Exhibit 10.6

MCG Capital Corporation

1100 Wilson Boulevard, Suite 3000

Arlington, Virginia 22209

August 2, 2011

Tod K. Reichert

MCG Capital Corporation

1100 Wilson Boulevard, Suite 3000

Arlington, VA 22209

 

  Re: Severance, Confidentiality and Non-Solicitation Agreement

Dear Mr. Reichert:

In consideration of your agreement to certain covenants set forth herein, MCG
Capital Corporation (the “Company”) agrees that you (the “Employee”) shall
receive the severance benefits set forth below in the event your employment with
the Company and its Subsidiaries (as defined in Section 4(a)(i) below) is
terminated under the specific circumstances set forth in this Severance,
Confidentiality and Non-Solicitation Agreement (this “Agreement”).

The Company agrees to continue employment of the Employee and the Employee
accepts such continued employment with the Company, as an “at will” employee
upon the terms set forth in this Agreement, for the period commencing from the
date hereof and ending on the date on which such employment is terminated. As of
the date of this Agreement, your employment duties shall consist of serving the
Company as General Counsel, Chief Compliance Officer, Corporate Secretary and
Senior Vice President.

 

1. Compensation and Benefits Payable Upon a Qualifying Termination.

(a) In the event that the Employee’s employment terminates in a Qualifying
Termination (as defined in Section 1(b) below), subject to the Employee’s
execution and delivery of an effective release of claims in favor of the Company
and certain related parties, the Employee shall be entitled to receive:

 

  (i) All amounts earned or accrued through the date of termination but not paid
as of the date of termination, including: (A) base salary; (B) reimbursement for
any and all monies advanced or expenses incurred in connection with the
Employee’s employment for reasonable and necessary expenses incurred by the
Employee on behalf of the Company for the period ending on the date of
termination; (C) vacation pay; and (D) any bonuses or incentive compensation
with respect to the fiscal year ended prior to the fiscal year in which the date
of termination occurs that was earned and unpaid (collectively, the items in
subsections (A) through (D) above referred to as “Accrued Compensation”). The
amounts provided for in this Section 1(a)(i) shall be paid within ten
(10) business days after the date of termination.

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  (ii) An amount equal to: (A) the Employee’s monthly base salary for a period
of eighteen (18) months, calculated at the highest rate in effect at any time
within the current or the prior two (2) fiscal year periods preceding the date
of termination; and (B) the sum of 1.5 times Employee’s annual target bonus in
effect, such amount to be paid (net of all applicable withholdings and
deductions) monthly for an eighteen-month period following the date of
termination in accordance with and at such times as provided under the Company’s
normal payroll practices during such period. Such installments shall commence
upon the Employee’s separation from service and shall be treated as separate
payments for purposes of Section 409A of the Internal Revenue Code (the “Code”).

 

  (iii) Continuation coverage for the Employee and any eligible dependents under
all the Company’s group medical, dental, vision, and hospitalization benefit
plans (“Continuation Health Coverage”), until the earlier of (A) eighteen
(18) months following the date of termination or (B) the date the Employee
becomes eligible to participate in any other plan that provides medical, dental,
or hospitalization benefits. As of the date that the Employee ceases to receive
coverage under any of the Company’s group medical, dental, vision, and
hospitalization benefit plans pursuant to this Section 1(a)(iii), Employee shall
be eligible to elect to receive “COBRA” continuation coverage to the extent
permitted by Section 601 et seq. of the Employee Retirement Income Security Act
of 1974, as amended. Notwithstanding the foregoing, the parties acknowledge and
agree that no payment or benefit shall be made pursuant to this
Section 1(a)(iii) to the extent that such payment or benefit would constitute a
deferral of compensation subject to Section 409A of the Code (and to the extent
permissible any such payment or benefit shall be modified to comply with
Section 409A of the Code).

 

  (iv) With respect to the shares of restricted common stock, $0.01 par value
per share, of the Company (the “Common Stock”), awarded to Employee during the
course of employment with the Company (collectively, the “Restricted Stock
Awards”), all of the shares of Common Stock subject to Employee’s Restricted
Stock Awards as of the date of termination shall immediately and fully become
non-forfeitable and fully vested in all respects. In the event that the
restricted stock agreements governing the Restricted Stock Awards provide for a
greater benefit than the terms contained herein, the terms of each applicable
restricted stock agreement shall govern.

(b) For purposes of this Agreement, “Qualifying Termination” means the
termination of the Employee’s employment with the Company and its Subsidiaries
(i) by the Company for any reason other than for “Cause” (as defined in
Section 1(c) below) or (ii) by the Employee for “Good Reason” (as defined in
Section 1(d) below).

(c) For the purposes of this Agreement, termination for “Cause” shall mean
(i) the Employee’s conviction for, plea of no contest to, plea of nolo
contendere to, or the imposition of unadjudicated probation for a felony (other
than a traffic offense that does not result in incarceration), (ii) the Employee
has been disciplined, suspended or disbarred by the Virginia

 

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State Bar or other jurisdiction in which the Employee is licensed to practice
law, (iii) the Employee’s having been the subject of any order, judicial or
administrative, obtained or issued by the Securities Exchange Commission, for
any securities violation involving fraud or intentional misconduct, including,
for example, any such order consented to by the Employee in which findings of
facts or any legal conclusions establishing liability are neither admitted nor
denied (iv) the Employee (A) has continually failed to substantially perform
Employee’s duties and obligations with the Company and/or to substantially
achieve Employee’s performance expectations as reasonably assigned by the
Company (other than a failure resulting from the Employee’s incapacity due to
physical or mental illness) which, if it is the first instance of such conduct,
is not cured within thirty (30) days after a written notice of demand for
substantial performance has been delivered to the Employee specifying the manner
in which the Employee has failed to substantially perform (and, if it is any
instance of such conduct after the first instance thereof and opportunity to
cure, then no such opportunity to cure need be provided with respect to such
conduct), (B) has willfully engaged in conduct that is demonstrably and
materially injurious to the Company, monetarily or otherwise, or (C) committed a
willful breach of fiduciary duty or an act of fraud, embezzlement or
misappropriation against the Company or any of its Subsidiaries. No act, nor
failure to act, on the Employee’s part, shall be considered “willful” unless
Employee has acted or failed to act, with an absence of good faith and without a
reasonable belief that Employee’s action or failure to act was in the best
interest of the Company.

(d) For purposes of this Agreement, “Good Reason” shall mean the occurrence of
any of the events or conditions described in the following subsections,
provided, however, that in the case of the events describe in subsections
(i) through (v) below the Employee provide notice thereof within 90 days of the
occurrence of such event:

(i) A material and adverse change in the Employee’s status, title or position
with the Company; or the assignment to the Employee of any material duties or
responsibilities that are substantially inconsistent and a material reduction to
such status, title or position;

(ii) A material diminution in the Employee’s authority, duties and
responsibilities (including reporting responsibilities) with the Company;

(iii) Any failure to pay the Employee’s base salary or a reduction in the
Employee’s base salary from the base salary in effect in the prior year (unless
such reduction is implemented in by the Company as part of an overall general
salary reduction plan among all of its executive employees and such reduction to
the base salary on a percentage basis is equal to or less than the percentage
reduction otherwise implemented under such plan);

(iv) The Company’s requiring the Employee to be based at any place outside a
50-mile radius from the office in which the Employee is employed on the date
hereof, except for reasonably required travel on the Company’s business;

(v) Any action or inaction which represents a material breach by the Company of
this Agreement; and

(vi) A Change in Control as defined in Section 4(a).

 

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Notwithstanding the foregoing, the occurrence of any conduct or circumstance
covered under subsections (i) through (v) above shall not constitute Good Reason
if such conduct or circumstance is cured by the Company within thirty (30) days
after written notice thereof has been delivered to the Company by the Employee
specifying the nature of such Good Reason; provided, however, that such cure
period shall be limited to five (5) business days in the instance of a failure
by the Company to pay base salary.

 

2. Benefits Upon Disability or Death.

(a) In the event that the Employee’s employment terminates for Disability (as
defined in Section 2(b) below) or by reason of the Employee’s death, the
Employee (or if applicable, the Employee’s estate) shall be entitled to receive
within 30 days of the Employee’s death or termination for Disability: (i) all
Accrued Compensation; (ii) the pro-rata portion of Employee’s annual target
bonus for the year in which Employee’s employment terminates for Disability or
by reason of the Employee’s death; and (iii) the restrictions with respect to
the shares of Common Stock subject to the Employee’s Restricted Stock Awards
shall lapse and the shares of Common Stock subject to such awards shall
immediately and fully become non-forfeitable.

(b) For purposes of this Agreement, “Disability” means a physical or mental
infirmity that impairs the Employee’s ability to substantially perform
Employee’s duties under this Agreement for at least one hundred eighty
(180) days during any 365-consecutive-day period.

 

3. Termination for Cause or Voluntary Termination.

In the event that the Company terminates the Employee’s employment with the
Company and its Subsidiaries for Cause or the Employee resigns without Good
Reason, the Employee shall be entitled to receive Accrued Compensation and the
Employee will forfeit any shares of Common Stock subject to the Restricted Stock
Awards as to which the forfeiture restrictions have not lapsed as of the
termination of employment.

 

4. Change of Control.

(a) For purposes of this Agreement, “Change in Control” means the occurrence of
any of the following events:

 

  (i)

An acquisition in one or more transactions (other than directly from the
Company) of any voting securities of the Company by any Person (as defined in
Section 4(b) below) immediately after which such Person has Beneficial Ownership
(as defined in Section 4(b) below) of fifty percent (50%) or more of the
combined voting power of the Company’s then outstanding voting securities;
provided, however, in determining whether a Change in Control has occurred,
voting securities that are acquired in a Non-Control Acquisition (as hereinafter
defined) shall not constitute an acquisition which would cause a Change in
Control. A “Non-Control Acquisition” shall mean an acquisition by (A) an
employee benefit plan (or a trust forming a part thereof) maintained by (I) the
Company or (II) any corporation or other Person of which a majority of its
voting power or its voting equity securities or equity interest is owned,
directly or indirectly, by the Company (a “Subsidiary”), (B) the Company or its
Subsidiaries, or (C)

 

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  any Person in connection with a Non-Control Transaction (as defined in
Section 4(a)(iii) below);

 

  (ii) The individuals who, as of the date hereof are members of the Company’s
Board of Directors (the “Incumbent Board”), cease for any reason to constitute
at least a majority of the members of the the Company’s Board of Directors or,
following a Merger (as defined in Section 4(a)(iii) below), the board of
directors of the ultimate Parent Corporation (as defined in Section 4(b) below);
provided, however, that if the election, or nomination for election by the
Company’s common stockholders, of any new director was approved by a vote of at
least a majority of the Incumbent Board (or, with respect to the directors who
are not “interested persons” as defined in the Investment Company Act of 1940,
as amended, by a majority of the directors who are not “interested persons”
serving on the Incumbent Board), such new director shall, for purposes of this
Agreement, be considered as a member of the Incumbent Board; provided further,
however, that no individual shall be considered a member of the Incumbent Board
if such individual initially assumed office as a result of an actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Company’s Board of Directors (a “Proxy Contest”) including by reason of
any agreement intended to avoid or settle any Proxy Contest; or

 

  (iii) The consummation of:

 

  (A) A merger, consolidation or reorganization involving the Company (a
“Merger”) or an indirect or direct Subsidiary of the Company, or to which
securities of the Company are issued, unless:

 

  (I) the stockholders of the Company, immediately before a Merger, own,
directly or indirectly immediately following the Merger, more than fifty percent
(50%) of the combined voting power of the outstanding voting securities of
(x) the Surviving Corporation (as defined in Section 4(b) below) if there is no
Parent Corporation, or (y) the Parent Corporation, or if there is one or more
Parent Corporations, the ultimate Parent Corporation;

 

  (II) the individuals who were members of the Incumbent Board immediately prior
to the execution of the agreement providing for a Merger constitute at least a
majority of the members of the board of directors of (x) the Surviving
Corporation or (y) the ultimate Parent Corporation, if the ultimate Parent
Corporation, directly or indirectly, owns fifty percent (50%) or more of the
combined voting power of the then outstanding voting securities of the Surviving
Corporation; and

 

  (III)

no Person other than (w) the Company, (x) any Subsidiary,

 

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  (y) any employee benefit plan (or any trust forming a part thereof) maintained
by the Company, the Surviving Corporation, any Subsidiary, or the ultimate
Parent Corporation, or (z) any Person who, together with its Affiliates (as
defined in Section 4(b) below), immediately prior to a Merger had Beneficial
Ownership of fifty percent (50%) or more of the then outstanding voting
securities, owns, together with its Affiliates, Beneficial Ownership of fifty
percent (50%) or more of the combined voting power of the then outstanding
voting securities of (aa) the Surviving Corporation or (bb) the ultimate Parent
Corporation.

 

  (IV) Each transaction described in Section 4(a)(iii)(A)(I) through (III) above
shall herein be referred to as a “Non-Control Transaction”; or

 

  (B) The direct or indirect sale or other disposition of all or substantially
all of the assets of the Company to any Person (other than (I) a transfer to a
Subsidiary, (II) under conditions that would constitute a Non-Control
Transaction with the disposition of assets being regarded as a Merger for this
purpose, or (III) the distribution to the Company’s stockholders of the stock of
a Subsidiary or any other assets).

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the “Subject Person”) acquired Beneficial Ownership
of more than the permitted amount of the then outstanding voting securities as a
result of the acquisition of voting securities by the Company which, by reducing
the number of voting securities then outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Persons, provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of voting securities by the Company, and after such
share acquisition by the Company, the Subject Person becomes the Beneficial
Owner of any additional voting securities which increases the percentage of the
then outstanding voting securities Beneficially Owned by the Subject Person,
then a Change in Control shall occur.

(b) “Affiliate” means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person. “Beneficial
Ownership” means ownership within the meaning of Rule 13d-3 promulgated under
the Securities and Exchange Act of 1934, as amended (the “Exchange Act”).
“Person” means “person” as such term is used for purposes of Section 13(d) or
14(d) of the Exchange Act, including without limitation, any individual,
corporation, limited liability company, partnership, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity or any group of Persons. “Surviving Corporation” means the
corporation resulting from a Merger. “Parent Corporation” means the corporation
that, as a result of a Merger, Beneficially Owns fifty percent (50%) or more of
the combined voting power of the then outstanding voting securities of the
Surviving Corporation.

 

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5. Section 409A Compliance.

This Agreement will be interpreted and administered in accordance with the
applicable requirements of, and exemptions from, Code § 409A in a manner
consistent with Treas. Reg. § 1.409A-1 et seq. The Company and all entities
treated as a single employer with the Company pursuant to Section 409A and the
regulations thereunder shall be treated as a single entity to the extent
required thereunder. To the extent payments and benefits are subject to Code §
409A, this Agreement shall be interpreted, construed and administered in a
manner that satisfies the requirements of (i) Code § 409A(a)(2), (3) and (4),
(ii) Treas. Reg. § 1.409A-1 et seq., and (iii) other applicable authority issued
by the Internal Revenue Service and the U.S. Department of the Treasury
(collectively “Section 409A”).

Where the term “Qualifying Termination,” “termination of employment” or
“termination” or similar words and phrases describing termination of employment
are used in this Agreement, such terms are to be read as satisfying the
definition of a “separation from service” in Section 409A. It is understood that
“separation from service” shall be defined as referenced under Treas. Reg. §
1.409A-1(h).

All reimbursements and in-kind benefits provided under this Agreement shall be
made or provided in accordance with the requirements of Section 409A to the
extent that such reimbursements or in-kind benefits are subject to Section 409A.
All expenses or other reimbursements paid pursuant to this Agreement that are
taxable to the Employee shall in no event be paid later than the end of the
calendar year following the calendar year in which the Employee incurs such
expense or pays the related tax. With regard to any provision in this Agreement
for reimbursement of costs and expenses or in-kind benefits, except as permitted
by Section 409A, the right to reimbursement or in-kind benefits shall not be
subject to liquidation or exchange for another benefit and the amount of
expenses eligible for reimbursement or in-kind benefits provided during any
taxable year shall not affect the expenses eligible for reimbursement or in-kind
benefits to be provided in any other taxable year.

To the extent that the Company reasonably determines that certain amounts paid
to the Employee under Section 1 or otherwise are subject to Section 409A of the
Code and the Employee is a specified employee, as defined under Section 409A of
the Code, such amounts shall be delayed six months following the Employee’s
termination from employment to the extent required by Section 409A of the Code.

 

6. Section 280(G) Compliance.

(a) In the event it shall be determined that any payment or distribution of any
type to or for the Employee’s benefit, by the Company or any Affiliate of the
Company, any Person who acquires ownership or effective control of the Company
or ownership of a substantial portion of the Company’s assets and the Employee
becomes entitled to any benefits or payments in the nature of compensation
(within the meaning of Section 280G(b)(2) of the Code) under this Agreement, or
any other plan, arrangement, or agreement with the Company (the “Total
Payments”), and the Total Payments will be subject to the tax (the “Excise Tax”)
imposed by Section 4999 of the Code (or any similar tax that may hereafter be
imposed), the aggregate present value of the Payments (as defined below) under
this Agreement shall be reduced (but not below zero) to the Reduced Amount (as
defined below). The term “Payment” means any benefit or payment in the nature of
compensation (within the meaning of Section 280G(b)(2) of the Code)

 

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under this Agreement. The “Reduced Amount” shall be an amount expressed in
present value which maximizes the aggregate present value of Payments under this
Agreement without causing any Payment under this Agreement to be subject to the
Excise Tax, determined in accordance with Section 280G(d)(4) of the Code. The
Company shall reduce the Payments under this Agreement by first reducing
Payments that are not payable in cash and then by reducing cash Payments.

(b) In determining the potential impact of the Excise Tax, the Company may rely
on any advice it deems appropriate, including, but not limited to, the counsel
of its independent accounting firm. For purposes of determining whether any of
the Total Payments will be subject to the Excise Tax and the amount of such
Excise Tax:

(i) The amount of the Total Payments which shall be treated as subject to the
Excise Tax shall be equal to the amount of excess parachute payments within the
meaning of Section 280G(b)(1) of the Code, as determined by the Company’s
independent accounting firm; and

(ii) The value of any non-cash benefits or any deferred or accumulated payment
or benefit shall be determined by the Company’s independent accounting firm in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code.

(iii) For purposes of the determinations under this Section 6, the Employee
shall be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the applicable payment is
to be made, and state and local income taxes at the highest marginal rate of
taxation in the state and locality of the Employee’s residence, net of the
maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes.

 

7. Your Duties and Obligations.

Your receipt of the severance benefits described herein is conditioned upon your
compliance with the covenants contained in Section 8 below.

 

8. Employee Covenants.

(a) Confidentiality. Employee shall not, without the prior express written
consent of the Company, directly or indirectly, use for any purpose any
Confidential Information (as defined in this Section 8(a)) in any way, or
divulge, disclose or make available or accessible any Confidential Information
to any person, firm, partnership, corporation, trust or any other entity or
third party unless (i) such disclosure is reasonably necessary or appropriate in
connection with the performance by the Employee of Employee’s duties as an
executive of the Company, (ii) such disclosure is required by applicable law or
(iii) Employee is requested or required by a judicial or arbitration body or
governmental agency (by oral question, interrogatories, requests for information
or documents, subpoena, civil investigative demand or similar process) to
disclose any such information, in which case the Employee will (A) promptly
notify the Company of such request or requirement, so that the Company may seek
an appropriate protective order and (B) cooperate with the Company, at its
expense, in seeking such an order. “Confidential Information” means all
information respecting the business and activities of the Company and any of its
Subsidiaries, including, without limitation, respecting the clients, customers,
suppliers, employees, consultants, prospects, computer or other files, projects,
products, computer disks or

 

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other media, computer hardware or computer software programs, underwriting,
lending or investment standards, marketing plans, financial information,
methodologies, know-how, processes, trade secrets, policies, practices,
projections, forecasts, formats, operational methods, product development
techniques, research, strategies or information agreed to with third-parties to
be kept confidential by the Company and any of its Subsidiaries. Notwithstanding
the immediately preceding sentence, Confidential Information shall not include
any information that is, or becomes, a part of the public domain or generally
available to the public (unless such availability occurs as a result of any
breach by the Employee of this Agreement) or any business knowledge and
experience of the type usually acquired by persons engaged in positions similar
to the Employee’s position with the Company, to the extent such knowledge and
experience is non-Company specific and not proprietary to the Company or any of
its Subsidiaries.

(b) Non-Solicitation. During the period commencing on the date hereof and ending
eighteen (18) months after the date of termination (the “Non-Solicitation
Period”), Employee shall not divert, solicit or lure away the patronage of
(i) any client or business of the Company or any of its Subsidiaries as of or
within the one (1) year period prior to the date of termination or (ii) any
prospective client or business of the Company or any of its Subsidiaries. As
used herein, “prospective client” means any client that the Company or any of
its Subsidiaries (A) has solicited within the one (1) year period prior to the
date of termination or (B) is soliciting as of the date of termination. Nothing
herein shall be construed to prevent the Employee from soliciting clients or
prospective clients of the Company or its Subsidiaries with respect to products,
services or businesses which the Company and its Subsidiaries neither offer or
conduct, nor have begun preparing to develop or offer, as of the date of
termination. The Employee shall not, during the Non-Solicitation Period,
directly or indirectly, recruit, hire or assist others in recruiting or hiring,
or otherwise solicit for employment, any employees of the Company or any of its
Subsidiaries. The provisions of this Section 8(b) shall not be deemed to limit
in any way the provisions of any other Section of this Agreement.

(c) Continued Assistance and Cooperation During Severance Period. During the
eighteen month period in which Employee is receiving the benefits set forth in
Section 1(a)(ii), as applicable, Employee agrees to provide general assistance
and cooperation with and to the Company regarding general business matters as
reasonably requested from time to time by the Company at mutually convenient
times so long as such assistance does not exceed 5 hours per month.

(d) Interpretation. The parties hereto recognize that the laws and public
policies of the various states of the United States may differ as to the
validity and enforceability of covenants similar to those set forth in
Section 8(b). It is the intention of the parties that the potential restrictions
on the Employee’s activities imposed by Section 8(b) to be reasonable in
duration and in all other respects, it being understood that the business
conducted by the Company and its Subsidiaries is nationwide in scope. It is also
the intention of the parties that the provisions of Section 8(b) be enforced to
the fullest extent permissible under the laws and policies of each jurisdiction
in which enforcement may be sought, and that in the event that any provision of
Section 8(b) shall, for any reason, be held invalid or unenforceable in any
respect, it shall not invalidate, render unenforceable or otherwise affect any
other provision hereof, and such invalid or unenforceable provision shall be
construed by limiting it so as to be valid and enforceable to the fullest extent
permissible under applicable law. If applicable law does not permit an invalid
or unenforceable provision to be so construed, then the invalid or unenforceable
provision shall be

 

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stricken and the remaining portions of Section 8(b) shall be enforced to the
fullest extent permitted by law. In addition, if any provision of Section 8(b)
shall be determined to be invalid or unenforceable, such invalidity or
unenforceability shall be deemed to apply only with respect to the operation of
such provision in the particular jurisdiction in which such determination is
made and not with respect to any other provision or jurisdiction.

(e) Remedies. Employee agrees that any breach of the terms of this Section 8
would result in irreparable injury and damage to the Company for which the
Company would have no adequate remedy at law; Employee therefore also agrees
that in the event of such breach or any threat of breach, the Company shall be
entitled to an immediate injunction and restraining order from a court of
competent jurisdiction to prevent such breach and/or threatened breach and/or
continued breach by the Employee and/or any and all persons and/or entities
acting for and/or with the Employee, without having to prove damages. The
availability of injunctive relief shall be in addition to any other remedies to
which the Company may be entitled at law or in equity but remedies other than
injunctive relief may only be pursued in an arbitration brought in accordance
with Section 8 of this Agreement. The terms of this Section 8 shall not prevent
the Company from pursuing in an arbitration any other available remedies for any
breach or threatened breach of this Section 8, including but not limited to the
recovery of damages from the Employee.

The provisions of this Section 8 shall survive any termination of this
Agreement, and the existence of any claim or cause of action by the Employee
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of the covenants and
agreements of this Section 8; provided, however, that this Section 8 shall not,
in and of itself, preclude the Employee from defending against the
enforceability of the covenants and agreements of this Section 8.

(f) Return of Materials. Upon the request of the Company and, in any event, upon
termination of employment, Employee will leave with the Company all memoranda,
notes, records, manuals, or other documents and media (in whatever form
maintained, whether documentary, computer storage or otherwise) pertaining to
the Company’s business, including all copies thereof; other than such documents
and items that are personal to the employee (e.g., reference materials not paid
for by the Company, books not paid for by the Company, pay stubs, personal tax
documentation and other compensation or employment related materials).

(g) Ownership of Employee Developments. All copyrights, patents, trade secrets,
or other intellectual property rights associated with any ideas, concepts,
techniques, inventions, processes, or works of authorship developed or created
by the Employee during the course of performing work for the Company, or its
clients, including, but not limited to, software programs, manuals, publications
and reports (collectively, the “Work Product”) belongs and shall belong
exclusively to the Company and shall, to the extent possible, be considered a
work made by the Employee for hire for the Company within the meaning of Title
17 of the United States Code. To the extent the Work Product may not be
considered work made by the Employee for hire for the Company, the Employee
agrees to assign, and automatically assign at the time of creation of the Work
Product, without any requirement of further consideration, any right, title, or
interest he may have in such Work Product. Upon request of the Company, the
Employee shall take such further actions, including execution and delivery of
instruments of conveyance, as may be appropriate to give full and proper effect
to such assignment. Notwithstanding anything else in this Agreement, any ideas,
concepts, techniques, inventions, processes or works of authorship developed or
created by the Employee on the Employee’s own time, and which have no
application in the business of

 

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the Company (“Employee Work Product”), shall not be considered Work Product, and
the Company shall have no interest in any such Employee Work Product.

(h) Consequences of Challenging Enforceability of Non-Solicitation. If at any
time the Employee or his subsequent employer successfully challenges the
enforceability of the Non-solicitation provisions of Section 8(b), then (i) all
references to the 18 month period in Section 8(b) shall instead be references to
the time period that such non-solicitation restrictions actually remain in
effect, and (ii) the amount of base salary that the Employee may receive as
severance under Section 1(a)(ii) shall automatically be reduced proportionately.

(i) Non-disparagement. During his employment and for an indefinite period
following termination of his employment with the Company, the Employee agrees
not to disparage in any respect the Company, any of its products or practices,
or any of its directors, officers, agents, representatives, stockholders or
affiliates, either orally or in writing. During the term and for an indefinite
period following the Term, the Company’s officers and members of its Board shall
not disparage in any respect the Employee. Nothing in this paragraph shall
prohibit the Employee or the Company’s officers and members of its Board from
responding truthfully when required by a governmental agency, law, subpoena or
court order.

 

9. Successors and Assigns.

(a) This Agreement shall be binding upon and shall inure to the benefit of the
Company, its successors and assigns. The term “Company” as used herein shall
include such successors and assigns. The term “successors and assigns” as used
herein shall mean a corporation or other entity acquiring all or substantially
all the assets and business of the Company (including this Agreement) whether by
operation of law or otherwise.

(b) Neither this Agreement nor any right or interest hereunder shall be
assignable or transferable by the Employee, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Employee’s
legal personal representative.

 

10. Arbitration.

Except as set forth in Section 8(e) hereof, any and all disputes, claims and
controversies between the Company or any of its Affiliates and the Employee
arising out of or relating to this Agreement, or the breach thereof, or
otherwise arising out of or relating to the Employee’s employment or the
termination thereof shall be resolved by binding arbitration in accordance with
the Employment Arbitration Rules and Mediation Procedures of the American
Arbitration Association. The arbitration shall take place in the Washington,
D.C. metropolitan area. The arbitrator shall have no authority to award punitive
damages. The award of the arbitrator shall be final and judgment thereon may be
entered in any court having jurisdiction. The parties shall share the costs of
the arbitration equally, unless otherwise ordered by the arbitrator. Judgment
upon the arbitration award may be entered in any federal or state court having
jurisdiction.

 

11. Notice.

For the purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when personally

 

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delivered or sent by certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses last given by each party to the other,
provided that all notices to the Company shall be directed to the attention of
the Company’s Board of Directors with a copy to the Secretary of the Company.
All notices and communications shall be deemed to have been received on the date
of delivery thereof or on the third business day after the mailing thereof,
except that notice of change of address shall be effective only upon receipt.

 

12. Non-exclusivity of Rights.

Nothing in this Agreement shall prevent or limit the Employee’s continuing or
future participation in any benefit, bonus, incentive or other plan or program
provided by the Company or any of its subsidiaries and for which the Employee
may qualify, nor shall anything herein limit or reduce such rights as the
Employee may have under any other agreements with the Company or any of its
Subsidiaries. Amounts which are vested benefits or which the Employee is
otherwise entitled to receive under any plan or program of the Company or any of
its subsidiaries shall be payable in accordance with such plan or program,
except as explicitly modified by this Agreement.

 

13. Miscellaneous.

No provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by the
Employee and the Company. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreement or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement.

 

14. Governing Law.

This Agreement shall be governed by and construed and enforced in accordance
with the laws of the Commonwealth of Virginia without giving effect to the
conflict of law principles thereof.

 

15. Severability.

The provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.

 

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16. Entire Agreement.

This Agreement constitutes the entire agreement between the parties hereto and
supersedes all prior agreements, if any, understandings and arrangements, oral
or written, between the parties hereto with respect to the subject matter
hereof.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer and the Employee has executed this Agreement as of the
day and year first above written.

 

MCG Capital Corporation

/s/ Steven F. Tunney, Sr.

Name:

  Steven F. Tunney, Sr.

Title:

  President and CEO

Employee:   Tod K. Reichert

/s/ Tod K. Reichert

 

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