EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT entered into as of the 1^st day of March, 2007 (the Effective Date), by and between MCG Capital Corporation (the Company), a Delaware corporation, and Samuel G. Rubenstein, an individual (the Executive) (hereinafter collectively referred to as the Parties).

WHEREAS, the Executive has heretofore been employed by the Company as its General Counsel, Chief Legal Officer and Executive Vice President and the Company desires to continue to retain the services and employment of the Executive as the Companys General Counsel, Chief Legal Officer and Executive Vice President on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the respective agreements of the Parties contained herein, it is agreed as follows:

1. Term. The term of employment under this Agreement shall be for the period commencing on the date hereof, and shall continue in effect through February 28, 2010 (the Initial Term). The Initial Term shall automatically be extended for successive one-year periods (Extension Terms and, collectively with the Initial Term, the Term) unless either the Company or the Executive gives notice of non-extension to the other no later than sixty (60) days prior to the expiration of the then-applicable Term. Except as otherwise provided herein, this Agreement shall be of no further force or effect following the end of the Term.

2. Employment.

(a) The Executive shall be employed as the General Counsel, Chief Legal Officer and Executive Vice President of the Company. The Executive shall perform the duties, undertake the responsibilities and exercise the authority customarily performed, undertaken and exercised by persons situated in a similar executive capacity. The Executive shall report to the Chief Executive Officer of the Company.

(b) The Executive shall devote his full working time, attention and skill to the performance of such duties, services and responsibilities, and will use his best efforts to promote the interests of the Company. The Executive will not, without prior written approval of the Board of Directors of the Company (the Board), engage in any other activities that would interfere with the performance of his duties as an employee of the Company, are in violation of written policies of the Company, are in violation of applicable law, or would create a conflict of interest with respect to the Executives obligations as an employee of the Company. The Executive may (1) serve on corporate, civil or charitable boards or committees, (2) deliver lectures and teach at educational institutions, (3) serve as a personal representative or trustee, (4) manage his personal, financial and legal affairs, and (5) invest personally in any business where no conflict of interest exists between such investment and the business of the Company, as long as the foregoing activities do not materially interfere with Executives performance of his duties as an employee of the Company.

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3. Compensation.

(a) Base Salary. During the Term, the Company agrees to pay or cause to be paid to the Executive a base salary at the rate of $375,000 per annum (such base salary, as may be adjusted from time to time in accordance with this Section, the Base Salary). Such Base Salary shall be payable in accordance with the Companys customary practices applicable to its executives. Such Base Salary shall be reviewed (and may be adjusted) at least annually by either the Board or the Compensation Committee of the Board (the Compensation Committee). Such Base Salary may be reduced only if such reduction is implemented 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.

(b) Bonus. During the Term, the Executive will be eligible to receive annual bonuses based upon achieving annual individual and corporate performance goals determined from time to time by either the Board or the Compensation Committee after consultation with the Executive (the Annual Bonus). The Executives target annual bonus opportunity will equal 100% of Base Salary (the Target Annual Bonus), but the Executive will have the opportunity to earn an annual bonus between 0% and 200% of Base Salary. The actual annual bonus for any year will depend on the achievement of performance goals, which will generally be based on individual and corporate goals, as determined from time to time by either the Board or the Compensation Committee.

(c) Restricted Stock.

(i) The Executive shall be granted 150,000 shares of restricted common stock of the Company (the Restricted Stock), pursuant to the terms and conditions of the Companys 2006 Employee Restricted Stock Plan and form of restricted stock agreements approved by either the Board or the Compensation Committee. The Restricted Stock shall become non-forfeitable, subject to accelerated non-forfeitability in accordance with Section 5 and Section 6 if applicable, as follows: 12,500 shares of Restricted Stock shall become non-forfeitable on each March 31, June 30, September 30 and December 31, beginning on March 31, 2007 and ending on December 31, 2009, subject to the Executives continued employment with the Company on the applicable forfeiture date (the Time-Based Schedule).

(ii) Except as set forth in Section 5 of this Agreement and unless either the Board or the Compensation Committee determines otherwise, any Restricted Stock that have not become non-forfeitable on the applicable forfeiture date as set forth in the Time-Based Schedule shall be immediately forfeited.

(iii) The Executive will be entitled to receive any cash dividends that are paid on the shares of Restricted Stock while such shares are held by the Executive.

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(iv) In addition to the Restricted Stock, the Executive will have the opportunity each year to receive an annual grant of shares of restricted common stock of the Company, subject to the approval of either the Board or the Compensation Committee in its sole discretion.

(d) Benefits. During the Term, the Executive shall be entitled to participate in all employee benefit plans, practices and programs maintained by the Company and made available to employees generally including, without limitation, all pension, retirement, profit sharing, savings, medical, hospitalization, disability, dental, life or travel accident insurance benefit plans, vacation and sick leave. The Executives participation in such plans, practices and programs shall be on the same basis and terms as are applicable to employees of the Company generally.

(e) Expenses. During the Term, the Company agrees to pay all reasonable expenses, subject to reasonable documentation, incurred by the Executive in furtherance of the Companys business, including, without limitation, traveling and entertainment expenses.

(f) Executive Seminars. During the Term, the Executive agrees to annually attend an executive training seminar at the Companys expense.

(g) Key Man Life Insurance. At any time during the Term, the Company shall have the right to insure the life of the Executive for the Companys sole benefit. The Company shall have the right to determine the amount of insurance (Company Limit) and the type of policy, provided, however, that the Executive shall have the right, if the policy permits, to require the Company to purchase an amount of insurance in excess of the Company Limit (the Executive Limit) if the Executive pays to the Company each month the difference between (i) the insurance premium for a policy at the Company Limit and (ii) the insurance premium for a policy at the Executive Limit. The Executive shall cooperate with the Company in obtaining such insurance policy by submitting to physical examinations, by supplying all information reasonably required by any insurance carrier, and by executing all necessary documents reasonably required by any insurance carrier. Except as otherwise provided in this Section, (i) the Executive shall incur no financial obligation by executing any required document, and (ii) shall have no interest in any such policy.

4. Termination of Employment. The Executives employment hereunder may be terminated under the following circumstances:

(a) Disability. The Company may terminate the Executives employment after having established the Executives Disability or the Executive can terminate if he has established his Disability. For purposes of this Agreement, Disability means a physical or mental infirmity which impairs the Executives ability to substantially perform his duties under this Agreement for at least one hundred eighty (180) days during any 365-consecutive-day period.

(b) Cause. The Company may terminate the Executives employment for Cause. A termination for Cause shall mean (i) the Executives conviction to, plea of no contest to, plea of nolo contendere to, or imposition of unadjudicated probation for any felony

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