Exhibit 10.2

MCG CAPITAL CORPORATION

2009 Long-Term Incentive Program

On June 17, 2009, the Compensation Committee (the “Committee”) of the Board of
Directors (the “Board”) of MCG Capital Corporation (the “Company”) recommended
that the Board approve, and on July 23, 2009, the Board approved, this 2009
Long-Term Incentive Program (the “Plan”).

 

  1. Purpose of the Plan.

The Plan is intended to motivate executive management to provide superior
performance over an extended period and to build long-term stockholder value.

 

  2. Eligibility.

All of the Company’s executive officers, within the meaning of Rule 3b-7 under
the Securities Exchange Act of 1934, as amended, and key, non-executive
employees designated by the Committee (the “Participants”) are eligible to
receive (i) an award of shares of restricted common stock, to be issued under
the Company’s Amended and Restated 2006 Employee Restricted Stock Plan, for
which forfeiture restrictions lapse in two tranches (A) upon the achievement of
specified Company share price thresholds and (B) twelve months after the
achievement of any applicable threshold set forth in clause (i)(A) (each, an
“LTIP Restricted Stock Award”) and (ii) a bonus payable in cash in two tranches
(A) upon the achievement of specified Company share price thresholds and
(B) twelve months after the achievement of any applicable threshold set forth in
clause (ii)(A) (each, an “LTIP Cash Bonus”).

Additional Participants may be added to this Plan at the discretion of the
Committee.

Eligible Participants must be employed by the Company on the date the Company’s
share price has reached the requisite share price milestone for the required
period of time specified in Section 9 (each, a “Share-Price Satisfaction Date”)
and the date that is twelve months following the Share-Price Satisfaction Date
(each, a “Final Satisfaction Date”) in order to receive (i) without restriction,
the full number of shares of common stock subject to the relevant portion of
their LTIP Restricted Stock Award and (ii) the full relevant portion of their
LTIP Cash Bonus under this Plan. Notwithstanding the foregoing, the Committee
has broad discretion when determining whether or not to award a Participant an
LTIP Restricted Stock Award or to pay an LTIP Cash Bonus.

An eligible Participant who ceases to be employed by the Company, other than as
a result of termination by the Company for cause or as a result of a voluntary
termination by the Participant: (i) after a Share-Price Satisfaction Date, but
prior to the corresponding Final Satisfaction Date, will be entitled to receive
immediately (A) the full number of shares of common stock subject to the
relevant portion of their LTIP Restricted Stock Award and (B) the full relevant
portion of their LTIP Cash Bonus under this Plan; or (ii) 60 days prior to a
Share-Price Satisfaction Date, will be entitled to receive immediately after the
applicable Share-Price Satisfaction Date (A) the full number of shares of common
stock subject to the relevant portion of their LTIP Restricted Stock Award and
(B) the full relevant portion of their LTIP Cash Bonus under this Plan.
Notwithstanding the foregoing, with respect to (i) any Participant on an
approved leave of absence on any Share-Price Satisfaction Date or Final
Satisfaction Date, as the case may be; and (ii) any Participant who during the
Plan Period (as defined below) becomes disabled and qualifies for benefits under
the Company’s long-term disability plan, the Committee may, in its sole
discretion and without any obligation to do so, determine to issue shares of
restricted common stock subject to an LTIP Restricted Stock Award (or permit
forfeiture restrictions to lapse thereunder) or pay an LTIP Cash Bonus to such a
Participant under this Plan.

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  3. Effective Date; Period Covered by Plan.

The Plan is effective as of July 23, 2009 and covers the three year period
ending July 22, 2012 (the “Plan Period”).

 

  4. Administration.

This Plan will be administered by the Committee. The Committee shall have
authority to adopt, amend and repeal such administrative rules, guidelines and
practices relating to this Plan as it deems advisable. All decisions by the
Committee shall be made in the Committee’s sole discretion and shall be final
and binding on all Participants and all persons having or claiming any interest
in this Plan. No member of the Committee shall be liable for any action or
determination relating to or under this Plan.

 

  5. Determinations.

The criteria and goals discussed below are guidelines. The Committee shall have
broad discretion to construe and interpret the terms of this Plan, to make
adjustments or amendments to this Plan, to make determinations regarding the
weighting or impact of any particular set of criteria or goals that have been
satisfied, and to ultimately make determinations as to whether to award LTIP
Restricted Stock Awards or LTIP Cash Bonuses. The Company has no obligation to
make any payments until such time as the Committee makes such determination, in
its sole discretion, regardless of whether the criteria and goals discussed
below have been satisfied.

 

  6. Guidelines for LTIP Restricted Stock Awards.

The forfeiture restrictions applicable to the shares of restricted common stock
subject to each LTIP Restricted Stock Award shall lapse according to the
following schedule:

 

Share
Price

  Percentage of Shares
of Restricted Common
Stock Issued     % of Restricted Stock for which Forfeiture Provisions Lapse    
  On Share-Price
Satisfaction Date     12 Months after
Share-Price Satisfaction Date   $ 3   25 %    16.67 %    8.33 %  $ 4   50 %   
33.33 %    16.67 %  $ 5   75 %    50.00 %    25.00 %  $ 6   90 %    60.00 %   
30.00 %  $ 7   100 %    66.67 %    33.33 % 

Immediately following each Share-Price Satisfaction Date, 100% of the shares of
common stock subject to the relevant portion of each LTIP Restricted Stock Award
may be issued to each eligible Participant, with 66 2/3% of the shares of common
stock subject to such relevant portion of the applicable LTIP Restricted Stock
Award becoming free from forfeiture on such Share-Price Satisfaction Date,
subject to the Participant’s employment with the Company on such Share-Price
Satisfaction Date. Immediately following each Final Satisfaction Date, the
remaining 33 1/3% of the shares of common stock subject to the relevant portion
of each LTIP Restricted Stock Award may become free from forfeiture, subject to
the Participant’s employment with the Company on such Final Satisfaction Date.

 

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Example

Eligible Employee “A” is awarded an LTIP Restricted Stock Award consisting of
1,000 shares of restricted common stock on July 23, 2009. On October 1, 2009,
the Company’s share price has maintained a per share closing price in excess of
$3.00, but below $4.00, for twenty consecutive trading days. After determination
by the Committee, on October 1, 2009, Employee A is issued 250 shares of common
stock, 167 shares of which are free from forfeiture restrictions. On
September 30, 2010, the forfeiture restrictions applicable to the remaining 83
shares of common stock subject to Employee A’s LTIP Restricted Stock Award
lapse, provided that on such Final Satisfaction Date, Employee A remains
employed by the Company.

 

  7. Guidelines for LTIP Cash Bonuses.

In the event that the Company’s share price reaches predetermined price
thresholds and subject to the discretion of the Committee, Participants will be
eligible to receive their respective pro-rata portion of the dollar amount
reserved by the Company for LTIP Cash Bonuses. Based on the Committee’s
determination, LTIP Cash Bonuses are not earned until such time as the Company’s
share price reaches $5.00, and the maximum payout is not earned until such time
as the Company’s share price reaches $8.00. The table on Exhibit A attached
hereto sets forth the aggregate LTIP Cash Bonus dollar amounts available for
distribution to Participants at various share price thresholds under the Plan.

Immediately following each Share-Price Satisfaction Date, 66 2/3% of the
relevant portion of each LTIP Cash Bonus earned may be paid to each eligible
Participant, subject to the Participant’s employment with the Company on such
Share-Price Satisfaction Date. Immediately following each Final Satisfaction
Date, the remaining 33 1/3% of the relevant portion of each LTIP Cash Bonus
earned may be paid to each eligible Participant, subject to the Participant’s
employment with the Company on such Final Satisfaction Date.

Example

Eligible Employee “A” is awarded an LTIP Restricted Stock Award consisting of
10,000 shares of restricted common stock on July 23, 2009 and eligible
Participants in the Plan are awarded LTIP Restricted Stock Awards consisting of
an aggregate of 865,000 shares of restricted common stock. On October 1, 2009,
the Company’s share price has maintained a per share closing price in excess of
$5.00, but below $6.00, for twenty consecutive trading days. After determination
by the Committee, on October 1, 2009, Employee A is paid $8,000, representing
66 2/3% of the relevant portion of the LTIP Cash Bonus earned by Employee A. On
September 30, 2010, Employee A is paid $4,000, representing the remaining
33 1/3% of the relevant portion of the LTIP Cash Bonus earned by Employee A,
provided that on such Final Satisfaction Date, Employee A remains employed by
the Company.

 

  8. Dividend Eligibility.

Each Participant shall become eligible for dividends paid, if any, with respect
to the shares of the Company’s common stock subject to their respective LTIP
Restricted Stock Awards on the date that the shares subject to each such award
are issued (i.e., on the applicable Share-Price Satisfaction Date).

 

  9. Share Price Thresholds.

Share price thresholds:

 

  •  

must be maintained for twenty consecutive trading days;

 

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  •  

must be achieved within the Plan Period; and

 

  •  

shall be measured as the closing price of the Company’s common stock on the
NASDAQ Global Select Market or on any national securities exchange on which the
Company’s common stock is listed, as adjusted for stock splits,
recapitalizations, combinations, reclassifications, spin-offs and the like. If
no sales of the Company’s common stock are made on any particular day, the price
of the Company’s common stock shall be the reported closing price for the next
preceding day on which sales were made.

 

  10. Other Bonuses and Incentives.

Nothing in this Plan shall limit the discretionary authority of the Board or the
Committee to approve and pay out additional or alternative bonuses to
Participants or provide Participants additional or alternative incentives
outside of the terms of this Plan.

 

  11. Acquisition of the Company.

This Plan shall terminate effective immediately prior to the closing of an
Acquisition (as defined below) of the Company. Notwithstanding the foregoing,
(i) all shares of common stock underlying the relevant portions of LTIP
Restricted Stock Awards shall be issued to each Participant and the forfeiture
restrictions applicable to such LTIP Restricted Stock Awards shall lapse in full
and (ii) all applicable LTIP Cash Bonuses shall be paid in full, in each case on
or prior to the closing of the Acquisition, assuming that the Price Per Share
(as defined below) in the Acquisition shall be substituted for the applicable
share price threshold without regard to any requirement that a share price
threshold be maintained for twenty consecutive trading days.

“Acquisition” means (i) any merger or consolidation in which (A) the Company is
a constituent party or (B) a subsidiary of the Company is a constituent party,
and the Company issues shares of its capital stock pursuant to such merger or
consolidation (except, in the case of both clauses (A) and (B) above, any such
merger or consolidation involving the Company or a subsidiary in which the
holders of capital stock of the Company immediately prior to such merger or
consolidation continue to hold immediately following such merger or
consolidation at least 51% by voting power of the capital stock of (x) the
surviving or resulting corporation or (y) if the surviving or resulting
corporation is a wholly owned subsidiary of another corporation immediately
following such merger or consolidation, of the parent corporation of such
surviving or resulting corporation) or (ii) the sale or transfer, in a single
transaction or series of transactions, of capital stock representing at least
51% of the voting power of the outstanding capital stock of the Company
immediately following such transaction or (iii) the sale of all or substantially
all of the assets of the Company, as defined under Section 271 of the Delaware
General Corporation Law.

“Price Per Share” means:

 

  •  

with respect to any merger or consolidation, (i) the price per share paid in
cash for each share of the Company’s common stock, together with the value of
all of the consideration issued in respect of such shares, including, but not
limited to, debt, deferred compensation rights or earn outs, or (ii) the market
value of the per share consideration issued to the holders of shares of the
Company’s common stock, together with the value of all of the consideration
issued in respect of such shares, including, but not limited to, debt, deferred
compensation rights or earn outs;

 

  •  

with respect to the sale or transfer, in a single transaction or series of
transactions, of capital stock representing at least 51% of the voting power of
the outstanding capital stock of the Company, the weighted average price per
share paid for such shares; and

 

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  •  

with respect to the sale of all or substantially all of the assets of the
Company, the aggregate purchase price paid to the Company for such assets
divided by the number of shares of the Company’s common stock then outstanding.

 

  12. Withholding Taxes.

The Company may deduct from any payment otherwise due to Participants under this
Plan any amount required to be withheld by the Company under applicable federal,
state, and local or other income and employment tax withholding laws and
regulations. However, with respect to LTIP Restricted Stock Awards, the Company
may not withhold shares of restricted common stock in satisfaction of such tax
withholding, unless and until such withholding is approved under applicable laws
and regulations. If the Company elects not to or cannot withhold such amounts
from payments due to a Participant, each Participant must pay the Company the
full amount, if any, required for withholding.

 

  13. Miscellaneous Provisions.

Non-Transferability of Rights

The Plan is not intended to create a right to an LTIP Restricted Stock Award or
the payment of an LTIP Cash Bonus. The rights to any LTIP Restricted Stock Award
or LTIP Cash Bonus under this Plan may not be sold, transferred, pledged,
hypothecated or otherwise disposed of.

No Right to Continued Employment

The opportunity to receive an LTIP Restricted Stock Award or LTIP Cash Bonus
under this Plan shall not be construed as giving a Participant the right to
continued employment or any other relationship with the Company. The Company
expressly reserves the right at any time to dismiss or otherwise terminate its
relationship with a Participant free from any liability or claim under this
Plan.

Severability

The invalidity or unenforceability of any provision of this Plan shall not
affect the validity or enforceability of any other provision of this Plan, and
each other provision of this Plan shall be severable and enforceable to the
extent permitted by law.

Amendment and Termination

The Committee may amend or terminate this Plan or any portion thereof at any
time.

Compliance with Internal Revenue Code Section 409A

This Plan and the share issuances and payments hereunder are not intended to be
subject to Section 409 of the Internal Revenue Code, because all payments
hereunder will be made within the “short-term deferral” period as described in
the regulations under Section 409A. The Plan shall be interpreted and operated
in a manner consistent with such intent. The Company shall have no liability to
a Participant, or any other party, for any liability under Section 409A,
regardless of whether the Plan is determined to be subject to Section 409A.

Compliance with the Investment Company Act of 1940

Notwithstanding the foregoing, no provision of the Plan shall contravene any
portion of the Investment Company Act of 1940 (the “1940 Act”), and in the event
of any conflict between a provision of the Plan and the 1940 Act, the applicable
section of the 1940 Act shall control.

 

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Governing Law

This Plan shall be construed, interpreted and enforced in accordance with the
internal laws of the Commonwealth of Virginia without regard to any applicable
conflicts of laws.

*****

 

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EXHIBIT A

 

Share Price

  Aggregate Dollar Amount Reserved for
Applicable Share Price Achieved $ 3.00   $ 0 $ 4.00   $ 0 $ 5.00   $ 1,000,000 $
6.00   $ 996,000 $ 7.00   $ 1,006,000 $ 8.00   $ 2,209,000