Document:

EX-10.1

EXHIBIT 10.1

Execution Copy

Allied Capital Corporation

Note Agreement

Dated as of May 1, 2006

Re: $50,000,000 6.75% Senior Notes due May 1, 2013

1

Table of Contents

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Section
	 	 	 	 	 	Heading	 	Page
	SECTION 1.
	 	 	 	 	 	DESCRIPTION OF NOTES AND COMMITMENT.	 	 	1	 
	Section 1.1.
	 	 	 	 	 	Description of Notes	 	 	1	 
	Section 1.2.
	 	 	 	 	 	Applicable Interest Rates	 	 	1	 
	Section 1.3.
	 	 	 	 	 	Commitment, Closing Date	 	 	2	 
	SECTION 2.
	 	 	 	 	 	PAYMENT OF NOTES.	 	 	2	 
	Section 2.1.
	 	 	 	 	 	Required Payments	 	 	2	 
	Section 2.2.
	 	 	 	 	 	Optional Prepayment with Premium	 	 	2	 
	Section 2.3.
	 	 	 	 	 	Notice of Optional Prepayments	 	 	2	 
	Section 2.4.
	 	 	 	 	 	Application of Prepayments	 	 	3	 
	Section 2.5.
	 	 	 	 	 	Direct Payment	 	 	3	 
	Section 2.6.
	 	 	 	 	 	Payments Due on Non-Business Days	 	 	3	 
	SECTION 3.
	 	 	 	 	 	REPRESENTATIONS.	 	 	3	 
	Section 3.1.
	 	 	 	 	 	Representations of the Company	 	 	3	 
	Section 3.2.
	 	 	 	 	 	Representations of the Purchaser	 	 	3	 
	SECTION 4.
	 	 	 	 	 	CLOSING CONDITIONS	 	 	5	 
	Section 4.1.
	 	 	 	 	 	Conditions	 	 	5	 
	Section 4.2.
	 	 	 	 	 	Waiver of Conditions	 	 	6	 
	SECTION 5.
	 	 	 	 	 	COVENANTS	 	 	6	 
	Section 5.1.
	 	 	 	 	 	Corporate Existence, Etc	 	 	7	 
	Section 5.2.
	 	 	 	 	 	Insurance	 	 	7	 
	Section 5.3.
	 	 	 	 	 	Taxes, Claims for Labor and Materials, Compliance with Laws	 	 	7	 
	Section 5.4.
	 	 	 	 	 	Maintenance, Etc	 	 	7	 
	Section 5.5.
	 	 	 	 	 	Nature of Business	 	 	7	 
	Section 5.6.
	 	 	 	 	 	Capital Maintenance	 	 	8	 
	Section 5.7.
	 	 	 	 	 	Interest Charges Coverage Ratio	 	 	8	 
	Section 5.8.
	 	 	 	 	 	Limitations on Debt; Interest Rate Swaps	 	 	8	 
	Section 5.9.
	 	 	 	 	 	Limitation on Liens	 	 	8	 
	Section 5.10.
	 	 	 	 	 	Restricted Payments	 	 	10	 
	Section 5.11.
	 	 	 	 	 	Mergers, Consolidations and Sales of Assets	 	 	11	 
	Section 5.12.
	 	 	 	 	 	Repurchase of Notes	 	 	13	 
	Section 5.13.
	 	 	 	 	 	Transactions with Affiliates	 	 	13	 
	Section 5.14.
	 	 	 	 	 	Termination of Pension Plans	 	 	13	 
	Section 5.15.
	 	 	 	 	 	Reports and Rights of Inspection	 	 	14	 
	SECTION 6.
	 	 	 	 	 	EVENTS OF DEFAULT AND REMEDIES THEREFOR	 	 	16	 
	Section 6.1.
	 	 	 	 	 	Events of Default	 	 	16	 
	Section 6.2.
	 	 	 	 	 	Notice to Holders	 	 	18	 
	Section 6.3.
	 	 	 	 	 	Acceleration of Maturities	 	 	18	 
	Section 6.4.
	 	 	 	 	 	Rescission of Acceleration	 	 	19	 
	SECTION 7.
	 	 	 	 	 	AMENDMENTS, WAIVERS AND CONSENTS	 	 	19	 
	Section 7.1.
	 	 	 	 	 	Consent Required	 	 	19	 
	Section 7.2.
	 	 	 	 	 	Solicitation of Holders	 	 	19	 
	Section 7.3.
	 	 	 	 	 	Effect of Amendment or Waiver	 	 	20	 
	SECTION 8.
	 	 	 	 	 	INTERPRETATION OF AGREEMENT; DEFINITIONS	 	 	20	 
	Section 8.1.
	 	 	 	 	 	Definitions	 	 	20	 
	Section 8.2.
	 	 	 	 	 	Accounting Principles	 	 	30	 
	Section 8.3.
	 	 	 	 	 	Directly or Indirectly	 	 	30	 
	Section 8.4.
	 	 	 	 	 	Schedules and Exhibits; Sections	 	 	30	 
	SECTION 9.
	 	 	 	 	 	MISCELLANEOUS	 	 	30	 
	Section 9.1.
	 	 	 	 	 	Registered Notes	 	 	30	 
	Section 9.2.
	 	 	 	 	 	Exchange of Notes	 	 	30	 
	Section 9.3.
	 	 	 	 	 	Loss, Theft, Etc. of Notes	 	 	31	 
	Section 9.4. 
	 	 	 	 	 	Expenses, Stamp Tax Indemnity	 	 	31	 
	Section 9.5.
	 	 	 	 	 	Powers and Rights Not Waived; Remedies Cumulative	 	 	31	 
	Section 9.6.
	 	 	 	 	 	Notices	 	 	32	 
	Section 9.7.
	 	 	 	 	 	Successors and Assigns	 	 	32	 
	Section 9.8.
	 	 	 	 	 	Survival of Covenants and Representations	 	 	32	 
	Section 9.9.
	 	 	 	 	 	Severability	 	 	32	 
	Section 9.10.
	 	 	 	 	 	Governing Law	 	 	33	 
	Section 9.11.
	 	 	 	 	 	Captions	 	 	33	 
	Section 9.12.
	 	 	 	 	 	Confidential Information	 	 	33	 
	Signature
	 	 	 	 	 	 	 	 	 	 	35	 
	Attachments to Note Agreement:
	 	 	 	 	 	 	 	 	 	 	 	 
	Schedule I
	 	 	—	 	 	Name and Address of Purchaser
	 	 	 	 
	Exhibit A
	 	 	—	 	 	Form of Note
	 	 	 	 
	Exhibit B
	 	 	—	 	 	Representations and Warranties
	 	 	 	 
	Exhibit C
	 	 	—	 	 	Form of Opinion of Special Counsel to the Purchaser
	 	 	 	 
	Exhibit D
	 	 	—	 	 	Form of Opinion of Counsel to the Company
	 	 	 	 

2

Allied Capital Corporation

1919 Pennsylvania Avenue, N.W.

Washington, DC 20006

Note Agreement

Re: $50,000,000 6.75% Senior Notes due May 1, 2013

Dated as of

May 1, 2006

	 	 	To the Purchaser named

	•	 	n Schedule I to this Agreement

Ladies and Gentlemen:

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

	 	 	Section 1. Description of Notes and Commitment.

Section 1.1. Description of Notes. The Company will authorize the issue and sale of
$50,000,000 6.75% Senior Notes due May 1, 2013 (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, with such changes therefrom, if any, as may be
approved by the Purchaser 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 Notes shall bear interest at the rate of 6.75% per annum. Interest on the Notes is
payable semiannually on November 1 and May 1 in each year, commencing November 1, 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 8.75% per annum (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 Purchaser, and the Purchaser agrees to purchase from the Company, Notes in the
principal amount set forth opposite the Purchaser’s name on Schedule I hereto at a price equal to
the principal amount thereof on May 1, 2006 (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 Purchaser. 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 the Purchaser the Notes to be
purchased by the Purchaser in the form of a single Note (or such greater number of Notes in
denominations of at least $500,000 as the Purchaser may request) dated the Closing Date and
registered in the Purchaser’s name (or in the name of the Purchaser’s nominee), against delivery by
the 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. The entire outstanding principal amount of the Notes shall
become due and payable on May 1, 2013.

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 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 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 the 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 Purchaser. The Purchaser represents, and in entering into
this Agreement the Company understands, that the 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
the Purchaser has no present intention of selling, negotiating or otherwise disposing of the Notes;
it being understood, however, that the disposition of the Purchaser’s property shall at all times
be and remain within its control. The 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 the 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 the 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 the
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 the Purchaser or any subsequent transferee of the Notes indicates that the 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 the 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 the 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 the Purchaser’s obligation to purchase the Notes
proposed to be sold to the 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. The Purchaser shall have received from Chapman and Cutler LLP, who
is acting as special counsel to the Purchaser 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 the 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 the
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 the 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 the Purchaser, the
Purchaser shall have received an officer’s certificate certifying as to such matters of fact
as the Purchaser may reasonably specify to enable the Purchaser to determine whether such
purchase is so permitted.

(d) 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 the Notes.

(e) 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
Purchaser and the Purchaser’s special counsel, and the Purchaser 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
Purchaser of the Notes to be issued to the Purchaser on such date or if the conditions specified in
§4.1 have not been fulfilled, the 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, the Purchaser may waive compliance by the Company with any such
condition to such extent as the 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 the
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 Company’s most recently
filed Form 10-K.

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, 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 95 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 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

(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. (i) Promptly upon their becoming available (or in the case
of registration statements, promptly after their becoming effective), copies of all
registration statements (other than the exhibits thereto and any effective registration
statements on Form S-8 or its equivalent), and reports on Form 10-K, 10-Q, and 8-K (or their
equivalents) filed by the Company with the Securities and Exchange Commission (or any
Governmental Authority substituted therefor) or any national securities exchange, (ii)
promptly upon the mailing thereof to the shareholders of the Company generally, copies of
all financial statements, reports, and proxy statements so mailed, (iii) promptly upon the
issuance thereof, copies of all press releases issued by Company, and (iv) promptly upon
their becoming available, 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 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 cost 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.

“Disclosure Materials” shall mean the Company’s December 31, 2005 Form 10-K and its current
reports filed on Form 8-K subsequent to December 31, 2005.

“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 October 15, 2001, pursuant
to which the Company has issued its $150,000,000 7.16% Senior Notes, due October 15, 2006, and any
replacement or renewal thereof, (ii) the Note Agreement dated as of May 14, 2003, 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,
(iii) the Note Agreement dated as March 25, 2004, 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, (iv) the Note Agreement dated as of November 15, 2004, pursuant to which the
Company has issued its $252,500,000 5.53% Senior Notes, Series A due November 15, 2009 and its
$72,500,000 5.99% Senior Notes, Series B due November 15, 2011, and any replacement or renewal
thereof, and (v) the Note Agreement dated as of October 13, 2005, pursuant to which the Company has
issued its $261,000,000 6.15% Senior Notes, Series A due October 13, 2010 and its $89,000,000 6.34%
Senior Notes, Series B due October 13, 2012, 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, 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 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, 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, 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, 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,
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, 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, 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.

“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 at any time an employee pension benefit plan (other than a Multiemployer Plan)
which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code and either (i) is maintained, or contributed to, by the Company or any ERISA Affiliate
for employees of the Company or any ERISA Affiliate or (ii) has at any time within the preceding
five years been maintained, or contributed to, by the Company or any Person which was at such time
an ERISA Affiliate for employees of the Company or of any Person which was at such time an ERISA
Affiliate.

“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.

“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 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 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 Purchaser’s
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 Purchaser,
duplicating and printing costs and charges for shipping the Notes, adequately insured to the
Purchaser’s home office or at such other place as the 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
the 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
the 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 the 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
shall (except as otherwise provided in clause (b) below) be, 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), 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 to distribute routine
communications, such as financial statements and other information as provided in § 5.15, and to
distribute this Agreement for execution by the parties hereto; provided that upon the request of a
Holder, copies of all such information (other than Form 8-K filed with the Securities Exchange
Commission) will also be furnished to such 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 the 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 the 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 the Purchaser prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by the Purchaser or any Person acting on the Purchaser’s
behalf, (c) otherwise becomes known to the Purchaser other than through disclosure by the Company
or a Subsidiary or (d) constitutes financial statements delivered to the Purchaser under §5.15 that
are otherwise publicly available. The Purchaser will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by the Purchaser in good faith to
protect confidential information of third parties delivered to the Purchaser, provided that the
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 the 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 the Purchaser, (x) in response to any subpoena or other legal process, (y) in
connection with any litigation to which the Purchaser is a party or (z) if an Event of Default has
occurred and is continuing, to the extent the 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 the 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

3

Accepted as of the date first written above.

	 	 	 	American Family Life Assurance Company

of Columbus

	 	 	 	By
/s/ Mary Ellen Keim

	 	 	Name: Mary Ellen Keim

Title: Vice President, Fixed Income

4EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

AGREEMENT, made and entered into as of the Effective Date by and between Diebold,
Incorporated, an Ohio corporation (together with its successors and assigns permitted under this
Agreement, the “Company”), and Mr. Thomas W. Swidarski (the “Executive”).

W I T N E S S E T H

WHEREAS, the Company desires to employ the Executive and to enter into an agreement embodying
the terms of such employment (this “Agreement”) and the Executive desires to enter into this
Agreement and to accept such employment, subject to the terms and provisions of this Agreement;

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for
other good and valuable consideration, the receipt of which is mutually acknowledged, the Company
and the Executive (individually a “Party” and together the “Parties”) agree as follows:

1. Definitions.

(a) “Affiliate” of a person or other entity shall mean a person or other entity that directly
or indirectly controls, is controlled by, or is under common control with the person or other
entity specified.

(b) “Base Salary” shall mean the salary provided for in Section 4 below or any increased
salary granted to the Executive pursuant to Section 4.

(c) “Board” shall mean the Board of Directors of the Company.

(d) “Cause” shall mean that prior to any termination pursuant to Section 12(c), the Executive
shall have committed:

(i) an intentional act of fraud, embezzlement or theft in connection with his duties or in the
course of his employment with the Company or any subsidiary;

(ii) intentional wrongful damage to property of the Company or any subsidiary;

(iii) intentional wrongful disclosure of secret processes or confidential information of the
Company or any subsidiary; or

(iv) intentional wrongful engagement in any competitive activity which would constitute a
material breach of the duty of loyalty;

and any such act shall have been materially harmful to the Company and its subsidiaries taken as a
whole. For purposes of this Agreement, no act, or failure to act, on the part of the Executive
shall be deemed “intentional” if it was due primarily to an error in judgment or negligence, but
shall be deemed “intentional” only if done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that his action or omission was in or not opposed to the best
interest of the Company and its subsidiaries. Notwithstanding the foregoing, the Executive shall
not be deemed to have been terminated for “Cause” hereunder unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less
than three-quarters of the Board then in office at a meeting of the Board called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the Executive, together
with his counsel, to be heard before the Board), finding that, in the good faith opinion of the
Board, the Executive had committed an act set forth above in this Section 1(d) and specifying the
particulars thereof in detail.

(e) A “Change in Control” shall be as defined in the Change in Control Employment Agreement,
which is attached hereto as Exhibit A.

(f) “Conditions Agreement” shall mean that certain Conditions of Employment agreement dated
January 1, 2002 and executed by the Executive on February 25, 2002.

(g) “Constructive Termination Without Cause” shall mean termination by the Executive of his
employment at his initiative within 30 days following the Executive’s learning of the occurrence of
any of the following events without his consent:

(i) Failure to elect, reelect or otherwise maintain the Executive in the offices or positions
in the Company or any subsidiary which the Executive held immediately prior to such termination, or
the removal of the Executive as a Director of the Company (or any successor thereto) if the
Executive shall have been a Director of the Company immediately prior to such termination, or the
removal of the Executive as a member of the managing authority of any subsidiary if the Executive
shall have been a member of such body immediately prior to such termination;

(ii) Failure to elect or reelect the Executive to any of the positions described in Section 3
below;

(iii) A significant adverse change in the nature or scope of the authorities, powers,
functions, responsibilities or duties attached to the position or positions with the Company and
its Subsidiaries which the Executive held immediately prior to such change, a reduction in the
aggregate of the Executive’s Base Salary and incentive pay potential received from the Company and
its subsidiaries, or the termination of the Executive’s rights to any employee benefits to which
he was entitled immediately prior to such termination which would be material when viewed in light
of all of the employee benefits provided to him taken as a whole or a reduction in scope or value
thereof without the prior written consent of the Executive;

1

(iv) any purported termination of the Executive’s employment that is not effected for Cause or
Disability;

(v) the expiration or termination by the Company of the Change in Control Employment Agreement
unless replaced by an agreement providing benefits to the Executive that are no less favorable than
the existing Change in Control Employment Agreement ; or

(vi) the failure of the Company to obtain the assumption in writing of its obligation to
perform this Agreement by any successor to all or substantially all of the assets of the Company
within 15 days after a merger, consolidation, sale or similar transaction.

Following written notice from the Executive of any of the events described above, the Company shall
have 10 calendar days in which to cure. If the Company fails to cure, the Executive’s termination
shall become effective on the 11th calendar day following the written notice.

(h) “Disability” shall mean the Executive’s permanent and total disability as defined by the
Social Security Administration.

(i) “Effective Date” shall be December 12, 2005.

(j) “Equity Incentive Plan” shall mean the Company’s 1991 Equity and Performance Incentive
Plan, as amended and restated as of January 30, 1997, as amended.

(k) “Pro Rata” shall mean a fraction, the numerator of which is the number of days that the
Executive was employed in the applicable performance period (a calendar year in the case of an
annual bonus and a performance cycle in the case of an award under the Equity Incentive Plan) and
the denominator of which shall be the number of days in the applicable performance period.

(l) “Shares” shall mean the Common Shares of the Company.

(m) “Term of Employment” shall mean the period specified in Section 2 below (including any
extension as provided therein).

2. Term of Employment.

The Term of Employment shall begin on the Effective Date, and shall extend until the second
anniversary of the Effective Date, with automatic one-year renewals thereafter unless either Party
notifies the other at least 6 months before the scheduled expiration date that the term is not to
renew. Notwithstanding the foregoing, the Term of Employment may be earlier terminated by either
Party in accordance with the provisions of Section 12.

2

3. Position, Duties and Responsibilities.

(a) Commencing on the Effective Date and continuing for the remainder of the Term of
Employment, the Executive shall be employed as the Chief Executive Officer and President of the
Company and be responsible for the general management of the affairs of the Company. The Executive
also shall be nominated to become a member of the Board, effective as of the Effective Date. The
Executive, in carrying out his duties under this Agreement, shall report to the Board. During the
term of this Agreement, the Executive shall devote substantially all of his business time and
attention to the business and affairs of the Company and shall use his best efforts, skills and
abilities to promote its interests.

(b) Nothing herein shall preclude the Executive from (i) serving on the boards of directors of
a reasonable number of other corporations with the concurrence of the Board, (ii) serving on the
boards of a reasonable number of trade associations and/or charitable organizations, (iii) engaging
in charitable activities and community affairs, and (iv) managing his personal investments and
affairs, provided that such activities set forth in this Section 3(b) do not conflict or interfere
with the effective discharge of his duties and responsibilities under Section 3(a).

4. Base Salary.

The Executive shall be paid an annualized Base Salary, payable in accordance with the regular
payroll practices of the Company, of $550,000. The Base Salary shall be reviewed annually for
increase in the discretion of the Board.

5. Annual Incentive Award.

During the Term of Employment, commencing in 2006 the Executive shall have a bonus opportunity
each year equal to 200% of Base Salary, payable in that amount if the maximum performance goals
established for the relevant year are met. If such performance goals are not met, the Executive
shall receive 40% of Base Salary if the threshold performance goals are met, and 100% of Base
Salary if the target performance goals are met. The Executive shall be paid his annual incentive
awards no later than other senior executives of the Company are paid their annual incentive awards.

6. Sign-on Arrangements.

As soon as practicable following the Effective Date, the Company shall grant the Executive
150,000 options to purchase Shares with a seven year maturity, vesting as follows: one-half shall
vest the day after Shares have traded at $50 per share or higher for 20 consecutive trading days,
and one-half shall vest the day after the Shares have traded at $60 per share or higher for 20
consecutive trading days. Otherwise all 150,000 options will become exercisable on the sixth
anniversary date of the award. The strike price for these options will be $37.87.

7. Additional Long-Term Incentive Awards.

(a) Stock Options. The Executive shall be eligible for stock option awards commencing
with awards in 2007, or sooner at the discretion of the Board, in accordance with Company practices
applicable to its senior-level executives at the sole discretion of the Board.

(b) Long-Term Incentive Plans. The Executive shall be eligible to participate in the
Company’s Equity Incentive Plan (for the 2006-2008 and future award cycles) with a 20,000 share
target and a 40,000 share maximum. The Executive also shall be eligible to participate in any
other long-term incentive plan the Company may adopt, on a basis comparable to other senior-level
executives.

8. Employee Benefit Programs.

During the Term of Employment, the Executive shall be entitled to participate in any employee
pension and welfare benefit plans and programs made available to the Company’s senior level
executives, as such plans or programs may be in effect from time to time, including, without
limitation, pension, profit sharing, 401(k) savings and other retirement plans or programs,
medical, dental, hospitalization, short-term and long-term disability and life insurance plans,
accidental death and dismemberment protection, travel accident insurance, and any other pension or
retirement plans or programs and any other employee welfare benefit plans or programs that may be
sponsored by the Company from time to time, including any plans that supplement the above-listed
types of plans or programs, whether funded or unfunded. The Executive’s participation shall be
based on, and the calculation of all benefits shall be based on, the assumptions that the Executive
has met all service-period or other requirements for such participation. The Executive shall be
entitled to four weeks paid vacation per year of employment, which shall be subject to the
Company’s vacation policy for senior executives.

9. Supplemental Pension.

The Executive shall be provided a Supplemental Pension based upon the Company’s Supplemental
Employee Retirement Plan II (the “SERP II”).

10. Reimbursement of Business and Other Expenses.

The Executive is authorized to incur reasonable expenses in carrying out his duties and
responsibilities under this Agreement and the Company shall promptly reimburse him for all
reasonable business expenses incurred in connection with carrying out the business of the Company,
subject to documentation in accordance with the Company’s policy.

11. Perquisites. The Executive shall receive standard Company executive perquisites,
including, without limitation, the following:

(a) The Executive shall be entitled to fly first-class in the event the Company does not have
its own aircraft available for his use.

(b) The Executive shall be provided a monthly car allowance for a luxury class automobile up
to a maximum of $3,295 which, if taxable to the Executive, shall be provided on a tax grossed-up
basis.

(c) The Company shall reimburse the Executive for reasonable financial planning and tax
preparation fees up to an annual maximum of $20,000.

(d) The Executive shall be provided with dues and membership fees for one country club.

(e) The Executive shall be entitled to an annual physical at the Company’s expense at the
Cleveland Clinic (or equivalent facility).

12. Termination of Employment.

(a) Termination Due to Death. In the event that the Executive’s employment is
terminated due to his death, his estate or his beneficiaries, as the case may be, shall be entitled
to the following benefits;

(i) Base Salary through the end of the month in which death occurs;

(ii) Pro Rata annual incentive award for the year in which the Executive’s death occurs, if,
and to the extent, such awards are payable, and paid when bonuses are paid to other officers;

(iii) all outstanding options, whether or not then vested, shall vest and shall remain
exercisable for a period of one year or until their stated expiration date, if earlier;

(iv) Pro Rata long-term incentives shall be payable when scheduled to be paid (if, and to the
extent, such awards are payable); and

(v) a pre-retirement death benefit based on Section XII of the SERP II based on the Executive
being deemed to have satisfied the eligibility requirements for a Supplemental Retirement Benefit
under SERP II.

(b) Termination Due to Disability. In the event that the Executive’s employment is
terminated due to his Disability, he shall be entitled to the following benefits:

(i) disability benefits in accordance with the long-term disability program in effect for
senior executives of the Company; provided, however, in no event shall such benefits provide the
Executive with less than 60% of his Base Salary to age 65;

(ii) Base Salary through the end of the month in which disability benefits commence;

(iii) Pro Rata annual incentive award for the year in which the Executive’s termination
occurs, if such awards are payable, and paid when bonuses are paid to others;

(iv) all outstanding options, whether or not then vested, shall vest and shall remain
exercisable for a period of one year or until their stated expiration date, if earlier;

(v) Pro Rata long-term incentives shall be payable when scheduled to be paid (if, and to the
extent, such awards are payable); and

(vi) continued participation in all medical, dental, vision and hospitalization insurance
coverage and in other employee benefit plans or programs covered by Section 8 in which he was
participating on the date of the termination of his employment until the earlier of 36 months
following termination of employment or the date, or dates, he receives equivalent coverage and
benefits from a subsequent employer; provided, however, that this continued
participation does not include continued participation in either the qualified pension plan or the
401(k) plan. In the event the Company’s plans do not permit continuation of Executive’s
participation in the benefit plans and programs covered by this Section 12(d)(vii), following his
termination, the Company shall provide the Executive with an amount which, after taxes, is
sufficient for him to purchase equivalent benefits excluding the qualified pension plan and the
401(k) plan.

In no event shall a termination of the Executive’s employment for Disability occur until the
Party terminating his employment gives written notice to the other Party in accordance with Section
23 below.

(c) Termination by the Company for Cause. In the event the Company terminates the
Executive’s employment for Cause:

(i) he shall be entitled to Base Salary through the date of the termination;

(ii) all outstanding options which are not then vested shall be forfeited; vested options
shall remain exercisable until the earlier of the thirtieth day after the date of termination or
the originally scheduled expiration date of the options, unless the Compensation Committee
determines otherwise;

(d) Termination without Cause or Constructive Termination without Cause. In the event
the Executive’s employment is terminated by the Company without Cause, other than due to Disability
or death, or in the event there is a Constructive Termination without Cause, the Executive shall be
entitled to the following benefits:

(i) Base Salary through the date of termination;

(ii) Base Salary, at the annualized rate in effect on the date of termination, for a period of
24 months following such termination, payable promptly following the date of termination in a lump
sum;

(iii) a Pro Rata annual incentive award for the year in which termination occurs, based on the
time the executive was employed in that year if, and to the extent, such awards are otherwise
earned, to be paid in a single installment when such awards are paid to others in the year
following the year of termination;

(iv) an annual incentive award at twice the Target bonus level for the year in which
termination occurs, promptly payable in a single installment after his termination;

(v) all outstanding options, whether or not then vested, shall vest and shall remain
exercisable for a period of two years or until the end of their term, if less;

(vi) Pro Rata long-term incentives shall be payable when scheduled to be paid (if, and to the
extent, such awards are payable), provided, however, that in the event incentives
are scheduled to be paid within six months of the Executive’s termination, then the Executive’s
incentives shall be paid six months after his termination; and

(vii) continued participation in all medical, dental, vision and hospitalization insurance
coverage and in other employee benefit plans or programs covered by Section 8 in which he was
participating on the date of the termination of his employment until the earlier of 24 months
following termination of employment or the date, or dates, he receives equivalent coverage and
benefits from a subsequent employer; provided, however, that this continued
participation does not include continued participation in either the qualified pension plan or the
401(k) plan. In the event the Company’s plans do not permit continuation of Executive’s
participation in the benefit plans and programs covered by this Section 12(d)(vii), following his
termination, the Company shall provide the Executive with an amount which, after taxes, is
sufficient for him to purchase equivalent benefits excluding the qualified pension plan and the
401(k) plan.

(e) Voluntary Termination. A termination of employment by the Executive on his own
initiative, other than a termination due to Disability or a Constructive Termination without Cause,
shall have the same consequences as provided in Section 12(c) for a termination for Cause. A
voluntary termination under this Section 12(e) shall be effective on the date specified in the
Executive’s written notice.

(f) Non-renewal by the Company. In the event that the Company notifies the Executive
pursuant to Section 2 of this Agreement that the Term of Employment shall not renew, the Executive
shall be entitled to the same benefits as provided in Section 12(d); provided,
however, that the period for which entitlements are provided shall be 12 months instead of
24 months in all subsections where such period applies.

(g) Consequences of a Change in Control. The Executive’s entitlements relating to a
Change in Control of the Company shall be determined in accordance with the Change in Control
Employment Agreement which is attached hereto as Exhibit A. In addition, in the event of a Change
in Control, the options referred to in Section 6 shall immediately vest and become fully
exercisable. In the event of any conflict between this Agreement and the Change in Control
Employment Agreement after the occurrence of a Change in Control, the Change in Control Employment
Agreement shall control and there shall be no duplication of benefits.

(h) Other Termination Benefits. In the case of any of the foregoing terminations, the
Executive or his estate shall also be entitled to:

(i) the balance of any incentive awards due for performance periods which have been completed,
but which have not yet been paid;

(ii) any expense reimbursements due the Executive; and

(iii) other benefits, if any, in accordance with applicable plans and programs of the Company.

(i) No Mitigation; No Offset. In the event of any termination of employment under
this Section 12, the Executive shall be under no obligation to seek other employment and there
shall be no offset against amounts due the Executive under this Agreement on account of any
remuneration attributable to any subsequent employment that he may obtain.

(j) Nature of Payments. Any amounts due under this Section 12 are in the nature of
severance payments considered to be reasonable by the Company and are not in the nature of a
penalty.

13. Non-Competition.

(a) The Executive agrees that during the Executive’s employment with the Company and for a
period of two (2) years following the termination of such employment, whether termination is by the
Executive or by the Company, and regardless of the reasons therefore, the Executive shall not
engage in any activity as an employee, principal, agent or consultant for another entity, and in a
capacity, that directly competes with the company or any of its related entities including
subsidiaries, affiliates and partnerships, in any actual product, service, or business activity (or
in any product, service, or business activity which was under active development while the
Executive was employed by Company if such development is being actively pursued during such two (2)
year period by the Company), in any territory in which the Company or any of its related entities
including subsidiaries, affiliates and partnerships, manufactures, sells, markets, services, or
installs such product or service, or engages in such business activity.

(b) The Executive further acknowledges and agrees that, in the event of the termination of his
employment with the Company, the Executive’s experience and capabilities are such that the
Executive can obtain employment in business activities which do not compete with the Company, and
that the enforcement of this Agreement by way of injunction shall not prevent the Executive from
earning a reasonable livelihood. The Executive further acknowledges and agrees that the covenants
contained herein are necessary for the protection of the Company’s legitimate business interests
and are reasonable in scope and duration.

14. No Solicitation of Employees.

The Executive agrees that during his employment with the Company and for a period of two (2)
years following the termination of such employment, whether termination is by the Executive or by
the Company, regardless of the reasons therefore, the Executive will not directly or indirectly (a)
induce or assist others in inducing any person who is an employee, officer, consultant, or agent of
the Company or its affiliates to give up employment or business affiliation with the Company or its
affiliates; or (b) employ or associate in business with any person who is employed by or associated
in business with the Company during the two-year period prior to the termination of the Executive’s
employment. In the event that the scope of the restrictions in Sections 13 or 14 are found overly
broad, Executive agrees that a court should reform the restrictions by limiting them to the maximum
reasonable scope.

15. Confidentiality. In addition to his obligations under the Conditions Agreement,
which remain in full force and effect:

(a) The Executive agrees that he will not, at any time during the Term of Employment or
thereafter, disclose or use any trade secret, proprietary or confidential information of the
Company or any subsidiary or Affiliate of the Company, obtained during the course of his
employment, except as required in the course of such employment or with the written permission of
the Company or, as applicable, any subsidiary or Affiliate of the Company or as may be required by
law, provided that, if the Executive receives legal process with regard to disclosure of such
information, he shall promptly notify the Company and cooperate with the Company, at the Company’s
sole expense, in seeking a protective order.

(b) The Executive agrees that at the time of the termination of his employment with the
Company, whether at the instance of the Executive or the Company, and regardless of the reasons
therefor, he will deliver to the Company, and not keep or deliver to anyone else, any and all
notes, files, memoranda, papers and, in general, any and all physical matter containing
information, including any and all documents significant to the conduct of the business of the
Company or any subsidiary or Affiliate of the Company which are in his possession, except for any
documents for which the Company or any subsidiary or Affiliate of the Company has given written
consent to removal at the time of the termination of the Executive’s employment and his personal
rolodex, personal files, phone book and similar items.

(c) The Executive agrees that the Company’s remedies at law would be inadequate in the event
of a breach or threatened breach of this Section 13; accordingly, the Company shall be entitled, in
addition to its rights at law, to seek an injunction and other equitable relief without the need to
post a bond.

16. Resolution of Disputes.

Any disputes arising under or in connection with this Agreement shall be resolved by third
party mediation of the dispute and, failing that, at the election of the Executive by binding
arbitration, to be held in Cleveland, Ohio, in accordance with the rules and procedures of the
American Arbitration Association. Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. Each Party shall bear his or its own costs of
the mediation, arbitration or litigation. Notwithstanding the provisions of this Section 16, the
parties agree that in the event of any alleged breach by the Executive of any of his obligations
under Sections 13, 14, or 15, then the arbitration requirements of this Section 16 shall not apply,
and that instead, the Company may elect, in its sole discretion, to seek relief in a court of
general jurisdiction in the State of Ohio, and the parties hereby consent to the exclusive
jurisdiction of such court. In addition, in connection with any such court action, the Executive
acknowledges and agrees that the remedy at law available to the Company for breach by Executive of
any of his obligations under Sections 13, 14, and 15 of this Agreement would be inadequate and that
damages flowing from such a breach would not readily be susceptible to being measured in monetary
terms. Accordingly, the Executive acknowledges, consents and agrees that, in addition to any other
rights or remedies which the Company may have at law, in equity or under this Agreement, upon
adequate proof of the Executive’s violation of any provision of Sections 13, 14, and 15 of this
Agreement, the Company shall be entitled to immediate injunctive relief and may obtain a temporary
order restraining any threatened or further breach, without the necessity of proof of actual
damage.

17. Assignability: Binding Nature.

This Agreement shall be binding upon and inure to the benefit of the Parties and their
respective successors, heirs (in the case of the Executive) and assigns. Rights or obligations of
the Company under this Agreement may be assigned or transferred by the Company pursuant to a merger
or consolidation in which the Company is not the continuing entity, or the sale or liquidation of
all or substantially all of the assets of the Company, provided that the assignee or transferee is
the successor to all or substantially all of the assets of the Company and such assignee or
transferee assumes the liabilities, obligations and duties of the Company, as contained in this
Agreement, either contractually or as a matter of law. The Company further agrees that, in the
event of a sale of assets or liquidation as described in the preceding sentence, it shall take
whatever action it reasonably can in order to cause such assignee or transferee to expressly assume
the liabilities, obligations and duties of the Company hereunder. No rights or obligations of the
Executive under this Agreement may be assigned or transferred by the Executive other than his
rights to compensation and benefits, which may be transferred only by will or operation of law.

18. Entire Agreement.

This Agreement contains the entire understanding and agreement between the Parties concerning
the subject matter hereof and supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between the Parties with respect thereto.

19. Amendment or Waiver.

No provision in this Agreement may be amended unless such amendment is agreed to in writing
and signed by the Executive and an authorized officer of the Company. No waiver by either Party of
any breach by the other Party of any condition or provision contained in this Agreement to be
performed by such other Party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by
the Executive or an authorized officer of the Company, as the case may be.

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20. Severability.

In the event that any provision or portion of this Agreement shall be determined to be invalid
or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement
shall be unaffected thereby and shall remain in full force and effect to the fullest extent
permitted by law so as to achieve the purposes of this Agreement.

21. Survivorship.

Except as otherwise expressly set forth in this Agreement, the respective rights and
obligations of the Parties hereunder shall survive any termination of the Executive’s employment.
This Agreement itself (as distinguished from the Executive’s employment) may not be terminated by
either Party without the written consent of the other Party. Upon the expiration of the term of
the Agreement, the respective rights and obligations of the Parties shall survive such expiration
to the extent necessary to carry out the intentions of the Parties an embodied in the rights (such
as vested rights) and obligations of the Parties under this Agreement.

22. References.

In the event of the Executive’s death or a judicial determination of his incompetence,
reference in this Agreement to the Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative.

23. Governing Law.

This Agreement shall be governed in accordance with the laws of Ohio without reference to
principles of conflict of laws.

24. Notices.

All notices and other communications required or permitted hereunder shall be in writing and shall
be deemed given when (a) delivered personally, (b) delivered by certified or registered mail,
postage prepaid, return receipt requested or (c) delivered by overnight courier (provided that a
written acknowledgment of receipt is obtained by the overnight courier) to the Party concerned at
the address indicated below or to such changed address as such Party may subsequently give such
notice of:

If to the Company:

Diebold, Incorporated

5995 Mayfair Road

North Canton, Ohio 44720

Attention: Vice President and Chief Human Resources Officer

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If to the Executive:

Thomas W. Swidarski

7574 Elderkin Court

Hudson, Ohio 44236

25. Heading.

The headings of the sections contained in this Agreement are for convenience only and shall
not be deemed to control or affect the meaning or construction of any provision of this Agreement.

26. Counterparts.

This Agreement may be executed in two or more counterparts.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written
above.

The Company

	 	 	 
	By: /s/Sheila M. Rutt

Sheila M. Rutt

	 	/s/Thomas W. Swidarski

Thomas W. Swidarski

Vice President,

Chief Human Resources Officer

5

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