Document:

EX-10.1

Conformed Copy EXHIBIT 10.1

Allied Capital Corporation

Note Agreement

Dated as of October 13, 2005

Re: $261,000,000 6.15% Senior Notes, Series A due October 13, 2010

and

$89,000,000 6.34% Senior Notes, Series B due October 13, 2012

1

Table of Contents

	 	 	 
	SectionHeading

Section 1.Description of Notes and Commitment.

Section 1.1.Description of Notes

Section 1.2.Applicable Interest Rates

Section 1.3.Commitment, Closing Date

Section 2.Payment of Notes.

Section 2.1.Required Payments

Section 2.2.Optional Prepayment with Premium

Section 2.3.Notice of Optional Prepayments

Section 2.4.Application of Prepayments

Section 2.5.Direct Payment

Section 2.6.Payments Due on Non-Business Days

Section 3.Representations.

Section 3.1.Representations of the Company

Section 3.2.Representations of the Purchasers

Section 4.Closing Conditions

Section 4.1.Conditions

Section 4.2.Waiver of Conditions

Section 5.Covenants

Section 5.1.Corporate Existence, Etc

Section 5.2.Insurance

Section 5.3.Taxes, Claims for Labor and Materials, Compliance with Laws

Section 5.4.Maintenance, Etc

Section 5.5.Nature of Business

Section 5.6.Capital Maintenance

Section 5.7.Interest Charges Coverage Ratio

Section 5.8.Limitations on Debt; Interest Rate Swaps

Section 5.9.Limitation on Liens

Section 5.10.Restricted Payments

Section 5.11.Mergers, Consolidations and Sales of Assets

Section 5.12.Repurchase of Notes

Section 5.13.Transactions with Affiliates

Section 5.14.Termination of Pension Plans

Section 5.15.Reports and Rights of Inspection

Section 6.Events of Default and Remedies Therefor

Section 6.1.Events of Default

Section 6.2.Notice to Holders

Section 6.3.Acceleration of Maturities

Section 6.4.Rescission of Acceleration

Section 7.Amendments, Waivers and Consents

Section 7.1.Consent Required

Section 7.2.Solicitation of Holders

Section 7.3.Effect of Amendment or Waiver

Section 8.Interpretation of Agreement; Definitions

Section 8.1.Definitions

Section 8.2.Accounting Principles

Section 8.3.Directly or Indirectly

Section 8.4.Schedules and Exhibits; Sections

Section 9.Miscellaneous

Section 9.1.Registered Notes

Section 9.2.Exchange of Notes

Section 9.3.Loss, Theft, Etc. of Notes

Section 9.4. Expenses, Stamp Tax Indemnity

Section 9.5.Powers and Rights Not Waived; Remedies Cumulative

Section 9.6.Notices

Section 9.7.Successors and Assigns

Section 9.8.Survival of Covenants and Representations

Section 9.9.Severability

Section 9.10.Governing Law

Section 9.11.Captions

Section 9.12.Confidential Information

Signature

	 	Page

	 
	 	 

2

	 	 	 
	 
	 	 
	Attachments to Note Agreement:

	 	

	 	 	 	 	 
	Schedule I

	 	-
	 	Names and Addresses of Purchasers
	 
	 	 	 	 
	Exhibit A

Exhibit B

Exhibit C

Exhibit D

	 	-

-

-

-
	 	Form of Note

Representations and Warranties

Form of Opinion of Special Counsel to the Purchaser

Form of Opinion of Counsel to the Company

3

Allied Capital Corporation

1919 Pennsylvania Avenue, N.W.

Washington, DC 20006

Note Agreement

Re: $261,000,000 6.15% Senior Notes, Series A due

October 13, 2010

and

$89,000,000 6.34% Senior Notes, Series B due

October 13, 2012

Dated as of

October 13, 2005

	 	 	 	To the Purchasers named

	 	•	 	n Schedule I to this Agreement

Ladies and Gentlemen:

The undersigned, Allied Capital Corporation (the “Company”), a Maryland corporation,
hereby agrees with the Purchasers named on Schedule I to this Agreement (the “Purchasers”) as
follows:

	 	 	 	Section 1. Description of Notes and Commitment.

Section 1.1. Description of Notes. (a) The Company will authorize the issue and sale of (i)
$261,000,000 6.15% Senior Notes, Series A due October 13, 2010 (the “Series A Notes”) and
(ii) $89,000,000 6.34% Senior Notes, Series B due October 13, 2012 (the “Series B Notes”
and together with the Series A Notes, the “Notes”, such term to include any such notes issued in
substitution therefor pursuant to §9 of this Agreement). The Notes shall be substantially in the
form set out in Exhibit A-1 and A-2, respectively, with such changes therefrom, if any, as may be
approved by the Purchasers and the Company. The Notes are not subject to prepayment or redemption
at the option of the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the Premium, if any, set forth in §2 of this Agreement.

Section 1.2. Applicable Interest Rates. The Notes shall bear interest (computed on the basis
of a 360-day year of twelve 30-day months) on the unpaid principal balance thereof from the date of
issuance. The Series A Notes shall bear interest at the rate of 6.15% per annum and the Series B
Notes shall bear interest at the rate of 6.34% per annum. Interest on the Notes is payable
semiannually on April 13 and October 13 in each year, commencing April 13, 2006, until such
principal sum shall have become due and payable (whether at maturity, upon notice of prepayment or
otherwise) and the Company shall pay on demand interest on any overdue principal and Premium (as
provided herein) and, to the extent permitted by applicable law, on any overdue interest, from the
due date thereof at a rate of 8.15% per annum for the Series A Notes and 8.34% per annum for the
Series B Notes (whether by acceleration or otherwise) until paid.

Section 1.3. Commitment, Closing Date. Subject to the terms and conditions hereof and on the
basis of the representations and warranties hereinafter set forth, the Company agrees to issue and
sell to the Purchasers, and each Purchaser agrees to purchase from the Company, Notes in the
principal amount set forth opposite such Purchaser’s name on Schedule I hereto at a price equal to
the principal amount thereof on October 13, 2005 (the “Closing Date”); provided that the Closing
Date may be postponed to such other date (but not more than ten days after the originally scheduled
Closing Date) as shall mutually be agreed upon by the Company and the Purchasers scheduled to
purchase the Notes on the Closing Date. Delivery of the Notes will be made at the offices of
Chapman and Cutler LLP, 111 West Monroe Street, Chicago, Illinois 60603. On the Closing Date, the
Company will deliver to each Purchaser the Notes of the Series to be purchased by such Purchaser in
the form of a single Note for each applicable Series (or such greater number of Notes in
denominations of at least $500,000 as such Purchaser may request) dated the Closing Date and
registered in such Purchaser’s name (or in the name of such Purchaser’s nominee), against delivery
by such Purchaser to the Company or its order of immediately available funds in the amount of the
purchase price therefor by wire transfer via Fedwire of immediately available funds for the account
of the Company to Account Number 3931033237 at Bank of America, Bethesda, Maryland, (ABA
#026-009-593).

	 	 	 	Section 2. Payment of Notes.

Section 2.1. Required Payments. (a) The entire outstanding principal amount of the Series A
Notes shall become due and payable on October 13, 2010.

(b) The entire outstanding principal amount of the Series B Notes shall become due and payable
on October 13, 2012.

Section 2.2. Optional Prepayment with Premium In addition to the payments required by §2.1,
upon compliance with §2.3 the Company shall have the privilege, at any time and from time to time,
of prepaying the outstanding Notes, either in whole or in part (but if in part then in a minimum
principal amount of $1,000,000) and ratably among the Series A Notes and the Series B Notes by
payment of the principal amount of the Notes, or portion thereof to be prepaid, and accrued
interest thereon to the date of such prepayment, together with a Premium equal to the Make-Whole
Amount, determined as of two Business Days prior to the date of such prepayment pursuant to this
§2.2.

Section 2.3. Notice of Optional Prepayments. The Company will give notice of any prepayment
of the Notes pursuant to §2.2 to each Holder thereof not less than 30 days nor more than 60 days
before the date fixed for such optional prepayment specifying (i) such date, (ii) the principal
amount and the Holder’s Notes to be prepaid on such date, (iii) that a Premium may be payable, (iv)
the date when such Premium will be calculated, (v) the estimated Premium and (vi) the accrued
interest applicable to the prepayment. Notice of prepayment having been so given, the aggregate
principal amount of the Notes specified in such notice, together with accrued interest thereon and
the Premium, if any, payable with respect thereto shall become due and payable on the prepayment
date specified in said notice. Not later than two Business Days prior to the prepayment date
specified in such notice, the Company shall provide each Holder of a Note written notice of the
Premium, if any, payable in connection with such prepayment and, whether or not any Premium is
payable, a reasonably detailed computation of the Make-Whole Amount (which calculation shall be
reasonably satisfactory to each Holder of the Notes to be prepaid).

Section 2.4. Application of Prepayments. In the case of all partial prepayments pursuant to
§2.2, the principal amount of the Notes to be prepaid shall be allocated among all of the Notes
(without regard to the Series of such Notes) at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof.

Section 2.5. Direct Payment. Notwithstanding anything to the contrary contained in this
Agreement or the Notes, in the case of any Note owned by any Holder that is a Purchaser or any
other Institutional Holder which has given written notice to the Company requesting that the
provisions of this §2.5 shall apply, the Company will punctually pay when due the principal
thereof, interest thereon and Premium, if any, due with respect to said principal, without any
presentment thereof, directly to such Holder at its address set forth in Schedule I hereto or such
other address as such Holder may from time to time designate in writing to the Company or, if a
bank account with a United States bank is so designated for such Holder on Schedule I hereto the
Company will make such payments in immediately available funds to such bank account, marked for
attention as indicated, or in such other manner or to such other account in any United States bank
as such Holder may from time to time direct in writing.

Section 2.6. Payments Due on Non-Business Days. Anything in this Agreement or the Notes to the
contrary notwithstanding, any payment of principal of or Make-Whole Amount or interest on any Note
that is due on a date other than a Business Day shall be made on the next succeeding Business Day
without including the additional days elapsed in the computation of the interest payable on such
next succeeding Business Day.

	 	 	 	Section 3. Representations.

Section 3.1. Representations of the Company. The Company represents and warrants that all
representations and warranties set forth in Exhibit B are true and correct as of the date hereof
and are incorporated herein by reference with the same force and effect as though herein set forth
in full.

Section 3.2. Representations of the Purchasers. Each Purchaser represents, and in entering
into this Agreement the Company understands, that such Purchaser is acquiring the Notes in a
private placement for the purpose of investment and not with a view to the distribution thereof,
and that such Purchaser has no present intention of selling, negotiating or otherwise disposing of
the Notes; it being understood, however, that the disposition of such Purchaser’s property shall at
all times be and remain within its control. Each Purchaser represents that it is an institutional
“accredited investor” within the meaning of Rule 501 of Regulation D as promulgated under the
Securities Act and at least one of the following statements is an accurate representation as to
each source of funds (a “Source”) to be used by it to pay the purchase price of the Notes to be
purchased by it hereunder:

(a) the Source is an “insurance company general account” within the meaning of
Department of Labor Prohibited Transaction Exemption (“PTE”) 95-60 (issued July 12, 1995)
and there is no employee benefit plan, treating as a single plan all plans maintained by the
same employer (or affiliate thereof as defined in Section V(a)(1) of PTE 95-60) or employee
organization, with respect to which the amount of the general account reserves and
liabilities for all contracts held by or on behalf of such plan exceeds ten percent (10%) of
the total reserves and liabilities of such general account (exclusive of separate account
liabilities) plus surplus, as set forth in the National Association of Insurance
Commissioners (“NAIC”) Annual Statement filed with such Purchaser’s state of domicile; or

(b) the Source is either (i) an insurance company pooled separate account, within the
meaning of PTE 90-1 (issued January 29, 1990), or (ii) a bank collective investment fund,
within the meaning of the PTE 91-38 (issued July 12, 1991) and, except as such Purchaser has
disclosed to the Company in writing pursuant to this paragraph (b), no employee benefit plan
or group of plans maintained by the same employer or employee organization beneficially owns
more than 10% of all assets allocated to such pooled separate account or collective
investment fund; or

(c) the Source constitutes assets of an “investment fund” (within the meaning of Part V
of the QPAM Exemption) managed by a “qualified professional asset manager” or “QPAM” (within
the meaning of Part V of the QPAM Exemption), no employee benefit plan’s assets that are
included in such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an affiliate (within the
meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client assets managed by such
QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the
QPAM nor a person controlling or controlled by the QPAM (applying the definition of
“control” in Section V(e) of the QPAM Exemption) owns a 5% or more interest in the Company
and (i) the identity of such QPAM and (ii) the names of all employee benefit plans whose
assets are included in such investment fund have been disclosed to the Company in writing
pursuant to this paragraph (c); or

(d) the Source is a separate account that is maintained solely in connection with such
Purchaser’s fixed contractual obligations under which the amounts payable, or credited, to
any employee benefit plan (or its related trust) that has any interest in such separate
account (or to any participant or beneficiary of such plan (including any annuitant)) are
not affected in any manner by the investment performance of the separate account; or

(e) the Source constitutes assets of a “plan(s)” (within the meaning of Section IV of
PTE 96-23 (the “INHAM Exemption”) managed by an “in-house asset manager” or “INHAM” (within
the meaning of Part IV of the INHAM Exemption), the conditions of Part I(a), (g) and (h) of
the INHAM Exemption are satisfied, neither of the INHAM nor a person controlling or
controlled by the INHAM (applying the definition of “control” in Section IV(h) of the INHAM
Exemption) owns a 5% or more interest in the Company and (i) the identity of such INHAM and
(ii) the name(s) of the employee benefit plan(s) whose assets constitute the Source have
been disclosed to the Company in writing pursuant to this clause (e); or

(f) the Source is a governmental plan; or

(g) the Source is one or more employee benefit plans, or a separate account or trust
fund comprised of one or more employee benefit plans, each of which has been identified to
the Company in writing pursuant to this paragraph (g); or

(h) the Source does not include assets of any employee benefit plan, other than a plan
exempt from the coverage of ERISA.

If any Purchaser or any subsequent transferee of the Notes indicates that such Purchaser or such
transferee is relying on any representation contained in paragraphs (b), (c) or (g) above, the
Company shall deliver on the Closing Date and on the date of any applicable transfer a certificate,
which shall either state that (i) it is neither a party in interest nor a “disqualified person” (as
defined in Section 4975(e)(2) of the Code), with respect to any plan identified pursuant to
paragraphs (b) or (g) above, or (ii) with respect to any plan, identified pursuant to paragraph (c)
above, neither it nor any “affiliate” (as defined in Section V(c) of the QPAM Exemption) has at
such time, and during the immediately preceding one year, exercised the authority to appoint or
terminate said QPAM as manager of any plan identified in writing pursuant to paragraph (c) above or
to negotiate the terms of said QPAM’s management agreement on behalf of any such identified plan.

As used in this §3.2, the terms “employee benefit plan,” “governmental plan,” “party in
interest” and “separate account” shall have the respective meanings assigned to such terms in
Section 3 of ERISA.

	 	 	 	Section 4. Closing Conditions.

Section 4.1. Conditions. The obligation of each Purchaser to purchase the Notes on the
Closing Date shall be subject to the performance by the Company of its agreements hereunder which
by the terms hereof are to be performed at or prior to the time of delivery of the Notes and to the
following further conditions precedent:

(a) Closing Certificates. On the Closing Date such Purchaser shall have received a
certificate dated the Closing Date, signed by the President or an Executive Vice President
or the Chief Operating Officer or the Chief Financial Officer of the Company, the truth and
accuracy of which shall be a condition to such Purchaser’s obligation to purchase the Notes
proposed to be sold to such Purchaser on the Closing Date and to the effect that (i) the
representations and warranties of the Company set forth in Exhibit B hereto are true and
correct on and with respect to the Closing Date, (ii) the Company has performed all of its
obligations hereunder which are to be performed on or prior to the Closing Date, and (iii)
no Default or Event of Default has occurred and is continuing.

(b) Legal Opinions. Each Purchaser shall have received from Chapman and Cutler LLP,
who is acting as special counsel to the Purchasers in this transaction, and from Sutherland
Asbill & Brennan LLP, counsel for the Company, their respective opinions dated the Closing
Date, in form and substance satisfactory to such Purchaser, covering the matters set forth
in Exhibits C and D, respectively, hereto.

(c) Purchase Permitted By Applicable Law, Etc. On the Closing Date, each purchase of
Notes shall (a) be permitted by the laws and regulations of each jurisdiction to which such
Purchaser is subject, without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance companies without
restriction as to the character of the particular investment, (b) not violate any applicable
law or regulation (including, without limitation, Regulation U, T or X of the Board of
Governors of the Federal Reserve System) and (c) not subject any Purchaser to any tax,
penalty or liability under or pursuant to any applicable law or regulation, which law or
regulation was not in effect on the date hereof. If requested by any Purchaser, such
Purchaser shall have received an officer’s certificate certifying as to such matters of fact
as such Purchaser may reasonably specify to enable such Purchaser to determine whether such
purchase is so permitted.

(d) Sale of Other Notes. The Company shall have consummated the sale of the entire
principal amount of the Notes scheduled to be sold on the Closing Date as specified in
Schedule I.

(e) Private Placement Number. A Private Placement Number issued by Standard & Poor’s
CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the NAIC) shall
have been obtained for each Series of the Notes.

(f) Satisfactory Proceedings. All corporate and other proceedings taken in connection
with the transactions contemplated by this Agreement, and all documents and instruments
necessary to the consummation thereof, shall be satisfactory in form and substance to the
Purchasers and such Purchasers’ special counsel, and the Purchasers shall have received a
copy (executed or certified as may be appropriate) of all legal documents or proceedings
taken in connection with the consummation of said transactions.

Section 4.2. Waiver of Conditions. If on the Closing Date the Company fails to tender to the
Purchasers of any of the Notes to be issued to such Purchasers on such date or if the conditions
specified in §4.1 have not been fulfilled, each Purchaser may thereupon elect to be relieved of all
further obligations under this Agreement. Without limiting the foregoing, if the conditions
specified in §4.1 have not been fulfilled, each Purchaser may waive compliance by the Company with
any such condition to such extent as such Purchaser may in its sole discretion determine. Nothing
in this §4.2 shall operate to relieve the Company of any of its obligations hereunder or to waive
any Purchaser’s rights against the Company.

	 	 	 	Section 5. Covenants.

From and after the Closing Date and continuing so long as any amount remains unpaid on any
Note:

Section 5.1. Corporate Existence, Etc. The Company will preserve and keep in full force and
effect, and will cause each Consolidated Subsidiary to keep in full force and effect, its corporate
existence and all registrations, licenses, permits and governmental approvals necessary to the
proper conduct of its business except, in the case of a Consolidated Subsidiary, where the failure
to do so would not have a Material Adverse Effect; provided, however, that the foregoing shall not
prevent any transaction permitted by §5.11.

Section 5.2. Insurance. The Company will maintain, and will cause each Consolidated
Subsidiary to maintain, insurance coverage by financially sound and reputable insurers in such
forms and amounts and against such risks as are customary for corporations and limited liability
companies of established reputation engaged in the same or a similar business and owning and
operating similar properties.

Section 5.3. Taxes, Claims for Labor and Materials, Compliance with Laws. The Company will
promptly pay and discharge, and will cause each Consolidated Subsidiary to pay and discharge, all
lawful taxes, assessments and governmental charges or levies imposed upon the Company or such
Consolidated Subsidiary, respectively, or upon or in respect of all or any part of the property or
business of the Company or such Consolidated Subsidiary, all trade accounts payable in accordance
with usual and customary business terms, and all claims for work, labor or materials, which if
unpaid might become a Lien upon any property of the Company or such Consolidated Subsidiary;
provided, however, that the Company or such Consolidated Subsidiary shall not be required to pay
any such tax, assessment, charge, levy, account payable or claim if (i) the validity, applicability
or amount thereof is being contested in good faith by appropriate actions or proceedings which will
prevent the forfeiture or sale of any property of the Company or such Consolidated Subsidiary or
any material interference with the use thereof by the Company or such Consolidated Subsidiary, and
(ii) the Company or such Consolidated Subsidiary shall set aside on its books, reserves deemed by
it to be adequate with respect thereto. The Company will promptly comply and will cause each
Consolidated Subsidiary to promptly comply with all laws, ordinances or governmental rules and
regulations to which it is subject including, without limitation, the Occupational Safety and
Health Act of 1970, as amended, ERISA and all laws, ordinances, governmental rules and regulations
relating to environmental protection in all applicable jurisdictions, the violation of which could
have a Material Adverse Effect or would result in any Lien not permitted under §5.9.

Section 5.4. Maintenance, Etc. The Company will maintain, preserve and keep, and will cause
each Consolidated Subsidiary to maintain, preserve and keep, its properties which are used in the
conduct of its business (whether owned in fee or a leasehold interest) in good repair and working
order, ordinary wear and tear excepted, and from time to time will make all necessary repairs,
replacements and renewals as the Company may determine to be appropriate to the conduct of its
business.

Section 5.5. Nature of Business. Neither the Company nor any Consolidated Subsidiary will
engage in any business if, as a result, the general nature of the business, taken on a consolidated
basis, which would then be engaged in by the Company and its Consolidated Subsidiaries would be
substantially changed from the general nature of the business engaged in by the Company and its
Consolidated Subsidiaries on the date of this Agreement as described in the Memorandum.

Section 5.6. Capital Maintenance. The Company shall at all times maintain Consolidated
Shareholders Equity in an amount not less than (i) $1,500,000,000 plus (ii) 75% of the Net Proceeds
of all Equity Issuances effected by the Company or any of its Consolidated Subsidiaries at any time
after December 31, 2004 (excluding the Net Proceeds of any Equity Issuance by a Consolidated
Subsidiary to a Consolidated Subsidiary or to the Company).

Section 5.7. Interest Charges Coverage Ratio. The Company shall maintain the ratio of
Adjusted EBIT to Interest Expense of the Company and its Consolidated Subsidiaries, determined on a
consolidated basis as of the last day of each fiscal quarter for the period of four consecutive
fiscal quarters ending on such day, at not less than 1.8 to 1.

Section 5.8. Limitations on Debt; Interest Rate Swaps. (a) The Company will have on the last
day of each quarterly fiscal period a ratio of Consolidated Debt to Consolidated Shareholders’
Equity not exceeding 1.5 to 1.

(b) The Company will not at any time permit the aggregate principal amount of Priority
Debt to exceed 25% of Consolidated Shareholders’ Equity.

(c) The Company will not at any time permit the Asset Coverage Ratio to be less than 2
to 1.

(d) The Company will not permit any Consolidated Subsidiary to enter into any
Subsidiary Bank Guaranty or Subsidiary Existing Note Guaranty, unless the Company shall
first furnish to each Holder of the Notes (i) an unconditional Subsidiary Note Guaranty,
(ii) an Intercreditor Agreement, and (iii) an opinion of counsel to the effect that such
Subsidiary Note Guaranty has been duly authorized, executed and delivered by such
Consolidated Subsidiary and constitutes the legal, valid and binding obligation of such
Consolidated Subsidiary, enforceable against such Consolidated Subsidiary in accordance with
the terms thereof, and covering such other matters as the Holders of 51% or more of the
principal amount of the Notes at the time outstanding may reasonably request.

(e) The Company will not and will not permit any Consolidated Subsidiary to enter into
any Interest Rate Swap except in the ordinary course of business pursuant to transactions
that are entered into for bona fide purposes of managing the Company’s interest rate and
currency risk and not for speculation.

Section 5.9. Limitation on Liens. The Company will not, and will not permit any Consolidated
Subsidiary to, create or incur, or suffer to be incurred or to exist, any Lien on its or their
property or assets, whether now owned or hereafter acquired, or upon any income or profits
therefrom, or transfer any property for the purpose of subjecting the same to the payment of
obligations in priority to the payment of its or their general creditors, or acquire or agree to
acquire any property or assets upon conditional sales agreements or other title retention devices,
except:

(a) Liens for property taxes and assessments or governmental charges or levies and
Liens securing claims or demands of mechanics and materialmen, provided payment thereof is
not at the time required by §5.3;

(b) Liens of or resulting from any judgment or award, the time for the appeal or
petition for rehearing of which shall not have expired, or in respect of which the Company
or a Consolidated Subsidiary shall at any time in good faith be prosecuting an appeal or
proceeding for a review and in respect of which a stay of execution pending such appeal or
proceeding for review shall have been secured;

(c) Liens incidental to the conduct of business or the ownership of properties and
assets (including Liens in connection with the making of loans to customers, worker’s
compensation, unemployment insurance and other like laws, warehousemen’s and attorneys’
liens and statutory landlords’ liens) and Liens to secure the performance of bids, tenders
or trade contracts, or to secure statutory obligations, surety or appeal bonds or other
Liens of like general nature incurred in the ordinary course of business and not in
connection with (i) the borrowing of money or (ii) obligations pursuant to ERISA, provided
in each case, the obligation secured is not overdue or, if overdue, is being contested in
good faith by appropriate actions or proceedings;

(d) minor survey exceptions or minor encumbrances, easements or reservations, or rights
of others for rights-of-way, utilities and other similar purposes, or zoning or other
restrictions as to the use of real properties, which are necessary for the conduct of the
activities of the Company and its Consolidated Subsidiaries or which customarily exist on
properties of corporations engaged in similar activities and similarly situated and which do
not in any event materially impair their use in the operation of the business of the Company
and its Consolidated Subsidiaries;

(e) Liens securing Indebtedness of a Consolidated Subsidiary to the Company or to
another Wholly-Owned Consolidated Subsidiary;

(f) Liens incurred after the Closing Date given to secure the payment of the purchase
price or cost of construction incurred in connection with the acquisition of, or
improvements to, fixed assets useful and intended to be used in carrying on the business of
the Company or a Consolidated Subsidiary, including Liens existing on such assets at the
time of acquisition thereof or at the time of acquisition by the Company or a Consolidated
Subsidiary of any business entity then owning such assets, whether or not such existing
Liens were given to secure the payment of the purchase price of the assets to which they
attach so long as they were not incurred, extended or renewed in contemplation of such
acquisition, provided that (i) the Lien shall attach solely to the assets acquired or
purchased, (ii) the Lien (other than Liens that are existing on such assets at the time of
acquisition thereof and that are permitted as aforesaid) shall have been created or incurred
within 180 days of the date of acquisition of such fixed assets, except in the case of
construction or acquisition of improvements to real estate, the land on which such
improvements are located shall not be required to have been acquired within such 180 day
period; (iii) at the time of acquisition of such assets, the aggregate amount remaining
unpaid on all Indebtedness secured by Liens on such assets whether or not assumed by the
Company or a Consolidated Subsidiary shall not exceed an amount equal to 80% (or 100% in the
case of Capitalized Leases) of the lesser of the total purchase price or fair market value
at the time of acquisition of such assets (as determined in good faith by the board of
directors of the Company), and (iv) all Indebtedness secured by such Liens shall be
permitted hereunder; and

(g) Liens securing Indebtedness (including Liens in existence on the Closing Date and
securing the Indebtedness described on Annex B to Exhibit B) so long as the aggregate
Indebtedness secured by all such Liens is permitted within the limitations of §§5.7 and 5.8.

The Company will not, and will not permit any Consolidated Subsidiary to, directly or
indirectly, create, incur, assume or permit to exist (upon the happening of a contingency or
otherwise) any Lien on or with respect to any property which secures Debt outstanding under the
Bank Credit Agreement or the Existing Note Agreements, unless the Company makes, or causes to be
made, effective provision whereby the Notes will be equally and ratably secured with any and all
other obligations thereby secured; provided that such security is granted pursuant to an agreement
reasonably satisfactory to the Holders of 51% or more of the principal amount of the Notes at the
time outstanding.

Section 5.10. Restricted Payments. The Company will not except as hereinafter provided:

(a) Declare or pay any dividends, either in cash or property, on any shares of its
capital stock of any class (except dividends or other distributions payable solely in shares
of capital stock of the Company);

(b) Directly or indirectly, or through any Subsidiary, purchase, redeem or retire any
 shares of its capital stock of any class or any warrants, rights or options to purchase or
acquire any shares of its capital stock (other than in exchange for or out of the net cash
proceeds to the Company from the substantially concurrent issue or sale of other shares of
capital stock of the Company or warrants, rights or options to purchase or acquire any
 shares of its capital stock); or

(c) Make any other payment or distribution, either directly or indirectly or through
any Subsidiary, in respect of its capital stock;

(such declarations or payments of dividends, purchases, redemptions or retirements of capital stock
and warrants, rights or options and all such other payments or distributions being herein
collectively called “Restricted Payments”), if after giving effect thereto (i) an Event of Default
described in paragraph (a) or (b) of §6.1 shall exist, (ii) as the result of an occurrence of any
other Event of Default described in §6.1 the Notes shall have been accelerated under §6.3 or (iii)
the Company would not be in compliance with the limitations of §5.8.

The Company will not declare any regular quarterly dividend which constitutes a Restricted
Payment payable more than 80 days after the date of declaration thereof; provided that any year-end
extra dividend which constitutes a Restricted Payment shall not be payable more than 120 days after
the date of declaration thereof.

For the purposes of this §5.10, the amount of any Restricted Payment declared, paid or
distributed in property shall be deemed to be the greater of the book value or fair market value
(as determined in good faith by the board of directors of the Company) of such property at the time
of the making of the Restricted Payment in question.

Section 5.11. Mergers, Consolidations and Sales of Assets. (a) The Company will not, and will
not permit any Consolidated Subsidiary to, consolidate with or be a party to a merger with any
other Person or dispose of all or a substantial part of the assets of the Company and its
Consolidated Subsidiaries; provided that:

(1) any Consolidated Subsidiary may merge or consolidate with or into, sell, lease or
otherwise dispose of all or a substantial part of its assets to the Company or any
Wholly-Owned Subsidiary so long as (A) (i) in any merger or consolidation involving the
Company, the Company shall be the surviving or continuing corporation and (ii) in any merger
or consolidation involving a Wholly-Owned Subsidiary (and not the Company), a Wholly-Owned
Subsidiary shall be the surviving or continuing corporation, and (B) at the time of such
consolidation or merger and immediately after giving effect thereto, no Default or Event of
Default would exist;

(2) the Company may consolidate or merge with or into any other corporation if (i) the
corporation which results from such consolidation or merger (the “surviving corporation”) is
organized under the laws of any state of the United States or the District of Columbia, (ii)
the due and punctual payment of the principal of and Premium, if any, and interest on all of
the Notes, according to their tenor, and the due and punctual performance and observation of
all of the covenants in the Notes and this Agreement, to be performed or observed by the
Company are expressly assumed in writing by the surviving corporation and the surviving
corporation shall furnish to the holders of the Notes an opinion of counsel reasonably
satisfactory to the Holder or Holders of 51% or more of the principal amount of the Notes at
the time outstanding to the effect that the instrument of assumption has been duly
authorized, executed and delivered and constitutes the legal, valid and binding contract and
agreement of the surviving corporation enforceable in accordance with its terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting the enforcement of creditors’ rights generally and by
general equitable principles, and (iii) at the time of such consolidation or merger and
immediately after giving effect thereto and to the incurrence of any Debt assumed or
incurred in connection therewith, (x) the aggregate amount of outstanding Consolidated Debt
and Priority Debt of the surviving corporation would be permitted by the terms of §5.8 as of
the last day of the fiscal quarter immediately preceding the date of such consolidation or
merger, and (y) no Default or Event of Default would exist; and

(3) the Company and any Consolidated Subsidiary may, sell, transfer or otherwise
dispose of all or any part of its Investments in the ordinary course of business including,
without limitation, in securitization transactions.

(b) The Company will not permit any Consolidated Subsidiary to issue any Voting Stock of such
Consolidated Subsidiary except to satisfy the rights of minority shareholders to receive issuances
of stock which are non-dilutive to the Company and/or any Consolidated Subsidiary; provided that
the foregoing restrictions do not apply to issuances to the Company or to a Wholly-Owned Subsidiary
or the issuance of directors’ qualifying shares.

(c) The Company will not sell, transfer or otherwise dispose of stock or Debt of any
Consolidated Subsidiary (except issuance of directors’ qualifying shares and sales, transfers and
dispositions of all the stock of a special purpose Consolidated Subsidiary for consideration if (x)
substantially all the assets of such Consolidated Subsidiary constitute Investments and (y) the
sale, transfer or disposition of all such Investments for substantially the same consideration
would be permitted by §5.11(a)(3)) and will not permit any Consolidated Subsidiary to sell,
transfer or otherwise dispose of stock (otherwise than by purchase or redemption of preferred
stock) of a Consolidated Subsidiary or Debt of any other Consolidated Subsidiary (except issuances
to the Company or to a Wholly-Owned Subsidiary or issuance of directors’ qualifying shares);
provided that the foregoing restrictions do not apply if the following conditions are met:

(1) all shares of stock and all Debt of such Consolidated Subsidiary held by the
Company and its Subsidiaries shall be sold simultaneously;

(2) in the opinion of the Company’s board of directors:

	 	(i)	 	such sale of stock or Debt is in the best
interests of the Company; and

	 	(ii)	 	the consideration paid for such stock and Debt
is deemed adequate and satisfactory.

(3) the Consolidated Subsidiary being disposed of shall not have any continuing
investment in the Company or any Consolidated Subsidiary that is not being disposed of
simultaneously; and

(4) such sale or disposition does not involve a substantial part of assets of the
Company and its Consolidated Subsidiaries.

As used in this §5.11, a sale of assets will be deemed a “substantial part” of the assets of
the Company and its Consolidated Subsidiaries if (i) the Book Value of such assets sold in a given
fiscal year (except those sold in the ordinary course of business) exceeds 15% of the Consolidated
Total Assets of the Company and its Consolidated Subsidiaries determined at the close of the
immediately preceding fiscal year, or (ii) the operations of such assets sold (except those sold in
the ordinary course of business) generated 15% or more of the consolidated operating profit of the
Company and its Consolidated Subsidiaries during the immediately preceding fiscal year; provided,
however, that for purposes of the foregoing calculation, there shall not be included any assets if
a portion of the proceeds of such assets equal to the aggregate Book Value thereof immediately
prior to such sale was or is applied within 365 days of the date of sale of such assets to either
(A) the acquisition of Investments useful and intended to be used in the operation of the business
of the Company and its Consolidated Subsidiaries and having a fair value (as determined in good
faith by the board of directors of the Company) at least equal to the Book Value of the assets so
disposed of, or (B) the prepayment at any applicable prepayment Premium, on a pro rata basis, of
Senior Funded Debt of the Company. It is understood and agreed by the Company that any such
proceeds paid and applied to the prepayment of the Notes as hereinabove provided shall be prepaid
as and to the extent provided in §2.2.

Section 5.12. Repurchase of Notes. Neither the Company nor any Consolidated Subsidiary or
Affiliate, directly or indirectly, may repurchase or make any offer to repurchase any Notes unless
an offer has been made to repurchase Notes, pro rata (without regard to the Series of such Notes),
from all holders of the Notes at the same time and upon the same terms. In case the Company
repurchases or otherwise acquires any Notes, such Notes shall immediately thereafter be canceled
and no Notes shall be issued in substitution therefor. Without limiting the foregoing, upon the
repurchase or other acquisition of any Notes by the Company, any Consolidated Subsidiary or any
Affiliate, such Notes shall no longer be outstanding for purposes of any section of this Agreement
relating to the taking by the holders of the Notes of any actions with respect hereto, including
without limitation, §6.3, §6.4 and §7.1.

Section 5.13. Transactions with Affiliates. The Company will not, and will not permit any
Consolidated Subsidiary to, enter into or be a party to any transaction or arrangement with any
Affiliate (including, without limitation, the purchase from, sale to or exchange of property with,
or the rendering of any service by or for, any Affiliate), except transactions in the ordinary
course of and pursuant to the reasonable requirements of the Company’s or such Consolidated
Subsidiary’s business and upon fair and reasonable terms no less favorable to the Company or such
Consolidated Subsidiary than would be obtained in a comparable arm’s-length transaction with a
Person other than an Affiliate.

Section 5.14. Termination of Pension Plans. The Company will not, and will not permit any
Consolidated Subsidiary to, withdraw from any Multiemployer Plan to which it may hereafter
contribute or permit any employee benefit plan hereafter maintained by it to be terminated if such
withdrawal or termination could result in withdrawal liability (as described in Part 1 of Subtitle
E of Title IV of ERISA) or the imposition of a Lien on any property of the Company or any
Consolidated Subsidiary pursuant to Section 4068 of ERISA.

Section 5.15. Reports and Rights of Inspection. The Company will keep, and will cause each
Consolidated Subsidiary to keep, proper books of record and account in which full and correct
entries will be made of all dealings or transactions of, or in relation to, the business and
affairs of the Company or such Consolidated Subsidiary, in accordance with GAAP consistently
applied (except for changes disclosed in the financial statements furnished to the Holders pursuant
to this §5.15 and concurred with by the independent registered public accounting firm referred to
in §5.15(b) hereof), and will furnish to each Institutional Holder of the then outstanding Notes
(in duplicate if so specified below or otherwise requested):

(a) Quarterly Statements. As soon as available and in any event within 50 days (or
such period as is 5 Business Days greater than the period applicable to the required filing
date of the Company’s Quarterly Report on Form 10-Q) after the end of each quarterly fiscal
period (except the last) of each fiscal year, copies of:

(1) consolidated balance sheets of the Company and its Consolidated
Subsidiaries as of the close of such quarterly fiscal period, setting forth in
comparative form the consolidated figures for the fiscal year then most recently
ended,

(2) consolidated statements of operations of the Company and its Consolidated
Subsidiaries for such quarterly fiscal period and for the portion of the fiscal year
ending with such quarterly fiscal period, in each case setting forth in comparative
form the consolidated figures for the corresponding periods of the preceding fiscal
year, and

(3) consolidated statements of changes in net assets and cash flows of the
Company and its Consolidated Subsidiaries for the portion of the fiscal year ending
with such quarterly fiscal period, setting forth in comparative form the
consolidated figures for the corresponding period of the preceding fiscal year,

all in reasonable detail and certified as complete and correct by a Senior Financial Officer
of the Company;

(b) Annual Statements. As soon as available and in any event within 80 days (or such
period as is 5 Business Days greater than the period applicable to the required filing date
of the Company’s Annual Report on Form 10-K) after the close of each fiscal year, copies of:

(1) consolidated and consolidating balance sheets of the Company and its
Consolidated Subsidiaries as of the close of such fiscal year,

(2) consolidated statements of operations, changes in net assets and cash
flows, and consolidating statements of operations and cash flows, and

(3) consolidated statement of investments

setting forth in comparative form the consolidated figures for the preceding fiscal year
(except in the case of such statement of investments) and in each case all in reasonable
detail and accompanied by a report thereon of an independent registered public accounting
firm selected by the Company to the effect that the consolidated financial statements
present fairly, in all material respects, the consolidated financial position of the Company
and its Consolidated Subsidiaries as of the end of the fiscal year being reported on and the
consolidated results of their operations, changes in net assets and cash flows for said year
in conformity with GAAP and that the examination of such accountants in connection with such
financial statements has been conducted in accordance with generally accepted auditing
standards and included such tests of the accounting records and such other auditing
procedures as said accountants deemed necessary in the circumstances;

(c) Audit Reports. Promptly upon receipt thereof, one copy of each interim or special
audit made by an independent registered public accounting firm of the books of the Company
or any Consolidated Subsidiary and any management letter received from such accountants;

(d) SEC and Other Reports. Promptly upon their becoming available (or in the case of
registration statements, promptly after their becoming effective), one copy of each
financial statement, report, notice, press releases or proxy statement sent by the Company
to stockholders generally and of each regular or periodic report, and any registration
statement or prospectus filed by the Company with any securities exchange or the Securities
and Exchange Commission or any successor agency, and copies of any orders in any proceedings
to which the Company or any Consolidated Subsidiary is a party, issued by any governmental
agency, Federal or state, having jurisdiction over the Company or any of its Consolidated
Subsidiaries;

(e) ERISA Reports. Promptly upon the occurrence thereof, written notice of (i) a
Reportable Event with respect to any Plan hereafter maintained by the Company or any ERISA
Affiliate; (ii) the institution of any steps by the Company, any ERISA Affiliate, the PBGC
or any other person to terminate any such Plan; (iii) the institution of any steps by the
Company or any ERISA Affiliate to withdraw from any such Plan; (iv) a non-exempt “prohibited
transaction” within the meaning of Section 406 of ERISA in connection with any such Plan;
(v) any material contingent liability of the Company or any Consolidated Subsidiary with
respect to any post-retirement welfare liability hereafter existing; or (vi) the taking of
any action by, or the threatening of the taking of any action by, the Internal Revenue
Service, the Department of Labor or the PBGC with respect to any of the foregoing;

(f) Officer’s Certificates. Within the periods provided in paragraphs (a) and (b)
above, a certificate of a Senior Financial Officer of the Company stating that such officer
has reviewed the provisions of this Agreement and setting forth: (i) the information and
computations (in sufficient detail) required in order to establish whether the Company was
in compliance with the requirements of §5.6 through §5.11 at the end of the period covered
by the financial statements then being furnished and (ii) whether there existed as of the
date of such financial statements and whether, to the best of such officer’s knowledge,
there exists on the date of the certificate or existed at any time during the period covered
by such financial statements any Default or Event of Default and, if any such condition or
event exists on the date of the certificate, specifying the nature and period of existence
thereof and the action the Company is taking and proposes to take with respect thereto;

(g) Accountant’s Certificates. Within the period provided in paragraph (b) above, a
certificate of the accountants who render an opinion with respect to such financial
statements acknowledging that the Company was in compliance with the financial covenants of
§5.6, §5.7 and §5.8(a), (b) and (c), and setting forth the procedures used to make such
determination; and

(h) Requested Information. With reasonable promptness, such other data and information
as any Institutional Holder may reasonably request.

Without limiting the foregoing, the Company will permit each Institutional Holder of the then
outstanding Notes (or such Persons as such Holder may designate), to visit and inspect, under the
Company’s guidance, any of the properties of the Company or any Consolidated Subsidiary, to examine
all of their books of account, records, reports and other papers, to make copies and extracts
therefrom and to discuss their respective affairs, finances and accounts with their respective
officers, employees, and independent registered public accounting firm (and by this provision the
Company authorizes said accountants to discuss with such Holder the finances and affairs of the
Company and its Consolidated Subsidiaries) all at such reasonable times and as often as may be
reasonably requested. Any visitation shall be at the sole expense of such Institutional Holder,
unless a Default or Event of Default shall have occurred and be continuing or the Holder of any
Note or of any other evidence of Indebtedness of the Company or any Consolidated Subsidiary gives
any written notice or takes any other action with respect to a claimed default, in which case, any
such visitation or inspection shall be at the sole expense of the Company.

	 	 	 	Section 6. Events of Default and Remedies Therefor.

Section 6.1. Events of Default. Any one or more of the following shall constitute an “Event
of Default” as such term is used herein:

(a) Default shall occur in the payment of interest on any Note when the same shall have
become due and such default shall continue for more than five Business Days; or

(b) Default shall occur in the making of any payment of the principal of any Note or
Premium, if any, thereon at the expressed or any accelerated maturity date or at any date
fixed for prepayment; or

(c) Default shall be made in the payment when due (whether by lapse of time, by
declaration, by call for redemption or otherwise) of the principal of or interest on any
Consolidated Debt (other than the Notes) of the Company or any Consolidated Subsidiary
having an aggregate unpaid principal amount in excess of $15,000,000 and such default shall
continue beyond the period of grace, if any, allowed with respect thereto; or

(d) Default or the happening of any event shall occur under any indenture, agreement or
other instrument under which Consolidated Debt of the Company or any Consolidated Subsidiary
having an aggregate unpaid principal amount in excess of $15,000,000 may be issued and such
default or event shall continue for a period of time sufficient to permit the acceleration
of the maturity of such Consolidated Debt or the Company or a Consolidated Subsidiary has
become obligated to purchase such Consolidated Debt or one or more Persons have the right to
require the Company or any Consolidated Subsidiary to purchase such Consolidated Debt; or

(e) Default shall occur in the observance or performance of any covenant or agreement
contained in §5.6 through §5.11 or §6.2 and such default shall continue for more than five
Business Days; or

(f) Default shall occur in the observance or performance of any other provision of this
Agreement which is not remedied within 30 days after the earlier of (i) the day on which a
Senior Financial Officer first obtains actual personal knowledge of such default, or (ii)
the day on which written notice thereof is given to the Company by the Holder of any Note;
or

(g) Any representation or warranty made by the Company herein, or made by the Company
in any statement or certificate furnished by the Company in connection with the consummation
of the issuance and delivery of the Notes or furnished by the Company pursuant hereto, is
untrue in any material respect as of the date of the issuance or making thereof; or

(h) Final judgment or final judgments for the payment of money aggregating in excess of
$15,000,000 is or are outstanding against the Company or any Material Subsidiary or against
any property or assets of the Company or any Material Subsidiary and any such final judgment
or final judgments have remained unpaid, unvacated, unbonded or unstayed by appeal or
otherwise for a period of 60 days from the date of its entry; or

(i) A custodian, liquidator, receiver or similar official is appointed for the Company
or any Material Subsidiary or for the major part of its property and is not discharged
within 60 days after such appointment; or

(j) The Company or any Material Subsidiary becomes insolvent or bankrupt, is generally
not paying its debts as they become due or makes an assignment for the benefit of creditors,
or the Company or any Material Subsidiary applies for or consents to the appointment of a
custodian, liquidator, trustee or receiver for the Company or such Material Subsidiary or
for the major part of its property; or

(k) Bankruptcy, reorganization, arrangement or insolvency proceedings, or other
proceedings for relief under any bankruptcy or similar law or laws for the relief of
debtors, are instituted by or against the Company or any Material Subsidiary and, if
instituted against the Company or such Material Subsidiary, are consented to or are not
dismissed within 60 days after such institution.

Section 6.2. Notice to Holders. When any Event of Default described in the foregoing §6.1 has
occurred, or if the Holder of any Note or of any other evidence of Debt of the Company gives any
notice or takes any other action with respect to a claimed default, the Company agrees to give
notice within three Business Days of such event to all holders of the Notes then outstanding.

Section 6.3. Acceleration of Maturities. When any Event of Default described in paragraph (a)
or (b) of §6.1 has happened and is continuing, any Holder of any Note may declare the entire
principal and all interest accrued on such Holder’s Notes to be and such Notes shall thereupon
become, forthwith due and payable, without any presentment, demand, protest or other notice of any
kind, all of which are hereby waived. When any Event of Default described in paragraphs (a)
through (i), inclusive, of §6.1 has happened and is continuing, the Holder or Holders of 51% or
more of the principal amount of Notes at the time outstanding may, by notice to the Company,
declare the entire principal and all interest accrued on all Notes to be, and all Notes shall
thereupon become, forthwith due and payable, without any presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived. When any Event of Default described
in paragraph (j) or (k) of §6.1 has occurred, then all outstanding Notes shall immediately become
due and payable without presentment, demand or notice of any kind. Upon any Note becoming due and
payable as a result of any Event of Default as aforesaid, the Company will forthwith pay to the
Holder of such Note the entire principal and interest accrued on such Note and (to the extent
permitted by applicable law) an amount as liquidated damages for the loss of the bargain evidenced
hereby (and not as a penalty) equal to the applicable Make-Whole Amount which the Company would be
obligated to pay if the Notes were being prepaid pursuant to §2.2, determined as of the date on
which such Note shall so become due and payable. No course of dealing on the part of the Holder or
Holders of any Notes nor any delay or failure on the part of any Holder of Notes to exercise any
right shall operate as a waiver of such right or otherwise prejudice such Holder’s rights, powers
and remedies. The Company further agrees, to the extent permitted by law, to pay to the Holder or
Holders of the Notes all costs and expenses incurred by them in the collection of any Notes upon
any default hereunder or thereon, including reasonable compensation to such Holder’s or Holders’
attorneys for all services rendered in connection therewith.

Section 6.4. Rescission of Acceleration. The provisions of §6.3 are subject to the condition
that if the principal of and accrued interest on all or any outstanding Notes have been declared
immediately due and payable by reason of the occurrence of any Event of Default described in
paragraphs (a) through (i), inclusive, of §6.1, the holders of 66-2/3% in aggregate principal
amount of the Notes then outstanding (without regard to the Series of such Notes) may, by written
instrument filed with the Company, rescind and annul such declaration and the consequences thereof,
provided that at the time such declaration is annulled and rescinded:

(a) no judgment or decree has been entered for the payment of any monies due pursuant
to the Notes or this Agreement;

(b) all arrears of interest upon all the Notes and all other sums payable under the
Notes and under this Agreement (except any principal, interest or Premium, if any, on the
Notes which has become due and payable solely by reason of such declaration under §6.3)
shall have been duly paid; and

(c) each and every other Default and Event of Default shall have been made good, cured
or waived pursuant to §7.1;

and provided further, that no such rescission and annulment under this §6.4 shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent thereto.

	 	 	 	Section 7. Amendments, Waivers and Consents.

Section 7.1. Consent Required. Any term, covenant, agreement or condition of this Agreement
may, with the consent of the Company, be amended or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or prospectively), if the Company
has obtained the consent in writing of the Holders of at least 51% in aggregate principal amount of
outstanding Notes; provided that without the written consent of the Holders of all of the Notes
then outstanding, no such amendment or waiver shall be effective (i) which will change the time of
payment of the principal of or the interest on any Note, change the principal amount thereof,
reduce the rate of interest thereon or change the method of computation of the Make-Whole Amount,
or (ii) which will change any of the provisions with respect to optional prepayments or (iii) which
will change the percentage of holders of the Notes required to consent to any such amendment or
waiver of any of the provisions of this §7 or §6.

Section 7.2. Solicitation of Holders. So long as there are any Notes outstanding, the Company
will not solicit, request or negotiate for or with respect to any proposed waiver or amendment of
any of the provisions of this Agreement or the Notes unless each Holder of Notes (irrespective of
the amount of Notes then owned by it) shall be informed thereof by the Company and shall be
afforded the opportunity of considering the same and shall be supplied by the Company with
sufficient information to enable it to make an informed decision with respect thereto. The Company
will not, directly or indirectly, pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, to any Holder of Notes as consideration for
or as an inducement to entering into by any Holder of Notes of any waiver or amendment of any of
the terms and provisions of this Agreement or the Notes unless such remuneration is concurrently
paid on the same terms, ratably to each Holder of Notes then outstanding even if such Holder did
not consent to such waiver or amendment.

Section 7.3. Effect of Amendment or Waiver. Any such amendment or waiver shall apply equally
to all of the Holders of the Notes and shall be binding upon them, upon each future Holder of any
Note and upon the Company, whether or not such Note shall have been marked to indicate such
amendment or waiver. No such amendment or waiver shall extend to or affect any obligation not
expressly amended or waived or impair any right consequent thereon.

	 	 	 	Section 8. Interpretation of Agreement; Definitions.

Section 8.1. Definitions. Unless the context otherwise requires, the terms hereinafter set
forth when used herein shall have the following meanings and the following definitions shall be
equally applicable to both the singular and plural forms of any of the terms herein defined:

“Adequate Rating” means a senior unsecured debt rating of A- or higher by Standard & Poor’s
Rating Services or Fitch Ratings, or a rating of A3 or higher by Moody’s Investors Services.

“Adjusted EBIT” means, for any period with respect to the Company and its Consolidated
Subsidiaries on a consolidated basis, income after deduction of all expenses and other proper
charges other than taxes and Interest Expense, all as determined in accordance with GAAP.

“Affiliate” shall mean any Person (other than a Consolidated Subsidiary) which (i) directly or
indirectly, or through one or more intermediaries controls, or is controlled by, or is under common
control with, the Company, (ii) beneficially owns or holds 5% or more of any class of the Voting
Stock of the Company or iii) 5% or more of the Voting Stock (or in the case of a Person which is
not a corporation, 5% or more of the equity interest) of which is beneficially owned by the Company
or a Subsidiary. The term “control” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise, other than by investment advisory contracts
entered into in the ordinary course of business of the Company or a Subsidiary of the Company.

“Asset Coverage Ratio” shall mean on a consolidated basis for the Company and its Consolidated
Subsidiaries the ratio which the value of total assets, less all liabilities and indebtedness not
represented by senior securities (all as determined pursuant to the Investment Company Act and any
orders of the Securities and Exchange Commission issued to the Company thereunder), bears to the
aggregate amount of senior securities representing indebtedness of the Company and its Consolidated
Subsidiaries.

“Bank Credit Agreement” means the Credit Agreement between the Banks and the Company dated as
of September 30, 2005, as amended from time to time, pursuant to which the Banks have extended
credit to the Company, and any renewals, extensions or replacements thereof.

“Banks” means the banks or financial institutions which are party to the Bank Credit Agreement
from time to time.

“Book Value” means, with respect to any asset at any time, the value thereof as the same would
be reflected on a consolidated balance sheet of the Company and its Consolidated Subsidiaries as at
such time prepared in accordance with GAAP.

“Business Day” shall mean (a) for the purposes of computation of the Make-Whole Amount only,
any day of the week (excluding Saturday or Sunday) on which banks in New York, New York are not
obligated by law to close and (b) for the purposes of any other provision of this Agreement any day
of the week (excluding Saturday or Sunday) on which banks in Washington, D.C. and New York, New
York are not obligated by law to close.

“Capitalized Lease” shall mean any lease the obligation for Rentals with respect to which is
required to be capitalized on a consolidated balance sheet of the lessee and its Subsidiaries in
accordance with GAAP.

“Capitalized Rentals” of any Person shall mean as of the date of any determination thereof the
amount at which the aggregate Rentals due and to become due under all Capitalized Leases under
which such Person is a lessee would be reflected as a liability on a consolidated balance sheet of
such Person.

“Code” shall mean the Internal Revenue Code of 1986, as amended and the rules and regulations
promulgated thereunder.

“Consolidated Debt” shall mean as of the date of any determination thereof, the aggregate
unpaid amount of all Debt of the Company and its Consolidated Subsidiaries determined on a
consolidated basis in accordance with GAAP.

“Consolidated Shareholders’ Equity” as of the date of determination thereof, shall mean the
total shareholders’ equity of the Company and its Consolidated Subsidiaries as the same would
appear on a consolidated balance sheet of the Company and its Consolidated Subsidiaries prepared as
of such date in accordance with GAAP, including, in any case, common stock of the Company (valued
at cost) held in the Allied Capital Corporation deferred compensation trusts and Permitted
Preferred Stock of the Company and its Consolidated Subsidiaries but excluding any stock, common or
preferred, not both issued and outstanding.

“Consolidated Subsidiary” shall mean any Subsidiary which is required to be consolidated on
financial statements of the Company prepared in accordance with GAAP.

“Consolidated Total Assets” shall mean total assets of the Company and its Consolidated
Subsidiaries on a consolidated basis.

“Debt” means, with respect to any Person, without duplication,

(a) its liabilities for borrowed money;

(b) all liabilities for the deferred purchase price of property acquired by such Person
(excluding accounts payable arising in the ordinary course of business but including,
without limitation, all liabilities created or arising under any conditional sale or other
title retention agreement with respect to any such property);

(c) its Capitalized Rentals;

(d) all liabilities for borrowed money secured by any Lien with respect to any property
owned by such Person (whether or not it has assumed or otherwise become liable for such
liabilities);

(e) all liabilities under Interest Rate Swaps entered into for the purpose of hedging
currency risk with respect to Debt; and

(f) any Guaranty of such Person with respect to liabilities of a type described in any
of clauses (a) through (e) hereof.

Debt of any Person shall include all obligations of such Person of the character described in
clauses (a) through (e) to the extent such Person remains legally liable in respect thereof
notwithstanding that any such obligation is deemed to be extinguished under GAAP. Any amount
receivable by the Company or any of its Consolidated Subsidiaries under an Interest Rate Swap
referred to in clause (e) above, as determined in accordance with the definition of Interest Rate
Swap, shall apply as an offset in the calculation of the total amount of Debt if and only if (i)
the counterparty in such Interest Rate Swap has an Adequate Rating or (ii) in the event such
counterparty ceases to maintain an Adequate Rating, such counterparty has posted collateral to the
benefit of the Company or the relevant Consolidated Subsidiary to secure such receivable, in which
case, the amount of such receivable that shall apply as an offset in the calculation of the total
amount of Debt shall be limited to the fair market value of such collateral.

“Default” shall mean any event or condition the occurrence of which would, with the lapse of
time or the giving of notice, or both, constitute an Event of Default.

“Equity Issuance” means any issuance or sale by a Person of its capital stock or other similar
equity security, or any warrants, options or similar rights to acquire, or securities convertible
into or exchangeable for, such capital stock or other similar equity security.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, and any
successor statute of similar import, together with the regulations thereunder, in each case as in
effect from time to time. References to sections of ERISA shall be construed to also refer to any
successor sections.

“ERISA Affiliate” shall mean any corporation, trade or business that is, along with the
Company, a member of a controlled group of corporations or a controlled group of trades or
businesses, as described in section 414(b) and 414(c), respectively, of the Code or Section 4001 of
ERISA.

“Event of Default” shall have the meaning set forth in §6.1.

“Existing Notes” means the notes issued by the Company pursuant to the Existing Note
Agreements.

“Existing Note Agreements” means (i) the Note Agreement dated as of May 1, 1999 among the
Company and the purchasers named therein, pursuant to which the Company has issued its $112,000,000
7.39% Senior Notes, Series A due May 1, 2004 and $25,000,000 7.49% Senior Notes, Series B due May
1, 2006 and any replacement or renewal thereof, (ii) the Note Agreement dated October 15, 2000
among the Company and the purchasers named therein, pursuant to which the Company has issued
$115,000,000 8.54% Senior Notes, Series A due October 15, 2005 and $10,000,000 Floating Rate Senior
Notes, Series B due October 15, 2005, and any replacement or renewal thereof, (iii) the Note
Agreement dated as of October 15, 2001 among the Company and the purchasers named therein, pursuant
to which the Company has issued its $150,000,000 7.16% Senior Notes, due October 16, 2006, and any
replacement or renewal thereof, (iv) the Note Agreement dated as of May 14, 2003 among the Company
and the purchasers named therein, pursuant to which the Company has issued its $153,000,000 5.45%
Senior Notes, Series A due May 14, 2008 and its $147,000,000 6.05% Senior Notes, Series B due May
14, 2010 and any replacement or renewal thereof, (v) the Note Agreement dated as March 25, 2004
among the Company and the purchasers named therein, pursuant to which the Company has issued its
€5,000,000 5.703% Senior Notes, Euro Series due March 25, 2009 and its
£5,000,000 7.343% Senior Notes, Sterling Series due March 25, 2009 and any replacement or
renewal thereof, and (vi) the Note Agreement dated as of November 15, 2004 pursuant to which the
Company has issued $252,500,000 5.53% Senior Notes, Series A due November 15, 2009 and $72,500,000
5.99% Senior Notes, Series B due November 15, 2011 and any replacement or renewal thereof.

“GAAP” shall mean generally accepted accounting principles at the time in the United States.

“Guaranties” by any Person shall mean all obligations (other than endorsements in the ordinary
course of business of negotiable instruments for deposit or collection) of such Person
guaranteeing, or in effect guaranteeing, any Indebtedness, dividend or other obligation of any
other Person (the “primary obligor”) in any manner, whether directly or indirectly, including,
without limitation, all obligations incurred through an agreement, contingent or otherwise, by such
Person: (i) to purchase such Indebtedness or obligation or any property or assets constituting
security therefor, (ii) to advance or supply funds (x) for the purchase or payment of such
Indebtedness or obligation, (y) to maintain working capital or other balance sheet condition or
otherwise to advance or make available funds for the purchase or payment of such Indebtedness or
obligation, (iii) to lease property or to purchase Securities or other property or services
primarily for the purpose of assuring the owner of such Indebtedness or obligation of the ability
of the primary obligor to make payment of the Indebtedness or obligation, or (iv) otherwise to
assure the owner of the Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Agreement, a Guaranty in respect of
any Indebtedness for borrowed money shall be deemed to be Indebtedness equal to the principal
amount of such Indebtedness for borrowed money which has been guaranteed, and a Guaranty in respect
of any other obligation or liability or any dividend shall be deemed to be Indebtedness equal to
the maximum aggregate amount of such obligation, liability or dividend.

“Holder” shall mean any Person which is, at the time of reference, the registered Holder of
any Note.

“Indebtedness” with respect to any Person means, at any time, without duplication,

(a) its liabilities for borrowed money and its redemption obligations in respect of
mandatorily redeemable preferred stock;

(b) its liabilities for the deferred purchase price of property acquired by such Person
(excluding accounts payable arising in the ordinary course of business but including all
liabilities created or arising under any conditional sale or other title retention agreement
with respect to any such property);

(c) all liabilities appearing on its balance sheet in accordance with GAAP in respect
of Capitalized Leases;

(d) all liabilities for borrowed money secured by any Lien with respect to any property
owned by such Person (whether or not it has assumed or otherwise become liable for such
liabilities);

(e) all its liabilities in respect of unreimbursed drawings under letters of credit or
instruments serving a similar function issued or accepted for its account by banks and other
financial institutions (whether or not representing obligations for borrowed money);

(f) Interest Rate Swaps of such Person; and

(g) any Guaranty of such Person with respect to liabilities of a type described in any
of clauses (a) through (f) hereof.

Indebtedness of any Person shall include all obligations of such Person of the character
described in clauses (a) through (g) to the extent such Person remains legally liable in respect
thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP.

“Institutional Holder” shall mean any Holder which is an insurance company, bank, savings and
loan association, trust company, investment company, charitable foundation, employee benefit plan
(as defined in ERISA) or other institutional investor or any other similar financial institution
which is not principally engaged in, or has one of its important activities, in the business of
making small business investments of the type made by the Company.

“Intercreditor Agreement” means an intercreditor agreement pursuant to which the Banks, the
holders of the Existing Notes and the Holders of the Notes have agreed to share payments made by
any Consolidated Subsidiary under a Subsidiary Existing Note Guaranty, a Subsidiary Note Guaranty
or a Subsidiary Bank Guaranty on an equal and ratable basis.

“Interest Expense” means, with respect to a Person and for any period, the total consolidated
interest expense (including, without limitation, capitalized interest expense and interest expense
attributable to Capitalized Leases) of such Person and in any event shall include all interest
expense with respect to any Debt in respect of which such Person is wholly or partially liable.

“Interest Rate Swap” means a currency swap, an interest rate swap or other currency or
interest rate hedge entered into by the Company or a Consolidated Subsidiary. For the purposes of
this Agreement, the amount of the obligation (whether positive or negative) under any Interest Rate
Swap shall be the amount payable or receivable by the Company or any of its Consolidated
Subsidiaries determined in respect thereof as of the end of the then most recently ended fiscal
quarter of such Person, based on the assumption that such Interest Rate Swap had terminated at the
end of such fiscal quarter, and in making such determination, if any agreement relating to such
Interest Rate Swap provides for the netting of amounts payable by and to such Person thereunder or
if any such agreement provides for the simultaneous payment of amounts by and to such Person, then
in each such case, the amount of such obligation shall be the net amount so determined.

“Investment Company Act” shall mean the Investment Company Act of 1940, as amended, and all
rules and regulations promulgated thereunder.

“Investments” shall mean all investments, in cash or by delivery of property made, directly or
indirectly in any Person, whether by acquisition of shares of capital stock, Indebtedness or other
obligations or Securities or by loan, advance, capital contribution or otherwise.

“Lien” shall mean any interest in property securing an obligation owed to, or a claim by, a
Person other than the owner of the property, whether such interest is based on the common law,
statute or contract, and including but not limited to the security interest lien arising from a
mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes. The term “Lien” shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and other
title exceptions and encumbrances (including, with respect to stock, stockholder agreements, voting
trust agreements, buy-back agreements and all similar arrangements) affecting property. For the
purposes of this Agreement, the Company or any Consolidated Subsidiary shall be deemed to be the
owner of any property which it has acquired or holds subject to a conditional sale agreement,
Capitalized Lease or other arrangement pursuant to which title to the property has been retained by
or vested in some other Person for security purposes and such retention or vesting shall constitute
a Lien.

“Make-Whole Amount” means, with respect to a Note of any Series, an amount equal to the
excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the
Called Principal of such Note over the amount of such Called Principal, provided that the
Make-Whole Amount may in no event be less than zero. For the purposes of determining the
Make-Whole Amount, the following terms have the following meanings:

“Called Principal” means the principal of any Note of any Series that is to be prepaid
pursuant to §2.2 or has become or is declared to be immediately due and payable pursuant to
§6.3, as the context requires.

“Discounted Value” means, with respect to the Called Principal of a Note of any Series,
the amount obtained by discounting all Remaining Scheduled Payments with respect to such
Called Principal from their respective scheduled due dates to the Settlement Date with
respect to such Called Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which interest on the Notes
is payable) equal to the Reinvestment Yield with respect to such Called Principal.

“Reinvestment Yield” means, with respect to the Called Principal of a Note of any
Series, 0.50% over the yield to maturity implied by (i) the yields reported, as of 10:00
A.M. (New York City time) on the second Business Day preceding the Settlement Date with
respect to such Called Principal, on the display designated as “PX-1” of the Bloomberg
Financial Markets Services Screen (or such other display as may replace PX-1 of the
Bloomberg Financial Markets Services Screen) for actively traded on-the-run U.S. Treasury
securities having a maturity equal to the Remaining Average Life of such Called Principal as
of such Settlement Date, or (ii) if such yields are not reported as of such time or the
yields reported as of such time are not ascertainable (including by way of interpolation),
the Treasury Constant Maturity Series Yields reported, for the latest day for which such
yields have been so reported as of the second Business Day preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or
any comparable successor publication) for actively traded on-the-run U.S. Treasury
securities having a constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield will be determined, if necessary,
by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with
accepted financial practice and (b) interpolating linearly between (1) the actively traded
on-the-run U.S. Treasury security with the maturity closest to and greater than the
Remaining Average Life and (2) the actively traded on-the-run U.S. Treasury security with
the maturity closest to and less than the Remaining Average Life.

“Remaining Average Life” means, with respect to any Called Principal of either Series
of Notes, the number of years (calculated to the nearest one-twelfth year) obtained by
dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying
(a) the principal component of each Remaining Scheduled Payment with respect to such Called
Principal by (b) the number of years (calculated to the nearest one-twelfth year) that will
elapse between the Settlement Date with respect to such Called Principal and the scheduled
due date of such Remaining Scheduled Payment.

“Remaining Scheduled Payments” means, with respect to the Called Principal of a Note of
any Series, all payments of such Called Principal and interest thereon that would be due
after the Settlement Date with respect to such Called Principal if no payment of such Called
Principal were made prior to its scheduled due date, provided that if such Settlement Date
is not a date on which interest payments are due to be made under the terms of the Notes of
such Series, then the amount of the next succeeding scheduled interest payment will be
reduced by the amount of interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to §2.2 or §6.3.

“Settlement Date” means, with respect to the Called Principal of a Note of any Series,
the date on which such Called Principal is to be prepaid pursuant to §2.2 or has become or
is declared to be immediately due and payable pursuant to §6.3, as the context requires.

“Material Adverse Effect” means a material adverse effect on (a) the business, operations,
affairs, financial condition, assets or properties of the Company and its Consolidated Subsidiaries
taken as a whole, or (b) the ability of the Company to perform its obligations under this Agreement
and the Notes, or (c) the validity or enforceability of this Agreement or the Notes.

“Material Subsidiary” shall mean any Consolidated Subsidiary which has total assets having a
value (determined in accordance with the valuation method pursuant to GAAP) greater than or equal
to $60,000,000.

“Memorandum” is described in paragraph 5 of Exhibit B hereto.

“Multiemployer Plan” shall have the same meaning as in ERISA.

“Net Proceeds” means, with respect to an Equity Issuance by a Person, the aggregate amount of
all cash received by such Person in respect of such Equity Issuance net of investment banking fees,
legal fees, accountants fees, underwriting discounts and commissions and other customary fees and
expenses actually incurred by such Person in connection with such Equity Issuance.

“Notes” shall have the meaning set forth in §1.1.

“PBGC” means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all
of its functions under ERISA.

“Permitted Preferred Stock” means preferred stock that is issued from time to time by a
Consolidated Subsidiary for the purpose of qualifying such Consolidated Subsidiary as a real estate
investment trust under Sections 856 through 860 of the Code and having an aggregate stated value
not exceeding $500,000 at any one time outstanding, provided that in any event Permitted Preferred
Stock shall not include any Voting Stock.

“Person” shall mean an individual, partnership, limited liability company, corporation, trust
or unincorporated organization, and a government or agency or political subdivision thereof.

“Plan” means a “pension plan,” as such term is defined in ERISA, established or maintained by
the Company or any ERISA Affiliate or as to which the Company or any ERISA Affiliate contributed or
is a member or otherwise may have any liability.

“Priority Debt” means (without duplication) the sum of (i) all Debt of the Company and its
Consolidated Subsidiaries secured by a Lien, (ii) all liabilities of the Company and its
Consolidated Subsidiaries under Interest Rate Swaps entered into for the purpose of hedging
interest rate risk with respect to Debt, if and only if such liabilities are secured by a Lien,
(iii) all unsecured Debt of Consolidated Subsidiaries, and (iv) all unsecured liabilities of
Consolidated Subsidiaries under Interest Rate Swaps entered into for the purpose of hedging
interest rate risk with respect to Debt (excluding in each case, any Debt or liability owing to the
Company or another Consolidated Subsidiary).

“Premium” means the Make-Whole Amount.

“Purchaser” shall have the meaning set forth in §1.1.

“QPAM Exemption” means Prohibited Transaction Class Exemption 84-14 issued by the United
States Department of Labor.

“Rentals” shall mean and include as of the date of any determination thereof all fixed
payments (including as such all payments which the lessee is obligated to make to the lessor on
termination of the lease or surrender of the property) payable by the Company or any Consolidated
Subsidiary, as lessee or sublessee under a lease of real or personal property, but shall be
exclusive of any amounts required to be paid by the Company or any Consolidated Subsidiary (whether
or not designated as rents or additional rents) on account of maintenance, repairs, insurance,
taxes and similar charges. Fixed rents under any so-called “percentage leases” shall be computed
solely on the basis of the minimum rents, if any, required to be paid by the lessee regardless of
sales volume or gross revenues.

“Reportable Event” shall have the same meaning as in ERISA.

“SBA” shall mean the United States Small Business Administration.

“Securities Act” means the Securities Act of 1933, as amended from time to time or any
successor legislation.

“Security” shall have the same meaning as in Section 2(1) of the Securities Act.

“Senior Financial Officer” means the chief financial officer, chief operating officer,
principal accounting officer, treasurer or controller of the Company.

“Senior Funded Debt” means any Debt of the Company which is classified as long term debt in
accordance with GAAP (including, without limitation, the Bank Credit Agreement) other than
Subordinated Debt.

“Series” means any series of Notes issued under this Agreement.

“Subordinated Debt” means all unsecured Debt of the Company which shall contain or have
applicable thereto subordination provisions providing for the subordination thereof to other Debt
of the Company (including, without limitation, the obligations of the Company under the Notes).

“Subsidiary” with respect to any Person shall mean (i) any corporation, partnership,
association or other business entity at least 50% of the outstanding shares of Voting Stock or
similar interests of which are owned, directly or indirectly, by such Person (including, without
limitation, any limited partnership in which such Person, directly or indirectly, shall have at
least a 50% vote on matters as to which limited partners may vote), (ii) any general or limited
partnership of which such Person shall be a general partner or as to which such Person otherwise
shall have unlimited liability, (iii) any general or limited partnership a general partner of which
can be changed or removed by such Person (other than removals that could be accomplished by
voluntary withdrawal of such general partner only), or (iv) any general or limited partnership in
which (x) the amount represented by such Person’s capital account shall be equal to at least 50% of
the aggregate amount represented by the total of all partners’ capital accounts or (y) such Person
shall be allocated at least 50% of the profit (or loss) or distributable cash of the partnership;
provided, however, that the term “Subsidiary”, when used in this Agreement without reference to any
particular Person, shall mean a Subsidiary of the Company.

“Subsidiary Bank Guaranty” means any agreement pursuant to which a Consolidated Subsidiary has
guaranteed the Debt of the Company under the Bank Credit Agreement.

“Subsidiary Existing Note Guaranty” means any agreement pursuant to which a Consolidated
Subsidiary has guaranteed the Debt of the Company under the Existing Notes.

“Subsidiary Note Guaranty” means any agreement pursuant to which a Consolidated Subsidiary has
guaranteed the Debt of the Company under the Notes.

“Voting Stock” shall mean Securities of any class or classes, the holders of which are
ordinarily, in the absence of contingencies, entitled to elect a majority of the corporate
directors (or Persons performing similar functions).

“Wholly-Owned” when used in connection with any Subsidiary shall mean a Subsidiary of which
all of the issued and outstanding shares of stock (except shares required as directors’ qualifying
shares and Permitted Preferred Stock) shall be owned by the Company and/or one or more of its
Wholly-Owned Subsidiaries.

Section 8.2. Accounting Principles. Where the character or amount of any asset or liability
or item of income or expense is required to be determined or any consolidation or other accounting
computation is required to be made for the purposes of this Agreement, the same shall be done in
accordance with GAAP, to the extent applicable, except where such principles are inconsistent with
the requirements of this Agreement.

Section 8.3. Directly or Indirectly. Where any provision in this Agreement refers to action
to be taken by any Person, or which such Person is prohibited from taking, such provision shall be
applicable whether the action in question is taken directly or indirectly by such Person.

Section 8.4. Schedules and Exhibits; Sections. References to a “Schedule” or an “Exhibit”
are, unless otherwise specified, references to a Schedule or an Exhibit attached to this Agreement.
References to a “Section” are, unless otherwise specified, references to a Section of this
Agreement.

	 	 	 	Section 9. Miscellaneous.

Section 9.1. Registered Notes. The Company shall cause to be kept at the principal office of
the Company a register for the registration and transfer of the Notes (hereinafter called the “Note
Register”) and the Company will register or transfer or cause to be registered or transferred as
hereinafter provided any Note issued pursuant to this Agreement.

At any time and from time to time the Holder of any Note may transfer such Note to another
Institutional Holder upon surrender thereof at the principal office of the Company duly endorsed or
accompanied by a written instrument of transfer duly executed by the Holder of such Note or its
attorney duly authorized in writing.

The Person in whose name any registered Note shall be registered shall be deemed and treated
as the owner and Holder thereof for all purposes of this Agreement. Payment of or on account of
the principal, Premium, if any, and interest on any registered Note shall be made to or upon the
written order of such registered Holder.

Section 9.2. Exchange of Notes. At any time and from time to time, upon not less than ten
days’ notice to that effect given by the Holder of any Note initially delivered or of any Note
substituted therefor pursuant to §9.1, this §9.2 or §9.3, and, upon surrender of such Note at its
office, the Company will deliver in exchange therefor, without expense to such Holder, except as
set forth below, a Note of the same Series for the same aggregate principal amount as the then
unpaid principal amount of the Note so surrendered, or Notes in the denomination of $500,000 or any
amount in excess thereof as such Holder shall specify, dated as of the date to which interest has
been paid on the Note so surrendered or, if such surrender is prior to the payment of any interest
thereon, then dated as of the date of issue, registered in the name of such one or more
Institutional Holders as may be designated by such Holder, and otherwise of the same form and tenor
and of the same Series as the Notes so surrendered for exchange. The Company may require the
payment of a sum sufficient to cover any stamp tax or governmental charge imposed upon such
exchange or transfer. Any transferee, by its acceptance of a Note registered in its name (or the
name of its nominee), shall be deemed to have made the representations set forth in §3.2.

Section 9.3. Loss, Theft, Etc. of Notes. Upon receipt of evidence satisfactory to the Company
of the loss, theft, mutilation or destruction of any Note, and in the case of any such loss, theft
or destruction upon delivery of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation upon surrender and cancellation of
the Note, the Company will make and deliver without expense to the Holder thereof, a new Note, of
like tenor, in lieu of such lost, stolen, destroyed or mutilated Note. If the Purchaser or any
subsequent Institutional Holder is the owner of any such lost, stolen or destroyed Note, then the
affidavit of an authorized officer of such owner, setting forth the fact of loss, theft or
destruction and of its ownership of such Note at the time of such loss, theft or destruction shall
be accepted as satisfactory evidence thereof and no further indemnity shall be required as a
condition to the execution and delivery of a new Note other than the written agreement of such
owner to indemnify the Company.

Section 9.4. Expenses, Stamp Tax Indemnity. Whether or not the transactions herein
contemplated shall be consummated, the Company agrees to pay directly all of the Purchasers’
reasonable out-of-pocket expenses in connection with the preparation, execution and delivery of
this Agreement and the transactions contemplated hereby, including but not limited to the
reasonable charges and disbursements of Chapman and Cutler LLP, special counsel to the Purchasers,
duplicating and printing costs and charges for shipping the Notes, adequately insured to each
Purchaser’s home office or at such other place as such Purchaser may designate, the cost of
obtaining a Private Placement Number for the Notes from Standard & Poor’s Corporation, and all such
reasonable expenses relating to any amendment, waivers or consents pursuant to the provisions
hereof, including, without limitation, any amendments, waivers, or consents resulting from any
work-out, renegotiation or restructuring relating to the performance by the Company of its
obligations under this Agreement and the Notes. The Company also agrees that it will pay and save
each Purchaser harmless against any and all liability with respect to stamp and other taxes, if
any, which may be payable or which may be determined to be payable in connection with the execution
and delivery of this Agreement or the Notes, (other than as specified in the penultimate sentence
of §9.2) whether or not any Notes are then outstanding. The Company agrees to protect and
indemnify each Purchaser against any liability for any and all brokerage fees and commissions
payable or claimed to be payable to any Person in connection with the transactions contemplated by
this Agreement other than any Person retained by or acting on behalf of a Purchaser.

Section 9.5. Powers and Rights Not Waived; Remedies Cumulative. No delay or failure on the
part of the Holder of any Note in the exercise of any power or right shall operate as a waiver
thereof; nor shall any single or partial exercise of the same preclude any other or further
exercise thereof, or the exercise of any other power or right, and the rights and remedies of the
Holder of any Note are cumulative to, and are not exclusive of, any rights or remedies any such
Holder would otherwise have.

Section 9.6. Notices. (a) All communications provided for hereunder shall be in writing and,
if to a Holder, delivered or mailed prepaid by registered or certified mail or overnight air
courier, or by facsimile communication (with a confirming copy of any such facsimile communication
sent via overnight courier service), or (subject to clause (b) below) by electronic mail
communication, in each case addressed to such Holder at its address appearing on Schedule I to this
Agreement or such other address as such Holder may designate to the Company in writing, and if to
the Company delivered or mailed by registered or certified mail or overnight air courier, or by
facsimile communication, to the Company at 1919 Pennsylvania Avenue, N.W., Washington, D.C. 20006,
Attention: Kelly A. Anderson or to such other address as the Company may in writing designate to
the Holders; provided, however, that a notice to a Holder by overnight air courier shall only be
effective if delivered to such Holder at a street address designated for such purpose in Schedule
I, and a notice to a Holder by facsimile communication shall only be effective if made by confirmed
transmission to such Holder at a telephone number designated for such purpose in Schedule I, or, in
either case, as such Holder may designate to the Company in writing.

(b) Electronic mail and Internet and intranet websites may be used only to distribute routine
communications, such as financial statements and other information as provided in § 5.15(c) through
(h), and to distribute this Agreement for execution by the parties hereto, and may not be used for
any other purpose; provided that copies of all such information (other than Form 8-K filed with the
Securities Exchange Commission) will also be furnished to each Holder in the manner set forth in §
9.6(a).

Section 9.7. Successors and Assigns. This Agreement shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of each Purchaser and to the benefit of its
successors and assigns, including each successive Holder.

Section 9.8. Survival of Covenants and Representations. All covenants, representations and
warranties made by the Company herein and in any certificates delivered pursuant hereto, whether or
not in connection with the Closing Date, shall survive the closing and the delivery of this
Agreement and the Notes and shall terminate upon payment in full of all amounts due under the Notes
and this Agreement.

Section 9.9. Severability. Should any part of this Agreement for any reason be declared
invalid or unenforceable, such decision shall not affect the validity or enforceability of any
remaining portion, which remaining portion shall remain in force and effect as if this Agreement
had been executed with the invalid or unenforceable portion thereof eliminated and it is hereby
declared the intention of the parties hereto that they would have executed the remaining portion of
this Agreement without including therein any such part, parts or portion which may, for any reason,
be hereafter declared invalid or unenforceable.

Section 9.10. Governing Law. This Agreement and the Notes issued and sold hereunder shall be
construed and enforced in accordance with, and the rights of the parties shall be governed by, the
law of the State of New York, excluding choice-of-law principles of the law of such State that
would require the application of the laws of a jurisdiction other than such State.

Section 9.11. Captions. The descriptive headings of the various Sections or parts of this
Agreement are for convenience only and shall not affect the meaning or construction of any of the
provisions hereof.

Section 9.12. Confidential Information. For the purposes of this §9.12, “Confidential
Information” means information delivered to any Purchaser by or on behalf of the Company or a
Consolidated Subsidiary in connection with the transactions contemplated by or otherwise pursuant
to this Agreement, provided that such term does not include information that (a) was publicly known
or otherwise known to such Purchaser prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by such Purchaser or any Person acting on such
Purchaser’s behalf, (c) otherwise becomes known to such Purchaser other than through disclosure by
the Company or a Subsidiary or (d) constitutes financial statements delivered to such Purchaser
under §5.15 that are otherwise publicly available. Each Purchaser will maintain the
confidentiality of such Confidential Information in accordance with procedures adopted by such
Purchaser in good faith to protect confidential information of third parties delivered to such
Purchaser, provided that such Purchaser may deliver or disclose Confidential Information to (i) its
directors, trustees, officers, employees, agents, attorneys and affiliates (to the extent such
disclosure reasonably relates to the administration of the investment represented by its Notes),
(ii) its financial advisors and other professional advisors who agree to hold confidential the
Confidential Information substantially in accordance with the terms of this §9.12, (iii) any other
holder of any Note, (iv) any Institutional Holder to which it sells or offers to sell such Note or
any part thereof or any participation therein (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the provisions of this §9.12), (v) any
Person from which it offers to purchase any security of the Company (if such Person has agreed in
writing prior to its receipt of such Confidential Information to be bound by the provisions of this
§9.12), (vi) any federal or state regulatory authority having jurisdiction over such Purchaser,
(vii) the National Association of Insurance Commissioners or the Securities Valuation Office of the
National Association of Insurance Commissioners or, in each case, any similar organization, or any
nationally recognized rating agency that requires access to information about such Purchaser’s
investment portfolio, or (viii) any other Person to which such delivery or disclosure may be
necessary or appropriate (w) to effect compliance with any law, rule, regulation or order
applicable to such Purchaser, (x) in response to any subpoena or other legal process, (y) in
connection with any litigation to which such Purchaser is a party or (z) if an Event of Default has
occurred and is continuing, to the extent such Purchaser may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the protection of the rights
and remedies under such Purchaser’s Notes and this Agreement. Each Holder, by its acceptance of a
Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this §9.12
as though it were a party to this Agreement. On reasonable request by the Company in connection
with the delivery to any Holder of information required to be delivered to such Holder under this
Agreement or requested by such Holder (other than a Holder that is a party to this Agreement or its
nominee), such Holder will enter into an agreement with the Company embodying the provisions of
this §9.12.

The execution hereof by you shall constitute a contract between us for the uses and purposes
hereinabove set forth, and this Agreement may be executed in any number of counterparts, each
executed counterpart constituting an original but all together only one agreement.

	 	 	 	Allied Capital Corporation

	 	 	 	By
/s/ Kelly A. Anderson

Name: Kelly A. Anderson

Title: EVP & Treasurer

4

Accepted as of the date first written above.

	 	 	 	Allianz Life Insurance Company of 

North America

	 	 	 	By:
Allianz of America, Inc., as the
authorized signatory, investment manager, of
which, the security should be registered
under the Nominee Name, (MAC & CO)

	 	 	 	By
/s/ Gary Brown

Name: Gary Brown

Title: Assistant Treasurer

	 	 	 	Allstate Life Insurance Company

	 	 	 	By
/s/ Robert B. Bodett

Name: Robert B. Bodett

	 	 	 	By
/s/ Mark Cloghessy

Name: Mark Cloghessy

Authorized Signatories

	 	 	 	Allstate Life Insurance Company of New
York

	 	 	 	By
/s/ Robert B. Bodett

Name: Robert B. Bodett

	 	 	 	By
/s/ Mark Cloghessy

Name: Mark Cloghessy

Authorized Signatories

	 	 	 	American Equity Investment Life 

Insurance Company

	 	 	 	By
/s/ Rachel Stauffer

Name: Rachel Stauffer

Title: Vice President Investments

	 	 	 	American Family Life Assurance Company of
Columbus

	 	 	 	By
/s/ Joseph W. Smith

Name: Joseph W. Smith

Title: Chief Investment Officer

Senior Vice President

	 	 	 	American Fidelity Assurance Company

	 	 	 
	By:

	 	Advantus Capital Management, Inc.
	
 
	 	By /s/ Kathleen H. Parker

Name: Kathleen H. Parker

Title: Vice President

	 	 	 	Beneficial Life Insurance Company

	 	 	 	By
/s/ Robert R. Dalley

Name: Robert R. Dalley

Title: Senior Vice President and Chief

Financial Officer

	 	 	 	Blue Cross and Blue Shield of Florida,
Inc.

	 	 	 
	By:

	 	Advantus Capital Management, Inc.
	
 
	 	By /s/ Kathleen H. Parker

Name: Kathleen H. Parker

Title: Vice President

	 	 	 	California National Bank

	 	 	 	By
/s/ Lisa Alexander

Name: Lisa Alexander

Title: SVP/Treasurer

	 	 	 	Colorado Bankers Life Insurance 

Company

	 	 	 
	By:

	 	Advantus Capital Management, Inc.
	
 
	 	By /s/ Kathleen H. Parker

Name: Kathleen H. Parker

Title: Vice President

	 	 	 	Denver Investment Advisors LLC

	 	 	 	By
/s/ William E. Stafford, Jr.

Name: William E. Stafford, Jr.

Title: Vice President — Portfolio Manager

	 	 	 	EMC National Life Company

	 	 	 	By
/s/ Raymond W. Davis

Name: Raymond W. Davis

Title: Sr. Vice President & Treasurer

Employers Mutual Casualty Co.
(Investment Manager for EMC National
Life Co.)

	 	 	 	Employees’ Retirement System of Alabama

	 	 	 	By
/s/ David G. Bronner

Name: David G. Bronner

Title: CEO

	 	 	 	EVG Diversified BD FD-HI Grade

	 	 	 	By
/s/ James Cunningham

Name: James Cunningham

Title: Account Manager

	 	 	 	Farm Bureau Life Insurance Company of
Michigan

	 	 	 
	By:

	 	Advantus Capital Management, Inc.
	
 
	 	By /s/ Kathleen H. Parker

Name: Kathleen H. Parker

Title: Vice President

	 	 	 	First Bank of Oak Park

	 	 	 	By
/s/ Leonard E. Musich

Name: Leonard E. Musich

Title: President

	 	 	 	Fort Dearborn Life Insurance Company

	 	 	 
	By:

	 	Advantus Capital Management, Inc.
	
 
	 	By /s/ Kathleen H. Parker

Name: Kathleen H. Parker

Title: Vice President

	 	 	 	General Electric Capital Assurance
Company

	 	 	 	By
/s/ David Bartsch

Name: David Bartsch

Title: Investment Officer

	 	 	 	JPMorgan High Yield Bond Fund

	 	 	 	By:
JPMorgan High Yield Partners,
LLC, as investment sub-adviser

	 	 	 	By
/s/ James P. Shanahan, Jr.

Name: James P. Shanahan, Jr.

Title: Managing Director

	 	 	 	Judicial Retirement Fund

	 	 	 	By
/s/ David G. Bronner

Name: David G. Bronner

Title: CEO

	 	 	 	Midland National Life Insurance Company

	 	 	 	By
/s/ Kaitlin Trinh

Name: Kaitlin Trinh

Title: Director

	 	 	 	Minnesota Life Insurance Company

	 	 	 
	By:

	 	Advantus Capital Management, Inc.
	
 
	 	By /s/ Kathleen H. Parker

Name: Kathleen H. Parker

Title: Vice President

	 	 	 	Nationwide Life and Annuity Insurance
Company

	 	 	 	Nationwide Life Insurance Company

	 	 	 	Nationwide Multiple Maturity Separate
Account

	 	 	 	By
/s/ Mark W. Poeppelman

Name: Mark W. Poeppelman

Title: Authorized Signatory

	 	 	 	New York Life Insurance and Annuity
Corporation

	 	 	 	By
New York Life Investment Management LLC,
its Investment Manager

	 	 	 	By
/s/ A. Post Howland

Name: A. Post Howland

Title: Director

	 	 	 	New York Life Insurance and Annuity
Corporation

	 	 	 	Institutionally Owned Life Insurance Separate
Account

	 	 	 	By
New York Life Investment Management LLC,
its Investment Manager

	 	 	 	By
/s/ A. Post Howland

Name: A. Post Howland

Title: Director

	 	 	 	New York Life Insurance Company

	 	 	 	By
/s/ A. Post Howland

Name: A. Post Howland

Title: Investment Vice President

	 	 	 	North American Company for Life and Health
Insurance

	 	 	 	By
/s/ Kaitlin Trinh

Name: Kaitlin Trinh

Title: Director

	 	 	 	The Northwestern Mutual Life Insurance
Company

	 	 	 	By
/s/ Mark E. Kishler

Name: Mark E. Kishler

Its Authorized Representative

	 	 	 	The Ohio Casualty Insurance Company

	 	 	 	By
/s/ Paul J. Gerard

Name: Paul J. Gerard

Title: Senior Vice-President

	 	 	 	Ohio National Life Assurance Corporation

	 	 	 	By
/s/ Jed R. Martin

Name: Jed R. Martin

Title: Vice President, Private Placements

	 	 	 	The Ohio National Life Insurance Company

	 	 	 	By
/s/ Jed R. Martin

Name: Jed R. Martin

Title: Vice President, Private Placements

	 	 	 	PEIRAF – Deferred Compensation Plan

	 	 	 	By
/s/ David G. Bronner

Name: David G. Bronner

Title: CEO

	 	 	 	PHL Variable Insurance Company

	 	 	 	By
/s/ John H. Beers

Name: John H. Beers

Title: Vice President

	 	 	 	Phoenix Life Insurance Company

	 	 	 	By
/s/ John H. Beers

Name: John H. Beers

Title: Vice President

	 	 	 	Pullman Bank and Trust

	 	 	 	By
/s/ John Kratkoczki

Name: John Kratkoczki

Title: Vice President — Controller

	 	 	 	Regency Savings Bank

	 	 	 	By
/s/ Michael Dunning

Name: Michael Dunning

Title: Chief Financial Officer

	 	 	 	San Diego National Bank

	 	 	 	By
/s/ Eric W. Larson

Name: Eric W. Larson

Title: SVP/CFO

	 	 	 	Southern Ute Permanent Fund

	 	 	 	By:
JPMorgan High Yield Partners,
LLC, as investment sub-adviser

	 	 	 	By
/s/ James P. Shanahan, Jr.

Name: James P. Shanahan, Jr.

Title: Managing Director

	 	 	 	Teachers Insurance and Annuity Association of
America

	 	 	 	By
/s/ John Goodreds

Name: John Goodreds

Title: Director

	 	 	 	Teachers’ Retirement System of Alabama

	 	 	 	By
/s/ David G. Bronner

Name: David G. Bronner

Title: CEO

	 	 	 	The Travelers Indemnity Company

	 	 	 	By
/s/ Annette Masterson

Name: Annette Masterson

Title: Vice President — Head of Fixed

Income Research

	 	 	 	United Life Insurance Company

	 	 	 	By
/s/ Chad A. Guenther

Name: Chad A. Guenther

Title: Fixed Income Analyst

	 	 	 	Woodmen of the World Life Insurance
Society

	 	 	 	By
/s/ James L. Mounce

Name: James L. Mounce

Title: President & CEO

	 	 	 	By
/s/ Danny E. Cummins

Name: Danny E. Cummins

Title: Executive Vice President,

Operations & Secretary

5

Allied Capital Corporation

6.15% Senior Note, Series A

Due October 13, 2010

	 	 	 
	No. RA-

$[     ]

	 	     ,200_

PPN

Allied Capital Corporation, a Maryland corporation (the “Company”), for
value received, hereby promises to pay to [     ] or registered assigns on the
13th day of October, 2010 the principal amount of [     ] Dollars ($     )
and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the
principal amount from time to time remaining unpaid hereon at the rate of 6.15% per annum from the
date hereof until maturity, payable semiannually on the thirteenth day of each April and October in
each year (commencing on the first of such dates after the date hereof) and at maturity. The
Company agrees to pay interest on overdue principal (including any overdue required or optional
prepayment of principal) and Premium, if any, and (to the extent legally enforceable) on any
overdue installment of interest, at the rate of 8.15% per annum after the due date, whether by
acceleration or otherwise, until paid. Both the principal hereof and interest hereon, any
Make-Whole Amount and any Modified Make-Whole Amount with respect to this Note are payable at the
principal office of the Company in Washington, D.C. in coin or currency of the United States of
America which at the time of payment shall be legal tender for the payment of public and private
debts.

This Note is one of the 6.15% Senior Notes, Series A due October 13, 2010 (the “Series A
Notes”) of the Company in the aggregate principal amount of $261,000,000 issued or to be
issued together with the $89,000,000 aggregate principal amount of 6.34% Senior Notes,
Series B, due October 13, 2012 (the “Series B Notes” and, together with the Series A Notes, the
“Notes”) of the Company, under and pursuant to the terms and provisions of the Note Agreement,
dated as of October 13, 2005 (the “Note Agreement”), entered into by the Company with the
Purchasers named therein and this Note and the holder hereof are entitled with the holders of all
other Notes outstanding under the Note Agreement to all the benefits provided for thereby or
referred to therein to the extent provided in the Note Agreement. Reference is hereby made to the
Note Agreement for a statement of such rights and benefits.

This Series A Note and the other Series A Notes outstanding under the Note Agreement may be
declared due prior to their expressed maturity dates in the events, on the terms and in the manner
and amounts as provided in the Note Agreement.

The Series A Notes are not subject to prepayment or redemption at the option of the Company
prior to their expressed maturity dates except on the terms and conditions and in the amounts and
with the Premium, if any, set forth in the Note Agreement.

This Series A Note is registered on the books of the Company and is transferable only by
surrender thereof at the principal office of the Company duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of this Series A Note or its attorney
duly authorized in writing. Payment of or on account of principal, Premium, if any, and interest
on this Series A Note shall be made only to or upon the order in writing of the registered holder.

This Series A Note shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the law of the State of New York excluding choice-of-law principles
of the law of such State that would require the application of the laws of a jurisdiction other
than such State.

	 	 	 	Allied Capital Corporation

	 	 	 	By

Name:

	 	 	 	Title:

6

Allied Capital Corporation

6.34% Senior Note, Series B

Due October 13, 2012

	 	 	 
	No. RB-

$[     ]

	 	     ,200_

PPN

Allied Capital Corporation, a Maryland corporation (the “Company”), for
value received, hereby promises to pay to [     ] or registered assigns on the 13th day
of October 2012 the principal amount of [     ] Dollars ($     ) and to
pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the principal
amount from time to time remaining unpaid hereon at the rate of 6.34% per annum from the date
hereof until maturity, payable semiannually on the thirteenth day of each April and October in each
year (commencing on the first of such dates after the date hereof) and at maturity. The Company
agrees to pay interest on overdue principal (including any overdue required or optional prepayment
of principal) and Premium, if any, and (to the extent legally enforceable) on any overdue
installment of interest, at the rate of 8.34% per annum after the due date, whether by acceleration
or otherwise, until paid. Both the principal hereof and interest hereon, and any Make-Whole Amount
with respect to this Note are payable at the principal office of the Company in Washington, D.C. in
coin or currency of the United States of America which at the time of payment shall be legal tender
for the payment of public and private debts.

This Note is one of the 6.34% Senior Notes, Series B due October 13, 2012 (the “Series B
Notes”) of the Company in the aggregate principal amount of $89,000,000 issued or to be
issued together with the $261,000,000 aggregate principal amount of 6.15% Senior Notes,
Series A, due October 13, 2010 (the “Series A Notes” and, together with the Series B Notes, the
“Notes”) of the Company under and pursuant to the terms and provisions of the Note Agreement, dated
as of October 13, 2005 (the “Note Agreement”), entered into by the Company with the Purchasers
named therein and this Note and the holder hereof are entitled with the holders of all other Notes
outstanding under the Note Agreement to all the benefits provided for thereby or referred to
therein to the extent provided in the Note Agreement. Reference is hereby made to the Note
Agreement for a statement of such rights and benefits.

This Series B Note and the other Series B Notes outstanding under the Note Agreement may be
declared due prior to their expressed maturity dates in the events, on the terms and in the manner
and amounts as provided in the Note Agreement.

The Series B Notes are not subject to prepayment or redemption at the option of the Company
prior to their expressed maturity dates except on the terms and conditions and in the amounts and
with the Premium, if any, set forth in the Note Agreement.

This Series B Note is registered on the books of the Company and is transferable only by
surrender thereof at the principal office of the Company duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of this Series B Note or its attorney
duly authorized in writing. Payment of or on account of principal, Premium, if any, and interest
on this Series B Note shall be made only to or upon the order in writing of the registered holder.

This Series B Note shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the law of the State of New York excluding choice-of-law principles
of the law of such State that would require the application of the laws of a jurisdiction other
than such State.

	 	 	 	Allied Capital Corporation

	 	 	 	By

Name:

	 	 	 	Title:

7

Representations and Warranties

The Company represents and warrants to each Purchaser as follows:

1. Subsidiaries. Annex A attached hereto states the name of each of the Company’s
Consolidated Subsidiaries, its jurisdiction of incorporation and the percentage of its Voting Stock
owned by the Company and/or its Consolidated Subsidiaries. The Company and each Consolidated
Subsidiary has good and marketable title to all of the shares it purports to own of the stock of
each Consolidated Subsidiary, free and clear in each case of any Lien. All such shares have been
duly issued and are fully paid and non-assessable. The Company is a Business Development Company
under the Investment Company Act.

2. Corporate Organization and Authority. Except where failure to be qualified or authorized
would not have a Material Adverse Effect, the Company and each Consolidated Subsidiary,

(a) is a corporation duly organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation;

(b) has all requisite power and authority and all necessary licenses and permits to own and
operate its properties and to carry on its business as now conducted and as presently proposed to
be conducted; and

(c) is duly licensed or qualified and is in good standing as a foreign corporation in each
jurisdiction wherein the nature of the business transacted by it or the nature of the property
owned or leased by it makes such licensing or qualification necessary.

3. Financial Statements. (a) The consolidated balance sheet at December 31, 2003 and 2004 and
the consolidated statements of operations, changes in net assets and cash flows of the Company for
three years ended December 31, 2004, each accompanied by a report thereon containing an opinion
unqualified as to scope limitations imposed by the Company and otherwise without qualification
except as therein noted, by KPMG LLP have been prepared in accordance with GAAP consistently
applied except as therein noted, are correct and complete and present fairly the financial position
of the Company and its Consolidated Subsidiaries as of such dates and the results of their
operations for such periods. The unaudited consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of June 30, 2005, and the unaudited statements of operations, changes
in net assets and cash flows for the six month period ended on said date prepared by the Company
have been prepared in accordance with GAAP consistently applied, are correct and complete and
present fairly the financial position of the Company and its Consolidated Subsidiaries as of such
date and the results of their operations and changes in their financial position for such period.

(b) Since December 31, 2004, there has been no change in the condition, financial or
otherwise, of the Company and its Consolidated Subsidiaries as shown on the consolidated balance
sheet as of such date except changes (i) in the ordinary course of business, none of which
individually or in the aggregate has been materially adverse; or (ii) relating to the sale by the
Company of its portfolio of commercial mortgage backed securities and commercial real
estate-related collateralized debt obligations and preferred shares in the second quarter of 2005
none of which individually or in the aggregate has been materially adverse.

4. Debt. Annex B attached hereto correctly describes all Debt (including, without limitation,
Debt held by the SBA) and Capitalized Leases of the Company and its Consolidated Subsidiaries
outstanding on June 30, 2005 since which date there has been no material change in the amounts,
interest rates, sinking funds, installment payments or maturities of the Indebtedness of the
Company or its Consolidated Subsidiaries, other than as disclosed on Annex B.

5. Full Disclosure. The Company, through its agent, Merrill Lynch, has delivered to each of
the Purchasers a copy of a Private Placement Memorandum, dated August 2005 (the “Memorandum”),
relating to the transactions contemplated hereby. The Memorandum fairly describes, in all material
respects, the general nature of the business and principal properties of the Company and its
Consolidated Subsidiaries. Except as disclosed in this Agreement, the Memorandum, the documents,
certificates or other writings delivered to the Purchasers by or on behalf of the Company in
connection with the transactions contemplated hereby and the financial statements described in
paragraph 3 hereof, taken as a whole, do not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein not misleading in light of
the circumstances under which they were made. Except as disclosed in the Memorandum or in one of
the documents, certificates or other writings identified therein, or in the financial statements
described in paragraph 3 hereof, since December 31, 2004, there has been no change in the financial
condition, operations, business, properties or prospects of the Company or any Consolidated
Subsidiary except changes that individually or in the aggregate could not reasonably be expected to
materially affect adversely the properties, business, prospects, profits or condition (financial or
otherwise) of the Company and its Consolidated Subsidiaries taken as a whole. There is no fact
known to the Company that could reasonably be expected to materially affect adversely the
properties, business, prospects, profits or condition (financial or otherwise) of the Company and
its Consolidated Subsidiaries that has not been set forth herein or in the Memorandum or in the
other documents, certificates and other writings delivered to the Purchasers by or on behalf of the
Company specifically for use in connection with the transactions contemplated hereby, except
matters of an economic or regulatory nature generally affecting businesses of the type engaged in
by the Company.

6. Pending Litigation. Except as disclosed in Annex C, there are no actions, suits or
proceedings pending or, to the knowledge of the Company, threatened against or affecting the
Company or any Consolidated Subsidiary in any court or before any governmental authority or
arbitration board or tribunal. As to the matters set forth in Schedule C, the Company represents
as set forth therein.

7. Title to Properties. The Company and each Consolidated Subsidiary has good and marketable
title in fee simple (or its equivalent under applicable law) to all material parcels of real
property and has good title to all the other material items of property it purports to own,
including that reflected in the most recent balance sheet referred to in paragraph 3 hereof, except
as sold or otherwise disposed of in the ordinary course of business and except for Liens permitted
by the Agreement. The Company and each Consolidated Subsidiary has the right to, and does, enjoy
peaceful and undisturbed possession under all leases to which it is a party or under which it is a
party. All such leases are valid, subsisting and in full force and effect, none of such leases is
in default and no event has occurred and is continuing, and no condition exists which, after the
passage of time or giving of notice or both could become an event of default under any such lease.

8. Patents and Trademarks. The Company and each Consolidated Subsidiary owns or possesses all
the patents, trademarks, trade names, service marks, copyrights, licenses, permits, registrations,
consents (governmental or other) and rights with respect to the foregoing necessary for the present
and planned future conduct of its business, without any known conflict with the rights of others.

9. Sale is Legal and Authorized. The execution and delivery of this Agreement, sale of the
Notes to the Purchasers, compliance by the Company with all of the provisions of the Notes and
compliance by the Company with all of the provisions of the Agreement —

(a) are within the corporate powers of the Company;

(b) will not violate any provisions of any law or any order of any court or governmental
authority or agency and will not conflict with or result in any breach of any of the terms,
conditions or provisions of, or constitute a default under the Articles of Incorporation or By-laws
of the Company or any indenture or other agreement or instrument to which the Company is a party or
by which it may be bound or result in the imposition of any Liens or encumbrances on any property
of the Company; and

(c) have been duly authorized by proper corporate action on the part of the Company (no action
by the stockholders of the Company being required by law, by the Articles of Incorporation or
By-laws of the Company or otherwise), and the Agreement and the Notes have been executed and
delivered by the Company and upon payment of the purchase price of the Notes by the Purchasers, the
Notes and the Agreement constitute the legal, valid and binding obligations, contracts and
agreements of the Company enforceable in accordance with their terms.

10. No Defaults. No Default or Event of Default has occurred and is continuing. The Company
is not in default in the payment of principal or interest on any Debt and is not in default under
any instrument or instruments or agreements under and subject to which any Debt has been issued and
no event has occurred and is continuing under the provisions of any such instrument or agreement
which with the lapse of time or the giving of notice, or both, would constitute an event of default
thereunder.

11. Governmental Consent. No approval, consent or authorization of, or registration, filing
or declaration with or withholding of objection on the part of, any regulatory body, state, Federal
or local, is necessary in connection with the execution and delivery by the Company of the Notes
and the Agreement or compliance by the Company with any of the provisions of the Agreement or the
Notes.

12. Taxes. All tax returns required to be filed by the Company or any Consolidated Subsidiary
in any jurisdiction have, in fact, been filed, and all taxes, assessments, fees and other
governmental charges upon the Company or any Consolidated Subsidiary or upon any of their
respective properties, income or franchises, which are shown to be due and payable in such returns
have been paid, except to the extent such failure to file or to pay would not materially and
adversely affect the properties, business, profits or condition (financial or otherwise) of the
Company and its Consolidated Subsidiaries, taken as a whole . For all taxable years ending on or
before December 31, 1999, the Federal income tax liability of the Company has been satisfied and
either the period of limitations on assessment of additional Federal income tax has expired or the
Company has entered into an agreement with the Internal Revenue Service closing conclusively the
total tax liability for the taxable year. The Company does not know of any proposed additional tax
assessment against it for which adequate provision has not been made on its accounts, and no
material controversy in respect of additional Federal or state income taxes due since said date is
pending or to the knowledge of the Company threatened. The provisions for taxes on the books of
the Company and its Consolidated Subsidiaries are adequate for all open years, and for its current
fiscal period.

13. Use of Proceeds. The net proceeds from the sale of the Notes will be used by the Company
for general corporate purposes. None of the transactions contemplated in the Agreement (including,
without limitation thereof, the use of proceeds from the issuance of the Notes) will violate or
result in a violation of Section 7 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), or any regulation issued pursuant thereto, including, without limitation,
Regulations U, T and X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter
II. The Company is not engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying any “margin stock” within the meaning
of said Regulation U. None of the proceeds from the sale of the Notes will be used to purchase, or
refinance any borrowing the proceeds of which were used to purchase, any such margin stock.

14. Private Offering. Neither the Company, directly or indirectly, nor any agent on its
behalf has offered or will offer the Notes or has solicited or will solicit an offer to acquire the
Notes from or has otherwise approached or negotiated or will approach or negotiate in respect of
the Notes with any Person except for not more than 145 institutional investors (including the
Purchasers), each of whom was offered a portion of the Notes at private sale for investment
purposes only. Neither the Company, directly or indirectly, nor any agent on its behalf has
offered or will offer the Notes or any similar Security or has solicited or will solicit an offer
to acquire the Notes or any similar Security from any Person so as to bring the issuance and sale
of the Notes within the provisions of Section 5 of the Securities Act. When issued the Notes will
not be of the same class as Securities listed on a national securities exchange registered under
Section 6 of the Securities Exchange Act of 1934, as amended, or quoted in a U.S. automated
inter-dealer quotation system, and will not be convertible or exchangeable into any such
Securities.

15. ERISA. The consummation of the transactions provided for in the Agreement and compliance
by the Company with the provisions thereof and of the Notes issued thereunder will not involve any
non-exempt prohibited transaction within the meaning of Section 406(a) of ERISA or Sections
4975(c)(1)(A)-(D) of the Code. The Company and each ERISA Affiliate has fulfilled its obligations
under the minimum funding standards of ERISA and the Code with respect to each Plan and is in
compliance with the presently applicable provisions of ERISA and the Code with respect to each Plan
except for noncompliances which would not, individually or in the aggregate, cause a Default or an
Event of Default or have a Material Adverse Effect. Neither the Company nor any ERISA Affiliate
has any contingent liability with respect to any post-retirement “welfare benefit plan” (as such
term is defined in ERISA) except as has been disclosed to the Purchasers. The representation by
the Company in the first sentence of this paragraph 15 is made in reliance upon and subject to the
accuracy of the representation in §3.2 as to the sources of the funds used to pay the purchase
price of the Notes to be purchased by each Purchaser.

16. Compliance with Law. Neither the Company nor any Consolidated Subsidiary (a) is in
violation of any law, ordinance, franchise, governmental rule or regulation to which it is subject;
or (b) has failed to obtain any license, permit, registration, consent, franchise or other
governmental authorization necessary to the ownership of its property or to the conduct of its
business, which violation or failure to obtain would materially adversely affect the business,
profits, properties or condition (financial or otherwise) of the Company and its Consolidated
Subsidiaries, taken as a whole, or impair the ability of the Company to perform its obligations
contained in the Agreements or the Notes. Neither the Company nor any Consolidated Subsidiary is
in default with respect to any order of any court or governmental authority or arbitration board or
tribunal.

17. Compliance with Environmental Laws. Neither the Company nor any of its Consolidated
Subsidiaries is in violation of any applicable Federal, state, or local laws, statutes, rules,
regulations or ordinances relating to public health, safety or the environment, including, without
limitation, relating to releases, discharges, emissions or disposals to air, water, land or ground
water, to the withdrawal or use of ground water, to the use, handling or disposal of
polychlorinated biphenyls (PCB’s), asbestos or urea formaldehyde, to the treatment, storage,
disposal or management or hazardous substances (including, without limitation, petroleum, crude oil
or any fraction thereof, or other hydrocarbons), pollutants or contaminants, or to exposure to
toxic, hazardous or other controlled, prohibited or regulated substances, which violation could
have a material adverse effect on the business, profits, properties or condition (financial or
otherwise) of the Company and its Consolidated Subsidiaries, taken as a whole. The Company does
not know of any liability or class of liability of the Company or any Consolidated Subsidiary under
the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. Section 9601 et seq.), or the Resource Conservation and Recovery Act of 1976, as amended (42
U.S.C. Section 6901 et seq.).

18. Foreign Assets Control Regulations, etc. Neither the sale of the Notes by the Company
hereunder nor its use of the proceeds thereof will violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the United States Treasury Department
(31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating
thereto, or is in violation of any federal statute or Presidential Executive Order, including
without limitation Executive Order 13224 66 Fed. Reg. 49079 (September 25, 2001) (Blocking Property
and Prohibiting Transactions with Persons who Commit, Threaten to Commit or Support Terrorism).

8EX-10.1

FIRST POTOMAC REALTY INVESTMENT LIMITED PARTNERSHIP

7600 Wisconsin Avenue, 11th Floor

Bethesda, Maryland 20814

Dated as of: October 12, 2005

KeyBank National Association

127 Public Square

Cleveland, OH 44114,

Attention: John C. Scott

Wells Fargo National Association

1750 H Street, NW

Suite 4000

Washington, DC 20006

Attention: Jennifer Dakin

	 	 	 	Re: Amendment No. 2 to Revolving Credit Agreement 

Ladies and Gentlemen:

We refer to the Revolving Credit Agreement dated as of November 30, 2004 (as amended and in
effect from time to time, the “Credit Agreement”), by and among FIRST POTOMAC REALTY
INVESTMENT LIMITED PARTNERSHIP, a Delaware limited partnership, and certain of its Wholly-owned
Subsidiaries (collectively, the “Borrowers”) and KEYBANK NATIONAL ASSOCIATION, WELLS FARGO
NATIONAL BANK and the other lending institutions which may become parties thereto (individually, a
“Lender” and collectively, the “Lenders”), KEYBANK NATIONAL ASSOCIATION, as
administrative agent for itself and each other Lender (the “Agent”) and WELLS FARGO
NATIONAL ASSOCIATION, as Syndication Agent, and KEYBANC CAPITAL MARKETS, as Lead Arranger and Book
Manager. Capitalized terms used in this letter of agreement (this “Amendment”) which are
not defined herein, but which are defined in the Credit Agreement, shall have the same meanings
herein as therein, as the context so requires.

We have requested you to make certain amendments to the Credit Agreement, and you have advised
us that you are prepared and would be pleased to make the amendments so requested by us on the
condition that we join with you in this Amendment.

Accordingly, in consideration of these premises, the promises, mutual covenants and agreements
contained in this Amendment, and fully intending to be legally bound by this Amendment, we hereby
agree with you as follows:

ARTICLE I

AMENDMENTS TO CREDIT AGREEMENT

Effective as of October 12, 2005 (the “Amendment Date”), and subject to the
fulfillment of the conditions contained in Article II of this Amendment, the Credit Agreement is
amended in each of the following respects:

(a) The term “Loan Documents” shall, wherever used in the Credit Agreement or any of the other
Loan Documents, be deemed to also mean and include this Amendment.

(b) The proviso contained in the definition of “Consolidated Gross Asset Value” contained in
Section 1.1 of the Credit Agreement is amended to read in its entirety as follows:

“provided that (i) if any Real Estate Asset is acquired during the first half of
any quarter, Net Operating Income from such Real Estate Asset for the applicable quarter
and the immediately following quarter shall be excluded, and such acquired Real Estate
Asset shall be included at its cost basis value for such quarter and partial quarter, (ii)
if any Real Estate Asset is acquired during the last half of any quarter, Net Operating
Income from such Real Estate Asset for the applicable quarter and the immediately following
two quarters shall be excluded, and such acquired Real Estate Asset shall be included at
its cost basis value for such three quarters, and (iii) Net Operating Income from Real
Estate Assets sold or otherwise transferred during the applicable quarter shall be
excluded.”

(c) The definition of “Eligible Unencumbered Property” contained in Section 1.1 of the Credit
Agreement is amended to read in its entirety as follows:

“Eligible Unencumbered Property(ies). As of any date of determination, an
Unencumbered Property that: (i) is a Permitted Property, (ii) is not the subject of a
Disqualifying Environmental Event or a Disqualifying Structural Event, (iii) is not a Real
Estate Asset Under Development, (iv) is wholly-owned in fee simple by the Borrower, and (v)
has been improved with a Building or Buildings which (a) have been issued a certificate of
occupancy (where available) or are otherwise lawfully occupied for their intended use and
(b) are in good and sound operating condition (the foregoing clauses (i) through (v) being
herein referred to collectively as the “Unencumbered Property Conditions”).”

(d) The definitions of “Implied Debt Service” and “Mortgage Constant” contained in Section 1.1
of the Credit Agreement are hereby deleted in their entirety.

(e) The definition of “Majority Lenders” contained in Section 1.1 of the Credit Agreement is
amended to read in its entirety as follows:

“Majority Lenders. As of any date of determination, (i) at any time that there are
fewer than three Lenders, all of the Lenders with outstanding Commitments; and (ii) at any
time that there are three or more Lenders, the Lenders whose aggregate Commitments
constitute at least sixty-six and two-thirds percent (66-2/3%) of the Total Commitment (or,
if the Commitments have been terminated, the Lenders whose aggregate Commitments,
immediately prior to such termination, constituted at least sixty-six and two-thirds
percent (66-2/3%) of the Total Commitment).”

(f) The definition of “Total Commitment” contained in Section 1.1 of the Credit Agreement is
amended to read in its entirety as follows:

“Total Commitment. As of any date, the sum of the then current Commitments of the
Lenders. As of the Amendment Date, the Total Commitment is $100,000,000. After the
Closing Date, the aggregate amount of the Total Commitment may be increased to an amount
not exceeding $150,000,000, provided that such Increase is in accordance with the
provisions of §2.8.”

(g) Section 1.1 of the Credit Agreement is further amended by inserting, immediately following
the definition of “Unsecured Consolidated Total Indebtedness” the following new definition:

Unsecured Interest Expense. For any period of determination, Consolidated Total
Interest Expense for such period attributable to the Unsecured Consolidated Total
Indebtedness of the Borrower, the Trust and their respective Subsidiaries.

(h) The proviso contained in the definition of “Value of Unencumbered Properties” contained in
Section 1.1 of the Credit Agreement is amended to read in its entirety as follows:

“provided that (i) if any Eligible Unencumbered Property is acquired during the
first half of any quarter, such Eligible Unencumbered Property shall be excluded for the
applicable quarter and the immediately following quarter, and will be included at its cost
basis value and the Net Operating Income attributable to such Eligible Unencumbered
Property shall be excluded from the calculation of the Value of Unencumbered Properties for
such quarter and partial quarter, (ii) if any Eligible Unencumbered Property is acquired
during the last half of any quarter, such Eligible Unencumbered Property shall be excluded
the applicable quarter and the immediately following two quarters, and will be included at
its cost basis value and the Net Operating Income attributable to such Eligible
Unencumbered Property shall be excluded from the calculation of the Value of Unencumbered
Properties for such three quarters, and (iii) the Net Operating Income attributable to any
Eligible Unencumbered Property sold or otherwise transferred during the applicable period
shall be excluded from the calculation of the Value of Unencumbered Properties.”

(i) Section 2.8 of the Credit Agreement is amended: (i) by deleting the reference to
“$75,000,000” contained therein; and (ii) replacing it with the following: “$50,000,000.”

(j) Clause (c) contained in Section 8.13 of the Credit Agreement is hereby amended to add the
following new paragraph at the end thereof:

“Notwithstanding the preceding paragraph of this clause (c), if the Value of Unencumbered
Properties exceeds $125,000,000, the Borrower need not deliver to the Agent the items
referred to in this clause (c) prior to the inclusion of such Real Estate Asset in the
Unencumbered Pool (except to the extent a Joinder Agreement and related Joinder Documents
are required to add a new Borrower in accordance with the terms hereof), but shall deliver
them when and as required under Section 8.4.”

(k) Clause (i) contained in Section 9.1(f) of the Credit Agreement is hereby amended to add
the following new language at the end thereof:

“except that, notwithstanding the foregoing, a portion of such Indebtedness at any time
outstanding not in excess of ten percent (10%) of Consolidated Gross Asset Value may be
Recourse Indebtedness of the Borrower so long as such Indebtedness is not secured by any
Eligible Unencumbered Property or a pledge of the equity of any Subsidiary that owns an
Eligible Unencumbered Property,”

(l) Section 9.1(i) of the Credit Agreement is hereby amended to read in its entirety as
follows:

“(i) Unsecured Indebtedness of the Borrower (not in the nature of a revolving credit facility)
incurred after the Closing Date, provided that (i) the aggregate amount of Indebtedness
permitted by this clause (i) shall not exceed ten percent (10%) of Consolidated Gross Asset Value
at any time outstanding, and (ii) at the time any such Indebtedness is incurred and after giving
effect thereto, there exists no Default or Event of Default hereunder.”

(m) The paragraph immediately following clause (i) contained in Section 9.1 of the Credit
Agreement is hereby amended to read in its entirety as follows:

“Notwithstanding the foregoing, in no event shall the Borrower, the Trust or any of their
respective Subsidiaries incur or have outstanding unhedged variable rate Indebtedness in
excess of twenty percent (20%) of Consolidated Gross Asset Value.”

(n) Section 10.6 of the Credit Agreement is amended to read in its entirety as follows:

“Unencumbered Pool Interest Coverage Ratio. As of the end of any fiscal quarter,
the ratio of (i) Adjusted Net Operating Income for the applicable quarter, annualized;
divided by (ii) the Unsecured Interest Expense for the applicable period
shall not be less than 1.75 to 1.0.”

(o) Section 10.7 of the Credit Agreement is amended by inserting the following new proviso at
the end thereof:

“, provided that (i) any Eligible Unencumbered Property acquired after the date
hereof during the first half of any quarter shall be excluded from the foregoing
calculation for the fiscal quarter in which it was acquired and for the immediately
following fiscal quarter, and (ii) any Eligible Unencumbered Property acquired after the
date hereof during the last half of any quarter shall be excluded from the foregoing
calculation for the fiscal quarter in which it was acquired and for the immediately two
following fiscal quarters.”

ARTICLE II

CONDITIONS PRECEDENT TO AMENDMENT

The Lenders’ agreement herein to amend the Credit Agreement as of the Amendment Date is
subject to the fulfillment to the satisfaction of the Lenders of the following conditions precedent
on or prior to such date:

(a) Each of the Borrowers (including any Subsidiary becoming a Borrower as of the date hereof
pursuant to a Joinder Agreement) shall have executed and delivered (or caused to be delivered) to
the Agent (i) a counterpart of this Amendment, which shall be in form and substance satisfactory to
the Lenders, and (ii) a promissory note in the face amount of $25,000,000 to KeyBank reflecting the
increased Commitment of KeyBank under the Credit Agreement as of the Amendment Date (it being
acknowledged by the parties hereto that the Borrowers exercised their right to a partial Increase
of $25,000,000 under Section 2.8 of the Credit Agreement and that KeyBank has agreed to provide
such $25,000,000 Increase);

(b) Each Subsidiary of FPLP that owns any Real Estate Asset that is being added to the
Unencumbered Pool as of the date hereof and that has not signed the Credit Agreement or a Joinder
Agreement prior to the date hereof shall have duly executed and delivered the Joinder Documents
(including a Joinder Agreement in the form attached hereto as Annex 1) to the Agent;

(c) The Guarantor shall have acknowledged and consented to the provisions of this Amendment;

(d) The Agent and the Lenders shall have executed this Amendment;

(e) The Borrower shall have paid all fees associated with this Amendment, including the
reasonable fees, charges and disbursements of its counsel in connection with the preparation
hereof, or satisfactory arrangements therefore shall have been made.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Each of the Borrowers (including each new Borrower party hereto) and the Guarantor hereby
represents and warrants to you as follows:

(a) Representations and Warranties. Each of the representations and warranties made
by the Borrowers and the Guarantor, as applicable, to the Agent and the Lenders in the Credit
Agreement and other Loan Documents, as applicable, was true, correct and complete when made and is
true, correct and complete on and as of the Amendment Date with the same full force and effect as
if each of such representations and warranties had been made by the Borrowers and the Guarantor on
the Amendment Date and in this Amendment, except to the extent that such representations and
warranties relate solely to a prior date.

(b) No Defaults or Events of Default. No Default or Event of Default exists on the
Amendment Date, and no condition exists on the date hereof which would, with notice or the lapse of
time, or both, constitute a Default or an Event of Default under the Credit Agreement.

(c) Binding Effect of Documents. This Amendment, the $25,000,000 promissory note in
favor of KeyBank and each of the Joinder Agreements, as applicable, has been duly authorized,
executed and delivered to you by each of the Borrowers and the Guarantor and is in full force and
effect as of the date hereof, and the agreements and obligations of each of the Borrowers and the
Guarantor contained herein and therein constitute the legal, valid and binding obligations of such
Borrower and Guarantor enforceable against such Borrower and Guarantor in accordance with their
respective terms.

ARTICLE IV

MISCELLANEOUS

This Amendment may be executed in any number of counterparts, each of which when executed and
delivered shall be deemed an original, but all of which together shall constitute one instrument.
In making proof of this Amendment, it shall not be necessary to produce or account for more than
one counterpart thereof signed by each of the parties hereto. Except to the extent specifically
amended and supplemented hereby, all of the terms, conditions and the provisions of the Credit
Agreement and each of the other Loan Documents shall otherwise remain unmodified, and the Credit
Agreement and each of the other Loan Documents, as amended and supplemented by this Amendment, are
confirmed as being in full force and effect, and each of the Borrowers and the Guarantor hereby
ratifies and confirms all of its agreements and obligations contained therein, as applicable.

1

If you are in agreement with the foregoing, please sign the form of acceptance on the enclosed
counterpart of this Amendment, whereupon this Amendment, as so accepted by you, shall become a
binding agreement between you and the undersigned.

Very truly yours,

	 
	 

	FIRST POTOMAC REALTY INVESTMENT LIMITED PARTNERSHIP

	 

	By: First Potomac Realty Trust,

	 

	its sole general partner

	 

	By: /s/ Barry Bass

	 

	 

	Barry Bass, Executive Vice

President and

Chief Financial Officer

	 
	AIRPARK PLACE, LLC
	By:	 	Airpark Place Holdings, LLC,
	its sole member
	By:	 	First Potomac Realty Investment Limited Partnership,
	its sole member
	By: First Potomac Realty Trust,
	its sole general partner
	By: /s/ Barry Bass
	Barry Bass, Executive Vice President and
	Chief Financial Officer

(Signatures continued on next page)

2

	 
	 

	CROSSWAYS II LLC

	 

	By: First Potomac Realty Investment Limited Partnership,

	 

	its sole member

	 

	By: First Potomac Realty Trust,

	 

	its sole general partner

	 

	By: /s/ Barry Bass

	 

	 

	Barry Bass, Executive Vice President and

	 

	Chief Financial Officer

	 
	AQUIA TWO, LLC
	By:	 	First Potomac Realty Investment Limited Partnership,
	its sole member
	By:	 	First Potomac Realty Trust,
	its sole general partner
	By:	 	/s/ Barry Bass
	Barry Bass, Executive Vice President and
	Chief Financial Officer

	 
	15395 JOHN MARSHALL HIGHWAY, LLC
	By:	 	First Potomac Realty Investment Limited Partnership,
	its sole member
	By:	 	First Potomac Realty Trust,
	its sole general partner
	By:	 	/s/ Barry Bass
	Barry Bass, Executive Vice President and
	Chief Financial Officer

(Signatures continued on next page)

3

	 
	 

	WINDSOR AT BATTLEFIELD, LLC

	 

	By: First Potomac Realty Investment Limited Partnership,

	 

	its sole member

	 

	By: First Potomac Realty Trust,

	 

	its sole general partner

	 

	By: /s/ Barry Bass

	 

	 

	Barry Bass, Executive Vice President and

	 

	Chief Financial Officer

	 
	RESTON BUSINESS CAMPUS, LLC
	By:	 	First Potomac Realty Investment Limited Partnership,
	its sole member
	By:	 	First Potomac Realty Trust,
	its sole general partner
	By: /s/ Barry Bass
	Barry Bass, Executive Vice President and
	Chief Financial Officer

(Signatures continued on next page)

4

	 
	 

	1400 CAVALIER, LLC,

	 

	a Delaware limited liability company

	 

	By: First Potomac Realty Investment Limited Partnership,

	 

	its sole member

	 

	By: First Potomac Realty Trust,

	 

	its sole general partner

	 

	By: /s/ Barry Bass

	 

	 

	Barry Bass, Executive Vice President and Chief Financial Officer

	 
	GATEWAY MANASSAS II, LLC,
	a Delaware limited liability company
	By:	 	First Potomac Realty Investment Limited Partnership,
	its sole member
	By:	 	First Potomac Realty Trust,
	its sole general partner
	By: /s/ Barry Bass
	Barry Bass, Executive Vice President and Chief Financial Officer

	 
	FP Campostella Road, LLC
	By:	 	First Potomac Realty Investment Limited Partnership,
	its sole member
	By:	 	First Potomac Realty Trust,
	its sole general partner
	By: /s/ Barry Bass
	Barry Bass, Executive Vice President and
	Chief Financial Officer

	 
	FP Diamond Hill, LLC
	By:	 	First Potomac Realty Investment Limited Partnership,
	its sole member
	By:	 	First Potomac Realty Trust,
	its sole general partner
	By: /s/ Barry Bass
	Barry Bass, Executive Vice President and
	Chief Financial Officer

	 
	Gateway Hampton Roads, LLC
	By:	 	First Potomac Realty Investment Limited Partnership,
	its sole member
	By:	 	First Potomac Realty Trust,
	its sole general partner
	By: /s/ Barry Bass
	Barry Bass, Executive Vice President and
	Chief Financial Officer

(Signatures continued on next page)

The foregoing Amendment is hereby accepted by the undersigned as of October 12, 2005.

	 
	 

	KEYBANK NATIONAL ASSOCIATION,

Individually and as Administrative Agent

By:_John Scott     

	 

	Name: John Scott

Title: Vice President

	 
	 

	WELLS FARGO NATIONAL ASSOCIATION,

Individually and as Syndication Agent

By: _Jennifer A. Dakin     

	 

	Name: Jennifer A. Dakin

Title: Vice President

(Signatures continued on next page)

5

[Consent to Amendment No. 2 to Credit Agreement]

CONSENT OF GUARANTOR

FIRST POTOMAC REALTY TRUST (the “Guarantor”) has guaranteed the Obligations (as
defined in the Guaranty by the Guarantor in favor of the Lenders and the Agent, dated as of
November 30, 2004 (the “Guaranty”). By executing this consent, the Guarantor hereby
absolutely and unconditionally reaffirms to the Agent and the Lenders that the Guarantor’s Guaranty
remains in full force and effect. In addition, the Guarantor hereby acknowledges and agrees to the
terms and conditions of this Amendment and the Credit Agreement and the other Loan Documents as
amended hereby (including, without limitation, the making of the representations and warranties and
the performance of the covenants applicable to it herein or therein).

GUARANTOR:

FIRST POTOMAC REALTY TRUST

By: /s/ Barry Bass     

Barry Bass, Executive Vice President and

Chief Financial Officer

6

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