CREDIT AND WAREHOUSE AGREEMENT

by and among

MERRILL LYNCH CAPITAL CORP.,

MCG COMMERCIAL LOAN TRUST 2006-2,

as the Issuer

and

MCG CAPITAL CORPORATION

as the Collateral Manager

Dated as of May 2, 2006

CREDIT AND WAREHOUSE AGREEMENT (together with each Schedule (hereinafter individually and collectively referred to as, the Schedule) attached hereto from time to time, as such agreement may be waived, amended, modified or supplemented from time to time, this Agreement), dated as of May 2, 2006 among Merrill Lynch Capital Corp. (Merrill Lynch), MCG Commercial Loan Trust 2006-2 (the Issuer) and MCG Capital Corporation (the Collateral Manager). The obligations of Merrill Lynch hereunder shall be subject to the provisions of Section 24 hereof.

RECITALS

WHEREAS, the Issuer, which has been established as a bankruptcy remote entity with limited purposes, intends to use funds advanced to it hereunder by Merrill Lynch from time to time to purchase interests (the Assigned Loan Interests or Assigned Interests) in certain Loans identified in Item 1 of the Schedule pursuant to agreements described in Item 2 of the Schedule (each an Assignment Agreement and collectively, the Assignment Agreements) under which the Issuer will from time to time acquire the rights described in Item 3 of the Schedule;

WHEREAS, the Issuer intends to pledge the Assigned Interests to Wells Fargo Bank, National Association, as trustee (the Trustee), under an indenture (the Indenture), to be entered into between the Issuer and the Trustee, as security for certain secured notes (the Notes) to be issued under the Indenture; and

WHEREAS, in order to provide funds to the Issuer in an amount not to exceed, in the aggregate, the Facility Amount to enable it to purchase the Assigned Interests, the Issuer desires to grant to Merrill Lynch, and Merrill Lynch desires to take from the Issuer, (a) collateral interests (each a Participation, and collectively, the Participations) consisting of a first priority perfected security interest in all of the right, title and interest of the Issuer in and to all cash, securities or other property in connection with the Assigned Interests (collectively, Distributions), including without limitation Distributions in respect of principal, interest, fees, costs and expenses, and (b) options (each a Call Option, and collectively, the Call Options) to cancel such Participations and require the Issuer to transfer and assign the Assigned Interests to Merrill Lynch in consideration for such cancellation.

In consideration of the premises herein and for other good and valuable consideration, the sufficiency and receipt of which is hereby acknowledged, the parties hereto agree as follows:

1. Participation, Call Option; Hedge Agreements.

(a) Effective upon (i) the delivery by each of the Issuer (or the Collateral Manager on behalf of the Issuer) and Merrill Lynch to the other of duly completed and initialed counterparts of a Schedule (which Schedule shall form a part of this Agreement, all the terms and provisions of which shall remain in full force and effect), and (ii) payment of the purchase price listed as Item 4 of such Schedule (the Purchase Price) funded with the proceeds of an advance by Merrill Lynch hereunder and relating to a particular Assigned Interest and the related Participation (the date of such payment, as set out in Item 5 of such Schedule, being the Payment Date) as of the date set out in Item 6 of the Schedule relating to such Assigned

Interest and the related Participation (the Effective Date), the Issuer hereby grants to Merrill Lynch, and Merrill Lynch hereby takes from the Issuer, the related Participation and the related Call Option; provided that the aggregate of the Purchase Prices of the Assigned Interests at any one time subject to Participations hereunder may not exceed the Available Facility Amount; provided further that with respect to any Assigned Interest (and the related Participation) with respect to Loans, Merrill Lynch shall only be obligated to advance an amount equal to the product of the Advance Rate and the Purchase Price of such Assigned Interest (and the remainder of the Purchase Price in each case shall be deemed to be a capital contribution to the Issuer by the Collateral Manager).

(b) Notwithstanding anything herein to the contrary, Merrill Lynch may, in its sole discretion (or, with respect to any Assigned Interest in Loans that are Senior Secured Loans, in its reasonable discretion), refuse to make an advance in respect of any Assigned Interest and acquire the related Participation and related Call Option, including, without limitation, by reason of any of the following conditions failing to be satisfied (after giving effect to any such acquisition):

(i) (x) at any time that a Collateral Event or Collateral Manager Event has occurred and is continuing, Merrill Lynch is satisfied in its sole discretion that the related Assigned Interest satisfies the Eligibility Criteria and any other applicable criteria established by any of the Rating Agencies and (y) at all other times, the Collateral Manager is satisfied in its sole discretion that the related Assigned Interest satisfies the Eligibility Criteria and any other applicable criteria established by any of the Rating Agencies; and

(ii) with respect to Assigned Interests in Loans that do not bear interest at floating rates (such loans, Fixed Rate Loans), at any time a Collateral Event or a Collateral Manager Event has occurred and is continuing, Merrill Lynch is satisfied in its sole discretion that the risk of depreciation in market value of such Assigned Interest by reason of an increase in interest rates is hedged pursuant to one or more interest rate protection arrangements entered into by Merrill Lynch that are satisfactory in form and substance to Merrill Lynch acting in its sole discretion exercised in good faith and made on an arms-length basis and at the prevailing market price (each a Pre-Pricing Hedge); provided that Merrill Lynch shall give the Collateral Manager prompt notice that it has entered into any such Pre-Pricing Hedge.

Merrill Lynch shall use commercially reasonable efforts to make a determination within three Business Days as to whether it will advance in respect of any Assigned Interest and acquire the related Participation and related Call Option, and, in the event that Merrill Lynch determines to make such an advance, shall make such an advance as soon as reasonably practicable thereafter.

In addition, notwithstanding anything herein to the contrary, Merrill Lynch shall not be required to make an advance in respect of any Assigned Interest or acquire any Participations or Call Options if the documents and agreements listed in Annex I hereto, each in form and substance reasonably satisfactory to Merrill Lynch, have not been duly executed and delivered by the respective parties thereto.

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(c) On or about the Pricing Date or on any other date as determined by Merrill Lynch in its sole discretion (the Portfolio Hedge Price Date), Merrill Lynch shall terminate all Pre-Pricing Hedges (if any) entered into by it in respect of the Participations. On the Portfolio Hedge Price Date, the Collateral Manager shall, in consultation with Merrill Lynch, arrange for the entry into an interest rate hedging agreement for the account of the Issuer with respect to the portfolio of Assigned Interests expected to be held by the Issuer on the Closing Date (the Portfolio Hedge and, together with the Pre-Pricing Hedges, the Hedge Agreements).

(d) The Issuer may (solely from the cash proceeds of capital contributions), with three Business Days prior written notice to Merrill Lynch, from time to time make an advance to Merrill Lynch of all or a portion of the amounts owed by the Issuer to Merrill Lynch (each a Prepayment); provided that the Issuer shall be under no obligation under this Agreement to make any Prepayments to Merrill Lynch. Merrill Lynch shall refund to the Issuer all or any portion of the aggregate amount of all Prepayments previously received by Merrill Lynch and not refunded to the Issuer, provided that (i) the Issuer shall have given Merrill Lynch not less than three Business Days prior written notice of the Issuers request that Merrill Lynch make such refund, (ii) Merrill Lynch is satisfied in its sole discretion (or, with respect to any Assigned Interest in Loans that are Senior Secured Loans, in its reasonable discretion) that on the date of such requested refund each Assigned Interest satisfies the Eligibility Criteria and any other applicable criteria established by any of the Rating Agencies, (iii) Merrill Lynch is satisfied in its sole discretion there has not been a material adverse change with respect to any Assigned Interest or a material adverse change in the assets, business, operations or financial condition of any obligor or issuer of an Assigned Interest and (iv) on the date of such refund, no Collateral Event or Collateral Manager Event has occurred and is continuing or would result from such refund. Each Prepayment and refund shall reduce or increase, as applicable, on a pro rata basis (but not below zero) the Adjusted Purchase Price of each Participation.

2. Administrative Fee.

Merrill Lynch shall pay to the Issuer certain administrative fees in amounts to be agreed between the parties from time to time (Administrative Fees) to compensate the Issuer for all of the Issuers expenses associated with administering the Issuers obligations with respect to the Assigned Interests and Participations, and the corresponding obligations under this Agreement consisting of agent bank fees and reasonable out-of-pocket legal fees and expenses associated with receipt and disbursement of payments and enforcement of the Issuers rights with respect to the Underlying Instruments, the Assignment Agreements, and the agreements under which the Assigned Interests are purchased by the Issuer (collectively, the Related Agreements); provided that the Issuer or the Collateral Manager on behalf of the Issuer shall obtain Merrill Lynchs prior written approval for any expense, other than agent bank fees, in excess of U.S.$2,500. The Administrative Fees shall be payable upon the issuance of an invoice by the Issuer to Merrill Lynch. For the avoidance of doubt, upon issuance of the Notes, all Administrative Fees previously paid by Merrill Lynch to the Issuer will be refunded by the Issuer to Merrill Lynch as expenses of the issuance of the Notes to be borne by the Issuer as contemplated in the definition of Financing Cost.

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3. Payments on Account of the Assigned Rights.

(a) Upon receipt by the Issuer of any Distribution, the Issuer shall hold such Distribution for the benefit of Merrill Lynch, and shall promptly (but in no event later than (i) in the case of a Distribution consisting of principal of a Loan, five Business Days and (ii) in the case of all other Distributions, two Business Days, in each case after receipt of immediately available funds or after funds become available for distribution after deposit of a check, draft or other instrument), pay such amount in immediately available funds to the Escrow Account, or, if all or any part of a Distribution is in the form of securities, deliver such property in accordance with Section 3(b), to Merrill Lynch, in the form in which it was received by the Issuer, with endorsements where necessary.

(b) If any Distribution consists in whole or in part of securities, the Issuer shall, upon receipt of any such securities, hold them for the benefit of Merrill Lynch and cooperate with Merrill Lynch to cause the beneficial and record ownership of such securities to be transferred to Merrill Lynch or its nominee as soon as practicable. The Issuers obligation under the preceding sentence and, insofar as it relates to the distribution of securities, Section 3(a), is conditioned on Merrill Lynch executing all agreements, instruments and documents and taking all other actions required to effect such transfer. At all times before such securities shall have been transferred to Merrill Lynch, including if the Issuer is prohibited by any law, rule, order or agreement from transferring any securities to Merrill Lynch as contemplated in this Section 3(b), the Issuer shall continue to hold such securities as agent for Merrill Lynch, and shall exercise any rights in such securities only as directed in writing by Merrill Lynch.

(c) Subject to Section 7(g) and Section 12, if the Issuer makes any payment or distribution to Merrill Lynch pursuant to the foregoing Section 3(a) or Section 3(b) and the Issuer is required to return to any Person all or any portion of such payment or distribution, Merrill Lynch shall, upon the written request of the Issuer made within two years after the Termination Date, return to the Issuer such payment or distribution required to be so returned or paid and interest thereon at such rate, if any, as the Issuer is required to pay thereon.

(d) On each Monthly Settlement Date, the Collateral Manager and Merrill Lynch agree to cause the Escrow Agent to make the following payments in the order of priority set forth below:

(i) to Merrill Lynch, from the Aggregate Distribution, the Total Financing Cost as of such date;

(ii) on any Monthly Settlement Date, an amount equal to the product of all Distributions constituting principal of the Loans on deposit in the Escrow Account and the Advance Rate (calculated as of the 11th day of the calendar month in which the relevant Monthly Settlement Date occurs) shall be distributed to Merrill Lynch and the remainder of such Distributions shall be distributed to the Trust Depositor; and

(iii) (x) on any Monthly Settlement Date on which a Collateral Event or a Collateral Manager Event has occurred and is continuing and any amount is due and payable to Merrill Lynch under this Agreement, no Distributions shall be made to the Collateral

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Manager pursuant to this subsection 3(d)(iii) and such amounts shall remain on deposit in the Escrow Account, and (y) on any other Monthly Settlement Date, the remainder of the Aggregate Distribution after giving effect to the disbursement in subsection 3(d)(i) above shall be distributed to the Trust Depositor.

(e) From time to time, for so long as no Collateral Event or Collateral Manager Event has occurred and is continuing or would result therefrom, an amount not greater than the Excess Overcollateralization Amount may be distributed to the Trust Depositor upon 2 Business Days notice by the Collateral Manager or the Trust Depositor to Merrill Lynch.

4. Delivery of Documents and Information.

Subject to the confidentiality or related provisions of the respective Related Agreements, the Issuer or the Collateral Manager on its behalf shall promptly furnish and convey to the Escrow Agent (and, upon request, to Merrill Lynch) copies of any material information or documents received by the Issuer from time to time with respect to or in connection with the Assigned Interests promptly after its receipt thereof. The Issuer or the Collateral Manager on its behalf shall request from the obligor or issuer of an Assigned Interest, and, subject to the confidentiality or related provisions of the respective Related Agreements, shall furnish to Merrill Lynch, such information concerning the business, affairs or condition (financial or otherwise) of such obligor or issuer as Merrill Lynch may reasonably request. The Collateral Manager on behalf of the Issuer shall deliver to Merrill Lynch all Related Agreements relating to each Assigned Interest then held by the Collateral Manager, and the Collateral Manager shall from time to time request from each obligor (or the applicable agent bank) or issuer all Related Agreements relating to each Assigned Interest (in each case, as reasonably specified by Merrill Lynch in writing at the time Merrill Lynch acquired a Participation in such Assigned Interest) not then held by the Collateral Manager. Merrill Lynch agrees, to the extent necessary to receive any Related Agreements or information relating to an Assigned Interest, to comply with the confidentiality provisions of such relevant Related Agreements or applicable to such information to which the Issuer or the Collateral Manager are subject. Nothing herein shall preclude Merrill Lynch from exercising such rights as it may have under such Related Agreements to obtain any such information.

5. Acts and Decision.

(a) At any time a Collateral Event or a Collateral Manager Event has occurred and is continuing, except as prohibited by the Related Agreements, each of the Issuer and the Collateral Manager shall act or refrain from acting with respect to any request, act, decision, amendment or vote (each an Act) in connection with the Assigned Interests that are Private Loans only as directed in writing by Merrill Lynch (which direction shall not be unreasonably withheld or delayed), and neither the Issuer nor the Collateral Manager shall have liability to Merrill Lynch in connection with any Act taken by it in accordance with any such direction. At any time a Collateral Event or a Collateral Manager Event has occurred and is continuing, each of the Issuer and the Collateral Manager shall act or refrain from acting with respect to any Act in connection with the Assigned Interests that are Public Loans using its best judgment. In addition, neither the Issuer nor the Collateral Manager shall have liability to Merrill Lynch for refraining from acting generally or refraining from acting with respect to an Act in connection with Assigned Interests that are Private Loans if Merrill Lynch has not provided direction with respect to such Act.

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(b) For purposes of this Section 5, at any time that no Collateral Event or Collateral Manager Event has occurred and is continuing, the Collateral Manager shall, with prompt written notice to Merrill Lynch (in the case of any material Act), act or refrain from acting with respect to any Act (i) in connection with the Assigned Interests that are Public Loans using its reasonable commercial judgment and (ii) in connection with the Assigned Interests that are Private Loans, only so long as such Act would not (in the reasonable commercial judgment of the Collateral Manager) materially adversely affect the rights of Merrill Lynch under, or its security interest in, such Assigned Interest.

6. Administration of this Agreement.

(a) Subject to Section 8, Section 10 and Section 25 hereof, notwithstanding any other term of this Agreement, the Issuer and the Collateral Manager shall have no liability in connection with the administration of the Assigned Interests or the Participations other than for its own gross negligence, bad faith or willful misconduct.

(b) The parties hereto intend and agree that Merrill Lynch shall not assume liability or become liable for any obligation under or in connection with the Related Agreements other than as expressly provided for herein.

(c) The Issuer covenants and agrees that it shall not sell, grant, convey, encumber or transfer participation or sub-participation interests in, or otherwise transfer, in whole or in part, any of its right, title and interest in the Assigned Interests except pursuant to Section 7.

(d) Each of the parties hereto acknowledges that:

(i) the Issuer has granted to Merrill Lynch a participation interest in all of the Issuers interests in the Assigned Interests except that the Issuer remains the legal holder of record of the Assigned Interests, and

(ii) Merrill Lynch has not acquired hereunder direct rights against the borrower with respect to any Assigned Loan Interest or the seller of any Assigned Interest to the Issuer except in each case as otherwise provided in the respective Related Agreements.

(e) The Collateral Manager shall have the rights and obligations as set forth in Section 8 herein.

(f) Notwithstanding any other provision of this Agreement, with respect to each Participation:

(i) nothing contained herein shall grant to Merrill Lynch any rights which the respective Related Agreements require the Issuer to retain,

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(ii) this Agreement shall be deemed to incorporate any provisions required by any Related Agreement to be incorporated in order to transfer the related Participation hereunder, and

(iii) this Agreement shall be deemed to omit any provision which any Related Agreement requires to be omitted in order to transfer the related Participation hereunder.

7. Repurchase of Participation; Exercise of Call Option.

(a) If the Closing Date occurs, payments shall be made on such Closing Date as follows:

(i) the Issuer shall repurchase each Participation then outstanding from Merrill Lynch at a price equal to the Hedge Adjusted Purchase Price;

(ii) the Aggregate Distribution and the Overcollateralization Amount shall be distributed in the order of priority set forth below:

First, to Merrill Lynch up to an amount equal to the Total Financing Cost;

Second, to Merrill Lynch up to an amount equal to the Net Loss, if any; and

Third, to the Trust Depositor, the remainder of the Aggregate Distribution and the Overcollateralization Amount.

(iii) The Net Gain, if any, shall be for the account of the Collateral Manager;

provided that, effective upon payment of the amounts set forth in this Section 7(a), all rights of Merrill Lynch in the Assigned Interests and all obligations of the Issuer or the Collateral Manager to Merrill Lynch, in each case as set forth in this Agreement, shall terminate except as otherwise specified in Section 21 hereof.

(b) If the Closing Date shall fail to occur prior to the Termination Date other than as a result of a Collateral Manager Event:

(i) Subject to clause (b)(ii) below, Merrill Lynch shall exercise the Call Option on a Business Day at least six Business Days (or, (x) if the Closing Date shall fail to occur prior to the Termination Date and a Collateral Event shall have occurred and be continuing, four Business Days or (y) if the Closing Date shall fail to occur prior to the Termination Date as a result of an event described in clause (e) of the definition of Termination Date, promptly but in any event, two Business Day) after the Termination Date by a written notice to the Issuer that the Issuer deliver and transfer title to the Assigned Interests to Merrill Lynch, which delivery and transfer shall take place no more than 20 Business Days after the

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delivery of such notice by Merrill Lynch. All representations, warranties, covenants and agreements of the Issuer and Merrill Lynch under this Agreement shall apply mutatis mutandis to such Assigned Interests transferred to Merrill Lynch. Effective upon such delivery and transfer, all rights of the Issuer in the Assigned Interests and all obligations of the Issuer, the Collateral Manager and Merrill Lynch, in each case as set forth in this Agreement, shall terminate except as otherwise specified in Section 21 hereof;

(ii) for a period of up to five Business Days (or, (x) if the Closing Date shall fail to occur prior to the Termination Date and a Collateral Event shall have occurred and be continuing, three Business Days or (y) if the Closing Date shall fail to occur prior to the Termination Date as a result of an event described in clause (e) of the definition of Termination Date, promptly but in any event, one Business Day) after the Termination Date, the Collateral Manager may notify Merrill Lynch that it intends to purchase any such Participation at its Hedge Adjusted Purchase Price (and for the avoidance of doubt, the related Assigned Interest from the Issuer at the Adjusted Purchase Price of such Assigned Interest), which purchase shall take place no more than 20 Business Days after the delivery of such notice by the Collateral Manager, and Merrill Lynch may, in its sole discretion, sell, otherwise liquidate or retain for its own account (in the event that an Assigned Interest is retained by Merrill Lynch for its own account, the Market Value of such Assigned Interest shall be determined as set forth in clause (1)(b) of the definition of Market Value) each Assigned Interest, which has not been identified in such notice and which remains subject to a Participation as of the sixth Business Day (or, (x) if the Closing Date shall fail to occur prior to the Termination Date as a result of a Collateral Event, fourth Business Day or (y) if the Closing Date shall fail to occur prior to the Termination Date as a result of an event described in clause (e) of the definition of Termination Date, promptly but in any event, first Business Day) after the Termination Date;

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