CREDIT AND WAREHOUSE AGREEMENT

(UBS AG, Stamford Branch MCG Capital Corporation)

CREDIT AND WAREHOUSE AGREEMENT dated as of January 29, 2004 (as amended from time to time, this Agreement), among UBS AG, Stamford Branch (UBS), MCG Commercial Loan Trust 2003-1, a Delaware statutory trust (the Borrower), and MCG Capital Corporation (MCG).

RECITALS

WHEREAS, pursuant to an engagement letter dated January 29, 2004 (as amended from time to time, the Engagement Letter) between UBS Securities LLC (UBSS) and MCG, MCG engaged UBSS to act as exclusive structuring agent and sole placement agent with respect to, among other things, (a) the structuring of several classes of notes (the Notes) and equity ownership interests (the Equity Interests and, collectively with the Notes, the Offered Securities) to be issued by the Borrower and (b) the marketing and placement of the Offered Securities;

WHEREAS, MCG will act as collateral manager (in such capacity, the Collateral Manager) to the Borrower with respect to the Warehouse Portfolio (as defined herein);

WHEREAS, the Offered Securities are to be offered and sold (the Offering) by the Borrower in a transaction (the Transaction) exempt from the registration requirements of the Securities Act of 1933, as amended;

WHEREAS, the Offered Securities will be secured (or, in the case of the Equity Interests, backed) by a portfolio of Collateral Debt Securities (as defined herein) having the characteristics described in Annex A hereto (such portfolio of Collateral Debt Securities, the Warehouse Portfolio); and

WHEREAS, in order to facilitate the Borrowers acquisition of Collateral Debt Securities (as defined herein), UBS is willing to finance 100% of the purchase price of such Collateral Debt Securities, all on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual agreements set forth herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereby agree as follows:

Definitions

1. Capitalized terms used in this Agreement have the respective meanings given to such terms (i) in this Section, or (ii) if not defined in this Section, elsewhere in this Agreement (including the Annexes hereto).

Page 1

Accrued Interest Spread means, with respect to each Collateral Debt Security at any time constituting part of the Warehouse Portfolio, the aggregate amount of accrued interest on such Collateral Debt Security plus, if such Collateral Debt Security is a Delayed Drawdown Security, the aggregate amount of accrued commitment fee (if any) on the Unfunded Amount thereof, in each case, to the extent actually received by the Borrower during the Carry Period therefor (exclusive of Purchased Accrued Interest).

Accumulation Period means the period commencing on the date hereof and ending on, but excluding, the earlier of (a) the date occurring three Business Days prior to the Closing Date and (b) the Termination Date.

Adjusted Purchase Price means, with respect to any Collateral Debt Security purchased by the Borrower and any date of determination, a price equal to (a) the Gross Purchase Price of such Collateral Debt Security plus (b) in the case of a Delayed Drawdown Security, the aggregate principal amount of any additional loans actually made to the relevant borrower by or on behalf of the Borrower (and funded by UBS pursuant to this Agreement) in accordance with the terms thereof during the period from (but excluding) the date of purchase of such Delayed Drawdown Security to (and including) such date of determination minus (c) the aggregate of all amounts paid by the Borrower to UBS on or prior to such date of determination pursuant to Section 2(k) minus (d) the aggregate amount of all net proceeds paid by or on behalf of the Borrower to UBS on or prior to such date of determination pursuant to Section 4(b) or 4 (d) to reduce the Aggregate Outstanding Balance payable to UBS.

Affiliate means, in relation to any specified Person, (a) any other Person who, directly or indirectly, is in control of, or controlled by, or is under common control with, such Person or (b) any other Person who is a director, officer, member or general partner of (i) such Person or (ii) any such other Person described in clause (a) above; provided that no other special purpose company to which an administrator of the Borrower provides directors and acts as share trustee shall be an Affiliate of the Borrower. For the purposes of this definition, control of a Person means the power, direct or indirect, (i) to vote more than 50% of the securities having ordinary voting power for the election of directors of such Person or (ii) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

Aggregate Outstanding Balance means, at any time, the sum of (a) the Adjusted Purchase Price for all Collateral Debt Securities at such time plus (b) all accrued Financing Costs not previously paid to UBS.

Applicable Spread means 0.50%.

Banking Day means a day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in New York City and London.

Page 2

Borrower Documentation means, collectively, the documentation related to the offering, placement, issuance or sale of any of the Offered Securities (including any indenture).

Borrower Security Event means (a) the Borrower or the Intermediate Company shall fail to perform in any material respect any of its obligations under, or shall breach in any material respect any provision of, the Pledge Agreement (beyond any applicable grace period specified in the Pledge Agreement) or (b) any representation or warranty made by the Borrower or the Intermediate Company in or pursuant to the Pledge Agreement, or in any certificate or other document furnished pursuant thereto, shall prove to have been incorrect in any material respect when made.

Business Day means any day (a) that is a trading day on the New York Stock Exchange and (b) that is also a Banking Day.

Capitalization Requirement means a requirement that is satisfied on any date on which Contributed Capital Assets are contributed to the Borrower or distributed by the Borrower so long as the sum of (a) the aggregate principal amount (or, in the case of assets issued at a discount, original issue price) of all Contributed Capital Assets consisting of cash in Dollars and Cash Equivalents held by the Borrower on such date plus (b) 66.66667% (or such other percentage as the parties hereto shall agree in writing) of the aggregate Market Value of all Contributed Capital Assets not consisting of cash in Dollars and Cash Equivalents held by the Borrower on such date is at least equal to U.S.$20,000,000.

Carry Period means, with respect to any Collateral Debt Security at any time constituting part of the Warehouse Portfolio, the period commencing on (and including) the settlement date for the purchase of such Collateral Debt Security and ending on (and excluding) the earlier of (a) if the Closing Date occurs on or prior to the Target Date, the Closing Date and (b) the settlement date for the sale or other liquidation of such Collateral Debt Security (or, if applicable, the date on which the Market Value of such Collateral Debt Security is determined pursuant to clause (b) or (c) of the definition of Market Value) in connection with a Realization Event. The Carry Period with respect to any Contributed Capital Asset shall mean the period commencing on (and including) the date on which such Contributed Capital Asset is contributed to the Borrower and ending on (and excluding) the earlier of (a) if the Closing Date occurs on or prior to the Target Date, the Closing Date and (b) the settlement date for the sale or other liquidation or disposition of such Contributed Capital Asset.

Cash Equivalent means any of the following:

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Clean Purchase Price means, with respect to any Collateral Debt Security purchased by the Borrower and any date of determination, (a) the purchase price (including any fees and out-of-pocket expenses charged to or payable by the Borrower, UBSS, UBS or MCG that are incidental to the purchase of such Collateral Debt Security by the Borrower, minus any up front fees paid or owing to the Borrower, UBSS or UBS in connection with such purchase, but excluding any amounts attributable to Purchased Accrued Interest) of such Collateral Debt Security plus (b) in the case of a Delayed Drawdown Security, the aggregate principal amount of any additional loans actually made to the relevant borrower by the Borrower (and funded by UBS pursuant to this Agreement) in accordance with the terms thereof during the period from (but excluding) the date of purchase of such Delayed Drawdown Security to (and including) such date of determination minus (c) the aggregate amount of all distributions of principal of such Collateral Debt Security, if any, actually received by the Borrower at or prior to such date of determination or receivable by the Borrower in respect of any record date occurring on or prior to such date of determination.

Closing Date means the date on which the Offered Securities are issued.

Collateral Debt Security has the meaning assigned to such term in Annex B attached hereto.

Collateral Manager Event means any of the following events:

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