Exhibit 10.3

RESTRICTED STOCK AGREEMENT

FOR MCG EMPLOYEE

UNDER 2008 RETENTION PROGRAM

This Restricted Stock Agreement (“Agreement”) is effective as of the [    ] day
of [            ], 2008, (the “Award Date”) by and between MCG Capital
Corporation, a Delaware corporation (the “Company”), and [            ]
(“Employee”).

WHEREAS, in accordance with (i) an order of the Securities and Exchange
Commission (the “SEC”) dated April 4, 2006 (Release No. 27280) granting certain
exemptive relief to the Company regarding the issuance of restricted stock under
and in accordance with the Investment Company Act of 1940, as amended, (ii) the
approvals of the Board on each of May 12, 2006 and February 14, 2008 and
(iii) the approvals of Company’s Stockholders on each of June 12, 2006 and
April 23, 2008, the Company has adopted and amended, as the case may be, a
Restricted Stock Plan (as defined below) that governs the issuances of shares of
restricted common stock, $0.01 par value per share, of the Company (the “Common
Stock”), from time to time to employees of the Company; and

WHEREAS, on September 22, 2006, the Company filed with the SEC a registration
statement on Form S-8 to register the shares of Common Stock that are authorized
for issuance under the Restricted Stock Plan; and

WHEREAS, on August 6, 2008, the Board approved the MCG Capital Corporation 2008
Retention Program (the “2008 Retention Program”), which program was designed to
provide specified eligible employees with certain incentives related to their
past service and continuing employment with the Company; and

WHEREAS, subject to and in accordance with the terms and conditions of this
Agreement, the Restricted Stock Plan and the 2008 Retention Program, the Company
desires to award to Employee shares of Common Stock (such shares, the “Shares”)
in connection with and as consideration for Employee’s various services to and
for the benefit of the Company (such grant, the “Award”); and

WHEREAS, it is a condition precedent to the Company’s making of the Award that
Employee enter into this Agreement with the Company concerning the rights and
restrictions of the Shares subject to the Award and any additional agreements
described herein that the Company may require.

NOW, THEREFORE, in consideration of the mutual covenants herein contained and
for other good and valuable consideration (the receipt and adequacy of which are
hereby acknowledged), and intending to be legally bound hereby, the parties
hereto hereby agree as follows:

 

I. OWNERSHIP OF SHARES

1.1 Awarded Shares. The Company hereby awards to Employee, effective as of the
Award Date, the number of Shares set forth on Annex 1. The Shares are subject to
certain restrictions and other terms and conditions set forth herein, including
without limitation, the forfeiture restrictions set forth in Article IV hereof.
The certificates representing the Shares that are subject to forfeiture
restrictions under Article IV may, at the Company’s election, be held in escrow
by the Corporate Secretary of the Company as provided in, and in accordance
with, Article V.

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1.2 Lapse of Restrictions. Subject to Sections 4.1, 4.2, 4.3 and 4.4 hereof, the
forfeiture restrictions set forth herein shall lapse with respect to the Shares
in accordance with the Schedule set forth on Annex 1.

1.3 Restrictive Legends.

(a) In order to reflect the restrictions on disposition of the Shares for
Affiliates of the Company, as defined under the Securities Act, any stock
certificates representing the Shares will be endorsed with the following
restrictive legend at any time while Employee is an Affiliate of the Company:

“THE REGISTERED OWNER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS AN
AFFILIATE, AS DEFINED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OF THE COMPANY AND MAY NOT TRANSFER THESE SECURITIES EXCEPT (A) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE ACT, INCLUDING RULE 144 UNDER THE ACT, OR
(B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT.”

(b) Upon the lapse of the applicable forfeiture restrictions, at Employee’s
request, the Company shall issue replacement certificates representing such
Shares without the legend set forth in clause (a) of this Section 1.3 if
Employee is not then an Affiliate.

1.4 Definitions. Whenever used in this Agreement, the following terms shall have
the meaning specified below unless the context clearly indicates to the
contrary.

“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” or “Beneficially Owned” means ownership within the
meaning of Rule 13d-3 promulgated under the Exchange Act.

“Board” means the Board of Directors of the Company.

“Business Day” means is any day that is not a Saturday, Sunday or a day on which
banks in the Commonwealth of Virginia are required or authorized by law to be
closed.

“Cause” means (a) the Employee’s conviction of, or the entering of a guilty plea
or plea of “no contest” with respect to, a felony or any crime involving
dishonesty or moral turpitude or (b) the Employee (i) has continually failed to
substantially perform his or her duties and obligations with the Company (other
than a failure resulting from the Employee’s incapacity due to physical or
mental illness), (ii) has failed to comply with a lawful instruction of the
Company so long as the instruction is consistent with the scope and
responsibilities of the Employee’s position or (iii) has willfully engaged in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise, which, in the case of (i) or (ii) above, if it is the
first instance of such conduct or noncompliance, is not cured within thirty
(30) days after a written notice of demand for substantial

 

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performance or compliance has been delivered to the Employee specifying the
manner in which the Employee has failed to substantially perform or comply (and,
if it is any instance of such conduct or noncompliance after the first instance
thereof and opportunity to cure, then no such opportunity to cure need be
provided with respect to such conduct). No act, nor failure to act, on the
Employee’s part, shall be considered “willful” unless he or she has acted or
failed to act, with an absence of good faith and without a reasonable belief
that his or her action or failure to act was in the best interest of the
Company.

“Change in Capitalization” means any increase or reduction in the number of
shares of Common Stock, or any change in the shares of Common Stock or exchange
of shares of Common Stock for a different number or kind of shares or other
securities of the Company, by reason of a reclassification, recapitalization,
merger, consolidation, reorganization, spin-off, split-up, issuance of warrants
or rights or debentures, stock dividend, stock split or reverse stock split,
cash dividend, property dividend, combination or exchange of shares, change in
corporate structure or substantially similar event.

“Change in Control” means the occurrence of any of the following events:

(a) 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
below) immediately after which such Person has Beneficial Ownership 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 which 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 (i) an employee benefit plan (or a trust forming a
part thereof) maintained by (A) the Company or (B) 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”), (ii) the Company or its Subsidiaries, or (iii) any Person in
connection with a “Non-Control Transaction” (as hereinafter defined); or

(b) The individuals who, as of the date hereof, are members of the Board (the
“Incumbent Board”), cease for any reason to constitute at least a majority of
the members of the Board or, following a Merger (as defined below), the board of
directors of the ultimate Parent Corporation (as defined 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, 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
Board (a “Proxy Contest”) including by reason of any agreement intended to avoid
or settle any Proxy Contest; or

 

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(c) The consummation of:

(i) 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:

(A) 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, if there is no Parent Corporation, or (y) the
Parent Corporation, or if there is one or more Parent Corporations, the ultimate
Parent Corporation; and

(B) 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

(C) no Person other than (a) the Company, (b) any Subsidiary, (c) 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 (d) any Person who, together with its Affiliates (as defined 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 (x) the Surviving
Corporation or (y) the ultimate Parent Corporation;

(D) Each transaction described in clauses (c)(i)(A) through (C) above shall also
herein be referred to as a “Non-Control Transaction”; or

(ii) The direct or indirect sale or other disposition of all or substantially
all of the assets of the Company to any Person (other than (A) a transfer to a
Subsidiary, (B) under conditions that would constitute a Non-Control Transaction
with the disposition of assets being regarded as a Merger for this purpose, or
(C) 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.

“Code” means the Internal Revenue Code of 1986, as amended.

 

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“Committee” means the Compensation Committee of the Board, which is composed
solely of independent directors, or another committee of the Board composed
solely of independent directors that is appointed by the Board to administer
this Agreement.

“Dividends” means all cash dividends (including shares of Common Stock acquired
through any dividend reinvestment program with respect to regular cash
dividends), except for liquidating dividends.

“Exchange Act” means the Securities and Exchange Act of 1934, as amended.

“Fair Market Value” on any date means the closing price per share of Common
Stock on such date and, when used with reference to shares of Common Stock for
any period shall mean the average of the daily closing prices per share of
Common Stock for such period. If the shares of Common Stock are listed or
admitted to trading on a national securities exchange, the closing price shall
be the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the shares of Common Stock
are listed or admitted to trading or, if the shares of Common Stock are not so
listed on any national securities exchange, as reported in the transaction
reporting system applicable to securities designated as a “national market
system security” or NASDAQ. If the shares of Common Stock are not so listed,
admitted to trading or designated, Fair Market Value shall be as determined in
good faith by the Board based on an opinion of an independent investment banking
firm with an established national reputation with respect to the valuation of
securities.

“Forfeitable Shares” means any Shares with respect to which the restrictions
have not lapsed in accordance with the Schedule set forth on Annex 1.

“Good Reason” means termination due to (a) a change in Employee’s status, title,
position or responsibilities (including reporting responsibilities) that
represents an adverse change from Employee’s status, title, position or
responsibilities as in effect immediately prior to the occurrence of such Change
of Control, (b) a reduction in Employee’s base salary from the base salary in
effect during the prior calendar year subsequent to a Change of Control, or
(c) the acquiring company’s requiring Employee (without Employee’s consent or
agreement) to be based at a location that is outside a 50-mile radius from the
office in which Employee was employed by the Company immediately prior to the
occurrence of such Change of Control, except for reasonably required travel in
connection with the acquiring company’s business.

“Non-Forfeitable Shares” means any Shares with respect to which the restrictions
thereon have lapsed (a) in accordance with the Schedule set forth on Annex 1,
(b) otherwise in accordance with the terms of this Agreement, or (c) otherwise
upon a determination of the Board or the Committee.

“Owner” includes Employee and all subsequent holders of the Shares who own such
Shares pursuant to a Transfer from Employee in accordance with Section 3.1 and
Section 3.2.

 

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“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.

“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.

“Restricted Stock Plan” means the Amended and Restated MCG Capital Corporation
2006 Employee Restricted Stock Plan, as initially approved by the Board on
May 12, 2006, and by the Stockholders of the Company on June 12, 2006, and as
amended by the Board on February 14, 2008 and by the Stockholders of the Company
on April 23, 2008, as such Restricted Stock Plan may be amended and modified
from time to time.

“Schedule” shall refer to the Schedule set forth on Annex 1.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Subsidiary” means any corporation which is a subsidiary corporation (within the
meaning of Section 424(f) of the Code) with respect to the Company, except that
for the purposes of the definition of a “Change in Control,” Subsidiary is
defined in such definition.

“Surviving Corporation” means the corporation resulting from a Merger.

“Transfer” means a transfer, sale, assignment, pledge, hypothecation or other
disposition of any Shares.

 

II. SPECIAL PROVISIONS

2.1 Stockholder Rights, Including Voting and Dividend Rights. Unless and until
any such Shares awarded to Employee hereunder are forfeited in accordance with
the terms and provisions of this Agreement, Employee (or any successor in
interest) shall have and be entitled to all of the rights and privileges of a
holder of Common Stock of the Company (including, without limitation, voting
rights and dividend rights) with respect to both such Forfeitable Shares and
such Non-Forfeitable Shares, but subject, however, to the transfer restrictions
of Article III.

2.2 Payment and Reimbursement for Applicable Withholding Taxes. Employee
understands that (a) all of the Shares that are Forfeitable Shares as of the
Award Date are considered to be subject to a substantial risk of forfeiture
under Section 83 of the Code, and (b) under Section 83(a) of the Code, upon the
lapse of any forfeiture restrictions applicable to any of the Shares, Employee
is required to include as compensation income (the “Taxable Amount”) the
difference (if any) between the price paid (if any) for such Shares and the Fair
Market Value of such Shares on the date on which any such forfeiture
restrictions applicable to such Shares lapse. Employee hereby (i) covenants and
agrees to reimburse and pay to the Company, upon written demand (including by
email or other electronic means) and strictly in accordance with each such
demand, in immediately available funds the full amount of withholding taxes as
determined by the Company to be due and payable to the Company with respect to
all Taxable Amounts and with respect to any Dividends paid (or to be paid)
relating to all of Employee’s Forfeitable Shares,

 

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and (ii) hereby authorizes the Company (at its election but without in any
manner modifying or limiting Employee’s obligations under clause “(i)” of this
sentence) to withhold, deduct and/or set off any and all such amounts owed or to
be owed to the Company in accordance with this Section from any and all payroll
or other amounts owed by the Company to Employee. If Employee has not paid in
full and in immediately available funds all amounts owed or to be owed to the
Company under this Section (as evidenced by a written demand from the Company)
no later than the date that forfeiture restrictions would otherwise lapse under
this Agreement with respect to any of Employee’s Shares (or the immediately
preceding Business Day, if such date is not a Business Day), then the lapsing of
such forfeiture restrictions with respect to such Shares shall be automatically
postponed by 45 calendar days and all amounts owed under this Section shall be
paid in full and in immediately available funds no later than the 45th calendar
day of such extension period (or the immediately preceding Business Day, if the
45th day of such extension period is not a Business Day). If any such amounts
that are owed or to be owed to the Company under this Section or that would be
owed to the Company upon the lapsing of forfeiture restrictions the stated time
for which has already passed (as determined by the Company) are not paid in full
and in immediately available funds prior to the end of such 45-day extension
period, then all of the Forfeitable Shares of Employee relating to such
delinquent payment(s) shall be permanently forfeited hereunder.

 

III. TRANSFER RESTRICTIONS

3.1 Restrictions on Transfer of Forfeitable Shares. Employee shall not transfer,
assign, encumber, or otherwise dispose of all or any part of the Forfeitable
Shares, other than to the Company.

3.2 Restrictions on Transfer of Shares; Transferee Obligations.

(a) No Transfer of Shares, whether or not permitted by Section 3.1, shall be
made or recorded on the books of the Company, and any such Transfer shall be
void and of no effect, unless:

(i) Such Transfer of the Shares is made pursuant to an effective registration
statement under the Securities Act, and applicable state securities laws or
pursuant to an exemption therefrom with respect to which the Company may, upon
request, require a satisfactory opinion of counsel retained by Employee (which
counsel shall be acceptable to the Company) to the effect that such Transfer is
exempt from the provisions of Section 5 of the Securities Act and applicable
state securities laws; and

(ii) Each person (other than the Company) to whom the Shares (whether
Forfeitable Shares or Non-Forfeitable Shares) are transferred by means of one of
the Transfers specified in Section 3.1 above shall, as a condition precedent to
the validity of such Transfer, agree in writing to the Company to be bound by
the terms and provisions of this Agreement and acknowledge that any such
transferred Shares shall be subject to the terms and provisions of this
Agreement, including without limitation (1) the restrictions on transfer
contained in Sections 3.1 and 3.2 as applicable, (2) the forfeiture restrictions
contained in Article IV, and (3) the escrow provisions pursuant to Article V, to
the same extent as if such Shares continued to be owned by Employee.

(b) No Transfer of Shares in violation of this Agreement shall be made or
recorded on the books of the Company, and any such Transfer shall be void and of
no effect.

 

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IV. FORFEITURE OF FORFEITABLE SHARES

4.1 Termination of Employment. Upon any termination of Employee’s employment
with the Company for any reason other than a termination for Cause, all of the
Forfeitable Shares shall become Non-Forfeitable Shares. In the event of a
termination of Employee’s employment with the Company for Cause, then all of
Employee’s Forfeitable Shares shall be forfeited as of such date of termination.

4.2 Change in Control. Upon the occurrence of a Change in Control, all of
Employee’s Forfeitable Shares shall become Non-Forfeitable Shares if, after the
date of such Change of Control, Employee’s employment with the acquiring company
is terminated (a) by the acquiring company for any reason other than for Cause
or (b) by the Employee for Good Reason.

4.3 Additional Shares or Substituted Securities. Upon the occurrence of any
Change in Capitalization, any new, substituted or additional securities or other
property (excluding Dividends) that is by reason of any such Change in
Capitalization distributed with respect to the Shares shall be immediately
subject to the restrictions set forth herein, but only to the extent the Shares
are at the time covered by such restrictions. Appropriate adjustments to reflect
the distribution of such securities or property shall be made to the number of
Shares hereunder in order to reflect the effect of any such transaction upon the
Company’s capital structure.

4.4 Existing Agreements. If Employee’s employment with the Company is subject to
the terms of an effective employment or other agreement that contains a
provision applicable to Employee’s termination from the Company, then such
agreement shall govern the treatment of Employee’s Forfeitable Shares upon the
occurrence of a termination, unless such employment or other agreement between
Employee and the Company provides for a lesser benefit than the terms contained
herein.

 

V. ESCROW

5.1 Deposit. Upon issuance, the certificates for the Forfeitable Shares may, at
the Company’s election, be deposited in escrow with the Corporate Secretary of
the Company to be held in accordance with the provisions of this Article V. Each
deposited certificate shall be accompanied by two original duly executed
Assignment Separate from Certificates. The deposited certificates, together with
any other assets or securities from time to time deposited with the Company
pursuant to the requirements of this Agreement, shall remain in escrow until
such time or times as the certificates (or other assets and securities) are to
be released or otherwise surrendered for cancellation in accordance with
Section 5.3 below. Upon delivery of the certificates (or other assets and
securities) to the Company, the Owner shall be provided with written evidence of
the number of Shares (or other assets and securities) delivered in escrow to the
Corporate Secretary of the Company.

5.2 Recapitalization. All Dividends shall be paid directly to the Owner and
shall not be held in escrow. However, in the event of a Change in
Capitalization, any new, substituted or additional securities or other property
(excluding Dividends) that is by reason of such transaction distributed with
respect to the Shares shall be immediately delivered to the Corporate Secretary
of the Company to be held in escrow under this Article V, but only to the extent
the Shares are at the time subject to the escrow requirements of Section 5.1.

 

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5.3 Release/Surrender. The Shares, together with any other assets or securities
held in escrow hereunder, shall be subject to the following terms and conditions
relating to their release from escrow or their surrender to the Company for
cancellation:

(a) The certificates for Shares shall be released from escrow (including any
Dividends thereon being held in such escrow) and delivered to the Owner after
the restrictions on the Forfeitable Shares lapse in accordance with the
Schedule(s) or as otherwise set forth herein, upon the written request of the
Owner with reasonable advance notice to the Corporate Secretary.

(b) If Forfeitable Shares are forfeited hereunder, then the certificates
representing such forfeited Shares (including any Dividends thereon being held
in such escrow) shall be surrendered to the Company.

(c) Notwithstanding anything to the contrary contained in this Section 5.3, all
Shares (or other assets or securities) released from escrow in accordance with
the provisions of Section 5.3(a) shall nevertheless remain subject to the
transfer restrictions set forth in Section 3.2 until such restrictions terminate
in accordance with the terms of Section 3.2.

 

VI. GENERAL PROVISIONS

6.1 No Employment or Service Contract. Nothing in this Agreement shall confer
upon Employee any right to continue in the service of the Company (or any
subsidiary of the Company employing or retaining Employee) for any period of
time or interfere with or restrict in any way the rights of the Company (or any
subsidiary of the Company employing or retaining Employee) or Employee, which
rights are hereby expressly reserved by each, to terminate the employee status
of Employee at any time for any reason whatsoever, with or without cause,
subject to the provisions of any employment agreement between the Company and
Employee.

6.2 Notices. Any notice required in connection with this Agreement shall be
given in writing and shall be deemed to have been given when delivered
personally to the recipient, sent to the recipient by reputable overnight
courier service (charges prepaid) or telecopied to the recipient at the address
indicated on Annex 1 or at such other address as such party may designate by ten
(10) days advance written notice under this Section 6.2 to all other parties to
this Agreement.

6.3 No Waiver. No waiver of any breach or condition of this Agreement shall be
deemed to be a waiver of any other or subsequent breach or condition, whether of
like or different nature.

6.4 Amendment. This Agreement may be modified, amended, suspended or terminated,
and terms or conditions may be waived, but only by a written instrument executed
by the parties hereto.

6.5 Employee Undertaking. Employee hereby agrees to take whatever additional
action and execute whatever additional documents the Company may, in its
judgment, deem necessary or advisable in order to carry out or effect one or
more of the obligations or restrictions imposed on either Employee or the Shares
pursuant to the express provisions of this Agreement.

6.6 Agreement Is Entire Contract. This Agreement (in conjunction with any
applicable employment agreement or other agreement that contains a provision
applicable to Employee’s termination from the Company) constitutes the entire
agreement between the parties hereto with regard to the subject matter hereof.

 

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6.7 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, as such laws are applied to
contracts entered into and performed in such State, without regard to conflict
of laws principles thereof.

6.8 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which, when taken together, shall
constitute one and the same instrument.

6.9 Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Company and its successors and assigns and
Employee and Employee’s legal representatives, heirs, legatees, distributees,
assigns and transferees by operation of law, whether or not any such person
shall have become a party to this Agreement and have agreed in writing to join
herein and be bound by the terms and conditions hereof.

6.10 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.

* * * Balance of Page Intentionally Blank – Signatures on Next Page * * *

 

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IN WITNESS WHEREOF, the Parties have each executed this Agreement as of the
dates set forth below.

 

THE COMPANY: MCG CAPITAL CORPORATION By:  

 

Name:   Steven F. Tunney Title:   President and Chief Executive Officer Date:  
EMPLOYEE:

 

Name:   [                    ] Date:  

 

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Annex 1

MCG CAPITAL CORPORATION

RESTRICTED STOCK AGREEMENT

Name:

Address:

 

Award Date:    [            ], 2008    Award of Forfeitable Time-Based Shares:
   [            ] shares   

Lapsing of Forfeiture for Time-Based Shares:

From and after the Award Date, but subject to the restrictions and other terms
and conditions set forth in this Agreement, the restrictions set forth in
Sections 3.1, 3.2, 4.1, 4.2 and 5.1 shall lapse with respect to [            ]
Shares of Employee’s Time-Based Shares on March 31, 2011, only if and to the
extent that Employee is still then employed by the Company on such date.

 

Initials: Employee:  

 

Company: