a full understanding of its terms.
This Agreement, including all attachments hereto, constitute the entire agreement between you and
the Company and supersede and cancel all prior agreements and understandings between you and the
Company, including without limitation the Employment Agreement that you and the Company entered
into as of January 1, 2004, all amendments to that Employment Agreement and all attachments, except
the Indemnification Agreement entered into between you and the Company on the 27th day
of February, 2004 and the existing stock option agreements shall continue in full force and effect.
In making this Agreement, the Parties warrant that they did not rely on any representations or
statements other than those contained in this Agreement. No modification or waiver of or amendment
to any provision of this Agreement will be effective unless in writing and signed by you and the
CEO. A delay or failure by the Company to exercise any right that is the subject of this Agreement
will not be construed as a waiver of that right. A waiver of a breach on any one occasion will not
be construed as a waiver of any other breach. Regardless of the choice of law provisions of the
District of Columbia or any other jurisdiction, the Parties agree that this Agreement shall be
otherwise interpreted, enforced and governed by the laws of the District of Columbia. This
Agreement will continue in effect until all obligations under it are fulfilled. If any part of
this Agreement is held to be void or unenforceable, the remaining provisions shall continue with
full force and effect. This Agreement is not assignable by you, but the Company may assign this
Agreement to any successor entity. This Agreement is binding on you and your legal representatives
and the Company, its successors or assigns. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and
no presumption or burden of proof shall arise favoring or disfavoring either party by virtue of the
authorship of any of the provisions of this Agreement.



This Agreement may be executed in any number of counterparts each of which shall be an
original, but all of which together shall constitute one instrument. The headings in this
Agreement are for convenience only and shall not effect the interpretation of this Agreement.



IN WITNESS WHEREOF, each of the Parties has executed this Agreement, in the case of
the Company by its authorized officer, as of the day and year set forth under their signatures
below.



ALLIED CAPITAL CORPORATION



	 	 	 
	/s/ Joan M. Sweeney

	 	By: /s/ Anthony T. Garcia
	 

	 	 
	Joan M. Sweeney

	 	CHAIRMAN, COMPENSATION






COMMITTEE OF THE BOARD OF




DIRECTORS



Date: May 13, 2009 Date: May 13, 2009