Document:

exv10w24

Exhibit 10.24

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into by and between John M. Scheurer
(“you”) and Allied Capital Corporation (the “Company”), a Maryland corporation, and will be
effective on May 5, 2009 (the “Effective Date”). You and the Company shall be referred to
collectively as the “Parties.”

     WHEREAS, the Company has determined that it is in the best interest of the Company and its
stockholders to retain your services as Chief Executive Officer (“CEO”) and to provide you with
compensation and other benefits on the terms and conditions set forth in this Agreement;

     WHEREAS, you are willing to accept such 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.

     The Company agrees to employ you as CEO. In that position, you shall report to the Chairman
of Company’s Board of Directors (the “Board”). As CEO, you, along with the Chairman of the Board
(the “Chairman”), shall be responsible for the overall strategic direction of the Company and
subject to the direction of the Board, you shall perform such executive, supervisory and management
functions and duties as may be assigned to you from time to time by the Board consistent with such
position. You shall devote your entire business time, attention, skill and energy exclusively to
the business of the Company and shall not engage in any other business activity, including but not
limited to the development of any other business. 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 or other non-profit activities and devote a reasonable
amount of time to private investments or boards or other activities, provided that you notify the
Board and in the reasonable determination of the Board such activities do not interfere or conflict
with your 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. Term of Employment.

     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, unless your

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employment is terminated earlier pursuant to Section 5 below (the “Term”). The Term may be extended by written
agreement of the Parties.

3. Compensation.

     (a) Base Compensation. Your base compensation shall be $91,667.67 per month (which
would equal $1.1 million dollars on an annualized basis), less applicable taxes and withholdings,
payable in accordance with the Company’s regular payroll practices in effect from time to time
(such compensation, as increased pursuant to and in accordance with the following sentence, “Base
Compensation”). The Company shall review your Base Compensation annually and may increase in its
discretion, but may not decrease, your Base Compensation.

     (b) Bonus Compensation. You will be eligible to receive an annual bonus as determined
by the Board in its sole discretion.

     (c) 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. 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. The Company shall reimburse you for your reasonable legal fees and expenses
incurred in the preparation of this Agreement. As to expenses eligible for reimbursement under the terms of the Agreement, (i) the amount of such expenses eligible for reimbursement in any taxable year
shall not affect the expenses eligible for reimbursement in another taxable
year, and (ii) any reimbursement of such expenses shall be made no later than
the end of the calendar year following the calendar year in which the related
expenses were incurred, except, in each case, to the extent that the right to
reimbursement does not provide for a “deferral of
compensation” within the
meaning of Section 409A.

     (d) Withholding. All payments under Sections 3(a) and 3(b) above shall be reduced by
the amount of withholdings that are required to be made by law.

4. Employee Benefits.

     You shall be eligible to participate in all employee benefit programs that the Company may
provide to employees at your level subject to the terms of such programs, which may include, but
are not limited to benefits such as health insurance plans, paid holidays, vacation, and 401(k),
subject in each case to the generally applicable terms and conditions of any such plan or program
in question 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. Termination of Employment.

     Upon the date your employment with the Company ends for any reason (the “Termination Date”),
except as otherwise provided herein or under the specific terms and provisions of any written plan,
arrangement or agreement with the Company, you will not be eligible for further compensation,
benefits or other perquisites under Sections 3 and 4 of this Agreement, other than those that have
already accrued or vested as of the Termination Date,
such payment of a pro rata share of your Base Compensation through your Termination Date and
payment for any accrued, unused vacation as of your Termination Date. 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 Affiliate or based on your
employment with the Company. Termination of your employment may occur under any of the following
circumstances:

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     (a) Expiration of Term. Your employment will terminate if the Term provided for under
Section 2 expires without written agreement of the Parties to continue your employment; or

     (b) Termination of Employment by the Company. The Company has the right to terminate
your employment at any time with or without Cause. If the Company terminates your employment for
Cause, it will give you written notice of the specific provision of this Agreement relied upon for
Cause. For all purposes under this Agreement, (“Cause”) shall mean:

	 	(i)	 	your willful failure to substantially perform your duties under
this Agreement that continues for more than thirty (30) days after the Company
sends written notice to you specifying in reasonable detail your claimed
failure;
	 
	 	(ii)	 	an act or omission by you constituting gross misconduct or
fraud;
	 
	 	(iii)	 	your conviction or entry of a plea other than “non-guilty” to
a crime involving moral turpitude or to a felony;
	 
	 	(iv)	 	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;
	 
	 	(v)	 	your willful failure to comply with a lawful, written
instruction of the Board of Directors that you fail to remedy within five (5)
days after the Company sends you notice of such failure; or
	 
	 	(vi)	 	a breach of your duty of loyalty to the Company that results in
substantial harm to the Company and is not remedied within thirty (30) days
after the Company gives written notice to you describing in reasonable detail
the conduct that constituted such a breach.

If the Company gives the initial notice of a failure under Section 5(b)(i) or a breach under
5(b)(vi), the Company may in its discretion specify in such notice that during the thirty (30) day
period after such notice you shall have no authority to bind the Company.

or

     (c) Death or Disability. 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, even
with reasonable accommodation, for more than twenty-six (26) weeks, whether or not consecutive, in
any twelve-month period (“Disability”). Termination will be effective upon the occurrence of such
event.

or

     (d) Resignation by You. 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 place you on paid administrative leave as of any
date prior to the end of such thirty (30) day notice period and request that you no longer

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be
present on Company premises. During any period of paid administrative leave, you will not be
authorized to act as a representative, or make any statements on behalf of, the Company.

     Before you can resign for Good Reason, you must give the Company written notice that you
intend 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, your employment will end at the end
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
(i) a material breach by the Company of this Agreement, including without limitation any material
reduction in your Base Compensation or benefits and any failure by the Company to maintain its
directors’ and officers’ liability coverage (but excluding any other reduction in benefits
applicable to all employees); or (ii) without your consent, your office has been relocated to a
location more than 40 miles from your current office location; or (iii) your duties or
responsibilities have been materially reduced.

6. Severance Payments.

     (a) If (i) your employment under this Agreement ends under Section 5(b) without Cause, Section
5(c) for death or Disability or Section 5(d) for Good Reason, and (ii) you or your authorized legal
representative release any claims you 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 a form (and
consistent with the time limits in such form) substantially similar to Attachment A to this
Agreement, but as such form may be modified within seven (7) days after the Termination Date by the
Company as necessary for such release to be legally effective on the date it is signed, you shall
receive the severance payments specified below in this Section 6 depending upon the particular
Section of this Agreement under which your employment ended (“Severance Payments”). Any such
Severance Payments shall be made in a lump sum on the first business day following the expiration
of six months after the Termination Date. You shall not be eligible to receive any severance
payments from the Company other than those provided under this Agreement. All such Severance
Payments shall be reduced by the amount of withholdings that are required to be made by law.

     (b) Subject to Section 6(a), if your employment ends under Section 5(b) without Cause or
Section 5(d) for Good Reason, you shall receive a payment equal to the sum of (y) three times (3x)
the “Fiscal Year Average” and (z) $1,000,000. The Fiscal Year Average shall
be determined by dividing by three (3) an amount equal to the sum of all Base and Bonus
Compensation that was paid to you during the Company’s three (3) fiscal years prior to the year in
which your employment ends for any reason listed in Section 6(a)(i) above.

     (c) Subject to Section 6(a), if your employment ends under Section 5(c) for death or
Disability, you shall receive a payment equal the sum of (y) one time (1x) the “Fiscal Year
Average” and (z) $1,000,000.

     (d) If you receive a payment under Sections 6(b) or (c), to assist you in obtaining
post-termination health and welfare benefits, you also shall receive a payment of $49,500.

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     (e) You shall not be required to mitigate the amount of any Severance Payments made under this
Section 6, nor shall any such payment be reduced by any earnings or benefits that you may receive
from any other source.

     (f) If all the conditions for your receipt of Severance Payments in accordance with this
Section 6 have been met and you become eligible for Severance Payments, the Company’s obligation to
make such payment shall be absolute and unconditional and shall not be subject to offset,
counterclaim, recoupment, or defense by the Company, except a defense that no such payment is due
as a result of a material breach by you of a material obligation under this Agreement. If a
dispute arises with respect to the enforcement of your rights under this Section 6, or if any legal
or arbitration proceeding shall be brought in to enforce or interpret this Section 6, you shall be
entitled to reimbursement for any reasonable attorney’s fees and necessary costs and disbursements
incurred as a result of such dispute unless, as a result of such legal or arbitration proceeding,
it is affirmatively determined in a final and non-appealable judgment or determination that you
instituted such legal or arbitration proceeding in bad faith or that your claims were frivolous.

     (g) To the extent required in order to avoid accelerated taxation and/or tax penalties under
Section 409A, you shall not be considered to have terminated employment with the Company for
purposes of the Agreement until you would be considered to have incurred a “separation from
service” from the Company within the meaning of Section 409A and, for the purposes of determining
the timing of payment, termination of employment shall not be considered to occur until you have
incurred such a “separation from service.”

     (h) If any provision of this Agreement would cause you to incur any additional tax or interest
under Section 409A of 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.

7. Return of Property.

     Upon termination of your employment with the Company for any reason, you agree to immediately
return to the Company all equipment, credit cards and other property belonging to the Company.
This includes 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 were created or are maintained or stored, including computer, typed,
written, imaged, audio, video, micro-fiche, digital, audio, electronic or any other means of
recording or storing documents or other information. You may retain a copy of any documents
describing any rights or obligations you may have after the Termination Date under any employee
benefit plan or other agreements.

8. 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 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 mean the Companies’ and their customers’ or business partners’
trade secrets or proprietary information and shall include information regarding either the
Companies’ or their customers’ or business partners’:

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	 	•	 	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;
	 
	 	•	 	members’, employees’ and consultants’ benefits, perquisites, salaries, stock
options, compensation, formulas or bonuses, and their non-business addresses and
telephone numbers; 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 should treat it as Confidential Information until you receive clarification from the Board that
it is not Confidential Information.

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

	 	(i)	 	during your employment with the Company as authorized by the
Company or as reasonably necessary in providing service to the Company in any
capacity; or
	 
	 	(ii)	 	with the prior written consent of the Chairman; 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 reasonable 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, to the extent legally permitted, you have
complied with the following procedures to ensure that the Company has an
adequate opportunity to protect its legal interests in preventing disclosure.
Upon receipt of a subpoena that could possibly require disclosure of
Confidential Information, you shall provide (i) notice to the Company by email
of having received such compulsory process within 24 hours after receiving it
and (ii) by hand a copy of the compulsory process and complete information
regarding the circumstances under which you received it to the Company by hand
delivery within forty-eight (48) hours after receiving it. You shall not make
any disclosure 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

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	 	 	 	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. The Company will indemnify and hold you
harmless from any damages resulting directly from your compliance with the
requirement in the proceeding sentence.

     (d) You hereby acknowledge that any breach of this Section 8 would cause the Company
irreparable harm. In the event of a breach or threatened breach of this Section 8, the Company
shall be entitled to injunctive relief enforcing this Section 8 without bond. If any part of this
Section 8 is found to be overbroad, the Parties authorize the court to reform this Section to
provide the maximum protection for the Company that is legally permitted and to enforce it as
reformed.

9. Non-Disparagement.

(a) Except for statements (i) authorized by the Company, (ii) made in the course of or in
connection with your employment with a reasonable good faith belief that such statement is
consistent with your duty of loyalty to the Company, or (iii) after compliance with Section
8(c)(iv), legally required by a subpoena or legal summons, you agree that both during the Term and
at all times thereafter:

	 	(1)	 	you shall not, directly or indirectly, in any manner or form
make any statement about the Companies or any of their directors, officers,
employees, agents or representatives to any media outlet (including without
limitation any television, radio, newspaper, chat board or website); and
	 
	 	(2)	 	you shall not, directly or indirectly, in any manner or form
make any disparaging or derogatory statements to any one about the Companies or
any of their directors, officers, employees, agents or representatives.

     (b) When your employment ends for any reason, the Company shall instruct those individuals who
are at that time members of the Board and your direct reports to not make any disparaging or
derogatory statements about you to any one outside the Company, except for statements made in good
faith that are required by law or necessary to fulfill the legal obligations of any company or
entity with which such individuals are affiliated.

     You hereby acknowledge that any breach of this Section 9 would cause the Company irreparable
harm. In the event of a breach or threatened breach of this Section 9, the Company shall be
entitled to injunctive relief enforcing this Section 9 without bond. If any part of this Section 9
is found to be overbroad, the Parties authorize the court to reform this Section 9 to provide the
maximum protection for the Company that is legally permitted and to enforce this Section 9 as
reformed.

10. Non-Solicitation.

     You and the Company agree that one of the Company’s most valuable assets is the people who
provide services to the Company. For two (2) years from the Termination Date, you shall not,

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directly or indirectly, individually or as part of or on behalf of any other person, company,
employer or other entity, hire or attempt to solicit for hire, any Covered Person, without the
Chairman’s prior written consent. “Covered Person” shall mean any person who has (i) provided
services to the Company at any time during the six (6) months before the Termination Date and (ii)
the date on which they ceased to provide such services was less than three months prior to any
conduct prohibited the first sentence of this Section 10. If any Covered Person accepts work with
any person, company, employer or other entity of 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 Person 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 Person to cease to provide services to the Company. You shall give written notice to any
person or entity to which you provide services within two (2) years of the Termination Date of the
terms of your obligations under this Section 10. You shall provide such written notice with a copy
to the Company on or before the first day of providing such services. Such notice must contain the
name and address of the person or entity to which you are providing services. You hereby
acknowledge that any breach of this Section 10 would cause the Company irreparable harm. The
Parties agree that any breach or threatened breach of this Section 10 shall entitle the Company to
injunctive relief enforcing this Section 10 without bond. If any part of this Section 10 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.

11. 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 while you were providing services to the Company. You
understand that in any legal action, investigation, or review covered by this Section 11 that the
Company expects you to provide only accurate and truthful information or testimony. The Company
shall reimburse all costs and expenses reasonably incurred by you in connection with your
compliance with this Section 11.

12. 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”).

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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 12
shall entitle the Company to injunctive relief enforcing this Section 12 without bond. If any part
of this Section 12 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.

13. 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 Chairman, or sent by overnight delivery
with acknowledgement of receipt requested, to:

Chairman of the Compensation

Committee of Board of Directors

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):

John M. Scheurer

4106 Rosemary Street

Chevy Chase, Maryland 20815

	 	 	 	 	 
	 

	 	Copy to:
	 	Anthony H. Dowling, Esq.

Bachelder & Dowling, P.A.

120 Exchange Street 

P.O. Box 7003

Portland, ME 04112-7003

     (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 B
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

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preserve the
status quo or to prevent irreparable injury, (3) disputes relating to Sections 8, 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) Nature of Agreement. This Agreement and the attachments hereto constitute the
entire agreement between you and the Company and supersede all prior agreements and understandings
between you and the Company relating to the matters covered by this Agreement, except the following
agreements between you and the Company which remain in effect the stock option agreements, the
Indemnification Agreement and the Split Dollar Life Insurance Agreement. 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 Chairman. 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 either with your written consent or to any successor entity that expressly assumes and
agrees to perform
this Agreement in the same manner and to the same extent as the Company would have been
required to do. 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. You
further certify that you fully understand the terms of this Agreement and have entered into it
knowingly and voluntarily.

     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/ John M. Scheurer

	 	 	 	By:
	 	/s/ Anthony T. Garcia
	 	 
	 

	 	 	 	 	 	 	 	 
	John M. Scheurer

	 	 	 	 	 	Chairman, Compensation Committee Of The Board Of Directors	 	 
	 

	 	 	 	 	 		 	 
	Date: May 5, 2009

	 	 	 	 	 	Date: May 5, 2009	 	 

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ATTACHMENT A

GENERAL RELEASE AND WAIVER OF CLAIMS

     John M. Scheurer (“you”) executes this General Release and Waiver of Claims (the “Release”) as
a condition of receiving certain payments under Section 6 of your Employment Agreement with Allied
Capital Corporation (“Company”) that became effective on May 5, 2009. This document is important
and you are advised to review it carefully and consult with an attorney before you sign it.

     1. Release of Claims.

     (a) You hereby release and forever discharge each of the Released Parties (as defined below)
from any and all claims, damages, injuries and actions 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 Release (“Released Claims”). For
purposes of this Release, “Released Parties” shall mean the Company and its subsidiaries,
predecessors, successors, parents, portfolio companies and affiliated entities and for each and
every one 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
Release, even if knowing about such claims could have affected your decision to sign the Release.

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     (d) Nothing in this Release shall be construed to release that as a matter of law may not be
released or 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 Release, you waive any right to recover monetary
damages or any other relief in connection with any such charge, investigation or proceeding.

     (e) Notwithstanding the foregoing, and for the avoidance of doubt, this Release does not
extend to, and you are not releasing, (i) any claims for reimbursement of expenses under Section
3(c) of your Employment Agreement that were reasonably and necessarily incurred within the 60 days
prior to the date on which your employment ended, (ii) any rights to vested benefits under Section
4 of your Employment Agreement or to any payments or benefits under Sections 5 and 6 of your
Employment Agreement, or (iii) any rights or claims under your Indemnification Agreement with the
Company or any other rights or claims to indemnification you may have.

2. Review and Revocation Period.

     (a) You may take up to twenty-one (21) calendar days to consider whether to sign and return
this Release to Chairman of the Board of Directors (the “Chairman”), Allied Capital Corporation,
1919 Pennsylvania Avenue, NW, Washington, DC 20006. If you choose to sign the Release 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. If you fail to return to the Chairman a signed copy of
the Release within twenty-one (21) days of receiving it, you shall not be entitled to any payment
under Section 6 of your Employment Agreement. You hereby acknowledge that you
have been advised by the Company to review this Release with an attorney before you sign it.

     (b) If you sign this Release within the twenty-one (21) day period, you then will have seven
(7) calendar days in which to revoke the Release by having a written revocation delivered to the
Chairman before the end of such seven-day period. If you timely revoke this Release, this Release
will be null and void and you will not be entitled to any payment under Section 6 of your
Employment Agreement. If the Chairman does not receive your revocation of this Release within the
seven (7) day period after you sign it, the Release will be final and binding on the eighth
(8th) day after you sign it (“Effective Date”).

By signing below, I certify that I have read, understand and am voluntarily signing this General
Release and Waiver of Claims.

	 	 	 
	 

	 	 
	John M. Scheurer

	 	Date

Initial:                     

2

 

ATTACHMENT B

DISPUTE RESOLUTION PROCEDURES

     The Parties agree to comply with the following procedures (“Procedures”) with regard to any
dispute that is required by Section 13(b) of the Employment Agreement between John Scheurer and
Allied Capital Corporation to be submitted for arbitration for final resolution.

     (1) The party claiming to be aggrieved shall furnish to the other a written statement of the
grievance, all persons whose testimony would support the grievance, and the relief requested or
proposed. The written statements must be delivered to the other party within the earlier of the
time limits for bringing an administrative and the time limits for bringing a court action based on
that claim.

     (2) If the other party does not agree to furnish the relief requested or proposed, or
otherwise does not satisfy the demand of the party claiming to be aggrieved within 30 days and the
aggrieved party wishes to pursue the issue, the aggrieved party shall by written notice demand that
the dispute be submitted to non-binding mediation before a mediator jointly selected by the
Parties. If the Parties cannot otherwise agree to a mediator, the Parties shall request a list of
nine mediators in Washington, D.C. from the American Arbitration Association and select by
alternately striking names with the aggrieved party striking the first name. The mediation shall
be held at a mutually agreeable location in Washington, D.C.

     (3) If the mediation does not produce a resolution of the dispute and either party wishes to
pursue the issue, that party shall request arbitration of the dispute by giving written notice to
the other party within 30 days after the mediation. The Parties will attempt to agree on a
mutually acceptable arbitrator. If the Parties cannot otherwise agree on an arbitrator, the
Parties shall request a list of nine arbitrators in Washington, D.C. from the American Arbitration
Association and select by alternately striking names with the aggrieved party striking the first
name. Regardless of whether the American Arbitration Association administers the arbitration, the
arbitration shall be conducted consistent with the American Arbitration Association’s then current
rules governing employment disputes (“Rules”). If there is any conflict between those Rules and
the Procedures, the Procedures shall govern. The arbitrator shall have authority to decide whether
the conduct complained of under Section (1) above violates the rights of the Parties as provided by
the applicable law. In any such arbitration proceeding, any hearing must be transcribed by a
certified court reporter and any decision must be supported by written findings of fact and
conclusions of law. The arbitrator’s findings of fact must be supported by substantial evidence on
the record as a whole and the conclusions of law and any remedy must be provided for by and
consistent with the laws of the District of Columbia and federal law. The arbitrator shall have no
authority to add to, modify, change or disregard any lawful term of the Agreement. Any arbitration
proceedings shall be held at a mutually agreeable location in Washington, D.C.

Initial:exv10w44

	 	 	 	 	 

Exhibit
10.44

 

CUSTODIAN AGREEMENT

 

dated as of April 3, 2009

by and between

Allied Capital Corporation

(“Company”)

and

U.S. Bank National Association

(“Custodian”)

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	1.

	 	DEFINITIONS
	 	 	1	 
	2.

	 	APPOINTMENT OF CUSTODIAN AND DESIGNATION OF ACCOUNTS
	 	 	3	 
	3.

	 	DUTIES OF THE CUSTODIAN
	 	 	4	 
	4.

	 	REPORTING
	 	 	10	 
	5.

	 	[INTENTIONALLY OMITTED]
	 	 	11	 
	6.

	 	COMPENSATION OF CUSTODIAN
	 	 	11	 
	7.

	 	APPOINTMENT OF AGENTS
	 	 	11	 
	8.

	 	DEPOSIT IN U.S. SECURITIES SYSTEMS
	 	 	11	 
	9.

	 	[INTENTIONALLY OMITTED]
	 	 	12	 
	10.

	 	RESPONSIBILITY OF CUSTODIAN
	 	 	12	 
	11.

	 	SECURITY CODES
	 	 	16	 
	12.

	 	TAX LAW
	 	 	16	 
	13.

	 	EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
	 	 	16	 
	14.

	 	REPRESENTATIONS AND WARRANTIES
	 	 	17	 
	15.

	 	PARTIES IN INTEREST; NO THIRD PARTY BENEFIT
	 	 	18	 
	16.

	 	NOTICES
	 	 	18	 
	17.

	 	CHOICE OF LAW AND JURISDICTION
	 	 	18	 
	18.

	 	ENTIRE AGREEMENT AND COUNTERPARTS
	 	 	19	 
	19.

	 	AMENDMENT; WAIVER
	 	 	19	 
	20.

	 	SUCCESSOR AND ASSIGNS
	 	 	19	 
	21.

	 	SEVERABILITY
	 	 	19	 
	22.

	 	INSTRUMENT UNDER SEAL; HEADINGS
	 	 	20	 
	23.

	 	REQUEST FOR INSTRUCTIONS
	 	 	20	 
	24.

	 	OTHER BUSINESS
	 	 	20	 
	25.

	 	REPRODUCTION OF DOCUMENTS
	 	 	20	 
	26.

	 	SHAREHOLDER COMMUNICATIONS
	 	 	20	 

i

 

     THIS CUSTODIAN AGREEMENT (this “Agreement”) is dated as of April 3, 2009 and is by and between
Allied Corporation, a corporation organized under the laws of Maryland (the “Company”), having a
business address at 1919 Pennsylvania Avenue NW, Suite 300, Washington, DC 20006 and U.S. Bank
National Association (the “Custodian”) a national banking association having a place of business at
One Federal Street, Boston, MA 02110.

     WHEREAS, the Company desires to engage the Custodian to act as custodian for the Company to
provide the custodial and administrative services set forth in this Agreement, upon and subject to
the terms of this Agreement; and

     WHEREAS, the Custodian is willing to act in such capacity as custodian under and subject to
the terms of this Agreement;

     NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, the
parties hereto agree as follows:

	1.	 	DEFINITIONS
	 
	1.1.	 	The following words have these meanings as used in this Agreement:
	 
	 	 	“Accounts” shall mean, collectively, the Cash Account, the Securities Account and any other
Account established by the Custodian pursuant to Section 2.2 of this Agreement.
	 
	 	 	“Authorized Person” shall have the meaning ascribed to such term in Section 3.10 of this
Agreement.
	 
	 	 	“Business Day” means a day on which the Custodian or the relevant sub-custodian is open for
business in the market or country in which a transaction is to take place.
	 
	 	 	“Cash Amount(s)” means the initial deposit in the amount of $50,000,000.00 made on April 3,
2009 by the Company to U.S. Bank National Association and any other cash amounts received by
the Custodian from the Company from time to time.
	 
	 	 	“Cash Account” shall have the meaning set forth in Section 2.2(b).
	 
	 	 	“Confidential Information” means any databases, computer programs, screen formats, screen
designs, report formats, interactive design techniques, and other similar or related
information furnished to the Company by the Custodian, for the purposes of this Agreement.
	 
	 	 	“Delivery Date” means such date or dates on which Securities or Cash Amounts may be
delivered to the Custodian from time to time pursuant to the terms of this Agreement (it
being hereby expressly acknowledged that there will be more than one Delivery Date).
	 
	 	 	“Federal Reserve Bank Book-Entry System” means a depository and securities transfer system
operated by the Federal Reserve Bank of the United States on which are eligible to be held
all United States Government direct obligation bills, notes and bonds.

 

 

	 	 	“Person” means any individual, corporation, partnership, limited liability company, joint
venture, association, joint stock company, trust (including any beneficiary thereof)
unincorporated organization, or any government or agency or political subdivision thereof.
	 
	 	 	“Proceeds” means, collectively, (i) all distributions, earnings, dividends and other
payments paid on the Securities or Other Securities by or on behalf of the issuer or obligor
thereof, or applicable paying agent, and received by the Custodian during the term hereof,
and (ii) the net proceeds of the sale or other disposition of the Securities pursuant to the
terms of this Agreement and received by the Custodian during the term hereof (and any
Reinvestment Earnings from investment of the foregoing, as defined in Section 3.5(b)
hereof).
	 
	 	 	“Proper Instructions” means instructions received by the Custodian, in form acceptable to
it, from the Company, or any Person duly authorized by the Company in any of the following
forms acceptable to the Custodian:

	 	(a)	 	in writing signed by the Authorized Person; or
	 
	 	(b)	 	in tested communication; or
	 
	 	(c)	 	in a communication utilizing access codes effected between electro mechanical
or electronic devices; or
	 
	 	(d)	 	such other means as may be agreed upon from time to time by the Custodian and
the party giving such instructions, including without limitation oral instructions.

	 	 	“Securities” means, collectively, the (i) investment securities delivered to the Custodian
by the Company from time to time during the term of, and pursuant to the terms of, this
Agreement, and (ii) all dividends in kind (e.g., non-cash dividends) from the securities
described in clause (i).
	 
	 	 	“Securities Account” shall have the meaning set forth in Section 2.2(a).
	 
	 	 	“Securities System” means the Federal Reserve Book Entry System, a clearing agency which
acts as a securities depository, or another book entry system for the central handling of
securities.
	 
	 	 	“Street Delivery Custom” means a custom of the United States securities market to deliver
securities which are being sold to the buying broker for examination to determine that the
securities are in proper form.
	 
	 	 	“Street Name” means the form of registration in which the securities are held by a broker
who is delivering the securities to another broker for the purposes of sale, it being an
accepted custom in the United States securities industry that a security in Street Name is
in proper form for delivery to a buyer and that a security may be re-registered by a buyer
in the ordinary course.

-2-

 

In this Agreement unless the contrary intention appears:

	 	(a)	 	a reference to this Agreement or another instrument refers to such agreement or
instrument as the same may be amended, modified or otherwise rewritten from time to
time;
	 
	 	(b)	 	a reference to a statute, ordinance, code or other law includes regulations and
other instruments under it and consolidations, amendments, re-enactments or
replacements of any of them;
	 
	 	(c)	 	the singular includes the plural and vice versa;
	 
	 	(d)	 	the word “Person” includes any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust (including
any beneficiary thereof), unincorporated organization, or any government or agency,
authority or political subdivision of any government.
	 
	 	(e)	 	a reference to a Person includes a reference to the Person’s executors,
administrators, successors and permitted assigns;
	 
	 	(f)	 	an agreement, representation or warranty in favor of two or more Persons is for
the benefit of them jointly and severally;
	 
	 	(g)	 	To the extent required in order to avoid accelerated taxation and/or tax penalties under
Section 409A, you shall not be considered to have terminated employment with the Company for
purposes of the Agreement until you would be considered to have incurred a “separation from
service” from the Company within the meaning of Section 409A and, for the purposes of determining
the timing of payment, termination of employment shall not be considered to occur until you have
incurred such a “separation from service.”
	 
	 	(h)	 	an agreement, representation or warranty on the part of two or more Persons
binds them jointly and severally; and a reference to any accounting term is to be interpreted in accordance with
generally accepted principles and practices in the United States, consistently applied.

	1.2.	 	Headings are inserted for convenience and do not affect the interpretation of this Agreement.
	 
	2.	 	APPOINTMENT OF CUSTODIAN AND DESIGNATION OF ACCOUNTS
	 
	2.1.	 	Employment of Custodian

	 	(a)	 	The Company hereby appoints the Custodian as the custodian of the Securities,
Cash Amounts and Proceeds pursuant to this Agreement, and in such capacity appoints the
Custodian to act as custodial agent on behalf of the Company with respect thereto. All
Securities, Cash Amounts and Proceeds delivered to the Custodian, its agents or its
sub-custodians shall be held and dealt with in accordance with this Agreement. The
Custodian shall not be responsible for any property held or received by the Company or
any other Person and not delivered to the Custodian (its agents or its sub-custodians)
pursuant to the terms of this Agreement. At the time of each delivery of Securities to
the Custodian by or on behalf of the Company, the Company agrees that it shall
expressly identify the same to the Custodian as Securities being delivered under this
Agreement.

-3-

 

	 	(b)	 	The Custodian accepts its appointment as custodian hereunder, and agrees to
receive and hold, as custodian for the Company pursuant to the terms of this Agreement,
the Cash Amounts and Securities delivered and identified to it by the Company on each
Delivery Date and any Proceeds received from time to time therefrom.

	2.2.	 	Establishment of Accounts

	 	(a)	 	There shall be established at the Custodian a securities account to which it
shall deposit and hold the Securities received by it (and any Proceeds received by it
from time to time in the form of dividends in kind) pursuant to this Agreement, which
account shall be designated the “Allied Capital Corporation Custody Account” (the
“Securities Account”).
	 
	 	(b)	 	There shall be established at the Custodian an account or accounts to which the
Custodian shall deposit and hold any Cash Amounts and cash Proceeds received by it from
time to time from or with respect to the Securities, which accounts shall be designated
the “Allied Capital Corporation Interest Collection Account” to which the Custodian
shall deposit Cash Amounts, interest Proceeds received on the Securities and the
“Allied Capital Corporation Principal Collection Account” into which the Custodian
shall deposit Cash Amounts and principal Proceeds received on the Securities
(collectively, the “Cash Account”).
	 
	 	(c)	 	Securities held in the Securities Account may be withdrawn by the Company from
time to time pursuant to Section 3.2 below. Amounts held in the Cash Account from time
to time may be withdrawn by the Company upon receipt of Proper Instructions therefor,
and may be invested upon and pursuant to specific direction of the Company in the form
of Proper Instruction, pursuant to Section 3.5 below.

	3.	 	DUTIES OF THE CUSTODIAN
	 
	3.1.	 	Holding Securities

	 	(a)	 	The Custodian shall hold and segregate, or direct its agents to hold and
segregate for the account of the Company all Securities received by it pursuant to this
Agreement other than Securities which are held in a Securities System, or which are
maintained in one or more omnibus accounts at the Custodian, its agents or
sub-custodians, and shall properly account for all Securities held in a Securities
System or maintained through one or more omnibus accounts and identify the same on its
books and records as held for the account of the Company.
	 
	 	 	 	Any Account may contain any number of sub-accounts for the convenience of the
Custodian or as required by the Company for convenience in administering such
accounts.
	 
	 	(b)	 	The Custodian shall have no power or authority to assign, hypothecate, pledge,
or otherwise dispose of any Securities except pursuant to Proper Instructions and as
described in this Agreement.

-4-

 

	3.2.	 	Delivery of Securities

	 	(a)	 	Delivery of Securities to the Custodian shall be in Street Name or other good
delivery form.
	 
	 	(b)	 	The Custodian shall release and deliver, or direct its agents or sub-custodians
to release and deliver, as the case may be, Securities of the Company held by the
Custodian, its agents or its sub-custodians from time to time only upon receipt of
Proper Instructions (which shall, among other things specify the Securities to be
released, with such delivery and other information as may be necessary to enable the
Custodian to perform), which may be standing instructions (in form acceptable to the
Custodian) in the following cases:

	 	(i)	 	upon sale of such Securities by or on behalf of the Company
and, unless otherwise directed by Proper Instructions:

	 	(A)	 	in accordance with the customary or established
practices and procedures in the jurisdiction or market where the
transactions occur, including, without limitation, delivery to the
purchaser thereof or to a dealer therefor (or an agent of such
purchaser or dealer) against expectation of receiving later payment; or
	 
	 	(B)	 	in the case of a sale effected through a
Securities System, in accordance with the rules governing the
operations of the securities System;

	 	(ii)	 	upon the receipt of payment in connection with any repurchase
agreement related to such securities;
	 
	 	(iii)	 	to the depositary agent in connection with tender or other
similar offers for securities;
	 
	 	(iv)	 	to the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable. Unless otherwise
directed by Proper Instructions, the cash or other consideration is to be
delivered to the Custodian, its agents or its sub-custodians;
	 
	 	(v)	 	to an issuer thereof, or its agent, for transfer into the name
of the Custodian or of any nominee of the Custodian or into the name of any of
its agents or sub-custodians or their nominees or for exchange for a different
number of bonds, certificates or other evidence representing the same aggregate
face amount or number of units.
	 
	 	(vi)	 	to brokers clearing banks or other clearing agents for
examination in accordance with the Street Delivery Custom;
	 
	 	(vii)	 	for exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the

-5-

 

	 	 	 	issuer of such securities, or pursuant to any deposit agreement. Unless
otherwise directed by Property Instructions, the new securities and cash, if
any, are to be delivered to the Custodian, its agents or its sub-custodians;
	 
	 	(viii)	 	in the case of warrants, rights or similar securities, the surrender thereof
in the exercise of such warrants, rights or similar securities or the surrender
of interim receipts or temporary securities for definitive securities. Unless
otherwise directed by Proper Instructions, the new securities and cash, if any,
are to be delivered to the Custodian, its agents or its sub-custodians; and/or
	 
	 	(ix)	 	for any other purpose, but only upon receipt of Proper
Instructions specifying the Securities to be delivered and naming the Person or
Persons to whom delivery of such Securities shall be made.

	3.3.	 	Registration of Securities

Securities held by the Custodian, its agents or its sub-custodians (other than bearer securities or
securities held in a Securities System) shall be registered in the name of the Company or if
directed by the Company by Proper Instruction, may be maintained in Street Name. The Custodian,
its agents and its sub-custodians shall not be obliged to accept securities on behalf of the
Company under the terms of this Agreement unless such Securities are in Street Name or other good
deliverable form.

	3.4.	 	Bank Accounts, and Management of Cash
	 
	(a)	 	Both Cash Amounts and Cash Proceeds from the Securities received by the Custodian, or its
agents or sub-custodians, from time to time shall be credited to the Cash Account. All amount
credited to the Cash Account shall be subject to clearance and receipt of final payment by the
Custodian.
	 
	(b)	 	Amounts held in the Cash Account from time to time may be invested pursuant to specific
Proper Instructions (which may be standing instructions) received by the Custodian from the
Company. Such investments shall be subject to availability and the Custodian’s then
applicable transaction charges (which shall be at the Company’s expense). The Custodian shall
have no liability for any loss incurred on any such investment. Absent receipt of such
specific written instruction from the Company, the Custodian shall have no obligation to
invest (or otherwise pay interest on) amounts on deposit in the Cash Account; and in no
instance will the Custodian have any obligation to provide investment advice to the Company.
Any earnings from such investment of amounts held in the Cash Account from time to time
(collectively, “Reinvestment Earnings”) shall be redeposited in the Cash Account (and may be
reinvested at the written direction of the Company).
	 
	(c)	 	In the event that the Company shall at any time request a withdrawal of amounts from the Cash
Account, the Custodian shall be entitled to liquidate, and shall have no liability for any
loss incurred as a result of the liquidation of, any investment of the funds credited to such
account as needed to provide necessary liquidity. Investment instructions may be in

-6-

 

	 	 	the form of standing instructions (in form Proper Instructions in form acceptable to
Custodian).
	 
	(d)	 	The Company acknowledges that cash deposited or invested with any bank (including the bank
acting as Custodian) may generate a margin or banking income for which such bank shall not be
required to account to the Company.
	 
	3.5.	 	[Intentionally Omitted]
	 
	3.6.	 	Collection of Income

The Custodian, its agents or its sub-custodians shall use reasonable efforts to collect on a timely
basis all income and other payments with respect to the Securities held hereunder to which the
Company shall be entitled, to the extent consistent with usual custom in the securities custodian
business in the United States. Such efforts shall include collection of interest income, dividends
and other payments with respect to registered domestic securities if on the record date with
respect to the date of payment by the issuer the Security is registered in the name of the
Custodian or its nominee (or in the name of its agent or sub-custodian, or their nominee); and
interest income, dividends and other payments with respect to bearer domestic securities if, on the
date of payment by the issuer such securities are held by the Custodian or its sub-custodian or
agent; provided, however, that in the case of Securities held in Street Name, the Custodian shall
use its reasonable efforts only to timely collect income. In no event shall the Custodian’s
agreement herein to collect income be construed to obligate the Custodian to commence, undertake or
prosecute any legal proceedings.

	3.7.	 	Payment of Moneys

	 	(a)	 	Upon receipt of Proper Instructions, which may be standing instructions, the
Custodian shall pay out from the Cash Account (or remit to its agents or its
sub-custodians, and direct them to pay out) moneys of the Company on deposit therein in
the following cases:

	 	(i)	 	upon the purchase of Securities for the Company pursuant to
such Proper Instruction; and such purchase may, unless and except to the extent
otherwise directed by Proper Instructions, be carried out by the Custodian;

	 	(A)	 	in accordance with the customary or established
practices and procedures in the jurisdiction or market where the
transactions occur, including, without limitation, delivering money to
the seller thereof or to a dealer therefor (or any agent for such
seller or dealer) against expectation of receiving later delivery of
such securities; or
	 
	 	(B)	 	in the case of a purchase effected through a
Securities System, in accordance with the rules governing the operation
of such Securities System;

-7-

 

	 	(ii)	 	for the purchase or sale of foreign exchange or foreign
exchange agreements for the accounts of the Company, including transactions
executed with or through the Custodian, its agents or its sub-custodians, as
contemplated by Section 3.6 above; and
	 
	 	(iii)	 	for any other purpose directed by the Company, but only upon
receipt of Proper Instructions specifying the amount of such payment, and
naming the Person or Persons to whom such payment is to be made.

	 	(b)	 	No less than 7 days following the delivery of a statement to the Company
identifying any such amounts, the Custodian shall be entitled to pay (i) itself from
the Cash Account, whether or not in receipt of express direction or instruction from
the Company, any amounts due and payable to it pursuant to Section 6 hereof, and (ii)
as otherwise permitted by Section 3.11(a) or Section 10.4 below, provided, however,
that in each case all such payments shall be accounted for to the Company.

	3.8.	 	Proxies

The Custodian may not vote any securities held by or for the Company’s account, except in
accordance with Proper Instructions or instructions contained in an Officer’s Certificate. The
Custodian will, with respect to the Securities held hereunder, use its reasonable efforts to cause
to be promptly executed by the registered holder of such Securities proxies received by the
Custodian from its agents or its sub-custodians or from issuers of the Securities being held for
the Company, without indication of the manner in which such proxies are to be voted, and upon
receipt of Proper Instructions shall promptly deliver such proxies, proxy soliciting materials and
notices relating to such Securities. In the absence of such Proper Instructions, or in the event
that such Proper Instructions are not received in a timely fashion, the Custodian shall be under no
duty to act with regard to such proxies.

	3.9.	 	Communications Relating to Securities

The Custodian shall transmit promptly to the Company all written information (including, without
limitation, pendency of calls and maturities of Securities and expirations of rights in connection
therewith) received by the Custodian, from its agents or its sub-custodians or from issuers of the
Securities being held for the Company. The Custodian shall have no obligation or duty to exercise
any right or power, or otherwise to preserve rights, in or under any Securities unless and except
to the extent it has received timely Proper Instruction from the Company in accordance with the
next sentence. The Custodian will not be liable for any untimely exercise of any right or power in
connection with Securities at any time held by the Custodian, its agents or sub-custodians unless

	 	(a)	 	the Custodian has received Proper Instructions with regard to the exercise of
any such right or power; and
	 
	 	(b)	 	the Custodian, or its agents or sub-custodians are in actual possession of such
Securities

-8-

 

	 	 	 	at least three (3) Business Days prior to the date on which such right or power is to be exercised.
It will be the responsibility of the Company to notify the Custodian of the Person to whom such
communications must be forwarded under this Section.

	3.10.	 	Proper Instructions
	 
	(a)	 	The Company will give a notice to the Custodian, in the form acceptable to it, specifying the
names and specimen signatures of persons authorized by the Board of Directors to give Proper
Instructions (collectively, “Authorized Officers”) which notice shall be signed by the
President, Chief Executive Officer or a Senior Vice President or by another Authorized Officer
previously certified to the Custodian. The Custodian shall be entitled to rely upon the
identity and authority of such persons until it receives written notice from the Company to
the contrary.
	 
	(b)	 	The Custodian shall have no responsibility or liability to the Company (or any other person
or entity), and shall be indemnified and held harmless by the Company, in the event that a
subsequent written confirmation of an oral instruction fails to conform to the oral
instructions received by the Custodian. The Custodian shall have no obligation to act in
accordance with purported instructions to the extent that they conflict with applicable law or
regulations, local market practice or the Custodian’s operating policies and practices. The
Custodian shall not be liable for any loss resulting from a delay while it obtains
clarification of any Proper Instructions.
	 
	3.11.	 	Actions Permitted without Express Authority

The Custodian, may at its discretion, without express authority from the Company:

	 	(a)	 	subject to Section 3.7(b), make payments to itself as described in or pursuant
to Section 3.7(b), or to make payments to itself or others for minor expenses of
handling securities or other similar items relating to its duties under this agreement,
provided that all such payments shall be accounted for to the Company;
	 
	 	(b)	 	surrender Securities in temporary form for Securities in definitive form;
	 
	 	(c)	 	endorse for collection cheques, drafts and other negotiable instruments; and
	 
	 	(d)	 	in general attend to all nondiscretionary details in connection with the sale,
exchange, substitution, purchase, transfer and other dealings with the securities and
property of the Fund.

	3.12.	 	Evidence of Authority

The Custodian shall be protected in acting upon any instructions, notice, request, consent,
certificate instrument or paper reasonably believed by it to be genuine and to have been properly
executed or otherwise given by or on behalf of the Company by any two Authorized Officers. The
Custodian may receive and accept a certificate signed by any two Authorized Officers (an “Officers’
Certificate”) as conclusive evidence of:

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	 	(a)	 	the authority of any person to act in accordance with such certificate; or
	 
	 	(b)	 	any determination or of any action by the Company as described in such
certificate,

and such certificate may be considered as in full force and effect until receipt by the Custodian
of written notice to the contrary from an Authorized Officer of the Company.

	3.13.	 	Receipt of Communications

Any communication received by the Custodian on a day which is not a Business Day or after 3:30 p.m.
(or such other time as is agreed by the Company and the Custodian from time to time) on a Business
Day will be deemed to have been received on the next Business Day (but in the case of
communications so received after 3:30 p.m. on a Business Day the Custodian will use reasonable
endeavors to process such communications as soon as possible after receipt.

	4.	 	REPORTING

The Custodian shall provide promptly, upon request, such reports as are available concerning the
internal controls and financial strength of the Custodian and any Sub-custodian.

	 	(a)	 	The Custodian shall render to the Company a monthly report of (i) all deposits to and
withdrawals from the Cash Account during the month, and the outstanding balance (as of the
last day of the preceding monthly report and as of the last day of the subject month) and (ii)
an itemized statement of the Securities held in the Securities Account as of the end of each
month, as well as a list of all Securities transactions that remain unsettled at that time and
(iii) such other matters as the parties may agree from time to time.
	 
	 	(b)	 	The Custodian shall have no duty or obligation to undertake any market valuation of the
Securities under any circumstance.
	 
	 	(c)	 	The Company acknowledges that any data and information held by the Custodian from time to
time concerning the Securities and to which the Company is given access (without herein
implying any obligation or agreement by the custodian to maintain or provide access to any
particular information or database) from time to time at the election of the Custodian (the
“Securities Database”) is unaudited and the Custodian does not independently verify the
accuracy of information it receives concerning the Securities (whether form the Company, from
others at the Company’s behest or on its behalf, or from issuers of the Securities or their
agents) prior to its inclusion in the Securities Database. The Custodian will not be liable
to the Company or any other Person for any loss or damage arising out of or in connection with
the relationship established by this Agreement as a result of inaccuracies in any information
contained in the Securities Database or any information to which the Company is given access
pursuant to this Section 4.
	 
	 	(d)	 	Within five Business Days of completion of any Securities purchased or sold pursuant to
Proper Instructions, the Custodian shall provide trade confirmation in writing to the Company.

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	 	(e)	 	The Company and the Custodian may agree to other recordkeeping procedures from time to time
in order to comply with 31(a) of the Investment Company Act of 1940, as amended (the “1940
Act”).

	5.	 	[INTENTIONALLY OMITTED]
	 
	6.	 	COMPENSATION OF CUSTODIAN
	 
	(a)	 	The Custodian shall be entitled to compensation for its services in accordance with the terms
set forth in Schedule A attached hereto and made a part hereof.
	 
	(b)	 	The Company agrees to pay or reimburse to the Custodian upon its request from time to time
all costs, disbursements, advances and expenses (including without limitation reasonable fees
and expenses of legal counsel) incurred, and any disbursements and advances made (including
without limitation any account overdraft resulting from any settlement or assumed settlement,
provisional credit, reclaimed payment or claw-back, or the like), in connection with the
preparation or execution of this Agreement, or in connection with the transactions
contemplated hereby or the administration of this Agreement or performance by the Custodian of
its duties and services under this Agreement, from time to time (including without limitation
costs and expenses of any action deemed necessary by the Custodian to collect any amounts
owing to it under this Agreement).
	 
	7.	 	APPOINTMENT OF AGENTS

The Custodian may at any time or times in its discretion appoint (and may at any time remove) any
other bank, trust company or other Person to act as an agent or sub-custodian to carry out such of
the provisions of this Agreement as the Custodian may from time to time direct; provided, however,
that the appointment of any agent or sub-custodian shall not relieve the Custodian of its
responsibilities or liabilities hereunder (except to the extent otherwise provided in Sections 8, 9
or 10 below). The Custodian is further obligated to exercise due care in accordance with
reasonable commercial standards in discharging its duties and must require any agent or
Sub-custodian as appointees to likewise exercise due care in accordance with reasonable commercial
standards in discharging its duty as securities intermediary to obtain and thereafter maintain the
Company’s assets.

	8.	 	DEPOSIT IN U.S. SECURITIES SYSTEMS

The Custodian may deposit and/or maintain Securities in a U.S. Securities System in accordance with
applicable Federal Reserve Board and Securities and Exchange Commission rules and regulations, if
any, and subject to the following provisions:

	8.1.	 	The Custodian may keep domestic Securities in a U.S. Securities System provided that such
Securities are represented in an account (“Participant Account”) of the Custodian in the U.S.
Securities System which shall not include any assets of the Custodian other than assets held
by it as a fiduciary, custodian or otherwise for customers;

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	8.2	 	The records of the Custodian with respect to Securities which are maintained in a U.S.
Securities System shall identify by book-entry those securities belonging to the Company;
	 
	8.3	 	If requested by the Company, the Custodian shall provide to the Company copies of all advices
from the U.S. Securities System of transfers of Securities for the account of the Company; and
	 
	8.4	 	Anything to the contrary in this Agreement notwithstanding, the Custodian shall not be liable
to the Company for any direct loss, damage, cost, expense, liability or claim to the Company
resulting from use of the U.S. Securities System (other than to the extent resulting from the
gross negligence, misfeasance or misconduct of the Custodian itself, or from failure of the
Custodian to enforce effectively such rights as it may have against the U.S. Securities
System).
	 
	9.	 	[INTENTIONALLY OMITTED]
	 
	10.	 	RESPONSIBILITY OF CUSTODIAN
	 
	10.1.	 	General Duties

The Custodian shall have no duties, obligations or responsibilities under this Agreement or with
respect to the Cash Amounts, Securities or the Proceeds except for such duties as are expressly and
specifically set forth in this Agreement as duties on its part to be performed or observed, and the
duties and obligations of the Custodian shall be determined solely by the express provisions of
this Agreement. No implied duties, obligations or responsibilities shall be read into this
Agreement against, or on the part of, the Custodian.

	10.2.	 	Instructions

	 	(a)	 	The Custodian shall be entitled to refrain from taking any action unless it has
such instruction (in the form of Proper Instructions) from the Company as the Custodian
deems necessary, and shall be entitled to require that instructions to it be in
writing. The Custodian shall have no liability for any action (or forbearance from
action) taken pursuant to the instruction of the Company.
	 
	 	(b)	 	Whenever the Custodian is entitled or required to receive or obtain any report,
opinion, notice of other information pursuant to or as contemplated by this Agreement,
it shall be entitled to receive the same in writing, in form, content and medium
reasonably acceptable to it; and whenever any report or other information is required
to be produced or distributed by the Custodian shall be in form, content and medium
reasonably acceptable to it.

10.3. General Standards of Care

Notwithstanding any terms herein contained to the contrary, the acceptance of the Custodian of its
appointment hereunder is expressly subject to the following terms, which shall govern and apply to
each of the terms and provisions of this Agreement (whether or not so stated therein):

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	 	(a)	 	The Custodian shall not be responsible for the title, validity or genuineness,
including good deliverable form of any property or evidence of title thereto received
by it or delivered by it pursuant to this Agreement.
	 
	 	(b)	 	The Custodian may rely on and shall be protected in acting or refraining from
acting upon any written notice, instruction, statement, certificate, request, waiver,
consent, opinion, report, receipt or other paper or document furnished to it (including
without limitation any of the foregoing provided to it by telecopier or electronic
means), not only as to its due execution and validity, but also as to the truth and
accuracy of any information therein contained, which it in good faith believes to be
genuine and signed or presented by the proper person; and the Custodian shall be
entitled to presume the genuineness and due authority of any signature appearing
thereon. The Custodian shall not be bound to make any independent investigation into
the facts or matters stated in any such notice, instruction, statement, certificate,
statement, request, waiver, consent, opinion, report, receipt or other paper or
document, provided, however, that if the form thereof is specifically prescribed by the
terms of this Agreement, the Custodian shall examine the same to determine whether it
substantially conforms on its face to such requirements hereof.
	 
	 	(c)	 	Neither the Custodian nor any of its directors, officers or employees shall be
liable to anyone for any error of judgment, or for any act done or step taken or
omitted to be taken by it (or any of its directors, officers of employees), or for any
mistake of fact or law, or for anything which it may do or refrain from doing in
connection herewith, unless such action constitutes gross negligence, willful
misconduct or bad faith on its part and in breach of the terms of this Agreement. The
Custodian shall not be liable for any action taken by it in good faith and reasonably
believed by it to be within powers conferred upon it, or taken by it pursuant to any
direction or instruction by which it is governed hereunder, or omitted to be taken by
it by reason of the lack of direction or instruction required hereby for such action.
	 
	 	(d)	 	In no event shall the Custodian be liable for any indirect, special or
consequential damages (including, without limitation, lost profits) whether or not it
has been advised of the likelihood of such damages.
	 
	 	(e)	 	The Custodian may consult with, and obtain advice from, legal counsel with
respect to any question as to any of the provisions hereof or its duties hereunder, or
any matter relating hereto, and the opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted by the
Custodian in good faith in accordance with the opinion and directions of such counsel;
the cost of such services shall be reimbursed pursuant to paragraph 6 hereinabove.
	 
	 	(f)	 	The Custodian shall not be deemed to have notice of any fact, claim or demand
with respect hereto unless actually known by an officer working in its Corporate Trust
Division and charged with responsibility for administering this Agreement

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	 	 	 	or unless (and then only to the extent received) in writing by the Custodian at its
Corporate Trust Services Group and specifically referencing this Agreement.
	 
	 	(g)	 	No provision of this Agreement shall require the Custodian to expend or risk
its own funds, or to take any action (or forbear from action) hereunder which might in
its judgment involve any expense or any financial or other liability unless it shall be
furnished with acceptable indemnification. Nothing herein shall be construed to
obligate the Custodian to commence, prosecute or defend legal proceedings in any
instance, whether on behalf of the Company on its own behalf or otherwise, with respect
to any matter arising hereunder or relating to this Agreement or the services
contemplated hereby.
	 
	 	(h)	 	The permissive right of the Custodian to take any action hereunder shall not be
construed as duty.
	 
	 	(i)	 	With the consent of Allied, Custodian may act or exercise its duties or powers
hereunder through agents or attorneys, and the Custodian shall not be liable or
responsible for the actions or omissions of any such agent or attorney appointed and
maintained with reasonable due care.
	 
	 	(j)	 	All indemnifications contained in this Agreement in favor of the Custodian
shall survive the termination of this Agreement.
	 
	 	(k)	 	All costs and risks of shipment shall be borne exclusively by the Company.

	10.4.	 	Indemnification; Custodian’s Lien
	 
	(a)	 	The Company shall and does hereby indemnify and hold harmless the Custodian for and from any
and all costs and expenses (including without limitation attorney’s fees and expenses), and
any and all losses, damages, claims and liabilities, that may arise, be brought against or
incurred by the Custodian as a result of, relating to, or arising out of this Agreement, or
the administration or performance of the Custodian’s duties hereunder, or the relationship
between the Company and the Custodian created hereby, other than such liabilities, losses,
damages, claims, costs and expenses as are directly caused by the Custodian’s own actions
taken in bad faith or constituting gross negligence.
	 
	(b)	 	The Custodian shall have a right of set-off against, any property and assets it may hold from
time to time under this Agreement to secure the payment when due of all amounts owing to it
from time to time hereunder including but not limited to the payments permitted under Section
3.7(b) hereof.
	 
	10.5.	 	Force Majeure

Without prejudice to the generality of the foregoing, the Custodian shall be without liability to
the Company for any damage or loss resulting from or caused by:

	 	(i)	 	events or circumstances beyond the Custodian’s reasonable control including
nationalization, expropriation, currency restrictions, the interruption, disruption or

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	 	 	 	suspension of the normal procedures and practices of any securities market, power,
mechanical, communications or other technological failures or interruptions,
computer viruses or the like, acts of war or terrorism, riots, revolution, acts of
God, work stoppages, strikes, national disasters of any kind, or other similar
events or acts;
	 
	 	(ii)	 	errors by the Company (including any Authorized Person) in its instructions to
the Custodian;
	 
	 	(iii)	 	failure by the Company to adhere to the Custodian’s operational policies and
procedures;
	 
	 	(iv)	 	acts, omissions or insolvency of any Securities System;
	 
	 	(v)	 	any delay or failure of any broker, agent or intermediary, central bank or
other commercially prevalent payment or clearing system to deliver to the Custodian’s
sub-custodian or agent securities purchased or in the remittance of payment made in
connection with Securities sold;
	 
	 	(vi)	 	any delay or failure of any company, corporation, or other body in charge of
registering or transferring securities in the name of the Custodian, the Company, the
Custodian’s sub-custodians, nominees or agents or any consequential losses arising out
of such delay or failure to transfer such securities including non-receipt of bonus,
dividends and rights and other accretions or benefits; or
	 
	 	(vii)	 	changes in applicable law, regulation or orders.

	10.6.	 	Disputes

If any dispute or conflicting claim is made by any person with respect to securities or other
property held for the Company, the Custodian shall be entitled to refuse to act until either:

	 	(i)	 	such dispute or conflicting claim has been finally determined by a court of
competent jurisdiction or settled by agreement between conflicting parties, and the
Custodian has received written evidence satisfactory to it of such determination or
agreement; or
	 
	 	(ii)	 	the Custodian has received an indemnity, security or both satisfactory to it
and sufficient to hold it harmless from and against any and all loss, liability and
expense which the Custodian may incur as a result of its actions.

	10.7.	 	Advances

Under no circumstances shall the Custodian have any responsibility, duty or obligation to advance
its own funds to or for the benefit of the Company. Notwithstanding the foregoing, if the
Custodian (or its affiliates, subsidiaries or agents) at any time or times, pursuant to this
Agreement:

-15-

 

	 	(a)	 	advances cash or securities for any purpose, including, without limitation,
advances or overdrafts relating to or resulting from securities settlements, foreign
exchange contracts, assumed settlements, provisional credit or payment items, or
reclaimed payments or adjustments or claw-backs,
	 
	 	(b)	 	incurs any liability to pay taxes, interest, charges, expenses, assessments, or
other moneys in connection with the performance of this Agreement, except such as may
arise from its own gross negligent acts or gross negligent omissions,

then, any property or assets at any time held for the account of the Company shall be security
therefor and shall be subject to a right of set-off thereon in favor of the Custodian for the
repayment of such advances and liabilities. If the Company shall fail to promptly reimburse the
Custodian in respect of the advances or liabilities described above, the Custodian may utilize
available cash and dispose of Securities of the Company, in a manner, at a time and at a price
which the Custodian deems proper, to the extent necessary to obtain reimbursement and make itself
whole.

	11.	 	SECURITY CODES

If the Custodian issues to the Company, security codes, passwords or test keys in order that the
Custodian may verify that certain transmissions of information, including Proper Instructions, have
been originated by the Company, the Company shall, safeguard any security codes, passwords, test
keys or other security devices which the Custodian shall make available.

	12.	 	TAX LAW

The Custodian shall have no responsibility or liability for any obligations now or hereafter
imposed on the Company or the Custodian as custodian of the Securities or the Proceeds, by the tax
law of the United States or any state or political subdivision thereof. The Custodian shall be
kept indemnified by and be without liability to the Company for such obligations including taxes,
(but excluding any income taxes assessable in respect of compensation paid to the Custodian
pursuant to this agreement) withholding, certification and reporting requirements, claims for
exemption or refund, additions for late payment interest, penalties and other expenses (including
legal expenses) that may be assessed against the Company, or the Custodian as custodian of the
Securities or Proceeds.

	13.	 	EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
	 
	13.1	 	This Agreement shall become effective as of its due execution and delivery by each of the
parties. This Agreement shall continue in full force and effect until terminated as
hereinafter provided. This Agreement may only be amended by mutual written agreement of the
parties hereto. This Agreement may be terminated by the Custodian or the Company pursuant to
Section 13.2.
	 
	13.2	 	This Agreement shall terminate upon the earliest of (a) occurrence of the effective date of
termination specified in any written notice of termination given by either party to the other
not later than 60 days prior to the effective date of termination specified therein, provided
that all Cash Amounts, Securities and Proceeds shall have been delivered to the

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	 	 	Company or as it otherwise instructs (subject to Section 13.4 below), (b) such other date of
termination as may be mutually agreed upon by the parties in writing.
	 
	13.3	 	The Custodian may at any time resign under this Agreement by giving not less than 60 days
advance written notice thereof to the Company.
	 
	13.4	 	Prior to the effective date of termination of this Agreement, or the effective date of the
resignation (or removal of the Custodian), as the case may be, the Company shall give Proper
Instruction to the Custodian to cause the Cash Amounts, Securities and Proceeds then held by
the Custodian hereunder to be delivered to the Company, or its designee, or a successor
custodian hereunder; and if the Company shall fail or be unable to do so on a timely basis,
the Custodian shall be entitled (but not obligated) to petition a court of competent
jurisdiction (at the Company’s expense) for such instruction.
	 
	13.5	 	(a) Upon termination of this Agreement or resignation (or removal) of the Custodian, the
company shall pay to the Custodian prior to the delivery by the Custodian to the Company (or
as it may otherwise direct) the Cash Amounts, Securities and Proceeds held hereunder, such
compensation as may be due as of the date of such termination or resignation (or removal) and
shall likewise reimburse the Custodian for its costs, expenses and disbursements. All
indemnifications in favor of the Custodian under this Agreement shall survive the termination
of this Agreement, or any resignation or removal of the Custodian.
	 
	(b)	 	If Cash Amounts, Securities, Proceeds or any other property remain in the
possession of the Custodian, its agents or its sub-custodians after the date of
termination hereof or the date of resignation (or removal) of the Custodian, as the
case may be, owing to failure of the Company to give Proper Instructions to the
Custodian for delivery thereof, as referred to in Section 13.4, the Custodian shall be
entitled to fair compensation for its services during such period as the Custodian
retains possession of such Securities, funds and other property and the provisions of
this Agreement relating to the duties and obligations of the Custodian shall remain in
full force and effect during such period.

	14.	 	REPRESENTATIONS AND WARRANTIES
	 
	(a)	 	The Company represents and warrants to the Custodian that:

	 	(i)	 	it has the power and authority to enter into and perform its obligations under
this Agreement, and it has duly authorized and executed this Agreement so as to
constitute its valid and binding obligation; and
	 
	 	(ii)	 	in giving any instructions which purport to be “Proper Instructions” under this
Agreement, the Company will act in accordance with the provisions of its memorandum and
articles of association and any applicable laws and regulations.

	(b)	 	The Custodian hereby represents and warrants to the Company that it has the power and
authority to enter into and perform its obligations under this Agreement, and it has duly

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	 	 	authorized and executed this Agreement so as to constitute its valid and binding
obligations.

	 
	(c)	 	The Company hereby represents and warrants to the Custodian that (i) the aggregate interest
in any class of interests any benefit plan investors (as such term is interpreted under The
Employment Retirement Income Security Act of 1974, as amended; “ERISA”) for whose benefit or
account the Portfolio is held by the Company shall not at any time equal or exceed 25% of the
outstanding shares of such class without the prior written consent of the Custodian and (ii)
the Company shall not, without the prior written consent of the Custodian, permit the assets
of the Portfolio to be deemed assets of an employee benefit plan which is subject to ERISA.
The Company acknowledges and agrees that the Custodian shall not grant its consent in either
of the foregoing circumstances unless and until the Company has entered into such amendments
to this Agreement and has provided such assurances and indemnities to the Custodian, as the
Custodian reasonably may require to be assured that it will not be subject to ERISA liability.
If for any reason the Company breaches or otherwise fails to comply with the provisions of
this Section, this Agreement may be terminated immediately by the Custodian.
	 
	15.	 	PARTIES IN INTEREST; NO THIRD PARTY BENEFIT

This Agreement shall be binding upon and inure to the benefit of the respective successors and
assigns of the parties hereto. This Agreement is not intended for, and shall not be construed to
be intended for, the benefit of any third parties and may not be relied upon or enforced by any
third parties.

	16.	 	NOTICES

All notices, approvals and other communications hereunder shall be sufficient if made in writing
(unless and except where and to the extent otherwise expressly provided by the terms of this
Agreement) and given to the parties at the following address (or such other address as either of
them may subsequently designate by notice to the other), given by (i) certified or registered mail,
postage prepaid, (ii) recognized courier or delivery service, or (iii) confirmed telecopier or
telex, with a duplicate sent on the same day by first class mail, postage prepaid:

	 	(a)	 	if to the Company, to Allied Capital Corporation, 1919 Pennsylvania Avenue, NW,
Washington D.C. 20006, Attn: Shawn Stuckey, Fax: (202) 721-6227; or
	 
	 	(b)	 	if to the Custodian, to U.S. Bank National Association, One Federal Street,
Third Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Services/CDO Unit
 — Allied Capital Corporation Fax: (866) 832-3895.

	17.	 	CHOICE OF LAW AND JURISDICTION

This Agreement shall be construed, and the provisions hereof interpreted under and in accordance
with and governed by the laws of The Commonwealth of Massachusetts for all purposes (without regard
to its choice of law provisions), except and unless there exists a conflict with the 1940 Act, in
which case the 1940 Act shall govern. The parties to this Agreement

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hereby submit to the jurisdiction of the courts of The Commonwealth of Massachusetts, including any
appellate courts thereof.

	18.	 	ENTIRE AGREEMENT AND COUNTERPARTS
	 
	18.1	 	This Agreement constitutes the complete and exclusive agreement of the parties with regard to
the matters addressed herein and supersedes and terminates as of the date hereof, all prior
agreements, agreements or understandings, oral or written between the parties to this
Agreement relating to such matters.
	 
	18.2	 	This Agreement may be executed in any number of counterparts and all counterparts taken
together shall constitute one instrument.
	 
	19.	 	AMENDMENT; WAIVER
	 
	(a)	 	This Agreement may not be amended except by an express written instrument duly executed by
each of the Company and the Custodian.
	 
	(b)	 	In no instance shall any delay or failure to act be deemed to be or effective as a waiver of
any right, power or term hereunder, unless and except to the extent such waiver is set forth
in an expressly written instrument signed by the party against whom it is to be charged.
	 
	20.	 	SUCCESSOR AND ASSIGNS
	 
	(a)	 	The covenants and agreements set forth herein shall be binding upon and inure to the benefit
of each of the parties and their respective successors and permitted assigns. Neither party
shall be permitted to assign their rights under this Agreement without the written consent of
the other party (provided, however, that this shall not limit the ability of the Custodian to
delegate certain duties or services to or perform them through agents or attorneys appointed
with due care as expressly provided in this Agreement).
	 
	(b)	 	Any corporation or association into which the Custodian may be merged or converted or with
which it may be consolidated, or any corporation or association resulting from any merger,
conversion or consolidation to which the Custodian shall be a party, shall be the successor of
the Custodian hereunder, and shall succeed to all of the rights, powers and duties of the Cash
Custodian hereunder, without the execution or filing of any paper or any further act on the
part of any of the parties hereto, except that the Company may have the right to terminate
immediately upon notice of the effectiveness of such merger or consolidation.
	 
	21.	 	SEVERABILITY

The terms of this Agreement are hereby declared to be severable, such that if any term hereof is
determined to be invalid or unenforceable, such determination shall not affect the remaining terms.

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	22.	 	INSTRUMENT UNDER SEAL; HEADINGS

This Agreement is intended to take effect as, and shall be deemed to be, an instrument under seal.

	23.	 	REQUEST FOR INSTRUCTIONS

If, in performing its duties under this Agreement, the Custodian is required to decide between
alternative courses of action, the Custodian may (but shall not be obliged to) request written
instructions from the Company as to the course of action desired by it. If the Custodian does not
receive such instructions within two (2) days after it has requested them, the Custodian may, but
shall be under no duty to, take or refrain from taking any such courses of action. The Custodian
shall act in accordance with instructions received from the Company in response to such request
after such two-day period except to the extent it has already taken, or committed itself to take,
action inconsistent with such instructions.

	24.	 	OTHER BUSINESS

Nothing herein shall prevent the Custodian or any of its affiliates from engaging in other
business, or from entering into any other transaction or financial or other relationship with, or
receiving fees from or from rendering services of any kind to the Company or any other Person.
Nothing contained in this Agreement shall constitute the Company and/or the Custodian (and/or any
other Person) as members of any partnership, joint venture, association, syndicate, unincorporated
business or similar assignment as a result of or by virtue of the engagement or relationship
established by this Agreement.

	25.	 	REPRODUCTION OF DOCUMENTS

This Agreement and all schedules, exhibits, attachments and amendment hereto may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar
process. The parties hereto each agree that any such reproduction shall be admissible in evidence
as the original itself in any judicial or administrative proceeding, whether or not the original is
in existence and whether or not such reproduction was made by a party in the regular course of
business, and that any enlargement, facsimile or further production shall likewise be admissible in
evidence.

	26.	 	SHAREHOLDER COMMUNICATIONS

Securities and Exchange Commission Rule 14b-2 requires banks which hold securities for the account
of customers to respond to requests by issuers of securities for the names, addresses and holdings
of beneficial owners of securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with the rule, the
Custodian needs the Company to indicate whether it authorizes the Custodian to provide the
Company’s name, address and share position to requesting companies whose securities are held in the
Company. If the Company tells the Custodian “no”, the Custodian will not provide this information
to requesting companies. If the Company tells the Custodian “yes” or does not check either “yes”
or “no” below, the Custodian is required by the rule to treat the Company as consenting to
disclosure of this information for all securities owned by the Company or any

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funds or accounts established by the Company. For the Company’s protection, the Rule prohibits the
requesting company from using the Company’s name and address for any purpose other than corporate
communications. Please indicate below whether the Company consents or objects by checking one of
the alternatives below.

	 	 	 	 	 
	YES

	 	[   ]
	 	The Custodian is authorized to release the Company’s name, address,
and share positions.
	 
	 	 	 	 
	NO

	 	[X]
	 	The Custodian is not authorized to release the Company’s name,
address, and share positions.

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     IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed and delivered
by a duly authorized officer, intending the same to take effect as of the 3rd day of
April, 2009.

	 	 	 	 	 
	Witness:	 	ALLIED CAPITAL CORPORATION
	 
	 	 	 	 
	/s/
Miriam G. Krieger

	 	By:	 	/s/
Shawn C. Stuckey
	Name: Miriam G. Krieger

	 	Name:	 	Shawn C. Stuckey
	Title:   EVP

	 	Title:	 	VP-Asst. Treasurer
	 
	 	 	 	 
	Witness:
	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION
	 
	 	 	 	 
	/s/
Ralph J. Creasia, Jr.

	 	By:	 	/s/ Lynora J. Gilligan
	Name:
Ralph J. Creasia, Jr.
	 	 	 	Lynora J. Gilligan
	Title:   Vice
President
	 	 	 	Assistant Vice President

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SCHEDULE A

CUSTODIAN’S SCHEDULE OF FEES

-23-

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